Please note that this conference is being recorded. I now hand the conference over to Ms. Radhika Arora. Thank you, and over to you, ma'am. Thank you, Darwin. Good day, everyone. Thanks for joining us today for the results for the quarter and nine months ended 31 December 2023. The presentation, press release, and the financial statements have been made available on the website, and 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 Bhupendra Dubey and Ashish Dobhal, the CEOs of the Advanta Business and UPL-SAS. We will start with Mike and Anand presenting the performance of the quarter, followed by the Q&A. With that, let me now hand it over to Anand. Over to you, Anand. Thank you, Radhika. A very warm welcome to all of you. I will begin by discussing the key financial highlights for the third quarter and nine months ended 31st December, followed by an update on working capital and debt. The global crop protection industry continues to navigate through a challenging phase as headwinds in the form of prolonged destocking and elevated pricing pressure continue to persist. We had initially anticipated a recovery in H2, but that anticipation was a bit premature as the market headwinds continued to impact the industry. Our Quarter Three performance was also significantly affected by these challenges in line with the rest of the industry, which is currently going through its worst downturn in decades. We continued our support to the channel partners by extending higher rebates and accepting sales returns, which impacted the revenues for the quarter. As a consequence of these factors, our reported revenue was down 28% for the third quarter and 22% for the first 9 months. Adjusting for one-time transitory impact of higher rebates and returns, the pro forma revenue for Q3 would be INR 10,695 crores, down by 22% versus last year, and INR 30,424 crores for 9 months, down by 18%. In particular, the ongoing destocking exercise had a significant impact in our larger markets of North America, Brazil, and Europe. However, our rest of the world region bucked the trend and performed quite well, reporting a double-digit growth in revenues in Q3. The differentiated and sustainable portfolio also continued to outperform, as the share of revenue of this portfolio increased to 32% of the crop protection revenues in Quarter Three versus 29% last year, and 36% in the first nine months versus 29% last year. Mike will cover details in this portfolio in his remarks later. The impact of rebates, returns, and high-cost inventory liquidation on contribution profits was more pronounced, as contribution margins contracted by 15% in Q3 versus that of the last year, Quarter Three. If one were to treat these transitory factors as a one-time change, the pro forma contribution would have been higher by INR 1,532 crores, and the contribution margin would have been lower by only 3% versus last year, instead of the reported decline of 15% versus the same period, the same quarter in the last year. Similarly, for the first 9 months, the pro forma contribution would be higher by INR 2,079 crores, and the contribution margin would be largely at par with the last year instead of the reported decline of 5.5%. Further, our organization-wide cost reduction initiatives are yielding results as we reduce our SG&A expense by 19% year-on-year in Quarter Three. We are on track to reduce our SG&A by $100 million in financial year 2025 versus the FY 2023 base. EBITDA for the quarter stood at INR 416 crores, down 86% versus that of the prior year. For the first nine months, EBITDA was INR 3,583 crores, down by 56%. The decline in EBITDA was driven by the significant drop in contribution profits. Adjusting for the transitory factors impacting the contribution margin, however, the drop in EBITDA for Q3 and nine months would be significantly lower. I would like you to briefly touch upon performance of two of our platforms, UPL Sustainable Agri Solutions, the India distribution business, and Advanta Enterprises, our seeds business, before moving on to the items below the EBITDA. Performance of UPL-SAS, the India crop protection platform in Q3, was also impacted as revenues contracted by 34%, while EBITDA declined by 47%. Key factors attributing to the revenue decline were poor Rabi season in Telangana and Karnataka, and low cotton acreage in North India, which led to high sales return. Secondly, the low glufosinate demand due to elevated channel stock and increased competition also impacted the results. And finally, our conscious decision to sell closer to the season to optimize working capital, resulting in realignment of some of our sales. Having said that, on a positive note, we did see very good traction in our newly launched Pyrazosulfuron solution. We are also expecting glufosinate demand to recover in the coming Kharif season. Furthermore, we are also introducing new products to diversify our crop mix. To give some update on our digital platform, it continues to see good traction on the back of launching exclusive online brands for retailers and in the farm services for farmers. We have also brought in significant operating efficiency to FaaS Business. Moving to Advanta, our global seed platform, it delivered healthy growth for the first nine months as revenues grew by 11%, driven by higher prices and volumes in sunflower, corn, canola, sorghum, and vegetable portfolios. EBITDA grew faster at 16%, driven by improved contribution and controlled overheads. Coming back to the overall financial results on the finance cost, there was a marginal decline in the net finance cost from INR 732 crores to INR 716 crores in Q3, due to lower factoring of non- or lower factoring or what we call the securitization on non-recourse basis. While for the first nine months, the net finance cost increased by 16% from INR 1,980 crores to INR 2,288 crores. The increase in finance costs over the nine months was mainly driven by the 300 basis point increase in benchmark interest rates. The average cost of borrowing for the quarter stood at approximately 7% per annum. FX loss for the quarter was significantly higher at INR 613 crores. The increase in FX loss is mainly attributable to the devaluation of the Argentine peso from 366 pesos to a dollar to 800 pesos to a dollar on the 13th of December, after the new government came to power in Argentina. The impact of peso devaluation was INR 297 crores in Q3. It's important to note that this impact of FX out of the INR 297 crores, INR 256 crores came on the day of devaluation that took place in Argentina. Further, we also saw currency devaluation in Turkey and in some of the other countries. Besides, the hedging there was not possible due to prohibitively expensive costs of hedging. Overall, we reported a net loss of INR 1,217 crores for the quarter due to transitory one-time impact of INR 1,532 crores on contribution and a one-time FX loss of INR 256 crores that that took place due to devaluation in Argentina. On the working capital front, the working capital days increased by 34 days year-over-year as compared to year-over-year to 155 days. Sorry, I repeat. On working capital front, the working capital days increased by 34 days year-on-year to 155 days. The increase is primarily on account of sharp drop in payables by 66 days and reduced factoring, which led to receivable days being higher by 23 days. Adjusted for lower factoring, receivable days actually improved by 7 days versus prior year. Overall, we expect to end the year with higher working capital days as compared to last year, due to lower payables and reduced factoring. To give you an update on the debt, our net debt stood at $3.77 billion at the end of quarter three, reflecting an increase of $439 million versus last year. However- Excuse me, sir. This is the operator. You are not audible at the moment. Hello? Ladies and gentlemen, we seem to have lost the line for the management. Please stay with us. It's Mike here. I can pick up. Go ahead, sir. Please go ahead. Okay. Yeah, I'll just pick up where Anand left off. However, when adjusted for reduced factoring, our net debt stood largely in line with last year. This is despite the sharp decline in payables, which were down $568 million year-over-year. To augment the cash flows, the company has taken the following initiatives: We have recently announced a rights issue of up to $500 million. Further, we're also exploring capital raise in our platforms.... The proceeds received from the above initiatives will be used to repay debt. And so now we'll, we'll move, and I'll provide an overview of the global, international crop protection business. So overall, the fundamentals for the global crop protection market remain strong, with farm gate demand at or above last year levels in most markets. And prices for commodity grains also remain strong. While coming off their highs of a year ago, lower margins remain positive, incentivizing them to drive yield and efficiency. This backdrop, however, is different from the short-term realities of the global crop protection market. This past quarter, distributors continued to destock or delay purchases, specifically in Brazil, North America, and Europe. Additionally, there was a margin compression due to sales of higher-cost inventory and from higher rebates and customer marketing programs, which were needed to support our channel partners in these markets. However, you should note that we continue to gain share in most key markets, and the level of destocking is expected to decrease going further, going forward. We anticipate the market getting more balanced as distributors start to restock by mid-calendar year, calendar year 2024. Moving to our results, where third quarter revenue and margins were impacted by price pressure, prolonged channel destocking, higher-cost inventory liquidation, and higher-than-usual rebates that were needed to support channel partners, as mentioned earlier. Our Q3 revenue dropped by 34% versus last year, and contribution shrunk by 69%, resulting in margin compression of around 1,900 basis points. More specifically, the business faced headwinds due to channel destocking in North America, Brazil, and Europe, impacting volumes. Brazil and North America also faced margin pressure from rebates. Outside of Brazil, the rest of Latin America grew 7%, driven by insecticide and fungicide volumes. Even though the average price for key active ingredients have stabilized since Q2, the decline this quarter has been sharp versus last, last year, aggravated by rebates, and this has impacted our top line by 6% in Q3 and 4% year-to-date. The contribution margin this quarter, when adjusting for one-time impact, as stated earlier, is significantly improved and only around 200 basis points lower versus last year. Similarly, with the same adjustments, our 9-month margin is at par versus last year, implying resilience in our business and a strong underlying trend. I am pleased to share that we have increased differentiated and sustainable volumes in Q3, led by fungicides, and this has supported improvement in differentiated and sustainable solutions mix to 37% versus 28% last year. Further, our NPP solutions in the first 9 months have maintained revenue versus last year, despite market challenges. Through focused efforts and optimization, we have lowered our quarterly overheads by 15%. We continue to drive improvements in our cost base as we move into the next fiscal year. Let us now go through the regional performance in Q3. In Latin America, our revenue was down by 30% due to price decline. Brazil was the main driver of this decline in the region, impacted by both herbicides and insecticides. However, it had robust growth in fungicides led by Mancozeb products, especially Evolution, Unizeb Gold, and Tridium. I would also like to highlight that our market share in Brazil has increased in 2023 from 8.5% to 9.1%. As mentioned earlier, outside of Brazil, we saw good volume growth in insecticides and fungicides, offset by herbicide pricing challenges, with the rest of LatAm posting strong growth. In North America, post-patent herbicides continue to face channel destocking, while issues related to tactical purchases persisted. In Europe, our revenue declined by 46% primarily due to destocking challenges and product bans impacting volumes. As in other regions, destocking pressure in the post-patent segment was pronounced in Europe. The rest of the world region performed well. Key growth markets were China, driven by insecticide volumes, and Turkey, led by herbicides. Also, our Natural Plant Protection volumes were very strong in this region, growing by about 20%. Moving into Q4, we anticipate channel inventory to normalize in Latin America, excluding Brazil. Elevated inventory levels in North America, Europe, and Brazil are expected to subside in the next few quarters. We expect Q4 to be weaker versus last year. However, the good news is that pricing of key post-patent active ingredients have now bottomed out since Q2. With unusual impact through Q3 mostly behind us, we expect sequential margin improvement in the fourth quarter... We remain focused, making improvements in our operating model and business quality. Our focus remains in improving the mix of differentiated and sustainable products, operational efficiencies to drive cost reduction, and working capital management. Additionally, we are building the organization for the future, creating robust pipeline of new products and leveraging our position in key emerging markets. Our manufacturing teams have made great progress in their drive to improve our manufacturing cost. Overall, while the current scenario is challenging, we have invested significantly in customer relationships and building a more capable and efficient organization, all expected to benefit us in the medium to long term. With that, we'll now open it up to question and answers. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saurabh Jain from HSBC. Please go ahead. Yeah, thank you so much for the opportunity. It has been pretty much, you know, forgettable quarter for us. I wanted to get a sense that things would started to look good for, seeing- Sorry, Saurabh, but the line for you in between seems to be breaking up. What I'm asking is... Sir, the line is still bad at the moment. What I'm asking is that how do you expect fourth quarter to be? Because it's more of a U.S. and Europe heavy quarter, and we are facing issues on the key product glufosinate. Is it fair to assume that the quarter that has gone by is the worst quarter for UPL, and things should start to improve from here on? And whether there would be any profitability to expect on net profits in the fourth quarter? That is my first question. Hello, Saurabh, it's Mike here. Maybe I'll take the question first. I'm not sure if Anand and the team have been able to rejoin. So firstly, Saurabh, yes, I, we do believe that Q3 will be the most challenging quarter, which is just behind us now. In Q4, we're still gonna be challenged by pricing, as we have in previous quarters, as we discussed in the prepared remarks. Much of the rebate issues are behind us, especially in North America. There still may be some issues that we're working through in Brazil, and overall, we would expect to have a net positive EBITDA and greater margins going into Q4. Okay, so, you know, that paints a very, you know, concerning picture. And, at the same time, you know, we're kind of understanding that the overall EBITDA that we have done is something about INR 3,600 crores, right? So expecting some, you know, additional EBITDA, even on December, would kind of make the effect on the EBITDA very small. So trying to understand, what are your, guidance end of FY 4, and, you know, all some person do this early, kind of reflect the picture wherein we can see clear from the rating agencies. Anand, are you back on the line? We're still waiting for Anand sir to connect. Okay. Look, since this is a question on the overall balance sheet and at the UPL Limited level, I think we should just park this until we get Anand back on the line. Maybe, operator, if you could dial the number in his office, so that he can get back on the line. Certainly, certainly, sir. Okay, in that case, if I may ask, while it might be early to kind of seek for any guidance on how FY 25 would look, but, broadly speaking, do you expect a material improvement in terms of your overall profitability for next year? Because even if you recover, if you do some sort of recovery in terms of overall revenue growth, does it look a materially better FY 25 from here on? Yeah. So in the international crop protection business, again, the underlying strength of farm gate demand is strong. We would expect going into 2025, our fiscal year 2025, that the grower demand and the distribution demand is gonna start to equalize. Obviously, we experienced significant destocking this year. And so as the destocking levels out and we get more of an equilibrium between grower demand and distribution demand, that of course will be a tailwind on a comparative basis. Also, from an inventory cost standpoint, you know, we will be going into our next year with a much better cost position on our inventory as we replenish inventories. We now have a lower cost basis, and so that will also be a tailwind for us. So look, we would expect the price challenges to continue at least in the early part of next year. And so that will be similar to this year, but some of the underlying, you know, impacts that we dealt with this year should be behind us. We would also expect- ... returns and rebates to balance back to more normal levels, versus the heightened levels that we experienced this year. Okay, understood. Maybe, you know, once, you know, I'll off the call down, so probably if, when Anand joins, if this question to balance, it can be, you know, answered from him. Okay, we are there. Hi. We are reconnected. This is Anand here. Can you hear me? Yes, Anand, we can hear you. Okay. Saurabh, go ahead and ask your question again so Anand can hear. So, probably what kind of, you know, net debt expectations would you be having now, end of FY 2024? And given that we have only done an EBITDA of about INR 3,600 crore in first nine months, add some incremental EBITDA we'll be doing in Q4, it still seems may end up, you know, kind of pretty lower than what were the initial expectations. So, you know, what kind of, you know, concerns can emerge out of this, you know, keeping in, in the context of the rating issues that we have faced in the past? Yeah. So Saurabh, I mean, clearly, it's a challenging time here. As you know, the rating agencies look at both, not only just the net debt, but they also would look at the net debt to EBITDA. We have been hit on both counts. Debt is a bit elevated, at the same time, EBITDA is down. So we are engaging with them. Clearly, the, I would say it's an, it's an industry phenomenon. Every, every player in the industry is going through this same, as you would see, as we have seen some companies announce their results. A lot more are expected to announce the results shortly. So we are, we are keeping our engagement with the rating agencies on. Finally, it will be up to their decision whether if they can give us some more time considering the overall down, downturn in the industry. But we'll have to wait and watch, once we share the numbers as to how they would look at it. But clearly, if one has to just look at the, you know, look at the numbers of our net debt as well as EBITDA, it, it's going to be challenging to retain our investment rate. Any, you know, indications on your end-of-year net debt guidance? I mean, we are working towards, you know, we, as you know, as of December, we are at about $3.7 billion. We are putting all efforts to see if we can bring it to around $2.5 billion, which would still take it, and this is without the rights issue. I think we are looking at, as I said, up to $500 million is what we have got the board approval for. We should announce that shortly by, before the end of this month. I'm hoping to get the money in. So if everything goes as scheduled, then, that should further help us to bring it down below $2 billion, from $2.5 billion to maybe another $400 million or $300 million, $400 million, $500 million, whatever that number is. There could be some reduction there. Somewhere closer to $2 billion, what you have been guiding earlier? I mean, yeah. That, 2.5 is what we are working towards at this stage, and then the rights, whatever that amount comes to. Yeah, so our post-patent, it could be somewhere closer to 2.2. Is that a fair assessment? I think that is. Okay. Thank you. I'll join back the queue. Thanks, Saurabh. Thank you. The next question is from the line of Madhav from Fidelity. Please go ahead. Hi, good evening. Thank you so much for your time. My question was a bit more, like, on the longer term. If I look at UPL's EBITDA margins over the last decade or a bit longer, you know, we've been at that 20% EBITDA margin mark. This is like a year where margins have come down. My understanding is that we are a global scale company with, you know, well-integrated capacities. So my couple of questions were basically, are we at a cost disadvantage to China in the molecules which we make? And, if that is not the case, if we are at par with them, then whatever pricing pressure we're seeing today would mean that even they are bleeding quite a lot, so prices should come back. So just wanted to understand in terms of the cost curve, where we are versus them. I don't think we were overrunning in the past decade because margins were very stable. So just your outlook on whenever this thing normalizes, you know, how margins could look like 2, 3 years out for UPL. Or if has something structurally changed in the industry that our margins should be lower versus what it was over the last 10 years? This is Rajendra here. Yes, so- I think, sorry, Mike, if you want to answer, I can- No, go, go ahead, Rajendra. Go ahead. Okay. Just to answer your first question on cost curve of UPL's competitiveness. Just to give you a data point, on our top 15 molecules, if we take the cost of UPL as of the latest cost of production, the latest China price, on average, UPL is 15% plus competitive versus China, today's China. So if you're looking at China at the bottom, even then UPL is still 15% competitive versus China. On a molecule-to-molecule, we are anywhere from 30%-40%, in some cases, obviously, at par in China, except for one molecule where we are above the China cost today, and where we surely have a line of sight how we can go below China. So just to give you the reference data point. Mm. By the way... Yeah. Yeah, and so with that as the backdrop- Again, as we talked about this year's results for the first nine months, if you were to adjust for both high-cost inventory and the excessive rebates that we invested in this year, contribution margins would be very similar to that of last year. Additionally, of course, we've also lowered our overall cost basis, and expect next year to have a lower cost basis than we have this year. Look, I think prices will continue to be challenged going into next year. You've asked about kind of looking out two or three years. We will have an investor day in May, where we'll give more clear guidance in terms of how we see the mid to long term unfolding. But again, we would expect our contribution margins to be back in line going into the near future. We'll have a lower cost SG&A base and, you know, and then the EBITDA margins, you know, should have an opportunity to eventually get back to the levels that we've seen here in the past. Got it. My second question was the savings which we've had on the SG&A side, about $100 million is what we're targeting this year. As the business, you know, hopefully recovers, might take a year or a little bit longer, we don't, we do not know at this point, could be a bit faster as well. But these savings, are they, like, sustainable in nature, or do some of these costs come back, you know, hopefully once the business normalizes? Yeah. So, so the commitment that we made is to have $100 million cost savings comparing FY 2023 to FY 2025. We're on track to deliver that, and we're delivering it in a sustainable way. And so obviously there's some, some level of discretionary spending that, that we reduced, but we've also taken out structural cost, and so we feel confident that we can deliver the SG&A savings in a sustainable fashion. Yeah, so my point was exactly that. Like, how much of the saving is more structural versus discretionary? So once the business, say, bounces back at some point, some of the costs which come back versus what has been, you know, just taken out of the system. Yeah, the majority of the takeout is structural takeout. Okay, got it. Okay, thank you. Thank you. The next question is from the line of Vishnu Kumar AS from Avendus Spark. Please go ahead. Good evening, and thanks for your time. Challenging times, but apart from inventory problem, we're also seeing that the Chinese are dumping product at record level. How does this impact the timelines of the recovery, and how confident are we that by, even by Q2 2025, there will be, I mean, the recovery, given that the goalpost has already moved and China continues to dump excess product in the market? If you could talk also about this and also regionally, how do we see the current problems behaving and just some sense on where we—how confident are we on the recovery? Yeah. So as per Rajendra's comments, in terms of our competitiveness versus China, even at these low prices that we're seeing out of China, we're very competitive, with the exception of one active ingredient, which we have a glide path on to improve. So look, as we are replenishing our inventory with lower-cost inventory coming out of our plants in India, we're gonna be very competitive in the marketplace. And again, we would expect our contribution margins to get back into the range that we've seen in previous years, excluding this year. I think the recovery will take a little bit longer in Brazil and North America than other regions. And as we talked about in the comments earlier, you know, our business is performing very well across other parts of Latin America, across Africa, Asia, and so we would expect that momentum to continue. I don't know, Raj or Ashish, if you want to add any further color? Yeah, no, no. This is Ashish here. What Mike said is right. I think our new inventories we are getting is at low cost. We are also seeing you know, overall destocking in the market, and I think we feel that definitely in the next two quarters, we should be back. Is it fair to- Sorry, and Mike, maybe you can say how China evolution, I think, is in the last two quarters, how, how you have seen it being stable or whatever that has been. So maybe that also tells the story. Yeah. No, that's good. Yeah, so look, over the last two quarters, we've really seen the prices out of China stabilize. You know, herbicides are maybe down about 1%. Insecticides and fungicides are really flat over those two quarters. And so we really do believe that this is, we're seeing the bottom, at least based on the current feedstock costs. You know, we can see the profitability from a number of the public companies that are crop protection manufacturers in China, and we can see that, you know, in essence, they're selling at or near their variable cost. And so, you know, there's not a lot of space at this point in the post-patent segment for the market to decline any further. Obviously, it's hard for us to predict if and when it'll improve. But you know, at this level of profitability, you would say it's not sustainable over the long term, you know, based on the current situation in China. Thank you. We have the next question from the line of Sanjeev Pandya from Lancers Impex. Please go ahead... We have the next question from the line of Siddharth Karekar. Please go ahead. Hi, sir. So first, just wanted to understand what has gone wrong in this year in our India business, given that, if we look at our peers, they have done relatively better in year, around 22% volumes. And in terms of next year, how should we look at the India business? Thanks for the question, Sanjeev. I think India business, we essentially had three big reasons why we were left behind a little bit, is that cotton and pulses are our key crops, and we all know that I think these are the crops which are hit the most this year. We are a dominant player in that. The second piece, of course, is, you know, glufosinate demand this year was the overall non-selective herbicide demand was down in Kharif first and then even in Rabi now, you know, where Karnataka and Tamil Nadu are our big markets. We did have some elevated channel stock for this, and we did have some initial competition. But the brand still is a strong brand in the market. And, so I think, you know, it's a large product for us, so this impacted us disproportionately. And, three, of course, you know, especially for this quarter, we also are taking conscious call to sell closer to the season, because, with a little bit of a price ambiguity, the overall business model is shifting a little bit towards closer to the season. So I think mainly cotton and pulses are positioned in these two crops. We, I think we definitely feel we've had two bad years back to back for cotton and pulses. So I think we definitely feel that, you know, we should come back big time on these two crops. We also definitely feel that our brand, brand equity on glufosinate is very decent, and with the destocking happened, I think even if we get moderate to, you know, decent rains, I think this is a product that should fly. You know, also since the destocking, you know, which was there in the channel for this product also has more or less been done. With this, we are also having a lot of new launches in some of our non, you know, so-called not so strong crops, you know, whether it is corn or whether it is sugarcane and paddy, which should help us in, you know, to come back properly in the next two to three quarters. In terms of our inventory in the Indian channel, are we now below the normal level? Would that be a fair understanding, given that how our performance was this year? Yes. We are, we are, as far as the India business is concerned, we are slowly, you know, coming to normal levels now. Okay. So secondly, now, in the international markets, like in Brazil and North America especially, is there any sense of how much high-cost inventory are we still carrying? And what kind of hit can we see in the fourth quarter, or we are entirely done with the high-cost inventory? Yeah. So Mike here. Look, we're, we have a path, we believe, to clear out the high-cost inventory as we exit this year, so there will still be some impact of that as we go through Q4. You know, I think a little bit less than we experienced in Q3. And again, as I mentioned earlier, from a rebate standpoint, those are essentially cleaned up in North America, and we've got a few that we're still working through in Q4 in Brazil. Going into FY 25, we will be entirely sitting on the low-cost inventory. Would that be a fair understanding? Yeah, that... We'll be very close to that position. So, I would expect very little impact, if any, from the high-cost inventory as we enter FY 2025. Okay. Thanks a lot, that's it from my side. Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah, good evening. Thanks a lot for taking my questions. Mike, I was just hoping to get your perspective on, you know, this inventory situation in the global marketplace. It's been, the destocking has been dragging on now for, you know, the past three or four quarters, and it still seems to be taking another couple of quarters. So, you know, any sense of just exactly how much is still left there, maybe in terms of the size of the industry? You know, any metrics or data that you might be able to share would be really helpful. Yeah. So I mean, as you know, in most of our markets, there's only one season per year. And unfortunately, you know, once that season passes, then it takes another three quarters before you get to, you know, restock for the next season. So I would... You know, so that's one piece to keep in mind. The second piece is, I would say, the inventory levels in the channel right now are lumpy, and so it's really active ingredient specific. You know, if you just think about the various categories, it's probably the non-selective herbicide category in Brazil, in North America, that is still being normalized to, you know, ending inventories where the channel will be targeting. And so I think we're kind of down to that point where there's a few markets with a few AIs that are still getting back into balance... that are important to us. For most of our AIs, we're getting back into a pretty good balance where inventory levels would be, you know, normal to where we would expect them to be. Understood. Thank you. And just on the China issue, have we sort of started to see production being shut down by some of the producers in China given the situation? And you know, are we seeing improvement in terms of the supply outflow coming out of China in recent months? Yeah, look, if, if you just look at the, say, take North America as an example, the China imports into North America last year from January to November were down over 50%. Same in Brazil, in the same period, they were also down around 50%. Now, we haven't seen capacity come offline yet. Obviously, most of the manufacturers are running at a low level of their overall capacity in many of their plants. But at this point in time, we haven't seen plants, you know, permanently shut or specific consolidation happen in the industry. We would expect that to happen if the situation doesn't change, but so far, we haven't seen, you know, those the shutdowns or the consolidation. That's helpful. Thank you so much, and I wish you all the best. Thank you. Thank you. The next question is from the line of Steve Byrne from Bank of America. Please go ahead. Steve Byrne, your line has been unmuted. You may proceed with your question. As there's no response from the current participant, we will proceed with the next question, which will be from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Yeah, good evening, and thank you very much. So the first part is in terms of the operating cash flow, if you adjust, the inventory losses, so, and the Argentine, FX loss. So you're talking about somewhere around INR 2,250 crores. Is that kind of cash flow visible in this quarter? And, do you see, any improvement in your, net working capital in terms of number of days? Although you said it will be higher than last year, compared to 3Q, will your working capital come down and thereby you'll be able to release some cash? How do you see that in the collection in the fourth quarter? As you know, the fourth quarter is when we usually get our, you know, a fair amount of collection. And at this stage, we have not, I mean, we have seen that collection coming by. So we expect it to be similar to that of the previous same quarter. So as of now, there is no such, I mean, we have some visibility, but although I would say broadly, we should be in a position to have the collection come by. So in terms of operating cash flows, net working capital, you, you will be able to manage the operations in fourth Q without any incremental debt. Is that something, is that a fair understanding? There could be a marginal increase, but not significant. Okay. Typically, we have a cash inflow, right? That debt will come down. We are guiding... We are $3.7 billion. We are talking about $2.5 billion, roughly in that range, from an operating side. So that's something what we are working towards, and we expect that to come. Okay. So in terms of relative market share, since you said Argentina was badly hit, and there's been very, you know, mixed news flow in Argentina about the politics and the drought. So what is the share of Argentina in your, in overall portfolio, and how is that doing in this quarter, given that, you know, there's been a big currency devaluation? And, yeah, is that all done and dusted, or, you know, is, the, is there still some overhang from Argentina? Mike, on the business side, maybe you can update, and then I'll say on the financial side, I can talk about. Sure. Yeah, so Argentina has been a good market for us this year. If you go back a year ago, they had a significant drought, and productivity was low, and use of crop protection products was low. Coming into this year, they experienced normal rains, and so the planted area went back up, and farmers invested in crop protection products. And so our business is up nicely in Argentina this year. So good performance in the market. Any number you can share in terms of what is the share, either in LatAm or in the overall portfolio from Argentina? Yeah, we don't break out the country-specific numbers, but you know, I would say, you know, Argentina in the... Because Brazil is included in Latam, so of course, Brazil is by far the largest market, followed by Mexico, and then Argentina would be third. Okay. So, in the fourth quarter or first quarter, you mentioned your capacity utilization has been reduced. So in terms of your manufacturing, are you still running at, you know, lower capacity? What's the current capacity utilization, and when do you see that move up back to normal capacity utilization? So Raj Tiwari, why don't you take that question? Raj?... They might have got disconnected. Look, I mean, overall, our volumes year to date are down mid-single digit. We do expect good volume in Q4, but probably down very low single digit versus last year. And so, you know, our plants are running a little bit slower than they ran last year. Of course, we're in the process of building our plans for FY 25. Based on not expecting the same amount of destocking, that'll be conducive for volume growth. And as we continue to expect market share gains in the markets where we're performing very well in, that'll also be conducive for more volumes. I would say our expectation, while we're gonna continue to manage working capital very closely, is, you know, we'll be running, running the plants in FY 2025, you know, at a level that's slightly above where we ran them this year. Sir, can I squeeze in a last question? In terms of your, you know, the cost of the inventory coming down, is it possible to give a sense in terms of what is the percentage decline in the value of the inventory, just to get a sense? No, so, you know, Raj here. Can you hear me? Yeah, we can. Yeah. So, Raj here. No, I mean, you know, in terms of the inventory numbers, if you see, we have year to date about, I mean, as compared to last year, December, we have about $500 million of lower inventory this year. It's a mix of both volume, but that's smaller number, but largely on the cost. So the inventory, which is there, roughly about $1.5 billion, is the inventory year to date, December, that's largely on account of cost. So, so I, we feel that, you know, significantly, I mean, significantly, you know, in the sense that next year, we should be able to manage our business in line with the inventory numbers, which are this year's. Just to understand, you said the value of the inventory is $1.5 billion, and it's down by about $500 million. Is that correct? Yeah. So, you know, I mean, year to date, if you see, inventory is about INR 17,000 crore, visibly about INR 20,000 crore last year, right? So 3,000 crore of inventory, which is down largely on account of two factors, a very small contribution on account of volume, but largely on account of cost. I mean, this is where you see that, you know, the channel is being, you know, the channel inventory will be now at a rebased cost, which is our, you know, much lower cost. Therefore, what Mike alluded is that we, you know, you know, our gross margin, at a gross margin level, we should be able to, you know, you know, maintain our gross margin, what we had last year. Yeah, understood. Thanks a lot for the clarification, and thanks a lot, and wish you all the best. Thank you. Thank you. The next question is from the line of Steve Byrne from Bank of America. Please go ahead. Yes, thank you. Sorry, I was on mute earlier. Mike, you made a comment about the it's gonna take a little bit longer to recover in the U.S. and Brazil. I was curious whether you were referring to destocking, or were you referring to price? I was also curious to hear your progress on your launch of your brand of the chlorantraniliprole product. Yeah. Yeah, thank you, Steve. So look, we're not expecting a recovery on price, you know, into the near term. Obviously, if that were to happen, that would be positive. But, you know, we're expecting that, you know, we're gonna continue to have, you know, low prices coming out of China. As we talked about, we can compete against that and earn back our historical margins. I think from a destocking standpoint, again, in North America, I would say it's largely glufosinate that we're still expecting to see some destocking going into the next couple quarters. In Brazil, as you may know, Steve, the drought that they experienced through the safrinha region did impact the farm demand. If you take, for example, the sucking pest segment, which we're very strong in, typically growers spray about 2-3.2 times per year on a soybean crop for sucking pests. This year, they sprayed on average about 2.2 times, and so you know, that's not really about destocking. There was some demand destruction just because of the drought in Brazil. Now, obviously, they've got a safrinha corn season coming up, and so we'll use some of the product to to manage insects in that crop. But, again, I think we're down to glufosinate in North America, and then, you know, it's just based on grower demand for the most part in Brazil. Coming to your question on CTPR, we have launched CTPR in a number of geographies. It's very early days. What we've launched so far has been solo mixtures. You know, our strategy for the most part is to focus on value-adding combinations, and so that's really where we're moving to. We're just in the process of starting to market a combination product with CTPR and Euvia, and we're looking forward to those opportunities in other markets here in the next 18-24 months. ... Mike, if I could squeeze one more in with you, what is it that makes it so challenging to monitor the channel inventory levels? Or do you think that you've made some adjustments in your own assessments to be able to monitor that better? Yeah. So look, we've got a good handle on the level of inventory of our product in the channel. Where we have less visibility is other products. And so I think, you know, if we go back over the last couple years, there was overstocking because of the challenges in the supply chain or the risks that were inherent in the supply chain at that time. And so, you know, again, we knew exactly what was happening with our inventory, but we didn't have clear visibility on, you know, our competitors' inventories. And so when it all shook out, you know, there... Prices came down, and distributors wanted to really destock because supply chains, you know, are viewed as highly reliable today. This is the, you know, the impact that we're seeing. Obviously, in markets like North America and Europe and Brazil, where there's been more consolidation in distribution channels, there's also more capacity to hold inventories. And so, you know, if you look at other parts of the world where our performance is really good this year, like in Latin America, excluding Brazil, and in what we call the rest of the world markets, those are more fragmented markets, where inventory holding capacity is lower and you just naturally get less of an impact, either when you're overstocking or destocking. Very good. Thank you. Thanks, Steve. Thank you. Ladies and gentlemen, we will now take the last question from the line of Tejas Sheth from Nippon Life India AMC. Please go ahead. Yeah. Good evening, everyone. On the markets from the U.S., North America, and Latin America, how are the distributors faring? Because they're a large distributor, so are they also kind of losing money in this whole trade, or it is something that we are taking the larger brunt of this whole destocking, and hence distributors are still faring well? Yeah, it's a good question. You know, and look, I would say it's a bit of a mixed bag. There's a few distributors in Brazil that are publicly traded, so you can see their results. Likewise, there's some large co-ops in North America and a large public company that is also a distributor in North America. So, you know, you can see those companies and their financial reports. I would say, they've also had margins compressed significantly in the last 12 months. And so, you know, I would say the burden is being somewhat shared across the supply chain. Probably a little bit more of the upside during 2021, 2022 was enjoyed at the supplier level. And this year, some of the downside and the squeeze in margin is also being felt harder with suppliers. But there is some sharing of the pain, I would say, across the supply chain. Got it. Got it. And also, if you can, give some color on how the innovators are behaving, because they obviously have kind of a larger end of the product, I mean, much more value-added product. Are they also getting very, very price competitive on their portfolio, or they are, or they are kind of not as competitive versus the generics? Is the generic prices and the innovator prices widened in this, in the last 12 months, or they have narrowed? Yeah. They have definitely widened. You know, and again, we can see it in our own portfolio, in the performance of our differentiated and sustainable products. You know, our margins have, you know, roughly held in line with historic levels north of 40%. And but the margins in our post-patent segment is what's got impacted the most. And so, you know, I would say that that trend is playing out across the industry, where differentiated products prices have largely held with where they were over the last few years, but the post-patent segment is where the significant prices come down. Now, of course, there is substitutability in the marketplace as well, and so there is, you know, some pressure. And as commodity prices for grains have come down, growers, you know, are looking at all their options. And so, you know, I think this is gonna continue to play out over the next, selling season, where, you know, there probably will be, some upside in volumes and market share towards the post-patent products, but margins will continue to be, you know, challenged there. And, and likewise, you know, we're seeing the prices come down very slowly, if at all, in the differentiated segment. Got it. Got it. Thanks for this. Just last question to Anand. Why are we paying to the suppliers at a much lower days? I mean, why we are not maintaining payable days at such a higher level, and hence, kind of at least get some mitigation of higher inventory days and receivable days? In a very high cost of borrowing environment, why are we paying much earlier to the suppliers? Well, Tejas, it's just that the level of activity has come down due to drop in the volume, as Raj alluded, about 5%-7% drop in volume, and it's largely because of the drop in level of activity. And of course, we also saw the prices coming down. So as a result, you are seeing a lower level of payable days. We normally have nearly the same credit days as we were in the past, so it continues that. Okay. Okay, and what are we doing on the capital expenditure side? Are we deferring our cash outflows there? Are we postponing the larger projects which we were planning to add, or are we continuing with it? No, we have slowed down. We have, you see, we've not done much acquisition on small one, which we announced. So because of that also, payments are happening next year, so we have slowed down. No, typically, we spend INR 3,000-3,500 crore on the CapEx annually. Yeah, we have done INR 300 crore till now. Yeah. Okay. Got it. Thanks for this. Thank you. Thank you. 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 today's call. If there's any follow-up questions, feel free to reach out to Radhika Arora or myself, and we should be happy to answer the calls. Thank you once again. Thank you. On behalf of UPL Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.