Insecticides (India) (NSE:INSECTICID) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Insecticides India Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participants' line will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Saxeeth Mehta from MUFG Entyme. Thank you, and over to you, ma'am. Thank you, and welcome to Q2 and H1 FY 'twenty seven earnings call of Insecticides India Limited. Today, on this call, we have with us mister Rajesh Kumar Agarwal, our managing director mister Sandeep Agarwal, chief financial officer mister Devinder Kumar Ray, chief operating officer and mister Dushyant Sood, Chief Marketing Officer. Before we proceed with the call, I would like to give a small disclaimer that this conference may contain certain forward looking statements, which is based on beliefs, opinions and expectations of the company as on date. So these statements are not guarantee of future performance and involve risks and uncertainties, which are difficult to predict. A detailed disclaimer has been given in the company's investor presentation, which is uploaded on the stock exchange.

1:25 Now I would like to hand over the conference call to the management for the opening remarks. Thank you and over to you sir. Good evening, everyone, and thank you for joining us for our Q2 and H1 earning call. We appreciate your continued interest in the support of the company. Today, we'll walk you through our performance for the second quarter, highlight the key developments across the business, discuss the progress we have made against our strategic priorities, and share our outlook for the coming quarters. Q2 has been an important quarter for us, and I would like to take this opportunity to reflect on what went well, where we face challenges, and how we are positioning the business for sustainable growth.

2:18 We'll begin with our overview on our financial and operational performance, followed by key business updates and our outlook. We'll then open the floor for the questions. With that, let me begin with the key highlights of q two. First, let me talk about the industry dynamics. Super aluminum has impacted or I should say that weather has disrupted the key agriculture regions across the country is not wrong. And it is not only India which was got impacted, but the entire Asia, rather the entire world got impacted because many regions saw drought and few states were badly impacted.

3:07 So along with this, the global uncertainty uncertainties and the supply chain disruptions also played a very important role. Because, you know, the crude prices went as high as $1.25, and it is just yesterday night when it has come again below $100. And the impact is yet to be seen because this is a Diwali time, festive time. So the things will get clear soon. But at this moment, everything becomes so expensive, including the sea freight that it was impacting the business adversely. So this, I mean, impacted the wet crops like sugarcane and paddy because in many parts of the country, the water availability was a constant. But at the same time, even the dry crops like maize, cotton, soybean, they got an impact. And Chile was also very adversely impacted so far after the current cyclones where the, again, impact is plus and minus.

4:01 When I say plus and minus, because the water became available to the crop, it is plus. But it came along with the wind, so the crop was down. So that is minus. So there were both type of impact which were observed from these two cycles which we have received in the last couple of days. But as a whole, we see that the Indian farmer remain buoyant for the new technology products. Another development is that the inflationary trend is visible in almost all agri commodities prices, particularly if we leave aside the vegetables which are... Which get impacted by the seasonal pressures. All the agriculture crops, we see a price hike and we see farmer... The general trend is that they are moving towards the premium products. The number of sprays have come down, but they are looking for better solutions for protecting their crop.

5:00 So I would say that despite of the low yield, the farmer profitability has remained intact to a greater extent and still we see a good interest in crop protection among the farmers. Talking about our performance in Q2, there is a 8% revenue growth in Q2 and if we look at H1, there is 2% deal growth. The margins have we see a consistency with focus on premiumization and cost effective products. Kairos continues to gain the traction as an emerging platform to expand distribution footprint, and I'm glad to tell you that North East and West, we could open up completely and the target to open a southern part of the country is in q two, which means that during this year, will be available across the country from Kashmir to Kanyakumari.

5:59 I'll be gearing up its crop based solutions with ICS plots. These ICS plots, IELTS crop solution plots, has been a big success for us in the past few years. Last year, we were working on 30 odd plots. This year, we have doubled that number, and that number is about 70 across four crops before maybe across where we are working our rice, cotton, soybean, and chili. We have demonstrated amongst the farmer that how by using the similar number of space and sometimes the lesser number of space, generally, with the lesser cost, how we have improved their productivity, how they can make more money per acre by using the solutions suggested by IL, and they have become so popular that thousands of farmers are attending the farmer meetings at these plots and giving very good acceptance to the new generation products which are introduced by INSECTICID.

7:02 So the marketing team has been very, very aggressive in the field activities in H 1. We have completed more than 18,000 formal meetings across the country. There has been more than 9,000 demonstrations and we have met more than 2.5 lakh farmers in H1. So the investment in manufacturing is continued in Sultanahala and Dahiich. So we are expected to complete the Dahiach project in full by December, though the plant is partially into manufacturing and it's partially capitalized, but it should be fully capitalized by the end of December. And Sotanana, we can expect the completion in the next fiscal. Currently, both inventories and datas are at little elevated level, focus on improving cash flows with working capital improvement is going forward.

7:55 Outlook on the macros. The macro conditions remain volatile. We remain focused on execution of strategic priorities. Premiumization and Cairo's expansion will support profitable growth for IIM. Normalization of interest cost with positive cash flow is expected now being recorded. After completion of Sultanalakujek, major CapEx cycle will be left behind us. We'll remain focused on improving utilization of our facilities, which we are putting up. And needless to mention that we are trying to build up the state of art plant, and the idea is to build up a DCS plant and focus on CDMO business from this plant in particular and also upgrade the hedge to this level so that we can do the CDM activities from both these sites.

8:52 Organization rebuilding is an ongoing process, keeping in mind the next phase of growth and efficiency, and we are working on our board. We are working on team building and trying to find the gaps wherever there are and fill these gaps across. Now I'd like to introduce our new director who is appointed today by the board. So mister as an independent director, he's highly respectable industry veteran and with over forty years of experience in the agrochemical and agri input sectors. He has held several senior leadership positions during his distinguished career, including serving as whole time director of Goromandar International Limited. He holds an MSC agriculture economics and is an alumnus of the prestigious INS Ahmedabad.

9:43 We are delighted to welcome mister to the board and look forward to benefiting from his rich industry experience, deep domain knowledge, and valuable insights. So with this, I hand over the phone line to our CFO to highlight the results. Thank you, sir. Good evening, everyone. I welcome you all to the Q2 and H1 FY 'twenty seven earnings conference call. Coming to the financial performance for the quarter. Our revenue from operation registered a growth of 8% year on year during Q2 FY 'twenty seven, reflecting the resilience of our business despite challenging market environment. Revenue from operations stood at INR686 crores as compared to INR677 crores in the corresponding quarter last year. Our gross profit margin stood at 33.7 during this quarter as compared to 34.5% in Q2 FY twenty twenty six. EBITDA for the quarter stood at INR92.44 crores and EBITDA margin stood at 13.5%.

10:54 Profit after tax stood at INR 56.17 crore during the Q2 FY 'twenty seven. For the first half of FY 'twenty seven, our gross profit margin stood at 32.7% as compared to 31.7% in the last quarter comparable quarter, showing an improvement of around 100 bps. EBITDA stood at INR 161 crore, while EBITDA margin was 12.3%. Profit after tax for H1 FY27 stood at around INR 100 crores. Coming to working capital. Our working capital days stood at one hundred fifty eight days during H1 FY 'twenty seven as compared to 151 during H1 FY 'twenty six. Inventory increased from INR $7.44 crore to INR $8.14 crore.

11:43 Debtors stood at INR $7.19 crore as compared to INR $6.43 crore. Creditors have increased from $4.20 crore to $5.33 crore. So net working capital as of September 30 was around 1,000 crore as compared to $9.66 crore as on 09/30/2025 and INR $8.28 crore as on 03/31/2026. Our efforts remains dedicated towards improving our working capital efficiency and strengthening our cash flow generation. These are the key financial highlights for the quarter and half year. Thank you. Thank you very much. Now we open the house to questions. Thank you very much. We will now begin with the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

12:46 The first question is from the line of Bharat Gupta from Fair Value Capital. Please go ahead. Hi, Sandeep. Hi, Rajesh. I hope I'm audible. Yes, please. Yes, sir. Sir, on the results side, so just want to understand first on the volume growth part. What has been the volume growth across our different segments in b to b, b to c in the export side? This has been a negative volume. There has been a negative volume growth actually in this quarter. Particularly, I can say there is a drop of about six to 7%. We have just managed to sell the value added products better or the premium products better. And I see a 4% to 5% value growth in this quarter,.

13:35 Sir, across our Maharifna and focus Maharifna categories, what kind of growth we have in this during this h one FY twenty seven? If we look at the entire range, then the drop has come particularly in the gold products because farmer has shown interest in the new generation products and we were also very, very actively marketing these products. So I can say that both Focus Maharathma and Maharathma have seen a little increase, particularly if I talk about Q2, then here, Marathna has shown a decent increase. Sir, also in the PPD, it has been mentioned the historical numbers have been mentioned till FY 'twenty six. I think h one FY twenty seven data has been missing across different product verticals.

14:28 I'll take down your question. Why it is missing? I'm not sure. So I'll get it amended if there is some errors. CFO is listening to your question. We'll note it down. Sure. And if the mistake has happened, we'll correct it. Sure. And, sir, like, how is the Cyrus segment performed during the this fiscal year? Kairos is doing very well in the brand segment itself. It has done a gross turnover of about INR 75 crores. In totality, the company is showing a total sales of INR 1 crores, 114 crores, if I'm sure, in H1. I believe the brand sales from here should increase in a reasonable manner because already as I told you North East and West the entire network is on, it is set And I believe that for the year two, we have made the complete preparation in terms of appointment of team and appointment of network and the material has gone into the market, very well accepted into the market.

15:30 The packing is appreciated. The quality is appreciated in the market. So we should do well. So the target is to cross INR 125 crores of brand turnover in Karos. In totality, the number can Karos standalone might touch roughly around 200 crores in this fiscal. And next year, we can very well plan to double from here. Alright. Good to hear, sir. Sir, also, like, with respect to the product pipelines, I think we were also anticipating to launch OVT insecticides during the fiscal year. So what's the update? And how are the... How the whole... And I think we were supposed to launch different entries, nine threes along in this whole fiscal year.

16:17 So where where are we placed in respect to it? Yes. The pipeline is strong. The registrations are taking some time. In this current season, the launch of Nissan's new product is going to be the first. It will get followed by some of the 93 products or the mixtures by IAN. And OAT, I'm not sure that the oil product is going to be released in this season or the next season because we have filed it in the, I would say, the first application has gone to include it in schedule. And once it gets included in schedule because there is some further inquiry from the CIB about that. So once that inquiry gets cleared, then we are going to file the application.

17:06 So since the application is not yet filed, so I don't see immediate visibility of launching in this calendar year of 2027. So it might get delayed by a few months. Correct. And, sir, just, like, what is the quantum of sales taken for us during the quarter and how the inventory is shaping up... Shaping across the channels? In the channel, we have cleared the channel. The sales written are high, but not as high as last year because we were very, very particular this year in our placements, though the season is weak. But despite of that, I believe that the returns have come down and all the returns are taken care, like most of the returns have already come in this Q2.

17:52 The Q3 will be the normal returns and whatever sales number you are seeing, they are all net of the returns. And so just a last bit from my side with respect to exports, I think there has been a mention in the PPD as well, while the statement has been a low single digit revenue contributor to us. What is the strategy approach to reach to the global markets and how we will be cost competitive with respect to the Chinese manufacturers? We have two, three point strategy for the international business. So here, so far, what we were doing was more of the brand business. So we were doing the white labeling and dispatching our products to Middle East, ASEAN countries, CIS countries. That was the initial strategy.

18:38 Now we are focusing on technicals. When I say technical, these technicals have started moving moving to CIS. They are going to Europe. They are going to America. They are going to Asian countries. So we wish to improve our production of the technicals and sell them to the developed the developed part of the world. And at the same time, we are also pursuing the CDMO business and we look forward that we make the breakthroughs in that. So some small small breakthroughs have just started. So they are in the initial stages, but we'll target that in the next fiscal in a big way. So CDM moves, think we'll be doing it for the Japanese players or we have onboarded. We are in discussions with different clients. Majority Japanese, but we are also in discussion with some other companies.

19:28 Right. Right, sir. That's it from my side, sir, and wishing the whole team a very happy Diwali. Thanks a lot. Thanks. Thanks. Yes, I forgot that you have completed. Yes, happy Diwali to everyone who is participating. Thank you. Thank you very much. Thank you. The next question is from the line of Praneeth from SJ Investments. Please go ahead. Hi, sir. Thank you for the opportunity. So I think I understand for what's our plan or let's say volume growth we expect for the entire year. You already mentioned that you have de grown by a little bit. Do you think we'll continue to de growth for the full year? Or how is it going to be like? I understand your question, but very frankly, this is not a year of volume growth. We'll just end up doing the value growth because the volume has already suffered because of low range. Herbicide sales are low because of low range, granule sales are low. These are the general products which consume lot of volumes.

20:31 So the volume growth will be down this year. I'll not be able to make it, but I'm very, very sure that there will be value growth and we'll be able to make some improvements in H2 of this year. So value growth is primarily on the fact that raw material cost increase and that's going to be a pass through or would it be that you're selling more premium products? It will be both. It will be a combination of both. Although I'll not be able to give the breakup, but it will be a mixture. Got it, sir. And with regards to our CapEx of their plant, how is it going? And do we see any delays? Or do we expect to commercialize it as we thought? When do we think that is? The hedge we were expecting to clear within the first half of the year. Now we expect that we'll be completing the hedge in this Q3.

21:21 So partially the production has already come out and it will be in production fully with all the improvements wherever we found the gas because there were some gaps in electricity, there were some gaps in utility. So everything we have sorted out now and after the shutdown when the plant restarts in December, it will start with full swing. So there will be further level of some improvements which we are doing in the plant that will come in the next year, but that will not be a big expense. That will be a small expense. I can say it is a maintenance CapEx. So it is in line. Regarding the Sultanana plant, we have a target of starting the formulation business in April. There might be a delay of one month to May because the gap in force in the NCR. So it might impact or there may be a delay of one, two months actually.

22:09 But I think by May, we should start formulation. And in the next fiscal, we are also going to start the technical manufacturing. Our vision was to start by Diwali, even if it gets late, then December, January. So in next fiscal, we are going to start it fully. The Sotala first part of technical and the complete formulation unit is going to start in the next fiscal. So it's very much in line with what we had planned, I can say. Got it, sir. And coming to our team side, I noticed that in our presentation we have given the seven fifty sales and marketing around coordinator crop advisory team. Do we have any plans of expanding this and by... Like, what's the usual trend of expanding this team year over year? And is there any further growth this year than normal? Could you just give us insight into that?

22:56 If I look at if I look at my sales and marketing team, the onboard team is almost the highest in the industry or is it part with the best in the industry? So I don't need more people in insecticides India. And then the third party team, it keeps on varying. The minimum is seven fifty. The maximum goes up to thirteen fourteen hundred. So as the season is little weak this year. So in H2, I believe the number will be in the range of seven fifty only, the third party people. But, yes, we have established Caros also, and we are taking Caros brand to the market. So in Caros, there will be another team of about 150 people. About 70, 80 people are enrolled and a similar number out of role on third party roles. Got it. So when you mentioned third party, the fact that we hire them for the only time being at that point of time and they're not on a payroll for the rest of the year? It's not necessary. There are some people who continue for a little longer times also, but they are on junior level. So we don't keep them on role till they develop a certain skill and they are fit for entering into the company. I mean to say they have to confirm certain deliveries.

24:03 They have to be trained in the market once a person becomes capable of being joined in the company, then only we give him the appointment in the company. Got it, sir. And one question I have with regards to our distributor management system or retailer system. Just wanted to understand, are we able to track all the secondary sales? So how does it work? Do we have any systems in place? Or do we have plan on having more systems in place? We have got the DMS, but this tracking takes place via informal system, which is run by the marketing team for all the important products, which where there is and where there is a feeling that we have to... Which are seasonal in nature, where where the places where we have the placements, we try to keep a track. So the entire marketing team activities to ensure that whatever goes to the market, it gets diluted.

24:56 So we have a QR system because QR system when it is... Like, once I supply to a distributor, distributor will download that, distributor download, then the retailer, then the farmer, but the success rate is 15, 20%, not more than that. Then we have a distributor DMS platform also in SFDC in IN, which is fully operational. But again, I don't give the full knowledge about the inventories in the trade. So it is an informal system. In Cairo also, I have opened a system called Beetroot, which will be fully operational from after Diwali festival. They have been doing trial entries since last two months. But again, the market visibility 100% by system will not be there actually, it will be partial.

25:46 Got it, sir. And we are at the higher end of the visibility that we can achieve because of the system or is there some more scope to go here? Yeah. We have to make the continuous improvements in the system, actually. So if my QR... So next year, I might be planning some schemes for the farmer and the retailer so that the participation increases. So if I'm able to increase that participation to 60%, 70% level, the visibility will be more. In the time I get 15%, 20% visibility, it is just nothing. It is just a market information or just a market idea or I can call it an informal idea which I get. The marketing team generally, they will keep our track because they are responsible for liquidating the product in the market. So they keep on discussing this in every week, weekly meeting. So I get that idea because I do my monthly meeting and apart from the monthly meeting, there's a fortnightly meeting also.

26:41 So I keep on getting that idea every, I would say, every fortnight. Got it. So basically, we are putting more effort and we'll launch schemes next year, we'll get more visibility to improve the system, Yes. Got it, sir. And with regards to exports, I was just wondering in terms of the potential because anywhere domestic market has not performed well. I understand superalina exists everywhere. Just trying to understand, is there a possibility that we can scale exports when especially domestic market is a little weak? We are working on that. International markets are also not very strong. The impact of aluminum is across the world. But still we are seeing a good opportunity since we have registered more than 10 technicals of ours. And in certain countries we have made more applications. So we are working on about 15 AIs and it is a big range in that way. So we are trying to establish ourselves IL as a strong supplier for variety of technicals of herbicide, insecticides and fungicides.

27:40 So once we get that traction in the market, then of course we see our international business going up and we are trying to sign some contracts with certain companies as our answering the first question to begin our CDMO. So that starts then it takes us to the different level. So we are trying to do that, trying to sign various agreements and try to do a regular business with certain set of companies. So as it happens, we'll make an announcement. Sir, I don't mind me. I'm I'm a little confused with when you mentioned the CDMA business. Could you explain what do you mean by it? Which business are you talking about? And what are the exact opportunities here, like, terms of sales and other things? Okay. So when I say CDMO, it means that our business, which is a contracted business, where a company tries to take the molecule from us on exclusive basis or semi exclusive basis.

28:34 Generally, all the companies see China as a key supplier to them, but they are trying to develop one parallel supplier along with China. So some companies are trying to develop Indian partners because India is one of the strong company to the country to manufacture these products. So some of the companies might be working in India with one partner, they take us as the second partner. Some companies can have exclusive arrangements with us. And then since our products are registered products and we have to register them in their countries, so it's a, I would say, a product process which is little difficult. So you have to generate more data. You have to qualify that country's position, then the biofecacies to be registered in that country. After the registration formalities are complete, then there is a chance that you start that type of business.

29:28 So we are trying to build up those businesses with certain companies, which will strengthen our international business. And R and D is taken care of in this particular business, correct sir? Mostly, yes. Sometimes we get the paper technology. We have to develop that. We have to announce it. So yes, R and D has to be taken care of us generally. Got it, sir. And right now, you mentioned that for technical areas, we're planning on signing and exporting. But what about formulations? Do we have any plans of exporting that also? Yes. Yes. We are exporting a lot of formulations. When I said by white labeling, we are making small packs, small to big packs and supplying them to various countries. That is the key business. So at the moment, we are working in more than 25 countries where we are supplying our branded products. So now branded means white labeling.

30:20 We are doing the white labeling for the our customers and we are doing it, giving that to them. Got it. So almost the 5% contribution is coming to formulation and technicals is expected to be... Majority formulation, technicals have started, but technicals didn't have the major share in the past. But in future, I see the growth coming from technicals. Got it, sir. So right now, how many molecules do we have on hand and how many are we planning on adding for the year? We have over 35 different formulations which are registered in many countries. And if I talk about technicals, think there are about 12 for which we have already filed for various registrations in various countries and many of them have already refilled the registration and there are three more about we are working on 15 at the moment in totality technicals.

31:09 And how many have in overall portfolio including a domestic apart from all registrations we are doing? So how many tickets do we have on now? In domestic markets, we have more than 25. So 28. Yeah. 28. Rather 28. Got it, sir. And most of this technical that have consumed within ourselves or do we also do some transactions with other players also? We do b to b business also. About 400 crore plus business comes from b to b sales. Got it, sir. And so in terms of portfolio, how many will we get to in the next year or two? It is overall the 28, where do you think the number will be at in next year and the year after? Every year two, three codes get added actually and sometimes the older codes get deleted also. So our major focus is to improve the efficiency because if I need to export, then export has a typical requirement of higher AI and lower impurities.

32:04 So we have to work on that. And at the same time, we have to also work on the quality and the yield of the product. So we are working on that because we have to develop the world class products and supply it to the international companies at competitive prices. So these are the two big challenges which we are facing and we are working on our improvements in these directions. Got it, sir. And last question with regards to our margins. I understand that a factor is going to be mostly of demand like the revenues. I'm just trying to understand what non demand pull activities are we doing to increase our margins today? The first activity is like we are trying to improve the product portfolio. So we are trying to sell more of the premium products.

32:51 So when I'm selling the premium products, definitely it has a positive impact on the margins. So continuous focus is to drive the engines because these the engines. The focus strategy, which has come in a few years back is a very strong strategy and our entire focus is to build up the volumes of the Focus Marathoner and Marathoner products and the gold products we are supplying just for the market demand because they are popular. They don't need any sales pressure, no sales volume and the retailer needs it for his counter. So we don't push any of those products. So that is a very clear strategy. We are going to follow a few more years also because we are working on more than 30 technologies at the moment. When I say 30 technologies, I see about 30 formulations, all patented formulations coming to the market in next two to three years of time from my end.

33:44 Okay, sir. And so as a result of this, where do you think the gross margins will be at, sir? I understand we expanded in the last five years. We keep on improving. We are improving. Already we have come at 33 odd percent level. So for this year, we will try to feel it around these levels. And definitely, because these two years continuously has been very bad and when we have seen two bad years, our expectation from the next year is will be positive. So if it comes positive, definitely it will have a very, very positive impact on our performance. So we'll keep on improving. The target will be to match the best in the industry, but that improvement is going to take step by step. So can we expect like 1% gross margin growth every year? On an average, yes. There may be certain years where we jump and have the 3% growth. There may be certain years where it can win pointers. So very difficult to comment because a lot of factors impact the business in totality, but we are trying to improve our efficiencies. We are trying to control our working capital cycles.

34:48 So these things are also going to help in showing a better performance for our company. Understood, sir. Guess, Last question regards to returns. Just how are returns at this point of time because we had high returns in the last few quarters. So how is it now? And do we foresee more returns going for next two quarters? I don't want to comment too much on this because already the numbers are shared for the Q2 and also for H1. And Q3, Q4, I think it should be normal. When I say normal, I'll not deteriorate, but at the same time, whatever loss has happened in H1, the visibility is there's no clear visibility that I'll be able to make it up. So we have lost a few crores in PAT margins in Q2 and a little more than that in Q1.

35:38 So how much recovery I'll be able to make out of it is not visible at the moment. But I can say that the Q2 sorry, H2 is also going to be positive, and I'll make a recovery. Got it, sir. Understood. That's it from my side. Thank you. Thank you. The next question is from the line of Santosh Chetty from DD Capital. Please go ahead. Thank you for the opportunity. So like my first question is the company has indicated a strong pipeline for like a product launch over the next two years. So how many of these products are expected to be launched during the remainder of 05/27? And what could be their potential revenue contribution? In the current fiscal, there are no further visible launches. There can be one or two odd launches.

36:29 So we are not targeting any big product into this fiscal. But next next fiscal, three to five launches can be... Are visible. But, yes, my... Lot of registrations are in process. As I was telling you, there are 30 technologies on which we are working. So all these 30 technologies are going to come in next two to three years of time. So we'll have lot number of products coming in, and that is something which compelled me to open Kairos because I was having so many technologies. I thought how will I handle so many technologies in one company, why not to establish a parallel brand so that we can make use of these best technologies when they come. So I might have to divide between the two companies. There are so many things which are in pipeline.

37:14 So I can just assure you that there is a very strong pipeline. I'll just inform you one more thing that I'm going to launch one more product with Nissan and that will be a new mode of action, herbicide, a major requirement in India. Let's see how much numbers we get from it. But yes, and whatever launches have happened in this year like Spinoase, Granubia in particular, it's again a new technology which has come in new way. The response has been lukewarm in the because of low rains, but I expect that we'll make some recovery in H2 in the Ravi crop. And then the next year, our expectation will be a little bigger than what we have done in this year. That's great. So like another just last question, what is the company's current annual investment in R and D? And like how is this expected to evolve? Like are we increasingly focusing on developing the proprietary molecules and formulations or rather than, like, just relying primarily on in licensing arrangement?

38:17 No. We believe in innovation and r and d, and I believe that thinking new, working new has been my strategy. Today, IEL runs four different r and d center with different themes. The expenses are lower because all these r and d centers, most of these are in my plants. And one r and d center, which is a new product discovery r and d center is in joint venture with the Japanese company. Here the Japanese company invest 80% and our investment is just 20% of this R and D center for new discovery. So the expense looks a little lower. And if I talk about the reverse engineering, then we are investing in reverse engineering and we have two R and D centers in Chopanki and also in the Gujarat.

39:05 So, Panchi R and D center is NABL and GLP. The Gujarat R and D center is also NABL. Now, if I talk about the formulation, for the formulation also, I'm doing some activities in Japan, but the majority of this R and D is going to Gujarat these days and we are doing the formulation R and D in Gujarat. Along with this, we also have a team of over one dozen doctors who conduct the trials in the field for all these products, all these technologies which we are developing, that expense is being booked in the marketing department, not in the R and D department, but that is also one expense which are we are incurring. If you see in our balance sheet, generally, the amount going to the R and D, you will see about 12 crores. But there is no major advantage if I show... Try to show 20 crores or 30 crores because there is no special tax exemption.

39:58 And I believe that r and d is to perform and not to show. So we believe in performance with lower expenses. We wish to do more r and d. So the total number of strength which was involved in r and d is more than 100 at INSECTICID and there are about similar number of scientists in OIL which is a JV with IL. So as such there are about 200 people who are involved directly and indirectly into the R and D. But yes, the expenses booked on R and D is much lesser than what we are exactly spending on that, I can say. Thank you. The next question is from the line of Yash from Grid Securities. Please go ahead.

40:45 Hello, sir. Hope I'm audible. Hello? Yes, yes. So I've got a few set of questions. So like firstly, with the company strengthening its technical manufacturing capability, So, like, how are we positioning ourselves in the global b to b and technical exports market? And also, are we seeing any opportunities for long term supply agreements with international customers? Yes. We started our international business with the brand business and doing the white labeling. Now we are slowly getting the traction in the technical market. We have got various registrations across the world. We are getting registration in Americas, Europe and also ASEAN, so CIS. So the expectation is quite high that we'll be increasing our business in the technical supplies.

41:32 At the same time, we are also working for the long term supplier in form of CDMO agreements. So we have signed some initial agreements. We are trying to develop these. So there are various companies across the world who are working with us. And once these starts, we'll make the announcement. So the commercialization either has happened slowly because we have supplied one one container that does not mean. So once we sign the long term agreements and the business starts in a big way, then yes, we'll announce that CDMO. So the development of and raised plant is getting... That is developing in the direction so that we qualify for the CDMO for these companies.

42:18 These were the. Understood. Understood, sir. And also, like, could you please elaborate, like, on the progress of the international collaborations with partners such as Nissan Chemicals, Forteva, and OTEGRIO? And are there I'll one more. Yeah. Yeah. I'll go one by one. So there are three only available in the public release. So I'll talk for all three. And then the fourth one is Momentum, which has been our partner for one product for quite some time. So I'll start with Nissan. Nissan was the first collaboration in the lot. It happened in 2013 and they offered us two products. From two, the number of ports we are handling today are seven and we are going to handle their eighth product very soon and they are one of our large partners and they are portfolio contributes more than 30% or 35% of my total brand sales.

43:09 So Nissan is a very important partner of us. They are supporting us in bringing the new technologies to India and now they are also partnering with us to develop the mixtures and extend the life of the products. So we are initially used to do these trade process with them. Now we are also developing mixtures with them and launching into the Indian market. Talking about OAT, with OAT also we established in 2030. We were lucky to have two Japanese company in the same year. We've made a JV with them and for discovery of new generation molecules and it is working very successfully. Apart from this, they gave offered us one product called Chevron to launch in the market a few years back. And this year, it's a PGR product. So this year, we are going to double the sales of this product.

43:57 So very good success received in the market. Product is doing well. And one more good news that we have made an application to include the new product which is developed by JBS, a new mode of action product. The first discovery of the country to include in schedule of insecticide that and once it gets included, we'll make an application for this new discovery molecule. Got it. Got it, sir. And just last question. So on the international business, so like how are we progressing across Latin America, Europe and Asia Pacific regions? Along with that, what is the current export revenue contribution and your long term targets for exports?

44:46 Okay. Export is very important business from India. The market size is bigger than the domestic market. Our presence is little low. Our contribution from international business is about 5%, which is very, very low in comparison to many of our peers. So we have made a note of it, and we are working to have more registrations of our products in the international markets. So, us we have backed certain registrations, market is competitive and their currency has got a very bad hit in the recent past. So, the demand is long credit, non LC backed business. We are working on that with certain strong companies.

45:32 We are working in Europe. We are working in Asian countries also. We have signed various agreements with various companies who are registering our products in different parts of the world. So we see the business happening. And I believe that once we start these technical business, the growth will be visible actually. So we have good growth targets from international business. I wish to grow at a CAGR of not less than 40, 50% because my base is very small. So let's see how the things progress, but I can say that five years down the line, I see my business as INR500 crores from international markets, which will include CDMO, the new product supplies and our regular export business to the different parts of the world.

46:21 Got it. Got it. Got it, sir. Yes. Thank you so much. That's helpful. Thank you. Thank you. The next question is from the line of Rajeev Jain from RK Investments. Please go ahead. Hello. Am I audible? Yes. Yes. Yes. Thank you for the opportunity, sir. So I just have a couple of questions. So firstly, could you elaborate on the progress of the OAT molecule discovery program? What is the expected timeline for development regulatory approvals and maybe potential commercialization? Our target was to launch the product in 2027. We have made an application to include the product in the first product in schedule of the insecticide act.

47:08 We are expecting that clearance in a few months down the line. And once I receive that clearance, I'll immediately file for an application. My IUPAC registration is pending. Once that comes, we'll expedite the process. So it might take one year from here. So I'm not saying that I get the registration by December because I see a delay of few months. Next fiscal, there is a chance to hit the first product. And once the first product is, we will start with the second because we have the availability of at least three products from this JV. So we have to start the data generation for the other products also once the first product starts. Understood, sir. Understood. And how is Cairo's research progressing as a separate growth platform?

47:54 With over 40 products commercialized, what are the revenue contributions and profitability levels currently? And what is the roadmap to scale this business, if you could throw some light on that? Yes. So very important question because Kairos is going to be our engine of growth. And we again see a good growth coming from Kairos in particular. I see the business growing at a good CAGR not less than 50%. In the next fiscal, it is going to be even more. If I get 100% CAGR, it will be wrong. So we are establishing our network across country. There are more than 55 products which have already hit the market and there will be a few more. So I can say in this year, we have about 60 products in the market.

48:43 There are more than 150 people who have joined on third party role and on the main company role in totality. The network is already established about 800,000 distributors are already appointed in the North East and Western corners of the country. In Southern markets, we are going to hit shortly. And in H2 of this year, we are going to complete our network in the Southern markets also for the all India market network will be opened in this fiscal itself. So which means that there should be a good growth from Cairo. So this year we see a total business of about 125 crores brand business in totality that my company might close around INR 200 crores in a stand alone results.

49:30 And next year, I see the company going doubling its brand business. Understood, sir. Understood. And sir, lastly, premium products currently contribute a significant share of the B2C portfolio. So what is the target contribution from Maharashtra and focus Maharashtra products over the next two, three years? And how will this impact overall margins? This is a strategy which was formed a few years back when the premium products were contributing 50%. So we have already reached in the range of 60 plus. The target is to touch 70% and then we will again revise our target once we achieve that target.

50:16 So yes, it will keep on improvising the margins of the company. So we'll grow step by step. In our previous question, I replied, it can be 1% in certain years, certain years it might be lesser. In certain years, it can be more than one percent option. So we keep on happening year on year, but I'm very, very confident that we'll not only grow our top line, we'll grow the bottom line margins also in terms of percentage and in terms of actual numbers. Understood, sir. Understood. That's all from my side. Thank you for answering my question. You. Thank you. A reminder to all the participants, if you wish to ask a question, you may press star and one now. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

51:12 As we wrap up Q2, I would like to acknowledge the efforts, commitment and collaboration of everyone involved. While we celebrate the progress and the achievements made during the quarter, we also recognize the opportunities where we can improve and do better. The learnings from Q2 give us the strong foundation to move forward with greater focus, accountability and determination. Let's carry the momentum into Q3, stay aligned on our priorities and continue working together towards stronger results. Thank you everyone for your continued dedication and contribution. Let's make Q3 not just about meeting exceptions, but about exceeding them.

52:03 Again, I wish you a very happy and prosperous journey. Thank you very much. Thank you. On behalf of Insecticides India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.