kaveri seed company limited

kaveri seeds"

14" December 2016

Bombay Stock Exchange Ltd.,

1st Floor New Trading Ring
Rotimda Building
P.J.Towers, Dalal Street, Fort,
MUMBAI - 400 001

National Stock Exchange of India Ltd.

Exchange Plaza, 5th Floor,
Plot No.C/l, G Block,
Bandra Kurla Complex, Bandra (E)
MUMBAI - 400 0051

Scrip Code : 532899

Scrip Code : KSCL

Dear Sir,
Sub :Presentation :Kaveri Seed Q2 & FY 2017 Results Announced on
13th December 2016 - Reg.
Please find attached herewith Presentation of Kaveri Seed Company Limited Q2 &
FY 2017 Result Announced on 13th December 2016. The same was displayed at our
company's website : www.kaveriseeds.in
This is for your kind information and record.
Thanking you,
Yours faithfully
For KAVERI SEED COMPANY LIMITED.

C. MITHUN CHAND
Whole Time Director
Encls: a/a.

Regd. Office : # 513-B, 5th Floor, Minerva Complex, S.D. Road, Secunderabad - 500 003.Telangana, India
Tel : +91-40-2784 2398,2784 2405 Fax : +91-40-2781 1237 e-mail : info@kaveriseedsh
CIN : LO1120AP1986PLCOU6/28

Results Presentation Q2 & H1 FY17

Safe Harbour
Certain statements in this document may be forward-looking statements. Such forward-looking statements are
subject to certain risks and uncertainties like government actions, local political or economic developments,
technological risks, and many other factors that could cause our actual results to differ materially from those
contemplated by the relevant forward looking statements. Kaveri Seed Company Limited will not be in any way
responsible for any action taken based on such statements and undertakes no obligation to publicly update
these forward-looking statements to reflect subsequent events or circumstances.

Contents

Quarterly Performance & Outlook

Business Overview

Appendix

Quarterly Performance & Outlook

Industry Backdrop

Industry Backdrop - Rainfall

Source: IMD
6

Industry Backdrop - Rainfall

Source: IMD
7

Industry Backdrop Commodity Prices

Cotton
Rs. Per Quintal

Dec. 2016

Dec. 2015

Change %

Andhra Pradesh

4,932.17

4,101.95

20.2

Gujarat

4,983.15

4,457.65

11.8

Karnataka

5,380.60

4,646.98

15.8

Madhya Pradesh

5,022.62

4,388.88

14.4

Maharashtra

4,976.51

4,372.13

13.8

Telangana

4,894.89

4,038.20

21.2

Source: AGMARKNET

Ind-AS Reconciliation
Reconciliation between the profits as reported earlier and the Ind AS recast profits for the quarter and half year ended
September 30, 2015
Particulars
Net Profit reported as per IGAAP
(i) Recognition of Biological assets
(ii) Restatement of Grant and Subsidies
(iii) Fair value adjustment of Financial Assets
(iv) Tax on above adjustments
(v) Profit on sale of Investments
Net profit recast to Ind AS

Q2 FY16
Rs (in Lakhs)

H1 FY16
Rs (in Lakhs

(4,675.25)
57.43
(0.56)
(0.38)
55.90
(254.97)
(4,817.83)

17,442.83
(105.99)
(1.14)
(3.50)
17.88
(254.97)
17,095.11

Amount of "Sales Schemes" grouped under "Other Expenses" in S.No:2(f) above, representing amounts in the nature of
discounts and rebates, have been reduced from Net Sales in S.No:1(a) as a result of Ind-AS adjustment for the quarters
ended 30.09.2016, 30.06.2016, 30.09.2015 and for the half years ended 30.09.2016 and 30.09.2015. The said adjustment
has not been carried out for year end figures of March 31,2016 which has been disclosed in accordance with
accounting standards notified under the Companies(Accounting Standards). Schemes & incentives which typically
would form 18-20% of Revenues would as per Ind-AS not form part of Revenues
The Company has valued financial assets (other than investments in subsidiaries which are accounted at cost), at fair
value. Impact of fair value changes as on the date of transition, is recognized in opening reserves and changes
thereafter are recognized in Profit and Loss account or Other Comprehensive Income, as the case may be
Minor impact on depreciation due to change in computation of asset life
In line with Ind-AS recommendation Company has reported Standalone results
9

Q2 & H1 FY17 Performance Review

Revenues declined primarily due to
reduction in hybrid cotton seed price
along with moderation in cotton seed
volumes. The selling price of hybrid
cotton seed has been reduced as per the
CSPCO (Cotton Seeds Price Control
Order) 2015 and Price Notification issued
by Ministry of Agriculture.

Rs. lakhs

H1 FY17

H1 FY16

Growth
(%)

Q2 FY17

Q2 FY16

Net Sales

56,173.85

60,566.84

(7.25)

6,776.43

6,630.14

2.21

Total Income

56,173.85

60,566.84

(7.25)

6,776.43

6,630.14

2.21

Cost of Production

31,574.18

33,555.88

(5.91)

4,121.47

8,497.81

(51.50)

Profitability impacted by :

Gross Profit

24,599.67

27,010.96

(8.93)

2,654.96

(1,867.67)

In FY16, the Company based on

notifications
of
various
state
governments, short provided the
royalty by Rs. 65.5 crore. The same
had been included in contingent
liability

Gross Margin (%)

43.79

44.60

39.18

Employee cost

1,859.54

1,280.80

45.19

Other Expenses

6,576.61

7,627.17

(13.77)

1,532.71

1,935.38

(20.81)

Other income

2,248.56

501.29

348.55

1,704.70

292.74

482.33

Increase in depreciation on account

of commissioning of new facility at
Molangoor, Karimnagar

EBITDA

18,412.09

18,604.28

(1.03)

2,042.25

(4,168.45)

EBITDA Margin (%)

32.78

30.72

30.14

Depreciation

1,504.39

1,047.90

43.56

724.51

527.27

37.4

(72.53)

Investment portfolio changed from

short-term to medium-term has
resulted in higher other income
Employee cost to normalize going
forward

Finance Cost

784.70

658.14

3.72

9.15

(59.34)

2.20

8.01

PBT

16,903.98

17,547.23

(3.67)

1,315.54

(4,703.73)

PAT

16,211.35

17,095.11

(5.17)

774.45

(4,817.83)

28.86

28.23%

11.43

PAT Margin

Growth
(%)

19.23

10

Consolidated Balance Sheet Summary

Rs. lakhs
Shareholders Fund
Long-term Debt
Asset Turnover (times)
Current Assets / Current Liabilities
(times)

As on Sep.
30, 2016

As on Sep.
30, 2015

110,924.63

94,998.69

163.86

163.86

0.39

0.47

3.8

3.17

Total cash on books of Rs . 542.94 crore as on 30 Sep., 2016

Excellent Working Capital Management

Rs. lakhs

As on Sep.
30, 2016

As on Sep.
30, 2015

Inventories

34,703.79

34,133.56

Trade Receivables

25,017.57

31,170.10

Trade Payables

17,969.25

14,050.86

5,789.37

4,856.57

233.67

279.60

Other current liabilities

Non Cash Net Current Assets (No. of
Revenue Days)

Significant
reduction in
trade
receivables

11

Cash investments as on 30 September 2016

Rs.in Lakhs
Fund House

Liquid

HDFC

Liquid
Plus

Arbitrage

FMPs

Short
Term

NCDs

5,000

Tata

700

Birla

2,865

Medium
Term

Total

3,500

8,500
700

6,500

9,365

Reliance

2,800

5,500

8,300

ICICI

4,869

7,703

12,572

SBI

1,000

Kotak

3,309

4,000

DSP Blackrock
UTI

1,000
1,000

2,780

550
1,000

15,978

1,000

7,309
1,000

1,780

IDFC

Total

1,000

6,895

1,100

1,650

28,303

53,176

12

Q2 & H1 FY17 Operational Highlights

While overall cotton seed volumes in India declined by
15% YoY, Kaveri volumes moderated by just 4%
Gained cotton seed market share across states
including AP and Telangana
More than 30% YoY improvement in Maharashtra
volumes; more than 20% YoY improvement in
Madhya Pradesh & Rajasthan volumes

Jaadoo and ATM performance continues to be better than

competition
3 new cotton hybrids under demonstrations with farmers
1 hybrid to scale up in FY18
3 new hybrids launched in maize for Kharif season
1 hybrid to scale up in FY18

In H1 FY17, maize volumes grew by over 29% YoY

Stock returns of field crops lower by approximately 35%
for Kharif season as compared to last Kharif season
Contribution of non-cotton crops to grow up

2 new hybrids to be launched in upcoming Kharif

3 new hybrids launched in pearl millet
Scale up of all 3 hybrids
1 new hybrid launched in hybrid rice and research rice
each
Both to be scaled up in upcoming Kharif
1 new hybrid and 2 new research variety to be
launched

Gross Revenues (Rs cr)

Sales Volume (mn packets)

65

75

Gross Revenues (Rs cr)

Gross level revenues shown to enable comparison with previous years

6.1

70

8.0

160.0

7.0

140.0

6.0

120.0

5.0

100.0

4.0

80.0

3.0

60.0

2.0

40.0

1.0

20.0

Sales Volume ('000 tons)

8.4

8.1
6.3

106

96

Gross Revenues (Rs cr)

134

9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-

H1FY17

6.1

6.6

H1FY16

*includes hybrid & research

H1FY15

411

80.0
76.0
72.0
68.0
64.0
60.0
56.0
52.0
48.0
44.0
40.0
36.0
32.0
28.0
24.0
20.0
16.0
12.0
8.0
4.0
-

Maize seed revenue & volumes

H1FY17

502
H1FY16

748

5.4

H1FY17

5.6

9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-

H1FY16

8.5

H1FY15

788.0
784.0
780.0
776.0
772.0
768.0
764.0
760.0
756.0
752.0
748.0
744.0
740.0
736.0
732.0
728.0
724.0
720.0
716.0
712.0
708.0
704.0
700.0
696.0
692.0
688.0
684.0
680.0
676.0
672.0
668.0
664.0
660.0
656.0
652.0
648.0
644.0
640.0
636.0
632.0
628.0
624.0
620.0
616.0
612.0
608.0
604.0
600.0
596.0
592.0
588.0
584.0
580.0
576.0
572.0
568.0
564.0
560.0
556.0
552.0
548.0
544.0
540.0
536.0
532.0
528.0
524.0
520.0
516.0
512.0
508.0
504.0
500.0
496.0
492.0
488.0
484.0
480.0
476.0
472.0
468.0
464.0
460.0
456.0
452.0
448.0
444.0
440.0
436.0
432.0
428.0
424.0
420.0
416.0
412.0
408.0
404.0
400.0
396.0
392.0
388.0
384.0
380.0
376.0
372.0
368.0
364.0
360.0
356.0
352.0
348.0
344.0
340.0
336.0
332.0
328.0
324.0
320.0
316.0
312.0
308.0
304.0
300.0
296.0
292.0
288.0
284.0
280.0
276.0
272.0
268.0
264.0
260.0
256.0
252.0
248.0
244.0
240.0
236.0
232.0
228.0
224.0
220.0
216.0
212.0
208.0
204.0
200.0
196.0
192.0
188.0
184.0
180.0
176.0
172.0
168.0
164.0
160.0
156.0
152.0
148.0
144.0
140.0
136.0
132.0
128.0
124.0
120.0
116.0
112.0
108.0
104.0
100.0
96.0
92.0
88.0
84.0
80.0
76.0
72.0
68.0
64.0
60.0
56.0
52.0
48.0
44.0
40.0
36.0
32.0
28.0
24.0
20.0
16.0
12.0
8.0
4.0
-

Rice seed revenue & volumes

H1FY15

Cotton seed revenue & volumes

Sales Volume ('000 tons)

13

Growth Strategy
Products
Market
Network

Industry
Trends

Reinforce cotton leadership in

Andhra Pradesh, Telangana and
Karnataka

The Surge for Food - Increasing

demand for food and agri products

Deepen cotton penetration in

Maharashtra and Gujarat

Increasing hybridisation - higher

acceptance of Commercial Seeds

Favourable government policies

Seed Replacement Rate

Focused on strengthening
distribution network beyond
South and Central India, to
northern, eastern and western
geographies

Cotton Seed: The White Gold

o

High Density Planting (HDP)

Mechanical Harvesting

Maize & vegetables : High demand

Rice: Higher under-penetration

Sustain strong momentum in

new markets such as
Chhattisgarh, Jharkhand, West
Bengal and Odisha

Explore attractive export

markets

Establish market network for

vegetables

Ramp up of newly launched

products

Over the next 3-5 years,

introduce new products in
cotton, maize, pearl millet and
paddy

Expand product offering in

vegetables

Developing farmer-centric
product pipeline for future

Farmer acknowledged
performance of products like
Jadoo, ATM, etc. has provided
visibility for medium to long
term growth

14

Business Overview

The Kaveri Moat : Seeding Profitable Growth

Strong P&L record, Cash
rich, consistent dividend
paying

Diverse Product portfolio

addressing crop rotation &
shift

Brand Salience: Preferred Choice for

farmers, growers, distributors

Farmer-centric Product
Pipeline: Superior
agronomic features
Unrivalled farmer loyalty:
Nurturing farmer
relationships since decades

Leadership in key crops: Top

5 Rank

Benchmark R&D:
Comprehensive germplasm
repository
Market adjacent, Pan- India
Operations with
comprehensive distribution
network; unmatched
processing & storage
capabilities

High Entry Barriers,

Indispensable industry

Best placed to scale-up

production

16

Company Profile

With consistent performance in

all functional areas of the
Company, our endeavour is to
make Kaveri a benchmark seed
company with the best of
research, innovation and product
development.

We are serving Indian farmer

consistently to improve their crop
yields ever since inception. We
have
developed
enduring
relationships with farmers across
India; and our Kaveri Seeds
brand enjoys wide reputation and
loyalty, owing to our product
range and quality commitment.

Our
Vision

Our
Reputation

Our
Mission

To realise our vision, every

member at kaveri will adopt
consequential values of the
Company
and
inculcate
sustainable business practices. In
our endeavour to reach the goal,
team Kaveri would uphold all
brand
promises
to
its
stakeholders.

Our
Expertise

We have over three decades of

experience in application of the
science of genetics and principles
of plant breeding in the evolution
of crop hybrids, quality seed
production, conditioning and
processing and in building
extensive distribution network
with strong farmer relationship.

17

Relevant facts
30 + Years

Around

65,000 acres

775 +

~ 100 MT/hour

8 MT/day

Seed production across

different agro-climatic
centres

Team strength

Total average throughput

Ginning capacity

100 +

1,00,000 +

213

14,000 MT

Developed high-quality
hybrid and varieties across
field crops and vegetables

Loyal production growers

Number of filings to date

Total cold storage capacity

15,000 +

87

2,900 MT

State-of-the-art seed
technology, processing
and storage plants

Point of sale across 15 key

states in India

Registrations

State-of-the-art seed
technology, processing
and storage plants

3 rd

6,00,000 sqft

70 +

16 MT/day

Largest producer of hybrid

cotton seeds in India

Cumulative warehouse
space at multiple strategic
location across India

Outreach trial centres

Environment-friendly
cotton delinting capacity

Rich experience in Indian

seed industry

18

Progress Down The Years

Kaveri Seed
incorporated

1976

Launched first hybrid

Maize

1986

Seed production
unit started by
Shri G. V.
Bhaskar Rao

1991

1997

Initiated R&D
programme

Achieved significant
benchmark turnover
of over Rs. 1,100
crore

2015
Conferred the BioExcellence Asia
Award by the
Department of IT, BT
and S&T, Government
of Karnataka

2014

2000

Listed by Forbes-best under

a billion in Asia Pacific

2011
Launched Kexveg,
new initiative for
premium vegetables.
Listed by Forbes-best
under a billion in Asia
Pacific

2007

Commissioned seed
conditioning plants at
Gundla Pochampally and
Eluru

Launched
premier cotton
Hybrid Jaadoo

Listed by Forbes-best under

a billion in Asia Pacific

Listed by Forbes-best under

a billion in Asia Pacific

2012

2004

2001

Seed conditioning plant

launched at
Kandlakoi, Telangana

2013

Public offer and

listing in stock
exchange

Received DSIR
recognition for
our R&D

2010

2009

Commissioned seed
conditioning plants
at Gundla
Pochampally and
Eluru

2008

19

Diversified Seed Portfolio

FIELD CROPS

20

Diversified Seed Portfolio

VEGETABLES

Wider
acceptance of
key products in
the market
place leading to
significant
increase in
revenues

Market oriented
& need focused
breeding
programs
resulting in
highly
successful
product
portfolio

Access to a
wide range of
products
owning to the
wellestablished
R&D set-up

High value
premium
hybrids of field
and vegetable
crops

High brand
recall across
product
segments in
farming
community

Capability to
produce over
100 high quality
hybrid seeds
across
commercial
crops, food
crops and
vegetables

21

Leadership Product Portfolio

Kaveris cotton seed volume break-up by state

Kaveri Market
Share (%) in FY16

Maize

*Rice

Pearl millet

10

Sunflower

28

FY15

FY16

AP & Telangana

4.40

5.42

3.42

Maharashtra

1.06

1.33

1.12

Karnataka

0.66

1.26

0.45

Gujarat

0.14

0.16

0.25

Madhya Pradesh

0.19

0.16

0.16

Others

0.25

0.29

0.18

All India

6.70

8.63

5.59

Cotton seed
12.0

10.0

*Rice seed

18.0
15.0

13.8

8.0
6.0

Maize seed

3.0

2.0

5.0
3.9

4.2

1.3

1.5

Market Share (%)

Sales Volume ('000 tons)

6.0

2.0

12.0

12.7

12.8

14.0
12.0

12.0

4.0

10.0

3.0

8.0

8.0

6.0

6.0

4.0

4.0

1.0
-

Market Share (%)

*includes hybrid & research

14.0

5.0

2.0

FY15

1.0

FY14

Sales Volume (m packets)

5.7

20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-

FY16

8.5
FY15

6.8
FY14

4.0
2.0

Combined, these crops

account for more than
90% of revenues of the
Indian hybrid seed
industry

2.0
-

10.0

11.2

10.1
FY15

13

FY14

FY14

Cotton

(m packets)

FY16

Crop

Kaveri is amongst the top

three seeds companies in
the cotton and sunflower
segments, and top five in
the maize, paddy and
pearl millet segments

Sales Volume ('000 tons)

9.2

2.0
-

FY16

Top 5 rank in key crop segments

Market Share (%)

22

Benchmark R&D
One of the Largest Pools Of Germplasm in India

Significant investments in the last five years for strengthening R&D

Developed proprietary germplasm and Hybrids

Over 600 acres of dedicated research farms with varying agro-climatic conditions

State-of-the-art Biotech, Quality check and seed technology labs

Cold / DH storage for germplasm

Multi-location breeding and trial stations

Strong and highly motivated R&D team about 100 personnel, including more than 20 scientists

Conjunct use of Bio and hybrid technologies in product development

Deployment of frontier technologies Doubled haploid breeding, MAS (Marker Aided Selection), MARS (Marker
Assisted Recurrent Selection), RGA (Rapid Generation Advance), Inbred pool-heterotic bins, MPS (Multi-parent
synthetics ) and MAGIC (Multi-parent Advanced Generation Inter-cross populations

Research and Development facility recognized by Department of Science & Technology, Government of India

Partnering with ICRISAT, Melinda Gates Foundations Harvest Plus program, IRRIs Hybrid Rice Development Consortium,
CIMMYT and USDA program on Heat Tolerant Maize for Asia (HTMA) and DBTs Biotechnology Industry Research
Assistance Program (BIRAP)

Collaboration with NARS (National Agricultural Research System) Institutes and All India coordinated crop improvement
programs of ICAR

Seed is most critical to output for a farmer: Performance ensures premium, repurchase
23

Distribution Presence

Punjab
Haryana

Uttar Pradesh

Rajasthan

Bihar
Jharkhand
Gujarat

Molangoor Gatla
Narsingpur
Gowraram
(2 plants)

Madhya Pradesh

West
Bengal

Odisha
Maharashtra

Pamulaparthy

Telangana

Eluru

Gundla
Pochampally
Bellary

Secunderabad

Karnataka

Tamil Nadu

- Head Office

- Plant

- R&D Laboratory

24

Best-in-class, Market adjacent, Scalable Operations

Strong Brand Equity in

farming community

Large production area across India with a loyal producer farmer network
o ~ 100,000 production growers across 12 different agro-climatic zones
o ~ 65,000 acres under seed production
High credibility with the farmers
Focused programmes to spread awareness amongst farming community on new products in
market

Amongst The Largest

Processing Capacities

7 Company owned plants across key locations in India with a combined processing capacity of ~
130 tonnes per hour
Modern equipment for pre-cleaning, grading, cob drying, storage, packing
Maize cob drying facility with a capacity of 2,900 tonnes per cycle
Green houses for screening, uniform blast nursery for disease/pest screening
Cotton delinting facility

Strong Warehouse
Capabilities

Warehouses across India with combined storage space of ~500,000 sqft

Dehumidified, climate-controlled storage facilities
Storage godowns of ~135,000 sqft. (cold) and ~280,000 sqft. (ambient) with holding capacity of
~25,000 MT

Pan India Presence

Network of more than 15,000 direct/indirect distributors across the country

~350 highly motivated marketing professionals on a pan India basis
Outreach centers are a key ingredient of expanding operations serving as feedback/marketing
centers gauging farmer needs and educating them to grow the product in best usage techniques

25

Complete control over all stages of Product Cycle

A 7-10 year cycle

Seed production undertaken post comprehensive market trialing
Practice benchmark production regimen throughout the cycle Grower/ Breeder to Farmer

Evaluating
Needs

Collecting
Genetic
Resources

Developing
New
Hybrids

Producing
Seeds

Quality
testing &
Packaging

Distributing
and Selling
Seeds

26

High Entry Barriers: Brand Equity Paramount

Need for high investments in

R&D for seeds

Lead time from R&D to

commercial launch is 7-8 years

Requirement of a wide
distribution network across India
for a diverse portfolio of seeds
considering the varied agroclimatic conditions across India
A complex process of developing
an effective hybrid (key skills
required to choose the right kind
of lines)

Need for high degree of

credibility with farmers
Farmers will not jeopardize their
years worth of income and land
arability on unestablished
company seeds

27

Investor Contacts

For further information, please contact:

G. Vijay Kumar
CFO, Kaveri Seeds

Tel: +91 40 4919 2345

Fax: +91 40 2781 1237
Email: cfo@kaveriseeds.in

# 513 B, 5th Floor, Minerva Complex, S.D.Road, Secundrabad

-500 003

www.kaveriseeds.in

Gavin Desa
CDR India

+91 22 6645 1237

gavin@cdr-india

Vikram Rajput
CDR India

+91 22 6645 1223

vikramr@cdr-india

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Thank you