Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries Q4 FY 2026 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.

Sanjay Agarwal, Group Chief Financial Officer; Dr. Atul Gupta, CEO, CSM Agchem; Mr.

Jagresh Rana, Global CEO of PI Ag Sciences; and Dr. Ramesh Subramanian, Global CEO of PI Health Sciences.

We shall begin the call with key perspectives from Mr. Singhal.

Following that, Mr. Agarwal will share his views on the company's financial performance.

Thereafter, 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 conference call could be forward-looking in nature.

A disclaimer to this effect has been included in the investor presentation that is available on the stock exchange websites. I would now request Mr.

Singhal to share his perspectives. Thank you, and over to you, sir.

Thank you. Thank you, and good afternoon to everyone for joining the call today.

I want to begin with a brief view on the global agrochemical landscape. Follow that with the domestic agchem environment, and then walk you through PI's operational and strategic progresses.

The global crop protection market has been continuing the multi-year downcycle. Recovery remains uneven, compounded by the global events during the quarter, which has led to a clear shift towards just-in-time purchasing.

The conflict in the Middle East, late February, have introduced a fresh layer of disruption that the industry was not anticipating. While the pressure is difficult, it also reinforces the strategic value of geographical diversification.

The domestic backdrop is generally encouraging on the fundamentals, even then the near-term industry demand has been muted due to the elevated channel inventory, low crop prices, and incidence of rains. Rabi season was good with increase in acreages.

Structural drivers for industry remain firm in place. The world still needs to feed global population, and farmers globally are demanding solutions for a safer and more selective and more sustainable solutions.

Innovators and integrated R&D-led manufacturing and proven trust, speed of execution, and will be the long-term winners. Moving to our business performance for the quarter, we have continued to demonstrate resilience underpinned by the breadth of our portfolio and depth of our customer relationships.

More importantly, we believe the investments made over the four years and we continue to make have a meaningful stem for PI's long-term position to differentiate and move it into the next orbit. Our consolidated revenue for the full year has delivered at ₹67,137 million with healthy EBITDA margins of 25% and cash in balance sheet of ₹34,275 million, enabling the company to pursue further strategic investments for long-term sustainable growth.

Our pharma business delivered a 40% growth for the full year with continuous customer engagement and innovators. Biotech companies will be investing in capabilities across process development, regulatory frameworks, we believe, is representative of importance for long-term growth platforms, leveraging our deep chemistry capabilities, integrated facility between India and EU, and the operating model for strong innovation expertise.

Let me now draw your attention to the biologicals, which has been our passion for over two decades, during which we have built one of the most comprehensive biological portfolios for the Indian market. Over the past two decades, the business has emerged as one of the fastest growing segments of our portfolio, compounding over 20%.

Our acquisition of a differentiated technology platform has given us a global market access and advanced R&D capabilities for significantly accelerating our growth ambitions globally. We believe our technology has the potential to address the next-generation crop health and protection for sustainable agricultural solutions.

On sustainability, we have maintained our position as S&P Global Yearbook and our most recent S&P Global CSA percentile had improved to 98th percentile, placing us firmly in the top-rated chemical companies in the world. I want to now focus our defining platform for PI over the coming decades: our in-house chemical entity program, a discovery platform.

Our first NCE, Pyroxasulfone, discovered in India, now is coming to the market soon, demonstrating our ability to invent at a global scale and take innovation from India to the world. We believe this is a major shift in the way PI will way for a global scale manufacturing from a distributor to reposition itself as a global innovator backbone strength and partner across the value chain, and turn ourselves into a life science company.

We expect in 2027 to deliver growth with exports and global biologicals factions backed by customer momentum, as well as domestic business is expected to gain from the new brand launches. Today, PI stands to move into the next orbit: into a more innovator mindset and a life science style tool building from CRDMO platforms, electronic chemicals, and operating growth across multiple lines.

Our growth will continue to support strong balance sheet, technological capabilities, and powered by science-driven platforms with deep-rooted relationships with customers and strong understanding of the global work culture. Before I conclude, I would like to take this opportunity to acknowledge the decade-long contribution of our Joint Managing Director, Rajnish Sarna, who's been a critical part in shaping and supporting PI.

He has stepped down from executive responsibilities, including IR, to focus his health, while he will continue to be associated with PI as Non-Executive Director of the board. I would like to also take this opportunity to, again, from the PI management and the board and all the family of PI, for this great commitment, dedication, and the contribution that he has made in building PI over the last three decades.

Going forward, I would like to make it clear that our Group CFO, Mr. Sanjay Agarwal, will continue to actively engage with the investor community and ensure continuity and communication at strategic engagements.

I am always there to support in any of those challenges. With that, now I hand it over to Sanjay and take you through the financial performance details.

Sanjay, over to you, and thank you once again, all of you, and to Rajnish for being an excellent part supporting the company. Over to you, Sanjay.

Thank you, Mayank, and good afternoon, everyone. I'll summarize the company's financial performance for the quarter ended March 31st, 2026, and for the full year FY 2026.

FY 2026, as Mayank mentioned, it has not been easy for agchem sector. However, we've been backed by our strong business model and, hence, navigated this near-term industry cycle.

We have also taken several initiatives proactively to work with our global agchem customers, and we believe the sector is transitioning out of downcycle. For quarter 4 FY 2026, we reported a revenue of ₹15,652 million, delivering sequential growth as per our guidance last quarter.

On a full-year basis, the revenue is ₹67,137 million, delivering a growth on a three-year CAGR. Decline in agchem exports is primarily driven by lower volumes, reflecting the broader global industry contraction and customer delivery schedules.

We have commercialized five new molecules in agchem exports and launched four new products in domestic agri brands. New brands now contribute around 18-odd percent of agchem exports, highlighting our focus de-risking strategy and innovation-led approach.

Domestic agrochemical demand remains being impacted due to channel inventory, pricing pressure, delay in the regulatory transitions for biological portfolio, and lower crop acreages impacting key crops for PI. However, we expect this growth momentum to now pick up with a stronger kharif season.

Our domestic business is supported by a strong product portfolio, new product launches, and focus on several on-ground initiatives led by technology and farmer engagements. This year, we launched four new products: three in the herbicides, one in the insecticide.

On our pharma platform, we delivered 40% growth in revenue for the full year, driven by growing strategic customers and our relentless effort to continue building capabilities to build a differentiated CRDMO model. Global biologicals also continue to progress with ongoing investments in market and product development, focus on innovation, and strengthening R&D capabilities in US and in India.

Our gross margins for the full year as well as for the quarter stood at 58%, supported by a favorable product mix and strong operational efficiencies. Further, at the EBITDA level, we delivered what we committed the start of the year: a resilient margin of 25% for the full year.

While the ETR for the quarter has risen due to higher non-SEZ sales, on a full-year basis, the ETR for FY 2026 remains at around 22%. We expect FY 2027 and thereafter ETR to be in the range of around 23% to 24%.

We have sustained our trade working capital in terms of days of sales at 139 days despite the volatility in the overall market. Our strong debt-free balance sheet, supported with net cash of ₹34 billion, provides strong resilience and flexibility for strategic investments.

In addition, we have successfully implemented SAP S/4HANA, which marks a key milestone in our digital transformation journey, strengthening our operational backbone, enhancing data visibility, and enabling future scalable growth with improved governance. As we see opportunities in FY 2027, we expect a positive growth in FY 2027, supported by new product launches, specially our first homegrown NCE in the domestic business, and our pharma and biologicals continue to scale up.

With this, I conclude my opening remarks. I'll now request the moderator to open the forum for Q&A.

Thank you.

Hi. Thank you so much for the opportunity.

My question is on the capex that you have incurred over the last 3 years, which translates to almost like a ₹2,600 crore of capex, but we are not seeing a conversion of this capex into the revenues for the last 2 years. For that reason, the asset turns, which used to be almost like 2.5x, they have dropped down to almost like 1.5 now.

Wanted to understand where this capex is being directed to, and some sense in terms of how much of it is being focused toward the legacy projects and the new projects, and when do you expect this capex to be translating into the revenues?

I think that's quite a question as well as. The point is that if you look at these asset investments are done for a multi-year ramp-up, both in capacities and scale of manufacturing.

Some of these investments have been in the software arenas with technology, NCEs, and new business arenas, which have a longer gestation, and some of them are coming of color in the coming year and the next couple of years. That's really where I would answer that from a contextual point of view, yeah?

Generally, I thought the gestation period used to be pretty short, right? We used to set up a plant in 8 to 9 months, and then it used to start to flow into the revenues.

Now this gestation period is seemed to be kind of widening. In ₹2,600 crore, how much of that would be spent onto the R&D and technology development and how much on actual steel on the ground?

Yes, but if the ramp-up doesn't happen over 1 year, as you would appreciate, if the eventual commercial capacities are at X, which are to be mature in 5 years, you build the plant. The ramp-up typically takes 4 to 5 years to do that, yeah?

If you were to take an example, I don't have the exact numbers, but I think Sanjay can build that way up. The arena where we've been doing the regulatory investments to take the new molecules into the market, that comes with a price tag, and those are also investments for building the new pharma capabilities and assets to create offering for tomorrow.

That's really been split today. Obviously, the present moment you see that, but also the industry cycle, or the demand have been lower, as you would say, occupation less, but fundamentally, the new products are in.

At some point with maybe a delayed gestation, would shape up, yeah?

Sure. I have other questions, but I prefer to get back into the queue.

Thank you so much.

Hi. Am I audible?

Yeah. Hi, sir.

For full year FY 2026, could you give a sense on what the growth would be for excluding your largest product in agro CSM business?

If I get your question right, for last year, besides the new molecules, the new product growth rate? Yeah.

As with all the new molecules we have been launching, they contribute around 18% to 20% of our total portfolio, and they also have been growing at a faster clip in the overall portfolio. While the revenues are declined because of the overall challenges, we know, but the new molecules, they have been shaping well and contributing incrementally to our margin profile.

Okay. Just apart from the new molecules, even the existing molecules, which you would have launched prior to that, right?

If you just strip out the impact of the largest product, Pyroxasulfone, excluding that, would there have been growth in FY 2026 in CSM exports, or that would have been a YoY decline?

If you look at the other lines, the biologicals, new molecules, yes, there is growth, but expected growth rates which were to be there given the external environmental situation and the agriculture scenario, they have not kept pace. Eventually, they're going to come up to shape.

That's what we see from our global partners' communication, understanding, yeah.

Okay. Understood.

Secondly, on the contract assets, now we have seen a reduction from ₹1,000 crores as of December '25 to ₹700 crores as of March '26. Now while that has reduced on a YoY basis, it is still higher.

I think in March '25, it was around ₹400 crores, right? Would we expect further reduction over here to FY 2025 year-ending levels, and how should we look at this number on a steady-state basis?

What sort of levels you target over here?

I would say that if it does a mark a huge reduction of about 30%, 35%, as you would have seen in this year for the last quarter, this subject to asset utilization to value of product in the pipeline and launching of the products. I would say this will remain over around the same level even where the business model and structures are today.

Okay. Thanks.

Just one more if I could squeeze in. Would you be able to share what the capacity utilization would be at a company level for FY 2026?

The FY 2026 is a bit below 80%.

Bit below 80%. Okay.

Thanks a lot.

Hi, sir. Thank you so much for the opportunity.

Just one question on margins. I think I can see over the last couple of quarters and for March of fiscal '26, you've been able to maintain your gross margins at a very healthy level of 58% to 59-odd percent.

For the last couple of quarters, at least on the EBITDA side, we've seen a bit of compression going back to the 22% mark, whereas we started the year with a 27.8% margin profile. Just going into fiscal '27, if you could just give us some sense of how should we think about margin profiles both on the gross margin level and the EBITDA margin level?

If I look going forward, we'll continue to focus on maintaining the gross margins, right? Obviously, the volatility quarter-to-quarter could be different, but the average gross margin that we've looked at that, certainly focused to continue to manage this in present demand, yeah.

I said with the quarter-to-quarter volatility as it continues, but if you look at the average gross margin for last year, we continue to focus to maintain the gross margin at that level, as indicated earlier.

Sure, sir. The EBITDA margin would be a similar comment?

You see, given the present environment the volatility of the various multiple factors, whether it's input costs, whether it's other cost structures and other challenges, I would say our target is always to say that how we can continue to manage them and beat them better. It would be very difficult to give a specific answer today to say where would they be.

Yet, as the company continues to manage that while making sure that we don't compromise on our long-term trajectory and our continued focused to look at market share and growth, yeah.

Sure, sir. That's clear.

If I could just squeeze in one more clarification. In the opening remarks, when you mentioned you're looking at positive growth in fiscal '27, would that be positive revenue growth or positive earnings growth?

Clearly, we're looking at revenue growth as one of the key drivers for this positive growth going forward, yeah.

Sure, sir. That's clear.

I'll rejoin the queue. Thank you so much.

Thanks for the opportunity. Sir, in our PPT, we have indicated that we have received regulatory approval for a launch of a nematode in US.

What is the kind of scale-up that we are expecting over the next maybe 3 to 5 years, and is it a biological or a synthetic one? Thank you.

I didn't get your question. What was your question, sir?

It was not very clear. Can you repeat, please?

Yeah. We have received the regulatory approvals for the launch of a nematoid in US.

That's what we have indicated in our PPT. Is it a biological, and what is the kind of market size that we are tapping or in terms of this particular product, what is the kind of potential revenues that we can generate over the next maybe 3 to 5 years?

I think I will take this as first, then maybe Jagresh can fill me in there. Yes, it is a launch of a new biological nematoid, and it's the first time a new biological nematoid coming in the market at that scale.

Jagresh, you can look at what you're willing to evaluate. Maybe you can give a better fill-in.

No, absolutely. Hey, thank you for asking this.

Based on the performance we have seen, this is kind of a very unique biological nematode product. Most of the nematode product which are there in the world today, they are mainly applied in the soil.

Today, there is hardly any nematode product which can be a foliar application. This is the first time that we have introduced a product in the market which is a foliar application based.

Second part, basically, in this is that the nematode market overall globally, specially in Brazil, US, in these markets, has been growing very rapidly. More and more farmers are realizing the problems of nematode.

We are expecting a significant growth from this product. US is a third market.

We have already launched it in Brazil and Mexico. US is the third market.

Where we have launched in Brazil, we are basically seeing this year that we should be almost more than tripling our sales for this particular product. It's a product which competes very well with the synthetic chemistry products, and we are seeing some very positive results and good performance on the farmer's side.

Only one caveat I will put: we're still in the early stages of developing the product, farmer acceptance to biologicals. Yes.

I think what Jagresh is saying, they are very positive about what we see. I think it will take a couple of years to establish our product.

The results are very encouraging and gives us a huge capability to say, yes, we need to invest to build the markets, and the investments will be an aggressive approach to build this part, yeah.

Sure. That's helpful.

Sir, second question in terms of CSM business. Last year, we had indicated FY '25 the contribution from new products was about 15% to 18%, and this year we have said FY '26 the contribution is about 18% to 20%.

If I do the math, it seems that on a year-on-year basis, the new product absolute revenue seems to be flattish or slightly negative. How do we look at it from the FY '27 perspective?

You're right. You see, as you can very well understand, the global agriculture market scenario itself is challenging, and you can see that from the performance of the large companies trying to put new products, customer expectation, acceptance due to commodity prices.

Clearly, as the situation is very volatile, but we do see this becoming a bit better, right? I think, fundamentally, the whole agriculture cycle has to pick back, and innovations will get adopted at a much faster rate.

We see that to be looking a little bit more positive. As you would have seen our commentary over the last year, there were challenges in the market, and what was expected to turn around, and our companies were looking second quarter, half second-half, but still not come around, but hopefully things shape up in the right direction.

We will see a better number coming from here. That's really where I would put that thought, yeah.

Sure, sir. Sir, just last one I'm squeezing in.

On our novel NCE molecule, Pyroxasulfone, we plan to launch in the Indian market. What about the global launch?

Are we expecting any kind of out-licensing for the same, and what could be the timelines for the same? Thank you.

Yes. Right now for the global markets, we're working a couple of global geographies where we will be looking to file regulatory.

Each geography has different regulatory requirements local and global. We'll be looking to put in application for filing probably at the end of this year or next year.

Then we'll go into the regulatory framework, and we'll be looking at strategic partnerships and would announce them at the right level when we come to the right point of decisions with them, yeah? First point today is to at the global level get into the regulatory framework.

Perfect. Thank you so much, and all the best, sir.

Hello? Am I audible?

Hello?

Sure. Thanks for the opportunity.

Sir, my questions are centered around the electronic chemical market. Typically, we have mentioned in the previous call about commercializing about 4 to 5 molecules.

If you could share some details in terms of the molecules, what kind of revenue contribution, what kind of end application each of these molecules are supposed to serve, and what kind of customer sets we have been talking about, both between Japanese and the non-Japanese? That is my first question.

That's an understanding, as you would have seen that in the past with PI commentaries of handling innovation, we are working on some new innovative ideas with companies. As you would say, they are right now at the ramp-up stage, the electronic chemicals.

They are not a significant portion of the company's top line, but what is an indicator that we're very strongly working in that area, and once we scale up, we'll have the right answers. To give into specific their niche applications, and they are unique in that in their offerings, and that's the area which PI always operates in, yeah.

Sure. Sir, if you could share some kind of, typically, what can be the size of this segment of our electronic chemicals say next 2, 3 years?

Can this be a ₹1,000 crore business in next 3 years?

I don't know about 3 years, but, yes, certainly, with time, we will definitely look at that is our target. We would love to do that.

As we've stated earlier last year, we have looked at saying, yes, we're looking to target about $100 million in the next 4 to 5 years in this segment.

Sure. Last bit.

Sir, when do we expect the pharma to turn EBITDA positive?

The pharma revenues are, as you can say today, as you've seen the global situation, the CRDMO play is a very what you call swing industry not play. We are right now very confident that we're looking at certain interesting opportunities, some part of the value chains, which should fructify with time.

Obviously, the investment mindsets are shifting. As we see these things move, and as we've stated earlier, achieving a ₹500, ₹600 crore top line is when you would see these things move into a positive phase.

This could be a couple of years if not a little bit more than that to get to that space, yeah? Right now, the company is more focused in building capabilities, offerings, and building customer confidence to look at the value delivering.

That's really where we are.

Thank you so much.

Hi, sir. Thanks for the opportunity.

First question on the overall pricing environment. Given the volatility in raw material prices of late and the global pressure there on the agchem cycle as a whole, is there any significant pricing correction or pressure that we are seeing across our portfolio?

Second bit, one clarification there. The 5-odd percent realization decline in our exports that we are seeing, is it more a product mix issue, or it's a RM deflation or some pricing correction there?

I was to answer there are pricing corrections, there is currency deviation, as we are pass-through models. Yes, we are seeing volatility in the raw material prices, and they've had come in pack.

There's a balancing act when the company is playing in this volatile market while supporting customers, meeting end-customer challenges to ensure that we have a sustainable growth and continue to put high utilization of our delivery plants while focusing and managing our gross margins. As you would very much understand, I can't give you a straight answer because nobody seems to have a straight answer in this very volatile market.

Oil is swinging like a yo-yo. Raw materials swing like a yo-yo, tomorrow yes, tomorrow no.

The outcome today is, yes, there is an impact. We are focusing on those impacts.

We are looking to how to create the value extraction in the company, and the company has a very strong focus to say how we can optimize and maximize, taking consideration from customer to supplies, yeah.

Sure. Let me put this way.

Our focus here will remain on volume growth for our existing as well as newer products, or we will prefer to have a balanced approach in terms of margin as well?

Our focus today would be to continue to hold the market share and get volume, because the margins could always return back if the other markets swing. That's typically our business focus, right, given the volatility that we see.

That does not mean that the margins will not come, but they are more volatile in nature right now, as you would understand, yeah.

Sure. That's helpful.

Just one clarification, if I may ask. The electronic chemicals or the newer areas where we are expanding into, the capex for them, these will be largely MPP-based or there will be some dedicated capacity coming in or which is already there in our books?

Again, these are niche chemicals. They will be multi-purpose assets, and some maybe specialized assets, right, because we're not in the commodity end of the electronic chemical.

We're more focused on niche and complex areas of operation capability.

Sure, Mayank. That's helpful.

Thank you, and all the best.

Hi, sir. Sir, on the pharma business, could you just re-share your thoughts in terms of growth and profitability over the next 2 to 3 years?

How should we see this business scaling up?

As I think I mentioned to the earlier question, it was exactly that we are looking right now to build those capabilities in the next 2, 3 years. As I said, the EBITDAs where we would be able to look at ₹500, ₹600 crore top lines, we should be able to move into that phase.

As you would very well understand, being the CDMO play, it takes a long term to build the foundation, but then you start seeing an accelerated curve which moves fast because the entry barriers and the regulatory frameworks followed with early-stage products, you start targeting. When the cycle picks up, it takes a J-curve.

That's really the approach that we see. I see that in the next 2, 3 years to start showing some early shoots, yeah.

Secondly, on the global biologicals business, given that now we have started getting product registrations and also building our distribution model across geographies, how should one think about the opex in this business, and when do we achieve a scale where we breakeven on this business? Again,

I would say the way to answer this, what we are seeing as I think Jagresh mentioned earlier, we see the positive trajectory. As you would see, the markets itself are depressed today in the agri sector.

We are clearly seeing a great acceptance of our technology and product performance. I would say we're very much positive to see that in the next couple of years, we should be in the position that you're looking to achieve for ourselves.

As you rightly questioned, again, if you see more opportunities of more innovations, we will be investing, and we will not do that to lower the value add. We are definitely very excited to what we see.

A couple of years from now doesn't look too far from us to be playing that game.

Lastly, for FY '27, in terms of we would have any higher opex in terms of any large registrations or any other one-time cost that would be coming in our P&L given that we are looking at commercializing a few products?

This is an ongoing thing since we have been investing into R&D and we are looking at these new NCEs. This has been continuous for the last few years, and the same trend will continue of ₹50 to ₹100 crores of additional spends which go I think

the question was next year.

Next year, FY '27 as well, we'll have similar expenses for the R&D and also for the launch. Since we're looking at the Pyroxasulfone launch this year, we'll have some additional cost in the next few quarters on that.

For the global products also, we would have additional cost coming in?

Yes, clearly. I think, to be very precise to your answer, next year is going to be heavy investments in building out markets.

Those costs will be there.

Okay. Got it.

Thank you.

Thanks for the opportunity. Sir, my first question is on the investment priorities going ahead and what is the kind of a capex.

In terms of the investment priorities, I just wanted to understand any specific investment that we are talking about the new business opportunities?

These would be capex we have guided in the past also, we should have ₹700 to ₹800 crores of capex this year as well. Again to build in new capex capabilities, both at the manufacturing level, some of the new launches which we are going to be having, R&D spends which we are going to have.

Across both pharma and our agrochemical business.

Okay. Also to have a better understanding about the kind of incremental contribution that we should be seeing from the newer business area, is it possible to discuss what is the kind of a construct to your order book position currently in terms of the areas whether it is agchem, pharma, and whichever newer area that we are talking about?

We don't have a specific clear for newer areas, but I think somewhere around $1.1, $1.2 billion, which is already the order book position, which continues to hold on, yeah. We won't have a specific break-up of those right now.

As typically, the other businesses are all B2C like the biologicals. There is no order book situation there.

Pharma is too insignificant in terms of the top line of PI, and there are numbers for order books, yeah.

Sure, sir. Then next question would be on the supply chain constraints.

You have mentioned about maintaining the gross margin situation for the full year FY '27, but if you can say something what is the kind of a availability situation and what is the kind of impact that possibly in the near term that we can see because of the availability of raw materials? Whether that's a big challenge at this juncture?

You have got me exactly. I think it's one of the most simple questions with the most difficult answer maybe or difficult answer with a simple question.

As you know very well, as we know, we are all challenged with that availability, and that's not something in our hand. Far, we've been able to manage, and we'll continue to manage.

We never know when the situation changes the way the world is today, right? I'm sure that's applicable to most of us in sector and the industry, yeah.

Sure, sir. Yeah.

Thank you, sir. Thank you for the

Sir. My question regarding pharma segment.

You have mentioned in the PPT a significant increase in CDMO inquiries. How is the conversion is going to happen considering all the inquiries you have, number one?

Number two, I have seen in the PPT your services business has increased significantly. What is leading this business?

Also, you are adding new customers in the last 12 months. Considering all these factors, next 2 to 3 years, how much growth you are expecting in the segment?

I think we just answered that earlier. Yes, as we are trying to add CDMO, the success rate moving to 2 years, new customers had been opened.

Clearly, as mentioned, we look at a ₹500 to ₹600 crore

As we mentioned earlier, right, that there is all these initiatives which have been taken, we're looking to target to get this in the next 2 to 3 years, yeah, of ₹500, ₹600 crore business, which could then become the J-curve approach to look at how we can look at more accelerated growth going forward.

Okay. For the outlook perspective, you have written, "We remain positive for the growth in FY '27."

Any number can we talk on a double-digit, lower double-digit, mid-teens kind of growth we are expecting in FY '27? All

I would say, yes, growth for sure. Double or late single will all be subjected to how the world reacts, yes?

Normal case scenario?

I can't look at a normal case scenario right now because the quarter has gone, it's too close to the quarter to answer that. Yes, I can say we can definitely look at growth, my friend, at a later stage of nearly late stage single digit or early stage double digit at the worst case scenario.

Worst case

scenario?

The worst case we will have definitely have some growth, I hope, because if it really goes that way there's no oil and there's no fuel and there's no food, then we can't do much, right? Today's world to answer that is challenging, but we have plans for growth at a at a aggressive pace compared to the competition.

Thank you so much.

Good afternoon. Thank you so much for taking my questions.

The ₹1,100 crore capex that we incurred for FY '26, sir, would it be possible to just break down the specific key projects in which this investment has gone?

It's across both the agrochemical, pharma, and the R&D spends which we have done. We were about to commercialize our kilo lab facility in Lote plant, so that has taken substantial sum plus one of the MPPs, the flow which we have commercialized during this year.

The spends have been there on the agrochemical side. Then the last is on the R&D's investments which we have been doing.

Okay. Just to clarify, the presentation says pharma capex was about ₹91 crores for the year.

Correct. ₹100 crores.

Yeah.

Yeah. Then should we understand that the remaining, say, ₹1,000 crores or so is all agrochemicals or how is it?

Agrochemical and on the R&D spends.

The fine chemical area as well, as we're talking about.

That will include all the electronic chemicals, agrochemicals, the R&D, fine chemicals.

Right. Okay.

Just to clarify, fine chemicals, any specific plant that's been put up or part of the MPPs, sir?

It's one of the MPPs which was getting commercialized, as you mentioned earlier, if you would note.

All right. Thank you.

Second one, for plant health care, would it be possible to just quantify the revenues for FY '26?

They have been in the range of around $12, $13 million.

Understood. Sorry, I might have missed this earlier, please excuse me if I did, but on contract assets of ₹700 crores, what's the kind of trajectory we are expecting in the year ahead?

Will it decrease further or by how much?

I think that's the range we've always been in the last report given the business model and scenario and balanced capacity inventory and customer needs. Also look at the volatility of supply chains, we would look at keeping it at that level.

All right. Thank you so much, sir.

All the best.

Hello, sir. Thank you for the opportunity.

First, sir, I have one request. One of your largest product in the CSM segment, there are patent rates.

It's nothing new. Most of the CDMOs or CSM companies have to deal with it.

What would be really nice is if you can address that question in your press release in some way. That I think would be really appreciated because there are so many layers to that molecule.

That is my request. The first question, sir, is on that molecule, do you see sort of a gradual decline over next 2 to 3 years and then bottoming out, or do you expect a cliff that we will see only in that molecule?

I'm not asking about rest of the business, yeah.

I don't know how to answer that. Number one, you'll appreciate that this is not our molecule, it's a partnership.

Revealing strategies would be a challenging scenario in the today's context. We're in a highly competitive world, and I would like to look and model this to the approaches that you've seen for any other product that goes into genericization in the sector.

Okay. The second question, sir, is for electronic chemical business, what is our current gross block and what kind of gross block do you expect in next 2 to 3 years?

We will be making another few hundred crore investments in that area, as that's a new avenue of growth. New assets and plants will be built up.

As we continue to see that we want to scale our business up, we've got 4 to 5 products in the pipe which are working well. We are looking to go develop more strategic areas into this, investments of the gross block would be going up in this area.

Then over the next 5 years, we start seeing terms of the volumes and revenues that we plan to achieve.

Sir, is that number ₹200 crore, ₹500 crore, ₹1,000 crore? What kind of asset turn, any range would be helpful.

Anything substantial of that area, ₹500 crores is a number which we are already look at. ₹100, ₹200 is not a significant investment, as you would appreciate in a plant today.

Asset turn would be high or low? Some idea around that?

Difficult to answer today because we're right now investing to build the business. The asset turn as you will see in the CSM business, the early stages have lower asset turns, but business when it has to mature, reaches a scale, you start seeing those colors, yeah.

Okay. There's a final question, sir, is on the NCE molecule.

In the NCE molecule, for the life of a patent, right, let's say 15 years sort of, I know it's a very dynamic world, there's so much hard work you have to do, find partners and all that, but what kind of potential can it be for the company of our size? Today, we are at, let's say, ₹8,000 crore revenue scale.

Would it be significant for our scale, or it would be 10% kind of scale? Some range there would be very helpful in terms of potential over the life of the patent.

It's significant. Significant or not significant, I think we are pretty gung-ho being an innovation out.

I think the year of launch and the first season of launch will give us the impact at a larger scale to look at the significance. I think the most important significance that needs to be noted is taking an innovation commercializing.

I don't think a single company from India has done that, and it's probably the first company in the chemical sector to do that. That's the benchmark for putting our capability take from discovery to markets.

Rest assured, it has to be of a significant number for us to invest and build, followed with that learning, we will have an understanding from the season that we go, and we'll be in a better position to answer. We're also looking at this as a capability build-out for more new things in the pipeline to come.

That's the way I would look at that, the shift in the PI's capability mindset from distribution company to manufacturing for innovation, now to take innovation to the markets. That's really what is the ability which is coming through.

Once this is demonstrated well with this product, it gives us hope to build a lot more for the next multi-decades, multi-years if I was to say, to bring innovation to the market. This is the significance of this product.

The number significance of the revenue, yes, it should be good contribution to the top line for the domestic business to start with. Based on some of our learning for the next season or two, we'll be in a better estimate to look at the projected sizing of the product, yeah.

Okay. I hope at some point of time you give some preview into the upcoming NCE molecules, sir.

I do hope that, and all the best.

Hi. Am I audible?

Thank you for the opportunity. My question has to do a bit with the client that we are serving for our biggest molecule.

Since they have come up with the guidance of their formulation in which they use our molecule, they have come up with a guidance of beating their conservative guidance of a full year of last year, and so I'm just trying to understand if our shipments to this client of ours is going to get better in the upcoming quarters. Basically, what I'm trying to understand is if we will have a growth on our agchem export sector, which is dominated by one single molecule.

Do we see traction in that molecule going forward? Will we see volume picking up in that molecule specifically for the next couple of quarters?

I would look at the way you look at that customer and follow that guidance from our perspective, when contract manufacturing, for what we are building in is already what we have contracted. As you would appreciate, these supply chains are long.

Clearly, will be too early for us to answer and to let guidance to say how we see that. Clearly, yes, if they do benefit, we would see the reciprocating benefit with time, yeah.

Right. Just to follow-up on that, since I know we've addressed about the contract assets already on the call, but we've seen a reduction of contract assets going from Q3 of FY '26 to Q4 of FY '26.

We're basically billing our clients and they are actually drawing up on the reserves of our contract assets? Would we see this trend moving forward, let's say, by Q1 '27, Q2, and Q3 '27?

I would say this is their level of inventory, which is always kept. There will be higher level kept given the volatility, as you could appreciate in the world.

We are looking to keep and build and then optimize capacities so that at no point we run out, right? That's how we're looking at it, right?

I think given the scale and the complexity of the value chain of production, contract assets below 5, 6 at ₹600, ₹700 crores would be a challenging number to manage that risk.

Any number that we can probably close on the contract assets for '27?

As I mentioned, we'll be remaining within this range for what we estimate for today. It could shift on a quarter-to-quarter basis.

Right. Another question just on the electronic chemical side.

What is the approximate revenue figure that you can give us for the electronic chemicals for FY '26 and any guidance for '27 and '28 as well? Because some of your clients have been talking about the end market tripling by FY '30, I think that a lot of traction in these molecules that PI is entering into, and I'm just trying to understand the whole market for these electronic chemicals and the numbers from your side for guidance for '27 and '28.

Let me be honest to tell you, we are right now at the early stage. The numbers are not significant for the PI top line with the development stage of some of these products.

We're building capacities and understanding and capabilities for the customer. In 2 to 3 years, we would be in a better position to understand the scale and size.

As you would understand, these are very serious level of confidentialities with our customer and confidentiality contracts given highly competitive environment of this space. We are very excited and gung-ho about it given the fact the areas that we are operating are in the niche space.

As these are light says that we have mentioned 4 to 5 products, which we are evaluating, developing, they've gone into the various phases which we'll be looking at a manufacturing scale at a later date, yeah.

Right. For it to have, let's say, a significant contribution, like let's say how pharma is having in our business right now, what kind of numbers

do you expect? 5, 6 years we've estimated about somewhere about $80 to $100 million of revenues in this space.

Right, right. Thank you for that.

Any commentary on gross margin guidance for '27?

I think as we have earlier questioned by a couple of others, we said we continuing to manage and maintain the average gross margin of last year.

All right, sir. All right.

That would be all. Thank you so much.

Hi. Thank you for the opportunity.

Two questions. PI has spent more than a decade discussing adjacencies like pharma, electronic chemicals, life sciences, yet agrochemicals still remain the dominant economic engine of the company, and we have been discussing why so.

As on today, from management's perspective, was the original assumption that PI's process chemistry and customer trust advantages would automatically transfer more easily across domains than they actually did? What has been the single biggest unexpected challenge in building meaningful non-agro scale?

That's my first question. Thank you.

I'm not very sure about whether you're talking about a decade, but we made these investments over the last 2, 3 years. Clearly, agrochemical is a bread and butter, in adjacencies we've got into discovery not only manufacturing.

Adjacencies have been only evaluated in the manufacturing space. I think if you look at back in the history of PI, even in the contract manufacturing, it took about 10 to 12 years before a significant impact on numbers could be seen in the past early 2000s.

That's what it really is when you get into innovator phase. Even if you understand CRDMO, a product doesn't get into a manufacturing play pharma at least for 5 to 6 years of impactful numbers, right?

That's really how we're looking at it. Same in the electronics, we've invested them over the last 3 to 4 years.

We're seeing products, they are scale up, we are seeing investments that we are making, there will be time. I don't know whether I would say that this is a concern for us, but this is something which we see working well, but in the strategies of the chosen play where we go for differentiated play, not just a large-scale commodity play in the other agencies.

Yes, there are challenges,

which are

there in the sectors, specially in the pharma sector. There has been challenges in external environment investments, biotech cutoffs, reduction that space.

The aggressiveness at which it was supposed to be approached has become one challenge, investments. Now I see that sector picking back up, we could see those scales come up, yeah.

Sure, sure. That's helpful.

I was actually alluding to the 2012 annual report, but anyway, what has PI learned so far about the difference between scaling agchem CDMO versus scaling pharma CRDMO, and what capabilities still need to be built before PI can genuinely complete with established pharma synthesis leaders on innovation depth, not just chemistry execution? Thank you.

Because if you see we have looked at the biological offering capabilities, which have been invested. We start working in that.

We are looking to further invest in building KSM materials, build batch. We have our GMP facility we need to be further built for CDMO.

Arch pharma, that's going to be fired up in this year, which is going to create pipelines for the future. I believe in the next year or two, number one, you can't build all the capabilities, all the offerings.

We are looking at capabilities which we need to have, which we can differentiate. Two, areas where we want to partner, we can become a fully integrated partner for a pharma biotech startup to a company with strong manufacturing in a regulated and an unregulated environment.

I believe in the next couple of years, we'll be in a pretty good, unique, competitive position with best-in-class assets to play this game well.

Wonderful. Wish you all the very best, Mayank and team.

Thank you.

Hello?

Thanks. Sir, I just had one question.

Would it be fair to assume that the current agchem market is tilting more towards generics than that of patented products? If you could also allude as to why would this be happening?

Would there be some stress on the farm economics level, or is it the farm demand that is going through a rough patch? Any thoughts on that would be quite helpful.

Yes, I think that's a good analogy if we were to pick it up. If we look at to be very honest, the commodity prices are not moving, but yet the prices on the other side are high.

The input costs to the farmer is going, agrochemicals are becoming a necessity, he's looking at cheap solutions right now. There are positions and openings for the opportunities in certain sectors where he doesn't have any value-contributing solutions where innovation is coming.

While the rate of adoption may have slowed down, it doesn't mean new molecules and new innovations will not be adopted. It is just that cyclical in nature.

As the aggression would come up with the commodity cycle and the agriculture sector, this would accelerate. That is our view.

If you still see, innovation is moving, but don't forget where the commodities or generics have gone to the bottom of the pit when the markets hit back. Whereas innovations will still continue at a steady pace.

On a average CAGR, you would appreciate that innovation is still continuing to do better. On short-term or windows of cycles if you cut and paste, yes, you could see the cycles and turns that you're talking about, which is what you call external dynamics which prevail in, yeah.

Right, sir. Thanks, that helps, and all the best.

Thank you, everybody, for joining the call, and thank you, as always, for your support. Look forward to catching up with you over the next quarter.

Thanks once again. Warm regards.