Q4FY23:
• The growth in the numbers is essentially driven by animal nutrition and bio-processing segment. Pharma API in domestic markets and nutrition in international markets primarily supported the numbers in human nutrition
• There is softness in the probiotics business and demand remains subdued in the domestic as well as in the international markets.
• Animal nutrition (15% of sales): This segment has significantly and continuously improved during consecutive quarters. It grew by 36% on year-on-year basis and 17% on a sequential basis and 27% during financial year '23.
• US Business and Ebitda margins: Lower international sales, in particular in the U.S. market, affected overall margin during FY '23. US business in terms of dollars is down by 15%. (9% in rupee terms).
Margins will come back once the US business starts growing or at least comes back on par. What is happening right now is that all the fixed expenses are on the same side. And when there is the de-growth of 15% kind of remaining US because of the inflation, that just impacts on the margins.
US business recessionary trend will continue for another one or two quarters. And then there should be improvement.
Reasons for improvement – Have launched few products in the last quarter, in the last year and now are in the mode of doing some long-term agreements, but it will take another one or two quarters to really convert.
• MISC NOS.:
o B2C segment, the revenue for FY '23 to FY '22 has gone down from ₹412 million to ₹383 million.
o Top 10 customers contributed about 24% of sales as compared to 28% during the corresponding financial year FY '22.
o Top product contributed about 24% of sales.
o Pharma contributed 27% of sales as compared to 23% in FY '22
o R&D expenditure - 6% in FY '23 as compared to 5% during FY '22.
Going forward, the numbers are going to be more or less same. Probably, we might spend 1% extra. We are developing our new R&D centres, right, as we mentioned last two, three times. So that is still under progress. Probably, the new building will be finished by next year, maybe April May of next year, so yes. But the number will remain the same range in that time.
• ON BECOMING ALTERNATIVE SUPPLIER TO NOVOZYMES: Whatever is happening in Ukraine or other areas, people are looking for other alternatives. There is only one supplier in the global area for most of the products like Novozymes and people were happy in the earlier stage. Now, Novozymes has suddenly increased their prices 10%, 20% in some of the products. Because the energy cost in Europe has gone up. And this has pushed people to look for other alternatives, the sustainability. And we see a lot of traction which is coming out during the last quarter as well as this quarter is some of the people started looking for the alternative supplier. And they want to go with the second supplier as well and this is where We feature and this is where we can grab some of the market share Novozymes, the area where we are competing in.
• 15% sales Growth guidance for FY23-24. Primarily in the second half of the year.
• WELLFA (B2C Brand) launched in India
• India sales growing: So Indian geography, we had grown by 14% on a year-on-year basis, roughly. And all of the segments have contributed. Yes, I think all our segments have contributed. The major contribution is coming from the human side as well as food business and bio-processing business areas.
• Two new products launched: Launched two new products, which are expected to get executed in the second half of this year. Segments are in in sugar management and weight loss area. And these two products, sugar management, weight loss products – we see a lot of traction in this market. We are getting some long-term orders also and we see these new launch products should take us back on to the track that we want.
• US Sales guidance U.S. market should be 9% to 10% of the growth this year’s number with last year’s number.
• FIXED COST VS VARIABLE COST: So I think one question that was regarding our fixed expenses and variable expenses, which we grow, say, for 15%, then how our expenses are going to go up? So I mean, the fixed expenses are generally about 45% to 50% and variables are between 50% to 55%. So as we grow our top line, the variable expenses could be in that same kind of increase in expenses. But yes, the fixed expenses will not at all grow.
• AMERICA VS EUROPE DIFFERENCE: America is like more focused on the nutraceutical area and it’s more on the human Nutrition area. While in Europe, we don’t sell much in the human nutraceutical area. Our major sales are coming from the food area. And as I mentioned, about the gas prices and other things and the cost impact that these people are facing and that is where they started looking for other alternatives. And that is where growth started coming in.
• So are we looking at selling food-related products in the American market? Or are we going to stick to the same product profile that we currently have? Mukund Kabra: We started working on it. We started building the team in the U.S. market at this point of time. But it will take some more time.
