Key Highlights

After 2 years of back to back drought years, FY'17 was somewhat better in terms of rains and productivity as compared to the previous years. However the distribution of rainfall geographically continues to be a worry. Especially in Southern region, the water reservoir levels are low. However rabi acreage and productivity was high which is very encouraging for farmers and for the company as well.

As per the management, fruits and vegetables, is the only section of eatables, which has shown a steady increase in prices and demand as well, and farmers also benefitted out of it in a big way. Going forward, management will aggressively tap the fruits and vegetables market and lot of initiatives which have been taken by the company will be shared later.

Overall for Rallis, its a good FY'17, although lower water levels, lower north-east rains in South India and lower pest attacks had some impact on Mar'17 quarter earnings. The company introduced 4 new products and was well accepted by the market.

Domestically, as per the management, more or less, they have held on the market share.

Internationally things are stable with Brazil which is the largest market for the company, stabilizing and showing an uptick in demand. Exports continue to remain around 30% of total sales.

Margins can improve from hereon but it will not reach to what management's plans of around 18-19% levels. If monsoon goes as per the expectations, there will definitively good increase in volume and value growth in FY'18. Nevertheless, given where the operating margins are for the company, some improvement is sure to happen in FY'18.

Dahej should commercialize in June'17 as the company has received couple of contracts on CRAMS basis. The testing and approval of these contracts is complete and now commercialization will commence.

Of the total sales of FY'17, Crop Protection business was around 70% and Non Pesticide business was around 30%. Of this crop protection business, insecticides which accounted for around 75% of sales now accounts for around 55%, while fungicides and herbicides which is the fastest growing segment now accounts for 45% of total sales.

Metahalix reported a 13% growth in net sales and 50% growth in PAT. Paddy and Millet constitute major chunk of seeds business for Metahelix while cotton and vegetables share is improving. Hybrids of Maize and Millets were well received by the farmers. Metahelix should continue to see margin improvement and management expects its margins to be at par with Rallis standalone margins in FY'18.

Increase in R&D activities and further activities in Dahej plant will result in company continuing with overall lower tax rate for FY'18.

The company is nearly a debt free company and working capital has improved significantly. As of now it has no plans on surplus cash that will accrue in next couple of years. It has options on organic and inorganic growth as well as giving back to the shareholders.

Going forward, Management expects a good FY'18, given the normal estimate of monsoon by the IMD. Also given lower inventory levels, new products, things should further improve from hereon.

Capex for FY'18 will be around Rs 40 crore.