Dhanuka Agritech Limited — Q3 FY26

Dhanuka Agritech Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=L_yP7RvSGLQ Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Q3 and 9 months FI26 post results conference call of Dhanuka Agrch Limited hosted by Antic Broking Limited. 0:13 13 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation 0:22 22 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star 10 0:29 29 seconds on your touchstone phone. I now hand the conference over to Mr. Rajut Aloy from Antique Stock Broking Limited. Thank you and over to you sir. 0:39 39 seconds Thank you. Uh good afternoon everyone. 0:41 41 seconds I'm pleased to host today's earning call of Dhanuka. We have the leadership team represented by Mr. MK Danuka chairman, Mr. Rahul Dhanuka, managing director, 0:49 49 seconds Mr. Har Danuka, executive director and Mr. Vikans CFO on the call. Without any delay, I would like to invite Mr. Dhanuka to start with opening comments. 0:58 58 seconds Post which we will open the floor for Q&A. Thank you and over to you sir. 1:10 1 minute, 10 seconds Uh thank you Ru. Good afternoon ladies and gentlemen. I am MK Danuka, chairman 1:17 1 minute, 17 seconds of Dhanuka Agit Limited. welcome you all to the Q3 FY26 earning call. I have with 1:25 1 minute, 25 seconds me Mr. Rahul Dhanuka, managing director, Mr. Hash Dhanuka, executive director and 1:32 1 minute, 32 seconds Mr. BK Bansal, CFO of the company. As you are aware, Dhanuka Agit is a leading 1:39 1 minute, 39 seconds Indian agrochemical company. Dhanuka is working with the vision of trans through agriculture. We have a pan India 1:48 1 minute, 48 seconds presence in all major states to reach out to more than 10 million farmers with 1:54 1 minute, 54 seconds our products and services. Dhanuka's key focus has been on introduction of novel 2:01 2 minutes, 1 second chemistries and extensive product development distinguishing us from the rest of the industry. 2:09 2 minutes, 9 seconds Over last couple of years, we have set up two research and technology centers 2:16 2 minutes, 16 seconds to enhance our focus on innovation and research. One of the center is focused 2:23 2 minutes, 23 seconds on applied chemistry and working for establishment of new product and new formulation development. The second 2:32 2 minutes, 32 seconds laboratory is focused on innovation in chemical synthesis for generic and late stage patented product. 2:42 2 minutes, 42 seconds To support our investment in innovation, we have significantly enhanced our regulatory team to speed up our Indian 2:52 2 minutes, 52 seconds international registration initiatives providing us faster access to international markets and quicker 3:01 3 minutes, 1 second introduction of new products. Dhanuka has international collaboration with 10 leading global agrochemical companies 3:10 3 minutes, 10 seconds from Japan, US and Europe which helps us to introduce the latest technology in 3:17 3 minutes, 17 seconds India. With four manufacturing units and 41 warehouses across India, we capture 3:24 3 minutes, 24 seconds around 6,500 distributors and 80,000 retailers. Tanuka has a strong sales and 3:31 3 minutes, 31 seconds marketing team to promote and develop new products. 3:38 3 minutes, 38 seconds During this quarter, agrochemical demand remained weak due to stressed demand 3:45 3 minutes, 45 seconds drivers, weather issues, low crop prices leading to industry-wide volume decline. 3:53 3 minutes, 53 seconds Farmer interests reduced in making investments in crop production chemicals due to lower crop prices. South and West 4:02 4 minutes, 2 seconds India saw sharp demand declines while East and North remained stable. Indian 4:09 4 minutes, 9 seconds farmers delayed purchases due to significantly extended rainfall and weaker commodity realizations. 4:19 4 minutes, 19 seconds lower farm incomes, reduce the spending on crop production products impacting domestic sales. Further, I'm happy to 4:28 4 minutes, 28 seconds share that we have commercialized the second product from the hay plant in Q3 FY26. 4:37 4 minutes, 37 seconds We are working for making the h operations aita positive in FY27 and try to reach 80% capacity 4:46 4 minutes, 46 seconds utilization of the existing plant. Also we are in the final stages of working 4:52 4 minutes, 52 seconds for the business plan for MP2 and will be concluding the same within this year. 5:00 5 minutes Now moving on to the financial performance for the last quarter. Our revenue from operations stood at rupees 5:08 5 minutes, 8 seconds 409.92 crores in Q3 FY2526 versus rupees 445.27 crores in Q3 FY2425. 5:20 5 minutes, 20 seconds Abit stood at 58.6 crores in Q3 FY2526 versus rupees 75.56 cr in Q3 FY 2425. 5:35 5 minutes, 35 seconds Profit after tax stood at rupees 40 crores in Q3 FY2526 5:41 5 minutes, 41 seconds versus rupees 55.04 crores in Q3 of FY 2425. 5:48 5 minutes, 48 seconds FY 2526 with two straight negative quarters has been a blemish on an otherwise decent performance from 5:57 5 minutes, 57 seconds Dhanuka over the years. I can assure the stakeholders that the bad phase is over 6:04 6 minutes, 4 seconds now and now in future it is going to be good only. I would like to assure our 6:11 6 minutes, 11 seconds shareholders and our stakeholders that our strategy is well laid out with continuous extension in rural market 6:20 6 minutes, 20 seconds penetration, new product introduction, technical manufacturing and international market expansion. We are 6:28 6 minutes, 28 seconds confident on delivering our long-term objective of achieving doubledigit CAGR 6:36 6 minutes, 36 seconds zone wise percentage share turnover for Q3 FY 2526 North India 25% 6:45 6 minutes, 45 seconds East India 11% West India 30% and South India 34%. 6:53 6 minutes, 53 seconds Product category wise percentage share of turnover for Q3 FY 2526 6:59 6 minutes, 59 seconds insecticides 28% fungicides 21% herbicides 37% others 14%. 7:11 7 minutes, 11 seconds Dhanuka considered itself responsible towards securing the farmers welfare and preserving food security of the nation. 7:21 7 minutes, 21 seconds We continue to strengthen our association with the agriculture universities kishan 7:28 7 minutes, 28 seconds and other critical institutions to impart knowledge and latest technology to the farmers. Thank you very much for 7:36 7 minutes, 36 seconds your kind attention and now we would like to open the forum to take the question. Thank you. 7:45 7 minutes, 45 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 7:53 7 minutes, 53 seconds star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 8:02 8 minutes, 2 seconds requested to use handsets while asking a question. Ladies and gentlemen will wait for a moment while the question cue assembles. 8:11 8 minutes, 11 seconds The first question is from the line of Prashant Biani from ARA security. Please go ahead. Thank you for the opportunity. 8:19 8 minutes, 19 seconds Uh sir, how is the current demand scenario for agrochemicals? While we understand Q3 was weak but uh how is Q4 8:28 8 minutes, 28 seconds doing and what is your expectation from Kar season? Right. So Q4 has really started well. 8:35 8 minutes, 35 seconds January has done well for us. South Indian patty, East India patty is looking really good. wheat crop has been good and the relevant consumption of 8:44 8 minutes, 44 seconds wheat herbicide has happened uh extending from uh late Q3 to early Q4. 8:51 8 minutes, 51 seconds So all that is looking bright. We are looking into a good harvest of Rabi and then getting into a good karif. Right 8:59 8 minutes, 59 seconds now it will be too early to uh kind of uh indicate anything for the upcoming karif. We would still be waiting for 9:07 9 minutes, 7 seconds weather forecast coming in late March and early April before we really firm up our karif plans. 9:15 9 minutes, 15 seconds Right. U and sa out of the total topline how much is the contribution from technical sales and uh revenue from the 9:24 9 minutes, 24 seconds molecules of buyer that we had bought both in Q3 as well as 9 months. 9:32 9 minutes, 32 seconds You see revenue from buyer moleur in the balance sheet of dhanoga is around 25 to 27 cr. 9:46 9 minutes, 46 seconds Right? Right. 9:47 9 minutes, 47 seconds And uh with regard to second part of your question with regard to uh technical 9:56 9 minutes, 56 seconds is is is around 50 CR. 10:02 10 minutes, 2 seconds Sir, I presume this will be for 9 months. For the quarter, how much is it? 10:08 10 minutes, 8 seconds See, technical sale is not much in quarter three is is hardly around uh 3 4 10:15 10 minutes, 15 seconds cr and uh with regard to this uh uh buyer product this was major in Q3. 10:26 10 minutes, 26 seconds Yeah. 10:28 10 minutes, 28 seconds uh uh this 25 to 27 cr is all top line or some of it is net economic benefit as 10:35 10 minutes, 35 seconds well. No, it is the top line net benefit is separate. Okay. 10:42 10 minutes, 42 seconds Which is around 6 CR in quarter 3 and overall is around 19.5 CR in 9 months. 10:50 10 minutes, 50 seconds And from here on uh the net economic benefit will continue to flow or it will stop 10:57 10 minutes, 57 seconds money it will definitely stop the moment we'll take the entire control the net economic benefit will definitely will discontinue. So in the from the next 11:06 11 minutes, 6 seconds financial year which is FY27 uh some of the exports will start appearing in our balance sheet and by the end of the financial year I think 11:14 11 minutes, 14 seconds we'll be controlling the overall uh revenue which which means uh in the year 11:22 11 minutes, 22 seconds FY28 there should not be any net revenue benefit but yes in next financial year net economic benefit would be there but 11:30 11 minutes, 30 seconds significantly lower than the current year Right. So sir, next year what could be 11:37 11 minutes, 37 seconds the contribution from technicals as well as these two molecules of buyers in all balance sheet. 11:48 11 minutes, 48 seconds Yes. 11:50 11 minutes, 50 seconds So you see that that is under process we see the team is working with regard to the 11:56 11 minutes, 56 seconds export sale. So it is little difficult to estimate. I think the progress is on. 12:02 12 minutes, 2 seconds we will be able to assess in a better way by the end of the March. 12:07 12 minutes, 7 seconds Even for technical technical sale would be sort of uh in line with this current year maybe 10 20% 12:16 12 minutes, 16 seconds growth okay and sir how much is the current cash on books current cash on books 12:25 12 minutes, 25 seconds cash cash and liquid investment is is more than 250 cr 12:33 12 minutes, 33 seconds okay sir just lastly uh how much was the sale from biologicals in FI25 and how 12:40 12 minutes, 40 seconds much was it for 9 months? 26 biological almost negligible in 26 and in 25 it was less than 2 cr. 12:54 12 minutes, 54 seconds Okay. Okay sir. Thank you so much for your time. Thank you. 13:01 13 minutes, 1 second Thank you. The next question is from the line of Sarab Jen from HSBC. Please go ahead. 13:09 13 minutes, 9 seconds Uh thank you for the opportunity. Uh will it be possible to kind of indicate or quantify what could be the impact negative impact of sales returns for you 13:18 13 minutes, 18 seconds in this quarter and same number say last year. 13:22 13 minutes, 22 seconds You see sales return this year is almost equal to the last year but slightly lower than by 2 cr this in Q3 as compared to the Q3 of the previous year. 13:34 13 minutes, 34 seconds Okay. So sales returns have not really kind of increased for you in this quarter and in this quarter. Yes, that's right. 13:41 13 minutes, 41 seconds Okay, understood. And uh correct me uh biologic you're saying there is no contribution for you in this quarter. 13:48 13 minutes, 48 seconds I'm a little confused on the biologic side. I thought it contributes almost 9 to 10% of your revenue. 13:54 13 minutes, 54 seconds Biologicals? No. When is the category PGR category? Biological is bio stimulum or you are saying biological? 14:02 14 minutes, 2 seconds So I mean the products which are under you know regulatory challenges what is that contribution uh product under regulatory changes in this 14:10 14 minutes, 10 seconds category we were having a contribution of around 19% but this year the impact in our Q3 is around 15 cr and 9 month is 14:18 14 minutes, 18 seconds a impact of 49 cr on account of the IC for product buy sale basically go 14:25 14 minutes, 25 seconds okay so you lost 50 of sales on the 9 month basis because of these that's right that's Yeah. 14:33 14 minutes, 33 seconds And uh how much of it is normalized now and what should we expect on this side in the future on the regulatory issues? 14:42 14 minutes, 42 seconds So the regulatory framework is in place which is really good for the organized players like Dhanuka. So our products 14:50 14 minutes, 50 seconds are under testing and approval stage. We are quite hopeful that we'll be receiving our approvals by end of this quarter and we'll be up and running with 14:59 14 minutes, 59 seconds fresh set of biological offerings, bio stimulants offering in this new regulated regime in uh Q1 of next year. 15:09 15 minutes, 9 seconds But are you confident that you will be able to get speedy approvals so that kind of kicks off for you in the first quarter? I'm trying to get a sense how 15:17 15 minutes, 17 seconds much of business has already normalized and you know uh what can be the expectations for F27 on that side. 15:23 15 minutes, 23 seconds When you say how much of business has already normalized I don't get that but yes we are tracking our approvals and we are hopeful of getting out of our uh you 15:32 15 minutes, 32 seconds know at least three products approval in this quarter so that we can launch by Q1 ending. 15:40 15 minutes, 40 seconds Okay understood. So expecting that almost three out of four molecules you will be expecting it to normalize in first quarter onwards correct. 15:48 15 minutes, 48 seconds Yes. Oh understood. 15:51 15 minutes, 51 seconds Thanks. And uh also I wanted to you know seek your comments around the recent changes in the China policy when they 15:58 15 minutes, 58 seconds ending export reates on some of the technicals of the generic molecules. So what would be your view on that side? 16:06 16 minutes, 6 seconds you know does it make a you know problem for players like Danuka because some of our purchases are linked to China. How are you strategizing to kind of handle this this issue understood? 16:19 16 minutes, 19 seconds So uh you see this is China's internal approach. This will certainly increase the price of some of the commodities for 16:28 16 minutes, 28 seconds which uh export rebates have been reduced. Since it is an industry-wide phenomena, it will not significantly 16:35 16 minutes, 35 seconds impact either our sourcing or our uh competitive edge in the market. 16:44 16 minutes, 44 seconds I don't see any material impact on our uh sourcing out here. 16:51 16 minutes, 51 seconds Okay. So you would assume that industry will be able to pass on these highs in India because I thought becomes difficult and challenging to pass on the 16:59 16 minutes, 59 seconds high patches and if it happens it happens with a lag. 17:03 17 minutes, 3 seconds So I will not comment about the industry here at Dhanuka. We kind of significantly follow this practice of 17:11 17 minutes, 11 seconds passing on the increased cost as much as possible downstream. We have mostly done it almost all uh past years and quarters 17:19 17 minutes, 19 seconds and we are pretty hopeful we'll be able to do that. 17:24 17 minutes, 24 seconds Okay. Possible to also tell us what is the you know revenue exposure that you would be having which is linked to uh some of these products. 17:35 17 minutes, 35 seconds Uh actually uh most of these products uh gluosinate we are already buying from India. We are not sourcing from China. 17:43 17 minutes, 43 seconds glyphosate uh the due uh the export benefit was already removed uh in the past year. So uh there will be no impact 17:50 17 minutes, 50 seconds and the other products um are not confirmed which will have an impact. 17:59 17 minutes, 59 seconds Okay, sure. Thanks. I'll get back in the queue. 18:06 18 minutes, 6 seconds Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question is from 18:14 18 minutes, 14 seconds the line of Vijalai from Antic Stock Broking. Please go ahead. 18:20 18 minutes, 20 seconds Hi sir. Uh clarification in terms of when you said that they are uh they are the income from the Bay about 6 cr for 18:28 18 minutes, 28 seconds this this quarter. So this is mainly the royalty income that you have mentioned the 6 crores. 18:36 18 minutes, 36 seconds uh it is not royalty it is uh net economic benefit it's like royalty not the royalty actually 18:43 18 minutes, 43 seconds understood understood and the tech uh and the sales of the revenue that you have mentioned this year maybe for the 9 18:50 18 minutes, 50 seconds month 25 27 cr so this is uh like earlier you have indicated that the majority part of the revenue came from 18:57 18 minutes, 57 seconds the domestic market so is it still the domestic market contributing this revenue from the bare product 25 27 crores or some some part of this product 19:06 19 minutes, 6 seconds this revenue came from the outside of India. No, no, it is from India only. 19:11 19 minutes, 11 seconds Okay. And the recent transfer for the overseas market. So when you can expect that and how is the uh timelines that are moving? 19:22 19 minutes, 22 seconds Uh it is in process for various countries and uh many of the applications are in process. So in 27 uh 19:31 19 minutes, 31 seconds sorry in 26 uh we will see a lot of transfers happening and uh even without the registration transfer the sales will 19:39 19 minutes, 39 seconds begin once the distribution appointment uh gets completed and the sales moves to the distributors Dhanuka distributors. 19:48 19 minutes, 48 seconds Understood. So for the overseas business uh we can expect uh the transfer or the revenue under Dhanuka's book might happen from the Q1 or Q2 of 27 right? 20:01 20 minutes, 1 second Yeah Q1 surely understood and uh in terms of the guidance uh if I look at your 9month 20:09 20 minutes, 9 seconds numbers and like uh you have mentioned in the PPT that the the the like we have maintained the guidance what we have earlier communicated. So if you look at 20:18 20 minutes, 18 seconds in terms of run rate so our our margins in terms of evida is roughly around 18% as of 9 month and if I if I look at last 20:25 20 minutes, 25 seconds year Q4 number so there were one one uh one of impact of the of the uh of the of 20:33 20 minutes, 33 seconds the benefit that we have got from our Japanese or some some some partners. So, so despite that we are expecting that 20:41 20 minutes, 41 seconds our margins to be uh 100 100 bits decline from the last year level. So, how are you confident of making like 24 20:49 20 minutes, 49 seconds 25% control pera margin uh in in 4Q? 20:55 20 minutes, 55 seconds So you see we are very much confident in terms of the abit our abit will be negative in line with the 9 month in 9 21:03 21 minutes, 3 seconds month our a bit negative is by 113 basis point to in overall annual basis we are expecting the similar decline 100 to 110 basis point. 21:16 21 minutes, 16 seconds Understood. And so in terms of new product launches so far so how many product you have launched in in the in in in 9 month period? 9 month period we 21:25 21 minutes, 25 seconds launched one is dimar on malio and one is and one is border three 21:32 21 minutes, 32 seconds okay so three we have launched right okay sir okay thanks sir uh thanks for clarifying all the questions 21:43 21 minutes, 43 seconds thank you the next question is from the line of vir Kacharia from simple please go ahead 21:50 21 minutes, 50 seconds uh yeah hi sir uh just couple of questions first is on the bio is coming uh uh just to understand what is the key 21:59 21 minutes, 59 seconds uh you know season time for this particular product. So the reason I'm asking is if if for any reason uh you know there's a delay in approval 22:07 22 minutes, 7 seconds uh you know from the government for registration. So if in case it doesn't come by Q1 is there a still a 22:15 22 minutes, 15 seconds possibility we can meet the sales or you think a good part of the season will be lost. 22:21 22 minutes, 21 seconds The peak consumption time coincides with our peak business opportunity which almost starts by June end say early July and goes on through late November. 22:33 22 minutes, 33 seconds So mostly July to November is the peak consumption. Another round comes up in March with sugar cane. 22:41 22 minutes, 41 seconds Understood. Got it. And uh when you say buy similar the total number of products which you would have in the portfolio would be four as of today. 22:50 22 minutes, 50 seconds Yes. the the ones regulated in the regulated environment were uh four out of which three will be coming through 22:59 22 minutes, 59 seconds and one would you know which is of you know animal origin and all that. So that may not be coming through easily or not in near future. 23:08 23 minutes, 8 seconds So the three would be a larger part of the sales uh loss which we as the other three constituted more than 80% of our revenue. So that would be 23:17 23 minutes, 17 seconds well placed. In addition to that, you would recall we had already launched microisa three four years back and then 23:26 23 minutes, 26 seconds we introduced microisa super also couple of years back which is a good replacement of bio stimulants as far as 23:34 23 minutes, 34 seconds farmers crop growth opportunities concerned and uh Dhanuka's micro super brand has taken a good position in the 23:42 23 minutes, 42 seconds market filling up the vacuum created by absence of bio stimulants from Dhanuka's own portfolio and of the competition as well. 23:51 23 minutes, 51 seconds Understood. Uh the second uh question was sir if you can give a mix of uh in ter of Aida of B2B versus B2C. 24:02 24 minutes, 2 seconds You see B2B of course the AIA is significantly lower than B2C. 24:11 24 minutes, 11 seconds So for the quarter going by what will be the AITA for the B business? or uh can repeat your question. 24:20 24 minutes, 20 seconds So the quarter which has gone by uh what will be the beta for the the B2B business? 24:27 24 minutes, 27 seconds H you see a beta is still negative in Q3 it is around 4CR as against the 5CR as against last year 4CR. 24:38 24 minutes, 38 seconds Okay. So this question on DH I think last quarter we mentioned that we are commissioning uh second product uh you 24:46 24 minutes, 46 seconds know for supply to do I think Kazone for supply to domestic market and uh we also having a good utilization for the first 24:55 24 minutes, 55 seconds quarter but if I look at the revenue for the quarter you know for the day you know it's hardly for CR as against the 25:03 25 minutes, 3 seconds rendered we you know in the earlier quarters uh generally the environment is quite positive in terms of price and volume uh 25:12 25 minutes, 12 seconds both from export point of you know uh for freeb exports. So what you know what is the reason why the sales are lower for dhips? 25:24 25 minutes, 24 seconds So Q3 in any case is uh uh offseason for both of these products. So 25:31 25 minutes, 31 seconds Q3 we were expecting uh lower pills that is one. Uh second our uh defense conole 25:40 25 minutes, 40 seconds production uh got extended and uh uh went into November and December which we 25:47 25 minutes, 47 seconds were expecting to close in uh October and November. So that got uh delayed slightly but now it is completely online 25:55 25 minutes, 55 seconds and uh so starting uh Q4 defend revenues will start coming in uh as per the plan 26:05 26 minutes, 5 seconds with respect to benrine in any case it was offseason Q1 we have started on a good note for bifenthine technical sales from the 26:13 26 minutes, 13 seconds hij so we are expecting that to continue in the future as well. Okay. So both min products together going into next year 26:22 26 minutes, 22 seconds what kind of a you know sales utilization we're looking at and what you need to cap it for the MPPP2 plant. 26:31 26 minutes, 31 seconds Yeah next year FI27 we are looking at a capacity utilization of close to 80%. 26:36 26 minutes, 36 seconds For uh these two plus we'll be adding one more product in this plant that is IO. 26:42 26 minutes, 42 seconds uh so three products together uh we are looking at 80% capacity utilization and the MPP2 we are expecting a capex in the 26:50 26 minutes, 50 seconds range of 60 to 70 crores okay got it uh last question uh so if I 26:58 26 minutes, 58 seconds look at the B2C you know if I adjust for the sales addition from the Bayer uh products you know in the quarter which 27:06 27 minutes, 6 seconds has gone by then for the degrowth for us you know is even higher you know in uh B2C and if I look at the other players 27:15 27 minutes, 15 seconds in the industry we've not seen that kind of a deg growth so just trying to understand you know uh there is what is driving a low performance for us you 27:24 27 minutes, 24 seconds know any color you can give so uh one is of course the impact of the 27:32 27 minutes, 32 seconds bio stimulants in B2C segments which has hit us hard in Q2 and Q3 business opportunity then also last year we had 27:41 27 minutes, 41 seconds some really powerful NPI new product introduction for Chile segment. Chile has taken a major beating in uh this 27:49 27 minutes, 49 seconds season down south. So the consumption has been significantly low which is a very specialized segment where farmer 27:56 27 minutes, 56 seconds consumes only high value product and that high value consumption has been hit hard. Third is I think at Dhanuka we 28:03 28 minutes, 3 seconds really optimize the channel inventory significantly faster than the industry standards. So we do not allow our channel partners to carry forward the 28:12 28 minutes, 12 seconds inventory. We try and turn it around faster than what the industry averages would be. That could probably you know 28:20 28 minutes, 20 seconds but this is an external factor which I don't have a complete hang of be influencing how our sales get compared. 28:30 28 minutes, 30 seconds Understood. But in terms of the receivables or inventory would it be right to think that so if I look at March 2025 you know we ended the year 28:39 28 minutes, 39 seconds with around 230 240 kores of cash and if I look at December I think we based on the commentary we are still around 250 28:47 28 minutes, 47 seconds kores of cash. Uh so would it likely think that we're sitting on a sizable amount of inventory or receables compared to a normal period? 28:57 28 minutes, 57 seconds uh you see uh in terms of March we are having a loan to the banker through the 29:03 29 minutes, 3 seconds tune of 50 cr which is speed in the current current financial year right and 29:10 29 minutes, 10 seconds now the our data portion is improved as compared also last year December 29:17 29 minutes, 17 seconds inventory of course has increased because of the you see impact on the volumes because there are many molecules which are imported and we 29:26 29 minutes, 26 seconds We we have we sourced the inventory as per our sales plan but somehow that misfired. So because of which our 29:35 29 minutes, 35 seconds inventory of few imported molecules have increased significantly this year. 29:44 29 minutes, 44 seconds Sorry to interrupt you sir. You may please rejoin the queue for the next question. 29:50 29 minutes, 50 seconds The next question is from the line of Ketan Shabla from Affirma Capital. Please go ahead. 29:57 29 minutes, 57 seconds Thanks for the opportunity sir. If you look at our gross margins from FI23 to FI25, there was an expansion of 30:06 30 minutes, 6 seconds approximately 580 bips. You know, our margins went from 34.4% to 40.2. 30:14 30 minutes, 14 seconds And if you look at the backdrop, this was in environment when technical prices were benign due to over supply and 30:20 30 minutes, 20 seconds inventory issues. I uh uh in one of the earlier corn calls I believe you had referred that you were expecting 100 to 30:28 30 minutes, 28 seconds 150 pips of contraction in gross margins because we were expecting the prices to stabilize and then thereafter increase. 30:36 30 minutes, 36 seconds But if you look at the gross margin for uh the current period it's still at 40%. 30:41 30 minutes, 41 seconds So two questions for you. Firstly is the softness and technical raw material prices still there and how long do we expect the softness to continue? 30:52 30 minutes, 52 seconds And second question is once the cycle turns and prices stabilize and increase what is our expectation of the 30:59 30 minutes, 59 seconds sustainable gross margin that we can have. 31:03 31 minutes, 3 seconds So you see the one impact of the gross margin is on account of this year we received around the NEB of rupees 20 cr 31:12 31 minutes, 12 seconds 19.5 cr which has no basically cox entirely impacting the gross margin to the extent another is uh with regard to 31:21 31 minutes, 21 seconds the technical prices I think the softening is almost over now and going 31:28 31 minutes, 28 seconds forward I am of the opinion key 38% % gross margin are sustainable in long-term. 31:36 31 minutes, 36 seconds Okay. Saying that now you're seeing technical prices uh picking up and stabilizing and you 31:43 31 minutes, 43 seconds expect about 200 bips impact on your margins and sustainable should be more 38% gross margins as opposed to 40 odd 31:52 31 minutes, 52 seconds percent which have been there for the last uh year year and a half. 31:57 31 minutes, 57 seconds Yeah. 2% impact on account of not the raw material prices would it would be on account of the NAB 32:05 32 minutes, 5 seconds understood and what percent of our raw material is actually sourced from China 32:15 32 minutes, 15 seconds uh direct procurement would be in the range of 10 to 15%. 32:19 32 minutes, 19 seconds And if you include indirect as well then how much would that be? 32:25 32 minutes, 25 seconds uh indirect is difficult to say because we buy a a lot of material from Indian companies who are uh both manufacturers 32:33 32 minutes, 33 seconds and importers. So it is difficult to say uh what would be um the indirect procurement from China. 32:44 32 minutes, 44 seconds Got it. Thank you sir. I'll come back in the question. 32:51 32 minutes, 51 seconds Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is 32:58 32 minutes, 58 seconds from the line of Par Mhata from Vlam Capital. Please go ahead. 33:03 33 minutes, 3 seconds Yeah. Hi sir, thank you for taking my question. 33:07 33 minutes, 7 seconds Just wanted to know uh for the quarter what would have been the contribution from the volume and price. 33:15 33 minutes, 15 seconds Uh you see in this quadra is almost flat similar value and volume are almost similar. 33:25 33 minutes, 25 seconds Okay. Okay. So equal contribution from volume and value right? Uh volume and price. Yeah that's right. 33:33 33 minutes, 33 seconds Understood. And uh just wanted to ask uh in the previous quarter uh there was uh you' given a uh guidance cut uh uh and 33:42 33 minutes, 42 seconds guided the puya to be ending uh with a flattish growth. So would uh would this still be uh know achievable or do we 33:51 33 minutes, 51 seconds think there could be some growth in Q4 giving given that Q4 has a good start? 33:57 33 minutes, 57 seconds Yeah, in in in case of Q4 just definitely there would be a growth but on yearly basis we are up and should be flattest. 34:08 34 minutes, 8 seconds Okay, got it. And just one on the uh guidance of the two beer products. Uh the guidance for the full year was around 40 crores. So is that achievable? 34:18 34 minutes, 18 seconds Will it be ending at 40 cr? 34:21 34 minutes, 21 seconds No no no because of the is the grape season not behaved as per structuration. 34:26 34 minutes, 26 seconds So it would not be 40 K. It would be significantly lower than 40 year. Okay. Maybe around 30 30 K. 34:35 34 minutes, 35 seconds Okay. Thank you. 34:41 34 minutes, 41 seconds Thank you. The next question is from the line of Arch Jooshi from Noama. Please go ahead. 34:48 34 minutes, 48 seconds Hi, good evening sir and thanks for the opportunity. I just have one question. 34:53 34 minutes, 53 seconds Uh sir uh what would you make out of uh the current uh draft pesticides management bill proposed uh uh by the 35:00 35 minutes government uh and uh uh what would uh the long-term impacts of be for organized players like us at Dhanag uh 35:09 35 minutes, 9 seconds so your thoughts thank you right so draft pesticide management bill would be really good for the organized 35:19 35 minutes, 19 seconds industry and organized players Dhanuka being organized player and believing in 35:25 35 minutes, 25 seconds building brand equity, building value for the customer in this case our farmer would significantly stand to benefit 35:34 35 minutes, 34 seconds from the PMBB. PMBB apart from various other things brings in tough uh rules 35:42 35 minutes, 42 seconds around you know misbranding fake spirious products. It brings stiff uh punitive 35:49 35 minutes, 49 seconds measures around fly by night operators which will be a big deterrent and will 35:56 35 minutes, 56 seconds open up more market space for organized players like ourselves. EMB I think so is long awaited. It does uh the 36:05 36 minutes, 5 seconds government has asked for various inputs from all possible stakeholders including farmer. We as the industry and industry 36:12 36 minutes, 12 seconds associations have submitted our viewpoints contributed for the same uh you know by 4th of February that was to 36:20 36 minutes, 20 seconds be achieved. So we have provided our views where the government and the industry together can facilitate the 36:29 36 minutes, 29 seconds desired growth of the Indian agriculture and prosperity of the Indian farmer. 36:36 36 minutes, 36 seconds Sure sir. Uh sir upon its execution and obviously after taking the uh comments from all the stakeholders in the 36:43 36 minutes, 43 seconds industry uh would you have any expectations or have an understanding on how the government will try to maintain 36:50 36 minutes, 50 seconds checks and balances about uh the most uh uh you know talked off problem with respect to spurious products and uh you know the misbranding that you spoke of. 37:01 37 minutes, 1 second uh would you have any any comments on on that account which might help us uh or rather as an organized industry to gain 37:08 37 minutes, 8 seconds more market share from from the ones who are uh doing the malpractices. 37:14 37 minutes, 14 seconds Agriculture is a state subject and to an extent the regulatory and the executive powers is also with the state which is 37:22 37 minutes, 22 seconds certainly not going to change with with the law yet. The provisions will make it 37:29 37 minutes, 29 seconds difficult for the hand and glove operators uh with the fly by night operators. You 37:36 37 minutes, 36 seconds know there are other agencies who could be handin glove with these. It will become difficult for them to really 37:45 37 minutes, 45 seconds play around. Yet the success of any law depends on how well it gets executed 37:52 37 minutes, 52 seconds where the center and the states will have to collaborate to ensure that the execution is in the spirit of the letter. 38:03 38 minutes, 3 seconds That is something that is something uh you know at Nama yourselves and at Dhanuka and the entire industry would 38:10 38 minutes, 10 seconds look forward to that the execution is in the spirit with which the law is framed. 38:15 38 minutes, 15 seconds Sure sir, understood and we'll definitely hope for the best. Uh thank you sir. 38:20 38 minutes, 20 seconds That's it for that's it from me. Thank you. All the best. Thank you. 38:26 38 minutes, 26 seconds Thank you. The next question is from the line of Rohit Nagaraj from 361 Capital. 38:33 38 minutes, 33 seconds Please go ahead. 38:37 38 minutes, 37 seconds Opportunity. Uh so in terms of new product introductions for uh next year FI 27th uh how are we placed and what 38:46 38 minutes, 46 seconds could be the 9394 products uh for what categories that we are looking at? Thank you. 38:52 38 minutes, 52 seconds Yeah. So we have lined up three new launches for next year out of which two would be fungicides and both of them 39:00 39 minutes would be you know 93 first time introductions and then we have also lined up a specialy offering for 39:08 39 minutes, 8 seconds enhancing spray efficiency. So these are the three products which we have lined up for introduction over next year. 39:18 39 minutes, 18 seconds And from an application perspective, which crops these would be utilized primarily for? 39:24 39 minutes, 24 seconds Right. So both the fungicides will find their application significantly in grapes and then in potato. They will 39:31 39 minutes, 31 seconds also find application in tomato and chili. Uh so grapes, tomato, chili, all three being high value crops will have a 39:39 39 minutes, 39 seconds good opportunity. And the third spray enhancer also as a premium product we'll be positioning largely in tomato markets. Sure. 39:50 39 minutes, 50 seconds Uh so second question uh in terms of uh the uh current environment I mean as of 39:57 39 minutes, 57 seconds now there are talks that uh there will be probably El Nino this year u historically since we've been through 40:07 40 minutes, 7 seconds several cycles uh whenever the El Nino has happened has it impacted materially 40:13 40 minutes, 13 seconds in terms of the uh performance for a particular curry season and Right question to that. Uh we have also 40:22 40 minutes, 22 seconds experienced the farm income being lower getting impacted the Q3 numbers. Uh if it continues to remain low, will it have 40:29 40 minutes, 29 seconds its repercussion for the next curry season? Just your thoughts on this. Thank you. 40:35 40 minutes, 35 seconds Right. So first a take on El Nino. The Elnino predictions which have come up recently are followed up by these being 40:42 40 minutes, 42 seconds too early and the margin of error being significantly higher. So the new predictions normally come in after uh 40:51 40 minutes, 51 seconds midappril. We'll be waiting for that to really understand how intense Elnino forecast is. Yet you would have also 40:59 40 minutes, 59 seconds noticed that all Elnino years are not poor rainfall years. So that uh being 41:06 41 minutes, 6 seconds said we'll have to wait for IMD uh Australian methological department and few other methological department for us 41:13 41 minutes, 13 seconds to kind of collate and understand how do we see the upcoming khif talking about the farm income so it is 41:22 41 minutes, 22 seconds the farm income which not only Dhanuka agreech but almost the entire nation depends upon agriculture contributing 41:28 41 minutes, 28 seconds 14% of the GDP and more than 50% of the population being dependent on agriculture. 41:35 41 minutes, 35 seconds not only agree inputs but FMCG, FMCD automobile industry depends on their success. So yes, we not only keep our 41:43 41 minutes, 43 seconds fingers crossed, we genuinely pray and at Dhanuka we work closely with the farmer so that we can support in enhancing their income. 41:54 41 minutes, 54 seconds Got that. Uh so just one last clarification in terms of our dahage manufacturing block are there any talks 42:02 42 minutes, 2 seconds going on with any of the multinational players or players outside India for an exclusive contract or arrangement which 42:11 42 minutes, 11 seconds we have been seeking uh for a fairly long time. Thank you. 42:16 42 minutes, 16 seconds There is uh one uh uh discussion which is going on in uh last quarter. Two 42:23 42 minutes, 23 seconds companies have visited us at the h. So one Japanese and one European. So uh we 42:32 42 minutes, 32 seconds are looking forward to uh progressing on these discussions further. 42:39 42 minutes, 39 seconds Sure. Uh that is helpful. Uh thanks a lot and all the best sir. 42:47 42 minutes, 47 seconds Thank you. The next question is from the line of Rajat Satia from Ithod PMS. Please go ahead. 42:55 42 minutes, 55 seconds Hi, thanks for the opportunity. So just one question. The amount of sales return in this quarter. 43:03 43 minutes, 3 seconds Yeah, sales return in this quarter is similar to last year in Q3. 43:09 43 minutes, 9 seconds Yeah sir, what is the number? I was not able to find last year. 43:13 43 minutes, 13 seconds Uh this year is 72 K as again 74 K last year. Right. So 72 in this quarter, right? 43:23 43 minutes, 23 seconds Yeah, in this quarter. That's right. 43:25 43 minutes, 25 seconds And the 9 month number would then be closer to 220 crores. Correct. Yeah, that's right. 43:32 43 minutes, 32 seconds Okay. All right. Thank you. 43:40 43 minutes, 40 seconds Thank you ladies and gentlemen. In order to ensure that a management is able to address questions from all participants 43:48 43 minutes, 48 seconds in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The 43:57 43 minutes, 57 seconds next question is from the line of Amit Ketan from Lumbam Capital. Please go ahead. Hi sir, thank you for the opportunity. 44:06 44 minutes, 6 seconds Uh so if I if I if you were to take a slightly medium to longerterm view. 44:17 44 minutes, 17 seconds Sorry to interrupt you sir. We are unable to hear you. Please use your handset. 44:32 44 minutes, 32 seconds Sir, are you able to hear me? Yeah, I can hear you. Hello. Yes. Yes, sir. Please go ahead. 44:39 44 minutes, 39 seconds Yeah. Uh, hi. Uh, thank you for the opportunity. Uh, uh, so if I if I if we take a slightly longerterm view of say 3 44:46 44 minutes, 46 seconds to 5 years, uh, what is the kind of growth opportunity for Dhanuka? What's what sort of growth rate can we realistically grow at? And it'll be 44:55 44 minutes, 55 seconds helpful if you can break that down into uh you know growth from existing products as well as new molecules and 45:02 45 minutes, 2 seconds exports as well as uh you know uh uh getting into new crops. 45:09 45 minutes, 9 seconds Right? So uh this is a very larger question but let us look at the macroeconomics favoring the agriculture. 45:17 45 minutes, 17 seconds Yeah I see a eco in my voice. 45:22 45 minutes, 22 seconds So there's a sound system over there which is causing this echo. 45:28 45 minutes, 28 seconds Okay, let me just mute it from my side. 45:34 45 minutes, 34 seconds Yeah, I hope so there is no more eco. So the macroeconomic factors certainly favor agriculture and so the agree input 45:43 45 minutes, 43 seconds industry also while uh ura DAP other nutritional segment is what farmer 45:50 45 minutes, 50 seconds invest in eagerly crop protection industry has taken up a strong position with investments in the agriculture 45:59 45 minutes, 59 seconds increasing and value added crops gaining ground significant ground in the agriculture base within that domain. 46:08 46 minutes, 8 seconds Dhanuka has constantly brought in new products, value added products, specialty products and niche products 46:16 46 minutes, 16 seconds from our Japanese, European and US-based partners thereby offering to the farmer specialized solutions for their problem. 46:26 46 minutes, 26 seconds So with this we have a place in specialized crops like grapes, tomato, chili, some of them getting exported as 46:34 46 minutes, 34 seconds well. While we also have a strong foothold in conventional crops like rice, patties, soya bean, cotton and 46:42 46 minutes, 42 seconds tea. So overall with this kind of favorable macroeconomic situation, I believe we will continue to grow at 46:50 46 minutes, 50 seconds Dhanuka with a healthy double-digit growth on a short to midterm horizon of next 3 to 5 years. The expansion 46:59 46 minutes, 59 seconds opportunity is available due to multiple crop cycles. Farmer is trying to grow 47:06 47 minutes, 6 seconds more than two crops now which is almost three crops in many patches of the country which is possible A because of 47:14 47 minutes, 14 seconds the irrigation facility and B because of the increase in marketability of the produce. 47:21 47 minutes, 21 seconds India with the uh six more than 600 grams per hectare 47:27 47 minutes, 27 seconds agrochemical consumption is still one of the lowest as compared to the world average agrochemical consumption with a 47:36 47 minutes, 36 seconds significantly high arable land of 150 million hectares. 47:42 47 minutes, 42 seconds So the growth opportunity is only northwards. It really depends upon how intensely we are able to reach to every 47:50 47 minutes, 50 seconds nook and corner, every plot and field where farmer is cultivating. 48:01 48 minutes, 1 second Understood. And if I if I could uh you know what do you see the risks aside aside from say uh you know weather 48:09 48 minutes, 9 seconds patterns what are the risks that could prevent you from achieving this double digit growth? 48:14 48 minutes, 14 seconds Apart from the weather pattern, what matters? Matter. 48:20 48 minutes, 20 seconds Could you put that on mute again? Again, I think so that should work. So, apart 48:27 48 minutes, 27 seconds from the weather patterns, the commodity prices and sometimes you know the policies like 48:34 48 minutes, 34 seconds Gramm G now could also have an impact on how the farmer move towards agree input. 48:41 48 minutes, 41 seconds A lot also depends upon the marketability, storage and transportation of the commodity. Uh 48:48 48 minutes, 48 seconds earlier uh India touched a milestone of almost 335 metric million metric tons of 48:55 48 minutes, 55 seconds food grain production and very soon production crossed that level and touched 340 49:02 49 minutes, 2 seconds million metric tons. Now hoticulture production is a value added production for the farmer and relatively higher on input consumption. 49:12 49 minutes, 12 seconds Increased in warehousing, increase in cold storage, increase in cold transportation, 49:18 49 minutes, 18 seconds good roads, non-stopage at Chungi Nakas because of the tax uh smooning all these 49:26 49 minutes, 26 seconds will actually facilitate only facilitate the progress of agriculture as well as agree input industry. So these 49:35 49 minutes, 35 seconds infrastructural tailwinds being favorable. I think so. Other than seasonal vagaries, nothing should stop. 49:46 49 minutes, 46 seconds Thank you sir. May we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. The 49:55 49 minutes, 55 seconds next question is from the line of Kan Shavela from Affirma Capital. Please go ahead. 50:01 50 minutes, 1 second Thank you sir. I started clarification on my gross margin question earlier. So what is the total quantum of the net economic benefit that we've received 50:10 50 minutes, 10 seconds which will now go away once we have it on our books and secondly what is the gross margin profile of these two brands which we had acquired from buyers. 50:21 50 minutes, 21 seconds You see net economic benefit quantum in the 9 month is 19 and a half cr and in Q3 is around 6 cr. 50:31 50 minutes, 31 seconds Okay. And what is the gross margin profile on these two brands? 50:37 50 minutes, 37 seconds Gross margin is in the range of the our overall gross margin. Okay. So broadly in line with 40 odd%. 50:44 50 minutes, 44 seconds Yeah. Absolutely. Some two three 200 300 basis point here and there. Understood. Thank you sir. 50:55 50 minutes, 55 seconds Thank you. The next question is from the line of Vir Kachara from Simple. Please go ahead. 51:01 51 minutes, 1 second Yeah, I have just two questions on the Bayer products. Uh one is uh if one has to understand the uh contribution 51:09 51 minutes, 9 seconds margins of the two products. Would it be in line with our uh B2C business margin or would it be even higher? Any color 51:17 51 minutes, 17 seconds you can give both contribution and operating margin? 51:20 51 minutes, 20 seconds It is in line with the overall gross margin of the company. 51:26 51 minutes, 26 seconds Okay, got it. And uh second question is uh you know uh see these two products uh you know they have a wellestablished uh 51:35 51 minutes, 35 seconds distribution system right uh you know uh so in terms of our approach you know I think somewhere in the call you talked 51:43 51 minutes, 43 seconds about us uh looking to appoint new set of distributors so are they for the new markets or you know or those are for 51:50 51 minutes, 50 seconds existing uh you know regions as well any color you can give how are we approaching in terms of go to market and any risk you see in terms of the execution. 52:00 52 minutes So currently in most of the countries Bayer has been selling the product through its distribution networks as bear is present directly in most of the 52:09 52 minutes, 9 seconds countries. Dhanuka is not planning to go direct distribution in these countries. 52:17 52 minutes, 17 seconds So we are appointing one national distributor in the various markets. So the new distributor appointment which I 52:24 52 minutes, 24 seconds referred to earlier was in the countries where Dhanuka is not present. In case of India and uh Nepal we are not appointing any new distribution channel. 52:37 52 minutes, 37 seconds Right. But going into 27 do you see any risk in execution and you know since the products are being transitioned from 52:46 52 minutes, 46 seconds beer to Dhanuka. Oh the risk is uh uh in any business 52:54 52 minutes, 54 seconds transaction it is there in terms of uh the setback in terms of supply chain because for supply chain we are still 53:03 53 minutes, 3 seconds dependent on buyer to provide the product and uh while the regulatory uh changes happen with registration 53:12 53 minutes, 12 seconds ownership being transferred from buyer to Dhanuka and uh India's sourcing getting added We will uh we may see some 53:21 53 minutes, 21 seconds uh issues in supply chain although we have done the planning but it is always a risk. 53:28 53 minutes, 28 seconds Got it. Uh in this last question if I can squeeze in uh see here uh you know most of the manufacturing is centered in 53:35 53 minutes, 35 seconds Europe and the cost of manufacturing is quite elevated compared to Chinese. uh so in that sense you know when we look 53:43 53 minutes, 43 seconds to move one of the product from uh Germany to India do you see any material change in the margin structure for the product or any color you can give? 53:54 53 minutes, 54 seconds Yeah definitely there would be an improvement in the margin structure for the products once the manufacturing moves to India. Absolutely. 54:03 54 minutes, 3 seconds Thank you very much. 54:09 54 minutes, 9 seconds Thank you ladies and gentlemen. We take that as the last question for today. I now hand the conference over to management for closing comments. 54:22 54 minutes, 22 seconds Thank you friends. Once again I would like to thank all the investors and analysts for your support and confidence 54:30 54 minutes, 30 seconds in Dhanuka. We have already initiated our FY27 plannings and looking forward to a 54:40 54 minutes, 40 seconds normal year. I reassure our stakeholders that we are committed to the task of transforming the landscape of 54:49 54 minutes, 49 seconds agriculture and farmers in India. I once again reassured the stakeholders that 54:57 54 minutes, 57 seconds the bad phase for the last two quarters is over now and now we have to look for a bright future only. 55:06 55 minutes, 6 seconds Thank you. India pranamistan. 55:10 55 minutes, 10 seconds Thank you and looking forward to connecting with you in the next quarter. Thank you once again. 55:18 55 minutes, 18 seconds On behalf of Antic Stock Broking Limited, that concludes this conference.