Rallis India Limited (RALLIS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to RALIS India Limited Q4 and F526 Earnings Conference Corps. We have with us today Dr. Gyanendra Shukla, Managing Director and CEO, and Mr. Bhaskar Swaminathan, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risk and uncertainties. A detailed statement in this regard is available in the results presentation. 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 touchstone phone. Please note that this conference is being recorded. I now invite Dr. Shukla to begin the proceedings of the call. Please go ahead.

Thanks. Good morning, everyone. And, uh... Thank you for joining us today on Rallys India Limited Q4 and Fiscal Year 26 earnings call. As mentioned, I have alongside myself, our CFO, Mr. Bhaskar Swaminathan.

Good morning, everyone.

I'll open with an overview of the industry landscape before addressing developments specific to Rallys. The Indian agrochemical sector is currently transitioning from a buyers to SLS market due to war-induced supply constraints and rising prices. Post-Eran war, the industry shifted to SLS market with signs of panic buying and hoarding. Supply chain disruptions persist, but inventories help most companies avoid damage. Agrochemicals, particularly glyphosate, is facing pass-through in China supply chain disruptions amid global tensions. The prices of other generic AIs like glufosinate, mancozade, metrobzene, strobilurin fungicides, pyrethroids, C-tip, etc., and year-term cost inflation wave likely to compress downstream margins. Quarter 4 is typically slow for the domestic market for agrochemicals. In addition, the ruby season has not gone well going to the unfavorable climate. As per the official data, the unseasonal rain and hillish storms have damaged the ruby crop across 2,000 hectares with wheat suffering the maximum impact. At the end of March 26, summer sowing is progressing at a slower pace, down 4.7% year-on-year, primarily driven by decline in rice, cereals, and oilseeds. Within cereals, bajra sowing has improved by about 9%, while mage has declined by about 8%. In oilseed groundnuts, sowing is significantly lower, down by 12.7%. Thank you. Also, this is a bright spot with total area rising by 17%. AMD is 2026, also in four at 90% of the A. Signals normal, retaining a degree, continental effects of like agro-prising new odds. Drive early deficit in north and central and western India, and which are key swaying areas, while south and east may see a relative better monsoon. Well-distributed precipitation during key swaying windows can partly offset deficits, whereas erratic patterns such as prolonged

dry spills or excessive concentration tend to be more disruptive.

Erratic patterns risk 5-10% demand cuts for herbicides and insecticides. In integrated firms with balanced portfolios of seed, crop protection, and soil and plant health tend to face less impact. Expanding irrigation coverage to 55% of the river land has notably reduced monsoon dependence on key crops for India. And also, the rural diversification into dairy, poultry, and allied sectors now contributes roughly one-fourth of the income for households,

providing a structural buffer against rainfall deficits.

The MSP framework key indicator for Kharib 25-26 is broadly supportive for oilseeds, pulses, millets, and cotton, while the hike in paddy is relatively modest. From the agrochemical and seed industry perspective, this is positive for crops such as cotton, soybean, groundnut, mage, pulses, and millets. Provided monsoon distribution and reservoir levels remain supportive. The agriculture sector may see a 3-4% growth in fiscal year 27. Seeds category remains a structural 5-10% keger story, depending on the portfolio of the companies. Volumes might shrink due to less acreages, but margins are expected to remain stable to soft. The market should favor low-cost producers with export breadth and tight working capital discipline. The near-term outlook remains contingent on the evolution of Middle East conflict, while healthy reserve levels of approximately 54% are supportive for ongoing season, reduced acreage, and forecast of below monsoon rainfall could possibly cause some risk. India's FCO 2026, this was a key bill which was brought to regulate the biostaminin fertilizer, standardizing humic acid and seaweed formulations, thereby improving product reliability and regulatory clarity. I think this is very good, positive development for the long term. The global crop protection market estimated at approximately $70 to $75 billion in 2026 and is projected to grow at a CAGR of 5 to 5.5%, supported by rising food demand, limited arable land, and need to improve farm productivity. On supply side, the globally China-linked supply concentration remains a key issue, especially for active ingredients and intermediates, where export restrictions, price shapes, or trade disruptions can quickly affect availability and cost. Elevated raw material and logistics costs continue to pressure manufacturers, while global weather uncertainty and changing crop patterns added demand volatility. Global recovery in this sector is visible, but uneven. U.S. demand is supportive. Brazil is weak. China-led pricing pressure remains a key concern. India's rising stock, rice stock position remains strong. But the latest report was said does not indicate any fresh increase from March to April. Global rice stocks have increased. Including a comfortable supply, which is an impossible pressure on global rice prices. So that's a global overview. Moving on to RALIS specific developments, we had a reasonable quarter four performance despite short-rubby season and geopolitical unrest. Our quarter four revenue stood at 456 crore versus 43 crore previous year. EBITDA improved by 96% to minus 1 crore from minus 19 crore in Q4 fiscal year 25. Profit after tax has stood at minus 15 crores versus minus 32 crores of quarter 4 fiscal year 25. Exceptional items include profit on the sale of some property, land for more 3 crores in Aurangabad. Across the technical portfolio, we are continuously broadening our customer base and securing additional registration with global players to drive share gains. And metrobazine, the volumes have decreased in quarter 4 in comparison to quarter 25 volumes. Pendimethylene volumes have increased. Hexacone volume also have increased. And there has been some decrease in the acephate volume. So pendi and hexa has done overall well. There's some shrinkage of volume in metri and acephate. Overall annual capacity utilization has improved in fiscal year 26 compared to 25. On new launches, we have currently launched Alster, a dual XN granular insecticide, and FIPLAN, which last year we had announced, but we were not able to launch because of some quality constraint. It has been launched now. It will help in managing both, say, broad-spectrum insecticide to manage both sucking and chewing pests. We have also obtained registration for a three-way rice herbicide, and in the past, I've been talking about growing herbicide segments, so this is addition to that. It will be called a SPIRO. We are working on the launch plan. In Q4, we had launched an initiative called Idea2Impact to establish an open innovation system to source, validate, and commercialize agri-innovations. We have also launched SAPCHUM, a GIS platform, which enables scientific identification of high-potential intelligence for target market expansion. On our new initiative, Sampark Plus captures farmer-level demand signals to generate actionable insights. And improve sales conversion and move inventory as needed. We're also using tech-assisted products in generate demand, digital-led field-AV van campaigns, farmer and retailer-level digital schemes, and enrollment of retailers on one-edge platforms. All these platforms are digriven. This is all for initial delivery of centricity goals, as well as retailer and distribution connect. As a result of improved manufacturing efficiency and operational excellence, RALIS has achieved record production levels. We have enabled digital-led engagement that extends data-driven decision-making and enhances farmer outreach and our advisory productivity. We are also shifting towards high-margin, sustainable, and pharma-centric offerings, including biological and next-generation product. That concludes my opening remark. I will now hand it over to Mr. Bhaskar, our CFO, for a detailed analysis of the financial situation. Over to you, Bhaskar. Thank you.

Good morning, everyone, and thank you for joining us today for our Q4 and FY26 earnings call. I will walk you through our financial performance for the quarter, post which we shall commence on the Q&A session. Starting with the top line for the year, our Q4 and FY26 revenue stood at Rs. 456 crore as against Rs. 430 crore for the same period last year, resulting in an overall growth of 6%. Overall volume growth has been 5% with pricing growth by 1%. Overall EBITDA for Q4 FY26 stood at Rs.-1 crore, higher by Rs. 96 compared to last year of Rs.-19 crore of the same quarter. Profit after tax stood at Rs.-15 crore versus Rs.-32 crore of Q4 last year, which is 52% higher than the previous year same quarter. Crop care segment grew by 5% to Rs. 425 crores in Q4 FY26, from Rs. 405 crores in Q4 FY25 due to volume expansion, new product promotion, and increased digital engagement. Moving to domestic, B2C. A 15% growth in Q4 FY26 registering Rs. 255 crore revenue vis-à-vis Rs. 222 crore in Q4 FY25, which was driven by volume growth of 14% primarily led by insecticides. Soil and plant health category grew by 27% to Rs. 47 crore from Rs. 37 crore in Q4 of FY26 in comparison to Q4 FY25. It registered a robust volume growth of 29%. The volume impact is due to growth in micronutrients and biofertilizers. Moving to seeds business, seeds revenue grew by 23% to Rs.21 crore in Q4 FY26 from Rs.25 crore in Q4 FY25 due to 8% volume growth and 15% price growth mainly driven by cotton and millet. Exports top line de-grove by 33% to Rs.77 crore from 114 crore due to degrowth in volumes and revenue from metri-bris-in and pentimethylam. CSM products, custom synthesis manufactured products, in queue for FY26 revenue will display promising growth by lodging 15% growth to Rs.66 crore from Rs.41 crore. Of last year, driven by both volume and price growth. That would be revenues stood at Rs. 170 crore versus Rs. 182 crore with a decline of 7% primarily due to volumes. For the full financial year period, top-line revenues stood at Rs. 2897 crore, reflecting a growth of 9% year-on-year. CropCare revenues to date Rs. 2416 crore. Reflecting 8% growth year-on-year, driven by volume expansion despite price softening, and seeds revenue increased to Rs. 481 crore, delivering 15% growth year-on-year, supported by cotton and maize, along with improved contribution from in-license products. The B2C business recorded growth of 5% delivering Rs. 1657 crore. The B2B business recorded growth of 14% delivering Rs.759 crore of revenue supported by both volume and price growth and expansion of the customer base. In the crop case segment, expansion of our customer base and product portfolio is enhancing business resilience. We are driving focused execution across frontline and operational functions by optimizing the product portfolio, rationalizing teleteries, eliminating overlaps, and simplifying costs across the value chain. In the seed segment, our primary focus will be on five strategic crops, cotton, maize, millet, mustard, and rice. A selective and concentrated approach in these crops is expected to drive operational scale and efficiency. Overall, we remain disciplined in improving capital efficiency across both fixed capital and working capital. At the quarter-end, our inventory levels remain slightly elevated in comparison to the same quarter of last year. Collection cycles remain smooth. We have healthy cash and liquid balance of Rs.

541 crores as of 31st March, 2026.

Our continuous approach towards improving digital-led initiatives is helping us reach targeted customer groups with greater momentum. In parallel, we are undertaking portfolio rationalization and sharpening our focus on priority markets to enhance operational efficiency, strengthen market presence, and improve profitability, thereby we remain committed to achieving consistent and profitable growth. That concludes our opening remarks. We can now commence the Q&A session.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to remove your cell phone from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Prashant Biani with Ilana Capital 3Squad.

Yeah, thank you for the opportunity. Sir, the first three bullet points of your commentary on slide 12 portrays a very pessimistic scenario, but your performance was pretty contrary to that. And I just wanted to know, especially on the gross margin part, what drove healthy margin improvement at the gross margin level?

So, I think, you know, when we put a commentary, it is based on what was happening in the market, right? So, you know, last year we started with a very heavy early rainfall that impacted herbicide uses in crops like soybean and cotton. So, that was a big impact. Then we came to end of Kharib season, massive rain led to decline in consumption of insecticide, and as you move forward towards Rabi, actually rain suddenly stopped in September, and as a result, there was an impact on pest disease pressure and all. So if you see the context of overall year development has been a little bit choppy, so it indicates that. Nothing else. Having said that, I think our focus is to, those events will continue to happen. How do we move forward and deliver better performance on an ongoing basis? Now, gross margin, obviously, is a combination of... So, two things, you know, so, I mean, again, it's a segment by segment. I think our contribution in seed and soil can plan and help business continues to remain robust. When we say crop protection as a category, there's always a mix of product. And you might, if any one of you might remember, I've been talking about two troubled child for us, you know, Claston and Benchilla, right? So, we are trying to actually liquidate that inventory. I think we are done with majority of it. That led to compression of margin and causal force because we had to liquidate that inventory, we just cannot keep it. Otherwise, it becomes a write-off.

Sir, I meant, sorry, you meant that these two products' inventory was liquidated before Q4 or during Q4? No, no, during Q4. But we delivered a decent margin expansion at the gross level. So... I am looking at Q4 specifically.

From the perspective of crop protection or seed?

Both. Seeds, I mean, is a small thing only, mainly on the crop care side.

So look, I think margin expansion, if you see from what I know, our CSM business delivered higher margin because we had a contract, though it is a smaller business, but there is a clause where we can actually get some benefit of volumes drop below certain threshold. So that helped. SPH business was slightly better. Overall B2B business exports were better. Seed was better. So that's what is reflected in our whole number. On crop protection, on a standalone basis, it was marginally down because, you know, B2C business because of Benjela and Plasto. Okay.

Sir, how are you seeing the initial demand for Kharib?

So, two things are happening. I think right now, everybody has gone into a wait and watch mode. First of all, the rainfall, Noir-Ninio impact, nobody knows. The other thing which is, people are looking at how government will be able to mop up sufficient fertilizer. These two factors might have some, and then third one is always commodity prices. Right? So rainfall pattern, commodity prices, and fertilizer, these three factors will determine to what extent farmer will plant what. When we plan our business, we plan on a normal basis because I believe each three of factors, you know, for example, I believe that if farmers get 10% less urea, it will not impact the yield because farmers are used to using high urea because they're highly subsidized. More than urea, phosphorus, potassium are going to be more critical. When it comes to rain, there's a forecast of 8% less rain over LPA. But again, there have been instances where rainfall has been 8% lower or even much lower. But distribution was good and it arrived timely. So as a result, it didn't have much negative impact. So I think a lot of unknowns and war-led petrochemical, you know, disruption, supply chain, or solvents, you know, energy costs, everybody increasing the prices of raw materials, all of that, when you factor in, it is very, very difficult to put a finger and say, look, what will happen? What we are trying to see is that historically, you know, in, I mean, My agricultural lifetime experience in 40 years, there have been two worse droughts. Even then, area soon does not go below 85, 95, even 90 percent. So farmers will plant something. They might make different choices. They might also down trade on the kind of seed they buy. They may not buy very premium seed. They might reduce some fertilizer consumption. And unless they expect a good income, they may opt for lower cost crop protection product versus high cost crop protection product. So it's too difficult to say. From our perspective, we're trying to secure as much as possible supply for Kharif. And we'll also seek opportunities to pass on at least cost increase.

Sir, just lastly, sir, our crop B2C business growth was driven by insecticides. Sir, why would insecticide sales grow this much when, you know, there is a, this would be a herbicide placement season?

So, I mean, so let me tell you placement. I think, first of all, we have not gone for any significant placement more than what is required in quarter four because some of this was low cost inventory and we would like to sell in quarter one because there's an opportunity to realize higher price. And, you know, so, so, but I mean, I keep saying that, look, don't look at our business on a quarterly basis. No, that's not the right way. Always look at our business on H1 basis, H2 basis. So if you say H1 story, I was telling H1, if you see our business, actually, the leading growth had come from fungicide and herbicide. And in H1, because of August, September rain, insecticide users had dropped as a result, insecticide business had declined. Come to H2, actually our herbicide and insecticide have done better, right? Whereas fungicide has slightly gone down because there's a driver of the lesser diseases. But on a yearly basis, I would say we are slightly down on insecticide because of the impact which got created in H1. We are up on fungicide and we are significantly higher on herbicide. So on a yearly basis, our herbicide business is up by 15%, fungicide by 5%, and insecticide is down by 3%. That means B2C business has gone by 4% overall.

Okay, sir. Thank you so much for your time, and all the rest.

Thank you. Thank you. Next question comes from the line of Ankur Pediwal, Access Capital. Please call me.

Yeah, hi, sir. Thanks for the opportunity. Now, my first question on the seed business there. So, you know, if I look at not quarterly, but on an annual basis, we have done reasonably well this year, along with some sort of stability or improvement coming in the EBITDA margin as well. And given your commentary of focusing on those key five crops, how do you look at growth or ramp up in this business over the next two to three years? There have been, you know, issues of lower inventory earlier, but despite that, we are seeing some margin uptake possibly because of better pricing. So your thoughts on, one, volume growth, pricing growth, and margin outlook for this business? Right.

So I think in one statement, I can say pricing across the board will be higher, because when commodity prices go up, we have to compensate more to the growers, and we have to figure out a way to continuously increase the price. Now, when it comes to yearly construct of the seed business, to me, Four crops are more important, cotton, rice, maize, and millet, and each one of those crops actually had delivered growth last year. Cotton, in fact, had grown by almost 35 percent, maize had grown by 20 percent, millet growth was 8 percent, and there was a small growth in rice because rice seed availability was a challenge. Now, when I look forward, I think cotton probably this year again will deliver highest growth followed by maize and rice and then millet because of the limited area. In fact, millet might surprise us in a less rainfall area. Sometimes millet area also goes up. So that's how I see it. So I expect a combination of price and volume growth and expecting to deliver high double digit growth again this year.

Sir, just one follow-up. High double-digit is a volumetric growth that you are looking at or it includes the pricing also?

It's a combination of volume and price.

Okay, sure. And on the margin front, should we expect to sustain these margins or maybe even improve given the realization improvement?

I cannot predict that, but obviously effort is, you know, when your business grows, you know, costs should not grow in the same proportion. That should have positive impact on the margin. But in seed, for example, last year we suffered because we had higher prices for drying and processing and all. This year, you know, there is a other phenomenon because a seed crop was on time by everybody else and harvest came at the same time. As a result, there was a sudden capacity constraint for dryers, which is a primarily third-party activity. As a result, companies have to pay incremental costs for drying in the paddy, you know, open field. When you dry in the open field, what we call pad drying, it also sometimes can lead to lesser recovery. So all of those factors are not known yet. I think we are in the process of preparing for kharif and inventory and costing and everything probably will be known towards end of the quarter. And how season fares from a consumption perspective is only known when first half is over.

Sure, sir. Second bit, on the crop care side, you know, if you can share your thoughts and comments on, you know, the specific product, SFA, 20, methylene, et cetera, you know, how is the macro behaving, especially, you know, given the supply chain volatility globally as well, both on capacity as well as on the price in front.

So I think as far as domestic branded business is concerned, availability is not a constraint.

We are okay.

Now, when it comes to our export business, I think there are four primary molecules we deal, pendimethylene, hexaconozole, acephate, and metrobogen. I continue to remain positive on metrobogen and pendimethylene and hexaconozole. There is a structural challenge on acephate side because the same people, those who supply us raw material, they compete with us in the American markets. So, as a result, there's always a challenge, you know, to supply those markets. Having said that, given some supply challenges also, we are trying to prioritize domestic market for a product like SF8, and we're trying to balance it, not lose the customer at the same time, see where we are going to be able, we will be making more money. There are other products like Metal XLM we make, Chrysopsim, Chrysopsim Methyl we make. Those are a relatively smaller product.

Sure, sir. That's helpful. I'll get back into the queue. Thank you and all the rest.

Thank you. Next question comes from the line of Viraj with Simple. Please, Huwai.

Yeah, just a couple of questions. Korsha, just to clarify, you said the standalone B2C gross margin has softened in the quarter, and whatever increase we've seen on a console basis is a mix of B2B exports and feeds. Am I right? Yes. Okay, and also with regards to the double, yeah, just you both, and with regards to the healthy volume growth which we saw in V2C in the quarter gone by, that would also be largely a function of the pre-price when we would be doing for N6-6-8 or maybe for the, you know, biostimulants for the upcoming quarter. Would that also be a right understanding?

No, actually, contrary to what we should have done, we have not done that. We have been very conservative on replacing the stock, right? So, we have only sold what is required because as the sentiments change, we might have an opportunity to have higher realization. As a result, we haven't aggressively pushed the stocks.

Okay, any color you can give in the inventory in the system for the market?

Look, at this point of time, if you go to the market, while it seems challenging environment, but every product is available. Right. And we haven't seen any early sign of price increase because consumption has not begun yet. Right. Except the cotton seed were probably in northern India were midway in the season. Some of the fossil we sell quantity were in season. So it's too early to predict. But yes, on seed, the cotton prices were not increased by the government. So they remain flat. So, we have to rely on volume, and cotton is going to be roughly 20-25% of our projected cotton seed business. So, from that perspective, no price increase. All the price increase opportunities will come in price, maize, and millet. Cotton is primarily a volume game. Same way, crop protection, I think, because of rain and all. So, yes, companies do place some, the normal inventory. We haven't done anything beyond normal inventory.

I went for the crop protection for the industry, not specific to us. Any color you have on the, you can give on the inventory in the system. Because, you know, even Q2 was bad, and we have not been that great. So, you know, any color you can give in terms of the inventory in the system.

I think inventory has come to normal level. I mean, two years ago, this whole industry was suffering from a lot of inventory hangover. I think that has reached to a normal level now. Now, obviously, I don't have company by company detail. I don't have insight into other companies, but there are enough indicators in the system to say people have inventory what they need. They're not carrying power load of excess inventory.

Okay, no, because where I was coming from is, as you alluded in the earlier part of the call as well, is that, you know, any cost increase which we are witnessing right now, we will be looking at opportunity to pass through. So, in that sense, you know, especially on the generic piece, you know, just understand the factors we are, you know, looking internally, which gives us confidence that we will be able to pass through.

Yeah, we are one of the first ones to announce price increase because we cannot absorb all the cost. Because season, consumption season has not yet begun, so it's very, very difficult to say how market will behave. But every company is kind of indicating, you know, they have to pass on cost increase, otherwise they will all become, they will, you know, they will face a very challenging time.

Okay, and last question was on the exports of the B2B, please. Any update in the pipeline, in the new molecules, which we are commercialized or looking to commercialize?

So, current year, so last year we did start making, there's a molecule called Pencicuron. Besides that, when that happened in the last quarter, I think we'll still rely on old molecules. There are two, three new molecules, so we have narrowed down the list we used to work. Now we've got about three molecules which should get introduced in the next two to three years. We are in the advanced stages of establishing processes, working with the buyers, and obviously there's a registration process that has to happen parallelly.

Okay, thank you very much.

Thank you. Next question comes from the line of Saurabh Jain with HSBC. Please follow me.

Thank you for the opportunity. Yes, sir. My first question is, can you please give us...

Mr. Jain, sorry for interrupting. You sound a little lower. Can you speak a little louder, please?

I'm saying, can you give us some sense on how is the trends you're looking at in April across all the three businesses? In terms of, you know, volume growth and maybe some sense on the pricing.

So, if you say April, April basically some season for tea gardens starts in the northeastern side. That is from a consumption perspective is normal. Apple season seems to be normal across Himachal and Jammu. Then you have cotton season, which begins in the north for seed. This is a low crop protection month and low SPH month, right? Because all of that will start with the rains when they start coming in the month of the end of May in Kerala and pre-monsoon showers, some places it happens. So it's too early to predict that. But as I was saying, farmers will plant the crop even in the worst monsoon years. We haven't seen acreages dropping. I think what farmers do start doing is down trading, right? So they might use lesser price, they might use lesser price seed. In some cases, they might go for saved seed. All of that happens. Given the uncertainty around rain and commodity prices and everything else, seed indication, I think, will have a fair seed indication by end of May in terms of sentiments towards crop. Crop protection, I think, is very, very difficult to predict any trend before end of May or early June.

And what about the global trends? Because you earlier alluded to the fact that there is some sort of panic buying that is being set in. Are you seeing any trends that indicate that the trade channels are looking to fill up the pagans and volumes are moving early?

Not early. So North America is the biggest season where placement happens in the March, right? Now, their purchases would have happened in the fourth quarter calendar year last year. So, I think what is important for North America is their rainfall, because their agriculture is highly rainfall dependent. Brazil had a decent season, not an outstanding season. But global commodity prices actually still are not reflecting in the commodity prices around the globe. Commodity prices continue to remain relatively soft.

And have you also increased, you've taken some price increases in the global portfolio?

Everywhere. I mean, wherever possible, we have to increase, otherwise we'll be paying money from our pocket.

Understood. And trying to tie this with the disruption that we are, you know, apparently witnessing. And you also mentioned that the margins in the B2B business has improved. Would it be fair to assume that the worst of the margins are behind and with the price increases that we might undertake, you know, the margins can, here on words, trend on a positive side and it can get better?

You know, in the last five, seven years, This industry has learned a lot, right? So there was a COVID and there was a Ukraine war and now this is new war. And every time new learning is coming, right? So during COVID period, everybody got engaged in the farming as a result. Companies did very well and supply chain was disrupted, but still material was available. Then came Ukraine war. There was a shock of petroleum prices that subsided. But that COVID thing also led to a lot of inventory buildup. Because one, two years did well, third, fourth year, a lot of inventory. Then war happens. Now that has become normal. Now we are dealing with a new thing, right? So too frequent, too many things happening. And now we are also talking about Al Nino. So all I know is that farmers will plant the crop. A Southeast monsoon, based on what it looks as though it's going to be good. Punjab, Haryana, Western U.P., part of Rajasthan, Eastern Madhya Pradesh, they're all irrigated or get what you call a short rainfall. So the risk is only few pockets in the country. So for example, Marat, Wada, Vidarbha could be a challenge. There could be a challenge in Saurashtra, there could be a challenge in Royal Seema. Other than that, there are pockets of challenge, but I would say still agriculture, farmers, that's a basic thing, right, will happen. Understood.

My last question, they will plant the seed. Sure, that's helpful. My last question, at this point in time, are you facing any disruptions in terms of your procurement of raw material or technicals or very high pressing which you would believe that it will be difficult to pass on?

So, there was a period when every company left, right, and center was issuing force measures later, and they said, wait, right? There was a time when they will say, we are giving you a price for a quantity confers in three hours. Otherwise, after three hours, they cannot. I think all of that is over now. There's a bit of normalcy. So, when this war started, when things looked very chaotic, but there's some order is getting established. Yes, obviously, we have to pay higher for everything. And then we have to figure out a way to see how much we can increase. Obviously, it will depend on what competitive products also do. I think I am doing it too fast, right? Yeah. Okay.

So let us see, you know, this thing seems to continue more than what we earlier expected. Would you expect any disruptions in your manufacturing in the next few critical months, month of May and June?

So, I think as far as Kharif is concerned, we have covered ourselves. Quite well. See, seed is all domestic, no problem. Soil and plant health is, by and large, covered largely domestic. Where we have a crop protection, which is a domestic side story, five ingredients we produce on our own. Some of the other ingredients, I know we have suppliers where they might want higher price, but we have secured supplies. So, it's not a straight answer. I would say I'm covered, by and large, for the Kharif. Okay. Sure, that is very helpful. It goes beyond you.

Thank you. Thank you. Next question comes on the line of Rohit Nagaraj with 361 Capital. Please follow me.

Yeah, hi. Thanks for the opportunity. The first question is, in your opening remarks, you mentioned that the margins will be stable to shops. And in terms of the cost increase, we have already experienced that the raw material cost or sourcing cost has increased. We'll be passing on to the, you know, farmers by increased prices, but given that the monsoon is expected to be low, how much ability do we have in terms of increased cost completely passing on to the farmers? And secondly, will there be any negative impact because generally the sentiment will be negative plus, as you also explained, there will be a down trading which will also happen. So, I mean, the farmers may go for branded generics through the normal generics. So, just a broader perspective would be helpful. Thank you.

So, so branded generics actually helps rallies, because this is where we operate now. We are selling generic product. We are not an inventor company. Right. As far as, Planting is concerned. We know that farmers, I mean, as I said, farmers even in the worst condition will plant the crop. And if they go for lower cost seed, lower cost of, lower price and priced product, it does help rallies both on the seed and crop protection and other category side. What we don't know is basically a fertilizer, how much government will be able to provide fertilizer, will farmers be making different choices. Government has not increased any prices for the farmers. So all price increase currently, if you see, is being absorbed by the government. And as I said, look, even if 10% less urea is available, it actually doesn't, it will not have any serious impact on the agriculture production. It might have a sentiment, so some people think that for growing corn, you need more fertilizer. So if they don't get enough urea, they might say, okay, plant less corn. But then there's the other side of the story where now they can easily sell that for the industrial users. So it's not a straight answer. I would say let's assume agriculture will happen. There'll be cost increase and companies will have opportunities to pass on the cost increase unless there's a total failure of agriculture. Monsoon doesn't come in at all in June and July. I mean, that has never happened in the history of no humankind.

Sure, sure, thanks. And just second question, in terms of cost increases, till now what is the kind of cost increase that we have observed in percentage on overall basis?

So, we have seen 15 to 25 percent, 15 to 25 percent is generally the range.

Sure, I think that is helpful. Thanks a lot and all the best sir.

Yeah, thank you. Thank you. Next question comes from the line of Ketan Chawla with Affirma Capital. Please go back.

Hi, can you just add a clarification on the earlier question? So the 15 to 25% cost increase is on account of raw materials, and what proportion of this are we passing through versus what we're absorbing?

So as I said in the beginning, right now it's all placement, right? We have tried to pass on all. We have announced the price increase. I think, you know, everybody is working. So there's always a carryover inventory which comes from January, February, March that was supplied at the low price. I think that will get exhausted and then new price will start getting established in the market. That's how market starts. So all the new supplies, we have been supplying at a price, our attempt to turn all the trees, whatever, but the rate and what reason reacts.

Understood. And in terms of, based on where, you know, how you see the market right now, how long do you expect this 15 to 25% cost increase? Are you expecting this to percolate for first half of this year?

Look, most of the Kharif inventory people will build by June. So for Kharif, this cost increase, you have to assume that it has happened. Right. It's already a reality. We cannot ignore that fact because we are getting into May now, very soon, and most companies would like to procure raw material even if something has to be sold in July, August, and September because there's a lead time of shipping, bringing in, processing, packing, and supply. So, generally, it's a 190 to 150-day cycle, depending on the... The product and crop. For herbicides, anyway, every company has made all the arrangements because herbicides need to be supplied in May and June for consumption in June and July, right? So herbicide is all done. Insecticides also start early. That's happening. Fungicides come later on. So, I think you have to assume this cost increase, even if, say, war settles tonight, you know, we have a surprise announcement that war is over, right, the state of arms is open, life is normal. It's going to take three to four months to unwind. To me, this is a reality. We'll live with it. We'll have to live with it. We don't have a choice.

Understood.

Thanks.

Thank you. Next question comes from the line of Abhijit Akela with Codex Security. Please go ahead.

Good morning. Thank you so much for your question. Hi, sir. Just first of all, one clarification on the numbers for revenue breakdown. Baskar had given us a number of 255 crores for B2C sales for the quarter compared to 222 last year. Just wondering if it might be possible to also give us a crop protection component within that specifically.

Yes, he will be able to provide that. So, you are looking at a breakup of, so those are micro details, but by and large, I would say it is split between SPH and crop protection, you know, 20 percent and 80 percent, but we will get back to you details separately. These are my, you know, first splits.

No problem.

You can drop a mail to Chaljeev separately.

Sure, sir. And when you guided to high double-digit growth for SEEDs in the next year, just to clarify that, it's basically referring to, say, something like high team, right? Is that the range you're looking at?

Yeah, I mean, mid-team, mid-team, easily.

Okay, okay, sure. And there was one comment, sir, you made in the opening remarks that the sector may see 3% to 4% growth in S527.

No, that's the GDP growth.

Okay, okay. All right, understood. But on the crop protection side as well, the margins, when you mentioned stable to soft,

I mean, percentage revenue growth will be higher this year because price increase, you know, so revenue growth probably will be maybe double digit and I don't know what it could be. Because if your input cost has gone up by 15% to 100%, it is going to lead to price increase for sure. It will be 5%, 8%, 10%. I don't know at this point of time. Because ultimately, many factors are not clear yet. Margins, depending on how competition will react, how commodity prices will behave. Generally, in such situations, Commodity prices tend to rise, and again, it tends to be crop-specific. Other than rice, I expect commodity prices to remain firm on everything else. Rice, global globe is sitting on an excess supply, including India. Now, India, for example, grows a lot of basmati. It very least remains disrupted. Then basmati demand will go down. As a result, farmers may plant less basmati, so they might plant regular rice. They might plant a little bit more maize or some other crops. So, I think those are the things, you know, too early to say. But again, for maize, they will say, I need more urea. Now, if more urea is not available, will they do something else? Too early to say.

Great. Just last couple of quick things for me. One is, you know, at some point, if we assume that this war ends and the price of crude comes down, how do we sort of protect ourselves from the risk that we may be sitting on high-cost inventories at that point?

Clearly, your line answered the question well, because the line was breaking.

Yeah, am I audible right now, clearly?

Yes, you are audible. Please go ahead.

Yeah, thank you, sir. Just asking that...

Repeat the question I had.

Yeah, sure.

So, just asking that... It's breaking, actually.

Yeah, sure. I hope you can hear me now.

Yes, Mr. Kaila, you sound loud and clear. Please repeat the question. Thank you.

Yeah, so the question is that assuming the price of crude comes down by some extent over the next three to six months, how do we sort of manage the risk that we might be sitting on high-cost inventories at that point in time?

So, I think two ways to look at it. One is that We don't have to become greedy in hoarding the inventory, right? So we will go as per our business plan based on what can be sold. So we are not going to hoard the inventory. And even if war unwinds in three to six months, I am saying we are not building inventory beyond Kharif. Right? Kharif is something we want to protect. So I think, you know, I can tell you and I don't know what other companies do. I have every call in the morning. Every day we talk. Right? So we are almost back to a situation during COVID. No, we were doing calls since morning, you know, 8 a.m. to 8 p.m. So we're into that situation. We are not, we are building inventory, which we think is right. We're not building excess inventory because that could be a good opportunity and a bad opportunity. So we are doing, we are very calibrated about what we buy, what we sell. We will only buy what we can sell.

Understood, sir. That's clear. Just last quick thing, this liquidation of Plasto and Benzela in the fourth quarter, was that one of the key contributors to this 14% volume growth that we saw in domestic combinations?

Oh, so. Benjela, we, when you can see 80% of the problem is solved, very little problem left, always solved, right? Class 2 was more dependent on the chili crop. The thrips, the chili crop didn't get planted, commercials were low. Teams, the for chili farmers, Benjela was, you know, preference of the farm. So we are launching new products in those segments. At the same time, we have, we are unwinding inventory completely.

Thank you so much, sir. All the best for the year. Thank you.

Thank you. Next question comes from the line of Raju with Antic Stock Booking. Please goodbye.

Yeah, hi, sir. I hope I'm horrible. My question regarding the inventory, if I look at your numbers, I think inventory is a bit higher. So, this is predominantly that we are building some inventory at a lower cost, maybe the pre-eward scenario or during the year scenario to protect the margin going forward. So, how it is, like, is it RM-related or, like, a finance-related inventory that we have already built?

No, no, so it is not related to what we build for the season. It is related to preparing for, so I mean, this war thing was almost imminent right from the month of January, right? So we didn't for war to happen, wait for war to happen. We did take some risk to build some inventory.

So, so, so, so, yeah, understood. So these are predominantly RM inventory and maybe a low cost kind of inventory that you have built.

Absolutely.

Understood. And, sir, second thing, if I look at in terms of, you know, in the current pricing of the few of the commodities, so in your earlier remarks, you said that you're expecting a good crop in terms of maize and other crops. So, if I look at tithing of maize, From the month of October, November. So, the prices are very low compared to the industry prices. How do you see the impact? Like, are farmers going to, you know, stick to the maize crop or there will be some shift that will happen? If that happens, like, what are the scenarios in terms of city business and in terms of your city business will get impacted?

So I think, look, low and high has to be seen from the perspective of farmers makes per acre of money. Don't worry about commodity prices as much. I think at the end of the day, it will be a matter of relative economics. So how much I can produce by growing a crop, how much it is going to cost and what price I can sell, to me, what they have seen for a period of time.

Crop is still very, very competitive to grow.

Understood. So crop prices might not impact significantly in terms of crop shifting, right?

Yes. I mean, it's again, I'm saying, for example, rice. So I think a lot depends on global inventory buildup. And what country allows to import and what country restricts. For example, India had a restriction on how much mage can be imported. We said we will not allow GM mage commodities, soybean, which is GM grown. So I think a lot of other factors will play. I would say other than rice, inventory, global inventory is at the normal level.

Understood, understood. And, sir, in terms of city business, right now, we have done 15% kind of a growth. So, in the domestic city business, if you could, you know, clarify in terms of volume and the duration growth in the 15% growth that we have recorded this quarter.

15% growth in which segment?

City business that we have recorded this quarter.

Oh, that is... No, no, drop protection. Where did we have the team? Oh, you are saying B2C growth, right?

Correct, correct, correct, correct.

Yeah, so, see, we have, when we say crop protection business, we primarily have, there's a soil and plant health, and there's also crop protection, and so these are the two major components. Now, this is B2C. Within that, there's a higher growth in soil and plant health. Relative to crop protection. And I have been saying that, look, my focus is to sell more herbicide, more soil and plant health and more seed, right? Because disease sometimes because of moisture and all can come and go, you know, insects come and don't come, right? So actually our focus segments have contributed more in terms of growth, if you see from that perspective.

Understood. So, sir, if we remove that, you know, 27% kind of growth in the SPA, so how much is your B2C, CP business growth for this quarter?

It will be flat.

Okay, it will be flattish kind of growth.

I mean, marginal growth. I mean, you can say marginal growth, low single-disc. If you don't be flat, it's still marginally positive.

Understood, understood. Yeah, thanks, everyone.

Thank you. Next question comes from the line of Nitin Avasthi with Internet Capital. Please do that.

Hello, sir. I just wanted to understand on your new venture, the aqua feed business, what is the current investments and the thought process behind this? And given that Tata and Maharashtra... The Tarak Group in Maharashtra does have expertise in freshwater fisheries with its hatchery business. It's not business, it's a social commitment perspective. So that linkage and the basic thought process behind this business, where we are, what we see to invest, where we are going to invest, that if you could outline.

So, look, as part of the TADA strategy in agriculture, we did the whole mapping, and we identified this as an idea to work experiment, right? I think it's still at the experimental stage because we believe, you know, as economies grow per capita income grows, you know, More animal-origin protein becomes a preferred food, you know, the consumption of fish, which can be grown in land, even our Prime Minister keeps talking about, you know, mission, so that now we are not only dependent on ocean, we can also have more fish in land. So, I mean, look at this. Still, it's a relatively smaller scale. It hasn't gone to a stage of discussing how much we want to make investment. I would like to see one more year this year to say where I am able to take it and then start thinking of this strategy. But yes, it's an important segment. We're trying to understand rather than trying to rush into this segment.

Understood. So the current products in the market are completely outsourced?

So, products are outsourced. Very similar to soil and plant health business, we incubated 7, 8, 10 years ago because when we sold Tata Chemical bulk fertilizer business, we were left with some residual micronutrients, right? So we said, okay, what do we do with this business? So we built this business. Now it has reached to a scale of, you know, to 50 crore plus. So now we are saying, okay, how do we invest more because this we find it very exciting, right? I think Equa is probably where, you know, Spice Tevinis ago, our Australian plant health business was. So probably one or two more cycles before we can say anything about it.

Understood, sir. Secondly, on the seed perspective, the whole industry has a lot of GE trials approved, including RALIS, and it's been going on for quite some time now, and given that the new policy of GE which has come up, which differentiates itself from GM regulation, Do you see, what do you call it, the traction in that segment increasing exponentially going ahead, or do you still see hurdles in this segment picking up?

See, when I look at seed R&D, there are clearly two components. One is called genetics, improvement, where you keep accessing genetics and start applying tools. To improve the genetics to develop product faster. I think there we are doing everything which needs to be done. When it comes to GE, basically, it's not about GM crop now any longer. It's not about bringing gene from outside. The conversation is all about genetic gene editing. And gene editing is one space, I think, where, while government has cleared the regulation, but big global multinationals continue to hold patent rights, right?

Thank you.

So we would rather initially, rather than trying to do everything in-house, we would rely on outside skills to get the job work done. And there are technologies we are accessing. For example, our cotton business is built on the foundation of BT technology. Now we are actually launching what you call Parian technology-led rice seed business where there will be herbicide tolerance gene and will be sold as a bundled product along with seed and herbicide. So we would rather license those technologies rather than trying to invest 10 years on researching those technologies because global multinationals, they have disproposted R&D on those areas. So, I think by spending small money and for the sake of, you know, conversation, I can say I will do it, but I would rather prefer accessing those technologies, you know. Understood, sir. Thank you.

Thank you. Next question comes on the line of Tarshi Tasha, the TSP Asset Manager. Please go. We have lost the line of Mr. Tarshi Tasha. From the next, that is Rajkumar Vedinati, RKM. Please go.

My question has been answered. Thank you very much.

Yes, please go ahead. Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session on behalf of Vialis India Limited. That concludes this conference. Thank you for joining us. You may now disconnect your room.