Ladies and gentlemen, good day and welcome to Sumitomo Chemical India Limited Q2 and H1 FY 2027 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 a touchtone phone. Please note that this conference is being recorded. From the management today we have on the call Dr. Suresh Ramachandran, Managing Director, Mr. Kunal Mittal, Executive Vice President, Mr. Anil Nawal, Chief Financial Officer.
Ms. Deepika Trivedi, Company Secretary and Compliance Officer and colleagues from SGA, their investor relations advisors. Now, I hand over the conference to Dr. Suresh Ramachandran, Managing Director of Sumitomo Chemical India Limited. Thank you, and over to you, sir.
Thank you. Ladies and gentlemen, a very good afternoon to all of you, and welcome to the conference call to discuss Q2 and first half FY 2027 performance of Sumitomo Chemical India Limited. This is my first earnings call since taking charge as Managing Director on September 1st, 2026, and I would like to begin with a few words on the transition. First, on behalf of the entire SCIL family, I would like to extend our sincere thanks to Dr. Mukul Asher, who completed his term as Chairman and Independent Director on August 31st, 2026, for his outstanding leadership and immense contribution to our journey over many number of years. As we shared on our last call, Mr. Chetan Shah completed his term as Managing Director on August 31st, 2026.
Following shareholders' approval, he has been appointed as non-executive, non-independent director and has been also appointed as Chairman of the Board. Mr. Sushil Marfatia also completed his term as Executive Director on August 31st, 2026. On behalf of the entire SCIL family, I want to place on record our deep gratitude to both of them. Over many years, they built the teams, distribution reach, channel, the manufacturing base, the brands, and above all, the culture of discipline that this company stands on today. We are fortunate that Mr. Shah continues to guide us as Chairman and Mr. Marfatia as advisor, and both of them remain available to us in an advisory capacity. We also welcome Mr. Anand Mohan Tiwari to the board as Independent Director. The new management structure which presented to you in May is now fully in place.
Mr. Kunal Mittal as Executive Vice President, together with Senior Vice Presidents, Mr. Hajime Shinomiya and Mr. Fumio Suzuki anchors the senior management team. Our commitment to you is continuity. The strategy, the financial discipline, and the farmer-first approach that delivered our results over the last several years remain unchanged. What we are adding is a sharper focus on execution, which we call our Good to Great initiative or Good to Great transformation, about which Mr. Kunal will speak shortly. Now, coming to Indian agriculture and agrochemical industry, how did the industry perform over the last six months of the current financial year? H1 FY 2027 was one of the most difficult first halves for the Indian agrochemical industry in over a decade. The main reason was the erratic and unpredictable monsoon. The southwest monsoon arrived late and started weak. June rainfall was about 35% below normal.
Generally, June month rainfall is very critical for the sowing operations by the farmers. Because of the delayed rainfall, the sowing of the key crops were delayed until mid-July. July rainfall was close to normal. Of course, it did not cover the shortfall of the June rainfall. August was dry again, about 16% below the normal rainfall, and September did not make up the shortfall. Overall, the season ended with a deficit of almost 13% of the normal rainfall. As per the IMD, this was the fourth weakest monsoon since 2001 and the weakest since 2015. Rainfall was very uneven. East and Northeast India had their lowest monsoon rainfall since 1901, and the South Peninsula was about 24% below normal. Of the 23 key agricultural states, 16 had deficit rainfall of more than 10%. Some even went up to 30%, 40%.
Several states, including Maharashtra, Karnataka, Andhra Pradesh, and Rajasthan, have declared drought in large parts of their area. Furthermore, India as a country, IMD has declared it as officially a drought year. Farmers were able to complete sowing with whatever water that was made available, was available by the monsoon, and kharif acreage ended little bit lower than the normal, about 1.5% below the normal. Rice was the main exception, with the acreage almost lower by 4%. However, there were very few days of above normal rainfall during the season, and crops faced long dry spells at the stage when they need the inputs most, which impacted the agrochemical consumption. Delayed sowing and dry spells reduced herbicide consumption. In August and September, farmers skipped spray rounds which lowered demand for insecticides and fungicides. Industry reports also show that farmers cut back on total overall agricultural inputs.
Production of key crops such as rice, cotton, soybean, groundnut, pulses, and oilseeds is now estimated to be lower than by almost 10%, depending on the crop. To begin at the beginning of the year, between March and May, the cost increased because of the Middle Eastern war. The technical prices went up. A weaker rupee depreciation, and high packaging solvent and freight cost added up to the overall cost of the inputs. Companies, including SCIL, passed on these increases to a large extent. However, because of the erratic monsoon, sensing that the season was not going to be normal, from June onwards, the prices started falling down. Some companies took the price correction. Some companies decided to maintain the price. The industry therefore carried high-cost inventory into the period of lower volume and softer price in Q2.
We focused, the SCIL team focused on key products which were critical for our success. Those products performed very well. Our key brands like flumioxazin, which is Sumi Max, Meshi, Excalia Max, Portion, ProGibb, Nature Deep, and Tribasic Copper all grew in both volume and value. All of these were our specialty products. Together, these products grew about 22% in value over H1 of last year, despite the very weak monsoon. We launched two proprietary products in the last quarter. The first one is TopGrain, a patented grain filling biostimulant technology developed by our affiliate, Sumitomo Biorational Company. In the entire world, we are proud to announce that India is the first country to commercially launch this product anywhere in the world.
We have introduced it to a limited number of farmers this season, and our teams are measuring the yield benefit at the time of harvest, which is currently going on. The second product is Helibex, which is an insecticide launched in a limited extent starting from August to control key caterpillar pest. We also continue to strengthen our digital approach. Our Excalia Max campaign ran across several platforms, and one influencer video crossed 1.7 million views. Our Sumi Max campaign won the Gen AI-led creative award at the ad:tech India in New Delhi. Each year we run more than 1,000 digital campaigns, reaching out to 17 million+ digital touchpoints. Our normal activities, we increased in reaching out to farmers through various means, including digital and physical, through our employees as well as contract workers. Now coming to the second half of the year, how the outlook looks like.
We expect H2 of the current financial year to remain challenging for three main reasons. One, El Niño. The World Meteorological Organization expects El Niño to strengthen further, peak around December, and continue through February 2027. It could be one of the strongest El Niño events since 1950. This overlaps with Rabi season, unfortunately. Second, water availability. Current estimates mention that reservoir levels across the country are at about 71% of the capacity and at least 25% lower than the last year at the same time. Since Rabi crops depend largely on irrigation, water availability, and soil moisture will decide how much area it is planted. Third, the Northeast monsoon, it began on October 15th. It has rained well in a couple of areas in southern geography. IMD expects reasonably normal rainfall over the south peninsula.
This should help the second season crop, but southern region starts with a large shortfall from summer. This led to lower soil moisture conditions compared to normal period. There are also some positives. Lower harvest estimates have pushed up the commodity prices. Whether it is rice, cotton, pulses, oilseeds, all the commodity prices are going up, which means that the farmers are getting the benefit in terms of income, which would put them in a position to invest in their second crop, in crop production, apart from other agri inputs. Where crop area holds up and prices remain firm, we expect consumption to be broadly normal. The rice area is expected to decline because in southern states, rice cultivation is discouraged because of the low water availability. Chili depends on November, December rains, primarily in Andhra and Karnataka. On the positive side, grapes season is looking better.
Wheat is expected to be normal. Cumin is expected to be normal. States like U.P., Chhattisgarh, these states look to be normal as of now, and the normal crop area would come. Our H2 priorities are stated below. Focus resources where demand is holding up. The main states I mentioned, like U.P., Chhattisgarh, some parts of Andhra, Karnataka, and Tamil Nadu, which has rained well, our focus is in those areas to do the business. Drive key products. We will push Excalia Max, Portion, Gibberellic Acid, and TopGrain. For TopGrain, currently the team is following up on the rice launch to demonstrate to the farmers. There are good positive feedbacks, which will help us to introduce it in the wheat in the Rabi season. Starting from February, the consumption of this product will start. Manage channel and inventory carefully.
We will continue to supply the channel based on the actual demand on the ground, and we have started steps to bring our own inventory down through H2 product by product. We will keep adjusting prices to market conditions and realistic situation while protecting our margins. We also possibly see an opportunity upside of glyphosate due to recent regulatory restriction on a competing product. Our goal for H2 is to grow our last year sales where the market allows while protecting profitability. Our portfolio reach strong relationship with farmers and channel partners position us well to do this. With that, I hand over to Mr. Kunal Mittal to take us through the next portion of this call. Over to you, Kunal.
Thank you, Dr. Suresh Ramachandran. Good afternoon, everyone. We will try to cover two parts in this. First is about our transformation initiative, and second, something about our operational numbers and our CapEx plans. First, about the Good to Great transformation, which Dr. Suresh briefly touched upon. With the new management structure in place from September 1st, we have launched a company-wide program called Good to Great: Transform to Secure Our Future. This program and this initiative is built on five pillars. First is about people, how we can build skills, leadership, and accountability through a performance-driven culture. Second part is about the operational excellence by improving productivity, quality, efficiency, safety, and speed of our execution. The third pillar is about the technology, how to use the technologies across all the functions in our company, including for refining our business processes and decision-making process.
The fourth important pillar is about data, digital and automation, how we can bring more efficiencies and accuracy in our organization through these initiatives. The fifth, and one of the most important pillar is about the cross-functional success, how all of us, our different functions can work together in a collaborative approach with the mindset of sharing the ownership for the results. So through these five initiatives and the pillars, I think we are going ahead in this kind of a transformation initiative. Collaboration is very important part of this initiative. This was also a theme of our annual conference, which we held in Delhi in the month of April with over 700 members of our commercial team, which is called Sumi Manthan. In a difficult year like this, these internal initiatives will help us improve our efficiencies and help us achieve our profitability objectives.
Now let's talk about our operating performance in this environment, which was very challenging due to weather situation. Our company delivered a stable performance. Q2 FY 2027, the revenue was INR 907 crore, down 2% year-on-year. H1 financial year 2027 revenue was INR 1,971 crore, down 1% as compared to previous year. Despite a clear fall in industry volumes and demand, our first half revenue was broadly in line with our last year numbers. In Q1, our revenues were supported by the price increases, which we took between the months of March and June 2026. In Q2, we kept our selling prices largely stable. Our sales volumes, however, fell by a high single digit percentage due to lower consumption in the adverse weather conditions. Our Q2 margins were affected by the timing of inventory cost.
In Q1, we benefited from the lower cost opening inventory. However, in Q2, inventory which we had bought at higher cost between April and June, more in the Q1 part, it flowed into our cost of sales. As a result, our Q2 gross margin was 40.7%, which was down 240 basis point year-on-year, and our EBITDA margins was 20.5%, which was down 297 basis points. For H1 financial year 2027, gross margin was 39.9% compared with 40.4% last year, and EBITDA margin was 21.3% compared with 22%. This is broadly in line with our historical levels and in line with our objectives, which we have discussed in the past to maintain our EBITDA margins equal to or more than 20% level, which was one of our objective, which we have implemented over last few years.
The inventory cost levels had largely normalized by the end of Q2 as cost and selling prices came back in line. Our domestic business held up pretty well. Q2 domestic revenues grew 2% to INR 774 crore, and H1 domestic revenue was broadly stable at INR 1,657 crore. Branded products made about 79% of domestic revenue. If we talk about exports, there was a decline of 23% in Q2 to INR 127 crore, mainly due to the timing of shipments to Japan and South America. For H1, exports were stable at INR 300 crore with Africa, South America, Asia, and Europe each growing by 15%-19%.
Some of these points were also mentioned after our Q1 results in our investor communication that Q1 also had little bit extra volume shipments in the extraordinary situation. In our exports, the share of branded products grew to 41% in H1 versus 34% last year, which is a very positive factor in our view. In terms of product category, insecticides, herbicides, fungicides were most affected by the weather conditions. In Q2, insecticides declined 9%, herbicides and fungicides each declined 6%. However, three categories grew in Q2. Metal phosphides grew by 13%, PGRs by 9%, and animal nutrition and environmental health together grew by 18%. So these three categories were positive. If you talk about our balance sheet and working capital, our balance sheet remains essentially debt-free. Cash and cash equivalent and liquid investments were approximately INR 2,523 crore as of September 30th, 2026, up from INR.
INR 2113 crore in March 2026. Net cash from operations in H1, financial year 2027, was INR 414.7 crore, compared with INR 435 crore in H1 2026. Collections were about INR 2,231 crore, against INR 2,277 crore last year. In a difficult collection environment, this is a reasonable number. Trade receivables at the end of September were INR 887 crore, lower than INR 903 crore a year ago. Overall, net working capital was 76 days as of September 2026, compared with 55 days in September 2025. This was mainly due to inventory, wherein the inventory days increased from 95 days last year, September 2025, to 115 days in September 2026. Two factors drove this number: higher inventory cost because the prices have increased, and secondly, the volumes were also impacted because of the softer liquidation and sales in Q2.
Some bit of our inventory volumes were on a higher level as on September 2026. However, we are monitoring this situation, and we have started taking corrective actions, and we expect inventory to come down to normalized levels through second half of this current year. On the CapEx and growth plan, all our announced CapEx projects are progressing as planned. First, about the Dahej project. We are investing about INR 150 crore for the development of a greenfield site at Dahej. Most of the projects at the Dahej site are expected for our parent company's future molecules, and these CapEx plans are on track. We expect the commercial production to start in Q2 financial year 2028, 2029 , as per our earlier announced targets. The second project which we are implementing is Tarapur, which is also under implementation. During last 12 months, we have announced two CapEx at Tarapur site.
Both of these are INR 10 crore each, so together it's a INR 20 crore, through which we are going to add three to four additional products in our Tarapur site. These CapEx are also in line. One part of this CapEx, first part is expected to be completed within this current financial year, and the second part is expected to be completed by end of the next financial year, 2027, 2028. Both of these projects, both Dahej and these two projects at Tarapur, continue to be in line with our earlier estimates, and they should contribute to our company's growth. Some of this growth will also be in domestic market, because some of this expansion, especially in the Tarapur site, is for domestic Indian market and not particularly focused on exports opportunities.
We are also evaluating few more additional CapEx projects for our parent company's global needs, and we will keep updating you as and when any project is approved by our parent company and our board. Our product pipeline for new innovative molecules from our parent company's portfolio also remain strong. India is now in the same tier to test early-stage pipeline product from our parent company, especially in line with trials in Brazil, North America, Europe, and Japan for early-stage testing. Trials are underway in India for many of these product, and we expect to introduce one or two new products every year and build from this by development of these products, working closely with the Indian farmers over the next three to five years. With this, now I hand over the call to our CFO, Mr. Anil Nawal.
Thank you, Kunal, and good afternoon, everyone. I will take you through our consolidated financial performance, starting from Q2 FY 2027. Revenue from operation was INR 907 crore, compared with INR 930 crore in Q2 FY 2026, down by 2%. Gross profit was INR 369 crore, down 8%. Gross margin, which was 40.7%, down to 40 basis points year-on-year due to higher cost inventory. However, compared with Q1 FY 2027, gross margin improved by 149 basis points. Operating cost was well controlled. Employee expenses were INR 70 crore, and other operating expenses were INR 113 crore. Both were largely flat year-on-year. Operating EBITDA was INR 187 crore, down 15%, with an EBITDA margin of 20.5%, down 297 basis points. The net profit, which was INR 157 crore compared with INR 178 crore last year, down 11%, with a net profit margin of 17.3%.
For H1 FY 2027, the revenue from operation was INR 1,971 crore, compared with INR 1,981 crore in H1 FY 2026, down by 1%. From a product mix perspective, insecticides remained the largest contributor at 38% of H1 revenue at INR 743 crore, down 4%. Herbicides contributed 25% at INR 488 crore, down 6%. Metal Phosphides grew 18% to INR 186 crore. The Animal Nutrition and Environmental Health grew 14% to INR 207 crore. PGR was stable at INR 179 crore, and fungicides declined 7% to INR 156 crore. Generic products made up 72% of revenue and specialty products 28%. Domestic business accounted for 85% of revenue and export 15%. Branded product represented 79% of domestic revenue and 41% of export revenue, up from 34% last year. Gross profit was INR 786 crore, down 2%, with a gross margin of 39.9% against 40.4% last year.
Operating EBITDA was INR 409 crore, down 4%, with an EBITDA margin of 21.3% against 22% last year. Profit before tax and exceptional item was INR 472 crore, broadly in line with INR 478 crore last year. Q1 FY 2027 included an exceptional income of INR 26.9 crore. This was the insurance claim received from business interruption caused by fire at our Bhavnagar plant in FY 2023. Including this, profit before tax was INR 498 crore, up 4%.
Net profit was INR 372 crore, up 5% from INR 356 crore. The net profit margin improved by 96 basis points to 18.9%. Earning per share for half year was INR 7.45 against INR 7.13 last year. Now, foreign currency. Finally, let's have a word on foreign currency, given continued volatility in the rupee. As we have explained before, our export-imports are broadly balanced. So our net foreign currency exposure is largely self-hedging.
We also hedge our exposure and do not carry unhedged foreign currency. To summarize, a half year marked by drought-like monsoon, weak consumption, and an inventory cost cycle, SCIL held its revenue broadly stable, kept its H1 margin profile close to historical level, grew net profit, generated healthy operating cash flow, and further strengthened its balance sheet. We will take a pause now from our side and request moderator to open the floor for question one by one.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask questions may please press star and one on your touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Nitish Rege from ChrysCapital. Please go ahead.
Good afternoon. Could you please share some update regarding the semiconductor chemicals opportunity?
Yeah. I think as you would have seen in some of the media coverages, our parent company, Sumitomo Chemical Japan, which has a separate sector, which is called ICTM, which is having this kind of a semiconductor business globally. They are one of the leading players in this particular segment. Our parent company is looking at India with keen interest. Our parent company has also made some announcement about this. Recently, a MoU has been signed between one of the leading semiconductor players in India, which is developing a first fabrication plant for semiconductors in India, which is expected to become operational in a very short to medium-term kind of a period. This MoU has been signed.
As per our latest understanding, more strategic discussions continues to be undertaken between such strategic customers and our parent company and also some of the additional stakeholders, including the Indian government, because it is a very important project, even from the Indian government side. The discussions are underway at strategic level with various stakeholders involved in this project. In the future, as and when this project will become more certain with more approvals, the due announcement will be made in next few months.
Understood. Just wanted some color around why there is so much uncertainty. We are attending all these conferences and seminars in India. Our parent has spoken about this in their annual report. We have done the MoU. There's a stated timeline for the semiconductor plant in India to come online. But despite all this, we have still not announced concrete plans, as in the Sumitomo Chemical India level entities. So why this uncertainty about whether to do it, not do it, where to do it, how to do it? Isn't there some kind of clarity yet as to how we are progressing ahead with these plans, and why have these then not been shared with the public at large?
Sure. So see, if you see the press release, which was announced by one of the strategic customers in India and also by our parent company immediately after signing of this MoU, I think the press release did throw a lot of light about this. So this first semiconductor fabrication plant is expected to become operational in India in next one or two years, as per our latest understanding. However, our products are not the candidates to start immediately. The localization plant is going to take some time. So I think the discussion at a strategic levels are on for certain number of chemicals, which are also mentioned in the press release. And our understanding is that once, I think, both the sides reach a more conclusive understanding about supply of this product and localization of the project, a due announcement will be made.
Intentions have already been made by the both sides. I think made it public also, and the MoU has also been signed during SEMICON 2026. However, before a formal communication to the investors and our shareholders and also our stakeholders, I think some more firm level of maturity of these discussions is required, and that is where I think maybe what you wanted to understand.
And will we have a role to play? We in the sense, the India entity, for which the con call is ongoing. Will we have a role in this opportunity as such?
As we mentioned that strategic discussions with all stakeholders are underway at this point of time. Sumitomo Chemical India is in some way part of those discussions, but nothing concrete, firm structure or any kind of a very specific role has been defined. Once the project reach a little bit more maturity and a firm level of maturity, I think this kind of a point, which is a very valid question which you asked, what will be the role of the Indian-listed company? This discussion, we are also expecting to get firm up and finalized in due course of time. But till the time this kind of a discussions reach a certain maturity and firmness, we don't want to go ahead of the time and make certain vague announcement which are more speculative at this point of time.
Understood. Many thanks. I will come back next.
Thank you. We'll take the next question from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah, thank you for the opportunity. Sir, what would be your short-term outlook on exports?
I'll take it. See, exports, if you look at it, even in the H1 as such, our products to many countries have grown. The major setback or the major challenge happened in the quarter two, primarily due to overstocking of some of the products to export to our parent company. That's the only thing. If you look at our third-party products, wherever we export to third-party customers in different countries have grown. Only because of the overstocking or still inventory liquidation is happening in some of our parent company molecules across the globe, and that's where the real challenge was, which we expect to recover in the coming months and quarters.
Okay. Sir, you also commented on opportunity outside of glyphosate. If you can elaborate on that would be helpful.
Yeah. See, what I meant was glyphosate opportunity has the potential to increase. The competitive molecule, one molecule, which is named paraquat, was recently banned by the Government of India. So that is going to leave us at a vacuum or space for other molecules to take that space, and glyphosate is one among them. We'll have to wait and watch and see how it unfolds in the coming months, provided the season is good, and of course, in the coming years.
Okay. Lastly, sir, can you share what is the current innovation turnover index for us?
It is in high single digit.
How was it last year?
Generally, it is in the high single digit of 9%, 10% every year-on-year. That is what we target also.
Okay. Thank you so much.
Thank you. The next question is from the line of Jignesh Kamani from Nippon India Mutual Fund. Please go ahead.
Yeah. Hi, Kunal and team. Just on the semiconductor, all the MoU signed is between client is signed by the parent entity, right? As of now, formally, the Indian entity has not signed any MoU with any of the client, right? Is my understanding right?
Yeah, that is right.
Understood. Second, on the current environment, have some idea of how is the sales return currently happening, can say? On the liquidation side, are you expecting there is any issue on the liquidation in the second half? Since inventory is slightly elevated level, do you need to have a higher provision in the second half on account of that?
No, I am talking about Sumitomo Chemical. I am not talking about the industry. Generally, as a practice, we do not have sales return policy. Our teams have been trained mentally in a way that whatever we sell must be liquidated. So to begin with, even in a normal season, the sales return is very low. Given that this season was very challenging, our teams were also very careful in terms of what their inventory to be built and made sure that almost everything is liquidated. There will be one or here, which will be very minuscule. We do not expect the sales return to be impacting our second half.
Understood. How is the performance of the new product like Excalia Max and everything in the overseas market like Brazil, U.S. and everything? How large this product has become globally? Just want to understand if you take a two-year or three- year downtime when we think about manufacturing part of that molecule in India, how large a quantity it can be. Just to understand that size.
Yeah, I think you are referring to Excalia Max, right? INDIFLIN.
Yes.
Okay. INDIFLIN has been launched in a few countries. I think still few countries are yet to get the registration. It is named as a blockbuster product. Definitely, it is doing well. These are initial years of launching. A product to get to a maturity stage, it takes about four to five years. The initial feedback is well, very well accepted by the farmers in countries like U.S. and Brazil, wherever it has been launched till now. Of course, in India also we launched last year. In India also, the traction has been very good. We were able to grow the molecule almost by 50% in the first half itself, despite the challenging season. Yes, I cannot put a number to it because that is a global information. Definitely, this molecule is going to be one of the big molecules within the Sumitomo Chemical portfolio.
Just to add to the manufacturing part. As I think you are referring to this manufacturing, which we are going to do in Tarapur of this product. That manufacturing in Tarapur at a smaller level only to meet the India requirement. Currently, we have not approved any CapEx for setting up the capacity for INDIFLIN for the global requirement point of view. That could be under discussion for future when this product reaches to a little bit more volumes. At this point of time, this product continues to be manufactured in Japan and in India. For the Indian quantities, it will be manufactured by end of this financial year. But there are no firm export plan of INDIFLIN from India, which you refer to, as of now.
Understood. Sure. Thanks a lot.
Thank you. We will take the next question from the line of Prasad Vadnere from Union Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. I have two questions. Firstly, you mentioned that you will be launching some of the early-stage molecules from the global parent in India. Could you please throw some light on same? My second question is, if we see Sumitomo Chemical being a global company, they have multiple subsidiaries in global market, and they have launched multiple molecules in the global market at different regions. When they try to look or try to enter into new geography with the existing business, is it a new molecule? What are the thought process that they build upon? Do they usually enter through the existing business, or they try to have their different structures? Thank you.
Yeah. Sorry, your voice was echoing. From whatever I could understand, I will try to respond. I think your question was, just to rephrase it, is the priority for Sumitomo Chemical Japan, new molecules to enter into a geography like India, is it the local entity that would be preferred or somebody else? If my understanding is correct. Yes, I think Mr. Kunal Mittal mentioned that in one of his comments that India is one of the top-tier countries along with Brazil, Europe, U.S. and of course Japan, to be the first tier countries for testing and launch of any new product. So you could see that Excalia Max, we registered and launched in India. There are a couple of molecules which are being developed. I mentioned in my remarks that TopGrain, a biostimulant product that was launched just about six weeks ago in India.
The first global commercial launch happened in India. We are very proud of that and more to come. There are pipeline molecules that are being tested, which are just coming out of the discovery stage. Clearly the priority is for any SCC molecule or SBC, which is Sumitomo Biorational Company, which used to be called as VBC, Valent BioSciences. India is one of the key markets, and of course, the only way they would come to India at this point of time is the priority is to come through Sumitomo Chemical India. So we will have all the access to the new molecules that are being discovered by Sumitomo Chemical or its affiliates. Point number one. Point number two, yes, Sumitomo Chemical keeps discovering new molecules. Whether every molecule has a fit in India, maybe not.
There are molecules that are being discovered to control soybean rust, which is a big problem in countries like Brazil or Argentina. In India, there is no soybean rust. So that product would not have a fit in India. So depending upon the product fit in this country, the product will be tested in India and will be registered in India for introduction.
Thank you, sir.
Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just one question. On the Good to Great transformation journey, wanted to understand what is the thought process behind it, and what exactly are we aiming to achieve here. If you can, in financial terms also, if you can quantify what was the need of this, why this idea came in, and what are we trying to achieve?
Yeah, very good question. Thank you very much for asking this question. This is my favorite topic, or our favorite topic within the company right now. See, when we had an assessment of internal situation, we interacted with many people after we took over as the management. Across the employee population in different sites and at the company level in head office, Delhi, everywhere we interacted. One common theme that came out was that we are a good company. But how do we become great? We are different from others. Yeah, I mean, this business can run, but unless we become different compared to the competition, it's going to be challenging for us looking at really the competitive future.
When we took inputs from all the people and some of the leaders got together and really ironed out what are the initiatives that we want to do, and we grouped those initiatives into five buckets. I think Kunal described those five buckets. All the functions, all the departments have charted out what are the initiatives that they are going to take it up and what is the transformation. There's some background noise.
Sir, I would request you, Mr. Chaudhary, please mute your line as the management-
Sure
is not able to answer. Thank you.
Yeah. All the key leaders have identified initiatives under all of these things. Some of them would yield in financial benefits. Some of them are more of qualitative benefits. We are in the process. This just happened three, four weeks ago. The whole meeting and discussion happened three, four weeks ago. All those inputs are being collated as of now. And eventually, the objective is how do we make sure that we move the needle to become a great company. That's the whole thing. And we would have a financial objective. In the near future, all the data is being crunched, and we should have a number, a goal, in the next few weeks.
Great in the sense within your operating system, or is there something else which we are thinking because of the existing end user we operate in brings a lot of volatility and challenges. Is there any thought process of using the cash of the balance sheet to bring more segments to the business and take it to the new high, or are we trying to make it more and more efficient within the operating range which we have?
Yeah. See, the utilization of cash is a different objective that calls for a larger discussion at the board. Of course, the team is open to give all the suggestions. That is also part of the scope, but this team just cannot take that decision. It will go into a larger level. At the same time, there are many things that we have identified which can improve our efficiency, simple as wherever there are repetitive tasks, can we use artificial intelligence? How do we engage people more and reduce attrition? How do we be prepared and anticipate the costing structure that is going to come out of China or even manufacturing costs that we have, how do we reduce it? That would be the largest focus. Of course, deployment of cash is also there as part of a smaller portion, but this team would not be deciding that.
We can give ideas which would be taken to a larger forum for further discussions and decision-making.
Any timeline or tentative indication by when we should expect the cash to be deployed or to be used?
See, when we find a suitable opportunity, we keep evaluating multiple opportunities that come along our way regularly. So, it should fit into our strategic scheme of things. We should see a suitable opportunity. So we cannot put a definitive timeline by such and such time we need to use it. So we keep evaluating opportunity, and for sure, as soon as we have something, we will come back to you.
Thank you. All the best.
Thank you. We will take the next question from the line of Rohit Nagraj from 360 ONE Capital. Please go ahead.
Thanks for the opportunity. Sir, first question is on the herbicide intermediate plant at Dahej. With INR 150 crore of CapEx, what is the kind of asset turn that we are looking at? The payback seems to be five years, so effectively, the margins will be at company-level margins. Thank you.
Yes, I think so when we had announced this CapEx, we had mentioned the same point which you mentioned, that it is a very healthy, I think, turnover ratios, and payback period is less than five years, and the margin profile should be in line with the company-level margins. All of these things were, I think, informed at the time of approval of the CapEx. At this point of time, all the assumptions remain true, and there are no change in any of the assumptions.
Right. Second question is, we have also said in the same that this is expected to be followed up with additional projects. Does it mean that we will have to undergo additional CapEx for any new projects, or will the new projects be also part of this INR 150 crore CapEx? Thank you.
No, there is expected to be additional projects because the Dahej site is more a new greenfield site for future development over the next 5 - 10 years. We are looking to develop the Dahej site. This is one step in the overall development of the Dahej site with a INR 150 crore investment. This is only for one intermediate, for one blockbuster herbicide. But like this, there are four or five blockbuster products which have been just launched or expected to be launched by our parent company soon. Each of these require multiple intermediates and the final TG product. As a combination of that, the entire strategy for manufacturing this new blockbuster product is being made, and the Dahej site is expected to play an important role in this entire development.
This INR 150 crore is specifically a dedicated facility only for this particular intermediate for one herbicide. It is not a multipurpose kind of a facility. For each of these initiatives, whenever something is approved by our parent company as the anchor customer and our Indian company board as an investor and as an operating entity, I think we will make announcements suitably.
Thanks for answering all the questions, and all the best, sir. Thank you.
Thank you. The next question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. Just wanted to go back to maybe the near term a little bit. In terms of H2, traditionally, in any case, H2 revenue run rate is much lower than H1 run rate. Given the current environment, can the run rate actually dip much below historical sort of run rate? Your view on that.
See, our objective is to maximize the opportunity. This country is vast, and there are always going to be opportunities somewhere. Okay. Fortunately, the early signs in South India seems to be okay with the rains in Tamil Nadu as of now, and also some rain forecast or storm forecast expected in Andhra and Karnataka. It augurs well, okay? Time only will tell how this second season rains are going to be spreading out. Having said that, the grape season is looking good. In that area, grape cultivation area, the season is looking fine with good water availability. Cumin seems to be good. Wheat would be normal in North India or wherever wheat-growing geography is, including Western India. South paddy will come. If not full, it will come.
Our focus remains on, as I mentioned, how do we redeploy our resources, which we did in the first half also, and maintain the margin or improve the margin. So that's what our focus is. This country is vast. There will always be some opportunities. Yeah, it's not a normal condition. To that level, we are preparing ourselves and capitalize on the available opportunity.
Got it, sir. Is it also fair to assume that margin trends will obviously continue to remain a bit more subdued on the lines of what typically happens for us in the second half? Is there any change in the pattern that you can see for this year?
I think as Dr. Suresh explained, on the revenue front, while the environment continues to be very challenging, due to various factors which were explained in H1, if you see overall, we have delivered a stable performance. Even in the H2, yes, some environment remains challenging, but also there are opportunities. It's a combination of that. We are expecting a stable kind of a performance, even including on the margin front. If you look at our first half margin, while yes, in Q2, it is little bit of a dip because of the inventory situation which we explained. In Q1, we got extra benefit of the opening inventory. In H2, at this point of time, based on all the information available, our margin are expected to be in the normal kind of a range as per the historical levels.
We are not expecting significant, any adverse factors in neither revenues or any kind of a margin which you referred to. We are not expecting or projecting any kind of significant adverse kind of a situation at this point of time.
Understood, sir. One last question, if I may. I think you mentioned when you were briefing about India being included in the same tier as some of the more advanced countries, that there are plans to launch one to two new products every year. That is specific to the basically specialized products? I just want to understand overall what is the kind of product launch schedule that we have, maybe over H2 and for FY 2028 as well.
No, these are all long-term projects. What I meant was that when a product comes out of discovery and Sumitomo Chemical decides that, yes, this product needs to be taken to the market, India would be one of the countries along with, of course, Japan, U.S. and North America and Europe for testing. In the past, India was not the priority country. It was taken much later once it was commercialized in rest of the world. Now that has changed. India opportunity is seen as one of the big opportunities, and that treatment is being given to India also. These products will take at least four or five years of introduction. It has to go through the testing process, then regulatory process, which will take four or five years to see the light of the day in terms of commercialization.
What we have mentioned in our commentary and what we refer to is, yes, one to two, a good speciality kind of a molecule, but actual launches can be even higher, including some of the generics and combinations in the market, similar to the past trends.
Got it. Thank you very much for your time.
Thank you. The next question is from the line of Vidrum Mehta from ASK Investment Managers. Please go ahead.
Yeah, thank you, sir, for the opportunity. My question pertains to exports. In your opening remarks, you alluded there were some shipment-related challenges which impacted the Q2 exports. If you can elaborate that is one. Second is country-wise, if you can help us understand which country looks more promising in terms of exports over the near to medium term, and where do you see some challenges with respect to the growth or the revenue growth country-wise? Thirdly, if I just look at last two years, probably our annual run rate for export is INR 680 crore- INR 700 crore. In H1 also, we have clocked exports of roughly INR 300 crore. Over the last three years, more or less, our export has been flattish, despite the stronger opportunity with respect to new launches supported by our parent.
That doesn't seem to be accruing, if I just look at last 2.5 years. On the contrary, would it be right to assume that our volume growth would have declined because INR has depreciated by 10%-15% over the last 24 months, from 82, 83 levels to 95 currently. If you can just throw some color or give us more insight on the export front. Thank you.
Yeah, as I mentioned, the major export problem this quarter was primarily from our export to our parent company. Our direct exports to the third parties have actually increased in H1. Okay? Thanks to some of the countries like Europe and Africa. Okay? U.S. also, we have got some impact, but primarily our increase happened in Africa and limited to some extent in Brazil as well as Europe. The major setback was in our exports to Japan, which has almost halved compared to the previous H1. The main reason is, as I mentioned, was the inventory built up that is getting liquidated now because if you look at last two, three years, there has always been one or the other unique factors that come into play in the export market, and that has come in this year also. That is the reason.
We expect it to come back to normalcy soon. It depends on the country and all those things. However, our focus remains on export wherever we have registrations and of course, our parent company, we continue to do that, and we have the capacity to fulfill their requirement. In terms of volume, yes, I think the volume has got impacted a little bit in the current year also. I think to be precise, about roughly 10%. Roughly 10% volume was impacted. Overall, we expect that in the future it should come back if the season becomes normal.
Sir, any guidance would you like to give from a medium to longer term point of view, what kind of growth can we expect in export market?
As a policy, we do not give any forward-looking estimates or a forecast, so it is difficult for us to give any specific guidance. But as a trend, I think lot of initiatives are being done to grow the business, both in terms of volumes and also overall in the business.
Okay, sir. Thank you. Wish you all the best.
Thank you. The next question is from the line of Jignesh Kamani from Nippon Mutual Fund. Please go ahead.
Yeah, hi. Just want to understand the opportunity size in the biorationals and the PGR portfolio. I believe it's roughly 10% for you, but still denominated by the only thing, one large product, that's Gibberellic Acid. Now you launched TopGrain this time. I just want to understand parents, if you take about whether a buyer's parent has a large portfolio and they acquired Barrix also. So how large is the product portfolio put together of the global entity? Out of that, how many are relevant for Indian entity? Some idea. In next three to five years, what is the plan to launch some of them in India?
See, biorational, as a stated team, is a very important area for Sumitomo Chemical globally as well as in India. That's the reason we acquired Barrix couple of years ago. After that, we have been having challenging weather. Last year was complete washout because of rain. This year seems to be more challenging because of the drought, ever since we acquired. But that product has a very good potential. It's very difficult to put a number as of now, but our endeavor is to make it as big as possible. Yes, TopGrain we launched just about seven, eight weeks ago, which is a product from Sumitomo Biorational Company based out of U.S., and this is also a biostimulant. We have just launched it seven, eight weeks back, and the first season results are coming out. It seems to be very promising.
Fortunately, we have got label claim on the largest acreage crops like paddy and wheat. Since we launched late in the season, and also we had very limited supplies, we could launch to a limited extent in the current season. The results are encouraging. Now, next year would be the full-fledged launch across the country. Apart from that, we are also planning to launch in the wheat in the month of February, March timeframe, where the consumption would happen. Again, the acreage is vast. The results are encouraging, and we expected to make in both these crops, this as a big product in the coming years.
Since you talked about this opportunity for globally and India, roughly, I'd say globally and in India, about 4%-5% business is, I think, biorationals. If you look at our parent company, maybe it is a $500 million kind of a business and expected to grow at a much, much faster pace as compared to the traditional chemistries. Earlier, some of these biorational products, the applications more were towards the fruits, vegetable, and the smaller crops. But now, as Dr. Suresh Ramachandran mentioned, like this TopGrain and some more products which are coming, they are on the mass crops like rice and wheat. That is why I think it gives us a positive expectation that some of this biorational portfolio and products can really be scaled up in future.
Is it safe to assume that if you take it from parent point of view, you have eight to 10+ products which can be suitable to India and gradually in next period of four or five years, you will be launching every year some of the products?
I think globally, many of the products which are there in our product portfolio, they have been tested or they are at different levels of evaluation. Many of those have been launched, and that is why we are generating almost 9%-10% of our revenue in India from that. There are no ready-made products available like in other geographies which we can launch in India. Some of the products are under testing and some are being launched. And the future pipeline, I think whatever is there, that will be available for us to launch in India.
Understood. Sure. Thanks a lot.
Thank you. The next question is from the line of Soham Jain from Dalal & Broacha Stock Broking Limited. Please go ahead.
Yeah, thank you for giving me this opportunity. My first question is, our branded share of H1 export revenue rose to 41% from 34%. Did the branded sales grow in absolute terms, or did the bulk export decline faster? I just want to understand, did our AND & EHD or Metal Phosphides contribute to this, or how these products are classified? Yeah.
I think exports are not there in some of the other segment which you mentioned. All our exports are in the Agchem business, and this is a real growth which is there. It is not contributed by decline in other segment, and large part of this is contributed by Africa as a segment.
Okay, got it, sir. Sir, if you can also highlight about the H2 order visibility from our Japan customer and where do the customer inventory levels in Japan stand today?
See, the demand side, whatever I think we are seeing because of the global situation, because weather conditions are different. I think the exports to our parent company, which anyway is a smaller part of our overall exports at this point of time, is expected to be on the softer side. But in the general exports overall, I think Dr. Suresh Ramachandran already mentioned some of the points. Overall situation is not so much on the softer side. We are trying best how we can recover this, let's say first half with this high single-digit volume drop which we had. The work is on. There is not so much of the softness overall. But in our parent company's export, the second half is also expected to be softer side in this year.
But from next year, because of certain CapEx coming in, some additional revenues can come in.
Got it, sir. And sir, one more question. Speciality share fell to 28% from 30% in H1, while generic rose to 72% from 70%. Was this driven by speciality volume or pricing weakness or these stronger generic sales and/or both? What does it imply in your margins also?
It was more a factor of the generic products witnessing higher price rise.
Our share of generic chemicals rose. That is what you meant, sir. That is what you meant.
Yeah. The share of generic has increased because there were higher price rises in generic in line with the market.
Okay. Got you. One last question, sir. With about INR 2,500 crore cash in our liquid investments and cash in our balance sheet, and with reported working capital stress among the smaller players, are we seeing any opportunity to acquire brands or registrations and distribution at reasonable valuation?
We keep looking at opportunities, but unless they are really strategic, I think it is very difficult because just from the point that let's say maybe the market consolidation is happening or someone is facing financial distress, I think it is not an objective because see, a few years back, let's say we did few acquisitions because these were strategic in the area for us. But if you look at strategic-wise, like whether we are not present in any part of India, whether we need to expand the distribution, whether we need to add any new segment which we are not doing as an insecticide or herbicide or anything like manufacturing we are not doing. So that way, strategically, many of the bases are covered. If we get some really interesting opportunity at affordable valuation, which adds to our strategic journey, surely we are interested.
Just because, let's say some other players may be struggling, I don't think those kind of opportunities will really make sense from us from a strategic point of view. Having said that, we keep looking at the market, and if we feel there is some strategic rational, for sure we would be very much interested to deploy the funds.
Okay, sir. Thank you. Thank you so much.
Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Just few clarification. First, on the export side, you did mention of specific product lead overstocking, and probably it will take some time for the Japan demand to pick up. Broadly speaking, this will impact only this year's sales and next year it should revive, or probably this inventory destocking could take longer?
As per our understanding, this is only the this year phenomena, and next year it should come back to the normal.
Sure.
Also because
Yeah
CapEx project, which we are implementing in Tarapur, they are not export-focused. They are more focused to expand our domestic business. That is also one of the factor why it is expected to be soft this time.
Sure. The herbicide revenue contribution should start coming in from the second half of next financial year, from a Japan export perspective.
No, no. The herbicide, that is expected from Q2 financial year 2028, 2029.
2028, 2029. Okay.
What is expected to come is higher utilization of the existing facility and some increase in the volumes.
Okay, fair enough. The other markets you highlighted, Brazil has been doing okay, and we are also expanding our network or maybe supplying to more countries within the Sumitomo Chemical Japan's network there, or it is largely the same existing territories that we are working on out here?
It is primarily the same existing territories, our affiliate companies and third-party companies which we have. Depending on the country, we also add new customers and new products to those countries in alignment with the local affiliate.
Sure. Sir, second question. On the broader revenue growth, leave apart this year, wherein the macro is such, if I look overall, our trajectory historically had been to grow ahead of the domestic market, and it obviously growing even faster on the export side. How do you see the same thing playing out over the next three years, excluding this year? So let's say 2028 onwards, should we continue to maintain the same trajectory on the domestic and export front, or there could be further acceleration given the new product launches, India getting tier status to the global markets, new product launches, et cetera? How should one look at it?
Yeah. Our endeavor is to accelerate the growth rate, but everything depends on the environment. Nobody thought this year would go, even till mid of June, we never thought, we never believed El Niño, that it's going to hit. We were optimistic. Last year was completely opposite. It was completely raining all over India, excess rains. So if the external environment supports us, for sure with the kind of products we have launched and couple of more products lined up for launching in the coming next subsequent two years, that should help us to accelerate the growth. Everything depends on the environment. Internally, we have the channel, we have the team. Fundamentals very strong. It's just a question of external environment supporting to accelerate our growth.
Sure, sir. Just last bit, on the margin front, appreciate the cost cutting and cost controls that we have displayed in the first half, largely maintaining our EBITDA margins there. All the RM inflation in terms of passthrough, et cetera, is already there. So whenever the revenue ramp-up happens, there will be a significant operating leverage coming in. Wouldn't that be a fair thought?
Yeah, I think that is what our belief is. That is the situation.
Okay.
From RM delta point of view, RM cost delta point, there is nothing negative at this point of time.
Yeah. You have mentioned that inventory situation is-
Yeah. in the Q1, we got little extra benefit because of low cost inventory, and some of those sectors have already been reversed in the Q2, which you can see little bit of a drop, few basis point in the margin profile. But through operating leverage, we could, I think, monitor the overall profitability situation. Going forward, we do not expect any adverse situation because of RM escalated costs. Unless the situation change further, at this point of time, there are no such situations.
Yeah. That is it. Thanks a lot, Mr. Kunal Mittal. Thank you for all the answers.
Thank you. The next question is from the line of Himanshu Binani from Anand Rathi. Please go ahead. Mr. Binani, I have unmuted your line please.
Hello. Am I audible?
Yes, sir. Yes, you are audible.
Yeah. Thank you. Thank you, sir, for taking my question. Again, harping on the semiconductor piece of the business. Just wanted a better clarity in terms of how are we actually placed into this. Are we still into the discussion stages in terms of how the arrangement would be, if at all it would be through the Indian listed entity or through a separate wholly owned subsidiary of the parent, or how are we actually placed in terms of if at all we are going for it, so which are the products? Anything, any better sense on this should be really helpful.
Yeah. Himanshu, I do not know. I think maybe you joined a little late in the call. I think this point was adequately addressed in some of the earlier questions. Just to very quickly summarize, our parent company has signed an MoU with one of a very large anchor customer, semiconductor customer in India, which is developing a first large-scale fabrication plant in India. Discussions are at MoU stage, and continuing with all stakeholders involved, including Sumitomo Chemical India is also part of some of those discussions. Whenever the discussion reach to a mature and firm level wherein localization and these kind of investments and plans are finalized, the role of Indian listed entity will be finalized in due course, and it will be informed to shareholders.
At this point of time, the discussions are not matured to that level for us to make any formal announcement to our shareholders at this point of time. We are monitoring and the discussions are progressing well between our parent company and various stakeholders.
Got it, sir. Sir, can we safely assume that maybe there is a high probability in terms of this getting landing into the listed entity than that of the full subsidy of the parent? How so?
Specifically comment anything at this point of time.
Okay. Got it, sir. Got it.
Thank you.
Thank you.
Thank you. The next question is from the line of Ashish Konaje from Leo Capital. Please go ahead.
Thank you for taking my question. I do not know if I heard right that the Dahej herbicide plant will be operational in Q2 FY 2028. Secondly, can you also guide us on how much CapEx is planned over the next few years?
Right. I think on this herbicide intermediate, which we are developing in the Dahej as a first project, that is expected to be commercialized in Q2 financial year 2028, financial year 2029. More specifically, the calendar year would be 2028, sometime, say July to October kind of a situation. We will see if something can be preponed by, say, a few weeks or so. But at this point in time, this is the same timeline which we announced when we announced the CapEx also in January 2026.
Got it. On the future CapEx side, sir?
Yeah. On the future CapEx, I think in the past, I think we have been always maintaining that about INR 50 crore- INR 70 crore kind of a maintenance and debottlenecking kind of a CapEx, which we have been doing. In addition to that, whenever certain projects, additional projects, special projects are approved, we keep announcing those CapEx. At this point of time, we do not give any forward-looking statement for any of the items, so it is difficult for us. But as a trajectory, yes, we are working on several opportunities that how we can develop the site for more additional projects. Whenever something or technical studies have been done for that, which are under discussion with our parent company, technically, we feel very confident that several of these projects can be implemented.
But whenever these projects are approved by our parent company as the key technology provider and the anchor customer and our listed entity, which is an investor and operating entity, I think whenever these projects are approved, it will be surely communicated with our investor.
Got it. Thank you, sir, and good luck.
Thank you. The next question is from the line of Abhishek Sharma from Nine Rivers Capital. Please go ahead.
Hello. Good afternoon. Thank you for the opportunity. Sir, just wanted to understand our strategy, right? We have seen various other peers diversify into other sectors to reduce the Agchem exposure. Why have we not taken this call? Why have we been slow in doing this? Just to follow up, right, we have around INR 2,500 crore of cash. If we are not certain in which area, let us say, we want to diversify, is it not better just to return cash to shareholders?
On the first point, I think our company's scope, we are part of the agro and life solutions sector in our parent company, and the primary focus of that is agro business. But in addition to agro business, we are also diversified into certain segments within the same sector, such as environmental health product and also animal nutrition product. We believe that within the sector we are well diversified. Yes, I think some of the companies you mentioned, we have noticed that some of the companies which are dominantly agrochemical companies have diversified into other segments. But at this point of time, we do not expect that any other segments become a very important driving factor for us in the future. Our primary focus continues to be the agro and these existing businesses like environmental health and animal nutrition.
We see a lot of growth opportunities within this sector itself. That is our primary focus. Having said that, our parent company has several additional businesses and sectors. We keep discussing with them at a strategic level whenever the time is right, how Indian entity can play a part in some of these expansion of these businesses in India. But at this point of time, these discussions are at a discussion level. Whenever things mature, we will certainly be looking to announce, I think, some of these areas. Second point, which you mentioned about deployment of the cash. At this point of time, we believe that there are opportunities which are possible for us to deploy the cash in Indian market, because India as a market is growing at a very fast pace, and also the agro business in India is growing.
We believe that there are growth opportunities in India, which are more, I think, attractive as compared to global opportunities. At this point of time, we don't believe that we should give up, I think, any kind of future growth and give this cash return to the shareholders. At this point of time, this is our thinking. But in the future, I think we take your point, which you mentioned, that if there is no usage of the cash, it should be returned to the shareholders. We will put it to the board, and our board will keep taking, I think, decisions. But at this point of time, we all continue to believe that there could be growth opportunities in the company itself.
Got it. Just because it's been around three years since we've been discussing with the parent, right? When will these discussions fructify for Indian investors?
Honestly, we understand your point, but it is very difficult for us to give any specific timelines at this point of time because several discussions are at various stages, but sometimes these strategic decisions are a little bit more cautious because we don't want to make any mistake and take up a little bit of a hurried decision. While, yes, it takes time, but we can assure you that discussions are on, and whenever something reaches to a maturity level, it will surely be announced.
Because, sir, just if you The premium at which Sumitomo trades in the market is also basically because of the optionality of getting into pharma, CDMO, electronic chemicals, semicon chemicals is a business in which our parent is already there. So once if you're saying that there is only Agchem that you will focus on, then the multiples will also We don't justify the multiple, right? Just feedback on that side.
Sure. We understand, [inaudible], your views.
Mr. Sharma, does that answer your questions?
Yeah. Just one ask, sir, just we expect better governance standards coming from a Japanese MNC on this front. There is a lot of uncertainty around various pieces, especially the semicon side.
Right. I think, see, from our side, I think we follow very high standards of corporate governance that we want to, I think, communicate to the investor community in a very, very realistic situation. As the situation is there, we are trying and providing update to our investors instead of providing any speculative or future and forward-looking kind of answer. We have been very, very cautious in our communication. In the future also, we believe that we will follow this even, like, say, whether there is any estimate or projections, we follow a cautious approach, and that is what we believe is better from a transparency and governance point of view.
Okay, sir.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Dr. Suresh Ramachandran for closing comments. Thank you, and over to you, sir.
Thank you. Thank you all for your time and your thoughtful questions. We hope we have addressed them. If anything remains, our team and SGA, our investor relationship advisors will be happy to help. The first half of this year tested the entire industry. Through it, SCIL kept its revenue stable, protected its margins, grew net profit, and strengthened its balance sheet. We remain cautious on the near term, but confident in our direction. A differentiated portfolio, deep farmer and channel relationships, a strong pipeline from our parent company, and a team now focused on taking the company from Good to Great. As we approach Diwali, the Festival of Lights, on behalf of the entire SCIL family, I wish you and your families a very happy Diwali and prosperous new year ahead. Thank you once again for your continued trust in Sumitomo Chemical India.
We look forward to staying engaged with you. Thank you.
Thank you, members of the management. Ladies and gentlemen, on behalf of Sumitomo Chemical India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.