Ladies and gentlemen, good day and welcome to the Q2 FY 2023 earnings conference call of PI Industries Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you and over to you. Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries Q2 FY 2023 earnings conference call. Today, we are joined by senior members of the management team, including Mr. Mayank Singhal, Executive Vice Chairman and Managing Director, Mr. Rajnish Sarna, Joint Managing Director, Mr. Manikantan Viswanathan, Chief Financial Officer, Mr. Prashant Hegde, CEO Domestic, and Mr. Atul Gupta, CEO Exports. We will begin the call with key perspectives from Mr. Singhal. After that, we will have Mr. Manikantan sharing his views on the financial performance of the company. After that, the forum will be open for question and answer session. Before we begin, I would like to underline that certain statements made on today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the investor presentation shared with you earlier and also available on stock exchange website. I would now like to invite Mr. Singhal to share his perspectives with you. Thank you and over to you, sir. Yeah. Thanks. Thanks, Nishid. Welcome, everyone, and thank you for your participation today. I'm happy to report that PI has built on the growth momentum sustained over the last few quarters and delivered a strong performance on Q2 for the year 2023. We have achieved overall revenue growth of 31% on a high base of last year. EBITDA has grown by 49% and net profit has increased by 46% on year-on-year basis. There are strong demands for our crop protection products during the robust Kharif season. Agriculture sector is buoyant, driven by prioritization, normal monsoon and healthy reservoir levels. Our newly launched products are getting good traction and acceptance across all crops. The outcome for the season looks very promising and we are expecting the domestic segment to achieve strong growth. The opportunity in the ag chem worldwide is apparent. PI, with its differentiated model in a position to create value with its unique strong technological capabilities, puts us in the lead. The challenge today, however, is to maintain a steady line of predictability on costs of raw materials, power, fuel, and the various other predictable costs which are getting disrupted in the industry. Whereas we actively manage our products mix so that we could deliver a sustained performance. The broader industry is lagging to absorb the higher costs. We also believe that India is well poised to address this opportunity, emerging a high technology manufacturing base. India's approach to looking at a backward integration across all sectors is with a strong asset base. In CSM exports, there has been an uptick in our order book position. We're proud to announce an order book of today INR 1.8 billion, the highest ever. This is traction from the new inquiries, particularly for products in the non-ag chem space. We're also enhancing our R&D and manufacturing infrastructure for non-ag chem. We have already commercialized one new molecule in this space in the year. I'm pleased to report our S&P Global Corporate Sustainability Assessment ranks in the 93rd percentile. Another great achievement done by the PI team. We view sustainability as a source of competitive advantage and a key to our business continuity and our success and the way of life at PI. On the domestic operations, we are poised to exceed the numbers of the new product launches during this fiscal year to previous years. We have launched five new products so far and two more are planned in Q3. We are also expanding the depth of offerings and addressing new market segments such as Taurus Revolution nematicide and Tomatough, another brand for unique biological products. We plan to continue to introduce brands with pipeline of over 70 more innovative products in different stages of development and registration. We are striving to deliver cutting-edge solutions to maximize farmer productivity for their crops. We already have a fleet of 300+ advanced application drones and now are piloting the drone application services in this sector. Our performance is underpinned by the PI purpose, the purpose of PI, reimagining healthy planet. In addition, we are implementing an integrated program to build our digital edge, people first. This is the multi-pronged program for building leadership pipelines to enhance performance with digital tools while growing and enhancing talent to suit the sources. We want to provide the best platform and opportunity for growth for individuals led by science and technology to create transformative solutions in the life sciences space. On diversification. Diversification with urgency through an inorganic route remains our top agenda apart from technology scale-ups. We have inducted senior leadership and are continuing to expand the teams in view to intensify efforts in the pharma play. We continue actively to evaluate inorganic growth opportunities in pharma, both domestically and internationally in line to create differentiated pharma strategy. The outlook for the year is encouraging. With this complemented by sustained improvements to margins of our model and further scale-ups. Through an enhanced product mix, better business productivity and tighter controls on volatility, we are set to contain the main factor inflationary tendencies in the input costs and disrupted supply chains. Let me once again thank the stakeholders and to all the members of PI for the great contribution for this quarter and half yearly performance. Now thank you and over to you, Mani, as the CFO of PI, to take us through the key financials of the company. Thank you, Mr. Singhal. Good afternoon, everyone, and thank you for joining us on the call today. I'll be summarizing the financial highlights of the company for the second quarter ended 30 September 2022. Please note that all the comparisons are on a year-on-year basis and refer to the consolidated performance of the company. During Q2 FY 2023, we reported a revenue of INR 1,707 million, a growth of 31% over the same period of the last year. This was driven by growth in exports revenue by 29% to INR 12,783 million and 36% increase in domestic revenue to INR 4,917 million. Exports revenue growth of 29% was driven by volume growth of around 25%, coupled with favorable price and currency of around 4%. Domestic revenue growth of 36% was mainly driven by volume growth of approximately 31% and price increase of around 5%. New innovative agri brands launched recently also contributed to this growth. The trend in elevated input costs continued during this quarter and half year. Although we achieved pass-through by increasing product prices both in exports as well as in domestic markets. Our gross margin increased by eighteen basis points to 45%, partially due to the cost pass-through and favorable product mix. EBITDA increased by 49% to INR 4,331 million for the quarter, driven by efficient supply chain management, operational efficiencies and tight control on fixed overheads. Profit after tax increased by 46% to INR 3,348 million attributable to EBITDA growth. Net cash flow from operating activities during the first half year was INR 3,078 million. Our balance sheet further strengthened during the quarter. Net worth increased to INR 66,176 million. Total CapEx for the half year stood at INR 1,204 million. Actual CapEx is in line with the plan. For this year, we estimated a CapEx of around INR 6,000 million. On inventory level, the levels have increased to INR 16,095 million, in line with our higher revenue, as well as to avoid supply chain disruptions to meet customer supply schedules and continue the operation. Trade working capital has gone up by 8 days in terms of days of sales from 103 days to 111 days during the first half year. The company maintained its strong liquidity position with surplus cash, net of ECB, of INR 23,211 million, including QIP proceeds. That concludes our opening commentary. I will now request the moderator to open the forum for Q&A. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, in order that management is able to answer all queries, kindly restrict your questions to two at a time. We will wait for a moment while the questions are assembled. We have our first question from the line of Aditya Jhawar from Investec. Please go ahead. Yeah, thanks for the opportunity. Congratulations. Great set of numbers. It's good to hear that you have increased the CapEx guidance to INR 700 crores from INR 650 crores in the last quarter. Is this increase, you know, sufficient to take care of increase in the order book that increased almost 30%, in this quarter? Also, you know, keeping in mind that our asset turns on a trailing twelve-month basis is already 2.4. In first half of the year, we have spent just about 20% of the annual CapEx guidance. If you can, you know, dwell a little bit on this, it'll be great. Yeah, Aditya. Thank you for the question. As you know, PI has, as we said, we are a technology-focused organization, and the company has done a great job in the first half of the year. We've been able to improve more than about 12% on some of the major production lines through asset turns by improving productivity and efficiency. That's where we believe we've been able to handle this growth. Going forward, the company is pulling more from its pilots and experiences, more areas in this front to drive capacity enhancements with low capital investments. While we are pretty confident to do this in the right approach, we'll be able to deliver the growth plan that enhances the company going into the future. Yeah. You know, Mayank, it was very insightful, but if you can help us to understand a little bit that if you know, in first half our CapEx spend was only about 20%, and if you think about the acquisition that we have been talking about, a large part of the acquisition would be pharma, say about 70%-75% of the funds will be deployed. The next should be earlier you had mentioned that it would be for non-agchem. For agchem growth, you know, our CapEx, you know, seems to be a little bit on a lower side, if you can help us understand why is that the case? As mentioned, we're increasing the throughput efficiency. As you know, some of this capacity has been built on the earlier understanding of some of the ramp-ups. If you've seen our commentary earlier, we have said, yes, we will be increasing the asset ton based on more inputs coming through better asset utilization by improving efficiency. Those are the points which I highlighted, and that's a well-balanced equation that we have internally. Third intervention is coming through process technologies that we are putting into the game. Just to add to this, Aditya, we have to also keep in mind the kind of investments and capacity expansion that we have made in last couple of years. Okay. Yeah. This is where, you know, we have some headroom for growth, and plus we are also making new investments. I mean, we'll have to look at all this in totality when we look at growth and the order book and the current capacity utilization and all. Just to give you a little bit more comfort on that, we have a dedicated cell, which constantly looks at this, and you would very much appreciate this business is not about, you know, today's demand is tomorrow's capacity. These are long-term orders. Capacity planning, asset utilization, all is an integrated process, including technology interventions. The company has over the last 20 years constantly delivered on its expectations, both in terms of growth and customer requirements. Absolutely. Final question is, this order book accretion of $400 million, what would be the share of non-ag chem? In our revenue also, what is the current share of non-ag chem? Yeah. It's not significant at this moment. The major increase in order book is coming from some of our existing products which we have been doing and which we have also launched in last few years. So there is certainly a ramp-up in the overall demand of these products, long-term demand of these products. The non-agchem products, as we have also you know guided in past, that they have been you know at a very initial stage of their commercialization at our end. So some of these products are commercialized, say, in last couple of years, and many of them are still at R&D stage, kilo pilot scale, and getting to commercialization in next few years. In this kind of a business model, the volumes and values of these products at initial stage is not very significant. Okay. Yeah. That's it from my side. Thanks a lot, and all the best, sir. Thank you. Thank you. We have our next question from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Congratulations on a good set of numbers, and thanks for the opportunity. Continuing with the order book here. You know, so earlier also we had highlighted our expansion into the electronic chemical space. Just now you commented that, you know, some of these products are probably may take some more time for them to ramp up in terms of volume or revenues. Will it be fair to say that large part of this delta in order book is led by AgChem, agrochemicals, you know, product? Could be China plus one or maybe, you know, Europe, the benefits from Europe diversification coming in? Yeah. This is exactly what I said, that the major contribution of this order book is coming from our existing products which we have been doing for some time, and the products which we have commercialized in last three, four years' time. Okay? The increase is coming from there. For the non-ag chem products, please appreciate that in ag chem we are almost now 25 years into this business. Okay? Therefore, the products and the new products and strategic products at a very large scale are there in the portfolio. In the non-ag chem space, we are hardly for last three, four years. Then the life cycle of these products getting R&D to commercialization itself takes one to one and a half year. Keeping that in mind, and then these other verticals will have a meaningful contribution in order book or revenues, maybe in next few years' time, but not at this point in time. Sure, sir. In the H1 growth, in the CSM side, if you could break it up into, you know, maybe the newer products, maybe last two to three year launched products, how big was the contribution coming from there, and what were the older products sort of, you know, the growth drivers there? Typically, I mean, the freshness index in our export is close to 16%-17%. The products which are commercialized in last three years, they are contributing close to that. On an annual Sure, sir. Okay. Yeah. If I'm not wrong, this number was around 20-25% last quarter? No. No, no. Okay. This is the broad range that it maintains, is it? Yes. Yeah. On an annual basis, I'm not saying. Per quarter. for a specific quarter, but on an annual basis if we see, the index is around that 16%-17%, 17%-18%. Fair enough. Sir, lastly on the CapEx front, you did allude towards, you know, technology-led initiatives which should enhance the asset turn further. Are most of those benefits now already in, or do you believe there is further scope for improvement here, which basically means that the intensity of CapEx may not improve further, and, you know, there could be significant cash flow accretion there? No, there are a number of initiatives which we have identified. Many of them have already been implemented and also reflected, you know, in the throughput and expansion and growth of the business, disproportionate to the CapEx that we have already discussed. Yes, there are still many of such initiatives which are in the process of fine-tuning, execution, and many of them will get, you know, executed and also reflecting in our next quarters and years growth as it comes. It's a continuous process at the end of the day. I think those are the unique capabilities the organization has from a technical commercial ability, which needs to be a little different from the other players in the business. That's what I would call our internal USP and our internal trade secrets. Sure, ma'am. That's helpful. Thank you and all the best. Thank you. Ladies and gentlemen, kindly restrict your questions to two at a time. We have our next question from the line of Vishnu Kumar from Spark Capital. Please go ahead. Thanks for your time. Sorry, to go back on the CapEx question again. Now, we have done a superior volume growth of 25%+, with our investments of INR 750 crores, INR 700 crores which you're talking about. I mean, can we increase the production or on a blended basis our volume growth can sustain another maybe 30, 40%? Or indirectly I'm asking what the utilizations would be so that, just trying to get some sense, at what point we need to step up on CapEx again. Vishnu, I mean, that's a question, you know, which is constantly a question which I've been handling over the last decade, and that makes it even more interesting. Everybody seem to ask, but unfortunately we are not in the commodity space, and we are not into 1 + 1 = 3, or 1.1 = 2. In the chemical business, it depends on the many moving parts. PI has many moving parts, and CapEx is dependent on those moving parts. One is technology, the other is efficiency and capacity enhancements. The third is process disruption, also depends on product and chemistries, right? All these factors have to be seen to really see what the CapEx is. What we see for now is what we have said from the order books and what we envision for the next two, three years. Based on this, the CapEx is running in the rates it is. You've seen that, I think just two years ago, people are asking you putting a lot of CapEx, are you going to look at what, right? This is all looked at what comes in and how that has been played out. We were sitting with capacity and people saying low turns, and today we're saying high turns. This is the cycle of the game, and it's dependent on how you look at it. That's the way I would answer this. I cannot say a specific answer. Yes, you want to put that in your model and say, look at the steady rate and look at the percentage average that we invest in over two to three years. That's the way to look at this, yeah. Got it. Second is, Just to add to it that we believe given our current utilizations, given our visibility on growth and everything, that we are sitting in a comfortable position, okay, as far as capacity ramp up is concerned. Secondly, as you know, we have no constraint as far as putting more investment and ramping up this capacity as and when we will feel that, yes, we should be doing that. In that sense, we are in a comfortable position in that. The world is highly volatile place. I think somebody asked earlier, is Europe moving here? I don't think that is happening. I would say, okay, China could be an opportunity, but close home supply chains are becoming the strategies for companies. Got it, sir. My second question was the intensity of your inflation you talked about passing through, but on actuals, there's only been a 4% or 5% price increase. Does this? I mean, I do see that your margins have been held up, but I mean, this is compared to peers, the price impact seems to be far lesser. Is that our raw materials have a lower cost because you've kind of covered it or actually, I'm just trying to understand on the inflation side of it, because it's just 4%-5% is the pass-through price increase. What it is, you cannot again look at the others than us because your different business model approaches working with distinct different customers. If you look at it last year, probably you were better or worse. At the end of the day, the business objective is to maintain the margins and handle the inputs and cost challenges coming in. Overall, if you see, that's what they've been able to manage. That's what I would look at, not really benchmark it to others which are doing a different kind of business approach or in different classes of products where price and inflation could be much higher. Yeah. Understood. Finally, the EBITDA margin guidance, given you have done a good number, and also, the FX benefit that we'll get passed through just on these two points. Yes. The FX does get passed through certain things for sure, as we discussed over the past. You know, in the good old saying, you can't keep it in check at all now. When you manage risk, then you have to share it. Got it. The EBITDA margin guidance for this year and let's say if you're seeing better numbers next year? Yes. As we have guided, I mean, we see a possibility of, you know, improving 200 basis points, okay, from the last year, as guided initially. Okay. We did something like, I mean, 22%, so we'll be I mean, we've done 24, but you're still saying only 100 basis points over the previous year. Sorry. Yes. You know, looking at the way the world is today and the way we look at the outlook, we want to be conservative. Yes, there is a huge amount of volatility and climate impact and challenges. Given that, we would still just stick to our guidance. Obviously, the company is constantly striving to do better. Got it, sir. Thank you, and all the best. Thank you. Thank you. We have our next question from the line of Mohit Pandey from Citi. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity, and congrats on a great set of numbers. Sir, my question is also on the order book increase. Just to understand it a bit better, so is this being driven by market share gains for you, as in are you gaining share from European competitors? Or is it just that the end products where your products are being used, they're seeing greater traction in the end markets? How should we read that, sir? Well, order book position is driven as your sales are going up, opportunities are going up, and order commitments. I would not like to claim to say European markets are moving here, but that's not really what it is. I don't know from where that comment repeated at level, at industry level. Yes, order books are growing as the business size is growing. PI, as I mentioned earlier, we look at order book position based on the opportunity, risk and things that we are looking at, right? It can go down and up, but the order book and the PI context should be looked at as a factor of creating a comfort to the guidance that we give for a year or two in line, or usually between the order books and in line of three to four years. It is more about creating a little comfort. Half a million dollars, $500 million here and there is not gonna change the delivery and the performance of the business. That will still be online. It is more about risk management and customer commitment management. Yeah. Right. Thanks for that. Secondly, has there been any increase in the share of spot orders in your revenue contribution in the recent quarters? Well, you know, the contract orders. Spot orders, it was. I would not say spot. There may be no long-term contract, but there are midterm commitments. That's how we work. I would not call them spot orders because you're not really doing product. Yeah, yeah. We are not, I mean, if you look at our business model, it is a, you know, kind of a CDMO, CSM kind of model, where we do synthesis, and then we get into long-term supply agreements and, you know, long-term understanding. Not for spot basis that, okay, there is some shortage in some geography of some product, and we kind of, you know, kind of fill that gap and put that product in plant or something. That doesn't work in our business model. All the businesses, most of the product portfolio is on a long-term basis. There's no such room for spot business, given the kind of capacities that we work and the kind of processes that we work. Okay, sir. Yeah, that's very clear. Thank you, and all the best. Thank you. We have our next question from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah, good afternoon, and thanks a lot for taking my questions. First, just on the growth guidance for the full year. In the first half, I believe we've done about 30-31% revenue growth year-on-year. In that context, would you be comfortable increasing the full year revenue growth guidance from the 20%+ that's been indicated? Well, let me tell you that we have given the initial yearly growth guidance, given the volatility, the challenges that we face in the world. I would still like, and the external climate conditions, we'll still stick to annual guidance. Yes, there could be certain positive swings which could really up this, but would be too early to take a call. It's only half year down the road. Just to add to this, you know, if you recall, our initial guideline was 18%-20%. Okay? Then given, I mean, seeing some uptick in the demand, we have already kind of upped this to 20%+. Some part of it is also planned. You know, that first half, given the schedules of supplies and all that is accordingly growing and all that. Some part of it is as per planned. Yes, some uptick is already factored in in our growth revised growth guideline of 20% plus. Okay, I understood. Thank you. The second question I just had was on the tax rate. You know, I understand that it's been on the lower side because of the ramp-up in our SEZ operations. If you could please help us understand for how many more years do we expect it to stay around this trajectory? You know, where does it eventually end up, let's say, a few years from now? Thank you. Yeah. Thanks for that. As far as SEZs are concerned, we have two SEZ units where we have 5 years and 10 years. Looking at that, we are left comfortably have that 5 more years to get SEZ benefits will continue. We should expect the tax rate to remain around this 16%-17% for the next 5 years at least. Is that how I should read it? Depends if this is the only business. I hope you're looking for creating some organic moves. An organic move. Yes, I understood. Okay, thank you. Yeah. Thank you. We have our next question from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. My question has been addressed, so I'll just get back to the queue. Congratulations on a great set of numbers. Thank you. Thank you. We have our next question from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Thank you and good evening. Mayank Singhal mentioned the linkage of the order book with visibility and risk mitigation. Can you give us some sense in terms of what will be the maturity of this order book in terms of number of years? I think I kind of get the question. What do you mean majority of it in terms of number of years? If you can please explain. In terms of the number of years of revenue that you expect based on this order book, in terms of the booking cycle. Yes. Conversion. Spread over a span of three to four years. Some are four, some are three, some are two. In terms of the domestic business, you have obviously done very well in the second quarter based on the, you know, momentum in Kharif. You're actually much better in terms of the overall growth. Is it possible to give us some sense in terms of how the margins are moving in the domestic business and how you see the, you know, overall top line growth in the domestic business over the next two years compared to what you have done this year? Well, fundamentally, we are not measuring the margins at overall product business. These are not businesses, they're more integrated business. But yes, we are looking at higher level of contribution coming from the domestic business with the changed focus and strategy. With the introduction of new products, it is creating a differentiated trajectory into the market, where we are bringing new innovation, higher growth rates with better stable contributions. Putting PI in a pole position to continue for this for the next four to five years, given that these products have just started the journey into the markets, and we have another set of 17 products coming through over the next three to four years, which are in the various stages of regulatory approvals. Just one last thought in terms of the global macros. If there is a slowdown or recession in Europe or rest of the world where you do business, is there any, you know, risk of you have to reschedule some of your commitments, and will that have some downside to the expectations from the CSM business? Well, so far, we've not seen any cues which are leading that way. I mean, food is one commodity which you would see the other trajectories of this. Prices, demand, climatic challenges creating the productivity. This is one area and segment globally which is still moving at a high trajectory of demand and giving the growth. In turn, I would say we are seeing a pretty stable, if not a more upside kind of an opportunity that may be clearly coming to this sector. Okay, thank you very much, and wish you all the best. I'll join the queue. Thank you. Thank you. Ladies and gentlemen, in order that management is able to answer all queries, kindly restrict your questions to two at a time. We have our next question from the line of Bharat Shah from ASK Investment Managers. Please go ahead, sir. Yeah, hi. Good afternoon. Clearly this is one more gratifying and satisfying performance over a period of time. Beyond the clearly apparent strength of the numbers and the order book, are there any other qualitative insights or any other aspects that you may want to highlight, which are not visible in the numbers, which can give us a better understanding of where things are headed? Thank you, Bharat, for that question. I think this is really what it's all about, the sustainability parts of the play that PI is constantly focusing on. If I look at the qualitative parts, we looked at three to four key pillars, and I think we are on a very aggressive note at the back working for the long-term future of this organization. The greater success to share that has been on the ESG progression, beating the 93rd percentile, tells us that both on that front PI is moving ahead at certain aggressive targets. The other aspects on the technology front, our IP index has gone up, our IP creation has gone up. Our research capabilities are going into the next phase. We're expanding our capabilities and offerings in this area. Third, on the other area, we have started looking at building in more complex areas in the chemistry, and one example is the fluorination and other areas that you're building from a commercial power play. Flow chemistry technology is getting upgraded, and our innovation spend moving up. Third area of a pharma strategy is an aggressive pace where we're coming out with some innovative business models where we build the human capability. On the people side is that this all leads to a very aggressive work plan. We've taken a very aggressive agenda where we work with the external consultants and internal leadership teams to develop a strategic move on the cultural shift to go to the next national level, where we are actually identifying developing talent through interventions and also accumulating and enhancing talent capability and a cultural shift to globalize the organization with strong interventions through the digital platforms to create more process orientation, simplification, and learning. That the scalability as we look to the next phase of our journey is a comfortable and a challenging one. Putting a culture of high drive, of high performance, expectations are high, delays have to be high, and efforts have to be high, and that's the DNA of PI. That's really where we are. Wonderful, Mayank. Delighted to hear this. The second, when we look at the way things are going in many parts of the Western world, especially more so in Europe and to a fair extent in America as well, generally Europe seems to be bumbling around with very legacy, regressive kind of a mindset and behavior. The energy crisis that they're facing is just one of them, but not confined to that. In general, the quality and the strength of the public policy formulation in Europe and America seems to be in a state of disarray. In China, we are seeing the muddle around supply chain disruptions and frequent lockdowns and many other things that you would think that doesn't make upfront change. Given the fact that a good part of our business is in some of these territories and some part of sourcing is from these territories, are there any near-term and longer-term implications on the business and the business model that we need to be mindful about? Thanks, Shah, for that question, and I think that's a question that everybody's asking, from analysts to country leaders to company leaders to citizens, which way the world is going. I think it depends how you look at it. You can look at it both ways. These are challenges and yet opportunities. Now, I think the key thing here is that, you know, somebody said things will move into Europe. I believe, yeah, things could move into Europe. Near home supply chains could become the next play. Certain things can't move out, so what is that opportunity? Somebody will say, "Oh, that's a high risk. There are great challenges." With this volatility, I think the key capability has to be to constantly be able to see through, manage, watch, and have a little opportunistic mindset either to invest, divest, or create, whether it's in products, inventory or assets. Constantly keeping a watch on that is going to drive the performance and really what I call now this is a real woke world. The key challenge which I've put to the team, to the people and to all the stakeholders, be agile, be fragile, and yet be strong, and that's really where we're going to be at, as a world. I think finding that path, there's no one answer. There could be an answer to look at how to really define it for your organizational DNA to deal with it. You know, I say some things you can change, some things you can manage, but today we are in a situation both don't apply. It's something we have to watch and have the ability to deal with it. Building capability is gonna be the challenge here. On balance, does this sound more like a concern or more like an opportunity? I look at every concern as an opportunity. Maybe that's where PI has been. You know, this was a concern, if I look back in 1996, of outsourcing cost structure China, that we had finally got the manufacturing business. I look at the concern of stagnant agriculture, where technology innovation was not coming, and that was an opportunity. Somebody said, "High cost imports supplying new technologies would be a challenge." This is also an opportunity, and we understand this bit better. Therefore we're leveraging our capabilities and looking at how we carve our opportunities, whether within or outside these geographies to answer these challenges. There could be an answer. At a higher level, it may look not so sensible, but at a detailed level it could be strategically correct. These are the challenges. I'm sure somewhere there's scope for error and can also happen. That's really what I look at. All right. Thank you. Let the PI fleet keep flying high, and, delighted to hear what you have to say. Thank you. No, thank you, Sumit. Thank you. We have our next question from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity and congrats on a great set of numbers. We have said that, from CSM, in second half will be commercializing six new products. Out of which, how many would be ag chem and non-ag chem? Thank you. Atul, maybe you wanna. Yes. We are expecting, you know, some 3-4 molecules in ag chem and, 1 molecule in the non-ag chem segment to get commercialized in the next 1 year on the rest of phase II. Okay. Thanks. Second question is, we have also mentioned that we are working organically on a scale-up of pharma intermediates and R&D pilot scale. Does this mean that we will be able to supply at least some commercial quantities on the pharma side to our customers? And how do we look at it, in terms of scaling up, this particular portion till our inorganic doesn't fructify? Thank you. I'm sorry, I didn't get the last part. Till the time our inorganic initiative in terms of acquisition till that time it doesn't get fructify, how this scale-up would really work in favor of us? Obviously, these have a time dimension of two to three years, and we started initially, as mentioned, the R&D capability and developing that into the next phase. Obviously, as you know, the pharma world takes a bit longer to look at approvals and time cycles, so I'd see them diversifying in two to three years. This could also be complementary or could also be additive to what we may be doing in the inorganic way. Both either ways, we will be taking a call in this direction, because of the clear intent and the direction that we have already moved ahead with its pharma-based strategy, which we will roll out over the next six months. Sure, sir. Thanks a lot and best of luck. Thank you. We have our next question from the line of Nitin Agarwal from DAM Capital. Please go ahead. Thanks for taking my question. Sir, we mentioned in the presentation that 11 of our plants are MPP plants. How many are dedicated plants of these in the CSM business? Well, that could be both. I mean, you know what, I think it depends on what you call dedicated. I think what happens when we get the full capacity of a plant, we call it dedicated. Of a single product that we call dedicated, but all these plants are fungible. They're by design concept multi-product plants. Right now, four plants are running at full streams of four products. They will. You may want to define them as dedicated. Sorry. You said there are 4 of these 11 plants, which are running on dedicated, sir. Three multi-product plants that we have got, not 11, number 1. All our plants are multi-product plants. Right now, maybe four plants are running a single product, so they may be looked at dedicated plants. Okay. That's why, because I've been needing to check. Four of these plants are running a single product right now? Yes. Okay. Okay. Secondly, you know, when we look at the domestic market, we've had a very, very strong Q2. Now, Rabi last year was a reasonably good year. How should we look at the second half of the domestic market? Prashant, would you like to give comment there? Yeah. Thanks. It is a good question. Look, we have very strong desire to grow. However, we also have to keep in mind it is a freedom business, and we have to keep in mind how the crop economists work. We are optimistic, that is all I can say. As our portfolio earlier, it was tuned more on rice and cotton. Now we are expanding into horticulture, wheat and few more crops as well. We are optimistic. That is how I can put it. Okay. Thank you. Thank you. We have our next question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead. Most of my questions have been answered, just one on the domestic business front. We have seen, you know, the strong volume growth during this quarter. Can you please share more thoughts on this? I mean, which brand did contribute to the overall numbers for this quarter? You know, I have to be very honest, we can't go to product-wise information disclosure, as you know, there's competitive intelligence. I would say at a higher level, this comes from the new product launches which have given a good trajectory, and some of the investments and efforts made by our team to aggressively work on the products in the last couple of years has started to show its colors. Overall, a set of 7-8 products have given us aggressive growth as mentioned with the new launches. Yeah. Okay. Sir, in this quarter, the herbicide contribution would not be there, right? That Osheen contribution? There is some contribution, yes. There is some contribution. Okay. Largely it is driven by the existing and the new products which we had launched for the Kharif. That's a mix of all the new product launches that we've done over the last couple of years and this year. Yes. Yeah. Yeah. Okay. That is a selling shift we are intending to show and demonstrate. Yeah. Sure, sir. Sure. Yeah, that's it from my side. Thank you. Thank you. We have our next question from the line of Archit Joshi from Batlivala & Karani Securities India Private Limited. Please go ahead. Thanks for the opportunity, sir. Sir, you've mentioned our plans on diversification. Other than the inorganic plans that we have, we have also seen quite a bit of traction happening on the non-agchem side with respect to order inquiries. I was just curious if you can elaborate this with respect to if there's any specific platform or chemistry or application where we are seeing this traction, just to understand where the company is headed to with respect to its growth in the non-agchem side. Thank you. Well, I can give you a larger perspective here. I cannot get into the details of technology part because there is facts which you would appreciate. Obviously, looking at the PI competence and capability of handling complex chemistry and technologies, that's the area which we're focusing in this niche application areas, which should be a little more value accredited to the way of PI way of working and creating a different segment partner. While we are certainly very well laid out strategies for the bigger pieces and it's clear and well, the format where we're building and creating, this is where we're sowing the seeds to build a market credibility so that could be a third engine of growth in this area. Sure, sir. Thanks. That's That's it. Thank you. That's it from my side. Thank you. We have our next question from the line of Rohan Gupta from Nuvama. Please go ahead. Yeah. Hi, sir. Good afternoon. Thanks for the opportunity and really fantastic performance. Congratulations. Sir, couple of questions. First is on the Europe opportunities, which you mentioned that right now you are not witnessing any significant opportunities coming out of Europe despite Europe facing such a large disruption, especially energy. While many companies have spoken about it, that they're seeing increased order or they are seeing increased inquiries. Sir, when we are supplying lot many intermediates to our German partners and those partners are looking for the, I mean, looking with increase in energy cost and not able to operate the plant. Aren't we see that there is a opportunity for a player like PI actually should be very solid opportunity going ahead over next 1.5 years to 2 years. Just wanted to get some more clarification on that, the disconnect between the industry and the PI. I don't think I mentioned that we're not getting an opportunity from that. Maybe some misunderstanding. What I'm saying it is not that Europe is moving business here. We are getting opportunities from there in Europe, but it's not that Europe is completely shut. Okay. Definitely, I mean, in such a shortest amount of time, we can't expect also things to move. Exactly. But, uh- It is- Yeah. Gap filling will take place. Sorry to interrupt. Go ahead. Yes, gap filling will take some place. We're getting opportunities right across the world, and you would appreciate the largest three innovators in the world are European. Obviously, if the products are going to Europe market, a separate question vis-a-vis being shifting from Europe is a separate question. Europe encompasses some of the global markets. That's where I came from. Just to add to this, Rohan, I think the key point that we were trying to highlight earlier also is that the kind of business model that we are in, the kind of product portfolio that we have, there's not much scope for spot business kind of, you know, opportunity. Yes, there is certainly some opportunity in terms of gaining a more market share of some of the products that we have or we are already doing in view of the current scenario. Major contribution is coming from the products where there is some long-term, you know, strength which is there in the offering of PI. Now, be it in terms of technology, be it in terms of competitiveness, be it in terms of our relationship with these global players. The bigger chunk of this growth or sustained growth that is coming and that is also visible for us is mainly on account of these factors and not so much so because of this temporary issue of China plus or Europe plus. Fine, Rajnish Sarna. Sir, second question is, which is from, I mean, exciting opportunity which we are seeing in terms of revenue growth. That also worries me a lot because given our business model, we generally work on per kg margin kind of thing. Sir, it's a bit confusing that in a inflationary environment which is driven by the raw material top line growth is largely driven by the price increase. I mean our EBITDA growth, I mean, in the inflationary environment also we are seeing a EBITDA margin expansion, and that's where our even EBITDA growth is even higher than the top line growth. While you should be chasing more of the volume growth. What worries me that when tomorrow we see that the price erosion, raw material prices definitely will soften and will come down to average levels. At that time, will we see that our EBITDA degrowth will happen because of the price, that growth won't be there and the prices will start declining. I mean, that is a reason for worry because we are seeing too much EBITDA growth and EBITDA margin expansion in an inflationary environment. I'm not able to understand that how and why it should be happening. If you can give some clarity or is it just completely driven by the product mix change or the operating leverage because this trend is indeed across the industry. Yeah, I mean this is precisely the point that we have tried to explain, that the EBITDA growth is majorly coming from operating leverage benefits. You know, if we are growing at 30% and we are able to, you know, efficiently manage our fixed costs and other things, I mean, the operating leverage benefit is flowing. Then of course, the product mix, that in the rising cost kind of a scenario, we have also very efficiently managed the product selection that which kind of product we would be running, what size of campaigns in our capacity, available capacity. Yes, I mean, the current growth that we are seeing in EBITDA is not flowing from price rise or some opportunistic price increase. Absolutely not. In fact, the majority of all the major business of ours, it is cost pass-through. As we have guided in the past also that we have also not been able to pass through 100% cost in many cases. There is always a lead and a lag in the cost pass-through scenario. The EBITDA margin growth is majorly flowing from our operating leverage benefit, the scale that we have been able to achieve and which is what the comforting scenario for us is that even going forward for balance year and coming few years, we have a great visibility of keep ramping up the scale and kind of gaining on the economy of the scale and the operating leverage. Sir, we are confident enough when the next year, suppose the price drops by 20% and, because of the softening raw material prices and our top line will decline by 20% because of the pricing decline. We won't see our EBITDA declining by 20% in line with the price decline. It will still grow with the volume growth. In fact, if you just simply go mathematically, it should improve the EBITDA margin, if you ask me. Thank you. We have our last question from the line of Sumant Kumar from Motilal Oswal Financial Services. Please go ahead. Yeah. Can you talk about the key product performance in domestic market? We are talking about the new product has driven the domestic business growth. What are the key product, you know, three, four, five product has driven the growth? Prashant, you may want to answer on these products which you launched and overall generally. I will go with rather than getting into a very product specific because some are maybe very restricted information. I'll say, look, we are expanding into horticulture crops. We are expanding to wheat. And our existing portfolio led by Nominee Gold is also doing well. We have launched five new products and mainly in horticulture two product. We have scaled up our herbicide in wheat. And we also launched couple of products in which are suitable for one for cotton and one for soybean as well. These are all definitely helping us in terms of scaling up our domestic business. Okay. Thank you, Prashant. Thank you. I now hand over the conference to management for closing comments. Over to you, sir. Thank you everybody for coming on the call today. Thank you to all the stakeholders, and want to congratulate the PI team for being a part of this journey. We continue with the blessings of God to succeed further. Thank you, everyone. Thank you. On behalf of PI Industries Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines. The conference is now.