Ladies and gentlemen, good day, and welcome to Kaveri Seed Company's Q4 and FY 2025 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 at the end of today's presentation. Please note that this conference call will be recorded. Joining us today on this call is Mr. Mithun Chand, Executive Director. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such consideration, please refer to the earnings presentation. I would now like to hand the call over to Mr. Mithun Chand. Over to you, sir.
Thank you. Good evening, and welcome everyone to our quarter four financial year 2025 earnings conference call. We hope you had a chance to review the presentation of our results, which is also available on our website. I would touch upon the operational and financial performance of the company, and then open the floor for the question and answer session. Financial year 2024 financial highlights. Revenue from operations was at INR 76.95 crores as compared to INR 80.54 crores in quarter four 2024. EBITDA was at INR -15.31 crores as compared to INR 10.72 crores. Net profit was at INR -30 crores as compared to INR 2.79 crores in quarter four financial year 2024. Revenue from operations was at INR 1,121.57 crores as compared to INR 1,062.43 crores in financial year 2024, grown by 5.57%.
EBITDA was at INR 274.29 crores as compared to INR 270.43 crores in financial year 2024, grown by 1.43%.
Net profit was at INR 265.21 crores as compared to INR 293 crores in financial year 2024. Cash on books stands at INR 556 crores in financial year 2025 as against INR 443 crores in financial year 2024. Major highlights. Witnessed good growth rates across all our non-cotton segments like hybrid rice, selection rice, maize, and vegetables. Volume growth across segments like bajra, hybrid rice, selection rice, maize, and vegetables has resulted in proportionate higher realizations, which is very encouraging trend. PAT for the current year is down on account of one-time entry of interest of INR 8.85 crores on the loan given by the company to the Employees Trust and increasing employees cost of INR 4.95 crores on account of increase in valuations of ESOPs given for employees and increase in depreciation of INR 5.68 crores due to recent addition of a new office.
Revenue during quarter four financial year 2025 was slightly down because of no one-time exports to government of Tanzania, but INR 24 crores in financial year 2024. Acquiring remaining 30% stake in distribution company, Aditya Agritech Private Limited, for INR 23.60 crores to increase company stake to 100%. Some of the operational highlights. The contribution of new products to volumes of bajra was up from 64% to 74%. Hybrid rice volumes increased by 13%, and revenues increased by 26%. Selection rice volumes increased by 22%, and revenues increased by 39%. Maize volumes increased by 7%, and revenues increased by 22%. Vegetable seed volumes increased by 3%, whereas revenues increased by 8%. Export sales stands at INR 22 crores in financial year 2025 as compared to INR 66 crores in financial year 2024.
This decline is due to political unrest in Bangladesh, and there was no one-time order from government of Tanzania. Volumes of non-cotton hybrids increased by 24%, and revenues by 22%. Volumes of cotton hybrids decreased by 35%, and revenues decreased by 27%. I would now open the floor for question and answer session. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Agastya Dave from CAO Capital. Please go ahead.
Thank you very much for the opportunity. Am I clearly audible?
Yeah.
Yes.
Sir, congratulations. Sir, how are you seeing the upcoming season? The buildup on the balance sheet indicates that you guys are preparing for a fairly robust season, but I would like to understand your point of view. What are you seeing in the market? And how do you see the season panning out?
The season looks good for the coming year. Even the prediction for the monsoon is good. We might get monsoon on time, so the acreages at the present looks more or less stable. There is a little pressure on cotton acreages, but we see a very encouraging trend for maize coming up. And rice segments, it is slightly sideways, but it should be stable. In terms of our plans, we have built up inventory for a couple of reasons. One, we anticipate a good season. Second thing, as we were almost empty with the entire inventory, and it was really tough in terms to produce more in these tough times. So where the strategy wanted to maintain a buffer inventory, that is one of the reason why we built up the inventory.
Understood, sir. Sir, thank you very much. All the best, sir.
Thank you.
Thank you. The next question is from the line of Saania Jain from Care PMS. Please go ahead. Hi, Saania. You are unmuted. Can you speak?
Yeah. Thank you, sir, for the opportunity. Actually, just two questions. What is the expectations of our cotton portfolio in Q1? Since our non-cotton portfolio has done very well in FY 2025, what do we expect in FY 2026 considering the high base?
Regarding cotton, last year we were down by close to 30% in terms of the volumes. With the low base, we are pretty confident that we will grow in cotton this year, even though the acreages may not grow, but as a company, as a level, we will grow with this base. We are launching a couple of new hybrids, which we have tested last time. Those hybrids are also doing well. As a cotton, as a portfolio going forward, looks very encouraging. On the other hand, non-cotton segment, we have already witnessed a good growth this year. Going forward, even with this high base, we can easily improve with the 12%-15% growth in this non-cotton segment also.
Okay, got it. What is the plan for the cash generated from operations?
As of now, we don't have much plans. We need to discuss and then come back once we have a concrete plan. As of now, we will keep cash with us. This time we have seen because we have built up the inventory, most of the cash is getting deployed there. Once we have the real cash, then we will have a strategy and we will let you know.
Okay, that's it from my side. Thank you.
Thank you. We'll take our next question from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Yeah. Hi, Mithun sir.
Hi.
About the cotton price hike that the government has announced of 4% price hike this year. Is that commensurate with the cost increases that you're seeing in the production of cotton, or how do you see this equation?
Yes. This time we have seen a huge increase in the cost of production. The government has increased only by 4%, but there is a lot of pressure in terms of the cost of production, not only in cotton, but all other crops, we have seen a sharp rise in the production cost. Whereas in the other crops, we might be able to pass it on to the farmer, but in cotton, even though the prices they have increased by 4%, it will be really difficult for us to pass it on because there is a lot of inventory in the system. We might be able to realize a good figure in terms of the new hybrids, but whereas in the old hybrids it may be a little bit difficult.
We are trying to push the realizations or try to pass it on at least some cost to the farmer, but only in the season we get to know.
Sir, one more follow-up question, if you may allow. What was your R&D spend as a percentage of sales this year, and how is it likely to be in 2026? Second—
Overall growth. Yeah. Sorry. Go ahead. Sorry.
And sir, second question was that you mentioned that inventory has gone up because you are keeping some buffer. I could not really exactly hear why this buffer, and is this structural, like you would want to keep going forward higher inventory as a buffer because you had the experience last year of non-availability of seeds during 2020. Is that one should assume that inventory now, generally speaking, will be higher for what it used to be in the past as a percentage of revenues? Thank you.
Sorry, what was the last one?
Sir, do we expect that inventory going forward, like this year, should on a structural basis, not like one-off basis, should be higher, as compared to it used to be in the past as a percentage of sales, as a percentage of cost of production because you want to keep some buffer.
In terms of the R&D cost, the revenue, I mean to say the recurring expenditure was close to 6.5%. If you add the fixed expenses altogether, it was in between 8%-9% of our total sales. In terms of the inventory, intentionally, strategically, we have built up the inventory. We will have some sort of a buffer stock as in some markets, as the production come arise very late in the first quarter or the last half of the last quarter of the financial year or in the first quarter of the financial year. We are missing some markets. We want to build up those inventory levels. Going forward, the sudden increase, what we are seeing this year may not be there going forward, but the inventory levels will be slightly usually higher than the previous years.
Thank you so much, sir.
Thank you. The next question is from the line of Aabhas Verma from East Green Advisors. Please go ahead.
Yes, sir. Am I audible?
Yeah.
Yes. Sir, I had a question regarding your revenue growth guidance of 10%-12% for the next two years that you had given earlier. In one of your earlier conference calls, you had mentioned that the cotton portfolio is expected to grow at around 15%-20%, and the non-cotton portfolio at around 15% ± 2%.
Yes.
Given that, could you please help me reconcile how this translates into a lower consolidated growth guidance of 10%-12%? Am I missing something here or—
No.
If you can—
Not exactly. We were a bit conservative in giving the guidance. By seeing the portfolio, it should be +15%. Non-cotton segment with a big base, 15% ± 2%, that will continue. Cotton with the small base will grow this year. When I gave a guidance of 10%-12%, it is for next three to five years, not for the existing year.
Do you still maintain that 10%-12%, or we can expect something higher than that also? Is it conservative?
That's the minimum what we see. It should be better than that.
Okay. Just one more question. When you are giving this 10%-12%, does it include the export guidance of INR 150 crore as well? Or have you factored that as well?
Export guidance of?
I mean, exports guidance. In your earlier conference calls, you had given around one—
No.
—INR 50 crores, something.
No, what I meant is that in the earlier call, I gave a guidance in the next five years. In the next five years,—
Yeah.
—the export market can be INR 150 crores. Even in the same time, I have given the guidance of vegetables also close to INR 150 crores.
All right. So 10%-12% is including everything. You have factored in everything into that, right?
Yes.
Okay. Thank you. That's it from my side, and all the best, sir.
Thank you. Participants, in order to ask a question, please press star one now. The next question is from the line of Krushi Parekh from Bugle Rock PMS. Please go ahead.
Yeah. Hi, Krushi Parekh here from Bugle Rock PMS .
Hi.
I just want to understand. We have this 40% jump in the inventory, and I understand there is buffer also. One thing is that, what proportion of this can be construed as buffer, and what is something that we would expect to be sold in this financial year itself? Also, can you give us some understanding on the mix, in terms of cotton, non-cotton, and in the overall inventory, new products, old products, something like that.
We have increased the inventory across all crops. It is not specific to one crop. We have increased the inventory in cotton and non-cotton segments also. There will be close to 20% - 25% of the inventory as buffer stock across all crops, leaving some varieties. We have produced some varieties, the most moving hybrids, which are in large segments. We have produced more because we can always use it for the next year, wherein the discard will be very low. In those crops, we have increased our inventories significantly high. In terms of the cotton also, the inventory is like last year, it was very minimal. Now this time it will be close to 6 million- 7 million packets.
Okay. Mithun sir, if you can just give some understanding on what is the proportion of the new products that we have in the market now, and how are we approaching it against the competition. Because I believe last quarter you had mentioned that we do not have products in terms of the yields and everything are pretty much similar to the competition also. How are we approaching to grow our products versus that of competition, and how are we looking to take on the competition this year?
It will be a bit difficult to explain about each market and each product suite we are doing. But I can give you the guidance, like in the next three to five years, more than 50% of the revenue will be contributed by the new products. New products in the sense which are already placed in the market, which are already launched in the market for the last one or two years, and to-be-launched products. These will contribute to more than 50% of our revenue.
Okay. But any sense in terms of how are our products differentiated versus that of competition that we will be expecting to pick up in the markets and grab some market share?
Sir, so many variants to do that. Basically, end of the day, it all boils down to yield. But how you arrive to yield is a different way. One is by stress condition the hybrid need to perform. One like low pests, low diseases. So a different crop maturity date. So a different crop has got a different parameters to look on. So when we see a competitor's hybrid or when we want to increase the market share, we see that in that given particular condition, our hybrid need to give better yield than the existing one, and the maintenance should be low. These are the two factors what we see.
Okay. Then we go on to educating the farmers about our differentiation.
Yeah, definitely. See, when we launch a hybrid, it should be tested in the farmer's field only. That's how we also create awareness program among farmers and show the difference between our hybrid and the competitor hybrid. That's how we increase the awareness and we create demand for that.
Okay. So typically, this would be one to two year cycle, and then a third year—
Yeah. Initially, once you launch the hybrid, based on the base, it will take one to three years. We need to tap market in different areas. So two to three years is the right time where you get the good visibility. First year will be very small.
Okay. And sorry if I may just continue on this question.
Yeah.
What proportion of our current products is something that is field-tested and new in the given year?
Sorry, what is field?
What proportion of our inventory currently is new and is already tested over the last one to two years across geographies?
More than 95% of the inventory. Close to now, more than 95% of the inventory is the products which are moving hybrids. Because when we launch a hybrid, it will be very low. The quantity will be very minimum. Once we see the performance, then only we will increase the inventory. That is what I said in the earlier call. The inventory what we have now, majority of the inventory is from the moving hybrids, which are already approved in the market.
Okay, great.
Good to hear.
Thank you so much.
Thank you. The next question is from the line of Yashovardhan from Tiger Assets. Please go ahead.
Hello, sir. Thank you for the opportunity. Do you understand whether gross margin sustainability going next?
The margins should sustain. The margin this year were like gross margins this year was close to 46%-47%. That should remain same in 1%-2% ± because this year we have high inventory costs and in cotton we may not pass on. This year might be slightly stressed, but going forward, there are pretty huge chances, high chances that the gross margin should further go up as we will be increasing in vegetables and other crops, bajra, which have high gross margins. Again, it should go up. This year, slightly we need to check, only because of cotton.
Understood, sir. And sir, on the inventory front, how much are we expecting to be utilized in Q1?
Basically, if you see the trend, 70% of our revenue comes in the first quarter. It is easy to take first half and second half because there might be some spillover sales based on the monsoon or arrival of the monsoon. So first half contributes 70%-80% of our revenue. That will continue going forward.
So first half as in H1, right?
Yes, H1.
Okay.
And even in H1, the Q1 contributes a lot, but as I said that there might be some spillover sales, which we place in the market in the first quarter itself, but sometimes we recognize the sale in the second Q2. Because if it is not liquidated, we don't recognize it as sale.
Understood, sir. Sir, lastly, you've already spoken about the monsoon. We just wanted to understand if you can elaborate a bit on how the good monsoon will benefit us.
Good monsoon in the sense that if you get a rainfall in time and it's a widespread rain across country, then the season will be as anticipated. Otherwise, there might be a chance in the crop shifting.
Okay.
That might impact sales to some extent, but as a company, we are there in most of the crops. When compared to other companies, we have minimal risk in that. The risk is very minimal for us because we are already there in most of the crops.
Understood, sir. Thank you. All the best.
Thank you.
Thank you. Participants who wish to ask questions may press star and one at this time. The next follow-up question is from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Mithun sir, just wanted to understand some color on the Bangladesh business. We have seen a big drop in exports this year. Do you think that business is gone for the next one or two years, or do you see it coming back?
It will come back. This year is a hit what we have taken. That's the reason I said that it's not only Bangladesh which is coming up in the next one to three years. There are many other countries we have arrived upon. Like we are there in Africa and other Southeast Asian countries. With a consolidated rate, we'll grow to INR 150 crores in the next five years, and this year we'll definitely see growth in these segments. Bangladesh will also pick up.
This year itself, we'll see Bangladesh coming back?
Yeah. We can see that Bangladesh. Last time there were a couple of reasons. One was the political issue. Second, there was a lot of inventory in the market last year in Bangladesh markets. Because before that, the season was not that great. Now that most of the inventories are down, the issue is also sorted out, and I think we can get back to those sales what we had done earlier. In fact, we have better plans in Bangladesh going forward.
Thank you, sir.
Thank you.
Thank you. The next question is from the line of Jeet Jhaveri from Moneybee. Please go ahead.
Acreages, y ou mentioned that we expect the cotton acreages to fall this year. Why is that, and why are we focusing on the cotton portfolio going forward in this year at least, if you are saying that the acreages are falling? I just want to get some more color on that.
As a crop, cotton is not that lucrative when compared to other crops like maize. The MSP of maize and the current market rate of maize is also pretty good. People are slightly inclined towards maize this year. As various cotton, this crop shift is very natural in terms of agriculture, wherein some crops will do well and some crops will fall. But cotton as a crop, we cannot neglect it, and going forward, cotton has also very good focus on it. With the small base what we have, decent base what we have right now, we have good scope to increase market share. That is the reason we are focusing on cotton. Going forward, our focus will be on cotton as well.
Okay. That is it from me, sir. Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star one to ask a question. The next question is from the line of Anurag Jain, who is an investor. Please go ahead.
Good afternoon, sir. Am I audible?
Yeah.
Good afternoon, sir. Basically, the Tata Group company Rallis, in its conference call, had mentioned that the entire seed industry is facing distribution challenges related to processing of seeds, packing of seeds, and sending seeds to the market. Is this something that is affecting Kaveri Seed also in the current season?
Not really, because we have most of the facilities are owned by Kaveri itself, and we don't give much on a, what to say that, we don't hire much of facilities from outside. It's all in-built facilities. We have faced this challenge earlier. That's the reason the strategy will move. We have done that. Everything should be in-house, and we are having that in-house processing facility as of now. For us, we don't see much of a challenge. It's not a major challenge for us to address.
Okay, sir. Sir, how is Kaveri placed in terms of capacities for processing seeds and packing seeds for the next two, three years? We already have the capacity to account for the growth for next two, three years, or Kaveri will need to do some CapEx to enhance capacity for processing and packing?
At present, if you see India, we have got one of the largest and highest processing facilities what we have right now. Both in terms of the processing facilities, in terms of the warehouses, in terms of the cold storages. We have one of the highest capacities and processing facilities. As of now for the anticipated growth, we already have plans. Whatever new capacities or new lines, whatever we have built, we have made it compatible to add on. That's a continuous activity to increase the facilities. Going forward, INR 20 crore- INR 30 crore per annum will be the CapEx for maintenance and addition of new plants.
All right, sir. Thank you.
Year- on- year.
Thank you. We will take our next question from the line of Nilesh Doshi from Green Lantern Capital. Please go ahead.
Hi, Mithun. Thanks for taking my question. What was the sale of cotton—
Sorry to interrupt you, sir, but your voice is breaking.
Can you hear me now?
Yeah.
Yeah. What was the cotton seed sale last year, Mithun?
It was around 3.6 million packets.
Mithun, you mentioned in one of the answers that the inventory you have created is 6 million-7 million packets.
Yes.
Is this correct?
Yes.
Second is can you just tell me the inventory of finished goods as of 31st March as a housekeeping?
I don't have the exact figure right now, but whatever is there, apart from the biological assets which is shown in the balance sheet as of now, apart from everything, is stock which is already there in the plants. There are different ways. We make it finished, ready to go to market, only when we try to send it to the market. Otherwise, it is all stored in bulk seed in different levels.
How much would be biological assets as of end of March?
It is like INR 200 crores. Exactly, I do not have the figure right from the presentation, but it is like INR 200 odd crores.
Anyway, I will take it offline.
I will get back to you regarding that one.
Sure. Yeah. Thank you so much.
Thank you.
Thank you. The next follow-up question is from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Mithun, just one clarification on the balance sheet. We see a CWIP of around INR 90 odd crores. This is despite the commissioning—
Sorry?
We see a CWIP of INR 90 crores on March in the balance sheet. This is why—
Sorry, I did not understand you. What you are saying, 90?
I am talking the capital work in progress, sir. That is there on the balance sheet as of March of INR 89 crores. So what does the CWIP pertain to? Because you have already commissioned the biotech center.
One is we have set up new office space now. That is already commissioned. Some part is left out, and some godowns and some R&D centers we are building up. That is in the capital work in progress.
Okay. That is over and above the biotech center you have already commissioned.
No, biotech is also part of it. Biotech we have not commissioned yet. It is in the process.
Okay, sure. Yeah. Thank you.
Thank you. Thank you, ladies and gentlemen. This was our last question. Thank you for joining the call. For any other information, please be in touch with Mr. Rama Naidu from Intellect PR on 9920209623. On behalf of Kaveri Seed Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.