Kaveri Seed Company Ltd
NSE:KSCL
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Kaveri Seed Company Ltd
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Ladies and gentlemen, good day, and welcome to the Kaveri Seed Company's Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Joining us today on this call is Mr. Mithun Chand, Executive Director.
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 would now like to hand the conference over to Mr. Mithun Chand. Thank you, and over to you.
Good evening, and welcome, everyone, to our quarter 2 first half '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 upon the operational and financial performance of the company and then open the floor for the question-and-answer session.
First half financial highlights. Revenue from operations registered a growth of 3% to INR 889.84 crores as compared to INR 863 crores first half of last year. EBITDA was at INR 299.68 crores, remained flat as compared to INR 298.87 crores in first half '24 (sic) [ '23 ]. Net profit was at INR 279.41 crores as compared to INR 278.55 crores. It remained flat. Cash on book stands at INR 559 crores, as again, INR 732 crores in the previous half year. For quarter 2 financial year revenues from operations was at INR 81.76 crores. EBITDA was at INR 6.89 crores. Net profit was at INR 3.49 crores.
The major highlights, Board has recommended a 250% dividend. That is INR 5 per equity share on a face value of INR 2 per equity share. Increase in volumes in hybrid rice and selection rice and maize that resulted in increase in revenues due to good realizations. Non-cotton segment has grown by 24% in the first half of the year on account of major contributors like selection, hybrid rice and maize have done well.
Exports during the first half were impacted by unrest in Bangladesh. This has resulted in a muted growth rates at revenue level and further below EBITDA and PAT. Increase in volumes in both selection and hybrid rice and maize have resulted in good growth rate on account of good realizations. Company's exports to recover in the second half of the year during rabi season as the situation in Bangladesh is stable now.
Operational-wise, the contribution of new products, the volumes of bajra was up from 59% to 73%. Hybrid rice volumes increased by 18%, and revenues increased by 28%. Selection rice volumes increased by 20% and revenues by 34%. Maize volumes increased by 9% and revenues were 24%. Vegetable sale volume decreased 11%, where our revenue decreased 13%. Exports sales stand at INR 6.1 crores in first half of '25 as compared to INR 25.93 crores in the first half of '24. The decline is due to political unrest in Bangladesh.
I will now open the floor for question-and-answer session.
[Operator Instructions] We have the first question on the line of Dhruv Saraf from Bowhead India.
Sir, if I just look at your maize revenue growth in H1 '25, which is at 24%. And if I were to just knock off Q1 of this year. So what I see in Q2 maize have degrown for the company Y-o-Y to the tune of around 30%, 40%. So what could be the reason, sir, given that other -- our competitors have shown good results in maize in Q2 specifically?
Dhruv, majority of the sales were there in the first quarter itself. Even though it's in the second quarter, it's nothing but the spillover of the first quarter. So we had a good sale in the first quarter. I don't know about the other companies they might have done the sale in the second quarter, but it's all of a half-to-half comparison is a good comparison.
Right, right. So there could be some front-loading that happens, which is why Q2 was subdued, basically?
Not exactly front-loading, but we take the actual liquidation of the stock. But the areas where we operate, the liquidation might have taken place in the first quarter itself.
All right. All right. That helps. And sir, just to understand the difference between standalone and consolidated numbers for this quarter. So we feel like this INR 40 crores, INR 50 crores, INR 50 crores, INR 60 crores difference. So could you just tell us what this difference is on account of?
Sorry?
The difference between standalone and consolidated numbers. What explains the difference? I mean, what leads to the difference between standalone and consolidated number of Q2?
You just wanted to have the consolidated for the Q2 -- only for the Q2?
Yes. So I mean, sir, consolidated for Q2 is at INR 137 crores, whereas stand-alone is INR 85 crores. So there is a difference of INR 50 crores that we see. What accounts for this difference of INR 50 crores?
So basically, we have other 4 subsidiaries in the company. One is Microteck, Genome, Mix and Aditya Agritech, these are the contribution from those companies.
We have the next question from the line of Gunit Singh from CCI.
Sir, I want to understand with the new tax regime, I mean, would we still be able to do buybacks going forward or buybacks are out of the question?
Again, there's a management decision that we need to take, but we have still more time for the buyback because we have completed the buyback in the last March. So we will decide in the later growth eventually.
Yes. I mean, you will decide, but I'm saying that, I mean, is it still possible with the new tax regime? Or is it practically impossible now with the new tax regime? I mean, I want to understand the purposes of management on this.
So that's all that we need to discuss and decide. It's not an individual decision. It's a Board decision. But we see how the shareholders get benefited out of it. We will -- most probably in the next quarter or so, we'll have a clear clarity on it.
All right. So currently, you haven't have a discussion regarding this yet?
Yes, yes. Still, we have some more time left for that.
[Operator Instructions] We have the next question from the line of Ms. Nitin Awasthi from InCred Equities.
Wanted some volume numbers. if you could shed light on your 4 core products, how much was the sale in volume terms for the first half of this year? That would be cotton, hybrid rice, selection rice and maize.
You want the overall volumes?
Yes, sir, total volumes just for these 4 products.
So usually, we are not disclosing volumes as of now, but if you want, I can give the overall company volumes. For the first half of last year, we had done volumes of 3.97 crores kgs. For this year, we have done 4.39 crores kgs.
Okay. And what has been the realization in the first half per package of cotton?
The realization is around -- close to INR 730-odd. INR 30, INR 40.
Okay. So INR 730-odd. Sir, next thing I wish to understand is how much is the maize market expanding by? What is -- what was our share? And where do we indicate to go with the growth in the market?
As of now, if you see compared to last half of this half, compared to last year half to this year half, the maize was up by close to 8% to 9%.
Total?
Total, as an India level, 8% to 9% level. Just -- it's in a single-digit number, between 5% and 8%. 5%, 7% is the total growth rate. But going forward, we see a good acreage coming in maize, as the ethanol plants are also coming up, the maize are good. It's much remunerative for the farmer now. We think going forward, maize as a crop should do well.
Sir, the market share a bit?
Market share of Kaveri?
Yes.
At present, we have a market share of 8% to 9%. Year-on-year, we think that we can grow our market share, especially in maize. We have very good pipeline hybrids in maize. And not only that, even maize is much visible in the first half. You can see even though the cotton is down by more than 30%, close to 30% in the first half, we were able to match our revenues as we have increased our sales in both rice and maize segment. Overall, you can say non-cotton segment. And going forward, which we see a very good growth rate coming in for these crops.
Understood, sir. But the main season from maize where you have the higher sales, maize is normally a crop where in H2 sales are higher than H1. So this year again and going forward, you expect a similar kind of growth or more growth in H2 for maize?
I don't think so. Usually, H1 contributes the majority of the maize. Even for last year, the maize was around INR 120 crores out of overall INR 190 crores. So H1 dominates the majority of the time. But in the second half sale, maize is the only crop which contributes more to the revenue.
We have the next question from the line of [ Harsh Vora ] from [ D.R. Choksi ].
My question is regarding [indiscernible] segment. If you can just throw some light on the drop in revenue we've witnessed in H1? And are you envisioning the growth of this segment over the next 3 years? And do you see any export potential in this segment?
So you're talking about export of cotton?
Vegetable seed.
Vegetable seed, if you see the overall first half, there's a slight decline of INR 2.5 crores, INR 3 crores, in percentage terms, it comes to 12% odd. But the season just was delayed this year because of the rainfall and heavy rainfall in most of the parts. We don't see any threat in vegetable seed. We are pretty confident that we'll grow in vegetable as desired, that will be contributed in the second half of the season.
Got it, sir. And any export potential going forward?
Last year, if you see the overall exports of around INR 65-odd crores. We have done close to INR 25-odd crores in Bangladesh itself. And other sale in Tanzania of INR 27 crores, INR 28 crores, as if you recollect last year con call, you said that's one of the core sales because we had done a government sale.
But especially in terms of Bangladesh, out of this INR 24 crores, we might lose INR 10 crores to INR 12 crores in export because we already lost the season because of the unrest, but we are trying to get that sale in some other parts of the world because we are starting in other countries like Vietnam, Ivory coast. We are getting orders from there. So we see that some of the revenue should be covered in those parts.
But if you see our overall growth of exports leaving 1 year like this. But overall, if you see the good growth in export as well as we are trying to -- as we are entering into many other new countries and we are getting very encouraging business from those countries as our hybrids are really doing well. We are fairly confident about export business as well.
Got it, sir. So you're planning to do exports across all products, right?
Yes, yes. Especially all products in sales, not cotton, but basically maize, rice and vegetables.
We have the next question from the line of [ Sanjeev S ]. from DreamLadder. Sanjeev your audio is not very clear, request you to go on the handset mode.
Is it audible now?
Much clear. Come closer to the microphone.
Yes.
I just wanted to get a sense of how the government business is standing out?
Government business for?
For our company?
Yes, yes, yes. Sir, we don't participate much in the government subsidies. If you see the revenue of the company for this year, it's hardly some few crores, even I doubt that it's in a single digit, not more than that.
Okay. And any new products that have been launched or how is the pipeline going forward?
That's a continuous activity what we do. We have launched -- we always try new products in each and every crop segment. The launches are very -- we have launched some hybrids in maize, in cotton, even in rice and even in other crops as well, including bajra and wheat, mustard. So that's regular activity, and there are -- apart from these hybrids which are launched, there are many other hybrids, which are in the pipeline, which are also -- have a good potential in the future years.
So how much would be the share of new products launched and the overall revenue?
That depends on the crop-to-crop. Usually, the hybrid which has launched in the last 3 to 5 years, we call it a new product. The overall contribution will be in between 20% to 35% in every year, in the range of 20% to 35%.
Okay. And what would be the CapEx for the current fiscal?
Most of the CapEx is already done. Like we might invest over INR 25 crores to INR 30 crores for this year. And year-on-year, INR 25 crores to -- what we always say, like INR 35 crores to INR 40 crores, but INR 25 crores to INR 30 crores should be more than enough.
Okay. And we have substantial investments also. And since we have most of the CapEx, we have already undertaken, is there any plan to distribute surplus cash to investors through maybe higher dividends or buybacks?
So if you see in the last 7, 8 years, we have done more than 6 buybacks, and every year, we are a dividend paying company. And we have just completed our buyback in the month of February-March. So always, we try to distribute cash, which is not required for the company. So as earlier I answered the question, like regarding the buyback tax has now changed, we need to have take a decision on that. I think in the next coming quarters, we'll have clear clarity on that.
And sir, the reservoir levels are like almost 87% full and...
Sorry? Which levels?
Reservoir levels.
Okay.
And we're expecting good demand as well as output in the rabi season. How should that kind of lead to increase in...
More or less, rabi for us is a very lean quarter, second half, usually second half is a very lean quarter when compared to first half. Most of the crops are -- like wheat and rice, which are all selection rice and some sort of a maize. So maize, we think it will be in line with last year's numbers. Vegetable is a very small segment for us, but we see a good growth in vegetables. But overall, if you see second half, we should be in line with last year's numbers.
[Operator Instructions] We have the next question form the line of Anurag Jain, an individual investor.
Good evening, sir. My question is for the half year balance sheet, the outstanding amount for biological assets is at INR 383 crores. This is the highest ever in last 4, 5 years. So is this indicative of the anticipated growth for next year, is the company undertaking higher production for the seeds for use in the next 1 year?
Yes. That's one way to look at it. But as rightly said, the production is pretty high this year and I think we have one of the largest production, what we have taken in the company's history. As we have -- most of the inventories are at almost 0 level. So we are trying to produce more. So that is 1 of the reasons where we see higher production. And the other thing is that we see a very good areas coming up. I mean to say, very good volumes, we are anticipating a good volume for the next coming years. It's a combination of both. The production is more and that same is affecting the balance sheet.
[Operator Instructions] We have the next question from the line of Dhruv Saraf from Bowhead India.
Mithun sir, we had some challenges in cotton in terms of production over the half year. So fair to say that these challenges are now behind us and the next cotton season should be good for us in terms of volume at least?
Yes, the kind of production what we have taken out this year and the current crop is what we see usually now unless and until something really bad happens with the climatic conditions. Otherwise, we'll get the anticipated production and with a good yield. So I don't see any challenges in the production for the next year, not only in cotton, but in most of the crops.
I had a question on high-density planting. There have been -- I mean, recently, there have been some actions and things set by the textile ministry regarding promoting the use of high-density planting practices in cotton. So are you seeing any action happening on the ground? Or is it just still more word than action?
Basically, most of the companies including Kaveri is working on high-density planting. But we are yet to get a very suitable hybrid, which give better yields. But the research is on, definitely, as the minister said and the industry is trying for it, definitely down the line the future of cotton field will be high-density plantation.
The other reason not only high-density plant -- the other reason is that even the daily labor is getting -- to get daily labor is also getting difficult -- farm labor, especially to pick the cotton seed. So it's a need for the cotton crop to be mechanized. The picking of cotton crop should be mechanized. So that is also one of the reasons why the industry will move to high-density planting.
And so you have to launch the product, I think it's 9292. Was it specific for high-density planting? Or is it, I mean, agnostic of that?
It's not exactly for high-density planting, but if you see the crop, it's slightly high density, but it's not like what is there. High-density plantation is nothing like that is more than double the yield rate what we saw now. At least double -- it is more than that, but at least double.
We have the next question on the line of Rohan Patel from Turtle Capital. Mr. Patel your audio is not very clear. Request you to kindly go off of speaker phone.
Hope so, now I'm audible.
Yes. We can hear you.
Considering that this year, our base for the cotton is the lowest. And we expect that next year, the production, there are no more production challenges. So with this low sales base, how much can cotton can grow from here? Can we get back to INR 350 crores, INR 400 crores base next year?
So 1 second, just [indiscernible] what are this year's figures or what's the exact number of cotton. This year, we have done altogether like if you see cotton as such. We have done close to INR 340 crores this year itself, it's INR 350 crores, I think.
In your presentation, is it shown H1 that you did INR 258 crores?
INR 258 crores, I just need to check, it should be -- sorry, sorry. I'm taking last year, sorry. Right. You're right, you're right. Cotton, we have done like -- yes, INR 250-odd crores. Next year, it should be like at least 20% more than what we had at now.
Okay. 20% more than what we had. And considering that our non-cotton, the base is higher, we are growing in like around like 25%, 30% in all of the hybrid rice, selection, maize. So will this trend continue?
What we see is that overall this year, we had a very muted growth because there are a couple of reasons. One is the cotton, we are down more than 30% and the other thing where we are slightly down in terms of the exports, the exports have not as anticipated for whatever reason it is. So going forward, what we see is that a 10% to 12% growth and 15% to 18% of the bottom line should much reflect. But next year, as we see, as cotton is already low, we'll at least grow by 20% in quarter next year. And other crops, we see a good potential in most of the crops. So next year, the growth rate should be in that 15% to 20%.
15% to 20% should be the growth rate for next year?
Yes.
And that would lead to like 20%, 25% growth in bottom line?
It should be more than 20% plus.
Okay. Okay. Okay. And we were going to bring some -- we have lost market share in cotton due to our hybrids being mature enough and we were planning to bring 2 to 3 new hybrids in quarter to get back our market share back. So how is the progress going over there? Have we started...
Yes, for the next year, what I'm saying of the 20% growth. Basically, it's only because of the new launch products. We are seeing good traction in those products, and we are giving good production for those products as well. So those are the major contributors for the growth of next year.
Okay. And after we reached back to INR 350 crores, say, a base in cotton next year. So how will cotton as a portfolio grow from over there? Like can we come back to INR 500 crores product -- cotton -- can cotton be INR 500 crores, again, like what we used to have in...
Sure. What we believe internally is that we have very good pipeline products and which are recently launched, are also giving very good results. We are pretty sure that we can go back to those previous levels what we had. It's a matter of 3 or 4 years from here.
Okay, okay. And some -- taking about medium to long-term time horizon. And the non-cotton portfolio should be growing like at a rate of somewhere around 15%? Can we...
Already, we are one of the biggest in the non-cotton segment and as a crop, it's growing, and as a company, we are doing much better than the industry. So these 2 combinations should -- as a mix of all products, not particularly the cotton, right, but we have many other products like mustard, bajra, Sorghum, wheat. There are many other products. So as a whole of -- if you divide both cotton and non-cotton segment, as cotton is with a low base, it should be in that 15% to 20% in the next 3 to 4 years. And this should be in between 20%, 15%. Overall, as a company, we see 12% to 15% growth very conservatively.
Best of luck for future.
[Operator Instructions] We have the next question from the line of Mohammed Patel from Care Portfolio Managers.
Sir, this is a follow-up to previous participants. So the non-cotton has done really well in FY '25 and the base is high. So should we expect non-cotton growth to slow down in FY '26 to single digit?
We don't see any single digit growth, it should be a double-digit growth, may not be like that 25% or so, but it should be in the 12% to 15%.
Even on this higher base?
Yes.
Okay. My next question is, exports of INR 6 crores in H1 FY '25. What should be this number for H2 roughly?
Overall, we have done INR 66 crores last year in terms of the exports. As I said earlier, there was a onetime sale of INR 28 crores from Tanzania, which we don't know whether we'll get it or not. That again depends on the government policy and other things we have done like INR 24 crores, INR 25 crores in Bangladesh. So INR 25 crores Bangladesh sale will be like INR 12 crores to INR 13 crores this year. We have already lost some sales in the second quarter.
Whereas the decline in Bangladesh sales, maybe like INR 6 crores or INR 7 crores or INR 8 crores might be covered in other parts of the world like we have Vietnam, Ivory Coast and other countries we are exporting, so that we have a chance to cover. But in terms of Tanzania, we need to see whether we'll get those type of quarter or not. But going forward, if you see export as a segment, it will grow at more than 15% as a whole on a year-on-year basis. We need to take the base of this year. This year, we can easily grow at 15% to 20% in vegetable -- in export market.
Then it should be INR 20 crores, excluding Tanzania?
It should be much better than that. If you see exactly like we have done only INR 6 crores from first half of export this year, next year, next half would be in between INR 30 crores to INR 40 crores.
And excluding Tanzania?
Overall. Tanzania, we don't know, but it should be 1 plus or minus, should be INR 30 crores and INR 40 crores.
And on that base, we can expect to grow at 15% to 20%?
Yes.
[Operator Instructions] As there are no further questions. This will be the end of the conference. Thank you for joining the call. For any other information, please be in touch with Rama Naidu from Intellect PR on 992-020-9623. On behalf of Kaveri Seed Company Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.