Please note that this conference is being recorded. I now hand the conference over to Mr. Advait Bhadekar from EY. Thank you, over to you, sir.
Thank you, Robin, and good afternoon, everyone. Welcome to Best Agrolife Limited's Q1 FY 2024 Earnings Conference Call. Please note that a copy of our disclosure is available on the investor section of our website, as well as on the stock exchanges. Please do note that anything said on this call, which reflects outlook towards the future or which could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. This conference call is being recorded, and the transcript, along with the audio of the same, will be made available on the website of the company and the exchanges. Please also note that the audio of the conference call is the copyright material of Best Agrolife Limited and cannot be copied, rebroadcasted or attributed in press or media without specific and written consent of the company.
Today, from the management side, we have with us Mr. Vimal Kumar, Managing Director, Mr. Sanjeev Kharbanda, Chief Financial Officer, and Mr. N. Surendra Sai, Head Strategy and Overseas Business. I would now like to hand over the call to Mr. Vimal Kumar for his opening remarks. Thank you. Over to you, sir.
Yeah, good afternoon. Good afternoon, everybody. This is Mr. Sai, who is doing the management company.
Thank you so much, Mr. Vimal. I welcome everybody to our Q1 FY 2024 earnings call. I hope everybody is doing well. Before I share some insights onto the business performance for the quarter, let me take a couple of minutes to share some insight on the industry trend. As we have been seeing for the last few quarters, the global agrochemical industry has been facing quite a few headwinds. This has been due to the excess of the channel inventory and consequent oversupply from our imported manufacturers and primarily from China. This situation continues to persist, and it has resulted in drop in the prices of commodity agrochemicals. The impact of this is visible in the Indian agrochemical industry.
Now, having said that, I am happy to share that our focus on the specialty and the patent product has shielded us from this impact and this de-inflationary-- deflationary trend. Moving towards our domestic. The domestic agrochemical market, the sowing for the kharif, kharif season in India was slow, and this was initially the... There was a delay in the monsoon, right? Where India received around 10% below normal rain, which was in some of the states. The deficit was as high as 60% below average, but however, the situation improved significantly with heavy and sustained monsoon spells in July. It not just covered the June deficit, but it has led to average or above average in most regions. We do see a good rains benefiting the agricultural regions.
As we speak, most of the agricultural regions, such as UP, Bihar, Chhattisgarh, Maharashtra, Gujarat, Punjab and West Bengal, all have received a normal rainfall. There have been instances of region-specific instances of flood, and there have been some areas which have experienced dry spell, but overall, the rainfall has been satisfactory for the farming community. We remain optimistic about the domestic demand, but we will continue to monitor closely as the monsoon unfolds. Before I move on to discuss our business performance, I would like to share since the data which has been released by the WTO or the World Trade Organization. India has emerged as the second-largest exporter of agrochemicals globally, and we have surpassed U.S., and we are trailed only by China.
This has been the result of great and excellent technical capabilities of Indian manufacturers, and who have been working hard on post-patent products and we've been able to bring these to the market in a very competitive prices. We do look at, we do look at the great potential of this reduced pricing and effective pricing, not just in India, but also in the global market. CTPR or chlorantraniliprole, which is one of the world's largest selling insecticide and which was being imported into India in a large number, large quantity. Now, now with this year, we will see a significant decrease in our reliance on CTPR import, India should become a net exporter of CTPR at some point.
I would like to point out that we are the first company in India to launch the CTPR in the market. Moving on to the company performance, Best Agrolife's revenue from the operations for Q1 FY 2024 stood at INR 612 crore. This is a robust 32% increase over the Q1 FY 2023. This has been primarily driven by a very strong growth in our formulation business, with the majority of the contribution coming from our branded product portfolio. Some of the major products include RONFEN, CTPR, AXEMAN, Warden, TOMBO, as well as our newly launched products, Amito and Propique. This quarter's performance reinforces the widespread acceptance of our products and Best Agrolife's strong brand presence in the Indian agrochemical market.
Our EBITDA margin for the quarter was 21.2%, which is an improvement of 700 basis points over Q1 FY 2024. This clearly reflects the change in the product mix, mix. I will later on let our CFO, [audio distortion] Sanjeev Ji, discuss the financials in detail. Moving on to the business highlights. I'm delighted to let everybody know that we have received registration for a couple of products and thre technicals, which are focused on herbicides and fungicides. Simultaneously, we have also launched two new products during this quarter. A couple of quick notes on the registration side. We are happy to share that we have received the registration for the indigenous manufacturing of one more patented product, which is Tricolor. Tricolor is a unique combination of triclopyr, difenoconazole, and sulfur.
This is in line with our strategy of creating niche combination of products, which will tackle a wide spectrum of fungicides. This combination will effectively control several crop diseases, primarily like sheath blight and powdery mildew, mildew. This has significant effect on a large variety of crops, which includes vegetables and rice. While two fungicides will tackle these crop diseases, the sulfur will act to, to increase the efficacy by three times. We have received positive feedback during our field trials, and this gives me confidence that this product will become another hit in the farming community, like Onset. We also received registration for three major technicals. Our subsidiary, Best Crop Science, has been granted registration for the technical indigenous manufacturing of diclosulam technical, boscalid technical, and dimethomorph technical, and by the CIBRC.
Very quickly, diclosulam functions as a broadleaf herbicide. It is designed to manage weed growth in soybean and peanut crops. Boscalid acts like a foliar fungicide. It effectively combats a wide array, array of fungal pathogens across the crops and vegetables. Dimethomorph is a systemic fungicide. It provides protections to potato, tomato, and grape crops from water mold and the fungus family. Overall, overall, the changes in the monsoon, we actually observed a change in the insecticide, fungicide, and herbicide uptake. We are well aware of these sort of changes. We are ensuring that we maintain our revenue focus, as well as ensure that we have a good bottom line. With the changing, with the changing weather, we are also changing our product mixes to be able to reflect this.
Seedlings India, our fully owned subsidiary, has been granted registration to manufacture pyroxasulfone domestically. This is a herbicide for wheat, cotton, wheat, corn, and soybean. Pyroxasulfone's market is worth over INR 450 crore, and we are confident of reaching at least INR 125 crore penetration in the first year of our introduction. I may say that we are the first and only agrochemical company to produce both the AI and the formulation of pyroxasulfone in India. Let me conclude. Our endeavor to reach the last mile, which is the farmer, has led to our distribution network growing exponentially, from around 5,000 last year to more than 7,000 distributors as we speak. I would like to hand over to Shri Sanjeev Ji, our CFO, to discuss the financials in detail. Over to you.
Thank you very much. Thank you, Mr. Sai. Thank you, Vimal Ji, and a warm welcome to everyone once again. Just to add on what Sainath has already explained, you know, the Q1, FY 2024, started on a very remarkable growth, and in fact, it performed with a commendable growth for the organization. The revenue for the quarter stood at INR 612 crore, which is 32% up year-on-year basis, and if we compare it quarter-on-quarter, this is almost 141% up quarter-on-quarter basis. The best part is, it is not just revenue growth. The organization is quite focused on a comprehensive growth driving and, you know, every parameter, every entire value chain of the business is being given due attention.
Resultantly, organization is able to achieve an EBITDA of, you know, INR 130 crore for the quarter one, which is 21%. If we compare it, the EBITDA growth itself, you know, is remarkable for the quarter on year on year basis, as well as on quarter on quarter basis. EBITDA margin for the quarter, which is 21%, as I mentioned, as compared to 3% in quarter four and 14% in quarter one, which explains almost an expansion of 1,800 basis points, quarter on quarter, and expansion of 700 basis points year on year basis. If you look at the pack delivery for the quarter, the pack delivery has been INR 90 crore, which is up by 1,168% quarter on quarter and 104% year on year basis.
The pack delivery for last year stood at 15%, for the quarter one, sorry, it stood at 15%, amounting to INR 90 crore. Coming to the segmentization of the business, as we mentioned earlier also, as part of our strategy, organization is very focused on investing high on B2C channel, investing high on the converter pack, and you know, investing on to ensure that the distribution network penetration is good enough to take our products till the last mile, which is not only giving us a consistent growth, also helping the organization, giving a direct consumer voice to align the kind of demand market has, the kind of products which are required to identify the gap, so that, you know, the right product makes the right value proposition is offered by the organization to the last mile in the interest of farmer as well.
Coming to the CapEx plan, as we announced earlier also, the CapEx plan for the backward integration for aligning our manufacturing capacity in, you know, to take care of the market demand is progressing well. We are very much on track in terms of investment on the backward integration, investment on enhancing the capacity to align with market demand, and also to ensure that market footprints are all going hand-in-hand with the demand to take care. Further, I would also like to, you know, mention, the initiative organization has taken very recently towards clean energy. We have signed a three megawatt solar energy power purchase agreement with four partners to take care of the power requirement in one of our manufacturing units based out of Gajraula.
This will not only give an annualized saving of almost 33% on the energy cost, but it will also help. It will also reinforce our commitment towards the society by reducing the carbon footprint. Approximately 4,000 ton carbon footprint emission would be taken care through this initiative. Apart from this, once we, you know, realize the success of this green power energy initiative in one of our factories, we are committed to explore if we can, you know, have similar extension to other manufacturing facilities also in phase manners. With this, I would like to thank everyone for a patient hearing, for a peaceful hearing, and enabling us as an organization remain focused on our delivery. Thank you very much. We once again assure you, what we promise, we are confident to deliver. Thank you very much.
Thank you.
Thank you.
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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavya Gandhi from Avendus Wealth. Please go ahead.
Sir, thank you for taking my question. I just wanted to ask, what kind of markets are we looking when it comes to CTPR, and what is the competitive intensity? Can you name a few players who are there, who are looking out for CTPR and who've launched CTPR? Yeah.
Yeah. CTPR is... Yeah, Gandhi, CTPR is actually our one of the product, which is basically one of fancy, you know, product which we are importing from outside India, and they are selling. That is their product, that is CTPR, and our brand name is CITIGEN. Of course, we were the number one, you know, to manufacture this indigenous in India, that technical as well as a formulation. Now, there are some players, other players, Indian player also is involved, and they are also selling the same CTPR. For the market size, if you talk about, this is more than INR 2,000 crore market is there for the CTPR annual as well as SC. There are two major formulations which they're selling. Of course, our strategy for CTPR is a little bit different.
We are selling as of now to this traditional CTPR, which selling by other companies also, but we are upcoming with the in coming year, we are upcoming with the new molecules, with our novel, patented CTPR. That is our strategy, basically, for CTPR in our term.
Right. No, what kind of market share are we looking when it comes to CTPR? I understand it's 2,000 + crore market size, what kind of share are we looking at?
This year, this year, we will do around INR 400 crore for CTPR market.
INR 400 crore. Okay, sir. Yeah, thank you so much. That's it from my end. Yeah.
Thank you.
I, I, I would just add to this, to your question. While the CTPR market has been primarily on the base, formulations on the technical, we are looking at creating a new market segments with novel and presented formulation, which is exactly what Vimalji was mentioning. There, there will be a expansion in the market size itself based on the current market. Our INR 2,000 crore market may actually be become larger, where we may be able to identify new areas which are CTPR combinations.
Okay, thank you so much.
Yeah.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Darshit Shah from Nirvana Capital. Please go ahead.
Yeah, thanks for the opportunity.
So if you look at, you know, the kind of performance that we've delivered, we kind of are an outlier in terms of what other agrochemical companies have done. You know, when we speak to few of our bigger companies like UPL, they did mention that their India business have done fairly well compared to the global businesses, where the price realization drops have been quite steep. The reason they gave us, that India is more of a B2C kind of business, where, you know, your proprietary branded formulations, as well as patented products, have not seen that kind of price drops.
Just want to have your thoughts on this, you know, about, you know, how better that we have fared because of this, and how, how the scenario currently playing out?
Yeah. Yeah. Good afternoon, Mr. Shah, thank you. Actually, you are asking, first of all, the UPL and the other companies, of course, UPL is a large company, and their turnover is far, far, you know, bigger than us. Definitely they are doing well, maybe in some countries and quarter to quarter. I don't know. I cannot comment their business model. Of course, UPL is such a large company, and according to that, if you talk about ourselves or why they are doing in that way, because they are, in fact, is globally. Because their business to India is not more than 15%, or I would say, like, maybe, according to my knowledge, it is not even 10%, actually.
It is less than 10% entire their revenue. That is, we cannot compare with such a, that kind of large company. Definitely, our vertical is a little bit different, and the way we are growing, that is, of course, global challenges is there. Globally, you know, some of Latin America, some of Southeast Asia, somewhere, you know, there is some... You know, it is, geographically, if you see, it's country to country, each region have different challenges this year. The major pressure is from China for the supply, because their oversupply is, you know, the main cause where the companies are hitting in the differently. As a Best Agrolife, we have different type of vertical, different kind of area we are, we are working.
We are only, you know, depending on the novel combinations which we are doing. We are developing our R&D, developing our, you know, we, we are doing all the different. That is one vertical which we are doing in a combination. The another, if you talk about, we are changing the off-patent molecule, which is getting off-patent. We are the number one to make it, you know, as Indian manufacturer and for the formulation for the same. We are doing R&D on that also. Third vertical we are doing for the backward integration, which we are doing in a very competitive way. That we are looking as a global competitive, not like just one molecule, and we are competing with Indian manufacturer.
We are, always we are doing when, backward integration, but please look at the global pricing and all the scenarios. This is the, this is the, if I am correct, if you got your answer actually.
Sure, sir. Yeah, that was really very cool. The second question was regarding, you know, the kind of sowing that we've seen has kind of picked up in July, and now it's almost up around 2% year-on-year. How, how is the demand panning out in current quarter? Do we see this robust growth that we witnessed in Q1 to kind of continue in the Q2 as well?
Yeah. In our introduction, Mr. Shah, as, you know, explained this, what you are asking, actually. This is, of course, the first quarter, even the last quarter of last year, it was challenging for the industry. I'm sure because this month we have seen the July also, and this quarter is going fantastic for... I can say for everybody it should be. I cannot comment on the any of the, because, I can tell you about ourselves. We are doing fantastic because rains has all over the India, if you see, rains are there. Even some area is flooded, rather than there is a lack of rain. That is also, you know, no, no farmer will leave their land like that, once it is flooded.
Definitely once rain stop, they will, definitely, you know, they will do the sowing of, like, rice or, you know. They will see alternate crops or maybe the same crop it is at that time will permit to them, so definitely they will do. No farmer, want to leave. Of course, there is, some of percentage, I can say percentage, you will see that is not more than 1%. That doesn't make any big difference, but, end of the day, you'll see this season will be, the better season. I'm not talking about the pricing, I'm not talking about the margin. It compared to company, according to their strategy, it will happen, but season is, really good, for, agrochemical and over the, you know, all the crop folks.
Surely, sir. Sir, on the last time you mentioned that, since the technical prices are also falling quite a bit, so that might, in a way, kind of, help us in terms of margins in our, patented products. Is it kind of playing out the way that we had envisaged earlier?
Yeah, Mr. Shah, we can say, but it doesn't make any big difference because you can see our inventory was higher in the March 23. Because we have to be ready for the product in the next six months, what we have to sell, because we are selling mostly our patented or our exclusion molecule. We are not selling generic. According to, you know, when you have to take arrangement for the, you know, for the six months, definitely that product impact will come. But for us, like, we cannot say directly, this is something we are getting extra margin or we are losing, because end of the day, we have to see year-on-year basis. Year-on-year basis, it sometimes it's higher, sometimes it's lower.
We have to take average, because we have higher product pricing also, which we buy before March. After March, we are getting lower price also. Definitely our selling price, we are not reducing and no need to reduce, those products are fantastic and it is in demand.
Great, sir. Sir, lastly, just when are we planning to list it on NSE again? I guess it was a voluntary listing that NSE allowed us. When are we coming back?
Yeah, actually, we were not listed in NSE ever. We were just have the one category there is permitted to trade. Of course, we have applied two years back, or maybe I don't remember the date, but of course, it is more than two years. We applied for the permitted to trade, and we got that permitted to trade. What we heard from NSE, that they are removing the permitted to trade for everybody, maybe who, who have that category. Definitely, we have all the criteria and all the criteria, you know, all the parameters, we are achieving that, and we have applied for the regular listing, and that is already in process with NSE.
Great! Best of luck. Thank you so much.
Thank you. Thank you, Darshit.
Thank you. We have the next question from the line of Siddharth Gadekar from Equirus. Please go ahead.
Yeah. Hi, sir. Just one first question on CTPR. Now, if you look at domestic, till now, the companies like Rallis, Sumitomo, who have reported results, we have seen that everyone has launched CTPR in the domestic market. In terms of competitive intensity, how should we look at this market going ahead, at least in the first and the second year?
I didn't get your question. You said CTPR, Rallis is doing or what? In between Rallis something.
Rallis and Sumitomo Chemical India both have launched CTPR in the domestic market. We have even other smaller players who have also announced that they will be launching. How should we look at the competitive in-intensity in this market?
I, I don't know about Rallis is doing that, and I have doubt if Rallis is doing. Even if they are doing, must be they are doing with some of the manufacturer, like us, maybe we or maybe other who is the manufacturer of the AI or the formulation. Rallis don't have direct CTPR as of now, registration, that we know. Directly, they don't have. If they are buying, maybe they are buying from the packed product, like B2C sale, for us or maybe some other, but we are not supplying to Rallis. I already mentioned it is not Rallis. If any other... Many companies now selling CTPR in India, because they have AI, they have everything.
They have cleared their patent, because there are many patents by the this parent company of CTPR. Of course, who, who is known in fringing group, they have to produce that. Of course, they are doing. But there are very not so many players. There are in my knowledge, there is only four players who can do in India. Out of that four players, maybe some of people, again, you know, there is a secondary sale, we can say, which is B2B, that they are doing. Maybe that's why they are selling, but that doesn't make any difference because market area is very big, 2,000 per hour. Like this way, you know, if many molecules you've seen in the past 50 years, each molecule has its life.
Of course, it is already 20 years passed for the patent, and now, if you see in the field, so it is, we can say it will be not, too much margin for the, when so many people will come. Definitely, we have different strategy for that, as I earlier mentioned, that we have different novel, you know, formulation for the same CTPR, and which will be our patented also.
Okay. Secondly, sir, in terms of our realization, can you share the mix between our realization growth, and our volume growth for this quarter?
Say again. Finally, say again.
Can you share the volume and the pricing growth that we have seen in this quarter on a YoY basis?
Actually, your question is not clear.
I'm also not clear. Pricing. Pricing for what?
You are asking, this, segmentation within revenue, or your question is what?
Volume growth in the domestic market.
Domestic and export you're talking about?
Yeah, yeah, in the domestic market, what is our volume growth this quarter?
We have-
This is, this is, this is, completely domestic growth only. We just, we are in a nascent stage of, you know, developing ourselves for the export.
I wanted, what would be the volume growth, the difference in the volume and in the price realization?
Okay, okay, you are talking about volume versus value, right?
Yes, yes, yes, yes.
Volume and value. By and large, this is, this number is driven by the volume growth only. It is not that the price change is this, this quarter was not actually helpful for the price changing, so this is completely a volume-driven growth.
How have we protected our realizations, given that if we look at pricing and all, all the active ingredients, they have declined anywhere between 20% to maybe 70% also. Despite that, we have maintained our pricing. What have we done differently in the domestic market?
See, I'll, you know, take you back for the explanation which just now Vimalji also mentioned, and in the opening remarks also finally mentioned. First and foremost, it is important to recognize that our product mix is more towards the specialized molecule. Our product mix is very, very less loaded by the generic. We, we have, you know, we have not got affected as the other players who are more into a generic molecule. That's how we have safeguarded and protected our margins, that's one. Second, in, in the quarter four, when, you know, the, the price crash happened due to oversupply by China, there was some inventory everybody had, the carry forward inventory at a higher price, and the correction was taken in last year itself in the NRV testing as per accounting principle.
Then when prices continued to decline in quarter one, when fresh purchases are happening to take care of the quarter one and quarter two, the average, you know, averaging with your purchase price also helps you to ensure that the final product margin is safeguarded.
Okay, so got it. Just lastly, sir, in terms of our full year, any numbers in terms of the top line growth and margin?
Full year numbers, we are confident that we should be able to maintain this momentum and should deliver approximate 30% growth over last year.
Oh, and so in terms of margins?
In terms of margin, endeavor of the organization is to protect the 20% EBITDA margin. However, you know, the business, as, as everybody acknowledge the fact that this business is also get, you know, there is, there is always an impact of climate conditions, soil condition, markets, which are beyond the control of any organization. If any such situation happens, we can't, you know, comment on that. But internally, as a management, we have taken a target of ensuring the 20% EBITDA margin we should be able to safeguard. As we are investing continuously on developing research driven products, so that should not be a challenging thing.
Lastly, what will be our cash CapEx outflow this year?
Sorry, cash CapEx?
Yes.
The CapEx plan, overall CapEx plan, which is nearly INR 200 crore, which includes the Bapar integration, which includes enhancement of some of the capacity enhancements, and some investment on R&D and market footprint expansion. I can say the plan is progressing well. However, the entire INR 200 may not get, you know, spent in the financial year FY 2023-2024. Some of the amount, some of the spend will get spill over with respect to the capitalization or put to use date to the next financial year.
How much will be the cash outflow for CapEx? That is the number I was looking at. Is it safe to assume around INR 150 crore?
Sorry, say again?
Around INR 150 crore would be the cash outflow this year?
It can be approximately to that number, but as I said, some of the projects, what we see might get completed or, you know, put to use date for next financial year. If that happens, then of course the, you know, capitalization would be accordingly, but cash outflow in phase manner should be around INR 100-INR 150 within this financial year.
All right, [audio distortion]. Thank you so much.
Yes.
Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Gagan, the line for you has been unmuted. You may proceed with your question.
Yeah, good afternoon. Am I audible?
Sir, you're not very audible.
You are.
It's low in volume. If you could please speak closer to the mic.
Yeah. Is this better? Can you hear me clearly now?
Yes, this is much better, sir. Please go ahead.
Okay. Great. Sir, can you give us an update on the RONFEN sales for the quarter and how it has grown year-on-year for you? What are you budgeting for the full year on RONFEN?
Yeah, in fact, this is mainly RONFEN is, of course, a second quarter product. Majorly second quarter, which is going on, the sale is going on, some in third quarter also, some in fourth quarter also, and some in first quarter also. In the, because, the last year we launched this product, so this is growing molecule and it is growing in many crops now. Last year, we have done very well in the cotton and chili, and now this year in vegetable and, you know, so many, you know, product, so many crops it is going to, what is, you know, insecticide, which is, the, you know, definitely, far better than, the, any of the molecule.
y this year we will cross it around, uh, I would say around, uh, INR 300, INR 35- INR 400 crore sales to. Out of that, in first quarter, we have done around INR 70 crore, which we have done sales in first, first quarter. But this is the product for the second quarter, mainly.
Okay. The last full year, RONFEN was how much? INR 200 crore or more?
Yeah, it was more than INR 200 crore.
Can you give the exact number? I'm sorry,
INR 140 crore.
Okay.
Around INR 240 crore.
Okay. You know, on, on RONFEN and on CTPR, you know, it would be, you know, very, very helpful if you could help us understand, you know, the, the business outlook or, or scenario beyond FY 2024. I understand CTPR will keep on having more companies getting registration. Should we think that, you know, you will be able to defend the INR 400 crore sort of turnover that you're going to do in FY 2024 in CTPR beyond that as well? Or do you see, you know, there being some sort of a decline in CTPR sales post FY 2024?
Yeah. First of all, CTPR is a big molecule for India as the insecticide. Again, I'm repeating, you know, this is, you know, more than INR 2,000 crore molecule for the India. The price was very high by the MNC company. You know, the price was really, you can say, you know, exact number I cannot say, but the price was very high from the MNC company. When the domestic player are coming and manufacturing in India, so definitely cost is reduced and price also are reducing. The way price reducing for the, you know, one, two years, the product will be, of course, it will be there, but when competition will be too much, then it will hit and a little bit.
We, in the FY 2023, we don't have major shares of CTPR. In FY 2024, we are hoping for the INR 400 crore, and definitely we can do INR 400 crore. Our target to sell CTPR, again, I'm repeating, our target is to sell CTPR, not to sell CTPR, but to create that market for our own novel combination product with the CTPR. Our target is different with the CTPR, and I understand because till last year, we have done so much of, you know, announcement for the CTPR and RONFEN. We have more than 25 patented products which are upcoming in the pipeline, and one of the products, which is Tricolor, which will be near to CTPR in next two, three, near to this, around 10 in next two years.
You know, the Tricolor, this year we have launched in July. Month of July, we have launched Tricolor. That is again, our, you know, the same, patented in our combination.
Okay.
That we have launched in July. The, we, we always say, you know, one or two product in the sale, we will launch easier. This year we have launched the first product with pyraclostrobin. Last year, we have launched RONFEN. Our major sales, we always want to do our patented, our, our, you know, the initial molecule, which we are doing, that, our, our target is always that. To give that, good chemistry to, you know, safest chemistry to the farmers.
What was the CTPR sales for the first quarter, if you can give that out?
CTPR, first quarter, our sale is not too much. I actually have the number. Just one second, please. INR 20 crore. INR 320 crore only.
INR 20 crores.
First quarter, in the product for the second and third quarter.
Right. Apart from RONFEN and CTPR, you also launched pyroxasulfone, and I think there were some other launches I am unable to recall names. Names are very complicated in this line of business.
Yes, yes, yes. Definitely. Ametryn is there, Propiconazole is there. Ametryn again is a herbicide, which is a really good molecule. That Ametryn we have launched, and that is again, it is an INR 100+ crore+ molecule, that is Ametryn, which is also, again, we are the second one in India who have launched this product. After Ametryn, we have propaquizafop. Again, propaquizafop, we are the first one who is doing in India, and Ametryn in India, and a combination. Before that, one of the MNC companies importing that propaquizafop . Now we are the second one in, but in only in India, we are the first one. We have done in the first quarter. That was really good. The third you asked for the pyroxasulfone.
Pyroxasulfone is a wheat herbicide. That season will come on the third quarter only, and the sale will close in third quarter. There is no sale in the any of the quarter. We are specific for the specific for the wheat, wheat segment, and that will stay in the this third quarter only.
Right. You for the second molecule that you mentioned, propaquizafop , if I understood it correctly, what's the market size and.
Yeah.
What is the market size, and what have you been able to do and for the first quarter, and what is your aspiration for FY 24?
Yeah. Actually, you are, we're talking about wheat one or the another one?
No, no, not... I'm not talking about pyroxasulfone, sir. I'm talking about the molecule which you mentioned before pyroxasulfone.
Yes, yes, yes, yes. That molecule actually basically is for soyabean. Soyabean is a, you know, major, you know, have a big growth in India, and we, we, we are targeting this year that more than INR 150 crore.
Okay. What is the market size for this one?
The total market size of it is around, INR 400 crore.
INR 400 crore. You also launched Tricolor. If you could give us some idea of the market size of Tricolor, and also what, you know, what's the in terms of competitive environment, in terms of your own sort of vision and aspiration for this product, what, what do you intend to, you know, target for this year and next year?
In the Tricolor is a three-way fungicide, which have trifloxystrobin, difenoconazole, and sulfur, acting as a catalyst to enhance the effectiveness of the product. This is again, patented product and applicable for paddy, wheat, vegetable, and you know, maize. It is, it is going in a many crop, and especially for the apple also in J&K and Himachal, for the scabs. You know, this is the fantastic molecule, again, new chemistry molecule, because a trifloxystrobin, very new chemistry. Bifenthrin also not very old chemistry. So, you know, sulfur is us- I told you, you know, using, you know, as a catalyst in this, and this is fantastic product as a fungicide. We, we firm believe, you know, in the next two year, we will do more than INR 400 crore for this product.
Initially when we launch, you know, this is a starting phase, but definitely in two years, we will cross more than INR 400 crore for Tricolor. Each of our product, which we are launching commercially, as a patent, that will be always, you know, not less than INR 200 crore, which we are targeting.
Okay. Okay. On working capital, if you could give us some idea, you know, from March quarter to now, how has working capital moved for you?
The working capital is well manageable, but at the same time, you know, you should also acknowledge the quarter one and quarter two for agricultural chemical industry. These are the big quarters. You know, having a good inventory right from RM to FG, having an inventory pipeline up to the distributor point, is something which is always required in these quarters. Working capital management is well taken care and as per the business plan only. That is, that is something.
From, from March quarter to now, it, it will increase because you have to place inventory. If 1 compares from, you know, June quarter of last year to June quarter of this year, would in days, in days sales terms? Have working capital remain, remained stable, or would it have grown or would it have dropped?
See, the best part is, in terms of the cash conversion cycle, because this last quarter, it has not gone up. Despite the fact there is a 30%, 32% growth in the revenue, your BSOs are not going up, overall cash conversion cycle is not going up in that ratio. The working capital is well managed. This is where I wanted to give you the comfort on working capital.
On CapEx, the funding will require, some amount of debt, or will you be able to do it through internal accruals completely for the year?
So far, so far we are able to take care of through the internal accruals only. We are making reasonably healthy EBITDA margins, and as I said, we are also working on a healthy cash conversion cycle. So far we are able to maintain it. However, as we move along, the growth trajectory in which if we have underlined the kind of targets, the kind of revenue target we have for ourselves, we might have, we will have to actually rather get into a greenfield project expansion also. Once we reach to that stage, we will explore for, you know, into the additional funding for long term.
Right. So one final question.
Sorry to interrupt, sir. We request you to please rejoin the queue for follow-up questions. Ladies and gentlemen, we request you to please restrict your questions to two per participant. The next question is from the line of Rohit Nagaraj from Centrum Broking. Please go ahead.
Yeah, thanks for the opportunity and congrats on good numbers. My first question is on the export strategy. We indicated that we probably will be planning to start exports in FY 2025, and Mr. Sai is also here as the Head of, you know, Business Development. What is the strategy that we are working on in terms of, which initially, products which are targeted, which particular geographies, and given that the registration process is relatively lengthier in developed markets, what is the, you know, exact roadmap that we are looking at? Thank you.
Yes, excellent question. The global market is very, very diverse. On one side, when you look at a diverse portfolio in terms of the number of crops, different regions with the different climatic conditions, and when you look at trying to match them with the product portfolio, the combination is actually very large. So definitely, definitely there has to be a clear path and a strategy to be able to go to overseas markets. The path that we are working on is to be able to identify geographies and locations and crops, which will be sort of aligned with our patent portfolios and our specialized molecules. What I can say is there are a good number of geographies which have a climatic conditions which are very similar to what we have in India.
The correspondingly, the sort of, fungal infections as well as the insect, insect, infestations, they are also very similar. We also see a certain great amount of herbicides which have a similar behavior across in the world. One of the areas which is our focus areas are Far East. We see a significant amount of paddy in these areas. We have very good products in India, and that is one area that we'll be looking at. One of the largest markets across the world in which country, no, no country can ignore is South America. South America is one area that we will be focusing on. We do see significant opportunities in Africa. We see areas in South Africa which are useful for different products from our portfolio.
There are two strategies that we are doing, which are slightly different with respect to the formulation business as well as with respect to the technical business. The strategy which I have told you right now is on the formulation business. On the technical, on the technical, the world market is very price-conscious because these are primarily B2B, and they are actually large formulators and manufacturers to other countries. We are trying to see that, you know, we produce the technicals which are environmentally safe, which are modern chemistry, which are difficult to make. And these chemistries are the, these are the technicals that we will be aiming for that. So the technical registration strategy would be slightly different from the registration strategy for the formulation.
That said, the, it's quite obvious that, both formulation, A, has a good lead time of potentially up to 2-3 years. It could be as high as six years. This is a, this is a game of investment and, you know, having a very clear strategy and a very clear path, in terms of our investment. Registration, it is going to require an investment in the initial years. The key out in terms of the foreign market is our ability to align our portfolio, our formulation plan, and our technical plan with the right, right country and the right crops. This, this is, this is a whole mix that, you know, we are doing. We have started off on our journey.
We do, we do anticipate there will be registration, time taken, because some of these are patented in novel combinations. These will take some time. Obviously, we will be protected from our pricing with respect to any other competing country, because they would not have that sort of a formulation or that sort of a business. Hence, we will be able to identify and get a premium pricing. This is, this is similar to what we have achieved in India. We sort of are looking to see if we can replicate it in the, in different countries. This is, this is, in short, the strategy that we are, that we are going to follow.
Thank you. Sir, sorry to interrupt, but the line is not clear.
Is it better now?
Yes, this is much better, sir.
Yeah. Yeah, thanks for that elaborate explanation. Just one clarification on this. What are the investments that we are looking at from a registration perspective, maybe over the next couple of years?
We have right now budgeting around INR 50 crore investment.
These will be over and above the INR 200 crore, which we are planning from the asset, you know, construction perspective.
Yes, INR 200 crore is purely a CapEx one for the capacity enhancement and backward integration. As far as export development, product registration, and studying that market is concerned, that's a separate budget we have here.
Right. Got it. The second question: Vimal, sir, indicated that there has been a price correction in CTPR. Just in terms of percentage, what is the correction that has happened from the, you know, innovator's price to our price? I mean, I don't want the exact numbers, but whether the innovator has also corrected their earlier price, and what will be our discount to the innovator's price? Thank you.
Yeah. In fact, if you talk about the, you know, different companies, they are, you know. Of course, they also have pressure, and they have reduced, you know, 15%-20%. Of course, as a-we are the second one or, you know, the second line or third line, those people are selling much less, you know, the 10% more lesser than them. You know, if you talk about, like, they are selling maybe 15%, so we are selling from the, their main price, which was the last six years, so we are selling over almost 25% lesser than that.
Right. Got it, sir. Thank you so much, and thank you.
Thank you. Thank you.
Thank you.
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you and good afternoon. If you can give us some insight into how you have achieved the kind of expansion in gross margins, given that, there has been, severe price competition, and how have you managed the supply chain to ensure the availability of raw materials?
Thank you, Mr. Ramesh, for your question. The answer to this, we, you know, as we mentioned earlier also, the right product mix, the branded products are the key drivers for, you know, carrying this growth in terms of top line, as well as safeguarding the margin. As we said, you know, as an organization, our strategy is to minimize on the generic molecule, to minimize on the commoditized part of business, which is highly affected by demand and supply gap. Since we are offering the products which are unique, which are, crop-specific solution, unique solutions to the farmers, so somehow organization has the ability to decide and drive the kind of, realization per SKU, per product we require, and that's, that's how we have been successful on this.
As a follow-up, can you share what is the proportion of revenue in percentage terms you get from your patented and premium products, and what is the share of new products in your current revenue?
Broadly, I can say the revenue from the. We, we see this business in two segments, primarily formulation-driven and technical-driven. In broad terms, the formulation-driven business is increasing and contributing between 60% - 70%. That is again, that's how it is helping us to safeguard the realization as well as gross margin on the product.
Since you are emphasizing on your positioning as a specialist product manufacturer, if you can give us some sense of the percentage share of specialized products, that would be useful, because everybody makes formulations. Given that their companies are not performing as well, there must be something that is driving your performance. What is the percentage share of your patented products in your overall revenue? That will be useful.
See, Okay, let me put it in a more simpler form. As I said, you know, nearly 65%, 65%-70%, total formulation business adding to the pie, and within that formulation, the B2C segment is contributing more than 60%, which is primarily driven by the specialized products only.
Okay. And can you share the share of the new products in your overall revenue?
When we say new product, the definition is slightly different person to person. For example, within our offering, within our, you know, overall basket of products, if we say RONFEN is a new product, we are very clear. Then there can be a different perspective that RONFEN was last year, it is a new for this year. Approximately.
The ratio is 70/30.
The ratio is 70/30. The new products are adding to the bouquet around 70%.
70% is new products. Okay, okay, thanks. I wish you all the best.
Thank you. Yeah, so it is again, you know, person-to-person definition. Somebody can have RONFEN, a year-old product. New definition is slightly different person to person.
Yeah.
Yeah, please.
In the last three years, you know, whatever you have launched in the last three years, because companies give their innovation rate or new product as a percentage of revenue. From that perspective, just to get a sense in terms of how mature your portfolio is and what is the share of new products, which possibly have a higher life cycle, a longer life cycle. You're saying 70% of your revenue in the last three years is 70%?
That's right.
Okay.
That's, that's right.
Yeah.
Right. Thank you.
Thank you. The next question is from the line of Ayush Mittal from Mittal Analytics. Please go ahead.
Hello, sir. Am I audible?
Yes, you are.
Sir, am I audible?
Yes, you are audible. Please go ahead with your question.
Okay. My first question is that, you say that, you know, RONFEN is INR 70 crore. I think CTPR is must be about INR 20 crore. You, just now mentioned that most of the book is from coming from the new products. If you can tell us, you know, which products are contributing, because we posted INR 600 crore of revenue, which are the other large products in our basket which are contributing to this INR 600 crore?
See, please, please understand, and we are saying, you know, the new products are contributing about 70%. One need to be... Let me clarify it. These are the annualized average numbers we are talking about. Quarter to quarter, the contributions are of course, different. For example, quarter one, if RONFEN is 70, the quarter two will be much bigger than this, because quarter two is the time when RONFEN demand will further increase. That number, that ballpark indicative number of 70% contributing by new products, we said year-on-year average basis.
Understood. Even despite that, like I asked that, you know, saying, you mentioned RONFEN is INR 70 crore and the CTPR is INR 20 crore, and we have posted a INR 600 crore revenue, which are the other large products in our basket right now in the, in the formulation, branded formulation?
Yeah, definitely. We have, you know, there are, you know, products like, BESTIE, CITIGEN. Of course, CITIGEN, you already said, but there is a product of DONGLE, AXEMAN. There is many molecule, TOMBO, and, of course, I said, you know, that is, you know, Petaloguta. There is so many molecules. There is not only one or two, but the major we are talking always, which is giving us, you know, the big revenue. We are talking about that only.
If you can quantify top two, three products apart from CTPR and RONFEN. Yeah, Q1, Q1 specifically.
Q1, Q2, Q3, Q4, specifically, you want the product?
No, no, sir. Only Q1 of this quarter, this year, Q1, FY 2024. If you can quantify top two, three products-
Yeah.
in branded formulation apart from RONFEN.
Yes, yes, yes. Yes, yes, apart from RONFEN, apart from CTPR, there is a product called Warden. That is the major, also Warden. There is a BESTIE, there is a BESTLINE, there's a PYMAX. These are the molecules. The different, different type. PYMAX have pymetrozine, then they have AXEMAN, pymetrozine plus dinotefuran. BESTIE have leucostate. These are different, you know, the product. Warden again, have the combination for heat treatment product. That is Warden, which is azoxystrobin, you know, and, you know, different, combination molecule. Thiophanate Methyl, azoxystrobin, and thiamethoxam. This is again, a combination of Warden. This is many molecule we have. Each molecule size, like, you know, from INR 50 crore - INR 10 crore, we can say. The major one, I'm telling you.
Got it. sir, my second question is on, you know, upcoming launches that we plan to do, and given that we have already posted INR 600 crore revenue in this quarter, and most of the products that you are mentioning on the call, are you saying Q2 and Q3 are much heavier? Are we expecting like, you know, INR 1,000 crore revenue next quarter? With so many new launches and RONFEN doing well, is that number achievable?
Oh, no. Number to say is very hard at, on the call. Definitely, we are improving and the same right as again, we are saying 30% of the growth and we will maintain the 20% orbit. Definitely, we will achieve that.
Got it. All right, sir, I'll come back in with you.
Thank you. Thank you, Mr. Nish.
Thank you. ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Once again, thank you very much. Thank you very much for joining us, and, you know, your participation gives us more motivation to keep delivering quarter-on-quarter, year-on-year with growth momentum.
Thank you. On behalf of Best Agrolife Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you. Thank you.