Rallis India held a conference call on 20th January 2022 to discuss the results for the quarter ended December 2021 and way forward. Mr. Sanjiv Lal- Managing Director & CEO and Ms. Subhra Gourisaria- Chief Financial Officer of the company addressed the call.

Highlights of the Concall

• Q3FY22 was a challenging quarter for the domestic market. While rabi sowing area has been up 1% over the previous year on account of healthy water reservoir levels and better northeast monsoon, factors such as unseasonal rain, pest attack in Chili, ban on hybrid crops in Andhra Pradesh and Telangana etc resulted in lower domestic demand especially in the southern region. The situation was further compounded by high input costs. Pricing on certain input materials have seen an increase in excess of 50% on account of tight suppliers from China during the month of October and November.

• The company has taken price hike across products to mitigate steep raw material inflation.

• The company reported revenue growth of 10% during the quarter. International business grew by 19% while domestic crop care business saw a growth of about 9%.

• Crop Care business grew 13% in Q3FY22 and 12% in 9MFY22 while seeds business continues to face headwinds and degrew of 31% in Q3FY22 and 11.8% in H1FY22. Crop nutrition segment continues to grow at strong double digit growth.

• Ban in states like Andhra and Telangana, as well as, as well as hybrid level challenges in the company's portfolio led to a decline in seeds business of 31% year on year.

• Exports business has been fairly steady supported in part by favorable agricultural agronomic conditions, especially in Europe and Brazil, and higher crop pricing as well. Demand continues to remain encouraging for most of its products with metribuzin as well showing early signs of revival. The company expects demand for metribuzin as well to be picking up in the coming year.

• The company believes that, over the long term, the China plus one strategy adopted globally across sectors provides long runway growth for the industry.

• The company is hopeful that portfolio augmentation should help it improve its market share in underserved regions like Madhya Pradesh, UP and Rajasthan and in select crops like soybean, wheat and certain crop segments in paddy.

• The company is also working towards expanding our network by adding distributors and retailers to expand the domestic business.

• The company has completed the organization of metribuzin production in a single location and expects the plant to be fully operational by Q2 of FY23.

• The company has commissioned the first phase of formulation Plant at Dahej and dispatches have commenced from the plant towards the end of December.

• Construction activities for multi purpose plant (MPP) is on track for commissioning during the FY23.

• The company introduced two new crop protection products during the quarter, taking the total count to 10 products during the nine months ended FY22 - six crop protection and four crop nutrition.

• The company has successful launched of a new microbial biopesticide, a potash rich organic manure, and a new maize hybrid

• Performance of contract manufacturing business during the quarter was lower than expected.

• The company expects overall capex of Rs 250 crore in FY22.

• The Ankleshwar pesticide de-bottlenecking project for two key active ingredients is also complete and has been commissioned.

• The company expects to complete most of the major expansion projects by the first half of FY23.

• The company expect that Q4FY22 to be much stable than Q3FY22