Kaveri Seed Company Limited (KSCL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Kaveri Seed Company's Q4 and FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Please note that the conference call will be recorded. Joining us today on this call, Mr. Mithun Chan, Executive Director. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation. I would now like to hand over the call to Mr. Mithun Chan. Over to you, sir.

Thank you.

Good evening and welcome, everyone, to our quarter of four financial year 26 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 will touch upon the operational financial performance of the company and then open the floor for Q&A session. Highlights, financial highlights. Revenue from operations was at 82.21 crore as compared to 76.95 crore in quarter 425, grown by 6.84%. And net loss was at... 25.65 crore as compared to 29.25 crore in quarter 425. Revenue from operations was at 1303.77 crore as compared to 1121.57 crore in financial year 25, grown by 16.25%. EBITDA was at 349.75 crore as compared to 274.29, grown in financial year 25, grown by 8.34%. Net profit was at 283.26 crores as compared to 265.21 crores in 25 crores by 6.81%. Major highlights, financial year 26 was a strong year for the company with the revenue from operations growing by 16.25% to 1303.77 crores, while PAT increased by 6.8% to... 2.83.26 crore on account of delivering good growth rates across all non-cotton segments, like rice, mair, and vegetables. Contribution for new cotton hybrids improved significantly, increasing from 10.3% to 30.05%, demonstrating strong acceptance of newly launched hybrids and strengthening of our future cotton portfolio, expecting growth in cotton sales across north, center, and south. India driven by new hybrid products. Maize remained the key growth driver during 26, with volume growth of 18.84% and revenue growth of 40.17%, supported by improved acreage and stronger market demand. Hybrid rise revenues increased by 18.3% despite restrictions in Punjab, while selection rise increased by 2.58% and revenues grew by 9.76%. Hybrid rice growth is expected from key markets, including Punjab, Uttar Padesh, Bihar, Chhattis, and Jharkhand. Export business delivered exceptional performance with approximately 90% growth during financial year 26, while quarter to four exports registered growth of nearly 76%, reflecting increasing acceptance in major international markets. Export business performance is expected to remain strong, expecting growth in rainy milliliter across Rajasthan and Uttar Padesh. The contribution of new products of volumes of cotton was up from 10.3 percent to 30.04 percent. Hybridized revenues increased by 18.3 percent. Selection rise volumes increased by 2.38 percent and revenue by 9.76 percent. Maize volumes increased by 8.84 percent and revenues increased by 40.17 percent. I would now open the floor for the event session.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question assembles.

Again, to register for a question. Please press star and 1. Participants, you may press star and want to ask a question.

Your first question comes from the line of Siddharth Dund with Goodwill. Please go ahead.

Yeah, hi. My first question is regarding the inventory level. Last year, our inventory had a very abnormal jump of 38%, but sales group has only 16%. This year also we've had a 17% inventory growth over the last year level. So, is inventory expected to normalize to a certain level or will we keep this extra buffer that we've started to create?

17% up.

This year, we have produced more because last year there was a lot of competition in terms of production areas. So we have produced more intentionally to keep some buffer stocks. That's the reason we are increasing a bit of higher inventory level.

Any update on BT3, VG3 trials?

I don't know, nothing but just moving in a very slow pace, but nothing concrete as such. Once we get any update, we'll definitely let you know, but it's still moving in a very slow pace.

Okay. El Nino effect or something that we see on our hills any time or it's not really a thing?

It's too early to say because there's a lot of mixed opinion about the monsoon altogether. But in the last week or three or five days, we have seen three monsoon shivers across most of the paths. So that may not be a right thing to judge. But as a seed business, we require initial two or three showers to sow the seeds. So we may not have much impact. But the delay in the mountain may impact the cropping patterns. But as we are there in most of the crops and we have a product mix company, so we might mitigate that risk. As of now, we don't see much of threat in that.

Are you expecting cotton to continue de-growing?

Cotton should grow this year. This year the sentiment is also good across India. The cotton acreages are in the initial trend we see the cotton acreage was also growing and there will be a linear effect. Even the sentiment for cotton is also good because it's a hardy crop. The sentiment is good and we see there will be an increase in the acreage and definitely Absolutely, we'll have an advantage in that. We'll be definitely growing in the quarter as a whole.

With that, expect new products to become, like, it went from 10 to 30, so can it become 50% plus of our business?

Yeah, most of the growth what we anticipate this year should come from the new products, so that we have already seen the initial trend last year, so that will grow, that will continue to grow.

Will it have a similar margin or lower or something because of price cap?

This year, we may not be able to increase the prices like how we have increased last year, but the other in the production cost is also slightly lower than last year. So in that way, we will be able to maintain the margin, so slightly, maybe in a better way than last year, because the other costs will come down.

Okay, overall production costs are down from last year?

Because the yields are higher, the production costs are slightly down.

Okay, great. Thank you so much.

Thank you. Your next question comes from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.

Good afternoon, sir. Sir, just wanted to understand on the balance sheet, sir, on the other current liabilities, we've seen a reduction from 600 crores of last year compared to 470 crores this year. So, sir, what does this pertain to? Is it due to lower customer advances that you've received?

Yes, compared, if you see the advances such as from last year to this year, we have received 75 to 80 crores of lower advances. Okay, sir. And what would be the reason? That's the main impact of that.

Okay, and what would be the reason behind this?

And even trade payables are also lower compared to last year. Yeah, yeah. What would be the reason behind this lower advances, sir?

Is it because of expectation of a poor season, for example?

Not really, but the sentiment of the farmers or the cash flow is a bit tight across the channels, and even we have not insisted more on advances because the margins are getting shrunk. Okay, sir, margins would be at the farmer's end is what you're trying to say? No, no, margins at the company level. If we take an advance, we need to give more incentives to them. So, we are not encouraged taking more advance. We have not floated attractive schemes. Okay, sir.

Sir, in terms of the key crops for us, cotton, maize, and rice, how do you see the channel inventory in the system for all three of them? And if you can touch upon the illegal penetration, especially in cotton for this year?

So, as of now, nothing is there in the channel, but if you see in the company levels, because as you see it, nothing will be left in the channels. But most of the inventory will lie with the company or in the season with the channel. So, the season is there to begin, the placements are slightly happening now in some areas. So, the inventory levels are pretty high in the system, especially with the companies. So, um... That's a challenge, but as the inventories are high, that's the reason I said that we may not be able to increase the prices as like what we did last year. But the branded products move more now.

Okay, so would it be the same as you said for all three crops, or do you see any difference in let's say cotton versus others?

In all three crops, the inventories are high. Most of the yields are also good. So, most of the standards were the inventory. Coming back to your second question regarding the illegal BT. Except in Gujarat, we don't see any rise in illegal BT. In Gujarat, it's still continuing as of now.

It's still continuing as of now. Okay, sir. All right. And sir, your expectation in terms of how FY27 could pan out, you know, in terms of volume growth or revenue growth and margins?

Last time we have increased rather than the reason we have seen a lot of revenue growth. This time the majority of the contribution will be from the volume growth. We see the 15-plus percent of growth at the top line, and we might grow much higher than what we have projected, like 15-plus at the company level, where the quantity should be more than 20-odd percent.

So volume growth, in the good case, can be 20-odd percent is what you're saying?

Yeah, overall revenue should be in between the 15-20 percent growth, and cotton should beat the overall company in terms of the growth. We may not increase the prices, so the revenue growth will be in line with the volume growth. Sure, sir.

Thank you, sir. I will get back in the queue.

Thank you. Before we take the next question, a reminder to all the participants, you may press star and then want to ask a question. Your next question comes from Amit Doshi with Care PMS. Please go ahead.

Yeah, thank you, sir. Inventories, what kind of, obviously, you said all the mix of all the three crops would be there, but for the cotton, especially since now the hybrid is contributing more, would we have more inventory of the old cotton seed, which ultimately would call for a write-off, considering two to three years of shelf life?

So, if you think the inventory compared to last year, the inventories are only up by 15 to 18 percent. So as we are anticipating more than 15% growth in this year. So we are in line with the inventory levels. But in terms of the write-offs, most of the inventory is a new production. So we may not worry about the write-offs, especially in cotton, the feed will last for three years. So the inventory what we have is hardly maybe maximum of 1.3 to 1.5 years, not more than that. So if anything is left, we will use next year.

Okay, okay, okay. So, you mentioned that this illegal cotton seed is still continuing in the state of Gujarat. So, despite that, our confidence is extremely high on the cotton sales. Is it just because of the price parity that we would have vis-a-vis illegal cotton or anything else apart from that?

So we are not competing with illegal cotton at all. We are competing with the normal legal BT cotton across. As if you can see, new hybrids have contributed more even in last year. So those hybrids have performed well last year. So we are anticipating a growth in those hybrids. So that will contribute to the majority of revenue in cotton.

Okay, so now do you believe this, the overall reduction in last four years has come down from 45 to 120. Now, of course, last year was an operation. So, what could be a next year likelihood?

So, definitely from

30% to last year, definitely when

compared to, if you compare to last year, then the contribution of quatern will definitely higher this year than compared to last year because we see a very good growth in quatern this year. That doesn't mean that it will not grow in other crops. It will also grow in other crops, but cotton will be growing much better than other crops.

Okay, okay, okay. So, we saw some announcement regarding the tax ruling, which is in favor of the company at the athlete level. Would you want to throw some sort of management highlights in terms of what is the likelihood of past as well as future such tax liabilities or the obligation vis-à-vis the call of income tax?

Whenever we have any litigation or any with the tax authority, they already intimated to the exchanges and to the investors. Because as we claim it as an agricultural income, it's not our company, it's across the industry where most of the companies claim it as an agricultural income. We are not the first or the only company who claim it. So there's a dispute and across, if you see, not only to Cauvery, but across industry, you see, all the received companies have won against the tax department. So, it's just a recognition of the income, and we are one at the Commissioner Appeals level, and in most of the cases, most of the companies have got many orders at ITAT and High Court. So, even though there might be a litigation, we are not worried about it. That's what we were saying in the last years also. We had a litigation. We were pretty confident that the nature of the income is agricultural income, and that is all clear in most of the courts. So, it's a matter of time. As of now, we don't have any other litigations as of now. If some litigation definitely comes in, definitely will know. As of now, we don't have any litigation.

Okay, okay, okay. Sir, anything update on the feed bill that was earlier last year proposed? Anything on that?

That should come this year most probably. Anytime. It's moving very actively. That should be out very soon.

Oh, okay, okay, okay. And, sir, since last two years, obviously, dividend has been maintained, but last two, I mean, accepting last year, we had done buyback as well. So, this year, there is no announcement of dividend, additional dividend. Any thought process at how...

So, usually, we give only one-time dividend. That is usually in the second or third quarter, we see. We were at a regular dividend picking. We have not changed our policy regarding dividend. Even though we don't have a policy, we are giving them the same time. But in terms of the buyback, last year we were not done, because we were pretty much sure that we are producing more we need to maintain for the inventory, that the money is stuck, and that's what you are seeing now. Once we realize this money by the next three to five months, then we'll come back with that.

Okay, okay. And last question for, since now, last year, you know, of course, the cost of production, etc. were higher. Now, you are saying that the cost of production is likely to be lower. On the other side, price is not going to happen. So, would you, like you said, that 15 to 20% growth should be there on the revenue level. On the margin front, over 24%, do you believe that we can cross going to loss, I mean, reduction in cost of production?

Most of the other expenses are same or will be lower than last year and slightly lower production cost. Compared to last year, we see that the margin should go up this year, compared to last year.

Okay, okay, okay. Thank you, sir. I wish you all the very best. Thank you.

Thank you. Participants, if you wish to register for a question, you may press star and then one now. The next question comes from the line of Anurag Jain with an individual investor. Please go ahead.

Good afternoon, sir. My question is on the capital, capital investment, capital expenditure. There is a capital working progress of 99 crores at the standalone level and 129 crores at the consolidated level. What is the capex being undertaken by the company and its subsidies? What kind of facilities are being built?

Most of the facilities or office building were Plant and machinery. Land, office building, and plant and machinery, these are the ones, the most for the capex is there. One of which only 30 are closed with one building which is going on, and some with acquisition of land, and some with seed processing unit and the machinery.

And so the land purchase is basically for R&D land or for building from... Thank you.

Thank you. Participants, you may press star and 1 to ask a question. A reminder to everyone, you may press star and then want to ask a question.

The next follow-up question comes from the line of Dhruv Saraf with Bowhead India Fund. Please go ahead.

Mitun sir, if I just look at the gross margins over the last 2-3 years, we have fallen from those peaks of 49% to roughly 49.5% to 47% today. So in FY28, sir, do you expect any gross margin expansion or will the margin expansion purely be led because of operating leverage?

Even if we see something cross-margin level, because in the last 2-3 years, rightly said, rightly observed, the cost of production has gone up, and in the same ratio, we were not able to... Pass it on to the farmer. Now, the cost of production is slightly lower, and the prices remain at the last year levels at least, if not higher. So, we might increase the gross margin this year. So, the addition in the bottom line should be across all gross and the operational levels.

Sir, I just wanted to specifically touch on maize. You know, you had alluded to the fact in one of the earlier calls is that maize inventory in the system is very high compared to previous years. And given, sir, this is an early new year, you know, maize has competing crops like soya bean and pulses which are expected to do well. Do you see very high pricing pressure in maize for the coming curry season?

So, as I know, the sentiment is not that great for me. Last year, the yields are very much higher. I'm talking just about the curry spot. Because the yields are good, the sentiment is good. One is because of El Nino, the mixed opinion of El Nino, and the other thing is that there's some sort of a shortfall in terms of the fertilizers in the market. That's also impacting to some extent, but it is too early to talk about that. So that's the reason we just see as sideways in the curry part. But second, Ravi, we see a very positive thing for me. And for other company as such, even in curry, we will be growing because we are targeting some other pockets where we are not strong. We have very good habits in those segments. We will be growing even in this particular tough conditions.

Okay, sir. You know, you had a lot of success with your new products in May over the last two, three years. Is there any major new product launches that you're doing this year or have you done last year which could start contributing to revenues?

That's a continuous activity what we do, but the last two, three years what we have done, those will be a major contributor for this year and for the next year.

Sure, sir. Thank you. Thank you. The next follow-up question comes from Anurag Jain, an individual investor. Please go ahead.

Good afternoon, sir. Sir, now Kaveri was using the Kaveri brand in the market. Now, you have started using one of the facilities, Aditya brand also. So, when you are looking at the market, how are you dividing the market segment between the Kaveri brand and Aditya brand? Are they targeting different segments or they are competing with each other also?

In terms of the company level, it's a 100% subsidiary of Ghaveri, but the products what we sell in Ghaveri and Aditya are altogether different. We have another subsidiary by name Genomics also. All three companies sell different products because as we have good R&D and we have... Having many new hybrids which are like B2 and in different segments. As a company, we may not be focusing on most of the hybrids. So those hybrids, we give it to, for marketing, we give it to Arithya and Genomics. In most of the cases, they compete also among themselves. But as a team, as a hybrid, they all operate independently. They are nothing related to each other. And the main product is in high-variant, something like me too, we'll go to those products.

Alright, thank you. Thank you.

Participants, you may press star and 1 to ask a question. As there are no further questions, this concludes our question and answer session. Thank you for joining the call. For any other information, please be in touch with Rama Naidu from Intellect PR on 9920-209-623. On behalf of Kaveri Seed Company Limited, that concludes this conference. Thank you, everyone, for joining us. You may now disconnect your lines. Thank you.