Ladies and gentlemen, good day, welcome to Q1 FY2024 earnings conference call of Sharda Cropchem Limited, hosted by Antique Stock Broking. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Darshita Shah from Antique Stock Broking. Thank you, over to you. Thank you. Good evening, everyone. On behalf of Antique Stock Broking, I would like to welcome all the participants in Sharda Cropchem's first quarter FY2024 earnings conference call. On the call with me, we have Mr. R.V. Bubna, Chairman and Managing Director; Mr. Dinesh Nahar, General Manager, Finance; and Mr. Jetkin Gudhka, Company Secretary. Without any further ado, I would like to hand over the call to Mr. Bubna for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, Bubna Ji. Thank you, madam. Good afternoon, and very warm welcome to everyone present on this call. I hope you all are keeping safe and healthy. Along with me, I have Mr. Dinesh Nahar, our General Manager, Finance, and Mr. Jetkin Gudhka, Company Secretary, and our investment advisors, SGA, are also on the call. Hope you all have received the investor deck by now. For those who have not, you can view them on the stock exchanges and the company website. Through its expertise and commitment, the company has established itself as a trusted partner in the agricultural industry worldwide. With a dedicated focus on seeking registration in its own name, Sharda continues to allocate substantial resources, thus establishing a strong foothold in the market and effectively navigating the competitive landscape. Sharda Cropchem's total product registration stood at 2,859 as on 30th June, sorry, as on 30th June 2023. 1,118 applications for the product registration globally are at different stages of approval. The CapEx for Q1 2024 stood at INR 155 crores. We have successfully maintained strong relationship with third-party manufacturers in China and India, mitigating sourcing dependencies and ensuring quality product at optimal prices. Over the years, we have built a strong network within our global markets. We are benefiting through the economies of scale and leveraging our supply chain to deliver value to the customers. For Q1 FY2024, the revenues have de-grown from INR 825 crores to INR 638 crores. This is due to lower sales volume in Europe and LATAM on account of high inflation, ongoing recession, and adverse weather conditions. The company has also experienced significant decrease in the product price realizations, especially in USA. Gross margin reduced to 8.7% in Q1 FY2024. Raw material and finished goods sales prices have reduced substantially. This has led to a stock revaluation as per accounting policy and has impacted the gross profit and profitability to the tune of INR 71 crores. The company is seeking an improving trend in Q2 FY2024. With this brief overview, I would now like to hand over the call to our General Manager, Finance, Mr. Dinesh Nahar, for discussing our financial performance. Thank you. Thank you, sir. Good afternoon, everyone. Coming to the Q1 FY2024 performance, revenue stood at INR 638 crores versus INR 825 crores in Q1 FY2023, a degrowth of 23% year-on-year. Agrochemical revenue reduced mainly due to low volume demand in Europe and LATAM regions on account of high inflation, ongoing recession, and adverse weather conditions. There was also low product price realization in U.S.A during Q1 FY2024 compared to the same period last year. Gross margins stood at 8.7% in Q1 FY2024, as against 25.4% in Q1 FY2023. Raw material and finished goods sales prices have reduced substantially. This has led to a stock revaluation as per accounting policy, and has impacted the gross profit and profitability to the tune of INR 71 crores. EBITDA stood at negative INR 66 crores, which is mainly due to the decline in the gross margin paid for the Q1 FY2024, stood at negative INR 88.6 crores. Coming to the split, agrochemical business degrew by 23% year-on-year to INR 475 crores, whereas the non-agricultural chemical business degrew by 23% year-on-year to INR 162 crores. In the agrochemical space, Europe degrew by 21%, NAFTA region degrew by 14%, LATAM degrew by 51%, and ROW region degrew by 16%. Europe contributes 52%, NAFTA 35%, LATAM 8%, and ROW 5% of the agrochemical business for Q1 FY2024. In the non-agrochemical space, Europe degrew by 64%, NAFTA region degrew by 26%, LATAM region degrew by 16%, whereas sales in ROW grew by 96%. Europe contributes 13%, NAFTA 52%, LATAM 7%, and ROW 28% of the non-agrochemical business for Q1 FY2024. Thank you all. We can now open the floor for questions. Thank you. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Samir Deshpande from Fairdeal Investments. Please go ahead. Hello. Good evening, everyone. Hello? Yes, we can hear you. Please go ahead. Am I audible? Yes. Okay. See, actually, the Q1 results, we basically are in a big surprise that the inventory loss provisions, et cetera, have taken up with a big chunk of the gross margins. But in the March quarter, after the results, also there was nothing of a caution which the management expected in May, that this type of a big erosion will happen in the product prices. Can you elaborate a bit on this? Going forward, you mean, you have mentioned that the product prices have started improving. What will be the scale of the improvement? The fall has been quite precipitous. Yes, sir. You'll have to break your question into two parts. Yeah. Why this was mentioned, not mentioned, earlier during the March quarter performance? That time, the signals were not available. This drop has happened, has started very slowly, very abruptly, and initial stages, we thought that it's a very small thing, that will not go down to so deep. It happened to happen that way, and it went down very deep. What your next question, Mr. Samir? Actually, you mentioned that the product prices, the drop was quite sudden. In May also, we were not in a position to get any clue on this. In May, we were only discussing about the Q4 performance, and not so much about the Q1 or April to June quarter. Our concentration was only in the last quarter of the last financial year. That is true. Okay. The foreign exchange rates and Euro and U.S. have been quite good for the company, it seems, that because the ratio has been quite one point one and something. That normally is a thing which benefits the company. Now this fall in prices has hit us in a big way, INR 71 crores. If you add back that INR 71 crores, we have a profit before tax of hardly still we have a net loss. That is a bit. The provision has what is the exact provision for this? Is it INR 71 crores or something more? INR 71 crores. Achha. Now, secondly, it is mentioned that there is some improvement in the prices in Q2. What will, what is the scale of the improvement? From INR 100, we have fallen to INR 40. Suppose from INR 40, it is now to INR 50, or it is come back to INR 70, INR 80. Any idea on that? We have not said, it is an improvement. There is likely to be an improvement. We feel it has touched the bottom, but it has not started improving, and the effect of this improvement will have a very long time lag to get reflected into the markets. Basically, recovery is expected to be slow, but our inventory, which was about INR 1,100 crore in March, if I'm correct. As the inventory now, we have sold about some INR 600 and INR 450 odd crore. What is the current inventory, which is likely to, now on 30th June, we have made the entire provision? Let me see. Mr. Samir, the current inventory is INR 953 crore. For that also, the provision has been made for the fall in the prices entirely? Yes, please. Yes, please. You expect the things to improve going forward? Yes, please. In terms of the price movement, but it is likely to be a bit slower. Correct. What is the effect of El Niño or all those things on our sales in any of the markets? Effect of what? El Niño, El Niño. El Niño? Yeah. No, sir. El Niño is not yet come into the picture, and it has not shown any signs or any adverse effects on the markets that we are dealing in. The fall in Europe and Latin America, you mentioned is because of recession and all those things. Since our products are actually basic necessities, how has it affected so sharply in the volumes? Is it due to the inventory build up there? Mr. Samir, you answered my question. It is due to excess supplies. Mm. The production has increased considerably in China. Mm. during last one or two quarters, and excess availability and reduction in the cost of raw materials for our manufacturers. Now, if... Mr. Deshpande, I'm sorry to interrupt. Can you please join back the queue? Okay, just one question I wanted to know. Hello? Sir, can you join back the queue, please, as there are other participants waiting? Okay, okay. Thank you. We have our next question from the line of Ramesh Sankaranarayanan from Nirmal Bang Equities. Please go ahead. Good evening, thanks a lot for this call. While we sympathize with the kind of challenges you are going through in terms of what you are seeing and hearing from China, is it possible to give a sense in terms of what is the% increase in price in terms of value or volume terms? When one can expect that to reasonably stabilize, obviously, it depends on the recovery in the Chinese- Mr. Ramesh, your voice is not very clear. The words are getting mixed up. Can you use your handset, please, Mr. Ramesh? Hello? Yes. Hello, can you hear me now? Ramesh? Hello, can you hear me now? Yes, yes, we can. Please go ahead. Yeah, so, yeah, Speak a little louder and slower. Yeah. Speed should be a little slower and voice should be louder. Yeah. In terms of your own thoughts on China and the excess supplies, is it possible to share what is the percentage increase in supplies in volume or value terms in the last 2 quarters? This seems to be impacting all companies. Secondly, what is the sense you get in terms of when these excess supplies will be evened out based on the, you know, supply chain in China itself stabilizing, based on growth in consumption there? There seems to be a mismatch between China, what China is producing and what they can consume. That's my first question. Can we answer your question first, one by one? Yeah. See, Mr. Ramesh, in China, there are no authentic statistics available about the stocks and things like that. They had an exhibition in the third week of May, we were there, we're having a stall, all the manufacturers that visited us had only one thing: They have thousands of tons of the raw materials in the stock, finished products in the stock, finding it difficult to get offloaded, sell them. Many companies, which had five, six, seven manufacturing plants, have stopped three, four plants in order to take care of their working capital and to take care of the excess stock that they have. The stock is huge, the price fall has been also unprecedented, which we have not seen in about 20, 30 years of our experience of dealing with these products. Okay. If I may, have a follow-up question. In terms of, the overall volume growth in your results, for the first quarter, 2024, what is the percentage growth in volume included in the revenue? One minute, sir. Sir, there is no growth in the volume. There's a degrowth in the volume to the tune of about 11%. 11%. Finally, in the working capital cycle, when do you see that going back to a normal working capital cycle? Because there's an increase of 29 days, including 17 days in inventory, as of June 2023. When do you see that stabilizing and getting back to normal levels? Sir, it will, we are hoping that it will come back, it will recover, the timing and target dates is difficult to predict. It could happen in the next three months, or it may take a little longer. Okay, thank you very much, wish you all the best. Thank you. Thank you. We have our next question from the line of Tarang Agrawal from Old Bridge Capital Management. Please go ahead. Hi, thank you for your time. Just two questions from my side. If you could give us region-wise volumes for the current quarter and the base quarter. Second, you mentioned that you have about 2,250 registrations or a similar number, 2,859 registrations at the end of the quarter. Could you give us a sense on how, what would be the unique molecules for this 2,859 registrations? Third, on working capital, there's been quite a buildup from 90- 120 days, if you could comment on that. Thanks. Now, Mr. Tarang, you have to go one by one. Okay. The first question, if I remember, is on the volume compared to the same period last year. Yes. region-wise. Yes. Am I right? Yes. In Europe, the volume has gone down by 37% compared to the same period in last year. Latin America, it has gone down by 53%. NAFTA region, there's a growth of about 49%, and rest of the world, there's also a growth of about 47%. Overall, there's a degrowth of 11%. Okay. The second question is, out of your 2,859 registrations, if you could give us, what is the unique number of molecules here? I think your question is very unclear to me. I don't understand what you call as a unique number of molecules. What I mean to say, sir, is, for instance, for a particular technical, you might have registrations across multiple countries, right? Or a particular formulation, you might have registrations across multiple countries. Yes. So, so- Now, I have understood your question. You mean to say that one molecule can have multiple registrations? Correct. Same registration in two different countries are two separate registrations. Correct. To answer your question about molecules, I think this 2,800 odd registrations will constitute about 130-150 molecules. Wonderful. The last is, sir, on working capital, if you could comment? It's moved up from 90 days to about 120 days. See, one of the biggest factors is, receivables. Receivables have gone up from 109 - 120 days, inventory days have also gone up from 68- 85. Great. Creditors' days have remained at 85 days. Yes, sir. It's disclosed in the presentation. I wanted to understand on the ground, what has driven the inventory days and receivable days to move up? I didn't understand. What is presented in the presentation is the correct fact. I cannot understand how can it be different from something different. No. Sir, no. My question is, what has led to the inventory days and working capital, receivable days to increase by the number that it has, versus the same period in the last year? I mean, operationally... Hello? Mr., Mr. Agrawal? Yes. Yeah. We have had to take back a lot of sales return from our customers- Mm. They said that they are not able to sell, the demand is less, and the prices are going down. I mean, because of that, they have returned a lot of goods back to us, which we have accepted, and that has increased to that has led to increase in the inventories. Okay, sir. Last question, sir: What is the expiry period on the inventory or the life of the inventory? Well, the life of the inventories is normally two years, sometimes it is three years. Okay. The products do not get discarded after the life of the distinct. They are always renewable, and they are not something which gets destroyed or rotten, you know? Okay. Thank you, sir. Thank you. Thank you. We have our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello. Yes, please go ahead. Yeah, thank you very much, sir, for the opportunity. Sir, I just wanted to understand, I mean, in the light of the current industry scenario, where you do expect recovery to be slow and even the price erosion we have seen, right? Even the returns from the customer. How do our guidance stands now? I think, in the last quarter, we were of the view 15%-18% growth with 18%-20% margins, right? How do we change that? Sir, it may go down to around 10%. What is 10%? This is just an estimation. It's too early to say that. It may go down to around 10%. Revenue growth? Yes, please. What about the margins? Margins, it is difficult to predict. Mm-hmm. It all depends upon how much time does it take for the Chinese inventories to get absorbed and the prices going up. It's going to be a little difficult question at this stage. Understood. Understood. And this INR 71 crores, the stock devaluation impact, that is done, right? I mean, we don't expect those kind of impact going into coming quarters. Yes, more or less, you are right. That's it from my side, sir. All the very best. Thank you. Thank you. Thank you. We have our next question from the line of Rohan Gupta from Nuvama. Please go ahead. Bubna ji, hi, sir, good evening. Good evening, sir. Sir, a few questions. Sir, first is, on volume degrowth, you mentioned roughly 11%. Yes. While our top line decline is roughly 22%. Can you further give the bifurcation between price decline and the currency? Price decline, it seems only at 11%, which I think that is quite minimal, probably. What is the further breakup of currency and price? I'll tell you. Currency, there's a growth of 6.5%. Volume, there's a degrowth of 11%. Price and product mix, there's a downside of 18%. Total growth is about 23%. Got it. Degrowth, sorry. Yes, sir. Sir, in terms of inventory write down, that's INR 71 crore you have taken, and that you mentioned that adequately covers your current inventory stocks of close to INR 950 crore. Do you see that, as you mentioned, that prices, in your view, have almost bottomed out? We are already sitting in almost July is over. Do you see that there may not be any further chance of any kind of inventory write down? How do you see that the channel is sitting right now in terms of the inventory? As you mentioned, a lot of sales returns have impacted your growth in the current quarter. Or is it too early, or have you seen that the prices have bottomed out and the channel inventory is almost at the lower level, or still a lot of pain has yet to be seen in coming months? Rohanji, I'll answer your question in two parts. One was about the prices. Price, we feel this is our guess and hunch, that the prices have gone down, and in some products, the prices have gone down to almost less than 25% of what was prevailing at the end of our, during the last quarter of last year, you know. We feel that there's a tremendous slide in the prices, and they will not go down further. As for the second question was about the inventory taking off. This is going to be a slow process because it all depends at what stage the Chinese are able to increase their sales prices and get the sales, you know. Today, Chinese are very desperate to get their stocks offloaded, you know. This is going to be a little. It's too early to predict on that, you know. Sir, just trying to understand the core of the current scenario. I understand that there was an inventory buildup which was happening, and also because of China reopening and initial years, I mean, last two years, post-pandemic, many agrochemical players and dealers and all was in a inventory buildup mode because there was a continuous disruption in supply from China. Where with the increased supply from China, people think that now there may be no more logistics-related challenge and disruptions in supplies are over. That's why they want to reduce the inventory. However, do you see that the ground level, farmer level consumption, has come down? Because it doesn't look like the agri commodity prices are softening anytime near, and farmer level consumption still looks decent. Is it all a market correction, the trade correction, or you see that there is a real disruption? Your question is too long. I think you should break it down. Sir, I will just cut it short. I will just say that. Yeah. It is- One by one. Yeah. Sir, the question is same. Is it a inventory reduction which is happening in inventory destocking, or you see that there is a farmer level consumption has come down? Sir, both. The farmer level consumption has also come down, also because of the psychological factor. The farmers are not going to, I mean, not buying anything for the future, fearing that the prices may still go down. Their inventory level is also going down. Sir, Secondly, the weather factor. Weather has not been very friendly in many regions. Many regions are seeing droughts, dry weather. In other places, there's a very heavy flood. The farmer level demand has also come down, the psychology to build up the inventory for future has also led to this increase in the inventory level at the farmer level, consumption at the farmer level. Your next question, sir? Sir, you also mentioned the growth guidance. Earlier you were talking 15%-20%. You just mentioned, sir, 10%. 10%, what you're talking is the growth or you see that 10% on the annual basis degrowth? Annual basis growth, 8%-10%. Irrespective, I mean, despite the price fall of at least 20%, you are still expecting a volume growth of 10%? Yes, sir. Despite the current scenario being so weak, what gives us that confidence? Sir, our own sense of the market, and considering, I mean, I would say the own estimate and sense of the market, I don't have any statistics or any figures to sort of support it. This is our own understanding and guess, sir. Sir, you are talking roughly 30% kind of volume growth, assuming 20% price drop. I mean, that is a very encouraging statement, sir. Especially if you see that, I mean, 30% volume growth, that kind of volume would not have been achieved in last year. That's what I was just curious to know that, despite the current scenario, you are still confident of at least 25%-30% volume growth. Just one minute. Just give me one question. Yeah, Rohan Ji, our main seasons, my main quarters are Q3 and Q4. Right. Right now we are in just finishing on Q1. Just as like I was answering to one of your questioners, some time back, by end of April or middle of May, we had some signs, but we not a precise idea as to what is coming for us, and what has come is a very big surprise for us. These things, these very big surprises don't last for very long. There are always some corrective factors. This is a law of nature. Fine enough, sir. Sir, thank you so much. I'll come back in queue. Okay. Thank you. We have our next question from the line of Gagan Tareja from ASK Investment Managers. Please go ahead. Yeah. Good evening, sir. I hope I'm audible. You're not audible. You have to speak a little louder, sir. Okay. Is this better? Can you hear me now? Now, it is better. Okay. Sir, the first question is around the depreciation. It seems to have year-on-year grown from INR 55 crores- INR 70 crores, a fairly outsized increase in depreciation. If you could elaborate and explain that. Sir, I think depreciation is mainly linked to our investment into registrations, which are intangible assets. As we are laying more stress, registrations is our basic backbone of our business model. We are investing extensively on the registrations. These are leading to higher capital investment and higher depreciations. Okay. This INR 70 crore quarterly rate will sustain in the future quarters as well, or will it increase further for the next three quarters of the year? Mr. Gagan, we cannot, say it very with surety. Mm. If you have understood our business model, registration process is very unpredictable. You cannot plan and follow that process. The registration process is filled up with so much of uncertainties, like field trials, weather, and we are dealing with government authorities who are never predictable. I mean, sometimes they meet after three weeks, sometimes they meet after three months. All these uncertainties, in this quarter, we have had to pay a substantial amount of data compensation to our for the registrations in NAFTA region, United States. This is not going to be continuing the same pace. Okay. Right, sir. You know, going back to your commentary in 4Q, you know, there was an indication that gross margins could be between 26%-30%, with possibility of it being closer towards 30 rather than 26. First quarter, adjusted for the inventory write down, it would still be 20%. I'm just trying to understand second half as you scale up and if prices, you know, remain stable, as it seems to be the case now, can you go back to at least the 25%, 26% mark, or, at this point in time, you know, even that is a difficult sort of a guesstimate to make? Sir, my answer is, it's going to be difficult because we have to carry the load of, first quarter, where the gross margin has been on the negative side. No, no, I'm asking for specifically for, you know, the third and fourth quarter. I'm talking on a quarterly basis, not for the full year FY2024. I understand full year will be impacted by the first quarter, but in the coming quarters, are we looking at gross margins heading towards 25% mark? Yes, we can. Okay. Thank you, sir. I'll get back in the queue. Thank you. Thank you. We have our next question from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go ahead. Hello, sir. Thank you. Sir, one question is, what was the sales return amount that you have booked in 1Q, which was probably you had booked that sales in last year and now you have, you know, reversed that? One minute, let me get back to this. Sir, in the quarter one, our sales return has been to the tune of INR 135 crores. Okay. Got it. Sure. Secondly is, so earlier, based on understanding, it was, you know, what we were getting feelers was that the excess inventory or oversupply was primarily at the dealer side. For example, US and Europe, major dealers, they had overstock so much because of supply uncertainty. Sir, your commentary is also suggesting that there is also excess inventory even at Chinese manufacturers. They are also sitting at excess inventory. Is that the case? I mean, they overproduced because they were not expecting the demand to be so weak? Yes, you are absolutely right. They overproduced, and they've gone through the difficult period of corona, where productions were limited because of many compulsions and factors, and all of them have disappeared, and they're very enthusiastic to produce as much as they can, and now they are feeling very sorry for the situation that they have landed in. There's a huge inventory at the manufacturer's level. As I mentioned, some manufacturers have shut down their plants in order to tackle this poor inventory situation. Sir, is it possible to give some sense on the quantum? Say, for example, if the excess inventory at dealer level or, say, retailer level is, say, 100, what would be the excess inventory with the manufacturers? Some sense, some quantification, if you can help. Mr. Dhruv, you are asking a very difficult question, you know. Just trying to understand how. They are not published information. Mm-hmm. When we talk to the manufacturers, they say they are sitting with 1,000 tons of this product, 2,000 tons of that product. We believe them, what they are saying is true, but I do not know whether it can be 1,500 or 1,800, and it doesn't interest us to go into that detail. They'll also find it little peaceful, and it doesn't lead to a good discussion, you know. Sure, sure. sir, last question. I guess you just get the feeling that they have a lot of stock. Yeah. What is the amount of stock, it's not a pleasant question to ask them. Sure, sir. Sir, last question is, this weakness that we are seeing or the oversupply that we are seeing, is it across molecules, or there are very specific molecules where you're seeing this? I mean, very old molecules like, for example, glyphosate and others, and some of the newer age molecules, there is not much of an pressure. Is that fair to say, or it is across molecules? I can answer that question. The glyphosate prices have come down to 25% of what it was prevailing. Yeah. about three months back, you know? Yeah. Sir, is this- A lot of related, older molecules, two, four-D, Mancozeb, everything has crashed. That doesn't mean that the good molecules have also crashed, may not be to this extent, but quite a substantial extent, you know. Okay. All right. Sir, sorry, one last question to squeeze. Your sir first half, first quarter, your CapEx is about INR 150 crores. What should we assume for the full year? Pardon me? For the full year, what should be the CapEx? Full year? Yeah. It should be around INR 400 crores, you know. Okay. Got it. Sure, sir. Thank you so much, and all the best, sir. Thank you. Thank you. Thank you. We have our next question from the line of Sonal Minhas from Prescientcap Investment Advisors LLP. Please go ahead. Hi, sir, this is Sonal Minhas. Am I audible? Yes, please. Sir, my question was linked to what the gentleman before me was asking. I wanted to know if we consider a period of, let's say, two years or three years, some of the old molecules, how much has the price or the realization corrected back? If you could... Sir, Mr. Sonal, you have to speak little louder. Your voice was not very clear to me. Okay, sir, just give me a moment. Am I audible now, sir? Yes, sir. Sure. Sir, I was saying that for the old molecules, which you were answering to the gentleman earlier, I wanted to understand from a two-year or a three-year perspective, because our realizations were going up, how much has the price corrected by, for the old molecules, if we consider a two-year or a three-year period, basically? Are we back to our pre-COVID realizations, or are we below those? If you could just give a structured answer to that. We are below the pre-COVID prices. Okay, by how much roughly? Period, by COVID period, the prices had gone up substantially, and now they have crashed, and the rate of, the speed of crash has been much faster than the speed of going up, you know. If I were to summarize, sir, we are below the pre-COVID prices? Yes, sir. Okay, sir. That's how much. That's it from my side, sir. Thank you. Thank you. Thank you. We have our next question from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah, thanks for the opportunity. sir, my first question is on the debtor days. The debtor days have increased, sequentially. Historically, whenever such an incidence has happened, have we realized that the bad debts mounting up, maybe during the 2008 crisis or any other such, you know, unique, situations? Thank you. Sir, bad debts have not mounted up, but as I told you, a lot of people have returned back the goods, saying that they cannot sell and they cannot pay. Yeah. With the current situation, we don't think the bad debt is going to be a big concern. The concern is the margins and realizations, you know, and the quantities. Right, sir. Got it. That was from my side. Thank you so much, and best of luck. Thank you. Thank you. We have our next question from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Hello, just a follow-up question, Bubna. Based on the discussions we've had, under normalized supply chain, margins, pricing and volume growth, will you be able to improve your ROC to whatever you were achieving one year ago? How do you see that, you know, move in the next two years, you take two years, by 2025, 2026, will you be able to get back to the normalized ROC? Because ROC has been under pressure. Well, ROC, there has not been a very steep fall. It's from about 26%- 21%, March 2023, compared to March 2022. one minute. I'm talking more in terms of the first quarter trend. First quarter trend, I don't know. We have worked out or not? We are working on yearly basis. Sir, we are working on the yearly basis. We are not working on the quarter to quarter, so I'll not be able to comment. No, I understand that. Given that, you know, you have gone through one of the worst quarters, so if you, if you look at 2023 ROC of 21%, what is the timeline you are giving yourself to, you know, achieve that, say, over the next four-eight quarters? Say, by 2025 end, should we be in a position to expect that kind of run rate where you can get that 21% ROC, and from there, maybe move back up to, say, 23%-25% by 2026? Is that possible? Yes, sir. March 25, which I think we should be able to return back. Okay. One more thing, Mr. Ramesh. Yeah. I'll tell you, that also gives me a little satisfaction. Our business model is very nimble-footed. Okay. Our limitation today is only to the extent of the stocks that have been returned back to us and our compulsion to sell them at a cheaper price than our cost price because of the market situation. That is not a huge thing. Moment we get rid of it, we'll source it at a very cheap price and also sell it at some margins. In terms of your supply chain for third and fourth quarter, for the second half of this year, in terms of whatever you are planning, in terms of the volumes and pricing, you are reasonably comfortable in terms of being able to achieve your volumes for third and fourth quarter? Exactly. Okay. Our only load is temporary. Okay. That, too, of having compulsion, forcefully compulsion to take back the goods. Otherwise, you either go with the litigation and other things, spoil relations with the customer, where there are others who are willing to sell them. This is a very temporary situation for us, and we are very confident we will be able to come out it. We don't have any compulsion to keep on manufacturing. We don't have any compulsion, as most of the manufacturers and other companies have. We are able to switch over very quickly, as I'm calling myself, nimble-footed. Understood, sir. Thanks a lot, and wish you all the best. Thank you, sir. Thank you. We have our next question from the line of Rohan Gupta from Nuvama. Please go ahead. Bubna, sir, thanks a lot for the follow-up. Sir, first question is on our small but quite sizable belting business. There, we have seen that revenues have declined, but your profitability hasn't been impacted. In that segment, we see that roughly 46 crore INR, the EBIT from the current quarter, has remained stable. That business is not impacted in the current scenario? Rohanji, let me understand. Can you please repeat once again? Sir, I was talking. impacted, sir. No, no, sir. I'm talking about our non-agrochemical business, belt business. Non-agrochemical business, yes. Yeah. I missed the word non. Yeah. I'm saying that though the revenue there has declined. Yeah. It's still a INR 43 crore contribution at EBIT, which has been maintained at the last year level. Yes. Just want to understand, in that business, there is no impact of this China and all? No, sir. You see, in that business, we are making to order, and we are selling after receiving the orders. We are not maintaining inventories, because every demand is specific. You understand? Right. The only impact there is the economies of consumption. Like in Europe, our sales of non-agrochemical products in Europe has got affected because of this Ukraine war. Which has totally destabilized the economies of most of the European countries. New projects are moving slow, new developments are coming slow, and our non-agrochemical business is mainly conveyor belts, which are linked to the new projects and new developments, you know. Secondly, the revenues have come down because mainly the logistics cost has come down substantially. For a container to ship to Europe, we are paying $20,000-$25,000. Today, it has come down to $2,000-$2,500. All those logistics costs was built up in our sales realization and revenues. Right. I said last year in 2023, we had gained significantly in terms of the profitability in non-agrochemical. I mean, belting business, we contributed roughly INR 170 crore EBIT. As the new project comes down and all, do you see that there is a risk of declining in this business also? Because earlier, we used to have roughly just only INR 50-60 crore contribution from this segment, but last year it has significantly contributed INR 170 crore. Do you see that this business is also going to decline? Sir, it will decline, but not very significantly. Okay. Because we are not impacted by unnecessary revenues and sort of stocks. Stock, we are not sitting on the stocks. The only thing is, if the projects are going down, then the buyers may delay the taking deliveries and all that, but there's not big impact on the stocks. Margins are fairly consistent even now. Right. Sir, in a post-pandemic era, we have gained significantly in Europe market and all, where, because of the many local players who were not able to source the supply from China. Now, do you see that when the supplies have increased so sharply from China and the material is abundantly available, do you see that these local players and all who have probably vanished from the trade, have come back again and are looking for the opportunistic business in the current scenario, that may affect our market share in a steady market like Europe and all? No, Rohanji. We don't feel that those local players have again come up into the scenario. I think that advantage will stay with us. Okay. Sir, just last thing, sir, with the such a sharp fall in agrochemical prices, do you see that farmer level consumption and ultimately, farmers are likely to benefit from the lower pricing of pesticides? Definitely when the season comes in H2 for us, maybe Q3 and Q4, do you see that there is a possibility of, I mean, the overall growth at the agrochemical consumption may remain high and the farmers benefiting from the low pricing scenario? Yes, I foresee that. The only thing is, particularly Europe, the only impact that the farmers are going to face is the disturbance in the economies. Like, when I visited some European countries, they were saying that the goods from Ukraine are being exported out of Europe through their ports, and the prices were so low that they get absorbed into those countries, and that is impacting the economy of their agronomy, I mean, agriculture economy of those countries. If somebody is selling from Ukraine, say, grains, at maybe $500 per ton, and the market price, local prices in Poland is $1,000. The $500 per ton goods, instead of getting exported out of Poland, they get absorbed into Poland, affecting their inventories of the produced product in Poland. These kind of disturbances are impacting the European countries and the cost of fuel going up, the cost of living going up, and that their capacity to purchase agro commodities, excess availability of agro commodities in Europe, is another big problem. Got it. Yes, I finished. Sir, just, one small clarification. I request you to join back the queue, sir. Yeah. Thank you. Thank you. I would now like to hand over the conference to management for closing comments. Over to you, sir. One minute. Thank you everyone for joining us for this conference call of Sharda Cropchem. I hope we have been able to answer all your queries. We look forward to such interactions in future. We hope to meet your expectations in the future, too. In case you require any further details, you may contact us or Mr. Devendra of SGA, our investment relations manager. Thank you very much. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.