Ladies and gentlemen, good day and welcome to the Q4 FY23 earnings conference call of Godrej Agrovet Limited, hosted by DAM Capital Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Neha Mehta from DAM Capital Advisors. Thank you, and over to you, ma'am.
Good afternoon, everyone, and thank you for joining us on the Godrej Agrovet Q4 and FY23 earnings conference call. From the company we have with us Mr. Nadir Godrej, Chairman of the company, Mr. Balram S. Yadav, Managing Director, Mr. S. Varadaraj, Chief Financial Officer, and Mr. Anurag Roy, Chief Executive Officer of Astec LifeSciences. We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call will be forward-looking, and a disclaimer to this effect have been included in the earnings pre-presentation shared with you earlier. I would now like to invite Mr. Nadir Godrej to make the initial remarks. Thank you, and over to you, sir.
Good afternoon, everyone. I welcome you all to the Godrej Agrovet earnings call. I hope and wish you are doing well. Godrej Agrovet recorded consolidated revenue from operations of INR 9,374 crore in FY23, growing at a 13% year-on-year. The growth was primarily driven by market share gains in animal feed and robust volume growth in branded products in our food businesses. Both of our food businesses delivered excellent top-line performance in FY23, growing at 28% year-on-year. Our in-licensed insecticide, Gracia, recorded robust volume performance in its first full year of launch. Our profitability was impacted due to a drop in operating margins of crop protection, animal feed and the dairy businesses. Vegetable oil and Godrej Tyson reported margin improvement as compared to the previous year.
In FY23, our efforts to optimize working capital and improve cash flows yielded results. Net working capital days improved from 79 to 51. Consequently, net debt to equity ratio improved from 0.57 as of 31st March 2022 to 0.47 as of 31st March 2023. Coming to the key financial and business highlights of each of our business segments. In animal feed, we achieved a volume growth in quarter four and FY23, led by the cattle feed category as we continue to gain market share. The segment margin, however, was impacted in quarter four by volatile co-commodity price movements and limited transmission due to pricing pressure, mainly in poultry feed.
For the full year, a major government intervention that resulted in decline in raw material prices in quarter one impacted profitability as high-cost inventory had to be consumed. Our vegetable oil segment registered strong growth in fresh fruit bunch volumes in quarter four. Profitability was impacted by lower crude palm oil prices as compared to the previous year. Despite a decline in CPO and PKO prices from the record high levels of fiscal year 2022, we maintained profitability in fiscal year 2023, driven by consistent volume and improved operational efficiency. In the standalone crop protection business, the top-line growth was led by higher sales of our in-licensed insecticide, Gracia, in-house herbicides portfolio and lower returns. Segment results declined due to the lower sales of plant growth regulator category and pricing pressure.
The segment achieved a substantial improvement in the working capital cycle and collections in FY23. For Astec LifeSciences, quarter four and full-year top line were severely impacted by sluggish demand for the key enterprise products, Tebu and Propi, and a sharp drop in realization. In addition to this, high-cost inventories led to the EBITDA margin contraction in FY22 versus the previous year. Contract manufacturing business, however, grew by 1.9 times year-on-year with improved profitability in FY23. The poultry segment recorded strong growth in top line as well as profitability. Branded businesses, mainly Real Good Chicken, with 30% volume growth, continued to drive the top-line performance in quarter four for the full year. Godrej Tyson delivered strong volume growth in branded categories, Real Good Chicken at 53% and Yummiez at 34%.
Profitability in FY23 also significantly improved with consistent performance of the Real Good Chicken segment.
For the dairy segment, volume growth was robust for quarter four as well as FY23, backed by a 37% increase in value-added products for the year. The salience of value-added products in revenue increased to 32% in FY23 from 29% in FY22. However, partial pass-through of rising milk procurement costs adversely impacted profitability. GAVL's joint venture in Bangladesh, ACI Godrej Agrovet, recorded revenue growth of 25% year-on-year in FY23, driven by a combination of higher realization and volume growth. That concludes our business and financial performance update for the quarter. With this, I close my opening remarks. We will now be happy to take your questions. Thank you.
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star then one on your 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. We have the first question from the line of Abhijit Akella from Kotak Securities. Please go ahead.
Yeah. Good afternoon, and thank you so much for taking my-.
Ladies and gentlemen, the current participant has left the queue. We move on to the next question, which is from the line of Aejaz Lakhani from Unifi Capital. Please go ahead.
Yeah. Hi. Sir, could you just spell out what are, you know, what all has happened in each of the, you know, segments? Specifically you could start with animal feeds and talk about, sir. There was a recovery that we were expecting in margins, you know, EBIT per kilo. That has surprised us and, you know, the outlook per segment, please, if you could start with first.
Hello. Let me start with animal feed. I think it was a very tough year from the point of view of commodity ups and downs. You know, our first quarter was wiped out because of soya imports were allowed suddenly and all of us were having lot of stocks of high cost materials. We made a loss in first quarter in animal feed. We expected this to recover, but unfortunately Q4 has been extremely bad for broiler feed, which pulled us down. I must also say that whatever growth we got, it was because of cattle feed, and that continues to be the situation in the new year also. We are still trying to figure out what is happening because of the low prices of broiler, the placements were less.
You can see the live segment in Godrej Tyson also suffered. My sense is that there is certain amount of stability which is coming now. I am not very sure that whether we will reach 5.3% EBIT margin, which we had reached in Q4 FY22. Definitely the steady rise in the margin has started happening. The kind of inflation which was expected in commodities has not happened. Hopefully, if there are no price increases, definitely our margins will show major improvement over Q4 FY23 in the first quarter itself.
Got it. Sir, could you speak about traditional crop protection and outlook on Astec as well?
Yeah. Astec, I think Mr. Anurag is here, he'll talk about it. On normal crop protection business, I must say that I think we had a major housekeeping done for last four or five quarters in this business. Two of our seasons were wiped out because of COVID and a very poor rain. We had lot of toxic inventory, toxic outstandings, et cetera, so that we took lot of hits because of sale returns and you know the story. There have been lot of improvements in working capital. We recovered as a company about INR 1,000 crores of cash. Cash flow was positive by about INR 1,000 crores. Major part of the cash flow came from the crop protection business.
We have put lot of discipline, lot of controls, which are now digital so that human intervention is reduced. We also have new product launches this year. Last year, Gracia was launched, and we will build up on that. My sense is that the new product, Maxpot, is also going to do well. Having said that, I must tell you two things which are likely to happen this year, apart from improved profitability. Just because these molecules have got a lot of pull and huge amount of field work we have done, we believe that our dependence on plant growth promoters, which were high cost, high margin, but required lot of credit and lot of, I would say bad debts were also generated because of that. We are under no pressure to sell to meet our profit targets.
I can assure that if for crop protection business this will be a watershed year. The other thing I also want to mention, the portfolio we are building. I would not say totally, but it is reasonably well insulated from monsoon as compared to our portfolio two years ago. Oil palm plantation, you know, the prices of palm oil good. We are expanding in different areas. Five, six years later there'll be major jump in production of fruits because we will have planted almost 50,000-60,000 hectares in Telangana and 15,000-20,000 hectares at Northeast till that time. We believe that oil prices will continue to be steady, and we will have steady margins in this business. As far as is concerned, the branded business has done well.
That is the focus. You will see increasing sales of branded business and reduced sales of labor business. I think we started this process about two years ago, and we will continue with that. Creamline Dairy, the problem was pass through of cost. Otherwise, if you see the brand value-added products, which are traditionally the money spinners are growing very rapidly. Our sales is also improving. We are happy in a way that the strategy is working as far as value-added is concerned, but a few price increases are desired or a reduction in milk re-milk cost is desired. There is a possibility of both happening this year because we are seeing a mini flush already. Yeah Anurag step in..
Yes, for Astec LifeSciences, we continue to face, you know, significant challenges, particularly from the last two quarters. The entire agro industry is going through these challenges, particularly the first major ones has been the inventory pile up in the channels. Post the COVID situation, supply chain disruptions also led to the inventory stock pile up. That was one. We also saw the erratic weather conditions, which led to some of the enterprise products less demand in the last two quarters. As we are now approaching into the Q1 of this year, what we are seeing from the customer is more of a wait-and-watch strategy because there has been lot of declinationary impact on the AIs which are coming from China.
Consumers are still thinking that the prices on some of these enterprise processes, products might go down further. They are waiting and watching. Our sense is that a lot of this inventory would try to balance out. There'll be more, you know, supply demand balance achieved by end of Q1 or getting into Q2. Lot will also depend on how the uptake for the next season, which typically starts from June across the globe, will happen. We had challenging last two quarters, as Mr. Yadav was mentioning. On the enterprise side of the business, we continue to see muted financial performance as we get into this year. As the season picks up, we are very positive that enterprise business should be back up.
On the CDMO side, we have done extremely well last year, almost doubled our business from the previous year. That lays the fundamental foundation of our business very well. We continue to focus on those foundational element of the business and maintain the same run rate as we get into this financial year.
Got it. Anurag, just a follow-up in the two key products on the enterprise side, what kind of price erosions have we seen from the two quarters prior? Do we expect that, you know, given that you mentioned that the season starts from June, do you foresee any uptick in those realizations, or do you expect the same price points to continue?
The this kind of price decline on particularly these two products which you're talking about has been, you know, historically low. Never, ever over the past decades have we seen such significant decline-.
Yes.
in four to five months. Tebu, on one of, the enterprise products, the price declines were as high as 69% from its peak of, you know, four quarter back. On Propi, the price declines were in the range of 42%-44%. That's the kind of steep decline in prices which we have seen over the last four to five months. Going forward, you know, on Propi particularly the decline in prices were because of the inventory pile up. There was a shortage of Propi, post-COVID. There was plant shutdown from China. That has led to inventory pile up at customer end, sometime last year. That's why, you know, a lot of companies making this and shown good results last financial year.
There's not been much uptake from these customers, and it was further worsened because of the erratic weather conditions. That led to complete shortfall in uptake of Propi. Once the season returns, I believe or I feel that the demand for this should come back and the supply demand situation is pretty much balanced. On the Tebu side, because of, you know, global factors, because of even muted demand within China and overcapacity situations there, we continue to see tremendous export pressure on the export prices for Tebu as we get into this year as well. I think Tebu, we still feel that there'll be challenges as we get into this year. On Propi, we expect once the weather comes back, we should be able to get back on track.
Got it. Thanks. Balram, sir, just a follow-up on what you mentioned earlier. Sir, you know, given that we are now in traditional crop protection doing the in-license products, which are relatively lower margins, how should we think about margins for FY24? Because, you know, the mix will keep now varying. What is the kind of range of margins that we should be thinking about for the traditional crop protection business?
To give you an indication, I think we will be back to our normal margin of 12%-14% PBT on sales, which we used to make. The focus will be on ROC and working capital. I think we don't want to lose that control.
Got it. You've given 12%-14% is on PBT, right?
PBT on sales, no.
Okay. Sir, just one last thing is that, you know, sir, on, you know, the dairy, which, you know, continues to consume a lot of capital and is not generating, you know, returns for us, do we have any strategic thoughts in the current scheme of things? Also, have we taken any calibrated price hikes or have raw material prices softened already? Or is it showing you that any leads indication that the prices are softening for us to start breaking even in this segment? Sir, you had, I think, mentioned a couple of quarters back on the call that at INR 1,500 roughly we should be able to break even, right?
If I correctly remember, I had said that at same contribution level, about INR 2,000 we will break even. You can refer to notes also. I think most of the erosion of contribution has been because of our inability to take price increase, because none of our competitors were taking. Continuous increase in the cost of milk. Two, three things we have one. I think last time I briefed you that we have engaged one of the Big Four consultancies to look at a lot of our efficiencies and our costs, etc. Possible pull out cost from both ends, procurement as well as sales. That is going very well.
I must also say that the value-added sales is likely to go up because the brands are doing well and weather permitting, because South India has several bouts of rain. April was a little subdued, but as heat picks up, we believe that we will definitely register more than 25-30% growth in the value-added segment this year also. It may, in case per season is good, it may go up to 40% also. That is one of the builders of contribution. We have also built in this that about 1% value restriction will still happen. That pass-through will not happen. With all this happening, in case we register that 20% growth we are expecting in the overall business and about 40% in the value-added business, we believe that we will move closer to break even.
I can assure you that whatever we are seeing in first few weeks in April itself already with us, I think we are right on that path, maybe faster than we thought. We believe that a little bit of help, in case there is a flush, signs of which are already seen, I think we should be moving closer to break-even this year. I must also say that based on the experience we have in this business and talking to competitor, I think this kind of secular rise in milk prices for eight, nine quarters consistently without flush has been unprecedented. In case there is a black swan event like that again or something else happens, I cannot tell. Whatever signs are we are seeing, we are seeing in increase in milk availability.
We are seeing tapering of the milk prices in last few weeks. I think all the signs are pointing out that we will improve significantly over FY23 performance.
Got it. Sir, what is direct procurement today?
direct procurement is about-
23%.
23%. There are two types of direct procurement. One is, our own, the whole channel, and one is through partners who only work for us. If you take our own channel, it is 23% and growing. Partners who work for us would be, that should be close to about 50%.
60, 65%.
Uh.
Sir, the partners who work only for us are paid a small commission over and above, right? Some sort of incentive.
But there's, so we have looked at that quite closely. Plenty of times in the year when the flush is there, our milk costs are slightly higher than the partner's milk cost because of their local knowledge, etc. They're able to drive down the cost. If you see annually, I think, definitely we would like to move towards our own procurement, but we are not that badly off in partners. What you are referring also is that 25%, 30% of this contractual, what do you call that?
Tie up.
Tie up procurement. Those tie up procurements are very volatile. They reflect the supply demand situation. That sometimes is 3%-4% lower than our normal cost or 4%-5% higher than our normal cost. That is the segment we want to attack and that is the segment we want to reduce.
Got it, sir. Sir, what was the FSR annual for this quarter? Sorry.
I'm sorry to interrupt, sir.
Yeah, no problem.
Sir, I would request you to rejoin the queue. Thank you, sir. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.
Thank you. Hi, sir. Just a central question on what is the impact that you see on our different segments of El Niño conditions coming up. one is also how have our segments performed during previous El Niño years, and what is your expectation this time for different segments? Thank you.
Definitely poor monsoon affects the entire rural economy, and we will not be any different. In case the monsoon failure is severe, what will get hurt most will be our crop protection business. Even though the portfolio is becoming more and more insulated from bad monsoon, but in a very, very bad monsoon situation it will be affected. I am very sure that cost will go through the sky and cooperatives will bear most of the brunt. We will be forced to probably take those costs. That is one big problem I see. I also feel that the positive side of poor monsoon or poor rainfall because El Niño is going to affect large parts of Asia. I believe the certain amount of price increase will also happen in CPO.
That will be a positive, but it will not be enough to take care of the kind of problems we will have in other businesses.
For our feed segment, maybe the green patches, which are usually used for as fodder, raw fodder, that will be less maybe nine months from now or whatever, like during later part.
We have seen that cattle feed sale increases during drought. The only problem is that the other inputs become so expensive. Every time there is a drought, we have seen some kind of a spike in our cattle feed sales.
That is a positive front. On margins also going forward and at this point coming up, and what is your expectation like for the next, for this quarter per se currently and for the foreseeable too?
I can tell you, I'll make a sweeping statement that apart from asset light sites where things are steady, they're still not improved. We still don't see the green shoots we wanted to see in this quarter. In rest, all our businesses, our margins are going to be better than Q1 of FY23.
Okay, sir. Got that. Thank you.
Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah. Hi, sir. Despite a decent growth on top line, we have seen a cross-segment margin contraction. In the past also we talked about the risk mitigating strategy for our margins. What is going wrong and what are we planning for lower the volatility in the margin side going forward?
Let me just tell you that volatility is nothing new in this industry. Food and AG has been volatile all over the world, and we have seen year over performance of very, very big companies also if you take data from the developed world also. Having said that, I think the journey started several years ago, and I've been briefing you in these conferences that one big thing for us to build a source of competitive advantage was research and development. You have seen that in all areas we have invested. First we invested in animal feed, and if you see we have 7%, 8% CAGR in volumes ever since that time. Some years we have even grown 14%-15%.
That is the nature of the industry, and we strongly feel that a 7-8% CAGR in feeds will happen because we have created that edge. One other example I will give you is that we created this brand called Samruddhi, and in cattle feed we have regained number 1 position in several states. Our growth in cattle feed last year was 13%, and Samruddhi accounts for almost 30% of our cattle feed volumes. I think this is a product which has come out of R&D. It takes about 5-6 years for something like this to happen. R&D will drive most of the probably prevention from downside. The brands definitely have done well. You've seen CDPL, you've seen GTFL also. Unfortunately, we cannot de-link brand from commodity prices in food businesses.
It has great bearing. You have seen the same thing happening in other industry, et cetera, et cetera. We will always have our linkages. As the brands become big, as the marketing spends increase, definitely the premium we can charge will definitely be much more. In Astec LifeSciences, we move towards PMO, the new R&D center, et cetera, which will open doors further for us and set us for every investment in Astec LifeSciences in several platforms. It was also part of the strategy which was conceived in 2017, 2018. Our big problem is it takes 5-7 years to implement several things because of infrastructure requirements, regulatory approvals in crop protection business, et cetera. One of the star products, for example, is Glacia. We will double the sale over last year if we get the material.
With the partner and registration, it was six, seven-year process. We are well on that way. If you really ask me, will we be dealing from volatility, the answer is no. The big thing will be that we will be moving away from more volatile to less volatile. Lifebuoy will keep on coming down as we go in future. Pure vanilla silk will come down as we go in future. That is how we are constructing our portfolio also. We are hoping that value-added dairy products will grow upwards of 40% last year. Yameen and Dale cook chicken upwards of 40%. Cattle feed upwards of 18%. In-house PGRs, in-licensing products upwards of 44%.
I think the focus is in the right direction, but you will see some of the results coming, not immediately, but in next few years.
Okay, sir. Thank you.
Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead.
Hi. Am I audible?
Yes, sir. Please proceed.
Okay. Thank you, for taking my question, sir. Just on Astec to start with, you know, the CMO business, would it be possible to just share how much the revenue was in the past year? You mentioned that it almost doubled. Is it somewhere close to INR 200 crores now?
We closed at INR 162 crores last year. That was almost, you know, double of what we did a year back.
Right. Is this largely driven by the new herbicide facility that we had commissioned, or is it something else? If you could also please just update us on the status of the growth projects we had at Astec, you know, particularly the both this project, the herbicide one, as well as, I think those three major triazole fungicides that we were sort of targeting. What's the thought process there, and what sort of investment are we looking at in the business over the next year or two?
Yeah. Obviously, a lot of the CDMO growth has come from our new investment in herbicide 1 plant. We had used those assets to build on the CDMO portfolio, we are well on target or ahead of target of what we committed, you know, previously as well in terms of the utilization of herbicide plant 1. We continue to see a good pipeline of CDMO projects coming in, as you were asking, we are also investing in scaling up or putting another herbicide plant, which is likely to go commercial in this financial year, around October, November this financial year, we'll be commercializing another herbicide plant. That is the part of CDMO growth will come from these assets.
Obviously we are utilizing our other assets, other sites as well, for different reaction chemistries like Grignard, Friedel–Crafts, as and when required to deliver on the CDMO part. On the fungi side of the herbicide product, as a part of also our de-risking strategy, because we have been over-reliant on few of the enterprise products, what we have now also taken up with the new R&D coming up is fast-pacing our development time cycles on some of the other enterprise products, which we are also expecting us to hit in this financial year, which not only will help us to de-risk from some of these established products, but also give us delta improve the margins and revenues for the financial year.
Sure. Just on the CapEx plans, if you could please help us both for Astec and for the overall Godrej Agrovet as a whole.
We are in the process of formulating plans. I think, first and foremost, this R&D center is commissioned, which is already capitalized. One more herbicide plant will be commissioned in October. We are already making plans to make first phase of a multipurpose plant, which will cost us close to about INR 500 crores. Most likely by the end of the year, we will start. We are still in the process of finalizing the location, and I think it will be announced very soon. Having said that, I think, these are already on the anvil because we will need that multipurpose plant to produce products which are in process of development in R&D. I think my sense is that, we will be on track.
We will be commissioning this multipurpose plant somewhere around December 2024, which is the timeline we have in our plan.
Sure, sir. apart from Astec, no significant CapEx plans in any of the other businesses?
All other businesses have, I'm saying for the company, big chunk of CapEx is in Astec. In other businesses we have several debottlenecking projects, et cetera. That will come close to about INR 150-200 crores in the current financial year.
Got it. Just one last thing, if I may, if you would, if you'll permit me. This was with regard to the decline in employee cost that we've seen this quarter. Seems quite significant. What might have driven that? Also as one previous participant was asking, if you could please just help us with the fresh fruit bunch number for the quarter and the full year. Thank you so much.
Abhijit, this is Varadaraj here. On the employee cost, as you know, the current year has not been good, FY23. Consequently, the variable remuneration, which we had sort of factored in our employee cost, that was not required to be provided for. That's the reason why in Q4 our employee cost has gone down.
Perfect.
In terms of fresh fruit bunch arrival for the current Q4 FY23, that was around 56,000.
For the full year also, please.
It was INR 5,44,000.
Thank you so much. I'll come back in the queue for any more.
Thank you.
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Yeah. Thanks for the opportunity. In case of Creamline, what is our, in a way the business has remained in investment mode for a very long period of time, and, I guess it is consuming the management bandwidth as well as the resources too. How do you see the business? Maybe it may turn positive once the milk prices come down. But when do you see that business generating, let's say, 15% plus ROE on a structural basis similar to the other dairy companies?
In last two years, a lot of steps have been taken to improve efficiency, reduce costs, make some structural changes from brand, from commodity to brand, et cetera, with very good results. I just want to say that last year in value-added production dairy on a base of about INR 400 crore, we grew 48%, which is very, very heartening for us. We are seeing steady improvement in margins, without a drop in the milk cost because of our change in the salient efficiency improvement and other cost, I would say reductions in the system. We are very, very confident that in case we get flush this year, even if it is a minor one, from a loss of INR 50 crore last year, we will move closer to breakeven.
That is the expectation, and we are encouraged by what has happened in April. What is likely to happen is yet to be seen. We believe that I think, what that is what we are also hearing from experts, that this year we might come back to the normal cycle of flush during winter in this business. If that happens, we will definitely breakeven. Having said that, I think we have already invested a lot of money. We have invested in plants. We are seeing very good traction for branded business. We strongly feel that salience of branded business will grow considerably as we grow this business in future. Once this happens, once the brands become bigger, they will be less volatile, the growth will be more sustainable and insulated from milk costs.
We believe that, in a year's time, if we prove that model, we will be ready to make bigger investments and take the branded business probably national. I'm saying that as a company, we believe strongly and we have the capability in branding products. I think, that will come into play once we prove that this is doable and doable consistently.
We have added, now Godrej brand equity also to Creamline Jersey. Has that helped to improve the realization? Since is there any better offtake, at least in value-added products or...
I think that value-added products, it really helps. In say, liquid milk, we are still indifferent. How many of us see which brand of milk comes very closely every morning. We definitely know what value-added products we are consuming. That Godrej brand equity has definitely helped.
Okay. Okay. Sir, last question. In case of animal feed, which are the segments, means basically cattle feed, poultry feed and shrimp feed or fish feed, which are the segments which are facing maximum pressure right now? Do you see recovery in, let's say, soon quarter?
Shrimp feed is facing a lot of pressure. We are small in shrimp business and definitely the market is also under pressure. Poultry feed is under pressure in first few months because traditionally they are difficult months for poultry because of heat, et cetera. I think cattle will be very, very steady. Fish feed, just because of new plant getting commissioned and last year first quarter it was not there, we are likely to see good growth in fish feed also. I think, if you ask me on this quarter, the drivers of growth will be fish feed and cattle feed.
Okay. Okay. Sir, means no end to the problems in shrimp feed at all?
shrimp feed actually, feed industry is dependent on the output.
Correct.
You know better than me what is happening. I think what point is our stakes are not too big in shrimp feed. We could be having 2%, 3% market share. It will be fish feed where we have budgeted huge increases and we have the capacity and our product is also accepted very well.
Okay, sure. Sure. Okay. Thank you.
Thank you. Ladies and gentlemen, this would be the last question for today, which is from the line of Rikin Shah from Omkara Capital. Please go ahead.
Hi, am I audible?
Yes, sir. Please proceed.
Yeah. On the Astec end of things on the enterprise segment, what I'm seeing, industry-wide weakness, I would say because of China coming back and inventory stuck in the system. Going forward, China would still be expected to be there on the supply side of things. You know, how would we be thinking about the same?
As I was mentioning earlier, obviously China is here post-COVID, and we expect them to continue to be aggressive in the coming quarters for years to come. The only way out there is expansion in our product portfolio or generating some differentiated advantage wherein we could compete head-on with China. In one of our key products, enterprise products, our cost structures, the supply-demand balance or the macros for us are equally favorable as to China. We expect to maintain our cost position there, and we expect to maintain margins in those lines of products for us. For the products where we are hit directly and where we have little control and we are dependent on China, as I mentioned earlier, we have taken a very aggressive plan to broaden our product portfolio.
We are putting in few of the opportunistic enterprise products within the fungicides as well as herbicide area to expand our portfolio, and we'll be balancing out our, you know, margins based on these expanded product portfolio. Broadly, these are the two strategies within the enterprise segment. At an overall business level, as Mr. Yadav was also mentioning, we are heavily investing and focusing in future on expanding our CDMO business through partnerships with innovators of the world across segments, which will give us, you know, good sustainable revenues and profits at an overall level. I think with these two, three strategies, we expect to move up the value journey for Astec from existing, you know, the portfolio products which we have, and then have much more stable and sustainable top lines as well as profitability.
Fair enough. With everything that has happened in the last two quarters, you know, we're still a bit compared to FY22, INR 88 crores. We've clocked in, I think INR 162 crores in the CDMO part. Is that fair?
Yes. Yes.
Going forward, you know, can we still expect positive trajectory here?
Absolutely. That's where, you know, most of the energy from the management side, top management side, investment side, we are heavily focusing there and there's no reason we cannot expect, you know, similar kind of double-digit growth as we move into subsequent quarters.
Fair enough. That's all from my end. Thank you.
Thank you.
Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you. I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we would be happy to be of assistance. Stay safe and stay healthy. Thank you once again for taking the time to join us on this call.
Thank you very much, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.