Bayer CropScience Limited (506285) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Nikunj Savaliya, Company Secretary and the Compliance Officer of Bayer CropScience Limited, who would like to extend a warm welcome to all of you attending this meet. I can see over 65 participants and some who are still joining, as I speak. This is an extraordinary occasion that brings together an exceptional group of individuals who are passionate about driving our company's success and exploring the endless possibilities that lie ahead. On behalf of the company, I would like to express our great gratitude for your presence today. Your support and engagement are vital to our continued success, and we value the opportunity to discuss our progress with you today. Let me introduce our speakers for this meeting, and may I invite them on screen place. Mr. D Narain, Vice Chairman and Managing Director and CEO of the company; Mr. Simon Wiebusch , Full time Director of the company and Mr. Simon Britsch, Executive Director and Chief Financial Officer of the company. Throughout this event, we aim to provide you with an overview of our company's operations, financial performance and strategic growth drivers. We are committed to fostering an environment of open dialogue and constructive engagement as we firmly believe that your perspective and questions are invaluable in shaping our future force. The sequence of today's meet will be to start with the presentation by the management team followed by a question-and-answer session. We understand the importance of open dialogue, and we are here to address your questions and concerns with utmost transparency. We have received several questions by email in advance, some of which we will be covering during our presentation itself. And the rest of the questions will be taken up in the Q&A session. If you have additional questions, please locate the chat taken at the bottom of your screen and send in your questions first through the chat box. We will attempt to answer as many questions as possible with the exception of items of commercial confidence. Considering time concerned if any question remains unanswered, please reach out to us at [email protected]. Please note that we are recording this interaction and the recording will be available in the company's website. Presentation slides are available at BSE website as well as company's website under the Investors section. With that, I now request Mr. D Narain for his [indiscernible], D over to you.

Thank you, Nikunj, and a warm welcome from me as well to all of you joining the call. It's indeed an honor and pleasure to have you joined us at today's investor deliberations. If you can get the slide, let me start with setting the context on why as a management team, we are really excited, but where Indian agriculture is growing and where we, as by Bayer CropScience are position to take advantage and not just advantage also deliver significant value to Indian agriculture. If you go to the next slide, I would start at a point where we hosted our Global CEO of Bayer CropScience, Rodrigo Santos, who is also a member of the Board of Management of Bayer recently in the month of March. He joined as the CEO early last year. And as he has spent the last 18 months in his role, his visit to India was very timely for a number of reasons. If you look at where Bayer India and Bayer CropScience India stands within the Bayer cropscience world. We are proud to say we are in the top 5 countries in the world. And number two, we already are a microcosm of entire Bio CropScience with the products and portfolio already present in India. And three, and most importantly, we reached almost 20 million out of the 50 million small holders that we, as Bayer CropScience touch globally, which is one of our biggest goals that we have as to how do you enable small holders and their livelihoods. And in this whole journey, I think the slides are moving faster. I want to see the slide with Rodrigo in it. I'm not sure I think the slides are moving faster. Can we go back to the previous slide, please? As part of this visit, there were a couple of key takeaways that Rodrigo clearly could see for himself. Number one, and he stated it publicly as well that we in India have the unique opportunity. Go to the next slide, please, which is with Rodrigo. Yes, we in India have the unique opportunity to lead the world of global agriculture in the decades ahead, as we stand today. Number two, he also said that we in India have the opportunity to do it inclusively, especially from a small holder perspective, which is so critical to deliver the value for agriculture and the country as a whole as we see this. The third piece is which we also quickly identified is post-COVID and the entire disruption to the global value chain of food value chain, the huge opportunity in India have to increase global exports of agriculture. And finally, the whole topic of regenerative and sustainable agriculture and how can India take the lead in the world of smallholder farming could deliver originated to agriculture. Why do I make this as a key pivotal point in the starting point of a conversation? This is because as the world's leading company of her innovation in agriculture, it's extremely important that Rodrigo saw this and also completely align with the huge opportunity that is there in front of us and how we [invite] with our continuous innovation can bring those innovation and bring value to agriculture. So that's the reason why I set the context of this visit, which is so critical for us as a management team in the country. And all of what I'm sharing with you is he stated publicly as well. If you go to the next slide, which is where I'd like to talk briefly on the macro context, right? And why this connects to the comments of Rodrigo, which I just shared. One is if we look at the macro level from the needs of the country, and obviously, we now have the distinction of being the world's largest populated country, the topic of food security is front and center. But not just food security, the topic of nutritional security is also right along with the same plane of food security. But then overarching all of these is a big shadow of what I'd see as the impact of climate change and how are we going to address both these two challenges of food and nutritional security in the decades ahead. But when we talk about the challenges and the needs, it's important to understand, and this again, we -- the team here, I think, I've clearly got to a place where we have said there are 4 or 5 key challenges that we need to address collectively to solve these needs that I just laid out. One is all of you interact with small holders, what is very, very clear is the access to good quality inputs is foundational and that is where the whole starting point is. And that's where the role that we have as input companies have a major opportunity to play. The second one is more and more, especially in terms of climate change, the whole topic of agronomy and agronomy knowledge becomes exceptionally critical. The third piece is none of this is going to start without access to cost-effective financing and which again is a major challenge for small holders in India as we speak even today. And to top it all is the whole challenge of labor and labor availability at critical moments. And finally, this doesn't stop with these 4, it comes down to connectedness to markets to being able to sell the produce at the right time at the right price. Why do I highlight all these? I highlight all these because for the first time as an industry, multiple set of stakeholders there's a clear alignment that these are the 4 or 5 key challenges that we need to crack if we have to deliver on the huge potential that Rodrigo realized as you walked away, right? And the good news is, even as we speak, there are major change drivers happening, which I think are moving in the right direction to solve it. And why do I say that? Number one, the whole topic of collectivization of farmers and small farmers is foundational. [None of us] can reach every individual farmer, but collectivization of farms and getting clusters of 100, 200 -- 500 farmers is a starting point. So therefore, we'll talk more about this as we get into the discussion. The whole topic of FPOs and enabling a full FPO to succeed is the starting point. Digitization. Digitization and the way the NPAT farming ecosystem is starting to get digitized by large companies like us and including the numerous startups investing on digitization is, I think, going to be a game changer for the future. The third topic is mechanization and not just mechanization, small farmer mechanization, those that are critical to solve the challenges of the small farmer ecosystem are very critical. Focus on sustainability. I already said climate change, but even more than climate change even as we speak, water and water availability in some of the key crops like rice is emerging as a key challenge. And rural entrepreneurship again, is starting to emerge as a huge opportunity. So if you take all these 5 that I laid out, as we speak, there's a clear move towards bringing all these together in a very focused way to start driving to make a big change to solve these big problems that I just laid out. But even more important than all this, I would think is the enabling policy environment of the government at the central government level and more and more states recognizing that these need to be solved to make a difference is emerging, and I think which is a positive thing. And all of these have one singular goal, how do you improve farmer incomes, right? Because I think when the government said doubling farming income in those at a time, 4, 5 years ago, it would have been a slogan, but I generally believe today, it has reached a point where the entire ecosystem clearly sees this as the most important change that needs to be done. Now as we go to the next slide, please. How can we and how are we as Bayer approaching it, right? It all starts with -- and I'm sure you're going to be talking more as we go through these. The starting pillar on this is we have to perform and deliver today. And on this vertical, I can very proudly say that with all the actions that we have taken in the last 4, 5 years, the strong focus we have in driving business holistically across all the different parameters, whether it is top line growth, cost optimization, cost management, whether it is managing the whole cash flow and risk mitigation. All of these are key KPIs we track consistently, and you will see how it's panned out in this time frame. But more important than all of these is in the same time frame, creating space for investing for the future, which comes to my next bucket, which we call transformation. And what does transform mean everything that I just talked about cannot happen with business as data scope. In the last 4, 5 years, we have talked about initiatives, projects, but again they are no longer initiatives and projects. Today, as we speak, the kind of ecosystem we're building through transforming the whole crop ecosystem is coming to fruition. And this is what we call transformation, and we will talk about how are we progressing in this dimension. But most important in all these is creating a holistic ecosystem which brings all the key stakeholders together to improve farm incomes and also sustainability. And that is a big focus for us. And this, to me, is going to be enabled with strong collaborations and partnerships. We as Bayer alone cannot solve it. And I'm very clear on this. Improving productivity alone doesn't translate to farm income. It is foundational to it, but it is not the only answer to the problem that we are seeing. And that's the reason why the holistic partnership and managing the whole thing collaboratively is going to be key. If we go to the next slide, I will stop and transition over to Simon, but here's what I believe, and I say that will come back later on. What you're going to hear today is steps we have already taken, but more importantly, what we are so excited as we look at the future, how we're going to build on it and also how we're going to accelerate some of these initiatives, which are going to become long-term growth drivers and not just initiatives. But I'll give it to Simon Britsch to talk about ultimately results in results matter. So Simon, over to you, and let's hear your part of the presentation, please. Thank you.

Very good. Thank you very much D. Hello, everyone, and also a very warm welcome from my end. I will now walk you through the financial and also our sustainability performance for the financial year that ended in March 2023. However, as D said, I will also use the opportunity to take a look at our performance over the last 4 years, basically since the merger with Monsanto India Limited in 2019. Next slide, please. Next slide, please. So these are the financial highlights for the year 2022, 2023, starting from the top with revenue from operations. Here, we witnessed a good growth of around 9%, which was achieved with an underlying strong liquidation and very much driven by good growth in both value and volume. Volume growth was achieved, in particular, in our corn seeds portfolio. Moving on to earnings per share. You can see that we were able to translate the revenue growth into profit. We were quite successful in managing inflationary pressure in both COGS and operating expenses. Looking now at how much of the profit we have shared, you know that we have already paid an interim dividend of INR 100 per share in November last year and are proposing to pay another INR 30 per share of final dividend. If approved by the shareholders this would lead to a total payout ratio of 77%, meaning that we continue to significantly share profit with our owners. Lastly, in terms of return on capital employed, we also saw a good growth of 190 basis points compared to the last year, ending with 33%. Next slide, please. Let's also now take a look at sustainability. From this year onwards, we will share with you some of the KPIs that we are reporting as part of the [ BRSR ] framework. Starting with the left-hand side, focusing on our employees. In terms of general diversity, the overall ratio of female employees was 21% at the end of last year. And during that same year, approximately 1/3 of our newly hired employees are female. In addition to that, we continuously invest into safe and healthy workplaces and also ensure that all of our employees are covered by well-being measures. Moreover, we check that all of our value chain partners operate under good health and safety practices and working conditions. Now focusing on the right-hand side of the slide, I'm just picking a few of the KPIs illustrating our work to reduce our ecological footprint. As we are reporting these for the first time, today is more about setting the baseline. And going forward, we plan to report progress on these. Our main focus areas are usage of renewable energy sources, consumption of water in our operations, greenhouse gas emissions and the total plastic waste that we have generated, recovered and disposed. Next slide, please. So as mentioned in my introduction earlier on, I'm taking the opportunity today to review our financial performance since the merger with [ Monsanto ] in India. Overall, we believe that we have holistically managed all of the relevant financial KPIs. Let me drill a little deeper, starting with revenue from operations. Here, we have achieved a CAGR of 12.5%. This top line growth was driven by broadening the small water reach, launching new products and also brand billing activities. Moving on to EPS. We accomplished a CAGR of almost 17%, which shows that we've been able to expand our earnings despite inflationary pressure in our costs and also on the supply chain challenges. I would also like to highlight that this earnings expansion has not been achieved on the basis of reduced investments, but that on the contrary, we continuously invest into our long-term growth. Next slide, please. On the left-hand side, there's an overview of the accumulated cash flow from operations over the years versus the dividends that we paid out. You can clearly see that we have paid out almost 90% of accumulated operating cash flow over the last 4 years. I would also like to mention the fact that we have been very successful in converting our profit into cash. This was also achieved by focusing on a stringent working capital management with a special attention on strong collections from our customers. Lastly, looking at the return on capital employed, we have been able to grow that KPI by 500 basis points over the last 4 years, which clearly underlines our continuously strong execution of a very efficient capital management. Thank you very much for your attention. And now I would like to hand over to Simon Wiebusch to walk you through the business performance.

Good afternoon, and Namaste also from my side. I'm thrilled to share with you more details on our operations. First and foremost, I am proud to say that as an organization, we stuck to our strategy and favored liquidation we were selling. As has been our source of success for many quarters now. We believe to entertain the cleanest channel of the industry and have diligently expanded our go-to-market focusing on small holder farmers and digital outreach. Next slide, please. On the sales side, we have seen excellent uptake of our newly launched insecticide Vayego as well as continued growth in [indiscernible] in our rice herbicide council. Also, corn seeds have performed well with spring corn being on par with a record last year despite production challenges. On Roundup, I'm happy to say that against volume shortages last year, we were able to maintain top line given positive price developments. Clearly, things are normalizing from beginning of this calendar year with availability resuming and prices returning to more normal levels as well. This is causing some strengths in the distribution system. We do believe that with rain setting in and land preparation happening, also Roundup consumption will follow the trend towards increased herbicide usage driven by labor shortage in agriculture overall. Horticulture, corn and padding achieved new heights. We have doubled down on brand building, which I will refer to later still. Liquidation was slightly higher than sales, though they are converging that. Still, they can deviate at quarter end, and we will always follow the liquidation trend. Launch product liquidation is key as a measure to launch success, and we are very happy with what we see here right now. Farmers are increasingly picking up crop solutions especially where export orientation prevails, but also the link between our corn seeds and [indiscernible], the corn herbicide remains very strong. We lead the industry in terms of discipline. I'm convinced of that. And as confirmed by our trade partners we are also seeing ever-reducing return percentages, which helps us to improve our overall operational efficiencies. Last year, we did see good rains, though especially the Northern belt was a bit undersupplied. Less disease pressure, especially in potatoes, reduced fungicide demand, specifically towards the end of the year and Q4. We continue to see robust commodity prices leading into good farm investment with some pressures, especially during harvesting obviously still emerging, which can harm [indiscernible] . All this in essence, led into good acres overall. Next slide, please. Where our focus in the last couple of years was clearly on stabilizing the underlying business, i.e., perform. Now our transform initiatives are clearly converging with and expanding our go-to-market strategy. We believe that Indian agriculture is collectivizing is mechanizing, digitizing and becoming more sustainable. In the subsequent slides, we will dive a bit deeper into these themes. Next slide, please. First though, I would like to highlight that Bayer CropScience is clearly aligning its activities with societal needs, which can be met through agricultural interventions. Our "leadership" is aimed at improving access to [more] nutritious food, catering to our region's needs as well as enabling exports to regulated markets. We drive the adoption of dry direct seeding in rice to reduce labor pressures and improve the water and methane footprint of [ padding ]. Another major goal is to increase protein availability for feed, silage and fuel via better corn yields through purpose spread hybrids. We work on accelerating the availability of the traits and support high-density planting in cotton. We also focus on supporting yield and quality increases in oil seeds, helping to reduce the need for imports. Offering specific tailored solutions to farmers via traditional and increasingly alternative channels like better like farming centers and e-commerce has elevated our impact. Bayer's offering expands over and above the physical portfolio. Being a thought leader at external forums partnering with government and private stakeholders driving value and outcomes. Our talent is industry-leading and our ever expanding routes to market supplement our liquidations while expanding farmer reach substantially. We believe that the differentiator of the markets will increasingly be understanding of the interaction of our agronomic interventions with a specific geological weather, nutrition and solar conditions at farm level. Here, digital solutions are a prerequisite to reach and support our 150 million farmers. Next slide, please. Ultimately, everything comes together at village level. We label our integrated go-to-market as Bayer brand. At a Bayer brand all the investments culminate. We consequently aim to ensure food and nutrition security while advancing sustainable agriculture all to improve farmer income and livelihood. For this, we connect all our activities holistically to serve the farmer nation. We fundamentally believe that only a multi-stakeholder ecosystem can solve the challenges faced by agriculture and the whole food value chain. Next slide, please. Coming to the three themes around collectivization, mechanization, digitalization and sustainability mentioned before, it is clear that land ownership in India will continue to be optimized. Labor shortage on farm, consolidated offtake needs by industrial trading and processing companies as well as traceability demands while food value chain and end consumer will mandate more collectivized farming. Market research constantly confirms that there is still a knowledge, access and trust gap in Indian agriculture. This is amplified by lack of access to finance and poor market leakages, especially where the [indiscernible] system is not in place. With our more than 1,500 better life farming centers, we and our partners, cater-performing communities' needs by overcoming these challenges. Our BLS centers ensure quoting inputs, disseminate agronomic knowledge, create market linkages and offer financial solutions next to many other services. We have seen significant income increases for farmers that are linked to our BLS centers and targeted grouping of agri entrepreneurs amongst the many women has improved livelihoods in numerous communities. It is our aim to expand the concept further and make the service rendered even more relevant than they are today. Next slide, please. Clearly, we are not the only ones who have identified the need for collectivization. In the spirit of collaborative ecosystems, we are supporting the government's drive to increase the number of sustainable FPOs and are making the part and parcel of our activities. In many ways, FPOs are an extension of our better life farming approach. Some of them now even host [ PLF ] centers as they face similar challenges as individual farmers. Their collective adoption of practices and higher adherence to market needs allows for more scalable interventions from our software. Next slide, please. Now [indiscernible] the talk of the nation. And we're convinced they solve a multitude of challenges that farmers increasingly face. We have been at the forefront of advocating for and guiding deregulation and have started commercial services now. Be it labor shortage, fear snakebites; precision of application, speed, operator safety or water savings, all are addressed with drones. Simply looking at the video that is playing on the right side where you see a traditional map set versus the drone, I mean, I would argue the video does speak for itself. Next slide, please. Now COVID has accelerated the digital connect to farmers, and we are leveraging digital means to connect with farmers, deepen our brand recognition drive knowledge dissemination and therewith built trust. Farmers are increasingly familiar with Facebook and especially YouTube and actively seek advise online. Brand recognition of [indiscernible] are key to ensure farmers invest in what will lead to the right outcome to them. As mentioned before, access to original products and knowledge of how to use them correctly is still a challenge in the country. One feature to call out is our authentication functionality within farm rise which allows farmers to scan Bayer products they bought and see whether it's genuine. This is literally the first instance where we can follow through our product flow from factory to farmer and target our advice to the individual via digital Connect. This is potentially the most exciting development that I see today. Next slide, please. While sustainability has many angles, not least the profitability of farming per se, I would like us to focus on the dry direct seeding of rice as a sustainable alternative to traditional transplanting and flooding. While labor shortage is the #1 driver at farmer level, we see significant additional benefits around water conservation, methane emission reduction, and that makes the system future-ready. We even believe farmers can earn from participating in carbon credit generation by changing their cultivation method from transplanted Paddy to DSR. This is probably the single biggest sustainability intervention that can be imagined for Indian agriculture were we to see adoption at scale. With this, I would like to thank you for your attention and hand back to D. Thank you very much.

Thank you, Simon. All I can do is conclude by saying the team here is super excited with all the opportunities that are there in front of us. But we also know that this is not going to be easy. And a big part of this whole drive which we started by saying we need to perform for today as we transform for both today and the future. And we think we have the right elements of the strategy to deliver on this. And what is also even more critical for this is this will require, and we've already seen us doing it, strong engagement with all stakeholders to drive the policy changes and the support of the entire ecosystem to make all these real. And we are clearly on that journey. And as we look at the future in a number of these initiatives, we'll keep coming back to you. And of course, some of them, we might have to pivot based on the learnings but the bottom line in all these is the innovation is no longer being driven by us as a pure product or a technology innovation company. But our stride is to innovate the entire ecosystem to deliver value for small farmers, improve farm incomes and assignment, but it clearly alluded to this sustainability at the core of everything that we will strive to deliver. So thank you, and back to Nikunj for the Q&A.

Thank you very much for the detailed presentation, sharing comprehensive understanding of our complete operations performance as well as strategic growth drivers. We now open the session for our Q&A and I invite [indiscernible] of you again for taking the questions one by one. We have already received a few questions right now and some of them are still showing. What I'll essentially do is I'll combine similar question. Make a broad question to all of you and rather put it to one of you, yes. The first question, there are a couple of questions with respect to seeking details about the breakup of the sales of the turnover. The question is, what is the breakup of sales in terms of domestic agrochemical and bond sales during the last financial year '22, '23. Simon Britsch, I think you can take this question to start with.

Sure. Very happy -- this one. I think this is a recurring question. So during the year, domestic Agrochemicals contributed 81% and domestic corn seeds was 13% of total sales.

Thanks, [Simon]. There's another question you can also take it on glycosides. So during the year, what has been the contribution of [glyphosate] in overall crop protection [indiscernible] growth?

Overall, we saw actually a decline of Roundup of glyphosate by 2% compared to the previous year, which was due to supply chain constraints.

There's another question on the phone. Simon [indiscernible] how would we see [indiscernible] business status? And what is the current market share and target market share specifically in cortical product on [indiscernible]

[indiscernible] was calling on me, but I think I got the gist. What I would say is in India, up until now, we've basically been talking about two major grains, which have been rice and wheat. My personal perception is that we're starting to talk about a third one more and more, and that obviously is corn [indiscernible]. So fundamentally, I am convinced that what we've seen also in a lot of other markets, corn becomes more important, and we see it in acre expansion. We see it also in profitability for farmers and to a certain degree and commodity price that is out there. We are the company that invests most into breeding globally. We have the biggest [indiscernible] tool. So in many ways, we are well set to also have a strong position in corn in the country. And I can tell you, whenever we're launching a hybrid with a good fit, we do that very, very successfully. So I'm very positive about our future for corn in the country.

Yes. Thank you. A couple of questions for new products. So what is the percentage of revenue cost from new launches? So perhaps [indiscernible] you can take this question.

Was difficult to hear, it was something about new launches?

Okay. Let me repeat the question, just in case. The question is what percentage of revenues come from new launches, new product launches?

Okay. So how much share of revenue from new launches. So you might know that in the recent past, we've launched a couple of products like [ ego ], Consent Active and also for new hybrids of [indiscernible] here in India. These launches represent, let's say, a high single digit of the last year's sales.

Okay. Got it. Thanks, Simon. There's another question on channel inventory and liquidation. Simon Wiebusch, I think you can take this. What led to double-digit equitation growth in Q4 FY '23 when industry demand has largely been sluggish due to lower investment station.

Good work. No. I mean, quite honestly, as I've been alluding to, we are very, very focused on [equitation] in terms of how we incentivize our sales team. There has been good investment into Chilli. So to a certain degree, it was taking up quite a bit of insecticides. And generally, the new launch of Vayego, there was a good business also in wheat, [indiscernible] more in the north. So in many ways, a very successful Q1 in terms of [equitation] -- sorry, Q4, obviously, in this context, the first quarter of the calendar year. Barring only fungicides and potato. So that's the one was potatoes [indiscernible] didn't take as many fungicides as we would have seen last year. Everywhere else, we were quite happy also a little bit better in Apple than last year.

Thank you, Simon. Another question on inventory and Simon Britsch, perhaps, you can take this. How much [ IQOS ] inventory are we sitting on? When will it be liquidated? And what are the reasons for increase in inventory levels in FY '23.

Okay. So let me answer in the following way. So the higher inventories that you see in our balance sheet at the end of Q4 are mainly in preparation for the upcoming season and business growth and there has also been an increase in the material costs.

Thank you. There are two more questions that you can take this. And the first one what are contribution of overall sales of top 5 products in over 10 in last [indiscernible] '23?

Both -- you're asking about contribution of top 5 products, correct? Okay. So our top 5 products is our, Dekalb, Roundup, Nativo, Laudis and Council Active and similarly to last year, these represent around 44% of our total domestic sales.

Thank you. The next question is what are the key factors that enabled the company to hold its margin at such a high level, despite falling glyphosate prices and the channel inventory [indiscernible], Simon Britsch, you can take this question.

Sure. So actually, we are able to slightly expand our gross margin there, let's say, three main factors. So one is the mix effect from higher corn sales. Second one, favorable round-up pricing due to a market shortage. And the third one is basically carryover benefits by having cheaper inventories that we sourced pre crisis times.

Great. Thanks, Simon. There's another question on glyphosate and Simon Wiebusch you can take this. The question is for FY 2024, what sort of revenue decline do you expect for glyphosate? How glyphosate prices are already corrected by in Q4 FY '23 for our -- we expected to decline further in first quarter of FY '24.

Yes. I mean with all honestly glyphosate is a bit of a moving target, which we know also from a global perspective. I think what's fair to say is that the prices have come back quicker than in many ways, would have been expected. Having said that, the market last year was extremely short which means that we do believe that the availability of glyphosate and the possibility to price the quantities that the market needs might help to compensate and most probably will actually overcompensate the loss of price effect that we see with the glyphosate being more affordable. So in many ways, the underlying, let's say, a normalized view on glyphosate continues to show a growth trajectory driven primarily by labor shortage in the country.

Thank you, Simon. There's another question, please name the new products launched during FY '23. How many new products do you expect to launch in the upcoming financial year, which is FY '22, '24? Simon Wiebusch, you can take this.

Yes. I mean I repeat myself here. I don't measure ourselves on new product launches as a number. That is absolutely irrelevant at our business. Barring maybe in the corn seed business where really new launches are important to keep the portfolio of fresh. I mean looking at it right now, statistics, we have 29 label expansions coming and potentially 4 new product registrations are really in the registration pipeline that might be coming through, a lot depends a little bit on when we really get it through the regulatory body. And we are, as we speak, launching a new hybrid also in Kharif and corn. So it is a continuous process for us. What is more important to me is when we launch this to have success. So we put a lot of effort into launch preparation and also follow up. And as I said before, for me, the liquidation of a new product is really the measure. One thing is to push a new product into the channel and hope that it will go. But much more important is really to say adoption of liquidation, and that's where the focus lies. And our portfolio overall, I'm referring to a product like Vayego quite frequently, is actually modernizing and it's taking up a larger proportion of sales. I believe, Simon was already saying 8%, which is a lot if you think of how especially Crop Protecting Portfolio can't sustain over many, many years.

Thank you, Simon. There's another question, perhaps you can take it and D can pitch in, if needed. Do you expect elevated channel inventories of agrochemicals to depress industry growth in FY '22, '23, '24 next financial year?

I mean I said several times now. My channel, our channel is very clean and is ready to go for the season. I cannot speak for competition. Still, I do believe everybody is gearing up for a good Kharif season. And so from that perspective, I think we need to speak after the season, if anything, to take a call whether there's a problem with channel inventories.

Okay. Another question. Are there any global update on cost pressure, supply chain, would you like to share anything? Simon Wiebusch, you can take that.

I think it's fair to say that we are still in an inflationary environment globally. So let's say, operational expenses on a global level, and that obviously also goes for the side of production or for production sites continue to be higher than what we would have seen in the past. We know that in some areas of the world, also energy prices are up. On the other hand, we also know that China is probably right now seeing rather a bit of a deflationary pressure. On [ grow, ] I do believe that we will continue to see an elevated level of cost of goods on average in the agrochemical area. And definitely, when you look at seeds, given just the simple fact of high commodity prices in corn and also, to a certain degree, rice means that the cost of goods on the side of seeds will definitely not be going down but rather be influenced by upward pressure.

Thank you, Simon. Another question. And more on the future outlook, Simon Wiebusch you can take this. Bayer has achieved excellent growth in crop protection and corn, driven by good monsoon and strong portfolio of new products. What are our future plans in this segment? How do we plan to gain market share?

Well, I hope that was also a little bit of good work there but quite honestly, let's look at the fundamentals, right? We're a nation of 1.4 billion people. We know from all projections that with a growing middle class or middle-income class, the demand for foods and especially nutritious food will grow. So the market fundamentals in India per se are already so positive that we must be expecting growth. Personally, I do believe that we will see a drive towards quality. We will see farmers being more selective at what they use and especially also with the cause and effect that you could build with digital interventions, they will be looking for quality inputs, which should play towards our strength. As I said, the integrated model's also the small holders and the reach that we've built is where we definitely want to go out and I mean my, let's say, unscientific statement usually is given by low single-digit acre share in this country, the growth opportunity is definitely statistically on my side. But D, you might want to add something?

No, I think you said it all. I mean, we've said it before, right? This whole share thing needs to be looked at very differently, right? It's such a large market, we have to expand the market, and that means the more you're able to create access to small holders and you end up having a portfolio reaching to more small holders, that itself is where the real opportunities. I don't think if you look like go back and look at where we started 4, 5 years if it stuck to the typical competitive dynamics and saying, hey, this is -- what about the size of the market, and let's play in that, that clearly, I don't think would have got us to where we are. So for us, this whole ecosystem needs to be shaped very differently from the product perspective. And Simon, 3 weeks ago, we had a horticulture forum in Delhi and even for us, it was amazing when some of the statistics that were shared by the government that the whole full -- I mean, fruits and vegetables' production needs to go up by 3 to 4x in the next 2 to -- at least 2 decades or so or even less than that, is a huge opportunity, right? And that cannot be solved by just business as usual, right? I think -- so that's the way we are approaching it. It's no longer just competition as usual. It is how do you create and grow into a market which doesn't exist today?

The next question is on corn, and Simon Wiebusch, you can take this. It is an elaborative one. Corn prices have increased year-on-year, which is a good news for our company as corn as our key product. What trends in corn are you seeing for the coming year? Can you also share your future plans and outlook on this corn portfolio? We believe this to be an important broad driver as combined strength of corn, pesticide and corn seeds can do miracle for our company.

Yes. I partly referred to it before. Remember my statement, third, right, corn will become increasingly more important in India. And this is also linked to the demographics and what we were saying in terms of rising incomes. There is a need for more animal fodder. We see right now a segment opening up very, very quickly, which is silage to do also with feed and cattle and the advantages of silage on milk production. And the third and not the least, which is a little bit forward-looking is the whole topic around fuel and ethanol. The Indian government has decided higher percentages of ethanol in traditional fuels, which will have an effect, most probably also on corn demand. Most important though is corn is profitable. It is profitable for farmers, and it actually fits better in certain cropping areas of the country, especially where water availability might not be so abundant. And I believe we will be seeing a contraction of rice acres with more move towards direct seeding and potentially higher yields per acre, which will give more room also for corn. So yes, absolutely right. We are a company which is well placed in corn, and we would benefit out of more acres of corn. And I believe we're also the ones who will be able to offer to farmers the wide corn which means the [indiscernible] that will perform best for what they need, be it feeds, be it, as I say, a silage fodder or be it in that sense, also potentially energy and fuel.

Thank you, Simon. There is one question on monsoon forecast and its impact. So there is a lot of fear around [indiscernible], but IMD has still predicted a 96% normal [indiscernible]. How do you think this will impact the sales of crop protection and seed portfolio?

Yes. I don't -- I'm not privy to any weather information, which is not available for everybody else. And [ India and non-India is ] [indiscernible] to be. But I mean what is very clear, Indian agriculture is influenced by moonsoon, and that is something I cannot completely leave aside. Still, we have, as an organization, worked very, very hard during the bad moonsoon years, if I may call them, so to become more resilient and be as an organization more agile to move into areas which I call green spots. Last year, we had a good percentage moonsoon. We had a very poor distribution, if you look at the [ Gangalines ] and the central part to no-central part of the country. And that means you need to then see where is crops being grown and where that might that potentially also lead to more, yes, let's say, feet on the ground to make sure that you also generate the liquidation there. Moonsoon in short, we always plan with a normal monsoon and a good distribution but we are agile to move wherever it's necessary and if the monsoon doesn't fill the dams, then it's very clear that this will have an effect on the later part of the season, and that's something that we'll have to deal with at that time.

Thank you, Simon. We have just completed our schedule time with 5 p.m., but I'll still take 2 more questions here. The first one is about industry market and global landscape, a little longer one. And [indiscernible] D and Simon Wiebusch, you can take this. Of the total investment, which is happening in Europe by European companies, there has been a shift of investment by companies and new investment is now happening in USA. USA has cheap land, cheaper resource of energy due to shale gas and faster approval process for setting up the plant. Could this be considered as a threat for companies here in India where the shift of investment from Europe to U.S.A. instead of India could refrain -- sorry, India could refrain India of taking the advantage of Europe Plus One strategy.

Yes, I'll try to give it a quick one, and then maybe D, you come in. India is in a global competition as everybody knows. Now when you talk about Europe Plus One, I assume you are talking about production. It is true that with the regulation with the Ukraine war with general assumptions, production in Europe, especially on basic chemicals is most probably not going to be the area of future investment. And yes, it is true. India is here competing probably primarily with something like the United States. My personal view is everybody will always at least look at India. And it's India's chance to ensure that people understand it is a future market, it is a huge market. And that is, to my mind, the most important thing to always keep in the back of our heads. I would -- personally, if I would to invest always look also at the local potential demand because you never know how international trade flows will move and say where do I have potentially also footprint weaknesses versus other geographical areas. The next one to me is, yes, India is giving certain incentives, but we all know that there is also challenges in the more, and we see positive trends there. also the Indian government ensures that, let's say, foreign investment and also local companies can act competitively the probability of India being a large player in any of our fields and D was alluding to the opportunity also to be a major food exporter. And to that point, I believe, especially in horticulture, we have these opportunities, we are going to be a player. Don't think anything in the next 20 to 30 years without India at the back of your mind. D?

Think coming out of COVID for the entire industry globally is don't put all the eggs in one basket, right? So this whole thing about Europe Plus One or in U.S., India, I think clearly, it is going to be well spread out to diversify the risk. But even more important, I think, to Simon, your point is what will drive investments will be global competitiveness. And the more we can be competitive at a global scale with the strong domestic market itself as a strong base, I think the chances of attracting investments here will continue to be significant, right? So I think it's early stages, but I think -- I generally believe India stands a very strong competitive position to also have a strong base going into the future.

Thank you, Simon and thank you, D. I'll take the last question, which is on operating expenses. And I think, Simon Britsch, you can take this question. The question is considering downward trend in other expenses in Q4 of FY '22, '23, whether this reduction could be more of a recurring number going forward?

Okay. So the downward trend that we saw in the other expense in Q4. Let's say it was mainly driven by 2 factors. So one is that which is -- what is more an accounting measure because this is a position where we will also show the incentive in kinds where in the previous year, we had divestitures of the 3-year program and this year, only 1 year program. That's one factor. And the second one is also reduced logistics cost, because we had also less exports in that quarter. So overall, I would say for operating expenses, we saw expenses growing in line with inflation. Needless to say, we have also now initiated measures in the last quarter and now to further focus on being cost conscious while still investing into future growth and also alternate business models.

Thank you, Simon. So with that, I think that was the last question we received. And there are a few 2, 3 questions. I think this is something which we will reach out back to the shareholders with our answers. Ladies and gentlemen, I would like to express my appreciation to each and every one of you who are joining us today. Your support and belief in our vision have been instrumental in driving our success. And we are truly grateful for your partnership. As we conclude this annual investor meet, I encourage you to carry forward this enthusiasm and insights gained from today's discussion. We remain committed to providing you with information and the responses needed to make informed choices. On behalf of the entire company, I extend my best wishes for your well-being and success. And with this, I close this investor meet. Thank you once again. Take care.

Thank you.