Key Highlights

Overall, the cropping acreage is down by 2% YoY as on Sep 18. Key crops are all down. Paddy and pulses down by 2% and 4%

While catch up did happen, monsoon is not normal. Its 9.4% deficient against long term average. Every single month of the monsoon has seen deficient which was seen after 14 years of time. It swung erratic with dry patch on one hand and then high rainfall in some time. Overall 31% of India was deficient from normal monsoon

Cotton price is the only one which is higher than last year whereas all rest commodity prices is lower than MSP prices

The good news is that water levels at reservoir is 137% of last year and remains high. Also no worms or insects seen in any crops so that is good news on production of crops is concerned

Overall, liquidity in hands of farmers and rural India is still not that high. Rural economy is not great in terms of cash flow perspective. While its better than last year, one needs to see how the events like elections and overall sentiments pan out.

Rs depreciation impacted the imported raw material prices

Crude price had a bearing on raw material prices as well

Higher debtors resulted in higher working capital in Sep 18 quarter due to general business environment

Internationally, a certain degree of buoyancy was seen compared to domestic market. Some herbicides portfolio has seen some increased offtake due to some regulatory aspects as well.

The company has lost gross margin by around 100 bps as it was not able to transmit the increase in cost to its sales.

Company imports around Rs 300 crore of imports every year and largely is from China.

China is on a war against pollution and waste water. They have just framed laws of land and how the soil should look like. Quite few industrial parks and many companies have been shut because of that.

So many companies will find it difficult to come on stream due to these regulations in China. So the costs are no longer going to remain low. Even the costs of labor and power have gone up substantially as compared to the past. So cost levels have changed significantly.

So lot of business opportunities will come in for India. So one needs to catch up and see how these events flare up. The trading activities will be discouraged and more and more manufactures will be in advantage stage.

So overall, FY 19 seems to be a tough year on margin front with difficult for companies to pass on the rise, the management is confident of the price increases next year.