Kaveri Seed Company Ltd
NSE:KSCL

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Kaveri Seed Company Ltd
NSE:KSCL
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Price: 943.4 INR -0.31%
Market Cap: 48.5B INR
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Earnings Call Analysis

Summary
Q1-2025

Kaveri Seed's Q1 FY25 Financial Performance and Outlook

Kaveri Seed's Q1 FY25 revenue rose by 5.32% to INR 808.08 crore. EBITDA increased 4.91% to INR 292.78 crore, while profit grew by 5.63% to INR 282.91 crore. Cash on books stands at INR 605 crore. The company saw significant growth in hybrid rice (10% volume, 17% revenue) and maize (49% volume, 80% revenue) but faced a 35% volume and 27% revenue drop in cotton. Guidance projects a 10-12% revenue and 15-20% bottom-line growth, despite a challenging cotton market due to pest issues and decreased acreage【4:0†source】【4:1†source】.

Earnings Call Transcript

Earnings Call Transcript
2025-Q1

from 0
Operator

Good day, and welcome to Kaveri Seed Company's Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation.

I now hand the conference over to Mr. Mithun Chand, Executive Director. Thank you, and over to you, sir.

C
Chennameneni Chand
executive

Thank you. Good afternoon, and welcome, everyone, to our quarter 1 financial year '25 earnings conference call. We hope you have had a chance to review the presentation of our results, which is also available on our website. I would touch up on the operational and financial performance of the company and then open the floor for question-and-answer session.

Company is very bullish on both maize and rice and expect both volumes and realizations to go up in the years to come. Increase in volumes in both maize and rice have resulted in [ good ] growth rates in revenues. Sowing area of maize and rice had increased across several states by 10% and 5.28%, respectively.

Operator

Sorry to interrupt, sir. Your voice is breaking.

C
Chennameneni Chand
executive

Am I clear now?

Operator

Yes, you are clear now, sir.

C
Chennameneni Chand
executive

Company is able to successfully pass [indiscernible] cost of cultivation and are able to...

Operator

Sir, your voice is breaking in between, sir.

C
Chennameneni Chand
executive

Sorry. Exports during the quarter have been very encouraging and would continue to do well in the coming years to come. Contribution of new products have substantially increased in both maize and bajra. Cotton volumes and revenues were down by 35% and 27% respectively.

Stand-alone financial highlights. Revenue from operations was at INR 808.08 crore as compared to INR 767.37 crores in quarter 1 FY '24, registered a growth of 5.32%. EBITDA at INR 292.29 crores (sic) [ INR 292.78 crores ] as compared to INR 279.09 crore in quarter 1 financial year '24, increased by 4.91%. I think profit was up over at INR 282.91 crores as compared to INR 267.84 crores, registered growth of 5.63%. The cash on book stands at INR 605 crores.

Hybrid rice volumes increased by 10%, and revenues increased by 17%. Selection rice volumes increased by 15%, and revenues increased by 27%. Maize volumes increased by 97% (sic) [ 49% ], and revenues increased by 80%. The contribution of new products was up from 67.67% to 75.79% of volumes in bajra. The contribution of new products was up from 40% to 52% of volume in maize crop. Cotton volume as well as revenue decreased by 35% and 27%, respectively. Vegetable crops like beetroot, tomato, ridge guard, sponge guard and marigold has been performed well. Export business sales is increased by 451.73% compared to last year quarter 1.

I will now open the floor for question-and-answer session.

Operator

[Operator Instructions] First question is from the line of Siddhant from Goodwill.

S
Siddhant Dand
analyst

Last quarter, you had guided for a 4%, 5% volume fall in cotton, if I'm not wrong, and volumes have fallen dramatically by 35%. So what -- and what would your guidance be for the year or an approximate one? And what has caused this huge 35% fall?

C
Chennameneni Chand
executive

Yes. When we started the last year, we thought that the cotton acreage will go up this year, but -- and we thought that the supply will be lower this year. But when we see this year, the acreages were down by 10% across the country, and there was more seedfall in these states of Northern India where we were very strong.

And there was some issue with the production also, where the hybrid feature in demand was in shortage for us. And there was a huge supply in the market. And as we want to retain our volumes -- I mean as we want to retain our realization, we are compromising volumes as well. So that's the major impact which we are seeing this year.

S
Siddhant Dand
analyst

Will you be able to catch up some of our cotton sales in the upcoming quarters? Or is it...

C
Chennameneni Chand
executive

Majority of the sale is already done for this year. I don't think the cotton acreages -- cotton sales will happen in the next coming quarters. But this is a sale what we anticipate, and this will remain as it is.

Operator

Next question is from the line of Rishi Kothari from PI Square Investments.

R
Rishi Kothari
analyst

Congratulations on a good set of numbers. Sir, I had -- this is the first time I'm attending the company's concall...

C
Chennameneni Chand
executive

Sorry, I can't hear you. Your voice is breaking.

R
Rishi Kothari
analyst

Am I audible now properly?

Operator

Yes, yes, proceed.

R
Rishi Kothari
analyst

Yes. What I was saying is this is the first time I'm attending company's concall -- conference. So while going through the financials, what I saw is that on a quarterly basis, the June quarter is one of the quarters that is -- post the highest sales among the all other quarters.

So what exactly -- is it because of the crop that we deal in are high? Is that all that is the reason? Is there any other, like, possibility of changing the dynamics from a full year rather than a seasonal revenue posting for us?

C
Chennameneni Chand
executive

We are in a business where it's very much seasonal because we get the monsoon in the month of June, July, and majority of the crop comes after the monsoon. And especially, for example, if you take quarter-on-quarter, it only comes in the month of May, June and July.

So we will be in line with the season. But if you see our portfolio, we have one of the largest portfolios with a good mix of crops. And going forward, I think this will remain as same, but the percentage will slightly change going forward. But definitely, first quarter will be the major quarter for us.

R
Rishi Kothari
analyst

[indiscernible] what are the revenue targets to be had in terms of the growth targets? Do we have anything on our mind or internally that we have decided?

C
Chennameneni Chand
executive

So we anticipated a growth of 10% in terms of the top line and 15% to 20% on the bottom line. We gave that guidance. But this year, unfortunately, we wouldn't do well in the cotton crop because of the -- as the crop has come down and -- or various reasons might be because of the pest attack, or otherwise, the returns on the crops were lower this year. But otherwise, if you see the other way, we have managed in spite cotton being more than 35% of our portfolio where we have lost 25% of the revenue, in spite of that downfall in the revenues, we were able to manage by growing in other segments, especially like maize and rice, wherein maize has grown by more than 75%, and rice went up more than 25%.

So that gives us a better edge than other companies where we have a good mix and we can compensate the revenue loss in other crops. But going forward, even we are bullish on cotton, as I said, that sometimes based on the seasonality and the price of the commodity, it varies. But I don't see a threat on a long-term business. As there will be a year or 2 where we see this type of unexpected things, but it could take [ a whole 30 days ]. 10% to 12% revenue growth and 15% to 20% at the bottom line is quite possible.

R
Rishi Kothari
analyst

For -- how many years are we [indiscernible]? For 2, 3 years? Or any...

C
Chennameneni Chand
executive

Going for about 5 to 10 years' view.

R
Rishi Kothari
analyst

Okay. 5 to 10 years' view. Okay. And in terms of the quarter, where, in fact, you said, right now, the -- I read the report that cotton prices recently has increased like what -- on an average of 4% to 5%. So does that beneficial to us? Or is it a harmful thing for us as a company?

C
Chennameneni Chand
executive

It's a beneficial thing for us. If the prices goes up, that gives more revenue for the farmer. But the other way is that like given our production cost has gone up and we were not able to reduce the cost of production -- we were not able to reduce the cost of production, and we were not able to pass it on to the farmer because it's controlled by government. And that's one of the reasons where we have [ lost ] the sales.

R
Rishi Kothari
analyst

So we have, in a way -- you said the cost of production, that has increased for us and not passed on to the farmers. So that is, in a way, cut the margins in a way.

C
Chennameneni Chand
executive

Yes, exactly.

R
Rishi Kothari
analyst

Okay. Okay. And in terms of the CapEx, what are we targeting for next year, FY '25?

C
Chennameneni Chand
executive

So CapEx is a continuous thing. As we are increasing volumes in other crops, we require new plants and facilities to process the seed. And other thing is that we are spending a lot in R&D. So as we have said earlier also, INR 40 crores to INR 50 crores is what we spend on a year-on-year basis for the CapEx. That should be more than [ competent ] for us.

Operator

Next question is from the line of Jahnavi from Aequitas Investments.

J
Jahnavi Dodai
analyst

My question is on the lines of the announcement on 109 seeds during elections by PM Modi. So in a few articles I read that these seeds also include a few of rice and cotton seeds. So could you help with, out of 109 seeds, how many seeds can we end up benefiting from? And what sort of size of opportunity are we looking at in case of approvals?

C
Chennameneni Chand
executive

So basically, those things are released by the government. We need to see the performance of those seeds. But anyhow, we are not accessing those seeds. We have our own in-house R&D where we breed for it and we sell in the market. So we don't use those seeds.

J
Jahnavi Dodai
analyst

Okay. So...

C
Chennameneni Chand
executive

But on the other way, we have ties to the universities where we store the main -- we have access to [indiscernible], and we have -- that has to be all the government bodies and the international institutes, where we take the access to the [indiscernible] in using -- or in developing hybrid seeds for us.

J
Jahnavi Dodai
analyst

Okay. But however, even if the performance of these seeds come -- for some of these seeds comes out really well, we would not end up using these seeds or not end up benefiting from this at all?

C
Chennameneni Chand
executive

No, as of now, no, because we have our own research, and we need to see that. But we have many hybrids which are -- we need to see the performance of that. This is the first year when they are launching it. We can only comment after seeing the results of that.

Operator

Next question is from the line of Sanjeev Zarbade from DreamLadder Advisors.

S
Sanjeev Zarbade
analyst

Yes, can you give me...

Operator

Your voice is very low, sir.

S
Sanjeev Zarbade
analyst

Is it audible now?

Operator

Slightly better, sir.

S
Sanjeev Zarbade
analyst

Okay. Can you give me a sense of the demand outlook for the future over the medium term?

C
Chennameneni Chand
executive

So if you see the crops where we are dealing with, we are mainly with rice, cotton and maize. These are the 3 big crops. Apart from these, we are in the vegetables, bajra, so given all of the crops. But this is the top 4 crops like maize, rice, vegetables and cotton. We see a growth in most of the crop because maize area is increasing year-on-year as they've sold too much as the -- and the government has initiated for the ethanol projects that will give a good way for maize.

And in rice, the realization percentage is going up. That's a good sign for us to increase the market shares of hybrid rice, and we are a part of it. And apart from that, cotton, if you see year-on-year, is coming down, but definitely cotton has acreage. Remember, the medium term, 3 to 5 years' view, definitely that should go up. So -- and the vegetables [indiscernible] the segment is increasing at more than 15% year-on-year.

So we are gaining most of the segments. Apart from that, we are there in which markets like mustard, bajra. So these are also doing well including sunflower. So we see good growth in most of the crops, and we are not worried about the cropping pattern as such as we are well-diversified portfolio. And in most of the crops, we are in the top 3. So we'll definitely get advantage of that. We see a good growth in the coming years.

S
Sanjeev Zarbade
analyst

And what would be the size of exports over the next few years?

C
Chennameneni Chand
executive

If you see exports, if you have the last 3, 4 years, we have gained some traction in exports especially in like new crops like sunflower, rice and maize. These are 3 big crops where we are exporting. Vegetable is also there, where we are doing in a very small way. But as you are aware that it takes a longer time for us to establish in different countries because the farmer only believes in seeing. So it takes some time. But it's very fortunate that the sample for the experiments or the -- what we have done in the last year is -- it's -- that's given a very good result.

Going forward, we are targeting many countries, especially the African countries and Southeast Asian countries. These are the 2 new where we are concentrating on. And we are getting [indiscernible] on that. So if you see in the down-the-line 3 to 5 years, we are very bullish about exports, and exports will definitely growing more faster than our normal growth.

Operator

Next question is from the line of Mohammed Patel from Care Portfolio Managers Private Limited.

M
Mohammed Patel
analyst

Sir, the textile minister mentioned that we can expect approval of new Bt cotton varieties. So where...

C
Chennameneni Chand
executive

Sorry, can you be a bit louder please?

M
Mohammed Patel
analyst

Textile minister mentioned that we can expect approval of the new Bt cotton variety. So where are we on that?

C
Chennameneni Chand
executive

We are one of the largest player in Bt cotton segment, hybrid Bt cotton segment, and we are already a part of the entire program. Whenever they give the licenses, we'll be one of the topmost to get benefited from that. So we are very like optimistic that most of the approvals will be given -- approved now. And we already are in tied with the service provider. So it should not be problem for us. And it's a very good sign for the industry as well because once the idea of genetically modified crops are clear -- this is not only cotton. There are many other crops to come in. So that's a very good sign for the industry, and we are very bullish and optimistic about that.

M
Mohammed Patel
analyst

So can we expect this to be a part of our sales next year?

C
Chennameneni Chand
executive

Time, we can't time exactly because it depends on the government approval. But by seeing the pace and by seeing the approach of the service provider and the government approach towards approving the genetically modified crop, it looks that it would be released as early as possible.

M
Mohammed Patel
analyst

And whenever this happens, what kind of opportunity this can bring for Kaveri?

C
Chennameneni Chand
executive

So basically, the entire cropping pattern will move to the new technology. So as we are already there in that business and we are in line, we are in tied with the service providers. So definitely, we'll be a part of it. And again, based on our hybrid performance, definitely, we have an opportunity to increase our market shares. So that's -- we are in like very positive -- very well placed for the new technology.

M
Mohammed Patel
analyst

And so whenever this happens, we can expect to grow 20%, 30% much higher than what you would have grown with the older technology?

C
Chennameneni Chand
executive

See, that all depends, like -- it's not about technology. Definitely, technology will definitely make an improvement in the yields for the farmer. But again, it depends on the hybrid. The compatibility with this technology will be hybrid. That matters. But the pipeline hybrids, what we have, it will -- it might be too early, but the experience, what we can say is that the hybrids, what we have in the pipeline, will definitely -- will help us to increase the market share.

M
Mohammed Patel
analyst

So you're saying after the approval, we can see higher growth in the cotton segment for a few years.

C
Chennameneni Chand
executive

Definitely. If not, even I'll just -- I'll say even if the technology is not approved, but the pipeline hybrids, what we have are giving better release, down the line, we see that even if the technology is approved or not approved, we'll definitely increase our market share in the coming years.

M
Mohammed Patel
analyst

And what will be the pricing for this new technology with the government...

C
Chennameneni Chand
executive

That, I think that will be decided and discussed both with the technology provider and the government. We are too early on that. But definitely, they are working on that one, the technology -- they will work on that one, the technology and [ approach ].

M
Mohammed Patel
analyst

Okay, sir. My next question is any update on the contingent liability and the tax matters?

C
Chennameneni Chand
executive

As of now, nothing. What we have disclosed is what we have. And something confirmed, definitely we'll disclose to the exchanges and investors.

M
Mohammed Patel
analyst

And what is the exports number for Q1, absolute number?

C
Chennameneni Chand
executive

Q1 is a very lean quarter. The exports -- I'll just continue in a while before the end of the call. I'll just let you know.

M
Mohammed Patel
analyst

It's okay. It's okay. My next question is, so maize grew 80%. So what -- have we gained market share as compared to last year, that is, relating to hybrid?

C
Chennameneni Chand
executive

Sorry?

M
Mohammed Patel
analyst

Maize has grown 80%. So I was just trying to understand, have we gained market share as compared to last year?

C
Chennameneni Chand
executive

Definitely, the maize acreages are up by 10%. In terms of the volumes, they are up by 50%. Definitely, we are gaining market share in that.

M
Mohammed Patel
analyst

Can you share the number, market share?

C
Chennameneni Chand
executive

Sorry?

M
Mohammed Patel
analyst

Can you share the market share number?

C
Chennameneni Chand
executive

We'll be around 10% to 11% of the market share now.

M
Mohammed Patel
analyst

And what was this number last year?

C
Chennameneni Chand
executive

It will be -- I'm just figuring out the first quarter, but we need to see market share at the end of the year. It's too early to give the market shares.

M
Mohammed Patel
analyst

Okay. What are the R&D spend expected for FY '25?

C
Chennameneni Chand
executive

It will be 15% higher than last year. Last year was around -- I think it was around [ INR 55 crores ], and the CapEx was around [ INR 50-odd crores ], INR 70 crores to INR 80 crores for the total expenditure on R&D. That will go up by [indiscernible].

Operator

Next question is from the line of Rohan Patel from Turtle Capital.

R
Rohan Patel
analyst

Some data points I want from your side. As for March -- as for financial year '24, what would be our cotton sales?

C
Chennameneni Chand
executive

Sorry, can you please repeat?

R
Rohan Patel
analyst

As of March '24, for financial year '24, what would be our cotton sales in volume as well as the value?

C
Chennameneni Chand
executive

I'm not able to hear you properly, sorry.

R
Rohan Patel
analyst

All right. Give me a second. For financial year '24, what would be the cotton sales for the year in value and volume terms?

C
Chennameneni Chand
executive

Cotton sales usually are -- there's a -- usually majority of the sale happens in the first quarter. The numbers which are there for the first quarter is more or less like for the year. Last year, we have, like, sold around 55 lakh packets. And this year around [ 35, 36 lakh packets ].

R
Rohan Patel
analyst

Okay. You sold -- I'm asking for financial year '24. Is this for financial year '24?

C
Chennameneni Chand
executive

Yes, more or less, like for financial '24, 55, 56 is our total sales.

R
Rohan Patel
analyst

Okay. And what would be in value terms for financial year '24?

C
Chennameneni Chand
executive

I don't -- I will find the exact number for the entire financial year for the cotton crop, but I can tell you the quarter basis because plus or minus 5% is the total sales for the year. On the financial year '23/'24, the cotton sales was close to INR 350 crores. This year, it is like INR 250 crores for the first quarter. So more or less, it should look similar to the -- it should look same for the entire year.

R
Rohan Patel
analyst

Okay. Okay. I see. And I just missed your comments on the reason why our cotton sales fell for this quarter 1 FY '25. Can you just help me in...

C
Chennameneni Chand
executive

I explained in the earlier...

R
Rohan Patel
analyst

Yes, yes. I missed that part.

C
Chennameneni Chand
executive

But that's really all the -- as we had low inventory this year compared to last year, we had a constraint in the stock for our main hybrids. Then one thing with the [indiscernible]. The other thing, cotton [ trade ] as a whole India decreased by 10%. And in the areas we are -- where we are strong, especially in Northern India, I guess are [indiscernible] question. Yes, so [indiscernible].

Operator

Sorry to interrupt, sir. Your voice is breaking.

R
Rohan Patel
analyst

Yes. I could not hear your whole explanation.

C
Chennameneni Chand
executive

So we [indiscernible].

Operator

Sir, it is still breaking. We are not able to hear you properly.

C
Chennameneni Chand
executive

Am I audible now?

Operator

Yes, sir. Loud and clear.

C
Chennameneni Chand
executive

Yes. The other thing is that as the production cost has gone up, and we were not -- I mean to say like the selling price got increased by only INR 10. So we wanted to realize more in that way. Consciously, we have lost some sales. So that's where we lost -- there are 4 or 5 reasons where as a combination of all where we have lost the market share and the sales.

R
Rohan Patel
analyst

Okay. So the main would be that, one, the acreages are down by 10%. Second, the cost has increased, which you could not be passed on. So we wouldn't want to set it at certain key realizations, which are not profitable for us.

C
Chennameneni Chand
executive

Yes, yes, exactly.

R
Rohan Patel
analyst

These are the 2, 3 main reasons. And do you have...

C
Chennameneni Chand
executive

And other things, where we were very strong in Northern India, we lost -- I mean to say, the acreages were down by 20%.

R
Rohan Patel
analyst

Acreages went down by 20% per quarter.

C
Chennameneni Chand
executive

Where we were strong, especially Northern India. And the other reason is that we were not having the hybrids because we were -- there was a production constraint last year because of pest and rainfall. We couldn't get the desired quantities of the most -- I mean it's a popular hybrid. That's one of the reasons.

Operator

Next question is from the line of Ranjit from IIFL Securities.

R
Ranjit Cirumalla
analyst

First thing on the cotton [ consol ]. Would it be too early to kind of give some comments over the next year's availability? How is the production turning out this year?

C
Chennameneni Chand
executive

It's certainly, but we'll definitely get an indication because this year, we were able to get more production area. And as of now, the crop also looks good. We have good rainfall this year. I don't see any constraint in terms of availability for next year, not only for Kaveri but for the industry. We don't see any constraint for that. The production will be sufficient for next year.

R
Ranjit Cirumalla
analyst

Right. So would it be fair to assume that we can go back to the '24 kind of volumes, FY '24 kind of volumes back to 5.5, 5.6?

C
Chennameneni Chand
executive

Definitely, we are pretty confident about that, and there are a couple of new hybrids which were launched last year, but we couldn't sell in a good quantity this year, even we are expecting a good production for that hybrid. So if that comes in, definitely, we see a good growth in cotton.

R
Ranjit Cirumalla
analyst

Yes. And then the second question is on the margin front. So despite cotton underperforming significantly, we are still able to protect our margins. So what is happening on the non-cotton seeds front which are the seeds of segments that we have seen a bit of an improved profitability this year and how sustainable that would be?

C
Chennameneni Chand
executive

Non-cotton crops are not -- pricing is not controlled by the government, and we are easily -- we can easily pass it on to the farmers. So we work on different margins in those crops. Even though if you see the production cost has increased in non-cotton segment as well, but we were able to pass it on to the farmer. So that's the reason we were able to maintain our margins.

R
Ranjit Cirumalla
analyst

Can you give a ballpark number on the margin for the non-cotton seeds.

C
Chennameneni Chand
executive

That will be a bit difficult, but if you see the first quarter figures, the EBITDA margins, I mean, they're like minus other income, EBITDA margin stood at like 35%. So this should be something like close to 38%, 39%. When we talk about the margins, we need to see this for the entire year being first quarter, being the major here, the margin looks higher.

R
Ranjit Cirumalla
analyst

So we should settle around 24%, 25% [indiscernible]. Okay, and can you guide us how much has been the quantum of the price increases in the non-cotton side?

C
Chennameneni Chand
executive

See, like more than between 10% to 15% is the price hike? The same we have incurred, I mean to say, even the cost of production has also gone up by more than 10% to 15%. We have increased in the same ratio as what the cost of production got increased.

R
Ranjit Cirumalla
analyst

Right. And finally, any thoughts on the -- continuing with the -- rewarding the institution of this profit. So we were earlier doing buybacks and dividends.

C
Chennameneni Chand
executive

Again, that's a Board call we need to take. But if you see in the recent years, there was changes in the taxation front that we need to again discuss in the Board, and then we'll take a call on that, but we have not discussed anything about that because we have just completed a buyback last quarter. So we'll come up with the decision in the later quarters.

Operator

Next question is from the line of [ Janish Shah ] who is an individual investor.

U
Unknown Attendee

Just wanted to get some understanding on the product mix. Basically, I think you have already managed to have almost like 2/3, 1/3 kind of a mix between the cotton and non-cotton in the season, basically the first quarter, which is the most remunerative quarter for the company. Going ahead now, how do we see the seasonality getting even out? Or is there -- do you think the variations in revenue can be a little bit balanced going ahead, as we go ahead, maybe next 2, 3 years, given that we have launched new varieties, and we are also trying to diversify the crop patterns. So how do we see that changing? And of course, you have already mentioned the profitability is higher. Do you think this year in spite of the decline in the -- sharp decline in the sales of cotton the margin -- the profitability which you guided around 15%, 20% growth in bottom line could be achieved? Or do you think it needs to be -- it will get pushed back to the subsequent years?

C
Chennameneni Chand
executive

First, coming back to your last part in terms of the profitability, as first quarter is a major quarter, I don't think we'll attain that 15% to 20% margin profitability because we have grown at 5% to 7% in terms of the profitability for this year. I think that should remain same by plus or minus 2% here and there. But then coming back to the seasonality in the business. Even I explained in the earlier call, as India being -- majority of the Indians are, I mean to say, in agriculture, majority of the acreage comes after the monsoon, which is month of June -- May, June, July. So these are the main quarters for us, and this will be the main for India. This will be our main season. So we will be in line with the Indian seasonality.

But yes, going down the line by like 3, 4 years, as a percentage of contribution in the first quarter and in the next subsequent 3 quarters will change. As a percentage, it will come down. If you see 10 years back and now, 90% to 95% of the revenue used to come in the first quarter. But right now, it's only 65% to 70%. Going forward, it might come down further, but definitely, first quarter will be a major quarter for us. Not only for us, any hybrid seed company.

U
Unknown Attendee

And is there any outlook on export in a sense in terms of numbers, what kind of a visibility or targets you set for yourself for next 2 to 3 years, as you already mentioned that export is going to grow faster than the overall company growth rate. So if you can just give some more flavor to it, that will be helpful. And is it margin accretive -- do we have an export as a higher margin than the domestic one?

C
Chennameneni Chand
executive

Export looks very good for us. We are -- every time, every year, we are having new countries. When you see in the last 5, 6 years, every year, we are -- our hybrids are getting introduced to different countries. So going forward, we are very bullish on exports, and export market is as a whole is also growing from Indian perspective. And as crops, we have enough crops to export to other countries. Going down the line, we see a better growth, as rightly said, but we see a better growth in exports when compared to normal growth. But as of now, it's only 4% to 5% of our total revenue. Down the line in 3 years, it should be like close to 10% of our total revenue.

U
Unknown Attendee

And margins are better?

C
Chennameneni Chand
executive

It's like in line with the normal market. But right now, we are even slightly compromising the margins as well as we need to establish our hybrids in the market. But down the line once we get the good market grip or when our hybrids get popular in those countries definitely we will try to increase the realization. As of now, it's slightly lower than what we realized here.

Operator

Next question is from the line of [ Krushi Parekh ] from [ Pentacle ].

U
Unknown Analyst

Can you hear me?

Operator

Yes, please go ahead.

U
Unknown Analyst

So my question is that just this last week, government released some new varieties of seeds, the [ Pereira ] seeds, which I believe will take about 2, 3, 4 years for the companies to start developing and making it available commercially. So how is the market dynamics likely to change because of this? And is there going to be any impact on Kaveri Seed's business going forward?

C
Chennameneni Chand
executive

I explained some of the questions earlier. I see these are new hybrids which are launched right now. We need to see the performance of the hybrids. But technically, if you see, there are many companies which are introducing hybrids every year. Not 100 hybrids. There are thousands of hybrids which get introduced every year across India whether it's by government or whether it by private players. So as a company, we are competing with all these and doing a business in most of the crops. So that will be -- that doesn't make much difference for us because we are more dependent on our own R&D, and we are pretty confident about our own R&D and the pipeline of hybrid what we are seeing now. So as of now, we can't comment about those hybrids, which are going to get released in the next 1 to 3 years. But by seeing our present portfolio and the pipeline hybrids, we are pretty confident that we'll do better than the industry.

U
Unknown Analyst

And how is our product mix likely to change over the next 3 to 5 years?

C
Chennameneni Chand
executive

I don't see much change in the product mix because we already lost a significant revenue in cotton. Last year also, we said that we can't go below in cotton, but due to some circumstances we lost revenues in cotton as well from the bottom, what we thought as a bottom. But if you see the crops portfolio where we operate, we don't see any decline from now. So what I mean to say is that the product mix will not change much going forward. Going forward, the cotton percentage might slightly go to what we have this year because we see good growth in cotton in the coming -- next 3 to 5 years. And definitely, we are growing in other crops also. At a low base, cotton will grow much faster than other crops.

Operator

Next question is from the line of [ Pradeep Rawat ] from [ Yogya Capital ].

U
Unknown Analyst

So I have some basic questions. So first of all, do we produce seed from -- do we procure seed from outside? Or do we manufacture it in-house?

C
Chennameneni Chand
executive

Basically, we produce the seeds. We take land on lease, and we have our own seeds where we take the production activity and produce for ourselves.

U
Unknown Analyst

So you mentioned earlier that the supply of seeds were not good for cotton. So that's why our volume took a hit. So I didn't get the point. So can you elaborate on that?

C
Chennameneni Chand
executive

As I said that we take land on lease and produce ourselves. Last time, there was a loss of -- there was some deficit rainfall in some areas where we have produced. And the other thing is that the delayed rains, the interval between the rainfalls was too high, and there was some pest infestation. So these all have affected our production activity. That's the reason we are not able to get the desired inventory levels.

U
Unknown Analyst

And where do we have our lands? So it is spread out over India? Or is it consolidated in some regions?

C
Chennameneni Chand
executive

So we don't purchase land. Based on our need and requirement, we take land on lease for the season and then develop, produce the hybrids. There are some specific areas where the climatic conditions are good. So we produce there. For example, in cotton, we produce in Andhra, Garhwal region or some Maharashtra, Gujarat and Karnataka. So based on the climatic conditions, we choose the land and that's how we produce it. Based on the need and requirement, we take land on lease and produce it.

U
Unknown Analyst

Yes, understood. And sir, my second question is, are we seeing decreased acreage of cotton, partly due to the high demand for maize and rice due to economic policies. So more land is being utilized for growing rice and maize rather than cotton. So is that understanding correct?

C
Chennameneni Chand
executive

There are many reasons for that. As of now, the maize prices are high, one reason might be because of this. But most of the -- some projects have not started. But still the maize price is pretty high now. The maize crop looks much lucrative than the cotton. That's the reason farmers are also moving in. And the other thing is that cotton cultivation has become a bit difficult now, one, because of the pests and second, because of not that lucrative price for the cotton, that's another reason why cotton acreages are down.

U
Unknown Analyst

And the feed requirement per hectare of cotton acreage. So is it higher than the rice, maize. So do you need more amount of seed to grow per hectare of cotton?

C
Chennameneni Chand
executive

We can't specify that because some require in kg and some require in grams. For example, to -- per acre of land for cotton, they required just like 900 grams up to 1 kg of seed. Whereas in rice, it requires 10 kg to 30 kg. So that all depends on which crop you are cultivating.

U
Unknown Analyst

Yes, understood. And you just said that first quarter...

C
Chennameneni Chand
executive

In vegetables it is in grams.

U
Unknown Analyst

Yes, understood. So my next question is regarding the export. So you mentioned that this was a lean quarter for exports. So can you highlight which is a bulk quarter for exports?

C
Chennameneni Chand
executive

Usually second, third and fourth because as of now, we are very small. I mean to say that the base is very low. And when we add new countries, the sale based on their climatic condition, the export will go up. But usually 2, 3, 4 quarters are the major quarters.

Operator

Next question is from the line of Rohan Patel from Turtle Capital.

R
Rohan Patel
analyst

Again, just to reiterate what you just said that due to low base in cotton, we will be expecting cotton to grow faster than other crops in the next 3 to 5 years. Is that right?

C
Chennameneni Chand
executive

Yes. I said that the overall company growth in terms of the revenue should be 10% to 12% going forward when you talk -- when you take a 3- to 5-year view. But being a cotton low base from here we expect a higher double. I mean to say like, better growth than the normal growth in cotton.

R
Rohan Patel
analyst

And for that to happen, and to capitalize on that first, cotton acreage needs to be increased. And second is we have to gain the market share for that. Is that assumption right?

C
Chennameneni Chand
executive

Definitely, cotton acreages should remain stable or at least should go up. And the other thing is that we need to have enough production, where we can supply for the demand. The other thing is that we need to have a good hybrids -- pipeline hybrids, or new hybrids which got introduced or which are getting to introduce the next 1 to 2 years, should do well. So out of these three, we expect the acreage is going up. Second thing we have a good production for the coming years. And next, we have better hybrid. So as a combination of these 3, we see a good growth in cotton.

R
Rohan Patel
analyst

And do we see that just a marginal increase in acreage, just to see that rice and maize are having good realizations for the farmers. And if cotton acreages won't grow substantially with stable acreage or current acreage, we can do -- we can grow at 10%, 12%, the cotton seed for next three years. Is that possible?

C
Chennameneni Chand
executive

Yes. Even if the -- even if by seeing the present acreages and if they are stable, still we can grow in those segments because we lost market share, we lost volumes which are basically we don't have the desired hybrid levels. Hybrid ones they want. For the next coming years, we will definitely have those hybrids because the production levels are goods for this year. And we have a very aggressive production program this year. So I don't see any challenge for the desired products.

R
Rohan Patel
analyst

Can you just name what kind of hybrids are you bringing into the market that will help us grow for sure.

C
Chennameneni Chand
executive

So there are different segments and different hybrids. The company as a whole, we market more than 200 hybrids. So not only for cotton for a mix as a whole, as a company. So we're marketing more than 200 hybrids. So based on each segment, we have different hybrids and different pipeline hybrids, which are performing well and that gives us confidence to say that we'll grow much better in the quarter as a company.

R
Rohan Patel
analyst

And just to confirm, like in previous calls, you were saying that over the next 3, 5 years, if we take our non-cotton portfolio will be growing in the range of somewhere around 15%, plus or minus 2%.

C
Chennameneni Chand
executive

Yes, if you see, we have grown much better this year compared to what we had guided earlier. But we have lost sale in quarter, like more than 35% of our revenues and volumes. So we are able to do better in non-cotton segment than cotton. But when you see -- combined as a whole for the next 5 years, even if you recollect, I was saying that there will be a year or 2 where we see ups and down based on the seasonality and the pests. So these are seasons where we see that sort of a difficulty. But when you compare in the next 3 to 5 years, as a consolidated or CAGR basis definitely we're growing between 10% to 12% in terms of revenue and 15% to 20% in terms of the margins.

Operator

Next question is from the line of Yash Gandhi from Stallion Asset.

Y
Yash Gandhi
analyst

I just wanted to understand how does the pricing sort of work in the industry? And how do farmers sort of compare prices of different competitions. If you just sort of comment on that, just for my understanding.

C
Chennameneni Chand
executive

Definitely, the farmer compare with the price and with yields...

Operator

Sorry to interrupt sir, your voice is breaking, sir.

C
Chennameneni Chand
executive

Am I audible now?

Operator

Yes, sir.

C
Chennameneni Chand
executive

If you see the expenditure or spend on feed as a total cultivation is less than 5% for the farmer. So he doesn't mind to spend more for the good quality seed, which gives better yields than the competition. So based on the competition, based on our hybrid performance [ with private ] 10% for healthy prevailing hybrid, which is doing better in those markets. And in that way, the other thing is that when we are in the market when our production cost is going up, that will be similar for the other competition as well. So they will also increase the prices. In that way, more or less, we will be in line with the competition, 10% to 20% based on our hybrid performance. So that shouldn't be a challenge for us.

Y
Yash Gandhi
analyst

And sir, I mean, your -- would some of your distributors would have some sort of a leverage in terms of what areas or what state they want to sell that's a one particular brand against some other brands? Or do you have old distributors?

C
Chennameneni Chand
executive

So basically, it's like -- it's not like -- definitely distributors or retailers will have a say in the call, but more than 75% to 80% of the farmers buy the seed by seeing the performance. So if a hybrid has those sort of like what you say, like potential, to give better yield and then the farmer will definitely ask for that. But yes, as you rightly said, some distributors will -- where they will say that the -- 15% to 20% of the market where they push some products or where they just -- or by the farmer, they take new hybrids, which are newly introduced in the market to try. Otherwise, like 75% to 80% of the farmer buys by seeing the performance of the hybrids.

Operator

Ladies and gentlemen, as there are no further questions from the participants. On behalf of Kaveri Seed that concludes this conference. Thank you all for joining us. For any more information, please be in touch with Rama Naidu from Intellect IR on 992-020-9623. Thank you. You may now disconnect your lines.

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