Please note that this conference is being recorded. Now I hand the conference over to Mr. Ranjit Cirumalla from IIFL Securities Limited. Thank you, and over to you, sir. Thank you, Vivian. Good afternoon, everyone. Thank you for joining us on the Godrej Agrovet Q2 earnings conference call hosted by IIFL Securities. From the company, we have with us Mr. Nadir Godrej, Chairman of the company, Mr. Balram Singh Yadav, Managing Director, and Mr. S. Varadaraj, Chief Financial Officer. We would like to begin the call with a brief opening remarks from the management. Following which, we will have the forum open for an interview question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Nadir Godrej to make the initial remarks. Thank you, and over to you, sir. Good afternoon, everyone. I welcome you all to the Godrej Agrovet earnings call. I hope and wish you are doing well. Godrej Agrovet clocked a healthy top line growth of 13.5% in quarter two fiscal year 2023, and 19.5% in half one fiscal year 2023 year-on-year. However, it was a challenging quarter in terms of profitability as it was impacted due to volatile commodity prices, higher input costs, and limited transmission of those costs. During the quarter, crude palm oil prices corrected sharply from all-time high levels in May 2022 on account of oversupply from Indonesia and Malaysia post the lifting of export bans. The southwest monsoon was erratic and unevenly spread. Prices of rice bran extraction jumped sharply in quarter two, and maize prices continued to trend higher. Coming to the key financial and business highlights of each of our business segments. In animal feed, we achieved 6% year-on-year volume growth in quarter two and 8% in the first half of fiscal year 2023. The volume growth in quarter two was mainly led by market share gains in the cattle feed segment. On the margin front, the animal feed segment achieved a sharp recovery in EBIT per metric ton on a sequential basis from INR 694 per metric ton in quarter one to INR 1,381 per metric ton in quarter two. For the vegetable oil segment, it was a mixed quarter with strong recovery in volumes of fresh fruit bunches, which was offset by lower prices. The average realizations of crude palm oil and palm kernel oil declined by 16% and 3%, respectively, in quarter two fiscal year 2023 versus quarter two fiscal year 2022. On the other hand, FFB volumes grew by 15% year-on-year in quarter two, more than offsetting lower volumes recorded in the first quarter. The standalone crop protection business recorded a top line growth of 11% year-on-year, driven by higher sales of in-house herbicide products. Reduced application opportunities for PGR and insecticides, coupled with a strict focus on credit hygiene, limited sales growth to some extent. The crop protection business achieved strong improvements in working capital in quarter two, driven by concerted efforts in maintaining credit hygiene. Astec LifeSciences continued to deliver a strong performance as profit after tax doubled in quarter two and grew by 35% in H1 fiscal year 2023 over the corresponding previous period. The robust top line performance was driven by volume growth in export markets, coupled with higher realizations in both export and domestic markets, which should be noted that quarter two fiscal year 2023 performance was impacted by flooding in our Mahad facility, and hence in the previous year, and hence there was a low base effect as well. For our poultry segment, quarter two is a seasonally weak quarter. Despite that, Godrej Tyson recorded 14% top line growth, led by robust volumes in Real Good Chicken and the Yummiez category. The EBITDA margin contracted as there was a sharp decline in live bird prices during the quarter. Quarter two fiscal year 2023 performance of Godrej Tyson was not strictly comparable with quarter two fiscal year 2022, as the business had benefited from pent-up demand post easing of COVID restrictions. Our dairy segment achieved sustained growth in both value-added products and milk volume in quarter 2 fiscal year 2023, and as a result, revenue grew by 27% year-on-year. Our value-added products portfolio accounted for 34% of the total sales in the first half of fiscal year 2023 and has grown by 49% year-on-year. However, profitability remains a drag as continued increase in procurement prices could not be fully passed on. GAVL's joint venture in Bangladesh, ACI Godrej Agrovet, recorded a revenue growth of 23% year-on-year in quarter two. That concludes our business and financial performance update for the quarter. With this, I close my opening remarks. We will now be happy to take your questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Participants who wish to ask a question may kindly press star one on your touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Kindly press star one to ask a question. The first question is from the line of Ankur Periwal from Axis Capital. Kindly proceed. Hi. Yeah. Hi. Thanks for the opportunity. Sir, first question, you know, on the RM inflation side. Now this quarter specifically, we saw, you know, decent pressure on the RM side across, many of the business segments. Animal feed, crop protection. You know your thought there in terms of pass-through. How are we looking to address this RM inflation? You know, whether it is just one quarter phenomenon, maybe next quarter onwards things should be back to normal. Okay. Let me just first talk about animal feed RMs. Look, I think we have sufficient experience and knowledge on these movements of raw material prices in case there is no external intervention which can cause dissonance which is not natural. We only faltered once in this year, and that too in soya, because of which our poultry feed as well as aqua feed contributions took a hit. When the prices of soya bean were ruling very high, and there was no chance that India will import any more soya bean, and all the poultry people and the aqua feed people were well covered for off-season. Suddenly, the government of India, under the pressure of inflation, announced import. That is the only time we got caught because of adverse raw material situation. However, you can see we have corrected that. The margin for animal feed has come back to about INR 1,300 a ton from INR 694-INR 1,381 per metric ton. Now that raw material prices are falling, so the margins are likely to improve further in Q3 and Q4. That said about animal feed, I just want to use a caveat that in Andhra Pradesh there are price controls in shrimp feed and fish feed, so the entire inflation and raw material cost was not passed through in this state particularly, and that is why the margins suffered. With the lowering of raw material costs, I'm sure margins will improve in aqua feed also. One thing which we are unable to understand and get a grip of is this secular rise quarter on quarter on the milk cost. Now, that is one thing which is worrying because there is no flush, so the prices continue to go unabated. We are unable to pass through most of the increase in milk cost to us because cooperatives are not taking price increases. For example, the cow milk prices have gone up by almost 18%, but we have taken a price increase only of 5% in the first half. I think that is hitting us very badly. That, I think remains a concern. However, in all other parameters of CDPL business, we are doing okay. Sure, sir. Just your comments on the crop protection side, especially on the standalone. You know, is there a recovery? Because I note that, you know, the receivables you mentioned, et cetera. You know, we have been pretty strict on that side, which is good news. From a growth perspective as well as RM inflation pass-through. Crop protection actually, this business went through a lot of hiccups in, if you remember COVID one and COVID two, both happened at the peak of our season, which is April to June, July. 2022, in year 2021, it was followed by a drought at the right time. That is why there were a lot of unsold material. Now, this also exposed us to our weakness in terms of our inventory management, agility, et cetera, which at one time used to be our strength, and we were left with a lot of unsold stocks and all kinds of hygiene issues. As I conveyed to you last time, that we took help of external consultants for a long project in trying to overhaul this business. Hygiene is of prime importance for us, so I think that project is still underway. As and when we get an opportunity to clean up a few things which are unsold or some toxic debtors, we are doing that on regular basis. Unfortunately, I think we are a little bit hurt by luck also. We had lot of hopes in September, October sales in CPB because of rains. I I think it got washed out. You would have heard similar things from other companies. Having said that, I think our woes are almost getting over. Inherently, this business is an extremely profitable business. My sense is that I think the kind of cleanup and the kind of strategies and processes we have created right now, and the action plan which has been implemented, I am very sure you will see a return to profitability to the earlier levels very shortly. Having said that, I must tell you that more new molecules are coming in the pipeline through our own molecules as well as through in licensing. You must be knowing that Gracia has been a great hit, and we are likely to double the volumes next year again. I'm saying that there are a lot of things on the right track, but I think this cleanup was necessary, so we bit the bullet and cleaned up the whole system this year. Yeah. Sure, sir. Just one clarification. If I heard you right, in crop protection, it's more a revenue growth issue because of the erratic monsoon and from an RM inflation perspective, we are pretty much there. Yeah. We are not selling unless and until the outstandings are reconciled and paid for, et cetera. We are very cautious. I think we have strict rules for the sales team now to give credit. I think we have suffered, so we are not very interested in top line, at least for this quarter. I'm very sure that the kind of traction we are seeing now and the collection we are seeing now, which is very evident in our working capital for this business. I think we will be back to normal in one or two quarter. If not in Q4 this year, 100% sure that Q1 next year will be again back to normal. Okay. Thank you, sir. That's it from my side and all the best. Thanks. Thank you. Participants, if you wish to ask a question, kindly press star one now. Please press star one to ask a question. The next question is from the line of Abhijit Akella from Kotak Securities. Kindly proceed. Yeah. Good afternoon, and thank you for taking my question, sir. Just a couple on two of the segments. First on oil palm, if it's possible to share a few metrics around the you know, volumes, both the fresh fruit bunch as well as the oil volumes themselves, as well as the average realizations on the key products and the oil extraction ratio, please. Thank you. Let me give you an answer to what is happening in the industry. One of the things which we are noticing in the last two years, particularly this is the second year, is that the season is getting shifted by at least a month. That is why you saw some shifting of volumes from Q1, where we grew 5%, to volumes in Q2, where we grew more than 15%. The growth in Q3 will be even higher than 15%, maybe 20-25%. I think this is one change we are seeing. We are studying that. In case we feel that this is going to be a normal phenomenon considering October rains, from next year onwards, our budgeting will reflect this change. That's point number one. Point number two, I think the pricing is something which I don't want to comment on because it is international prices you can easily calculate. Now, nothing is following what the experts are saying and what the trends are. When everybody said that CPO prices will not fall, they fell. A month ago, everybody said that they will not rise. Now they have started rising again to INR 91-INR 92. Such is the situation in global commodity market. On OER, I can definitely say that we are doing well. A lot of our initiatives have proved to be very, very beneficial to us. Quarter on quarter, our OER is rising. I can give you some example also. Where is it? Just a minute. If you see in H1, it was 17.75. H2, it is 18.62. I can definitely H1 2023 is 18.62%, as compared to H1 in 2022, which is 17.75%. I can definitely say that it will be much more than 18.62% for us in H2 in the current year. I think a lot of our initiatives are proving to be very, very good in improvement of OER and definitely yield also. I just want to remind you that more OER is direct addition to our profitability because we pay on weight of fruit. All right. That's helpful, sir. Just to clarify, now with oil prices having started to rise again, contrary to all expectations, should we expect that 2Q was probably the low water mark in terms of profitability for the business? Q3, you must always remember that normally this is the start of the off-season. We have had a very good October. September also is promising, but it started tapering. The tapering will take probably longer than normal, so you can expect it to be better than Q3 of FY 2022. Definitely Q4 will be off-season. That said, I think all in all, the performance of this business will be, I think, in terms of several indices, which is OER, FFB, volumes, and other efficiencies also will be better than FY 2022. Right. In animal feed. Oil prices are your guess, so you can plug that number in. Okay. In animal feed, can we expect to get back to our targeted level of INR 1,800-INR 2,000 EBIT per ton in the second half? All signs are pointing that it will be much better than Q2. The numbers we're talking about depends on how raw material prices shape up, particularly in Q4, when most of the in-season stocks are there, and then, what position we take will come into play. I am very confident that Q3 will be much better than Q2, and Q4 and Q3 will not be too different. Got it. One last thing from my end. Just on the Another thing I'm saying that I think we in animal feed business, we just want to keep on creeping in volumes. We are very glad to say that in the first half also we have grown 7%-8% on the back of almost 20% growth last year. I think, we are in case we get to 8%-10% growth for next one or two years, we will get into a virtual cycle where scale will start playing. I'm very glad to say that there is a big jump in our capacity utilization last year and also this year. Sure. Finally on the Tyson business, this correction in live bird prices, you know, how does it look year-on-year? Was it, I mean, particularly more pronounced this festive season compared to the previous years? Let me just tell you the live bird prices story. I think we can show a simulation where live bird business, except for the COVID years, never lost business because it is commodity. When the prices go down, the population goes down and comes up. Last 10-year data, it's a simulated data with actual numbers, shows that we can make 4 or 5% PBT to about 15, 16% PBT, which is a standard commodity play. I must point out where the efforts went and what is the advantage. I think what is noteworthy is that we have been putting a lot of effort in. Where is the Godrej Tyson Foods chart? Yes. Let's see. Just Just hold the line for a moment. One second. I need to tell you that. The focus for last several quarters is the branded business. I must tell you that we have had 46% top line in our branded business. RGC 75% growth over last year, and Yummiez 39% growth over last year. This is the future. That is one of the reasons that in spite of a very poor first half as far as live bird prices, we are profitable. That is where we are building our business. I can definitely assure you that we have very good clients in our process business. We have also got very good traction in our frozen heat and eat business. I'm very sure we will continue to build this branded business. You asked me about live bird prices. I think live bird prices will remain close to INR 100-INR 110 in the next coming weeks. I cannot talk about January onwards because we have no clue on what are the placements, but I can definitely give you indication of Q3. Most important part in Q3 is not prices. We believe that cost of production of chicken will fall almost 7-8%. It has already fallen about 5% on the back of raw material prices. Soybean has come from INR 51,000 a ton to INR 40,000 a ton. Corn from INR 25-INR 26 to INR 22. All this will play out in next two, three months. Thank you, sir. I'll come back and queue for one more. All the best. Thank you. Participants, if you wish to ask a question, kindly press star one on your touchtone telephone. The next question is from the line of Vidit Shah from IIFL Securities. Kindly proceed. Hi. Thanks for taking the question. My first question was around, you know, the share of profits from associates that's like, you know, dropped sharply from 2Q 1Q levels this year and even YOY. What's happened there? Has the profitability at the ACI JV declined sharply or is it coming from other associates? Yeah. I need to give you some flavor of what is happening in our neighboring country, in Bangladesh, where we have a substantial business. We are almost, I think we are number two now, in the animal feed business there. We are growing volumes at 7-8%. Last year again, was a big growth. The big problem came last year was from the price controls in poultry feeds. Because I think Bangladesh has brought lot of price controls in poultry feed, and that has hurt us very badly there. Unfortunately, poultry feed used to be the most profitable product, but in the first half has become a loss-making product. That said, that has hurt us a lot in Bangladesh. However, with the drop in costs, profitability has come back in October and is likely to build up in future. There is very little we can do when the sovereign governments start putting price controls on food and very critical commodities. Near our home, you know that Andhra Pradesh government has put price controls on aqua feed and fish feed, not from point of view of controlling inflation, but purely politics. Yeah. Got it. Just in terms of future growth plans, we understand that Astec has a lot of, you know, plans in terms of growth. If you could just shed some light on, you know, plans across the other segments, especially the animal feed and the dairy segments, and the poultry segment. Are we adding- Yeah, yeah. I'll go business by business. In animal feed and aqua feed, we have adequate capacity now. This year we commissioned 1 fish feed plant because the situation in Andhra Pradesh is not likely to improve in terms of profitability if the government keeps on bringing price controls. Rest of India, both in fish feed and in shrimp feed is the focus. We have commissioned one plant about three-four months ago in Barabanki, and I'm very glad to say that the capacity to produce 55,000 tons of feed, and we might just exhaust that capacity next year, but it has a great opportunity to double the capacity at marginal investment. The animal feed put together, I don't see more than INR 20-25 crore investment opportunity, at least in next six-eight quarters. In Astec LifeSciences, in that meeting, we have already told you that the plans are already made for big investments in this. For that, we are likely to acquire some industrial land in the state of Gujarat or Maharashtra. I think they're very near closing those deals. In oil palm plantation business, two investments are already underway. It will cost us about INR 70 crore. One is a 400 metric ton refinery. I think once we refine, then we will benefit. The profit margin can improve by about 1.5%-2%. Because of the erratic schedule of lifting by our customers, we get a FFA penalty because more we keep crude palm oil, the FFA rises, and there is a penalty for that. We want to use lot of by-products and extract oil from that also. We are setting up a 200 metric ton per day solvent extraction plant also. I think these two investments are already underway. There's nothing much which has been planned in other businesses except for the fact that one SIG line in our milk business will be operational, so we will be able to make multiple value-added products there in different sizes. That line should be functional in January. Effect of that you will see in our sales rising in value-added products in Q4. Got it. What are the timelines for the two investments in vegetable oil, the refinery and? I think refinery definitely we are going to commission in April and solvent extraction plant in May. Solvent extraction plant is needed in June, so we're trying that. If we are able to make it operational in May, there'll be immediate benefit to us. Good thing about the solvent extraction plant investment is that we will also experiment in off-season doing extracting oil from rice bran. We will also learn about the de-oiled rice bran economics through the solvent extraction plant. Because we are a big user of DORB both in our cattle feed business and our fish feed business. I think this plant is very important for us to learn in case we need to learn about backward integration into raw materials in the other two businesses. Okay. Thanks. Thanks for answering my questions. Good luck. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Kindly proceed. Hi, sir. My question is regarding the margin volatility for overall company. We have seen some companies, some segment like, say, animal feed, sometimes margin is on the peak, and again, we have seen some risk. Overall, all the segment we see maybe the animal feed is complementary for your milk business and animal feed is complementary for your Tyson food business. Is it complementary and having a backward integration, but sometimes have a severe impact also on the margin front. We need to understand what are the strategic investments we have taken and going forward we are going to take to mitigate the risk of so many variables we have in the in our company across segment. I think one thing I fully agree with you because such a diverse business and when you are present in all parts of the agri value chain, whether it is pesticides, technicals, oil, and all kinds of animal protein, both on the feed side and the output side. Some or the other volatility will hit because we have never had a year in last 30 years of my experience when one part of the segment has not been hit. I think that is very well understood and that criticism is very well accepted by us. I can definitely say that yes, we are looking at our portfolio very closely, but it is not easy to solve this problem in bad times, particularly. If you understand what I'm trying to say. Second thing is that we are a little, I would say, constrained by the structure also. In some businesses we own 51%, some businesses we own 52%. One of the company is public also, Astec LifeSciences. I think it'll take us some time to solve this puzzle. I can definitely assure you one thing is that efforts are on in all businesses to pull out costs, to make them sustainable and scalable. We sit in very huge opportunity in each area. My sense is that internally, I'm very sure that we are working very closely to cover gaps which we have. Externally, I cannot say, because this is a very volatile sector and something or the other will definitely hit us. Having said that, I think vertically integrated business are less susceptible to these kind of volatility. I think portfolio strategy is definitely underway. How and when we do it and in what shape it will come is still under discussions. Do we have any plan, we are so diversified and do you think any of your business should demerge and run separately to handle in very good manner, so your earnings volatility will be lower, or you will give more energy towards that segment to control all the risk? I'm saying that these are a matter of strategy also. I think definitely there is a need for a discussion and thinking on that, which is also underway. I'm not saying that it is not underway. Point is that these are very strategic discussions. I can definitely say that we are sensitive to that fact. We also understand what is happening in the macro environment. For me to tell you anything concrete on a call is not likely the right thing to do. Thank you so much. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Anurag Patil from Roha Asset Managers. Kindly proceed. Thank you for the opportunity. Sir, in the shrimp feed business, have we taken any price hikes in the current quarter, Q3? Sorry. We had taken a price hike, but the government asked us to roll it back. The price hike was INR 2,250 a ton. Unfortunately, we had to roll it back because Andhra Pradesh government advised the industry to do that. Okay. Despite that, raw material price correcting should continue to benefit us in the remaining two quarters. Is it correct? The issue is that even though the raw material price correction is there, but these businesses now require lot of initial investment, very sophisticated plants and laboratories, and we already commissioned a R&D center. The issue is that we need certain amount of contribution per ton to cover our fixed costs. I can definitely say that the contribution in Q3 and Q4 will be definitely better than H1, but still not enough, because during the season, which was in H1, most of our volumes got sold at lower contribution. Even if the volumes in H2 get sold at higher contribution, the overall contribution will still not be remunerated. Okay, sir. Understood. That's it from my side. Thank you very much. Thank you. For questions, kindly press star followed by one on your touchtone phone. The next question is from the line of Aejas Lakhani from Unifi Capital. Kindly proceed. Hi. Thanks for the opportunity. My first question is, have there been any inventory losses in any of the segments that have impacted margins in this quarter? We have taken some hits in some pesticide stocks. Not much, but since you asked me this question, I must disclose that. We sold a lot of stocks which were near expiry, et cetera, at a discount. That is the only hit we have taken in Q2. Rest, I think most of it was in soya in Q1. This is traditional crop protection, two-thirds of the portfolio that is your own product basket. This was a traded portfolio. Oh, this is in the traded portfolio. Okay. Sir, you know, your blended margins in the traditional crop protection business have been higher. What exactly happened this quarter? Could you just explain that again? There are many things which have happened. One is that we have taken some stock back returns of unsold stocks, because I think the first and the foremost thing we have to do is hygiene. Because we did not take them back, we could not recover money from the market and this, the disputes continued. I think that we have done. Whatever unsold material is there, we'll just at the end of this season, we will take it back. That is the strict policy which we have made now. I think that is there. Plus we will try and dispose of all near expiry stocks. All expired stocks we will take back, and if it is not legally reprocessable, it will be destroyed. That also will be done. Plus there is the other big thing which we did is that to collect outstanding, because our recoveries have been extremely good in Q2, in this business, but it has not come free. It has come at a cost of some additional discounts and incentives which we have given to collect that money. I think, all in all, we are doing everything to clean up our system to be ready for next season with a clean slate. My sense is that we are almost through in all this in Q3 and there'll be very, very little spillover in Q4 this year. Got it. Sir, the third quarter for the traditional business is the seasonally most weakest quarter, and fourth quarter is a slightly better quarter than third. Is that understanding correct? Actually, normally, if you ask me, in animal feed, third quarter is supposed to be a very good quarter because raw material prices are the lowest. It is the corn season, it is the soya season, it is DORB season in cattle feed. It is also reflected in milk prices also, which may not because most likely there will not be any flush. Q3 is the start of margin enhancement due to low raw material costs in animal protein industry, but unfortunately not likely to happen. Surprisingly because of shifting of seasons in oil palm plantation business, we will see a much better Q3 than expected. Got it, sir. Actually, my question for third quarter was on the traditional crop protection business. That's a weak quarter for us. You're absolutely right. It'll be a weak quarter. Yeah. Okay. Sir, could you just call out what is the oil extraction ratio and the actual FFB collection? Oh, okay. Just hold. In H1 2023 oil extraction ratio is 18.62% as compared to H1 FY 2022, 17.75%, which is higher by 87 BPS. FFB processed this year, 322,000. Last year, 305,000, which is a 5.5% increase. Having said that, I must say that this year we are seeing a much larger shift in season than we saw last year. I'm expecting Q3 growth will be much, much better than last year's Q3 growth. Got it. Sir, from your own end, you know, given the acreage that you have, when do you see the, you know, larger volume shifts really taking place? Is it can be expected in FY 2024 or will it still be, you know, based on the plantations you would have already done? You will see a secular growth at least for next 3, 4 years. I must also tell you that because of that NMEO-OP scheme, we have imported almost 3x of seedlings what we imported in year 2022, in 2023, which is a very big jump considering our allocations in Assam, Tripura, Manipur, and other states, plus more allocation in Telangana and Andhra Pradesh also. Definitely in this year onwards, you will see a quantum increase in our plantation. You know it is a long gestation business. It will all show up as a step jump in FY 2026, FY 2027 or so. Got it. Sir, in the milk business, you know, given that, you know, flush is rolled out for 2023, at what level? You know, given that, you know, our VAP portion is already quite significant, at what revenue scale do we start to break even? I think you asked a very interesting question. I think that there's a few things which would have definitely helped our business this year. The big thing is scale. Considering the contribution margins remain what they are. We just did the back of the envelope mathematics that we would have been profitable if we crossed INR 2,000 crore in FY 2023. However, we are very likely to cross INR 1,500 crore in FY 2023, up from about INR 1,200 crore, because you must have seen that our growth is almost 27%. Topline growth is 37%. Salience has also gone up to 34% in H1 from 29%. I must tell you that what is heartening is to see growth in curd was 52% in H1 year-on-year, and premium, value-added products, 34%, ghee 30%, etc. On value-added salience, I'm very sure that we will keep on improving, and we will try and aggressively gun for 45%+ salience next year. The worry remains the cost of milk again and again. We really do not know when it will start tapering or it will be steady, when the prices will catch up with what is likely to happen. The only green shoots I can see is that Tamil Nadu, which had not taken price increases for time immemorial, I think for almost 2 years, they have not taken price increase in the retail market, and the gap between us and private players and the government dairy milk was between INR 16-INR 18 in different parts of Tamil Nadu. Suddenly, I think 2 days ago, they announced a 12 rupee price increase. I'm saying that if same behavior is exhibited by all cooperatives, we are likely to see some price increase to cover some additional costs which have incurred in the past few months because of milk costs in the coming quarter. Let us see how it pans out, but from the outside, we get a feeling even the cooperatives are running out of steam in terms of supporting low prices. Let us see. I think if we have 45% salience at the same contribution levels and a INR 2,000 crore+ turnover, we would definitely be near breakeven next year. Got it. Basically, you're saying that the path to profitability will be 2025, 2024 is when you will breakeven in dairy. You never know. I'm saying that this is very much. I mean, this business has seen changes very fast. I think one day people can wake up and take a INR 4 price increase. Now, a INR 4 price increase translates to something like 5% or 6% price increase, which is big, actually. That is a cascading effect because curd prices go up by even more, value-added products by even more, and where the price elasticity is little less. I'm just saying that anything can happen. We just keep your fingers crossed. Definitely, as current situation is there, INR 2,000 crore 45% salience is something which may happen in 2024. Got it. Sir, just a small request. In next quarter, if you could consider to give the gross profit per liter for the milk portion, it'll just give us to contextually understand where you are, if that's possible. Sir, my last question is. Sir, you spoke about live bird prices being 110. What were they in the corresponding quarter in 1Q? What do you think of, you know, you mentioned that 3Q prices are gonna be in range, in this range. Are we again expecting a slower, slightly weak-ish quarter, or do we expect the path to profitability to come back in third quarter itself for, you know, the poultry segment? I think you will appreciate the numbers which I'm going to tell you, because being in stock markets, you're also used to volatility. January cost of production was INR 87, and the price was INR 84. In March, cost of production was INR 95, price was INR 146. In May, cost of production was INR 102, price was INR 117. In July, cost of production was INR 98, price was INR 76. In August, cost of production was INR 97, price was INR 72. In September, cost of production is INR 97, price was INR 94. In October, cost of production is close to INR 90, and the price is about INR 91 or INR 92. I'm saying that this is the season for peak consumption. We also know from feed sales and the raw material consumption patterns which we are hearing from the market, that placements are a little low. That is why I'm expecting a cost of production because of raw material cost, improved efficiency to drop to INR 87-INR 88, and price to remain between INR 100-INR 110 in different parts of the country. Got it, sir. That's a very helpful answer. You know, roughly what is the component out of the sales which is coming from, you know, Yummiez and, you know, Real Good Chicken? It's about 35%-40%? 44.44% of our sale in live was live bird in first half. Okay. Okay? Good thing was that last year, first half was 56%, so there's a drop of 12% there. In Yummiez, last year was 17%, this year is 16%, so there is a drop of 1%. Last year we had excellent demand in the first quarter because of COVID. I think that is the base effect we are having. We are very happy with the progress in Yummiez business. I think the stunning thing, and I think this is where biggest correction has happened, is that last year, Real Good Chicken was 26% salience, and this year it is 40%. Got it. Sir, at an EBIT level, the Yummiez and the RGC business is profitable for us, right? Well, at contribution level, I can tell you that this is percentage or so? Mm-hmm. Huh? This percentage. This percentage. I'll come, no? Last year, we had a contribution, which is margin after variables in livestock at about 4%. Now it is about 3%. Yummiez, which was 40+%, is now about 35%. Real Good Chicken was 4%, now it is about 10%. Branded margin still remains the same at about 11%. We are expecting a big growth in Yummiez and Real Good Chicken in the coming months. I think, we are in the right direction in this business section. Mm-hmm. Well, sir, is it possible to divert the, you know, the live bird sales towards more RGC and Yummiez in the years to come so that you can- That's what happened. More and more live bird is going into these things, and processing is going up. We are at about 85% utilization in both our plants. Both our plants are going in for debottlenecking. My sense is that next year we will be able to increase our processing by 10%-12% only by debottlenecking. We have marquee customers, multinational QSR, et cetera. I think, we are producing the quality they want. I think, hopefully we'll keep on building on this business. Oh, got it, sir. Got it. Thanks, sir. I'll follow back in queue. Thank you. The next question is from the line of Rajesh Khetarpal, a Retail Investor. Kindly proceed. Hello, Mr. Yadav. I would appreciate if you can spend a minute talking about Maxximilk. Every time I see you investing in that, I get excited. What is your plan over the next 3, 4, 5 years by when it will start contributing to our top line and bottom line, et cetera, et cetera? I can tell you that generational improvement in large animals takes a long time. Okay. We produce an embryo, then we impregnate the cow, and then nine months later, the new calf is born. It takes another 15, 16 months for that calf to mature sexually and get inseminated again. Normally it takes about 30-33 months for the kind of herd we want to build because we are interested not in the surrogate mother, but in the progeny of the offspring, if you understand what I mean. Yeah. Yeah. It takes time. It is also biological activity. Plenty of times the embryo transfer fails in the first trial. There is a success of between 40%-50% in that. Now, to set up a lab, to set up a farm, to get surrogate mothers, then to get very good quality offspring, and then to phase out the surrogate mothers because mothers were only there to produce the high quality genetics. I think it takes between 4-5 years, and that's what time we have spent. Now, let me tell you what is happening right now. Right now we have got our herd sizes close to about 1,100, of which the 85% of the animals are the ones which have been produced and are very high quality genetics, which are at our farm. These animals, almost 500 of them, are lactating now. I would say that in this country a herd average of 20 was supposed to be very good, but we have a herd average of 24-25 liters. I think that is one good thing which is happening because several of these animals are producing 60+ liters per day also in their peak. Oh. I think we have the herd ready. Now we have got into a phase where we are producing 45-50 high quality offspring, and this farm will be out of capacity for next 3-4 months. In next 3-4 months, we'll be constructing another farm now again in Nashik. Now, where is the, what is the output of this farm? The heifers which we are producing are commanding a very good price, close to between INR 2.25 lakh-INR 2.5 lakh in the market. That is one revenue stream we have. The other revenue stream we have is we are selling embryos. In that breed improvement program of NDDB, we have got a substantially big order. In case that order continues to repeat and grow, which is the government policy, we will have to upgrade our lab to have more embryos. Third thing is that the kind of quality of milk we are producing is very high quality. You will not believe that the milk is now being bought by a multinational for their milk powder, et cetera. That is the quality of milk, and milk is traveling close to 1,000 kilometers to reach there and still very high quality and at a very remunerative price. Okay. We have made losses. This year, in case the milk prices remain the way they are and all the embryo orders we are able to cater, we might just come close to EBITDA positive this year. Okay. What is the turnover this year and expected next couple of years, over the next, say, two, three years? I don't have Maxximilk numbers right now. Okay. Amit, just send him that. Yeah. Yeah. Point is that the one thing is that herd is now ready. Okay. This activity you want to remain focused only in and around Nashik only? No. Now I'm saying that the way things happen, suppose we have 700 animals. In 390-day cycle, all animals have to produce one more calf. Okay. That is how this business grows. Beyond a certain point, which is seven-eight years, there is an exponential rise because you have so many. You know, this progeny also keeps producing. Yeah, yeah. I think the price has been paid. I think the price of learning and growing the herd is paid already. Okay. Okay. Thank you. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Yes. Before I make my closing comments, I just wanted to comment on some of the questions. There was a question about palm oil prices, and right now palm oil is tracking gas oil very closely because there's a lot of demand for biodiesel from palm oil to replace diesel. Another comment I wanted to make is that although it will take a long time to expand our palm oil production, as the tree takes five years to grow, there will be very good nursery business in the next five years, and that itself will be a significant business. Beyond that, there'll be rapid growth in palm oil production. With those answers to the question, I would like to thank all of you. I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we would be happy to be of assistance. Stay safe and stay healthy. Thank you once again for taking the time to join us on this call. Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.