Ladies and gentlemen, good day and welcome to the Dhanuka Agritech Q4 and FY25 earnings conference call hosted by Antique Stock Broking Limited. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar. Thank you, and over to you, sir.
Thank you, Sasha. On behalf of Antique Stock Broking, warm welcome to all the participants on the fourth quarter FY 2025 earnings call of Dhanuka Agritech. Today, we have Mr. M. K. Dhanuka, Chairman; Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; Mr. V. K. Bansal, CFO on the call. Without further ado, I would like to hand over the call to Mr. Dhanuka for opening remarks, post which we will open the floor for Q&A. Thank you, and over to Mr. Dhanuka.
Thank you, Manish ji. Good afternoon, ladies and gentlemen. Myself, M. K. Dhanuka, Chairman of Dhanuka Agritech Limited, welcome you all to the Q4 and FY 2025 earnings call. I have with me Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. V. K. Bansal, CFO of the company. As you are aware, Dhanuka Agritech is a leading Indian agrochemical company. Dhanuka is working with the vision of transforming India through agriculture. We have a pan-India presence in all major states to reach out to more than 10 million farmers with our products and services. Dhanuka's key focus has been on introduction of novel chemistries and extensive product development, distinguishing us from the rest of the industry. With four manufacturing units and 41 warehouses across India, we cater to around 6,500 distributors and 80,000 retailers.
Dhanuka has a strong sales and marketing team to promote and develop new products. Dhanuka's strong R&D division has a world-class NABL accredited laboratory, as well as an excellent team for new product registration and development. Dhanuka has international collaboration with 10 leading global agrochemical companies from Japan, U.S., and Europe, which helps us to introduce the latest technology in India. It is my privilege to address you at the close of what has been a landmark year for Dhanuka Agritech Limited. FY 2024-2025 was a period marked by bold decisions, strategic partnerships, and excellent financial performance anchored in our vision to serve farmers with science-led, high-impact solutions. Among our most significant achievements this year was achieving a milestone revenue of more than INR 2,000 crore, as well as acquisition of international rights for two key fungicide molecules, Iprovalicarb and Tebuconazole, from Bayer AG, Germany.
This deal is not just a product expansion; it is a strategic gateway to global growth. With these molecules, we now have a presence in more than 20 countries across Latin America, Europe, Asia, and Africa, marking a momental step in our journey from an Indian leader to a global agrochemical player. This year, we have given a slogan to our team, "2025 in the year 2025." So I am happy that the team has delivered INR 2,035 crores in the year 2025. This year, we have aggressively increased our presence in corporate sales in the Indian market, paving the way for future growth for products being manufactured at the age. We have approved the next product for manufacturing in the existing plants, for which the revenue will start from Q2 onwards. Our investment in process research is yielding good results, with many more products in the pipeline.
I am delighted to share that our revenue from operations during Q4 FY 2024-2025 is INR 42.02 crores, representing an increase of 20.01% over the corresponding period last year. For the FY 2024-2025, it is INR 2,035.15 crores, which is 15.73% up over last year. EBITDA stood at INR 109.75 crores in Q4 of FY 2024-2025, up 37.03% year-on-year basis. For the FY 2024-2025, it is INR 416.61 crores, up 27.23% over last year. EBITDA margin improved from 21.75% in Q4 of FY 2023-2024 to 24.83% in Q4 of FY 2024-2025, and improved from 18.62% in FY 2023-2024 to 20.47% in 2024-2025, which is an improvement of 180 basis points. You will appreciate that at the beginning of the year, we have given the guidance of 100 basis points reduction in EBITDA margin. Later on, by the end of the first quarter, we revised our guidelines to 100 basis points improvement in EBITDA over last year.
Finally, we have been able to deliver 180 basis points improvement over last year. Profit after tax is at INR 75.5 crore in Q4 FY 2024-2025, up 27.94% compared to the corresponding previous last year quarter. It is INR 296.96 crore in FY 2024-2025, up 24.2% year-on-year basis. PAT margin improved from 16.02% in Q4 FY 2023-2024 to 17.08% in Q4 of FY 2024-2025, and improved from 13.6% in FY 2023-2024 to 14.59% in FY 2024-2025, an increase of 99 basis points. The Board of Directors has recommended 100% dividend, that is INR 2 per equity share, having face value of INR 2 per share, which will absorb INR 9.02 crore. The said dividend will be subject to the approval of the shareholders in the 40th Annual General Meeting, scheduled on 1st August 2025.
You will recall that in the second quarter, Dhanuka has done buybacks and rewarded the shareholders by doing the buyback of 500,000 shares at a value of INR 2,000 per share. Zone-wise share of turnover for Q4 FY 2024-2025 is North Zone 34%, East Zone 12%, West Zone 20%, and South Zone 34%. Product category-wise share of turnover for Q4 FY 2024-2025 is insecticides 38%, fungicides 13%, herbicides 32%, and others 17%. We consider ourselves responsible towards preserving food security of the nation. We continue to strengthen our association with the agriculture universities, Krishi Vigyan Kendra, and other critical institutions to impart knowledge and latest technology to the farmers. Thank you very much for your kind attention. We would like to open the forum to take the questions. Thank you very much.
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 remove 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 Rohit Nagraj from B&K Securities. Please go ahead.
Thanks for the opportunity, and congrats on a very strong outperformance. The first question is based on the initial monsoon estimates, which seem to be favorable. Given that our base has also reached and crossed INR 2,000 crore, what is the revenue growth and maybe with the margins that we are looking at for FY 2026? Another question in terms of the Dahej facility, how has been the performance during the entire FY 2025? What is the revenue, and what is the EBITDA? Similarly, what could be the guidance for FY 2026? Thank you.
I will start with the Dahej performance update. Dahej performance last year was a revenue of INR 40 crore in FY 2025. For the coming year, we are looking at a revenue of INR 60 crore from Dahej. In terms of EBITDA, last year was a negative EBITDA of INR 14 crore. This year, the EBITDA will be on similar lines.
For the entire.
Sorry, with respect to your first question on the monsoon forecast being good, both IMD and SkyMet have given a positive monsoon forecast at 105% of LPA, which means that the initial sentiment is quite positive for the growers to plant their fields. On the revenue, this year, what we are planning is a higher double-digit growth. On the EBITDA, we expect it to remain on similar lines as this year.
Sure. That's all from my side. Thanks, and all the best.
Thank you very much. The next question is from the line of Viraj from Simpl Innovative Brands Private Limited. Please go ahead.
Yeah, hi. Thanks for the opportunity. Am I audible?
Yes, sir, you're audible.
Hello. Yeah, just a couple of questions. First is, can you give a breakup of B2B sales and B2C sales for FY 2025 and Q4 in the domestic market?
Okay. So B2B sales this year was close to about 9% of the total revenue, and 91% was from the brand sales.
This 9% would also include the technical sales of INR 400 million we did, right?
Yes, absolutely.
Okay. What is the corresponding figure last year?
Last year, the corresponding figure was about 4%.
Okay. Got it. Second question is, you talked about new molecule introduction into the Dahej plan. So can you give some color what kind of a product? Is it the existing synthetic pyrethroid family we are looking, or is it something else? And at what level of utilization one could expect a break-even or positive EBITDA from the Dahej plan?
I'll answer the question in two parts. First of all, the product which we are going to introduce is not a synthetic pyrethroid. It is a fungicide. The volumes this year expectation is not very high, but we are expecting about INR 10 crore of revenue from this new product, which is included in our forecast. In terms of EBITDA in this year, it is not expected to contribute significantly positively. The EBITDA margin overall is expected to remain similar.
No. Okay. So what I was trying to understand is what level of utilization you expect the operations at Dahej to be break-even or contribute positively.
The current capacity utilization is close to 25% for the last year. This year, we are expecting to take it up to 35%. For EBITDA margins to become positive, we need to reach about 70%-80% of capacity utilization.
Okay. Just two questions. One is on the broader margin. I think what you guided is overall growth in double-digit and operating margin to be in a similar band. Now, if you see our B2B operations, we are expecting a similar level of operating loss in 2026 as against 2025. If you see in the B2C also, what we are seeing is the unit costs of key RMs are kind of increasing across the board. The cost pressures are also quite high. B2C margins, if I compare to our own history in the past, have been at the higher end of the band. Just trying to understand if you can give some more clarity on the drivers of the margin sustainability going into 2026 as well. How are you looking at it?
What factors you think would help us sustain the margins going into 2026?
The cost increase, we will obviously pass on to the customer. That has been our regular practice. The cost increase in raw material will be passed on to the customer. Our past launches, which are relatively in high-value segment, constantly upgrading product portfolio and increasing the revenue from relatively high contribution products are certain dynamics which will help us maintain our volumes, value, as well as margin. We have upgraded some market outreach efforts in terms of creating a base of loyal farmers and powerful spokesperson across scientific community, which is also going to create a relatively high brand recall and brand equity for Dhanuka products, which hopefully will keep our margins on the higher side.
Okay. Just last question was on the cash position. Yeah, just last question. On the cash position, I think even post the acquisition price we paid for the two products in Bayer, our cash position is quite healthy. Given the way things are, this will just keep on building up. Any thought you can provide in terms of how are you looking at distribution of this cash, either in terms of payout or investment? A few quarters back, we talked about us looking at possibly other agri input value chain opportunities. Any update you can give there as well?
We have a healthy practice of dividend as well as buyback, which was also achieved this year. Recently, we announced 100% dividend also. Going forward also, we will have a continued practice of rewarding our shareholders. Strategic opportunities as and when will come will be shared on this platform as well.
Okay. I'll come back in a few. Thank you.
Thank you.
Thank you so 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 Raman Kavi from Sequel Investments. Please go ahead.
Hi, sir. I have one question with respect to the international rights for two of the key molecules which the company received, bought. I just want to understand what is the time of these two molecules and how much incremental revenue are we expecting from sale of the, from utilizing these two molecules in FY 2026 and FY 2027?
I got one part of the question, revenue in FY 2026 and FY 2027. What was the first part of your question, please?
Total addressable market for these two molecules.
Okay. Got that. The total addressable market for both these molecules is close to $100 million. However, in one of the products especially, there is a number of generic products in many parts. We have acquired a business for that product in the Brazil market where the entry barrier is quite high. We expect to maintain those business. In terms of revenue contribution from both products combined, in this year, we are looking at about INR 110 crore, including India brand sales and international sales from both the products. As we speak, Bayer is continuing to do the commercialization in most of the countries. We will be taking over distribution operations starting October. India, we have already launched the product in Dhanuka brand name in the month of May.
Okay, sir. I just want to more or less make a follow-up. You said you bought the right for these two molecules to be sold in Brazil market, right?
One of the products is only in Brazil market. The other product is spread across more than 20 countries.
Okay, sir. And my second question is, so what is the guidance for this particular year? And will be there any further margin expansion?
In terms of gross margin, we are expecting a hit of around 100 basis points in the year 2025-2026. In terms of EBITDA, we are basically maintaining this year percentage in the year 2025-2026.
Revenue growth?
Revenue growth is we are expecting higher double-digit growth.
Higher double-digit. Sir, also, can you give a ballpark of margin figures for the segment-wise? Insecticides, what is the margin from insecticide business? What is the margin at fungicide levels and herbicide levels?
We don't share category-wise margin.
Can you give which is a better margin business?
Sorry to interrupt, but can you please join the queue again for a follow-up?
Okay.
Thank you so much. The next question is from the line of Riju Dalui from Antique Stock Broking. Please go ahead.
Yeah, hi. Thanks for the opportunity and congrats on good set of numbers. My first question is regarding the revenue growth that we have registered this quarter, right? It was a 20% kind of a growth rate. Is there any kind of contribution from the Bayer product in terms of royalty that has helped to achieve this kind of revenue growth, or is it purely an organic growth if you could clarify?
This is purely organic growth. This growth has in the last quarter and the entire financial year has come from Dhanuka's existing product portfolio.
Understood. In terms of volume and the value growth, if you could bifurcate those things, out of 20%, how much was the value growth and how much was the volume growth?
Yeah. In Q4, the volume growth was around 19% as against value to 20%. In annualized basis, the volume growth was higher by 300 basis points as against 15 odd, which is around 18 odd figure.
Understood. Yeah. Sir, if I look at your gross margin, right, gross margin basically flat on a year-over-year basis for the quarter. If I look at the EBITDA margin, that has seen a sharp improvement of over 300 basis points. In terms of the other operating expense, right, other operating expense, which used to be around 12% on total revenue, it has come down to 9% on total revenue. What has driven this kind of a cost saving? Are you taking any kind of cost-saving measures or what actually has driven this kind of a cost saving in terms of your operating costs?
I think there appears to be some gap. Other expenses, 9%, we are seeing. There is no such basically improvement in the other expenses. Other expenses has come as a percentage of more than 11%.
No, it was more than 11%, but this quarter, it has come down to 9%.
What are you asking? I'm saying for the whole year.
No, no, sir. For this quarter.
For quarter, you see, basically because of we are getting some marketing expense reimbursement from our foreign, basically.
Japanese partners.
Japanese partners. This year, in the quarter four, basically around INR 5 crore incremental value we received as compared to previous year, because of which the other expenses appears to be a little low. You have to see as a whole, I think it is in the similar %.
The improvement in the gross margin right now,
what I would like to add is we continue to invest aggressively in demand generation, farmer education, and brand building, both as brand Dhanuka and branding and education of our individual products to farmers across all categories. We have done special campaigns in February and March with sugarcane farmers for their education around the VD sites, which we launched in the previous year.
Understood. Thanks for the clarification. The other question was that I think rising depreciation for the quarter. We must have capitalized the Bayer acquisition cost in the balance sheet. In terms of the acquisition, did we get any kind of royalty from Bayer during this quarter?
Yeah. In the shape of net economic benefit, we received around, you see, around 12 share in this quarter.
Twelve share of royalty. Understood. As you highlighted earlier, the royalty that we will continue to get till the registration name to be transferred to Dhanuka. Any kind of guidance you would like to tell how much kind of a royalty that we can get or the percentage of royalty that you are getting on our revenue? It will be helpful.
I think this year we are expecting anything between 15% to 20%.
Understood. Yeah. One last question, if you could allow me. That is regarding the herbicide portfolio that we have. In terms of herbicide portfolio, how much pre-emergent herbicide is in our portfolio out of the total herbicide portfolio?
That's a very specific question. Indeed, how much is a pre-emergent herbicide versus a post-emergent herbicide? I don't think so. We are ready with that because we have various generic products, for example, Dhanu Top, Crazy, and many others in the pre-emergent segment, as well as many including Targa Super in post-emergent segment. Dhanuka is a company with very strong portfolio and choice of variety of products across paddy, sugarcane, soybean, cotton, groundnut, with various specialty and generic herbicides. We continue to introduce many Japanese herbicides, and in future also, we'll be launching few herbicides in different categories.
Understood. If you could give any ballpark number, that will be very much helpful.
Yeah. None so far. Thank you.
Yeah. Thanks. Thanks for the clarifications.
Thank you very much. The next question is from the line of Sani Vishe from Axis Securities. Please go ahead.
Yeah. Thank you for taking my question, sir. And congrats on a good set of results. I just want to understand, given that we are entering the international market with this acquisition of fungicides from Bayer, do you see the market moving in line with the expectations? Because as you understand, international market hasn't been that supportive overall. Is it going in line with our estimates? I mean, in general, I want to understand how the international market is doing.
Two things. One, to the operator, in general, there is disturbance in the line. This particular gentleman, we could not hear at all.
Okay. So is it better now, sir?
There is some disturbance in the line in general, but yours was absolutely inaudible, sir. Can you repeat this slowly?
Yeah. So I'm just trying to understand how the international market is doing, given that in most of the cases for other players, we have seen that international agri market is not doing so well. Given that we have acquired the two fungicides, is it moving in line with our expectations, or are there some challenges?
International market obviously is behaving the way it is behaving. We acquired these two fungicides last year. One, we see a good opportunity for Melody Duo and Melody's variants in country in India. It is a gateway for us to get a footprint in the export markets where Dhanuka is relatively new and trying to get into export domain. I think it's a pretty good opportunity with having these two fungicides in our portfolio with access to the world's largest agrochemical market of Brazil and also to various other countries with Melody and its variants, which itself is a very powerful fungicide.
Okay. The revenue we are expecting from this, was it part of the growth guidance that we just discussed? Double-digit growth?
It is part of the growth guidance that we have given. Yes, sir.
Okay. Finally, this small question. We can see that inventories and the trade payables seem to be in line with whatever there was earlier. The trade receivables have gone up significantly. Can you just throw some light on that? What are the expectations for coming quarter?
Our channel and our team really align well, and I think trade receivables are mostly in line with what we were expecting in last quarter. This will be coming down pretty sharply in first quarter also and in future quarters as well. I think this is a very healthy mix of what we have in both in terms of inventory and trade receivables.
Okay. Pretty clear, sir. Thanks, sir.
Thank you very much. Does the management have any disturbance in the call?
The call is not very clear. A bit hazy.
Do you want me to reconnect you?
No, I don't think so. It will waste a lot of time of all of our audience. So we'll try and continue. Yes.
Okay, sir. Thank you so much. The next question is from the line of Huseain Bharuchwala from Carnelian Capital. Please go ahead.
Hello. Am I audible?
Yes, you are, sir.
Yes, sir.
Sir, just wanted to understand. We have basically got a royalty of INR 12 crore this year. Are we looking at further products to be added, basically acquiring some more products? This is the first time we have entered into global markets, and we have acquired some products there. Are we looking at further more products in the pipeline?
If there is a good opportunity for domestic and international markets, we are on lookout for inorganic growth opportunities in multiple ways, including acquiring products.
Got it. Got it. Secondly, sir, just wanted to understand, you said INR 5 crore is the reimbursement you got from the customers, basically your suppliers, Japanese customers, basically whom you supply from, who are your key suppliers. Is it a regular phenomenon or is it something which has happened for the first time, and do we see more type of deals like this?
It varies from product to product or year to year. It is only relevant in the context of why quarter four numbers were looking relatively low. The clarification there is important in terms of our commitment to continuously invest in our marketing efforts, in our branding efforts, farmer education, and product development. Dhanuka is absolutely committed and relentless about it.
Sir, because of the commodity prices going up, do you think this is one of the reasons you are guiding that you will see 100 basis point fall in the gross margins because you see commodity chemical prices going up?
You see, the main reason is last year we got the advantage of continuous decline in the raw material prices, and the same decline were not passed on to the customer. This year, now the price is relatively stable and are increasing trend, because of which we are expecting a 100 basis point impact.
Got it, sir. These were the only questions from my side. Thank you. Thank you. Thank you.
Thank you very much. The next question is from the line of Pavan Kumar from Ratna Traya Capital. Please go ahead.
Sir, can you talk about your vision on the export side, what you are looking forward in terms of that? Also, can you outline the strategy behind this Dahej facility and over a longer term, how will it benefit us?
I think the question is short, but the answer is a little detailed. I'll try to keep it short. The strategy for Dahej, of course, is very positive for the future. Looking at the global challenges that we are observing and the uncertainties which are there, we believe it is important that India comes up as a key supply chain point for agrochemicals, especially for manufacturing chemicals and more so in agrochemicals. Globally, right now, for agrochemicals, India and China remain two of the top manufacturers. With some negative sentiments around China, trade wars, tariff barriers, which seems to be the new norm, we believe India will have an advantageous position, having very good relations with most global countries. In the light of that, the international market presents a great opportunity for Dhanuka to expand our operations beyond the boundaries of India.
To make Dahej also successful, international markets will be key in the future as we come out with more products which are having larger base and even some of the unique chemistries which very few players are manufacturing globally. We are looking at differentiated products on the manufacturing side as well, the same similar strategy that we employ on the brand side. Yes, our portfolio will remain mixed with generics and differentiated products on the manufacturing. All in all, I believe international market opportunity is absolutely phenomenal from India, and we are committed to drive our international sales revenues in the future.
Thank you so much. The next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Thank you for the opportunity and congratulations on good set of numbers. Rahul ji, how is the monsoon season looking like to you?
[foreign language] IMD [foreign language], SkyMet [foreign language] , Australian Meteorological Department [foreign language] forecast [foreign language] favorable [foreign language .]
Okay. Sir, vis-à-vis last year, which crops can give you major swings in revenue if monsoon pans out well distribution-wise?
Believing that monsoon will pan out well distribution-wise, the most important crop will remain paddy, then soybean, all oil seeds and pulses. We are pretty hopeful of phenomenal growth in the horticulture segment. Sugar cane has been our key attention and will continue to drive large part of our business. Maize as a widespread and phenomenally high acreages is going to support us significantly. We are pretty boastful of the chili acreages also, which will be reducing a tad this year, yet will continue to consume crop protection chemicals significantly. Dhanuka has good penetration in grapes. We are going to launch a grapes fungicide also late next quarter. I am pretty positive about all the geographies and most of the crops across the country this year.
Any new products planned for launch except the fungicide you mentioned for grapes?
We are going to launch our paddy herbicide Dhinkar this month itself, which is a Japan Hokko Chemicals product. We are going to launch a Japanese fungicide from Nissan Chemicals in next quarter.
Okay. Sir, just one question on Q4. While the top-line growth was pretty healthy, was it because some partners are preparing for a healthy kharif season early, or it was primarily a rabi season demand only?
This won't be, I won't say, rabi season demand. This is also aggressive sugarcane and maize acreages coming up in February, March. Our significant attention and focus towards horticulture crops for which February, March, April is a very important month. Pulses crop, green gram acreages have gone up significantly in Uttar Pradesh, Madhya Pradesh, Rajasthan, which has become a new opportunity for various weedicides and insecticides. Paddy acreages in South India, which was the rabi crop, continue to consume in March, April. That remained an opportunity. These were the large consumption opportunities. Yes, since there was an increasing price trend in last quarter, I feel some of the partners were probably preparing for the good kharif.
Okay. Mr. Bansal, I think you said INR 12 crore as royalty number for Q4 and INR 15 crore -INR 20 crore next year. I mean, why is only INR 15 crore -INR 20 crore for the entire year if we have INR 12 crore in the quarter? Is it that after a period of hello?
Actually, first of all, this is not the royalty. It is in the shape of net economic benefit. Because you see, for Indian business in India, we are starting our billing in the quarter one itself. Earlier, we were getting because the buyer was doing the business on our behalf. Right? The moment the sales number are coming in our balance sheet, that benefit will go away.
Okay. And sir, lastly, I missed the number, but how much could be the contribution from Iprovalicarb and Triadimenol in FY 2026?
You see, we earlier said it should be in line with our existing business revenue.
In FY26?
I think about 4% for the next year.
Okay. Okay. That's it from my side. Thank you.
Thank you.
Thank you very much. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead.
Yeah, Bansal, we have just two or three questions in terms of bookkeeping. During the quarter, Bayer product, you said royalty is around INR 12 crore side to be booked. So any other cost we have booked in a P&L, or it's directly flowing to EBITDA?
No, no. It is absolutely directly going into EBITDA, except the cost is only depreciation.
Okay. Absolutely. Right. In terms of cost of acquisition, we have taken to the balance sheet, right, which is INR 160 crore of intangible assets, which is showing in the summary. Okay. Next year, when you said a number of INR 15 crore-INR 20 crore of royalty, right, apart from that, any other income will come? Because we have mentioned also INR 100 crore of revenue in FY 2026. What is the P&L, which is the revenue comes in the next year?
Revenue is already shared in terms of both the molecules. We are expecting around INR 110 crore of revenue.
Okay. And INR 100 crore of revenue, it is over and above your INR 15 crore-20 crore of royalty, right, which will be booked in the next year?
Absolutely. Absolutely.
Okay. And INR 100 crore of revenue, I think earlier when we acquired this molecule, we have alluded, right, the margins in this INR 100 crore of revenue will be the same as the company's margins, right, EBITDA?
Yeah. We are saying basically, yeah, overall margin we are taking is gross margin 100 basis point hit. That is including that.
Okay. Understood. So basically, next year, just again saying that, it's a number is around INR 120 crore of revenue, basically booking can come to the next year for a Bayer as a product for us.
Yeah. That's right.
Right? Royalty and the revenue. Okay. Understood. Yes, sir, in terms of can you share the export revenue for this year and what is the expectation for the next year?
Export of the acquired products or overall exports?
No. Overall, sir.
Overall exports, we are expecting to the tune of INR 50 crore other than Bayer products.
Okay. What was the number for this year, FY 2025?
The number was close to.
This year's number is around INR 30 crore .
30 crores.
30 crores. Okay. Understood. And just one clarification. I think, Harsh, you mentioned in the start, I think the head side you said EBITDA 14 crores, right, in FY 2025, which was a negative, right, number or?
Negative. Negative.
Negative. Next year, you are saying the same number will continue?
Yeah. There is a little improvement.
Little improvement. Okay. Understood. Yes, that's from my side. Thank you.
Thank you.
Thank you so much. The next question is from the line of Viraj from Simpl Innovative Brands Private Limited. Please go ahead.
Yeah. It's simple. Just two questions. First, again, a clarification on the Bayer product acquired. So the revenue recognition, revenue on the P&L recognition would be to the tune of INR 110 crore-120 crore in FY 2026. And in addition to that, there will be another INR 15 crore-20 crore of royalty. Am I right?
Yes. That's correct.
Okay. So if I just understand our normalized because this integration will happen over a period of a year and a half. On a normalized basis, what will be the sales and profitability that entity would have done in 2025?
Sir, sorry, your question was not clear, Mr. Viraj.
If I look at FY25, what will be the normalized sales and profitability? Any of those two products, what would that be looking like in FY25?
For these two products you are talking?
Yes, sir.
These two products, FY 2025 revenue would have been close to INR 200 crore.
And profitability?
Profitability, we don't know because it was on the books of Bayer.
Okay. Got it. Second question is on the B2B sales. See, you said that we did somewhere around 9% of sales as B2B, including diets, and this was 4%. Now, if I exclude the diet sales ramp-up, our B2B sales have gone from around INR 630 crore to INR 145 crore in 2025. I am just trying to understand two things here. One is, how are we looking at this particular channel approach for us? Historically, if I compare other players, also the margin profile in B2B is not that generative as B2C, which has been our focus area since many, many years now. Any deep dive you can give in terms of the thinking and the thought process behind the ramp-up of B2B sales in domestic market?
Yes, sir. Thank you for that question. This is where it was a very strategic call to build the channel on the B2B side. While we have an extensive channel and brand name with the B2C customers, we are not that strong on the channel for the B2B customers. The idea is to ramp up our customer base on the B2B side for future products coming out of the H, including what we have commercialized already and the products that will be coming out of our R&D efforts.
Okay. Any color on the genetic economics and B2B? Would it be a low-teen margin business or any color? How do we see that evolving for us?
The margin is absolutely, as compared to a branded business, low. At the same time, on EBITDA level, I think it is okay because there is hardly any expenses on this business. In terms of gross margin, there is a significant difference. On EBITDA level, the difference is not that much.
Okay. So if I have to just understand one next question.
I'm sorry to interrupt. So sorry to interrupt. Can you please join for the follow-up?
Sure. Sure. Thank you.
The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Hello. Can you hear me?
Yes.
Yeah. Thank you very much. Congratulations on your good result. If you look at last year's quarter number and the Khareef outlook for this year on this INR 500 crore revenue and the 13% kind of EBITDA PAT margin, what is the sense you have in terms of the first quarter and first half growth and revenue and margins? Sir, your voice is not clear. The disturbance level has gone up.
Just hold on. Just hold on.
Yeah. Can you hear me now?
I can hear you.
Yeah. Okay.
I was just asking, going by the first quarter and first half numbers last year, given that this year the Khareef is going to be much better, what is the sense you have in terms of revenue growth and PVT margins in your first quarter and first half? What is the sense you have based on the current sense and current trend and replacement?
We are going to maintain the growth trend that we have forecasted for the year. First quarter is relatively a slower quarter, yet I think we'll maintain our higher double-digit growth trend in Q1.
Okay. If you look at the EBIT margin based on whatever you reported so far, incrementally, the Bayer business, when would it move towards your blended margin? Initially, I think it'll possibly be lower because of the higher depreciation. When do you think the Bayer business can earn the kind of EBIT margins already earning on the blended basis?
I think currently, as we take over the business, the margin will be in line with the existing. However, there are opportunities over the next three years to optimize the cost as we take more control on the supply chain. Right now, the product is being formulated across three different geographies globally. As we consolidate that and bring the production more to India side over the next three years, the EBITDA margin from that business can improve.
Okay. So in terms of your overheads and distribution costs, incrementally, do you expect any additional expenditure on promoting the Bayer products, or will it be in line with whatever you're doing as a percentage of sales?
A large portfolio of the Bayer products will move as a B2B sales to national distributors across various countries. The India business will, of course, become part of the branded sales that we have as our business. The operating expenses for the India portion of the business will be in line with the existing business. For the global business, it will be similar to B2B business expenses. Not very high, but yes, definitely, it involves registration expenses in various countries, which will be part of the business.
Okay. Thank you very much. I wish you all the best.
Thank you, sir. Thank you.
Thank you so much. The next question is from the line of Dhruv Muchhal from HDFC AMC. Please go ahead.
Yeah. Thank you so much. The margins in your distribution business, I mean, the B2C business, if I'm right, are about 21% in this year in FY 2025. They are the best ever. You have broadly maintained the margin guidance for FY 2026. Just trying to understand, is there a meaningful change in the product portfolio, what you had over the last many, many years, that is giving you the confidence that these margins can sustain? Just some broader thoughts here, sir, please, just to understand the sustainability of these margins.
We have a constant effort to upgrade our product portfolio. Every year, we have introduced minimum one up to two ninety-three products also. Very specialized and monopolistic products is what we have introduced every year. Because of which, our product portfolio getting upgraded, the margin situation has also shifted forward. I think we'll continue to introduce new products, powerful products, and be able to maintain the margin levels and probably continue that way.
Also, generally, if I understand the product life cycle, in the initial years, the margins are strong. Then, as I think I mentioned earlier, it starts to narrow and starts to decline. You have factored that in. All those factors are there in your base case to give these margin guidances, right?
Yes. Absolutely. What you're saying in terms of product life cycle, towards the tag end of the product life cycle, the margins tend to decline, which is kind of compensated by other new introductions to some extent. Then, as the new introductions ramp up volumes, they also add to the absolute revenue as well as the margins.
Sure. Got it. And one small point on the depreciation. Is the Q4 depreciation run rate accounting for the acquisition of Bayer, I mean, the acquisition of Bayer molecules?
Yeah. It is at the rate of 10%. It's straight line.
Okay. Perfect. Thank you so much, sir. That's all.
Thank you very much. The last question is from the line of Raman KV from Sequint Investments. Please go ahead.
Hello, sir. Thank you for the follow-up question. Sir, I just want to understand that majority of that whether the growth comes from introduction of new molecules or is it the existing molecules growing at a significantly double the high double digit?
Most of the growth last year has come from introduction of new products.
No. I was just asking in terms of long term.
Yeah. Going forward also, most of our development effort, farmers' liking, is towards getting new technology, new concepts, new methods for protecting their crop. Our constant effort is to bring eco-friendly, effective, and low-dose products to the farmer. The constant brand equity that we develop with the farmer keeps traction for our products high. The choice of new products is obvious as the Indian agriculture is also constantly upgrading.
Sir, and one final question.
With respect to the ties you have with MNG such as Nissan Chemicals, can you just throw some light on how does the tie work, revenue-sharing model, or is it like a profit-sharing model?
Ties are working really well. We are able to introduce new products every year. I think that's about it. What I can say about these relationships, which models we are using and how each one is going is probably restricted to an alternate discussion.
Okay. Thank you.
You're welcome.
Thank you very much. I now hand the conference over to management for closing comments.
Friends, once again, I would like to thank all the investors and analysts for your support and confidence in Dhanuka. With the transition in management, we have embarked on our next era of growth and business success. I reassure our stakeholders that we are committed to the task of transforming India through agriculture, the landscape of agriculture, and farmers in India. [foreign language] Thank you and goodbye until next time. Thank you. Thank you.
Thank you very much. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.