Dhanuka Agritech Limited (507717) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 earnings conference call of Dhanuka Agritech, hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you. And over to you, sir.

Thank you, Stephen. On behalf of Antique Stock Broking, I would like to welcome all the participants on the call of Dhanuka Agritech. From the management, we have Mr. MK Dhanuka, Managing Director; Mr. Harsh Dhanuka, Full-time Director; and Mr. VK 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, Dhanuka.

Thank you, Mr. Manish. Good afternoon, ladies and gentlemen. Hope you are all doing well and keeping safe. I, MK Dhanuka, Managing Director of Dhanuka Agritech Limited, would like to welcome all of you to Dhanuka Agritech Limited Q2 FY 2021 results conference call. I have with me Mr. Harsh Dhanuka, Full-time Director; and Mr. VK Bansal, Chief Financial Officer of the company. Dhanuka is a leading agrochemical company in India. We specialize in formulated products and have a solution for almost every crop and every pest. We have a strong diversified product portfolio, which is well distributed across insecticides, herbicides and fungicide segments. We have a pan-INDIA presence with over 7,000 distributors and dealers and approximately 80,000 retailers. Dhanuka has 3 state-of-art manufacturing facilities in Rajasthan, Gujarat and Jammu and Kashmir. Coming to the quarterly operating performance. In the first quarter of 2020, '21 ended on June 30, 2020, the company reported unprecedented financial results with a growth of 70% in top line. However, in second quarter, the company has performed modestly because of deficit rainfall in the month of July and excessive and continuous rainfall in the months of August and September. Lot of crops have been damaged in the space of MP, Gujarat, Maharashtra, Andhra Pradesh, Telangana and Karnataka. The farmer was not able to get chance to go to the field because of the continuous rain and the pest infest was also very low due to which the condition of pesticide was also low in second quarter. It is expected that rabi crop should be very good due to moisture in the soil and all irrigations are being full of water. So farmer will be certain that they will get water for irrigation. As for government data, it is expected that in kharif season, there will be all-time record in food grain production, and the farmer will be having good money in their pocket. So they will be ready to spend money to save rabi crop for pests and diseases in the rabi season. Some of the ambitious steps taken by the government of India to receive the role of agriculture in the growth of Indian economy, such as increasing MSPs, eNAM portal, distribution of soil health cards and direct benefit transfer via PM Kisan Samman Nidhi have helped create a robust foundation to enhance farmers' income, encourage 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 the operations stood at INR 442.39 crores in Q2 FY 2021 versus INR 402.03 crores in Q2 of FY '20, representing an increase of 10%. EBITDA stood at INR 88.90 crores in Q2 of FY '21 versus INR 73.38 crores in Q2 of FY '20, up 21.26%. EBITDA margins improved from 18.25% in Q2 FY '20 to 20.11% in Q2 FY '21, led by strong operating leverage. Profit after tax was at INR 70 crores in Q2 FY '21 versus INR 60 crores in Q2 FY '20, up 16.81%. PAT margin improved from 14.75% in Q2 FY '20 to 15.55% in Q2 of FY '21. Coming to the zone-wise share of turnover for Q2 FY '21. North has contributed 26%, east has contributed 10%, west has contributed 34% and south has contributed 30%. Product category-wise percentage share of turnover for Q2 FY '21. The insecticide share was 47%. The fungicide share was 20%. Herbicide share was 21% and others, 12%. The Board has already approved buyback of equity shares of the company using funds of INR 100 crores at a maximum price of INR 1,000 per share in the last Board meeting. The said buyback is open from 20th October to 3rd November 2020. We would like to highlight that during the last quarter, we have launched 2 new [ nutrient ] products by the name of Kirari and Nissodium, which are both fungicides for grapes segment. Kirari has been launched in technical collaboration with Nissan Chemical, Japan, and it will control the downy mildew pest in grape crops. And the Nissodium has been launched in technical collaboration with a new Japanese company, Nippon Soda, and this will control the powdery mildew in the grape crop. We would also like to inform that Dhanuka has shifted its corporate office to new premises at Global Gateway Towers near Guru Dronacharya Metro Station, MG Road, Gurgaon. We hope that with the shifting of new office, the productivity of the staff will further improve because of the better working environment. During the quarter, our Udhampur unit has received NABL accreditation, which is valid until 29th September 2022. Further, the company has decided to make a R&D center at Palwal in Haryana. Dhanuka regularly organize various seminars, Krishak Goshtis, 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 indigenous 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 advertisement 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 engage with the end consumer. We consider ourselves responsible towards securing the farmers' welfares and preserving food security of the nation. We are strengthening our association with farmer producer organization, that is FPOs, online sales channels, Krishi Vigyan Kendras and other critical institutions to increase our business expertise and boost our market presence. To summarize, Dhanuka Agritech Limited continues to demonstrate its 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 consumer. I reassure our shareholders and our investors that we are committed to the task of transforming the landscape of agriculture in India and will play an integral role on -- in reviewing -- in rewriting the future of a better and new India. On this note, I would like to hand over the mic to the operator to enable us to take questions from you. Thank you.

[Operator Instructions] The first question is from the line of Rohit Nagraj from Sunidhi Securities.

Congrats on a good set of numbers. So the first question is in terms of availability of intermediates and [ AIs ] from China. So how has it been over the last maybe 3 to 6 months? And how the pricing has also behaved over the last 6 months? And what is our outlook on pricing in the forthcoming future?

Yes. The availability from China is good. There was some time during the lockdown period at initial level when there was problem and delay in clearance of the consignment from China. But after the lockdown, things streamlined and the availability from China became easy. Rather the availability has become more smooth in the first quarter, there was very good demand. So the prices increased. But in the second quarter, because of the sluggish demand, because of the excessive rainfall in August and September, demand was low. So the prices also were basically reduced by most of the companies in maximum number of products. Only very few products have increased in the prices. Otherwise, the prices are either stable or they have reduced. I don't foresee that in near future, any increase in the prices for the imports from China. And I foresee that prices will remain stable or they will further reduce in the next quarter also.

Okay. That is quite encouraging. The second thing is on the balance sheet. So balance sheet, we are seeing that the inventories have risen as well as the debtors have also risen. Any specific reasons for the same?

The debtors have not risen. You see that growth of the company is 31% in the first half of this financial year while the debtors have increased by 4% only. So basically, we have been able to manage our debtors in a very nice way because against sales growth of 31%, debtors have increased by only 4%. Definitely, the inventory levels have increased because the planning was very good. The growth plans for the second quarter was also very good. But unfortunately, the season did not behave as per the planning and we were left over with the inventory as we could not liquidate the insecticides. There was no -- farmer could not get the chance to basically consume the products in the field. So insecticide sales has been badly impacted in the second quarter. That is the reason of higher inventory, and we hope that out of this raise in inventory, we will be able to liquidate in the third quarter.

The next question is from the line of Probal Sen from Centrum Broking Limited.

Congratulations on a good set of numbers. As you rightly mentioned, H1 growth based on the first 2 quarter results is now already at more than 30%, sir. And if I look at the EBITDA in PAT growth, that is obviously trending in almost 60% range. So just was wondering, would you like revisit the earlier guidance? Earlier conversations on guidance you have given have been much more conservative than this, and I know that you like to be conservative. But in face of this kind of a performance in H1, and you mentioned about the better water availability in which can probably improve H2 prospects also more than earlier years, is it fair to assume that 20% is extremely conservative guidance in this kind of a scenario?

You see last year is...

Go ahead.

Hello?

Please go ahead.

Yes. Q3 was very good. But basically, this is good. Last year, we worked extremely well. So therefore, we are expecting good growth. But you see growth should be nearly in the line of Q2 numbers or slightly better than Q2 because the base is high.

I understand. What I meant to say, sir, was that for the full year FY '21 now, if I really look at it, based on H1, the growth...

Yes. For the year, you can expect the growth should be moving 22%, right?

Right. Right. So 22% to 25% kind of a range is what we should now be working with, sir. Is that a fair...

Yes. Yes. That's right. That's right.

Sir, the second question was with respect to the product, apologies if I have missed. I think Dhanuka, sir, was mentioning about some of the products launched. I just wanted more clarity in terms of what is the section 9(3) and section 9(4) product launch guidance for the next 12 months, if you can throw some color, sir?

Yes. We launched 2 in-licensed products in the first quarter. And in the second quarter, we have launched 2 9(3) products, which are Kirari and Nissodium. In the coming years, we are expecting to launch another 2 9(3) products and maybe 3 to 4 in-licensed or 9(4) products.

Okay. So 2 more -- so 4 have been launched so far in H1, and we would expect another 6 to be launched in the next year, 12 months or so? Is that a fair way to look at it?

Yes. So next financial year, I was talking about on the 6 products. In this financial year, maybe another 2 products are expected in H2.

Okay. Okay. I got it, sir. So okay. All right. And another small question was how have we sort of got the -- this 44 crore negative entry in terms of the inventory that is there in the reported numbers. Can you just update us in terms of how that has played out, sir?

Negative entry in inventory?

Sir, 44 crores.

That is basically increase in inventory, right?

Right. Got it.

That is increase in inventory, right?

Okay. Okay. Okay. That is all right.

The next question is from the line of Prashant Biyani from Prabhudas Lilladher.

Sir, how much was the volume growth in second quarter?

You see second quarter volume growth and value growth were almost similar. There's a difference of only 5, 10 bps. Value growth was 10.04 and the volume is 9.9%.

Okay. And sir, other expenses increased I mean by around 25-odd percent despite I would assume that marketing or corporate travel would be very limited. So any reason for increasing other expenses?

Yes. Other expenses increased, you say -- you were saying how much?

By 25%...

Other expenses increased 22%, right? So basically, the significant increase on the count of -- you see one is on account of adjustment of office rent. You see in the last year, the adjustment was made of this in Q2. So there's an impact of 2 crore on account of the office. And 1 crore impact on the CSR expenses were incurred largely in Q1 and Q2 as against your annual obligation. Which means in the second half, the CSRs would be quite low. Because of COVID, our expenses on -- of CSR are significantly higher. The 1 crore impact in Q2 is on the CSR. And thirdly, we have shifted our office in a new location from Cyber City to that place. So we have made arrangement of the new office. And the -- we have made a provision of around 4 to 4.25 crore on account of the renovation of the new office.

Sir, the renovation of new office or the erstwhile office?

Not renovation, the new construction of the new office. Basically, a new office

Which amount, if you have?

Because it's a rental property. Therefore, we have a made provision revenue, basically, not capitalized.

How much is the amount?

The amount is around 4.25 here.

Okay. So sir, this 4.25 would be onetime, I would presume.

It is one time. That's right.

And for this adjustment of office rent of 2 crore, what could be the impact in the second half? I mean will it result in lower rental expenses in second half? Or how could we see?

That impact is adjusted in the first half. Second half, there will be no impact because that ended December last year within the Q2, which means Q3, Q4 is for this arrangement. So the amount is basically appearing in the account of depreciation interest. The one is for this arrangement, any lease which is expiring in more than 1 year. So we have to -- right to use, we have to create assets. And on asset, we have to create a depreciation. And the -- on the liability side, we have to make a provision of interest.

Right. And sir, on the marketing side, what is the current status? I mean have we resumed the on-ground marketing activity, to what level we have resumed? Then going into second half, how do you see this totally traveling, marketing expenses and activities?

Right. So our field activities have resumed in a phased manner in last 3 months. And now our team is able to expect more and more in the rural market. And in terms of our marketing and branding investment, we have not curtailed any expenses. And we are continuing our expenses on this front to ensure our presence is there in the market.

Okay. And just one thing more. On the fungicide sales, we have seen around 40% growth in quarter 2. I would assume that west would be a big fungicide market, but western region for us has been around 2% decline in Y-o-Y sales. So could you explain this mismatch, which reason has been more growth in fungicide and why it is not getting reflected in western region, particularly?

In terms of -- you see, as a whole of -- in Q2, the south zone has delivered a significant growth. And there was no growth in case of ration because of the continuous rain in Gujarat and MP in Maharashtra. So largely growth was driven by south during Q2 and normal growth in north and east India, as a whole. In case of fungicide, I think largely contribution from the south and west.

[Operator Instructions] The next question is from the line of Varshit Shah from Emkay Global.

Congratulations to the management for the incredible results considering the high base of last year as well as growth in Q1. So it's heartening to see this kind of growth. Sir, my question is more long term, beyond FY '21. Starting FY '21, there, it seems that the line is probably at a multiyear high. And going into FY '22, assuming that the rainfall is normal level, what kind of growth you think is possible for the industry, if not on Dhanuka, at a higher level, which -- because considering the high base of FY '21 itself? So that's my first question. And my second question is, I think there has been -- even after the adjustment, there has been improvement in our overall working capital. So what is driving this overall improvement in working capital? Can you just share some thoughts on that?

You see there is a huge opportunity available for this industry to grow even in 2022 and beyond. Because we are consuming one of the lowest pesticides there in India in comparison to the developed nation. So once the technology reaches to the farmers, this industry has huge potential for growth. But as the farmers are illiterate, the land holdings are small, so we expected that the industry should go around 10% to 12% in FY '22, and Dhanuka should grow between 15% to 20%.

Sure. Sure. And my question on working capital. So is that a significant improvement in overall capital I think largely driven by debtors. Can you just show some -- is there a policy change or maybe more stricter implementation of the collection time lines?

Yes. Definitely, there is a basically change in the policy. So in working capital, we are assuming key -- in terms of debtors, we have reached a reasonable level. We'll try to maintain that level in the next year as well. In terms of inventory, it is basically a 1 quarter impact. In 1 quarter, it could increase, then it will manage the second quarter because of, you see, we see very high expectation in inventory level increase. So we are expecting some improvement level on account of inventory levels.

Sure. Sir, if I could squeeze in one more, last one on the gross margin. So we have seen good improvement in gross margin. I think this will be largely because of the falling raw material prices. But I think since you were carrying higher raw material rate in Q1, I think all the benefit would have not flow into those. So will there be some more benefit in raw material which should flow in Q3?

Not really significant, but not really -- very much because you see, in the impact to gross margin is because of this change in products was largely in Q2. Likewise, in Q3, because the last year was also a very significant improvement in the gross margin. Q3, the base is good. So we are not expecting significant improvement year-on-year this year in Q3. There could be some improvement of imported goods, but not very significant.

[Operator Instructions] The next question is from the line of [ Shanti Patel ] from [ Shanti Patel ] Investments.

I just want to know where is [Technical Difficulty]

Mr. [ Patel ], can you move over to reception area, please? Your voice is breaking up.

Hello? My question is we're dependent on China for this. Now what steps we are going to take to mitigate that particular dependence? That is number one. Number two, as regards to these new products which we are going to introduce or we have introduced, what will be the approximate turnover? And what will be the impact on profitability of the company during the year? That's all.

You see for pharma and agrochemicals, India is dependent on China in a big way because even the companies who are manufacturing EPA, that is technical-grade pesticides in India, they are importing chemicals and intermediates from China only. So some of the companies are going for backward integration, but it will take time for India to become self-sufficient. And basically, until then, most of the products which we are imported from China, not Dhanuka. The industry itself is dependent on China for the procurement of agrochemical technical. So I don't foresee that any issue should come because of the India, China, basically relationship because business is separate and the relationship is separate. But going forward, 2 companies are creating base for the basically backward integration. And we hope in times to come, the situation will change and our dependence from China will reduce. Regarding second question, I request Mr. Harsh to answer.

Right. So around new product introduction, for the next 3 years, we are expecting of around 50 crores to 60 crores of revenue from these 4 products. And the impact on margin. So every year, we are introducing new products. Some of them have a better margin than our existing average and some have a lower margin. So I think that will continue to happen. In case of these specific 4 products, I don't think they will have any significant impact on the overall gross margin.

Sir, only a follow-up question. Suppose there is a war with China and import stops, what will be the company's position?

Sir, you see Dhanuka is having technical ties with mainly Japanese companies. And around 40% of these basically product set we are selling are of Japanese companies. So only balanced products. We are procuring raw materials indigenously from various technical manufacturers. We are importing only 3, 4 technicals directly from China. So if any war, basically, I don't foresee that war should be there between India and China. But if at all, war is there, then definitely, to some extent, the production of those 3, 4 molecules will have the impact.

The next question is from the line of [ Jatin Takar ] from ASK Investment Managers.

Sir, just one question. There is an increase in other financial liabilities from 60 crores to 173 crores. What was year-end ?

Yes. You -- basically, you see this is because of the change in the product mix where the schemes are more. There is a growth of 31% in the sales. We are basically settling the customer account in the year-end. A significant increase on account of the provisioning of the credit note on the customer side. And because of COVID, certain vendor account are not settled, a corresponding provision is being made on that. And increase in expenses, therefore, the significant increase is happening there. And largely, we will settle in the Q3 a significant amount of them which are in the Q3.

And sir, just one last question. If you can share the region-wise spread for same quarter last year.

Pardon? Repeat again?

Region-wise revenue contribution for Q2 FY '20 of the -- on FY '21, the number in Q2 FY '20

I know. Just a minute. Region-wise, you see the north region was -- contribution was 25%; east was 11%; west, 33%; and south was 31% for FY '19-'20 full year, right?

Okay. And for Q2?

For Q2 last year, the north was 25%; east was 10%; west, 38%; and south, 27%.

The next question is from the line of Viraj Kacharia from Securities Investment Managers.

Congratulations on a good set of numbers. I just have two questions. First is, if you can just provide some color in terms of inventory in the channel for us and the industry, how has that been in the end of 30th September? So how does that compare to the normal cycle?

You see inventory in the channel is not much in our case. So basically, if I compare our inventory level as of 30th September this year versus last year, it would be almost similar.

Okay. And for the industry, sir?

Industry could be a little high because we are not pushing the inventory, as you know, for the last so many -- 3 whole years. So in the case of other companies, it could be a little move as compared to us.

Okay. And for Q2, what will be the volume versus the price kind of a growth?

It is almost similar, 10% versus 9.9%, just only -- the difference of only 10 bps. Volume-wise, generally slow. Volume-wise, generally slow.

Sir, your comment then, since the inventory being higher for the industry, and you also said the overall RM environment is also quite [ benign ], do you see any chances? I mean do you see any activity in terms of, say, competition being more aggressive in terms of pricing actions to clear out that inventory in Q3 so far?

That happens generally because when the season is not favorable and any company is basically struck with the inventory, the prices are reduced by the companies to basically liquidate the inventory. And that definitely has some impact on the margin. So that's competition you have to face when you are in the field. So some of the generic molecules have these kind of challenges, and Dhanuka is not an exception. We have to face the challenge and we have to also reduce the prices in line with the market prices.

Just to add on to that, so we keep on getting regular feedback from the market. And whatever is required, we are geared up to take that up and not lose on any volume.

Okay. So what kind of generic molecules where we would have seen a price correction? And is the spread in those molecules still intact? Or -- that's the last question.

I mean price correction is not an issue largely in case of generics nor the specialty molecules were a significant price correction.

The next question is from the line of [ Tarang Agrawal ] from Ulrich Capital.

I had a couple of questions. The first question, sir. This growth that you've seen on a strong base, has there been a significant market gain which has led you to deliver this growth? Or generally, the industry has grown in the same order?

Yes. Of course, there is some market share gain. But how much, we will be able to attain only at the end of the year once we have the annual numbers.

So what did Dhanuka do differently in this quarter that helped you gain the market share, if any?

Yes. So we have a very flexible supply chain and a very agile supply chain. And we anticipated the -- this challenge, and we were able to aggressively supply material to the market which helped us in getting these numbers.

Okay. So it's been largely on account of strong distribution and supply and not any product-specific growth. Would that be the right way to look at it?

It's both.

Absolutely, it's both. So many products had a substantial growth. And also, we were able to service them because of the supply chain.

Got it. The second is to an earlier participant's question, you alluded that there has been some change in your working capital policy. Can you elucidate the changes that are in here?

Not exactly in working capital policy. We were saying in collection policy. In debtor's management, there is a significant change in our policy this year because of which we could -- should deliver the improvement of 14 days in our [ GDP ], and there is only 4% increase in receivable level as against the 31% liquidity turnover.

True. So what is this change? That is what I wanted answered.

You see, basically, the -- every time whenever a machine starts existing, they are having sort of taking over the customers and entering into the app and then you see the track record of us basically in these commitments and all and the tightness in the credit limit policy at the corporate level.

The next question is from the line of Sameer Shah from Valuequest.

One is, sir, this inventory that we said that we aim to liquidate it in rabi season, so will it be -- I mean was it all the inventory is liquidable in rabi? Or some will spill over to next kharif now?

Some large part of that inventory would be liquidated in rabi season and maybe some small portion, less than 10%, maybe carryforward.

Okay. Okay. And sir, my other question is, we have spoken about [ CRAMs ], et cetera, or usage of Dahej land. I presume that we need to do something in the next 12, 18 months on the land. Anything on that?

Yes. Definitely, the management is considering the -- initially, we are putting up a facility for formulation at Dahej. And we have appointed one; vice president to basically work on the project. And we hope that by the year-end, we will be able to share the -- that information about the edge it would be better.

The next question is from the line of Kunal Mehta from Vallum Capital.

Sir, I just wanted to revisit the scenario which happened this quarter. Sir, could you please give us more understanding of what situation happened this quarter? I mean if I have to summarize it, it is that we were ready for a better pickup in the market. But given the way the rainfall happened, the farmers are not in a position to use those pesticides. Just could you please elaborate more on what happened this quarter exactly? And now going forward in the coming quarter, is there any more buying left? Or it's now all that we focus buying will never happen from Q3 because I'm presuming now it's only that we focused procurement, which will happen in the channel. And that is my first question.

Yes. So this quarter, what we saw was initial period was a little dry in the month of July, which impacted the herbicide sales. And then August and September was continuous rains, especially in west and south region where there was a substantial consumption expected. So this changed the product mix also. And coming right now in the -- coming third quarter, there is some kharif sales on south region, which is still there, but rest would be -- rabi would be starting for north and west.

Understood. So the positive momentum, positive pickup which we're expecting just because the acreage numbers were so high and very positive, that did not materialize to the extent that we were reporting. Still, I mean the top line is still good for us, but it could have been better, that's what you are suggesting. Is that a correct way to put it? And just...

We were expecting a higher revenue, especially from MP, Gujarat and Maharashtra.

Okay. Understood, sir. The second question I have is that -- is just regarding the inventory that is there in which we have in the channel line plus the inventory which we have in the balance sheet. So for the inventory on the balance sheet, you mentioned that we would be able to liquidate most of it in the coming 2 quarters. So the inventory which we have in the channel, sir, is it a meaningful portion? And sir, you mentioned that there's not much. But just to reiterate on that, can we see some sort of a reversal happening? And also the money that is there in trade receivables, which we -- which is yet to be collected, do you see that given the situation which the farmer has gone through where the expectations were high and so -- at least in the major states where the -- where farmers are -- where we were expecting -- farmers are expecting more money to be made this season. So any problems there do you foresee?

So I think I'll break that in 2 parts. One is around collection. So our collections are much better than last year. And, as VK mentioned, our outstanding has increased by 4% against a revenue increase of 31%. So our collections are certainly better. And we are not expecting any undue -- no increase in bad debt or delays in payments. Second part of your question is around the farmers getting their money delayed or any kind of that action. So I think the recent increase in several crop prices would probably support our farmers in getting a better income. And in coming rabi season, we can expect the farmers to spend more on crop inputs, and we can expect a good rabi reason.

Okay. Despite the current situation, farmers are still well placed to spend on rabi. It's not a problem at least as compared to past years where things were a bit difficult, a bit much -- I think a lot more difficult. This is -- the real situation of the farmer is much better than where he was maybe 12 months back. That is the right way.

Sir, as per Agriculture Minister, if you have read or heard in the TV, they are expecting all-time record production in the kharif this year. So overall, maximum number of farmers have benefited, but wherever the excessive rain or flood situation was there, where the crop has damaged. Those farmers has definitely been impacted, but better number because in India, we have 14 crores of farmers. So that numbers which have been impacted by the floods or the excessive rainfall, that will be to the extent of 81%. So definitely, that will have the impact, but major farmers will have the benefit of the MSP and the bumper crops.

The next question is from the line of Bharat Gupta from Edelweiss.

I have a couple of questions in regard to our new products. So sir, can you explain what has been the innovation turnover index for this quarter?

Around 11%.

And sir, it was last. What was the IDI portion last year in same quarter?

It was 13%.

Okay. Going forward, sir, we have seen that there has been an increase in the product launches. So we expect the IDI levels to improve to 15% going forward? 13% to 15% range?

Yes. In FY '21, '22, that's right. We are expecting this much. This year, this number is -- appears to be a little difficult.

Okay. All right, sir. And sir, just one more question. Sir, can you explain about the products which we have launched? So for these products, we have the exclusive license for distribution, right?

For Kirari and Nissodium, yes.

And sir, what can be a possible market size for both the products?

Harsh?

Yes. The possible market size total potential because there are several products, it could be anywhere in the range of 300 crores to 400 crores. But for 1 individual product, it will not be more than 30 crores to 50 crores in next 5 to 10 years.

Okay. And we have the co-marketing rights for these products, right?

For Kirari and Nissodium, we have the exclusive rights to market in India.

The next question is from the line of Deepak Kolhe from B&K Securities.

Congratulations for a good set of numbers. Sir, can you speak about the specialty and generics total revenue, sir, for this quarter?

You see, normally, our product mix, like specialty contributes 2/3 and generic is 1/3. And this year, in Q2, the [Technical Difficulty] delivered a better growth as compared to generic. Therefore, change in product mix is around 1% or 2% type.

Okay. Okay. And sir, the deprecation (sic) [ depreciation ] cost is like -- will that mean that range only because in this quarter, we have seen INR 32 million as compared to INR 57 million. So there is a decline in that. So what's our expectation for this, sir, for whole year?

Could you repeat your question, please?

Sir, can you just guide on the depreciation cost?

Depreciation cost?

Yes, sir.

Depreciation would remain almost similar to the last year. There would not be a significant change in depreciation.

The next question is from the line of [ Resham Jain ] from DSP Mutual Investment Managers.

So I had this question which you mentioned about Dahej facility. So formulation, as I presume, will not have a very large effect. But when you are developing the site, is there any thoughts of getting into technical manufacturing also? And if so, if you can just share around your thoughts around like on the technical manufacturing side?

So [ Resham ], as I shared earlier, the management is considering the same regarding getting into the technical production. We have appointed 1 Vice President, and we are waiting for the project report. Once the projects take shape, then definitely, we will be able to come out and inform the investors. So that's why I said the things will be clear by the end of the year, and we will be able to share the exact information with the investors by end of this financial year.

Okay. Okay. Because in the past many years, our overall CapEx intensity has never been so high. I was just asking from that perspective. Like in technical, you might need to invest like 200-odd crores, that should not be a constraint. That's what I was just asking.

No. Dhanuka is a cash-rich company, and we have ample balances available in passive, in mutual funds, et cetera. So I don't foresee there will be any constraint or any problem for Dhanuka to make investment even in the fixed assets.

Thank you. As there are no further questions, I now hand the conference over to Mr. Manish Mahawar for closing comments.

Thank you, Stephen. On behalf of Antique Stock Broking, I would like to thank the team of Dhanuka Agritech for providing us an opportunity to host the call. Dhanuka, would you like to make any closing comments, sir?

Just to -- again, I would like to reiterate that because of the moisture in the soil and the reservoirs are full of water, farmers are certain that they will get water for the irrigation in the rabi season. Last year, also, the kharif was bad, but the rabi was good. But such would this year, the kharif was -- is good and rabi is also expected to be very good. And so the base was higher in rabi last year. So that's why we are basically expecting moderate growth in the next 2 quarters. But still, since the crop is expected to be very good and swing is going to be there and farmers will be having money in their pocket. So they will be ready to spend the money for safeguarding their crops from pest and disease, we expect a good second half also. And we hope by the year-end, Dhanuka will be able to deliver one of the best performance. Thank you.

Thank you. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.