Ladies and gentlemen, good day and welcome to Rallis India Limited Q1 FY 2027 Earnings Conference Call. We have with us today Dr. Gyanendra Shukla, Managing Director and CEO, Mr. Bhaskar Swaminathan, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties that are difficult to predict. A detailed statement in this regard is available in the results presentation. As a reminder, all participant lines will be in 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 the conference over to Dr. Shukla. Thank you, over to you, Dr. Shukla. Thanks. Good morning, everyone, and thank you for joining us today on Rallis India Q1 fiscal year 2027 earnings call. As mentioned, I have alongside myself our CFO, Mr. Bhaskar Swaminathan. I'll start with a synopsis of the industry landscape before addressing development specific to the company. Q1 was characterized by a weak demand environment and sustained pricing pressure in the Indian agrochemical space. While the supply chain was not materially disrupted, it remained fragile and cost-sensitive, with volatility in raw material availability, freight, and logistics. Dependence on Chinese inputs continued to influence sourcing dynamics, while selective disruptions and inventory constraints created intermittent supply tightness. However, the market did not face a structural shortage. The key takeaway is that cost remained elevated while demand recovery was insufficient to support price hikes, resulting in continued margin stress across the sector. The budding Middle East war likely affected the agrochemical sector in Q1, mainly through higher feedstock, energy, and freight costs, which compressed margin even when selling prices were adjusted upward. That said, the price increases triggered by Middle East supply disruptions are expected to partially offset the volume-led drag. Companies with imported intermediates or fertilizer-linked input exposure are more vulnerable than those with a stronger domestic sourcing. Margin pressure was likely strongest for businesses that could not fully hedge energy and freight costs or quickly revise realizations. The sector also faced uncertainty rather than a one-time shock because even a ceasefire, of course, does not immediately normalize energy and shipping costs. Additionally, at the start of the season, El Niño was described as a probable threat to a weaker monsoon because it tends to warm the central and eastern Pacific, which disrupts atmospheric circulation and can reduce the monsoon flow over India. Official and media reports said that IMD linked its below normal rainfall outlook to developing El Niño conditions, especially for the second half of the season. Market witnessed aggressive channel filling in March ahead of anticipated price increases, delayed onset of the southwest monsoon weighing on ground consumption, cumulative rainfall deficit below normal and lagging Kharif sowing deferred placements. The late arrival of this year's monsoon and the resultant delay in Kharif sowing impacted agrochemical uptake across the domestic market. As per IMD's latest available update, overall India's seasonal rainfall remained about 15% below normal. This was the data as at 8th of July. Obviously, there has been some recovery since then. IMD's latest long-range seasonal outlook for the 2026 southwest monsoon projects below normal rainfall for the country overall, most likely about 90% of the long period average, with a modest error ±4%. Monsoon core zone is most likely to be below normal. Reason why the data suggests that central and western India has improved sharply in early July, while east, northeast, and part of south continues to lag, especially in Karnataka. Rainfall shortfalls in June and early July slowed Kharif sowing, especially in the rain-fed belts and for crops like paddy, maize, pulses, soybean, and groundnut. If rains arrive in burst after a dry start, farmers often resow, which raises seed and crop protection usage. Farmers tend to move towards shorter duration crops, drought-resistant varieties, and move away from water-sensitive crops where irrigation is limited. Northwest and some eastern, southeastern pockets may fare better, while central peninsular and core rain-fed regions face higher sowing stress. As of end June 2026, Kharif sowing was significantly lagging last year with only 17% of the normal area covered. As we move forward, I think there has been a significant progress as far as crop acreage is concerned. Based on the latest indication, it is about 17% behind. The crops like cotton and groundnut are probably the most significant, which are lagging behind. If you go by the water situation, a Central Water Commission report quoted on 17th July that reservoir level had risen to 34.4% by 16th of July from 26% on 2nd of July. A 10-year average is higher than the current level with current storage at 98% of the normal. Reservoir level, minus Karnataka, I think seems to be in a good situation. The fiscal year 2027 Kharif MSP regime is broadly supportive of crop diversification, sharper hikes in oilseed, pulses, and cotton. The standout while paddy and maize saw only modest increases. The government approved MSP for 14 different crops for the marketing season of 2026/27, with estimated procurement of about 880 million metric tons and estimated payout of about INR 2.6 lakh crore. The pricing framework remains aligned with the policy of keeping MSP at least 1.5x the cost of production. The relatively stronger increase in oilseed and pulses Suggest an intent to increase shifting away acres from paddy and move towards more diversified crop mix. From an agrochemical perspective, this is constructive for demand diversification. It is particularly relevant for pulses and oil seeds, where input users and crop protection needs differ from those of paddy. Volume may shrink as acreages decline, but margins are likely to remain stable to slightly soft. Integrated firms with balanced portfolio, combining seed, crop protection, and a nutrition product are better placed to navigate the volatility. Market is also likely to favor low-cost producers with a broad export presence and disciplined working capital management. On the biostimulant category regulatory framework, India significantly modernized the biostimulant category framework. Under the FCO with standardized specification for humic acid, fulvic acid, and seaweed extract formulation. This move should help bring regulatory clarity, product reliability, and market formalization. For fiscal 2027, the cleaner consensus is that agrochemical are expected to grow around 6%-8% in India, while seed is likely to grow mid to high single digit, but it'll depend on the crop. Cotton certainly will see a significant decline. The global crop protection market is estimated at roughly $70 billion-$80 billion in calendar year 2026. Depending on the definition, it is expected to grow at 4.5%-6% CAGR. Are supported by rising food demand, limited arable land, and need to improve farm productivity. Global crop protection markets are being shaped by tighter regulations, supply chain de-risking, rising biological adoption, and continued innovation in formulation and new modes of action. Demand growth remains strong in emerging market while pricing margin pressure and climate-driven crop volatility continue to influence the sector. The near-term outlook remains dependent on the Middle East conflict, as well as the rainfall situation. All of that means that sector recovery remains uneven. U.S. demand is still supportive, but Brazil remains weak in key agri-linked end markets. China continues to drive pricing pressure and supply chain risk, especially for API and intermediates. There's no India stock buildup in the latest WASDE data which likely reflects a balanced sheet offset. Higher production was absorbed by demand and trade assumptions, leaving ending stocks broadly unchanged. This was a general commentary. Moving on to Rallis' specific development, we had a reasonable quarter one fiscal 2027 performance, despite the fact that several factors impacted planning, including the war in West Asia, which led to panic buying of commodities with significant price increases and delayed monsoon in India. The overall demand was subdued. Severe heat wave in Q1 delayed showing due to delayed onset of monsoon, farmer crop switch, reduction in crop acreages coupled with extensive spread of illegal HTBt cotton. Trade channel rush to secure fertilizer, which resulted in cash crunch for crop protection, causing conservative inventory stocking and slower liquidation. The domestic formulations, the growth was driven by aggressive placement, liquidation efforts, and volume scale-up. Talking about quarter one numbers, our revenues stood at INR 1,022 crore versus INR 957 crore last year. EBITDA improved by 23% to INR 184 crore from INR 150 crore in quarter one of 2026. Profit after taxes stood at INR 125 crore versus INR 95 crore of previous year quarter. Exceptional items include profit on sale of property of INR 2 crore. Our overall capacity utilization has slightly increased in Q1 in comparison to Q1 of fiscal 2026. New launches initiative. During the quarter, we have launched four new crop care products. Two herbicide, one insecticide, and one soil and plant health category product, very tailor-made for ginger and turmeric. In seed business, we have launched quite a few new product for North India. Herbicide tolerant, direct seeded rice under the Dhaanya brand to promote direct seeded rice, as well as short duration of Bajra variety. In all, we have introduced nine new products in seed. Our digital marketing intervention continue to promote product through Anubandh Edge scheme, Farmer QR code reward scheme and enhancement in Sampark Plus program. Anubandh Edge initiative is a retailer-level digital platform to support retailer engagement and benefit schemes and enabling tighter integration between dealer and retailers. Retailers registration as on June-end crossed 56,000. Farmers QR code project helps in better product knowledge sharing with the farmer. Our initiative Sampark Plus continues to capture farmer-level demand signals to generate actionable insight and improve sales conversion. We had launched Idea to Impact platform in Q4 of last year to establish an open innovation ecosystem to source, validate, and commercialize agri innovations. Till now, we have received encouraging participation of 40 applications, out of which two are in the pilot stage. We are continuously using tech-assisted marketing initiative to promote products and generate demand. Digital-led field heavy van campaigns balance focus on physical and digital connect with focus on key products drive. We are increasingly enabling digital-led engagement that strengthens data-driven decision making enhances farmer outreach and advisor productivity. We are also shifting towards high-margin, sustainable and farmer-centric offerings, including biological and next-generation product. That concludes my opening remark. I will now hand over it to Bhaskar, our CFO, for a detailed analysis of the financial situation. Over to you, Bhaskar. Thank you, Dr. Gyanendra. Good morning, everyone, and thank you for joining us today for our Q1 FY 2027 earnings call. I'll walk you through our financial performance for the quarter, post which we shall commence the Q&A session. Starting with the top line for the quarter, our quarter FY 2027 revenue stood at INR 1,022 crores, as against INR 957 crore for the same period last year, resulting in an overall growth of 7%. Overall volume growth has been 2%, with pricing and growth of 5%. Overall, EBITDA for Q1 FY 2027 stood at INR 184 crore, higher by 23% compared to INR 150 crore in Q1 of the previous year. Profit after tax at INR 125 crores, versus INR 95 crore of Q1 FY 2026, which is 31% higher than the same quarter of previous year. Crop care segment grew by 7% to INR 697 crore in Q1 FY 2027 from INR 652 crore in Q1 FY 2026, due to both volume and price growth and new product promotion, increased digital engagement as well. The volume growth is 2% and price growth is 5%. Within the crop care segment, the domestic B2C witnessed a 19% growth in Q1 FY 2027, registering INR 534 crore revenue, vis-à-vis INR 449 crore in Q1 FY 2026, which was driven by volume growth of 15%. Crop production category grew by 18% and registered Q1 FY 2027 revenue of INR 455 crore, vis-à-vis INR 386 crore in Q1 FY 2026, which was driven by volume growth of 16%. Soil and plant health category grew by 10% to INR 62 crore from INR 56 crore in Q1 FY 2027 in comparison to Q1 FY 2026, driven by price growth of 13%. We applied prudent pricing approach to drive the margins of the categories. Exports top line grew by 28% to INR 110 crore from INR 152 crore due to 35% degrowth in volumes. Reasons for degrowth are due to lower demand for pendimethalin in Europe, coupled with competitive China market pricing. The price competitiveness aggressively impacted volumes of acephate, pendi, CS, and hexaconazole. There were delays and uncertainty in shipping timelines due to port congestion or logistical challenges. Our CSM Q1 FY 2027 revenue displayed promising growth by lodging 191% growth to INR 24 crore from INR 8 crore, driven by Recount and Peak KK sales volumes. Total B2B revenue stood at INR 163 crore, vis-à-vis INR 203 crore, as decline of 19% was primarily due to volumes which degrew by 26%. In the crop care segment, we are focused on expanding our customer base and product portfolio is enhancing go-to-market strategy. We are driving focused execution across frontline and operational functions by optimizing the product portfolio, rationalizing territories, eliminating overlaps, and simplifying costs across the value chain. We are continuously putting efforts into increasing customer centricity through digital initiatives to reach out to channel partners, customers, implementation of customer satisfaction surveys, and identifying new growth areas. Moving to seeds business. Seed revenue grew by 6% to INR 325 crores in Q1 FY 2027 from INR 305 crore in Q1 FY 2026, due to 6% price growth. We witnessed acreage drop in north cotton and intense competition in south and central cotton. The overall seed supply in terms of volume was sufficient but delayed due to non-availability of dryers, processing facilities, and concentrated arrivals, coupled with labor shortages on the supply chain side. We will have a clear liquidation picture to emerge by end of July. In the seed segment, our primary focus will be on five strategic crops, cotton, maize, millet, mustard, and rice. A selective and concentrated approach in these crops is expected to drive operational scale and efficiency. Overall, we remain disciplined in improving capital efficiency across both fixed capital and working capital. At quarter end, our inventory levels remained elevated in comparison to the same quarter of last year. Collection cycles remained smooth. We have healthy cash and liquid balance of INR 309 crore as of 30 June 2026. That concludes our opening remarks. We can now commence on the Q&A session. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ankur Periwal with Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. First question on the exports market. How are you seeing the product wise demand as well as the pricing scenario there, given that Chinese competition on pricing sort of still keeps depressing? Your thoughts there first. Okay. We go one more. Yeah. Thank you, Ankur, asking questions. I think export, I must say, it is challenging unless you have a branded business in the countries you operate. As far as CSM is concerned, where you have a contract with the company, I think it is okay, still fine, because you can discuss with the counterparty and negotiate terms and conditions. As far as catalog products are concerned, I think we have to remain competitive. One of the products where we face challenges are really SF8, because raw material has to come from China, then we have to process, pack, and sell it to countries like Brazil and U.S. China is also competing directly in those markets. Other than that, I think we are quite competitive. Now we can compete with China, and again, it only depends on the demand situation. On CSM, not a challenge, because we have a contract. It is only the catalog product where challenge becomes significant. Sure, sir. On the other products, pendi and other products, are we seeing? Pendi, metribuzin, hexaconazole, we are still competitive. I think we are able to compete. Including metalaxyl. I think other than SF8, it's not a big challenge. Okay, great. On the CSM side, we were thinking of or we had talks earlier that to increase the share of CSM here. Any luck there in terms of the ramp? Yeah. We did start making a product for a customer in U.S. First shipments have gone this year and subsequent volumes. First shipment is well received, from a quality perspective and everything else. We are in the process of securing more customers. As I've been saying in the past, that's a slow burn. It takes time to keep cultivating. There are three, four products we are working parallelly on CSM, and one will be already with an existing customer where we make and supply one product. We are going to be adding those products, but they're all a slow rate. On catalog category, we are going to launch, I would say three to four products in next three years. We are at different stages of either advanced registration or pilot production and trying to increase some commercial quantities. Sure, sir. Just next bit on the domestic part. If I heard the initial commentary right, we are looking at a lower cotton acreage for this financial year, at least given the macro, the rainfall, and the El Niño risk. Since our portfolio is slightly heavy on the cotton side, what are your thoughts on the domestic growth overall for this year? Cotton, I would say anybody operating in crop protection sector. We have stakes as far as cotton is concerned, both in crop protection as well as seed. Seed, we have already factored in that this year it is unlikely that cotton business will grow. Two things have happened. We were pretty heavy on northern side and north side, Punjab and Haryana cotton area has significant decline. Even in south and central, two factors are playing. A, it's a rain-fed area. When it rains less, farmers plant anyway less cotton. On the top of that, there has been a lot of whisper of illegal HTBt cotton which is being sold. Cotton, I think we are looking at, as we near the end, maybe flat year, but we are focusing quite a lot on rice and maize and millet where we had launched quite a few product in last few years. This year again, we have launched product in paddy, maize, and millet. Focus has shifted right now for the current season to be more aggressive on other crops. Cotton will remain important. In my view, cotton will recover. These kind of rainfall situation happen once in a while. They do not have to happen every year. Sure, sir. Just on the domestic crop protection growth as well. Yeah. Cotton is one crop will takes lot of the sprays. Last year, if anybody remembers commentary, we said, look, cotton area, well, there was a lot of area. Farmers did not get chance to spray the crop because it was raining too much. Right? While cotton area may go down, sometimes this intermittent rain, whatever crop has been planted, cotton prices remain, I think, quite supportive. Farmers, those who have planted, if they are able to do field operations, it may have only marginal impact at the end of the day. This is something looking at a crystal ball and saying what will happen from a rain perspective in September, October, August. It's very difficult to say, I wouldn't be very pessimistic at this point of time. I would say sometimes good distribution of rain, even if it's marginally lower, even if 90%-95% of the normal cotton acres get planted, might still lead to similar situation as last year. Sure, sir. Thanks a lot for your detailed answers. Thank you and all the best. Yeah. Thank you. Thank you. Next question comes from the line of Praneeth with SJ Investments. Please go ahead. Hi, sir. Thank you for the opportunity. I wanted to understand in terms of the El Niño effect that everyone's been really talking about, has it transpired in the ground, or how is the sentiment on the ground as far at this point of time? El Niño certainly is a reality. The country has seen deficient rainfall. You have to understand, roughly 50%+ of the area in the country is irrigated, has some kind of source of water. It's only the 50% which is highly rainfall-dependent. As we see, because of the delayed rain, there has been delayed sowing, but there's also been catch-up. Right? Most of our farmers, they are not 1,000-acre, 5,000-acre farmers. They are able to quickly plant their crop. The only thing which changes is crop set. Right. For example, this year, pulses area has gone up, but we know for sure that groundnut area in Saurashtra has gone down because of delayed rain. We know cotton will be planted less, but rice seems to be on track. It varies from area to area. Maize, certainly initially it was thought that maize will not be planted, but maize is getting planted. Some of the coarse grain, bajra and all in the marginal areas in Rajasthan might get impacted. It's a mixed picture. I still think that even in the worst-case scenario, 90%, 95% of the crop will get planted. Clarity is yet to emerge what farmers would prefer. Soybean has got planted. There is in between soybean seed-related challenges, but farmers did plant all those crops. To me, if crop gets established, at least on those areas, I'm sure farmers will try to protect because commodity prices are also firming up in anticipation of lower yields this year. Sir, in terms of volumes, do you think it will be more of flattish or a marginal degrowth for the year? I understand that if the sowing, it will happen, but the volumes might still take a hit for the year. For example, it's a very difficult question to answer. Assuming including insecticide, fungicide, herbicide, and on a national area basis, on an average, say three sprays are happening, and I don't know whether it's three or four or two. I'm just giving you an example. If on an average, three sprays are happening, and last year in 20%-30% of the area because of the weather factor, one spray got missed, maybe three became 2.7 on average. Now, 90% area, if that crop gets sprayed more for farmers to protect their crop, we might still come back to the same number. I think it'll be very situational. There are years where rainfall has been low, crop protection has still done well. Too early to predict. I think if you ask me this question in the middle of August, I'll be able to give you a better picture. It's too early to predict. Understood, sir. Coming to the pricing, I think this quarter we took a large pricing increase and most of our growth was price. Do you think we're going to take more price increases going forward? Or have we completely passed on our raw material price increases to the farmer? I think now focus has to be primarily be competitive in the market. I think price increase during the mid-season is generally very difficult. Whatever price increases have to happen, have happened. Somewhere we have been able to pass on the full cost increase, somewhere partial and somewhere none. On an overall basis, I would think there'll be marginal positive impact from the price. Majority of the growth has to come from volume, and that's where your market excellence, your ability to work with the dealers, distributors, farmers, generate demand, be very agile on positioning stocks in the market, all of those factors will come to play. As I've been talking in the past, we have been very active in that area, more active than probably would have been in the past. I was mainly still actually referring to, because in the last few months, we had a large pricing increase in input commodities, right? Were we able to pass on, let's say, 0.8 or 1, the entire part of it or only 80% of it? Where are we in the overall passing on level so far? Overall, we have tried to increase the pass. If you remember, I talked about when I discussed the April result in March, we said, look, we are the first one to announce the price increase. We did. Until April, t here was hardly any realization in the market. Of late the market has moved on. Price increases, effective, it depends on the product. Having said that, will everything will translate to margin? Answer is probably no, because you also have to make sure that you don't become uncompetitive in the market. We have to, at the end of the day, sell what we have produced. Will there be a price increase on overall basis? The answer is yes. Will there be more volume increase this year? Our emphasis will be to sell more and capture market share, because I also believe this year might be challenging for quite a few small players where they might have working capital issues or money to promote and be aggressive in the market, and that's where organized players will try to take advantage. Got it, sir. In terms of, let's say, channel inventory, I think we have a little elevated compared to last year. How is the overall, in terms of the market, how is the channel inventory so far? Channel inventory, I would say is normalized now. It was more worrisome a month ago. I think of late we have seen even in crops like soybean. There's a shift, for example, there's a lesser demand for a pre-emergence herbicide in soybean, but there's more demand for post-emergent herbicide. In these situations, what happens, farmers will wait. If they have sown the seed, soybean, they'll say, "Okay, let me ensure that my crop emerges first, then I'll put money on the input." This year, post-emergence herbicide demand is much more stronger than the pre-emergence. As I said, because of the situation, mix will change. How it will change, it will depend on the situation on the ground. We have to be ready for all the eventualities. Got it, sir. Do we expect any more returns compared to last year, this year, extra because of the situation? Or is the returns level going to come down this year? Return is another challenge, but I think every company, including ours, there's a method by which we account for returns. This year, we would be more cautious in accounting for returns. Probably we'll err on accounting more rather than less. Because you don't know the situation how situation will run. There's always a formula, which is also there's AI-driven model, customer feedback, dealer distributor feedback. We try to factor everything. Am I provisioning enough? Answer is yes. How much enough that is going to be enough, I don't know. Got it. Is it a fair understanding, sir, because it's so uncertain, you're just going to put as much product as possible, whatever offtakes it is going to offtake? That kind of thing. We are cautious about that situation, certainly. Got it, sir. You also mentioned this line of unorganized probably consolidating. Do you think what kind of impact can this have on organized players? Because you mentioned the working capital issues this year is going to affect them badly. Do you think the organized side, how much do you think it might grow? This sector suffers from oversupply, right? There's a slight less supply in the market. It helps companies improve their return metrics and everything else. There's always more supply than the market can take. That's the reality of this market. Be it seed, be it crop protection. I think the larger challenge which we are not talking here is money getting stuck because of the fertilizer. Right? Because when fertilizer deficit because of this war situation happened, everybody stocked fertilizer, money went to fertilizer, and then fertilizer liquidation got delayed because of the delayed rain. As a result, obviously, every company will have a delayed offtake of crop protection product and a subsequent impact on the cash flows. Got it, sir. In terms of the raw material spiking, do you think if you see it stabilizing and going down or do you expect these levels to continue? Because crude and everything has been stabilizing. About a month ago, when this MoU was signed between two countries, I think things have started looking that things have cooled down and prices have started trending towards norm. The last five, seven days of development. At this point of time, there's enough inventory for Kharif, so nobody is panicking. As a result, it is not seen. I think as fresh buying starts, we would see that, and because we are not buying a lot now, we have a stock enough for the Kharif season. It's only when Rabi procurement will start now in the month of August, we will see how situation is. I'm sure things which are directly correlated, for example, people buy cyclohexanone C9 as a solvent, that is actually linked to crude prices. People increase up and down as soon as crude prices go up and down. Is it a general trend? I think most of the people have stocked for the Kharif, so there's no panic at this point of time. If this situation persists, will people have to pay higher price than Rabi input? Answer is yes. Okay. You expect still price to go up from here? It depends. It depends how war will evolve. Okay. Have you seen any tapering down, let's say, from the peak? Like what percent have you [audio distortion]-- They did significantly taper down. Right now, because demand-supply situation is normalized, so you don't see that spike. It's only when people go for a stocking for next season, things will start beginning there. Got it, sir. In terms of competitiveness, you mentioned that we want to remain competitive and we don't want to raise the prices too much. Have you seen any new players or the existing players getting more aggressive in the market now that they're becoming more competitive and they're becoming more aggressive in the market? Not noticed. I think everybody has the same challenge. Everybody would like to optimize their income and profit. I haven't seen that kind of panic moment. Can that happen? We will see. At this point of time, generally, everybody is holding on. Everybody seems to be very optimistic. Understood, sir. Thank you so much for the time. Yes. Thank you. Next question comes on the line of Sonika Patolia, Millennium Mams. Please go ahead. Yeah. Thank you, sir, so much for giving me this opportunity. My question is about long-term value creation, like the agrochemical industry remaining quite competitive. I wanted to know, few years from now, what do you believe will be Rallis India's strongest competitive advantage? I think two things. One thing is our brand, I think, is our biggest strength, I must say. The other thing, we are actually working on the portfolio because brand alone will not be enough if we are not able to supply product which farmer will need at the competitive price. Our focus on R&D is much more sharper than in the past, and we continue to put more effort on increasing our R&D output, our collaboration efforts. I think combination of these three things and really our customer outreach, now more trackable with a lot of digital investment. These three, four areas, as we have articulated and being a little bit more aggressive on seed as well as soil and plant health, which are high-margin business. I think combination of these things and being on the top of fixed cost. I think these four, five factors should ensure that we remain competitive in the marketplace and a formidable player. As I said, look, these businesses margins cannot be tracked on a quarter-on-quarter basis. Two years ago, we said we want to deliver 500 basis points over a period of five years EBITDA margin. I think we're on the track. That's how people should see it. Okay, sir. Thank you, sir. Talking about R&D, Rallis has been consistently investing in R&D product registration and the capabilities, manufacturing capabilities. You have taken a difficult decision of impairing certain development assets, how do you ensure that whatever has been invested, how do you go with the project evaluation so that every rupee invested today generates superior returns? I think two things fundamentally I've talked about in the past. A, focusing on R&D. A few things we stopped doing. We said we'll not research vegetable seeds because we were not competitive. We will not invest money on GM crops. We stopped that. We got very focused on only doing R&D when it comes to seed, five crops. Soil and plant health business primarily was dependent on third-party products. We took a conscious choice to build capabilities in that areas. To that extent, we have started taking steps. While we will continue to in-source product from other R&D and provide them market access, but we would build our capabilities on soil and plant health segment as well, because I believe that's very critical, not only for Indian agriculture, but also bringing robustness to our portfolio and offering more comprehensive solution to the farmer. Even in soil and crop protection, we actually have focused on two areas more. One is really being very sharp, laser-focused, and we have a portfolio department which has been strengthened. We have added a layer of product development team between marketing, R&D, and sales, so that we have more rigor in what we do, how we do. Then we also have put a strong B2B team, which is focusing and reaching out to global collaborators to access new products. Combination of things will ensure that we remain competitive. Thank you so much, sir. Sir, my last question. As a shareholder, if I meet you again after three years, what are the measurable outcomes that you would want me to see in Rallis India that would conclude that there has been some structural transformation that has happened, and that it has been transformed into a higher quality business delivering sustainable growth and superior shareholder return? Let me ask you a question. What would be your expectation three years down the line from us? Three year down the line, I want to see Rallis as the only company that is coming to everyone's mind when we think about investing in this sector or segment. Okay. Rallis should be top of mind, that's what I hear. Yes. Obviously, all what I said I am doing, that's a single aim that we should be seen as a significant player in transformation of agriculture, at the same time, delivering superior return to shareholders. That's all we are working for. That will not come unless we manage our back-end process as well, be it R&D, product advancement, be it cost competitiveness, collaborations, manufacturing operations. I think those are the component how part of it. Our goals are very aligned with your aspirations. Ultimately, shareholders look for delivery of margins, right? We want to be a consistent company which delivers 15%+ EBITDA margin even a bad year. That kind of consistency and stability we want to bring in. Thank you so much, sir. Thank you so much. Thank you. Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Rajakumar Vaidyanathan with RK Investments. Please go ahead. Yeah, good morning. Thanks for the opportunity. Can you hear me? Yes, I can hear you. Good morning. Yeah, good morning. Sir, just two questions. The first question is, this rupee depreciation, how much it has improved the competitiveness of Rallis with respect to the B2B business? Yeah, I think it's a double edge sword because when you buy raw material in dollar, you also end up paying more rupees. I think because we are a net exporter, net-net it is positive for us. No, I know it's positive. I am asking because you are still saying that you are facing competition from Chinese. Just want to know, has it not helped you improve your competitiveness? It does on a overall basis. That's the reason in spite of delivering lower volume on export, our profitability contribution to the business has grown. Okay. It has added to the profitability. Okay. Do you see yourself bettering the competition go forward with the current rupee levels? I think, look, we are competing with Chinese players as well as Indian players in overseas market. Obviously, when it comes to Indian players, I don't think our situation gets any worse, right? With Chinese players, it is product specific. For example, I keep saying acephate is a problem because acephate, I have to buy raw material from the same supplier who also produces acephate and sells to customers in Brazil and U.S. I think there are one or two products where there's a specific issue, but otherwise, by and large, in other products, we are competitive. Okay, got it, sir. The second question is, I want to know what is your outlook on the sugarcane and the chili crop, and I also want to know how much contribution you get from these two crops, sir. Chili is an important contributor to us. Not only to us, but in general for crop protection industry. One of our product was badly impacted last year. Last year we sell because of chili and because commodity prices were very low. This year, chili planting intentions are positive, even commodity prices are high. I think this year chili should see recovery. Sugarcane, I think as of now, it's a crop which takes a lot of water. While planting is there, how water situation will evolve, I think is a little different. As of now, I would say sugarcane is also broadly positive. Okay. This improvement in chili, will it improve your top line and sales significantly? It should, yes. The products which are specific to chili have suffered last year. It should lead to positive sentiment. It is all going to happen in quarter two, I can't really say how things will evolve, by and large, quarter two and three where chili products grow. At this point of time, I have no reason not to be optimistic. Okay. Sorry to labor on the same question. I just wonder whether the improvement in chili, will it help you in terms of showing the growth on the domestic crop care segment? Yes, it should. If everything goes from here on as expected. It is a game changer. Things matter in every crop, and it's a general answer, that whether crop is there or not, whether farmers have enough resources in terms of water to raise the crop or not, and then pest pressure, and then commodity prices. Farmers, if commodity prices are strong and they do not have any risk of not able to grow the crop, they tend to invest in the input. Okay. Got it, sir. Thank you so much. All the best. Thank you. Next question comes from the line of Rohit Nagaraj with 360 ONE Capital. Please go ahead. Thanks for the opportunity. First question is, due to the shift in cotton and short duration crops, will there be any impact on the agrochemical consumption for us and generally for the industry? Thank you. I think it depends. As I said, as a thumb rule, last year, lot of cotton was planted. Certainly significantly higher than current year, and rainfalls were also very good. What happened, it rained a lot in the month of August and September. As a result, in spite of the standing crop, farmers did not get time to spray. We said, okay, insecticide business in many crops has suffered because there was a low commodity prices and farmers did not get time to conduct the operation. 5%-10% less crop with an open window to farmers, those who have already planted the crop on 90% of the acre, actually can nullify the impact of lower crop. I think what is important is a decent moisture environment for farmers to continue to grow crop actually might turn out to be more positive than what we think it could be in reality. Sure. Sir, second is on the biologicals or biofertilizers. Last year it was impacted because of the ban. Prior to that, what could be the percentage of sales from biological biofertilizers in the total revenues? Would we see a material traction during the ongoing quarter and in Q1 from the biologicals perspective? Thank you. I think overall, I would say biologicals should do significantly better than last year. Right. Any understanding in terms of the overall sales, what could be the contribution? It's a smaller segment, relatively, obviously it's more profitable. For example, in quarter one, it has grown by 10%. This was also a quarter where crop sowing was slow. As crop sowing picks up and farmers come back to apply various micronutrients and biostimulant, biofertilizers, water-soluble fertilizer, I expect this to certainly pick up faster than what it has done in the past because there has been a lot of positive regulatory development. As of now, we do not have any challenges from our portfolio perspective from not able to sell. It should become even more positive in my view. Perfect. Sir, just one last clarification. In terms of the delay in monsoon, would it have any impact on the seeds production for us? Maybe for the next year season, we may have some scarcity of seeds? Thank you. This is a very interesting question because I can tell you in my more than three decades of career, nobody has been able to predict the future in this. If you remember, in 2024 and 2025, we said we could have sold more because we were getting less seed from production. It was happening because there was too much of rain in the month of October and November and seed planting getting delayed. As a result, harvesting or industry's inability to supply on time. Majority of the seed other than cotton gets planted in the month of October. Cotton production is already in the field, in fact, we have taken a proactive step to reduce the production acre this year because each company will carry forward cotton seed inventory, which is good enough to meet, if not all, at least 30%, 40%, 50% of the next year requirement. Right. From a seed production perspective, cotton companies will not have a challenge. If there's a significant failure of cotton seed production in the current season, this could become a challenge, but nobody can predict. We'll only know in October, November, and December. All maize, rice, bajra, and other crop production season begins in October, crop comes from harvest in the month of March and April, processed, packed, and sold, and some is stored in the cold storage for future. Last year monsoon ended in the month of September. As a result, t here was a significant planting because industry had suffered for last two, three years because of the shortage of the seed. There was a lot of planting of seed crop, and rains also cooperated. As a result, this year actually industry has excess production of everything. There is enough corn, rice, everything is available. Again, it is not enough to cover the next year. Again, seed companies will go for next planning season in the month of September. If it continues to rain in the month of October, November, planting will get delayed and you get into a challenging situation. In normal course, I would say, seed actually in the seed industry is sitting on the surplus this year, which should help us in better managing next season. Perfect, sir. Thanks a lot, all the best. Thank you. Thank you. Next question comes from the line of Gunjan Sharma with Guruji Associates. Please go ahead. Yeah. Hi, am I audible? Yes. Hi. All right. Thanks for the opportunity. My question would be for the seed segment. First of all, what is the position of our inventory in comparison to the last year? In addition to cotton, which crops are majorly responsible for this variance, and what would be the reason for the same? As I said, inventory situation is comfortable. I would say last year our hero was cotton. This year our hero is going to be rice, maize, and millet, and hopefully mustard because oil seed prices are also up, but mustard season will come in the month of September. This year, because of the factors I explained earlier to the question, cotton is going to be subdued, because north cotton did not get planted where we had very high stake with Diggaz. South and central also, cotton area is lower. Also, there has been a spurt of illegal HT cotton in the northern area. Cotton, I do not expect much growth when I look at the year-end forecast. Other crops we should grow significantly over last year. That's the advantage of diversification in seeds, soil, and plant health, and crop protection. One or the other thing works. Last year cotton took us where we reached. This year probably we'll have to rely on other crops. Right. Could I ask which crops are leading to the higher inventory versus last year? Cotton primarily. Inventory cotton. Cotton, everybody had planned for the production, and planting got delayed. Not only delayed, also reduced. Then the illegal HTBt cotton came in the market. Other crops are on similar lines of inventory? Sometimes, in rice and corn, some extra inventory is a good problem to have. All right. Okay. Sir, second question would be that EBITDA margin in seed business has gone up from 26%-30%. What are the key factors that drove this improvement? I think key factor really is the mix change. What happens, cotton, because of the government price control, margins are always lower. Whereas margins on rice, maize, and millet are higher. When proportion of these products go up relative to cotton, margins improve. It's basically product mix. Product mix. Right. Sir, how do we compare the yield of this year as compared to the earlier years? Productivity wise, we can get you the details, but I think this year the challenge at the time of harvest happened was that because of gas, so all seed which gets harvested has to be gas dried, and majority of the drying capacity is located in and around in Hyderabad, and seed intake starts coming in from the month of March. When war begin in the month of end of February, there was a suddenly gas crisis, if some of you remember, right, including domestic and industrial. As a result, gas was not available and farmers were harvesting crop and saying, "Take away your crop." We had to actually do what we call pad drying, what we call open field drying of the seed, not only us, many companies, because enough seed capacity was not available. The harvest was much bigger than the previous year to the extent of 50% in some crops. While yield was higher, but that may not translate to cost benefit because when you dry the seed in open field, your recovery is less. Whatever gains came from the yield improvement probably got neutralized by the cost of extra drying in the field as well as lesser recovery. We haven't done that math. I think that seasonal work is still in progress. We would be probably able to give you more clarity maybe later. Maybe you can send an email to Chirjeev. We can provide a greater clarity, but we are still working out those numbers. As soon as harvest comes, our primary focus becomes on whatever is recovered, please process, pack, and sell, and send to the market. What has happened, we don't worry. The postmortem and analysis is done later on. Sure. Just one last question, sir. Seed business has grown well this quarter. I believe earlier you mentioned this was led by price improvement. Which crops have driven this growth? Yeah. Cotton, there's a volume drop. There's a price as well as some marginal improvement, some improvement in the volumes of rice, maize, millet. Okay. What about the price improvement, sir? If you look at the mix, I think we have about 6% overall improvement. I would say a lot of it is actually driven by price. All good. That will be all from my side. Thank you so much. Thank you. Next question comes on the line of Abhijit Akella with Kotak Securities. Please go ahead. Thank you so much. Sir, there's a INR 35 crore provision reversal within employee cost, I believe, this quarter, which is shown in footnote six. Adjusted for that, the employee cost would be INR 87 crore, which is up quite sharply both year-on-year and sequentially. If you could please just help us understand what the reason for that is, as well as the sharp increase in other expenses as well that we see this quarter. Yeah. I'll ask Bhaskar to give you the details. Yeah. Hi. As far as the INR 35 crore number is concerned, INR 10 crore of that would be more only Q4 of last year versus Q1, difference. Like to like quarter June last year versus this, it's not a difference ITD. Okay? That leaves us only with INR 24 crore, which is more a one-time correction only of this year. This is not likely to repeat at all. Sorry, just to clarify, you said the year-on-year difference is INR 34 crore because of the provision reversal. INR 35 crore is the number, right? Yeah. Around INR 10 crore -INR 11 crore is a difference, which was there in like-to-like quarter last quarter as well as last June as well as this June. We do not need to take that for comparison because it happens every year. INR 24 crore is a one-time thing, which is specific for this year, you can say, this is not likely to repeat in any other quarter. This is a one-time thing which is happening. That's it. I see. Yeah, exactly. The increase in the cost would be around 12%, which is normally an inflation which always happens year-on-year. Okay. 1 Q of every year tends to have some of these items which don't recur in the other quarters. Yeah, exactly. Okay. Understood. How about the other expenses? Those are up by about 13%-14%. Is that also fairly normal? See, in certain cases, we have had a certain one-time cost, which also may not be repetitive. Yes, these costs are there. Okay. This INR 35 crore provision reversal, if you could please just help us understand what exactly this item is related to. As I mentioned, about INR 11 crore is more about the performance incentive at the year end when we see what is to be given. We understand what is to be given, and then what is not given is reversed in the first quarter because the payouts happen during the first quarter. Any provision difference is settled in the first quarter. This is more a recurring thing you can say. This would be happening in every Q1 of every year. However, the balance INR 24 crore, what is there as a reversal, that's more to do with the certain restructuring and retirement stuff, which doesn't happen in every year actually. All right. Thank you so much. For Mr. Shukla, just one question here. Sir, if I heard you correctly in your opening remarks, I think you mentioned that for the crop protection domestic market, you're expecting, or rather the industry is expected to grow at, say, 6%-8% this year and seeds somewhere in the mid to high single digits. Is that really a reasonable estimate for the year ahead? Mid to high minus cotton. Sorry, mid to high minus cotton? Yeah. Cotton we have to exclude from the conversation. Cotton is a challenging case. Right. agrochemicals, you still think 6%-8% is possible for the year? Yeah. I think price increase will be a reality. It's quite fair to assume because their average input cost increase unless really it becomes so competitive, so much of inventory in the market that people resort to unnecessary discounting. At this point of time, I haven't seen any panic in the market. That means demand supply is probably fairly balanced. The prices increase alone should take care of that 6%-8% growth. Understood, sir. Just one last thing, is there a spillover of sales for either of our businesses, crop protection or seeds from 1Q to 2Q? We are very careful because the way we close our years, the only thing happens is sometimes return provisions. That is very, very difficult to estimate what we have sold in the month of, say, March. When you relook at other than some here and there adjustment, we are very calibrated and careful about what we say and what we deliver. There'll always be some, but it'll be part of the normal course of business. Okay, sir. Thank you so much, and wish you all the best. Thank you. Thank you. Next question comes on the line of Himani Badetia with ICICI Prudential. Please go ahead. Hi, sir. Thank you for taking up my question. Yes, ma'am. Sir, you mentioned in the opening remarks that the working capital, it has increased on the industry wide. Just wanted to understand what is the working capital that we have at Rallis this year in the June versus last year in number of days? Okay. Bhaskar, g o ahead. Working capital net to net, it has kind of increased by around 15- 20 days. Okay. If you ask me the reason, the reason is more like the fertilizer availability, the shortage which was there, people flocked to buy that and book that, actually. Farmers had locked their cash first into the fertilizer. That's when they have rationing issues for the other agri inputs which they need to spend on. This is pretty much the same situation for most of the people in this industry. Okay. Sir, the next question that I wanted to understand was, sir mentioned on the sales return side that it is difficult to predict what could be the sales return, or it is the industry-wide phenomenon because while we have placed into the channels, it is not very clear as to we can have 100% liquidation of the same. Until 21st of July, as we are sitting today, have you seen any sales return until now? Yes, we do. For example, cotton seed for North India would have taken back in the quarter one itself. Right. It is crop-specific, product-specific. Now for crop protection, I think majority of the returns will not happen by June. Whatever was maybe supplied for Rabi season before December quarter, and that does not get sold and there's no opportunity, or in the March quarter, there's no opportunity to sell in Kharif, will obviously be taken back. It's product crop-specific. All the pre-emergence herbicide business for rice, soybean, groundnuts, everything will be taken back in this quarter. It changes from crop to crop and product category to category. It's again, is a very normal thing because there's no point in leaving product which is not going to be consumed and unnecessary having receivables on the book. Right. Also, sir, one last thing. You also mentioned on the capacity utilization that it has slightly increased from the last year. Could you just help us with what is the levels current year versus last year, and also the kind of CapEx that we have had in the past, what is the incremental sales that we are getting from that? I think this is lot of detailed question. I would ask Chirjeev to get back to you with the detail because there are multiple plants we have. It's plant-specific, product-specific. He can provide the detailed version of it. Okay, awesome. Thank you. Thank you. Next question comes from the line of Riju with Antique Stock Broking. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. First question regarding the some of the media reports suggest that in North India, especially for the paddy crops, farmers are doing DSR sowing. How that can impact in terms of post-emergent herbicides consumption and if we have any portfolio. If we have any strong product there, how do you see the opportunity in this season? As a thumb rule, when farmers move from transplanted rice to direct seeded rice, consumption of both pre-emergence, early post, and post-emergence increases. Your question is, do we have a portfolio? Yes, and we are launching new products. Even this year we have launched a new rice herbicide, including we have started participating by licensing a direct seeded rice technology, and we have already sold on a pilot basis some quantity particularly in Chhattisgarh region. Yes, we are participating in that segment. We are adding product. Do we have any kind of existing product existing or strong brand that can take the opportunity or grow in the herbicide segment, since until now, herbicide revenue was not that much strong this year. Two years ago I said that, look, our herbicide is our weakness, we have started adding products. As we speak this year, if you say this quarter, just this quarter, actually, herbicide is our largest contributor, followed by insecticide and fungicide. Our herbicide business has grown by 12%. Okay. Understood. Sir, in terms of second question, I think in 4Q you have mentioned that we have done some pre-buying for the inputs or inputs material in the month of February, early March in anticipation of price hike. Was there any kind of a positive impact that we have recorded this quarter? If you could quantify the same, please. You're right that we did say we started procuring inventory because when war started, nobody had a clarity where it is heading, prices were going up every day. We had to secure inventory for Kharif season. We did that. As a result, at the end of the day, how season will end, I must say, at the end of the season, I'll be able to give you a clear answer what was our weighted average. Because something you would have bought lower and again at a higher price and all, then prices have stabilized, I think now prices might again start coming up again given the war situation. Yes, I think we do track what is my weighted price increase. At that point of time, because we had cash, we were also able to negotiate better discount. I think overall, it should have positive impact. One last thing I would like to clarify with you that we have seen some of the price hike in the month of March to May, maybe 15%-20% kind of price hike that we have seen through the channels. How that scenario, if you look at prices in the month of March or May and in the month of June, how much will be that price hike already there in the system? How much you have to take it back in terms of due to the lower consumption. How was the generic product import during this period because of increasing prices? I would say price and volume is always seen in combination depending on how much you want to sell and what you want to sell. When we started buying product at a higher price, we also were probably one of the first few to go and increase the price. Price increase was not accepted by the market till really May. It is really in the June, when lot of material already stocked, maybe prior to March quarter, got liquidated. Reality of price increase became a reality. I think for us, what I believe is that when we report the number, is a combination of volume as well as price, which is helping us. Whatever you sold in quarter one, probably it also had a carry-over from the previous low season prices, making it difficult to estimate. Given the challenges in the season, our priority will remain to strike a fine balance between volume and price, give a precedence to volume if we have to make it up this season. Understood. Sir, in terms of the imports of generic products by trader and what about the actual channel inventory by the import of generics? I think it's normal. Initially, it looked like they may not be very active, but a delayed monsoon also gave them opportunity, some extra time. At this point of time, I wouldn't say industry is sitting with very high inventory. Industry is sitting with the normal inventory, and if things go as per the plan, I think if season cooperates, I think we might end up in a very decent situation as well. Understood. Sir, I think you have clarified in terms of crop shape and all. If I look at in terms of maize price and cotton price, over our last one-year period, I think maize price is continuing to trade at a lower level from the MSP and still trading at a lower level across the mandate, while the cotton prices have seen roughly around 40%-50% jump over last year period. How do you see in terms of crop shape in this season or maybe in next season? If there is not enough crop shape visible from maize to other crops, what is the reason that farmer still sticking towards the maize crops? If cotton acreages are going up, in that scenario, how do you see the consumption of agrochemical products? As a thumb rule, if you are, say, sitting in Vidarbha region, you have only two choices. Either you can grow cotton or you can grow soybean. In Vidarbha, they will not grow normally corn. Because these two crops are sorry, it is cotton or soybean. Depending on the rainfall situation, they can switch. The switch could also be combination of rainfall and commodities. If they end up planting more of soybean, there is going to be increased consumption of herbicide and less consumption of insecticide and fungicide. If they end up planting cotton, there may be reduced use of herbicide, but insecticide and insecticides will be sitting on the top, maybe 60%-70%, even fungicide might be lower. I think situation is evolving. What we know that cotton has gone down, soybean and maize has gone up, pulses have gone up. Again, in pulse, if they end up planting urad and moong, is a short-duration crop, lesser risk space. If they end up planting tur, is a long-duration crop, more risk space. I think I can give you a general principle how farmer operates. Even if there's a long-duration crop, pest pressure is lower, like last year, too much of rain, farmers couldn't spray. How things will roll is very, very difficult to say. Understood. Thanks, sir. I think that's all from my end. Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session on behalf of Rallis India Limited. That concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you very much. Thanks, everybody.