Professional Documents
Culture Documents
Other Participants
• Varshit Shah
• Nihal Jham
• Analyst
• Ashish Thakkar
• Vishnu Kumar
Presentation
Operator
Ladies and gentlemen, welcome to the Q2 FY20 Results Call of Dhanuka Agritech hosted by Emkay Global Financial
Services. As a reminder, all participant lines will be in a listen-only mode. There will be an opportunity for you to ask
questions at the end of today's presentation. (Operator Instructions) Please note that this conference is being recorded.
I would now like to hand the conference over to Mr.Varshit Shah of Emkay Global. Thank you, and over to you sir.
Varshit Shah
Thank you, Tanvi. Good evening, everyone. We have with us today Mr.M.K. Dhanuka, Managing Director; Mr.Rahul
Dhanuka, Director Marketing; and Mr.Vinod Bansal, Chief Financial Officer. I would like to welcome all the
management and thank them for giving this opportunity to host the conference call.
I would now hand over the call to the management for opening remarks. Over to you, sir.
Page 1 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Dhanuka is a technology-driven company that offers products to protect all major crops across all geographies of India.
Dhanuka model is a rural FMCG model. We service the diversity of Indian crops and needs of farmers. Dhanuka
Agritech has wide range of products in the portfolio. Over 80 brands in pack sizes ranging from 2 grams to 200 litres.
These products are in various forms; liquid, dust, powder and granules.
Dhanuka has pan-India presence through our marketing offices in all major states in India with a network of about
6,500 distributors, dealers, selling to approximately 80,000 retailers across India and reaching out to more than 10
million farmers. Dhanuka has technical tie-up with four American and six Japanese companies for sourcing specialty
molecules, proprietary technology and new molecule.
About performance of the company during the quarter and half year ended 30th, September 2019, I would like to
submit that the turnover of the company has grown by 4.87% in the second quarter, that is, from INR 383.36 crores to
INR 402.04 crores. The company reported a PAT of INR 60 crores in the quarter ended September 30, 2019, which is
up by 9% as against a profit of INR 55 crores in the corresponding period last fiscal.
PAT for the first half year ending September 2019 was up by 5% at INR 74.79 crores as against a profit of INR 71.22
crores in the corresponding period last fiscal. EBITDA of the company stands at INR 78.19 crores for Q2 FY20.
The turnover -- zone wise turnover was, in the North region percentage share was 25.35%, West zone percentage share
in turnover was 38.05%, East zone 9.93% and South zone 26.66%.
Coming to the product category, the percentage of insecticides in Q2 was 50.20%, fungicides was 15.72%, herbicides
23.48%, and others 10.6%. The company has launched three new molecules in FY20 that were APPLY, LARGO and
CHEMPA. All the three products have received very good acceptance from the farmers community and we have been
able to get a visible share from the market for these molecules.
Dhanuka is going to launch 194 molecule under the brand name Zapak, which is a ZC formulation, and first time
Dhanuka is launching this ZC formulation in the market.
Thank you very much for your kind attention. Now you are welcome to ask questions on the results of the company.
Thank you once again.
(Question And Answer)
Operator
Thank you very much, sir. We will now begin the question-and-answer session (Operator Instructions). The first
question is from the line of Varshit Shah from Emkay Global. Please go ahead.
Varshit Shah
Hi sir. Sir, just can you just elaborate around this new product, which you had mentioned you were going to launch in
H2. Just elaborate around that?
Page 2 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Varshit Shah
Okay. So what kind of applications in terms of crop will this have?
Varshit Shah
Okay.
Varshit Shah
Okay. Got it. I'll come back in queue.
Operator
Thank you. The next question is from the line of Bharat Gupta, from Edelweiss Securities. Please go ahead.
Nihal Jham
Thanks a lot. This is Nihal here from Edelweiss. I remember last quarter we mentioned that approximately 20% of our
raw materials were witnessing price increase. If I look at the current margin trajectory especially on the gross margin
side, I think it has become a little more adverse. So first of all, if you could just highlight, what the situation on the raw
material side is and how do you see it for the remaining part of the year? I'll ask a my second question after that.
Nihal Jham
So then is it fair to expect that if they were inventory losses this quarter because of falling prices that the margins will
definitely be better in the coming part of the year when I compare to last year?
Page 3 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Yes. I can say this much of a steep decline should not be there in the Q3 if not better registered it will be equivalent to
the last year level at least in the Q3.
Nihal Jham
Okay. Sure. Fair enough, sir. So second part is that kharif obviously was impacted by adverse rainfall and weather
conditions, but obviously the reservoir levels have -- is something that even your competitors have mentioned about. So
is it that, we can expect the rabi season growth trajectory to be much better and just wanted your thoughts on that?
Nihal Jham
Okay. In terms of the performance of CHEMPA and LARGO how is it been in the kharif season? Because I know that
we did see a very strong launch in start with, so just the feedback on those two products?
Nihal Jham
Absolutely. Just one last follow-up on this but if in case, when I look at your portfolio X of LARGO and CHEMPA, is
it that the portfolio has been flat or de-grown, would that be a better way to look at it and just any reasons for those?
Nihal Jham
Okay. And just last question for myself. What was the volume growth for this quarter, the split between volume and
prices?
Page 4 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Nihal Jham
Okay. Sure fair enough.
Analyst
Sir, sorry just to interfere here, question is for Rahulji. Sir as you mentioned the conventional product portfolio
probably have either report some product drop itself. I believe that from last three to four years we are really seeing a
pressure on our conventional product portfolio especially products like Targa Super, Caldan, VG Super and all those
products have I think have been reporting muted growth. Could it be possible for you our right now top five products,
which are the top five products for us and what kind of growth can expect from those products in near-term?
Analyst
Yes. Followed by sir would be?
Analyst
Sir, sorry Targa, Cover and then third?
Analyst
Okay. And sir, you mentioned that Targa Super has shown some sort of growth in this year, while we have seen that in
MP, soybean crop has been quite under pressure and delayed monsoon also have affected the overall acreages so Targa
still remains I mean a growth in maintained growth in this year?
Page 5 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
What's your observation about MP soyabean is absolutely right the subsequent rains in biggest parts have actually
increased the demand for weedicide portfolio across the board. Like, life save but like Targa, Targa being a weedicide
is finding good acceptance.
Analyst
Okay. Rahulji sorry, one more question if I can squeeze in and then come back in the queue. Sir we have definitely
seen that there has been a deterioration in our top-line growth from last two years, three years in respect to definitely
industries also have been under pressure. But the pressure probably on our segment or our products have been even
much more than the industry. Though you are quite confident about new product launches like APPLY, LARGO,
CHEMPA and also now this Zapac. But do you feel that somewhere we are from last couple of years have been losing
market share and maybe the weak product launches or maybe companies have become much more aggressive in
launching new products with the lifecycle of the new product launches shortening. Is that the reason and is the
company really I mean working something towards that?
Analyst
Thank you, Rahulji. I will have some follow-up questions and come back in queue. Thank you so much.
Operator
Thank you. The next question is from the line of Chirag Dubey from HDFC Mutual Funds. Please go ahead.
Analyst
Page 6 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Hi sir. Thank you for the opportunity. So for the first half of this year, can you split revenues into specialty and
genetic? And how it is moved over the last year kharif season?
Analyst
So this gross margin compression. I understand that the specialty piece has far more stickier gross margins. Would you
say that the entire compression has been because of generic?
Analyst
Here we are unable to take price is it.
Analyst
Okay. Fair point. So when you sort of look at this portfolio, what part of your specialty piece, can you -- do you think
you can pass on what part of the 65% can you pass on the price hikes over say a reasonable period of time?
Analyst
Okay. Fair point. And then sir, so you talked about 194 launch, which is a differential formulation. What is the sort of
premium that you can charge versus the farmer using these two products separately? Just from a farmer -- what is -- I'm
trying to understand. What is kind of premium the farmer can pay?
Page 7 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
work really effectively because Lambda makes the product really fast in action and Thiamethoxam makes the results
sustainable as a long duration control. This advantage, the right ratio of mixing which is very difficult for farmers
watching in terms of the right ratio of mixing and the new formulation, which is relatively more moving fast and atacks
the target site in a better way, is what will attract the farmer.
Now to differentiate between the two as a tank mix versus as a premix and a different formulation. So we are also just
launched the product and waiting to see how farmer accepts and what kind of premium he is willing to pay. We have
positioned it at a really premium as compared to tank mix and all our premixes are positioned like that.
Analyst
Would it be two times that of the tank mixer from a usage standpoint?
Analyst
Yes.
Analyst
Could be. Okay. Fair point. And sir can you give us an update on the Dhanuka Labs acquisition by the promoters? And
what is the status on that? And what is the status of the pledged shares?
Analyst
So what happens from now, sir ? From now on. Does the transaction get consummated just your sense on.
Page 8 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
We have to wait and watch because you never know about the court how they take decisions. Otherwise there was no
reason for such abnormal delay in taking the decision on this. Although verbally, the judge was saying that why don't
you be -- I put the company on liquidation. But what the final order comes that is not known.
Analyst
Fair point sir. And so this is the last question is on the when you think of the market, market growth has come down
meaningfully over the last couple of years. Is there something structural about this weaker growth. What are your
thoughts around the market growth coming down so substantially?
Analyst
There is nothing structural about this recent slowdown in growth rates is the response that you want to sort of try and
give me?
Analyst
So my question is I mean, I'm trying to think that, if the weather permits then will this growth come back or is there is
that the farmers' ability to pay is just not there to use any more agrochemicals.
Page 9 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Farmers ability in recent past has been lower because of the lower commodity prices and poor liquidity in the
ecosystem, farmer depends upon loans, farmer depends upon finances and that too many times without any collateral.
Now what is happening with the collateral-based organized economy of finance is visible to all of us.
It's ripple effect has gone down in the non-secure financing system of the rural economy. So that has certainly impacted
farmers' ability to take loans and finances input, finance his business which is agriculture. So that has certainly
happened negative. Yes, we will depend upon rains, we will depend upon commodity prices and we will depend upon
the restoration of the liquidity in the ecosystem.
Analyst
Fair point sir, and just the last question sir tax rate guidance for this year and the next?
Analyst
For FY20 also, sir?
Analyst
Okay. Thank you. All the best.
Analyst
Okay sir. Thank you so much. Best of luck.
Page 10 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Operator
Thank you. (Operator Instructions). The next question is from the line of Ashish Thakkar from Motilal Oswal AMC.
Please go ahead.
Ashish Thakkar
Yes. Thanks for the opportunity. So given the market condition do you feel that they more needed to tail cut the
distributors?
Ashish Thakkar
Yeah, I am audible now? Hello? Am I audible now?
Ashish Thakkar
So given the market conditions is there a need to cut more number -- cut the distributors the tail end of the distributors?
Ashish Thakkar
Okay, sir does this exercise intend any cost savings or in terms of working capital do you see anything in our favor?
Ashish Thakkar
I'm sorry for that. So this exercise does it get to any savings in the working capital.
Page 11 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Ashish Thakkar
Yes.
Ashish Thakkar
Okay. Fair enough. Last question on this inventory level, if you could help us understand how our inventory levels are
going up for the company?
Ashish Thakkar
Okay, and any scopes for price increase in our portfolio?
Ashish Thakkar
Yes, given that the positive on the rabi crop.
Page 12 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Ashish Thakkar
Okay. So last question on this by Bio micro-nutrients, so we had some products in this category and we were looking
for an FY20 launch. Any update on this?
Ashish Thakkar
For all crops you are saying,
Ashish Thakkar
Okay. So it's obviously season agnostic, right? So it can be used in both the season kharif and rabi?
Ashish Thakkar
Okay.
Ashish Thakkar
Okay, I'm used to the tax guidance number, if you could it'll be good.
Page 13 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Ashish Thakkar
25%. Okay, so we are okay. Thanks. Thanks and all the best.
Operator
Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead.
Vishnu Kumar
Good evening, sir. Thanks for your time. With respect to the rabi season be whatever the products that we've already
placed. I mean are we comfortable in terms of the margin profile or are we not able to pass on prices at this point in
time even for rabi also?
Vishnu Kumar
Okay. So we will have some more stress for the second half as well. If that is what you're trying to?
Vishnu Kumar
Sir, when you mean opportunity, is it partly that the fact that the consumption goes up so there will be more demand for
the product and we can price it better or is it also that you at some point think that the Chinese technical prices will
come off. Which one do you think will play out first?
Page 14 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Vishnu Kumar
Got it. Sir you talked about to a lot of the Chinese technical player. In terms of your sense, there is also a conversation
that many are moving to Inner Mongolia they're going to different districts I mean provinces like Dalian, different,
different locations. Do you expect at least two years from now or a two and a half, three years from now at what point
in time do you think some of these prices if not like come back to their old 2014-15 levels could at least drop by at least
20%, 30%. Which time window would you put there --?
Vishnu Kumar
Got it. Sir, on average would you say it's two years out from now, you will be in a much better raw material situation
position, two years out which means 2021 of that sort. Would you have some confidence on that or even that also you
think we have to wait and watch?
Vishnu Kumar
No, no, I'm saying currently, our prices is currently I mean price of technicals are relatively higher will this Chinese
situation improve say by another 18 months to 24 months due to which the RM cost at least on an average will be down
say 10% to 15% or some percentage which gives more cushion in terms of margins or in terms of prices. So that ability
is with us. So supply availability could it improve let's say 2021 early or any timeline, you would want to put? That you
see at least by this window it will be better.
Vishnu Kumar
Page 15 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Got it. And in the domestic market are you finding more competition from more organized players or let's say if in a
district or market where you operate there are ten players. Now are you seeing the prevalence of two, three more
players or the share of organized guys going. What kind of shift are you seeing within the guys who are currently
operating and any trends that you can kind of give us?
Vishnu Kumar
Okay. Got it. So in terms of the organized competition have the number of players gone up or is it -- has it come down
in the last two years within the organized player secured call it?
Vishnu Kumar
At least the intensity I'd rather instead of a number whether I would rather put it in intensity other more players fighting
it out with more and more products because of which the market share whatever is available is getting spread out. I
mean on those terms just to get a broader sense of the competitive intensity in the market.
Vishnu Kumar
Okay, got it. And finally your thoughts on probably thinking about a technical plant or let's say tying up doing some
sort of a cramps arrangement for your land facility that you already have any anything that you finalized or anything on
Page 16 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Vishnu Kumar
Got it sir. But you are positively aligned towards that thinking or you still not take any call on that along?
Vishnu Kumar
Got it. Thank you.
Operator
Thank you. The next question is from the line of Chirag Dubey from HDFC Mutual Fund. Please go ahead.
Analyst
So thank you for the follow-up. So, can you give a ballpark sourcing mix, from China, India specialty if you can just
share some numbers?
Analyst
Yes sir, purchase.
Analyst
Page 17 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
Okay 75% is indigenous when you say you mean from India.
Analyst
That number you said 75%?
Analyst
25% is imported. Okay, and Bansalji typically when I look at our first half numbers inventory decreases in the order of
about 8% to 10% of sales for that, first half. This year, it has increased slightly. The difference is largely because of the
pricing environment that you talked about.
Analyst
No. I understand, sir. I am comparing it with as a percentage of sales in the P&L number --
Page 18 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
Sir, I understand. So but typically there is a -- so in the P&L, there is a decrease in inventory number that you're
sharing.
Analyst
Yes sir, all of it put together.
Analyst
No my point is that typically in the first half we see 8% to 10% of sales as a reduction because, clearly you will sell
through you'll buy through the second half and sell through the first half which we understand. But my question is that
this we haven't seen in the first half of FY20 and we've seen a INR 3.7 crore increase in the first half. This number is it
large -- is this increase or is the difference versus the previous trend largely because of the increase in prices?
Analyst
Okay. Fair point. Is there a number you have your mind set of what is the margin impact due to the inventory levels or
prices coming down?
Analyst
250 basis points?
Page 19 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Yes.
Analyst
Okay, so that is helpful. And this is the last question sir. Do you have any thoughts on the pesticide management bill?
There is some press talk about them taking this up any broads thoughts?
Analyst
Okay, sir. Thank you, sir.
Operator
Thank you. Next question is from the line of Manish Marwar from Antique Stock Broking. Please go ahead.
Analyst
Yeah. Hi Rahul. Just one point if you look at the raw material prices are correcting, right. And do you think the next
year FY21 maybe the -- we will see there is a pricing decline or pricing deflection basically in the industry as a whole?
Analyst
Last because last six quarters or seven quarters are consistently seeing is a relation growth or a price growth in the
industry, which is led by the raw material increase. Now the raw material prices are correcting. Do you think the next
year growth industry per se will be to some extent offset by the lower realisation or prices?
Page 20 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
say is not that number other -- that doesn't drive me that is a cost increase which I have to pass on but it is the potential
of the -- volume increases which is more important and we are looking at really positively at the volume growth and
then subsequently price increase because of the demand site full given the moisture and crop situation in South India
and country as a whole. This is that demand -- South on fully when the prices could be stable to upside also because in
the industry is the pressure of margins.
Analyst
Okay.
Analyst
Right. Thank you. But definitely the impact generally happens with some lag effect, basically this quarter if we look at
-- your realisation was around what Mr.Bansal said, around 50-50%, 50% is a volume growth and 50% is a realization
growth, which is around if I assume around 2% to 3% is a your realization growth for this or a price growth for this
quarter per se right? So this is predominantly on account of product mix or this is just we have taken some price
correction and the better product mix led to this growth?
Analyst
Okay. But inventory impact actually on our gross margin is over now in this quarter or do you think this will contain in
the Q3 as well?
Analyst
Okay. But there could be some impact on Q3 as well. But largely you said maybe like 250 basis point we have seen
across margin impact for this quarter to maybe 5800 basis points could be possible the next quarter as well?
Page 21 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
Okay. And Rahul if -- can it be possible to share what could be the industry growth for 1H in India?
Analyst
Okay, and this will be driven by volumes or price GDP? If I possible?
Analyst
Okay. Understand.
Analyst
Okay. And one of the question of an earlier participant if you look at the last three years of industry, right? I put into
this industry or company into three bars MNCs domestic Indian player or importer to based on your assessment which
basket has gained the shares in the industry?
Analyst
If you put into industry players into three baskets, like one is MNC, second is a domestic Indian player which is Indian
player basically, third is importer is because there's a lot of compaies who import and sell in India, right? Who has
gained market share?
Page 22 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
No, Indian formulation company like us.
Analyst
Understood, okay. And last question on the industry side. Rahul you said, rabi outlook is very upbeat in time. And I just
wanted to know which are the factors. Which you think is on account of that you are think that rabi outlook is upbeat
because we know the reservoir are higher in the South as well as the most of the part of the India but apart from that
which are the other fundamental or technical factors you see in the -- at a ground level.
Analyst
Okay.
Page 23 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
These are some macro and micro factors with the impact. One thing I would like to understand from you is how you
see liquidity timing out because that is something this is going to influence farmers buying power.
Analyst
I think still at that is a subjective silly question mark for each and everybody's mind right now, but just why am I asking
you rabi crops basically because last two or three years we are expecting always the industry as well as investor
expecting the good rabi crop, but it turned out to be bad at the end of the season actually. And therefore saying how it is
differ was upset because I don't know if it is started. We are hoping for good rabi. But it will be a good or not and still
there wasn't asked factors, which is a difference.
Analyst
Okay. This has started. Okay, that's enough. Okay sure Rahul. Thanks and all the best.
Operator
Thank you. The next question is from the line of Raj Kajaria from Securities Investment Management. Please go ahead.
Analyst
Yes hi. Thanks for the opportunity. I just have three questions, first is if you can share what is our innovation turnover
index like share -- revenue share from new products in H1 FY19 versus what it was say in FY15 or '14, this will give
you a better understanding of how new product have scaled the path.
Analyst
And how was it like four or five years back.
Page 24 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
Okay, so just to understand this our growth and our overall margin expertise said that already set. Tax recovering of the
margin of the ability to increase prices depends on the industry increase in industry consumption as well. So for us,
when we look at our new launches and also like to see product portfolios, is this that any recovery in margins,
especially in the gross level will marginally be a function of new product scale up because the kind of pricing pressure
or the commoditization we've seen in the existing brands or old brands for is that how one should understand? Future
growth and margin recovery for us?
Analyst
Yes the new product launches it is just the function of how well the new products incrementally do and hence we may
see any new -- we are incremental margin expansion for us winning now?
Analyst
Okay. So just a related question if we can just talk a bit more in detail about the Kohinoor program because I think in
the past one of the issues we had was in terms of efficiency of better throughput of that channel network. I know you
have in the past made some changes and corrections. So where are we in terms of that, implementation versus that
benefit cycle playing out for us if you can just provide a bit more color on that.
Analyst
Okay. So how would for distributor revenue or if you just fill in some of those metrics how would have those change
and last three years ago? It's been more than three years. We've been doing those changes and we've also pruned some
distributed as well. So how would have those network efficiency would have moved?
Page 25 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
Analyst
Okay. That's all for me. Thank you.
Operator
Thank you. Due to time constraint, the next question will be the last question of this conference, which is from the line
of Bharat Gupta from Edelweiss Securities. Please go ahead.
Analyst
Yes Rahulji thank you. Rohan here for follow up. Sir question is on this your other expenses and inside cost from last
four quarters. We have seen that we have reduced this expenses significantly, especially employee costs are
significantly lower in last year's second half and this quarter we have cut our other expenses significantly. So this as
you mentioned, that the growth initiatives and all the expenses remain stable. So, just want to understand that how this
expenses are coming down and can there be further scope for any further cut and deduction on this on in second half?
Unidentified Speaker,
Rohan the reduction is expense is mainly because of the optimization of the manpower. Because of the reduction in the
man power because of that you see our expenses and amount of traveling and vehicle maintenance that is the reduction.
Second in terms of the office and godown rent because of a change in the accounting as per Ind AS now the asset is
cleared as right to use and the liability on account of the lease liability. So there's around INR 3 crore amount is shifted
from this expense to the depreciation and interest. And one improvement on account of the -- there was a ForEx loss in
the first half of the previous year around INR 2 cr which is not there in this financial year. So that it is because the
cumulative impact of all these things. And thirdly there was a reduction in the C&F commission rate to our related
party which was earlier 2.5% is reduced to 1%. But under the head and marketing the reduction in C&F expenses was
because of that reason. The cumulative impact is like that but it cannot keep on going reduction not I think we have
reached to a level of key this year will optimize all these things next year. They will increase in proportion to C&F and
all.
Analyst
3 crore impact of Ind AS is there and reduction in their expenses? This is for cumulative first half or it is quarterly?
Unidentified Speaker,
It is for cumulative first half. We have taken the effect in the this time. It was effective from 1st of April 2019 and all
these properties which are on rent office and go down. We have to create a asset as right to use and corresponding
Page 26 of 27
Company Name: Dhanuka Agritech Market Cap: 14318.6966078 Bloomberg Estimates - EPS
Company Ticker: DAGRI IN Current PX: 300.95 Current Quarter:
Date: 2019-11-08 YTD Change($): -163.8 Current Year: 26.25
Event Description: Q2 2020 Earnings Call YTD Change(%): -35.245 Bloomberg Estimates - Sales
Current Quarter:
Current Year: 11041
liability on the present value. And on asset side, we have to calculate the depreciation as per their lease period. And on
the liability side since it was provided from the present value and differential value, which we have paid is the interest
cost.
Analyst
Okay that explains. Thanks. Thank you so much.
Operator
Thank you. I now would like to hand the conference over to management for closing comments.
Operator
Thank you very much, sir. On behalf of Emkay Global Financial Services, we conclude this conference. Thank you for
joining us and you may now disconnect your lines.
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