Good evening, everyone, and welcome to UPL's Capital Markets Day 2022. It's a pleasure to meet you in person after a three-year challenging but rewarding period. A lot has happened in these three years with the completion of the integration of Arysta, followed by the aftermath and overcoming of the COVID years, launching of NPP, a separate biosolutions business segment, and raising the industry bar by the launch of nurture.farm and also signing the Gigaton Challenge. Needless to say that all of this was alongside a strong delivery of business performance year-over-year. We tried and created an experience center of many of these achievements in the experience center you just saw outside the presentation hall. A lot of effort has gone into this, and I would like to thank the entire team for putting this together.
During the event, we will be referring to a presentation, and those of you joining us on the webcast would be able to view the event live. The presentation is also available for download on the website, and we take as having read the safe harbor statement. From UPL, we have with us today the entire global leadership team, and we are also joined by our esteemed board of directors. The session will start with a presentation and will be presented by the Global CEO, Mr. Jai Shroff, CEO and President, Mike Frank, Anand Vora, Global CFO, Raj Tiwari, Global Chief Supply Chain Officer, Dhruv Sawhney, COO, nurture.farm, and our CEO of the Advanta Seeds business, Bhupen Dubey. Post the presentation, we'll have a Q&A session followed by a high tea and then an open interaction session time for you with the leadership team.
With that, let me now hand it over to Jai.
Thank you, Radhika. Welcome, everyone. Before I begin, I just want to thank all the people who were involved in the emergency response team in Ankleshwar, where we had a fire incident on Friday. It was unfortunate, but the team did an excellent job of bringing the whole fire under control within two hours. It's been another fantastic year at UPL. Among all the challenges which we can only imagine, we could cope with.
With COVID being past us, we were estimating that this will be a much more easier year to navigate, but it's been very challenging, and I just wanna congratulate the whole UPL team to cross INR 10,000 crore of EBITDA, which is a record and only a dream a few years ago when we embarked on the journey of integrating the Arysta business within the UPL framework. It is been an extremely exciting experience, but combining two companies in a period of 3-4 years at the speed we did with operations in 100 countries or more, and putting together and continuing to grow the business was no easy task.
It looked effortless, with the whole team completely focused on not only integrating the businesses, but also continuing to gain market share in almost every market which we operate in. I touch on the revenue numbers. I'm sure that you have seen the extremely fantastic performance across all markets in a year where we had so many uncertainties, even after all the supply chain disruption, the war in Ukraine, the currency fluctuations, the oil price fluctuations. We started in a year where we were expecting almost a flat or a price reduction market. We've then seen hyperinflation in the same year.
Dollar strengthening now and the Brazilian currency and, you know, all the other currencies being completely volatile, which was almost impossible to predict. In our business, we have to manage that every day, and the team has done an incredible job of dealing with that. As we see the revenue growth of 19%, EBITDA growth of 19%, we've been able to reduce our debt to below two, which was a number we were always targeting. We continue to reduce debt going forward, and we are also increasing the payout to our shareholders with a buyback and probably a good dividend payout. Our ROC also has been growing.
The key three key pillars for sustainable growth and the whole environment around sustainability is growing, and UPL is actually the thought leader and the business leader in all the business sectors. We have been growing from 2017 till 2022. With the integration of Arysta and all the challenges, we've continued to grow our business and are continuing to create a portfolio of differentiated products which are really helping us to continue to gain the trust not only of farmers in the farming community, but also of the whole food industry. We are continuing to gain market share, and we are today at about 8% market share.
We believe that by 2027, we will be above 10% or around about 10%-12% of market share worldwide. In the bigger advantage of UPL's investment over the last so many years in terms of integrated manufacturing and the over-investment we have done is beginning to pay off and is paying off today, where we can be so much more self-reliant on our own supply chain. This gives us the comfort and our customers a comfort around the fact that we are less dependent on the other factors of supply chain disruptions around the world. The whole world is transforming from just food production to sustainable food production. The farmers will be beginning to get rewarded for better and better behavior and better practices.
We are seeing a huge growth in our new business line, NPP, and the opportunities and the pipeline of products coming out of there is really helping us to continue to build a trustful relationship with the whole food system. The whole, the puzzle, as we call it in UPL, the OpenAg and the transformation of UPL from being just a supplier of ag chem products to be a solution provider with the UPL Crop Protection business, the DECCO business, which is the post-harvest, the NPP business, which is the biosolutions platform, nurture.farm, which is the technology platform, which enables farmers to really digitize and give complete traceability to our amazing platform in Advanta, which is bringing in transformational technology. Not only today, but it was one of the first companies to create hybrid canola.
Today, we are the first non-GM sorghum traits, herbicide-tolerant traits, and all these businesses are getting huge traction around the world. We are seeing almost double-digit growth in the Advanta platform and getting great traction not only in the Asia region, which was the traditional stronghold of Advanta, but in Central America, South America. Our oilseeds platform there around sunflower is giving us tremendous confidence too that the Advanta business will continue to grow. UPL is focused on our businesses are focused individually, and that's why we have divisionalized them. Each of the platform has sustainability goals and has a sustainable strategy to really make a huge impact.
Being a company which is committed to make every food value chain more sustainable and better for the world, we believe that anything we do today has to be around making everything more sustainable. We are very excited with the beginning of this journey, and you will see in the next five years, this will be the mainstay of our whole industry. This also expands the universe of our market. When you look at some of the fertilizer replacement and reduction technologies, that's a $250 billion segment. If you look at all the quality and value which we create through our NPP finishing product, that's a huge extra segment.
DECCO, which there is so much awareness around the world about food wastage, and DECCO is by far the industry leader on grain protection, on fresh food waste reduction. We're very excited about all these industries because there is such a lot of global awareness today about what we are doing, and it's much easier to talk to our customers, to supermarkets, to food companies, and to obviously the farmers who see a much better value using these technologies.
The nurture.farm platform has done an incredible job in a very, very short period of time of really understanding not only the pain points and the challenges of farmers and addressing some of those things like weather-related insurance products, et cetera, but also convincing them that burning 6 million acres of rice stubble in the north of India is not the right solution. We are beginning to get data that when you do not burn your fields and create such a lot of pollution, which not only impacts his own family, but all the cities and villages around. We've been able to convince 425,000 farmers, and this year we are committed to do minimum 2 million acres of area.
What we are able to see that the farmers who do not burn the crop have a huge soil improvement, and we are able to increase the soil carbon in the soil. If you are aware, which I think you'll hear more and more going forward, is soil carbon is the key matrix to understand the productivity of soil. You know, these areas have been farmed for a long time, and the farms have not been replenished with enough carbon. With this project, where we intend in the next three to four years to complete all these rice farmers to actually not burn their crops and incorporate all the compost which we generate through our program into the soil.
We'll see a huge yield increase in this area and also reduction of fertilizer use, which is such a big thing because if you just look at the fertilizer subsidy in India, the numbers are astronomical. Anything we can do to help farmers reduce the use of fertilizer can be a huge impact to their income level. We've also been able to be the first company in the world to sell field crop agriculture credits. We sold 20,000 credits from the rice farmers where they were able to reduce the methane generation. This is also very exciting, and we believe that this will go to millions and millions of acres in the future, and this benefit will really help farmers follow more sustainable practices.
We are collaborating with globally, as you are aware, UPL is present across almost every agriculture area in the world, and we have committed to a Gigaton Challenge where we will reduce 1 billion tons of carbon through better farming practices. This is a great challenge and we are driving this thought leadership around the fact that we can use agriculture not as a pollutant of the environment and air, but as a way to remove carbon from soil. This is something which will drive the whole industry to move to that. We are already seeing that other companies are willing to join us in this journey, and all of the food industry will soon join us, and we believe that labeling of sustainably grown food is the future for every food value chain.
I'll hand over to Mike.
Thank you, Jai. All right. I'm Mike Frank. I recently joined UPL, and it's really good to be here for my first Capital Day meeting. We're gonna split up the next 60 minutes or so into three segments. Firstly, we're gonna take a look at FY 2022, our year that we just finished, look at Q4 results, and then do a full year summary and talk about the highlights. We're then gonna look at FY 2023 guidance, and we're gonna finish the presentation with quite a deep dive on our five-year business plan. You're gonna hear from our Head of Supply Chain, you're gonna hear from Dhruv, who leads our Nurture platform, and Bhupen, who leads our Advanta Seeds business. I think it's gonna be a very exciting afternoon.
We have a long list of highlights from this past year. As Jay mentioned, we grew both the top line 19% across the entire UPL business, as well as the EBITDA line by 19%, in spite of a very challenging year from a supply chain standpoint. We'll talk about that a bit more. We also launched a new dedicated business unit that we call NPP, Natural Plant Protection. This is a business unit that we have had in our company for several years. When we looked at how do we really exponentially grow this business, we came to the conclusion that we need to set up some dedicated resources to help our field sales organization globally really have the competence and the skills to effectively sell NPP products.
We also made significant investments and advancements in our Nurture platform, and you'll see that when Dhruv gets a chance to highlight that later today. Our Advanta Seeds business had a fantastic year, growing 24% on the top line and 26% at the EBITDA line. We also received a second tranche of $700 million in a sustainability-linked loan. I really believe that that really validates what we're doing from a global sustainability standpoint, in addition to lowering our cost of borrowing. We were also recognized a number of times with various global institutes on our great sustainability work, and so it's always great to get those third-party recognitions of what our teams are working really hard side by side with growers.
I really believe that really validates what we're doing from a global sustainability standpoint, in addition to lowering our cost of borrowing. We were also recognized a number of times with various global institutes on our great sustainability work, and so it's always great to get those third-party recognitions of what our teams are working really hard side by side with growers and other stakeholders to really impact global agriculture and make it more sustainable. We joined The Climate Pledge, and as Jay mentioned, we also launched the Gigaton Challenge. Finally, we'll talk about collaborations later, but we entered a new long-term collaboration with a company called Chr. Hansen, which is one of the leaders in microbial discovery. We've got an exclusive opportunity to work with them on a number of products.
The first one that we're gonna launch in Brazil this year, and we have a pipeline of other products that we're gonna be working with them on for the next several years. When I look back on 2022, you can see that we had very strong operational performance. In spite of many operational challenges, our teams leaned into them. The agility and the speed at which we adjusted was really incredible. We had a strong year financially, both on the income statement and the balance sheet, and we advanced several strategic initiatives throughout the year. Here's a quick look at our Q4 results. You can see that we had a very strong Q4, growing revenues. This is across the entire UPL company at 24%. We grew contribution margins on a comparative basis Q4 over Q4 by 231 basis points.
You saw over the course of the year with each quarter, we were able to really price into the environment that we had with increasing raw material costs. By the fourth quarter, we were really humming, and you can see that how it played out here on the income statement. Ultimately, we grew EBITDA by 26%. When you look at fourth quarter in particular, you can see that price drove nineteen percent of the 24% growth. Volume was 3%, and we also gained about 2% on foreign exchange. Then last, look at Q4 just from a regional perspective. We had strong growth, I would say, in every one of our regions, with the exception of Europe. The Latin American region grew by 21%, really across the board.
Again, thanks to solid pricing, and some new product launches and strength of our herbicide portfolio in particular. We had a great year in North America, and it ended with a really strong quarter as well, with 38% growth in North America. Again, largely on herbicides and insecticides, but also strong pricing. We also believe that the channel, in anticipation of a very strong year that's gonna unfold here, in the next several months, was probably pulling through a little bit of inventory in the first three months of this year into the channel. Europe grew by 2%. Europe had some real headwinds throughout the year, especially in the back half of the year with the euro devaluation. The conflict, of course, at the end of the year in Ukraine.
As well as we had about a $40 million impact last year from products that we sold the year before that we're no longer able to sell in Europe because of the regulators are taking products off the marketplace. In spite of that, our teams continued to really work closely with growers, and even in the Q4 with the conflict in part of that region, we still grew by 2%. In the rest of the world region, which is a number of countries, we grew by 25% in the fourth quarter. Again, largely on pricing, and it really was across our entire portfolio. Then finally, the highlight of the quarter was here in India, where we grew quarter on quarter by 63%.
Some of that was benefited from a relatively weak Q4, the previous year, but mostly it was because of new product launches, stronger pricing, and I think our team really did a good job out there, and we believe we grew quite a bit of share in, as the year wrapped up as well. Great job by our team here in India. If you look at this across the year, as Jay mentioned, 19% revenue growth, 19% EBITDA growth. There was a really nice balance, where the growth came from. Of that 19%, 10% of it was from price, 8% of it was from volume, and about 1% from foreign exchange. We anticipated the volume growth.
When we think about the opportunity that unfolded this past year, we were really excited about our differentiated and sustainable products, and we did see significant growth in that category. What we didn't anticipate, as Jay mentioned, was the escalation in cost of our post-patent products. We recognized the challenge, and our teams priced into that marketplace and ultimately was a big part of our revenue growth last year. From a regional perspective, Latin America grew 21%. If you kinda divide Latin America up between Brazil and the rest of Latin America, we grew about 25% in Brazil, so we had really strong growth in Brazil. About 14% across the rest of Latin America.
There was some weather challenges, specifically in Mexico and Argentina last year, that probably took off some of the opportunity for us in some of those countries. In North America, we had a very strong year, and it was across a number of herbicides, but also our insecticide portfolio grew by over 60% in North America last year. Just really strong performance across the board there. As I mentioned, in Europe, we grew 7% last year. Pretty balanced across the portfolio, but the highlight would've been our NPP products or our sustainable portfolio, which grew at a more accelerated rate. The rest of the world region grew by 11%, a very balanced growth across our portfolio. Finally, in India, we grew 22%. Obviously, we had a very successful Q4.
We had a challenging Q3 with some product returns, coming off of a very dry Kharif season. We recovered that and then some in Q4. That's a look at the income statement and the operating performance for Q4 and for the entire year 2022. I'll next ask Anand, our Group CFO, to come up and review some of the balance sheet metrics from our balance sheet. Anand?
Good afternoon, everyone. Thanks, Mike. Let me start off by saying that considering all the global nature of our business and the challenges we had during the year, I'm really pleased to say that we came up with a robust set of performance, which has helped us to deliver good growth, both in terms of revenue, where we grew by 19% for the financial year, in net profit, where we grew by 26%, along with an improvement in return on capital employed. It's important to highlight that some of these challenges which we faced during the year, especially we started off the year with COVID-19 still continuing in some way or some geographies and with associated logistics and supply chain challenges.
We also saw a sharp increase in raw material prices in a very short span of time, which took the markets by surprise and did not permit us to increase the prices for our products. We therefore had pressure on margins in particularly Q3 and Q4 of the financial year. We also saw huge volatility in currency, especially in Latin America. Towards the end of the financial year, there was the conflict in Russia, between Russia and Ukraine, added to the global challenges, resulting in sharp jump in commodity prices and also putting in inflationary pressure across various economies. Considering all this, I think the performance, we still ended up with some very good performance, and I think it's thanks to all our team members who relentlessly work to deliver these results.
Stepping back a bit, when we announced the acquisition of Arysta and also the launch of our new purpose, the OpenAg platform in 2019, we kept focusing on improving our return on capital employed. I'm happy to say that we have been able to successfully improve the return on capital employed by 170 basis points to 15.6% by end of financial year 2022. Since 2019, when we announced the acquisition and the OpenAg platform, we have improved our return on capital employed by 800 basis points. This improvement in return on capital employed over the last three years has been driven by strong EBITDA growth of almost at 30% CAGR over the last three years.
While we improved the EBITDA growth, we continued to make strategic investments in manufacturing capacities, product innovation, and new initiatives such as the Natural Plant Protection, which is our biosolution platform, and the nurture.farm , our digital platform. Such strong all-around performance through the cycle highlights the robustness of our business model. I'll take you through some of the highlights of Q4, as you see in the slide. Talking about the financial results, benefiting from healthy demand on the back of strong agri commodities, commodity prices, we posted solid growth in operating profits. More important, the robust growth in contribution and EBITDA, which we saw in Q4, is a good reflection of the team's ability to drive price increases and higher sales of differentiated and sustainable products.
The agility of our team, along with the resilience of our business, resulting in normalization of margins in Q4, provides us a strong platform to continue our healthy growth momentum heading into financial year 2023. The robust EBITDA growth also translated into strong bottom-line performance as net profit for the fourth quarter rose by 29% year-on-year to INR 1,379 crores. This significant increase in net profit was in spite of higher finance costs and exceptional costs. Let me give you some color to this higher financial cost as well as the exceptional costs. While overall interest on borrowings did come down quarter-on-quarter, we did see an increase in cost of non-recourse factoring due to increase in securitization amount in line with our growth of sales, particularly in the Americas, both the North and the South America.
Additionally, we did have a mark-to-market loss of about INR 172 crores on hedges taken in on advanced sales orders in Ag, again, in Latin America countries as compared to a gain which we had in the previous quarter in the previous year of the same quarter. We should see the benefits of this reversal of mark-to-market as we start invoicing our products in the following quarters in the coming financial year. On the exceptional items, we had a charge of INR 123 crores arising because of the fire that we had in our warehouse in South Africa. Further, the fourth quarter being seasonally the strongest quarter for us, this robust performance in Q4 translated into a superior full year performance, superior performance for the entire financial year.
Yeah. Moving on to the full year performance. I think did I move two slides? Oops. We're going the other way around. Are you controlling? Sorry about that. Yeah, okay. Moving on to the EBITDA bridge for Q4. As you would see that we did have higher realization largely on account of efficient supply chain, which helped us to drive our contribution margin by almost 230 basis points over that of the previous quarter. Our contribution margins were at 39.2% as compared to that of the previous year, which was around 35%.
SG&A as a percentage of sales did go up as you would see here, and that was largely because of our investments in nurture.farm, as well as the nurture.farm platform, which I spoke about, as well as in the biosolutions platform, which we have launched. Besides, of course, the normalization of business as we came out of COVID-19 resulted in higher travel costs as well as SG&A expense, as well as advertising and selling and promotion expenses. This is the bridge for the full financial year, and as you would see, we did have a flat despite the Q2 and Q3, as I mentioned earlier, where we had pressures on our margins. We did end up with EBITDA margins at flat, and that's about 22%.
As I said, this ensured us the Q4 robust profit, ensured us to deliver good results for the full financial year. Moving on to working capital. We did see an increase in inventory by 14 days, as is reflected, which is a reflection of a higher raw material cost and a strong order book that we have for financial year 2023. As the receivables, we did manage to manage our risk well by increasing our non-recourse factoring, which is in line with the robust growth which we had in sales in the Americas. The increase in payables is largely in line with the increase in inventory, and therefore, we did see a reduction of about 2 days in our overall net working capital. Overall, again, on working capital, we continue to deliver good results as we move forward.
This is the cash flow bridge, which I know has been a point of great interest. People have been focusing on the debt reduction initiative. Keeping in mind that we had guided for about 7%-10% growth in sales and that we ended up with delivering 19% growth in sales, we did see higher working capital, but I'll take you still through the numbers. In absolute dollar terms, we did end up reducing our debt by $90 million. However, in rupee terms, due to depreciation of rupee from 73 at the end of last year to 75, we did see almost a flat net debt reduction in INR terms. Going through detail each of the items in the cash flow.
The business generated operating cash flows before working capital of INR 9,267 crores, which was higher by 14% as compared to that of the previous year. The incremental working capital of INR 1,124 crores was largely to support the higher growth in revenues over and above the guidance that we had given of 7%-10%. The incremental working capital and tax payments, the company generated healthy cash flows. After deducting the working capital and tax, the company delivered healthy cash flows of about INR 4,426 crores.
Given the highly dynamic supply chain environment and the strong demand tailwinds, the growing needs to secure good supply chain through enhanced Farmer Connect, we continued with our strategy of making prudent capital investments and investments through increased incremental spend in NPP and the Nurture platform for ensuring healthy and sustainable growth moving forward. The company also distributed higher dividends considering the good performance for the financial year. The resulting cash flow resulted, as I mentioned earlier, in a net debt reduction of $91 million. The robust growth in absolute EBITDA resulted in the net debt to EBITDA ratio of 1.86 times, far exceeding the guidance which we had given at the beginning of year of 2 times. The gross debt and the net debt numbers in INR and U.S. dollars are provided in the slide for your ready reference.
I would like to hand over to Mike again to take us through the guidance for FY 2023. Thank you for the attention.
Great. Good job.
Thank you. You know.
All right. Thank you, Anand. We're gonna talk a little bit about FY 2023 guidance. As I talk to farmers really anywhere, the common theme of the conversation goes a little bit like this: this year coming into this crop year, rents are higher, seed costs are higher, fertilizer price is higher, fuel is more expensive. The cost of establishing and investing in the crop this year is gonna be significantly higher than last year. Now, the benefit farmers have, of course, is the commodity prices for their grains are also up over double digits where they were just a year ago. When they think about crop protection products and biosolutions, they tell me that they're gonna maximize their investments this year in these types of products to protect their crops and maximize yields.
I really believe coming into this new year, we've got some real tailwinds behind us. Like every year, there's gonna be some challenges. We don't know what they are. Obviously, today, supply chain continues to be somewhat of a challenge and a bottleneck, including out of China today with the COVID-19 situation. Currencies, the U.S. dollar has appreciated against some of the currencies in key regions, like in Europe and Japan. But generally, we're expecting a very strong operating and financial performance again as we look at FY 2023. As Jai mentioned, we're guiding for revenue increase of 10% or more with EBITDA growth in the 12%-15% range, and very importantly, continue to improve on ROCE with another 125-200 basis points improvements on return on capital.
Jay mentioned our three areas of strength and our pillars, and this is gonna play out again in our business in FY 2023. We're expecting strong growth from our differentiated and sustainable products. Last year, the mix between post-patent and sustainable and differentiated remained about flat. About 71% post-patent, about 29% differentiated and sustainable. Again, on the post-patent business, that's where we saw a significant price increase, and in fact, 90% of the growth in that business came from price. In the differentiated and sustainable business, 70% of our growth last year came from volume, and we expect that to play out again this year. We've got some very exciting new launches. Between last year and this year, we'll launch over 80 new products globally.
On the next slide, I'll show you three of those products that we're very excited about. We're also making unique investments. When we look at countries where we think we can increase our presence, really drive our sustainable and differentiated solutions, we're making unique investments in 22 countries that represent about 80% of the global crop protection product marketplace today, and we believe we're gonna grow exponentially quicker and gain more share in those 22 countries. We'll talk a bit more about that during the five-year plan. Finally, really the part that anchors our success here at UPL is the strength of our supply chain. That showed itself last year, and we know that it's gonna be a key strength for us again going into this new fiscal year. Just to highlight three products that of eighty.
I didn't wanna go through 80 products with you today, but here's three that we're incredibly excited about. Firstly, there's a new soybean herbicide for growers in the U.S. One of the challenges that growers in the U.S. have is resistant weeds, specifically glyphosate resistance. We have a new two-way herbicide for soybean growers that can be put on in the fall or pre-plant in the spring. It has nice residual value, and the crop safety is second to none. This will be our launch year. Our team in North America is already run out of product, and so we have sold everything that we've got, and we're anticipating even more growth in this business coming into the following year. It's a really nice product launch and introduction to this product called PREVIEW in the U.S.
In Brazil, we're launching a product called Evolution. This is a new three-way fungicide that really is gonna be the leading product for Asian rust in Brazil. Efficacy is incredible. I was out in Brazil a couple weeks ago with our country manager, Rogerio, and we were looking at some plots, and you could see the difference between Evolution and the standard in the market today. Not only was efficacy higher in the field results that we harvested, yields are also higher with Evolution. We really believe this is gonna be incredible product. We've increased the supply, so we've asked our supply chain to produce even more, and we think we're gonna have a really big year with Evolution in Brazil this year. Finally, a product that we launched in Q4 here in India, which is Trishul.
It's the first three-way herbicide ever launched in India, and it really demonstrates the incredible work between our R&D formulations team, our regulatory team, and our marketing and commercial teams, all coming together, creating a product for sugarcane growers that is the best product from a weed control standpoint and also from a yield standpoint. This is really a new breakthrough for our business and for growers here in India. Next, I'm gonna call Dhruv to come to the stage and talk about our very exciting nurture.farm platform. Dhruv?
Hi. Good afternoon, everyone. Just talking about the Nurture platform and the leading of sustainability initiatives, there's a lot of focus on R&D capabilities, open innovation model. I think I came too soon.
No. I called you too soon. Thank you, Dhruv.
Thanks.
I saw Dhruv's name on the last slide, so I thought, "Well, this is time to call Dhruv up," but premature. Sorry, Dhruv. We're gonna switch to talk about our five-year plan. I think you'll conclude when you look at our five-year plan, that we have incredible opportunities across our business, in the crop protection space, in the biosolutions NPP space, in our seed business with Nurture, and again, the exciting work that we're doing in our supply chains. I'm gonna start by talking about some of our innovations, what we call open innovations, and I'll talk about our R&D capabilities, our open innovation model, our innovation pipeline. We'll show for the first time our really strong IP landscape. Firstly, it all starts with business smart R&D.
This is how we invest our R&D resources to become super efficient and effective at delivering new technologies to farmers around the world. We have over 1,000 R&D professionals across 30 facilities, and we've increased our investment from about 2.5% previously to about now 3% of sales in our R&D investments. This here is a short snapshot of our OpenAg farm in Brazil. Last year, we opened up a 25,000-hectare at-scale farm in Brazil. What we wanted to do at this farm is we wanted to put down UPL products wherever we could to grow corn, soybeans, and cotton.
We also wanted to use it as a demonstration field where we could do both some demo and some science, but also bring farmers across Mato Grosso and beyond to come to the farm and look at the technologies that we're applying. In our first year, we were able to put UPL products in corn and soybeans down on 70% of all the applications. If you think about our market share in Brazil today, it's not 70%. On this farm, 70% of the products that we used were UPL products. Not only did they work, they delivered about 6% more yield than the average yield across Mato Grosso, which is about 3.5 bags per hectare. We also tested and trialed scientifically a lot of our NPP BioSolutions .
Again, versus the standard farmer practice, we saw about an 8% yield increase. The benefit of this farm is most companies do their trials on small plots, and often when you talk to farmers, they say, "Well, maybe what happened on a small plot doesn't apply on a big field." We're proving in Brazil, where, as you all know, there's some really big farmers, that at scale, our products and technologies can really benefit growers. I really think this is an exciting advancement in our OpenAg farm.
We also look at R&D through what we call farmer pain points, so recognizing where are farmers challenged today agronomically, and where can we bring new solutions, whether they be new mixtures of conventional crop protection products or ProNutiva products, which is a combination of our biological platform, along with conventional crop protection products or straight up NPP products. That's how we focus our R&D investments. When we look at our pipeline and our exciting products coming through the pipeline, on a risk-adjusted basis, we have over $5 billion of revenue that we believe is gonna be generated through our R&D pipeline. Over half of that is gonna come between now and the end of fiscal year 2027.
It really demonstrates that this pipeline is coming at us each and every year, which is why we had, for example, 80 new product launches in the last two years. When we look at the makeup of the portfolio, about one quarter of all of our pipeline is post-patent products, and about three-quarters of our pipeline is differentiated and sustainable products. It really demonstrates for us that we're investing in the right area. When we look out to 2027, we expect about half of our product mix to be differentiated and sustainable products, and again, about half of our mix to be post-patent products. Both segments will grow. When we look out over the next five years, there's about $6 billion of global market of crop protection products that are gonna come off patent.
A lot of our post-patent investment here is in the AIs that are gonna be coming off patent over the next handful of years. We wanna be first in the marketplace when those products come post-patent, but more importantly, we wanna take those products, combine them with either our NPP products or other active ingredients in our portfolio, and that's how we bring differentiated and higher value products to our customers. I think this is the first time that we've showed this slide. We have an incredible team within UPL that's focused on IP, securing patents, defending patents, and really understanding that entire landscape globally, which is complicated. We have over 1,500 granted patents.
We have over 3,000 in the queue waiting to be approved that are pending today. Over 600 innovations across these patents, and we've achieved patents in over 133 countries. When you look at what we've patented, it's very balanced between herbicides, insecticides, fungicides, and also biosolutions. We also have a multitude of types of patents, from composition patents to method of use, formulations, process patents. All of these really create a lot of value for us, help us make these investments in these differentiated products, which ultimately benefit growers. When we look at our current sales from last year, over 1/3 of all of our sales of crop protection products and NPP products were covered by one or more of these patents. It's a very important part of our business in creating unique value for our customers.
Again, in summary, as we think about our open innovation, we have a pipeline that has risk-adjusted value of over $5 billion. Again, over half of that is gonna be realized, we believe, in the next 5 years. About three-quarters of our pipeline is differentiated and sustainable solutions. We're making more investments in R&D and in field testing, and we have a very rich IP patent estate. The next area of growth for us is in what we call open collaborations. We've talked about some of these previously, but we wanna give you an update on some of our key global collaborations, plus talk about at least one or two new ones that we did this past year. Firstly, with FMC. We announced this about a year ago. It's for a very large and important active ingredient called CTPR.
We actually launched our first solo CTPR product this year called Shenzi. We launched it in five countries, and we had very good sales of this product. We've also built a manufacturing facility to produce CTPR, and we expect to be operating that in the second quarter of this year. As we look out towards 2027, we expect to have a portfolio of over 40 CTPR solo or combination products that are differentiated. This is gonna be a very big part of our future growth platform. We also have a partnership with Mitsui on a very new and novel active ingredient that's an insecticide for rice.
We're expecting the first registration of this product here in India in FY 2023, and over the next two or three years, we expect many more registrations of this product across Asia, as well as a seed treatment for this unique product in the U.S. Another new product collaboration that we entered this year is with Chr. Hansen. They're one of the leading companies today discovering new microbial technologies. We've got access to a broad part of their portfolio. As I mentioned earlier, we're launching our first new product in Brazil this year, and we have about six other products that are right now in the pipeline, and we expect more to come here over the next couple years. Finally, I'll highlight a new go-to-market collaboration that we have in Brazil with Bunge.
Bunge is one of the leading grain traders around the world and oil seed processors. They have a very strong presence in Brazil. One of the things that they do with growers in Brazil is they help manage risk. By providing credit on future grain, they're a natural partner for us, where we can go to a grower, help them manage risk, and help them get access to seeds, fertilizer, and crop protection products. We've invited them into an investment that we have in a retail network called Sinagro. They came in and took a 33% share of that business. Now we're operating it together with them, and we're just in the process. We got approval for this investment just in March of this past year.
We're now just coming to our growers, and we're targeting primarily, I'd say, small and medium-sized growers with this initiative through the center and northern parts of Brazil. It's gonna really help us accelerate the growth of Sinagro, but more importantly, the growth of UPL products through that platform. When we look at our collaborations that we have today, and we're working on a number of new collaborations, we believe that by 2027, over 10% of our business will come through collaborations, whether they're with these type of large companies that we profiled today or partnerships that we're doing today in our OpenAg Center in North America with a lot of the startup community.
We just have a lot of exciting collaborations that we're working on, some big, some small, but we believe that they're gonna have a significant impact on our ability to bring technology and value to growers and to help us grow our business. As I said earlier, in addition to our innovation, we're also looking to see where can we make unique investments at the country level, specifically to get closer to growers. When you think about selling differentiated and sustainable products, it takes more of a partnership with growers. You need to help them understand the benefits and the features of the technology. Often, they're priced to value.
Unlike post-patent products, they're not priced on cost, they're priced on the value that you can establish with your customers. As we continue to grow our differentiated and sustainable product portfolio, we wanna continue to get closer and closer to the farmers that we serve with our technologies. What I'll do in this section is highlight some of our unique NPP BioSolutions , and give you some examples of some new products that we're launching this year. I will invite Dhruv up to talk about our Nurture platform. I'll highlight some of the investments we're making in our key countries, really enhancing the proximity to our customers. Then I'll highlight what we're doing with what we call the ProNutiva platform, which is where we combine sustainable solutions, natural solutions, with more traditional solutions to create new value.
When we look at all the markets where we participate in, we believe that this segment of biologicals, biostimulants, biocontrols, bio nutritionals, this will be the fastest growing market probably over the next decade in agriculture. We believe over the next five years, this market alone is gonna grow at a CAGR of about 14%. We are the number one player in this market today, but it's still very fragmented. Our strategy in this market is to continue to develop new technologies ourselves, including some of the technologies that we're developing here in Thane, right here in India for global distribution, some technologies that we're developing in France and in Mexico. We're globalizing our really rich portfolio that we have today, and that's one area of growth, but we're also looking for new opportunities, whether that be collaborations or acquisitions.
We plan to grow at an accelerated rate from the market. Our plan within this segment is to grow at about a 20% CAGR over the next five years. We lead today, but we believe that over the next five years, we can even further establish our leadership position. Here's just a couple of examples of what NPP products are about. The first one is a product called Vacciplant. This is really like a vaccination for the plant. It creates a healthier, more robust plant, especially when it deals with abiotic stress. Whether that's heat or drought conditions, by using this technology, it creates a more durable plant. It helps boost the plant's natural immunities.
This is a product that we sell today, and we're in the process of creating a number of combinations with this product, with other biosolutions to really create a unique portfolio of bioproducts that can help create stronger plants and stronger roots, and ultimately higher yields for growers. The second product is K-Tionic. K-Tionic is a bio nutritional product. We sell it today in 15 countries, and as you all know, with the price of fertilizer that's gone up significantly over the last 18 months, farmers are looking for tools and technologies to help them optimize and reduce the investment in fertilizer. K-Tionic is one of those products, and so we're doing a lot of work with growers in these 15 countries and beyond to commercialize this technology.
We believe it's a technology that not only creates value in high fertilizer price markets, but even when fertilizer eventually comes back to more normal prices, whatever that's gonna be. More importantly, it creates a very important sustainability benefit. By having less nitrogen, more natural organic products in the soil, it creates for a healthier soil, and ultimately, growers are really trying to look for those types of solutions. Lastly, a technology that we call Gaxy. Gaxy is a concentrated biostimulant. It again creates stronger plants. It's a very exciting technology that we are just about to launch this year.
This is a product and a Natural Plant Protection that's gonna be sold individually as a standalone, but also we believe can be part of many mixtures with other biologicals, but also with some of our conventional products as well. All right. With that, Dhruv, I think we're ready.
Second time lucky. Good afternoon, everyone. I think we've seen across the world multiple industries benefit when technology-led innovation starts disrupting how traditional business has been run. We've seen that happen in pockets for agriculture with great products, innovations having been developed. The challenge has been that there hasn't been a strong platform to take those innovations in a very cost-effective, efficient, and convenient way to farmers. nurture.farm is now well-positioned to be the leading platform in doing so. We are primarily focused on two goals. Our first goal is to solve for farmer resilience. 85% of Indian farmers are smallholding farmers.
As you can imagine with inflationary pressures, access to labor, cost of labor going up, cost of inputs going up, and crop prices typically being kinda held at a certain ceiling, they're definitely feeling the pressure in the middle. How do we make farmers more economically resilient in a world where their land holdings are shrinking and costs are going up? The only way that can happen is if we help them improve their operation and help them run their operation more efficiently at a lower cost, with better advisory, better guidance, and the right curated set of products and inputs such as ProNutiva packages and other solutions that would actually drive better yields. The second goal that we're focused on is a shift to sustainable outcomes and sustainable practices. The world is gonna add another 2 billion more people by 2050.
How do we feed 2 billion more people without cutting more trees and accessing already precious resources? Again, the only way that'll happen is if we can grow more from less using sustainable practices. Our focus on these two pillars of solving for farmer resilience and a shift to sustainable practices is being dealt through the following approach. We believe farm mechanization is a key lever for us, where in a shared economy model, we are giving access to the right tools to a smallholding farmer at a price point that is far more efficient and profitable for them. We're also giving them access to the right advisory at the right time so that they don't have to discover the knowledge systems on their own in a world that is fast evolving. A farmer should not have to discover that knowledge.
The information and the outcome should be at their fingertips, and that's what the platform does through our digital offerings of presenting services, products, access to information, and a lot of solutions that we are curating for farmers with the knowledge and confidence that we'll be able to give the outcome that will give the profitability improvement that the farmer is seeking. Last and not the least, this ecosystem has been well supported and run with retailers and distributors and the channels supporting the farmers in the form of ag inputs and credits. We are now here to support that channel as well, and through our retail e-commerce platform, we are bringing authentic products to the doorstep of every retailer and distributor in the most efficient, predictable supply chain.
Technology can play a great role in innovating in how we predict impact of weather and pest and disease onsets. There's no reason why retailers and distributors and farmers can't benefit from these technologies as well. We already have close to actually about 3,000 machines for spraying services, multiple harvesting machines. We're gonna be launching our drone machines soon, which the farmers are benefiting from. About 5.5 million acres have already been serviced in this last year, and about 1.5 million farmers have been onboarded onto our digital platform. This is a great progress that we made over the last couple of years.
We have over 80,000 retailers now accessing our retail platform, with over 15 brands that are already participating in this e-commerce venture. Just looking ahead, you know, we believe that the pace of innovation and the access and reach that a digital platform gives can lead to exponential growth when we combine that with the right products and services and the knowledge systems available to us. Today we are already at 1.5 million farmers, over 5 million acres serviced with 80,000+ retailers. We're just beginning. We believe in three years, we can easily have over 6 million farmers transacting on our platform. We'll have over 40 million acres serviced through various initiatives and over 300,000 retailers transacting on the platform as well.
This is going to be a platform which is available to the complete ecosystem. We have a new means of livelihood being generated with new knowledge systems coming in. We look forward to brighter futures for our farmers and the ecosystem and the retailers. Thank you. I'm gonna hand back to Mike.
Super exciting, Dhruv. Very impressive what we're doing with that platform and the impact it's having for growers across India. As I mentioned, we're making unique investments with over 96 separate initiatives in 22 countries. This is a new program that we really just started in the last year. As Anand mentioned, we did see some growth in our SG&A. Some of that was to get closer to growers, and it was also partly to invest in these unique opportunities that we're tracking very carefully from a spend and benefit standpoint. We believe that the growth that will come through these 96 unique initiatives over 22 countries will be in the range of 1.5%-3% CAGR over what would've been our base business, just over and above the R&D portfolio and new products that we're developing.
Again, we have many, many examples today here at the Capital Markets Day. We have each one of our regional leaders, during question and answer, if you wanna ask any questions about what's going on in any specific country, we have people that can talk about that. It's really exciting. In every country, we're getting closer to the growers, helping pull our products and technologies through to the farm and really making our relationship and our business durable and creating a better defense in the long run with our business. Finally, the ProNutiva concept. This is again where we take a biosolutions product, one of our NPP products, and combine it with the conventional crop protection products. Often, people talk about the need or the want or the desire to go to organic farming.
The reality is today, most farmers can't move directly to organic farming because the biocontrol products and the biostimulants aren't as good today across the board as some of the more traditional fertilizers and crop protection products. We believe that this is a journey. We believe over the next decade, we're gonna move from a world today that's primarily conventional crop protection, eventually to a world that's primarily Natural Plant Protection, and we're gonna lead in that journey. As we go from today to that future world, we think it's a combination of bringing products and technologies together, making agriculture more sustainable, making plants more durable, and ultimately helping growers drive yields and economic viability on their farms. One really neat example of ProNutiva in action is here in India with groundnut.
If you go back just to 2020, we had about 100,000 acres here in India under the ProNutiva concept. Today, we have over 1.7 million acres. We have over 4,000 villages that have adopted this technology and 220,000 farmers using the ProNutiva package. On average, we've increased farmer income by 15%, and it's increased groundnut yields by 35%-40%. It brings it all together, higher yields, more profits for growers, and a more sustainable production. That's how we see the evolution of the marketplace. To summarize, we have a number of exciting initiatives that are gonna drive our growth and accelerate our growth over the next 5 years.
NPP products, obviously our nurture.farm platform, our unique investments across 22 countries, getting closer to growers, and then bringing more and more ProNutiva packages to farmers around the world. Next up, I wanna invite one of my new best friends, Raj, who leads our supply chain. One of the first things I did when I joined the company is I had a chance to travel extensively with Raj to a number of our plants. I was blown away at the scale, but more importantly, the world-class which we run our manufacturing operations. Raj, it's a pleasure to welcome you to come up and talk about what we're doing in supply chain.
Thank you very much, Mike. I mean, this year was really a tough year. We thought, you know, COVID behind us, you know, should be a relatively an easier year. It was the toughest year of, you know, which I have experienced in my last 10 to 15 years in supply chain. I mean, right from the time, you know, the you know, energy crisis in China started to sudden rise of costs, and we were not very sure. I mean, how do we, you know, pass it on? I mean, whether to source or, you know, to scale it down.
Then the whole issue in terms of logistics, that was our biggest nightmare. As Jay mentioned earlier, the reliability of supply chain and cost competitiveness are the you know, overarching twin objective of our supply chain team. Further to that point in this section, as we move forward, we will discuss how supply chain acts as a competitive advantage for us and what are the key initiatives which we are taking in time to come.
First on you know safety as Jai initially mentioned on Friday we had a fire incident at one of our factories in Ankleshwar and one of the portions of one of the plants caught fire. The rest of the plants in the same factory are operating normally. There were five people who got injured. One has been released and 4 are recuperating in the hospital. We are taking good care of them. Last year our TRFR in terms of our KPI the two key KPIs the TRFR was 0.21. On process safety incident we have two process safety incidents.
Taking a cue from our you know our South African warehouse fire, we have got external experts you know for the all new warehouses which we are hiring or we are going to hire. We have got external experts in terms of doing the due diligence in the hiring process and redefining our checklist for hiring a new warehouse. Also the existing warehouse in terms of identification of the gaps and the mitigation of those gaps we are working on, and we should be completely able to come out of those gaps, if any, which are identified.
On hazardous chemical handling and incident management, we have implemented what we call hazardous chemical transportation management. This is completely implemented in India, especially coming from Nhava Sheva to our factories, which is incoming raw materials. W e are also leveraging on digital initiatives in terms of AIs and Manufacturing 4.0.
In terms for the safety, for PPE compliance in the factory, what we are doing is that we are using video analytics to a great extent in terms of understanding where real-time PPE violations are there to be able to bring, you know, more rigor and discipline on the shop floor. Also the crisis management plan. In just in case if there's a crisis, we have a crisis management plan which is rolled out, where EY has helped us in terms of designing the whole crisis management plan, along with the leadership team and the people in the factories, which is rolled out for India, and we're in a process of rolling it out for our global regions.
As you can see in the pie chart, this is, you know, in terms of our sourcing footprint, if you see in the pie chart, you'll be able to see that our raw material sourcing is quite diversified. If I talk about FY 2022 per se, about 31% was the share of China, 38% was India, and 31% was rest of the world. This is really very balanced. If I talk about last three years, you know, we have moved China share from 38% - 31% now.
If you see on the left-hand side, where you know, wherein if you see 72% of our actives manufacturing we do in-house. The interesting piece is that 6% of our actives we now get it done by our what we call as strategic partners. This itself in three years' time have moved from 2% - 6%, so almost 300% jump, and largely in India. Only about 22% of our actives we source directly. Therefore, you can see that you know reliance on import of AI is you know fairly low.
Additionally, we have also worked on enhancing our manufacturing efficiency by closing down our Rotterdam plant, which was basically making mancozeb. That capacity we moved to India and, you know, Colombia, thereby bringing efficiency. More importantly, you know, the top ten AIs for UPL, we do in-house, and that is mostly backward integrated through and through. If you see on the left-hand side of the chart, when the globe map is there, that largely shows our formulation footprint. Of course, it has actives as well. Largely, the formulation footprint is such that we are closer to our customer for two, you know, reasons.
One is that, you know, we can be more agile, and we can service our customer orders better. I mean, we don't differentiate between a half a kilo order or a half a ton order. Therefore, if our formulation plants are closer to our customer, that will help us in terms of serving them better. Lastly is that, you know, we also can keep AI as a safety stock so that, you know, our reaction time is much faster. In fact, in 2020, we also expanded our formulation footprint in China by the acquisition of Yoloo. Therefore, overall, if you see, we have a well-diversified raw material supply base.
We have highly reliable active and specialty chemical manufacturing setup. We have a backward integration linkage. Actually, this has held us in good stead in FY 2022. Going forward in FY 2023 also, this is going to be a big advantage to us in terms of maintaining our competitive advantage, agility, and our margin expansions. Over last three years, one of our major focus has been to drive growth, organic growth, with optimum investments. To achieve this objective, we actually established a robust ecosystem for our strategic manufacturing partners.
as I said earlier, if you see from 2% - 6%, almost three times, we have grown the share of our strategic partners in our active intermediate space, and that is largely India. We have kept on expanding our, I mean, you know, investing in our new capacities for new products. Also we have continuously worked on debottlenecking our existing plants to sweat our assets. Overall, these initiatives helped us to drive organic volume growth, you know, by about 40% on average over the last three years.
In a very capital efficient manner with our fixed asset turnover actually improving by about 30%, which was 1.8 times in FY 2019 to 2.4 times in FY 2022. What's more important is that while we achieve this feat, we also continuously worked on de-risking our supply chain. We not only diversified our sourcing in terms of raw materials, but also in terms of geography and supplier source in terms of mix. We also, you know, last year was a nightmarish year for ocean freight and whole supply chain.
Actually we, you know, what helped us was long-term contracts which we had, you know, done last year with some of our partners, foreign ocean lines. Further to that, we also leveraged on our scale and our footprint to be able to get, you know, favorable sourcing terms from our strategic partners. Therefore, overall, these de-risking initiatives, you know, combined with our agility and our ability to adjust to volatile supply chain situation helped us not only deliver robust volumes, but helped us maintain our, you know, maintain our EBITDA or slightly improve our EBITDA margins.
Further to, as Jai mentioned, earlier, our purpose is to reimagine sustainability to drive the real world impact. To further this purpose, we have really done some hard work over last four, five years in terms of optimizing our or dramatically improving our manufacturing footprint or environmental, you know, footprint. Just to give you numbers, I mean, key KPIs for our environmental footprint, you know, reduction, we actually reduced our water consumption per ton by about 11%. We reduced our CO2 emission by about 7% and our waste disposal by about 17%.
Now this is all possible, you know. We have a fair share of course, we had substantially increased our green power usage. We have also reduced. We have also continuously worked on bringing specific energy consumptions down, and therefore, the new technology adoption in the factories has been commendable. We have conserved and reused 50,000 cubic meters of water in rainwater we have used. Also, we have continuously put up technology to reuse the wastewater which is coming back into our process.
That has been, you know, a big initiative because of which we have been able to save the use of fresh water. Looking ahead over next five years, we are focused on implementing a robust three-prong strategy to enhance efficiency and to drive ROC accretive sustainable growth. The first one is, you know, of course, you know, we'll keep on optimizing our sourcing mix. You know, it will not change dramatically, but I mean, by and large, it will remain balanced, but India will gain some share in that mix optimization.
We will keep on working with our strategic partners so that we can raise the share of our strategic partner in our overall AI intermediate sourcing, which is long-term. Extensively, we are going to leverage digital and analytics. We are already under a transformation project wherein we are end-to-end our supply chain S&OP process is getting digitized, and we are using, we are going to use AI ML tool for demand forecasting and so that our forecasting errors are less, which is going to also optimize our inventory. We expect that with this digitization, we should be able to optimize our inventory level by about 10%. Sustainability being the core, we consider that as extremely important for us to remain competitive.
We are going to leverage our sustainable initiative, and we are going to keep working on improving our footprints year- on- year. We have already given commitments in terms of from FY20 baselines to reduce our CO2 emissions by 25% and our wastewater consumption by 20%. I'm sure my team and the entire UPL team is going to surpass these targets. Thank you very much, Mike. I'll invite my colleague, Bhupen Dubey, to give you some color on our seed business. Thank you.
Good afternoon. Thank you very much, Raj and Mike. After agrochemical, I would like to take opportunity to update on the Advanta progress for the year, the year gone by and the next few years. These are some numbers. We have taken the number in a rupee crores. So Advanta is now nearly INR 3,000 crore revenue company. We have a CAGR of about 14% for last two years. Against the backdrop of industry, seed industry CAGR is about 5%-6%. Against that background, consistently the growth is going up by 14%. EBITDA, similarly, our focus has been on the EBITDA. Relatively, while we have a size where we have opportunity to grow, but our focus has been on the profitability.
If you see, you know, we have an EBITDA of about INR 774 crore and a CAGR of about 23% over a period of 2019 to 2022. In the seed industry, it's very, very important that we manage our inventory very well. Sometimes we try to choose top line aggressively and end up having the return of the inventory from the marketplace, and that hits very badly. To recover from that takes years to gather. Our team, Team Advanta, has been able to manage this in a good year and bad year, you know, continuously this kind of focus on the profitability. We have 900 hybrid varieties across 40 crops. We operate in both the domains, field crop as well as vegetable crop.
Field crop really out of, let's say, 40 crops, nearly field crops are 10 and 30 crops are vegetable part of it. As you know, in a previous presentation also, we started in. You know, breeding-based company, number of years matters in terms of two aspects, which are important ingredient for the continuous success. Number one, germplasm. More number of years seed industry, seed company in the business have a very good germplasm collection. That is where UPL, the Advanta has a privilege of having it. And also we have breeders who know this material very well, and they know how to play around with this different genetic material and come out with an innovative product. That is extremely important asset which we have.
Country-wise, we have now expanded to 84 countries, you know, of agencies. Similarly, we are also going into production sites. We are now 24. With the uncertainty happening in the global, you know, arena because of the pandemic as well as, of course, the conflict in Europe, every country we interact with the decision makers, one thing they are very clear, that they want to produce seed locally. Extremely important. Which is a downside of it is that, we will not be able to take advantage of, you know, the scale. But at the same time, positive part is that if you are committed to a given country, I think this is a great opportunity for investment.
As a result of that, we are now production sites in 24 countries, and this is likely to continue to expand going forward. In terms of regional mix, we have, you know, South Asia is the number one region for us, 31%, followed by LATAM at 24%. ASEAN, Australia and rest of the world in North America. It's very well-balanced. Almost all the key components we are present. Here you will find that our presence is not as strong in Europe as of now. There we are focusing primarily on the oilseeds, which are coming from Eastern Europe. In terms of the crop, number one crop for Advanta is field crop, field corn, primarily tropical corn and subtropical corn.
We are not very much into the temperate corn. That is the area we have not really paid that much attention at this point in time, but that opportunity remains in future. Our second most important crop, where we have a very strong presence, is grains and forage sorghum. This is very important, you know, crop in our portfolio. We are one of the top two or three companies in the world, where we have very good strong position in the sorghum. As you may know, that is a climate-smart crop. In that definition, sorghum fits in well. More biomass, using less fertilizer, less soil, less water is something really, this crop qualifies a lot. Time has come for this crop to expand faster.
Another important product category we have is vegetables, sunflower, and canola, other crops very well distributed in terms of geography as well as the crop portfolios. Another important aspect, I think in a seed industry is by definition a company which survives for 60 years successfully are the companies having a very strong innovation portfolio. Without innovation, we cannot survive. Here, Advanta team globally has done a wonderful job. We are a very good team of professionals across the countries, highly dedicated, very knowledgeable, and then very, very creative in terms of the way they approach the market. We have three platforms where we, you know, give us a very differentiated position in the marketplace. One is the global brands.
Advanta Seeds is a global brand from us, but there are regional brands under which these products are being marketed like Pacific Seeds Australia, Pacific Seeds Thailand, Alta Seeds North America, et cetera. These are the brands which we have association with the farmers for many years. While we contemplated that globally we will standardize it, that everywhere we just eliminate these names and we make it Advanta, but we realized that farmers associate the brand name of the seed very strongly. Any change, there is always a fear of losing the farmers. As a result of that, we continue to play with these brand names in various countries. Umbrella brand remains Advanta, though. Crop-specific brands.
You know, it's important that whatever new features our breeders are able to bring in the marketplace are identified in the different brand, you know, brand platforms. We have got Ampere, the Hyola, Verede, as well as Pacific Seeds Wheat, other brands which are crop-related brands, which are associated with the unique attributes. The most important next category we have created is the technology brands. Advanta primarily is in conventional breeding, and we bring out the unique features. For example, iGrowth. iGrowth is a first of its kind technology in the world in sorghum. Many of you may be aware that crops like corn and soy have been highly technified crops.
They got a lot of traits which are primarily incorporated via using GMO. Now, GMO has reached to a plateau in many countries where it's openly accepted, but many, many regions like Europe and some of the Asian regions, they are reluctant for the GMO. How do we go about it? Our breeding team started a project in 2007 to develop a herbicide tolerance in a sorghum via non-GM route. It's a very big challenge. 2007, they started investing in, and finally they succeeded in launching a product in 2016. Nearly nine years. The product has created a big impact to begin with in Argentina.
Let's say today, Argentina has about 1.5 million hectare sorghum, and this area is limited because it does not have any herbicide tolerance. Now, these countries does not have labor force to eliminate the weeds manually, and therefore, they are unable to. There's no selectivity and therefore they cannot use the herbicide like glyphosate the way they use on the corn, et cetera. Our breeding team incorporated this gene via mutagenesis technology, and they launched this one product called iGrowth. Farmer can apply the iMEP herbicide, and it will kill all the weeds, but the crop will be protected. In three years' time, 2016, 2017, 2018, 2019, 2020 now, four years' time, we have nearly 62% market share in iGrowth in Argentina.
Now, that is a template of success. Similarly, next year we launched in Australia. Last year we launched in U.S., and the current year we launched in Brazil. Nearly 4 countries, we launched this technology. If you take template of Argentina as a success template, and we are able to successfully come, you know, we transfer this, you know-how and replicate the success, then our value creation, you know, in this segment is going to be humongous. This may not only convert the conventional sorghum into iGrowth, but also, the area under sorghum will expand exponentially, in the area where say there's a, you know, the multiple times they're going for the corn.
Similarly, we have a, you know, Vertix, Afix, and a Nutrisan, each one associated with like, the traits, special trait for a given crop. Coming to the numbers once again. The revenue is INR 3,000 crore. We have 24% growth. You know, EBITDA is about 32% growth for the year which gone by, and EBITDA margin is 150 basis points up. You know, if you look at the revenue by region, growth is South Asia is 19%. Could have been more actually, 24%-25%, but I think, extended rain, monsoon in India especially, spoiled some of the areas and, you know, the business was impacted. Therefore, we are at 19%. LATAM is the highest growth we have, at 32%.
The reason was primarily, as I explained, igrowth. You know, growth was very, very high. ASEAN region, led by Thailand and surrounding countries, 14%. Australia is a wonderful year we had, I think one of best year in last few years, 21%-22%. NAFTA, North America, the USA, Mexico and Canada, we call it the NAFTA. We have a 32% growth, and rest of the world is about 24% growth. Each region has contributed very well in our growth journey so far. Core focus on innovation remains R&D. I think that is a core for us. We just cannot compromise on that. We are very proud of our R&D talent community of 189 scientists. They are all PhD in you know biotechnology or plant breeding, et cetera.
They collaborate very well and then committed working over a period of time because a single product launch in seed takes about 9-10 years. That is a powerhouse for us, which will propel continuous growth for Advanta going forward. Advanta has delivered a robust EBITDA growth over 2019-2022. While it's not a one-off story, and I'm very proud of team Advanta, our professionals. We had a tough time because sometime in 2014 and 2015, 2016, I think industry operating environment also very challenging. Within that, internal challenges also very high. We decided to make sure that we focus on 2-3 areas. Number 1, profitability.
Because in a good year or bad year, if we're focused on profitability, then sustenance, and growth is guaranteed. That is something our team has been able to do that. If you look at FY 2019, we had a 21% EBITDA. It's about 21% EBITDA going up to 24% EBITDA, and now it's 26% EBITDA. Last four years, even if you go back two, three years further, the EBITDA number was about 16%, 14%. Last five, six years continuously the EBITDA percentages are going up. Now, if you compare with the industry peer, where the top line is going up because of the organic growth, inorganic growth, but there's a direct relationship when they go up in the top line, EBITDA start declining.
The biotech company, GM-driven companies, they used to have a 24%-25% EBITDA. Currently, these companies, all the big name in the industry, their EBITDA is 14%, 15%, 16%, right? In this background, when you look at Advanta, we are very, very proud of, you know, the delivery of these numbers by our team here. We believe that we have now the processes, you know, business processes, the systems and the mindset in place to make sure that this journey will continue even if we go on the top line going forward. Long-term growth ambitions, which we have, we believe that we are at a level which is platform is just to take off.
Operating environment in industry, as you have seen Mike, you know, sharing in many slides, is very bullish going forward. I think every country want to make sure that their population gets enough food on time. When the systems are disrupted, people talk about de-globalization. In this scenario, every country priority is to make sure that there's a stability, political stability. For political stability, it's important that food supply is there on time. Inflation going up, and the temperature will go up in the power structure. They will be sickened up. We have seen that, yellow revolutions and orange revolutions and all those things happening. No country want to go through that. Therefore, we believe that the food security is a top priority for all the countries.
In that, we are being a part of, important part of the chain, food security, you know, seed industry part, and therefore, long-term, outlook is very, very bullish for us. That would continue for. We will be continue to benefit out of this trend. You know, the priority is the product innovation, and second is the increased penetration across the geography and crop. Product innovation will continue. There are fascinating projects, nearly, I think 85-86 projects we have lined up. We are just prioritizing, so that we fund those projects. Because once we commit R&D project, you cannot go back because you have to be. You have to stay the course for 6-7 years' time or 8 years' time. Therefore, we are very careful in prioritizing the project.
Now with the kind of results which we are seeing 4-5 years, giving us a good confidence probably to consider many more projects than what we have, so that our innovation rate continues to grow, than what we are today. You have seen my earlier slide. We are right now in 85 countries. Still we have an opportunity to grow within those countries at the level which we have. That is one growth area. Also, we intend to expand another 10-15 countries. There is a possibility we can expand with the investment. I think, Mike, over to you. I think Mike will be walking up and down for 10 kilometers, 11 kilometers today.
Thank you. Very good, Bhupen. Yeah, amazing results, outstanding performance, and a very exciting future for the Advanta Seeds business. Just to wrap it up with two more slides, and then we'll do a short video and then move to Q&A. You saw over the last several slides, I think, a very exciting story for UPL over the next 5 years. We have opportunities in many, many areas, and when you add up the opportunities, we believe that we could have growth over this term of 7%-10% compounded. By 2027, we believe that 50% of our revenue will be from differentiated and sustainable solutions, not only helping growers be more successful, but from a UPL standpoint, also greatly benefiting our business. We have a pipeline that we believe can deliver $5 billion of value.
Over half of that will be commercialized in the next five years, accelerating the growth of our NPP BioSolutions business, expanding nurture.farm, and making unique investments in 22 countries to continue to drive incremental growth. As Bhupen just mentioned, growing our Advanta Seeds business at a rate of 12%-15% per year, and then maintaining and growing our manufacturing competitive edge that we have in this business. We'll continue to focus on increasing ROCE and improving our leverage ratios. We expect this year that we'll be able to reduce our total debt by about $400 million. Finally, we are reimagining sustainability and bringing real-world impacts with how we reimagine sustainability, creating a better environmental footprint for agriculture, really driving food security with our seed business, with our biosolutions, with our traditional crop protection business, with our DECCO post-harvest business.
Creating real economic and social benefits for farmers and farm communities around the world. I think this next video will really bring it to life.
Our planet faces challenges like never before. Soil health, water supply, food
I don't know if there's any mics down there.
There are mics. Anybody who wishes to ask a question, you can just raise your hand and one of us will come closer to you to hand over the mic to you.
Hi. This is Prashant from Elara Capital. Jay, when do we plan to take nurture.farm global? When do we plan to monetize it? What size do we want it to reach before we do so in terms of asset or revenue, whatever it may be?
Thanks for that. There's a lot of global initiatives. You know, in different markets, different farmer groups require different, have different challenges. While we are today focused mainly on all the challenges and improving farmer resilience for the smallholder farmers in India, that's by no means all the projects. We have the Gigaton Challenge is something which is going to monetize for farmers around the world. The value of sustainability. It will also give traceability as a tool for farmers to be able to monetize you know more sustainably grown crops. I believe the world is going to start labeling sustainably produced food. Nurture will cater to. The digital platforms will cater to that.
We are already doing a lot of stuff there. Today, Nurture is focused on really building farmer resilience, and we are launching similar projects around the world. I was surprised that even large farmers are looking for technologies to reduce their impact, the biosolutions, even fertilizer use, using the NPP and a lot of these things will have much more additional value than just the reduction of cost. As far as monetization, there's a lot of excitement around the Nurture platform from various, you know, sovereign funds, other funds. We are constantly discussing what is the right time and what is the right partner for us, because it's not just about the money.
Nurture is a profitable company and is probably to be the largest and the most profitable AgTech platform in the world if it were to be separated. There is a lot of interest there, and we are constantly discussing and evaluating options to unlock value and also to be able to get talent retention. The bigger challenge in the start-up space is, you know, the talent wants to be tangibly involved in their own, in their own journey. As you can imagine, we have a lot of brilliant young talent at Nurture in Bangalore who are in the ecosystem and are looking for exciting things. That's a discussion, the management team, myself and various other stakeholders are discussing. We will keep considering options and let you know at the appropriate time.
Yeah.
Yeah. Hi, sir. Good evening. Rohan from Edelweiss. I have many questions, sir. We'll keep it short, in the interest for other participants to ask a question. Sir, first is on your guidance. You mentioned a 10% kind of growth for the current year. We see it's already visible now that the price increase itself will be likely to be more than 10% for at least FY 2023, given the current prices. So the 10% you are mainly focusing only on the volume growth. That's one, the first clarification wanted.
I mean, with the challenges, you know, and the vulnerabilities and the impact of all these price increases, there may be a price reduction. We have to really look at it in a sensible way. Obviously, if you look at it from today's point of view, we expect better than that growth. Three months later, six months later, you know, things can change. We are being conservative there, and we believe that if situation remains the same, it can be better than that growth.
I just want to make sure that, I mean, we are not expecting any volume degrowth because of that price increase itself is roughly 10%-20% this year, then we are. Are we building a 10% volume degrowth in the numbers? Just wanted to make sure on that.
Yeah. No, absolutely not. In fact, we expect to see some volume growth in this next year. If you think about pricing, so the prices of our products came up through the year, especially starting in Q2. Then by Q3, we really for the most part reached the new pricing level that we are still at. We got a lot of that price lift throughout much of the year last year. If we look out over the next, say, two quarters, we'll expect prices to roughly remain about flat, unless again, there's a dramatic change in cost of goods. As we look out for the next two quarters, we don't expect to see significant cost of goods change.
Depending on what happens on the back half of the year, we could see some growth due to price. We won't see a lot of growth due to price in the first couple quarters of the year. The growth will primarily come from volume in the first, at least in the first half of the year.
Second, despite the inflationary scenario, we have seen 19% EBITDA growth in FY 2022, quite remarkable, much ahead also from what you guided earlier. I believe that though the volume growth has been 8%-10%, 8% only in the current year, but EBITDA growth has not only chased the volume growth, but it seems that you have also improved the margin significantly, to get this 19% kind of EBITDA growth. Just wanted to understand that the price increase still remains there, cost-led inflation is still there. Are we going to, or will we be able to protect this kind of EBITDA margins which has already been visible in the current year? Or you see that the margin pressure may come, and we may see some drop in EBITDA margins?
As we guided today, we expect to see revenue growth of about 10% or more, and EBITDA growth of 12%-15% in this next fiscal year. We do expect to see some increase in our gross margins. We also expect to see some economies of scale and some efficiencies from an SG&A standpoint. We will get more efficient in the middle part of the income statement. We do expect to see EBITDA margin expansion this next year.
Despite this, cost increase, still we expect some margin expansion.
Yeah. Of course, you know, not only cost of goods, but we're also seeing wage inflation right now. We have a number of initiatives to make sure we're managing our SG&A. You know, in some countries where the currency is devalued against the U.S. dollar, that will give us a little bit of relief on that. It's something that we'll be managing throughout the year.
Sir, another question is on our outsourcing partners. You mentioned that roughly the share of outsourcing partners of the sourcing has gone up from 2%-6% over the last three years. If you can share that, what are our expectations over the next three years? Do we have any numbers in mind that, our outsourcing partners will be contributing any particular number in terms of our sourcing?
I think by and large, if you see, I gave the number about 31% is China, and about 37%-38% is in it. 31% is rest of the globe. This is not going to change dramatically. As you said, you know, out of that 38%, there is that, you know, percentage of our strategic partners' share, which is largely in India but also outside India. This will inch up, but not that this whole balance is going to be lopsided to India or to rest of the world or to China. That is not going to happen. That will remain balanced.
Okay. I will take the later opportunity to ask one question. On this fixed asset turnover, definitely that looks like it has increased from 1.8x - 2.4x, but I think that the credit goes to the rising input prices and the end product prices, which has gone up by almost close to 18%-20% for the year that is showing a higher asset turn. Do you see that there is any opportunity for us to improve this asset turn and driving ROC going forward if we adjust it for the inflation?
Well, yes. I mean, partly it's the price. If you see 8%, you know, volume turnover in last year, such a difficult scenario, I don't know how many you know it can be compared with any other company. 8%, you know, volume growth has been largely because of our own manufacturing. We have been able to sweat the asset more.
Yeah.
Definitely, you know, we look at revenue growth of almost INR 4,000-5,000 crores a year. We continue to debottleneck and add more capacities and, you know, we have ongoing investment cycle, which is continuous. We are planning for 2-3 years ahead. So you will see that impact as the company keeps growing and, you know, be able to really. A lot of our backward integration projects where certain critical raw materials we over-invest, even, to make ourselves less vulnerable to supply chain disruptions.
Just one more from my side. Sorry for being greedy in the current scenario. Sir, though you maintained very strong margins in the current quarter, kudos to the management for that. As far as the volume growth is concerned, I think. I mean, 3% volume growth for the quarter versus 8% for the full year is definitely quite disappointing. Just wanted to understand that is it because of the low demand scenario or poor demand because of the rising end product prices, and that is affecting the demand? Or it is just only some spillover is being there and the dealers are keeping it more closer to the consumption, and we can see some spillover in Q1?
I mean, why there's such low volume growth and also why very poor growth in Europe market? Though you gave the reason for that, but just wanted to understand. Will it catch up or the current scenario looks like that it is unlikely to be improved significantly.
Yeah. A couple things. Firstly, in Q4, a lot of our business in Q4 is sales into the retail channel. If you think about globally, obviously, there is some product that goes on ground in that quarter, but a lot of our sales goes into retail warehouses in anticipation of the upcoming season. Three percent volume growth, I think, is probably gonna be consistent with what we saw across the industry for that quarter. The fact that we had 18% price increase, I think is really a testament to the good work from our teams. In Europe, yeah, we had 7% growth on the year. Again, we lost about $40 million to products that were banned on a year-over-year basis, and we overcame that.
If you think about that on a percent, that's about a 3 or 4% of the European business. You know, in a market like that, if you look at our peers around the world, 7% growth in that timeframe would likely be one of the leading, we'd be one of the leading companies in the world in terms of our growth in Europe.
Just to also add that, you know, when there is such a lot of volatility and prices are going up, you do face a little bit of slowdown, and if you flood the market with all your products, you're not gonna be able to increase the price. So there is a little bit of balance we have to maintain with our sales channels, where if we want a price increase, you can't offer the same amount of volumes. You have to tighten up.
Just to add one more point. I think we sold a lot of new products during Q4. You saw the growth in India, 63% in Q4. That was the launches of new product. Also we are seeing some shift more towards differentiated products than the off-patent products. That's also that you would see higher sales of these differentiated products will not be that much high volume, but will be much higher in the pricing.
Hello. This is Surya from PhillipCapital. Last two years, back-to-back, strong growth, value growth, what we have witnessed. Firstly, the successful integration of Arysta in FY 2021, and in the current year, it is the price-led growth what has contributed to the overall value creation. Going ahead, given the scenario that there could be a kind of a price erosion scenario that is there, going ahead, what value growth or what factors can really create value growth for UPL for FY 2023 and or going ahead over next five years?
Yeah. Thank you for the question. You know, as I said in my comments, our value growth is really gonna come from our differentiated and sustainable products. Those are products that are not based on a cost plus pricing. It's really based on the value that they deliver to our farmer customers. When we think about going from approximately 29% share of our mix today up to 50%, there's gonna be a lot of value growth as we transition our mix towards that part of the portfolio.
Is this the product mix or is it a market mix which is going to really contribute incrementally over next five year?
Yeah. For us, it's really around product mix.
Product mix and wallet share, also growth with all the initiatives which we are doing.
Sure, sir. Just last question. On the non-agri initiative side that you had mentioned or since few quarters that you have been emphasizing more on, and that too in the current scenario of the supply disruption and all that. I think that initiative is going to have incremental contribution to the overall business and the value creation. Anything on this that you can share and guide us?
No. This is the specialty. I think, you know, there is a lot of growth possibilities there. That business is growing nicely. It's very small today for us in the whole scheme of things. Still, we are one of the large players. That business has a lot of interest and is growing quite nicely. I think the impact will come in the next two years, three years, where it'll become one of the larger specialty chemical platforms, where we are supplying to all the ancillary industries, based on core competencies we have built for our crop protection business. Those portfolios will be used for pharma intermediates, other specialty needs for the country, primarily for domestic use. It's very small right now.
This is Vishnu from Spark Capital. I have a few questions. Firstly, is the cost increases that we are looking for completely done, or costs are continuing to gallop, and we will be taking further price hikes as we go forward in the next couple of months?
Do you want to take it?
Do you wanna address that?
Well, you know, my take is that in next 2 quarters, the cost is gonna be the same level what it is today. We don't see a very large, as you use the word gallop. I don't think the cost is going to gallop that way. What current level the costs are there, more or less it is going to be there the similar level because the Ukraine conflict has already factored, and also the global macroeconomic situation is already factored. That's what visibility we can say with some amount of certainty that we can say that for next two, you know, quarters, but can't say for third and the fourth quarter.
Have we passed on everything that, probably between February, March, any cost increases, all those have been completely passed on? Or should we see some more next few months?
I mean, quarter four numbers you can say. I mean, when you are saying February, March, I mean, the quarter four numbers itself says that we have been successfully able to pass on the cost increases to the market.
Yeah. I would just add, you know, when you look at the post-patent segment in particular, it's both a cost of goods equation, but it's also a supply-demand equation. If we think back over the last 8-12 months, there's been products that have also been short in supply. Sometimes there's a disconnect between cost of goods even in the post-patent segment and the price you can achieve in the marketplace. There was some of that that played out as well that benefited us, I think, in Q4 as well.
You did speak about cost inflation across the board, fertilizer, seeds, and ag inputs. Is the farm margins still way better than last year, or is it still coming down? What is the experience when you increase the prices to the farmers?
Yeah. It largely depends on the region and the crop. If you look at global row crops, you know, wheat, corn, soybeans, crops like that that are traded globally that have a very established price, those prices are extremely high. In most countries, you know, that we operate, farmers will earn a very strong margin on their production this year. Some of the specialty crops and some of the domestic crops haven't seen the same inflation, and yet those farmers have the headwinds of cost inflation. It really depends on the region, but more so on the crop and what's happened in terms of how the prices have evolved.
Got it.
Also, the farmers which are selling the produce harvested now have not had the cost inflation which they're gonna have in the next season. Economics is a very dynamic economics going on there. The farmers are very, very conscious. We know some farmers taking fertilizer holidays, reducing it, et cetera, trying to anticipate what can happen to commodity prices. There is a little bit of tension every farmer has also because, you know, he has to plant, harvest, sell 8, 10 months from now, but he has to buy the produce, his raw materials today at today's prices. He's seen the benefit of that. He may get hit, so they're very conscious of that. At least the very professional farmers.
Got it. When you say we are gonna take at least 200-300 basis points market share gains the next 3-4 years, would this come from the innovators or the smaller players? I mean, we have, we did see a lot of different things that we are approaching, but the larger companies would also be doing something similar. Where exactly are we, one, going to take the market share from, and what are the competitors today, if we are looking at it, and how are they going to counteract in terms of this market share gain?
You know, UPL has been every year since inception, we've been gaining market share. We have a very strong cost base. We are a very efficient and agile company. I think a lot of companies would like to be in our shoes. We have a very loyal customer base. You know, we probably invest more money or more effort per dollar of revenue in terms of making supply chain security and backward integration and CapEx as we do. We have the trust of our customers, whether it's large distributors, dealers, or farmers. Now with the innovation, the rate of innovation which we have, the value of innovation, our innovation is not for the sake of innovation.
It is because it generates some value for the farmers. When we are gaining market share, it's just not selling more cars or whatever else they're selling. We are selling differentiated solutions which are adding incremental value, so we naturally gain market share. It's not necessarily just bulldozing and driving somebody out of the market. We increase wallet share because we give more value to the farmer, whether it's the nurture platform where we help farmers improve soil health. We're seeing today in the wheat farmers who did not burn their crop, we're seeing yield gains. They're seeing much better quality grains, better quality. The groundnut farmers are seeing oil content in their groundnut going by 3%-4%, and that gives them and better quality seed.
If you have A grade quality groundnut produced in your farm, then you actually get a 30%-40% higher price for your crop. If you have higher oil content, you get another little bit premium. They're not doing it. We are not just bulldozing our way with price. We're giving value to the farmer, and that's why we believe that our market share gains are sustainable and really we are not really focused on necessarily bulldozing anybody out of the market. We just gain it because the natural strength of our portfolio and our technologies and our approach to the farmer.
Brazil has been a real workhorse for us. I mean, doing pretty strong in the last couple of years. I mean, where are we today? Let's say firstly in the market in LATAM, what would be our market share in terms of the top three, four, five? Where would we be specifically in Brazil? Where would we be, and where can we grow from here in Brazil? Is it a 15%-20% growth market even from here on, or is that more or less done?
Rogerio is here somewhere. I can't see him. You should catch him in the coffee break afterwards. No, I think you know with a product launch like Evolution we have a few other products which are actually number one in their category for the solution. Those are just launched. That's a huge segment. The Asian soybean rust segment is huge, and we think that farmers will naturally move towards that. Even if you look at some of the Bunge partnership it's very easy for farmers to do more business with UPL. It is the biosolutions bit and the whole impact on fertilizers substitution with K-Tionic and Humic Humiflex .
Some of those technologies which we are launching, every avocado farmer in Mexico, which is, you know, one of the largest producers, is going to be a UPL customer. It wasn't the case two years ago, but now it will be. We are gaining market share by crop, by market, by region. It's solid market share with something which is creating an innovation and carrying value to that farmer. We feel that we can take that market share and keep it. Some of it is not really taking market share from the existing player at all. Some of our biosolution product on heat tolerance, better quality crops, our soybean products gives actually better quality.
Those are not really taking this, creating a new market. We believe that is another area where we are growing, where we're not taking market share from anybody else.
Where would we be in the top 5 rankings, let's say, in Brazil today? I mean, we'll be top 3-4.
Yeah, we are. It depends on how you look at it, but we are in the top three companies for sure.
Just.
If you add glyphosate, you remove glyphosate, it becomes very different. We don't play in that market much. That's more a commodity business.
In the differentiated, which we are talking about growing this business, a lot in the next couple of years, would physical assets, fixed assets, CapEx go in this business over the next couple of years? Any guidance in terms of how much will we be spending?
We're not going to increase our CapEx any more than our guidance. In fact, in proportion of revenue, I think it keeps going down. But we will need to. We don't have too much spare capacity. So we've added a lot of investment, a lot of capacity for the NPP portfolio in our Bangalore facility. We are adding more facilities. We're expanding in France, we're expanding in Mexico. Everywhere we're adding capacity, but it's within that limit. Within that budget of INR 2,000-3,000 crores. INR 2,000 crores or so, right, Anand?
Yeah.
Sourcing this 38%, would it continue to inch up closer to 50% or more or less will be here at 38%-40%?
No, I think I said that, you know, earlier it is going to be remain balanced. It is not going to go to 50-odd% and all. At least I don't see that happening. I mean, 38% can become 40%, but not, you know, 50%.
Hi, this is Varshitya from Plutus Capital. This side. My question on volume growth. One of our competitors in their earnings call has alluded that there has been some preponement of orders from Q1 to Q4. Is there any element which we have seen in our numbers in Q4 where we have seen preponement, especially in North America?
As I mentioned, we saw about 36%-37% growth in Q4 in North America. Some of that was probably the channel in anticipation of a very strong year and potential shortage of products. We think that there was probably a little bit of pull through. As we look at our business in April and the early parts of May, it continues extremely strong. You know, I don't think we're gonna see a negative impact of that in Q1. I think the market's gonna be really strong.
Maybe that negative impact or at least some normalization will happen in maybe second half of the year, maybe in Q4 or Q3. Is that the right understanding?
Well, it all depends on how big the market is. You know, ultimately, in North America, the retailers buy it and put it on the shelf, and then it has to get purchased by a farmer. If there's the expectation of 90 million acres of corn and 91 or 92 million acres of soybeans, if that happens, and it's starting late, so it's a late spring. If they get all that crop planted, there'll likely be extremely high demand for products, and that will de-inventory the channel. And if that happens, then we'll be back starting to reload the channel in Q3 and Q4 later this year.
Geographic mix has been more towards North America on a year-over-year basis. That would have also aided our product mix and margins overall, right? Because it's a high margin geography for us from a GP perspective.
As our business grew in North America this year, it contributed to our strong margin performance as well.
Thanks, and all the best.
Tejas here from Nippon India AMC. I have two questions. One, on the market share gain at the global level, are we looking to gain that market share from the innovators by offering different product propositions? Or is it something at the lower end of the market which is catered by, let's say, smaller players, and they are not able to meet the demand because of the supply chain issues?
Yeah. I think Jai did a good job of really addressing this a few minutes ago. If you look back over the last 12 months, clearly there was a benefit for the companies that had a strong supply chain, and we were clearly one of the winners. When you look at our growth, whether it be on the calendar year or on our fiscal year, we definitely were one of the companies that grew the most. I think if you look at the global data for the crop protection market, probably the smaller companies had a tougher time last year because they were less backward integrated. If supplies out of China got tight or they couldn't get access or get products moved on time, then they got impacted.
I think there was some of that played out in the last year. Now, going forward, as Jay said, our differentiated and sustainable products are gonna compete at the farm level against post-patent products, against other innovative products. Yeah, we don't think about who do we displace. We focus on how can we create value for our farmer customers, what products fit the best, how can we bring ProNutiva products to create even more value, bringing, for example, a glufosinate product with a Gaxy product in canola, which is one of our plans in Canada. This is how we actually grow the pie, and we get new acres as well.
No. Why I ask this question is, if you are replacing the lower end of the suppliers, and they are predominantly the price disruptors, right? Because they want to gain market share at a lower margin proposition. If China supply chain resumes, and if these players come back, and then the margin profile which we are enjoying for last one year, will be at risk. If you're displacing innovators who are not predominantly the price disruptors, then the margin sustainability will last. That's where I wanted to have some understanding.
I mean, yes, logically, what you're saying is correct, if you replace the low end of the market. First of all, China disruption is increasing. I think that the regulation in China is increasing, standards are increasing. I think the number of players will reduce over a period of time. They are also becoming price conscious, and they are not as competitive as they were in the past. And also our products are, as you say, as we mentioned, is a differentiated product, so it's not a like for like replacement. It's not a me too. We don't play that market as much as we used to, and we are transitioning away from that. It is not easy to calculate. It's not a straightforward calculation.
With our whole NPP portfolio, our ProNutiva concept, we're focused more on outcomes for farmers than just a replacement strategy.
Yeah. Plus, in my experience, you know, when you support a customer through a challenging time, and last year with supply chains being tight and products being short, even in our own portfolio, we had to make decisions on how can we support our customers the best. I know our field teams did an outstanding job of working closely with those customers, making sure they had supply at the right time so they could apply it. I think we really built stronger relationships with our customers throughout this last year, and I think we're gonna get the benefit of that, even if things do normalize going forward.
My second question is on the guidance for the debt reduction for this year at $400 million. Last year, obviously, it was difficult considering the working capital blockage. I mean, we nearly ended up blocking $800 million of additional working capital. When we are not seeing a larger price increase this year or even for that matter, there are some reasons for the price reducing, wouldn't the working capital release this year will be much more than the $400 million debt reduction you're guiding? I think you're playing conservative on the both ends of the guidance. One is on the revenue side, where you're guiding just 10% and playing conservative, and other end, you're also being conservative on the debt reduction. I mean, both are inverse, I believe.
No, it's true. It's always better to be conservative. It's very challenging time. You know, like Raj said, we hope that at least for next three to four months, we should be able to maintain the prices and other things. Now, if we're able to do it for a longer period of time, maybe we should be in a position.
To improve our working capital, because we are already on inflated working capital as of now, you know. So there are opportunities there. I think one thing we can assure, we don't leave things on the table. There is always, you know, KPIs of each of us to see how we can keep improving on all, whether it's contribution margin, EBITDA margins and reduction in SG&A. So it's always our effort to do that. But at the same time, we prefer to be conservative and outperform rather than. Especially in such uncertain times, it's better to be that.
Yeah. Anand, at INR 8,600 crore of EBITDA, we were at $500 million dollar debt reduction. At INR 12,000 crore plus EBITDA, we are at $400 million dollar, and that's kind of a little disappointing.
As I said, we will certainly do the reductions, there's no question. You should also see that we are pushing for higher margin products and other things. Those are some of the. We just don't want to take aggressive target. I mean, people have held us for not reducing any debt this year.
Thank you.
Hi, sir. Earlier Mike had mentioned that out of the $5 billion R&D pipeline, half of that will be coming before FY 2027. Even if I just take $6 billion of the base revenue and $500 million, like out of the $2.5 billion, your base growth itself is $500 million on the $6 billion. Are we assuming that this will be cannibalizing the existing products?
Some of our pipeline products will replace products that are currently in the pipeline. But again, if you look at our 7%-10% compounded growth on revenue off of the current base, most of the pipeline will be incremental. Yeah, we can work through the math with you, but it's mostly incremental, not cannibalizing.
Something like a product, for example, if you take the case of Evolution, it's largely a strobil plus mancozeb and a conazole. This combination we already have in multiple brands. Even though we've given a $1.5 billion addressable market, but I believe it'll be cannibalizing our own products eventually.
Yeah. That's a good example where we're upgrading the portfolio. We're gonna be competing in a whole new area of the market. With this, with Evolution, we're gonna be taking on products like Fox Xpro, which is Bayer's premium product. In the past, we haven't had a product that can compete head to head against products like that. There will be some cannibalization on the lower end of our portfolio, but we believe a lot of the growth will come from you know, competing in the higher end of the marketplace with a product like Evolution.
It's interesting to see, you know, like, because just specifically for the Fox Xpro perspective, two years back, we had done a marketing tie-up with Bayer. How this thing with the product launches cannibalizing their products, how will this marketing tie-up play out?
It was about four years ago.
Yeah.
I mean, this is that program ended. We have now positioned ourselves in that really high-end market. We compete now with Syngenta, Bayer in that segment. We didn't have a product in that. So while logically it could cannibalize, it's not likely. Rogerio is here, he can answer that question later on, and I don't know who else is here from Brazil team.
Sure. Thank you.
Hi, good evening. This is Tarang here from Old Bridge. A couple of questions from my side. The 7%-10% growth that you're aiming over the next 5 years, is it largely organic, or there is an element of sizable inorganic contributor there? That's number one. Number two, as the business evolves, given your size, if we do see you going in for an inorganic acquisition, in which areas could that be in? I mean, crop protection could probably not be the case because strategically it may perhaps not make a lot of sense beyond a point. Just wanted to get some sense of where all can we see you headed.
This is a completely organic growth. There's no acquisitions in there. We do acquisitions, and we look at strategic projects when they come by. As far as you know, we have in the past made acquisitions for strategic technologies and strategic market access. Of late, we have been doing partnerships with on our for our OpenAg whole strategy with Bunge and similar type of things. In fact, that is bringing in money to our platform because we sold some stake in the in Sinagro. But as such, you know, we can map out where we are under present in the market.
When we decide to gain market share in that market, we look at the opportunities where what we need to do to achieve market share to our satisfaction. The obvious market is Brazil, which we have a decent growth trajectory and market access. We probably won't do a pure ag chem acquisition there. There are markets in the world where we are underpenetrated, like we bought a business in Indonesia this last year. That's helping us in a big way to probably become the leading company in Indonesia this year or next year. We look at each market and what it takes to achieve our ambitions in that market, and then decide what is the right target, if there is. There's no y ou know, we don't run around with a checkbook giving it to anybody who.
He's got something to say.
Got it. Just on India, right? I mean, you've been outperforming India for quite some time. This year specifically, the outperformance has been quite significant versus whatever we've seen. Just wanted to get some sense on what's really working in India that has helped you outperform so significantly.
I think, taking focus from just being product focused, but to being solution and outcome driven has been a big shift. ProNutiva bringing together the digital platform, working with farmers more directly on the ground, really understanding their challenges and providing them services and solutions is a big shift. Our synergies between, you know, the classic products and being service-oriented is, I think, driving a lot of the growth in the market.
Mr. Dubey, just wanted to understand there are certain big crops that are probably missing in the seeds portfolio right now, and as you said, it takes almost 8-10 years to get them. What's the plan there?
I think our growth engine, if you see our crop-wise distribution, our number one is tropical corn and subtropical corn, and there's a lot of scope to grow. The big picture, if you look at it globally, genetics are divided into tropical and temperate side of it. With the temperature going up globally, the area under tropical and subtropical is expanding. Thereby, the genetics which we have or germplasm which we have, the crop which we have, are becoming more and more valuable. To give you one example, there's a place called Krasnodar in, you know, Russia. It's all temperate corn, a lot of dairy there, when I visited first time. We have a good sorghum there. So we said, "Okay, let's get some sorghum and try it out." They laughed at us.
They said, "Sorghum will never grow here, Krasnodar." The name of state is Krasnodar. It's about 3 hours flight from Dubai. We said, "Okay, let's try it out." We tried, and they grew very well. In that year, the temperate corn did not perform very well at all. Those dairy farmers started now growing sorghum. So the crop. Currently we have a tropical corn, so it can expand on this area, and also sorghum can expand in this area. So both the platforms are very good opportunity for us to expand. Third important growth opportunity for us is a vegetable crop, which if you remember a few years ago, you know, in a presentation we made this, we had a couple of acquisitions in vegetable space. They are doing very well.
Currently, they are again a tropical country, so we are focused on India and surrounding, but we map globally now. All the tropical country, including Central America, in the USA, Florida, for example, are the market, these genetics is doing very well. These are the areas we are developing, deploying manpower, to develop the product, expanding our technology development team and extension team. After, in 2 or 3 years' time, normally growth will start coming in. Current portfolio has a very good steam still to grow.
Okay, thank you.
Rohit from Emkay Global. You have given guidance about margins growth as well as ROC. What is the guidance about debt-free, becoming debt-free in the next three years, four years, five years? Thank you.
We are a growth-oriented company, and we continue to invest. With the tax rates where they are, I don't think becoming debt-free is going to be any joy, you know. I mean, it's just going to increase our cost of functioning. We like a bit of debt. We are comfortable. Even at the current levels, we don't feel as such discomfort, but we'll continue to deleverage. Becoming debt-free, I don't see it, at least so long as we are in emerging markets where tax rates are where they are.
Fair enough. The second question is, we have had a cost inflation last year because of which obviously there is an impact on the pricing front. Now, if this year, if the cost inflation, the energy cost, as well as the logistics, everything becomes, you know, normalized, will there be any change in terms of our long-term guidance, from next year onwards, given that, the pricing environment probably will come down and obviously the product prices will also subside? Thank you.
Yes. We anticipate in the course of the five-year plan that there will be some normalization of costs and supply chain and logistics will normalize. That being said, we don't know what normal looks like. You know, we wouldn't anticipate that costs are gonna go back to where they were two years ago. You know, again, in the post-patent segment, I did say some of our products benefited from global supply tightness, and so some of that margin would potentially go away. The price increase as a result of the COGS increase, if the COGS come down, the price will likely moderate, but our margin should still largely be similar.
you know, our guidance is durable over the five-year time horizon with expectations that, you know, there will be some normalization of costs and supply chains.
Thank you.
Hi. Nitin from DAM Capital . Mike, on the two buckets that you talk about, post-patent products and the differentiated products. Typically, what is the difference in gross margins between the two buckets?
Yeah, we don't split out the margins across those segments. Typically, a differentiated and sustainable products would have likely a 10% or more margin benefit in normal times versus post-patent products. They are definitely higher margin, which again, if you look at our revenue evolution last year, 90% of our revenue increase in post-patent was because of price, and 70% of the revenue increase in differentiated products was because of volume.
I mean, is it fair to then conclude that once over the next five years as a bucket of the differentiated products increase meaningfully, almost doubles from there based on a percentage perspective, per se, that should lead to a meaningful delta on our gross margins on a consolidated basis?
Yeah. We, you know, we didn't guide over the long term on EBITDA. As we expect our portfolio to continue to evolve to differentiated products, we would expect EBITDA margins to improve along that journey as well.
Secondly, Jai, on, you know, on the capital, do we have a defined capital allocation policy now? We did a buyback announcement, almost completed this buyback. Is there any thought in terms of having some sort of guidelines for some quantum of buyback/dividends that we'll keep doing every year given the cash generation that we have in the business?
Obviously, the intention is to increase payout. If at the board, you know, consistently considers all the options and the value of the company is much below the market benchmarks of our global peers. Based on that, the board recommended that we do a buyback. You know, the idea is to continue to have a much or a higher payout. Either it'll be a buyback dividend, whatever the board decides, based on the forecast for the next couple of years, and the value of the company.
Last one. You talked about the carbon credit opportunity. Given our size, I mean, at what stage do you think it can become a meaningful opportunity per se given the size of the business, the profitability that we currently have?
I'll pass it to Dhruv. It's an exciting way for us to we believe that farmers should be rewarded. If you want a meaningful transition to sustainable agriculture, farmers need to be rewarded for that. That will come from two aspects. One is labeling and traceability, that this is sustainably grown food, like you have organic food labeling now. The second thing is they need to be incentivized to change their behavior like everybody else. On specifically on the carbon, I'll pass it to Dhruv.
Yeah. I think the carbon markets continue to evolve. As we move closer to more regulated, you know, compliance, we should see an increase in demand for carbon credits, regulated, verified carbon credits. I think there will be certain ups and downs along the way, depending on macroeconomic situations, geopolitical situations as they emerge. Having said that, I think there is a very clear opportunity for farmers to get better outcomes. We've seen by adopting more sustainable practices, they're actually benefiting in terms of overall outcomes, better value, better yields, better quality of crops. I think that shift is definitely headed in the right direction. The value to farmers for carbon credits should also keep increasing over time.
This should become material over time, but I think there's a path to it that is still a bit evolving at this stage.
Does this carbon credit, I mean, there is gain for the farmer, but does it imply any potential gains from a carbon credit specifically per value perspective to UPL also?
It would. There is a value that is, has to be passed on to the farmer. As per the, you know, the international markets, there's a general norm and a guidance around that. It's too early to say what that gain for UPL would be. I think this is something we would like to keep a close watch on.
Thanks. Maybe one last one. Anand, you talked about a 10% reduction in inventory. This target is for the year, or this is more of a long-term target?
This is for the year. I'll hand over to Raj. He's undertaken a project and let him.
No, this is for the year. This is because of, you know, the digitalization initiative which we have taken. There's a special project on that which we are working on. We feel that, you know, in terms of number of days, we should be able to improve it by 10%.
Thanks. I mean, Anand, the reason I was asking is, I mean, this is a meaningful reduction on our overall working capital in terms of it has implications for the cash release, which is capital release for the business.
Sure. Yeah, that's right. I mean, as I said, we will try to reduce the debt as much as we can. We will certainly not go to zero, but at the same time we are being conservative of giving guidance. You know, as I said, there's just too many uncertainties. We know we are still not off the war. Supply chain constraints still continues. Freight costs have not come down. One needs to see how the year progresses.
Thank you.
Hi, this is Tushar Bohra from MK Ventures. This question is, you know, slightly more philosophical and, maybe, I'm not sure whether the answer could be just in one session. Traditionally, you know, we've essentially been moving up the curve in terms of, more value, more sustainable solutions. We're trying, and every year to be closer to an innovator rather than a, competing generic company or a, you know. Philosophically, would it be fair to say that the solution profile, you know, the products, the solutions that you're offering would be very different in terms of the approach positioning, you know, to the farmer also. Not just, you know, from an investor stakeholder perspective.
What I see in our interactions, and I've been following the company's last few years, there's an increasing focus on the branding part of it, right? You know, the solution is branded. There's a very clear focus around it. Very clear IP is being built around it. Is it also how you are approaching the farmer? A to B, therefore, would it be fair to say that the solution selling would be very different from how you have been, you know, selling your products earlier years? As this business starts to scale up and become more meaningful and prominent in the overall revenue chain, would this require very different capital allocation strategy, very different resource allocation strategy, very different branding and positioning at an overall corporate level, and where it could be monetized much better?
I mean, one of the reasons you would brand it, I'm assuming, is to be able to monetize it at some stage. Lastly, how are you positioning this vis-à-vis the innovators specifically as to what similar products or solutions do they have? Because, you know, obviously there's a lot of research happening across the globe, and I'm sure you would be, you know, trying to track or keep a check on what is happening, with the other innovators and the leading companies globally in terms of their research programs. If you could help us understand where our research, where our IP stands vis-à-vis these companies, and how is this positioning changing, and therefore what are the implications from a next 3-5 year perspective? Thanks.
No, that's an excellent question. It's something which is very different from what you call innovators. We don't want to copy other companies because the need of the hour is completely different. Today, the farmers are looking for solutions rather than buying products. Traditionally, our industry was trying to sell brands. That is my belief is the business of the past. Today, you have to. The farmers are interested in outcomes, and they are not really focused on one product. UPL through our whole, which we call our puzzle with DECCO, with NPP, with our soil health approach, is very, very different from anybody else.
We believe that that's a completely different direction we are driving our business. In various value chains of crops, we are able to drive the transformation from selling products to really focusing on outcomes. In two years' time, when you talk about the Punjab, Haryana farmers, they will be talking about soil carbon, not about crop burning. It's gonna transition away, because once a farmer stops burning the crop, you're not going to talk about crop burning. You're talking about carbon content. Carbon content in the soil in Punjab and some areas of Haryana and this area has gone to below sustainable levels, and it needs to go up, and that will impact long-term value of that land if you look at it from agricultural productivity.
The services built on our whole services platform, farmers designed their farming practices for INR 10-INR 20 a labor, a day labor 25 years ago, 30 years ago. Today, labor cost is INR 300-INR 500 a day. Five years from now, labor cost will be INR 1,000-INR 1,500 a day. If you don't transition our industry to meet some of these challenges, you will have a huge challenge in food production. Because if a 5-acre farmer finds that his son, who's a big farmer, a 5-acre farmer in a village is a reasonably rich guy. If his son makes more money delivering food for Swiggy or Zomato than producing because of his labor costs, et cetera, that's not viable. Transition.
This is a whole transitioning from really selling products to giving solutions. We are driving that in different value chains. We're seeing about 30%-40% of the income of a groundnut farmer in Gujarat goes to labor. If you don't transition to that, to reducing that, what will happen in five years? It'll be a disaster. UPL is transitioning not only with our portfolio of products, but with a solution approach, which is not what our competition is doing, not what innovators are still focused on innovating products and looking for farmers. We are looking at farmers and seeing what we can bring to make their life different.
Thanks. Just the second part of it, so as the solution part of it starts to become more and more relevant, meaningful in your overall revenue profile, as an organization, what is the implications for you?
Today, I mean, statistically, if you look at every farmer in the world buys one UPL product, and I think they will buy two or three or four.
From a corporate structuring perspective, from an allocation of resources perspective?
I think, you know, our organization, as you speak to the teams here later on, you will see everybody's mindset is transitioning because we are driving this change. There's nobody else driving this in our industry, where we are actually going and telling the farmers, "Don't worry about the products, but really focus on outcomes." That whole approach and our Bunge partnership, our partnership with various food companies, our partnership with the value of sustainability. Today, I think about five sugar companies are giving about a third of their land or 25%-33% of their land on our program, where they will be saving 30%-40% fertilizer, 30%-40% water consumption, billions of liters of water.
I think next year at this time you'll see the results of that, where actually the farmers are increasing 20%-30% yield also. Now, these impacts on the value chain, when you go to a sugar consumer and are able to showcase that the impact of the sugar they're using is much lower, you will see a huge transition. Because today there is a lot of distrust that, "Okay, are you talking? Is it gonna work? Am I gonna get more money?" I think the cost of sugar will come down and the value for the farmer will go up. These sort of transitions are happening, and in five years you will see huge impacts in some value chain.
I'm not saying everywhere, but there'll be so many value chains which are completely transformed, where the farmers are not talking about buying products, but they're trying to latch onto a program. That's where Nurture comes in with different kinds of solutions in terms of insurance, weather-related insurance, and all the other financial tools they will bring to the farmers, which will really enable him to become more resilient and be able to cash in and become more financial inclusion, because of all the tools we bring to him.
Thank you.
I think we can take one last question. Okay, good. No more questions.
Definitely break.
I think we can break now, but it's a request that everybody please exit from the main door, from the reception door where the reception was and in the backside of this. That door will not open, but just on your way, you'll have to take a left and then left again whenever you leave after the interactive session. Thank you.