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00:00If you see Dhanuka Agritech's revenue, revenue was up 33% while EBITDA margin is at around 15%.

00:07So to talk to us more about the numbers and the outlook going forward,

00:12I am joined by Mr. M.K. Dhanuka, who is the Vice Chairman and MD of the company.

00:16Happy to have you, sir, on the show.

00:18Starting with my first question, given the strong momentum that we have seen in Q1

00:23with 34% year-on-year revenue growth,

00:26do you believe that this is the right time to just revise the guidance from 18% to maybe 20% to 25% for FY25?

00:34No, actually the July has not gone well.

00:38We were expecting good rainfall in July but scattered rainfall was there in the month of July

00:46and from 25th July onwards the rainfall has picked up.

00:51So the consumption of VD side has basically been very low

00:57and the VD side which was placed in the month of May and June that has been returned back.

01:04Some quantities of that has been returned back by the dealers and distributors.

01:09So that's why we are continuing with our guidance of 18% to 20% growth in the top line for FY25.

01:18Alright, and also on your EBITDA margin side,

01:22so do you see your EBITDA margin going to around 21% to 22% given the current performance?

01:28No, we have rather given the guidance of 100 pips degrowth in the EBITDA margin

01:35because of the introduction of new molecules and expenses being incurred on marketing for promotion of new molecules.

01:44So that's why there can be a dip of 100 pips approximately in the EBITDA margin over last year.

01:51Is there a chance that we go to our EBITDA margin of 22% to 23%

01:58because I think in last September 2023 we had around 23% of EBITDA margin.

02:03So was that a one-off or extraordinary thing that we did last year?

02:08You see, the second quarter is the best quarter, ours is a seasonal industry.

02:14So quarter wise the revenues and the EBITDA margin differs.

02:19So second quarter is the best, so that's why the EBITDA margin in the second quarter is also higher.

02:26But overall we are given guidance of 18% EBITDA margin for the whole year.

02:32Also regarding company's engagement with innovator partners for manufacturing patented technical molecules,

02:40how has the engagement been progressing?

02:43No, it is at initial stage only we are having discussions with our Japanese partners

02:51and considering our relationship of more than 25 years,

02:55we do hope that sooner or later we will get the molecule from the Japanese companies.

03:01Japanese companies are slow in taking the decision but once they decide then it is for long term.

03:08So let us wait for some time and we hope that something will definitely happen in this direction.

03:15Also can you provide a breakdown of volume versus price led growth in the current quarter?

03:22Yeah, the volume growth was 39% while the value growth was 33%.

03:30So the prices has reduced to the extent of 6% in the first quarter.

03:36As you said that Q2 is our best quarter, so how are you seeing Q2 shaping up right now?

03:43As I told you July has not gone well, so August and September we are dependent

03:50because the maximum consumption of insecticides and fungicides is in the second quarter in August and September.

03:57So we are confident once the south season will start, we will be able to coop up

04:04and August and September will turn out to be good months overall for the company and the industry.

04:12Also I wanted to understand on the volume side, so we have seen almost 39% volume growth which is actually very good.

04:19Now how do you see the industry for the quarter?

04:22What kind of growth are you anticipating for the industry in the current year?

04:26I expect that the industry should have gone half in comparison to what Dhanuka has grown

04:33because we introduced some new molecule PARS, LANEVO and MICROSUPAR

04:38for which we got a very good response from the market which has boosted our revenues in the first quarter.

04:46But the other companies have not been able to launch some new molecules

04:51or they have not got that much success in the new molecules.

04:56So these new molecules have played an important role in our top line.

05:01And also on the speciality side, so what is the revenue mix,

05:05I mean what is the contribution of speciality chemicals to overall revenue?

05:10Overall speciality is around 50-50, 50% speciality and 50% is basically generics.

05:19And in terms of non-availability and rising freight cost, how is the scenario now?

05:26I mean is it still same or it has started improving and are you able to pass on the increased freight cost to farmers?

05:37Yeah, definitely it takes some time in passing on the cost to the farmer

05:42because initially in the system, in the pipeline, the old cost inventories are available.

05:51So when the other peers also increase the prices only then it is possible to increase the prices.

06:00Speciality portfolio, there is no change in the prices,

06:04but only it happens in the generics which are coming from either China or from the domestic manufacturers.

06:12So definitely the prices are now either stable or they are on the rising trend.

06:21And the freight cost which went 4-5 times has now come to double only.

06:30So some freight has been reduced now from China to India

06:35and we are confident that as the season will further progress,

06:40we will be able to pass on the cost to the consumer.

06:44Alright, well thank you so much sir for answering our questions and all the best.

06:49Thank you, thank you Varsha ji.

Dhanuka Agri's FY25 Growth Outlook | NDTV Profit

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