Capitaline

Analyst Meet / AGM 23-Apr-21

Conference Call

Rallis India

Target to launch 2 new products from its own R&D efforts

Rallis India held a conference call on 23^rd April 2021 to discuss the results for the quarter and year ended March 2021 and way forward. Mr. Sanjiv Lal- Managing Director & CEO, Mr. S. Nagarajan- Chief Operating Officer and Mr. Ashish Mehta- Chief Financial Officer of the company addressed the call.
Highlights of the Concall

The company was happy to mention that India Meteorological Department (IMD) has forecasted a normal monsoon during the year while Rabi sowing area has grown by 3% in Q4FY21 followed by a good credit growth in rural India leading to buoyant domestic sentiments and globally also sentiments for pesticides is positive.

Revenue increased 36% during the quarter while PAT was Rs 8.12 crore compared to Rs 65 lakh led by improved performance of domestic and international business. The growth rate was also aided by lower base in last year.

The company is continuing up stocking of raw materials to avert production disruptions due to potential supply chain issues and sharp price hike.

Domestic revenues stood at 59% of total revenues while international revenues were 41% in Q4FY21. For FY21 domestic revenues was 63% and international revenues was 37%

The company is directing its efforts towards delivering steady and consistent growth in the domestic business. The company has drawn a three prong strategy towards achieving that objective- strengthening product portfolio, augmenting distribution network and strengthening and leveraging brand power.

The company is targeting consistent product launches - a minimum 2 new products from its own R&D efforts in 9(3) category over the coming years. It introduced 6 products in FY20 (In house- 3 and Co-marketing- 3). For FY21, it introduced 4 products (In house- 3 and Co-marketing- 1). The company expects to introduce new products in the coming year as well which will help drive the revenue run rate.

The company launched new 9(3) formulation in Q4FY21 – Eevee (Kresoxim Methyl + Flubendiamide) targeted as a insecticide and fungicide combination for vegetables.

The company has identified products and location gaps to bolster its portfolio mix. It plans to build presence in Wheat and Soybean crops, cultivated predominantly in the states of Madhya Pradesh, Rajasthan, Uttar Pradesh, Punjab and Haryana

The company is targeting a deeper market penetration by expanding its distribution network. It target of total 4000 distributors and 65000+ retailers in crop protection while in seeds business 2700 distributors & 35000+retailers

Domestic formulation business revenue stood at Rs 172 registering a volume growth of 35% with a price correction of 10% downwards, resulting in net growth of 15% for this quarter. For FY21 revenue stood at Rs 1084 crore versus Rs 949 crore in the previous year registering a volume growth of 16% and a price correction downwards of about 1% resulting in a net growth of about 14%.

International Business revenue stood at Rs 230 crore for the quarter, a growth of 73% over the previous year, largely driven by volume across all activities. For FY21 revenues crossed Rs 741 crore versus Rs 722 crore in the previous year, registering an overall growth of 3% breakup of which is largely volume with a price correction mainly in metribuzin.

Crop Nutrition revenues during the quarter stood at Rs 23 crore compared to Rs 19 crore in last year registering growth of 21% largely driven by volume. For FY21 revenues stood at Rs 120 crore compared to Rs 98 crore in previous year registering a growth of 34% largely driven by volumes.

Seeds revenues during the quarter was Rs 26 crore against Rs 24 crore in previous year quarter largely driven by better price realization. For FY21 revenue was Rs 401 crore compared to Rs 364 crore in the previous year.

The company is undertaking steps towards improving product mix in international business by exploring opportunities to register own product in key markets. It has received registration for metribuzin technical in North America and metribuzin formulation in the Brazilian market.

The company has got two new registrations approved in Uganda.

The company has renewed its focus towards developing contract manufacturing business where it is seeing softness in business due to limited portfolio. It has created a separate dedicated team for the business and aim to leverage its strengths to develop a partnership with global players.

The company is focused on addressing the seasonality aspect of the current portfolio and production challenges in seed business. It is undertaking steps towards building a comprehensive portfolio by targeting Rabi crops and expanding portfolio in vegetable segment. With regard to the Rabi segment, it is exploring in licensing opportunities to launch Rabi maize and vegetable seeds till the time its own hybrid seeds get commercialized. Recently added mustard has done well.

The company has launched 4 new products in seeds business during FY21 which encouraging response from the market - two new products in maize, one in Bajra and One in Chilli.

The company expects margin progression in seed business in coming years on the back of better product mix and operating leverage.

Of the Rs 800 crore capex plan approved by the Board, the company has firmed up plans for about Rs 550 crore till date of which it has completed expansion of few products and two more will be completed by June 21 i.e. along with the annual shutdown of Ankhleswar facility. The company also expects the capex encompassing its multipurpose plants, pilot plant, and automation etc, to be completed during FY 22.

Overall Capex implementation delayed by 2-3 months due to COVID 19 wave II

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