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The company held its conference call on 25 Jan 18 and was addressed by Mr. Ashish Mehta CFO
Key Highlights
Overall margins were affected due to adverse rains in Oct 17 in Southern India, which led to some sale back from retail to distributors and thus affected sales and margins.
Product mix also was adverse. Some high margin Export dispatch got delayed and will happen in Mar 18 quarter.
Margins will improve in Mar 18 quarter. Expects margins to be much better in FY 19.
The company has around Rs 100 crore of cash as on Dec 17, to be used for expansion and manufacturing activities.
Tax rate at consolidated level will remain around 26-28%.
Karnataka, Tamil Nadu, Andhra are some of the major markets of the company. Paddy sowing was lower due to excessive rainfall in Oct which affected the offtake.
Another major reason of lower margins was the upward trend in major raw material from China, and local raw material costs as well. Expects the prices to come down by Mar 18, as local players already are dropping prices and China has to drop down, as trading is not happening at this price.
Rallis increased the prices only from Jan 18 onwards and hence Mar 18 margins will be better. Scenario will completely improve from FY 19 onwards.
Company had concentrated on volumes and was able to see its market share improve. While overall market was down, Rallis was able to report double digit volume growth.
Board approved Rs 50 crore to be spent on manufacturing the intermediates for Contract manufacturing activities. Around Rs 22 crore already spent which should give some dispatches in form of sales in Mar 18 quarter. Full impact will be visible in FY 19, where atleast around Rs 50 crore of sales will happen from this Rs 22 crore of capex.
Remaining capex will be done in FY 19 which should also result in higher sales of Crams in FY 19.
Dahej plant is ramping up and expects normal sales to start from April 18 onwards.
6-7% revenue growth was seen in Metahelix in Dec 17 quarter and losses were contained despite lower dispatches of Paddy and Millets.
Mar 18 should see further improvement in Metahelix.
Exports continue to remain around 1/3rd of revenues and will remain around this level going forward.
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