Ladies and gentlemen, good day, and welcome to the Jain Irrigation Systems Limited Q1 FY 2025 earnings conference call, hosted by DRChoksey FinServ. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ashwini Trivedi. Thank you, and over to you, ma'am. Hello, Ashwini ma'am, we are not able to hear you.
Hello?
Hello. Ashwini ma'am, we are not able to hear you.
Thank you. Yeah.
Hello.
Yeah, ma'am. Yeah. Thank you. Good afternoon, everyone, and welcome to Jain Irrigation Systems earnings call to discuss the Q1 FY 2025 results. Today, we have on call Mr. Anil Jain, CEO and Managing Director, Mr. Bipin Malani, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements that may involve known and unknown risks, uncertainties and other factors, and must therefore be viewed in conjunction with the risks that the company faces. Future results, performance or achievements may differ significantly from what is expressed and implied by such forward-looking statements. Please note the results and presentations are available on the exchange and on our company website. I now request Mr. Anil Jain to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you. I would like to welcome everybody on our earnings call today. We had a board meeting today morning, and we have declared the results. Overall performance, I think is profitable overall as a company. However, our revenues are lower compared to last year, at about close to 13%. Our company's achieved revenue of about INR 1,480 crore, with an EBITDA of approximately INR 180 crores. That's when we look at the breakup of these revenues. Out of INR 1,480 crores, approximately about INR 445 has come from our Hi-Tech business and about INR 566 came from plastic business and about INR 465 is from agro-processing. Fairly, in three different buckets in terms of overall revenues coming from. When I look at EBITDA of INR 180 crores, about INR 68 has come from Hi-Tech, about another INR 66 from plastics, and about INR 48 crores from agro-processing.
Agro-processing usually has little bit lower level of EBITDAs, considering the nature of the business. When I look at actual margins in Hi-Tech, it has been at about 15.6%, plastics at about 11.7%, and agro-processing at about 10.3%. That is what we could achieve. Net PAT has been about INR 12 crores and cash PAT is about INR 76 crores. That's on the console level. While our business in India did get impacted especially related to JJM and other issues in India, in this particular quarter, which we had anticipated. Some of the business which has gone down is linked to the projects which is a progressive way as we close the project, that's going to happen. But our pool business has done. It's been positive actually, in terms of revenue growth. Our Overseas Plastic Sheet business has done well.
It's also positive in terms of revenue growth. When I talk about the standalone business, again, Hi-Tech and plastics is the two major divisions there. The reduction has been more actually into the plastic business there by almost 30%, while Hi-Tech got reduced by 17%, registering approximately 25% reduction in that context. Consequently, with the lower utilization of capacities, there was lesser fixed cost absorption, resulting into a lower EBITDA into the business which was there. But business even on standalone India basis has remained profitable. Overall, there was no big change in the balance sheet, I would say, compared to March. Two important factors from the balance sheet. We could reduce our overall receivables almost by about INR 150 crores during this quarter compared to the March. Which is a good thing, as we are recovering these receivables.
But inventory did go up during this period because one, in the food processing business, it is seasonal. We will process lots more onions and mangoes, so inventory does go up. But even in our normal pipes and MIS business, partly inventory has gone up because of weak quarter, but I think that should get through the system during current quarter. When I look at overall working capital cycle, as I already explained, inventory has gone up in the short term but should not be there beyond September. The receivables did come down, which is a good and positive sign. In terms of when I look at overall debt of the company, at standalone basis, almost at the same level, what it was in March, what it is now.
During this period, we have repaid some of the long-term loans as they fall due on the due dates, while there is some addition on the working capital side, cash credit side. All in all, reported debt remains almost same as March. If we look at consolidated numbers, they are slightly lower compared to the March numbers because there has been also repayment of the long-term debt on the overseas side, but no big change in the debt numbers. They have slightly improved, I would say, compared to March. But considering the fact that this was really weak quarter in terms of underlying trading, this is a good outcome that actually there is a small amount of marginal improvement on the debt. In terms of overall when we look at capital or in terms of working capital and this fixed capital.
The addition, including all the maintenance CapEx we do, has been about INR 45 crores globally in this quarter as against depreciation of INR 60 crores. This is in line of our usual trend. There is no big change there. At India level, our order book position is about INR 1,000 crore and at the console level, total orders in there about INR 1,800 crores. Out of this INR 1,800 crores, most of the large orders which we have in hand, about INR 1,000 crores are actually in the food business. Because that is governed partly by contracts. But we still have some orders in Hi-Tech Agri business as well as the plastic product business to the tune of about INR 800 crores. Again, there is no big surprise in those numbers.
Now, when I talk about what happened during this quarter, it is important to see also mentioned that when I look at cash flow, so during this quarter, company generated about INR 128 crores of net cash from operating activities after working capital change. Which same period last year was INR 152 crores. So slightly lower than the last year, but tune of about INR 24 crores. But overall, quite good generation of cash from the operating activities. And standalone basis as well, despite the lower profitability and lower sales, net cash generated from operating activities post working capital changes and post income tax was INR 56 crores. So both places, good generation at operating level from the business side. In terms of overall narrative, I think, generally speaking, it has been quite good to see monsoon.
Monsoon has been quite positive, which in short term negatively impacts the business because you cannot sell many pipes or irrigation systems when the fields are wet or farmer's crop is standing. But this augurs quite well for the second half H2 and even the next year because water tables are going up everywhere. Whole country is having really good monsoon. And in fact, half of the country is having even more than long-term average. So our headquarters, which is in Jalgaon in Maharashtra by now has about 30%, 35% more rains than long-term average. And that is the situation for good part of the country where normal to higher than normal is the norm right now as we speak. And if this continues, I think this really August very well for at least full next, in not only this season, but next two seasons in terms of agriculture.
Another event during this quarter has been the budget which we recently saw. As expected, the government has kept its focus on overall agriculture, which was one of the ministry which got maximum amount of funds. Within those funds, there has been adequate, I would say, allocation for drip and sprinkler system, which gets captured under Rashtriya Krishi Vikas Yojana. We have been told that government is very focused in pushing the necessary benefits. The other part of our business which gets impacted due to the budget is also piping, which is partly the orders related to Jal Jeevan Mission. There, also government has provided almost close to INR 69,000 crores or so towards JJM under the Ministry of Jal Shakti. Third, I think it is important part that government has announced a bigger support to MSMEs.
While we as a company are not MSME, most of our dealers who are our customers who sell onwards to the farmers are MSMEs. If they get additional benefit, either the guarantee from the government or loan from the government and so on, I think their ability to invest into our product increases. They carry more inventory, et cetera. Generally speaking, that would also help us to strengthen our network and get to more business from the dealer network, and that's what really, you know, we have been speaking about this for last one to two years. That is where we as a company really want to focus on.
Having said this, when I really look at the things which we as a management are focused on, one medium to long term has been that we should continue to go towards deleveraging on a comparative basis where the business will continue to grow, profits will continue to grow, and debt goes down. So net debt to EBITDA, we are able to bring under control. In terms of another part of that growth of business versus net debt to EBITDA is also that we continue to improve especially the receivable cycle. There, you will have seen or matched over last two to three years on the retail business, we have done better and we continue to improve, but it has taken us some more time than expected on the government receivables.
We expect now that we're really coming into the last final lap of closing various projects, after which we expect those funds to be released. So significant amount is still expected to be released before current fiscal year-end, and whatever is remainder should get done in FY 2026. So that is in line with what we have projected before, that almost close to about INR 800 and odd crores should get released in the current year and the next year put together against the projects. Beyond this, in terms of individual businesses, we were going slow on not only on the government projects, but there are few states where government places orders on us versus on behalf of the farmers. There the payment comes from the government, even though we don't invoice the government. There we were going slow because of all the elections, et cetera.
And one of the states where there have been a lot of delays in Andhra Pradesh, but I am just happy to share that post now change of the government and the new dynamics, just this week, we have started receiving the payments from the early on old legacy payments. That's a good part that it has started acting now, and we hope as things stabilize around the country now, rest of the situation in other states will also improve. With just one more caveat, for our company, Maharashtra is one of the most important state in terms of our overall business, and there are state level elections expected sometimes in September for the state of Maharashtra Legislative Assembly, and there could be some disruption around that time. But thereafter, I think post-October, because season remains weak till then in any case, and really it picks up only beyond mid-October.
So we are expecting from mid-October onwards to May to be very positive season with all election disruptions behind us, as well as the monsoon, assuming it continues its good run, also being there, and the fact with the positive things government is doing in the budget to provide additional support to either MSMEs or to the farmers in general, that would be supportive to overall business which we are doing. While that is primarily focused on PE pipe and drip which goes to the farmer, our overall food processing business should grow about, I think 6% or 7% now. But the idea for the whole year is that it should grow double digit. We just finished mango processing season and so on. That is going in line with our expectations. And Overseas Plastic Sheet business has really delivered good revenue growth and good earnings as well.
So that is a normal course that should move quite well. So this is where we are as a company. Structurally, I think a good place going forward. In terms of operating numbers, while this quarter has been weak, we had a little bit of inkling of that, and I have spoken about that in last conference call. But I think when we talk of September results, I think we should come sometimes end October I think we will be able to give a better guidance to investor community as well as stakeholders in terms of how do we expect that whatever shortfall we had in the current quarter, how that can be and how much of that can be captured in a very strong H2. And that, I think, it would be more appropriate to talk about that at that point of time.
This is what I think I would like to start, and I will be very happy. Me and my CFO is here, and we will be happy to answer any or all questions you may have. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kunal from Sunidhi Securities. Please go ahead.
Hi. Good afternoon, Anil, sir. One of my question is that there is a mention of the sale of shares from the Jain Farm Fresh Foods Limited to Mandala Capital for total transaction value of about INR 9.9 crores. Can you throw some light on that? Hello?
Sir, one minute.
Hello.
Sir, the management line has been disconnected. Please wait patiently while we reconnect them. Ladies and gentlemen, the management's line has been connected. Kunal, can you please go ahead with your question?
Yeah. Sir, hi. Good afternoon. I had two questions. One on the sale of shares of Jain Farm Fresh Foods Limited to Mandala Capital of total transaction value of about INR 9.9 crores. Can you just throw some light on that?
I think, as a part of overall holding and discussions with Mandala, this is less than 1%. I think 0.86% of the food company shares, which were sold to Mandala with a profit of approximately INR 5 crores in that. It was a small transaction because Mandala has been a long-term shareholder into the Farm Fresh company. Going forward, now that their investment has been here for about five to six years, we are now, I think, sometime in maybe this year, next fiscal year, we will look at some opportunity of what they need to decide about in future. As a part of that overall discussion, there was one particular understanding which a small quantity of the shares were sold to them.
Okay, sir. The next question is that exports went up about 93% in the Hi-Tech Agri segment. Is it to Rivulis as it is mentioned in the presentation? Can you give a break up of how much of, like at standalone level, how much retail, project, and export is the percentage break up at standalone level?
You mean sales?
Yeah. Sales break up. Yeah.
When I look at the sales analysis at India level, overall, if I look at about INR 850 crores, right, INR 844 crores. So retail was about INR 566 crores, and about what we call Micro Irrigation Projects, where the government gives orders on behalf of farmers, and that was about INR 70 crores. Project was INR 44 crores . Institutional sales are about INR 75 crores, and exports were INR 86 crores, so that's INR 850 crores. So for the larger narrative, the retail MIP institution can be treated as one. Government projects is another, and the export is third.
Okay.
Thank you very much. The next question is from the line of Tej Patel from Niveshaay. Please go ahead.
Yeah. Hello, am I audible?
Yeah, please go ahead.
Thank you so much for the opportunity, sir. Sir, I had a couple of questions. First is, although there is a huge potential for micro-irrigation in India, there is not much happening on ground. If you see the whole industry in the last two, three years, they have almost have a very insignificant growth, right? Almost, probably they have added 1 million of hectares of land every year, probably, let us say 5%-6% growth in last two, three years. Not only you, other players are also facing difficulties of, let us say, lower penetration of micro-irrigation in India due to slow release of the subsidies to you and the farmers as well.
Sir, what are the major constants, apart from what I mentioned, which is creating the hurdle for the industry and, what changes you think might improve this and how do you see the industry growing in the next two to three years compared to last two to three years? The penetration have always been low, and the micro-irrigation have always been the focus area for government, but there is no growth in the industry in last three to four years. There are issues regarding the receivables, as you mentioned in your every con call. When do you see this improving and when do you see that green shoot coming in when you see double-digit growth in the micro-irrigation sector for India business?
I think that is a very interesting and a good question. When I look at overall. Just one second. As you rightly pointed out, the delay in release of the subsidies by the government, even to farmers, under DBT, has been partly the reason, and part of it has been procedural, in fact, for last one year, where micro-irrigation is combined under a scheme called RKVY, Rashtriya Krishi Vikas Yojana, and there are three, four other schemes. State have to give utilization certificate before they can draw new funds from the central government. Because the other schemes are linked to the micro-irrigation, which were not completed, that is the reason they could not draw the money even linked to the micro-irrigation. This is big bureaucratic, big administrative issue.
But I think the states by now have talked to the central government and so on, and they have been told some kind of a solution is imminent, going to come from the Government of India to the state. It is nothing to do with companies or firms. This is directly just between center and state, internal administrative issue. I hope that would not be issue this year, and so a lot of funds will get released. In fact, last year, out of the funds which center had provided, almost INR 1,000 crores could not be released to the state due to some of the administrative issues. And this year it is expected that will not be the issue. So as that money flows all the way to the state or all the way it goes to the farmer, the dealer funds get released, overall mechanism improves.
If I then look at overall, when I total running business for drip irrigation for us, FY 2023 it was about INR 1,357 crores and including exports, which we do, and then it became INR 1,478 crores in FY 2024. So we managed some amount of growth during that period of time. And we hope, as we have hoping for a solid H2, we should maintain that growth as well because we also expect higher exports. So one was this administrative part, right?
There is an adequate amount of cash being allocated even in the current budget by the central government, but states' ability to use it. And some states were unable to utilize, right? For example, I talked a little bit about Andhra Pradesh. Even Gujarat, which is normally quite efficient, got delayed last year. And now, AP and Gujarat both we are seeing they have started moving positively as we speak.
I hope this year a lot of things will improve. We as an irrigation association or industry are actually requesting government to create some kind of a central level of portal where all farmers can register and that can be monitored in an efficient way. And the government can then disperse also in an effective way, if that can be done. So some of these additional changes actually can bring about structural change and where then industry can really achieve the true potential because penetration levels are still quite low, and this is one scheme where the farmers do get measurable, tangible benefits through higher productivity, lower cost. So, we are quite optimistic with the new government and the focus now as such, and also at the state level with the changes, administrative changes, things to be better from the coming busy season.
Got it. Sir, just a follow-up question on this. Correct me if I am wrong. So you are saying there is an administrative problem for the coming of central funds through state and then to the farmers. But if I am not wrong, there is probably, let us say 50%-60% share comes through central and then the rest 40% comes to state, right? So what about the state releasing their funds?
The way the structure operates, that central releases X, state adds Y, and then it is given to the farmer. State cannot merely give its own share, then they cannot draw from the center, and so on.
Okay.
I think this will go together. As I said, we can talk a little bit more by end October, but we really hope that they have solved that administrative issue by then, and more funds will flow. We have seen in two states, which there were a lot of delays last year, are actually moving positive.
Very good. Sir, any new states coming up with having higher allocation this year? Because if you see, mostly the allocation goes to the southern states and the western states, such as Gujarat. Do you see new states coming and taking initiative for Micro Irrigation Project, such as, let's say, MP or UP? What about those states? Where there's, of course, adequate rainfall, so probably they don't need Micro Irrigation Project, but there's still some movement towards Micro Irrigation Project. Do you see something like that?
Amongst the larger northern states, we have always been doing good work in Rajasthan, Haryana. I think UP is one state which has now taken a much larger program, and they have created a structure in line with the Gujarat state structure. We think, while it is early days now, but they are taking up ambitious programs. I think over the next couple of years, UP could develop to be one of the large states.
Okay. Got it. Sir, just a clarification on the revenue recording. If I am not wrong, the retail business includes revenue from both the subsidized business and the non-subsidized business, right?
Yeah.
Is it retail business? Yeah.
We are concerned, right? We are selling most of the time to the dealers. Subsidies are mostly given to the farmers. So for us, it is one business when we sell the drip irrigation. So you can say project business and non-project business.
Okay. Why I was asking, because you always pointed towards shifting from the subsidy business to the, let us say, the non-subsidized business. For that reason, I was asking, so how the trend has been, and why would a farmer probably buy through a non-subsidized route if they have availability of a subsidy. So I just wanted to know on the farmer side, what are they thinking, and why would they buy a Micro Irrigation System through a non-subsidized route rather than a subsidized route?
So yeah. In some of the states, even where the government is placing orders on our behalf, we are doing cash and carry business. There, the answer is why those farmers letting go of 70% subsidy, why they would pay 100% cash and buy from us is because the benefits they are getting. Sometimes some of the farmers are ineligible for availing subsidy. For example, subsidy is given to every farmer, and depending on the state rules, maybe after five years. If the farmer has changed his crop or he is wanting to buy a new system with new technology or latest features, then he might say, "Okay, I am making so much more money, I can afford to invest myself 100%." That is why they are buying.
Okay. Got it, sir. Sir, what are the current receivables which are still left to be realized under the project business?
There I talked about, that approximately the total government project in the pipe division and drip irrigation division is close to about INR 900 crores.
So these are the receivables, right?
Yeah.
Have you created any provisions for it? Do you expect any write-off would happen, or you expect it to realize all INR 900 crores?
Most of that should come through. I do not think it is going to be a very big sum change. When you close the project, the government as well as you end up calculating some of the things which have happened on the project. So there could be some amount of impact, but by and large, I would say these are good receivables and most of them have come.
Okay. Sir, what would be our current utilization across the three different divisions?
I would say, generally speaking, pipe is closer to 55%-60%.
Okay.
And within season, it is 75%. The drip and sprinkler is around 45%. In the season, it is 55% and 60%.
Okay. So probably on a control level, it's probably 50%, 60%, right?
Yeah.
And sir, how much of our pipe sale would be to the Micro Irrigation Project? Out of the total pipe sales, how much of it would go to the Micro Irrigation Business?
So as far as we are concerned, the pipe, when we show the plastic division, we have highly category input in pipes.
Yeah.
Whatever pipes get used in micro irrigation are produced under Micro Irrigation Division only.
Okay. They are shown under MIS only.
Under MIS. Yeah.
Okay. The plastic division revenue is other than micro irrigation.
Yeah.
Probably an energy-driven machine, no?
Yeah.
Yeah, got it. Sir, currently after the sale of the international business, our split is almost 1/3 , 1/3 ,1/3 across all the divisions on control basis. Sir, do we expect this share to be like this, or do you have any internal thoughts regarding this, how to maintain this going forward?
I think going forward, we expect all businesses to grow.
Yeah.
Every business has certain level of cycles. I think pipe business would remain always as a plastic part, would remain strong, I think in terms of percentage of growth. Followed by, I would say irrigation, followed by food. Because food is somewhat more mature business.
Okay.
It has a lot more, I think, potential to grow because penetration levels are quite low.
Right. Okay, sir, that's all from my side. I will join back in the queue. Thank you.
Thank you very much. The next question is from the line of Sumanthan from Relay Investments. Please go ahead.
Hi, sir. Am I audible?
Yeah. Please go ahead.
Sir, I just wanted to understand, having gone through multiple cycles over numerous years, I understand our business has a lot of moving parts. Sometimes it is monsoon, sometimes it is reasons for plastic products, sometimes it could be raw vegetables and fruits, which we do as part of food processing industry. Sir, having gone through multiple cycles and having gone through a lot of stress period, how do you think for next two, three years we are positioned or how we have more resilient in terms of business? Because these are things maybe beyond our control. I wanted to get some sense on that front. That is my first question, sir. I will follow up my second question after this.
Sure. I think that is a very good question, and that is what we at management level also keep working on. I think talk about steps we have already taken and the steps we will take going forward. One of the steps which we have taken, because of the seasonality linked to the climate change, is that while we have been primarily selling, as you know, in west and south, as we sell more in north and east, and that is where we are building our networks now, I think that can partly buffer us from the seasonality change. That is one. Other part of tackling the seasonality in India or climate in India issue is to increase exports. As exports grow more, partly again, it can help buffer the seasonal change within India.
In terms of the profitability angle linked to the plastic raw material prices or oil derivatives, et cetera, there, I think you would have seen over last two, three years, while we were trying to change business model and improve cash flow, margins have held themselves. The reason has been better buying of strategy in terms of what we do in India and what we import from other markets, and also selling more value-added product in terms of product mix. That is the way you can keep ensuring good margins despite the variation coming from raw material. Third, that are working out a new type of arrangement with the dealers on price transmission. Our price transmissions nowadays are, especially in pipe business, are quite efficient in a sense. If I see raw material price increase today morning, by afternoon, we also increase the prices in the marketplace.
So price transmission, because only up to a point you can absorb, otherwise risk. But also overall industry is moving towards that way, so that price elasticity comes into the play through the transmission. On the food side of the business, again, the way to fight the change in availability of raw materials or sudden export of too much of mango or less of onions, et cetera, is to, one, create more crops you can process. For example, while we have been primarily doing mango and onions, we are seeing garlic as something to grow more upon. We are seeing tomato we could process more. As a part of spices, we are looking to process more of now turmeric and ginger. As we run the plant for 11 months, then some of these seasonalities again can be captured there and can counterbalance each other.
And there again, the domestic business versus export business, that also balances, we are keeping. As we go along, the idea is that we as a company, while there are separate divisions, you work through the entire ecosystem of the entire value chain of a given crop, like a banana or a mango or pomegranate or onion, garlic or tomato, et cetera. And so you get different level of opportunities to process, to trade, to add value, to sell to the same farmers planting materials through our tissue culture division, et cetera. So again, so that no matter what, no matter with the external factors which influence our underlying business, we make it more and more stable and steady going forward.
And on other hand, because of this kind of seasonality in the business and unpredictability, the other thing which we have decided, and we have been now over last three, four years, we reduced overall debt by half at a console level, is to further reduce the debt. As the debt burden and interest burden goes away, it becomes easier to manage when the underlying business grows.
Right. Sir, thank you for sharing that light. I think you have also kind of highlighted we are moving to the ecosystem, but I think you would also agree partly that over previous cycles, we have added on things probably which were not actually part of our strong suit in terms of, say, suppose some kind of NBFC decisions and some kind of project which would have given some scalability on the revenue side. But sir, I just wanted to understand. As we are standing now, we are also seeing things, really everything happening and management also trying their level best. Going for next two, three years, when do you think, sir, all our cylinders can fire? Because I understand tissue culture is one of our good cash cow. It is advanced business. There is no receivables, and it is growing very steadily. Banana in Jalgaon and many other products.
Standing here or seeing from now for the next, say, suppose two years of whatever management can kind of perceive as of now. When do you think you can have all cylinders firing? Because I know it will take a lot of time to de-stress some of our assets. Also, have you shared some thought on probably selling off some of these projects to some private equity or some kind of, if there is a possibility, so that would be very helpful.
These type of projects don't get sold to private equity. But in terms of firing on all cylinders, in terms of all businesses doing well across all the major three segments which we have, we think you would already start seeing that in H2 of this year. But larger issue, the quality of earnings, what you want to see and free cash flows, I think that would happen over the next four quarters because most of these old government linked projects, outstanding, et cetera, should start flowing back to us as we complete the projects. That recovery, part of it will go to the reduction in the debt, part of it will stay into the business to provide that extra push to develop the retail network.
The core idea when we changed the business model was that consistently we should sell more directly to the dealers and where we are recovering cash before we deliver. So very nominal, small single-digit days of credit. That we are succeeding, and we have moved up quite a lot than we were before. That's what our focus is. Some of the things have been passed, and you talked about NBFC or whatever else. That decision was taken 10, 12 years ago because we didn't want this long-term credit on our balance sheet. But then when the government waived the loan to the farmer, that did not work. But now, under the new model, we are not talking about giving any credit. I think the new things which we are doing, like not deciding any credit, has no downside, has only upside from where we stand.
We are very clear in terms of when you look at cash flow, revenue, and profitability, that the order currently what we are focused on has been the cash flow margin and then revenue. You see lower revenues or whatever. But we are taking conscious calls sometimes. Okay, this sale is available, but I will not do it because that would mean blocking my money for six months. I don't want to take that business. But I want to still make the effort to do more directly with the farmer. As we succeed and come closer to that model, which we have done a lot, but I think some more to go through new geographical expansion within the country. You would start seeing impact of all our actions, as I said, not only in revenue or profitability, but in actual free cash flow.
Sir, one small question, and I will come back in the queue.
Sir, may we request that you return to the question queue for follow-up questions, as there are several participants waiting for their turn?
Okay.
Yeah. Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Sanjay Kohli from Goldstone Capital. Please go ahead.
Hi. Good afternoon. Am I audible?
Yeah. Please go ahead.
Yeah. Thank you. Anil Jain, this guidance that we have for the entire year, which was INR 7,000 crore, are we going to maintain this guidance for FY 2025? Hello? The sales guidance for the entire year.
Yeah.
Which you indicated around INR 7,000 crore. Are we going to basically maintain this guidance now going forward?
Yeah, I think this quarter's miss, as I said, was very specific. So in terms of overall revenue, I think a number of INR 7,000 crore is definitely doable. As I said, part of that comes from food, part from plastics, and the rest will come from normal business.
Okay. That is encouraging to know that. That we are maintaining our guidance. Thank you. I only have the one question. For the time being, I will rejoin the queue. Thank you.
Okay.
Thank you very much. The next question is from the line of Ankit Bansal from AB India. Please go ahead.
Hello?
Yes, please.
Sir, looking at the numbers, they are not very encouraging, sir. It has been a year and a half the restructuring agreement has been done. Sir, how the company is progressing, sir, I am not able to understand. In the recent concourse you promised to live to the glory back of the Jain Irrigation. But sir, revenue is down, sir, despite recent elections there. But how are you ramping up? What are solutions that will take Jain Irrigation to the past glory?
I think, see, I have been very clear, and if you really see the transcript over the last few quarters or couple of years, is that we have worked hard to change the business model to sell to more dealers and generate cash flow and reduce receivables. There we have succeeded. That has happened, and one can see that over a few years how that. Where things have still gone slow has been recovery of the old government projects. I think we are coming into the final lap and over the next 12+ months, we expect to close most of existing projects and recover this INR 800 crore-INR 900 crore, which is out there. As that burden goes away, I think from overall balance sheet, you would clearly see a much better balance sheet and P&L in terms of going forward.
In our business, it is always possible that a given particular quarter can go weak due to things which are beyond our control. Generally speaking, as I just answered the earlier question, our overall, what we are talking about for the year, it does not change what we had planned at the start of the year, even though this particular quarter is weak. In terms of glory, the fundamental things which I think all stakeholders like to see, especially shareholders, is that the debt goes down to a reasonable level from this. We have brought it down by 50%, but I think even in my own estimate, it is still high, and we are committed to bring it down further, and through receivable reduction, that will go down apart from internal efforts.
The second part is that the cash we generate through selling, the new sales which we do to the new customers, new dealers, new farmers, that should come back home right away and quickly. That part is already working. As we do more volume there, you will start seeing more free cash flow. Again, I think where we stand is not for want of trying. It is very clear and very concise basis in terms of new direction. In terms of time, it is taking a little bit, sometimes beyond us, but I don't want to take that as some kind of an excuse, that this reason or that. I am not talking about excuse. We had anticipated first quarter to be weak. I think we have kind of referenced that to that as well when we spoke in the past.
For the rest of the year, again, second quarter usually is a weak quarter for us because of just nature of business. If you look at for the fiscal year, FY 2025, we will be better off than FY 2024, quantitatively. But we will be qualitatively much better than all our years.
Okay, sir. Sir, are you sure these receivables will come this year? Because you are saying, I think from more than two years, three years, this receivable amount still remains the same of INR 800 crore-INR 900 crore. Not a penny, like INR 100 crore, INR 50 crore, has come in account. Are you sure this year they will come? And sir, how will you maintain the revenue? You are saying that this is doable. You are not saying that we will do it.
Ladies and gentlemen, we have lost the management's connection. Please stay connected while we reconnect them. Ladies and gentlemen, thank you for patiently holding. We have the management team back on call. Bansal?
Hello.
Mr. Bansal, please go ahead with your question.
Yeah. Sir, I was just referring, sir, are you sure these receivables will come? Because you have been saying from last than two years, not a penny from this INR 800 crore-INR 900 crore has come. And other is, sir, are you sure the revenue, because you have said that this is doable. You have not said that we will complete it. Are the revenues, will you able to do for the year, sir?
Okay, two things. I want to just correct one statement. You have said not a single penny has come. That is not correct, because we have received large amount from the old receivable. But to complete the remainder part of the project, we have done the new invoicing. Last year, for example, on the project, there were almost INR 600 crore of new invoicing. Including new invoicing, what you see is INR 900 crore outstanding. Substantial amounts have come and somebody can go through that analytics or our finance department can take you through that.
On the second question, which you talked about in terms of overall where we are, I think as things stand, we expect, as I said, H2 to be very strong, and we should be able to hit that INR 7,000 crore number in terms of revenue growth with the orders we have, the commitment we have from our dealers, what we are able to read in terms of underlying farmer pent-up demand, et cetera. Of course, every quarter one has to see how things go, and that's why actually at the start of the call I said, once this lean second quarter gets over, sometimes in October, we will be more firm. But overall, this particular quarter, what has happened, I don't think it suggests any structural change in the underlying business model of the company. It is a specific quarter issue which was there.
Okay. Sir, and how the Jain Farm Fresh business is going? Sir, what are the steps are you taking it to a global level, like a brand? Sir, as a North Indian, I have not encountered any brands of Jain Farm Fresh. I have not known brands like Nestlé, Jain's brands. Sir, how are you taking that business to another level?
Okay. I think, the business which we have in Jain Farm Fresh, primarily since inception, has been a B2B business. You talked about the brand, right? If you know Coca-Cola has a brand called Maaza. We sell a lot of our mango pulp to them. They add water and sugar, et cetera, and they bottle the juice, they have their bottlers, and they sell it to the market. You talked about Nestlé, they have a brand called Maggi. We do supply dried onion or onion powder to them, and they add that along with the rest of the stuff, and they sell Maggi. If you talk about ketchup, whether Maggi or Kissan , we supply them tomato paste. Our primary business in this case is B2B. We supply to global companies, McDonald's or Pepsi or others, with the ingredients which they use in their final brand.
We have not been a B2C company, we are a B2B company, even though over last one or two years, we have done small amount of business. It's not very big, it's a small business, where through online basis, we are selling smaller packaging under our own brand. That's a very tiny business. It will take time to build the retail scale, et cetera. So right now we are focused on growing our B2B business in global markets and Indian market. We are seeing also a lot more people are willing. They need good quality suppliers. They need more competitive pricing. In the crop sweet process, whether it's mangoes, bananas, pomegranate, or onion, garlic, or tomatoes, we have emerged as one of the large supplier out of India. So I think that will continue to grow.
We have overseas business also as a part of the food in U.K. or U.S. and so on. Some of those businesses sell their brands locally within those markets. But as far as India is concerned, our primary business model is B2B.
Okay, sir. Can we see B2B share in.
May we request you that you return to the question queue for follow-up questions.
Okay, ma'am.
Thank you very much.
Yes.
Next question is from the line of Vinay Chaudhary from Invexa Capital. Please go ahead.
Hello. Thank you for the opportunity. Sir, can you give some light on the margin front? We understand it decreased due to lower top line. But can you give some outlook? Where do we see in terms of full year, next two years?
I think if you talk of overall couple of years, at the company level, the margins should improve primarily because of two reasons. As the government project part of the revenue goes away and the retail business is more part of the product mix or revenue mix, that is typically more profitable. So that should help improve margins. And second, as additional revenues through the sales would mean better fixed cost absorption. That should also further help improve the margin. Having said that, we are also keen to significantly increase our presence in new geographical markets like Northern India or Eastern India, et cetera, where you need to be extra competitive if you're a new player in those markets. All in all, structurally speaking, I would say that over two years you will see a definite improvement overall level in terms of margin.
But it won't be all that spectacular increases at margin level. Absolute amount, whatever is revenue growth, automatic net absolute amount of margins will go, but percentage of margin, I think there would be definitely incremental benefits which would come into play.
Okay. And lastly, on the Inter segment. The plastic goes into the Hi-Tech Agri, which we use currently. So how should one look at as a percentage of Hi-Tech Agri revenue or should we look at it as a separate segment entirely?
Today, just to clarify, and I think if you see our investor presentation, we have tried to clarify and give that clarity. The Hi-Tech Agri input business has micro irrigation, that is drip irrigation and sprinkler irrigation, and that is also agriculture input, which is the planting material which we sell to the farmer. So Hi-Tech Agri Division has drip sprinkler as well as the tissue culture plant and solar water pumps. These are the four products which get sold to the farmers directly as a value-added product. That is the Hi-Tech Agri Division. The plastic division covers the piping part and plastic sheet parts, partly for domestic market, partly for export market. And part of these pipes do get sold to the farmer. That's the plastic division has all about pipes and sheets. It's all mostly plastics. So I think that is the breakup.
All right. Thank you.
Thank you.
Thank you very much. Next question is from the line of Rishikesh from RoboCapital. Please go ahead.
Yeah. Hi, thank you for the opportunity. Just wanted to confirm regarding the pending receivables, is there any dispute with the government?
I would not say. One or two places there is some amount of dispute, but in most of these cases, I would say 95%. The payments are linked to the completion of the projects. Some places, projects have been like 95% complete, last 5% is pending, where government needs to do something, and then only the funds will get released. We are really expecting that to get done. But by and large, these are not contested, I would say, in terms of legal process, but there can always be two different views. But by and large, most of these receivables, we should receive as we fully complete the project.
Once we execute the remaining project, we should be getting the proceeds, right?
Right. And at that time, government can contest some of this, that this cost was not there or this is overrun of the cost, et cetera. But as I said, based on our experience, by now, I think we have sold and collected against the projects, almost INR 8,000 crore over last seven, eight years, and INR 7,000 crore we have collected, while this INR 900 crore and odd is outstanding. Overall, I think we expect most of these payments to come through. There could be some variation, but that one would come to know only when you close the project.
By this year itself, you will be closing the execution projects at your end?
Most of them. I think by June next year, almost all projects should get completed.
Okay, so have you started it already or you will be starting it when? If you could let us know.
I think it is an ongoing process. It would pick up more speed post-October, post-rainy season.
Okay. And by June, you are aiming to complete it?
Yeah, as I said, almost 90% of projects. We have about 30% ongoing projects. Most of them should get completed by next June. Three or four might take some more time, but that would be small percentage.
Got it. Thank you very much, sir. Thank you.
Thank you very much. The next question is from the line of Siva Ramakrishna Kodali, an Individual Investor. Please go ahead.
Good afternoon, Mr. Jain. Am I audible? Hello?
Please go ahead.
I have read the balance sheet, Mr. Jain, and it is an excellent balance sheet, especially the non-financial part of it. It communicates all the benefits the farmer can have by, what you call, having a partnership with our company. I understood as an investor, but how do we make the farmer understand? What is the strategy that we have to get the farmers on board, especially we think we have a good model of supplying them tissues, what you call supplying them the sprinkler systems, and then, what you call, also buying back. Excellent model. That is one question. How do we communicate to the farmers that it is beneficial and they should be working with us?
The second thing is, I have heard in many earlier conference calls also that we will be strengthening our distribution systems, that we are strong in west and south, but we will be expanding in north and east, and we have about 3,000-odd dealers, and the number would go to about 7,000. What was the number of dealers last year, and what are the number of dealers now, and how many more new dealers do we have in Northern India and Eastern India?
Okay. Two parts to your question. The first part, in terms of communication with farmers and engagement with farmers, that is an ongoing way. One way we do, we have this demonstration farm at our headquarters in Maharashtra as well as in Tamil Nadu. We invite farmers to come see, we engage with them. In January, February, we had 40,000, 50,000 farmers to come and meet us there physically. That is one way. The second is to go to individual villages or regions or areas where there are clusters, and do campaigns there along with our experts and the local farmers, carrying street corner meetings or meetings along with university experts, et cetera. That is an ongoing thing we do by crop. If we have more cotton farmers or more mango farmers, that is another way we are engaged with the farmers.
The third way to engage with the farmers is through our dealers, because dealers have already an existing relationship. So where our sales engineers and agronomists work with the dealers to canvas to the farmers and convey them the importance of what we do. Fourth is, around the country, there are a lot of agriculture-linked exhibitions, and we participate in these regional exhibitions in various places so that the local farmers who come and visit the exhibition do get some demonstration benefit, as well as our people are on the stand to connect with them. As a company, we are actually reaching out to few hundred thousand farmers every year, and that is how we are continuously increasing the base in terms of reaching out to the farmers.
In your second question in terms of increasing the dealer network, I think we have created good level of dealers in west and south. Especially south, we are right now actively strengthening quite a lot, and our business as a result has grown, I think over last two, three years, almost INR 300 crore a year in south because of additional dealers. We have opened another, I would say, about somewhere between 50 and 100 dealers in rest of the country over last 9- 12 months. As we go along, it is not only the quantity of the dealers, but the quality, their strength in carrying inventory as the distributors as well. So that is what we are working on, getting right people who are committed to our business for next 10 or 20 years.
Because a lot of our dealers have been with us for 20, 30 years, and that has really done wonderfully well. It is mutually beneficial relationship. So I think our next 1.5 year, we will be able to report much larger penetration. The best way to test this, right, whether our new dealer network is working is you see the sales in the newer states compared to the West and South, where we are quite already doing well now.
Yeah, but you have been talking about increasing the number quite significantly, and 50-100 dealers is not much because for a company like ours, I think reach and penetration is very important, right, Mr. Jain?
Yeah. I think when I am talking of dealers cum distributors, right? Some of our distributors carry sub-dealers under them. When I talk of one distributor, he could have about 100 dealers. The West and South, the model has been more individual dealers rather than distributor. But in rest of the country, North, Northeast, et cetera, there is a model which works as more of a distributor for you, but then the distributor has lot many sub-dealers. A combination. I am right now talking of only people with whom we deal, either dealers or distributors. I am not counting into this numbers of sub-dealers. I think we understand the basics, right?
Yeah.
The idea is that, over the next three, four years, business should double in its size, whether pipe or drip, going to the farmers. For that, whatever the adequate network required, either through distributors who have a large number of sub-dealers or directly dealers, is what we are working on.
Mr. Kodali, are you done with your question?
Yeah, I just want to recheck. You said in three to five years, the business would double, is what you said, Mr. Jain?
Yeah, that's our plan.
Okay. That's very encouraging to hear. Thanks.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.
Yeah. My apologies for some disruption. I do not know what was with communication. Again, I would like to thank everybody for their interest in the company and continued questions and queries about where we are and where we're planning to go. I just want to assure that I believe we are on the right path, which should result into much better value for all shareholders going forward. While our business, by its inherent nature, has seasonality, cyclicality, and unpredictability, we are trying to work with a model which would be more, I would say, predictable going forward as we go along. Also which will be more free cash flow generative rather than just merely revenue. That's what we are committed to.
I think as we talk sometimes in October, I should be able to give you more clarity on FY 2025 numbers and outlook for FY 20 26. Thank you very much.
Thank you, members of the management team. Ladies and gentlemen, on behalf of DRChoksey FinServ Private Limited , that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.