Ladies and gentlemen, good day and welcome to Kaveri Seed Company's Q1 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 after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. 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 considerations, please refer to the earnings presentation. I now hand the conference over to Mr. Mithun Chand, Executive Director. Thank you, and over to you, sir.
Thank you. Good afternoon, and welcome. Good afternoon, and welcome everyone to our quarter one financial year 2025 earnings conference call. We hope you have 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 question and answer session. Company is very bullish on both maize and rice, and I expect both volumes and realization to go up in the years to come. Increase in volumes in both maize and rice have resulted in growth, rise in revenues, sowing area in maize and rice is up 3% and 5.2% respectively.
Sorry to interrupt, sir. Your voice is breaking.
Am I clear now?
Yes, you are clear now, sir.
Company is able to successfully pass the cost of cultivation and input—
Sir, your voice is breaking in between, sir.
Oh, sorry. Exports during this quarter have been very encouraging and would continue to do well in the coming years to come. Contribution of new products have substantially increased in both maize and bajra. Cotton volumes and revenues were down by 35% and 27% respectively. Standalone financial highlights. Revenue from operations was at INR 808.08 crore as compared to INR 767.37 crore in Q1 FY 24, registered a growth of 5.32%. EBITDA was INR 92.29 crore as opposed to INR 29.09 crore in Q1 FY 24, increased by 4.91%. Net profit was up. Was at INR 282.91 crore as compared to INR 267.84 crore, registered a growth of 5.63%. The cash on book stands at INR 605 crore. Hybrid rice volumes increased by 10%, and revenues increased by 17%. Selection rice volumes increased by 15%, and revenues increased by 27%. Maize volumes increased by 97%, and revenues increased by 80%.
The contribution of new products was up from 67.67% to 75.79% of volumes in bajra. The contribution of new products was up from 40% to 52% of volume in maize crop. Cotton volume as well as revenue decreased by 35% and 27% respectively. Vegetable crops like beetroot, tomato, red gourd, bottle gourd and marigold have been performed well. Export business sales increased by 451.73% compared to last year, quarter one. I would now open the floor for question and answer session.
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 touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Siddhant from Goodwill. Please go ahead.
Yeah. Hi. In the last quarter, you had guided for a 4%-5% volume fall in cotton, if I am not wrong, and volumes have fallen dramatically by 35%. What would your guidance be for the year or an approximate one, and what has caused this huge 35% fall?
Yeah. When we started the last year, we thought that the cotton acreage will go up this year, and we thought that the supply will be lower this year. But when we see this year, the acreages were down by 10% across the country and there was more steep fall in the states of Northern India, where we were very strong. There was some issue with the production also where the hybrids which were in demand was in shortage for us and there was huge supply in the market. As we want to retain our volumes, I mean, as we want to retain our realization, we are compromising volumes as well. So that's the major impact which we are seeing this year.
Will we be able to catch up some of our cotton sales in the upcoming quarters or is it—
Majority of the sale is already done for this year. I don't think the cotton acreages, cotton sales will happen in the next coming quarters. But this is the sale what we anticipate, and this will remain as it is.
Okay. That's perfect. Thank you.
Thank you. Next question is from the line of Rishi Kothari from Pi Square Investments. Please go ahead.
Hi, sir. Thank you so much for the opportunity and congratulations on good set of numbers. Sir, this is the first time I am attending the Kaveri Seed's conference call.
Sorry, I cannot hear you. Your voice is breaking.
Am I audible now properly?
Yes, please proceed.
Yeah. What I was saying is, this is the first time I am attending a company's conference. While going through the financials, what I saw is that on a quarterly basis, the June quarter is one of the quarters that posts the highest sales among all other quarters. What exactly is it? Is it because of the crop that we deal in, or if at all that is the reason? Is there any other possibility of changing the dynamics from a full year rather than a seasonal revenue posting for us?
We are in a business where it is very much seasonal because we get monsoon in the month of June, July, and majority of the crop comes after the monsoon. Especially, for example, if you take cotton only comes in the month of May, June, and July. We will be in line with the season, but if you see our portfolio, we have one of the largest portfolios with a good mix of crops. Going forward, I think this will remain as same, but the percentage will slightly change going forward. Definitely, first quarter will be the major quarter for us.
Eventually, let us say two, three years down the line, what are the revenue targets do we have in terms of the growth targets? Do we have anything on our mind or internally that we have decided?
We anticipated a growth of 10% in terms of the top line and 15%-20% in the bottom line. We gave that guidance. This year, unfortunately, we couldn't do well in the cotton crop because as the crop has come down and for various reasons, it might be because of the pest attack or otherwise, the returns on the crops are lower this year. Otherwise, if you see the other way, we have managed, in spite cotton being more than 35% of our portfolio, where we have lost 25% of the revenue. In spite of that downfall in the revenues, we were able to manage by growing in other segments, especially like maize and rice, wherein maize has grown by more than 75% and rice has grown by more than 25%.
That gives us a better edge than other companies where we have a good mix and we can compensate revenue loss in other crops. Going forward, even we are bullish on cotton, as I said that sometimes based on the seasonality and the price of the commodity, it varies. But I do not see a threat on a long-term business, as there will be a year or two where we see these type of unexpected things. But if it stays compounded way, 10%-12% revenue growth and 15%-20% of the bottom line is quite possible.
For how many years are we expecting, for two, three years or any—
No, going forward, I am talking about 5- 10 years view.
Okay, 5 - 10 years view. And in terms of the cotton prices that you said, right now I read the report that cotton prices recently has increased like on an average of 4%-5%. Is that beneficial to us or is it a harmful thing for us as a company?
It's a beneficial thing for us. If the prices go up, that gives more revenue for the farmer. But the other way is that even our production cost has gone up and we were not able to reduce the cost of production. We were not able to reduce the cost of production, and we were not able to pass it on to the farmer because it's controlled by government, and that is one of the reason where we have lost the sales.
We have, in a way, absorbed the cost of production that has increased for us and not passed on to the farmers. So that has, in a way, capped our margins in a way.
Yeah, exactly.
Okay. In terms of the CapEx, what are we targeting for next year in the FY 2025?
Our CapEx is a continuous thing. As we are increasing volumes in other crops, we require new plants and facilities to process the seed. Other thing is that we are spending a lot in R&D. As we have said earlier also, INR 40 crores -INR 50 crores is what we spend on a year-on-year basis for the CapEx. That should be more than sufficient for us.
Okay, sir. Thank you so much for the information. I will join back with you.
Thank you. Next question is from the line of Jahnavi from Aequitas Investments. Please go ahead.
Hi, sir. My question is on the lines of the announcement on 109 seed varieties during elections by PM Modi. In a few articles, I read that these seeds also include a few of rice and cotton seeds. Could you help with out of 109 seed varieties, how many seeds can we end up benefiting from? What sort of size of opportunity are we looking at in case of approvals?
Basically, those seeds are released by the government. We need to see the performance of those seeds. But anyhow, we are not accessing those seeds. We have our own in-house R&D where we breed for it, and we sell in the market. We don't use those seeds.
Okay.
But the other way, we have ties to the universities where we store the main. We have access to their germplasm, and we have ties to all the government bodies and the international institutes where we take the access to the germplasm in using or in developing hybrid seeds for us.
Okay. However, even if the performance of these seeds, for some of these seeds comes out really well, we would not end up using these seeds or not end up benefiting from this at all?
No, as of now, no, because we have our own research, and we need to see that, but we have many hybrids. We need to see the performance of that. This is the first year where we are launching it. We can only comment after seeing the results of that.
Okay. All right, sir. Thank you.
Thank you.
Thank you. Next question is from the line of Sanjeev Zarbade from DreamLadder Advisors. Please go ahead. Mr. Sanjeev, your line is unmuted. Please proceed.
Can you give me a—
Your voice is very low, sir.
Is it audible now?
Slightly better, sir.
Okay. Can you give me a sense of the demand outlook for the future, over the medium term?
If you see the crops where we are dealing with, we are mainly with rice, cotton and maize. These are the three big crops. Apart from these, we are into vegetables, but we are also doing all other crops. But specifically top food crops like maize, rice, vegetables and cotton. We see a growth in most of the crops because maize area is increasing year on year as the government has initiated for the ethanol projects. That will be a good way for maize. In rice, the hybridization percentage is going up. That's a good sign for us to increase the market shares of hybrid rice, and we are a part of it. Apart from that, cotton, if you see year on year is coming down, but definitely cotton as a crop in the medium term, three to five year view, definitely that should go up.
Vegetables as a segment is increasing at more than 15% year on year. So we are there in most of the segments. Apart from that, we are there in niche markets like mustard, bajra. So these are also doing well, including sunflower. So we see a good growth in most of the crops, and we are not worried about the cropping pattern as such, as we have a well-diversified portfolio. In most of the crops, we are in the top three, so we'll definitely get advantage of that, which will boost in the coming years.
Yeah. Thanks for the detailed answer. What would be the size of the exports over the next few years then, sir?
If you see exports, last three, four years, we have gained some traction in exports, especially in crops like sunflower, rice and maize. These are three big crops where we are exporting, including vegetables is also there, where we are doing in a very small way. But as you are aware that it takes a longer time for us to establish in different countries, because the farmer only believes in seeing. It takes some time, but it is very fortunate that the samples or the experiments or what we have done in the last year, that's given a very good result. Going forward, we are targeting many countries, especially the African countries and Southeast Asian countries. These are the two where we are concentrating on, and we are getting from that.
If you see in the down line three to five, we are very bullish on exports, and exports will definitely grow faster than our domestic growth.
Okay. Great. Thanks a lot, sir, from my side.
Thank you. Next question is from the line of Mohammed Patel from Care Portfolio Managers Pvt. Ltd.. Please go ahead.
Hi. The textile minister mentioned that we can expect approval of new BT cotton variety. So where are we—
Sorry, can you be a bit louder, please?
Textile minister mentioned that we can expect approval of the new BT cotton variety. So where are we on that?
We are one of the largest player in BT cotton segment, hybrid BT cotton segment, and we are already a part of the entire program. Whenever they give the licenses, we will be one of the topmost to get benefited from that. We are very optimistic that most of the approvals will be approved now, and we already are in tie with the service provider, so it should not be a problem for us. And it is a very good sign for the industry as well, because once the idea of genetically modified crops are cleared, it is not only cotton, there are many other crops to come in. So that is a very good sign for the industry, and we are very bullish and optimistic about that.
Can we expect this to be a part of our sales next year?
I cannot time. We cannot time exactly because it depends on the government approval. But by seeing the pace and by seeing the approach of the service provider and the government's approach towards approving the genetically modified crops, it looks that it will be released as early as possible.
Whenever this happens, what kind of opportunity this can bring for Kaveri?
Basically the entire cropping pattern will move to the new technology. As we are already there in that business and we are in line, we are in tie with the service provider, we will definitely be a part of it. Again, based on our hybrid performance, we definitely have an opportunity to increase our market shares. That is why we are very well placed for the new technology.
Whenever this happens, we can expect to grow 20%, 30% much higher than what we would have grown with the older technology.
See, that all depends. It is not about technology. Definitely, technology will definitely make improvement in the yields for the farmer. But again, it depends on the hybrid. The compatibility with the technology with the hybrid, that matters. But the pipeline hybrids, what we have, it might be too early, but the experience what we can say is that the hybrids what we have in the pipeline will definitely help us to increase the market share.
You are saying after the approval, we can see higher growth in the cotton segment for two years.
Definitely. If not even, I will say, even if the technology is not approved, but the pipeline hybrids what we have are giving better yields. Down the line, we see that even if the technology is approved or not approved, we will definitely increase our market share in the coming years.
What will be the pricing for this new technology based on the government resolution?
That need to be decided and discussed, both the technology provider and the government. We are too early on that, but definitely they are working on that, on the technology. They will work on that once the technology is approved.
Okay, sir. My next question is, any update on the contingent liability and the tax matters?
As of now, nothing. What we have disclosed is what we have, and something definitely we will disclose it to you coming years. Yes.
What is the exports number for Q1?
Actually, Q1 is a very lean quarter. Exports I will just check it when we will be to the end of the call, and I will just check it out.
It is okay. My next question is, maize grew 80%. Have we gained market share as compared to last year that is resulting into hybrids?
Sorry?
Maize has grown 80%, so I was just trying to understand, have we gained market share as compared to last year?
Definitely. The maize acreages are up by 10% and in terms of the volumes, we are up by 50%. Definitely, we have gained market share in that.
Can you share the number, market share?
Sorry?
Can you share the market share number?
We'll be around 10%-11% of the market share now.
What was this number last year?
It will be, I'm just signaling out the first quarter, but we need to see market share at the end of the year. It's too early to declare about the market shares.
What are the R&D spends expected for FY 2025?
It will be 15% higher than last year. Last year was around INR 55, and the CapEx was around INR 15 crores. INR 7 crores-INR 8 crores will be totally finished around R&D. That will go up by [audio distortion]
Okay, sir. Thank you.
Thank you. Next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Hello?
Hello?
Yeah. Go on, please.
Yeah. Some data points I want from your side as for March. As for FY 2024, what would be our cotton field?
Sorry, can you please repeat?
As of March 2024, for FY 2024, what would be our cotton sales in volume as well as the value?
I am not able to hear you properly. Sorry.
Yeah. Give me a second. For FY 2024, what would be the cotton sales for the year in value and volume terms?
Our cotton sales usually, majority of the sale happens in the first quarter. The numbers which are there for the first quarter is more or less like for the year. Last year, we have sold around 55 lakh packets. This year around 35 lakh- 36 lakh packets.
Okay. I am asking for FY 2024. Is this for FY 2024?
Yeah, more or less like for FY 2024, 55, 56 is our total sale.
Okay. What would be in value terms for FY 2024?
As of now, I do not have the exact number for this entire financial year for cotton crop, but I can tell you the quarter basis because ± 5% is the total sale for the year. For FY 2023-2024, the cotton sale was close to INR 350 crores.
Okay.
This year it is like INR 250 crores for the first quarter. So more or less it should look same for the entire year.
Okay. I see. I just missed your comments on the reason why our cotton sales fell for this Q1 FY 2025. Can you just help me and—
Oh, I explained in the earlier.
Yeah, I missed that part.
But as we had low inventory this year compared to last year. We had a constraint in getting the stock for our million hybrids. That is one thing where we are not the same. The other thing, cotton acreage as a whole in India has decreased by 10%. And in the area where we are strong, especially in northern India, acreage is down by more than 20%. The other thing is in cost of production terms.
Yes.
Sorry to interrupt, sir. Your voice is breaking. Sir, your voice—
Yeah, I could not hear your whole explanation.
Okay. So we—
Sir, it is still breaking. We are not able to hear you properly.
Am I audible now?
Yes, sir. Loud and clear.
Yeah. The other thing is that, as the production cost has gone up, and the selling price got increased by only INR 10. We wanted to realize more. In that way, consciously, we have lost on sale.
Okay.
That's where we lost. There are four or five reasons where the combination of all, where we have lost the market share.
Okay.
Market share and sale.
Okay. The main would be that, one, the acreages are down by 10%. Second, the cost has increased, which you could not be passed on.
Yes, exactly.
Those are two, three main reasons.
The other thing, where we were very strong in Northern India, I mean to say the acreages were down by 20%.
Acreages were down by 20% for cotton.
Where we were strong, especially Northern India.
Okay.
The other reason is that we were not having the hybrids, because there was a production constraint last year because of late season rainfall. We couldn't get the desired quantities of the most popular hybrids. That's one of the reason.
Okay. Thank you. That was from my side.
Thank you. Next question is from the line of Ranjit from IIFL Securities. Please go ahead.
Yeah. Hi, sir. Thanks for this opportunity. First thing on the cotton front, would it be too early to kind of give some comments about the next year's availability? How is the production turning out this year?
It's early, but we will definitely get an indication, because this year we were able to get more production area, and as of now, the crop also looks good because we have good rainfall this year. I do not see any constraint in terms of availability for next year, not only for Kaveri, but for the industry. We do not see any constraint for that. The production will be sufficient for next year.
Right. Would it be fair to assume that you can go back to the 2024 kind of volumes, FY 2024 kind of volumes, back to 5.5?
Definitely we are pretty confident about that. There are a couple of new hybrids which were launched last year, but we couldn't sell in a good quantity this year. Even we are expecting a good production for that hybrid. If that comes in, definitely, we see a good growth in cotton.
Yeah. Thank you. The second question is on the margin front. Despite cotton underperforming significantly, we are still able to protect our margins. What is happening on the non-cotton seeds front? Which are the seeds or the segments that we have seen a bit of an improved profitability this year and how sustainable that would be?
Non-cotton crops, pricing is not controlled by the government, and we can easily pass it on to the farmer. We work on different margins in those crops. Even though if you see the production cost has increased in non-cotton segment as well, but we were able to pass it on to the farmer. That's the reason we were able to maintain our margins.
Okay. Can you give a ballpark number from the margin for the non-cotton seeds?
That will be a bit difficult, but if you see the first quarter figures, the EBITDA margins, I mean to say they're like minus other income, the EBITDA margins were at like 35%.
Right.
This should be something like close to 38%. But when we talk about the margins, we need to see this for the entire year. Being first quarter being the major year, the margins look higher.
Right. So we fix at around 24%-25% and—
Yeah.
Okay. Can you guide us how much has been the quantum of the price increases in the non-cotton side?
If you see, it's like more than in between 10%-15% is the price. But the same we have incurred, I mean to say, even the cost of production has also gone up by more than 10%-15%. We have increased in the same ratio as what the cost of production got increased.
Right. Finally, any thoughts on continuing with the rewarding or the distribution of these profits? You were earlier doing buybacks and dividends.
Again, that's a board call we need to take, but if you see in the recent budget, there was a change in the taxation front.
Right.
That we need to again discuss in the board and then we will take a call on that. But we have not discussed anything about that because we have just completed our buyback last quarter. So we will come up with the decision in the later quarter.
Sure, sir. Thank you.
Thank you.
Thank you. Next question is from the line of Jinesh Shah, who is an individual investor. Please go ahead.
Yeah. Thank you, sir, just for giving an opportunity. Just wanted to get some understanding on the product mix. Basically, I think you have already managed to have almost like 2/3, 1/3 kind of a mix between the cotton and non-cotton in the season, basically the first quarter, which is the most remunerative quarter for the company. Going ahead now, how do we see the seasonality getting evened out or do you think the variations in revenue can be a little bit balanced going ahead, as we go ahead maybe next two, three years, given that we have launched new varieties and we are also trying to diversify the crop patterns. So how do we see that changing? And of course, you have already mentioned the profitability is higher.
Do you think this year, in spite of the sharp decline in the sales of cotton, the profitability which you guided around 15%-20% growth in bottom line could be achieved, or do you think it will get pushed back to the subsequent years? Thank you, sir.
First, coming back to your last part, in terms of the profitability, as first quarter is a major quarter, I don't think we will attain that 15% to 20% margin profitability because we have grown at 5%- 10% in terms of the profitability for this year. I think that should remain same by ± 2% here and there. But when coming back to the seasonality and the business, even I explained in the earlier call, as majority of the Indian agriculture, majority of the acreage comes after the monsoon, which is in the month of May, June, July. So these are the main quarters for us and for India, this will be the main season. So we will be in line with the Indian seasonality.
But yes, going down the line by three, four years, as a percentage of contribution in the first quarter and in the next subsequent three quarters will change. As a percentage, it will come down. If you see 10 years back and now, 90%- 95% of the revenue used to come in the first quarter, but right now it's only 65% - 70%. Going forward, it might come down further, but definitely first quarter will be the major quarter for us. Not only for us, any hybrid seed company.
Okay. Is there any outlook on export in a sense in terms of numbers, what kind of a visibility or targets you set for yourself for next two to three years? As you already mentioned that export is going to grow faster than the overall company growth rate. If you can just give some more flavor to it, that will be helpful. Does it a margin accretive? I am saying, do we have an export as a higher margin than the domestic one? Thank you.
Exports looks very good for us as every time, every year, we are adding new countries. When you see in the last five, six years, every year our hybrids are getting introduced to different countries. Going forward, we are very bullish on exports and export market as a whole is also growing in Indian perspective. As crops, we have enough crops to export to other countries. Going down the line, we see a better growth, as rightly said, that we see a better growth in exports when compared to the normal growth. But as of now, it is only 4%-5% of our total revenue. Down the line, in three years, it should be close to 10% of our total revenue.
Okay, and margins are better?
It is in line with the normal market. But right now we are even slightly compromised in the margins as well as we need to establish our hybrids in the market. But down the line, once we get the good market grip or when our hybrids get popular in those countries, definitely we will try to increase the realization. As of now, it is slightly lower than what we realize here.
Okay. Thank you. Thank you very much.
Thank you. Next question is from the line of [Khushreet Arif] from Pentacle. Please go ahead.
Yeah. Hi. Can you hear me?
Yes, please go ahead.
Yeah. My question is that just this last week, government released some new varieties of seeds, the breeder seeds, which I believe will take about two, three, four years for the companies to start developing and making it available commercially. How is the market dynamics likely to change because of this, and is there going to be any impact on Kaveri Seed's business going forward?
Even I explained some of the question earlier. As these are new hybrids which are launched right now, we need to see the performance of the hybrids. But technically, if you see, there are many companies which are introducing hybrids every year. Not 100 hybrids, there are thousands of hybrids which get introduced every year across India, whether it by government or whether it by private players. As a company, we are competing with all these and doing a business in most of the crops. That doesn't make much difference for us because we are more dependent on our own R&D, and we are pretty confident about our own R&D and the pipeline hybrids, what we are seeing now. As of now, we can't comment about those hybrids which are going to get released in the next one to three years.
But by seeing our present portfolio and the pipeline hybrids, we are pretty confident that we'll do better than the industry.
Okay, got it. How is our product mix likely to change over next three to five years?
I don't see much change in the product mix, because we already lost a significant revenue in cotton. Last year also, we said that we can't go below in cotton, but due to some circumstances, we lost revenues in cotton as well from the bottom, what we thought as a bottom. But if you see the crops portfolio where we operate, we don't see any decline from now. What I mean to say is that the product mix will not change much going forward. Going forward, the cotton percentage might slightly grow what we had this year, because we see a good growth in cotton coming in next three to five years. And definitely we are growing in other crops also. As a low base, cotton will grow much faster than other crops.
Okay, got it. Thank you.
Thank you. Next question is from the line of Pradeep Rawat from Yogya Capital. Please go ahead.
Yeah, good evening, and thank you for the opportunity. So I have some basic questions. First of all, do we procure seed from outside, or do we manufacture it in-house?
Basically, we produce the seed. We take land on lease, and we have our own seeds where we take the production activity and produce for ourselves.
Yeah. You mentioned earlier that the supply of seeds were not good for cotton, so that is why our volume took a hit. I did not get the point. Can you elaborate on that?
As I said that we take land on lease and produce ourselves. Last time there was some deficit rainfall in some areas where we had produced, and the other thing is that the interval between the rainfalls were too high, and there was some pest infestation. These all affected our production activity. That is the reason we were not able to get the desired inventory levels.
Yeah, understood. Where do we have our lands? Is it spread out over India, or is it consolidated in some regions?
We don't purchase land. Based on our need and requirement, we take land on lease for the season and then develop, produce the hybrids. There are some specific areas where the climatic conditions are good, so we produce there. For example, in cotton, we produce in Andhra, Gajwel region, or some Maharashtra, Gujarat, and some Karnataka. Based on the climatic condition, we choose the land, and that's how we produce it. Based on the need and requirement, we take land on lease and produce it.
Yeah, understood. Sir, my second question is, I'm seeing decreased acreage of cotton, partly due to the high demand for maize and rice due to ethanol policy. More land is being utilized for growing rice and maize rather than cotton. Is that understanding correct?
There are many reasons for that. As of now, the maize prices are high. One reason might be because of ethanol, but most of the ethanol projects have not started. Still, the maize price is pretty high now. The maize crop looks much lucrative than the cotton. That's the reason farmers are also moving it. The other thing is that cotton cultivation has become a bit difficult now. One, because of the pest and second, because of not that lucrative price for the cotton. That's another reason why the cotton acreages are down.
Yeah. The seed requirement per hectare of cotton acreage, is it higher than the rice, maize? Do we need more amount of seed to grow per hectare of cotton?
We can't specify that because some requires in kgs, some requires in grams. For example, per acre of land for cotton, they require just 900 or 1 kg of seed. Whereas in rice, it require 10 kg to 30 kg. So that all depends on which crop we are cultivating.
Yeah, understood. You just said that first quarter—
In vegetables it's in grams.
Yeah, understood. My next question is regarding the export. You mentioned that this was a lean quarter for export. Can you highlight which is the bulk quarter for exports?
Usually second, third, and fourth. Because as of now, we are very small, the base is very low. When we add new countries, the sale based on their climatic condition, the export will go up. But usually two, three, four quarters are the major quarters.
Okay, understood. Thank you for answering all the question and all the best.
Thank you. Next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Thank you, sir, for the opportunity. I again, just to reiterate what you just said, that due to low base in cotton, we will be expecting cotton to grow faster than other crops in next three to five years. Is that right?
Yeah. I said that the overall company growth in terms of the revenue should be 10%-12% going forward, when you take a three to five-year view. But being in cotton low base, from here, we expect better growth than the normal growth in cotton.
Okay. See, for that to happen and to capitalize on that, first, the cotton acreage needs to be increased. Second is we have to gain the market share for that. Is that assumption right?
Yes. Definitely, cotton acreages should remain stable or at least should go up. The other thing is that we need enough for production, where we can supply for the demand. The other thing is that we need to have good hybrids, pipeline hybrids, or new hybrids which got introduced or which are getting to introduce next one to two years should do well. Out of these three, we expect the acreage is going up. Second thing, we have good production for the coming years, and next, we have better hybrids. As a combination of these three, we see a good growth in cotton.
Do we see that just marginal increase in acreage, just to see that rice and maize are having good realizations for the farmers, if cotton acreages don't grow substantially with stable acreage or current acreage, we can grow at 10%-12% the cotton seed for next three years. Is that possible?
Yeah. Even if by seeing the present acreages and if they are stable, still we can grow in those segments because we lost market share or we lost volume. These are basically we don't have the desired hybrid levels, hybrid one they want. For next coming years, we will definitely have those hybrids because the production looks good for this year. We had a very aggressive production program this year, so I don't see any challenge for the desired products.
Okay. Can you name what kind of hybrids you are bringing into the market that will help us grow our share?
Sir, there are different segments and different hybrids. The company as a whole, we market more than 200 hybrids. So we are not only profit cotton for a mix as a whole, as a company. We're marking more than 200 hybrids. Based on each segment, we have different hybrids and different pipeline hybrids, which are performing well, that gives us confidence to say that we will grow much better in quarter to come.
Okay. Just to confirm, in previous calls, you were saying that over the next three to five years, if you take our non-cotton portfolio will be growing in range of somewhere around 15%, ± 2%.
Yeah. If you see, we have grown much better this year when compared to what we have guided earlier. But we have lost our sale in cotton, more than 35% of our revenues in one year.
Yeah, I get that. Yeah.
We were able to do better in non-cotton segment than cotton. But when we see as a combined, as a whole for the next five years, even if you recollect, I was saying that there will be a year or two where we see ups and downs based on the seasonality and the pests. So these are seasons where we see that sort of a difficulty. But when you compare in the next three to five years as a consolidated, as a CAGR basis, definitely we are growing between 10%-12% in terms of revenue and 15%-20% in terms of the margins.
Okay. Thank you. That was confirmed.
Thank you. Next question is from the line of Yash Gandhi from Stallion Asset. Please go ahead.
Hi, sir. Thank you for the opportunity. I just want to understand, how does the pricing sort of work in the industry, and how do farmers compare prices of different competition? Will you just sort of comment on that, just to sort of my understanding.
Definitely. The farmer compare with the price and with the need. When you see [audio distortion]
Sorry to interrupt, sir. Your voice is breaking.
Am I audible now?
Yes, sir.
If you see the expenditure or spend on seed as a total contribution is less than 5% for the farmer. He doesn't mind to spend more for the good quality seed which gives better yield than the competition. Based on the competition, based on our hybrid performance, we price it 10% ± of the prevailing hybrid, which is doing better in those markets. In that way, the other thing is that when we are in the market, when our production cost is going up, that will be similar for the other competition as well. They will also increase the prices. In that way, more or less, we will be in line with the competition, 10%-20% based on our hybrid performance. That shouldn't be a challenge for us.
Okay. I mean, over here, would the sort of your distributors have some sort of a leverage in terms of what areas or what states they want to sell, let's say one particular brand against some other brands, or do you have like sold distributors?
Basically, it is not like definitely distributors or retailers will have a say in the call, but more than 75%-80% of the farmers buy the seed by seeing the performance. So, if our hybrid has those sort of a potential to give better yield, then the farmer will definitely ask for that. As you rightly said, some distributors where they will say that 15%-20% of the market where they push some products or where they get, or as a farmer, they take new hybrids which are newly introduced in the market to try. Otherwise, 75%-80% of the farmers buy by seeing the performance of the hybrids.
Okay. Got it. Thank you.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, on behalf of Kaveri Seed Company, that concludes this conference. Thank you all for joining us. For any more information, please be in touch with Rama Naidu from Intellect PR on 9920209623. Thank you. You may now disconnect your lines. Thank you.