Good day everyone, and thank you for joining us on Rallis India Limited's Q1 FY 2022 earnings call. We have with us today Mr. Sanjiv Lal, the Managing Director. Mr. Nagarajan, the Chief Operating Officer, and Ms. Subhra Gourisaria, the Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation. I now invite Mr. Lal to begin proceedings on the call. Over to you, Sanjiv. Thank you, Gavin. Good morning, everyone. Welcome to this call. Thank you for joining us on this call. As mentioned by Gavin, I have alongside with me over a call, Mr. Nagarajan, our Chief Operating Officer, and Subhra Gourisaria, our CFO. To begin the call with a quick over view of the sector and the trends that we observed during the quarter, after which I will move to Rallis specific developments. Domestic demand during the quarter has been quite healthy. There is a good positive growth over last year. Even in international business, we have witnessed good momentum. We did not see any panic buying from the trade and farmers domestically as we had seen last year. Also, unlike the first wave, the second wave of the pandemic has impacted rural hinterland, with most distributors, dealers being directly or indirectly affected by it. We have accelerated our focus behind collections, and this continues to be one of our top priorities. Furthermore, while the overall headline numbers for rainfall during the current monsoon appears to be healthy, the timing and the spatial distribution hasn't been uniform. As far as commodity prices are concerned, soy, maize, pulses, and cotton among field crops, and green chilies, grapes, and apples amongst fruit have been higher. Prices for bajra have fallen significantly year-over-year. In terms of international markets, chemical prices have shown a steady upward trajectory. COVID-related disruptions continue over logistical movements, in turn impacting cost and availability of key raw materials. However, we believe the situation should improve gradually with time. Moving on to Rallis specific developments, we saw revenue growth of 11.7%, driven by a steady performance across domestic and international markets. If you remove the impact of the lockdown spillover of sales which we had in Q1 2021, we have witnessed an overall growth of 19.7%. Growth in the seeds business has been impacted by the purchase of illegal cotton seeds by farmers and crop shifts to soybean. Competitive pricing environment has limited our ability to pass on increased input costs. We have also been adversely impacted by the steep cost increase for both inland and ocean freight across our domestic and international business. Employee cost has registered an increase with reference to the base quarter, where we had not given a salary revision to our employees in the previous year. Despite that, our EBITDA margins continue to be around 16.4%. Export income was negatively impacted due to ambiguity and delay in announcement of the export incentive schemes. Overall, PAT for the quarter stood at around 11.1% versus 13.9% for Q1 FY 2021. Moving on to individual businesses, starting with our domestic crop care business. As we have indicated in our previous calls as well, our efforts are largely directed towards delivering growth by strengthening our product portfolio and distribution reach. Domestic formulation business registered 34% growth year-over-year basis. This was driven by strong performance of some of our flagship brands. We continue to focus on connect with farmers digitally through video conferencing, through Google Meets, supported by aggressive TVC campaign as well as social media campaigns. I'm also happy to say that we have been delivering on our guidance of introducing a minimum of two new products annually. In Q1 of FY 2022, we have launched three new formulation products. One is a product from our own 9(3) formulation, which is referred to as PEPE, and two other products which were also launched through in-licensing. Based on our product portfolio gaps, we have a healthy portfolio pipeline which is in various stages of development to strengthen presence in various segments. In terms of international business, we had a growth of 38% after removing the impact of sales spillover in the base quarter. Adjusted for spillover effects, growth was witnessed in most of our key active ingredients in Q1. Metribuzin sales were also higher than Q1 of FY 2021, but it is yet to pick up to a satisfactory level. I'm happy to say that we obtained new registrations in our markets in Africa and Southeast Asia as well. Moving on to the seeds business. We saw growth of 3.1%, which was impacted largely by illegal cotton and a shift in cropping pattern to soybean. We launched a medium maturity paddy hybrid and five new hybrids in the cotton segment. We continued our focus towards building our Rabi portfolio, which will iron out the cyclicity in our business. As indicated earlier, we will leverage in-licensing opportunities for mustard and vegetable seeds till the time our own hybrid seeds get commercialized. With that, let me now hand over the floor to Subhra, who will walk you through the financial performance of the quarter. Just to introduce Subhra, who has recently joined the company as CFO, has over 17 years of experience in business finance, financial strategy, P&L management, controllership, and is well-versed in handling financial operations across multi-geographical businesses. Till recently, she was the General Manager, Finance, Home Care for South Asia at Hindustan Unilever. That concludes my opening remarks, and it's over to you, Subhra. Thank you, Sanjiv. Good morning, everyone, and thank you for joining us today for our Q1 FY 2022 earnings call. I hope all of you are doing safe and are healthy. Let me walk you through our financial performance for the quarter, post which we will commence the Q&A session. Starting with the top line first, revenue for the quarter stood at INR 741 crores as against INR 663 crores reported during Q1 of FY 2021. This is higher by 11.7%. Without the impact of carry-forward of lockdown sales in Q1 of FY 2021, the growth is 19.7%. The growth was higher in Crop Care business compared to Seeds. EBITDA for the quarter stood at INR 122 crores as against INR 128 crores for Q1 of FY 2021. As Sanjiv mentioned, margins have been impacted by the pricing pressure, limiting our ability to fully pass on the cost inflation. Employee spends have gone up by INR 11 crore since we had, one, not given any salary increment to our employees during the base quarter, and actual charge for gratuity and leave encashment spends that we had to take during this quarter. PAT for the quarter stood at INR 82 crore as against INR 92 crore generated during the corresponding period last year, which is lower by 10%. Moving on to business-specific performance. We have seen a steady 31% growth in Domestic business on the back of recent product launches. As mentioned by Sanjiv, we have been working towards improving our portfolio by introducing new products in the market. During this quarter as well, we introduced three new products and the initial feedback has been quite positive. COVID-related challenges have impacted our marketing and on-ground activities. However, we believe that the same will change as COVID subsides. Secondly, our effort towards strengthening our distribution reach has been shaping quite well, which should help us better market our products. Our efforts towards digital marketing acceleration in the wake of pandemic continues to bear fruit. In the Seeds business, we generated revenue of INR 269 crores as against INR 261 crores generated during Q1 of FY 2021. This is higher at 3.1% versus base quarter. The growth was impacted by the increase in demand for illegal HT cotton and the crop shift pattern. EBITDA for the quarter stood at INR 83 crores as against INR 82 crores reported during Q1 of FY 2021. Better realizations coupled with stringent management of fixed costs helped in holding on to margin delivery. PAT for the quarter stood at INR 60 crores as against INR 60 crores generated during corresponding period last year. Moving on to International business, we delivered a growth of -8% for the quarter owing to steady demand across most of our key products. This growth has to be seen on the back of lockdown spillover of INR 45 crores of sales in base period. As mentioned in our previous call, we are working towards registering new products across our key geographies. Input product prices for most of our products have seen an uptick. As far as the contract manufacturing business is concerned, demand for the molecule PEKK continues to remain subdued with stress in the aviation industry. We are nonetheless focusing on leveraging our chemistry knowledge and in dialogues with the global players in the agri domain. A quick word on the CapEx before I hand it over back to the moderator. The work on formulation plant at Dahej is progressing as per the schedule, and we expect the unit to start operations by the 2nd quarter. Work on the new MPP plant as well is on track. We expect our CapEx for the current year to be approximately INR 250 crores. That concludes my opening remarks. We can now commence the Q&A session. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Rohit Nagaraj from Emkay Global. Please go ahead. Yeah. Thanks for the opportunity. The first question is on the increases in input costs. We have seen that across the board the costs have increased. On the contrary, we have not been able to pass it on. What is our perspective in terms of incremental cost increases which are happening and whether we have the ability to pass it on completely over the subsequent quarters? Thank you. There will be some price corrections that we will keep taking. A lot of the pricing is really determined by what's happening in the market in terms of competitive action, also in terms of the ability of the farmers to pay for it. We will judiciously look at any kind of price correction as the season progresses. Thank you. The second question is on the international business. Again, here also we have seen that it has got impacted because of the logistical issues, both in terms of inbound as well as outbound. What is our sense on this, that whether the situation is still continuing in the similar fashion or will it recover in the coming quarters? With regards to this, do we have to take certain changes in terms of how we are approaching the global market? Thank you. No. Yeah, go ahead, Naga. Go ahead. No, you're absolutely correct. I think the quarter one, we have actually witnessed significant challenges on international business on the freight front. As you are aware, one is, of course, the rates have gone up significantly, freight rates. We've also found that it was difficult to actually secure availability of shipping containers. It has been a global impact. Certain markets have obviously been impacted a lot more than in other markets. If one were to look at how things have progressed, let's say, in the latter part of June, and let's say early part of July, compared to how things were in the earlier part of June and the latter part of May, certainly I think there is a little bit of an improvement in terms of availability, but the rates still continue to be quite high. From our point of view, the way we are approaching this is that obviously we are trying to take preemptive action wherever possible as regard the raw material front, in terms of making sure that our production doesn't suffer for want of raw material. As far as outbound shipment is concerned, we've also been focused on trying to sort of book the containers, book the shipping lines as much as possible under the circumstances. That is how we've been navigating so far. With regard to how things might move forward, I guess it is a little bit difficult to predict. From our point of view, these are the actions that we are taking. Yeah, that's helpful. Just one last clarification on the strategic perspective. On the contract manufacturing, anything that we have finalized in terms of products, in terms of application areas, and when do we have a definitive understanding of where we want to proceed on this front? Thank you. No, on our contract manufacturing, as we said, for us, this is important area and it is an area where we have started focusing on only in the last year and a half. I've already mentioned in my previous call that we have put a good structure in place for business acquisition. Discussions are currently underway with multiple potential partners, and it is still work in progress. There's nothing to confirm as of now. It will take its own time, considering that we have not been very active in this part of the business. It will take its own time, and we are putting the necessary resources behind it. As of now, there's nothing to report. Thank you so much and best of luck, sir. Thank you. Thank you. I request to all the participants, please restrict to two questions per participant. If time permit, please come back in the question queue for a follow-up question. The next question is from the line of Varshit Shah from Veto Capital. Please go ahead. Yeah, hi. Thanks for the opportunity. Varshit Shah from Veto Capital. My question pertains to that if you see your pricing action has been slightly lagging behind the competition. Is that as sessment correct and hence you were able to slightly garner the higher market share in the domestic business? That's my first question. Probably it is for Naga and Sanjiv Lal. Okay. Sanjiv, can I go ahead? Yeah, Naga, you can go ahead, please. I think if one were to kind of ask the question in terms of what has contributed to our improvement in market share, frankly, I would say it is less to do with the pricing action and more to do with some preemptive work that we had undertaken in Q4. One of the important things that we had focused on was making sure the learnings from the previous year with respect to availability of particular SKUs of particular products is improved, because we do have a challenge of producing some of the SKUs in a given period of time because of the labor intensity. Since we had felt that in Q1, we are likely to face the kind of challenges that actually we did face, we had taken some of these production in Q4 itself, and thereby we had built up some amount of finished goods inventory. Particularly, I'm referring to the smaller SKUs. That allowed us to be able to improve impact to some degree. The other one, of course, is that if you look at our herbicide segment, we did introduce Enzip as a product last year, and we also introduced [Mark Plus] this year. We also gained volumes on the back of that, plus we also gained volumes on some of our legacy products, strong brands that we have. One would think that those were probably the bigger drivers for our increased volumes and perhaps improved market share as well. We will have to wait for the market share figures at the end of the year when we have proper industry information. With regard to pricing, certainly like what Sanjiv mentioned, we do have a portfolio where there are certain brands where we are able to sort of pass on the cost increases fully. There are, of course, brands where we do have to keep in mind the effective price point for the farmer as well as what the competitive actions are. We do have a mix, and for those cases where we have been perceiving a significant competitive pressure, we have chosen not to pass off the full cost. Certain other cases, we have been able to do that. I think the broader driver for the improved volumes in the domestic market is more coming from the actions that I described. Sure, that's helpful. There's one more thing. If you see FY 2021, we were unable to ramp up some of the newly launched molecules because of the physical movement restrictions. Where are we on that in terms of now further progress and how much of that, probably not a particular number, but probably is that also one of the important element in the growth acceleration, which we have seen in Q1 on a like-to-like basis, excluding the impact of the spillover. Just one last question on the MEIS impact. What is the full year MEIS incentive either in percentage terms or absolute terms in FY 2021? That's it. For the first question, we do find challenges even this year from the standpoint of physical work as far as demand generation is concerned, because as you would recall, in Q1, though we did not have a nationwide lockdown like we had last year, we did have regional lockdowns, which limited our ability when the second wave happened. Certainly, things have been easing up since, you can say, middle of June. I think if you take an overall quarter perspective, like we had mentioned in the last analyst call as well, we had illustrated as well. We had prioritized safety above everything else. We have got impacted. However, what we did this year is that learning from the experience of last year, we did increase the amount of effort on the distance marketing front. There were two kinds of learnings. One is, of course, the intensity of work. Second is in terms of improved efficiency in distance marketing. We would reckon that we would have perhaps reached almost twice the number of farmers that we reached last year through distance marketing work this year. That is how we have been dealing with this for this quarter. Sure. Is it okay to assume that the benefits of the newly launched products are yet to kick in, and probably it will gradually pick up as we go along the year, subject to, obviously, COVID-related hiccups? Certainly. I think if you compare FY 2020, FY 2021, and FY 2022 first quarter, certainly the level of physical demand generation work that we were able to in FY 2020, we are still not able to do. When you talk about products like PEPE, for example, what Sanjiv mentioned about, which is actually a product which requires a fair amount of demand generation work, I don't think we have yet got the full benefit of it. However, certain other products which are comprising of highly genericized active ingredients where the farmers are already familiar with the product, those products are likely to not that much benefit from the demand generation work. Sure. That's it. My question on the MEIS incentive. That's it from my side. Subhra, would you have the figures? Hello. MEIS? Would you have that? Yeah. MEIS, of course, as you know, there has been some bit of ambiguity, and hence we have stopped recognizing that as a revenue. We have seen an impact of close to INR 3 crores in this quarter because of non-realization or ambiguity around the announcement of MEIS scheme. Sure. Just for clarification, what are the full year MEIS incentive or the recognition last year and how much of that was part of Q1? It'll help us model this for this full year. I wouldn't have the full year numbers handy. It also depends on how much of the export revenue we do. As I mentioned, for Q1, we have seen an impact of INR 3 crores for MEIS. Sure. Thank you, and all the best. I'll get back in the queue. Yeah. Thank you. I request all the participants, please restrict to two questions per participant. If time permit, please come back in the question queue for a follow-up question. The next question is from the line of Madhav Marda from Fidelity. Please go ahead. Hi. Good morning. Thank you so much for your time. I had two questions. The first one was on the contract manufacturing business that we are speaking about. If I understand right, there are quite a few players in India who are sort of well-entrenched in this business since maybe 10-odd years. Just wanted to understand, is there a specific type of chemistry or something in our competitive positioning that we are trying to focus upon that will help us differentiate versus these players who've been in the market for longer than us? Actually, there's a lot of work which we are doing on multiple chemistries. Of course, we've been very good at certain chemistries. As part of our overall portfolio, where we are adding new products to even our international business, there's a lot of work happening on multiple chemistries. We are not limiting ourselves to the type of chemistries that we can take up for any CM kind of opportunity. Your observation is correct, that there are some well-entrenched players, therefore it becomes all that more important for us. Rather, I would say, the kind of effort that is required to try and bring in CM opportunities for our company. That is where the work is currently underway, Madhav. Just a follow-up to that. Basically, this would be CRAMS work that we would be doing? Would it be just contract manufacturing, or is it some part of research and custom synthesis also? How would that work out for us? Actually, currently some of the discussions which we are having is also including some amount of synthesis work. Okay. We can call it CRAMS, we can call it CM, but these are not the patented molecules. Okay. Let me just also clarify that. Yeah. What we are working on is not the patented molecules. Okay, got it. My second question was for the domestic crop care business where we had the 31% growth, could you break it down in terms of price and volume growth for the quarter? Subhra, would you like to just share the number? Yeah. We specifically do not talk about volume and price growth. On a broad basis, I can say it has a fair mix of volume and price growth, because it also varies depending on, as Naga alluded, between different products where we have a market premium, where we're able to command higher price growth vis-a-vis some products where for getting market share, we would have not taken pricing very aggressively. Okay, got it. Okay. Thank you. Thank you. The next question is on the line of Abhijit Akella from IIFL Securities. Please go ahead. Yeah, good morning, and thank you so much. Just one follow-up on the domestic formulations growth. This is the second successive year of strong growth in this quarter for us. Last year also, we had grown, I think, close to 25% in domestic formulations in Q1. Just wondering, this number might be rather high compared to what the industry might be expected to do for this one age for the kharif season overall. Should we expect that there was some amount of channel filling this quarter and growth will probably slow down a little bit in Q2? Is that how we should look at it, or you think this 25%, 30% growth can be sustained even in Q2? Abhijit, Naga, I'll let you take that. Abhijit, we do have a very good approach in terms of how we are placing product, and it is really based on demand. Last year, you'll recall that there was some amount of panic buying by the trade because they didn't know whether material would be available or not. That is not the situation this year. There is a certain amount of expectation that we have from the way the monsoon has picked up, and on that basis only we are placing our material. One of the points that Naga has already pointed out is that there was some expectation of certain SKUs that were more important, which we missed out on last year, which we are able to do this year with better planning. That has also helped us in the current quarter. We do expect a reasonably good kharif, so we don't think that we have overplaced any material. It's been done very judiciously in terms of what we expect to sell. Naga, you may like to add. Yeah, no, absolutely. I just wanted to add just the last point, what you mentioned, that we have felt fairly comfortable with the level of channel inventory that is there for our products. Like you correctly point out, Abhijit, the first quarter is always the placement quarter. We will have to wait for the full H1 for understanding the trends with re gard to kharif. Last year, for example, as per the industry data, the full year growth rate was closer to 9%-10%, although in the first quarter we did have much higher growth because of the panic buying, because of various factors that happened last year. From our point of view, certainly, I think we have learned from the happenings of last year, and we have therefore been able to supply some of the material that we identified might be required, and that is also one of the contributors for our growth. Thank you, sir. That's helpful. Yeah. Just the other question I had was on the CapEx budget. I think Subhra mentioned about INR 250 crores for this year. If it's possible to just give us a rough breakdown of the major components of that in terms of projects. Thank you. Abhijit, in the last quarter, we had given a split of what would be the key heads of CapEx. Largely, that does not change. We are in the same path of delivering some of our existing projects, which are related to, one is commissioning of the CZ formulation facility during this current quarter, and trying to accelerate as far as possible the multipurpose plant that we are building in the SEZ at Dahej. These are our two big projects which are currently on the ground. Many of the other projects are already coming towards closure, which is related with the Metri resiting into one particular plant, which we had already talked about. That is already coming up for commissioning during this month. Apart from that, there are two other open projects which are also getting closed during this month and early next month for our two existing products, which we are de-bottlenecking. Of course, we do have a lot of expenditure related with the digitization, automation, and all those kind of projects which are also currently underway. Apart from that, we have the new R&D center. That is something that is running a little slower than planned. We are still awaiting certain approvals related with name change and all of the land. It's still something that is pending. That has got delayed because of the availability of people for getting the name change done in the various khatas and all that are maintained by the various authorities. That is one project which is still running behind schedule, and only once all the paperwork is done can we really start the construction. That is one project which is running slow. That is the new R&D center. In the meantime, what we've already done is we've added significant additional capacity in our existing facility, which we have in Bangalore, and we've also added more people, and we are currently running there in two shifts to avoid any delay in any of the projects that we want to undertake. Apart from that, we're also working with some CR Os for some of the projects that would have otherwise been taken up in-house. If you can just refer to the investor call deck of last quarter, there is no significant change in the overall approach that we are taking on CapEx. Great. Got it. Thank you so much. Wish you all the best. Thank you. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hello, team. Good morning. Couple of questions from my side. One, if you could give us your ITI for Q1 FY 2022 and the similar figure for the last year's same quarter. The second, some sense on the competitive intensity in the market. How are the consumption patterns right now in the hin terland given the high commodity prices, strong kharif Rabi last year, but then there's the impact of COVID-19, the second wave going to the rural land as well. Just wanted to get your thoughts on that. Nagarajan, would you like to? Yeah. I will take the second one first, just to sort of give you a little bit of an overall feel of how we are seeing the industry moving. As you know, the rains started off very well this year. However, after the third week of June, there has been actually a slowdown, and this is what was mentioned in the opening remarks by Sanjiv that there has been a bit of a start-stop kind of a monsoon or a paused kind of monsoon. However, I think it got revived in the last, let's say, 10 days or so, and we are therefore hopeful that the original prediction of normal monsoon will prevail. With regard to, therefore, the sown area, we don't see much of a difference. In fact, the estimates that are made are ± 1% or ±2% of last year. Not very different. The progress of sown area was good early, it kind of slowed down. The season's progress has actually been a little slower compared to last year. Like I said, we are still hopeful that the overall acreage will be reached. In the market, the flow of credit has been good. Agricultural credit in May 2021 was about 10% growth compared to 5% in May 2020, it's certainly a favorable situation. Because of the variation in the rains as well as because of commodity prices, we do expect quite a bit of crop shift. Of the commodity prices, as you know, soybean has been ruling very high this year compared to last year. Cotton is also higher than last year, as is maize and some of the pulses like tur. This crop shift is something which has implications in our portfolio for cotton certainly in our seed portfolio and for also hybrid paddy in our portfolio because in some of the North Indian markets there has been an increase towards OP varieties or collection rice compared to hybrid Paddy. On the fruit and vegetable front, green chilies, grapes, apples, these products have had good commodity prices, so that is actually a favorable situation. Bajra is one crop where the commodity prices have actually gone down significantly over last year and that has implications, for example, from our portfolio. Net-net it is expected that the farmers will adapt to the situation through these kinds of crop shifts so the farming profitability is also expected to be actually higher on a per acre basis compared to last year. With regard to COVID, you are absolutely correct that this second wave has been more damaging, I should say, for the rural areas. We have had some of our channel partners who have got impacted because of COVID. Some of them have passed away as well. We are working through some of the challenges that it consequently creates, movement has been a challenge. The freight rates have actually gone up substantially. Net-net, one would say that quarter 1 has been a challenging and difficult quarter. Towards the end of June, one would say that things have certainly begun to look up, and we are hopeful that as we come out of the second wave kind of a situation, things will stabilize. Of course, the fear is there in everybody's mind with regard to the third wave, which all of us are aware of. From our point of view, we are prioritizing employee safety, partner safety. Those areas we're continuing to focus on. That's broadly in terms of how the quarter has been. If any particular aspect of the quarter you would like to sort of ask, I can respond and then go to the ITI. No, this is all right. Just the only thing, while on the cropping pattern, I understand. I wanted to also understand from the rural consumption perspective. Because you said that you did face some competitive intensity on pricing, which sort of pushed your gross margins. Are the farmers willing to spend more given the strong seasons that they've gone through in the past, or you don't see any such trends emerging? No. I think on that purchase behaviors, certainly last year also we had, if you recall, in the beginning, there was this feeling that the farmers might downgrade or there might be some kind of value purchases in the sense of, let's say, more generic products at lower prices. That is not something which we witnessed last year as well. We don't expect that that would happen this year, too. As long as the product is differentiated, because the season has started off on a very promising note, we do expect the same trends to continue. Even in our first quarter, for example, like I mentioned, some of our legacy brands, which are strong, have contributed to our growth. At least the channel has been willing to stock them up. I think they share the perception that the farmers will be open to. In fact, in some of the markets like North India, we have found the farmers being willing to invest in these products as long as they are differentiated. Sure. On the ITI question. On the ITI, normally I think ITI would make sense to look at from an annual point of view. There are certain products that we will be introducing in Q2, and we will also be introducing during Rabi as well. Right now only three products have been introduced. It is therefore unlikely to provide a good measure of what we are introducing this year. Of course, the point remains that in the previous years, whatever we have introduced, those would contribute to a better revenue share. Also that quarter one is a placement quarter largely, except in North India. Therefore, with all those caveats, I can say that at this point in time, it is trending better than what we had hoped for the first quarter. It is about 6% right now, but I think we will have to wait for the full year to really see what the ITI percentage ends up being. Okay. That's really helpful. Thank you, and all the best. Thank you. The next question is f rom the line of Chintan Modi from Haitong Securities. Please go ahead. Yeah. Hi, thank you. Sir, on the international- Sorry to interrupt you, Chintan. Can I request you to speak little louder? Yeah. Can you hear me now? Much better. Thank you. Sir, on the international business side, when we look at the growth for this spillover in the base quarter, could you give us some sense, like how much was the volume contribution and what would be in the pricing? Last year we have seen a steep in prices. Wanted to understand that lower prices in the base quarter has already started kicking in, or it will kick in from next quarter. Yeah. I think, Sanjiv, shall I go ahead and respond on this? Yeah, go ahead. Yeah. Hello? Chintan, may I request you to mute y our line from your side? There's a bit of static coming from your line. Am I audible? Yes. Go ahead. What I would respond is as follows. If you adjust for the spillover of last year, for all our key AIs, we have actually witnessed growth in terms of volumes. In terms of the price realizations, metribuzin is really the one where there has been a substantial drop through the year last year. If you see, compared to quarter 1 of last year, the realizations this year are still ruling lower. It is not yet in the base. However, if you compare it with Q4 of last year, the prices have been slightly improved on the metribuzin front. The full impact of the metribuzin drop is not yet reflected in the base quarter. Other products have been reasonably safe. Sure. Sir, just to add more on this, like last quarter also, we saw 75% growth. This quarter also decent growth. The momentum is good. It indicates that the demand has been good. Do you think there is also a lot of supply coming into the market, which is not allowing the prices to kind of go up at least quite a bit? Are you referring to the international market? Sorry, international. International market, in a general sense, the prices for all chemicals have been firming up. I think that is also something which Sanjiv mentioned in his opening remarks. Specifically to individual products, yeah, there could be varying demand supply position in each of those products. That is what I mentioned that in the case of metribuzin as an example, the pricing have improved over quarter four in quarter one. If you look at Acephate prices have actually been much higher compared to quarter four. It is actually product specific and in a general directional sense, the prices have actually been increasing in Q1 compared to Q4. Sure. Just one last question. On the gross margin, I missed your comments. Whether this reduction in gross margins was largely to do with domestic or international business? No, the gross margin for both domestic and international business has been stable. It is actually the mix between our crop care business and seed business in this quarter versus the mix in the first quarter of last year. That is the reason for the gross margin reducing. For example, last year in the first quarter, maybe Subhra, you have the percentage of contribution from seeds and crop care, right? Compared to this year. Yeah. You want to comment? Just to add to what Naga was saying. Last year, if you look at our share of seeds business was close to 35% and crop care 65%, which has swung the other way, and the mix has come down by 8% for seeds business. This is driven by the high growth that we saw in crop care business. We indeed make higher margin in seeds business compared to crop care business. While on a standalone basis, each of our segments of business has delivered a good margin. It has come down because of the impact of the mix, which is sitting in our portfolio. Also to what Naga was saying, the way we internally look at gross margin is also considering other variable costs. With that into account, we can say that the mix has been something which has impacted our gross margin. Does that help? Yeah, sure, ma'am. Thank you. Thanks a lot. Yeah. Thank you very much. The next question is from the line of Amar Maurya from AlfAccurate. Please go ahead. Yeah. Thanks a lot for the opportunity. Firstly, if you can give me what is the contribution of the organic manure in this particular quarter? We don't call that out separately. It is rolled into the total crop. Sorry, Chintan Modi, we are unable to hear you. Hello, can you hear me? Yes, sir. I was just saying that we don't give out the breakout within the crop care business. We call out the total crop care. It is part of that. Okay. Secondly, sir, in terms of the CSM or the CRAMS business, as you said that the work is in progress. If you can, sir, help us like how we had any new incubation in terms of the team on the sales side or on the R&D side? How the progress is in terms of building the team for the CSM, because that, as you said, you are new into the business and the animal is different than the existing business? If you can help us, any new people bought on the CSM to specifically drive the business, that will help us to understand how the progress is? Amar just to clarify, we have been in this contract manufacturing business for the last two decades. Correct. It has not been an area where we have been focusing, and that focus we brought only about a year and a half back. Correct. To support this part of the business, we have put in place a business team, and we have also created a team at the R&D to support the business team. I had mentioned that we have added resources to the R&D setup, and we have also started working extra shifts and all that so that one is the physical distancing and all that we need to maintain, and also there's a limit which is there in terms of number of people who can be at a particular area at one point in time. Keeping all that in mind, one is that we've moved to a two-shift operation. Second is we've added more chemists, more scientists to our team. Second is that we have split the R&D team between a team that is supporting contract manufacturing and a team which is working on our own reverse engineering synthesis of the AI portfolio that we are building. That is how we have resourced this particular part of the business to focus on getting opportunities for us. Okay. One is basically building the portfolio or building the AIs that is basically the R&D part of the business. I was focusing more from the marketing point of view, like ultimately somebody has to go and showcase that. Are you saying that that is being done by the existing sales? No, there is a business team. I mentioned to you that we put in place a business team, which you can call marketing team or we are calling them a business development team. Okay. That team is already in place. Okay. How many people, sir, in the sales, I mean, the business team? Two people. Based out of India, based out of international market? Based out of India currently, based out of Mumbai. Okay. Got that. Anyway, even for this, like the way we are dealing using video conferencing, these meetings are happening over video conferencing. Even potential customers are preferring that in the current situation. That's not an issue as of now. Yeah, once things normalize, people will travel. Okay. Sir, in terms of the molecules, how many molecules we would be working, would be at a discussion stage, which can culminate into the business, let's say in predictable future? Without getting into numbers, just to say that the team has got their hands full. They've got enough work to do on the inquiries that we are currently dealing with, including the R&D team. Thank you, and sorry to interrupt you. Amar, I request you to come back in the question queue for a follow-up question. The next question is from the line of Rohan Gupta from Edelweiss Financial Services. Please go ahead. Yeah. Sorry. Hi, sir. Good morning, and thanks for the opportunity. Sir, first, if you can just give absolute numbers for our seeds and domestic agrochemicals and exports. You had started this practice of giving the separate numbers that I think is not provided in the current quarter. If you can give absolute numbers for the current quarter as well as for the last year. Hello, Rohan Gupta. Yes, sir. Can you hear me? There's a lot of disturbance coming from your line. May I request you to speak through the handset? Sir, can you hear me now? Yeah, of course. Okay. Sir, I was asking, can you give us absolute numbers for the seed domestic agrochemicals and exports for the current quarter and last year? Sir, you started this practice of sharing this number on a quarterly basis. I think that this quarter is not being provided. Can you just clarify on those numbers? It is in the investor presentation. If it is not yet uploaded, maybe it will be. The seed revenue was INR 269 crores this quarter. Last year first quarter was INR 261 crores. The crop care revenue was INR 471 crores this year first quarter, and the last year was INR 401 crores. The EBITDA and PAT numbers are also displayed, and it will be part of the investor presentation. Sir, can you share also the absolute numbers, sir separately? Yeah, it is also there in that sheet. This year the share of international business is 28%, compared to last year, 36%. That is because in the last year, these numbers are without adjusting for the spillover. Okay. Sir, second question. We have seen that a lot of input cost-driven price increases there in the market across the agrochemicals and given large part of our product basket is generic in nature. Can you, sir, give some sense that what kind of price increase in general or average we can expect for this year, and how much it has already been in the first quarter? You are still in the process of passing it on, so I'm just asking that how much you see that the price increases can happen in generic products for this year, sir. See, Rohan, maybe I think if I can explain the way we are approaching it might help. The way we are doing it is that every month we have actually instituted what you can call a high-frequency pricing approach, where we are looking at the changes that we are witnessing at that point in time. That is because we are finding that the variations are much more frequent than they have been in the past. Based on the kind of changes in our cost and on the basis of how the competitive movements are happening, we are taking very short frequency pricing calls. Therefore, it becomes a little bit difficult to predict for the full year. It becomes difficult to predict for the full year because as you would appreciate, there are certain products which certain companies may have carried stock. We may have also carried certain stock, which gives us the opportunity to sort of benefit from an increasing price regime. On the contrary, there could also be the opposite situation where we may have not carried the stock and we are forced to buy in order to cater to the market. It's hard to actually give you a forward view on what it is likely to be. That is because this is the kind of approach that we are taking. As regards what we have already witnessed, I think already Subhra mentioned, we have healthy volume growth as well as reasonable price growth. We have passed on wherever we have been able to, certainly the strong brands that we have, which have good market share as well. In certain other cases where we find that the differentiation that our products enjoy in the market is somewhat weaker, we have not passed on the full opportunity. Sir, just last question from my side, and I'll come back in queue for follow-ups. Sir, this is referring to your annual report of 2021. Sir, from last three years, our focus has been a lot on the new product launches and driving sales for our branded products. Despite that, sir, and a lot many products which have been launched in last three years. Our innovation turnover index has fallen last year from 16% to 11%. It means that the revenues from the new products actually have gone down in the last three years, especially last year. Sir, we have created many more initiatives. We have taken many more initiatives, like architecture of the brands and new product launches. Sir, it's not somehow getting reflected in the numbers, especially from the new product launches, and that I think is continuously depressing our margins also. If you can, sir, share a bit on that, how you see that this year the new product launches revenues can be, or the ITI can look like over the next couple of years, if you can give some sense on that. Yeah, certainly. I think your observation is absolutely correct. We have had a decline in the ITI. Last year was 12%, earlier year was 16%. If I recall right, the previous year before that was about 10% or 11%. We did not get the growth last year, and I think we had mentioned that one of the big difficulties that we have had is that in terms of the demand generation work to scale up some of the new products, which we think are differentiated, those have got hampered in the market last year. We continue to face those challenges this year also, although that is not deterring us from introducing the new products because we do want to sort of attempt to market these as best as possible and of course be poised for any opening in the market that can happen if the COVID were to subside. Your observation is correct, that the ITI index last year has been lower. We are hopeful that as COVID ends, we should be able to engage more in the demand generation activities. Some of the products that we have introduced, including PEPE, which Sanjiv already mentioned, these are good differentiated products, and they will need to be backed by good demand generation work because these are not low-price products. Like you correctly said, from a margin point of view also, they are very beneficial. At the basic level, the price points are not very low. Therefore, they require detailing to the farmers, strong demand generation work. We, at this point in time, are hopeful that things will improve on this front. Sir, a continuation of the same thing if I'm allowed to ask the same thing. Sir, we have also observed that the biggest drop in ITI has been in insecticide category, where it has fallen from 20% to almost 9% last year. Is it something, sir, because our focus on reducing the sales from the red triangle products and insecticide falls is the maximum in that category. Is it something that the regenerating our product portfolio where we are having a thought process of reducing the red triangle product sales from our portfolio. Is it something to do with that insecticide sales and ITI in insecticide has fallen the most? Is my observation correct or is there some other reason for that? No, it is not related to red triangles because we have not had red triangle products for some time in our portfolio and certainly not in the ITI products. That is not the reason. Maybe this particular question one will have to really look at to give you a more thoughtful response. Perhaps we can take it subsequently. Thank you. I am sorry to interrupt you, Rohan. I request you to come back in the question queue. I request to all the participants, please restrict to two questions per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Aditya Jhawar from Investec Capital. Please go ahead. Yeah. Thanks for the opportunity. Just a couple of questions. The first one is on export. If you can help us understand that there has been a sequential drop in export. What could have driven this? Is it because of the container issue and that highlighted that in the beginning of July and last week of June, things are looking better. Does that mean that there could be a bit sequential uptick in export as the situation improves? A related question is that, just to get your confirmation, you also mentioned that in export, the pricing of the key molecules like metribuzin, that is also kind of improving. Just wanted to confirm. That was the first question from my side. Yeah, that is correct. The price of metribuzin on a sequential basis has improved in Q1 over Q4. With regard to your other point about whether it is about shipping difficulties that have contributed to a sequential change. Not really, because I think even in a normal situation, if you were to look at a couple of years back, there are variations between Q4 and Q1 of international revenues. Just like in our context, Indian context, these shipments that we make of various AI to various overseas countries is driven by their local weather conditions, and therefore the timing is actually more determined by those factors. I don't think it is actually attributable to scaling difficulties contributing to any reason for the seasonal decline. QoQ decline. Sir, I mean the quantum was 40%, which we have not seen in the past. That's why that question. Sir, moving on to the next question is in a couple of quarters back, you had indicated a big CapEx plan for the next five years where you had announced about INR 800 crore of CapEx, which you will spend. Out of that, about INR 400-INR 450 crore kind of a CapEx, you have clearly identified certain action items on that. The question here is that, since we have entered into FY 2022, is there a line of sight for the remaining INR 350- INR 400 crore CapEx? Have we identified certain areas where the next phase of CapEx can be targeted towards in terms of specific molecules or specific broad areas that we can target for the next phase of CapEx? Aditya, one of the areas which we still need to finalize, and that is also dependent on the way our work at the R&D center is goi ng, is we are currently building one multipurpose plant, which is largely intended for fungicides, insecticides. We need to build one more multipurpose plant for the herbicides, which is also the work which is currently happening. We will take that decision perhaps during the course of this year as to when to start the work on that. This year we are really focusing on closing out on some of the key projects that we have taken up so that we can start commercializing products from them. This is the current focus. During the course of the year, we will take decisions on, one is the additional MPP for the herbicides. Also one more decision which we need to take is on the plant for the intermediates. That also is something that we will decide perhaps during Q3 or Q4 once we have clarity on the work that the R&D team is progressing on. Thank you. Sorry to interrupt you, sir. The question will come back in the question queue. The next question is from the line of Prashant Biyani from Prabhudas Lilladher. Please go ahead. Thanks for the opportunity. Sir, the pricing pressure is mainly coming only from the international business or is it also in the domestic business that we are seeing some sort of a pricing pressure? No, no, it is there in various products, certainly in domestic market also. We are facing pricing pressure. Sir, despite the overall environment being good and the underlying demand also relatively better with regular price hikes also, then what could be the reason for the pricing pressures in the domestic market? Actually, the increases in some of the raw materials have been substantial. If you look at increases in certain raw materials like acetic anhydride, for example, these are all substantial increases. These are not small 2%, 5% kind of increases. Therefore, in order to be able to pass on those kinds of increases, the resultant farmer prices will have to become substantially higher, which becomes difficult for the customer to be able to bear. Really speaking, I think these are abnormally high cost increases that we have witnessed, and that is the reason why there is a pricing pressure. Thank you. We move on to the next participant. The next question is from the line of Nirbhay Mahavar from N Square Capital. Please go ahead. Yeah. Sir, is there any significant inventory addition in the seeds vertical? I'm sure you were not prepared for a 3% growth in the business. Yes, we do have. That is also because we had consciously taken a higher quantity of paddy production in Rabi of 2020, because we have, again, as a learning from the previous years, found that having some level of buffer stock is useful for us to capture some of the opportunities which we were otherwise losing, and therefore, we had deliberately taken a higher quantity of production. That production has come in during the course of this quarter, some of which came in after the shipment of paddy seeds for this quarter. Those have been inventoried, and therefore there is a higher level of inventory compared to last year. Sir, if you look at all the three verticals, domestic, international, and seeds, while two verticals are showing clear sign of buoyancy, in seeds from some time we are seeing some kind of stagnation. What is our game plan for this? Do we expect it to increasingly become a smaller size in the overall scheme of things, or we have some aggressive growth plan here? Actually, we don't expect the contribution or the share of that business to become smaller. You are right that I think we have not been able to get the kind of growth that we were hoping to get. In the case of cotton, for example, we had identified it as one of the growth areas, and we did have new hybrids that were approved by the GEAC. We did launch them, though, of course, this year was the first year. In fact, in the opening remarks, I think Sanjiv mentioned that we introduced 5 new products. In this particular year, we have not been able to gain. We have been affected by the crop shift that we mentioned. There has been a significant impact in Eastern Maharashtra consequent to shift to soybean. We've also had the challenge of illegal HT proliferating in the market. Therefore, we have, despite our efforts, not been able to increase our business share, business volume on the cotton front. On the maize front, on the other hand, it has been a different factor. We did have some challenges in the Rabi production season of last year because of the weather conditions that prevailed then, which led to a lesser availability of maize from a placement point of view. This is something which had in the past affected us in the case of paddy, and that is what we took higher production in Rabi and certainly for maize as well, we will plan as we go forward. Certainly for this quarter, we got impacted because of limited availability. From our growth point of view, we still think that cotton represents an important area for growth. We have introduced these hybrids this year, and we should focus on scaling them up in the years ahead. Thank you. On vegetables, things have been actually more satisfactory, which is another area which we have called out in the past as a growth area. Q1 has been satisfactory from our point of view. Of course, we have to also focus on the Rabi maize product, which we mentioned earlier, from a profitability improvement standpoint because our portfolio continues to remain curated. That is something which our breeding team is focused on. You're right, I think we have work to do on the seed side. Nirbhay, just to add. Some of the work that is happening on the new hybrid seed development for all our field crops, that is progressing well. We did mention that it'll take a couple of years before we're able to fully sort out our portfolio. We have already launched five new products in cotton, which Naga mentioned. Of course, these have to be scaled during the subsequent years. Our pipeline is looking reasonably good, and some of the pre-commercial work that we are doing on some of these hybrids is also looking positive. Overall, while it has not created the kind of growth that we were expecting, I think there is a positive trajectory that we can see in the coming years. Thank you. We move to the next participant. The next question is on the line of Somaiah Valliyappan from Spark Capital. Please go ahead. Thanks for the opportunity, sir. The first question is on our projects. In terms of the new volumes that is expected to come up. I know you have given a breakup of the projects. With respect to Metri recommissioning or the debottlenecking exercise, can you just provide, in terms of quantum, what will be the volume expansion in our international portfolio? It could be either probably in percentage terms or probably in absolute terms, in million metric ton, where our capacity will go in each of these products. That's the first question. Naga, you may like to just give some detail on that. Yeah, sure. You want me to refer to the previous presentation that has been sent? No, Naga, just in terms of what is the overall increase in production which we are expecting. Example, we've more than doubled the Metri production. Yeah, compared to. Our production. Where do we expect the overall volumes to reach? Yeah. Based on- In the case of, maybe I'll start with metribuzin. Metribuzin compared to where we were in FY 2020, we have more than doubled our capacity. However, what has happened in the case of metribuzin, because there has been a softness in demand, we are not expecting that we will be running at 100% capacity utilization. From a capacity increase point of view, we have doubled it. We will of course, be calibrating our production in line with whatever demand feelers that we get. That is something which we will take on a month-to-month basis. If you look at pendimethalin, our capacity has increased by about 25% compared to where we were FY 2021 beginning. That one is fully commissioned, and it is deployed and the demand outlook so far has also been fairly positive. We are actually running at more than 90% of our capacity utilization. As far as hexaconazole is concerned, we have increased that also by about 70% of capacity compared to FY 2021 beginning. hexaconazole also, we are having a good capacity utilization situation, and we are swapping more than 85%, 90% of capacity utilization. These are principally from the export market point of view. In addition, for pyroxasulfone we had expanded capacity. We had doubled the capacity. Here, the utilization has so far been good. I think on an annualized basis, we would not expect to run at 100% utilization, but maybe it'll be a fairly high, maybe something like 70%, 75% utilization. These are the projects which are completed. The other projects about acetamiprid, lambda-cyhalothrin, these are now getting completed, and they will get commissioned in quarter two. Helpful. Just one follow-up on that. With respect to metribuzin, we have double capacity with respect to last year itself. In terms of capacity, we are in line compared to last year between FY 2022 and FY 2021. It's about the utilization rate of this capacity. Is this the right understanding? No. Sorry. Metribuzin we have doubled compared to FY 2020. Okay, compared to FY 2020, because last year also we had increase in capacity. Compared to FY 2020, we have doubled. Got it. When is the new MPP plant expected to come? I'll request you to come back in the queue for a follow-up question. Thank you. The next question is from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead. My question to you is that, do you feel, due to ESG and different environmental concerns, the entire biopesticide theme would work out much earlier than we have envisaged, and there could be a huge demand for these kind of biopesticides? That is one question. Secondly, sir Hello, Faisal, can you hear us? Can we look at more acquisitions like we did the Metahelix acquisitions? Do we look at such opportunities often? Just to further highlight, while we did not talk anything during this call on the biologicals, we have already launched two products during the last financial year. Even this year, we will be launching two biological products. This is an area which is important, and even from an export perspective of some of the crops that are being exported out of the country, there is a need for farmers to use products which reduce the MRL levels for certain kind of chemicals. We are focused on this category of products. Apart from that, even our crop nutrition portfolio is doing fairly well. We've been adding products even during Q1. We did add a product for nutrition related with the apple crop, so that product has already been launched. Last year, we had done a similar kind of crop nutrition product portfolio application for the grape crop. These are areas where we have been slowly adding products to our portfolio. Your second question, Faisal? Yeah. What was that? My second question is that, do we look at more acquisitions like Metahelix? Yeah, sorry. This is something that we constantly look at, and we will make the appropriate decision, because it has to be value-creating for Rallis. We regularly scan to see what are the things that we need to add to our portfolio. We will go for acquisitions as and when we find something that will be value-creating for Rallis and its shareholders. Do we feel that the biopesticide movement could really accelerate a lot faster than we have envisaged, and how well-prepared are we for that? Well, let's say that we did have a few biological products in our portfolio over the years, and we have now made a conscious effort in terms of adding more products into our portfolio based on our package of practice that we are recommending for various crops, whether it is field crops or whether it is horticultural crops. We have been adding products. We'll be launching new products, as I mentioned. This is certainly an area of focus for us. We will continue to build this portfolio while we drive crop protection as well. Thank you very much. We move on to the next participant. The next question is from the line of Ashwin Reddy from Samatva Investments. Please go ahead. Yeah, hi. Good afternoon. I have two questions. First one is on the contract manufacturing bit. I just wanted to understand what specific steps are being taken, because the reason I ask is, I understand there's been a management change and there's been a change in the company's direction. Contract manufacturing has been a focus area for a long time for the company. What specific things have changed, and what gives you the confidence that you can track it now? Ashwin, I think I've already answered this question to something that I think Amar had asked. We have, as I've already mentioned, put in place a business team who is engaging with the potential partners. We also have a R&D team which is working along with business. In the discussions that we are having with various partners, there are certain opportunities that are there, for which the R&D team is working on the route of synthesis and costing and also making available samples to the potential partners. Right. It does go through its own cycle time of getting ourselves qualified to be able to make it at the right price and the right quality that is expected by the partner. That is work in progress. We believe that we have a good team in place, both at the business level as well as at the R&D level, to support this part of the portfolio. Understood. Broadly, what time is the big insight in terms of expecting tangible results? Two years from now, three years from now? What do you think is a reasonable time frame for it to start contributing in that timeline? It is safe to assume that this is not going to happen in the next quarter or the next two, three quarters. Right. This is something that will really start kicking in maybe a year, maybe two years from now. Okay. Because we do have a capacity-related issue, and as we just answered the earlier question, that most of our capacities are maxed out. Our new MPP plant is getting built. That is intended for a certain set of products. We will take decisions on further investments, basis the various discussions that are happening. It is safe to say that any further revenue streams will happen only over a year from now, year and a half from now. Got it. That's helpful. Second question is on the metribuzin. Can you give some more clarity on the advance happening at the global level and what are the factors that you're looking for to change? Is it because capacity has come up in parallel and metribuzin prices are depressed, or how do we track, or what are the things to look forward to that can give confidence that metribuzin capacity can be utilized in the next one, two years from now? Any broad pointers that you think we should look at? Yeah. Maybe I can take that, Sanjiv. Go ahead. I think from our point of view, I think we are focused on increasing market access. As you are aware, we obtained a direct registration on Rallis. Hello? Sorry. Can you hear me? Now we can hear you. Yeah. We obtained a direct registration in the U.S. market, and that gives us the opportunity to access customers. We have begun that work and we have added customers and we hope that we will be able to add more customers going forward. Sir, your audio is coming a little feeble. Is it better now? Yes, sir. Yeah. What I was saying is that, from our point of view, we are trying to increase the number of customers to whom we can sell this product, and we are trying to do that through increased registration. One of which has come through for USA some time back, and we have already obtained additional customers. We are also doing the same thing in other geographies also. That is the important aspect from increased utilization of the increased capacity. Thank you very much. Ladies and gentlemen, I will now hand the conference over to the management for closing comments. Thank you. Thank you all for joining our earnings call and the questions that were asked. We do hope that we've been able to provide the necessary clarity to all your queries. We do look forward to a positive kharif season ahead, despite all the challenges. We are optimistic because things on the ground are certainly showing directional improvement, and we hope to have a reasonably good kharif season. We will again meet at the end of next quarter with the set of results. With that, it's back to you, to the moderator.