Ladies and gentlemen, good day, and welcome to UPL Limited second quarter and six months ended 30th September 2021 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Radhika Arora. Thank you and over to you, ma'am.
Thank you. Good morning and good evening, ladies and gentlemen. Thanks for joining us today for the results for the quarter and half year ended 30 September 2021. On this call, we will be referring to a presentation that has been shared with you and is also available on our website, and we take it as having read the Safe Harbor statement. From the management we have with us Global CEO, Mr. Jai Shroff, Global CFO Rajendra Darak, COO Carlos Pellicer, Global CFO Anand Vora, Raj Tiwari, Global Chief Supply Chain Officer, and Farokh Hilloo, Chief Commercial Officer. We will start with a brief overview from Jai, followed by a business update from Carlos, and then a financial update from Anand. With that, let me hand it over to Jai. Jai.
Thank you, Radhika. Pleasure to talk to everyone today. It's been a challenging year as one can imagine. Lots of volatility in almost every sector we can imagine, every aspect of our business, particularly running a business with a global presence. There has been a lot of sleepless nights for our whole team, but they've done an exceptionally good job, as you will see. On the ESG front, I'd just like to cover some highlights. Reimagining sustainability is a key focus of UPL. Over the last five years, we have reduced water consumption by 21%, carbon emissions by 26%, waste by 45%. In the first half of this year, we have reduced carbon emissions by 4%, water by 18%, and waste by 29%.
We keep investing in technologies and ability to reduce waste and improve our ESG across the board. We've also signed the Climate Pledge, which is a commitment to reduce our carbon footprint and by 2040 to zero. We've also launched the Gigaton Challenge, which is to reduce CO2 in the atmosphere by 1 gigaton by 2040. This is using agriculture as a key tool to reduce, to decarbonize the world. We will mobilize 100 million hectares with 2 billion farmers to decarbonize the world. It's one of the most exciting challenges in our sector in the world for decarbonization. At nurture.farm is one of the key initiatives of digitizing the ecosystem for agriculture inputs. Nurture.farm has had tremendous success in the last 18 months. We have onboarded 1.4 million farmers. We've onboarded 60,000 retailers.
We have had a GMV of INR 600 crores in the last six months. We have serviced almost 3 million acres, and we have 90% adoption on a digital platform. We have also helped farmers trade 5,000 tons of their produce. We also launched the EndTheBurn campaign, which actually helps farmers not to burn their crop. One of the key challenges in North India is, in this part of the year, farmers burn about 6 million hectares of rice stubble. UPL and Nurture, our platform, was able to take a target of 10%, and we are very happy to share that as of last night, we did about 400,000 acres were completed. We will do a little bit more, but we are committed to end this in the next three years.
We have a lot of requests from the government and other agencies to do that next year, completely end the burning of the rice stubble. NPP is another initiative which we have formed. All our biological business comes through NPP, and we have launched a lot of products, and NPP platform is also doing amazingly well. We have focused on developing BioSolutions for all the key challenges being faced by farmers, and that business also is growing. We have signed a long-term agreement with Christian Hansen, one of the key dev companies in Europe on BioSolutions. They will manufacture products as per our request for some of the challenges we see and research targets we give them. We also bagged the Asian Sustainability Leadership Award a couple of months ago. With that, I'll hand over to-
Carlos.
Carlos to give you a business update. Thank you.
Thanks, Jai. Good evening, everyone. I'm pleased to join you today and present our financial results.
Carlos?
Yes.
Sir, sorry to interrupt. If you can speak closer to the device, please. You're sounding very distant.
Okay. I will start again.
Thanks, Jai. Good evening, everyone. I'm pleased to join you today and present our financial results for the second quarter of full year 2022. We are operating in a highly volatile and uncertain world with ever emerging disruption. Whatever the challenge comes from supply chain or from manufacturing costs, we have continued to provide solutions to address the pain points of the farmers globally while delivering our financial commitments. These have been made possible through our strong backward integration, manufacturing capabilities, and our supply chain excellence. The strengths of our team and our OpenAg network, whether through our customers or partners, has helped us anticipate the foregoing challenge and has made us better prepared to effectively overcome them. Driven by our purpose, we are inspired to be agile, focused deeply on our customers and grow sustainably, and just as identified by Jai.
We are also excited to announce that, two new patents, among other pending applications, have been granted in Brazil on a novel three-way mixture to support our soybean disease resistance management platform. These patents have been granted in nine additional countries, including USA, Argentina, Australia, Russia, and European countries. Now, moving to the financial results, I'm glad to report that our revenue as well as our EBITDA for the quarter have been shown robust growth. The revenue have grown by 18%, while the EBITDA have increased by 13% versus Q2 full year 2021. The increase in revenue was led by strong volume growth enabled by our strong backward integration capabilities, along with improved overall price realization.
Even though there has been a significant cost pressure on our key AIs in this inflationary environment, we have been successful in maintaining our gross profits to Q2 FY 2021 levels. Further, when adjusting our EBITDA for the nurture.farm-related investments, our EBITDA margin improved to around 20.1%, flat versus previous years, implying a 16% growth over Q2 of FY 2021. Now, let's look at the performance of our regions. In LATAM, we registered around 21% growth, led by strong increase in volume. Brazil, the key country in the region, grew by around 27% versus last year, driven by the volume growth of our key products and supported by improved price realization. Other subregions, such as Southern Cone and Argentina, also demonstrated robust volume-based growth.
Furthermore, Mexico has managed to maintain its revenue versus previous year despite prevalent severe drought conditions. Looking to North America now, revenue growth was achieved through higher price realization, especially due to its upside on non-selective herbicide. This was driven by improved price realization, resulting in robust growth of 34% over Q2 full year 2021. Improved commodity price, tight supply for key products, and favorable channel stocks further enabled this strong performance.
Request all the participants to please stay connected while we reconnect the management. Ladies and gentlemen, the line for the management is reconnected. Thank you, and over to you, sir.
Yes, sorry. I just repeat North America as I don't know until when and where you have been able to have the information. In North America, revenue growth was achieved through higher price realization, especially due to the upside in non-selective herbicides. This was driven by improved price realization, resulting in a reduced growth of 24% over Q2 FY 2021. Improved commodity prices, tight supply for key products, and favorable channel stocks further enabled this strong performance. In Europe, we grew by a robust 31% in Q2 versus previous year. This strong performance has been achieved through a mix of favorable volume growth and higher price realization. Improved market conditions, including weather, led to accelerating sales in Q2. France, Benelux region, and United Kingdom have delivered strong growth, driven by robust performance in fungicide, herbicide, and BioSolutions segment. Moving to India.
India, we exhibited a better performance than the overall market in this part, despite general slowdown due to average 99% deficient rainfall and reduced kharif acreage for key crops such as cotton, soybean, and groundnut. Moving to the rest of the world, we delivered around 13% growth in revenue this quarter versus last year, despite the ongoing major supply constraints. Australia and New Zealand registered strong growth led by the higher volume and improved price realization. Japan sales were comparable with the previous year, despite depreciation of the Japanese yen. Among the regions, Africa and Middle East region registered weak growth, primarily due to the unfavorable rains in part of Africa and overall supply chain challenges.
before handing over the call to our Global CFO, Anand, to provide more details about our Q2 financial results, I'd like to congratulate our team for their resilience, dedication, and unified focus to deliver this strong performance in Q2 despite challenges on several fronts. Over to you now, Anand, please.
Thank you , Carlos. Thank you very much. Good evening, everybody. I'm taking us back to the presentation, which is put up on our website and, having read the Safe Harbor statement. I'll begin with providing you the key highlights for the second quarter and first half earnings, and then take you through the detailed financials. The performance of second quarter is a true reflection of company's resilience and strong business model that help us deliver strong results amid the global supply chain disruptions and a tough environment. This was enabled by the backward integration and end-to-end manufacturing capabilities for our key products and of course, the agility of our team. The Q2 performance highlights and Q2 P&L highlights are as follows. Talking about the key financial metrics for Q2, we ended the quarter with revenue of INR 10,567 crores, an increase of 18%.
What is most heartening to mention here is the 15% growth in volume over that of the same quarter in the previous year, and 3% due to price increases, which primarily started coming in September 2021. Talking about gross margin for Q2, the impact of 85 basis point increase in freight and 96 basis point on account of geographical revenue mix, the higher sales, this revenue mix was largely on account of higher sales in Brazil, given the strong demand and the increasing acreage. However, I would also like to add here that the gross margins including Brazil, although they were still lower than the company's average, thereby impacting our overall gross margins.
In spite of the above two factors impacting the gross margins by almost 180 basis points, the gross margins for the quarter were at 39.7%, same as that of the previous year. In reality, therefore, our gross contribution increased if we were to keep take aside the increase in freight, which is exceptional for this quarter, at the same time, the revenue mix. On the fixed overhead side, as the world is moving towards normalcy post the COVID global pandemic, we are seeing increase in travel, marketing, and advertising spend reaching close to the pre-COVID levels. In addition, we also continue to make long-term investments in the digital platform, and for Q2, this was INR 81 crores.
As for EBITDA, keeping aside the investment in digital platform, which are long-term in nature, we delivered EBITDA growth of 16% over that of the previous year, and EBITDA margins were at 20.1% for the quarter. The reported EBITDA stands at INR 2,045 crores, a growth of 13% over last year, and the EBITDA margin at 19.4%. The finance cost for the quarter is at INR 359 crores against INR 343 crores in Q2 last year. Of this, the interest cost on borrowing has reduced by INR 67 crores over that of the Q2 of the previous year. As mentioned in the last quarter where we had MTM mark-to-market impact on hedges on advanced orders, particularly in Brazil, these have been winding down with the execution of orders. In addition, the BRL depreciated during the quarter by 8%.
It moved from 5 BRL to a dollar to 5.4 BRL to a dollar as of thirtieth of September. On the tax front, the tax rate for Q2 was at 23%, higher than Q2 last year, primarily because of the increase in profits in Brazil as a result of reversal of mark-to-market losses from Q1 on advanced orders as we start invoicing of the products with the beginning of the sowing season. Overall, full year tax rate is expected to be lower and is expected to be at the lower end of the guidance of 15%-18%. Net profit for the quarter stood at INR 636 crores versus INR 464 crores, which was lower than the market expectation mainly due to increase in taxes as explained earlier.
H1 performance highlights. On H1, there was again a strong increase in revenue with the overall revenue growing by 14%. Gross margin were marginally higher at 41.5% compared to that of H1 of the previous year. This of course was after considering the two impacts as I mentioned, touched upon them earlier, which is the impact of trade costs as well as the regional mix. Without considering the above two impacts, the gross margin would have been at 43.4%, around 200 basis points higher than that of H1. Our fixed cost on investments in digital platform for H1 were at INR 124 crores. EBITDA without considering the INR 124 crore investment in digital platform is 14% versus H1 last year, and H1 EBITDA margin stood at 21.1%, almost at the same level as that of the previous year.
Finance cost which increased by INR 72 crore is mainly attributed to the exchange impact and the NPV adjustment for long-term payables in line with the IFRS accounting standards. The interest of borrowing has gone down by INR 56 crore during H1. The effective tax for H1 is at 6.5% and will remain within the guidance range as mentioned earlier. Moving on to working capital. The net working capital days stood at 114 days, higher by eight days compared to last year. The payables as of September 2021 increased by 14 days while inventories increased by 12 days and receivables increased by 10 days. We expect the net working capital days to be around 80-90 days by end of the financial year. Cash flow and debt position.
As mentioned earlier, our debt obligation is being serviced sufficiently, demonstrating our commitment towards our bankers and stakeholders at large, and we remain committed to reduce our debt and maintain investment grade credit rating. The gross debt and the net debt as on 30 September 2021 stood at INR 27,146 crores and the net debt at INR 24,279 crores. The net debt increased by INR 430 crores over that of the previous year same period. However, it increased by INR 535 crores over March 2021. We maintain our guidance provided at the end of the year to bring down the net debt to below two times the net debt to EBITDA. Overall, we believe that we are well placed and will continue to deliver strong results.
With this, I will hand over back to the moderator to take further questions. Thank you.
Thank you very much. We will now begin the question and answer session.
All right.
Anyone who wishes to ask a question may press star and one on their touchtone telephone.
Just one point before the questions. I just would like to talk about the perspectives. Say, overall in another direction that nothing is impossible. We continue to maintain our full year 2022 outlook despite our volatility as highlighted in the Capital Markets Day presentation in 2021. In continued collaboration with our customers and partners, we are trustful of achieving the higher end of our full year 2022 guidance. It was set at a 7%-10% revenue growth, 12%-15% EBITDA growth and net debt to EBITDA ratio less than 2x. This, it's, we are very trustful that we will be able to deliver that. Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Veera from Abakkus. Please go ahead.
Hi, sir. Just wanted some feelers about the current ongoing season in Latin America.
Ongoing season in Latin America.
The ongoing season. If we get Brazil, the planting season has started and it's moving very well. The weather is very good. Farmers are very motivated. The same for Southern Cone and Argentina. Mexico has had a very tremendous result in the Q1. Q2 has recovered. We are believing that Mexico will be able to recover the numbers as per budget until the end of March 2022. So, in general, the Q1, Q2 for Latin America except Brazil have been more difficult, except Argentina, Southern Cone and Brazil, because of this drought in the Mexico and Central America. We are very confident that our deliverables in Latin America.
Sure. Sir, in terms of, given the current glyphosate prices, how is the demand shaping up with all that?
I'd say, this is a quite good opportunity for us, you know, because glyphosate is the main herbicide in the world, is the biggest used in volume in hectares. The price of glyphosate moving up and its scarcity, not availability, it's demanding and shifting demand to products like our Select or some other products that we have, some other of our solutions like Select, like a glufosinate, like some of our pre-emergence, our S-metolachlor that we have just launched. The herbicide perspective, it's very good and open up a lot of opportunity for us. Some of our AI, we are sold out because of the demand is very high.
Sure. This is helpful, sir. Thank you.
Thank you. The next question is from the line of Prabhal Sain from Centrum Broking. Please go ahead.
Thank you for the opportunity. With respect to the guidance that you, again, reiterated for the full year, H1 performance very clearly is running ahead of that, as of now. Should we interpret the guidance as just being conservative as of now, or is there some wrinkles that you see on the horizon because of which the revenue growth guidance is, you know, still maintained at around sub 10%, where we are running at 14%-15% as of now for the first half? That was my first question.
Yeah, thanks, Prabhal. I mean, as you know, we generally give guidance at the beginning of the year.
Sure.
We keep changing. While clearly we do expect the revenues to be higher than what we have guided, which is 8%-10%, there's no doubt.
Mm-hmm.
We do expect also to have good improvement in EBITDA. I'm sure you're well aware of the uncertainties which we are there seeing in the world in terms of supply chain and other things. I must say that we are very, very well covered because of our manufacturing assets that we have, and most of the key products we manufacture ourselves, so we are very well covered. While we are hoping for the best, as Carlos said, we'll certainly be at the upper end of the band. We generally don't like to change the guidance between the of the year. We are very, very optimistic to be, if I have to say as much above the guidance in both revenues and earnings.
Sure, got it, sir. That's useful. The second question was with respect to, just on the domestic business or on an overall basis as well, what kind of product launches have happened in H1? How many new products have been launched, and what's the sort of schedule that we have maybe for the second half of the year?
As we have launched products in a lot of different parts of the world, you know. There are a lot of products to be launched in the next months until the end of the year. We are predicting to keep our innovation rate in the range of 20%+ as we are keeping these launches in a very important way. One of the key launches will be our three-way mixture of Full Size in Brazil Evolution. That is a really very unique product, a very unique formulation, very unique mixture. We are very positive with that in the first year.
This product is part of the family of NMX that we have already launched many products in that platform, like Unizeb Gold, like Tridium, like Triziman, like Cloy, and now Evolution. We have other ones coming in the near future. I'd say but that's, it's moving quite good.
Yeah. In case if you are specific about the India domestic product, we also have our Global CEO, Farokh Hilloo on the line, CCO.
Uh-huh.
Farokh, in case you can add a few more color to this.
Thank you, Anand. We have a triple way seed treatment, which we are very upbeat about. There is also a three way in pesticides that we are pretty hopeful of in the next growing season. There is a few lined up once we launch and we would disclose more information about them.
Okay, Farokh. Thanks.
Thanks, Prabhal.
Question if I may. What sort of CapEx guidance have you given, if at all? I'm sorry if I missed that earlier. Excluding any acquisitions that may or may not be there for 2022 and 2023.
Our CapEx guidance was about $300 billion-$320 billion. This is, I would say, 60% towards product registration and 40% is towards putting up physical assets.
This is for this year, sir, this financial year?
That's right. This is for this financial year.
All right, sir. Thank you very much. I'll come back if I have more questions. Have a nice
Thank you, Prabhal.
Thank you. The next question is from the line of Girish Achhipalia from Morgan Stanley. Please go ahead.
Thanks for the opportunity. I have just two questions. One was just the pricing environment. How has that been, given the inflation that we've seen? Are there any specific pockets in the second half where you think there could be some pressure, continuance? The second was just a vision question around nurture.farm as to, you know, how do we look at what kind of CapEx or investments are we expected to do this year and next year, and how do we think about it slightly more medium term? Thanks.
Thanks a lot. I'll take that. As far as the pricing, you know, there has been a complete disruption. UPL is probably the most backward integrated company in our industry. You know, there is a huge disruption of supply from China because of all the reasons which are well known, including power, you know, the Winter Olympics and various other issues going on there. We feel quite confident that all the cost increase will be passed down to the market because there's just no way to be able to absorb some of the, you know, costs which are increasing dramatically across the board.
We are, while there are some ongoing commitments which have been made, but most customers are absolutely open to an understanding that there is a kind of a force majeure in the environment. We are able to see the price increases month by month. We are quite comfortable with passing that through. As far as nurture.farm, it's an ambitious project which is transforming the agriculture space in India with digitizing a lot of the aspects of their operations. We're very happy with the adoption of our digital platform. Most of the services are being ordered.
90% adoption we've had on our platform for various aspects of our you know initiatives. We are going to continue to invest you know about $50 million a year, give or take, for the next couple of years at least, and then we will review that.
Thank you. I'll join the queue.
Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead.
Good evening and thanks for your time. Circling back on the same question on margins, two questions. One, when do we expect some respite in the cost in China? Second, from a pricing front, should we expect some uptick in pricing in the next two quarters?
Maybe Raj Tiwari, our Global Head of Supply Chain, is on the line. Maybe Raj Tiwari, you can answer the first part and then Carlos can answer the second one.
Yeah. Thanks. Thanks, Anand. No, I mean, we expect that, you know, China's situation should normalize during the next calendar year, sometimes early part of next calendar year. Because of this energy crisis, we don't see things getting, you know, any better at least till end of this year for sure. Next calendar year we see some normalization happening. That's on the cost side.
On the price uptick, Carlos, maybe you can.
Yeah. Thanks for the question. We have been increasing price in consultation with our customers who are aware of the current situation to ensure that their requirements are fulfilled. See, we have a very strong customer intimacy and we have been able to sit down with the customers and work together with them to understand their needs, to understand their problems, and to make them understand the momentum too. They are aware of that, and we have been able to really ensure and work together with them to find the best solution. These have been working in a very positive way.
You know, we are also trying to help farmers with alternative solutions like BioSolutions, functional equivalence technologies that we are working to help them to overcome this moment.
Vishnu, just to add to what Carlos said, you know, I mentioned in my commentary that this quarter we could start seeing price increases somewhere from mid-August and September. We will see the full impact. We'll see the impact of full price increases in Q3 and Q4 as we move forward.
Yeah. We have been able to manage that because of our relationship with the customers and the way that we care about that. As Aman said, let's say we will see that more effectively in Q3 and Q4.
Thank you.
Got you. Just one question on the taxation-related commentary in the notes. With specifics on the management and control from India, which subsidiaries are there and any potential impact that you could just highlight?
These are basically subsidiaries out of Mauritius and Gibraltar. We don't, you know, we are challenging the orders, I mean, the information request and other things because we do believe that there is no real case for us, for them to raise these questions. We have been in process of taking legal advice, and we'll be providing if we go to that.
Thanks a lot, sir. All the best.
Thanks, Vishnu.
Thank you. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead.
Hello, good evening.
Good evening, Tarang.
Two questions from my side. One on the Chr. Hansen collaboration. What's the significance of this? You know, what factors do you think that might have worked for Chr. Hansen and UPL for this collaboration to come through?
Uh, uh, I will-
I can answer that. U-
Go ahead.
UPL is number one company in the BioSolutions space. We, today with our NPP platform, we are a market leader in most markets and most, you know, crops in the BioSolutions space. We have a clear focus on that and as a company that clearly Chr. Hansen is looking for partners. In fact, they have actually walked away from existing relationships in some of the markets and moved their existing portfolio to us, like in the groundnut market in Argentina. Our whole ProNutiva concept, which is a combination of bio and the traditional chemical business, is finding great acceptance among the agricultural sector.
Also with our focus on sustainability and our focus on sustainable agriculture practices, you know, this concept is being accepted very well. The OpenAg platform, which is really collaborative by its inheritance, is something which is helping us really open doors with many other companies, not only Chr. Hansen.
Thank you. My second one is on nurture.farm. You know, how are you generating awareness on this? You know, are there any competing platforms? What's, you know, differentiating about nurture.farm?
Yeah. Nurture.farm is a grassroots level. The awareness is with farmer. There is direct contact. UPL has a huge presence on the ground. We have ProNutiva villages, which are platinum gold villages, where we have more than 70%-80% market share. Last count there was close to 100 such villages. We have a lot of grassroots connect at the farm. Our whole business is moving from selling products to selling outcomes. We are with the nurture.farm platform. We are actually working towards offering farmers outcome rather than just products. That allows us to have a much more stronger relationship, and also a much stronger trustful relationship with the farmers.
Okay. Are there any competing platforms?
You tell me. I don't know.
No, I'm not aware. That's why I'm asking.
Even I'm not aware.
Okay. Okay. Thank you.
Thank you. The next question is from the line of Varshit Shah from Veto Capital. Please go ahead.
Hi, congrats on great set of numbers. My question is actually to follow on Brazil. We have seen a tougher year, tougher previous season in Brazil. I just wanted to know what is the channel inventory for the industry as a whole in Brazil and for UPL. Second, how many more quarters of price increase is required to compensate for the current government related inflation in the Latin America market?
Channel inventory in Brazil and
Yeah.
The Brazil business has been a challenge because we have taken these anticipated orders. Because of our relationship with the customers, the way that we have been able to manage that, explain the difficulties and all the situation that is there, have been more challenging. We have been working very close with the customers to overcome that. The inventories is reducing now that the season has started. The planted area of soybean will be increased for more than 40 million hectares of soybean. Corn area is increasing. Cotton area is increasing significantly.
The inventory in Brazil at the end of this season or the end of this year potentially be one of the smallest in history because farmers, because of the constraint of product availability, will be trying to use as much as possible their inventory. We are predicting a very low inventory at the end of the season in Brazil. Inventory now is moving to the farmers and as the price of soybean is quite good, cotton price is quite good, corn price is very good. We believe that inventory will be very low at the end.
Sure. That's really helpful. Sorry, just for clarification, I am just studying. How many more price hikes are required to cover the inflation which there is to get your gross margin to the desired level in Brazil and overall that time?
How many more price hikes?
I'll say it's like this. You know, based on the cost inflation, we are, as Carlos mentioned in one of the early answers, in a position to pass on the cost increases. Now, as most of the peer group companies are facing these challenges, more so because of the supply constraints, you know, it is becoming even easier to push on the prices because what the farmers and distributors are looking for is regular supplies of material. Because of our backward integration and end-to-end manufacturing of key molecules, we are in a very advantageous position on this aspect. We are taking price increases.
Of course, I cannot give you one price increase across all the business, but we continue to take price increases as and when we see if there's a cost increase pressure or increase in logistics costs or any of those such issues.
Thanks and all the best.
Thank you, Varshit.
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang. Please go ahead.
Good evening, and thank you very much, and the best of recent meetings. The first thought is in terms of the strong performance in U.S. and Europe, particularly Europe, because first quarter was disappointing. What explains the strong performance in Europe and U.S.? How much of this is driven by volume growth?
I'd say it's a combination of volume and price, you know. It's like our growth, 18% growth in volume and 8% growth in pricing. In Europe, in U.S. it's proportionally the same. The demand in U.S. because of the price of the commodity are so good and U.S. have had a quite reasonable harvest, farmers are very excited for the next season. The needs, say our core portfolio, it's very in line what the customer needs in Europe, in U.S. All the work that we have done to develop the product portfolio, back integrated the right products. Now, we have done the good choice.
Now if they do see the choice that we have done to invest in glufosinate, to invest in esfenvalerate, to invest in different molecules have been the right decision at that time, you know. Like these kind of decisions we don't take in one year. This is a long-term decisions. It's a planning, is a vision, you know. In Europe in U.S. it's very much that. We have growth consistent in the key molecules that we have in Europe and the key molecules that we have in North America. Let's say very consistent, very good and as volume and pricing as both.
Okay. The second part is in terms of your sustainable and biological solutions in the second quarter, what kind of growth and traction you are seeing there?
I think we are looking as we have announced in some of our meetings before. Our drive is to align 50% of our sales with a differentiated product and BioSolutions products. Our drive is to move in that direction. Our growth in differentiated products have been higher than any other area or portfolio. We have grown much more in differentiated solutions than in post-patent me-too products. We have been able to have a double-digit growth in BioSolutions, even though the frost in Europe. The growth in Mexico, we have been able to grow double-digit in BioSolutions, and we are confident that we will keep that course until the end of the full year 2022.
I believe, this year we started demonstrating the importance of launch of NPP, our Natural Plant Protection company. This localization, the launch of the Natural Plant Protection company is really giving us the focus that we need, giving us the platform that we need to really build BioSolutions in the level that we have planned.
Thank you very much, and wish you all the best and join with you.
Thank you.
Thank you. The next question is from the line of Abhijit Akella from IIFL Securities. Please go ahead.
Yeah. Good evening. Thank you so much. Just a couple from my end. One is on nurture.farm. You know, we are making significant investments here going forward for the next several years. You know, any thoughts you could share regarding the possible monetization plans we are looking at and you know, how valuable could this be in coming years?
We are building a digital platform which is really engaging farmers from all their challenges and some of the pain points. Because we are transitioning from a products company to more a solution provider. You know, this is an exciting journey. We've had fantastic, much better than expected, traction. We are seeing across the board, you know, in every value chain we look at, because this works on a value chain basis. We are seeing a tremendous impact on yield, and we are able to make for the farmer. We've just closed the groundnut season in Gujarat, and we saw 30%-40% yield increase for almost 300,000 acres. Everywhere, we are seeing a tremendous growth.
The response which we got for the CRM, what we call as #EndTheBurn campaign, around Punjab and Haryana. We also saw huge. You know, we were restricting the number of farmers we take on that platform. We saw a tremendous response, and we feel that while we were targeting 3x growth next season, we think we'll be able to cover more than 75% of the acres next year, all these farmers on board digitally. This platform is growing. We've over the last 18 months hired almost amazing pool of talent in our nurture.farm office in Bangalore.
We've grown that from one floor to, I think, almost three-quarters of one floor to three floors, and it's a bustling office with almost 300 people close to all of young, talented guys who are really excited about the impact they're making in agriculture. Right now, we are just building this platform. We'll see what to do with it later. There are other companies also wanting to engage on it. There are some discussions going on. Some products are on the platform. You know, lots happening there. No plans for anything right now, but we know that this is the future of, you know, agriculture. It has to be digitized.
Thank you. That's helpful. Second question, just on the margin outlook. You know, we've had this target of a three- to four-year target of, you know, achieving, say, 24-25% EBITDA margins at the consolidated level. In the context of, you know, these investments in, say, Nurture and other areas, as well as the input cost pressures, do we believe we are still on track to sort of deliver on that, you know, 24%+ in the next three years or so?
Yeah, absolutely. You know, this year was a very difficult year in India in terms of weather patterns. The growth got a little bit muted. A lot of crops were disrupted, so there was some pressure. Plus we had a large investment in some of these platforms. Also, transitioning farmers from traditional chemicals to bioproduct is a slightly more costly exercise in terms of SG&A. So that's taken up some more investment. But all these things in a normal year would not even show up, because if we talk about normalized growth in India of 15, 20, even 25%, these all things would be absorbed within the existing kind of cost structure.
Saying that, we have to invest in the future and we will continue to invest in the future. You know, these are all assets which are much more valuable than the money we are putting in.
Just to add here to what Mr. Shroff says, I believe these are all done to accelerate. In fact, if at all, these investments will speed up our reaching that target of 24 or even higher in a shorter period of time.
Got it. Thank you so much and wish you all the best.
Thank you.
Thank you. The next question is from the line of Ritesh Gupta from Kotak Securities. Please go ahead.
Hi, all. Thanks for taking my question. Just on the market share bit, you already have about 19% market share in the global agrochemical market. Is there ambition that you have, let's say, over next five years or so that you would like to articulate in terms of the amount of market share that you want to take? Secondly, on the margin side as well, I mean, we do see that you do import some of the raw material still from China and probably things like yellow phosphorus are probably for that you are probably dependent on China in every case.
Any way you could reduce that dependency and how Q3, Q4 will look like given the kind of situation you're seeing in China, in the recent, especially on this material?
Let me answer that first on your second question, on the yellow phosphorus. We actually don't import any yellow phosphorus from China. Right? We have alternate sources. We don't import any yellow phosphorus from China, so we are not dependent on China for yellow phosphorus. That's number one. And as far as the yellow phosphorus is concerned, you know, we are adequately covered for the next two quarters. So I don't see any worries in terms of coverage or supply security is concerned, right? So that's on China. On market share, I think.
Yeah, I didn't understand your question. What was the first part of the question?
No, you already have about 19% market share after the Arysta acquisition. Do you want to articulate any kind of market share aspirations you have over next three to five years?
Over the last 10 years, UPL has been the fastest growing company in the industry. Typically we gain market share in almost every market we operate in every year. Steadily we'll continue to gain market share, and we believe that in a period like this where commodity prices are high, markets will also grow. Farmers tend to overinvest. While we are today UPL is the number one company in many parts of the world, including India, Mexico, Chile, Colombia, South Africa, and in many other African countries. We believe that leadership requires other responsibilities.
We are continuously investing in innovation, not only in our portfolio, but also in our, you know, way to market go to market. That whole transition is going to drive the whole change in the industry. I believe that industry will continue to consolidate so because we believe that the farmers are not really interested in buying products, they are interested in outcome. UPL is a thought leader and market leader in that whole concept. We believe that consolidation will drive a market share, right, not only for us, but the rest of the top five, 10 companies.
Sure. That's helpful. Just one small follow-up. On the yellow phosphorus bit, how much proportion of global yellow phosphorus production comes from China and from other countries, if you have it at the back of your mind?
We don't buy any from China, so.
Okay. Thanks.
Thank you. The next question is from the line of Vijay Sanghvi from Pragya Equities. Please go ahead.
Hello. Thanks for the opportunity. Since the last many quarters, promoter stake has remained stagnant. Any plans of increasing fund or increasing promoter stake?
I mean, slow and steady, we will increase promoter stake.
Okay. Like, it's around 28% right now. What the stake will increase to?
At this value, I want 100%.
Okay. Thank you.
Thank you. The next question is from the line of Matthias Wamel from BlueBay Asset Management. Please go ahead.
Hi. Thank you very much. Hopefully you can hear me all right. Two or three questions from my side, which are more debt focused. The first one is, you know, clearly and understandably so, the working capital usage increased a little bit, this first half of the year. Are you kind of comfortable and in seeing that reverse in line with the seasonality of the business for the kind of second half? Then two related questions is, can you tell us, what was the outstanding amount of your receivable sales at the end of this first half of the year, and what are you targeting for the full fiscal 2022? Thanks.
Hey, Matthias, thanks for joining us on this call. We remain confident of, you know, having working capital in the range of 80-90 days, between that range, at the end of the financial year. You know, these elevated inventory levels are super beneficial in situations where there's a supply shortage, at the same time, the other supply chain disruptions. We remain very optimistic and confident about that. I think the receivables outstanding, the securitization as of 30 September was in the range of about $600 million.
It was about $50-odd million higher than that of last year same time. That's the number.
Okay, perfect. Do you have a sense for the full year figure?
We should be in the range of we are targeting about $1.1 billion-$1.2 billion, about $100 million more than last year's numbers.
Okay. Perfect. Thank you.
It will depend on Matthias also how the interest rates behave in Brazil. You would have heard today morning again, last night they increased their SELIC rate by BCB SELIC rate by 1.5. If it gets too expensive, we will not do much of securitization.
Okay, perfect. Thank you very much.
Thank you, Matthias.
Thank you. The next question is from the line of Deepak Chitroda from PhillipCapital. Please go ahead.
Thank you. Thanks for the opportunity. First of all, congratulations on the good set of numbers. My first question is about, you know, as a commentary, prices are on a, you know, higher side, if you talk about, you know, across the agri inputs, including AgChem and fertilizers, seeds and all. Do you think that, you know, probably not in the near term, maybe after 1 or 2 quarters, that farmers will become very cautious and, you know, that is indirectly going to impact their margin as well? Probably indirectly that can, you know, impact overall, you know, the demands or volumes.
Yeah. I can take that. I'd say, if you see, what will be the strategy of the farmers would be to manage their fertilizer. Because a lot of farmers have fertilizer in the soil, and they could reduce the rate of fertilizer or in some situation minimize that in an important way. On the crop protection side, they doesn't have much a choice because at the time that you buy a seed, that you invest in the seed and the farmers needs to invest, they buy a low value seed, this will be even worse. They need to have yield. If they do that, they need to control the weed, they need to control disease. How they can manage without control disease? They need to control insects.
How can they manage without the control insects? You see, what could happen is some shift in technology. Now, let's say they will try to use a little bit lower value technology, and this could be even favorable to us because we have both. Now, we have a more, let's say not so expensive technology, and we have the premium technology too. See, I believe it will be a mix. Cotton growers, with the price of the cotton that we are seeing now, will use as much technology as they can because the fact the price is quite good. Potentially corn growers will be more selective. No? Soybean growers will be normal because the price is still $12.5 per bushel. No?
If you see price of the specialty crops, coffee, it's an amazing price. Say one of the it's at a, it's in the high, high level of historical price of coffee. Say, demand for citrus, very high. No? Let's say we see that the farmers will use technology. They will potentially minimize the amount of fertilizer in a strategic way.
Sure. My second question is about our BioSolutions business. As I understand, we are aiming to, you know, have a contribution of almost close to about 50% we are targeting towards the differentiated products. In terms of BioSolutions product, as I understand, we have larger contribution, I think initially from the European region. Now, with the Arysta integration, almost like two years now. How big is the penetration across the other regions like Latin, North America or Asia?
Yeah. The critical part of the BioSolutions is the presence. Now to be present closer to the farmer. This is with the integration of the two companies became a very strong base for us. Now we have presence in 138 countries. We are on the ground closer to the farmers. With the launch and the separation of NPP as an entity inside of UPL that will be completely dedicated for the BioSolutions, the speed of growth will increase dramatically. We have launched amazing team. We have launched amazing brand. The our NPP brand is beautiful. It's really unique and we are working a lot with this life that the BioSolutions create.
As Jai has pointed out, our focus in reimagining sustainability, our focus in carbon sequestration, our focus in soil health, it's something that it's creating an environment for us to really grow and we be able to teach the farmers, to help the farmers to be more sustainable using ProNutiva approach that we use the chemical when is needed. We used to explain that to the farmers. It's like that we. It's like ourselves as a human being, we take our vitamins, we take our probiotics, we take everything that is possible to minimize the use of antibiotic. When you need antibiotic, you need to take the antibiotic for your diet. No? It's the same what we are doing.
We are working to make the plants more resilient, make the plant more healthy, and then the farmer can use less to do more. That concept is our concept of ProNutiva, that we use the best of both, how we can manage to apply our biotechnology approach, our BioSolutions approach, and use the chemical as needed. Now, I'd say that is the concept. This is why we believe that by 2026, 50% of our sales will be differentiated solution and BioSolutions together. Our post-cropping technology or V2 technology be less than 50%. That is our focus, and we are in a good movement in that direction. We are having amazing support from our partners like Chr. Hansen.
Hansen that Sanjay was explaining. That is amazing partner to us. It's a great partner, and we have many others that we are working together.
Thank you. Ladies and gentlemen, we take that as the last question. I now hand the conference over to Mr. Anand Vora for closing comments. Over to you, sir.
Thank you. Thank you, everybody. Thanks for joining us on this call. If you have any follow-up questions, please feel free to reach out to Radhika or myself, and we'll be happy to answer them. Thank you very much. Have a great evening. Bye.
Thank you. Ladies and gentlemen, on behalf of UPL Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.