Ladies and gentlemen, good day, and welcome to UPL's Q1 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Radhika Arora. Thank you, over to you. Thanks, Yashaswi. Good day, everyone. Thanks for joining us today for the results for the quarter ended 30th June 2023. The presentation, press release, and the financial statements has been made available on the website. We take as having read the safe harbor statement. From the management team, we have with us today Vice Chairman, Rajendra Darak, CEO of Global Crop Protection Business, Mike Frank, CFO, Anand Vora, Chief Supply Chain Officer, Raj Tiwari, and other members of the leadership team. With that, let me now hand it over to Anand. Anand? Yeah. Thanks. Thanks. Thank you, Radhika. A warm welcome to all of you who have joined us today. I'll begin by discussing the key financial highlights for the first quarter, followed by an update on working capital and debt. The global crop agrochemical market is going through a tough phase over the last couple of quarters. As per the most recent S&P Global estimates, the market is expected to degrow by approximately 5% for the calendar year 2023. Our first quarter performance, too, was impacted by the industry-wide slowdown, as well as by the erratic monsoon in India. Consequently, revenues for the first quarter were down by 17%. Contribution margin improved by 200 basis points to 45.7%, led by higher share of differentiated and sustainable products, a favorable geographical mix, and an improved margin delivered by the seed business. Overall, contribution profit was lower on the back of lower sales, but we did see a 200 basis point improvement as a% to sales. Our SG&A went up marginally by 5%, bulk of this increase being due to translation of financials in INR amidst depreciation of INR against the U.S. dollar. However, with the drop in sales resulting in a drop in contribution profits, there was a significant impact on absolute EBITDA. The EBITDA for the quarter stood at INR 1,593 crore, showing a decline of 32% over that of the previous year. While the performance of our crop protection business came under pressure, it's worth noting our seeds business platform performed robustly, with revenues increasing by 26% from INR 840 crore to INR 1,060 crore at a 50-- showing a 54% growth... Sorry, showing a good growth in revenue and a 54% growth in EBITDA. The strong performance of the seed business was supported, the profitability, overall profitability for the quarter. Net finance costs rose by 36%, despite the decrease in debt and non-recourse factoring. This was primarily due to rise in benchmark rates by 350 basis points year-on-year. The average cost of borrowing for Q1 FY 2024 stood at approximately 6% per annum, as compared to 3.5% per annum for Q1 in FY 2023. FX loss for the quarter was INR 200 crore. This was mainly due to cost of hedging contracts against advance orders taken in Brazil. Additionally, there are certain countries where we could not hedge currencies, such as Russia and Turkey. Devaluation in currencies of these countries also led to higher FX impact. Net profit for the quarter came in at INR 166 crore, as the impact of higher finance costs and FX loss was to the extent offset by lower taxes, as we benefited from the lower tax rates due to poor business performance in some of these countries mentioned above. The tax rate for the year is expected to be at the lower end of the guidance of 15%-18%, given at the beginning of the financial year. As we highlighted at the Capital Market Day in May, improving our cash flows and strengthening our balance sheet continues to remain one of our key focus area. In line with this, we reduced our net debt in U.S. dollars by $160 million, from $3.35 billion in June last year to $3.19 billion as of 30th of June 2023. Additionally, we also reduced the non-recourse factoring significantly by $250 million on a year-on-year basis. The receivable securitized stood at $890 million as of 30th June 2023, against $1.14 billion as of 30th June 2022. Coming now to working capital. The working capital days increased by 14 days year-on-year to 122 days. This was primary on account of lower payables and a reduction in factoring, as I spoke earlier. In rupee terms, the factoring was down by INR 1,700 crore versus last year. Overall, we expect to end the year with working capital of 65-70 days. To give you an update on the corporate realignment initiative, during the quarter, we transferred our specialty chemicals business to a wholly-owned subsidiary, UPL Speciality Chemicals Limited. This proposed transfer has been approved at the shareholders' meeting in July, and the transaction is expected to be completed in next few months. The carve-out of specialty chemicals business will allow us to accelerate growth in that business and enable improved access to capital. Moving ahead, as we look at for the rest of the year, while Q2 we see subdued demand, in the second half of the year, the demand on the crop protection side is expected to recover as channel inventory approaches a near-normalized level. Further, protecting our profitability in the current environment is of foremost priority. Accordingly, we have undertaken a cost reduction initiative of $100 million over the period of next 24 months, of which we expect to realize at least 50% by the end of this financial year. Overall, led by gradual recovery in crop protection demand, supported by continued healthy performance of seeds business and the implementation of cost optimization efforts, we expect the revenue growth for FY 2024 to be in the range of 1.5%, 1%-5%, and EBITDA growth in the range of 3%-7%. On the cash flow and balance sheet front, our focus for generating healthy free cash flow and de-leveraging will continue. With this, I'll hand over to Mike to give us more detail on the market condition, on the global market conditions, and also a quick update on some of the key geographies. Over to you, Mike. Thank you, Anand. Hello, everyone. As highlighted by Anand, the global crop protection business has been facing a tough market environment over the last two quarters. While ag chem demand at the farm gate level continues to be strong, the industry is facing unprecedented challenges due to significant price decline for most post-patent products, combined with distribution channel destocking, which greatly impacted product sales in this past quarter. Even though the current grower demand will absorb existing channel inventories in the next several months, this is a major price point for manufacturers. It is, however, worth noting that our product share at the end user level has increased in certain segments, demonstrating the strength of our portfolio and commercial strategy. Moving to results performance, Q1 of FY 2024 was impacted by the overall volume decline and pricing pressure, largely in the herbicide segment. Herbicides such as glufosinate, glyphosate, clethodim, and S-metolachlor, especially in North America and Brazil, accounted for roughly 75% of the total quarterly revenue decline this quarter versus last year. Our Q1 revenue dropped by approximately 24%, while contribution margins were down around 31%. Margins were impacted by lower prices, resulting in 380 basis points compression versus last year, while EBITDA also declined by 65% year-on-year. Despite the tough environment, we have grown in our differentiated segment by 10% through new launches such as Evolution and Ferosio. This has also resulted in our improved product mix in this segment from 24% last year to 35% in first quarter. Our NPP Biosolutions have also improved margins on a quarter-over-quarter basis. This clearly demonstrates our commitment and focus to improving our overall business quality. The strength of our differentiated and sustainable portfolio will continue to be demonstrated throughout this year. Taking a look at regional performance for the past quarter, in Latin America, our revenue declined by 28%. Brazil was impacted from significant market degrowth, specifically in non-selective herbicides, due to price decline. We did experience growth in Mexico and Argentina versus last year, driven by herbicide volumes. The impact from Brazil drove the overall revenue decline in the quarter from this region. In spite of our quarter challenges, through our increased customer focus and our strong product portfolio, we are increasing our market share across this growth region. While Q2 will still see some challenges, we anticipate growth in the second half of the year in Latin America. Moving to North America, sales of herbicides to channel partners slowed considerably versus a year prior. Overall, sales and usage at the grower level in the U.S. and Canada was strong. However, distribution channels were focused on drawing down inventories, in part because they were seeing prices fall, and therefore, they only purchased on an as-needed basis. Herbicides such as glufosinate, S-metolachlor, and clethodim were most impacted, with headwinds from lower volumes and pricing pressure. While this trend will persist in Q2, we expect partial moderation by key insecticides and fungicides such as mancozeb. Our differentiated and sustainable segment, led by NPP products and new launches, is poised to mitigate post-patent price decline. We have also seen an increase in California rice acreage, which provides a nice opportunity to drive sales in that market. We do expect North American distributors will be restocking for next season during Q3 and Q4 of our fiscal year. In Europe, revenues declined by 19% in the quarter due to channel inventory concerns and degrowth in countries such as France, France, and the impact of product bans. While these concerns will persist in Q2, we see upsides in sulfur and copper-based fungicides and in herbicide volumes in the second half, which are expected to lead overall recovery in the region. The rest of the world was down by approximately 10% due to high price pressure from China competitors, especially in Southeast Asia and Africa. I would like to highlight that we grew strongly in China, nearly doubling our revenue through insecticide, fungicide, and soil and seed health volumes. Looking ahead across the global crop protection business, we anticipate Q2 to remain weaker than last year due to continued channel destocking in Brazil specifically, and the global reset in prices in the post-patent segment. As previously mentioned, recovery is expected from Q3 onward through normalization of channel inventories and demand for herbicides and our new launches as key growth drivers. We're undertaking stringent overhead reduction actions. These measures are expected to positively impact by around $100 million in the next 24 months, with at least 50% of that being realized this year in FY 2024. While Q1 was a challenge, the strength of our supply chain assets and our overall strong grower economics, which is driving end-use demand, plus our proactive cost actions and new product revenue growth, we foresee EBITDA growth in the second half of this fiscal year. With this, we'll now open it for our Q&A session. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 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 Abhijit Akella from Kotak Securities. Please go ahead. Yeah, good afternoon, gentlemen. Thank you so much for taking my questions. While you've alluded to a subdued outlook for 2Q, it would be helpful if you could please help us understand maybe the rough range within which we might expect revenues to be under pressure for the quarter. Then also just to check on the revised guidance for the full year. If I'm doing my math correctly, it seems to imply that in the second half of the financial year, the ask rate, the implied growth rate would be, you know, probably north of 15% or so. Given that, it will probably require 20% or 25% volume growth to achieve that, given that pricing is probably going to be negative to the tune of at least, you know, 10 percent points or thereabouts. Do you expect, you know, that sort of volume growth to be an achievable target in the second half? Thank you so much. Yeah, very good. Thank you for the question. I'll, I'll take the Q2 question and pass the full year guidance question to Anand. I would expect in Q2 that we'll see somewhat of a similar price decline that we saw in, in Q1, which is in that high single-digit range. That is likely to persist in, in Q2 for us. I think volumes won't be nearly as impacted as they were in, in, in Q1. That would kind of give you a shape that, you know, the overall expectation, even though Q2 will be subdued, it won't be to the same magnitude as we saw in, in Q1. Yeah. Abhijit, coming to the guidance, you're right, we are looking at a volume growth of anywhere between 15%-20% for this full year. You should also keep in mind that last year, that's financial year 2022, 2023, the Q4, we had a sharp dip in the prices. We do expect some pricing correction also as compared to those prices as of Q4. Overall, we do believe that based on what we are seeing and our assessment of Q2 as well as of H2, we feel comfortable with the guidance of revenue growth of 3%-7%. You're absolutely right, it will be largely driven by volume and very marginally by price. Got it. No, that's helpful. Thank you. Maybe just one other point on which I was hoping to seek Mike's insights. On the matter of competition from China. We understand that they've increased their capacity substantially in some of your key products. Do you see them reducing their competitive intensity in coming quarters, or would you see the overcapacity there as a bit of a structural problem? Yeah. Thank you, Abhijit. Look, I think once capacity comes online, it's more of a, a permanent fixture. You know, right now, what we're seeing is very low demand coming into the market in China, so exports are low. This, this change in, in buying habits by distribution is impacting, I would say, across the industry, whether they be, you know, Chinese producers or across the, the rest of the multinational companies, as, as we're seeing other companies report their results from this past quarter. Look, on a go-forward basis, I, I think the competition will be intense. Eventually, I think the, some of the A-AIs that are have too much capacity, that will get rationalized over time, but that will take, I think, several quarters into the future. I don't think that's gonna happen here in the near term. That being said, we do know that some of the projects that were set up for further capacity expansion, what we're seeing in China now is that those projects are being stopped. I would expect that there'll be very few projects in the future which are adding capacity, but we do have some AIs where capacity is very high at this point. Thank you. That's very helpful. Just one last quick thing for me, for Anand. Any guidance on the debt reduction and the factoring levels for the full year, Anand? Thanks a lot. Well, factoring, I think we'll try to keep it between $1.4 billion-$1.6 billion. Debt reduction, you've seen Q1, while I know we, we didn't give any guidance, but we did reduce our debt by about $160 million in Q1. We will continue our effort to reduce debt as we move forward in this quarter over this financial year. Thank you very much, and wish you all the best. Thank you. Thank you. We have our next question from the line of Madhav Marda from Fidelity International. Please go ahead. Yeah, hi, good evening. Thank you so much for your time. I have 2 questions. First one was, given that, you know, there, there has been some destocking which has been happening in the channel, across most of the key markets, do you think channel inventory is running lower than usual levels? Like, if, if it was like X at a, on a usual time, are we running lower than those levels right now? Yeah. Look, the reality is, it's really a country-by-country, market-by-market situation. I was in the U.S. just 2 weeks ago, visiting with key distributors across the U.S., and I would say largely, the inventory levels are at what I would call, you know, normal levels for most companies. There was a few distributors I talked to that still had higher than desired inventories. Now, if you go to Brazil right now, of course, they're in the process of gearing up for the upcoming soybean season. You know, I think it depends whether you're looking at Northern or Southern Hemisphere. Inventories at the distribution level, I would say, haven't completely normalized. I would expect that to take place over this upcoming quarter, for the most part. We're approaching those levels. Again, if you if you rewind the clock over the past couple years, the situation with COVID and then, also the, the, the Russia war situation, it did put pressure on supply chain reliability. Through that period, distributors were generally trying to, you know, bring into inventory products that they could get a hold of. Overall, that's why inventories were built up really on a global basis. Now we're seeing the other side of that situation, where there's no longer concern about supply chain reliability, and therefore, naturally, distributors are trying to get back to a more normalized level. It's getting close. I think we have another quarter or so of normalizing this, and then, and then from that point, we'll be restocking as per normal. Got it. My second question was, you know, a lot of the AIs, like you said, and we've seen data on pricing having come down meaningfully in the last 6 or 8 months. Are these prices... would you call them sustainable levels, or do you think these are prices where it's where profitability comes under question? Because there's been a lot of volatility in prices of a lot of products over the last, say, since COVID to now. Do you think current prices are more sustainable or are they, like, below sustainable levels? How would you read that? Yeah. I, you know, I would say based on current feedstock costs, that, you know, generally, the prices that we're seeing, are, are barely covering feedstocks and probably not covering fully loaded, overheads. So, you know, at that level, that can't persist into the, the mid to the long term. I do expect that there's gonna be, you know, a combination of rationalization and ultimately, some uplift in, in prices. Again, it's hard to predict, you know, when exactly that's gonna evolve. You know, right now, because of the, the low demand, we're seeing the, the low prices persist. Understood. Understood. Thank you. Thank you. We have our next question from the line of Sonali Salgaonkar from Jefferies. Please go ahead. Thank you for the opportunity. My first question is with respect to the debt. Could you give us the in INR terms, the gross debt and net debt figures for Q1 this year versus last year? Sure. Just give me a second and I'll just go. Anand, I have that. If you want, I can say that. Yeah, just, go ahead with. Yeah. INR numbers, please. Yeah. Sonali, it's, it's essentially on the slide 11, if you look at the quarter one presentation that's there on the website. The numbers are INR 30,083 crore in June 2023, and similar number June 2022 was INR 30,123 crore. However, if you in, you know, dollars, it was $3.66 billion versus $3.8 billion, so down by about $147 million. Got it. essentially, on a QoQ basis, we have slightly increased the debt. Is that right? That's correct, Sonali. And this is- Typically, as you know, the working capital goes up. Yeah, it's the seasonality, but, therefore, we always compare a debt position vis-a-vis the same quarter last, in the previous year. Understand. Sir, I understand you are not giving a guidance for deleveraging per se, but any guidance for net debt to EBITDA for the year? Net debt to EBITDA, last year we closed at about 1.5x net debt to EBITDA. I think this year, considering a very marginal growth in EBITDA, we definitely will be below 2, but anywhere hovering between 1.5-2. Got it, sir. Sir, lastly, on the product ban in Europe, anything you'd like to quantify in terms of what is the impact that you are gauging? If at all, it is going to have a impact on the full year numbers as well. Yeah, I'll, I'll take it. It's Mike here. The one product that we was banned last year, that we're not able to sell any longer this year is an Active Ingredient called bifenthrin. It's a very nice product for us, high margins. Last year's revenue was about $24 million. Obviously, we knew that coming into this year, so that was part of our, our planning assumption, but that gives you a magnitude of the product bans on a year-over-year comparative basis. Got it. Sir, and last question, sorry, if I may slip one. The North American sales have declined quite sharply for UPL Corp as compared to the other regions. We understand it's related to channel inventory issues, but any further clarity you'd like to give on this? Yeah, as I said, I was in the U.S. just a couple weeks ago. I think our portfolio is performing very strong. Our relationships with our channel partners there is also very strong. This really is a, a, a correction in inventory levels. As they, you know, get... As you may know, in North America, it's really just one season, and so they typically load up in, in our third and fourth quarter, and then they delete their inventories, you know, in, in Q1, Q2, Q3. So their sales to growers is strong. Our products are performing very well in the U.S. Again, I think once we get to Q3 and Q4 stocking in the U.S., we'll see our, our business pick, pick back up. Got it. That's very helpful. Thank you. All the best, sir. Thank you. Thank you. Thank you. We have our next question from the line of Prashant Biyani from Elara Securities. Please go ahead. Yeah, thanks for the opportunity. Mike, in your recent visit to U.S., how or what feedback have you got about the Midwest region? We are hearing about drought-related conditions persisting there. In that backdrop, how do you see the North American sales for the year? I understand that you have told that sales could revive, H2 onwards, but won't that be too early for the industry to revive, given that, you know, then, I mean, that market is sitting on a very large inventory, some people are saying. Yeah. Thanks, Prashant. Yeah, firstly, with regard to, you know, the drought, there obviously is some weather impact in certain areas of the market. I was in Chicago, I was in Minneapolis, there, there are some of those regions that have had a lack of rainfall this year. Yet, in other areas of the Corn Belt, rains have come very timely. Again, it's very much a, a kind of a county-by-county situation there. Generally speaking, though, I think that North American yields for corn and soybeans are gonna be probably near trend line, maybe off trend line a little bit, but there's gonna be generally, strong yields. Which again, you know, if you multiply that against commodity price that growers are getting for corn and soybeans, grower economics are gonna come out this year quite strong. Just to be really clear, then, on the restocking, Q2 is not a restocking quarter for us in the U.S. We continue to, you know, sell into the channel, I would say on an as-needed basis, where certain products are getting pulled. Right now, mostly insecticides and fungicides, more so than herbicides, where we're replenishing, you know, certain distributors. Really, the restocking for next season happens in our Q3 and in our Q4. Again, we, we would expect to see a strong, strong business in North America come Q3, Q4. Right. Second question on the India business. How are we anticipating the on-ground consumption after this recent bout of pickup in rainfall for the current kharif season? Yeah, Ashish. Yeah, go ahead. Yes, yes. Thanks for the question. I think, after the June, you know, lack of rainfall we had, I think it's good that things have moved in India, and we are seeing good rains now. The only thing is that it's too much rains now in a lot of areas like Punjab, Haryana, and Gujarat, where there's a, there's a lot of flooding. Eastern side, we still are deficient. Some districts of soybean are still deficient, and Northern Karnataka is still deficient. However, you know, having said that, the liquidation from here should, should definitely increase. I think this is much, you know, much better to what we initially thought in terms of how the weather will pan out. These, these rains should definitely help us in the Q2 liquidations. Lastly, just a short one. Ashish, sir, how much delay is the India business going? I mean, the season has got delayed by how much in India right now? I think it's a delay. It's very, very, very different for various geographies. If you would see, you know, the Gujarat business that started, now it's got delayed because of the floods. Cotton is absolutely okay in time for north. The paddy in north is again delayed because of the heavy floods which came in the GT belt. Soybean is on track. Maharashtra is more or less on track. The Karnataka season will be delayed a little bit, and so will be Hyderabad season, where still, you know, we are experiencing some heavy rains. East is still delayed by about 15 days. Thank you. That's it from my side. Thank you. We have our next question from the line of Josefina Rodriguez from Waha Capital. Please go ahead. Hi, thanks for the call. Two questions from my side. I see gross debt, you're reporting now $3.667 million. In the last quarter, if I look at FY 2023, it was $2.7. I wonder if you're, like, now counting some maybe factoring or what was the driver of that increase in debt? Second question is, CapEx, if you give guidance for this year and if you're thinking of maybe reducing it to preserve cash flow. Thanks. Yeah. Thanks. Thanks, Josefina. As you know, with due to the seasonality of our business, we do see an increase in working capital as we move into the financial year. Typically, you would see that Q1, you will see an increase in working capital, and it peaks in Q3. December, quarter in December, you, the working capital is at its highest level, and then we see a drop in working capital in Q4. In continuation of the increase in working capital, you will see that the borrowings also keep going up, and therefore, we always compare, at the end of the quarter with that of the quarter of the previous year rather than quarter-on-quarter comparison. As a result, we, when you see, if you see our presentation slides, you will see that we compare the borrowings and the working capital vis-a-vis the same quarter of the previous financial year. Therefore, this increase, there is almost INR 700-800 crore of increase in working capital as we move into the season, and correspondingly, the debt has gone up. That's the reason. It's nothing to do with our non-recourse factoring, which, you know, doesn't impact our borrowing. Moving to the second question on the CapEx. Certainly, I mean, we had guided for about $325 million-$350 million. We, we, we now feel that we should be in the range of around $300 million. 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For example: 1. **What is the purpose of the email?** (e.g., introducing your company, following up on a meeting, proposing a project, etc.) 2. **Who is the recipient?** (e.g., their name, title, company) 3. **What is your company/service/product?** (A brief description will help me tailor the language.) 4. **What key information or call to action do you want to include?** (e.g., "We offer X solution," "I'd like to schedule a demo," "Please review the attached proposal.") 5. **What is your desired tone?** (e.g., professional, friendly, assertive, collaborative) 6. **Is there any specific subject line you have in mind, or would you like me to suggest one?** Once I have this information, I can draft a professional and effective email for you Okay, thanks. Thank you. We have our next question from the line of Abhiram Iyer from Deutsche Bank. Please go ahead. Hi, thank you for taking my question. I understand you're comparing the gross debt on a year-on-year basis, which is fine, but previous year also had the impact of a reduction in debt due to the equity infusion by the minority shareholders in, during the restructuring of the company. That impact seems to have sort of gone. Is the entire increase to, from $2.8 billion-$3.6 billion, driven by working capital? The other question is, cash as well has sort of come down from March to now. Again, could you just quantify a bit, help us a bit on, on the walk in net debt, basically, on a quarter-on-quarter basis? Is the entire thing working capital, and is it expected to reverse in Q4? All right. Certainly, we will get reversed in Q4. As I said, it's Q4 is when we get our most of our cash collection happens during Q4. Well, as I mentioned earlier, about INR 700 crore is spent on working capital. There has been certain CapEx spend and other working capital related, I mean, loans and I would say rather the tax and other payments, which have been there. As you would have seen, the Q1 has also not been very, very profitable in terms of profit generation was lower by 32% EBITDA. The interest and finance costs has resulted in a dip in the PBT. Overall, the working capital has gone up during this quarter. As I mentioned earlier, we, we do see, in fact, in the next 2 quarters also, you will see a slight improvement, increase in working capital, and in Q4, you will see the working capital coming down. That's, that's been the trend over the last-- if you look at last 5 years, that's been the trend. We do expect, working capital, I mean, the debt levels to be, we, as I said, in Q1, we have reduced by about $160 million in US dollar terms, as well as we have reduced the factoring by about $250 million. We do expect to continue with this trend as we move into the next 2, 3 quarters. Clearly, looking at the state of business and the market, largely, it's as, as, as Mike alluded, looking at the conditions of market, we will take all measures to improve our cash and maintain our cash flows well, and see how we can bring down the debt further. Got it. Got it. In a sort of similar vein, the company's bonds are still sort of on negative outlook by Fitch, one of the two agencies which rated investment grade. Maybe just give a big glimpse on what the conversations have been and how do you see sort of, you know, Evolution and basically time given by the rating agency to sort of get back to, you know, a full sustainable sort of business. I mean, current, obviously, the current, there is an impact from market effects. Yeah, we are engaged with the rating agencies, and we have very good discussions with the rating agencies. I think the good part is they have been rating several, various other crop protection chemical companies, and though they do know the market conditions. I think in Q4, we, they maintained the rating. I mean, they were, they were a bit surprised with the performance, but, as they later, as you know, more and more information started making available and on China, as well as some of the other companies came out with their results, we do believe that they do understand the market conditions. Considering that, all, if you look at the peer group, we, we, we have, while we have all lost on revenues as well as on EBITDA, there has been lower revenue in EBITDA, but the drop in our case has been much lower. This quarter, the reduction in debt, I think, I'm, I'm sure, I mean, we haven't spoken to them as we have just announced the results, but that should be a positive. Also, you know, most rating agencies take into consideration the non-recourse factoring and the reduction in non-recourse factoring also by $250 million, is something which I'm sure they will look at it more positively. We haven't engaged after the results, as of now. We've, as you know, we just announced the results, those calls are scheduled over the next couple of weeks. Perfect. Just one last question. There is a cost reduction initiative that's been mentioned of $100 million over the next two years, and about 50% of them would be in the next fiscal year. May I just understand that your revised EBITDA forecasts include this cost reduction, or is this an upside that potentially might come about if, if, if these are on track? We have penned in this cost reduction in our 3%-7% EBITDA increase over that of the previous year. Got it. Perfect. Thanks, thanks a lot for answering. Thank you. We have our next question from the line of Darshit Shah from Nirvana Capital. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, if you look at the question on the India business. The India business has been fairly okay as far as Q1 was concerned, while the rest of the regions, as you mentioned, are seeing a sort of channel restocking and prices fall. Can you highlight what the situation in India in terms of our product portfolio is concerned and overall general industry perspective on the Indian market? Is India also witnessing the same kind of channel restocking and price realization fall? I think, hi, Ashish here. Thanks for the question. I think, so I think India is a, you know, a little bit slightly different in a slightly different position as compared to the global businesses, where we had a very good fourth quarter. We are facing some of the headwinds that are there in the global business also, that's primarily on the molecules, which are more post-credit molecule. I think we have a very high share of proprietary products in India. We have some good brands, some new, some good new launches coming up. We have our number 1 product, flonicamid, I think we have a mixture of that, which is there in the market. We also have some soybean herbicides, which we recently have launched. We have a good outlook in terms of some of the other wheat products and some of the other rabi products which are there in the market. I think having a higher, relatively higher share of proprietary products in the India business, sort of insulates us from some of these things. Having said that, we have faced a very, very tough situations with some of the products which are very, you know, where, where a lot of triggers are pulled from China, for example, glufosinate and acephate and mancozeb. Overall, because of the proprietary products and some of the new launches that we've had in India, we. Have a relative position. You know, once again, that's, that's relative because we do have to offset some of the negatives that are coming in the in the post-patent space. It is very similar with some of the other companies in India. I think the companies having proprietary products have fared slightly better, and the companies who are purely into post-patent chemistries have really struggled because this is one of the very few years where the prices from, from, let's say, February, March to June, have actually come down rather than increase for, for post-patent products. I think, which also has led to a lot of, you know, online companies, which, which also have created a lot of issues in the market for, for the proprietary, sorry, for the post-patent products. I think that, that's one thing. Of course, India is one of the geography in the UPL ecosystem, which is very, very close to the farmer. You know, it's a pure B2C play that we have in India. That also sort of gives us some insulation in terms of, you know, how we are facing the challenge in the market. Roughly Q2 for us should improve to some extent, and then I think it should get in better from there on. I hope I have answered it. Yeah, you have answered it, really nicely. Thank you so much. Thank you. We have our next question from the line of Rohan Gupta from Nuvama. Please go ahead. Yeah. Hi, sir, good evening, and thanks for the opportunity. My first question is on our the presentation you have cited, that the farmer level consumption probably has yet not been impacted, and it's all about the inventory destocking, which is impacting the growth. Just for me to understand that. I'm sorry, sir, your voice is breaking. Anyway, we understood the question. You're, you're talking about farmer-level consumption and the destocking, right, Rohan? I think we have lost him. I think his network connection is poor, sir. Mr. Gupta? Yeah, I'm better right here. Yeah. Can you repeat your question because- I'm sorry, we lost his connection now. We'll move to the next question from the line of Matias Romali from BlueBay Asset Management. Please go ahead. Hi. Thank you. I think I'm taking us maybe back to the beginning of the call, but I'm, I'm really sorry. If you can repeat a little bit and explain and help us understand the, the weakness in Brazil, and then obviously a little bit of how you're seeing that going forward, given that it's obviously the biggest market in LATAM, and it has a, a meaningful impact. Thank you. Yeah, thanks for the question. So, yeah, the Brazil impact on this quarter is really related to the herbicide segment, most specifically. And even within herbicides, it's really the non-selective herbicides. With the prices coming down significantly for both glyphosate and glufosinate, products that we sell into the channel in Brazil. You know, through the first quarter, we were in negotiations with a lot of our distributors. There were some product returns that we had to consider and some renegotiations that we also needed to consider in terms of working closely with our distributors to set them up for success going forward. That work really took place in the first quarter. I would say a lot of it's behind us. There's probably still a little bit to do in the second quarter, but that was really at the crux of why the situation in Brazil was so significant. Again, if you look at across the industry, this really was a factor that impacted the entire global crop protection industry. I think softness in Brazil is a feature for every company that participates in that market. Mr. Matias? Thank you. Thank you. Yes, thank you very much. We have our next question from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking the question. Two things. One is, A, first on, you know, this Chinese aggression, which has come through on some of these non-selective herbicides. I mean, how does it really, does it really make you, sort of relook at your strategy for the next three, five years? Yeah, Nitin. You know, part of that is, it goes back to how we're looking at overall our, our cost of doing business. You know, we really do think that on some of these AIs, specifically in the post-patent herbicide market, that these costs have reset, and therefore, we're also resetting our costs, both from a manufacturing standpoint, but also our, our cost to serve our SG&A in those segments. When we talk about taking cost out of the business in the range of $100 million over the next two years, it's really setting up our, our post-patent business to be leaner, so that we can compete more aggressively. I would say that's, that's primarily how we're adjusting for this new reality. Secondly, on secondly, on the guidance, you know, do we, from a term debt, net debt perspective, you know, do we have any color on we're looking at reduction of debt versus the last year level, so on a, on a net debt level? Already we see the dollar debt, ending up. Nitin, as you see, Q1, we have managed to bring it down by about $160 million. I think, as I mentioned earlier, our efforts will be to bring down our debt further. As you know, we see the- As I mentioned in my, when opening remarks, considering the industry where it is today, I think it's best to focus on profitability and conserve cash. We will look at reducing the debt. In INR terms, it will be a bit difficult to give exact guidance, but upwards are on. I also mentioned that on the CapExes also, we are closely monitoring the CapExes spend. Everything within our, if I have to say, what we control, we, we'll try to see how we conserve cash. Needless to mention, we'll keep reducing, bringing down the debt as we move forward during this financial year. Second, I, on the guidance for the year that you've given out, I mean, given where Q1 ended up, I think it's a pretty reasonably, I think, very positive guidance for, for the full year, in, in my view. I mean, what are the risks that you see that change the guidance number of, you know, 3%-7% that you put out on the EBITDA? Well, I think, the good part is we have been engaging with our teams across the world, with various regions, and we are, we are getting their feedback. We, we mentioned earlier that we will be focusing on the volumes just to ensure that we don't lose the market share. In fact, even in Q1, despite the drop in sales, we, we did, maintain our market share. We, we remain fairly confident of delivering this guidance. I mean, it's been after a lot of, internal discussions and feedbacks from our regions that we have come up with this guidance. If you see the range also, we have given a broad range just to ensure that we remain within the guidance. If not... I mean, exceeding is great, but, make sure that we don't fall below the guidance. Also the cost saving initiatives, the SG&A, which Mike explained, you know, we, we have, we have taken an aggressive cost reduction drive, and already we have started work on it. We do believe that that should also give us some cushion to ensure that we deliver on our guidance on the EBITDA. Clearly, it's, it's, it's something, especially when you look at Q1 numbers, it looks like a bit of a tall order, but we do believe that we should be in a position to deliver based on the revised guidance. Thanks, Hemanth. That's very comforting. If I could squeeze in a last one. This is the first, I think, after two very, very high growth years, you'd have one sort of quote, quote, unquote, "normalizing year" for the business from a top-line perspective. I mean, does it structurally ease out, working capital pressures for you? I mean, how do you look at that from that perspective? Yes and no. I mean, yes, because, you know, the price, the, the benefit which you got over the last two years in the price increase obviously did have an impact on the working capital. As, as you saw, the sales growing at much faster pace than what we had forecasted or what we had guided for. With the prices now normalizing, we should see some reduction in working capital. You know, the good part is we are seeing the destocking, and once the distributor starts destock, are seeing the destocking happening at their level, you know, which means they would have cash flows in and fresh orders also would be placed. We do expect, you know, some reduction in working capital despite the growth in revenue, what we have projected for between 1% to 5%. We do see overall reduction in working capital as we move forward during, for this financial year. Okay. Thank you, Anand. In, in number of days, it may still remain where it is, but overall, you could, you, you may see some improvements there. Thank you. Thank you. We have our next question from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Good evening, and thank you very much. In the last quarter, you had mentioned that, there was a reduction in your capacity utilization in your manufacturing plant. Has the capacity utilization remained the same? Secondly, can you give us some sense of the loss you have taken on returns and inventory? Viraj, do you want to take the capacity question? If Viraj Tiwari is on the line? Yeah. Yeah, I can, I can hear that. Yeah. I mean, you know, except for, your, herbicide, the capacity utilization in most of the cases, have, have gone up as compared to last year. On herbicides, you know, of course, because of the market pressure, some of the, you know, you know, herbicides are, are facing volume, pressures, and therefore the capacity utilization has been a bit lower as compared to last year. Yeah, on, on the question of returns, I'll maybe just hit that. You know, I would say generally, even though we did take some returns in Brazil, for the most part, the return levels are quite low. Instead of taking returns, we did more renegotiation with channel, you know, I would say that it's not physically bringing back product into our warehouses. We worked with the channel and renegotiated some of the positions, and also then anticipated some future sales with them. That was more of a feature that impacted our financials in Q1. If I may squeeze in one more thought: In terms of the cash flows, you have seen it reduce substantially to about INR 268 crore. Based on your guidance, what is the kind of visibility on cash flows, and how do you see that impacting your rating going forward, say, by the end of the year? As I had mentioned earlier, Ramesh, that the rating agencies are, have a good view on the overall industry, and they are also rating some of our peer group companies. You know, it, it should not come as any surprise to them. I think the Q1 reduction, which we have seen and which we have delivered, both in terms of, so you see, rating agencies also look at the non-recourse securitization program. The reduction in absolute debt by about $160 million, as well as in terms of non-recourse, that's off balance sheet, reduction of $250 million, I think should other very well with them. As I mentioned earlier to one of the questions asked earlier on this call, we have just announced the results. We're not engaged with them. We will do that over the next two weeks. We'll, we'll hear from them. I do believe, based on my earlier conversations, overall reduction in debt as well as in terms of securitization reduction, should other well or should be viewed positively. Can we take it that your cash generation will improve by the end of the year? Well, as I mentioned, that's the output, right? Considering the way the markets are, we will focus on cash and profitability. Thank you very much, and all the best. Thank you, Ramesh. Thank you. We have our next question from the line of Marvin from abrdn. Please go ahead. Hi. Thanks. Thanks for your time. I just wanna dive in a little bit on UPL Corp. Just noticing that, EBITDA has dropped about 65%, margins is also sub 10%. Just want to understand, based on your projected guidance of 3%-7%, how will UPL Corp's EBITDA change over the next few quarters? Yeah. I'll, I'll give some shape and then pass it to Anand as well. Q1 traditionally is our smallest quarter, and we would expect that to be the same this year. Of course, when we have the, you know, our SG&A is relatively smooth through the 4 quarters, but our revenue and margins are, are lowest in Q1. You know, obviously, when we saw the margin compression, and the reduction in sales, then, you know, you get the corresponding significant impact in reduction in EBITDA. As we go through Q2, as I mentioned, we don't expect to see the same level of reduction. Q2 is also, typically a little bit larger of a quarter for us, then the second half of our year is typically 60% or more of our business. You know, we're not, we're not providing specific guidance on UPL Corp. We will be under pressure, I think, over the course of this year to see EBITDA growth. Our SG&A actions are gonna help, and our focus on gaining share and driving volumes through the second half of the year will also help us drive revenue. Anand, I'm not sure if you have any other comments. No, absolutely. I think that pretty much well explains, because always the H2 is heavier. It's a 60/40 H1, H2 ratio- H2, H1 ratio. We should see the improvement. You know, as Mike said, SG&A typically would be more or less stable for the full year. With the initiatives that we have taken to bring down our SG&A by INR 50 million in this financial year and over the next, that's this year, next year, up by INR 100 million, that should also help to improve the EBITDA as we move forward. Okay, thank you. Maybe just a, another follow-up. For the other entities like UPL SAS, Advanta, and the Specialty Chemicals business, those have, I suppose, been a little bit more defensive. Do you think it's gonna remain the, the, the same over the coming quarters as well? Well, you heard from Ashish, our UPL SAS, business head or CEO. Maybe, a few words from our seeds business CEO, Mr. Bhupen Dubey. Maybe I'll hand it over to him. Bhupen, if you can, just give a view on the quarter gone by and the full year performance, please. Thank you, Anand. From Advanta perspective, I think if you look at the number, the quarter one has been quite robust. It was significant growth in top line, EBITDA, bottom line, all the aspects. The good point is that the source of growths are very balanced. The volume, a significant contribution, which is about, let's just say total growth is 26%, and the volume growth is 14%, price is about 9%, and product is about 3%. Very balanced and very robust and very healthy growth, and reflected in, you know, subsequently in contribution profit, in EBITDA also, which has gone up by 52%. Some top couple of comments on the crop wide, the field corn, tropical field corn across the key market like Peru, Ecuador, Thailand and India, they have performed very well. The fifth corn in Indonesia, where we are moving from a B2B to B2C, a good demand is picking up in a new arrangement. Another important segment is the grain program in the USA, which China, you know, paid dedication visit to the USA recently, and they are talking with the U.S. sorghum industry to buy to the tune of 7 million-8 million tons of grain sorghum for the pig industry and alcohol industry. As a result of that, they have a pickup for the grain sorghum also is quite good and reflected in the commodity prices there. These are the key highlights on the Quarter 1. Quarter 2, you know, Quarter 2, also we believe that the, so muted than the Quarter 1, but I think growth should be, you know, you know, definitely double digits, 10%-12%. That is what looks like today. Broadly, when we look at the outlook for entire year, also, I, I do believe that the, you know, the current operating environment for the seed industry is very positive. For Advanta particularly, our product portfolio is very sustainable. A lot of portfolio whereby we can withstand, you know, deficit rainfall in many parts of the world, like sunflower, like sorghum, like canola, et cetera. That is actually the scenario which is evolving is very favorable to us. Therefore, Advanta is poised to have a much better performance than even the seed industry. Broadly, net, net positive for seed industry and Advanta. Thank you, Bhupen. Thank you. We have our next question from the line of Somaiya V. from Spark Capital. Please go ahead. Thanks for the opportunity. Sir, please use your handset. We are unable to hear you. Yeah. Am I audible now? Yeah, yeah. Go ahead, Vishy. This is Somaiya. Quick question on the volume growth outlook that we have. Quite a strong one for the second half. If you can just help us in terms of, you know, regions or specifically LATAM and NA, what are we expecting in second half? You know, what, what should drive us this kind of a volume growth in second half? Yeah. It's Mike here. In our global crop protection business, the volume growth is really gonna come from really changing the timing of when distributors are restocking. Again, over the past couple of years, distributors were restocking throughout the year. I think now that, you know, the view is there's no longer risks on supply chain reliability, distributors want to stock much closer to the season. Of course, on top of that, you've got higher interest rates, and so they're trying to manage their working capital as well. That-that's why we expect to see, especially in the Northern Hemisphere, really good restocking in our Q3, Q4 business. Asia, Africa, again, those businesses take place throughout the year. There's several markets that we serve in that region. Then, you know, coming into the second half of the year, we'll be restocking for Safrinha corn in Brazil, along with, the various, markets in Central America and Mexico that we, that we serve. So, you know, we have pretty good line of sight, again, based on some of this being a shift in timing, where we can anticipate a, a strong volume, half in the second half of our year. Got it, sir. This is helpful. Second thing, in terms of pricing. In terms of pricing curve, where do we think we are? I mean, because we've had some five, six quarters of continuous double-digit pricing growth. The pricing impact, are we close to the bottom or is it still more left in second half also? Compared to pre-COVID levels, where we are today, and how do you see things going forward? Yeah. The quarter-on-quarter pricing impact is gonna continue to play out throughout this year. As we reported in Q1, our price was down about 10% in our Global Crop Protection Business. I would anticipate that it'll be somewhat similar in, in Q2 and Q3. In Q4, it, it may not be that significant because we did take some pricing actions starting in Q4 of the, of last year. Again, I think we've got 2 more quarters where that range of high single or low double-digit price decline is, is gonna be seen and felt. Then we'll work out of it coming into our fourth quarter. Then again, you know, next year, as, as you know, we'll, we'll see how the China price evolves. obviously, our, our growth of our differentiated and sustainable business will also have the opportunity for us to continue to drive pricing opportunities as well. Got it. One small clarification in terms of working capital. When we say we are expecting a reduction for the year, so this also includes the effect of lower factoring for the year? No, factoring, I mean, Yeah, we, we said we'll be in the 1.4-1.6 range, which is very, I would say, flat as what we delivered as of March 31, 2022. You know, so we'll be in that range. Understood, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Anand Vora for closing comments. Over to you, sir. Thank you. Thank you everyone for joining us on this call. If you have any follow-up questions, kindly reach out to Radhika, or you can reach out to myself, and we'll be happy to answer. Thank you once again for joining us on this call. Thank you. On behalf of UPL Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.