Dhanuka Agritech Limited ($507717)

Ladies and gentlemen, good day, and welcome to Dhanuka Agritech Limited 4Q and FY '26 Post Results Call hosted by Antique Stock Broking. [Operator Instructions] I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, sir.

Thank you, Suja. Good afternoon, everyone. I'm pleased to host today's earnings call of Dhanuka Agritech. We have leadership team represented by Mr. Mahendra Kumar Dhanuka, Chairman; Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. Vinod Kumar Bansal, CFO, on the call. Without any delay, I would like to invite Mr. Mahendra Kumar Dhanuka to start his opening comments, post which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Manish. Good afternoon, ladies and gentlemen. I'm Mahendra Kumar Dhanuka, Chairman of Dhanuka Agritech Limited, and I welcome you all to the Q4 FY '25-'26 Earnings Conference Call. I have with me Mr. Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr. Vinod Kumar Bansal, CFO of the company. As you are aware, Dhanuka Agritech is among India's leading agrochemical companies with a long-standing commitment towards advancing Indian agriculture through technology-led crop solutions. Over the years, we have built a strong pan-India franchise with deep farmer engagement, a differentiated product portfolio and a robust distribution network. Today, we reach more than 10 million farmers across India through approximately 6,000 distributors and over 80,000 retailers. Supported by our 4 manufacturing facilities and 41 warehouses, we continue to strengthen our ability to deliver products efficiently across key agriculture markets. A key differentiator for Dhanuka has been our consistent focus on introducing innovative and globally relevant chemistries in the Indian market. Our partnership with 10 leading multinational agrochemical innovators from Japan, Europe and the United States continue to provide us access to advanced technologies and differentiated solutions for Indian farmers. Our 2 R&D centers supported by NABL accredited laboratories and a strong regulatory and product development team remain focused on product registration, formulation development and strengthening our future growth pipeline. The broader operating environment during the quarter remained challenging for the agrochemical industry. The sector continued to witness pressure from erratic weather trends, uneven crop economics, weak channel liquidity in certain regions and continued global volatility in commodity and supply chain dynamics, which became prominent in March due to the war in Gulf region. Climate variability is increasingly becoming a structural factor for Indian agriculture. Unseasonal rainfall, temperature fluctuations and shifting monsoon patterns continue to impact sowing behavior, crop protection demand and overall farmer sentiment. In addition, geopolitical tensions, trade disruption and supply chain uncertainties across global markets have kept input planning and logistics management dynamic during the quarter. Q4 is seasonally a relatively softer quarter for the agrochemical industry. And this year, the rabi season was further impacted by unfavorable climatic conditions in certain key regions. While near-term demand visibility remains linked to monsoon progression and deserved conditions, we continue to remain constructive on the medium- to long-term structural growth opportunity for Indian agriculture and crop protection. Against this backdrop, I'm pleased to share that Dhanuka delivered resilient operational and financial performance during the quarter. Revenue from operations for Q4 FY '25-'26 stood at INR 48.3 crores as compared to INR 42.02 crores in Q4 of FY '24-'25, registering a growth of approximately 9%. EBITDA for the quarter stood at INR 124.9 crores as against INR 109.7 crores in the corresponding quarter of the previous year. Profit after tax stood at INR 97.7 crores compared to INR 75.5 crores in Q4 of FY '24-'25, reflecting healthy profitability improvement supported by product mix, operational efficiencies and disciplined cost management. Our balance sheet and cash generation continue to remain strong, providing us the flexibility to invest for future growth while maintaining a shareholder-friendly capital allocation approach. The zone-wise contribution to turnover for Q4 of FY '25-'26 was North contributed 32%, East contributed 12%, West contributed 23% and South contributed 33%. Product category-wise, insecticide contributed 41%, fungicide contributed 14%, herbicide contributed 31% and others contributed 14%. The Board of Directors has recommended a dividend of 100%, that is INR 2 per equity share face value of INR 2 each. The proposed dividend will absorb approximately INR 9.02 crores and is subject to shareholders' approval at the 41st Annual General Meeting scheduled on 3rd August 2026. Further, the Board has also approved a proposal for buyback of up to 5 lakh equity shares for an aggregate amount not exceeding INR 70 crores at a maximum buyback price of INR 1,400 per equity share. This decision reflects the Board's confidence in the long-term fundamentals cash flow strength and future growth prospects of the company while also reaffirming our commitment toward enhancing shareholder value. I'm also pleased to inform you that the Board has approved the introduction of an employee stock option plan or ESOP scheme. We believe this initiative will further strengthen entrepreneurial mindset across the organization, enhance long-term alignment and support our next phase of growth and leadership development. As we enter the next phase of our journey, the company remains focused on strengthening its product portfolio, expanding pharma reach, driving operational excellence and building future-ready capabilities across manufacturing, R&D and market development. At Dhanuka, we continue to believe that sustainable business growth must go hand-in-hand with farmer prosperity and national food security. Our continued engagement with agriculture universities, Krishi Vigyan Kendra and other scientific institutions remain an important part of our farmer education and technology dissemination efforts. With the ongoing management transition, we are also building the foundation for the company's next era of growth, combining the strength of Dhanuka's legacy with a sharper focus on innovation, agility and long-term value creation. Thank you very much for your kind attention. We would now like to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Rishabh Shah from BMS.

Sir, my question is about 2 products which we -- which were acquired by Bayer AG. So have we launched any new products within those products and also added any new customers? And one of the challenges we were facing with this new business model was registration in different companies. So how these things have evolved for us in the year's time frame?

Right, sir. Thank you for this question. So the 2 products that we acquired, triadimenol and iprovalicarb from Bayer AG. So in most of the markets for the last financial year, Bayer AG continued to do the commercialization. In current year also, in some countries, they have agreed to continue the commercialization. We have appointed customers in about 5 countries till now, and we are in advanced discussions with the customers in another 10 countries. And as distributors start getting on board, the revenues will start building up from them. Till that time, Bayer AG is doing the commercialization in most of the countries. Regarding any new products, so currently, we have not introduced any new products from the portfolio. Only for India market, we had shared last year itself that we introduced Melody Duo in Q2 itself. And that product is now part of our product portfolio for India business.

Okay. And sir, these challenges which you are facing with this new business model, the registrations.

Yes. So registration is not the bigger issue because the major concern is around appointing the distributors and managing the supply chain. With the support of Bayer AG, we are resolving most of the issues on how the supply chain will be handled in the coming times. We have already initiated the formulation of both the Melody Duo variants in India. Triadimenol formulation will also be shifting to India in current financial year itself. And the iprovalicarb technical by end of this financial year, we'll be starting that production.

Okay. And sir, my next question was like in the last 5 years, we have been trying to do 2 things. One is backward integration and second is acquisition of products from Bayer AG basically for export purposes, which we were doing only in formulations before. And both these are new things for us, exports and B2B business and manufacturing. So my question is what kind of challenges in particular to this new business have we faced in this the last 5 years?

Yes. So this is absolutely a wonderful point that we are expanding to international markets, and we have also explored inorganic growth by these 2 brand additions as well as we are doing backward integration on both these products. First, let me talk about the opportunity. The opportunity here is leveraging our Dahej chemical plant for manufacturing this in India and also leveraging our formulation capacities and formulating these 2 products in India, thereby -- and cashing on the arbitrage of the costs these products had when they were coming from European or other markets and upgrading -- enhancing the capacity utilization at Dahej. While you are already aware of the headwinds chemical business has overall faced in last couple of years. Many international players have faced these headwinds, so has Dhanuka as the newcomer in this domain. Finding the right distribution channel and appointing distributors in different countries has been a challenge. Then getting regulatory approvals has been another challenge and getting our foot into the door in terms of these markets as very new opportunities for us has also been a challenge. We are pretty excited as we deal with these challenges and work on the opportunity this new domain has opened for us.

Okay. And sir, my last question is...

Sorry to interrupt, Mr. Shah, may we request you to please rejoin the queue. We have participants waiting for the turn. The next question is from the line of Sid from SIMPL.

Just a couple of questions. Now first is on the Q4 results. If I look at the sales, was there any element of preplacement into the market? So any color in terms of volume value mix you can give for Q4 and FY '26? And a related question is, see, if you look at our gross margin, despite the environment, we have seen a significant expansion. And it's also a quarter where the OpEx cost has seen a drop. So if I look at EBITDA margin, it's been the highest ever we have ever seen in our life. So just trying to understand what is the drivers of this because even the new product contribution has dropped. And if you look at segment-wise, herbicides and fungicides not seen that kind of growth. So any color you can give on this? So that's the first question.

So you see you asked 3, 4 questions in one question. You see one with regard to the EBITDA margin, -- this is largely because of the GST refund. You see in Udhampur unit, the GST refund year was last year, March '26 only. So you see the refund has increased significantly in the Q4 of this financial year because of which the EBITDA is highest in this quarter. In terms of the placement, placement is similar to the previous year, not very significant as normal placement, which is happening every year. And what was your third question?

Just on the GST refund, what is the quantum?

Quantum in terms of placement?

No, no, GST refund amount.

GST refund amount, you see in the whole year basis, it was INR 29 crores and a significant portion in the quarter 4. And as against the last year, it was very low because of some provisioning.

Okay. And can you give the Dahej sales and EBITDA? And similarly, how much Bayer AG revenues contribution?

Dahej sales on a yearly basis, it was actually INR 50 crores as against INR 41 crores in the previous year. In terms of the Q4, it was INR 8 crores versus INR 15 crores. In terms of the value volume, it was almost flat. The volume growth and value growth was almost same in Q4.

No, I meant Dahej EBITDA, was it breakeven? Was it?

Dahej EBITDA loss as against last year, INR 14 crores this year was INR 13 crore loss on a whole year basis in Dahej.

Okay. Fine. Just 2 questions, sir. One is on the guidance which you've given for '27, now you see this year, we would see a consolidation of Bayer AG product revenue as well in our numbers. And last year, in '26, we had an impact of ban of sale of Biologicals for a few quarters. So if you add these 2 itself, we would easily maybe very comfortably achieve our guidance of low double digits. So that gives an impression that the base business may not grow or in fact, may probably degrow. So I'm just trying to understand why -- what is driving -- I mean, -- if you can just give some color on your guidance, how are you going about that?

You see this year, 2% impact on account of the -- actually, there was no contribution of the GST refund and there will be a little hit on account of the net economic benefit. Around INR 40 crore impact would be on account of these 2 heads. That will be compensated by the introduction of the biostimulant again. And in terms of the Bayer AG, the entire sale will not come in this financial year. Only a portion of that sale will come in this financial year and probably we'll get the full sale from the next financial year, not this year.

So for '26, how much Bayer AG sales has been recorded? And for '27, how much are you expecting?

You see there was a loss of around INR 50 crores plus in the year '25, '26 on account of the biostimulant ban. And we are hopeful we'll compensate the entire thing in the year.

No, I'm talking about Bayer AG products. How much was recognized in '26 and how much you expect in '27?

'26 we recognized on the India sales value, right? It would be something is around INR 27 crores. And in the year '26, '27 is almost double of that.

INR 200 crores.

Total.

27, 28, 20...

INR 35 crores plus -- around INR 60 crores this year.

Okay. Can I just squeeze in one more question? It's on the ESOP. Just a suggestion. I think this is the first time we have rolled out this policy, and it's quite a good initiative. Instead of new issuance, new share issuance, a suggestion would be if we could consider buying shares from the market and meeting the ESOP obligations. I think it's also reflective of the valuation the company is currently trading at. So that is one suggestion. And second is on the buyback. If you can give some rationale behind the buyback price. I think the last was around INR 2,000 per share. So I just want to understand your thought process on why this time we arrived at a INR 1,400 per share buyback price.

Actually, the buyback price is around 25% higher in comparison to the market prices. The last year when we did the buyback at INR 2,000, at that time, the market prices were around INR 1,700. So we did the buyback at INR 2,000. This year, the market prices was INR 1,100 approximately when we decided to buy back at INR 1,400. So INR 300 benefit basically around 25% higher in comparison to the market prices. We are giving the advantage to the shareholders.

The next question is from the line of Rohit Nagraj from 360 ONE Capital.

First question, in terms of the availability of material from outside, have we faced any challenges? NH Q4 has been good. But during the last 1.5 months in terms of the technical availability from outside, are we facing any challenges? And if not, are we more or less protected at least for the kharif season?

Right. So availability of material from outside is not a challenge at all. Most of our imports come from the East, either Japan or China. So there has been no concern around the availability. Post war in March and April, there was definitely price increases, which were more of speculative. And in last 15 days or so, the price increase has stabilized. And in a couple of products may be slightly reduced also. But overall, the prices have increased over the last 45 to 60 days.

Sure. And if you can provide us what is the increase in input prices as a basket? And how much of that has been translated into the price increase?

You see as a basket, one is in case of imported material because of the depreciated rupee, the impact is around 5%, 6% in terms of imported material. And in terms of the indigenously in the infusion generic, the increase is very steep, maybe 25%, 30%, 15%. But on a basket level, it would be ranging around 3% to 5%.

Sure. So overall, in terms of raw material inflation, we are seeing close to about maybe 5%, 7% -- and the similar kind of increase will be passed on in terms of the product prices. Is that the right assumption?

You see passing on to the customer, it depends. I mean currently, it is -- we are finding it difficult. But yes, over a period of time, we passed on by the end -- by the beginning of the quarter 2. Some part is already passed on, and it will not be passed on immediately. It will take a little time.

Sure, sure. And just one number in terms of -- one question in terms of number. What was the Bayer AG royalty payment during Q4 and for full year FY '26?

Full year, it was around INR 32 crores and in Q4 is around INR 10 crores.

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

Mr. how much has been the price increase in Q1? And consequently, how much would be the remaining price increase that we may have to take from Q2?

You see Q1 overall price increase may be in the range of around 2%...

Which means we have to take a higher price hike in Q2, maybe around 5% to 6%?

Around 3% to 4%, yes, that's right.

Okay. And Rahul ji, how has been the demand trend for Kharif as of now? And any early indication of herbicide consumption, if it has started in any part of India?

Any indication of what consumption?

Herbicide consumption has not really started much, yet sugarcane was an important crop for this quarter when the herbicide consumption has started in -- especially in North India and has been good. As of now, it is -- it was a mixed approach in April and so far in May, and it has not been easy to filter how much of the market pull is because of the price sensitivity versus how much of the market pull is because of actual demand. So yet, I would say there is a certain market pull in anticipation of price increase as well as some actual demand. So far, there is growth over last year, and things seem to be on track for Q1.

At the end consumer level?

I think so there is some noise. I could not catch your question. Could you repeat that?

Sir, I'm saying the demand pull is from the channel itself? Or is it at the end consumer level also?

That's what we are not able to filter immediately because some of the products which get consumed in this window, they are moving, but they are moving at a higher speed than normal. So it is difficult to filter whether the demand is exactly at the consumer level or is it only the channel pull?

Right.

Maybe both are there, but difficult to filter.

Sure. And then on Bayer AG's molecule that we have bought, I think the initial plan was to make only -- manufacture only one molecule in India because for the other molecule, I think further value addition by shifting manufacturing here was not looking possible. Why would there be change of plans to manufacture both molecules now on?

So we will be manufacturing the active ingredient of only one molecule. The other products, active ingredients, we will be procuring from outside. The formulation, we will be shifting for both the products to India because that is providing us supply chain efficiencies and reduce costs.

Okay. And just lastly, for the international business, registration is fine, but at the distributor level, what kind of challenges?

I'm sorry to interrupt Mr. Biyani, but there is a lot of disturbance from your background.

Right. So I was saying if this is clearer, I was saying what kind of challenges are we seeing at the distributor level while trying to expand in overseas markets?

Okay. So at distributor level, the challenges are around delivering the volume and the price metrics, which we want the distributors to achieve. So either they are not able to commit the volumes for that market or not able to maintain the price values -- price levels, which are currently prevailing in the market. So they are looking for selling the products at lower prices, which is not workable.

The next question is from the line of Riju from Antique Stock Broking.

Congrats for a great set of numbers. A few questions regarding the Q4. So you have said that GST refund for the full year was INR 29 crores. Specific to 4Q, how much that would be?

In Q4, it was INR 14.5 crores.

Understood. And sir, in terms of biostimulant portfolio and Biologicals, both, so how much was the total revenue contribution for FY '25 and '26?

'25, '26 is around...

INR 70 crores...

INR 70 crores.

INR 70 crores for '26?

Yes.

And the prior year, that is for FY...

It was around INR 110 crores.

Understood. And sir, I think the product for biostimulant has been started in last -- since last year, November. So how many products we have already registered? And how much -- how is the growth expectation for this portfolio in FY '27?

I didn't get the question.

You see we launched molecule in this category in '25, '26 and 3 will launch in the month of June.

And how much growth you're expecting? Because if we look at the base year, that is INR 110 crores kind of a revenue. If we take that as a base year because last year, we had some rotary issues. So this year, how much you are expecting in terms of revenue for this category?

We are expecting a revenue of more than INR 130 crores.

Understood. And in terms of, sir, like in 4Q, we have reached roughly a 9% kind of a total top line growth. So if you could break it down by volume and by the prices, that will be helpful.

In Q4?

Yes, in Q4.

In Q4, value or volume is almost similar, same.

Okay. Almost similar. And for the full year...

Full year is almost same.

Okay. Okay. Understood. And in terms of Dahej revenue last year, I think -- sorry, last quarter, I think we had guided roughly around INR 60 crores kind of a revenue target for '26. But you have achieved roughly around INR 50 crores kind of revenue for the full year. So how much we are targeting this year in terms of like what was our guidance was roughly around INR 100 crores kind of a revenue target for FY '27. So that is intact -- or are you going to change that in terms of looking at the current prices of the technical products and all? How is your view for the Dahej?

Yes. For Dahej, last year, we forecasted INR 65 crores for FY '26, and we were able to deliver only INR 50 crores against that. And this year, we are forecasting a revenue of INR 75 crores, lower than our earlier estimate of INR 100 crores. Looking at the current scenarios, we have downgraded that forecast.

But sir, prices already have seen some improvement and looking at the 2 products like another product that we have already launched in last quarter. So in any specific scenario why you are expecting lower revenue this year?

Lower from our original forecast, but from previous financial year against INR 50 crores, we are expecting INR 75 crores. So it is 50% higher. We added one product in Q2 last year. So we will get full year of that product. And for bifenthrin, domestic sales are robust. We got our first international registration at the end of last financial year and for one of the markets internationally, and the sales has started over there. Volumes from that market are not expected to be very high. And in the larger markets, the registration is taking time for the Dahej products.

Understood. And sir, one last bookkeeping question in terms of Bayer AG product that we have bought. So I think you have shared the number of roughly around 50% to 60% of our revenue for '27. So that is for the India revenue that you are expecting or it is India plus few geographies while you are expecting the product issuance to be transferred to your name?

So this is the revenue for the rest of the world as well, India plus rest of the world.

Okay. So that means that royalty income will get for this year as well, right, for FY '27 as well, right?

Yes, royalty income would be there this year, but maybe a little lower than the '25, '26.

Sorry to interrupt, may I request Mr. to please rejoin the queue, sir. The next question is from the line of Dhruv Saraf from Bowhead India Fund.

Sir, just wanted to understand how are the early trends in terms of acreage for Kharif planning out? We've seen good price rise in cotton and soybean. So do you expect both of these crops, which are very important crops for you to gain ground over maize this year?

So cotton will certainly be gaining ground this year that is there. Soybean will compete with maize, cotton and few other summer pulses for its acreage. So we are not very sure of the soybean acreages, but we are very sure that pulses and oilseed acreages will increase. So cotton will increase, pulses will increase. Other oilseeds will also increase, but soybean, particularly within the oilseeds will compete with cotton, maize and other pulses.

Understood. Sir, can you specifically comment on maize? How do you -- because your maize is also coming off a very high base of last year. So do you see like a drastic fall in maize and hence, soybean could ultimately benefit? Or could it be like flattish compared to last year?

See, between soybean and maize, maize is a relatively more broad tolerant crop. Less water gives comfort to maize vis-a-vis it gives comfort to soybean. So that is the one part of the balance. The other part of the balance is how much stress continues on bioethanol. So one of the major outcome from high maize is bioethanol. And between these 2 things, maize will have to find a sweet spot. I don't see acreages increasing over last year, but a significant reduction also may not happen.

Understood. Understood. So why I ask you this is because if I look at soybean prices specifically, they are like 50%, 60%, like 65, 70 kg versus 40 a kg last year. So that's where I came from, given the low base of soybean, could it be positive for us as a company?

Yes, we have a very strong portfolio of soybean herbicides, soybean insecticides and some plant growth regulators. Increase in soybean acreages could be helpful.

The next question is from the line of Ketan Chawla from Affirma Capital.

I had a couple of questions. First is pertaining to the guidance that you've given in lower double digit for FY '27. If we were to break this up in terms of price growth and volume growth, if you could provide some color around that, please?

You see, we are -- in terms of the volume or value growth, there could be difference by the year-end, maybe around 2% type.

So you're saying volume growth will be 2% more than the price growth?

No, no, price growth will be more than the volume growth.

Okay. And how does this -- obviously, FY '26 was a flat year. But if you look at history, how does this compare to, let's say, FY '25?

'25, I think the price was negative volume was more, price was negative, yes.

Understood. And my second question is regarding the EBITDA margin decline of 100 bps that you've factored in. So what is the underlying assumption or the drivers for this?

You see decline in EBITDA margin is only because of the decline in the gross margin, absolutely, that is only because of the GST refund and some decline in the net economic benefit.

And...

Yes.

The current environment where raw material prices are increasing, freight is increasing, packaging materials, you see the entire gamut of input cost increasing. You don't expect that to impact your margins this year?

You see in the full year basis, I'm of the opinion that that should not impact. But yes, on quarter 1 or quarter 2, there will be a little impact. But on a full year basis, we are a very strong opinion that we will be able to pass on the increase to the customer. And at the same time, when the price is increasing, we have certain advantage of the carryover inventory. So that will compensate that loss in case we are see a little delay in the passing over the increased cost that will be compensated on the inventory lying with us.

Understood. And if this current crisis prolongs, obviously, Kharif season would be protected to a certain extent, as you said, because of inventory line and replacement, et cetera. What impact do you see on the rabi season?

You see it is difficult to predict. If the price continues increasing continued, then at that point of time, it's difficult to estimate that.

Got it. And last thing is, you mentioned in your presentation, 9(3) products as being margin accretive and being a growth driver. So I just want to understand what portion of our revenue currently comes from 9(3) products?

Around 26%.

And we are looking to ramp this up to what levels? Any guidance there?

In the range of 25% to...

Okay. So we are on a growing base, you're saying that we'll continue to maintain this at 25% to 26%...

Yes, yes, absolutely.

And how...

Sorry to interrupt Mr. Chawla, we request you to please rejoin the queue, sir. The next question is from the line of Rishabh Shah from Block PMS.

So the tie-up with Spanish company for Biologicals products, how has that performed for us? How big is this market in India? And also who are the others present in this particular market?

So Biologicals market can be divided into 2 parts: biological crop nutrition, which includes seaweed extracts as well as other products covered under biostimulants and then the biological control market, which is biopesticides, which includes me and other products. This market is estimated to be about INR 4,000 crores to INR 5,000 crores. Due to biostimulant regulations introduced last year, this market dropped down significantly and is gradually catching up in terms of the seaweed extract and bionutrition biostimulants coming on track. At Dhanuka, we introduced in this category, MYCORe Super, the brand name Mycorrhiza and Mycorrhiza Super as a product has done really well -- in a drought situation, El Nino situation like this year, MYCORe Super is expected to do much better than the past years. Further, we are going to launch our biostimulants this year, and we introduced Bardor last year. So these are some of the products that we are positioning in this segment. The alliance that we were trying with the Spanish company, we called it off. We signed an MOU with them, but subsequently, we called it off. And I think so by now, that Spanish company has probably changed hands as well. So we had some red flags in the MOU, and we didn't want to pursue it.

Okay. And sir, in one of the calls, you have said that at Dhanuka, you manage your inventory and receivables differently as compared to what is happening in the industry. Could you please elaborate more on this in detail? Like how are you managing in a better way than the industry?

So this is almost like asking me for my trade secret. I would only say that most of the years and most of the quarters, you would see inventory situation only improving. We plan our production not on the economies of scale when it comes to brand sales and formulation. We don't plan our production on economies of scale. We plan our production in small batches. We don't plan logistics. Again, on truckloads and economies of scale, we plan logistics in small batches so that we can service the changing demand of the market very fast, and we can react to it suitably because the market changes dramatically based upon how it has rained over the last 3 days. And in terms of receivables also, you would have noticed that this year, we have reduced our receivables by about 4% as compared to last year on 31st of March. So we continue to do that, and we strive to do better sometimes we are not. So for example, after West Asia crisis in March, we decided to do some strategic buying, thereby our inventory has gone up in short term and as well as last year because various sites did not move as well as we wanted to. So that also got added to our inventory. So this 31st March inventory, you would see is significantly higher to last year.

The next question is from the line of Rohit Nagraj from 361 Capital.

Sir, first question is in terms of the channel inventory, given that in rabi, the pest infestation was low, what is our sense in terms of the channel inventory currently?

Come again. What did you say about rabi?

Rabi, the pest infestation was relatively lower. So probably some inventory of insecticides would be there in the channel. So what is our sense whether the channel has higher inventories and that will cause some concern in terms of later half of Kharif season?

In my experience, rabi consumption was better than kharif. We had better movement of insecticides as well as fungicides in rabi, including South and late chili and subsequently in vegetables also. So the movement was adequate on ground in the Q4 in terms of consumption also. So I don't expect a lot of that inventory lying out there in the market.

Got that. And second, in terms of the GST refund, is it a part of the revenues recognized during this quarter?

Yes.

The next question is from the line of Viraj from SIMPL.

I just had a question on the margins front. See, you indicated that we did some smart sourcing when the war broke out. And there's also an element of low-cost inventory, be it the herbicides. So in that sense, going into '27, you have some advantage on the cost front vis-a-vis the industry. Still you're expecting 100 bps kind of moderation. And there is also element of high-margin product loss -- sales loss we had from biostimulants. So considering all that, which elements are you seeing the focus getting a higher volume growth?

You see in terms of the 100 basis decline in the margin is basically on account of -- I've already clarified on account of the loss of refund of GST which will not be available in this year and some impact on the reduction in the net economic benefit. So we are saying in net-net, we are -- we will be able to maintain the '25, '26 gross margins. We will get the advantage, of course, in the -- some inventory, but at the same time, we'll lose some margin on account of the high-cost inventory when the cost component will be passed on the phased manner, not immediately. So in net-net, we are very hopeful or of the opinion, we will be able to maintain the gross margin. I'm not expecting any expansion in the gross margin in the current financial year.

The next question is from the line of Archit Joshi from Nuvama.

Sir, just one question. We have been hearing from quite a few corporates that there has been a labor shortage. Is that also prevailing at the farm level -- because remember that whenever there's a labor shortage, the consumption of herbicides typically gets better. Do we see that scenario prevailing even now?

So labor shortage is kind of a perpetual thing now because of various CapEx initiatives by the government and by the private sector also. So that labor shortage has become now a continuum and is progressively expanding to relatively more labor-intensive geographies. For example, Eastern UP, Bihar, Jharkhand, Chhattisgarh, these places which were actually labor availability was much easier has also seen labor challenges. Hopefully, we will see labor shortage now emerging in growth-oriented West Bengal also. So this is going to continue.

Sir, do you have any expectations on the herbicide consumption going into the peak season right now, should that have any robust effect in...

The forecast for the month of June is pretty good. Oilseed pulses, acreages are expected to be pretty high. So with that and our strong and robust weedicide portfolio, we are pretty hopeful that Q1, especially the month of June is going to be really exciting.

The next question is from the line of Abhi Srivasta from Marcellus Investment Managers.

Am I audible?

Yes, sir.

Sir, your other expenses have gone down by 26% Y-o-Y and approximately 49% Y-o-Y for Q4. Could you help us understand why this happened?

Yes. In Q4, there is a significant decline in the other expenses. And on a yearly basis, this marginal only 3% is mainly because of the Q4. Basically, after you see after the Q2 result, we released basically message to our SODs to maintain the expenses in the end of November. So everybody as you see managed the expenses very nicely in Q4. But one major reduction on account of the -- because of some -- we get the field promotion support from our principals. That has increased significantly. And our Dhanuka doctor expenses, there is a significant improvement in this year because of which this improvement is happening in the Q4.

Got it. And sir, also on other income, we see a 20% increase. Any particular reason why the increase has come about?

Other income, basically, last year, there was a provision in one investment which was made in the drone company because of this that you see our last year income in the '24-'25 is lower. Otherwise, it is absolutely similar to '24-'25 in the year 2026. This year, there was no provisioning. Rather, we have made one investment in Kisan Connect. There is an appreciation of around INR 3 crores in valuation, which there has happened -- has happened in the other income.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.

Thank you. Once again, I would like to thank all our investors, analysts, business partners and stakeholders for their continued trust and confidence in Dhanuka Agritech Limited. We remain committed to building a resilient, innovation-driven and farmer-focused organization that creates sustainable long-term value for all stakeholders. Thank you, and goodbye until next time.

Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.