Anupam Rasayan India Ltd Q3 2025 Earnings Call Transcript

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

Question: Meet Vora - Emkay Global Financial Services - Analyst : Sir, firstly, by the Pharma and Polymers business is doing well. Agchem sales have been slow for quite some time now. So is this more customer-specific or market-specific rationalization in terms of overall sales? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: Meet Vora - Emkay Global Financial Services - Analyst : Yes. Sure, sure. And sir, secondly, Congress on continuing the LOI signing and conversion of that into contracts. So again, like yesterday, we have signed an LOI. And now based on that, what is your overall outlook for the US business?

Question: Meet Vora - Emkay Global Financial Services - Analyst : Sure, Vishal-bhai. And in terms of reaching a peak revenue potential from the LOI pipeline that has been signed, I think we were at your envisaging that, that will be achieved broadly by FY27. So I think that time is still is or is there any change on that?

Question: Meet Vora - Emkay Global Financial Services - Analyst : Understood. And just last question. Are we also looking at any inorganic opportunities in this space, either on pharma, agro or polymers or within the extreme verticals that we are having?

Question: Ankur Periwal - Axis Capital Limited - Analyst : Ankur Periwal. Congratulations for a good set of numbers. First question on the change in business mix that you highlighted. So good to see personal care, pharma volumes, et cetera, also improving there. So will it be fair to say that balance there, which is roughly around 50%, 55% of the revenues in nine months?

Question: Ankur Periwal - Axis Capital Limited - Analyst : Great. And the margin profile for these segments, Pharma or Polymer, Will it be largely the similar way the way we have been pricing agrochem or these will be margin-accretive?

Question: Ankur Periwal - Axis Capital Limited - Analyst : Sure, Vishal-bhai. So where I was coming from was on a nine-month basis, our gross margin has expanded. And this expansion is largely led by the change in business mix. And given that incrementally also growth in for polymer, pharma, et cetera, but have given the molecules that we are working on, largely, these gross margin numbers should be maintained. Will that be a fair assumption?

Question: Ankur Periwal - Axis Capital Limited - Analyst : Okay. So Vishal-bhai, one thing since you mentioned EBITDA margins, are other overheads as well as manual costs on a nine-month basi has declined both in double-digit numbers. If you can put some more light here, is there a cost reallocation? Or how should one look at it?

Question: Ankur Periwal - Axis Capital Limited - Analyst : Sorry to interrupt, my question was more on the stand-alone side. I'm excluding ...

Question: Ankur Periwal - Axis Capital Limited - Analyst : Okay. And just lastly, on the working capital side, any -- since the large domestic M&C is gradually exiting -- sorry, we are gradually exiting the large MNC, should we -- how should we look at the working capital part, both on item side as well as the new business, which is almost 50% of revenues now? How is the working capital -- how are the working capital terms over there?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Congratulations on your results. So in terms of your operating cash flows for nine months and this year, what is the CapEx you have done for these nine months? And how are you seeing the operating cash flow? And what is the increase in debt as on date?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Okay. And in terms of working capital days as of nine months, where are we in terms of the inventory and debtors on the net working apace cycle?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : So when you responded to the previous speaker that you expect to achieve a reduction in working capital in 18 months, so what would be the net working capital number of days that you can achieve in the 18-month period?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : So if everything works really in terms of your own business plan, where do you see your debt -- gross debt figure in the next two years?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Sir, if you look at the warrant issue promoters, when do you expect the balance wanting to be paid? How much would that be, say, ?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Yes. Sir, let me squeeze in just two more thoughts. One is capacity has gone up from 27,000 to 30,000. That's per the latest presentation. So where has the 3,000-tonne expansion happened in Unit five and six in touching? Where exactly has this happened?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Okay. So about 1,000, each or --

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Okay. Okay. And between domestic and exports, can you give us a split what is domestic and how much is exports as of nine months or 3Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Okay. So if you're looking at your margin profile, as you said, you're expecting some improvement based on your product mix and there is an expectation of 35% growth. So what is the base FY23 revenue you are penciling in for that growth? And in terms of the overall portfolio margin, assuming that you're able to convert the LOIs and the existing business, you'll be able to maintain that current year average trend in terms of margins.

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Mid-teens degrowth for the full year FY25, right?

Question: Rohit Nagraj - BRD Securities - Analyst : A couple of clarifications and a couple of questions. First, in this clarification, you mentioned that total number of -- the total quantum of LOIs that is commercialized is INR3,100 crore. So is that reflected in numbers? Or these are the contracts which have been commercialized? How should we look at this particular number?

Question: Rohit Nagraj - BRD Securities - Analyst : This year meaning FY25?

Question: Rohit Nagraj - BRD Securities - Analyst : Got it. Second clarification, the growth of 30%, 35% YoY. Are we basing it on the stand-alone numbers or consolidated numbers for FY25?

Question: Rohit Nagraj - BRD Securities - Analyst : Okay. Fair. The couple of questions now in terms of the broad margin expansion that we have seen. So historically also, you've been telling back normally, we have a back-to-back arrangement into, raw materials as well as the contracts that are in place. And hence, our gross margins or even EBITDA margins are largely secured. But quantum jump smart particular quarter, so are there any other factors which have moved the cost margin significantly given that you're again just alluded that on a sustainable basis, we still look at, say, [25%], 28%. So is there any one-off which has moved these gross margins during this quarter?

Question: Rohit Nagraj - BRD Securities - Analyst : So just to summarize, probably, if there is a change in a particular quarter, it will get even out during the course of quarter in a year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: Rohit Nagraj - BRD Securities - Analyst : And you also mentioned about one of the domestication of the NGL coming in at the . This is 15% of Atim revenues or total revenues?

Question: Rohit Nagraj - BRD Securities - Analyst : Okay. And this has happened in FY25?

Question: Rohit Nagraj - BRD Securities - Analyst : This has been taken effect from FY25? Is that the right way to look at it?

Question: Rohit Nagraj - BRD Securities - Analyst : Fair. Just last question on the CapEx front. You said INR200 crore of CapEx. However, the INR670 crore probably still sitting at the LP level, and hopefully, will get commercialized during this quarter. So how do we look at -- so let's say, 70 plus 200 will be the total capital...

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : Good set of numbers. Congratulations. Clarifications to questions earlier asked. One is on the debt level. Did I hear the figure right that INR11 crore is your gross debt number as of 31st December '24?

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : So does that mean that it has come down by INR170 crore? Because as of 30th September, this number was INR1,270 crore from what I can see.

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : Yes. So basis, what I can see, as of 30th September, your gross debt was INR1,270 crore. And what you mentioned was at now you got in number December 31, INR1,100 crore. That wouldn't indicate INR170 crore repayment. Is that right? Or am I missing something?

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : INR1,200 crore. So there's still a marginal decline from INR1,270 crore to INR1,200, crore. Would that be...

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : Okay. And sir, if you could just clarify that I think Anko had asked at the start of the conference call that the decline in operating expenses on a stand-alone basis that we see on Page 8, which is quite substantial, you mentioned that it's mostly due to outsourcing cost of contracts that you give out or is it that you capitalize some of the cost into the CapEx? There is no capitalization. Is that a fair assumption to make?

Question: Ashwini Agarwal - Demeter Advisors Llp - Analyst : Perfect. And sir, would you be able to read out the numbers for inventory and -- essentially, inventory number as of December 31. This number was INR1,272 crore as of 31 --

Question: Raja Kumar - Wageningen RK Investments - Analyst : Am I audible?

Question: Raja Kumar - Wageningen RK Investments - Analyst : Can you hear me now?

Question: Raja Kumar - Wageningen RK Investments - Analyst : Sir, my question is on the inventory, sorry, to labor on that. So if I see your September inventory, it was INR1,270 crore. And what December number, the changes in inventory is almost 120 , which means we have added further INR120 crore inventory. So it's about INR1,400 crore of inventory roughly you should have as of December. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call So -- and you also look at your material cost to sales is about 40% on a consol basis, so which means you are roughly carrying almost inventory to serve almost INR3,400 crore of revenue, which is almost like two years of revenue. So I just wanted to -- if you could just give some color why we are adding it this material. Is it because is there a lot of lead time that's involved in boating this material or it's a long production cycle? If you could just enlighten us, it would be really helpful.

Question: Raja Kumar - Wageningen RK Investments - Analyst : Yes. Yes, this is helpful, sir. And any comment on the material cost rate to sales? It's [about 40%]. So we are roughly having two years for inventory. So if you could... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: Raja Kumar - Wageningen RK Investments - Analyst : Okay. That's helpful. Sir, just on the question -- just one more question. So -- I'm sorry. I'm just collecting my thoughts. Sorry.

Question: Raja Kumar - Wageningen RK Investments - Analyst : I'm sorry. I'll just get back, sir. I just...

Question: Tushar Legate - Kamya Wealth Management - Analyst : Congratulations for good set numbers. So the question is on the working capital. From the last five years, I do see like your working cap -- like your inventory as a percentage of sales from 40%, it has been to 72%. Firstly, I would just like to know what would be the average of that? Is it 60% or like just a random number I'm saying? So accordingly -- you take on that first.

Question: Tushar Legate - Kamya Wealth Management - Analyst : 58%, you're saying, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: Tushar Legate - Kamya Wealth Management - Analyst : Okay. Okay. So that means you are...

Question: Tushar Legate - Kamya Wealth Management - Analyst : Got it. So that means like more or less INR2,300 crore of sales considering the inventory you have, right?

Question: Tushar Legate - Kamya Wealth Management - Analyst : Got it.

Question: Tushar Legate - Kamya Wealth Management - Analyst : Got it, sir. Again, one question. Sir, on the trade receivable part, so like a higher as of the business [34%], but the trade receivable is growing at 37%. Just what is your take on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 10:30AM, ANUY.NS - Q3 2025 Anupam Rasayan India Ltd Earnings Call

Question: Tushar Legate - Kamya Wealth Management - Analyst : Got it, sir. And sir, your non-Agro...

Question: Tushar Legate - Kamya Wealth Management - Analyst : So just wanted to know your non-Agro business, like due to that, do you see any working capital relaxation going forward?

Question: S. Ramesh - Nirmal Bang Equities - Analyst : There are two parts. One is if you look at the kind of indications you gave on the mid-teens kind of decline for full year, it suggests that you have to grow your fourth quarter revenue by about 15% because last year, we did about INR[300] crore. So what the visibility you have to surpass last year's 4Q core revenue at peak? And secondly, if you look at the mapping of your growth drivers on, I think, Slide 17, you have given the three growth drivers, Polymer, Pharma, LOIs and then polymerization. So can you support any overlaps and say, what percentage of the growth will come in each of these areas? Because there will be some common product across the three categories. So if you can bring these three drivers into independent categories of growth to avoid the overlapping and duplication, that will be very helpful.

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Yes. On the second question on the growth drivers, you can step off the -- yes.

Question: S. Ramesh - Nirmal Bang Equities - Analyst : Yes. That will be very useful.