Anupam Rasayan India Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: S. Ramesh - Nirmal Bang Equities - Analyst : That's useful. So just to get a perspective on '26 and '27 growth, if you see your order book, some of them have been commercialized and then there are some which are being commenced in '26. So if you take these two buckets in the LOI already commercialized, how do you see that ramp up in percentage terms on the value of the order book it is well to divide it by, say, five or six years, say it's about INR400 or INR800 crores. So you see the value of the LOIs already commercialized, you take it over six years, about INR800 crores. How much of that would you expect to book say, over in terms of actual deliverable. And similarly, whatever you are talking about commoditizing in '26, if you take a about another [INR1,200 crores] So on that, when it starts picking up how much of that would we be able to actually monetize say, from FY27 and over '28 ballpark numbers you can give, that will be useful for us to reach our assumptions on this LOI monetization? Unidentified Company Representative Sure. I think on the line, I would put it simply, and that's where I would put it for now. And that you're right, the large commercializes that has happened on the FY22 LOIs that we had signed, which is around INR2,600 crores worth of LOIs, right? Those INR2,600 crores would mean that INR450 crores to INR500 crores is the revenue coming from that. We believe that of that we are doing around [250] kind of a number and that should ramp up and should be peaking out by '26, '27. So that's the number that we can see. So you have to look at it in three different buckets. The second bucket is the one that we have signed in '23, principally, which would be in the range of total, if I were to add the total it is around INR1,000 crores-odd more. So 1,000, if I divide it by 6, you would be doing around about INR1,500 crores -- INR150 crores a month. which should ramp up by -- it should start in '26 and ramp up by '27, '28, and that's how you should look at, and that's where I would put it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 7:30AM, ANUY.NS - Q2 2025 Anupam Rasayan India Ltd Earnings Call And then the balance, we should be starting to see the commercialization in '26 and '27, and then you see two years of ramp-up from then on. So I would put it very simply two years for getting into LOI two years from commercialization another two years LOI to ramp commercialization to ramp up. Now give an allowance of a six months on which happens because of either the validation, anything about the environment, all that plays out in maybe six months of average in give or take on that.

Question: Krishan Parwani - JM Financial Ltd - Analyst : So if I just look at the stand-alone numbers, your inventory at inventories are somewhere about INR1,185 crores. And if I calculate the inventory days in the stand-alone business has jumped to more than 550 to 600 days. Can you elaborate, please, what is going there? Unidentified Company Representative So first, thank you, Krishan, and I wish you also a happy Diwali. In terms of simple, I would say, you're right, my inventory has expanded. I'm not saying that it has not expanded. Now what we are seeing is only from the -- you would have done it from a TTM basis. And I mean, if you look at these are the four quarters, which are unleased quarters and if you use that as a tics, these numbers will be in that range. Now we can look at this. But to my mind, two things will happen from here on. There is an additional inventory which you are seeing, which will get liquidated over the next two quarters to four quarters, which is the volume that have manufactured but not so. So that will happen. And two is when the -- and it is the same when I sell it out, that converts into revenue and gets into my denominator also. So when you do numerator reduction and denominated addition, you will see that the numbers will start getting more opportunities with in terms of what we have seen in FY '24 at the end of FY25 and '26 is where you will start seeing the reduction from the FY24 numbers. Further significantly because I'm expecting a decent growth in FY26, which will further allow me to liquidate inventory and also becomes the base for these calculations. So both will happen. But today, you are right, it has expanded and there is a very sharp focus from the management side to ensure that (inaudible).

Question: Krishan Parwani - JM Financial Ltd - Analyst : Okay. So even if, let's say, even if you assume a growth of 20% over the second half of FY24, then also your top line or just the stand-alone top line could be meaning of anywhere earnings of INR950 crores-odd, INR960 crores-odd. Even then -- so let's say you have liquid is more like INR100 crores-odd, INR120 crores-odd of inventory. Even then if the stand-alone inventory days is going to be much higher than 360 days, so how do you kind of propose to reduce the net debt, which is kind of a loan to almost INR1,200 crores-odd in September '24? Unidentified Company Representative Sure. So Krishan, let's answer it in two parts. Okay. One is the inventory you rightly elevated. So when I do that, what we are doing is we are opportunate the lower revenue that I Q1, Q2 H1 also into this calculation. But when running the business and if I'm doing, let's say, INR350 as a revenue on a quarter. Let's say, because if you -- the numbers that you are speaking, if I add that as it here, I'm not guiding for that, but just for the reason of Latam sampling, that number. If you look at it from that perspective itself, that's the kind of annualized revenue that I'm seeing going forward, right? When I'm saying that inventory has to be because see, unfortunately, retake the historicals of the financial, and we take the transaction of the balance sheet to do it, and that's how we all have been doing it. That's all the most scientific way of doing it. But when you look at it from a business point of view, there is this discussion like I would look at the going forward revenue and accordingly, I will have my balance sheet. But let's take that -- so that's one part. I would want to. And second, when you come back to the, let's say, the net debt part of it I believe that I would be far more profitable as you go because the second half, if I were to do whatever number you are saying and if you -- if I make a 25% EBITDA margin, let's not even talk about 28% that or 30% that I'm doing on a stand-alone basis also. We are talking about a sizable contribution that is coming from there, right? Open more to take care of it. And if I'm saying that I'm going to reduce the working capital intensity and not increase, then there is no absorption of working capital, right? And so some of cash (inaudible). So my CapEx turn and CapEx is perfectly okay. So that's the second part of it, right? So there is no cash deposit that is there over and above servicing of the debt, which is largely a largely working capital and the CapEx on. So to that exam, have nothing more comfort there. And then FY25, 6 is then my preference of preferential shares of INR270 also comes in. And that will further ensure that I have -- reducing the loan much -- if I take that off, I am very comfortable from the quarter performance half one. And that's how the management's internal management plan is that we don't need any further external debt to really finance micro for at least near term.

Question: Krishan Parwani - JM Financial Ltd - Analyst : Okay. So -- and this is the guidance you're giving on right? I mean -- or you said that (inaudible) Sorry. No, no, sorry. I could hear you well. So if you can this FY28, '29 or how is it? Unidentified Company Representative I would put it in the medium term, which is to three years to four years, and I'll leave it there, Krishan. As we get there, I can really come and comment better on. Unidentified Participant Okay. But sorry, just a clarification there. So your current asset base in the stand-alone business is about INR17 crores, right? And then 1.5 times

Question: Rohit Nagraj - Centrum Broking Ltd - Analyst : So in our Slide number 12, we have given the business vertical wise up by 20% and other specialty 10% during the first half of FY25. So other specialty is only polymers or excluding polymers. And a live question to that is from the total LOIs that we have, how many of them or if you can just quantify how much of that is from (inaudible) and how much of that is from pharma and how much of that is from polymers? I mean out of that 9,000 outlets. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 7:30AM, ANUY.NS - Q2 2025 Anupam Rasayan India Ltd Earnings Call Unidentified Company Representative So let's go with the first question that you asked. Other is practically for polymers. So you can case you can use polymer as a renter other products, okay? So that's one clarification. Second, if you look at the first 1, 2, 3, 4, 5 and 6. The 6 LOIs that I signed in 2022, they all are agro-based product, okay. And then the 2023 LOI, that is also a growth one. Then the balance, if you look at it, the 1, 2, 3 and 4, the 4 next are polymers and engine included application and 1 of them is also pharma applications also. And then the last but 1 is agro and the last 1 is a polymer.

Question: Rohit Nagraj - Centrum Broking Ltd - Analyst : Sir, just one question on the -- Unidentified Company Representative Okay. Okay. I think we see the problem -- we will do that because we report into two segments only Lifetime is another the specialty and hence, you're not seeing it as especially whatever are you paying around on polymers. so you wouldn't be able to answer it simply. And the life sciences practically are all agro because pharma very limited have a -- LOI long-term oil kind of a contract. There are more domestic market with typically, you have a long-term relationship, but not a contractual relationship largest. Unidentified Participant Okay. So no other question which comes into mind is that. So during the first half, whatever growth we have seen in pharma and other specialties, which is nothing but polymers, this is predominantly from the legacy products and non-LOI products. Is that assumption right? Unidentified Company Representative Polymer -- so I would say there is some bit on the polymer that you would have seen, but legacy -- it's not legacy, there are new products which have been launched in pharma, which is really. So last year, I launched 17 new products like death revenue, that 17 products is giving me the revenue as well, right? So it's a combination of right.

Question: Rohit Nagraj - Centrum Broking Ltd - Analyst : So FY25 will be around 20% plus minus from the LOI? Unidentified Company Representative From the LOI, yes. Yes.

Question: Rohit Nagraj - Centrum Broking Ltd - Analyst : Sure. That is sensing. Just one last clarification. When we are talking about the alloys in terms of RF contracts. However, given that there has been pricing pressure in most of the products currently next year when we are talking about? Is there a compensation on the pricing part or in terms of volumes to attend that particular contract value over a period of time. Unidentified Company Representative So see, pretty appreciate that might -- as we have said the input raw material cost is at -- you're right that pricing across revise up and down. So you're also preceding 22 the numbers -- the pricing of 22, which will be the sizing reference of 31 and there are contracts which are signed in 24, which will be pricing tenor early part of 24. So there is a whole cycle in it. And also, please petites a five year contract or a seven year contract. So today, prices may be lower tomorrow, there are -- there will be higher price rises. So we believe that there is an average thing that happened across the time frame. In terms of revenue per ton. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 7:30AM, ANUY.NS - Q2 2025 Anupam Rasayan India Ltd Earnings Call Now is that how we will answer it. The way we do it is very simple, that the costs are passed through. But when I say that in seven years or eight years, I will do so much of our revenue from this contract, it is an assumption of an average price that I would have seen over a period of time right? And hence, and we are not trying to say that if I would -- so I'm not doing mark-to-market if I would use the word Mascomarket, it will be that, but every quarter, the mark-to-market number will change then, right? And it doesn't help in terms of understanding how the business is going well.

Question: Siddharth Gadekar - Equirus Securities Private Limited - Analyst : Now one of our slides, Slide number 14, we have highlighted new chemical where we highlighted three themes. What are we exactly doing in that formation? I'll go to that slide and then we can talk about it. So we are saying we have highlighted radian chemistry. Unidentified Company Representative Yes. So we are using this premium chemistry for manufacturing of a couple of our products, which will be going into the pharma application right?

Question: Siddharth Gadekar - Equirus Securities Private Limited - Analyst : Okay. Got it. So secondly, in terms of the photo chemistry, how many molecules are we doing in that technology as of now? Unidentified Company Representative So there are three to four molecules which are in the pipeline where we are doing it in the photochemistry.