Dhanuka Agritech Limited (507717) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Dhanuka Agritech Q4 and FY '25 Earnings Conference Call hosted by Antique Stockbroking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar. Thank you, and over to you, sir.

Thank you, Sasha. On behalf of Antique Stockbroking, a warm welcome to all the participants on the 4Q FY '25 earnings call, Dhanuka Agritech. Today, we have Mr. M.K. Dhanuka, Chairman; Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; 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, post which we will open the floor for Q&A. Thank you, and over to you, Mr. Dhanuka.

Thank you, Manish. Good afternoon, ladies and gentlemen. Myself, M.K. Dhanuka, Chairman of Dhanuka Agritech Limited. Welcome you all to the Q4 and FY '25 earnings call. I have with me Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. V.K. Bansal, CFO of the company. As you are aware, Dhanuka Agritech is a leading Indian agrochemical company. Dhanuka is working with the vision of transforming India through agriculture. We have a pan-India presence in all major states to reach out to more than 10 million farmers with our products and services. Dhanuka's key focus has been on the introduction of novel chemistries and extensive product development, distinguishing us from the rest of the industry with 4 manufacturing units and 41 warehouses across India. We cater to around 6,500 distributors and 80,000 retailers. Dhanuka has a strong sales and marketing team to promote and develop new products. Dhanuka has a strong R&D division, has a world-class NABL-accredited laboratory as well as an excellent team for new product registration and development. Dhanuka has international collaboration with 10 leading global agrochemical companies from Japan, U.S. and Europe, which helps us to introduce the latest technology in India. It is my privilege to address you at the close of what has been a landmark year for Dhanuka Agritech Limited. Financial year 2024-'25 was a period marked by bold decisions, strategic partnerships and excellent financial performance anchored in our vision to serve farmers with science-led high-impact solutions. Among our most significant achievements this year was achieving a milestone revenue of more than INR 2,000 crores as well as the acquisition of international rights for 2 key fungicide molecules, iprovalicarb and triadimenol from Bayer AG, Germany. This deal is not just a product expansion, it is a strategic gateway to global growth. With these molecules, we now have a presence in more than 20 countries across Latin America, Europe, Asia and Africa, marking a momental step in our journey from an Indian leader to a global agrochemical player. This year, we have given slogan to our team 2025 -- in the year 2025. So we have there -- I'm happy that the team has delivered INR 2,035 crores in the year 2025. This year, we have aggressively increased our presence in corporate sales in Indian market. Paving the way for future growth for products being manufactured at Dahej. We have approved the next product for manufacturing in the existing plant for which the revenue will start from Q2 onwards. Our investment in process research is yielding good results with many more products in the pipeline. I'm delighted to share our revenue from operations during Q4 FY '24-'25 is INR 442.02 crores, representing an increase of 20.01% over the corresponding period last year. And for the financial year '24-'25, it is INR 2,035.15 crores, which is 15.73% up over last year. EBITDA stood at INR 109.75 crores in Q4 of FY '24-'25, up 37.03% year-on-year basis. And for the financial year '24-'25, it is INR 416.61 crores, up 27.23% over last year. EBITDA margin improved from 21.75% in Q4 of FY '23-'24 to 24.83% in Q4 of FY '24-'25 and improved from 18.62% in FY '23-'24 to 20.47% in 2024-'25, which is an improvement of 180 bps. You will appreciate that at the beginning of the year, we have given guidance of 100 bps reduction in EBITDA margin. But later on, by the end of first quarter, we revised our guidelines to 100 bps improvement in EBITDA over last year. And finally, we have been able to deliver 180 bps improvement over last year. Profit after tax is at INR 75.5 crores in Q4 FY '24-'25, up 27.94% compared to the corresponding previous last year quarter and it is INR 296.96 crores in FY '24-'25, up 24.2% year-on-year basis. PAT margin improved from 16.02% in Q4 FY '23-'24 to 17.08% in Q4 of FY '24-'25 and improved from 13.6% in FY '23-'24 to 14.59% in FY '24-'25, an increase of 99 bps. The Board of Directors has recommended 100% dividend, that is INR 2 per equity share, having face value of INR 2 per share, which will absorb INR 9.02 crores. The said dividend will be subject to the approval of the shareholders in the 40th Annual General Meeting scheduled on 1st August 2025. You will recall that in the second quarter, Dhanuka has done buyback and rewarded the shareholders by doing the buyback of 5 lakh shares at a value of INR 2,000 per share [Technical Difficulty] Zone-wise share of turnover for Q4 FY '24-'25 is North zone, 34%; East zone, 12%; West zone, 20% and South zone 34%. Product category-wise share of turnover for Q4 FY '24-'25 is insecticides, 38%; fungicides, 13%; herbicides, 32% and others, 17%.We consider ourselves responsible towards preserving food security of the nation. We continue to strengthen our association with the agriculture universities, Krishi Vigyan Kendra and other physical institutions to impart knowledge and latest technology to the farmers. Thank you very much for your kind attention. And now we would like to open the forum to take the questions. Thank you very much.

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

Sir, first question is based on the initial monsoon estimates, which seem to be favorable. And given that our base has also reached a cross of INR 2,000 crores. What is the revenue growth and maybe EBITDA margins that we are looking at for FY '26? And another question in terms of the Dahej facility, how has been the performance during the entire FY '25. So what is the revenue and what is the EBITDA? And similarly, what would be the guidance for FY '26?

So I will start with the Dahej performance update. So Dahej's performance last year was a revenue of INR 40 crores in FY '25. And for the coming year, we are looking at a revenue of INR 60 crores from Dahej. And in terms of EBITDA, last year was a negative EBITDA of INR 14 crores. And this year, the EBITDA will be in the similar lines.

And for the entire...

Sorry, with respect to your first question on the monsoon forecast being good. So both IMD and SkyMet has given a positive monsoon forecast at 105% of LPA, which means that the initial sentiment is quite positive for the growers to plant their fields. On the revenue, this year, what we are planning is a higher double-digit growth. And on the EBITDA, we expect it to remain on similar lines as this year.

The next question is from the line of Viraj Kacharia, SiMPL Innovative Brands Private Limited.

Just a couple of questions. First is, can you give a breakup of B2B sales and B2C sales for FY '25 and Q4 in the domestic market?

Okay. So B2B sales in this year was close to about 9% of the total revenue and 91% was from the brand sales.

So this 9% would also include the technical sales of INR 40 crores we did, right?

Yes, absolutely.

Okay. And what was the corresponding figure last year?

Last year, the corresponding figure was about 4%.

Okay. Got it. Second question is you talked about new molecule introduction in the Dahej plant. So can you give some color on what kind of product -- is it the existing synthetic pyrethroids family we are looking? Or is it something else? And at what level of utilization one could expect a breakeven or positive EBITDA from the Dahej plant?

So I'll answer the question in 2 parts. First of all, the product which we are going to introduce is not a synthetic pyrethroid, it is a fungicide. And the volume this year expectation is not very high, but we are expecting about INR 10 crores of revenue from this new product, which is included in our forecast. And in terms of EBITDA in this year, it is not expected to contribute significantly positively. So the EBITDA margin overall is expected to remain similar.

No, okay. So what I was trying to understand is what level of utilization do you expect the operations at Dahej to be breakeven or contribute positively?

So the current capacity utilization is close to 25% for the last year. And this year, we are expecting to take it up to 35%. And for EBITDA margins to become positive, we need to reach about 70% to 80% of capacity utilization.

Okay. Sir, just 2 questions. One is on the broader margin. I think what you guided is overall growth in double digits and operating margin to be in a similar band. Now if you see our B2B operations, we are expecting a similar level of operating loss in '26 as against '25. And if you see in the B2C also, what we are seeing is the unit costs of key RMs are kind of increasing across the board. So the cost pressures are also quite high. And B2C margins, if I compare to our own history in the past, has been at the higher end of the band. So just trying to understand if you can just give some more clarity on the drivers of the margin sustainability going into '26 as well. How are you looking at it? What factors do you think would help us sustain the margins going into '26?

So the cost increase, we will obviously pass on to the customer that has been our regular practice. The cost increase in raw materials will be passed on to the customer. Then our past launches, which are relatively in the high-value segment, constantly upgrading product portfolio and increasing the revenue from relatively high contribution products are certain dynamics which will help us maintain our volumes, value as well as margin. We have upgraded some market outreach efforts in terms of creating a base of loyal farmers and powerful spokespersons across the scientific community, which is also going to create a relatively high brand recall and brand equity for Dhanuka products, which hopefully will keep our margins on the higher side.

Okay. This last question was on the cash position. On the cash position, I think even post the acquisition price we paid for the 2 products in Bayer, our cash position is quite healthy. And given the way things are, this will just keep on building up. So any thoughts you can in terms of how are you looking at the distribution of this cash either in terms of payout or investment. And a few quarters back, we talked about us looking at possibly other agri-input value chain opportunities. So any update you can give there as well?

So we have a healthy practice of dividends as well as buybacks, which was also achieved this year. And recently, we announced 100% dividend also. So going forward also, we will have a continued practice of rewarding our shareholders and strategic opportunities as and when will come will be shared on this platform as well.

[Operator Instructions] The next question is from the line of Raman KV from Sequent Investments.

I have one question with international rights for both key molecules, which the company I think bought. Sir, I just want to understand what is the TAM of these 2 molecules and how much incremental revenue are we expecting from the -- from sale of -- from utilizing these 2 molecules in FY '26 and FY '27.

So I got 1 part of the question, revenue in FY '26 and FY '27. What was the first part of your question, please?

TAM, total addressable market for these 2 molecules.

Got that. So the total addressable market for both these molecules is close to USD 100 million. However, it is -- in one of the products, especially, there is a number of generic products in many parts. We have acquired a business for that product in Brazil market, where the entry barrier is quite high. So we expect to maintain those business. In terms of revenue contribution from both products combined in this year, we are looking at about INR 110 crores, including India brand sales and international sales from both the products. As we speak, Bayer is continuing to do the commercialization in most of the countries. And we will be taking our distribution operations starting in October. India, we have already launched the product in the Dhanuka brand name in the month of May.

Okay, sir. Sir, I just want to like a more or less like follow-up. Sir, you said you bought the rights for these 2 molecules to be sold in Brazil market, right?

So one of the products is only in Brazil market. The other product is spread across more than 20 countries.

Okay, sir. And my second question is, sir, what is the guidance for this particular year? And are we will pay there any further margin expansion?

In terms of gross margin, we are expecting a hit of around 100 basis points in the year, '26 -- '25 '26. In terms of EBITDA, we are basically maintaining this year's percent base in the year '25 '26.

And sir, revenue growth?

Revenue growth is -- we are expecting double-digit, higher double-digit growth.

Higher double digits. Sir, also, can you give a ballpark number of margin figures for the segment-wise? Insecticides, what is the margin from the insecticide business? What is the margin at fungicide levels and herbicide levels?

We don't share category-wise margin.

So can you give, which is a better margin business?

[Operator Instructions] The next question is from the line of Riju Dalui from Antique Stockbroking.

Congrats on the good set of numbers. Sir, my first question is regarding the revenue growth that we have registered this quarter, right? So we have a 20% kind of a growth rate. So like is there any kind of contribution from the Bayer product in terms of royalty that has helped to achieve this kind of revenue growth? Or it is purely of an organic growth, if you could clarify?

This is purely organic growth. This growth has, in the last quarter and the entire financial year, has come from Dhanuka's existing product portfolio.

Understood. And in terms of volume and the value growth, if you could bifurcate those things like out of 20% to how much was the value growth and how much was the volume growth?

Yes. In Q4, volume growth was around 19% as against value growth 20%. And on an annualized basis, the volume growth was higher by 300 basis points as against 15-odd, which is around 18-odd.

Understood and sir, if I look at your gross margin, right, so like gross margin basically flat on a Y-o-Y basis for the quarter. But if I look at the EBITDA margin, that has -- like that has seen a stock improvement of over 300 bps and in terms of the other operating expense, right, so other operating expense, which is to be around 12% on total revenue, it has came down to 9% on total revenue. So what has driven this kind of a cost savings? So are you taking any kind of cost-saving measures or like what like what actually have driven these kinds of a cost-saving in terms of the operating costs?

I think there appears to be some gap. Other expenses, 9% we're seeing. There is no such -- basically, improvement in the other expenses. Other expenses has come -- percentage value will be more than 11%.

No, like it was more than 11%. But this quarter, it came down to 9%.

What you are saying, I'm saying for the full year.

No, no, sir. For this quarter.

For quarter, you see, basically because of we are getting some marketing expense reimbursement from our foreign basically Japanese partners. So this year, in the quarter 4, basically around INR 5 crore incremental value we received as compared to the previous year because of which the other expenses appears to be a little low. But you have to see as a whole, I think it is in the similar percentage.

So the improvement in the gross margin, right?

What I would like to add is we continue to invest aggressively in demand generation, farmer education and brand building, both as brand Dhanuka and branding and education of our individual products to farmers across all categories. And we have done special campaigns in February and March with sugarcane farmers for their education around the VD sites, which we launched in the previous year.

Understood. And the other question was that I think like rising depreciation for the quarter, so we must have capitalized the Bayer acquisition cost in the balance sheet. So like in terms of the acquisition, so like did we get any kind of royalty from Bayer during this quarter?

Yes. In the net economic benefit, we received around INR 12 crores in this quarter.

INR 12 crores of royalty. Understood. And like as you highlighted earlier that the royalty that we will continue to get till the registration, like registration name to be transferred to Dhanuka. So any kind of guidance you would like to tell, like how much kind of royalty that we can get or the percentage of royalty that you were getting on revenue, it will be helpful.

I think in this year, we are expecting anything between INR 15 crores to INR 20 crores.

Understood. Yes. And one last question, if you could allow me. So that is regarding the herbicide portfolio that we have. So in terms of herbicide portfolio, how much -- like how much pre-emergent herbicide is in our portfolio of the total herbicide portfolio?

That's a very specific question. Indeed, how much is a pre-emergent herbicide versus a post-emergent herbicide? I don't think so we are ready with that because we have various generic products, for example, Dhanutop, Craze and many others in the pre-emergent segment as well as many, including Targa Super in the post-emergent segment. Dhanuka is a company with very strong portfolio and choice of variety of products across paddy, sugarcane, soybean, cotton, ground nut with various specialty and generic herbicides. And we continue to introduce many Japanese herbicides, and in the future also, we'll be launching few herbicides in different categories.

Understood. But if you could give any ballpark number, that will be very much helpful.

Yes. None so far. Thank you.

The next question is from the line of Sani Vishe from Axis Securities.

Congrats on a good set of results. So I just want to understand, given that we are entering the international market with this acquisition of fungicides from Bayer. So do you see the market moving in line with the expectations because as we understand, the international market hasn't been that supportive overall. So is it going in line with our estimates? I mean in general, I want to understand how the international market is...

Two things. One, to the operator, in general, there is a disturbance in the line. But this particular gentleman, we could not hear at all.

Okay. So is it better now, sir?

So there is some disturbance in the line, in general, but yours was absolutely inaudible. Sir, can you repeat this slowly?

Yes. So I'm just trying to understand how the international market is doing, given that in most of the cases for other players, we have seen that the international agri market is not doing so well. So given that we are acquired the 2 fungicides, is it moving in line with our expectations? Or there are some challenges?

So international market, obviously, is behaving the way it is behaving. We acquired these 2 fungicides last year. One, we see a good opportunity for Melody DUO and Melody's variants in the country in India. And then there is -- it is a gateway for us to get a footprint in the export markets where Dhanuka is relatively new and trying to get into an export domain. So I think so it's a pretty good opportunity with having these 2 fungicides in our portfolio with access to the world's largest agrochemical market of Brazil and also to various other countries with Melody and its variants, which itself is a very powerful fungicide.

And the revenue we are expecting from this. So was it part of the growth guidance that you discussed double-digit...

It is part of the growth guidance that we have given. Yes, sir.

Okay. And finally, just a small question. So we can see that inventories and the trade payables seem to be in line with whatever there was earlier, but the trade receivables have gone up significantly. So can you just throw some light on that? And what are the expectations for the coming quarters?

Our channel and our team really aligned well, and I think so, trade receivables are mostly in line with what we were expecting in the last quarter and this will be coming down pretty sharply in the first quarter also and in future quarters as well. I think so there is a very healthy mix of what we have in both in terms of inventory and trade receivables.

Does the management have any disturbance in the call?

The call is not very clear, a bit hazy.

Sir, do you want me to reconnect you?

No, I don't think so it will waste a lot of time of all our audience. So we'll try and continue. Yes.

Okay. The next question is from the line of Huseain Bharuchwala from Carnelian Capital.

Sir, I just wanted to understand. So we have basically got a royalty of INR 12 crores this year. So are we looking at further products to be added, basically acquiring some more products? This is the first time we have entered into global markets, and we have acquired some products there. So are we looking at further more products in the pipeline?

If there is a good opportunity for domestic and international markets, we are on the lookout for inorganic growth opportunities in multiple ways, including acquiring products.

Got it. Got it. And secondly, sir, just wanted to understand this -- you said INR 5 crores is the reimbursement you got from the customers, basically your suppliers, Japanese customers, basically, whom you supply -- who are your key suppliers? So it is a regular phenomenon or is it something which has happened for the first time, and we see more types of deals like this?

It varies from product to product or year-to-year. So it is only relevant in the context of why quarter 4 numbers were looking relatively low. And the clarification there is important in terms of our commitment to continuously invest in our marketing efforts, in our branding efforts, farmer education and product development. Dhanuka is absolutely committed and relentless about it.

And sir, because of the commodity prices going up, do you think this is one of the reasons you are guiding that you will see 100 basis point fall in the gross margins, but you see commodity chemical prices going up?

See, the main reason is last year, we got the advantage of a continuous decline in the raw material prices. And because -- and that same decline were not passed on to the customer. So this year, now the price is relatively stable and our increasing trend because of which we are expecting a 100 basis point impact.

The next question is from the line of Pavan Kumar from Ratna Traya Capital.

Sir, can you talk about your vision on the export side, what you are looking forward in terms of that? And also, can you outline the strategy behind this Dahej facility? And over a longer term, how will it benefit us?

So that's -- I think a question is short, but the answer is a little detailed. So I'll try to keep it short. The strategy for Dahej, of course, is very positive for the future. Looking at the global challenges that we are observing and the uncertainties, which are there, we believe it is important that India comes up as a key supply chain point for agrochemicals, especially for manufacturing in chemicals and more so in agrochemicals. Globally, right now, for agrochemicals, India and China remain 2 of the top manufacturers. And with some negative sentiments around China, trade wars, tariff barriers, which seem to be the new norm, we believe India will have an advantageous position, having very good relations with most global countries. So in the light of that, the international market presents a great opportunity for Dhanuka to expand our operations beyond the boundaries of India. To make Dahej also successful, international markets will be key in the future as we come out with more products, which are having larger base and even some of the unique chemistries, which very few players are manufacturing globally. So we are looking at differentiated products on the manufacturing side as well, the same similar strategy that we employ on the brand side. But yes, our portfolio will remain mixed with generics and differentiated products on the manufacturing. So all in all, I believe international market opportunity is absolutely phenomenal from India, and we are committed to drive our international sales revenues in the future.

The next question is from the line of Prashant Biyani from Elara Securities.

Congratulations on good set of numbers. Rahul, how is the monsoon season looking like to you?

[Foreign Language]

Okay. And sir, vis-a-vis last year, which crops can give you major swings in terms in revenue if monsoon pans out well distribution-wise?

So believing that monsoon will pan out well distribution-wise, the most important crop will remain paddy. Then soybean, all oilseeds and pulses. We are pretty hopeful of phenomenal growth in the horticulture segment. Sugarcane has been our key attention and will continue to drive large part of our business. And maize as a widespread and phenomenally high acreages is going to support us significantly. We are pretty boastful of the chili acreages also, which will be reducing a tad this year, yet will continue to consume crop protection chemicals significantly. Dhanuka has good penetration in grapes. We are going to launch a grapes fungicide also late next quarter. So I'm pretty positive about all the geographies and most of the crops across the country this year.

Any new products planned for launch, except the fungicide you mentioned or grapes?

So we are going to launch our paddy herbicide Dinkar this month itself, which is a Japan Hokko Chemical product. And we are going to launch a Japanese fungicide from Nissan Chemicals in next quarter.

Okay. Sir, just one question on Q4. While the top line growth was pretty healthy, was it because some partners are preparing for a healthy kharif season early or it was primarily rabi season demand only?

This won't be -- I won't say rabi season demand. This is also aggressive sugarcane and maize acreages coming up in the Feb, March. Our significant attention and focus towards horticulture crops for which Feb, March, April is a very important months. Pulse crop, green gram acreages have gone up significantly in Uttar Pradesh, Madhya Pradesh, Rajasthan, which has become a new opportunity for various weedicides and insecticides. Paddy acreages in South India, which was the rabi crop, continue to be consumed in March, April. So that remained an opportunity. So these were the large consumption opportunities. And yes, since there was an increasing price trend in last quarter, so I feel some of the partners were probably preparing for the good kharif.

Mr. Bansal, I think you said INR 12 crores as royalty number for 4Q and INR 15 crores to INR 20 crores next year. Is it -- I mean, why is only INR 15 crores to INR 20 crores for the entire year if we have INR 12 crores in the quarter? Is it that after the period of...

First of all, this is not the royalty. It is in the shape of a net economic benefit. Because you see for Indian business -- business in India, we are starting our bidding in the quarter 1 itself. Earlier, we were getting it because of the Bayer is doing the business on our behalf, right? The moment the sales number are coming in our balance sheet, that benefit will go away.

Okay. And sir, lastly, I missed the number, but how much could be the contribution from iprovalicarb, triadimenol in FY '26?

See we earlier said it should be in line with our existing business revenue.

In FY '26?

I think about 4% for the next year.

The next question is from the line of Manish Mahawar from Antique Stockbroking.

Just 2, 3 questions in terms of bookkeeping. During the quarter Bayer products you said royalty is around INR 12 crores, right, we have booked. So any other cost we have booked in the P&L or it's directly flowing to EBITDA?

It is absolutely directly going into EBITDA, except the cost is only depreciation.

Okay. Absolutely. And in terms of cost of acquisition, we have taken to the balance sheet, right, which is INR 160-odd crores of intangible assets, which is showing...

Right.

Okay. And next year, when you said a number of INR 15 crores to INR 20 crores of royalty, right, apart from that, any other income will come because we have mentioned also INR 100 crores of revenue in FY '26. So what is the P&L, which the revenue comes in the next year?

Revenue is already shared in terms of both the molecules, we are expecting around INR 110 crores revenue.

Okay. And INR 100 crores revenue, it is over and above INR 15 crores, INR 20 crores of royalty, right, which will be booked in the next year?

Absolutely, absolutely.

Okay. And INR 100 crores of revenue, I think earlier when we acquired this molecule, we have alluded, the margins are in this INR 100 crores of revenue will be the same as the company's margins, right, EBITDA?

Yes, we are saying basically -- yes, overall margin, we are taking gross margin, 100 basis point hit. That is including that.

Okay. Understood. So basically, next year, just again saying that the number is around INR 120 crores of revenue basically, booking can come to the next year for Bayer as a product for us?

Yes, that's right.

Royalty and the revenue. Okay. Understood. And Yes, sir, in terms of -- can you possibly -- can you share the export revenue for this year and what is the expectation for the next year?

Export of the acquired products or overall exports?

No. Overall, sir.

So overall exports, we are expecting to the tune of INR 50 crores other than Bayer products.

Okay. And what was the number for this year, FY '25?

Number was close -- number is around INR 30 crores.

Okay. Understood. And just one clarification. I think, Harsh, you mentioned in the start, I think Dahej side, you said EBITDA of INR 14 crores, right, in FY '25, which was a negative, right, number or...

Negative. Negative.

Negative. And next year, you are saying the same number will continue...

There is let's say, little improvement.

The next question is from the line of Viraj from SiMPL Innovative Brands Private Limited.

Yes, it's simple. Just 2 questions. First, again, a clarification on the Bayer acquired. So the revenue recognition -- revenue on the P&L recognition would be to the tune of INR 110 crores to INR 120 crores in FY '26. And in addition to that, there will be another INR 15 crores to INR 20 crores of royalty. Am I right?

Yes, that's correct.

Okay. So if I just understand normalized, because this integration will happen over a period of 1.5 years, normalized sales and profitability [indiscernible] wouldn't have done in '25?

Sorry, your question was not clear, Mr. Viraj.

So if I look at FY '25, what is the normalized sales and profitability [indiscernible] of those 2 products, what would that be looking like in FY '25?

For these 2 products, you are talking?

Yes, sir.

So these 2 products, FY '25 revenue would have been close to INR 200 crores.

And profitability?

Profitability, we don't know because it was on the books of Bayer.

Okay. Got it. Second question is on the B2B sales. See, you said that we did somewhere around 9% of sales as B2B, including Dahej and this was 4%. Now if I exclude the Dahej sales ramp-up, our B2B sales has gone from around INR 63 crores to INR 145 crores in 2025. So I'm just trying to understand 2 things here. One is how are we looking at this particular channel approach for us? And historically, if I compare other players also, the margin profile in B2B is not that [ greater ] as B2C, which has been our focus area since many, many years now. So any deep dive you can give in terms of the thinking and the thought process behind the ramp-up of B2B sales in the domestic market?

Yes. Thank you for that question. This is -- it was a very strategic call to build the channel on the B2B side. While we have an extensive channel and brand name with the B2C customers, we are not that strong on the channel for the B2B customers. So the idea is to ramp up our customer base on the B2B side for future products coming out of Dahej, including what we have commercialized already and the products that will be coming out of our R&D efforts.

Okay. And any color on the unit economics in B2B? Would it be a low-teen margin business? Or any color how do we see that evolving for us?

Margin is absolutely as compared to a branded business is low. But at the same time, on an EBIT level, I think it is okay because there is hardly any expenses on this business. In terms of gross margin, there is a significant difference. But on EBIT level, the difference is not that much.

[Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang Equities.

Congratulations on your good results. So if you look at the last year's first quarter number and the kharif outlook for this year on this INR 500 crores revenue and 13% kind of EBITDA -- PBT margin, what is the sense you have in terms of the first quarter and first half growth in revenue and margins?

Sir, your voice is not clear. The disturbance level has gone up.

So I was just asking, going by the first quarter and first half numbers last year, given that this year, the kharif is going to be much better, what is the sense you have in terms of revenue growth and PBT margins in your first quarter and first half? What is the sense you have based on the current trend in...

I think we are going to maintain the growth trend that we have forecasted for the year. First quarter is relatively a slower quarter yet. I think so we'll maintain our higher double-digit growth trend in Q1.

Okay. And so if you look at the EBIT margin based on whatever you reported so far, incrementally, the Bayer business, when would it move towards your blended margin? Initially, I think it will possibly be lower because of higher depreciation. So when do you think the Bayer business can earn the kind of EBIT margins already earning on the blended basis?

I think currently, as we take over the business, the margin will be in line with the existing. However, there are opportunities over the next 3 years to optimize the cost as we take the more control on the supply chain. Right now, the product is being formulated across 3 different geographies globally. So as we consolidate that and bring the production more to India side over the next 3 years, the EBITDA margins from that business can improve.

Okay. So in terms of your overheads and distribution costs, incrementally, do you expect any additional expenditure on promoting the Bayer products? Or will it be in line with whatever you're doing as a percentage of sales?

So a large portfolio of the Bayer products will move as a B2B sales to national distributors across various countries. And the India business will, of course, become part of the branded sales that we have as our business. So the operating expenses for the India portion of the business will be in line with the existing business. And for the global business, it will be similar to B2B business expenses. So not very high. But yes, definitely, it involves registration expenses in various countries, which will be part of the business.

The next question is from the line of Dhruv Muchhal from HDFC AMC.

Sir, the margins in your distribution business, I mean, the B2C business, if I'm right, are about 21-odd percent in this year in FY '25, and they are the best ever. And you have broadly maintained the margin guidance for FY '26. So just trying to understand, is there a meaningful change in the product portfolio, what you had over the last many, many years that is causing -- giving you the confidence that these margins can sustain? And just some broader thoughts here, sir, please, just to understand the sustainability of these margins.

So we have a constant effort to upgrade our product portfolio. And every year, we have introduced a minimum 1 up to 293 products also, very specialized and monopolistic products is what we have introduced every year because of which our product portfolio is getting upgraded, the margin situation has also shifted forward. And I think so we'll continue to introduce new products, powerful products and be able to maintain the margin levels and probably continue that way.

So also, generally, if I understand the product life cycle in the initial years, the margins are strong. And then as you -- I think I mentioned earlier, it starts to narrow and starts to decline. But you have factored that in all those factors are there in your base case to give this margin guidance, right?

Yes, absolutely. So what you're saying in terms of product life cycle, towards the tag end of the product life cycle, the margins tend to decline, which is kind of compensated by other new introductions to some extent. And then as the new introductions ramp up volumes, then they also add to the absolute revenue as well as the margins.

Sure. Got it. And one small point on the depreciation. So is the Q4 depreciation run rate accounting for the acquisition of Bayer -- I mean, the acquisition of Bayer molecules?

Yes, it is at the rate of 10% straight line.

The last question is from the line of Raman KV from Sequent Investments.

I just want to understand that the majority of the growth comes from the introduction of new molecules. Or is it the existing molecules growing at a significantly high double-digit?

So most of the growth last year has come from the introduction of new products.

I was just asking you in terms of like long term?

Yes. Going forward also, most of our development effort, farmers' liking is towards getting new technology, new concepts, new methods for protecting their crop. Our constant effort is to bring eco-friendly, effective and low-loss products to the farmer. The constant brand equity that we develop with the farmer keeps traction for our products high and the choice of new products is obvious as the Indian agriculture is also constantly upgrading.

Sir, and one final question. Sir, with respect to the tie-ups you have with MNC such as Nissan Chemical, can you just throw some light on how does the tie-up was like, revenue sharing model or is it like a profit sharing model?

So tie-ups are working really well. We are able to introduce new products every year. And I think so that's about it what I can say about these relationships, which models we are using and how they -- each one is going is probably restricted to an alternate discussion.

Thank you very much. I now hand the conference over to management for closing comments.

Friends, once again, I would like to thank all the investors and analysts for your support and confidence in Dhanuka. With the transition in management, we have embarked on our next era of growth and business success. I reassure our stakeholders that we are committed to the task of transforming India through agriculture, the landscape of agriculture and farmers in India. [Foreign Language] Thank you, and goodbye until next time. Thank you.

Thank you.

Thank you very much. On behalf of Antique Stockbroking Limited, that conclude this conference. Thank you for joining us, and you may now disconnect your lines.