Godrej Agrovet Limited ($GODREJAGRO)

Ladies and gentlemen, good day, and welcome to the Godrej Agrovet Q4 FY '26 Earnings Call hosted by ICICI Securities. [Operator Instructions]. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Probal Sen from ICICI Securities. Thank you, and over to you.

Thank you. Good afternoon, everyone. Thanks for making the time and joining us on the Godrej Agrovet Q4 FY '26 Earnings Conference Call. From the company, we have with us members of the senior management, including Mr. Nadir Godrej, the Chairman of the company; Mr. Burjis Godrej, the Chairman Designate; Mr. Sunil Kataria, the Chief Executive Officer and Managing Director; Mr. S. Vardaraj, the Chief Financial Officer; and Mr. Arijit Mukherjee, the Executive Director and Chief Operating Officer of Astec LifeSciences. We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for an interactive Q&A session. Before we start, I would like to point out that some statements made in today's call may be forward-looking and a disclaimer that this effect has been included in the earnings presentation that the company has shared with you earlier. Without further ado, I would now like to invite Mr. Nadir Godrej to make the initial remarks. Over to you, sir.

Thank you. Good afternoon, everyone. I welcome you all to the Godrej Agrovet earnings call. I will begin by briefly commenting on our performance for quarter 4 fiscal year '26 and the full year of fiscal year '26. Godrej Agrovet delivered a strong and consistent performance in quarter 4 fiscal year '26, concluded in the year on a positive note. For the quarter, consolidated revenues grew to INR 2,333 crores, reflecting a 9% year-on-year growth, while profit before tax, excluding nonrecurring and exceptional items, increased by 16.8% to INR 87 crores. This performance was driven by broad-based volume-led growth, disciplined margin management and a favorable business mix across key segments. For the full year ended 31st March 2026, the company surpassed an important milestone with consolidated revenues exceeding INR 10,000 crores reaching INR 10,233 crores, representing a robust year-on-year growth of 9%. Profit before tax, excluding nonrecurring and exceptional items, an increase by 17.2% year-on-year to INR 569 crores reflecting the improved quality of earnings, margin expansion and strong execution. In addition to earnings growth, fiscal year '26 also saw a meaningful reduction in working capital translating into stronger operating cash flows and the tangible improvement in return on capital employed. Let me now briefly walk you through the performance of our key business segments. Animal Nutrition delivered another strong quarter with quarter 4 volumes growing 15% year-on-year significantly ahead of industry growth. [ Cattle ] feed volumes increased sharply by 24%, supported by strong performance of new products launched, favorable commodity positions and continued cost optimization. Margins expanded meaningfully across the portfolio. The oil farm business concluded a landmark here in fiscal year marked by highest-ever area expansion, strong volume growth and all-time high oil extraction ratio. While quarter 4 is seasonally weak, margins were largely resilient aided by improved oil extraction ratios and improved realizations. The Crop Care business remained impacted in quarter 4 of fiscal year '26 due to carry forward of inventory in the core marketing channel, leading to lower volumes of in-house products. This was partially offset by improved sales of selected specialty products. Astec Life Sciences continued its strong turnaround momentum with EBITDA breakeven in fiscal year '26 in quarter 4 of fiscal year '26. Both revenue and EBITDA recorded robust year-on-year growth, driven by higher volumes led by the [ CDMO ] category improved realization and better capacity utilization. Enterprise margins improved further compared to quarter 4 fiscal year '25. But I would also like to mention that in line with our focus on harnessing group expertise in chemicals, we have recently augmented the Astec [indiscernible] with Mr. [ Vishal Sharma ] as Nonexecutive Chairperson, Mr. [ Matthew I], an Independent Director, Mr. Arijit Mukherjee, who has been the COO of the business has joined the Board as Executive Director and will be leading the business going forward. These appointments meaningfully strengthen Astec's leadership, and we believe will be instrumental in accelerating growth and unlocking its true potential. Creamline Dairy recorded approximately 5% year-on-year growth in revenues, excluding bulk sales, during quarter 4 fiscal year '26. Profitability remained under pressure due to elevated milk procurement costs, though value-added product savings improved to around 40% up from 38% last year. [ Godrej Foods ] Limited continued its strategic shift towards branded offerings in quarter 4 fiscal year '26 EBITDA margins improved significantly driven by margin expansion in both the live bird and [indiscernible] categories, supported by improved realizations branded revenue savings remained above 80% in fiscal year '26. Overall, fiscal year '26 was a year of strong performance for Godrej Agrovet underpinned by disciplined execution, improving business mix and sustained focus on value-added and branded portfolios. We also made meaningful progress on our sustainability agenda under the good and green vision with leadership positions across climate, water and renewable energy initiatives. Thanks.

Should we be question-and-answer session?

Let's do that. Yes.

[Operator Instructions]. We'll take our first question from the line of Abhijit Akella from Kotak Securities.

I limit myself to 2 or 3 in the first one. First, from the standpoint of FY '27, the way you're seeing the outlook for your various segments, would it be possible to offer us some sort of outlook or guidance regarding what kind of revenue growth, what kind of profitability we might be try to expect for the year ahead?

Hello, Abhijit. Sunil here. So Abhijit, obviously, the direction that -- like a broad guidance that has one overhang of Iran war, which none of us have anticipated. And that's one piece, which I would say remains a bit of a variable still, I think, open for everybody as how it pans out currently. But given from the strong work that we've been doing in the last 9 months, overall, at a G&A level, we'd like to look at -- we'd like to focus on getting a early double-digit revenue growth across -- put together at a consol level, along with the way our PBT has improved this year, we'd like to again target, let's say, a mid strong double-digit, mid-teens kind of a PBT growth also for the next year. So that's a broad directional overall growth that we would like to go for. Between the businesses, I think [ Animal Nutrition ] business has done a very strong showing across. And also before that, I think the entire revenue growth for us, by and large, we are focused on driving through underlying volume growth. That's another large piece that would play out for us. So we are focused on getting volume-driven revenue growth. In terms of businesses, I think, first of all, [ Animal Nutrition ] quickly. The business has been doing pretty well across led by cattle feed and even some other feed businesses. That's something momentum continues. I would like to again go for a double-digit growth in revenue led by volume in Animal Nutrition business as we would like to call it now. And similarly, for our crop care business, the next year is likely a year which we'd like to go for a recovery. And that's what we are calling as a year of recovery for this. However, at the same time, one piece I want to just point out is that the recovery of the crop care business, we'll start seeing it coming back fully from quarter 2 onwards because the last year also, there's a co-marketing base inventory, which is sitting in our Q1 base of last year. And that will play out in this Q1 for CCB business and the crop care business. Otherwise, we'll go for a very strong recovery in both bottom line and top line. And it will be, again, a very high double-digit number that will happen in the crop care business. In [ cynical ] business, the journey continues toward increasing value-added portfolio further. The pressure points will be adding the milk recurrent prices, which we expect it to cool down somewhere from quarter 2 gradually. And then the broad direction at quarter 2 onwards, the milk pad should kind of normalize the Godrej Foods part, again, in the value-added piece, which is primarily the branded piece, again, the focus is very clearly to drive double-digit growth, the momentum that we already built for ourselves that is again going to continue. Liveboard continues to keep coming down for us. And that's where we'll keep on investing in both these businesses [ bring ] advertising to ensure that there's strong double-digit volume growth happening. Oil pump on a very, very strong footing right now. Again, looking for other year of double-digit volume growth in oil pump, early double digit. And we have done some exceptional work on oil extraction ratio. We definitely see some more work happening there. And we have done a record area expansion this year. Next year, we're going for even beating that record on area expansion. We also -- so I think I have covered animal nutrition and Astec. And on the Astec business, I think that [indiscernible] would come in between specific questions, but broad direction, let me just give you that we have seen a strong comeback led by CDMO. Our pipeline funnels are looking pretty good. We expect that momentum to continue with a clear focus on CDMO led growth happening. And we have become EBITDA breakeven this year, and we will expect that journey to continue going forward. So all in all, there is a momentum that is there in the business. We expect the momentum to continue across all parts of our business. And with some businesses, we have taken a beating, getting into a recovery mode.

That's very helpful. Just one or 2 follow-ups, sir. I mean one is on the [ palm ] oil business. So you mentioned that all of the top line growth is targeted to be driven by volume expansion. But at the same time, you're seeing fairly strong palm oil prices at this point in time. So is that all over and above this guidance that we are kind of looking at? And what is your outlook for palm oil prices? I mean, do you see them remaining firm here for the foreseeable future? Or how do you see the trajectory?

Okay. So this is my big point, and then I'll ask [indiscernible] should also step in. But first of all, I think the way -- there are certain kind of palm oil modeling that had happened pre-Iran war where the outlook for the year in palm oil was actually a little bearish this year. when I've gone to Malaysia, the conference, which really the fall conference, which happens, which gives us kind of outlook. This was looking like a little bearish here. When I had gone to Malaysia, the conference, which really the oil conference, which happened, which gives a kind of outlook, this was looking like a little bearish year. And then this war happened. And obviously, now all models have gone a bit air on palm oil. So for me, to be very honest to say that what is the year-long outlook on palm oil I think we are right now playing it quarter-to-quarter, honestly. So it's very, very difficult to give you a very long-term point of view. But I would say we'll take it by the quarter. And maybe I'll express [indiscernible] wants to also give any sense of what his take on this is right now. Mr. [indiscernible]?

Yes. I will also mention that a lot depends on what happens in the Middle East. And palm oil prices are strongly correlated with crude oil prices because of the connection through biodiesel. And therefore, a lot will depend on that. But I would also like to say that the -- if the Middle East war continues, it will probably be bad for the crop protection business, but good for oil palm. So for Agrovet overall, the impact either way may not be very great.

Got it. And if I may ask one last one before I return in the queue. Just on the Astec business, obviously, with all this management kind of restructuring that has recently happened or should I say just changes at the senior management level, I would really appreciate some color from the promoters or senior management regarding the way forward for Astec as well as the overall chemicals business of the Godrej Group.

I would ask Burjis to give in a few points on this, and then I'll second. Burjis, over to you.

Yes. Abhijit, this is Burjis speaking. I just want to say that we do believe that Astec has very strong underlying potential, and this is supported by Godrej Industries Group's very deep chemical experience and manufacturing expertise. So we did make some recent management and Board changes, which reflect our intent to leverage this expertise more effectively and accelerate value creation and synergies. The Board is strengthened with the induction of Mr. [ Sharma ] as Chairman and Mr. [ Matthew Iip ] on the Board, whose sectoral experience, we believe will materially benefit Astec. And Arijit Mukherjee has been closely involved with Astec's operations as COO for over a decade, will now drive the business forward as an Executive Director. Sunil and I will continue on the Board, and this will ensure continuity, and we are very confident that leveraging the group expertise will be the starting point for an accelerated scale-up of this business.

And one more thing which I just want to add here, Abhijit, is that in terms of structure, it is too premature for us to comment on the same. We are in the process of evaluating what is the most optimal structure and how it will go forward. And I think maybe over a period of next 2, 3 quarters, then once we have a bit more clarity in our mind and thought process, we'll come back to all of you on that. For now, we just want to assure that the interest of all minority shareholders will be protected. And our endeavor is actually to make sure that we enhance shareholder value for everyone. So I think give us a bit more time, I think as we are more clear, we'll come back to you over the coming 2, 3 quarters.

Okay, sure. And my apologies, but just the last quick 2, if I may just squeeze in before I return for more. On the animal feed side of things, the volume growth seems to have accelerated quite sharply in the last few quarters. So what's behind this? And how do you see that going forward? Also, are margins expected to stabilize and if so what are the drivers behind that? That was one piece on the animal feed business. The other was just with regard to your outlook for CapEx, working capital and free cash flow for the year ahead. What should we pencil in for each of these items? And what are the proposed uses of any surplus cash that you might generate?

Okay. So I think on the Animal Nutrition business, I think it's a mix of some very, very strong execution, which has been happening and some environmental support. So the one -- let me first say the a little bit part of the support, I would not say that's played the biggest role is the fact that when milk procurement prices remain so elevated, it does become a kind of a positive trigger for shift from unbranded to branded compound feed business because the farmers see the benefits of the income which they're generating from a better higher milk feed. So that obviously is one thing which we have seen in the last 7, 8 months, which has impacted our [indiscernible] dairy business very negatively, but that's something which plays fly in this part of the business. Having said that, I think there have been 2, 3 some very fundamental execution levers that [indiscernible]. One, first and foremost, I think there has been a strong work across some key geographies that we have focused on. We have done very well in West, which has always been our stronghold. But we have done also very focused work towards East and Central India, which have maybe been a bit of a traditionally a weaker part of our business. And that we have started seeing some gains in the services business. It's very difficult to get a equal share gain report, but our hunch is that we have started making some share gains out of these 2 other geographies that we started focusing on. That's one thing which has happened. Secondly, there are some products that we had launched a few quarters back and some in the last quarter, which I think started giving us some gains. And these products are aimed at more higher end or what we call as the type 1 products, which are targeted at higher yield animals, which, again, while I won't call it premiumization in that sense right now, but that is a focus, I would say a little bit more value-added part of the business, which we are trying to push to grow. So that is the second piece which has very clearly happened. I would also want to call out that our R&D has done some very strong work in terms of also reconfiguring certain cost structures in our raw material prices -- raw material component here, which also has given us some benefits in the margin expansion. So I think put together, these 3, 4 things are something which are played out for us pretty well in the animal nutrition business.

May I add something, Sunil?

Yes.

Yes. I would like to add that Sunil has got a lot of focus on the sales organization and the marketing organization -- we always had very strong R&D, but now we are focusing it more directly on the consumer. And as a result, we have developed these new products. And I think these initiatives will continue -- and we have the potential of helping the farmers greatly by making better quality feed, which gives more production from the animals at a lower cost, and we will drive our R&D knowledge with better marketing to satisfy the farmer and grow the business.

And I think [indiscernible] I want to say, now take on the question on that cash flow and what capital [indiscernible]. So is in terms of [ Animal Nutrition ] before I move to the cash flow. In terms of the segment margin improvement, which we saw, part of the reason for the improvement in segment margin in Q4 is that, that includes the pet food business income of around [ INR 9.5 crores ]. Now we sort of take care of the back end or the manufacturing business of the pet food different end is taken care by [indiscernible] pet care food business. And the back end is sort of taken care of by us. So that's a line of business for us in a small way, we manufacture

I would just add in here. In a way, it's a new stream of operations for us. You can say it's a bit of a -- it's actually a kind of a new category expansion work for us at the back end where as this business area is moving forward, we are also going to get some strong income coming out of this [indiscernible]. And consequently, unfortunately, what has happened is the way we have sort of structured this arrangement, it sort of sits in the other income line. And that is the reason why you don't see it in the normal space. So that's one reason why the segmental results for the animal feed business as sort of -- animal nutrition business has gone up. In terms of the cash flow, we expect that for the full year of '27, we will be sort of after taking care of the CapEx requirement of the year, which is close to INR 400 crores, we should be left with around INR 125 kind of crore cash surplus, which will be there. And in terms of CapEx, I think the CapEx requirement would be in the coming years, we are pretty much first our overall CapEx, it [indiscernible] INR 350-odd crores, roughly around 75% to 80% of that CapEx would be growth CapEx for us. And we are pretty clear in my mind, we have done -- the entire capital allocation would be towards high-growth businesses, and that is where the entire CapEx is going through. If I remember correctly, and correct me -- roughly around I think 50-odd percent of our CapEx deployment is going towards oil -- palm oil, towards the palm oil business.

Sorry, just to clarify this pet food business of INR 9.5 crores, the income there. This is the profit you are talking about, is it or the revenue?

The profit. Yes, the profit. And this is an additional stream of income for us going forward.

Yes. And what would the corresponding revenue pertaining to that would be?

Revenue doesn't come to us because revenue doesn't -- see, we are manufacturing this product for them, right? So we are the manufacturer of this product. The revenue doesn't belong to us. The profit of payout on the manufacturing piece that happened to us. So it's kind of a contract manufacturing kind of arrangement.

So Abhijit, as you would appreciate, the manufacturing part of the business is taken care of by us, but you would appreciate that as per our accounting standards, accounting guidelines, we are required to account the entire transaction in a particular manner. And that is the reason why we don't see the revenue stream coming.

There's a good adjacency for us, which is develop it.

Next question is from the line of [ Arjun Khanna ] from Kotak Mutual Fund.

Sir, the first question is regarding the impact of monsoons. So there is a prediction by Skymet and IMD that you'd probably see below normal monsoon this year. You did talk about the impact of the war on our business. Could you just comment on how you see the outlook for the year while you did give us a brief interplay with the weaker monsoons segment-wise?

Ladies and gentlemen, we've lost the management. Please stay on the line while we reconnect them. Ladies and gentlemen, we have the management team back on the line.

So I'll just reframe my question again. We did in the opening remarks, talk about the impact of the war on our business. And we also give a commentary on the outlook for the year. Given that there is a prediction from IMD and Skymet, that the monsoons this year would be below normal, below long period average. How do you see that interact with or predictions for the year in terms of volume growth? And which segments do you see positively or negatively impacted due to the same?

Honestly, we all have a smile on our face asking this question. To be very honest, when we made this whole guidance in this plan, we were still not very sure how the [ Skymet ] and IMD's predictions with panel. The some clear or in the last 30-odd days, especially with IMD giving a prediction which is worse than Skymet right now. Honestly, I mean, these numbers don't figure in a real impact. But at the same time, I think it's very difficult for us to right now put in any part of [ El Nino ] because 3 reasons -- or 2 reasons. One, all the productions are saying that June will be pretty normal. And then there will be a gradual decline in August and September generally becoming pretty bad. So the severity will I think, it August and September if these productions were to come right. Now what this means is that it has got -- that June, July would still fall within the LPA range as the material department described it. So I would say this line will have maybe 2 halves to it. That's point one. Second part is, there is always in this one thing which happens is that how does it play out geographically? Now our businesses have all different kinds of SKUs. Like for example, the core production business for us has a pretty decent [ skew ] towards South and West. Now as of now, if I going to go by this monsoon, it says the only region which is likely to play out normally in the entire [ El Nino ] period is South. Now if that happens, [ El Nino ] is not exactly [ El Nino ] for us in the crop care business, while it [indiscernible] some other businesses, and the third part, very clearly is there is always this probability of our Indian ocean [ dipole ] or something developing and then maybe the effect could get in a month, some kind of moderated. So honestly, there is clearly [indiscernible] playing out. Now how it plays out in geographies, how it plays out in time period is a bit of variable, which is still very difficult to take a hard column. So the way we would see it, we would like to stay core on this guidance as of now and see how we can play it out across once this line becomes clear by the month. That's where I would say stay right.

Do you want to say something about oil and --

Yes. Are you taking that I'll add on to that, yes.

Yes. So we feel that there will not be a very bad impact on oil palm this year, even if the monsoon is poor because it's all pounding a tree, it takes a long time to get affected. There could be some effects next year but we will do a lot of research to see if there are any solutions to prevent bad effects next year as well.

But to add on to that, we have certain kind of -- in an overall piece on oil palm, we don't expect any impact of oil palm plantation business this year. And there are certain kind of interventions we have planned to see how to counter [ El Nino ] in this year so that it also does not impact us too badly next year. Just one more thing I want to also add on to oil palm plantation business from a long-term point of view. See, there is a very interesting thing of what we are internally calling as demographic dividend which is playing out for us in this business. There's a lot of -- like today, roughly around 50% of our fees are in the stage, which we call as a June stage, which is 0 to 4 when they are completely unproductive. And as we have been doing a lot of plantations now, over a period of time, starting from this year and next year and then next year, all these June trees start becoming younger trees, which become productive. It's almost like typically what India has seen the benefit, and I love this word, I introduce, the team what a team saying, hey, this business is actually going to see a demographic dividend over the next 5 years. So while what [indiscernible] mentioning that debt, first of all, this year has no impact if at some stage, some impact comes in a year after. My hunch is that -- my reading is that it will be more than made up by our [ debit ] dividend playing out. because more and more part of our business will start coming into a productive state and that more than offset any negative impact, which may happen at a year or so. So I'm pretty bullish about that overall with the intervention that we're playing out, the demographic dividend playing out. Overall, I guess the oil computation business should be pretty strong going forward for us.

Perfect. That's good to know. And just the last bit on the animal feed piece because historically, a poor monsoon as we saw in '23 calendar year '23 or August '23. If I look at FY '22, that's the highest ever revenues we have done as a company. So if you could just talk about the correlation between our animal feed piece and the monsoons.

Yes. Okay. I mean normally, I think our correlation is pretty well to what happens to the milk yield, I would say, I think. So I think that, I would say, a larger variable than anything else in this business.

Sure. Fair enough. Sir, the second query I had was more bookkeeping. If we look at the other equity line in our balance sheet for FY '26, it's substantially lower than FY '25. Given that you have had good profits, yes, you have paid out dividends. Could you explain the difference of the INR 300-plus crores reduction in other equity?

Okay. [ Arjun], the reason why that is happening is because when -- in the current year FY '25, '26, we acquired the remainder stake in our dairy business that --

So the loss is fair. Understood.

[Operator Instructions] Next question is from the line of [ Manish Badani ] from [ 361 Capital ].

Sir, my first question is in the asset life an part like we are used to cut a lot of raw material from the China. So how much currently we are sourcing on the China persists for the asset like science?

[indiscernible]

So for half year, the purchase has been in the around 47% of the total imports have come from China.

Okay. And like we're also providing some sort of on the backward integration. So how is going on?

Backward integration is in 2 assets. One, it is done continuously because not only for our own molecules or other molecules also we generally go and reviewing what to do with the backward integration, but always backward integration is not only based on the price, right? Backward also will also general has to generate some long-term value creation. It has to match our assets, it has to match our chemistries also. So as of now, what we have done for most of our enterprise molecules, we are fully backward integrated. In the sense, if there is a supply constraint or the prices goes up or supplies are not there, we can immediately start the backward integration process so that the supplies are not affected. Similarly, for major of the CDMO, we talk with the partners and we are going for backward integration. So it is a continuous, but it all depends on the valuation and the value creation and also the cost competitiveness.

Okay. Got it. And like we all know that the Indian currency is depreciating. So given a substantial part that we are importing from China. So how we are managing this input cost? And like what sort of the margin impact we are seeing on this?

In our sort of businesses, say, currency management or currency volatility is a part of a structurally -- we approach to it, right? But you have to remember that we are a net exporter. So once ever the depreciation happens and the export realization actually offers a natural hedge to the imports. So that is one aspect. Secondly, we manage our imports properly in terms of proper time of, say, importing the lot, so that the production -- there is not too much of inventory buildup. There is also some action is taken in terms of -- with the currencies. Currencies also is there -- so that in the short term, we really take care of the currency volatility. And being a net exporter, it has almost neutral to neutral impact in terms of our business' margin. It does not impact too much in the overall business.

But maybe -- I would say maybe a little bit that again, this currency volatility is something very difficult to predict. But yes, I mean maybe in the short term, with this times too high, there could be a mid positive benefit for [indiscernible], which happened given that we are a net exporter overall. But again, these are things which, as we know, they are pretty much changing by the month.

Got it. And sir, it will be valuable. If you share the outlook on the product mix like enterprise [indiscernible] contract manufacturing going forward? Like if you have any targets at your mind and also on to the domestic exports market, like what will be the contribution going forward?

[ Arijit], over to you.

Yes. So in 206, enterprise constitutes almost 48% of the entire revenue and CDMOs where 3 are new products constituted around 52%. I think next 2 years also, it is a ratio wise, it will be the same. A little bit reduction in enterprise will happen only after financial year '28. And in terms of the exports, this year, we clocked around 53% of the total revenue to exports. Next year, if we see the enterprise molecules moving up, we should be somewhere between 60% of the revenue coming from exports.

Got it. And sir, I think 2022 -- was '23, we also launched some banks. So how is the traction for that brand? And in the coming future or -- like launch, we have an idea to launch any new brands like the [indiscernible] we launch in '22, '23, something like that?

Okay. So obviously, [ subsidy ] brand is one brand which led to a complete disruption in the market of Maharashtra for us [indiscernible] '23. And as I mentioned in the earlier answer to Abhijit, that there are a couple of more products which have started coming in for us in the last years. And one such product which had come in scaling up now pretty well for a brand called [indiscernible]. And that is one piece which has started happening in market for Maharashtra and Karnataka. Again, it is targeted at the higher yield melting animals. So that is, again, which is showing us a good traction, and we hope to take that brand further to across these 3 states of Maharashtra, [indiscernible] and on most, and we expect that to become a pretty strong product for us going forward. In southern markets, we have also upgraded on a renovation of a product, which is a product from which we earlier used to have called [ grow], which we have upgraded to a new richer product called pro. And that, again, is giving us a pretty decent incremental gains which are happening in parts of South.So I think as -- and also mentioned some in the middle, that one clear focus for us going forward in all our businesses. And while malnutrition, obviously comes in that is that we are -- and as part of our long-term strategic shift we are becoming more consumer-centric. We are becoming more market facing and R&D innovation pipeline across all our businesses will become stronger and stronger.

Next question is from the line of [ Sumant Kumar ] from [indiscernible].

So my question in core protection --

Sorry to interrupt. Can you use your handset more, please?

Can you hear me now?

Yes, please go ahead.

Yes. So can you talk on new product launches in the coming year in the key segment and also across [indiscernible] in the corporate segment.

Okay. So your question with respect to specifically the crop protection [indiscernible]?

Yes, yes.

Okay. Maybe for the benefit of everybody, I'll say there are 2 pieces that are changing in terms of nominator of businesses internally. One is we're moving our animal feed business to -- we are aiming it now Animal Nutrition business. And it's not a name change really because we are shifting the mindset itself of the business part of our strategy direction to a more benefit-led, innovation-led and market-centric model. So we believe we would like to shift our mindset to more from a feed to a nutrition. That's one. Similarly, in our crop protection business, we believe that -- there is a segment of products that we -- which we are reasonably strong, which is plant growth regulators which are about plant nutrition. So hence, we would like to not only be thinking ourselves as crop protection business, but also as an overall crop care business. That's a second nomenclature change that we're doing. But more than just name change, it's also actually a strategic mindset strategic direction, value add that we are doing in these names. So that's one thing I just wanted to add in the beginning. Now in the crop care business, there is one very large strategic shift that we have done. But as I mentioned somewhere earlier that we are in the middle of this whole strategy piece is that we have been very much stuck on to what we call as a single point of failure. That we -- in all of our businesses. So if you see in our crop care business, we were pretty much very, very centric on being a cotton herbicide led vertical. And then there was obviously another product of our [indiscernible], which was focused on [indiscernible]. So if these 2 seasons go bad, we see what happens as what happened last year, which was kind of a perfect storm for us. Now one thing which is going to shift drastically over the next 5 years is that we are diversifying our portfolio very sharply. Obviously, products take time to come on this, but we are going to move away from 2 crop segment product to a multi-crop segment product company. So that we'll have more crops coming in our way, we'll have more segments from herbicide to maybe insecticide and fungicide also coming into our play. So this business should -- in 5 years, we have very different business from what it's today. In the immediate, what you're going to see a change that in the year of FY '27, there are 2 new products that are coming in, which are completely new products altogether into new crop segments. One is something which got launched in the month of December last year, which is [ Ashitaka], which is our first main entry with the [indiscernible], that will see a major scale up this year. So that's one product which is going to be one of our star products. The second is we are entering into a rise plus insecticide segment through a product, which is called [indiscernible] which is actually a multi-crop insecticide, although it's lead application is paddy. So this will be a second new entry, which will happen for us. Between these 2 products itself, we expect next year -- just to give you maybe a number dash, give you how we are moving on to this diversification. Last year, since this got launched only towards the later part of the year. This contributed to roughly around 3-odd percent of our revenues. Between these 2 products itself, if everything goes right in terms of whether season, et cetera, don't play to one, we expect these 2 products itself to contribute roughly around anywhere between 16% to 18% of our business. So that's the kind of shift that we'll see roughly around a 4x salience shifting for [indiscernible].That would happen for us next year.

Next question is from the line of Aejas Lakhani from Unifi AMC.

My question is for Mr. [indiscernible]. Mr. [indiscernible], as an institutional shareholder who's been observing your business for 5-plus years, we appreciate the breadth of strategic changes that have been underway to try and improve the quality of the business across lines. From what you've done in share gains in feed to improving margin profiles in palm by moving forward and backward, the restructuring in dairy, the buyout of poultry to speeding of the changes that you've made to clean up the crop protection portfolio, now the sharper focus towards in-licensing. So we appreciate all of those things that you've been engaging in. But if I were to ask you just the next 2-year view, just your 2-year view, sir, so what should we as investors be looking to understand, should we be looking at the [ GBL], which is trying to be more strategic sort of from a portfolio restructuring perspective where business units are being cluster together to unlock probably value through that and improve friability? Or is it that given the composite nature of the business and the CapEx requirements, which could feed into multiple, it will continue to be one cohesive unit, but it will be more accelerated, more consistent revenue growth, better profiles, better ROCE improvements, the same capital allocation discipline, which one of this is the part that [ JBL ] is likely to take?

Sunil here. So maybe let me take a little bit of a shot at this, and then I can ask [indiscernible] if required. But I hear your question, loud and clear. But what is it that you're seeing. So thank you for noting down some of the shifts that you're making. So one fundamental piece over the next 2 years, what you can expect is that any transformation takes 4, 5 years to happen fully, and especially in a business like us, which is a multisegmental business. But the shift that you'll start seeing from already started planning on over the next 2 years, is that we will move from fundamentally from a commodity-centric thinking to a market customer-facing approach. Whatever the nature of the entity itself is right because that's a fundamental mindset and a capability shift that we're doing. If I were to read out a few points I put down on the [ rest you], what you can expect is that our animal nutrition business will move from a feed business to a nutrition mindset business is led by innovation, technical services, marketing and sourcing as modes. Our crop care business will move from a product chemistry and patent focus business to a product innovation, distribution and branding as [indiscernible]. Our [ oil com ] business, as I already talked about, from a volume-led upstream player only to a full pledged differentiated upstream downstream value-added players which happen. In terms of asset from an enterprise business to a very clearly [indiscernible] focused business. Everything may not pay out in the 2 years because the demo funnels take a little longer. So that part of the sales will happen over from FY '28 onwards, but you will see that shift already started happening. In Godrej Foods, very clearly, we are dialing down live-bird completely. And over the next 3, 4 years, it should just remain maybe a back end of us and that becomes a protein forward a company which will have many new segments coming in. In fact, I would like to call out what you would see in the next 2 years in terms of new -- starting this year itself is we are making entry into 2 new segments in the food business. One is we have entered into [indiscernible], which we believe there's a potential to upgrade the street's food business into a branded business. And the second one is there is a very piece which I personally think can have a very strong ramp up over the next 3 to 4 years that India would be entering into frozen chicken [indiscernible]. And that's another piece which is playing out for us. And in CPL, clearly, the value-added journey goes forward, we have to make it more and more profitable. I think this is the largest shift, which is we have given a headline of a strategy document for you. It is going to followed by a cost culture with a mindset shift. Coming back to whether there will be a restructuring of these businesses. As I said, the models are still taking shape in our mind. We cannot say at what time it will pan out. We talked about that question to Astec is that maybe in a couple of quarters, we'll come back in to say, how does this whole chemical fees plays out for us. But this in a nutshell is my take on that, that is a larger transformation at play. We have already made portfolio choices also maybe for everybody's benefit, say, on what we don't want to which also will see in the next 2 years. So for example, the businesses that we're putting up as for strategic review right now, our [ sim ] business, our seed business, our [ catalog genetics ] business, we -- our live bulk business obviously is coming down. We are going to take some strategic reviews of this business going forward. So this industrial is the journey, which is contesting shape, you'll see them exporting over 2 years and then maybe the structural pieces will, if any, will play out at that stage, we don't know right now. Anything which [indiscernible], you want to add on at this stage?

Yes. Thank you, Sunil. This is Burjis Godrej speaking. I appreciate your question. And I think the deeper subjects, if I'm correct, is possibly hinting at unlocking shareholder value. So I think Sunil has answered the question very well. I'm confident that this approach will lead to good performance and unlocking of shareholder value across GAL as a whole, but we remain open to suggestions, alternative pathways, if you have any for how to improve performance and how to unlock shareholder value. So I welcome your thoughts and suggestions on this topic and you reaching out to us separately to discuss it in more detail. I'll request Mr. Nadir Godrej, if he has any comments.

Yes, this is not [indiscernible]. I would urge you to focus on a longer horizon. In oil palm, there is likely to be rapid growth because, a, is the demographic dividend that Sunil talked about; b, is the rapid expansion in acreage that we did both in the fiscal year '26, and we are likely to do even better in fiscal year '27. Plus, we are producing more and more value-added products and we have very good technologies for -- [ well ] from waste, which will also gain traction and all these will get magnified by the rapid growth of acreage. So I see a very bright future for this. And even for Animal Nutrition, we should look further out in just 2 years. We will have good growth in 2 years, but just imagine what kind of growth we can have over 10 years.

Thank you, everybody. It is one more point, which I think you had asked for comments from your end on the return on capital employed. So I think, again, if you see the last 2, 3 quarters, this is an exceptional work which we've done through a focus on working capital, and our return on capital employed has also moved along with our results from 16% to now 20%, which is a very sharp jump of 4%, which has never happened in our history of our business. Now as we invest further on growth CapEx, one thing we'll be very sure of in the next 2 or 4 or 5 years, in fact, for that sense, that we will be very, very stringent, and we'll keep the discipline very strong on managing working capital and return on capital employed. We have reached 20% while I wouldn't have a guess right counting how ambitious we can be in it, but we will definitely not let it slip away. And as we find more and more opportunities, we'll only try to improve it further.

We'll take our next question from the line of Probal Sen from ICICI Securities.

Just a couple of housekeeping questions first. In terms of the foods business, I think you've obviously mentioned the strategy and the branded savings is going up consistently and maintaining at about 18%. But just as a thought, in terms of the live bird business, is there a thought to sort of exiting the [ live bird ] business altogether? Or does this still provide supply chain benefits and pricing boosts from time to time depending on the seasonal factors. Just your thoughts on that.

Yes. So Probal, thanks for the question. So one thing is live trading per se is coming down sharply for us. And over this next 5-year period, and I think more accelerated manner we would not be in the business of selling live birds. That is very clear. [indiscernible], we don't want to do it. So that's out of question for us. What may happen for us and which I think is -- I think could be a very strong moat as we build a business. I mentioned that we would like to maybe try to build certain categories like a new emerging category of pros and chicken in India, right? Now what is happening in this business is that there is a potential of doing a category creation all together in this business that one of the reasons why fresh chicken never sold was because there is a shelf life of 4 days. Now with frozen chicken, the shelf life changes, the work that we have done on product innovation is the chicken is as good as any [indiscernible]. And we have now got a structural tailwind which is happening in this industry in the shape of [indiscernible], whereby the cold chain also is getting taken care of. We believe that if we go ahead and build this category forward, then one of the biggest modes actually is a control on the raw material supply of this category which is where the -- having some the presence of live bird as a store thing is a d*** good -- a very good, what you call, differentiator. So clearly, no play on live bird as a trading stock sales business. We could have this pure play as a back-end supply chain for our future businesses. Whether it is [ Jami's ] nugget, which you want to take it forward or whether it is some of the new categories that we're looking forward.

Understood, sir. A couple of more small questions. One was what was the amount of FFB that was processed this quarter? And what was the extraction ratio just for this quarter?

Okay. The extraction ratio for this quarter to remember was 20.4%. Let me just -- just in a minute. Sorry, it was INR 20.7%. [indiscernible] extraction because this quarter -- the overall, the number is very small per se. For the [indiscernible] business, the become very small. Just to give you example that out of our 67,000 FRP process annually. This is just [ 600-odd ] -- so this is a small which comes in this. So it's a [indiscernible] marginal quarter for [indiscernible] business per se. But the good part is we were at a 19.6% last year on OR in the same quarter --

Ladies and gentlemen, please stay connected we've lost the management connection. Ladies and gentlemen, thank you for patiently holding the line. We have the management team back online. Probal?

Yes, sir. Apologies, we got cut off. I think you were mentioning a number of somewhere around 20% plus extra but on a smaller base for this quarter.

Yes, was [indiscernible] precise. The number was 20.7% on a smaller base. I said the base is so small for us that it just lies the base, for example, is [ INR 60,000 on a base of INR 6.3 lakhs]. So this is seasonally a very, very marginal quarter. But a good part is that even on such a small base, where the leverage really doesn't come in also into play an operating delay. Our OER was pretty much stronger over last year's same quarter. And that the direction for which tells you about how the processes and the productivity parameters have got established by the team. I think that's a very good time going forward.

One last question, if I may. In terms of dividend policy, the dividend payout, obviously, has been at fairly healthy levels, around 45% to 47% in the last couple of years. Any thoughts in terms of how it will proceed given that they're definitely expecting mid-teens profitability and EBITDA growth? Is it fair to assume that is it CapEx remaining at somewhere around, let's say, INR 300 crores to INR 350-odd crores that this number has the potential to go up as well from here?

Probal honestly, this is something which very difficult to comment because this is a larger distance which gets taken as the years go results come in. So I would say that we have had a very strong policy of being consistently good dividend, as you just have mentioned, range of [ 8-odd-percent ] and I think that a call which we will take along with promoters every year as the results come back. And it's one thing very clear that obviously, the results are good, I mean, it's always good to make sure that the shareholders benefit, but I think a call which will take note as the results come in on.

We'll take our next question from the line of Abhijit Akella from Kotak Securities.

Just on Astec, would it be possible to get your thoughts for the year ahead in terms of the growth expectations across both [ CM ] as well as enterprise and on the profitability as well, EBITDA [indiscernible].

So the way the entire industry is behaving is a positive sense because Q4 also, if you see the numbers, improvement [indiscernible] both in terms of the volumes and also the price realizations. This is primarily because more or less the prices have bottomed out. Bottomed out in the sense of the market prices and the competition from China is more or less stabilized, that is primarily because most of the geographies are showing local demand, be it China, be it India, the local demand has improved. So international supplies should be normal right now. So price realization, I think, has stabilized. Raw material supplies, if you remove, we don't know what would the impact long-term impact in terms of Iran or some other problems coming into. But more or less, it is stable. So I think we should we should -- like anywhere we should aim around 15% of growth in terms of the top line. And [ CDM ] should be growing further a little bit higher than the [ CDMO ] margins are intact, both in CDMO and for enterprises, margins are intact. That is much I can see as of now. Directionally, it is a positive growth both for CDMO and for enterprise business --

Maybe we can, I think one thing which is very clearly looking positive for us on the asset front as that I think the work that the team has between doing on the business end over the last year. I think there are some good early leads emerging for us in the space, although they still to come to the [indiscernible]. But I think going forward, this is a business which -- where we'll keep the do percentage going well in the range of around 52% to 53% plus kind of sale. And while [indiscernible] obviously not talking about I think a number of [indiscernible], but I believe we have a pretty good shot at something in the range of 20% to the numbers going forward on this.

Got it. And just on oil [indiscernible]. How much of the earnings now come from the value-added side of things? And how do you expect that category to sort of continue to increase its contribution. Just asking from the context that suppose palm-oil prices were to correct a year down the line, then I mean how do we cushion the impact on our earnings in that business?

I think that's a fair question. So one question -- one part first. I'll give you maybe a bit of context that the last year, sharp jump of oil palm profitability that we have seen, if I were to purely discount the pricing part of that, 65% or part of that profit, which was 70% has come because of our internal efforts. So that's I think is a good context to have that the pricing play, which was abnormal played out last year is still not more than 30-odd percent of other things. So that tells you the structural strength of the work which is happening. That is one part. Second is, yes, as part of our strategic exercise that we have done, one clear direction is how do we get into more and more differentiated value-added play to further insulate ourselves from any of these pricing volatility or variation as that may happen. So what is happening is that this year in May itself, we are rolling out our specialty [indiscernible] refinery also and which will come into full flow from, I would say, maybe, let's say, second half of the year in full passion. And that will start giving us a very meaningful play in second half onwards into value-added products, which will then go from strength to strength over a period of next long-range plan of 4 to 5 years. Our broad direction is that we would like this business to have roughly around 50% to 55% of its portfolio over a period of maybe [ FY '21 ] in that direction coming out of value-added products. And that should give us a very, very significant insulation from any kind of price volatility years, which could go down into busy sense. So I think that's a very clear direction. When I said from being an upstream players to a complete value-added upstream downstream player. That's the aspiration that we are having for ourselves.

Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir.

Thank you. I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we would be happy to be persistent. Thank you once again for taking the time to join us on this call.

Thank you, members of the management team. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.