Dhanuka Agritech Ltd
NSE:DHANUKA
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Dhanuka Agritech Ltd
Earnings Call Analysis
Summary
Q1-2025
Dhanuka Agritech reported a robust performance in Q1 FY '25, with a 33.74% increase in revenue, reaching INR 493.58 crores. EBITDA surged by 64.46% to INR 71.72 crore, and profit after tax grew by 48.45% to INR 48.9 crores. Despite uneven rainfall impacting herbicide liquidation, new products like La LaNevo and MYCORe Super exceeded market expectations. The company maintained its revenue growth guidance between 18% to 20% for FY '25. Additionally, a buyback of 5 lakh equity shares worth INR 100 crores was approved. Key strategic moves include leadership transitions and expansion of the product portfolio .
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Ladies and gentlemen, good day, and welcome to Dhanuka Agritech Q1 FY '25 conference call hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Darshita Shah from Antique Stock Broking. Thank you, and over to you, Ms. Shah.
Yes. Thank you, [ Ashlok ]. On behalf of Antique Stock Broking, we welcome all the participants to Dhanuka Agritech's First Quarter FY '25 Earnings Call. Today, we have Mr. M.K. Dhanuka, Vice Chairman and Managing Director; Mr. Rahul Dhanuka, Joint Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. VK Bansal, CFO, on the call. Without further delay, I would like to hand over the call to Mr. Dhanuka for opening remarks. Post which, we can open the floor for Q&A. Thank you, and over to you Dhanuka ji.
Thank you, Darshita ji. Good afternoon, ladies and gentlemen. I am M.K. Dhanuka, Vice Chairman and Managing Director of Dhanuka Agritech Limited. I welcome you all to the Q1 earnings call of Dhanuka Agritech Limited. I hope all of you are doing well and keeping safe. I have with me Mr. Rahul Dhanuka, Joint Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. VK Bansal, CFO of the company.
As you are aware, Dhanuka Agritech is a leading agrochemical company in India, focusing on brand sales in the market. Also in FY '24, Dhanuka has commenced operations at our Dahej chemical synthesis plant, and we are working to create way-through in chemical synthesis. Dhanuka is going with the reason of transforming India through agriculture. We have a pan-India presence to reach out to more than 10 million farmers with our products and services. Dhanuka's key focus has been on introduction of novel chemistries and extensive product development, distinguish us from the rest of the industry.
Firstly, I would like to share a very important announcements with all of you. After attaining the age of 75 years, Mr. RG Agarwal, who is the chairman of the company, has decided to pass on the baton of the organization and stepped down from his operational role. I'm thankful to him, and the Dhanuka's Board of Directors, for an entrusting this responsibility to me to take on the role as the Chairman of the company.
Mr. Agarwal's leadership has been nothing short of extraordinary. His reasons and foresightedness have [indiscernible] through challenges and opportunities always with an nonwavering commitment to excellence. Friends, I am happy to share that Mr. Agarwal has accepted Board's request to continue guide and mentor us to ensure that we stay in alignment with our long-term business strategy as chairman emeritus. We welcome him and he has been elevated from chairman to chairman emeritus.
Further, Mr. Rahul Dhanuka will now assume the role of Managing Director of the company. Rahul has worked dedicatedly over last 25 years in making Dhanuka brand powerful. And under his leadership, Dhanuka is transforming into a sales and marketing powerhouse. I'm confident that we will lead the organization into a bright future.
Now I will request Mr. RG Agarwal, chairman of the company, to share a few words with us on this transition.
Dear friends, at the age of 75, as I stand here today and look back at my journey of 55 years, I'm faced with immense pride and gratitude to us, all our stakeholders, shareholders, directors, investors, employees, customers and vendors. With all the support I have been able to build a great organization, Dhanuka Agritech, which is completing 44 years of operation.
Today, as approved by the Board, I am overjoyed to pass on my role as chairman to Mr. M.K. Dhanuka to guide the organization into the next phase of growth. He has been a great pillar for the organization and working for the growth and success of the business. He has exceptional leadership script and a remarkable entrepreneurship. Further with Rahul, as new managing director, I'm looking at the speed of Dhanuka increasing even more. Rahul connect with people, focused on building brands for business and forcing great relationship with all principal companies has played a critical role in our growth.
I'm particularly delighted with the last financial year's performance, where we achieved a core high profit and one of the best profitability levels, despite that last year was not good and many companies were having degrowth. I am also pleased with the continuing success in the first quarter of current financial year, which is a very, very proud moment. Our achievement is exciting and highly commendable.
As I move on the next stage of my life. I would like to wish both of them great success. Once again, thanking all the investors and all of you on the call for your support to Dhanuka in the past and hope it will continue in future. Thank you very much. Thank you.
Thank you, Mr. Agarwal. Friends, as Chairman, I pledge to honor our heritage while embracing the winds of change. We will innovate fearlessly knowing that progress is not linear. It is a [indiscernible]. With your support, I am committed to build business that increase our speed further. As we transition, let me assure everyone that this process has been years in the making. It began with Mr. Rahul's appointment as Chief Operating Officer in the year 2021, followed by my appointment as Vice Chairman and now taking on the role of Joint Managing Director in 2023.
Through careful handholding and seamless to [indiscernible] the culmination of our efforts, the passing of the [indiscernible], transitions can unsettled businesses, but our transition will fortify years. Our future is bright, and we stay committed to transforming India through agriculture. India [Foreign Language].
Coming to the Q1 performance of the company. Friends, this year, the weather conditions have shifted positively although not as per the expectations. The effect of El Nino have subsided. However, the lagging effect is yet to be observed. There was less than 100% rainfall in first quarter and uneven rainfall in several regions in the month of July till 25th July. The raw material prices have mostly stabilized now. However, there is still price reduction on the basis of Q1 FY '24 versus Q1 FY '25.
Overall, the demand for our product was very good in this quarter. The rainfall was highly uneven in July, especially in the central region impacted herbicide liquidation. On a positive note, the IMD has given an updated forecast of above average rainfall for August and September for most regions in India. This is a good sign for the rest of the rainy season as well as the Kharif season as well as the Rabi season. Already the water level in reservoirs and dams is increasing.
Our new introductions parts, La LaNevo and MYCORe Super are receiving great response from the market with the demand exceeding our expectations. I'm confident that these products set will new benchmark for Dhanuka industry. Further, we are going to launch 2 9(4) Me Too products in next 3 month. We are committed to keep bringing new products and technologies for the Indian warming community to support them in their endeavor to increase farm productivity and safety of the foods.
Looking at the financial results of the year, our revenue from operations during Q1 FY '24/'25 was INR 493.58 crores, with a significant improvement of 33.74%. I repeat 33.74% as compared to the corresponding quarter previous year. EBITDA stood at INR 71.72 crore in Q1 FY '24-'25 representing an increase of 64.46% as compared to the corresponding quarter of the previous year. Profit after tax is at INR 48.9 crores in Q4 of FY '24-'25, representing a growth of 48.45% as compared to the corresponding previous year quarter.
Friends, the zone-wise percentage share of turnover was north, 31%; east, 8%; West, 42%; and south 19%. Product category-wise share of turnover was insecticides, 25%; [indiscernible] herbicide, 50%; other 15%. You will notice that out of the 100%, 50% share was only of herbicide, because initially, the conjunction of herbicide is highest in the first quarter. But due to less rain from 1st July until 25th July, the consumption of herbicide has been less and there will be some good returns in the month of July because of the known consumption of herbicide.
For financial year '24, the company has already rewarded its members by paying an interim dividend at the rate 400%, that is INR 8 per equity share, having face value of INR 2 per year, which has absorbed INR 36.46 crores. The shareholders of the company in the 39th Annual General Meeting has today, has approved the final dividend at the rate of that 100%, that is INR 6 per share. This will absorb an additional of INR 27.35 crores with a total payout of 27% over last year's PAT.
Further, the Board of Directors of the company in its meeting held today has approved the proposal for buyback of 5 lakh equity shares of the company for an amount not exceeding INR 100 crores. INR 100 crores only at a maximum price, not exceeding INR 2,000 per equity share. Thank you very much for your kind attention. We would now like to open the session for question and answers. Over to moderator. Thank you.
[Operator Instructions] The first question is from the line of Yash from [indiscernible].
Congratulations again on a great set of numbers. Sir, given the strong momentum we've seen in Q1 with 34% revenue growth, do you believe that this is the right time to revise the guidance from 18% for FY '25 to significantly upwards to about 25% and your margins going up by -- EBITDA margins by 21%, 22%?
Yes. You see our guidance would be -- we are upgrading from 18% to 20%. As of now, as you're already aware, the July was not a very good month, because of the some less liquidation of duty side and some of the June billing.
Okay. So I thought that we're seeing a very strong momentum in Q1, because typically, Q2 is our largest quarter. It's very strong. So how are you seeing Q2 going on for right now?
Expecting a little lower double-digit growth in Q2.
Okay. Okay. Okay. And sir, my last question would be, how do you see your margins trending, sir, the next 2, 3 quarters? Do you think it can go above 29% EBITDA?
You see, we are expecting on a year-on-year basis, around 100% decline in the gross margin.
100 bps.
100 bps, basically, and there was improvement in the quarter 1, it was expected. But overall, last year, the gross margin was expected. So we are expecting a decline of around 100 bps in the gross margin level. And similar dip on the EBITDA margin as well.
The next question is from the line of Sujan Shah from Molecule Ventures.
New funds for introducing 9(3) products in the coming quarters.
Could you repeat the question?
Yes. Are you planning any launching product to launch in the coming quarters in the herbicide or any [indiscernible] segment?
Yes. So we our planning 1 9(3) plus launch in Q3 of this year.
Okay. And as of now, we are seeing herbicide the demand being impacted, how the demand outlook we would be expecting in the herbicide segment and how it will be evolving in FY '26?
In fact, July has been a difficult month for the herbicides. until June it was a good run. But after the range in the last week of July, we are looking at some of the herbicides picking up again. So for some products, the stage is over now, the crop stage is higher. But for some other product, for example Targa Super will now have a good opportunity after the last week of -- last week rains of July. So some herbicides that is still going to opportunity in the month of August.
[Operator Instructions] The next question is from the line of Pradeep Rawat from Yogia Capital.
So I have a couple of questions. The first question is regarding our engagement going on with innovative partners. So with respect to the approval for manufacturing patented technical molecules, so how has been the engagement going on?
Yes. Engagement is going on. We don't have any breakthrough as yet, but we are working on it.
And what kind of ROCE and EBITDA margin can we expect from patent technicals?
You see, it is very difficult to comment point of time because there's no such event has been finalized now. So that question cannot be answered.
So any ballpark number, what could be it over and above the generic technicals. So it will be 50% higher than that or something like that?
I can't comment on that at this point.
Okay. Understood. And other question is regarding how much of our revenue comes from exclusive molecule tie-ups with innovators?
Innovators, our molecules of 9(3) types is around 25% of the total turnover.
Okay. And one basic question. So do the generic formulas are sold under a brand name or is it sold without a brand name?
They are all sold under a brand name.
Okay. And do we have any plan to export formulation where we don't -- where registrations are required?
So we have started exports of formulations, not in Dhanuka brand, but in some partner distributors in the destination countries.
So their registrations are required by us or is it the registration of our partners?
Registration is required by the local distributor.
The next question is from the line of Hussain Bharuchwala from Carnellian Capital.
On the technical side, we said that you have on a patented technical. So we need to have [indiscernible]?
Could you repeat again?
Sir, you said you were doing some PT technical. So can you elaborate on that part, what are basically we doing on the patented technical? Is it on the manufacturing side that we are doing in the something of that, if you can explain that part?
So we did not mention that we have started manufacturing any patented technical. We are looking at tie-ups with companies who are having patented technicals for manufacturing purpose. At the same time, we are introducing patented technical as formulated products in India in Dhanuka brand. So no patented technical manufacturing. But yes, patently technical production has unique products for the Indian market.
Got it. Got it. And sir, since you said there are returns that are happening in the month of July, so how do you see the whole year -- financial year? If you can give us some ballpark in terms of the guidance. I think initially you explained to some extent, but if you give some number in that field will be better for us to understand. For the whole year, what is our revenue guidance? Maybe 18% was initially, now you guide between 18% to 20%. Do you and [indiscernible]?
Yes. That's right. We are giving the guidance of between 18% to 19% -- and 20%.
Got it. Got it. And any update in terms of interaction with the Japanese player? Any update in terms of -- if you had a certain site with it by the Japanese. So is there any further discussions that are happening? Any of that sort that we are able to commensurate? Or any discussion with the Japanese? If you help us out to understand that.
Whenever there is any significant update, we will definitely update all the investors.
The next question is from the line of Viraj from SiMPL.
Yes. Sir, first question is, you mentioned about sales happening in July. If your sales for the full year we're expecting around 20% growth. Now given the kind of growth we have seen in Q3, it would mean that for the balance 3 quarters of the year, the growth will be flat, even if I consider 20% growth for the full year. So why this conservatism, just trying to understand on that? So that is one.
And second is, so also on the margin guidance which you gave, right, that on a full year basis we're expecting around 100 basis points contraction in EBITDA margin. Again, that would mean a degrowth in part for the rest 3 quarters. So just trying to understand how does it add up given the environment is very positive and the RM price is also relatively conversive?
You see, when we are talking, we are talking as a consolidated view, including Dahej. And so far now our Dahej unit is delivering negative EBITDA. So considering that impact, I'm telling you, there would be impact around 100 basis points. And as far as you're talking 20% growth in the top line, if we are delivering around 15% growth quarter-on-quarter basis, then only we will be able to deliver 20% annual basis.
No, I understand. So for Dahej, what will be the revenue contribution and the profitability or the loss, how much would that be for the quarter?
For the quarter, the contribution in the top line is around INR 14 crores. And in terms of the EBITDA, there is a negative EBITDA is INR 3.75 crores.
Right. Still, I mean, if you adjust for Dahej, the losses we will be incurring. It seems the base of everything -- base is the B2C business, would see a good amount of -- would see some good property growth for the 9 months.
I could not get your question.
The environment is so positive and the way the RM prices are still quite favorable for branded formulated players like us.
Right. You see there was -- last year, there was exceptional growth because the raw material prices are declining every month-on-month basis. But similar reduction was not happening in the final price. Because of which, there are some extraordinary profit [indiscernible] there last year. Therefore, we are saying there could be an impact of around 100 basis points on the whole year gross margins, including the Dahej.
Okay. Okay. Got it. And in terms of [indiscernible] specialty portfolio, what would that be in the quarter?
Mr. Viraj, can you repeat your question as you are not audible?
My second question was in terms of the mix -- product mix of specialty and non-specialty portfolio. And has there been any price correction in the specialty portfolio also?
See, major impact was generic, specialty portfolio, there was not much impact.
Sir, what is the mix? What is the revenue contribution in specialty?
It was almost 50-50.
[Operator Instructions] The next question is from Rohan Gupta from Nuvama Wealth.
So my first question is on breakup of volume versus price-led growth in the current quarter?
Current quarter volume versus value, there is a difference of 6%. Our volume growth is more than 39%, as is value of 33%.
So I think price was negative minus 6%.
Yes. But you see, on an overall year basis, we are expecting the impact maximum 2%. Because last year, the price was declining quarter-on-quarter basis. But things have improved significantly and expecting that the price of value versus volume would remain around 2%, 2.5% in quarter 2, and it should be 0 sometime in quarter 3, and quarter 4, it should be a little reverse. And on yearly basis, it should not be down to more than 2%.
Sir, with this 39% kind of fantastic volume growth, my question is how do you see that the industry for the quarter would have grown? Also, I heard that in July, definitely, there were some, in herbicides, some sales slightly weakness coming back. So I just wanted to know that the industry scenario. And for the year, what kind of volume growth you are anticipating in the current scenario for the industry.
Well, we are just breathing out of the end of the quarter. So it's difficult to give some industry estimates. However, my best estimate is that probably half of what we have grown would be the volume growth of the industry. And our growth has been driven significantly by our recent new launches, Perch, a very powerful Japanese herbicide for groundlet and soybean. LaNevo, a very strong insecticide for horticulture crops, and horticulture crops as we have seen have received a huge impetus across the country because of their pricing, value to the farmer and also boost by the government.
And our launch of MYCORe Super, which is a biological product and soil quality enhancer. That is also offered for specialty crops, horticulture crops, sugarcane and pulses. So these 3 offerings have really given us a big boost. And there were, a couple of years back, started exporting domestic trade business has also given us additional boost. So I think -- so what our team has achieved is a good achievement for the first quarter, and the industry growth would be somewhere about half of that.
For year, sir, given the monsoon so far now is quite encouraging and agri-commodity prices are also benign. So stand for the industry growth will be similar, like half of the -- I mean, roughly 18% kind of number you were talking about the industry growth. What would be your growth estimate for the industry for the year?
I wish. But not that, I can forecast for the industry right now. What I would say is that at Dhanuka, we are looking at a healthy double-digit growth, what we kind of estimated in the previous call. We are sticking to that estimate. We are looking at close to 18% plus growth for ourselves on the overall financial year basis.
Okay. Sir, my second question is on the raw material prices. We have seen that the prices have now stabilized or have actually started going up in some pockets in agrichemical intermediates coming from China or even domestically. Dhanuka, my question was that how is the availability? But we have understood that some of the intermediates was not coming from China, and domestic prices have gone up. So just -- agrochemical intermediate or technical availability, how it is right now? And how is the pricing scenario?
You see the prices have been reducing. In most of the molecules, there can be exceptions, because there are so many pesticides available in the market. There are registration of more than 250 product in India. So this is going to happen every time that, out of 250 molecules, 10 products prices may reduce and 20 product prices can increase. So now the prices are more or less stable. Or in some of the molecules, like at hydrochloride there is heavy jump. [indiscernible] there is heavy jump. [indiscernible], there is jump. So some of the product prices are increasing.
So overall, it's a mixed bag. Some products, it is reducing, some are stable and some are increasing. Availability from China is not a question mark. Availability is abundant because Chinese companies have increased their capacity manyfold. And -- but unfortunately, because of known availability of vessels and the container, the cost of freight has increased drastically. And because of known availability basically, there is a challenge and a gap in supply and demand in India. Because the supplies are delayed, the containers which were coming in 15 days' time, it is taking even 1 month's time in getting the supply. So that's why gap is there in demand and supply in this situation.
Okay. Sir, in terms of the nonavailability, you mentioned that definitely the freight cost has gone up. So how is the scenario now? Is it still the same? Or it has started improving? Because we understand that the Red Sea crisis is still going on and container availability still remains a challenge, so -- and the rising -- I mean freight cost challenges are -- I mean, when the cost is going up, are you able to pass it on to the end customer and farmers in terms of pricing?
Yes. So sir, the shipment costs, which had gone almost 3 to 4x has now come down to almost like 2x from what it was at the beginning of this calendar year. So definitely, the availability has improved for the containers and the freights have gone down. Talking about the passing on the cost to the consumer, the freight cost in most of the products is a small component. And wherever the price increase is there, we try to pass it on regularly to -- in our product prices.
Sir, my question is on the Dahej plant. We have initially thought about making some generic products here [indiscernible] and all. So just wanted to understand that how is that product portfolio ramping up? And in the current scenario, have you identified or have you finalized some more products in generic categories? Or is still the utilization level in Dahej still remains lower and we are still currently contemplating the trends kind of opportunities only?
So Rohan, we are contemplating both. We are exploring -- continue to explore grams and contract manufacturing opportunities. At the same time, we are also ramping up our number of products in the existing plant, generic products. So we have already identified, shortlisted and developed the products. And soon in this financial year -- by the end of this financial year, we'll have one more product from the Dahej.
[Operator Instructions] The next question is from the line of Darshita Shah.
My first question was regarding the gross margin expansion. How much of the gross margin expansion would be due to better product mix? And how much of it because of the low RM price benefit?
Large part of the gross margin expansion is because of the product mix. Very negligible impact could be on account of the raw material prices.
Okay. Got it. Secondly, we are expecting -- are we expecting the technical prices to inch up from overall as Dhanuka highlighted that there could be a possibility or has it neutralized?
I believe the current technical prices for most of the products have stabilized, barring a few products, as I said earlier. There is a few products price increase, a few products still, there is some price correction. So on a financial year basis, we are not expecting more than 2%, 2.5% difference in the prices on the overall portfolio for the company.
And on the sales return front, how has the sales return trend been until now in the second quarter? If you could highlight something on that.
There was a significant -- there was increase in July. But I'm expecting on the overall quarter, we said, they will not be any [indiscernible].
Okay. And lastly, on the low double-digit growth that we guided for, for the second quarter. We have adjusted for the sales return impact on that, right?
Absolutely, absolutely.
The next question is from the line of [ Fadi Rawat ] from Yoga Capital.
So what is the average gross margin for patented formulation and generic formulation?
You see, we are dealing with more than 80 brands, so generate when there is a great variation. There are starting in general where the gross margin is around 10%, 12%. At the same time, the generic which are having margin 20%, 25%. And [indiscernible] are having [ 30% ] margin as well. And in terms of 9(3), definitely good margin, you can say better than the average margin.
Okay. And how is the collaboration going on with Kimitec? And how big can be the biopesticide business for us?
Biopesticide business opportunity is actually huge and emerging. And the government's continuous effort to actually encourage farming in different forms and ways. And recent budget planning of bringing 1 crore farmer in alternative methods of farming opens up new revenues on that front. Kimitec, the Spanish company is also developing various new products for their own launches in Europe, America and in India also. We are under discussions with them for bringing various biological products as we continue to promote our own biological range. So we do hope to bring in some of Kimitec products by the end of this financial year.
And how big could it be in percentage terms to our overall revenue?
Well, as of now, it is insignificant in terms of our overall revenue. And if we compare with the overall industry consumption, our estimate of the actual crop protection by biologicals is less than 5%. If we include in this biological nutrition, which includes seaweed, mycorrhizal, then that is another 5%. At Dhanuka, we are very strongly present in 3 formulations that we offer to farmer of mycorrhizal, including our first quarter launch of MYCORe Super. We are offering 3 variants of sea weed extract in name of Danshin Gold and Dunbar, which is our amino acid offering.
And we are also offering plant nutrition in some other forms. So we are very strongly positioned along with the farmers when it comes to nutrition, soil health and plant health management. But in terms of overall biological portfolio, it is really insignificant currently. But we do hope that with the changing landscape and mindset of the farmer, this opportunity is there to stay and would probably grow at the double-digit rate as compared to the conventional chemicals.
Yes. Understood. And one bookkeeping question. So what is the production capacity at our formulation plant? And what is the utilization currently?
You see in formulation plant capacity is not at all a challenge because we are making different silos of SKUs from 50 ml, 100 ml, 250 ml, 500 ml, 1 liter, 5 liters. So you see calculation of capacity utilization is very difficult. It changes with the SKU. So as such, there's no challenge in the capacity per se.
The next question is from the line of Rohit Nagraj from Centrum Broking.
Congrats on one more robust set of quarter. Sir, first question is on the manufacturing, Dahej manufacturing fee. So when based on our strategy and our visibility, when do we expect that this facility will be broken even? Is that probably sometimes end of FY '25 or maybe sometime in mid FY '26? Any time line based on current visibility?
So we are expecting breakeven in FY '27.
Sure. That helps. And the second question, in terms of the targeted market for the molecules from Dahej, which in all our geographies where we are currently targeting. And given that Danukaji also mentioned, there has been an ample supply coming from China, what is our strategy or our differentiating factor when we are selling these products into -- or formulations into other geographies?
So I got the first part of your question, which I'll address, is the products that we are manufacturing in Dahej. So we are targeting markets initially where the registration has to be taken by the domestic distributor. But now we have already started working on registrations in U.S., where we are connecting with various customers to reach our products in the U.S. market. Brazilian registrations are taking time. We have initiated those as well, but it is -- take a longer gestation period. Could you repay the second part of the question?
Yes. So there have been -- I mean, a greater supplies which are coming from China. So what would be our maybe selling point in terms of approaching those new geographies, where probably China is currently supplying a similar set of molecules?
So China definitely has a significant cost advantage in most of the products because of the scale at which they operate. Two, the place China as a source in most countries in the short term is definitely not visualized. But yes, we're working as developing alternate source for some of the molecules. Where China is present, China is present with its products all across the world. We are trying to target both some of the African, Middle East market as well as the American markets, where we are trying to position our products favorably with the customers.
The next question is from the line of [ Kash Ramesh ] from Nirmal Bang Equities.
So can you talk about the contribution of the new products launched there? So exclude the new products, what would be the volume growth and the top line growth for this quarter? And how do you see the growth for the existing portfolio to exclude the new products for the rest of the year?
Yes, excludes new product, there would be impact around 7%, 8%.
So you are saying the volume growth will be 30% this quarter?
Yes.
And what is the outlook you see for the existing portfolio for the rest of the year in terms of top line growth?
Around 15%.
So you will get 15% plus the growth in the new products. That's the way to understand it, right?
That's right.
And what is your plan for further new product launches this year for the next 9 months?
See the one with [indiscernible], we are going to launch in quarter 2, and [indiscernible] in quarter 3. And one more [indiscernible] in quarter 3.
So the second one you mentioned is a 9(3) or...
9(3) in quarter 3 is dinker. Dinker would be 9(3).
The next question is from the line of Ravi Gandhi from Dalal and Bucha Stock Broking.
Sir, with respect to our M&C products, just wanted to understand, are we the sole supplier? Or are there any other third-party distributors or those companies also formulates also supplying in the domestic market?
So we are partnering with Japanese, American and European companies. Most of the American and European companies have direct distribution in India. So the molecules that we are distributing are core distributed along with the principal company, and there is no exclusivity agreement with most of these companies. However, with the Japanese companies, when we introduced the product for the first time in India, we have an exclusivity period, which sometimes gets extended also as we continue to invest in the product and grow the volumes.
So it is different for the Japanese companies where we enjoy exclusivity for a period of time. And with the American and European companies, normally, there is no exclusivity.
So what would be the period for this exclusivity? Is it like 2, 3 years? 10 years? Or if you can give some light on that as well.
Initially, it starts from 3 to 5 years.
Okay. And how much would be the total revenue contribution from patented products that we co-market?
Okay. See, sometimes this patenting thing can be over-imposing. Yet, what happens is that many of our products, while we sell are not all of them patented, yet the Indian regulatory system does allow some safeguards in terms of a new source registration taking as much time of 5 to 6 years. So while our patented products will be a few in the list, yet by virtue of the regulatory system itself, we get any good protection for a few years.
Two, in the meanwhile, when we are able to develop the brand equity for these new introductions, farmer is more akin to use this tried and trusted brand from the house of Dhanuka more committedly rather than changing it for his precious crop.
Okay. I mean if we were to put the specialty basket -- I mean, the protected ones as well as patented ones, what would be the total revenue contribution, put together, not the specialty part. Not the specialty part. I mean the one where you can -- the other players will have to delay their registrations and one where we have got some sort of patented molecules. So if you were to put that in one basket, what would be the total revenue contribution?
Regulatory and patented, put together. So something close to INR 500 crores.
Okay. Got it. And just one last thing, if I can squeeze in. And do we earn -- what sort of trade margins do we earn when it comes to M&C products? Because I mean, if M&C selling it directly, are we going to won better trade margins because of the distribution that we have? Or are our price not that competitive when it comes to pricing?
Yes. Just this point like a few minutes back, in terms of many M&C products that we handle have, over a period becomes generic or have become over competitive in space of various other competition. So as such, just being an M&C product probably is not a guarantee, but is a differentiator for sure for the customer. The margin ranges from 10% to 12% to 15% to 30% in various M&C products. There is -- some of our 9(3) products would have margins way above 30% to 40%, 50% also.
Got it. Fair enough. And just one last thing, if I'm allowed to. Because of the Dahej plant, I mean, our boat lies in the distribution and branded formulations, whereas manufacturing is a tough business. There are already a lot, many players. I mean you already addressed it, but is it the right strategy in terms of capital allocation?
Well selling branded products is an easy business, is probably not my cup of tea to say. Where we have been able to do a reasonable job with our brand business is for sure. At the same time, you will see various other chemical plants doing a good job in the country. So each of these businesses required a lot of commitment, investment of money and time. We are here for a long haul and long run. We would really like to take advantage of the political economic scenario of India Plus One, the consumption opportunity in the country, the consumption opportunity globally from the Indian chemical manufacturing landscape. So we are here to stay and take advantage of all these opportunities.
The last question is from the line of Archit Joshi from BNK Securities.
Sorry if I'm being repetitive, I missed the first part, wherein you had mentioned about 50% of our sales are coming in from herbicide products. Sir, was there anything different during the quarter that we were able to sell more herbicides? And I recall this from what we had experienced during COVID, sales of herbicide in the first quarter is pretty high due to labor shortages. Is that a phenomena aberrative in nature? Or was there something else? If you can be a clarification.
We are happy for you to repeat that. If at all, there is a repetition in my response also. Dhanuka is strongly positioned as a herbicide company because we have introduced some powerful herbicides over the last many, many years, thanks to our partnership with various Japanese companies. And in this quarter, also, we introduced Perch, a very powerful herbicide, along with already existing very powerful herbicide portfolio.
Government's impetus on making India [Foreign Language] in terms of oilseeds and pulses is a very powerful and unique opportunity. And If I may add our current agriculture minister comes from Madhya Pradesh, with a very long stint over there, which brings in focus towards soya bean a very important, oil seed crop and various other pulse crop there, which are important for Madhya Pradesh. Overall, farmer has significantly increased the acreages of oilseeds and pulses, wherein Targa Super, Sakura, Purge, Tornado, some of the products which have found really good opportunity across the country, including Madhya Pradesh, Gujarat, Uttar Pradesh, Karnatka, Telangana, everywhere.
In addition to that, significant push on increasing maize acreages purely for economic reasons by the farmer. Interim water scarcity increase for order has also significantly boosted Sempra sales in maize pockets. So overall, Q1 was heartening in terms of herbicide growth.
Sure, sir. So in a nutshell, the recent acreages that we saw had more salient or herbicide products and we are having a strong herbicide portfolio. That would be suffice to say.
Absolutely.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Friends, to conclude, I would like to thank all our investors for your support and confidence in Dhanuka. With the transition in management, we have embarked on our next era of growth and business success. We continue to demonstrate our ability to overcome challenges and emerge stronger despite uncertain business environment. As we assure our stakeholders that we are committed to the task of transforming India through agriculture, and will play an integral role in rewriting the future of a better and new India.
Wishing you all health and safety. Thank you very much.
Thank you very much, sir. On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.