Insecticides (India) Limited (532851) Earnings Call Transcript & Summary

Thanks, Janice. Good afternoon, everyone. On behalf of Elara Securities, I would like to welcome all the participants who logged into this conference call of Insecticides (India) to discuss the first quarter results. We have from the management team, Mr. Rajesh Aggarwal, Managing Director of the company; and Mr. Sandeep Aggarwal, CFO of the company. Thank you, sir, for giving us the opportunity to host the call. I would like to request Rajeshji to first take us through the quarterly performance of the company. Hope that we can open the call for Q&A. Thank you. Over to you, sir.

Thank you. Thank you very much. This is Rajesh Aggarwal. I've divided my presentation into 3 parts. First of all, I would like to discuss about the industry scenario, followed by the company performance, and then I will give the future of the industry as well as the company. So again, welcome all the participants to this Q1 results conference call. As you are aware, due to this COVID and the extended lockdowns, the effect has been on the entire economy as well as the business throughout the country. The agriculture sector as such is less effective. Why? Because the -- we see a reasonable level of demand. And this is a business who's engaged more than 60% of the population. And the sector I believe is going to sail through these economic ramifications and pandemic. The lockdown imposed by the government to check the spread of the virus has severely affected the economic activities in the country. Agrochemical sector also faces initial issues, particularly in manufacturing and, of course, the labor and logistics. Everything has been impacted. Despite of all this, I would like to come to the company performance. We have recorded the revenue of INR 410 crores in Q1, representing more than 14% growth year-on-year. So I can say that the growth in this quarter has been in the expected lines. And particularly, the Herbicide segment has supported a lot in this quarter. It has been a good rainy quarter and this season -- the future also is looking good, because the rains across the country are quite good actually this time. If we look at the contribution, the brand sales have increased by almost 16%, contributing a total 73%. The exports this year, though the total contribution is just 3%, but it has grown by 53% plus. And if you look at the Institutional sales, that has also grown by more than 5%, contributing 25% -- 24% to the total sales. Coming down to the EBITDA. The EBITDA delivered by the company in the Q1 is INR 49 crores. Yes, the EBITDA margin is 12% and the net profit has come to INR 24 crores with a margin of just INR 5.9 crores. So the profitability of this quarter is little muted due to various reasons. The -- first of all, I would like to talk about the pandemic, because that has led to the high fluctuation in the prices of the raw material and the packing material. And also there has been the availability constraints, not only for these raw material and packing materials, but also the transportation issues and manpower issues. And then overall, in the market, there is a liquidity crunch that is impacting the total market of agrochemicals also. Furthermore, there is 1 more provision, which we have made for a write-off of INR 10 crores. So as you are aware, that there was an issue in Chhattisgarh. Total amount discussed is about INR 20 crores. So we have filed a FIR in 5 various cases against a few people. Some are already arrested. We hope that we'll be able to recover about 50%. So we have made a provision of INR 10 crores, which we had to pass in this quarter. Talking about our CapEx. So we have been excited in investing in all the sites of Rajasthan, Gujarat. In Rajasthan, we are trying to expand our manufacturing capabilities, both for formulations as well as technical with the major focus around the technical expansion and this activity is on and is in full swing, I can say. We have recently bagged the approval from the central government for this -- from this environment clearance. Coming down to Rajasthan. In Dahej -- Dahej, again, we have dealt all the approvals, and we are setting up a new facility. The construction is in full swing. And this year, we are also setting up a plant in SEZ, which we had already started partially, but we are completing its first phase of expansion, which we expect to clear in the second quarter. The first phase will be completed in the second quarter, and there has been a small investment in the CapEx from this. The major growth for the company, the focus is like to be wish to work on the products, which are launched in last 3, 4 years. And parallelly, we also target the new products, which are introduced during the year. So this year, already 2 introductions have taken place, Milstim Max and Hakama Super. So Milstim Max is a biofertilizer. Hakama Super is the herbicide from Nissan, Japan. So both these products have gone to the market. A small contribution has come off of our INR 4 crores from this product. But this year, the target is to launch at least 10 new products. And these products should contribute INR 40 crores to INR 50 crores to our total revenue, and we are very, very confident with the registrations coming in because Diafenthiuron is something which has hit in the last quarter, but I am expecting to launch at least 4 products in this quarter, and I believe -- so 4 new products should enter into the market and our target of launching total 10 products is still on. But as you know, that the registration is sometimes slow. So we will get these registrations. We'll launch these products as we carry these products to the farmer. And wherever we get the season, so we'll be pushing these products. So we are expecting that this year should be a reasonable growth year, because the growth will be from all directions. The new products we are going to launch, the Maharatna range should also grow because for selling the Maharatna products, the major season begins in the second quarter. And if you look at this quarter, the beginning is looking very good at. [Technical Difficulty] For the continued rain and our sales on Maharatna. [Technical Difficulty]

Excuse me, members of the management. Sir, we are unable to hear you. Your audio is breaking up, sir.

Actually, this line was a problem. But yes, I'll try to be near the phone. The export sales also should grow. And the institutional sales is also expected to grow. So I believe that we are, but still, we should be able to cross INR 1,500 crores in this fiscal. So now coming out to the industry. So industry is showing the robust growth because the monsoons are above normal, and there is good water availability in the reservoir. The government still targets a lot of reforms in the agriculture sector particularly the PM Kisan Credit Guarantee Scheme and for the MSMEs and the MGNREGA. These all -- such schemes are helping in a big way to the farmer. And the raw material availability, the international position has improved a little, though it varies from product to product, but the prices in China have decreased a little. At some other places, they are more, but overall, I would say, it is favorable for the industry. And then the government's focus on Atmanirbhar and, self-reliance schemes actually. So this is also a special focus on the sector. And I would say that it improves the -- our prospect of getting the new registrations faster and we are quite hopeful that the registrations for whom which we are waiting for last 2, 3 years should get cleared in this year, and we should have the good range of product available for this year and for the next years to come, and we should get at least more than -- like our plan is to launch 10, but the number of registrations which we should be able to back should be more than 10 in this fiscal. That is my... [Technical difficulty] and support us in all our expansion programs because for our expansion programs, we have 2-point agenda. At one place... [Technical Difficulty] the backward integration to do the post substitution. And at other place, we will be launching certain -- like we'll be preparing for manufacturing the new technicals, what we are going to register. So I believe that we are working very hard on both these sites, and we would be ready to take the company to the new heights for future. So management team remains fully committed to drive growth through new innovative products, improving product mix, increasing brand business and enhancing profitability. So with this, I know that line was little disturbed, but would like to solve all your queries through your questions. Thank you very much.

[Operator Instructions] We take the first question from the line of Prashant Biyani from Prabhudas Lilladher.

Sir, over the last 3 quarters, we have seen our performance being slightly opposite of the overall industry performance. And first in Q3, it was the impact of Pakistan-related exports. In Q4 and Q1 also, we have seen a drastic decline in our gross margins. So I mean, precisely, what has been happening, if you can clarify something on that. So we'll get a clear picture on the operations front.

Okay. I'll go first step-by-step. Firstly, to answer your question of Q3, where we were hit by Pakistan. Actually, for us, the export business was new business, and we had started just 3 years back in a little better way. Our 50% of the sale at that time was coming from Pakistan and Pakistan suddenly closed the doors for India. That created a little trouble for us, but we are making a recovery. If we look at the total export sales in the last fiscal, it was not dropped, though the growth did not come, but we could close around INR 65 crores to INR 70 crores roughly -- yes, INR 68 crores INR 69 crores, roughly was the total export, which we got last year. And this year, we are a target of INR 100 crores, and we are working on that. Coming down to [ muted ] margins actually. So we had formed a strategy, whereby, we were planning to bring the business on cash and carry basis, and we wish to finish all the debts what we had in the -- in our system. We wanted to be debt-free. So we worked very hard on being debt-free. And in that zeal we discovered later that during the fourth quarter, most of our sales we could do was generic products. And though, that was not at a loss, but it was on a lesser margin, which could not cover the entire year's expenses actually. So that lead to the little disaster in Q4. When this year began, it began with the COVID. So the COVID holiday was announced from 21st or 22nd of March itself, 24 March itself. So the factories were not able to produce. So whatever material you had at your depots, you have to start the sale with that. And then logistics and manpower, everything was a constraint. So under these constrained circumstances, we began with Q1. And in Q1 last year, if I compare, last year, I have shown a very good growth, which was not there for the industry. So industry had given very muted sales last year in Q1, whereas Insecticide had given a very good sales. So growing on that number with no availability of raw materials and no availability was from products was difficult. Despite of that, we have grown by almost 15% in Q1. I believe that is reasonable because I cannot expect the major sales coming out of Q1 itself. So the number -- the top line number is reasonable. Yes, we have got a hit in bottom line because the Maharatna sales which could not happen due to availability of raw materials and the other issues. But I believe that we'll show that recovery in Q2. And in Q2, we will see both the growth in top line as well as bottom line.

So sir, it would be safe to assume that the gross margin contraction is now done with more or less?

You can say broadly. But here, like -- though we are sitting on 1 position where we have, like our margins are contracted, but here I would like to point out again that we have collected lot of cash. We are sitting on huge cash balances today. We have reduced the credit, which we are supplying to market. And that does not mean that I'm going to -- like trying to give you a figure that our product profitability will contract. It will not contract. We'll try to be normal in Q2 itself. And Q3, Q4 should help us to further improve these situations.

And sir, we also seem to be much more impacted by the labor and packing material unavailability vis-à-vis industry. So sir, any comments on that?

I don't think that it is very specific, maybe we were not carrying huge inventories because we sold a lot in Q3, Q4 also, generally, which we don't do. There was a sales spike in Q4. So might be due to that, we were not carrying huge inventories. We generally -- what other people may be carrying. So if you will see the sales of Q4 and Q1, both together, I believe the answer is there because Q4 also was the sales growth. And Q1 also is the sales growth. So some companies who have shown the growth in Q4 -- Q1 there might not obviously have shown the similar growth in Q4, maybe. So it's very much on an average to what industry is, but yes, the Jammu plant were closed for a longer period. It took a little while to start the Jammu plant. There were also restrictions in Rajasthan, though we got the permission, but they were not allowing the buses. So there were a lot of manpower issues, which we had to face, particularly in the months of April and May.

And sir, just last question. So we have ample raw material for our Maharatna products to sell-through in Q2?

Yes, that is available. And the manpower situation has also improved. Though we are still struggling, but it has improved. I can say that we have achieved more than 90% of our manpower number.

Okay. And I'll just end with 1 last question. Sir, any impact do you see on the industry of the 9 molecules getting banned for paddy crop in Punjab?

Like everything which is restricted has an impact. It's very unethical, I would say. So we are going to quote the association not as Insecticides (India). So very shortly, we feel that we should be able to take -- get justice in this.

The next question is from the line of Deepak Agarwal from [ Impetus ] Advisors.

Just want to know the receivables position?

Yes. Receivables collection in this quarter has been all-time high. It's still in my collections in the month of July. [Technical Difficulty]

Well, members of the management we are unable to hear you. Members of the management we are unable to hear you, sir. Can you please confirm? Well, requesting the participants to please stay on line, while we're trying to reconnect the management back to the call. Please stay on line. Ladies and gentlemen, thank you for patiently holding the line. We have the management reconnected. Sir, we have the question from Deepak Agarwal.

Yes, Deepak. Sorry. There was a power fluctuation. Yes.

Yes. I just wanted to know about the receivables position?

Yes. The receivables position is good. The collection has been all-time high in last 3, 4 months continuously and we are getting a lot of cash in our books. So we're getting it good. Market is tough. So you have to be a little aggressive on collections. So we are, at this moment. We have -- like we have reduced the credit limits, we have reduced the credit period to the market, and we are pushing for more collections.

So what are the details at the end of June?

At the end of June -- at the end of June, what was the number? So the [ opened ] number is not clear, but there will be some INR 30 crores, INR 40 crores cash in the balance sheet at that time and the outstanding...

Sir, what were the debtors?

About INR 350 crores.

The next question is from the line of Rajat Setiya from VRDDHI Capital.

Am I audible?

Yes.

Sir, just wanted to check [Foreign Language]

[Foreign Language] maybe we will use 1 more quarter. [Foreign Language]

Sure. [Foreign Language]

[Foreign Language] losses is a different term basically. [Foreign Language].

Okay. Basically margins [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Sure. And sir, 1 final question. [Foreign Language]

[Foreign Language] Due to whatever circumstances, bottom line [Foreign Language] under the difficult situation we have grown. [Foreign Language] So I believe that [Foreign Language] which will also support the bottom line. [Foreign Language]. And there is no risk on sales or profitability of the company.

The next question is from the line of [ Sanket Biyani ], individual investor.

Sir, I wanted to ask you quarter 4 conference call [Foreign Language].

[Foreign Language] backward integration, it's a long term project which takes 2 to 3 years of time. Overnight [Foreign Language] Yes. I have a answer. See I'm trying to backward integrate certain products [Foreign Language] Yes, we are preparing for import substitution. [Foreign Language] .

Okay. Sir, one more question. How are you planning to use the cash balance, which is available there as of June 30?

[Foreign Language] we are working on that.

The next question is from the line [ Amit Deep ], individual investor.

So we have guided for the company to be debt-free by the end of first quarter. So just wanted to know the status on that?

The cash balance we had at the end of first quarter was about INR 70 crores. So the debts are gone and INR 70 crores was the balance we were carrying in the 30th of June.

Okay. So we are currently net debt-free?

Yes.

Okay. Congratulations on that. And for the CapEx, we are planning, like when are we -- when do these operations become commercialize, like contributing to the numbers?

Actually, this will start at the end of this year, at the end of this fiscal, I would say. And the exact numbers will come in the next fiscal only. So some production might start from December-January. But technically, it would be next year. SEZ though should start functioning in the second half of this year, around Diwali, fully functional, in the first phase of expansions as we are targeting to complete it by September into October, November, we should see the results and we'll see that.

Okay. So if you finish it by September-October, we can see improved margins from Q3, Q4 because this is primarily backward integration?

Actually, that is just for the formulations and packaging. The backward integration will show results from Q4 only. So Q4 is generally muted. So the technical results in the bottom line should start from Q1 of '21 -- '22. But Q4 should also let -- we are keeping the finger crossed, how fast we can do it and how fast the things can show the results. So let's try.

So what is the incremental top line you are expecting from the overall CapEx? Any ballpark...

Like the overall CapEx is the 3 years program. And we have already given our '21, '22, '23 guidelines. We have not issued the separate guideline, but I'll try to make a separate guideline from the -- this backward integration and the new plant expansions. So we'll try to show it separately for next year, actually next fiscal. Because this year, we are not expecting much out of that.

Okay. So for this year, you're expecting INR 1,500 crores of top line?

This year -- yes, INR 1,500 crores. So it's a small increase of about INR 120 crores, INR 130 crores actually. So that we have divided into 5 different -- like from 5 different areas, we'll be getting it. So that will be coming from the new products that will come from Maharatna products, that will be coming from generic products, also from export and institutional business. So all these 5 products -- 5 areas would be contributing INR 30 crores, INR 40 crores each. Some might contribute INR 50 crores. So consolidatedly, we are planning a growth of about INR 150 crores coming out of our total business, actually in this year. So I'm just counting this looking at the COVID scenario. So there can be some impact. So INR 1,500 crores should be easy for us actually to achieve [ in this fiscal ].

Okay. And just 1 last question. So on the full year basis, for the INR 1,500 crores, what is EBITDA margin, average EBITDA margin you are targeting?

EBITDA margin, we should be able to show the improvement. It has declined in Q1. So it should show a major improvement in Q2. That is the expectation. So like in the previous year, in '19, it has been very, very good. So vision is to touch that figures. So I'm not sure that I'll be able to touch the similar figure in this fiscal. But I'll be trying -- I'll be trying to reach near to that figure, I would say.

The next question is from the line of Rohit Nagraj from Sunidhi Securities.

Sir, almost 1.5 months for the quarter has gone by. So what is the trend that we are seeing in the market?

Again, if we talk about July, August. July was not a very strong month from the perspective of agriculture because we were seeing very muted rains actually, and there were long gaps. But in August we have seen good rains actually. So the expectation has gone up. So first month, July month was almost at par with the previous year. But August and September should show a jump. So overall, the expectation is very high because the demand is good. There is demand from all parts of the country, I would say. Some parts like, Bihar had some floods. UP, Eastern side has some floods in some areas, 2 of my -- 2, 3 -- it covers -- some of my staff actually. So rest of India is doing good actually, and these areas should also pick up after a month, I believe.

Okay. And sir, on backward integration, so currently, what is our dependency from China? And maybe after 2 years, once the backward integration is over, how much will it reduce?

Like, frankly speaking, if we look at our target for future, we wish to add on the new products and most of the technical products in making the technicals by ourselves. So this dependence on the international market is always going to be high. Today, if I look at my total purchases, then about 30% of the raw material is directly imported by us. I believe that I would not be able to reduce this percentage very drastically. But still, I believe that I should be able to come down by about 15%, 20%, not more than this, because some products I'll be manufacturing by myself, where I'll be doing import substitution. But at the same time, when I'm introducing new products and these products if -- are coming from the last steps, then the raw material has to be imported. If they are coming from the like from the initial steps only then there will be lesser imports. So overall, my import might remain about 28%, 30%. But the China import will definitely see a downward trend because some of the major raw material I'll be making. So but still, I cannot say more than 20% drop in China imports.

All right. And sir, 1 last question. In terms of our branded products and generic products, so what is the kind of gross margin difference that we have in both these products? So if I say, 30% of normalized gross margins, so what it would be in the branded ones and in the generic ones?

Actually, it varies. So I can say that if they are -- Maharatna products and then again, the new launches. So new launches sometimes may carry 40% to 50% gross margins. But generally, the gross margin is to the tune of 30% plus/minus. Some products have 40%, some have 20%, and sometimes in case of generic products you are forced to go as low as 15% also.

Okay. And just 1 last clarification. Last con call, we have said that our FY '20 debt is INR 118 crores and we'll be debt-free by June. And just now you said, we are currently of cash surplus INR 70 crores, so INR 118 crores debt is repaid and above that you have INR 70 crores?

Yes. All -- there is 0 debt actually, including the working capital debt. So INR 70 crores is above that. INR 70 crores was the figure of 30th June, and that is continuously increasing.

The next question is from the line of [ Manish Dhariwal ], individual investor.

Am I audible?

Yes. You're audible. Please go ahead.

My question was basically related to risk management. In fact, I was observing that. Unfortunately, for 1 reason or the other last couple of quarters, they have been very -- they have not been up to the mark. Especially, in terms of the profitability. And 1 after the other -- 1 reason then another reason then another reason has come out. So I would like to get an understanding of what kind of I mean, what are we doing to basically mitigate such kind of risk. So we are -- how are we kind of looking at the, say, next couple of quarters? What kind of possible negative surprises can we expect? And what steps are we kind of taking to mitigate that so that we can protect and actually use this particular environment, which has been very favorable for the industry to enhance our value-add?

Okay. Like the biggest thing -- the biggest contributor to the margins is the new generation molecules. So if you can back the registrations and bring the products in time, then you can make money out of it. Ours is a cyclic business. With first quarter giving about 20%, 25% -- about 25%, we can say, of contribution. And second quarter we come about 35% to 40%. It varies from seasonal situation. So about 70% or 60% -- about 70% business comes from the 2 quarters and the third and fourth quarter are relatively subdued. This is the industry average. In Insecticide (India), we are able to achieve these mostly. So 25% and 35%, we are able to do it easily. So second quarter is the biggest quarter where you sell all type of products because this includes the monsoon months. So you will find that the things are showing a good improvement. In the third quarter, again, there is a second season where wheat and all paddy, and different vegetable crops are sown. So that also is a generally reasonable quarter, where you can see expect a profit. Q4 is largely subdued, because the sales in Q4 is largely dependent on lot of factors, actually like the rabi crop, how is the rabi crop behaving at that time? Is there a pest infestation? No pest infestation, what type of sales are happening? What type of inventory trade is trading -- having? So a lot of factors. So Q4 was, yes, subdued. Q3 also maybe, you can say, it didn't match your expectations. If it is not, then Q1, of course, though we have made a recovery, but it's like still subdued because the EBITDA margins itself have declined as we compare year-on-year, and it is not matching our best performance. So there are 2, 3 things which we can do. Number one is to create the product portfolio. So we are creating. We know, we are working very hard to get the registrations. Secondly, to create the manufacturing facilities for this. So we are working in that direction also. We are enhancing our manufacturing capabilities and because once you back the registration, then you have to supply the product to the market. If you are manufacturer of technical by yourself, you have to manufacture the technical. And if you are formulating, then again, you have to develop the formulation facilities, especially for these product. So we are working in that direction also. And at the same time, market, market development activity, they are also in full swing. Though, this is a different type of year. Lot of things, launches and other things are happening virtually. The staff also thus, particularly -- sales and development staff is not moving so freely in the market. But yes, we are using technology. We are using, I would say, all the social media and other things and also advertising our products vigorously. So we are following the multi-facet approach. Again, to sum up, we are bringing new products and [indiscernible] manufacturing capabilities, developing our marketing capabilities and of course, looking at after the farmer by using the media. So the training and other things, we are doing by this. So we are working in all directions.

Thank you for a very detailed answer. My additional point was that, see, I think -- in the quarter 1, we really went after reducing our debt. And in fact, the -- it's a nice development that today as we speak as of June, the company has become debt-free. 0 debt from close to INR 190-odd crores, which was appearing on the balance sheet as of March 2020. And on top of it, the cash has also been collected to the tune of about INR 70-odd crores, as you just mentioned. Is it 7 0 crores or INR 70 crores or -- sir I think somewhere in the call said there was INR 30 crores, INR 40 crores. So how much cash, if you can just clarify?

Yes. So, yes, little confusion. Yes you're correct. INR 70 crores is something which are from now. 30th June is INR 17 crores only. My understanding was a little like -- yes.

No problem. So cash as on 30th June was INR 17.7 crores, right?

INR 17 crore and today it's INR 70 crores.

INR 70 crore as of say, August?

Yes. 15th August you can say, [ 16th ] August. yes.

Right, right, right. And the debt is 0 right now, right?

Debt is 0. All debts are 0 actually. Now we are working to do the cash purchases and also to -- to fund our capital requirements actually. So that is happening from the internal -- whatever money has come in?

So basically, are we saying that, going forward, we are going to be not taking any risk. Or we can say that we are going to be a debt-free company?

The plan for at least next 3 years would be to go debt-free. I'm going to fund all the capital requirements from the internal accruals only and also the working capital requirements will go funded by the internal accruals. That's the vision for next 3 years.

I think that's a very powerful target. And I think this will make the company very, very [ old ] and also mitigate a lot of other liquidity and other kind of risks. But sir, 1 question is that our inventories and our trade receivables now between these 2, the figures keep on like, 1 goes up another goes down, then another goes up, and another comes down. As a result of which, what is happening is that the cash actually is not really kind of coming out. So to back my comment, I would say that in FY '17, our debtors were just about INR 212 crores. Obviously, our turnovers have also increased. But -- and in March '20, we were at INR 320 crores from INR 244 crores in March 2019. And as of June, we are even higher at INR 350 crores, and this is when we are trying to do cash sales. So how is it that this control over debtors is not working because it is easy to do all the hard work, and we can create a sales. But if the money doesn't come in and then there is a problem. And you've also seen as to what happens in the future. So that's a straight [ pursuit ] at the bottom line. So...

Actually, Chhattisgarh problem has come out of the fidelity issue. Some of the trusted employees, they created a problem. Ultimately, they tied up with the distributor, and it was -- it happened actually. So we are going very cautious now, and it's a one-off, actually. I could not expect that happening from a 20-year-old employee, but it has happened, that's happened. Regarding this credit control, we are following very strict credit control measures. But as the turnover goes up, the risk also goes up actually. So we have to -- we need to work. We are trying to frame a policy, wherein, we're pushing a lot of cash sales actually for the products, and would try to control the total debt into the market. We are working for that. And as you pointed out, regarding inventories, inventories also we need a lot of work, but since the business is cyclic, sometimes when you are backward integrating and you are making more of technicals, so at that time you have to build up the inventory because the prices and everything is also very, very cyclic. So that is something, which I can say are very strategic decisions sometimes, which you have to take, looking at the coming seasons actually and the market trends. So I would right now be able to comment too much on the inventory, but we are trying that we don't have any inventories, which are not saleable actually. So everything that generally what we keep is saleable. And the inventories of the branded products, what we have in the market, we try to bring it to the minimum by the end of the season, and we build up the new inventories for the new season actually. So if I look at this year in particular, then there was a lot of demand for smaller packs and some specific products, which I was not able to fulfill in last 4 months. So that has been a challenge. So that means that I'll have to be more prepared and to keep more inventories of the small packs and some specialty products for the coming season. So inventories maybe in totality in number, I may not be able to control much because the raw material also I'll have to arrange and I'd have to keep ready because when the new facilities are also coming, I'll have to buy the raw materials for these also. But all other aspects I should be able to control. So overall, you will see the cash position will not be stressed. It will be -- continuously we should be generating cash. And of course, we'll be focusing on debtors.

That is I think very, very good. And going forward sir, material cost...

[Operator Instructions] Next question is from the line of Jatin [indiscernible]

[Foreign Language]

[Foreign Language]

[Foreign Language]

14%, EBITDA?

14%, EBITDA. Yes, sir.

[Foreign Language] 14% is not difficult, [Foreign Language] that is achievable. [Foreign Language].

Okay, sir. That's good to know sir. [Foreign Language]

[Foreign Language]

The next question is from the line of Sagar Kapadia from Asian Market Securities.

Sir, first, I think on the Q2. So for the first 45 days, how much has been the mix of generic and the Maharatna products?

[Foreign Language]

Okay. Sir, do you think that the tight credit policy could be 1 of the reason why the demand for maybe high-margin product is impacted in Q1?

I cannot lose it to a great extent. [Foreign Language] So we are trying to categorize our distributor from A to E segment. [Foreign Language] So we are trying to do that segregation. [Foreign Language] So as per market need, we are taking call. [Foreign Language] I cannot be extremist [Foreign Language]. I'll have to follow a middle path, to which we are doing.

Okay. And sir, second thing, for the second half, H2, last half it was [indiscernible] for overall industry. Now definitely on the high base and also our 2 products will not be there on [ government ] time. So like what is your sense in terms of H2 expectation for the company in terms of the top line growth?

[Foreign Language] So we should be able to achieve [Foreign Language].

Okay. And sir, just last thing. Overall, if you see the monsoon, so like 2 or 3 states like MP, Rajasthan and Orissa, where it has been recession -- so have you seen any slower offtakes in these 3 states, specifically?

[Foreign Language] If I look for my company, my sales in Orissa is just INR 30 crore. If I come to Gujarat is about INR 50-odd crores. If I come to MP, it is a state of about INR 55 crores, INR 60 crores sales, actually for me. [Foreign Language] So herbicide movement have been quite good, more than expectation actually. [Foreign Language].

Okay, Sir, just last thing on how much is the stake we are holding the inventories of Nuvan?

[Foreign Language] I should be dilute it by Diwali plus/minus.

The next question is from the line of Rajat Setiya from VRDDHI Capital.

My question has been answered.

Thank you. Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Pratik Tholiya for closing comments. Over to you, sir.

I would like to thank all the participants who logged in to the call. Also thanks to the management for giving a detailed answers to all the question. Sir, would you like to make any closing comments?

I would like to say that you always trusted Insecticides (India) and we have been moving forward, actually with the vision in mind. Vision to support the farmer and to bring the new technology in the reach of the farmer. We'll continue with that. And we'll be vision of our Prime Minister to support the domestic manufacturing and -- his slogans are always very, very helpful to influence the market and also to influence the Ministry to an extent. And the way the ministries are supporting the industries. I believe that the agriculture ministry is also going to support the Indian industry in a big way to launch these new molecules, which were delayed in the past, because of the like non-grant of registration. So we are expecting many good registrations during this fiscal also. And with our expansion coming in, my expectation from next year are even higher and this year we should be able to make the recovery both in top line as well as the bottom line. Thank you very much.

Thank you.