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Edited Transcript of GODE.NS earnings conference call or presentation 12-May-20 9:30am GMT

Q4 2020 Godrej Agrovet Ltd Earnings Call

May 12, 2020 (Thomson StreetEvents) -- Edited Transcript of Godrej Agrovet Ltd earnings conference call or presentation Tuesday, May 12, 2020 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Arijit Mukherjee

Astec LifeSciences Limited - Whole Time Director

* Balram Singh Yadav

Godrej Agrovet Limited - MD & Executive Director

* Nadir Burjorji Godrej

Godrej Agrovet Limited - Chairman

* S. Varadaraj

Godrej Agrovet Limited - CFO and Head of Legal & IT

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Conference Call Participants

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* Aditya Singh

* Aniruddha Joshi

ICICI Securities Limited, Research Division - Research Analyst

* Ankur Periwal

Axis Capital Limited, Research Division - VP of Media and Logistics

* Anoop Poojari

Citigate Dewe Rogerson Ltd. - Client Manager

* Kapil Popat

* Kashyap Pujara

Axis Capital Limited, Research Division - Head of Research & Executive Director of Strategy

* Madhav Marda

Fidelity Investments - Equity Research Associate

* Nav Bhardwaj

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Nihal Mahesh Jham

Edelweiss Securities Ltd., Research Division - Research Analyst

* Nitin Awasthi

* Prakash Kapadia

Anived Portfolio Managers Pvt. Ltd - Principal Officer

* Prashant Biyani

Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst

* Pratik Rangnekar

Crédit Suisse AG, Research Division - Research Analyst

* Prit Nagersheth

* Rakhi Prasad

* Saurabh Kapadia

Asian Markets Securities Private Limited, Research Division - Research Analyst

* Sumant Kumar

Motilal Oswal Securities Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Godrej Agrovet Limited Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.

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Anoop Poojari, Citigate Dewe Rogerson Ltd. - Client Manager [2]

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Thank you. Good afternoon, everyone, and thank you for joining us on Godrej Agrovet Q4 FY '20 Earnings Conference Call. We have with us Mr. Nadir Godrej, Chairman of the company; Mr. Balram S. Yadav, Managing Director; Mr. S. Varadaraj, Chief Financial Officer; and Mr. Arijit Mukherjee, Chief Operating Officer of Astec Lifesciences. We would like to begin this call with brief opening remarks from the management, following which we'll have the forum open for an interactive question-and-answer session.

Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.

I would now like to invite Mr. Nadir Godrej to make his initial remarks.

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [3]

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Good evening, everyone. I welcome you all to the Godrej Agrovet conference call. I hope and wish you and your families are doing well and are safe. We are currently battling one of the toughest health crises, which has disrupted the entire world and [ensuring] safety is paramount. We are also taking all necessary steps to ensure safety and well-being of our employees and business partners. These are exceptionally difficult times for everyone, but I believe that this too shall pass, and we will emerge much stronger.

In the beginning of February 2020, false rumors of getting coronavirus infection through poultry and its products significantly impacted volume prices and thereby the profitability in 2 of our businesses, Animal Feed and Godrej Tyson. Further, the outbreak of COVID-19 from mid-March 2020 in India, disrupted the volume and sales in other segments too. Our manufacturing facilities were closed from March 24, 2020, onwards post the announcement of the nationwide lockdown. GAVL operates in the agricultural sector and all our businesses are part of essential items. We've resumed operations in April 2020, after obtaining the necessary approvals from local authority. Our factories are currently operational, and we have all the deployed health and safety protocols across our location.

Moving to the financial and operational performance. The key highlights and developments for the fourth quarter and full year '19-'20 are as follows: For the fourth quarter of 2020, consolidated total income was INR 1,509 crore, registering a growth of 7.5%. Consolidated profit before taxes, excluding nonrecurring and exceptional items, was INR 18 crore compared to INR 54 crore in the previous year.

Similarly, for the full year of 2020, consolidated total income was INR 6,876 crore, registering a growth of 15.7%. Profits before taxes, excluding nonrecurring and exceptional items, was INR 281 crore compared to INR 361 crore in the previous year.

Above financials are adjusted for nonrecurring items, the details of which are as follows: In the fourth quarter and the financial year '19-'20, total income excludes INR 134.7 crore and profit before tax excludes INR 78.1 crore of income earned from sale of real estate project. The financial year '18-'19 has been adjusted for 2 nonrecurring items. Firstly, the fourth quarter and full year fiscal year '19 excluded a loss of INR 2.3 crore incurred on sale of land in a subsidiary, CDPL. Secondly, the full year financials also exclude income of INR 29.9 crore earned on sale of land in GAVL. Please also note that the financials for fourth quarter fiscal year '20 and fiscal year '20 includes the results of Godrej Tyson Foods Limited and Godrej Maxximilk Private Limited, which became subsidiaries with effect from March 27, 2019.

Now I will discuss the performance of each of our business segments. In the Animal Feed business, volume declined in the fourth quarter by 11.3%, mainly due to lower poultry feed volumes in February and March 2020. Volumes were also affected in cattle and fish feed from mid-March onwards. As a result, despite taking price hikes, volume declined (technical difficulty) lowered the quarterly segment results by 27.9%. However, for full year 2019 to '20, segment revenue and segment results have posted a growth of 20.1% and 19.6%, respectively, driven by a strong performance of the first 9 months.

We have seen a recovery in poultry prices from April onwards, as the COVID-19-linked rumors after fading away. We expect volumes and profitability levels to recover in the coming months.

In the Vegetable Oil segment, fourth quarter performance benefited from the high crude palm oil prices. However, the fresh food [bunches] arrival was marginally impacted by the lockdown post mid-March 2020. Also, for the financial year '19-'20, the performance has been adversely impacted by lower end product prices and lower oil content in the peak season, the first half of the year (technical difficulty).

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Operator [4]

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Sorry to interrupt you, Mr. Godrej. Actually, your voice is breaking up, sir. We're not able to hear you clearly.

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [5]

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Can you hear me now?

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Anoop Poojari, Citigate Dewe Rogerson Ltd. - Client Manager [6]

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Much better, sir.

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Operator [7]

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Yes, yes, thank you.

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [8]

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Okay. Further -- also for the financial year 2019-'20, the performance has been adversely impacted by lower end product prices and lower oil content in the peak season, i.e., the first half of the year.

In the Crop Protection standalone business, the sales mix was in favor of (technical difficulty) products, which have relatively lesser margin. Therefore, despite revenue growth, the segment results declined in the current quarter, albeit on a low base. Further, replacement of (technical difficulty) in March 2020 due to the lockdown, which impacted sales and margin. For the full year 2019-'20, the performance was modest due to erratic and subsequently delayed monsoon, which limited application opportunities. During the year, the company successfully launched Hitweed Maxx, which is an in-house cotton herbicide and Hanabi, which is a specialist to control mites on tea plantations. Going forward, these products should help increase revenues and profitability.

In our subsidiary, Astec Lifesciences, it was one of the best quarterly performances, as revenue and EBITDA grew by 35% and 66%, respectively. Higher realization along with volume growth in key products contributed to this growth. For the full year also, revenue and EBITDA, excluding the nonrecurring expenditure of INR 6.2 crore grew by 21% and 18%, respectively. Geographically, both domestic sales and exports continued -- contributed to our growth.

Creamline Dairy Products Limited, our dairy subsidiary, posted marginal revenue growth of 5% during the quarter. This was because milk sales were lower than last year and volumes of value-added products were also impacted by the COVID-19 disruption in mid-March. However, for the full year, value-added products have grown at a faster pace than overall growth. As a result, the share has increased to 29% of sales from 24% 2 years ago. Profitability for the quarter and for the year was impacted by high milk procurement prices. While we have taken price hikes at regular intervals, the entire cost increase could not be passed on to the customer due to tariff -- due to [time lags].

In terms of new launches, we have launched Jersey Recharge, an energy drink for the youth, which has been well received by the targeted customer segment. In the medium term, our focus remains on increasing the share of higher-margin value-added products in the overall product portfolio.

Godrej Tyson Food Limited, our poultry business witnessed one of the most difficult quarters, as output prices in the live bird business hit back to unprecedented low levels due to rumors linked to COVID-19. We incurred a quarterly loss of INR 33.5 crore at the operating level. For the year, the loss is at INR 47.6 crore, as performance in the first 9 months were also impacted by high raw material prices. However, I would like to highlight that the market has started improving that prices of live bird increasing. Further, raw materials have started softening, which should lead to the improvement in performance (inaudible).

GAVL's joint venture in Bangladesh, ACI Godrej recorded a robust revenue growth of 83.3% in fourth quarter fiscal year '20, driven by strong volume growth in cattle, broiler, and aqua feed.

I now conclude our business and financial performance update for the quarter. I would take this opportunity to highlight that in these challenging times, we, at Godrej Agrovet, are fully committed to support our nation, customers, business partners and employees. We are well equipped to manage the current situation based on the strong business continuity plan put in place. We are also focusing on cost optimization and working capital management. Our balance sheet remains strong with low gearing levels of 0.3 debt-to-equity and healthy liquidity position.

With this, I close my opening remarks. We will be now happy to take your questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Ankur Periwal from Axis Capital.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [2]

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My first question is on Tyson Food and the poultry business overall. While you did mention that things have stabilized, as prices have sort of normalized now versus what we have seen in the last quarter, but your sense and your thoughts on how do you see both Tyson Food as well as the poultry feed business panning out in the next financial year?

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Unidentified Company Representative, [3]

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Okay. So let me just brief you that normally, India places about 75 million to 80 million broilers a week, and it produces about 220 crore eggs a week. And you'll be really surprised that in month of April, according to our calculations, the production has come down to 35 million to 40 million a week, which is less than 50%. And the egg production has come down to about 170 crores to 180 crores per week. So one of the problems right now in the industry is that the demand is still subdued, but the supply is matching the demand in both eggs as well as chicken. So that is why the prices have gone up to about INR 95 to INR 100 in different parts of the country. And in southern part of the country, it has already crossed INR 104, INR 105 a kilo ex-farm. Cost of production, which was about INR 84, INR 85 in March, has substantially dropped to about INR 77, INR 78 now and dropping because raw material prices have come down, majorly because of low demand for raw material as poultry feed demand has come down. And second reason is that the [maize] production of Rabi has come in to harvesting. So this year, the crop is bumper, mainly in Eastern India. And to give you an idea, which will play out in the next few months in cost of poultry feed as well as cost of chicken and eggs. In different parts of the country in January, the price of corn was INR 22 to INR 24 a kilo. Today, it is holding at INR 12 to INR 14 a kilo and falling. So we believe that next few months the prices will be remunerative. Low demand will also be met by low supplies because in poultry we cannot up the supply at very short notices. Heavy, heavy losses have been made, particularly in the chicken industry to the tune of something between INR 12,000 crores to INR 15,000 crores by all the players. You won't believe in March, the average price in some market was for INR 4, INR 5 a kilo when the cost of production was about INR 84 a kilo at farm. So we believe that this is likely to happen in the next few months. The prices will be remunerative, 50% of chicken demand is out-of-home consumption. In case that comes back in the next few weeks to the tune of 15%, 20% of the original level also, we will see shortages of chicken and the prices going up. Coupled with raw material prices down, I think the profitability will improve in this segment.

Another thing which we are seeing is surge in value-added products, heat-and-eat products, ready-to-cook products, et cetera, there is a big surgent demand in spite of very poor distribution still. The reason is that since out-of-home consumption has gone down, so people are experimenting and having ready-to-eat products at home to just to replicate that. And we strongly believe that home delivery models, heat-and-eat models, which gained a lot of momentum because out-of-home consumption will still take time to come back.

As far as poultry feed is concerned, yes, definitely, our major part in poultry feed, we sell close to about 5.5 lakh tonnes of poultry feed, out of that about 4 lakh tonnes or so is layer feed, where we don't see any drop in the coming year because egg is a steady business. Whatever cut in production was there will come back in a few weeks' time because the placement continues. Broiler feed was a smaller segment for us. We strongly feel that we will have about 10% to 15% drop in broiler sales -- broiler feed sales in this quarter as compared to the last quarter. The reason being that even though the price market has -- even though the placement has come down, the players have also reduced in this market. We can sell as much as we want. The one problem is that there is a shortage of cash. So a lot of credit sales is happening for a lot of players and which we are not encouraging. So in all, I feel that both cattle, poultry, likely to do well in coming months. In case there is a small pickup in out-of-home consumption demand in chicken, chicken prices will also be at a very profitable level.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [4]

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Sure. That's helpful. Sir, on the animal feed business, while we have -- barring this quarter, we have seen the last maybe 7, 8, 9 quarters, wherein we had showed a strong volume growth, more or less in tandem with the guidance of around 10%, 12% odd volume growth. Do you think FY '21 can see that sort of a volume growth rebound again, especially when the rest of the industry, as you rightly mentioned, is reeling under pressure? And there could be consolidation-led benefits to us there?

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Unidentified Company Representative, [5]

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So consolidation, I do not know because not too many assets come up for sale in this industry. You've seen in the past that people exit and come back because entry/exit barriers are very low. So -- but I can definitely say that first and foremost, the prices of output have to be at remunerative level, which are at the moment, especially in Aqua, both shrimp and fish prices are very ruminative. Egg and chicken prices are getting remunerative and will continue to be remunerative for some time because if the consumption goes up 20%, 30% more than what it is now, there will be shortages. Cattle feed still is a little bit low because the milk prices have not gone up. Substantial part of milk production is consumed in the institutional sector, all these chai, coffee shops, long shelf-life products, ice-creams, et cetera, which -- where the -- in spite of being the season, normally summer is the season for these products, but the demand has not picked up. Once it's picked up, definitely, we see -- in a reduced market also, we see our market share going up as far as animal feeds is concerned.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [6]

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Sure. Sir, my last question on the Crop Protection business, both on standalone and on Astec. Standalone, why the margin sort of corrected sharply for us in the quarter as well as for the year and your thoughts there? And on Astec, what has been driving the growth and the outlook ahead?

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Unidentified Company Representative, [7]

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I'll answer the Crop Protection business question and my colleague, Mr. Arijit, will answer the Astec business -- Astec question. So, in Crop Protection business, we are on overdrive as far as collection and hygiene of the business is concerned. And it so happened that we picked up a lot of material from the market, which was reversed in sales in the first half of March. Normally, in the second half of March, just because the credit periods are very strict for distributor, distributor pick up the material towards end of the month and there is a certain amount of advance booking, particularly in products like Oryzostar, Hitweed and Hitweed Maxx, which had happened. And there were substantial orders we had, but we could not dispatch and everything was shut from 22nd of March. I think that hurt us in the margins. We could do that in April. But definitely, the game is on. Most of our production facilities came into production towards -- by first half of April. It was not classified essential initially. The flaxseed and milk and others, they came into production in the first week of April. But we believe that we will recover the lost ground in coming weeks. Astec, Arijit, please answer.

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [8]

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Yes. So Astec, we have to think at the business like 2 parts, where the generic businesses, where it is enterprise businesses. In the fourth quarter, we had both advantages of, one, entirely across the globe, there was a disruption from Chinese supply chain because the Chinese problem with COVID started during December, which aggravated like by middle of January, which coincided with the New Year. So that was the advantage which came to us. Hello?

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Unidentified Company Representative, [9]

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Yes, yes.

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [10]

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Yes. Yes, go ahead.

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [11]

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So that was one of the advantage because we repositioned ourselves. Major purchases shifted from China to us. So we captured a lot of southeast Asian market. Russia, CIS market opened up very strongly. That has been one of the growth, and that will be a permanent growth, plus the U.S. Europe market. So these changes will be, to some extent, permanent because most of the multinationals will now actively looking for derisking. So this one change in terms of enterprises will be there.

Second change is which is -- which will happen is or which we are also experiencing is shifting to the CMO businesses because if you see, most of the multinationals are working in asset thin. So they do not produce much actives within themselves. They just procure it either from China or India. And majority, almost 70%, 75% is working from Chinese Op. So there is a shift. So almost this year, we have launched 2 new products. So that is actually a shift from China because they used to procure from China and these have shifted into India to Astec. So these changes -- these 2 changes will more or less remain permanent. You will see more of Japanese projects coming to Astec as well as to other companies. And enterprise businesses, derisking will go on. So for coming year also, we think this type of growth, we will be able to maintain.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [12]

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Sure. That's helpful. Enterprise business...

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Operator [13]

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Sorry to interrupt you, Mr. Periwal. May I request you to rejoin the queue for follow-up question. The next question is from the line of Kapil Popat from Sundaram Mutual Fund.

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Kapil Popat, [14]

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I have two questions. One is, you have talked, in your presentation, about the expenditure control measures and you have also talked that the liquidity is very good. So if you could elaborate on both these points, it would be very helpful for us.

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Unidentified Company Representative, [15]

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So as far as the cost and variable cost control, there are several measures, which have been implemented by us. First and foremost is that we have frozen recruitment that we did probably in February, and there's a big focus on productivity improvement. The second is that, just because of COVID there is a benefit of very little travel, which used to be a very big cost for us because we had almost 700 people and 250 managers, et cetera, traveling. So I think that costs have come down. On the variables and all the other, costs have been curtailed, particularly no conferences. And we have also not given the annual increments also in the first quarter, and we will review the situation in the -- towards the end of first quarter where we are and what is the COVID situation and how the impact of COVID on business is playing out. Having said that, in the variable cost, definitely, we have curtailed sales promotion expenses, discounts and commissions substantially. One of the reasons is that even production is a premium right now. So whatever is produced is sold. So there is no need for push kind of promotion expenditures. Apart from that, we are keeping a very strong control on credit right now. One of the problems we had, particularly in the Aqua feed business and our Crop Protection business has been bad debt. And I think this is something which we are controlling. Some amount of recoveries have also happened in first few months of this year, including April, and that we should try and continue in time to come. So I think if you really ask me the most important 2 things in this year would be, first one will be on cash. I think we just don't want to increase our debt. We want to recover the money and we want to be very low on loans. And second thing is that we just want to clamp down on both fixed and variable costs. I think it is also giving us an opportunity to also realize what all can be given up even in good times because, I think, for all companies, for everybody, these 45 days have been eyeopeners.

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Kapil Popat, [16]

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Right, sir. And also about the liquidity part, how are you managing the liquidity front?

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Unidentified Company Representative, [17]

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I think has COVID not happened, we were selling very well, and we would have -- our debt would have been very, very low. But unfortunately, our collections really suffered towards the end of March. Everybody pays between 20th and 30th of the month. And so debt is still at about 0.23% to 0.25% of the equity, so which is a good level. This is a season also. So naturally, some debt will go up, but we are (technical difficulty) our collection system. And in some businesses, we are seeing that if the output prices improve in coming weeks, the collection will improve substantially.

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Operator [18]

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(Operator Instructions) The next question is from the line of Sumant Kumar from Motilal Oswal.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [19]

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Sir, my question is regarding the palm oil business. So what is the utilization of the plant currently? And how is the ability of FFB?

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Unidentified Company Representative, [20]

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So palm oil business, very predictable business. If you know the age of our plantation and the standards of production at a particular age, you will be able to predict our FFB production. The only variable is normally the weather, that particularly monsoon. In case the monsoon is good, then we don't see any problem. Our season normally is July, August, September and October, where we receive almost 60 -- 55% to 60% of the fruits. But the initial arrival trends are good. We are running one of our mills, which can do 1,200 tonnes per day right now. In another week, we will start the other mill, which will do 1,200 tonnes. We are also refurbishing another mill, which will have a capacity of 600 tonnes per day. The reason is that our peak this year -- last year, our peak was close to about 2,400 to 2,500 tonnes per day. This year, our peak for about 2, 3 weeks is likely to be more than that. That is why we need 3 plants functioning. So you can say that normally, the capacity of these plants is calculated on 6 monthly basis because almost 5 months these plants are operated once a week or so. So if we -- today, we have a capacity of close to about 4 lakh tonnes -- about 2,000 -- sorry, let me tell you in this thing, 3,000 tonnes per annum at peak capacity. And today, we are operating at about 1,200 tonnes per day -- so sorry, 3,000 tonnes per day. At peak capacity, we are operating at 1,200 tonnes per day.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [21]

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Okay. So there is no impact of the COVID-19 on the utilization side?

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Unidentified Company Representative, [22]

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No, the issue is that -- I'll tell you the impact of COVID-19. The fruits will come. They have to be harvested. They will be brought -- There'll be oil in the fruits depending on whether the fruits will be more or less and the oil will be more or less. The only problem is because of COVID now the prices of both crude palm oil and palm Kernel oil have started coming down. The reason is palm Kernel oil import is close to 9 million tonnes. And most of the crude palm oil, sorry, is consumed by the institutional players. All these bakeries, confectioneries, eateries, et cetera, they consume huge quantities of palm oil. And most of the domestic consumption in India is soft oil, which is your rice bran oil, sunflower, cotton seed oil, ground nut oil, soya oil, et cetera. So we strongly believe that in case the out-of-home consumption or the institutional consumption remains subdued, palm oil prices are not likely to rise and maybe in case they fall too much, the government will bring in more duties. As far as palm Kernel oil is concerned, palm Kernel oil is an industrial oil, which is used in FMCG sector and some beauty products, et cetera. So once those factories start and that consumption rises, Palm Kernel oil consumption will also rise. So our sense is that there will be no effect of COVID on production, on yield, on OER, et cetera. The only effect will be in -- on the prices in case the consumption doesn't go up.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [23]

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What is the price now currently?

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Unidentified Company Representative, [24]

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INR 58,000, INR 59,000 a tonne.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [25]

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The similar level of previous year?

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Unidentified Company Representative, [26]

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No, previously, it was a little less. But if you take, for example, March, March prices have gone to INR 67,000, INR 68,000 a tonne also.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [27]

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Previous year?

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Unidentified Company Representative, [28]

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About 4, 5 weeks ago, 6 weeks ago.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [29]

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Okay. And how is the utilization of Crop Protection plant?

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Unidentified Company Representative, [30]

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Crop Protection plant, we have permission to run 2 shifts only because there is a staggered opening of the industrial activity in different states. First, they gave us permission for 2 weeks. For 2 weeks, we ran about 8 hours shifts and maintained all protocol and procedures, which they were checked. And based on that performance, we've got permission for another shift, and we hope that from 17th onwards we will be able to run 3 shifts regularly.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [31]

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So currently, it is at 50% utilization, right?

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Unidentified Company Representative, [32]

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No, not 50%. You can say that just because we're not taking weekly-offs, et cetera, we can run the plants on the weekly-offs by giving OT, et cetera, in these times. So we will be operating at about 70% -- 65% to 70%.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [33]

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So there will be not a loss for the industry and for you?

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Unidentified Company Representative, [34]

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No, no, no. My dear, these plants should have run 100% capacity from 5th March onwards -- 15th March onwards. So whatever is lost, I hope we are able to make it by running it on weekly-offs, et cetera, and improving productivity. So the industry has lost almost 1 month of production [this last month].

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Operator [35]

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I would request Mr. Kumar to rejoin the queue for follow-up questions. (Operator Instructions) The next question is from the line of Madhav Marda from Fidelity Investments.

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Madhav Marda, Fidelity Investments - Equity Research Associate [36]

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Just wanted to understand on the Crop Protection business, I think there was the idea of reducing our debtor days in FY '21. With given the COVID impact now, the expected impact, can we push that plan ahead by some time? Or will we still be looking to cut down working capital days in the coming years in the domestic business?

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Unidentified Company Representative, [37]

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Yes. So man proposes, God disposes. I think what my answer is, anybody's guess. We will try in to balance risk with the business. So I think that the kind of discipline we wanted to bring in, in collections and in inventory management will be relaxed for some time at least during season, and we will see how we can tighten it and try and balance that whatever is possible. I think this year is not the year of value growth, et cetera, and sell all kinds of generic. This year, we will focus on profitability, on collections, et cetera. And we have the products, which we are sure that if the season is good can give us good collection and larger volumes also.

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Madhav Marda, Fidelity Investments - Equity Research Associate [38]

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Got it. And the palm oil business last year, we also had the pricing pressure. What was the leverage of the palm oil prices in Q1 of last year, same time, when the margins had taken pressure?

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Unidentified Company Representative, [39]

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Q1 of last year, I think, if I correctly remember, the CPO prices were at INR 53,000, INR 54,000 a tonne and palm Kernel oil prices were INR 65,000, INR 66,000 a tonne. Unfortunately, palm Kernel prices have dropped to INR 60,000 and even below INR 60,000 because of lack of demand. And this year also, palm Kernel prices are very low. Normally, there used to be a difference of 50%, 60% between CPO and CPKO prices, but not anymore. Let us see if the FMCG sector opens, in particularly, the personal products, et cetera, in coming weeks, palm Kernel oil prices will go up substantially. That is what our expectation is.

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Operator [40]

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The next question is from the line of Pratik Rangnekar from Crédit Suisse. Sorry, we seemed to have lost his line. So we'll move to the next question, which is from the line of Kashyap Pujara from Axis Capital.

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Kashyap Pujara, Axis Capital Limited, Research Division - Head of Research & Executive Director of Strategy [41]

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I had a couple of questions. First is regarding the Godrej Tyson business, just a broader question. Would be that -- are we the rightful owners of this category, I mean, of this business over time? And given the fragmented and commoditized nature of the segment, do you think over time, there is a sizable profit opportunity for us? And what could those broad strategy or thought process be from your side?

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Unidentified Company Representative, [42]

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So let me just break that business into 2 parts. One is the branded business, which is the Real Good Chicken and Yummiez, and the other is the live business, which is a commodity business. Let me also tell you that this industry has grown at a CAGR of about 7%, 8% volume for the last 20 years in India. And in spite of COVID, in spite of all the ups and downs that will come in this industry, in 7, 8 years the chicken consumption will again double in this country because this is the protein, which is acceptable to most of the India because India is not going to be a beef country or a swine country. It will have to be chicken, egg and milk, which will be the chief sources of animal protein. Now the only problem with this industry is that the processing or the branded business are 1%, 2% of the total size of the industry, which is close to INR 70,000 crores, INR 80,000 crores and the branded chicken business will be about INR 2,000 crores, INR 3,000 crores, and we are the large player in that segment. But it is still -- it is still not growing because of several reasons. That is -- one of the reasons is adoption by the consumer, the other is cold chain, et cetera, et cetera. So it is tricky. Two drivers of these businesses which we have studied, countries like ours, which exploded in the areas about 15, 20 years ago. The drivers were a rise of modern retail and food loss. Both are not happening at the pace which -- with which they should happen in a country as populated and as congested as us. So I think this is a drawback, which is there. Of course, there are plenty of times that things improve because of certain events like China after the bird flu banned street processing or street slaughter of chicken, and suddenly, there was a plethora of chicken processing plants at the investment of thousands of crores, which came up in China post bird flu in 2003, 2004. And from 10% processing in 10 years, China has become 90% processing industry. So that's unlikely to happen. But if this event can increase the pace of growth of this segment because of want of hygienic chicken and because of the growth of business models like direct-to-home and Licious, et cetera, where chicken is delivered and we need not go to the shop to buy it, we believe that, I think, it is still (technical difficulty) Yummiez or Real Good Chicken will have some kind of traction in time to come.

On the live business, let me also tell you that we have data for the last 15 years, but for these events like bird flu or COVID, we have always seen that patches of undersupply and patches of oversupply keep the prices balanced. We have to be on the lesser side of the cost curve. And we have seen people exiting the industry. 10 players at one-time controlled 10% of the industry 20 years ago. Now they control 60% of the industry. Big becomes bigger. So I'm saying that there is an opportunity. However, it is a matter of choice, strategy where we want to be. And I think we would still watch before making our next move on this.

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Kashyap Pujara, Axis Capital Limited, Research Division - Head of Research & Executive Director of Strategy [43]

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Sure. Okay. And sorry -- the question regarding the agri inputs, while you did discuss it earlier, but I recollect we have a pipeline of in-licensed -- in-licensing molecules that we were supposed to get from R&D measures. What is some of the progress on some of those initiatives, which can ensure longer-term sustainability of growth?

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Unidentified Company Representative, [44]

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So I think whatever we could launch we launched. In December, we launched Hanabi. It is a Nissan product for miticide in tea and chillies. Response was excellent. Whatever material we got, almost, all of it is sold, and results are very good. Most of the other products are at different stages of registration. And I think this temporary disruption by COVID does not change the long-term story. Of course, last year and this year, we were banking very high on Oryzostar and Hitweed Maxx. Both these products sold to -- Hitweed Maxx sold to our expectation. We produced about 160 kl, we sold 160 kl. But we also sold Hitweed normal of about more than 320 kl, 330 kl. And this was the year -- current year, we were looking at reversing the whole thing because we want to push Hitweed Maxx. The results are very good. It is a herbicide, which takes care of both types of weeds. So I think that story will continue. And I think we had outlined -- I don't have that paper with me right now, that there are 3, 4 molecules which are under registration, which will be launched in 2021 and '22 and '23. I think that is on track.

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Operator [45]

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The next question is from the line of Pratik Rangnekar from Credit Suisse.

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Pratik Rangnekar, Crédit Suisse AG, Research Division - Research Analyst [46]

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My first question is on the Crop Protection segment, sir. If you could just throw some light on what are the external challenges that you noticed in the coming 6 months from the farmer end? So it could be either labor availability or liquidity or just progress of sowing. If you could throw some light on that.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [47]

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So let me just surprise you on a few things. Fertilizer sale is more than last year. Sowing and procurement is more than last year, in spite of all this. I think the state governments and the central government really did a marvelous job as far as the agriculture sector is concerned. 2 installments of payments have already been transferred and (inaudible) have that payment and slowly this will reach the farmers also. The seed sale is very brisk, be it paddy, be it corn and be it cotton. And my news is that several states have started sowing paddy also, particularly the nursery paddy, because the nursery is transplanted after 3, 4 weeks into the main field, which will happen post 15th of June -- 1st to 15th of June. So for that nursery preparation and sowing has already happened. Large parts of Northern India are also thinking of dry sown rice, which is called DSR, which means that because of labor shortage they cannot muster enough labor to do transplanting. So they are going in for direct sowing, which is also good news for herbicide companies because whenever we have direct sowing, the chances of herbicides are -- herbicide usage are very high.

So I think that there are 2 showstoppers in this segment right now. One is monsoon, which is a no-brainer. And the second is that, if you see all agrochemical factories are located in certain pockets in this country, which is Gujarat, Maharashtra. And to get excise benefits we are located -- a lot of companies are located in Jammu also. Now depending on COVID situation, containment, red zone, lockdown, lockdown starting, lockdown opening, cases -- because there are so many variables at play as far as industry is concerned and there is no consistent policy being adopted month-on-month, everything is so dynamic, depending on the situation of COVID that it is changing. Whether they will quarantine the factory for 1 week or 3 weeks or 2 weeks, that clarity is not there in different states. So I think if the industry is able to produce continuously and at to capacity, number one. Number two, if -- this is the first time we are hoping that monsoon is late by a week or 10 days so we'll get 10 more days of production, and we will cover up lot of lost ground there. If these 2 things continue, good production and good monsoon, I don't think we are going to have a bad season. Liquidity should not be a problem. And I did not recount this Kisan Credit Card and Direct Benefit Transfer, et cetera, which is going to happen. Procurement has been much higher than last year. Now the procurement of pulses and oilseed has started. So I think government will put enough money in the agri space.

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Pratik Rangnekar, Crédit Suisse AG, Research Division - Research Analyst [48]

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Got it. On the feed segment, sir, do you think prices this year will be lower because of the lower corn prices or lower MEIS? And in that case, if we can be able to...

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [49]

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We always set our profit margins and contribution margins on rupees per tonne. So according to this, top line is vanity in feed business.

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Pratik Rangnekar, Crédit Suisse AG, Research Division - Research Analyst [50]

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Right, sir. Then in that case, we should be able to maintain our profitability on a per tonne basis. Is that correct?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [51]

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I'm saying that the way things are going and the way we believe -- you may be -- you may compliment us for higher percentage of profit on sale because sale price will come down because the raw material price has come down. And the margin will expand because some price reduction we will keep.

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Operator [52]

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The next question is from the line of Aniruddha Joshi from ICICI Securities.

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Aniruddha Joshi, ICICI Securities Limited, Research Division - Research Analyst [53]

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Yes. Sir, now probably you are seeing that more or less, almost all the segments are doing well. So as a guidance, can we take maybe similar revenues or maybe plus/minus 5% in FY '21 compared to FY '20? Will that be a fair assumption?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [54]

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So if you tell me what will happen to COVID, I will tell you exactly what will happen in Godrej Agrovet Limited.

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Aniruddha Joshi, ICICI Securities Limited, Research Division - Research Analyst [55]

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Sir, but that is...

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [56]

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In that it is so much dependent on consumption going up. In several segments, we have oil, milk, chicken, consumption has to go -- out-of-home consumption has to go up. Yes. So I'm saying that the situation is still fluid. But if it is contained and India opens up, et cetera, so I don't see -- this is essential services. People will eat come what may. They may not buy expensive cars for some time, et cetera, et cetera, but they will not give up food and probably they will indulge more. So we are in a decent position in case the consumption goes up.

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Aniruddha Joshi, ICICI Securities Limited, Research Division - Research Analyst [57]

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Okay. Okay. Sir, last question. In this time, many small but good businesses pass through a tough patch. So are you -- Godrej Agrovet the way last time you had acquired Creamline and Astec, do you see any opportunities to add good businesses at relatively lower valuation? Is the management thinking on these lines?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [58]

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So we are always looking at inorganic opportunities to grow. So that will continue. Not that anything has come to us because of the current situation, but maybe in future, who knows. The balance sheet is strong, and we will be more than keen to evaluate.

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Aniruddha Joshi, ICICI Securities Limited, Research Division - Research Analyst [59]

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Okay. But there is nothing in the pipeline in a way?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [60]

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Yes, there's nothing, yes. Actually, if you really ask me, today, we are -- I'm saying that it is not easy to run business. I'm saying we have 60-plus factories which are operating. But most of the senior management is stuck at home. So I'm saying most of our time is going in managing, motivating, facilitating business for our people. So I'm saying that there is no concentrated effort also we have put in this direction.

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Operator [61]

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The next question is from the line of Bharat Gupta from Edelweiss Securities.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [62]

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This is Nihal from Edelweiss. I have 2 questions, sir. First, on Astec Lifesciences. At the start of the call, you mentioned that there has been, obviously, orders which have come in from Southeast and potentially they could be permanent. Just to understand for our key products, so what would be currently the pricing difference on an import parity basis compared to China, both, say, for export markets as well as for India?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [63]

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So if you go back at dollar terms, right, more or less the export price has -- for India also is equivalent to Chinese. There has been a significant increase. Like if you say Tebuconazole, which is one of our major products, Q1, we started international -- means export was around 18.5%. It increased to up to 24%. Now it is back to 22% -- 22.5%. So more or less, these prices will be in parity to China, because China produces almost 5x of what we produce. So international prices will be driven by them. The advantages, which India has, is a better production in terms of our cost of productions. Those advantages we have. So profitability for Indian companies with the same price band will be almost a little bit better than the Chinese. But price is nothing we will be realizing more in international markets. That will still be driven by the Chinese. (52:08)

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [64]

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So on prices, you're saying we are more or less similar at this point in time to the -- to when Chinese import?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [65]

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Yes.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [66]

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Sure, sir. Sir, I had another question on dairy, actually. I think it's been around 5 years since we acquired Creamline and we have obviously looked at the performance of a lot of other dairy companies also. Eventually, we do end up seeing that unless you have a strong procurement, you do end up seeing vagaries of price increases ending up impacting profitability, which has happened for us in this year. So as a longer term, what is our thought process on dairy? And in case the performance doesn't go as per expectations, are we open to considering of having this business off also? Just your thoughts on that.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [67]

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So 2 things I want to say. First one is a conceptual thing. Investing in harvesting is also our business. So that is point number one. So issue is that we will keep on evaluating and we will keep on -- so we buy the business and we have sold the business. And we have demonstrated that in past also. The second thing is that I'm saying that there are some things which, if you ask me from the long-term point of view, are going very well for us. The new product development, the brand, the long shelf-life products and their acceptance, et cetera, are all very good news for this business. Now there have been this for last few quarters, about 5, 6 quarters, there have been lot of difference because of low milk prices and high milk prices and shortages, et cetera. And unfortunately, when things were started looking a little good, I mean, we were very, very keenly banking on the current summer months for some of our LSL products which have really gained momentum, but unfortunately this has hurt us. So if you really ask me in our own metrics, if you are talking about profitability, et cetera, of the business, definitely, we are wanting more and we are lacking big time there. But if you all go by indices of brand, about value -- share of value-added in total sales, margin on value-added products, brand recall, et cetera, directionally we are right and the performance is not bad at all. Now one of our plans was that -- and I must -- I can share that with you since you asked me a sensitive question. Very soon in few quarters, our contributions from our value-added products will overtake our contribution from liquid milk. So this is the kind of stability which we want in the business, which will be like value-added products are less susceptible to price fluctuations, et cetera. So directionally, we are right. But I must also acknowledge. The only failure on our part is that we are a year late on what we wanted to achieve in this business on all parameters.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [68]

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Sir -- and just the last follow-up on this. On the procurement side, currently, what is the thought on improving that on the dairy side?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [69]

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The procurement is -- we had a traditional procurement system through agents, et cetera, which we tried to change. Now almost about 20% to 22% of our milk is direct procurement from our procurement centers. So this was one of the initiatives we have taken. And every year, that salience is increasing, and it will continuously increase because then we have more control if not on price of milk, but definitely on quality and quantity of milk, which is very critical. So I'm saying that, that is a long-term thing. So people -- companies have taken decades to build that system, and we will also build that. But I think that this is still a -- the bigger initiative and the quick win is in case we get our LSL or say, value-added salience to 40-plus percent from 29% this year. It could have been easily 30% to 33% had COVID not struck. We were very, very optimistic about several of our products. Another thing which I wanted to point out is that we put a UHT plant 2 years ago and we are very glad to tell you that UHT products are not easy to sell, but we have already broken even in that plant in the year '19-'20, and it will be a profitable plant from this year onwards. Several things are pointing in the right direction. But as I said, that you never know. Investing in harvesting is also our businesses.

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Operator [70]

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The next question is from the line of Prashant Biyani from Prabhudas Lilladher. (Operator Instructions) The next question is from the line of Prashant Biyani from Prabhudas Lilladher.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [71]

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So this INR 150 crore of CWIP that we have, what were the assets in which we have invested?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [72]

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Vardaraj, will you take this question, please?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [73]

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Yes. So this pertains to primarily 2 areas. One is in respect of -- we have put up a project in -- for our Animal Feeds business. This is for the raw material substitution project, which we are sort of, which is around INR 120 crores of CWIP. And around INR 22-odd crores in Astec. This is for our various herbicide plant, et cetera, which we are setting up in Astec. So this is primarily the 2 big areas for the CWIP.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [74]

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And sir, CapEx for next year would be how much?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [75]

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So CapEx, we expect, if all things go well, it will be in the range of INR 200 crores to INR 250 crores, depending on how things pan out.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [76]

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And these would be in which segment?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [77]

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We can sort of share that off-line, yes.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [78]

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Okay. Sir, just a follow-up with Mr. Yadav. How do you see the cattle feed segment panning out next year for us in terms of both volume and profitability?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [79]

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So the paddy crop in the Rabi has been very good. The wheat also has been bumper, you would be knowing that. So I think de-oiled rice bran price, which is almost 50%, 60% of the quantity of raw material in cattle feed, the prices have started coming down, which is also strange because, normally, this is the off-season for paddy and the prices go up. So my sense is that margins will -- margins as well as volume will expand in the coming year. The only caveat here is on volume. One of the important things, which should happen, is that milk consumption should go up because milk prices are suffering because consumption is very low, particularly in the out-of-home consumption segment. All these chai tapris and the coffee shops and small coffee shops, the industrial canteens, ice-cream in marriages, paneer in marriages and parties, et cetera, it is down to almost 10% in the country. And sweets -- particularly sweets also are big consumer of buffalo milk. So once all these things come up, in case this demand increases by another, say, 30%, 40% of wherever we were a few months ago, you will see huge shortages of milk in next few weeks in this country, and that will be good for cattle feed volumes also.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [80]

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Okay. And sir, again, this palm oil prices -- palm oil consumption is mostly, again, out-of-home. So in case all these eateries and all don't open, then even though on the production side we don't have any issue in getting production growth, but do you see some pressure on the selling side?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [81]

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That's what I said. Selling side pressure will not be there because import will reduce. So the only thing is that the price will go down. When the price goes down, the other soft oil prices will also go down. So the government will step in and put duties. So I think we have seen that several times. And it is a formula based, so our margin and percentage will be protected. But I think what -- we are also interested in high prices because our absolute margins are very high when the prices are high.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [82]

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So volumes are not at risk in the palm oil, only the volatility in price?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [83]

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We predict up to point -- I think 96%, 97% accuracy every year. We know the standard. We know the age of our plantation. We know how much fruit will come. We know in what temperature, humidity condition, how much is the oil extraction ratio. So I think it is very predictive.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [84]

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And sir, just 1 last question. Broadly, what would be the out-of-home consumption for dairy or milk specifically for Agrovet and for the industry as a whole?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [85]

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Let me just tell you that out of 180 million tonnes of milk, roughly, [mota moting] about 60 million tonnes -- 50 million to 60 million tonnes is in the organized sector. About 45 million to 50 million tonnes, you can see, is in the organized sector. And according to me, 1/3 of that milk goes into value-added products and institutional segment. All companies -- particularly, let me just add to that, all companies in South India, who are our competitors, 20% to 30% of sales for different players is the institutional segments, largely these chai, coffee shops, small hotels, et cetera.

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Operator [86]

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The next question is from the line of Prakash Kapadia from Anived PMS.

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Prakash Kapadia, Anived Portfolio Managers Pvt. Ltd - Principal Officer [87]

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I just had 1 question. Most of the questions are answered. Sir, in this environment, which business you see tailwinds and room for market share gains? And historically, in these testing times, we've seen bad debts occurring. So what are we doing to reduce risk, which segment has potential risk, if you can comment on that?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [88]

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So my sense is, if you ask me, I don't see -- I see Animal Feed, agrochemical, Astec and Crop Protection business, aqua feed business, all these businesses will be steady or improving in time to come. As I already said, even if the size of the market reduces, bigger players will have slightly more market share. Raw materials and feed are coming down. So we believe that there is opportunity for margin expansion there. The issue will be chicken and milk and oil because there the out-of-home consumption is a substantial part of the business. In milk, it is close to 30% and chicken it is close to 40% to 45%. In oil, almost 9 million tonnes of palm oil which comes almost 7 million, 8 million tonnes is used in the institutional segment. So definitely, it is a big country. Lockdown cannot be forever. It has to come down. All the consumption has to come back. When it will come back, it is a matter of conjecture. But my sense is that in terms of our focus, risk versus reward, this will be the list.

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Prakash Kapadia, Anived Portfolio Managers Pvt. Ltd - Principal Officer [89]

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And we don't see any credit risk per se?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [90]

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Credit risk is definitely -- 2 businesses I see a little bit of credit risk right now, aqua feed business and the Crop Protection business. And the credit risk is not the current credit risk because I'm very sure that we will be very careful. But I think in both these businesses, we give credit of 90 to 120 days to several of our distributors. The good news from the aqua segment, I need to tell you the shrimp prices have really skyrocketed after a bit of lull from U.S. demand because out-of-home consumption of all foods is very poor in America. China stepped in and it is importing huge quantities of our shrimp. It has the price of INR 40 gone to INR 200. Government declared a price of INR 260, which is a remunerative price for the farmers, but now it is prevailing at INR 300, INR 310. Fish prices also are very high because harvesting of fish has not happened. And just because of lockdown, the harvesting and consumption is matching. So even though there is fish in the pond, the prices are not going down. So once the system opens a little, definitely our recovery are possible. In agri, we have to see because we already have capital stuck in the market which was supposed to come in February and March and not come over and above how much credit, et cetera. So we had to really tread that path with lot of question.

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Operator [91]

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The next question is from the line of Rakhi Prasad from Alder Capital.

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Rakhi Prasad, [92]

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Most of my questions are answered. I just had a couple of data questions around the fresh fruit bunch that was processed in FY '20 and how much was the CPO also that was...

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [93]

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Vardaraj, will you take the numbers?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [94]

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Yes. I'm doing that, sir. So we processed -- in FY '20, we processed 568,000 metric tonnes of fresh food bunches. And your next question was in terms of...

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Rakhi Prasad, [95]

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CPO.

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [96]

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CPO sold, we sold around 98,600 metric tonnes of crude palm oil.

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Rakhi Prasad, [97]

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And your hectares under cultivation in FY '20?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [98]

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That we'll share it off-line with you. Yes?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [99]

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Also number you give, no. Palm kernel oil, how much we sold?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [100]

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Palm kernel oil, we sold 12,000 metric tonnes.

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Operator [101]

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The next question is from the line of Nav Bhardwaj from Anand Rathi.

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Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [102]

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Sir, a short question on Astec. What I wanted to know is that the confidence that we are getting in terms of the sales that we received in the previous quarter continuing in the times ahead, is that based on a commercial inertia trend? Or have we signed some long-term or rolling contracts with new customers?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [103]

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So it is a combination of both. One is a long-term agreement also we have made that is under -- covering both CMO businesses as well as the normal generic businesses. Thus, as our output has increased, the spot market has also improved. So previously, we were mostly into the contractual businesses, but now we have almost 10% to 15% of the stocks we sell on the spot price basis. So that also has given us a little bit higher increment in terms of price realization.

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Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [104]

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All right. And then in terms of pricing, do we think this is sustainable at the current level?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [105]

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Yes. This will be -- yes, current level will be sustainable because manufacturing, be it in India, be it in China is also constrained. Chinese situation have improved a little bit of that. But still, they are not on a 100% basis. There also productions are between 60%, 70%, 35%. And the cost of manufacturing across the globe has increased, right, because all the other cost or cost...

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Nav Bhardwaj, Anand Rathi Financial Services Limited, Research Division - Research Analyst [106]

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Sir, volume, we are continuing with the same trend?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [107]

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Yes, yes.

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Operator [108]

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We'll take last 2 questions. The next question is from the line of Aditya Singh from Axis Bank.

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Aditya Singh, [109]

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Sir, this question was for Astec Lifesciences. Sir, how do you see the exports business of Astec? It has increased over the past 3 years. It's come up to almost 60% of the annual sales. So how do you see that being affected after this event?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [110]

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There is no effect as such because -- always there is no effect. These are all long-term positions, and agriculture everywhere is an essential activity. So there is -- there would not be any negative effect of COVID. So these are very sustainable businesses.

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Aditya Singh, [111]

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Yes, sir. Sir, also, sir, 1 follow-up question on the Astec Lifesciences only that, sir, the CapEx that we had committed to in Astec Lifescience. So I think we had invested around -- as you had earlier said, that we've invested around INR 22 crore in CWIP. So what is the plan going forward for Astec in terms of debottlenecking?

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Arijit Mukherjee, Astec LifeSciences Limited - Whole Time Director [112]

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This investment -- one is debottlenecking is a continuous process. Other than this, investment has mostly been in herbicide plant. So herbicide plant commissioning will start by third quarter. So this year, third quarter, the herbicide commissioning will start.

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Aditya Singh, [113]

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Okay. And sir, like just on the overall numbers to Balram, sir, like, how -- like, as you had earlier pointed out, it is based on the lockdown that we'll be able to see whether the -- how the overall sales pan out for the company. But our focus being on profitability, sir, can we expect similar margins going forward?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [114]

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So I can't comment, but I don't know how to answer that question. At this time, it is difficult. If COVID situation improves, things improves, so we might see expansion in margins also.

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [115]

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COVID is causing raw material prices to fall, so that is some [compensation].

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Aditya Singh, [116]

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Okay. Okay. So sir, just another last question, sir. So as -- I think there was a land parcel sales, so that's been mentioned in the investor PPT. So like, sir, this -- I mean, even last year, I think we had around INR 30 crore that we had obtained from the land sale.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [117]

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Land sale in Hyderabad, yes.

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Aditya Singh, [118]

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Yes, sir. So sir, do we expect any like further -- was this -- as a part of strategy, was this planned?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [119]

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So Godrej Agrovet has several land parcels, and some of them are old factories which are in industrial areas which have now changed. Like there are feed factories, which were started in early '80s or early '70s, and now those industrial areas are middle of residential or IT parks, et cetera. So we keep on looking at these opportunities of getting rid of real estate. But I think a small transaction is still remaining. Mr. Vardaraj, will you explain to him?

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S. Varadaraj, Godrej Agrovet Limited - CFO and Head of Legal & IT [120]

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Yes. So out of the 100-odd acre, almost 86 acres is what we sold now. The remainder 14 acres is under -- that project is still on. We're trying to play some of the things. And if everything goes well, we will try and monetize that as well in the coming year.

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Operator [121]

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We'll take one last question, which is from the line of Saurabh Kapadia from Asian Markets Securities.

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [122]

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So you have launched a new energy drink mill. So I just wanted to know your strategy going...

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [123]

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Hello?

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [124]

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Yes. So am I audible? Yes. Sir, go ahead.

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Operator [125]

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You are audible. Please go ahead.

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [126]

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Yes. Sir, I was asking about the new launch in the energy drink space. So your strategy in this field and how we see developing the distribution in this area.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [127]

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So one thing I must tell you is that there is a big focus on value-added products. More and more milk needs to be converted into value-added products to come out of this yoyo profitability because of milk procurement prices or milk sale prices because we also realize competing with cooperative is almost impossible with so much of government interference, et cetera, et cetera. So definitely, that is the strategy now. This energy drink is made from the whey protein which comes out of paneer production, and this is a drink which is a low price point drink. It is a INR 10 drink. It is a UHT packed drink. And it's a very good product at that price. But our main focus will continue to be more milk-based products like yogurts, ice-creams, milkshakes, flavored milk, et cetera, et cetera.

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [128]

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Okay. And sir, the last question. How you are currently positioned in terms of upcoming Kharif season in terms of the product placement and overall inventory levels?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [129]

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Which season?

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [130]

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For the agri input season?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [131]

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Agri input season.

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Saurabh Kapadia, Asian Markets Securities Private Limited, Research Division - Research Analyst [132]

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Yes.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [133]

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Agri input season, I'll be very frank that we are not where we normally should be in the first week of May because there is a huge amount of placement all the companies do in March and April. So that placement has started 15, 20 days late this year. The second thing is that most of the plants should be running full capacity from March to June, July. That some amount of loss of production has also happened, but we have already contracted some more factories to cope up with that loss. So according to me, I think, we will be there at the last year level definitely in terms of placement of product by end of May, which is the time when all the things which are required for Kharif have to be placed. But if you really ask me, that is still dependent on the COVID situation, different districts, different industrial areas, different states having different lockdown rules depending on the COVID situation in their geographies. So I am optimistic that, I think, more and more we hear that we will have to live with COVID means that economic activity and industrial activity will be allowed to continue, even though there are cases discovered here and there because, I think, the life should go on. In case that happened, in case stability in production comes, I don't see why we will not be able to match and exceed last year levels.

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Operator [134]

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The next question is from the line of Nitin Awasthi from East India Securities.

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Nitin Awasthi, [135]

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I would just like to know. There was a big hit that we took in the feed segment because of the raw material price movement, which was not in our favor. This was in spite of the price hike that we had taken. So if you could just highlight a few of these raw materials that have moved against us and where do they stand as of today?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [136]

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I told you that one of the big hit in the first 9 months in our chicken business and in our feed business, particularly poultry feed business, was the corn prices. Unprecedented high -- all-time high corn prices of INR 22 to INR 24 a kilo were seen last year. And they did not come down in spite of a good crop because the poultry demand was very, very good. And now that poultry demand is almost vanished, the corn prices are coming down. This is supposed to be off-season. The Rabi crop is only about 25%, 30% of the total crop. So normally, the prices don't sink to this level now, but the corn prices have come down to INR 11.50 to INR 12 ex-Bihar right now. At this time last year, it was INR 17, INR 18. So you can see the drop. Similarly, soya meal also. We cannot export too much. The production was very good last year. And poultry demand used to be almost 70%, 80% of the soya meal demand. That has come down substantially. So soya meal is also likely to come down if -- it is already dropping, but it is dropping slowly, but my sense is that in time to come soya meal will also come down by at least about 7% to 8% more. From the peak, it has already dropped about 15%. De-oiled rice bran, again, the paddy -- Rabi paddy, 4 million, 5 million tonnes of crop has been very good. All these shelling mills and solvent extraction plants will start again. And we can see that impact of DORB. It has dropped about INR 1,000 to INR 1,500 at different places on a base of INR 11,000 in last 1, 1.5 months. So my sense is that the raw material position in feed will be bearish. The demand in poultry feed will be bearish, but this will benefit our chicken business and our feed business and to a certain extent milk business also because cost of production of milk for farmers has is coming down.

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Nitin Awasthi, [137]

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Okay. Sir, if you could just put a price to where the soya meal prices were and where they are now?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [138]

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So it was INR 36,000, INR 37,000 ex-Indore per tonne about 1.5 months ago or so. Now it is INR 31,500 to INR 32,000. So don't tell me that in the morning, I asked it is INR 500 more or INR 500 less, kind of more ballpark because commodity -- even as we talk, prices are changing. So I'm saying that this is the thing. I think, almost 13% to 15% drop in last 45 days, 50% to 60% drop in last 45 days in corn and about 10% to 15% drop in de-oiled rice bran in last 20, 25 days.

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Operator [139]

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We'll take the last question from the line of Prit Nagersheth from Wealth Financial (sic) [Finvisor].

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Prit Nagersheth, [140]

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I think my question was on corn, which got answered. The only other question I wanted to know was in palm oil, which is the government has banned the import of palm oil. So how does that affect us?

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [141]

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Refined palm oil.

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Prit Nagersheth, [142]

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Right.

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Balram Singh Yadav, Godrej Agrovet Limited - MD & Executive Director [143]

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So crude palm oil will still be imported and soft oil will still be imported, but the refining margins will become better. So refiners will make more money. Earlier, refined oil could be imported, so it was refined -- refining margins were suppressed because of the import parity, et cetera. So Mr. Godrej, would you like to add something on palm oil?

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [144]

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Yes. So palm oil prices have fallen (technical difficulty) no longer much in demand. The government did bring some licenses for refined palm oil. But if the refined palm oil is coming from Nepal or Bangladesh where they have lower import duties, the government is blocking those imports because they are not properly certifying the country of origin. So I think very little refined palm oil will come in. And as Balram said, that will give the refiners good margin. And the palm oil prices have fallen. And in the season, they may fall a little bit more. But if palm oil goes way below soybean oil, even in-home consumption of palm oil will start even if the out-of-home consumption of palm oil is very high.

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Operator [145]

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Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Members of the management, would you like to give any closing comments?

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Nadir Burjorji Godrej, Godrej Agrovet Limited - Chairman [146]

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I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we would happy to be of assistance. Stay safe and stay healthy. Thank you once again for taking the time to join us on this call.

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Operator [147]

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Thank you. On behalf of Godrej Agrovet Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.