Ladies and gentlemen, good morning, and welcome to the Rallis India Limited Q1 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Gavin Desa from CDR India. Thank you, and over to you, Mr. Desa. Thank you. Good day, everyone, and thank you for joining us on Rallis India Limited's Q1 FY 2023 earnings call. We have with us today Mr. Sanjiv Lal, the Managing Director and CEO, Mr. S. Nagarajan, the Chief Operating Officer, and Ms. Subhra Gourisaria, 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 of the call. Over to you. Thanks, Gavin, and good morning, everyone. Thank you for joining us on our Q1 FY 2023 earnings call. I have along with me Mr. S. Nagarajan, our Chief Operating Officer, and Ms. Subhra Gourisaria, our CFO. I'll begin the discussion with a brief overview of the industry before I move to Rallis specific developments. On a sectoral level, as most of you are aware, we had a slow start to the monsoon till July first week. However, the monsoons have picked up with cumulative rainfall being 11% above normal till July 13 on an overall basis. For the season up to July 13, 30 of the 36 subdivisions have received excess or normal rainfall with cumulative rains of 306 millimeters against a normal of 275 millimeters, which is 11% above normal. Uneven spatial distribution, however, is a concern, with 53% of the districts receiving deficient or large excess rainfall. Some key rice-growing states like UP, Bihar, West Bengal, have received very scanty rainfall this season. Region-wise, while East and Northeast regions received 21% surplus rainfall, Northwest India, Central India, Southern Peninsula were deficit during the week ending July 1, 2022. However, we have seen a monsoon pick up pace and are hopeful of good rainfall for the remainder of the season. Delayed monsoon consequently led to lower acreage across states, 5% down as of July 1 on a year-on-year basis. Acreage for major crops were mostly flattish or slightly lower on a YOY basis. However, with the monsoon picking up pace, we have seen sowing activities increasing, leading to narrowing down of acreage deficit on a weekly basis. Let me now move on to Rallis-specific developments. Starting with our headline numbers. We have seen our Q1 revenue grow 16.5% over the previous year. Growth was well-balanced with growth around 5%. EBITDA stood at around INR 113 crores with margins of 13.1%, lower by about 330 basis points. Crop care growth and margin is on a healthy trajectory. Overall margins were impacted due to lower margin in seeds to liquidate stocks and aging-based provisions on seed stocks. Profit after tax for the quarter stood at INR 67 crores. Moving on to individual businesses, starting with domestic business. We have seen a growth of 17.1%, largely driven by better realization. We have undertaken median price hikes of 4%-5% during the quarter to offset the impact of higher raw material prices. We have witnessed volume growth during the quarter for herbicides which enters the crop cycle first. In fungicide, returns on some products from rabi paddy and chili markets offset Q1 placements. It may be recalled that the disease incidence was lower in rabi paddy and crop condition for chili was not good last year. However, Q1 is largely a placement season and clearer liquidation trends will become evident in Q2. Our channel stocks are higher as on Q1 end, as we have consciously stocked up with a view to not miss possible liquidation opportunities in Q2. We expect the channel stocks to narrow down closer to last year's level by H1 end. In terms of new product development, two new herbicides for cotton and paddy crops have been commercially launched, along with three new paddy hybrids and a tomato hybrid during the quarter. We have maintained a good run rate in terms of launching new products. We are specifically working towards gaining market share in certain underserved markets such as MP, UP and Rajasthan across crops such as soybean, wheat, and certain segments of paddy. Moving on to our international business. We have seen a good growth driven by volume as well as realization. Demand for most of our products continues to remain encouraging. Metribuzin sales, as indicated in previous calls, should pick up Q2 onwards. We remain buoyant on the exports demand and will continue to work on augmenting our portfolio. Q4 FY 2022 performance, as you will recall, was impacted by challenges surrounding raw material procurement for pendimethalin. In order to avoid such incidents in future and lower our dependence on China, we have identified a local partner to supply raw materials to one of our key products. While cost-wise, we may not see a material impact, this arrangement will help us secure raw materials in a timely manner. Furthermore, as indicated earlier, we are also working towards increasing the share of formulations on this front, and we have obtained a registration for all 27 states in Brazil for an acephate formulation and are on course towards commencing shipments from Q2. In terms of contract manufacturing, as highlighted in our previous call, we signed two new contracts during Q4 FY 2022. While the quantum may not be material in the near term, this development is reflective of our renewed focus towards scaling up the business. Moving on to the seeds business. While on a broad level the business environment continues to remain challenging, we have seen a flat revenue over the previous year. The overall pace of growth was impacted by delayed monsoon, which impacted liquidation. We also witnessed segment shift patterns in the paddy crop. Demand for cotton seeds was impacted due to delayed monsoon in Maharashtra, affecting sowing activities and increased usage of illegal HT cotton seeds. However, we are pleased with the growth of our new cotton hybrid, Diggaz, in the markets of Punjab and Rajasthan, where we have increased our volume to 1.75 lakh packets from about 20,000 packets last year. Notwithstanding the growth we saw in Diggaz, the seeds environment was challenging due to segment shifts. We have revised our strategy for the business with a greater focus on liquidation, cost optimization and more robust evaluation of new product pipeline advancements. Work towards building our rabi portfolio and scaling our presence in vegetable business is also progressing as per schedule. We continue to remain cautious in our seeds business, and we are hopeful that we will be able to address the portfolio issues in the coming years. On the biotech front, we have received state NOC from Haryana and Karnataka for conducting our BRL-1 trials for insect resistance and herbicide-tolerant cotton and maize GM events. We are awaiting final approval from the regulator, GEAC, after which we hope to commence the trials in this financial year. To conclude, while we have started the year on a steady note, we expect business to pick up pace, H1 onwards, especially on margin fronts on the back of new capacities, new product launches, better product mix and a wider distribution network. Our focus, as we have reiterated in earlier calls, is to accelerate the volume growth and we are focused on achieving the same. This concludes my opening remarks, and I'll now hand it over to Subhra for an analysis of the financials. Thank you, Sanjiv Lal, and good morning, everyone. Thank you for joining us in our Q1 earnings call. Let me quickly walk you through our financial performance for the quarter, post which we shall commence the Q&A session. Starting with the top line, our revenues for the quarter stood at INR 863 crores as against INR 741 crores generated during Q1 FY 2022, a growth of 16.5%. Within that, crop care growth was 26.5%, driven by 16.3% price growth and 10.2% volume growth. Domestic business had a growth of 17.1%, primarily due to price hikes taken last year and during the quarter to partially offset the impact of rising raw material prices. International business reported a growth of 50.8%, driven by both volume and value. Seeds business generated revenue of INR 267 crore during the quarter. EBITDA for the quarter stood at INR 113 crore as against INR 122 crore generated during the corresponding period last year. Crop care EBITDA has improved to 9.5% versus 8.1% last year, primarily due to leverage impact coming from growth. Seeds margins were impacted due to lower realization owing to the commercial interventions for stock liquidation and aging-based provision of INR 13 crore recognized on inventory. PAT margin stood at 7.8% as against 11.1%, lower by 330 basis points, primarily on expected lines given the higher input prices. While we did undertake price hikes during the quarter, the quantum wasn't commensurate with the increase in raw material prices. We expect the margin trajectory to start improving as several raw material prices cool off and our capacity utilization in the plant start to improve. Profit for the quarter stood at INR 867 crore as against INR 82 crore during Q1 2022. Moving on to business-wise performance. Domestic business performed reasonably well. Overall volumes were relatively subdued due to returns from the rabi paddy markets. We have seen the monsoons pick up pace and are spreading across regions, resulting in improved overall acreages. In terms of new product launches, we introduced two products in crop protection segments during the quarter. We are focused on delivering a strong volume growth and are undertaking the requisite steps towards achieving our objectives. We have done a thorough analysis of portfolio and identified missing gaps in terms of products and regions, and are hopeful of improving our product mix in coming years. With gradual restoration of normalcy post pandemic, we're also intensifying our engagements with farmers, dealers, retailers. As far as international business is concerned, we have seen a good growth of 50.8% during the quarter. The growth was driven by both volume and value. We continue to see good demand for our products. Price growth may come under pressure with raw material prices cooling off in some products. However, our endeavor would be to continue to drive volume growth on the back of expanded capacities. We are also working on supply resilience to ensure steady and consistent availability of raw materials and lower our dependency on China for meeting our basic requirements. While the unit economics may remain the same, we will be assured of key raw materials, which will help us to better plan our operations and meet the customer requirement. Moving on to the seeds business, the overall environment continues to remain challenging. We also witnessed a shift in the crop pattern in cotton and paddy crops during the quarter. Given last year's experience, we have recalibrated our strategy with a focus on liquidation, cost optimization, and more robust evaluation of new product pipeline advancements. We are hopeful that our performance during the quarter would be relatively better than the previous year, and our efforts will ensure more resilient and profitable business going forward. A quick word on CapEx before I hand over to the operator. As indicated in the previous call, the overall CapEx for the year would be INR 250 crores. Our immediate focus would be on commissioning of the multipurpose plant later during the year and commercial scale of one new technical, Difenoconazole, of which we spoke earlier. To conclude, I would like to iterate that we are focused on growth in the business and are undertaking all the requisite steps towards achieving it. While the seeds business may remain a bit soft during the year, we're hopeful that domestic and international business should pick up pace during the course of the year. That concludes the 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 their touch tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. In order to ensure that the management will be able to answer all the questions from the participants, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The first question is from the line of Aditya Jhawar from Investec Capital. Please go ahead. Yeah, thanks for the opportunity. My first question is on export business. Now you know, you highlighted that in June month, we did a record month of INR 100 crore. So was there a lumpiness because of some reason? Secondly, you also mentioned that metribuzin, you know, the capacity will come in Q2. So should we expect, you know, the run rate that we saw in June will be, you know, further built on? And if you can elaborate on what has been the trend in metribuzin prices and raw materials. And last question on export is that, in the last call, you had mentioned that pendimethalin was facing some issue of raw material shortage. Has that been sorted out? So these were the questions on the export business. Thanks, Aditya. Yeah, in fact, I would say that the exports business has been doing well for the last couple of quarters. There has been from our side a volume increase as well as we've been able to take some price increases. We expect to continue on a reasonably good trajectory as far as exports are concerned. While INR 100 crore in the month of June is a good milestone to achieve, I would say that we'll be fairly close to getting those kind of numbers, but it cannot happen month-on-month as you would appreciate. It also depends on the season and the phasing of the business at the customer end. We will see decent exports happening from the capacities that we have built up. As far as pendimethalin is concerned, yeah, we did land up in a stockout situation. The situation still remains fairly tight for one of the key starting materials. We are managing with some local suppliers as well. We expect that the situation to be fully normalized only towards the end of the calendar year. That may still take some time to play out. Metribuzin, we will see the plant running at capacity towards end of Q2. We still hold some inventory which we will be working off, so that should also start playing out in a favorable manner. Anything else? S. Nagarajan you would like to add? No, I think that covers it. Generally, I think like what you said, this INR 100 crore figure in June may not be interpreted as a run rate figure, Aditya. However, we are definitely witnessing good growth on the exports front. I would also like to just mention that, you know, the prices are tending to be on the higher side. Once the prices soften, while the volumes may still be there, the revenues may start looking lower because of the price changes. Okay, okay. That's why I gave you a little heads up on that because it is both volume as well as price. Prices are tending to be on the higher side, but these will also ease off at some stage. Right. The second question on the domestic crop care business, closely on the margin front, you know, this quarter we saw on a YOY basis, despite these headwinds of RM and inventory adjustment, we still did about 150 basis point expansion YOY. Is it fair to assume that, this, you know, probably could be one of the lowest margin, and from here on, you know, with the liquidation expected in Q2 and the raw material, lower raw material prices also kicking in, we should see a meaningful margin build-up, in, you know, Q2 onwards. I would say more towards end of Q2, Aditya, just to be very careful on saying that because, you know, we too still have some inventory which may be at a higher price. It will take time to work off. Perhaps towards the latter part of Q2 we will see more normalization happening as far as our margins are concerned. Yeah, no, I think that is right. I think on the domestic front, if you disaggregate the business, Aditya, on the domestic front, we have, like what was mentioned by Sanjiv Lal in the opening remarks, taken about 4%-5% median price hikes in the quarter compared to March end, which on the revenue front, when you compare quarter-on-quarter, like was mentioned, there is more than 10% pricing differential, which also builds in the mix effect there. On the domestic front, I think we have been able to reasonably pass on the cost increases. On the international front, we have had good demand and we have had improved realizations, but certainly on the margin front we have had some challenges because of the cost of raw material that we have got. That is something which we do expect will run off. The old raw material will run off, thereby providing the benefit when we buy the fresh raw material at lower prices. Of course that the impact on GM will depend on how the realizations move from a competitive point of view. The third aspect is of course the seed business, which as you know there was a specific impact which we had taken with regard to aging-based provisions and also reflecting the trends of liquidation that we have seen as of now based on the monsoon effect. That's how maybe we will disaggregate it into the three broad businesses. Perfect. Just last one, if I can. This, you know, seed provision of. I'm sorry to interrupt, Mr. Jhawar. Oh, I'll fall back in queue. Yes, sir. Thank you. The next question is from the line of Varshit Shah from Veto Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Just continuing the earlier question, I mean, I think S. Nagarajan mentioned that roughly YOY increase is 10% in the domestic crop care segment and you delivered 17%. Actually volume growth is in the range of 6%-7%. That's the implication from these numbers. Actually this is a very healthy growth, I mean, considering that because of challenging weather, I mean, and I know that a lot of it is placement, but still it seems like a very healthy growth on your part. The stocks are slightly, placement is slightly higher compared to industry. Is it true to assume that you're looking to kind of improve your market share overall in H1, if I see the season as a whole? That seems to be working at least, for the time being. Maybe I'll just clarify here, the Varshit. Varshit. Varshit. The crop care growth was 26.5% quarter-over-quarter, that is last year's quarter. Of which 16% was price growth and 10% was volume growth. This is crop care, which includes both the domestic business as well as the international business. We have had the benefit of volume growth, more in the export business. In the domestic business, that is if you take our crop care within India, we have had volume growth more in the herbicide business, but herbicide category, I should say. On fungicides, like was mentioned, we did have some returns that happened in Q1 from the placements which we had done in Q4 of last year, which offset the placements to some extent that we did in Q1. However, as you correctly observed, Q1 in the domestic market is largely a placement season. With the rains improving, our expectation is that liquidation should pick up. This is where we are at this point in time on the domestic business. Sure. That's helpful. Second, on the margin front in the crop care segment, I mean, if I were to see a most recent capacity expansion over the last one year, you have increased capacities across AIs. So your reliance on material business has actually come down as a mix, I'm saying. I think post-expansion also the reliance will be much lower compared to what it was two years ago on material business. So this broad basing on the international business, in my opinion, should diversify the risk, you know, emanating from a particular molecule going haywire in terms of margins. So do you think that from a two-year perspective, the margins in international business will be more stable than it were in the last two years? I'm just, d irectionally, I'm talking about specific numbers. See, Varshit, you know, what you say is right, that having more products in the portfolio is de-risking in case of one particular AI having difficulties in certain markets. Our other approach on our international business is to have a better proportion of the formulated product business. This is the work which has been done over the last many years. We are seeing progress. As you're aware, we had launched a formulated product from metribuzin in Brazil last year. That is also picking up well, that's doing well. This year, during Q2, we will be starting export of a formulated acephate product as well. We will be using levers of portfolio expansion for the AI category with a new product which we will be launching towards the later part of this year from the new MPP, and also to increase the share of business coming from the formulated product. That will be across geographies. Of course, the key geography of Brazil is very important, but also we are getting reasonably good traction for the smaller markets as well. Would you like to add something? No, absolutely. I think what you said is what I just want to reiterate. Varshit, yes, I think we will be increasing the portfolio. We will be increasing the markets that we'll be selling to, and we'll be increasing the proportion of formulations in the overall international or exports revenue. All of these are part of our strategy, what we articulated also some time back, to stabilize the margins and even improve them. On metribuzin, just to clarify, you know, we have built a capacity which is significantly higher than even our own expectation of business. That will always be there in terms of having that capacity available, which we will also be using for some other product, is what our current planning is. From about 1,100 tons capacity, which we had about three years back, we are now at a significantly higher capacity of almost 2,300 tons. While we would certainly like to see this entire capacity being filled with metribuzin, but we'll be happy with a significant utilization. Even 60%-65% capacity utilization is good. I'm sure that's helpful, and all the best. Thank you. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity. First question is again on the international business. One, in terms of, the supply chain challenges, are those alleviating? Will that have an impact from the supplies coming from competitor? What gives us the confidence that, you know, H2, or rather Q2 onwards, international business will certainly perform well. Is it some POs that we have or customer commitments that we are currently having? Thank you. On the supply chain front, I think if you compare between, let's say, December end, December 2021 end, and June 2022 end, certainly we could say that raw material prices are also coming down for quite a few of the raw materials. The logistics challenges that we were witnessing in December, which actually worsened subsequently after the invasion and also the fuel cost increases, the crude price increase, all of those things seem to have come a little bit lower, at least in June end or now, let us say, in the middle of July. One should also add that this comparison, if you did with, let's say two years back, how the situation was, certainly the challenges are there. Short timescale of last six-seven months, certainly it seems to be improving. With regard to the outlook for Q2, we are in conversation with customers. We are having indications at this point in time. We don't have contracts completely for the whole of Q2, but certainly I think what we're finding is the demand environment appears to be quite positive. Mr. Nagraj, do you have any other question? In the meanwhile, we'll move to the next question, which is from the line of Amar Maurya from AlfAccurate Advisors. Please go ahead. Yeah. Sir, thanks a lot for the opportunity. Couple of questions from my side. I'll just spell out all the questions at once. First thing is this, sir. The high cost inventory which we are mentioning about metribuzin or the high cost RM. In March, the total inventory was around approximately INR 900 crore. Out of that, how much would be the high cost inventory which is currently sitting in the balance sheet? That is number one question. Number two, in the international business, what would be the CRAMS contribution in this particular quarter and specifically in the June quarter? I mean, in the June month, what would be the CRAMS contribution? That is number two question. Third question is what would be the volume growth in the overall export business? Amar, we will not like to specifically call out the CRAMS business from the exports business. As far as the cost of inventory is concerned, Subhra, you'd like to add something on that? The cost of inventory will progressively, as we said by the end of Q2, start unwinding. What we're talking about is at a weighted average level, we should be by the end of Q2 in a much more comfortable position in terms of margins are concerned. Sir, why I'm asking this CRAMS business specifically, because I believe last year, majority of the CRAMS business contribution was diminished significantly because of the, you know, the PKK issue or the metribuzin issue or other things. I'm saying, if you can just indicate that, you know, whether those businesses are now coming back. No, no. I, Amar, I would just also like to clarify. Our contract manufacturing business, you're aware that we've got about two contracts that have been there with us for many years. Mm-hmm. While one contract has been very steady, the PKK business for practically the last two years, we've done very little. Correct. We've now got some positive indications on some movement that we're expecting towards Q4. In anticipation of getting the PKK plant back on stream, we have started the overhauling of the plant so that we are ready by the end of the year for getting the plant restarted. Because there is some silver lining that we see in terms of getting back into production for PKK. There is a positive note which is there. The order is still not in hand, but we've only got an indication that there could be some requirement coming towards end of this financial year. Does that clarify? Yeah. What would be the volume growth in export business? Export volume growth is about. Equally split between volume. Yeah. More or less equally. About 25%-26% is the volume growth, and balance is the price growth, Amar. Okay. Thank you, sir. Thank you. The next question is from the line of Saurabh from Asian Markets Securities. Please go ahead. Thank you for the opportunity. First question on the June export. Was the jump because of any specific geography or specific molecules are being exported in this month? Yeah. We've had a good uptake of most of our products, including acephate. I would say it's balanced. The only product where we have not really had the kind of traction is on hexaconazole. This is also not the season for the key market in which it goes. We expect hexaconazole volumes to also look good towards Q2, Q3. Okay. My second question on this, export only, you mentioned you are focusing on the formulation side. What is the current mix of formulation in the export, and what is the target maybe by next year you want to achieve? I think in terms of the mix, it may be about 5%-6%. 20%. I'm corrected by my colleague. It's 20%. We would like to see it improve. Again, this goes through a registration process cycle. As the registrations keep coming in, this will certainly improve. 20% is good. Even though we may have a larger export portfolio, 20% will still look good. Okay. The next question on the seeds side, you already, you know, taken some write down in the Q1. Do we, you know, further expect to take some write down in Q2 as well? If there is some further issue in terms of liquidation? No, no, sir, we'll have to take that call once we have clarity on the liquidation, because there has been some delay in the seeds business, as mentioned, due to some pause in the monsoon during the month of June. Sowing activities have picked up, and we are monitoring the liquidation of these stocks that we have lying with the trade. We will be starting to get back unsold stocks during Q2, and the complete clarity will be there with us only by October. We will take a view on what is coming back. As of now, our teams are doing a great job in terms of trying to get the liquidation done. Okay. Sir, on the realization. I'm sorry to interrupt, Mr. Saurabh. Okay. I will come back. Yes. Thank you, sir. The next question is from the line of Rohan Gupta from Edelweiss. Please go ahead. Hi, sir. Good morning, and thanks for the opportunity. Sir, question is on our seed business because it's very seasonal and Q1 is very heavy and a lot of profit is loaded in the current quarter itself in Q1. With the margin pressure in the current quarter, do you see that the current year seed business profitability will be impacted and the chances of having losses or maybe almost NIL profit in the current year, or you see that Q2 can pick up in terms of some of the improvement in EBITDA and margin-wise? Rohan, I think it is going to be a challenging year for us. Normally Q1 is the quarter where most of the heavy lifting is done. Based on the way the season has progressed in Q1, as a matter of prudence, we have factored in certain provisions. We really need to see how Q2 goes before we are able to give a full year's outlook. I would just say that we are ourselves looking at this business very cautiously, just to make sure that we are able to keep it as a stable business. Things have not been very good last year, and this year also, I would say has been challenging. Sir, would it be possible for you to quantify the kind of write-downs we have affected in the current quarterly in seed business, inventory write-downs? Yeah. Subhra mentioned that. I'll just request her to fill in. Yeah. Yeah, go ahead, Subhra. Rohan, we mentioned thirteen crores for the quarter, and this is not a write-down, this is a provision. We've taken a provision of INR 13 crore. Coming on our export business, definitely you mentioned that one of the best month ever seen in the history of the company with INR 100 crore kind of turnover. Still we see that our export business in terms of the utilization level and in both in a formulation as well as in a technical plant. Can you just give some numbers that what are the utilization level that our plants are operating right now in Q1? And you also mentioned that you'll you see that in H2 you'll see further pickup in export business. Where we see that from where we are getting that confident, I know that you have in the previous participant question also tried to answer that. Just some more granularity about it that from where we are seeing that the growth coming in export business, whether it's an international business, higher acceptance for our product, or you see that the global supplier of those products are phasing out and that's where the opportunity for us. I think there's a robust demand for all the products that we have in our portfolio, Rohan. Just to say that our acephate plant is running flat out. As far as the metribuzin plant is concerned, it will be running at about 50%-60% capacity utilization. Our pendimethalin plant is running close to about 70%-75% utilization. Our hexaconazole plant is currently running at a slightly lower utilization because you know of the seasonal requirement, which is slightly on the lower side. You know what we have also done in the last two years, Rohan. You'd be aware that we have been upping the capacity of our plants. All these numbers that I'm giving in terms of capacity utilization are based on the enhanced denominator in terms of capacity. There is good headroom that we have, in availability of product from our existing assets. Got it, sir. Thank you so much, sir. Thanks for answering the question. Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good morning, gentlemen. Thank you so much for taking my questions. Just a couple. You know, you alluded to the flooding and excess rainfall in a large part of the country, especially in southern India. Just wondering if, you know, there might be some reasons for concern for the domestic season, for the rest of the kharif, you know, season remaining. If you could please just share your perspective on that. Thanks. Actually, we were referring to some parts of the country where there has been excess rainfall. As you know, Northeast was quite badly affected. At this stage, it is very much looking positive. Certainly the last 15 days of rainfall has been good. There have been places where the rainfall had been lower earlier. It seems to be picking up. At this point in time, I don't think we have any such, you know, expectation or any anticipation for the Peninsular India. We will see how it goes because as you know, it's always quite difficult to predict how the weather conditions turn. As of now, it looks fairly encouraging. Okay, sir. Thank you. The second thing I just had is, you know, you had provided the volume versus price breakdown for the export business this quarter. You said it's roughly half and half. Would it be possible to share the same for the domestic business? That was one. Also in terms of pricing, you know, you have been, the industry has been taking price increases in the past, you know, several quarters. Now with raw material prices starting to cool off, how do you see pricing trending in the next quarter or, you know, over the balance of FY 2023? Thanks. Yeah. On the domestic crop care, as you know, we had mentioned about 17 odd percent growth. 14 odd percent is coming from price and about 2%-3% is coming from volume. With regard to the raw material prices, yes, there is a drop in specific raw material prices. But the final product prices, we are more governed by the cost of treatments that we are able to provide to the farmer, the competitive actions that are there. So those have been more our guiding factors. We will have to see how the whole context plays out in Q2. You are right, I think there are certain organizations that seem to have indicated some price reductions, but we will actually have to take it product by product and deal with it in the quarter as it comes. Great. Thank you so much, sir. I wish you all the best. Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Yeah. Good morning, and thanks for your time, sir. Broadly on your export and international strategy, if you could help us understand how you're thinking on this piece in the next two-three years. You did mention that you are taking registrations in US, sorry, in Brazil, for acephate. The next couple of years, if you could give us some idea how we should think you will be adding more capacities here or also you'll be focusing more in terms of registration directly, in that sense, if you could help us understand the thought. Yeah. Actually, you know, what we have mentioned in the past also, currently if you look at our crop care business, both domestic and international, about 33%-34% is comprised of the exports business. We are working towards making it a little more balanced with about 40% of our revenues intended to come from our exports business. To support that, we've been adding capacities. We are also building a new facility for commercializing new AIs, which are new to our portfolio. For that the registration activities have also been started. Apart from that, we've also. I'd also alluded to our formulations that we are applying for registration in many more countries. Some of the products that we have are good for other countries as well, so we are working on that as well. We will be looking at 60/40. 60 domestic, 40 exports, portfolio, maybe three -four years down the line. Okay. Okay. The domestic business obviously erratic and the rains play a bigger role in it. Wanted to understand specifically, would we deploy more capital in terms of adding more capacities, any CapEx number that you can probably at least in ballpark that you'll be doing over the next couple of years on this side of the business. Also if you could help us understand any new people have been added on the international side of the business, where you have either hired them from some other larger MNCs and again any specific revenues that you have till now achieved on your registration business. If you could help understand on these lines. In terms of registration, we are certainly pressing ahead with registration of our newer AIs in the key markets. As far as people are concerned, we've got a fairly good robust team, and they're doing a reasonably good job in terms of getting not only the more business from existing customers, but also newer customers being added to our customer list. That is working quite satisfactorily. We will of course take decisions on adding more resources if needed, but as of now, we are in a good place. We had already created a new line of business focused specifically on contract manufacturing that we had alluded to earlier. We've got a team for our contract related business, custom synthesis business. That team is supported at the back end with an R&D team as well. There are people at R&D who are working only with the custom synthesis business team for ensuring that whatever are the inquiries that are coming are getting converted into samples and progressing with the registration for exports as well. Does that answer your question, Vishnu Kumar? Yeah. Got it, sir. Any revenues that you've got on direct- Sorry to interrupt, Mr. Vishnu Kumar, you'll have to rejoin the queue, please. Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors Private Limited. Please go ahead. Hi. Thanks for the opportunity, sir. Sir, my question is related to seed business. We were working on developing a multiple new seed since our largely dependent was on the cotton seed, then now we have already started paddy. Can you give some more color on the seed business, how we are looking from two -three-year perspective? Bharat, actually, you know, if you look at our portfolio, we've got largely our business coming from field crops. Among the field crops, the biggest revenue is coming from paddy only. We have millet, we have got cotton, and we've got maize, right? These are our key field crops. We of course do a small amount of sunflower and those other crops as well. Then we've got a very small vegetables portfolio, which is about INR 20-odd crore, INR 20-INR 25 crore. It's a business that we are building both through our own products as well as through in licensing of the seeds, vegetable seeds. This quarter, Q1 itself, we have launched three new paddy hybrids in the market, and these will be scaled up over time. Cotton is a relatively new part of our portfolio, and having achieved a peak about 3 years back in terms of number of packets sold, the quantum of business we've been doing on cotton has been declining. Because of the issues that we are seeing in terms of proliferation of illegal cotton, the size of the market, which is addressable market by organized players, has been shrinking year-on-year. Even within this shrinking market, we do see some ray of hope because one of our products which we had launched last year, this is a cotton hybrid called Diggaz. This we launched in Punjab and Rajasthan. This has done better than our expectations in terms of offtake. From our 20,000 packets which we sold last year, this year we are looking close to about 1.75 lakh packets. This is small, but for us it is big. Small in the sense of the total industry, which sells close to about 400 lakh packets. Out of 400 lakh packets, 1.75 lakh packets is very small, but for us it is a very good development because it's giving acceptance to the segment in which we have positioned this particular hybrid. You'd like to add something more, S. Nagarajan? Yeah, no, I think you covered it, Sanjiv. Maybe just I would say that, as a strategy, we are trying to sort of fix some of the portfolio gaps that we have. As Sanjiv alluded to, paddy is our largest crop. We are in the top three in the country as far as paddy is concerned. But we also have certain segments in which we are trying to bring new hybrids so that we can plug those gaps. In maize, we have a challenge in terms of the portfolio that we have for the rabi maize. That is an area of focus. We have been working on that for some time, and in fact, one of the things that we are really intensifying, doubling down on, is trying to improve our R&D outcomes as far as our rabi and spring maize portfolios are concerned. Bajra is another crop where we have a relatively better position. We are in the top three in Bajra in the country. Here we will be augmenting more hybrids in the different segments. Cotton, like what Sanjiv Lal said, we have had some green shoots we think in the North Indian markets, Punjab and Rajasthan. We have to strengthen our portfolio in the south and central zone as it's called Maharashtra, Gujarat, Telangana, these markets. Our focus from an R&D perspective is to improve our offerings in this particular segment. That's broadly what we are focused on. In addition, because of the difficulties we have faced last year and this year, focus is certainly one of the areas that we are focused on. Okay. Sir, and on this crop care, what is our innovative index as on today? I mean, last year was. How do we see that moving? Bharat. Mr. Sheth. I'm sorry to interrupt. Mr. Sheth, I would request you to join the queue. Okay. As there are many other participants waiting for their turns. The next question is from the line of Viraj Kacharia from Securities Investment Management. Please go ahead. Yeah. I just had two questions. First is on the RM part. You know, so post the price increase which we have taken in the domestic business, and, you know, you've also kind of alluded that the raw material prices are easing. The under-recovery under the raw material cost is by and large through in domestic business or is there any perspective you can share that? Second is, you know, earlier, to one of the questions of one of the participants, you said something on 20%. I just couldn't quite get it. What was it related to? Yeah. Yeah. This 20% was related with the proportion of our formulation business in the export portfolio, Viraj. You had alluded to this question on under-recovery and RM prices. What we mentioned is that we would see this getting corrected towards the latter part of Q2. Okay. This 20% is as of today as we speak, the formulation- Yes, yes. Okay. Yes. As the registrations which you have got in Brazil, this will, over a period of time, should increase. Yeah, 2020, 2022, 2024, that could be okay because our overall export portfolio will also grow. Having a reasonable proportion of formulations will be a good idea because it tends to give us more opportunities in more markets. What I really meant is there a margin difference, say, in- There is. Vis-à-vis technical? So. There is a margin difference. Margins are more favorable for the formulated business. Okay. Thank you and good luck. Thank you. The next question is from the line of Ramesh Sankaranarayanan from Nirmal Bang Equities. Please go ahead. Oh, good morning, and thank you very much. The first question is on the cost side. Your other expenses have gone up pretty sharply. What is the kind of trend we should see for your other expenses for the year? The other expenses is composed of various elements. One big part of it is freight, both ocean freight and inland freight, which is both volume linked and also during this steep inflation we are seeing both on diesel hikes and also ocean freight. That will continue to see an increase. The rest of it is a semi-variable cost. Some components of it will be variable, some are fixed. To that extent, there may be a reduction going forward, but it all depends on how the external factors in terms of freight et cetera play out. Okay. The second thought is on the target for exports and the current share of exports. Is it possible for you to give us some sense in terms of the key markets and their share in the exports like U.S., Brazil? Is it possible? Yeah. I think the big markets that we export to are U.S., Brazil. We sell in Europe as well. We also have relatively a smaller amount, but we also sell in Southeast Asia, so it's fairly widespread. The dominant market is U.S. Okay. One last thought. If we're looking at the share of exports going up in the overall quality of the business, it'll be more driven by the ability to grow your top line without much, you know, impact on the margins. Do you see some impact on the margins as well when your share of exports go up? See, you know, margins sometimes tend to be a function of the competitive pricing, right? Yeah. In certain markets where our product is registered, there they tend to be a little more stable. The pricing will be impacted by competitive pricing as well, Mr. Ramesh. Okay, fair enough. Thanks a lot. Thank you. The next question is from the line of Bhawana Israni from Anand Rathi. Please go ahead. Ms. Israni, there is a lot of disturbance from your line. I would request you to go to the quieter place and ask your question. Hello. Now this clear? Yes. My question is that, currently crop nutrition business is contribute around 5%-6% to our revenue. Anything is coming from the export market or it's completely the domestic, comes from domestic market? Crop nutrition is. Crop nutrition. Yeah. Crop nutrition is presently entirely domestic, but there is- Okay, entirely domestic. There are some opportunities in the neighboring countries that we are exploring. There could be some export, but very small in the near future. Okay, sir. Thank you so much. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you. As we had started on a positive note, I must also end on a positive note. The overall sentiment for monsoons is good and agriculture has started showing progress during July. We are in the midst of the liquidation season for our crop protection portfolio and all efforts are on to ensure successful liquidation of our products, including our seeds business, and we are working to expand our business in the international markets as well. Agrochemical industry is witnessing significant volatility in prices, and we will continue to work in an agile manner to navigate the same by taking market benchmark pricing decisions. With that, we can close the call, and we will again connect three months from now with our September results. Thank you. On behalf of Rallis India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.