Ladies and gentlemen, good day and welcome to Kaveri Seed Company Limited Q1 FY 2026 earnings conference call. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. Joining us today on this call, we have with us Mr. Mithun Chand, Executive Director. Before we begin, I would like to mention that some of the statements made in today's conference call may be forward-looking in nature and may involve risk and uncertainties. For a list of such considerations, please refer to the earnings presentation. I now hand the conference over to Mr. Mithun Chand. Thank you, and over to you, sir.
Thank you. Good afternoon and welcome everyone to our Quarter one financial year 2026 earnings conference call. We hope you had a chance to review the presentation of our results, which is also available on our website. I will touch upon the operational and financial performance of the company, and then open the floor for Q&A. We are delighted to declare a good set of numbers on account of increasing acreages and high realizations of non-cotton segments like rice and maize. Increased volumes of non-cotton hybrids have resulted in good realizations, which have been well reflected in the overall revenue growth. The increase in contribution of new products of volumes of cotton will have major impact in the quarters to come in our overall cotton revenues growth. Rice, maize, and vegetable segments continue to grow both in terms of acreages, revenues, so as realizations.
In spite of restrictions in hybrid rice sowing in Punjab, we have delivered good set of growth in hybrid rice revenues. We have witnessed a kind of substantial increase in revenue growth as compared to volume growth across all non-cotton segments like rice, maize, and vegetables, which would continue in the next years to come. Revenue from operations was at INR 945.31 crore as compared to INR 808.09 crore in quarter one FY 2025, registered a growth of 16.98%. EBITDA was at INR 332.85 crore as compared to INR 292.79 crore in quarter one financial year 2025, increased by 13.68%. Net profit was at INR 316.50 crore as compared to INR 282.91 crore, and registered a growth of 11.88%. Key highlights.
The contribution of new products of volumes of cotton up from 12%- 34%. Cotton sales impacted by increase in illegal cotton. Increase in cost of production of cotton seed impacted the profitability. Hybrid rice volumes increased by 6.48% and revenues increased by 32%. Hybrid rice is restricted in Punjab, affected the sales in that state. Selection rice volumes increased by 1.5%, and revenues increased by 11.58%. Maize volumes increased by 21% and revenues increased by 54%. Vegetable seed volumes increased by 28%, whereas revenues increased by 41%. Volumes of non-cotton hybrids increased by 8% and revenues increased by 31%. Volumes of cotton hybrid decreased by 15% and there is corresponding decrease in revenue. I would now open the floor for Q&A session. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone phone. 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 comes from the line of Siddhant from Goodwill. Please go ahead.
Hello.
Yes, you may proceed.
Hi. My first question was, when you refer to the cotton illegal seeds, are these largely BG-III seeds?
Yeah, basically illegal BG-II RRF seeds. That's what we call-
Okay.
Illegal seeds.
Okay. Any update on the BG-III?
Not yet. It's been positive. Anytime it should come by seeing the growth in this type of illegal cotton, even the government authorities are a bit worried about it and even farmers want new technologies. We have a continuous dialogue with the approving authorities, so anytime we may expect it.
Okay. Any update on non-cotton GM seeds or testing?
As of now, the testing is going on, but not much. What we think is that initially, first thing will be the cotton segment because which is already approved in the market, and non-cotton segment may take some more time to get the formal approvals.
Okay. The non-cotton growth that we achieved this quarter, firstly, congratulations on that. Secondly, do you think this will sustain at this rate for the next few years or maybe a lower rate?
Definitely. What we think is that non-cotton segment should be in and around the 20% growth levels.
Okay
Going forward as we see an acreage increase in maize, and even we see a rice market grow. This time, even though rice market grew when compared to previous year, majority of the market was in this varietal seed, not in the hybrid segment. But definitely what we anticipate is that definitely they move to hybrids. We will definitely see as an industry, as a growth, we see acreages coming up in both maize and hybrid rice. Whereas Kaveri, we are well-placed in maize. We have very good pipeline hybrids which are coming in, which are not only for the current segment, which we are already working on the segments which we are not there. Even in rice, we are working on the segments where we are not there. So we have very good pipeline hybrids in those segments.
What we believe is that going forward, year on year 20% growth in non-cotton segment is very much possible. Coming back to cotton by saying the base what we have, even last year, we said that we have a low base, we will not go back. But the illegal cotton has gone up this time and the acreages are also slightly down. That has impacted the sale. But the plus point in our sale this year is that even though we have decreased in our sale, but the new cotton contributions have gone up when compared to the previous year. So those are the hybrids which are doing well. Definitely we think that even in cotton, we see a good growth coming up. We just got delayed by a year or so, but we are fairly confident about the cotton growth.
Overall, when we see the company, 15%-20% growth going forward for the next three to five years looks very much possible.
Okay. Within the cotton, is the illegal seeds productivity higher than the BG-II seeds that we are selling right now or the industry is selling right now?
Right now, what we anticipate is our company's internal thing may differ from other companies, but what we see, 20% of the market is on the illegal BT now.
Okay. No, I am talking about the productivity of those seeds. Is it better than-
No. Still, we need to watch it now.
Okay.
We have seen a mixed result on that. But still the crop is on the ground. We need to see the result. But anyway, the government is also acting very harsh now. They have witnessed this type of growth. We all as association, we all represented saying that it will harm the farmer going forward because they do not know what sort of seed they are putting in.
Sure.
That also will impact yield going forward. I think that will be corrected.
Perfect. Last question before I join is, what is our dividend cash payout policy? Because I think we are sitting on all-time high cash, and we had a buyback policy before. What is it going forward?
Not at the all-time high because we have produced more inventory this year. Majority of the cash is there in the inventories, which will be realized in the next few more coming quarters. But as of now, we have not taken any decision on the buyback policy. Dividend will be definitely there. We will come back with the policy once we have the discussion on it.
Okay. Because you are sitting on all-time high inventory, do you expect some inventory to get written off or not really?
Whatever inventory we have produced is all new inventory. Written-offs is always a part of the system. So we do not see any sort of high risk in writing it off as of now. But the stock is not yet written yet. We have just made a provision. It is reaching the stock. We need it to the quality test and do that. But with our experience, what we see is that most of the stock is this year produced stock. So usually these stocks last for two to three years. So we do not see that sort of risk.
Okay, perfect. Thank you.
Thank you. The next question comes from the line of Amit Doshi from Care Portfolio Managers Private Limited. Please go ahead.
Yeah, thank you. Sir, while you say that we have a 17% growth, that's on the stand-alone. When I looked at the consolidated numbers, we are in the single-digit growth. Is it fair to say that the sales that we have done is lying as inventory in subsidiary? Any clarification that you would like to give?
We don't have any inventories in subsidiaries. Whatever we sell is through subsidiaries only. Majority of the subsidiaries, when we see, it's only cotton, not the other crop. That's the reason you see a single-digit growth there. If I can clarify.
No, still not very clear. When you say stand-alone has INR 945 crores of sales and consolidated has around INR 90 crore less sales. I didn't get the cotton part.
As per the accounting chart, we need to deduct that. That's the only thing. That's the reason you see a single-digit growth there. We need to knock off that sale.
But ultimately, as a company, including subsidiary, we would have done sales of only INR 50 crores, right? Not INR 945 crores.
We have done more sale in subsidiaries, but when we see the source of the seed is from the main company seed. For example, if I sell at INR 800 in cotton there, the INR 600 is registered in the books of Kaveri, only INR 200 is registered in the books of subsidiary. That's the reason you see a very small growth there, only INR 50 crore sale there. Anyway, I'll come back with those.
Yeah. Not very clear on it.
I will also try to clarify that regarding the consolidated one.
Yes.
In what way the accounts are treating it, I just will do that.
Sure. In terms of volume growth and price growth, we have seen significant price hikes in all of the crop seeds except the cotton one. Any particular reason that this time there is no significant demand or some price hikes that we have taken? Anything particular, because all volumes are grown, but the price has grown far higher. Anything on that?
If you see the last two quarter concalls, we were saying that the cost of production is going up in most of the crops. That is what we have seen here. And we were able to pass on the cost of goods to the farmers in non-cotton segment. Whereas in cotton segment, because the prices are restricted by the government and there was a lot of inventory, the demand was not that good. So these all have affected in not passing on to the farmer. That is the reason, even though we have realized a few tens of rupees more than last year, but the cost of production is really high when compared to the last year. That has impacted our profitability.
Okay, so that is something which you have taken.
If you see the decline, we are down by 1% in EBITDA margins compared to the previous year. Usually, when we do sale in non-cotton segment, the margin should go up. In fact, the margins have gone up in non-cotton segment, but the margins in cotton have dragged a bit. That is the reason we have seen a dip of 1% in the overall EBITDA margins.
Understood.
That is a very temporary thing. All the companies have produced more. Now they should moderate.
Okay. Earlier participants spoke about inventory. Of course, we had a very high inventory compared to last year, INR 750 crores, more than INR 1,000 crores. Last time you mentioned, we produce buffer stock. Do you see anything significantly liquidating in the second half in the rabi season, and how do you see rabi season?
Definitely the second half will be much better than the last year, because we see a very good positivity for maize. If you see this year also, major crop is maize, which has grown by more than 21% in terms of volumes as well.
Okay.
Going forward also, maize is a crop which will grow. Vegetables have also gone up. When you see the next three quarters of the second half, basically, it should be much better than what we had earlier.
Understood. Sir, any clarity on the tax matter which is still pending or the hanging forum or something?
As of now, nothing.
With the government.
As of now, no case is disposed at commissioner level. I mean, in a CIT appeals level. If anything is there, definitely we will inform to the investors and the exchange.
No, anything at the policy level. The current assessments are obviously.
Policy level, not yet. As an industry, as an association, I am also part of it. We are continuously representing it, and they also want to make a policy, but they are still working on it. There are many reports which suggest that it should be treated as agriculture income internally. We are waiting for the policy. We are trying for it.
Okay.
I am not sure when we will get, but we are continuously trying for that.
Okay. Sir, we also have crop nutrients as a part of our sales. What percentage of that would be, I mean, sales breakup you have given, but this crop nutrient segment?
Sorry?
We also have crop nutrients segment, right? Or everything is seed only.
Yes. No, that all comes in the subsidiaries, but that is a very small part of the business.
Okay. It would be less than.
The crop nutrients is only INR 45 crore-INR 50 crore business as of now.
Okay.
But even going forward in the next three to five years, even that will also contribute, meaningful contribute to the top line. We were working on the products earlier. Maybe in a year or two, most of the products and the network will be across India. We see good activity in those segments. The other part, what we have done in this year, in the last one, two years, even in subsidiaries, we were only doing cotton earlier.
Okay.
But we have many products in R&D, because we have expanded our subsidiary network to other states where we are giving other products which are not there in Kaveri. For example, if we have two or three hybrids in Kaveri, one of the hybrids are given to the subsidiary so that we can market all the hybrids. Because in a company, we can't market all the hybrids at a go. So we are already expanding those networks. So even in subsidiaries, we'll also do very good business going forward, both in cotton and non-cotton segment. Earlier in the last 10 years, it was only pure cotton.
Okay.
Very negligible cotton segment business.
Okay. Sir, when I look at other peer segment results, peer companies which are listed. So they've also done significantly well, like Rallis, if I take more than 35% growth. So this time, is it across industry? Would you want to say that Kaveri has also done in line with industry or slightly.
That we need to see, because this time the industry was tough. Except for maize, in some crops, most of the crops, they were not able to do. For example, cotton, no. But whereas Rallis, their hybrid has done well in Northern India. Cotton.
Okay.
But as the industry, because every company has their own policies initially, because some do that in first quarter, some do in second quarter. As a policy, as a company, we take only the liquidated stock as we sell, and provide everything as returns. Whereas other companies take the policy of 110%, 15% or so. Usually, this time, what we see in the industry is our returns are more than the usual terms. So we need to check for the second quarter results, and we can only say what they have done well.
Okay.
Because we don't have exact idea about the liquidation amount. Once we see the second quarter, we can compare first half to first half, and then we can draw a conclusion.
Okay. Thank you. I'll reach out to you separately on the driving standalone consolidated. Thank you so much.
Sorry?
I said thank you so much, but for the standalone consolidated clarification, I will reach out to you separately.
Yeah. I will definitely try to work on it. I will just try to understand it correctly.
Sure sir.
Thank you so much.
Bye.
Thank you. The next question comes from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Hello, sir. Congratulations on the good numbers.
Thank you.
Sir, just wanted to understand, what is the R&D as a percent of sales for the quarter?
Last year, the entire revenue expenditure of R&D was close to INR 60 odd crores.
Yeah.
This quarter it should be in the same line, INR 15 cores-INR 17 crores, and CapEx, capital expenditure, extra over and above that, because we have constructed almost like it is already done. Again, invested INR 45 crore-INR 50 crore in new R&D plant. Today it was the opening of that R&D center.
You have seen around INR 14 crore of depreciation in the first quarter.
Sorry?
You have seen around INR 14 crore of depreciation in the first quarter. Sir, should we assume this run rate as well going ahead, or will depreciation increase more?
Yes. Maybe for a year or so, this run rate for next 12- 18 months, this should go on because we have set up a new office. That also was capitalized in the last quarter. If you see last quarter, the depreciation was INR 14 crores. This quarter it is INR 12 crores. It will continue for next five, six quarters, then it should be done.
You do not expect your depreciation to increase from these levels in the next few quarters?
Because the R&D plant has come into. We will be starting this R&D plant here. The depreciation, both last year and this year, the depreciation altogether should be like INR 14 odd crores per quarter. INR 12 crores- INR 15 crores should be there per quarter. It should not go up more than this.
Understood. Thanks.
Right. Mithun sir, what is the visibility you have on the export business on the Bangladesh sales? Do you expect?
Compared to last year, we see a lot of positivity in Bangladesh. Not only in Bangladesh, in other countries like Tanzania, Vietnam, Philippines, we have already exported to some extent. Compared to the previous year, the exports will definitely have a 30%- 40%. Last year the base was very small again. Whatever we are growing this year, that will be the base. Year on year, we see a good growth in exports also because most of the products are accepted in new countries also, which we are testing for the last three to five years. Some quantity we have already exported this year and in this quarter also, the running quarter also, we have done some sales.
Right.
Sir, I had a question on cotton, sir. You have seen the new products perform well in the market, and you have scaled up to almost INR 10 lakh packets of new products. Going ahead in FY 2027, FY 2028, how do you see the mix changing of cotton? Should we assume that new products in cotton would be most of the sales going ahead? Are you confident of that?
If you are talking about FY 2028, 80%-90% of the products will be something new.
Okay.
80%-90% of the revenue for me will be new products.
Sure. All right, sir. I will come back to you. Thank you.
Yeah.
Thank you. The next question comes from the line of Krushi Parekh from BugleRock PMS. Please go ahead.
Yeah. Hi. Sorry, first of all, for the background noise. But we had this substantial jump in the inventory, about 40% has come previously in the March quarter. I mean, the sales revenue jumped only about 70 odd percentage. Is it largely because of this quarter or?
Sorry, in between I was missing you. What is your question?
Sorry. One minute. Yeah, my question is that we saw a jump in the inventory during the March quarter.
The revenue for this quarter jumped by about 70 odd percentage. Is the mismatch because of cotton seeds only or because of some other seeds as well?
We have produced all seeds. If you recollect, last year call also, con call, when we had a batch for the result, we said that we have intentionally increased the inventory. One is we are anticipating good season, and second thing is we want to maintain some buffer stock because this time we faced inventory crunch and we lost some sales. That is last year. So we have produced more and strategically and we are keeping some as buffer stock. Yes, cotton, as per our anticipation, we thought of doing better, but we have not done well. The cotton inventory is slightly higher than compared to our anticipation. But if you see the overall level, if you see cotton as a percentage is only 20% of our revenue.
Right.
That will be in line with our inventories.
Okay. Typically, who would be producing these illegal cotton seeds? How can?
There are many. There are tons of companies who do it. Usually not the big companies who do. The smaller companies.
Okay. Considering where we are today in terms of our inventory levels, how will our procurement be in the next season?
Cotton, we have already given it. We are trying to reduce the inventory because we have not done well to what extent we will be successful in that. Any of the water inventory we are given is a new hybrid, so we don't have any worry about that. But whereas in other crops, we are yet to give the production because that all happens in the second half. By seeing the inventory levels, by seeing which variety we need to give, based on that we will give. We don't see any threat in those non-cotton inventories.
Okay. Thank you.
Even in cotton, it's a new hybrid, so even we don't see any issue in that.
Okay. Thank you.
Thank you. The next question comes from the line of Anurag Jain, an Individual Investor. Please go ahead.
Good evening, sir. Just to continue on the point of consolidated sales and standalone sales. Last year, the consolidated sales were around 8% higher than standalone sales. So for the full year, would you expect the same trend to continue, that consolidated sales would be like 8% higher than, say, standalone sales?
Majority of the quarter is first quarter, but that is what I said that just need to find out the accounting policy of standalone and consolidated. But if you see the subsidiary business when compared to last year, that will definitely better than the next second half. Last year second half to this year second half, or last year three quarters to this year three quarters, it will be much better than the last year. Because as I said that earlier we were only concentrating on cotton crops. Now we are done to the non-cotton segment. Non-cotton segment usually comes in the second half. So that will be much better than last year.
The reason I am asking this question is because if we look at consolidated sales, the growth is only 7%, which is good.
Yes.
But standalone sales growth is 17%, which is excellent.
Yes.
For the full year, what kind of trend would you look at? Like a 7% growth or a 17% growth, which is a more meaningful number?
Consolidated, I will just come back with the accounting policy, how they do that. But if you take the standalone process, it will be much better than the 17% growth.
Okay. Okay, sir.
The next three quarters will be much better than the first. For example, if we have done 17% growth when compared to quarter to quarter one. If you compare next three quarters to these coming consequent three quarters, the 17% growth will be much higher than the 17% growth.
Okay. And this-
Overall, what we think is that right now the 17% growth, which is looking for quarter-on-quarter, but year-end it should be close to 20% growth overall.
Okay, sir. The same trend should be reflected in the consolidated sales too.
Yes.
Because the consolidated should be higher than the standalone
Yes.
For the full year.
That's what I was saying. I'll just come back on how the accounting of the consolidated number, but definitely the sale will be, in terms of absolute figure, the sales will be higher both in terms of the consolidated and in terms of the standalone.
Okay. Sir, there's a follow-up. One of the previous participants had asked that, where are the illegal seeds coming from? You said that it's coming from the smaller companies. But the smaller companies in India, or is it coming from overseas?
No, it's all India. Most of the cotton companies are Indian companies. I mentioned that this way. No reputed company done this. It's only smaller companies, they are very small pockets. They produce and they cater to their own segments.
Okay, sir. Sir, just to understand the growth in rice volumes, growth in rice seed volumes, the sowing area has increased by around 17% across different states, as per the commentary in the presentation. But for selection rice, the volumes are up by 1.3%, and hybrid rice volumes are up by 6.5%. Our volumes have grown lesser than what is the increase in the sowing area. What would be the reason for this lower volume growth versus the growth in the sowing area for rice?
I have already commented on this, but again, I will clarify on it. Regarding rice, hybrid rice remains same, but we have grown at 6% in terms of the volumes in hybrid rice. Whereas in other areas, the rice acreage has gone up, but it all moved to the varieties, not to the hybrids. That is the reason we are seeing a decline. We have remained same.
Okay, sir. So basically we have maintained our share.
Yes. In fact, we have increased our share in hybrid rice.
Okay. All right, sir. And sir, when the company says new products, for like cotton, we are saying that new products have gone up from 12%- 34%. What is the definition of new products? These new products are like the products which are launched in last one year or last two years? What is the definition of
Last two years.
Last two years. Okay.
In fact, three years you can say. Three years.
Okay. Last three years.
Yeah.
All right, sir. Thank you.
Thank you. The next question comes from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Sir, what is your outlook on the cost of productions going ahead? You had a tough season there. Do you believe you have seen the peak in terms of cost increases, or are you seeing further increases in terms of next season?
I don't think so, because last year, the competition was pretty high among all the companies, because most of the companies were down with the inventories and everyone was very aggressive in producing it, and the cost of production has gone up. This time, the inventories are there. Everyone is showing down on the level of inventories. So I don't see any further rise, some sort of inflation here and there, but not a significant rise like what we have witnessed this year, that we may not witness in the coming next two to three years.
It's safe to assume that your margins can expand from here going ahead, given the mix has changed to more cotton.
Yes.
Yeah.
Even I said in the earlier thing that going forward, the margin should improve.
All right, sir. Okay. Thank you, sir. I get done with it.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, and over to you, sir.
Thank you. For any further queries, you can call our investor desk and anything, I'll come back with the consolidated one again. Thank you.
Thank you for joining the call. For any other information, please be in touch with Rama Naidu from Intellect PR. On behalf of Kaveri Seed Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Thank you.