Analyst Meet / AGM - Analyst Meet
Seeds business will drive the growth going forward
The company held its analyst meet on 27th April 2015 and was addressed by Veeramani Shankar Managing Director & CEO
Key Highlights
Domestic Pesticide industry grew in between 0-3% in FY'15. Unseasonal rainfall, adverse climatic conditions, lower MSP, reduced crop acreage etc lead to the lower growth.
The company had launched new products in pesticide industry, which although had received good response, the pricing was not that powerful, given the whole market was not growing to that extent.
Unseasonal rainfall and sudden changes in climatic conditions affected Q4 FY'15 performance, where net sales was down by about 3% YoY to around Rs 314 crore. Ebidta margins however were higher due to higher seeds business sales and better product mix.
Seeds business have reported a 40% growth in net sales to around Rs 300 crore in FY'15 with Ebidta margin of around 8%. Management expects strong growth in seeds business to continue and margins to improve further once operating leverage come in. Ebidta margin will be in strong double digit in FY'16-FY'18 period. Seeds business will drive the growth going forward.
The company is among top 5 companies in each of its main seed product categories of hybrid rice, corn and millets. The company has launched cotton seeds in FY'15 and expects good business from this segment.
Working capital and debtors days got stretched in FY'15 due to shortage of urea and tight liquidity conditions in the market. The company is also carrying good amount of inventory at the end of Mar'15. Going forward, management however expects working capital situation to improve if things don't worsen from here on.
International business also was affected due to drought conditions in major markets like Brazil and currency volatility. The company is also working on firm Crams order for its Dahej plant. It is in continuous negotiations with more than 10 projects in Crams business and expects to get some concrete orders in next few years. Excessive fluctuations in international market is somewhat delaying the orders.
The company already has a strong presence in insecticides and fungicides business. It will ramp up its herbicides product portfolio and further its seeds business going forward. Thus, non pesticides business product basket will grow at a faster rate compared to pesticides.
As per the management, while IMD is a bit pessimistic about the monsoon projections, management still is very hopeful that FY'16 will be better than FY'15, wherein what could have gone wrong has actually had gone wrong.
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