Dhanuka Agritech Limited (507717) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Dhanuka Agritech Q1 FY '21 Earnings Conference Call hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, sir.

Thanks, Janice. On behalf of Antique Stock Broking, I would like to welcome all the participants on the call. From the management, we have Mr. M.K. Dhanuka, Managing Director; Mr. Rahul Dhanuka, Director, Marketing; and Mr. V.K. Bansal, CFO, on the call. Without further ado, I would like to hand over the call to Mr. Dhanuka for opening remarks. Over to you, Mr. Dhanuka.

Thank you, Mr. Manish. Good afternoon, ladies and gentlemen. Hope you all are doing well and keeping safe. Thank you for joining us for the Q1 FY '21 results conference call. I have with me Mr. Rahul Dhanuka, Director, Marketing; and Mr. V.K. Bansal, CFO of the company. Dhanuka Agritech Limited is a leading agrochemical company in India. We specialize in formulated products and have a solution for almost every crop. We have a strong diversified product portfolio, which is well distributed across insecticides, herbicides and fungicide segment. We have a pan-India presence with over 7,000 distributors and dealers and approximately 80,000 retailers. We have 3 state-of-the-art manufacturing facilities in Rajasthan, Gujarat, J&K. Coming to the quarterly operating performance. Despite the challenges faced during the nation-wide lockdown and reverse migration of labors from big cities to rural areas, I'm pleased to inform you that we have witnessed record sale on the backdrop of good monsoon, recharged groundwater table and better sowing in kharif season during the month of June. Some of the ambitious steps taken by the Government of India to revive the role of agriculture in the growth of Indian economy such as increasing Minimum Support Prices, eNAM portal, distribution of soil health cards and direct benefit transfer via PM Kisan Samman Nidhi have helped to create a robust foundation to announce farmers' income and encourage wide -- wider adoption of high-quality seeds and judicious use of fertilizers. These initiatives would transform Indian agriculture and make it competitive globally. Coming to the financial performance for the quarter, revenues from operations stood at INR 373.84 crores in Q1 of FY '21 versus INR 219 crores in Q1 of FY '20, representing an increase of 70.7% growth. EBITDA stood at INR 65.28 crores in Q1 of FY '21 versus INR 19.97 crores in Q1 of FY '20, up 226.94%. EBITDA margins improved from 9.1% in Q1 of '20 to 17.5% in Q1 of FY '21, led by strong operating leverage. Profit after tax was at INR 51.79 crores in Q1 '21 versus INR 14.79 crores in Q1 FY '20, up 250.12%. PAT margins improved from 6.76% in Q1 of FY '20 to 13.85% in Q1 FY '20 (sic) [ Q1 FY '21 ]. Such a tremendous performance is possible because of the teamwork from factories, from the marketing team, from finance team, from logistics team and all deserve appreciation from management. Coming to the zone-wise share of turnover for Q1 FY '21. North zone contributed 31%, east zone contributed 10%, west zone contributed 42% and south zone contributed 17%. Product-wise category -- product category-wise share of turnover for Q1 FY '21. Insecticides contributed 31%, fungicides contributed 11%, herbicides contributed 46%; and others 12%. You are well aware that at initial stage, consumption starts with herbicides, followed by insecticides and then fungicides. I'm happy to inform that the Board has approved buyback of equity shares of the company using funds of INR 100 crores at a maximum price of INR 1,000 per share. These equity shares will subsequently be extinguished, resulting in reduction of paid-up share capital of the company. We would like to highlight that we have received approval for 1 molecule in this quarter under section 9(3) category, which will be used for grapes and potatoes. Also during the last quarter, we have launched 2 new products by the name of Dabooch and Dozo Maxx, which are both herbicides. Both the products are in-license products. Friends, Dhanuka regularly organize various seminars, Krishak Goshtis and sammelans to educate our farmers about new innovative techniques of farming. Being India's leading agrochemical company, we are at the forefront of introducing digital solutions and innovation, streamlining policies and collaborating with ingenious entities to boost integration of technology across business segments. In the same endeavor, we have tried to boost our reach through online farmer interactions and aggressive use of TV advertisements for our 3 products, such as Sempra and Targa Super. We are focused on expanding our market coverage through our network of distributors and our digital platforms where we are engaged with the end consumer. We consider ourselves responsible to our securing the farmers' welfare and preserving food security of the nation. We continue to strengthen our association with the farmer producer organization, Krishi Vigyan Kendra and other critical institutions to increase our business expertise and boost our market presence. To summarize at last, Dhanuka continues to demonstrate our ability to overcome challenges and emerge stronger despite uncertain business environment. We will aggressively roll out new formulations in the upcoming quarters and would ensure that it reaches to the consumers. I reassure our shareholders that we are committed to the task of transforming the landscape of agriculture in India, and will play an integral role in rewriting the future of a better and new India. And now on this note, I would like to hand over the mic to Mr. Manish to enable us to take question and answers. Thank you very much.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We take the first question from the line of Rohit Nagraj from Sunidhi Securities.

Sir, our sales have been very robust and congratulations on the sales. Is there any preponement of sales for Q1 due to the lockdown issue and probably maybe the lockdown will be extended if second wave comes in. So from that perspective, has there been -- we are seeing that some of the sales, which was supposed to do in Q2 have come online in Q1?

Yes. Definitely, there is a preponement as well as postponement of the sales in the quarter 1. Because of the lockdown in Q4, we could not meet the billing of at least 8 days. So approximately 10% of the sales of Q4 were postponed to -- in Q1. At the same time, because of onset of monsoon before in time, so there was a preponement of sale as well of July to some extent. That's right.

Okay. And currently, how is the situation for the month of July? I mean everything has come to normal in terms of our plant operation, our logistics and supply chain, both from product placement perspective and from raw material procurement perspective?

Could you please repeat that question?

Yes. So now that the first quarter is over and we're at the end of month of July, so how has been the position in terms of our plant operations have been normalized? And on the supply chain front, sir, both from our product placement in the market and raw material procurement?

Right. So our plant operations stabilized much earlier, I think so, somewhere around April end, they were significantly up and running. And I think so by mid-May, we were running at full capacity. We received large support in this from the local governments from -- at the district and the state level also. Agriculture and agri inputs being essential commodity, we received a very good support. At one of our plants, we faced issue of the labor going back to their native districts. But the -- by the month of June end, they were really back and into operations up and active again. So plant operations are absolutely really good, and that's why we could service our channel and customers in the last quarter. In terms of the supply chain, I believe, except for the sporadic impact of the local district level lockdowns, the supply chain is significantly smooth and things are moving positively. And also, the procurement pipeline faced some hiccups in May and June for various reasons, which also has significantly stabilized, and the procurement pipeline is also running largely unhindered, undisturbed.

And sir, one last question. In our presentation, we have said that we target to launch 10 new products across the segments over the next 2 years. So what are the categories? And what are the crops we are targeting for? And what is the potential revenue or potential of these 10 products? That's it.

Right. So in the call, I'm only specifying the products which we are going to launch. However, we have maintained largely an effort to introduce about 4 to 5 products every year. We have already introduced 2 products in the previous quarter, which is Dabooch and Dozo Maxx. And we are planning to launch about 3 to 4 more products within this year, out of which 2 will be 9(3) introductions. Our efforts will be to cover the -- all these segments of herbicides, fungicides and insecticides. We'll be introducing across the span.

Yes. Any market size for these 10 products? Any idea, I mean broader understanding?

No, we are not specifying that.

[Operator Instructions] We take the next question from the line of Varshit Shah from Emkay Global.

Heartiest congratulations to the management team for this splendid performance. My question is on the margins. So you are seeing gross margin improvement on a Y-o-Y basis. But my sense is that probably gross margins could have improved even better. I think one of the reason I could think of is because we were ahead of the competition in terms of securing our supply chain, especially from the imports. And hence, we were able to place the products probably ahead of competition, which led to this robust performance. But then probably we had to compromise a bit on margins in the form of higher cost of goods because we were ahead in the game and then prices came down subsequently. Is my assessment correct? That's part one. And if that is yes, then will we see even further improvement in gross margins in Q2? That's my question.

For your second concern, definitely, we can expect improvement in gross margin in Q2. That's right. And with regard to your -- first part of your question, I have understood you are saying that there is an improvement in the gross margin by 19 bps, but it could be much better than this, right?

Yes, sir. Yes, sir.

So yes, you're right. It could be. I cannot deny that. But you see, in the quarter 1 portion of the -- some B2B sale in generic is exponentially increased disproportionately. Therefore, increases like this, it could have been better if the proportion, which we have normally 2/3 or 1/3, it remains like this, it could have been much better.

Understood. So I think going forward, it would normalize. That's what I can assume?

That's right. That's right.

Again, congratulations and best of luck for the rest of the quarter.

We take the next question from the line of Madhav Marda from Fidelity Investments.

I just wanted to understand that given that there's been some preponement of sales in Q2 and some postponement from Q4, what should we look at in terms of annual sales growth for FY '21 given that the season looks very, very good right now? Any like thoughts on your side on that?

We have already given guidance of 20%-plus growth for the whole year. So we maintained our -- that guidance of 20%-plus growth.

Okay. Okay. And in terms of the EBITDA margin side, any outlook on that as well?

Yes. EBITDA margin also, the guidance was 100 bps improvement over last year. So that also we maintained that minimum 100 bps improvement over last year.

We take the next question from the line of Probal Sen from Centrum Broking.

Congratulations on the good set of numbers. Sir, 2 questions. One was you just mentioned about the category-wise breakup, where herbicides has obviously stood out. Is it a function of the fact that this -- because of the shortage of labor, there has been more transplantation and weed removal investment by the farmers? And if so, for the rest of the year, can we expect this proportion to once again revert back to the sort of 40% insecticide and 35%, 33% herbicides for the full year? That was the first question, sir.

Yes, you are right, Mr. Probal. This quarter, because of the migration of the labor, especially from Punjab, Haryana, et cetera, the manual weeding was not possible, and that's why chemical weeding is the only option for the farmers. So consumption of herbicides even, otherwise, in first quarter is always higher. So we hope that at the year-end, the similar percentage will be there. That means insecticide consumption in the bracket of around 43% and herbicide consumption around 31%.

Okay. And sir, the other question was more near term. I think you mentioned earlier also as well as on TV that Q2 historically tends to be the strongest quarter for you in a year. Now obviously, this year, we are going off a larger base because 1Q itself is so strong. But still, on a Q-o-Q basis, is it fair to assume that 2Q would be stronger than even this quarter if things stay as favorable as they are now?

No, that much growth was possible in Q1 because of the postponement of the March sales to first quarter and preponement of July sales in first quarter. So that much growth is not possible in the second quarter. However, over last year, there will be definitely growth we are expecting in the second quarter also, being monsoon good and sowing all-time high. So that's why growth is 100% going to be there.

Right, right, right. And sorry if I missed this, sir, if I may ask one last question, what is the share of sort of the newer molecules, what you call, in your overall sales as of now, just as a rough percentage?

Are you there, Vinod?

Yes. In quarter 1, it is coming 7.4%.

Okay, 7.4%, sir?

Yes, current year plus 3 years. As in last year, in quarter 1, it was 7.34%. It is almost similar to last year. There is an improvement of only 6 bps. But by the year-end, we are expecting a significant improvement over last year, say, more than 200 basis points.

Okay. Okay. Okay. So for the full year, a 200 bps improvement in this index?

Absolutely, we are expecting at least minimum.

Congratulations again and all the best.

We take the next question from the line of Viraj Kacharia from Securities Investment Management.

Just 2 questions, sir. First of all, congratulations for good set of numbers. So first question is, so as of end of March, the inventory in the channel for us and the industry also was quite thin. And in the initial part of the Q1, you had issues in production and placement. So currently, how would the inventory in the channel be for us and the inventory now, as of June end or in July so far? How is the inventory position in the channel being now? So that is one. Second you talked about the gross margin expansion starting to play out in Q2. So is it purely a function of product mix which we expect to correct? Or is it also the fact that you expect either the RM and price environment being more favorable of you and your products have taken a price increase? So which of those factors are actually going to drive the margin expansion? And third is, if you can provide any update on those ban of 27 molecules, which the government had come up with the order. So has there been any further update on that? And also on the glyphosate-related molecule?

So first of all, I'll be talking about the channel inventory. Of course, March end, the channel inventory was not very high. And subsequently, due to aggressive sowing, availability of irrigation water, availability of groundwater has led to actual consumption of agrochemicals. So April, May, June has seen significant consumption of agrochemicals and almost 60% to 70% of the stocks build have been consumed. So there is pretty less inventory in the pipeline. What I'm talking to you about is the 30th June situation, and then the consumption has continued. So that is -- the pipeline stocks are not expected to be very high. That is one thing. Of course, the second point was about the margin expansion. So in Q2, the largely impact will be of the product mix.

Yes if you see last year, there was a significant decline in the gross margin in Q2. So one, the base is low. Secondly, last year, there was a decline in trade when it started in the month of August. This year, we are not expecting such a trend. So therefore, it is a combination of all. One is the base, one is the decline in trade and third is the product mix. Therefore, we are expecting improvement in the Q2 GP.

And then talking about 27 products ban, the industry took up very strongly this issue. Farmer associations and the channel also took up the issue very strongly because this does not have scientific base. And as of now, the subject has not moved forward. We are not looking at any of this ban coming into action in near future. The entire list contains about 3 red triangle products. So at worst, what can happen is that those red triangle products might come in the government's ambit in the short term. But in long term, the government would probably be seeking more data and being satisfied with the data would allow the products to be continued because these are the optimum low-cost choices and options available with the farmer, which is not, as of now, prudent to withdraw.

Okay. If I can squeeze in one question. Sir, you said that apart from the mix and the base, also the trade terms you have tightened. So for us in the industry, is that by and large the approach that, given the kind of demand and consumption we are seeing right now, the approach is more of tightening in terms of trade, either in terms of more stricter credit terms or increase in product prices, any of those things we have seen in the marketplace?

Right. So as such, I would -- you know that Dhanuka is an asset-light model and a debt-free balance sheet, so we have that leverage available from our vendors. When we go out to reach out to our customers, I think so this is natural what is happening in the ecosystem. But we have improved our trade receivables significantly. So we have gone really aggressive on that front. And that was largely part of the plan as we were shaping up the Q4. We have gone aggressive on our collections and trade receivables.

[Operator Instructions] We take the next question from the line of [ Rikin Shah ] from Phoenix Capital.

Congratulations on a fantastic set of numbers. Firstly, I'd just like to ask, now on the global scenario, we are seeing disruptions and companies like [indiscernible] saying that India has a very good opportunity for contract manufacturing, so are we going to be looking at that side? And secondly, I would like to ask, are we going to see a better trend of 9(3) and 9(4) in-licensing?

In-licensing is a continuous effort that we do because India does not have basic R&D, basic research available. We have two 9(3) products coming in this year, both are grapes fungicide. And we have some very powerful products in pipeline to be introduced in coming years. And this year, we've already introduced 2 in-licensed products, Dabooch and Dozo Maxx. And also going forward, we'll be continuing to do these in-licensing 9(4) products as well. So we are going to stay aggressive on both these fronts. Talking about the supply disruptions globally and the opportunity there is, yes, that opportunity is absolutely there and it is an open opportunity for Dhanuka also. As and when we have something powerful to share in this group, we'll certainly like to come back and do that.

Next question is from the line of [ Krish Kothari ] from Shinobi Capital.

I was wondering could you tell me if you, in your assessment, as you've managed to gain some market share predominantly from smaller companies that -- especially private companies that may not have been able to sort of have necessary production going on in the factory in the quarter or had problems with the distribution network?

Right. It is relatively difficult to assess because even our team does not have very clear access to the markets right now due to corona-related restrictions imposed by the district administrations or sometimes the market associations themselves. So what I'm talking is relatively more secondhand. So this is true that the unorganized sector probably could not service the market with as much agility, and that is why the market would have shifted towards the organized sector mode. That is one thing. Secondly, I also have a sense that because of our very agile supply chain at Dhanuka, our 3 formulation units being up and running relatively much earlier, our very sincere efforts to have all our depots spread across the country to become active in spite of the local curfews was very helpful in servicing our farmers, the service what happened in the industry. So it was a very agile supply chain for which we were able to take this advantage. And all the credit goes to our supply chain team and the 3 factories team, which did this great job. So as an outcome, the market share would have certainly increased.

Okay. And just one question on the employee cost for the quarter, I was wondering has there been any salary cuts? And assuming there have been, will they simply be made up in subsequent quarters? Or have you paid pretty much 100%?

We have paid 100%.

Next question is from the line of Nitin Agarwal from IDFC Securities.

Sir, 2 questions. One is, a, with all this talk about potential banning of certain goods from China -- I mean, a, how do you see that impacting the industry landscape in general? And 2, I mean from a Dhanuka perspective, sir, how much of a business impact does it have for us from a strategy perspective?

Right. So I don't think so we've heard any specific message around banning of agrochemicals import from China. How I look at it is that agriculture is the cornerstone of Indian economy, GDP, both economically as well as politically. What we should worry about as a country and as a government is about food imports. So still we have to indulge in a lot of pulses imports, lot of oilseed imports, and we need to really take care of that by increasing the productivity in our country. So should we become food dependent or should we become chemical dependent for a while? While the government takes initiatives to increase Make in India and increase the chemical production in the country, which is certainly laudable and appreciable effort. I think so we will not be -- as a country, we will not be compromising with our food security. And we would probably be trying and making the efforts to check our import bill -- our food import bill. So that's not happening in short term is my feel. But if there is any dumping happening of agrochemicals from China or something like that, then I think the government should take a serious view of that and take corrective actions as well. Talking about the strategic perspective of China sourcing, for Dhanuka, our strategic sourcing is largely from our Japanese principle. Our 9(3) pipeline largely constitutes of Japanese partnerships and products. And also our relationship with American and European companies, which are the major source of in-licensing products. So the strategic base remains clear.

And, sir, secondly, what's the broader question? Sir, we've had -- this is pretty much our best year after a gap of almost 3 years, right? Because then we've had very uneven monsoons with flooding and effects after FY '17 onwards. So when we start to look like a 3-year view of this business going forward, in the context of how uneven growth has been for us over the last 3 to 4 years, so how should you -- how should we look at the business on a 3-year view? I mean does it continue to remain hostage to these monsoons on an annual basis as it's been in the recent past? Or you see a more structured -- structural sort of steady improvement in growth as you go forward?

Right. So I cannot discount the impact of monsoon when we talk of 3 years perspective. Yet, at Dhanuka, we are making efforts to streamline this mode in terms of structural changes, how we can make it more and more agnostic to the monsoon impact. Now this initiative, while we are taking at our end, is also very visible in the environment because more irrigation channels are being established, more water accessibility for the farmer is happening and the technology is moving towards drought-resistant crops in agriculture. So that is going to help the Indian agriculture grow and stabilize in perspective. From our side, we are introducing more products which are suitable for the farmer even in case of less water. So for example, last year itself, we have introduced a product, Chempa, which is a rice herbicide and it is meant for direct-seeded rice and water-stressed rice. And this year, it was because of labor stress that the Punjab and Haryana kisan and various other markets, the farmers shifted to labor-free, direct-seeded rice and Chempa has exhibited a major boost. So what I'm sharing is we are trying to make our portfolio also monsoon agnostic.

Right. And if I can squeeze in one last one. Sir, for the kharif or rabi season, are there any indications why -- when will we start getting a sense of how rabi will really play out this year for us -- for the industry?

So far, the monsoon forecast is very good for the rabi. Also La Niña is largely predicted and has settled. La Niña is a monsoon-favorable situation of the Pacific and Atlantic. So I think so we are well placed when it comes to a good rabi rainfall. And we're also well placed in terms of the self-sufficiency call of the government of oil seeds, pulses and other crops. So I think so rabi is expected to be really good.

We take the next question from the line of Rohan Gupta from Edelweiss.

Sir, first question is on our current year, I mean FY '21, the growth prospects, which we are seeing for our company. Sir, no doubt, Q1, we have seen a very solid growth. And you are still talking about that in Q2, you remain confident about further growth in Q2 as well, right? Despite this some preponement of sales happening in the current quarter, but you still remain confident that Q2 we may see growth over last year?

Yes. Definitely, we hope that we will definitely have growth over last year, which is evident from the last 20-day sales also.

Okay. And maybe, sir, if I just were to look at the slightly more closely, then what kind of growth number we can expect? Though you've mentioned, sir, for full year, you are expecting 20%-plus revenue growth, my whole point was that given the robust Q1 and even if we are expecting a Q2 growth, then it means that for full year, we are going to see revenue growth number may be beyond 25% or even 30% also. So I'm just looking at, are we being conservative in terms of how we are seeing this year? Also, the same thing is, sir, reflected in bottom line like EBITDA margin expansion, though you initially guided for 100 basis points. But sir, if I keep your last year 9-month number same and Q1 number if I factor in for the current year, then itself you have achieved 150 basis point EBITDA margin expansion already. So I just wanted to get a clear sense that how FY '21 could pan out for us given that -- in a current scenario and how the agri is doing? So if you can just can share some more light on that.

I will request Mr. V.K. Bansal to answer this question.

Yes. Thank you. You see, you are absolutely right. So we have committed around 20% growth in the beginning of the year. Now looking for the quarter 1 numbers, definitely, we are hopeful that our overall growth will be more than 20%. In quarter 2, definitely, growth will come, and it should come in double digits. But you will see in the last year, rabi was very, very good -- exceptionally well. So in the last year rabi, growth appeared to be a little dull. I'm hoping so, it would not be very great in growth in the rabi. As far as EBITDA margin is concerned, you're absolutely right. We have completed 100 basis points, and I'm sure our EBITDA margin improvement is significantly more than what we committed.

Okay. Okay. Sir, second question is related to buybacks. Sir, how should we read it? Is it in lieu of the dividend which generally we give or you thought that it's a better time to distribute the cash because we are doing the buyback when stock has seen a huge appreciation in last 3 months and even the buyback price is also pretty aggressive at INR 1,000. So is it in lieu of dividend you are doing the buyback because there is no tax-related benefit now? Or it is another smart way of paying the money to the promoters because 75% we have, and are we also going to participate in a buyback and so that is it a smart way of paying money to the share -- promoter? So just one thought on that, sir.

Yes, you see. You see it's definitely one way of rewarding the shareholders. Instead of paying dividends, you are doing the buyback. In paying the dividend, the tax liability remains with the shareholder, while in the buyback, the tax liability will be borne by the company. So ultimately, shareholders are going to get the advantage in this buyback. Since promoters are holding 75%, so always that benefit will be passed on to the promoters also because they will be participating, it's the tender made. So promoters will be also participating in the buyback process.

And see, we are not saying we will not pay any dividend. But yes, in the year, buyback dividend is significantly lower as compared to the previous year. But the dividend will definitely be there this year as well.

We take the next question from the line of Archit Joshi from Dolat Capital.

Congrats for a great set of numbers. Sir, we have had around 70-odd percent of volume growth for this quarter. I just wanted to ask if we have been benefited by the recent locust attacks that had happened in the quarter. So if I were to look at a like-for-like basis and if you can share the quantum of the volumes that we have had from the locust attack itself because I think we had about 7 to 8 products from our insecticide portfolio that could have been used for this particular phenomena. So if you can help us out with that?

Right. So locust attack is relatively spread out in terms of the north and northwest of the country. However, its intensity keeps on varying depending upon the micro climate of the area. So right now, the locust is active in some parts of Haryana and Uttar Pradesh. And the agrochemical consumption is largely tender based where Dhanuka is not aggressively participating. Whatever is the consumption in the private hands of the farmer, our options are available to the farmer much aggressively and much better way for him to make his choice.

Right, sir. Got it. Sir, another question on the participant who had asked about the gross margin expansion. If you can just repeat as to what has happened in the first quarter and what we are expecting in the second quarter? I think I missed that point.

You see, in the first quarter, there is an improvement of 90 bps in gross margin. And in quarter 2, we are expecting an improvement in the gross margin because last year, there was a significant decline in the gross margin in quarter 2 and because the price decline in trade was there in the month of August and September. This year, we are not expecting such a trade. So therefore, we are expecting an improvement in the gross margin as well as some improvement in the product mix as well.

Right, sir. Sir, on the same point, I think you've already taken a price hike in the previous quarter. And will that also sort of come into play if you -- if we consider the base? And if you can also comment on how is the underlying pricing of the things that we are importing from our in-licensing partners?

In case of imports, normally, prices are stable for the -- throughout the year. The price change was significant in the month of April, May in case of generic and now largely settled. In the few molecules, there is a little softness, and in few molecules, there is an increase in the price.

Right, sir. So largely it's stable?

Yes.

We take the next question from the line of Levin Shah from Valuequest.

Yes. Firstly, congratulations on very good set of numbers. Now if you look at the growth that we have seen this year, so majorly, the growth has been led by volume growth. And there has been hardly any price increase that we have seen. So do we see this phenomena continue throughout the year? Or like you said, that this was just because in this quarter, we saw that the product mix has changed? So that was the reason that we have seen no value growth as such?

You see in this quarter, actually, the volume growth was more. It was 72.52% approx and whereas the revenue growth is 70.72%, which means there is a decline of around 180 bps in the value because of many molecules, prices were lower in the quarter 1 as compared to the price of quarter 1 in the last year. So I am expecting this gap will be fulfilled by the year-end. It would be almost -- should be almost similar, volume and value, by the year-end.

Okay. So we are not expecting any major growth in the value or the growth would be driven -- major growth would be driven by the volume?

Absolutely right. That's correct.

Right. Sir, and my last question, again, is on this gross margin. So like what we have seen last year, there was a big compression in the gross margins in FY '20 numbers if we see. And now with growth coming back and also like new products that we have launched, do we see our gross margin going back to like FY '19 -- FY '18, FY '19 levels in this current year?

It is little difficult to comment, but definitely, I can say one thing that this year there should be improvement quarter-on-quarter in the gross margin definitely because last year, there was a very bad situation.

Sir, I'm talking about year as a whole. So if we compare FY '20 gross margin, they were like compressed as compared to FY '19. And there was like a major compression and last year's gross margins are one of the lowest in like 6, 7 years' history.

Yes. That's what I'm saying. I'm not sure whether we will be equivalent to the FY '19 level, but that is sure that we would be better than the FY '20 level.

We take the next question from the line of Deepak Kolhe from B&K Securities.

Congratulations, sir, for good set of numbers. Sir, can you please provide the generic and the specialty revenue mix for the first Q as well as for the last year?

You see for the quarter 1, it is almost 50% -- 60%. And in the last year, it was approximately 60-40.

Okay. And sir, how do you see this raw material supply situation currently? If you can give some color on that, that would be great, sir.