Aug 2024 concall(Q1-2025)
1…ENTERPRISE SEGMENT
A…Demand
=If we look at geographically, demand from the domestic market has started firming up, and we are also seeing some prices to firm up. But we
continue to experience challenges in the export market, wherein the price points are still very low, also seen
B…Over supply
=There is continued dumping of products from the China market.
=From China, we are seeing a huge amount of overcapacity, so increased supply side situation and that’s why when the demand is back, we are
not seeing any firming up of prices on most of the triazole products.
=So that’s the scenario on the enterprise product. We feel that the demand should likely be back in next quarter or two quarters. But price, specifically in the export market, might take a few more quarters to
firm up as the supply demand balance evens out in most of the products.
C…New product
=On the enterprise side, there is a new product, which we have launched at a very fast-paced basis on the development timeline, for which the volume has started to go in the export market from Q4 last year quarter.
D…There was a lot of sales which were booked for the export market, which was not realized in the first quarter. So the impact from the revenue perspective will start kicking in from Q2. So that’s on the enterprise side
E…Final stretch of inventory write down
= We have taken inventory write-downs in Q1 on tune of almost ₹ 18 crores. We brought all the inventory to the existing pricing level in the market. So, any kind of uptick in prices as we
get into the subsequent quarters will have a positive impact on our profitability.We have seen almost final stretch of inventory liquidation there
=Last yr Q2@almost 40% to 50% of inventory or high-cost inventory was depleted
=Next quarter onwards, we should not see at least gross level loss in the enterprise side
= So ,in the subsequent quarters, we should not see any further impact on the inventory write-down.
F…Restructuring capacity
=From China, we are seeing a huge amount of overcapacity, so increased supply side situation and that’s why when the demand is back, we are
not seeing any firming up of prices on most of the triazole products.
= So, we are also rejigging some of those capacities to work around the other intermediates and CDMO products, some of the other new products and hence, balancing out
the capacity from our historic product lines. So, we are working around that balance so that our capacities are fully utilized to the extent possible, and we require very minimal Capex or
investment as we breathe through these tough situations.
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2…CDMO
Expected 2025 rev@260cr/yr@will grow at 60-70%
=On the CDMO side, actually few of our project or the volume sales were being deferred to the
subsequent quarter because of the supply chain issues on some of the raw materials coming in from China. So we were not able to realize the revenue in Q1 because the lack of availability of containers coming in from China. So those were the 2 primary reasons for muted Q1 numbers
=On the CDMO side,
we continue to have a run. Obviously, we are growing from a smaller base. And each year, we are growing by almost 60% to 70% year-on-year, and we hope to maintain the same run rate as we get into this year and the following years
=We have invested to increase the capacity on the herbicide plant, which is likely to be commercialized this quarter. And as such any ramp up in
the CDMO will cater through the second herbicide plant, which we’ll be commercializing.
=As I mentioned earlier, since we were growing from a smaller base, we are expecting 50% to 60% growth year-on-year, and we want to maintain that run rate at least for the next 2 to 3 years. So that’s on CDMO.
Q=So, you did mention there is a deferral of orders in CDMO because of the supply chain issue, the gutsy
prices. I hope we have not lost out on any of the business in CDMO, and it’s just a deferral.
Anurag Roy: No, no. It’s just a deferral. So, as I mentioned for the year, our guidance stays the same, it’s just
a deferral which has happened in Q1.
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3…EXPECTED GROWTH
A…So we maintain the same guidance that from last year, ₹ 260 crores- ₹ 270 crores number. We’ll continue to grow that number by 60% to 70% this year, and we are well on target to achieve
those numbers.
B…On the enterprise, very difficult to put a number or a forecast, but since we have launched some of the new enterprise projects as well, we believe at a portfolio level, we’ll be
able to utilize our capacities fully for the remaining quarters and appropriately meet the revenues
and profitability.
Disc…invested
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