Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rallis India Ltd (BOM:500355, Financial) reported a robust Q2 performance with a strong double-digit volume growth in the domestic market.
- The company's revenue for Q2 stood at INR928 crores, up from INR832 crores in the same period last year, marking a significant increase.
- Profit after tax for the quarter was INR98 crores, which is 20% higher than the previous year.
- The Seed business recorded a 48% revenue growth due to better Kharif liquidation and effective use of the Seed-Say digital tool.
- Rallis India Ltd (BOM:500355) has successfully completed pilot scale production of Flavocide, a novel insecticide, indicating promising future partnerships and growth potential.
Negative Points
- The export business continues to face pressure with lower prices impacting revenues and slow demand recovery.
- The domestic market faced challenges due to erratic rainfall, affecting the application of pesticide sprays and leading to lower volume growth in certain categories.
- Acephate market remains under pressure in key regions like the US and Brazil, with raw material prices at their lowest.
- The company is experiencing pricing challenges, with a 6% price degrowth in the domestic crop care segment.
- Trade receivables have increased significantly, raising concerns about cash flow management.
Q & A Highlights
Q: What drove the volume growth in the seeds business, and how did specific products like Aatish and Diggaz perform?
A: Gyanendra Shukla, CEO, explained that improved forecasting and digital tools like Seed-Say helped place products effectively, reducing returns and boosting net sales. Diggaz performed well with negligible returns, while Aatish is a mature product on the decline. The focus is on profitability and operational efficiency.
Q: How did the domestic crop care business perform in terms of volume and pricing?
A: Subhra Gourisaria, CFO, noted an 11% growth in domestic crop care, with a 17% volume increase. The segment faced a 6% price decline, but the volume growth was driven by positive monsoon effects and better commodity prices.
Q: What is the strategy for the CSM (Contract and Strategic Manufacturing) business, and what are the expectations for its growth?
A: Gyanendra Shukla, CEO, stated that the CSM strategy involves selective partnerships and maximizing existing capacity before expanding. The focus is on building relationships with global players, and while the business is in early stages, it shows promising potential.
Q: How is Rallis India addressing the challenges in the Acephate market?
A: Gyanendra Shukla, CEO, acknowledged the competitive pressure from integrated players like ADAMA and UPL. Rallis is exploring cost re-engineering and relationship-building to improve its position in the Acephate market.
Q: What are the current challenges and outlook for the export business?
A: Gyanendra Shukla, CEO, highlighted that while products like Metribuzin and hexaconazole are performing well, Acephate remains challenging. The export market is competitive, with subdued prices and a focus on optimizing existing product sales and developing a pipeline for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
