...Note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Today, from the management side, we have with us Mr. Vimal Kumar, Managing Director, and Mr. Vikas Jain, Chief Financial Officer. I now hand the conference over to Mr. Vimal Kumar for his opening remarks. Thank you, and over to you, sir.
Thank you. Good afternoon to all, and welcome everyone to our Q1 FY25 earnings call. I would like to open this call, starting with the industry landscape, followed by business milestones. Mr. Vikas will then take you through the financial performance. Monsoons continue to play a crucial role in the context of Indian agriculture. Even now, two-thirds of our farmland are dependent on the monsoon rainfall for a good crop. A good monsoon leads to better sentiments among the farmers and lifts the demand for farmer inputs. This year, good monsoon is expected to ease inventory levels for the industry. The increased demand will hopefully help in liquidating the excess inventory across the sector. Till now, the monsoon rains have been fair to above average, and there are indications of increasing demand of agrochemicals leading to market growth.
As for the Federation of Indian Chambers of Commerce & Industry, the Government of India recognized the agrochemical industry as one of its top 12 industry goals to help India achieve global leadership. The Indian agrochemical manufacturing industry is facing stiff competition from China with its large manufacturing capacities. At Best Agrolife, we have taken up the challenges to reduce this dependency by developing the manufacturing technicals in-house, with a strong focus on our R&D capabilities to continue to work on Section 9(3) registration and backward integration and new formulations. We are addressing the challenges of price and profitability in imports by focusing on in-house manufacturing capabilities and strengthening our research and development to stay resilient. As we close Q1 FY25, I am pleased to highlight milestones that underscore our commitment to patented products, innovation, and sustainability.
In Q2, we launched our patented rice herbicide under the brand name Orisulam, which is a broad-spectrum pre-emergence, early post-emergence, and post-emergence herbicide. This patented triple combination herbicide controls a wide variety of weeds, grasses, and sedges. This season, we will be focusing on generating product awareness and promoting farmer education. We look forward to our product doing well in years to come. We introduced another new patented product under the brand name of NemaGen. This is an innovative, broad-spectrum insecticide with three potent technicals of Chlorantraniliprole, Novaluron, and Emamectin Benzoate. This product combats the developing pest resistance. This product is an excellent solution for farmers, for crops such as cotton, paddy, maize, pulses, and vegetables. With the product launch activity being carried out in Q1, we look forward to NemaGen doing well in the coming quarters, and this will go in Q2 as well as Q3 also.
We also introduced our patented soybean seed treatment and insecticide under the brand name of Warden Extra. India ranks fifth in the world for soybean production, and this product has an excellent score for the years to come. In Q1, this product will be used for seed treatment, while in Q2, Q3, and even Q4, this will be demand as a foliar spray. This will be a good addition to our specialty for product portfolio. In another Q2, there is one product we will be looking forward, another unique patented product, Defender. This unique insecticide plus fungicide combination is an excellent paddy product with effectiveness against fungal disease such as blast, as well as for reducing the major paddy pest of BPH. This combination will control the major threats of paddy crops, thus improving yields and crop resilience.
With the expectation of good rain and a good paddy crop, this will be another product for the years to come. We will further expand our range of agrochemical solutions designed to meet the changing needs of the sector. Our product and new product launches reinforce our dedication to research and development. We will continue our effort to create new, effective, and sustainable pesticide composition that provides superior protection for crops. Our mission is to support farmers with advanced, effective, and safe nicotine-related products. I want to emphasize that despite anticipating industry challenges, we are confident that our unique portfolio will provide resilience to market trends and mitigate the impact of pricing uncertainty. Now I hand over to Mr. Vikas Jain to elaborate on our financial performance for the quarter ending with Q1 FY25. Thank you.
Thank you, Vimal Ji. Good afternoon, everyone, and thank you for joining us here today. So just to give the details on the financial performance, our revenue from operations for Q1 of FY 2025 stood at INR 519 crores, compared to INR 612 crores in Quarter One of FY 2024. The decline was primarily due to our strategic shift on building the branded business and lowering the institutional sales. Also, there was a delay in monsoon in June, which resulted in postponement of sales from Q1 - Q2. Another major factor which reduced our sales was the price variance. Because of the crash in the prices in China, there was reduction in prices and much higher competition in the market. Our focus on enhancing our branded business is showing promising results.
Branded sales now contribute close to 63% to our overall revenue, as against 55% in Q1 FY 2024. This aligns perfectly with our strategy to prioritize and expand our branded product offerings. In terms of our profitability, our Q1 FY 2025 EBITDA, excluding other income, was around INR 55 crore, against an EBITDA of INR 130 crore in Q1 FY 2024. This was not only due to the decline in revenues, but also on account of our strategic business shift to branded sales from institutional sales, which also led to higher employee and other expenses. And the other major reason is due to liquidation of the expensive inventory, which we were carrying from Q4 FY 2024. The Q1 FY 2025 PAT stood at INR 21 crore compared to INR 91 crore in FY 2024.
With respect to balance sheet, our working capital days for the receivables was 80 days for March, which presently is at around 90 days. Not much difference there. Similar increase we see in the payables also, which were around 110 days. Presently, we are at 130 days. Inventory days, if you take on the sales which have already happened in March, in March, we had inventory days of 200 days, which is presently also around 200 days. But if you take the forward-looking sales, we will be exhausting this inventory in coming season, plus the Rabi season. So since our director, Mr. Sai, is not there, he would have given the details about the international business, so I will like to give the update on the international business.
The short update on international development are that we are pleased to update, we have opened a subsidiary in China. This China subsidiary is an important step in increasing our business collaboration with China for registration, technology, and also potential tie-ups. China is an important agrochemical producer and supplier. We believe our presence here is a step towards expanding our international reach. On the patent front, we have filed for 14 international patents. This includes combinations as well as process patents. We look forward to continuing our work on the international patents. Our registrations are going on in Thailand, Mexico, and Taiwan, and we are planning for registrations in Brazil, India, and Australia. We are aligning our registrations and patents with global markets and country-specific requirements based on the R&D we are doing in new formulations and technicals.
We hope these steps will create a base for our future growth. In Thailand, we have currently five products under registration. In Mexico, we have registration process underway for two products, while in Taiwan, we are in the process of registering two technicals, which we have developed our own backward-integrated processing process. In addition to this, we have successfully registered several products across diverse markets, including Madagascar, Lebanon, Sudan, Ethiopia, Yemen, and Zimbabwe. Thanks all from from our end. We can now take questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on the 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Komal from AK Investments. Please go ahead.
Yeah, thanks for the opportunity. Just I want to understand, when you say branded and institutional sales, I mean, the institutional sales is basically B2B. Is there any trading revenue in these two reporting segments? That is my first question. And can you elaborate on the...which is the high margin for you? I think the branded should be high margin. And when you say pyroxasulfone, does it sit in institutional sales? And when you talk about all these patented, does it sit in branded? Can you explain this one?
... Yes. So, first question with respect to branded and institutional branded is what we sell through our dealer network. And also in case, if we are packing the material in a final pack form to other competitors, those are considered under branded material. Then there is other part, which is B2B. It includes both parts, wherein technical manufacturing and then we manufacture and give, or there is part which is trading. So out of total INR 520 crore, around INR 100 crore is what we have in trading, which is 20% of our business, which keeps on reducing. Earlier, it was close to 30. Presently, it is 20, and it will go down further. With respect to your next question, all these patented products would be part of the branded business. So our branded business is through two entities.
One is Best Agrolife Limited, and the other one, which we acquired last year, Sudarshan. So these two entities would be selling all these patented products.
Okay, okay. You said in institutional sales only there is trading, right? Is my understanding correct?
Sorry, trading, this is our manufacturing and,
Institutional sales, you are recording trading also, correct?
So there's some trading which will, which we said, within B2B, there is one portion which is manufactured, and we manufacture and sell, and a small portion which is trading.
Okay, okay. So when you say institutional sales, it has trading also, that's all, right?
Yes.
Okay. In the patented, I've seen for each and every category you have patented, but I don't see anything is reflected in numbers. Can you just throw some light when can we expect... Because I think the patented should be approx 20%-25% of EBITDA margin, or 30%, right, when you say patented.
Yes.
Then, why we see it in numbers as? When can we expect to see meaningfully in the numbers? Can you guide on that?
So, most, for last three, four months, we had launched close to three patented products. So these, those we have launched recently. And also, June, there was delay in monsoon by 15, 20 days, because of which the sales got shifted. So all those patented products, obviously, we'll start seeing the results now. But these patented products are not only for this year, but also would give a lot of, benefit to the company over the years. But, just for this year, we will see the numbers, much higher numbers reflecting from next quarter.
So next quarter, we would see in the branded more contribution. I mean, it will increase the PI, and we'll see the margin also improvement there.
Sure.
Okay, okay. And from the balance sheet perspective, okay, it's all bloated. Unless you do a write-off or you do a debt, there is no way we can revive our balance sheet. If balance sheet is not revivable, I don't think so it will be attractive for shareholders. So what is the thought for revival on the balance sheet? Because it's very huge.
So yes, so presently, we are in the growth stage. So you are right that we might have some initial teething issues with respect to financing. But if you still see, my receivables are within good range of 90 days. So my credit period is 90 days, and presently, my receivable days is also 90 days. With respect to inventory, yes, because we were carrying inventory from last year, due to very bad season, I hope you'll be aware that last year it was really bad for the AgroChem, not only domestically, but also globally, and almost entire industry was carrying very high inventory. So those inventory will get liquidated during this season. So, by September end and much more in December, you will see a lot of improvement in the balance sheet.
How much inventory can we expect? You are expecting no write-off in this inventory of roughly INR 950 crore you have in March 2024.
Yes.
You don't expect any write-off here?
There would be normal write-off, but those would be very small and normal part and parcel of which we do every year. We keep certain provisions as well, and those would be within those provisions where only we don't see any major write-offs being seen.
But I thought-
Because generally, the shelf life is close to 2, 2 years.
When all agrochemicals have reported strongest set of numbers in the quarter one, but ideally, we are sitting with the inventory, then why were we not able to sell the inventory? I mean-
So-
Why is it taking time? Because we see across branded, all the agrochemical companies have reported very strong set of numbers, and we have not reported and we have lowered the guidance also for this year. So what are the thoughts here?
Yeah, I understand, your question is right. But, not the whole industry, we can say, they are performing well in quarter one. There are companies, who are not performing well. But in, case of Best Agro, our most of the product, you can say, which is weedicide, which is insecticide, which is a combination of fungicide and insecticide, which is our unique product, and some of the new products also coming in the second quarter only. And, moreover, in quarter one, which product we sold? Of course, there was a margin. If you see, as a purchase price and sale price, there is a huge margin we can see even in the quarter one. But the problem, what happened, we were carrying the high inventory, high cost inventory.
That is the main reason, which is Q1 has fallen short. Otherwise, you will see, if we compare today, purchase price and today's sale price, so of course, we have good margin in quarter one also. But unfortunately, there was a carrying inventory from last year, which Mr. Vikas already explained. So that is the main reason, where we are stuck and, you know, some performance was there. In case of Best Agrolife I'm talking about. Some companies also have the same base, and some, you know, the 15 days delay also in the season, so some of the sales of in June, that is, forward to, you know, this is July, for July only.
So you are confident of reaching the EBITDA margin of 15%-17% from the next quarter? I mean, consistently, can we clock that quarter-on-quarter basis without any-
So-
-any fluctuation?
Yes, yes. So next quarter onwards, you will see. So next quarter, possibly it will be little higher. So our guidance is for the full year. So next quarter it will be much higher and because, because of the good monsoon, last year, the Rabi had washed out. But this year, we feel we are pretty sure of the Rabi season because almost all the dams are full, including you would be hearing news about Tungabhadra being full and all the other dams of Andhra and Telangana being full. So this gives a surety of the Rabi season, which was lacking last year, and last year also, our Q3 and Q4 numbers were bad because the Rabi was washed out.
This year, we don't see those kind of situation, and our EBITDA will be close to 15%-17%, as we had mentioned.
Do you plan to do any funds? I know the stock price has beaten, so it, dilution becomes very ineffective for us. But to maintain stability or to maintain a good balance sheet, we will need required funds, right? So how are you thinking of financing? Because if you take debt also, I don't think so anyone could provide at a decent rate. So how investors should have a confidence in the company? I understand you are making a right progress in patented, but seeing the balance sheet or the number, it doesn't give confidence. So can you throw on the fundraise or how can we see revival in the Best Agrolife?
Yeah, yeah. As of, yeah, yeah. As of now, we can't recommend on it because we are not doing this kind of anything, because we have inventory, and we are, you know, thinking about that high-level inventory, which will be clear somehow second and third quarter. And this year, our target is high, so I feel second quarter and third quarter, you will see end of the third quarter, there will be there should be, you know, a very less inventory. So when we will liquidate the inventory, so things will be resolved and our balance sheet will be healthy. With that, that plan we have.
Okay, sir. I wish you all the best. And do report the trading revenue separately, because that gives a clear picture as an investor, right? Otherwise, because trading will be less margin and institutional and branded are some, I mean, 10, 12, and that is, I think, 15%-20%, right? Institutional and branding.
Yeah. So we are giving guidance as part of the overall group business. So as I mentioned, that trading we are reducing, so this pie would obviously get reduced and our sales of branded business will be much higher, which will give much higher margin effectively.
But I think last year or 2023, 2024, there was high amount of trading revenue, right? But that was not reported in the numbers. That doesn't give a right picture for our investors to understand that, okay, there is a trading revenue here. So it has become difficult process for us to understand, okay, there was a trading revenue. That's why I came up with the question.
Yes.
In the last two, three, I've asked this question also.
Yes.
It was very difficult to understand. There will be doubts when the stock price also fall. In order to clear confusion, we can make this practice for the investors.
Definitely, definitely. So trading-
Right, right.
That is, trading is very less.
Yeah.
Thank you.
I wish all the best, and hope for the revival in the next quarters.
Thank you.
See strong fit in the next year. Wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, please limit your question to two per participant. Should you have a follow-up question, we request you to rejoin the queue. Our next question is from the line of Deepak from Sapphire Capital. Please go ahead.
Hello. Yeah, am I, am I audible?
Yes, sir.
Okay, yeah. Thank you very much, sir, for the opportunity. So just first up, I wanted to understand in terms of seasonality, I mean, first half, how much percentage of your total profitability you do versus second half?
This is changing. If you compare from last year, obviously the numbers will not match because last year was a seasonal failure. But otherwise, mostly the first six months should give anywhere close to 65% of the business, and next six months, the balance.
First, first half should give about 65%, right? Now, given your guidance also, I mean, if you have to take the lower end of a guidance of 15%, kind of a top line growth and EBITDA of about 15%-17%, let's say 16%, still you need to do about INR 350 crores of EBITDA for this entire year. Out of which, if-
Yes.
65% has to come, I mean, ideally, in the first half, and INR 54.5 crores you have done in the first quarter. So ideally, your second quarter EBITDA should be close to about INR 170 crores-INR 180 crores, I mean, which is a very big number. I mean, ideally, what we have been doing, I mean, even last year, we have not achieved such kind of numbers. So some comment would be very helpful at that, because already one and a half months we are through into this quarter. So is this the kind of number that you'll be targeting for the second quarter?
... Yes, for the second quarter, we are hopeful of pretty good numbers, which we want to achieve, and that in the sense, so it might not be near exactly 65%-35% ratio, but we are pretty sure that the guidance what we are giving for full year, with respect to the EBITDA margin, that we will achieve.
For full year guidance, we are looking to achieve what we have. So ideally, then, if second quarter might not be that, ideally, then the second half should be much better than what we have done in the past, basically.
No, in fact, I just want to say, second quarter definitely will be very good, and because we are comparing from the last year, third and fourth quarter, actually, third and fourth quarter will be, again, good because of our product line, because we got new patented, and we will, we have opened our South India market also. And major season of the South India market is the third and fourth quarter. So that is the main reason, we are hoping for the second, third, and fourth quarter. It all will be good. Of course, second, we are hoping the best one, but third and fourth also will be very good as per our plan.
Oh, okay. Okay. And from the industry perspective, I mean, has the inventory destocking stopped? I mean, what is the situation out there?
Most of the inventory destocking, at least for Best Agrolife, if I say that 90% of all the issues with respect to the earlier stocks are closed now, that's why we are pretty confident of the next quarter. With respect to industry also, what we understand is most of the inventory from earlier period has been liquidated, and now whatever is there in the market is mostly all the new inventory.
Okay. So when we speak, inventory—most of the inventory destocking is done, what's the timeline benchmark? I mean, we are talking as of June end, or we are talking as of now? I mean, last one and a half months, have we seen destocking to continue in the month of July and, I mean, 15 days of August?
So as for Best Agrolife, most of it was closed by June, and there was some portion, say 80% got closed by June and another 10% by July. So that's why by end of July, 90% of it is all whatever expensive inventory we had for few of the products where the prices had crashed; those are all issues are over now.
Okay. Those issues are over. Okay, okay, okay.
Yes.
But then, I mean, if 80% of your inventory is done by June, then but still our inventory days are very high as of June, right?
No, when I say 80%, means wherever the inventory, where were expensive inventory, I'm not talking about my overall INR 900 crore inventory. I'm talking about there were few products where the inventory was at high cost. Those high-cost inventory, most of it we have liquidated. So that means my, wherever the problem inventory, those has been sold. Not, no, I'm not talking about the overall inventory.
Okay. Okay, I got it. I got it. I think that would be it from my side, I think. Yeah, all the very best to you. Thank you so much.
Thank you.
Thank you. Our next question is from the line of Nitin Gandhi from Inoquest Advisors Private Limited. Please go ahead.
So taking my question. Just continuing from the previous discussion, INR 950 crore investment, right? So how confident we are by December we should be clearing this with 15% EBITDA, INR 1,100 crore revenue?
For the second quarter, you are asking?
I'm saying six months from June, so by December end, I am saying.
You are talking about 1,100. You are asking for the 1,100 number.
Correct, correct.
Yeah. In fact, we are hoping a good number, but I think that is not to say the number here, the address number. But of course, we are hoping the very good numbers for these two quarters, second and third quarter.
Okay. Past high-cost inventory is already over by June, right?
Yes.
Okay. That's good to hear. And, this differentiated products which you launched, so when you do this registration and all, what are the expected target turnover from each of this? Can you share something? What do you think are your plans for this differentiated product? How much they will start contributing two or three years after the introduction?
So these are all commercially launched. We obviously have some internal plans for each of the products. We might be able to give you how much each product will contribute, but this is for sure that all these patented products, even what we have launched last year, are the one which are the go growth drivers for the company, not only for the top line, but also for the bottom line. So there are various products which we have launched in, say, last one and a half year, out of which closely three, four products are coming only just three, four months back. So those will be launched. Some are replacing our existing products, others are actually really very new products.
Those will be the growth drivers, but, yeah, product-wise, we will not be able to tell you what are the targets.
Okay. How many of these six products which you introduced could be more than INR 100 crore turnover?
The product, you are asking for the product.
Yeah.
Our patented molecule, we have many molecules, which is more than INR 100 crore in a year.
So far, we have already crossed 100, and the new which we have launched, most of the targets are above INR 100 crore revenue. In fact, if we talk about our,
Now, that's a cumulative figure or every year figure?
So, see, when we say patented, it's not necessary. Suppose, one product which we have launched, if most of the season is gone now, so it might not be in this year, it might be next year, it might be a soft launch. So, not necessarily what we are talking about is for all this year, but I think these are our, for the long-term strategy, wherever season are over and most part of it is over, then the numbers will be coming next year.
I'm not saying even this year or next year, but after the third year of launch, from fourth year, each of these can contribute INR 100 crore minimum, that's what we are saying, right?
Yes. Already from our existing portfolio, there are 3 products which we had launched last year, already 2 of them are contributing more than INR 100 crore.
Even one of our molecule, which we have launched last to last year, that is contributing. One product even first year it was close to INR 100 crore, maybe INR 90 crore or INR 80 crore. Secondly, it crossed INR 100 crore and INR 120 crore. This year it is crossing like, maybe it can go up to INR 200 crore also, the one product. So each year, because this is a patented molecule, we have to go in a strategy with from the field level, so each year it will increase, any of our our patented molecule which we are launching.
Okay. Then will it be better if you share contribution from last 3 years' launch or last 2 years' launch, so that we also know how you are moving and how the launch products are performing? If that's the statistics, if you can share, it will be helpful.
Last March, when I can tell you what, what we had given was close to 25% of our business was coming mostly from the new products.
Okay.
That percentage will remain in future as well.
Okay. You don't think that can go to 30%?
Yes, surely, because number of products are increasing. As Vimal ji mentioned, it was 3-4 products last year, and now we have launched 3 products in 3 months. So this will certainly go up. Because the other part, what we are doing is, few months back, we had discontinued 8-10 of our products. Those were more generic kind of products. So slowly, we are trying to build a portfolio where in our high margin patented products take the much bigger share in the sales, and trying to discontinue those which are lesser margin and not contributing much.
Okay, sir. Thank you, and all the best.
Thank you.
Thank you. Ladies and gentlemen, please limit your question to two per participant. If you have a follow-up question, we request you to raise your hand again. Our next question is from the line of Raj from HDFC Securities.
Hello, am I audible?
Yes.
To keep the part of the guidance then, how much are we expecting to grow in FY 25?
We are expected to grow from anywhere between 15%-20%.
All right. How much is the EBITDA then?
EBITDA is in the range of 15%-17%.
For the full year?
For the full year, yes.
All right. How much CapEx are we expecting with the...?
CapEx, we are still in planning. So we already have certain thing in our mind, so we are just about discussing the way financing has to be done. So once that happens, we are all set to do the CapEx, so it all depends upon how the financing discussion goes on, so.
Mostly, we will for the expansion, mostly we will go for the debt, or by our system.
All right. And sir, for Q2, are we also expecting an EBITDA in the same range of 15%-17%?
As per, you know, scenario as on today, because 1.5 month already passed for the second quarter, it should be more than that.
More than that. All right. Okay, sir. Thank you. All the best.
Thank you. Thank you, Mr. Raj.
Thank you. Our next question is from the line of Hemant, an individual investor, please go ahead.
Hi, sir. Good afternoon.
Good afternoon.
Sir, I wanted to know the revenue of Sudarshan this quarter.
Yeah, please. Just one second.
Okay.
Sudarshan, this quarter was close to INR 100 crore.
INR 100 crore, okay. So based on the presentation that you have released today, I did some math. So last year you have done around INR 620 crore, and this year you have done INR 520 crore. So if I remove this INR 100 crore of Sudarshan business out of this INR 520 crore, you have done INR 420 crore, and out of that only INR 220 crore came from your branded business. If I compare that INR 220 crore with last year, last year, you have done around INR 340 crore of branded business. So can you please explain me the reason of-
So, Hemant, Hemant, last year even last year, we had sold to Sudarshan as a third party. So we had similar sales of around INR 80 crore to Sudarshan. So earlier it was coming as a third party, and then we took over, and now INR 100 crore is coming as our own subsidiary. So that way, it's the numbers, earlier INR 80 crore was coming as a third-party sale, and now INR 100 crore is coming as our own subsidiary.
So the third-party sales will come in B2B or B2C?
It will come under, B2C because we were giving them the back material.
Okay. So in that case, our branded revenues were flat this year.
Yes, yes. That is the main reason our branded sales are increasing and our institutional sales and trading are reducing. So branded is also flat because there was a 20% price variance because of the price crash in China and much higher competition here. So if you see my volumes went up, so there was higher volumes, of course, this year, because of much better season. So volumes were higher by close to 21%, and there was a price erosion of close to 19%. So, as you mentioned, yes, it is, it is flat or just about 1% or 2% increase in the branded business.
10%-12% increase in branded?
1%-2%.
1%-2%. Okay. Okay. Sir, and my second question is related to our H2 business. So, because of our low top line and higher expenses, majorly because of the interest cost and employee expenses and all, from the past two years, we are actually showing minus EPS. So can you throw some light on that? So how will be your H2 this year?
Hello, Madhuri, can you hear us?
Yes. Yes, sir. Can you, can you hear me, sir?
Yeah, now we can hear you. Can you please repeat because the line was lost?
Sir, my question is related to our H2 business. So if we see our past two years business, in a majorly in H2, our top line is less, and our expenses in terms of interest cost, employee expenses, have risen a lot in the past two years. Because of that, we are showing minus EPS in the H2, specifically Q3 and Q4.
Yes.
So if we,
Yes, go ahead. What's your question?
If we continue to do less than INR 500 crore of business in Q3 and Q4, that would continue this year. And even Q1 EPS is very less this year if I compare to last year, INR 39 versus INR 9. So usually, if I compare everything based on last year's performance, our earnings per share would be negative by end of this year.
So, yes, Hemant. In fact, when we are talking about our expenses, higher, you know, the finance cost, of course, it is correct. You can see the benefit that the number is there for the first quarter result. But in another way, we can say, in another term, that is kind of investment also, like, you know. Because when we are talking about the expenses, that expense is not for the one quarter, not for the one month, this is for the entire year. Like, if we have a South India market, if we are opening, you know, various market in the international markets also. So everywhere we have to expand, and of course, we have to make an expense there.
We cannot get an investment in terms of benefit, but actually that result will come in the coming quarter only. Like if, for the example I will give you, for the South India. Look, second quarter, but the major sales will come in the third and fourth quarter. Because generally, if you see our history as a Best Agrolife, our third and fourth quarter was going low. So we change our strategy. We are making team there. We have now many people in South India, and our target is very high in the South India as well. And fortunately, this year are looking good also when we are starting good operations in South India. We have earlier also operations in South India, but aggressively we are doing this year.
So that is the investment type you can say, but it will come under expensive. And, other question?
So, Hemant, just to add here what you mentioned that in case, so what you see number for our Q3, Q4, INR 500 crore, is actually INR 500 crore after sales return of under INR 150 crore, which came much higher because of the Rabi season was washed out. So INR 500 crore is not our number. INR 500 crore was the number when the, Rabi was fully washed out. So we can assume, a much higher sale, which we are expecting, especially when we know that the dams are full and the Rabi season is guaranteed.
Okay. Sir, as you mentioned regarding South India, I am also from South, and my father is a farmer. So I wanted to know one thing. Best Agrolife is the recent company in South India. You have been here maybe from last one, one and a half year. So what kind of investments you wanted to do here so that most of the farmers know about Best Agrolife's patented products, mainly Orisulam and different products that you have launched this year?
Yeah, NemaGen, NemaGen, Defender in the category, there are doing well in South India. There are many products for which we are doing well in South India, and investment type, which we can say expenses, you can see in our first quarter, that is through the people. The We have now big team in South India, entire South India. Any part of South India you talk about, our presence will be there.
Okay.
And investment-
Are you planning for any farmer engagements?
Yeah, of course, there is many farmer meetings we are doing. For awareness, we are doing different kind of campaigning that our marketing budget is also very high for entire India and of course for South India as well, and we are doing very well in South India in the term of marketing and sales. So generally, just one more point to add, you know, with respect to farmer engagement, we have around close to 500, 600 people whom we call field staff for demand generation activity. They're day in, day out towards to meet the farmers. So they meet them in the morning, they meet them in the night, do farmers meeting.
So in case if we have to build our product, especially we are having patented product, we need to have close interaction, which we are religiously doing since last one year.
Okay. Okay. Okay, sir. One thing I liked about Best Agrolife, most of the established agrochemical companies in India, they were not launching patented products, patented formulations, but you have been doing very well in the market. You have launched around four products this year. So number itself speaking, but only thing as an investor, we are hopefully hoping to see those numbers maybe in the next one, two years from Best Agrolife.
Yeah, definitely it will be there, and each year, when we launch any product, each year, it will be the quantity and the value.
Okay, sir. Thank you so much.
Thank you. Our next question is on the line of an individual investor. Please go ahead.
Am I audible?
Yes, sir. Yes.
Yeah. Good afternoon, sir. So my key question is that since we have pivoted the business model from institutional sale to branded, so I want to understand. So there will be a replacement in the sales, in the distribution sales, or it will be a new addition in the business? So are we closing our institutional sale and just doing B2C now, or will it be continued, the B2B part, and there will be new addition from the B2C in the B2C side?
Yeah. So because we are not going to close the institutional part, it's only that the branded business keeps on increasing, and the pie as a percentage of institutional will go down. But under institutional also, we want to keep certain very good molecules and very good products which we want to sell to others and to remove products which are of lower margin. So institutional business will remain, but as the year goes on, the pie of the branded business keeps on going up because of our much better product portfolio, which we keep on adding over the year.
Okay, and that's good. Second question is regarding the new patent launches. So in your presentation, which was published in our dash, I could see there were two recent products, Nemagen and Defender, and there are two upcoming product launch in the slide 11. So what is the market size, like product wise? Like how, how, how much penetration you are looking in, in, in two to three years in these four new products?
Now you're talking about, which product we are going to launch in future?
So, basically the market size for Nemagen, Defender, and the upcoming two launches, one is the mix of three molecules, there's herbicide plus Chlorimuron and something, and the other is... Basically, I want to know the market size of all those.
Yes, Mr. Sai, each product have different market size, different, you know.
Yeah, the numbers, numbers. Product-wise numbers of the market size.
As a whole, you are talking about number, or each product you are talking about number?
Each product, the number for each product. What is the market size of each product?
No, I'm telling you, the same way I'm telling you, like, if any product is for the, suppose, second place. The second place segment is very big in India. If you talk about only India, the India market of second place is more than INR 5,000 crore. But, how we are slowly will, you know, because marketing increasing, in India also as well as global, the margin increasing. If you talk about, you know, if we are having share of, starting from the first, year, like 2%-3% in that segment, so it is, coming around like any of the new molecule, first year we launch, it will be like INR 67 crore. So next year, we'll jump into roughly maybe double also, if the product is very good.
Because first year, we also, you know, we have to push more, we have to do more expenses in the marketing, because any of the product you have even the very good product, a very, nice product, still it need, to market and, still, still it has to be coming to the knowledge of the farmer. And farmer also want, you know, the result in the field, because they, they, they are not, like we are talking and they are buying. They need result in the field. So first year they will test, trial, it's kind of trial also, it's kind of, sale also, but, it will be trial for the farmer. The next year, when they are confident on that product, so it will be sometime double.... We have example of one of our product, Ronfen.
First year to second year is a 50% growth. Second year to third year, this third year, we can see it will be around INR 200 crore. So within the three years, INR 220 crore also can be. So within the three years, you are INR 70 crore-INR 80 crore, you are now INR 220 crore. So each product, each year will increase, which have potential. And most of the products which we are commercializing in our patented portfolio, that all will be in a commercially valuable, and it will be give, you know, each year growth will be very essential for these products.
Fair enough, sir. Lastly, about the international sales. International sales are largely generic sales, are these B2B, or the branded ones also have potential for the international market?
In fact, parallelly, we are opening our international market, but right now we cannot say there is any good number of sales. There are very few, 41, that is a small number. But definitely, we are opening in a different way our branches in the international markets, and mainly because we are into the regulatory business, and entire world in each country different kind of regulation for launch of the product. So if you talk about any market, Southeast Asia, like Thailand, Myanmar, you know, Indonesia, all these markets, if you talk about, you know, each market, each country, we have to go and register our product as per their regulatory requirement.
So that we are doing, it will, the results will come for this product at least by 2025 end, you can say.
Fair enough. Last question. So one thing which I observed, that there were some sales return in Q3 and Q4. So, just as a, you know, just perspective, have you thought about, you know, introducing any sort of lending partner with you to mitigate that risk, rather than doing the credit sales, maybe, you know, bringing a lending partner and, you know, mitigating risk from your books of the sales return?
Yeah, this is the-
If that strategy is working?
Yeah, so this question, actually, this is, you can club your this question to last, my answer. In fact, when we are launching any of the new products, we have to take some risk, because, how much forward success will be there, and we have to do work very hard. As, as terms of expenses, if you talk about, in, in the terms of balance sheet, there will be expense will be higher, marketing expense will be higher, sales expense will be higher, and there is a possibility of the return. But in any of the way, we are keeping the provision in balance sheet in the same quarter when we are selling it. It is not like there is surprise that quarter, fourth quarter return are so high.
Last year, there was some, you can say, end of second quarter, there was a, kind of, season failure. That is some different situation, but, we are hoping this year will be very good, and, each year not, will be like, last two years. We can take certain potential better.
Okay, fair enough. Thank you, and good luck for the upcoming quarters.
Thank you. Thank you.
Our next question is from the line of Udit Sehgal, an individual investor. Please go ahead.
Yeah, good afternoon, sir. Am I audible?
Yes, we can hear you.
So, sir, I wanted to know, our closing inventory for 31st March was INR 950 crore. So, approximately, what portion would be, say, in, herbicides, insecticides, and, fungicides? Just an approximate percentage.
You are talking about segment-wise, or the inventory levels you are talking about?
Yes. Yes, sir.
Yeah, definitely, in the first quarter, major sale is herbicide. You can say if our total sale number is INR 520 crore after our internal sales, but then the final accumulated number is INR 520 crore. So out of the INR 520 crore, you can say herbicide, because that price has dropped, that's why, you know, the results have a little bit. But we can say approximate, I don't have a real number in front of me segment-wise, but in my idea, there will be more than INR 300 crore of the herbicide, and other will be fungicide and the...
So, basically, sir, our turnaround, it will be depend, dependent on whether how the sale of insecticides and fungicides will be in the coming quarter, if I-
Of course. Generally, it is like this way only, if you see. Second and third quarter, major is for the insecticide and the fungicide.
I suppose our margins are also higher in insecticides and fungicides?
Yeah, we have most of the product, which we have our patented molecule, that is mostly, you know, you can say. Of course, we have herbicide also, but herbicide, we have only one, which we have learned this year, Orisulam. And, in the fourth quarter also, we are launching the new product, that will come Shot Down, but that will come in the fourth quarter of FY25. But in the second and third quarter, the major sale will be our major molecule, like second molecule, which is insecticide and fungicide combination, and of course, the insecticides combination.
Okay. So sir, what are the conditions? I know nobody can predict, but what are the conditions which aid insect, you know, insect attacks or like, fungus? I mean, it's the humidity or the rainfall or some other conditions. How do we track whether there is going to be an insect attack or major insect attack or the fungicides sale? I mean, how can we think about that?
...In fact, you know, these two are different questions, but, but I can explain you. You know, this is, if you talk about fungicide, of course, fungus comes mostly in the rainy season, if you talk about. But in general, disease of, you know, if you talk about the pest, it is not directly, we can say there is a white fly, there is a pest. So, it will come or it will not come, your question is like this way, but generally, if you see in last 30 year, 40 year, pattern has changed and climatic also changing, but there is no year where you can say there is a growth and then don't have pest or fungus.
You can say like this way, in a general way, because otherwise I have to elaborate, very long. Generally, you can say, you know, as a learning, as a learning.
Sir, you are mentioning that sales will be good for the Rabi. Sorry, please.
Yeah, yeah. I mean, you can see the history of agriculture and the pesticide. So then you will know there is no season, because if you talk about 9% of growth in the industry, so each year it is coming, if you see. Because, of course, if there is no pest or there is no fungus, so how it comes? In general, I'm talking about, if I elaborate, I know everything, but I don't think the time will permit us to elaborate that way.
Sir, you are talking about the Rabi season. So what kind of sales do we do in the Rabi season? That would be in the third quarter, typically?
Yeah, typically third quarter. Rabi season is typically third quarter. Some goes in January also, but mostly in the third quarter.
What kind of products do we sell during the Rabi season? It's again, herbicides or-
Yeah, it's herbicide only. Because our Rabi season also have insecticide, and the fungicide, that will go into the fourth quarter. But if you talk about major weedicide, which is going in Rabi season, mainly in the wheat, that will be in third quarter only. You can say third quarter sale for the Rabi season will be for herbicide, and fourth quarter sale for insecticide and fungicide will be in the fourth quarter. It is like this way, for Rabi season.
So do we expect, like-
And for Rabi, there is a big market in South for pulses, for chili. So those also, we have good products.
So, third-
Hello, line from Udit, sir, has been disconnected. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to Mr. Vimal Kumar for closing comments.
Yes, thank you, everyone. We are excited about the future of Best Agrolife Limited. Our commitment to quality, innovation, and farmer satisfaction remains unwavering as we continue to push the boundaries of what is achievable in agriculture for the prosperity of our farmers. If you have any further questions, please feel free to contact with Ernst & Young, our PR, our investor relationship team. Thank you all for participating today. Thank you very much.
Thank you. On behalf of Best Agrolife Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.