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

Ladies and gentlemen, good day, and welcome to Insecticides (India) Limited Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Masoom Rateria.

Thank you, and welcome to Q4 FY '25 earnings con call of Insecticides (India) Limited. Today, on this call, we have with us Mr. Rajesh Kumar Aggarwal, the Managing Director; Mr. Sandeep Aggarwal, the Chief Financial Officer; and Mr. Dushyant Sood, the Chief Marketing Officer. Before we proceed the call, I would like to give a small disclaimer that this conference may contain certain forward-looking statements which are based on beliefs, opinions and expectations of the company as on date. Now I would like to hand over the call to Mr. Rajesh for his opening remarks. Over to you, sir.

Thank you very much. Good evening, everyone. Welcome to Q4 and full year FY '25 earnings call of Insecticides (India) Limited. Thanks for taking the active interest in IIL and your participation today. I'm joined with CFO, Mr. Sandeep Aggarwal; and CMO, Mr. Dushyant Sood. So let me start with the industry outlook. There is a very positive sentiment across the industry. There was a good monsoon prediction and we have seen the good pre-monsoon showers that has covered the entire country at large. All the catchment areas are receiving good rains. The crop sowing is expected to start a little early in the early part of June itself. Farmer has made good earning in the field crops, in particular in the rabi season because the crop condition was good and prices of most of the field crop was quite good. The raw material prices for the industry are stable. And overall, I can say that there are the signals of favorable tailwinds and we expect this to continue in fiscal 2026 also. Now let me talk about IIL. We had very good launches during the year. The highest number of launches, almost 12 launches were done in the fiscal '25. Out of these 12 launches, 4 products I'm able to shift to Focused Maharatna this year. The total number of Focused Maharatnas till last year were 12, which has been increased to 16. And I can say that there is a very good acceptance of the products we take to the market last year. The farmers are generally very happy. The trade is happy. And I expect the good growth from these products. This year, we did not wait for the season. Whenever we got the registration, we launched the products. I can say it was a trial launch. That's why the number achieved in the last year was not very big. But this year, as I have suggested, that 4 products are moving to Focused Maharatna and rest of Maharatnas also will be giving a good performance. So we can anticipate that this quarter, these products are going to support us well in our growth strategy. For the year 2026 also, the number of launches are big. There are almost half a dozen products which are lined up for launches. So recently, in this week, I've launched a product called Altair, which comes from the stable of Nissan, which is the 7th product in the list of Nissan, which is coming to Insecticides India directly from Nissan. And today, we can say that Nissan is the most important Japanese partner for Insecticides India and plays a very important role in our patented product portfolio or I can say the value-added portfolio or the premium product portfolio. So this is going to be a herbicide for rice, again patented, very interesting product. And in the recent past with our launches, Insecticides India has developed a good, I would say, on the herbicide segment. For almost all the major crops in the country, we have got the specialty herbicides and they are doing very well across the country, may it be rice, soybean, pulses, maize, cotton, wheat, sugarcane. We have got the solutions and they are #1 solutions in that segment. If I talk about the major herbicides, which are doing good for IIL, they are products like Hachiman, Torry, Torry Super, which is a recent launch, Terrox, Green Label, Green Mix, Greene Expert, Stroke, again, it was relaunched by making the technicals in-house, [ Million ]. So in this, Terrox came out of our own technical Torry and Torry Super, Torry Super which was our recent launch, again came out of our own technical. Stroke came out of our own technical, which was relaunched. Million came out of our own technical. So a lot of development is taking place for AI manufacturing also and which take these products to the FM segment. And we are very, very confident that we'll be able to make them big. Talking about our presence across the country, I can say that today, IIL is present across the -- throughout the length and breadth of the country, across all crop segments and we have the solutions for every crop for every season, which makes us more buoyant that we are present across and selling throughout the year. So the 60% business comes in the first half of the year. So that is going to remain like that. But you can see that in Q4, we have posted a decent increase in our top-line as well as the bottom line. And I believe that this type of future will continue in the future also. Talking about the Dahej plant, there is a good news. We had made an investment of about INR 150 crores in this plant. And now this plant has received the in-principle approval from the government, which means that in the month of June, we will start our production. The plant is going to commence the production. So there will be a lot of new products which will be started in these plants and there will be some expansion of the capacities because the new plant will be used majorly for manufacturing of insecticides, fungicides and the intermediates. In the old facility, we are going to enhance our capacity and some new of herbicides and their intermediates and also some new herbicides will be launched from the older plant which means that we are going to divide the herbicides and the insecticides area in totality in Dahej plant in this fiscal because the announcement in the power connection is also expected, which should come in another 2 months. So we will come into production. And this year, this plant is going to contribute roughly about INR 100 crores, this expansion, with a CAGR of more than 50% in the next 3 to 4 years because the expectation is very big and our hope from this new expansion is quite big and we'll be launching many new products and increasing our capacity for many products from this new expansion. Here, I would also like to talk about our expansion budget, which for this year, we have kept at around INR 100 crores in FY '26. A major investment is going to go to Sotanala, which is going to be a fully automated plant, and it will boost the momentum. The most -- the part of the INR 100 crores expense is going to go to Sotanala. There will be some maintenance CapEx, which will be used across our plants. But yes, the major part will be this. Here today, I would also like to talk about the inventory, because on 31st of March, you would have seen the increased inventory in the system. So that's the part of the strategic move, because if you look at the current scenario, the monsoon predictions were quite good and the preparedness was the -- for the new season was quite needed. We had very aggressive launches in the year '25 and we have very aggressive launches in '26. There were a lot of new rice, new brands which are to be introduced into the market. So we had to build up the inventory in the month of March which will finish very soon, by June, July. You'll see a big impact because these are the months of selling and we are fully prepared to take on the market. So the most important thing, which I would like to talk today is that we are working on effective implementation of things all across the organization. So we are working on inventory control. We are working on working capital. We are again working on the expansion and projects and to finish off these things kindly. The outlook from the trade is very, very positive. I shall always beat the market. We shall continue with our double-digit growth strategy with the top-line growth coming majorly from Maharatnas, which will mean that the bottom line will increase better than the top-line. So with this, I hand over the call to the CFO, Mr. Sandeep Aggarwal, to explain the results.

Good evening, everyone, and welcome. So the major financial highlights of the results are very strong revenue growth of around 32% registered during the fourth quarter of FY '25. And the major -- with a very good margin improvement also. The major growth has come from our premium products. The major products in which we registered the growth are Shinwa, Izuki, Mission, Mycoraja and some new launches. And gross profit margin in FY '25 also stood at 32%, which is showing improvement of 655 bps over the last year. So this is due to the better product mix sales, improved pricing strategy on which we are working and some new launches. So they all combined contributed to the improvement in the gross margins. The EBITDA margin for FY '25 also improved by 281 bps due to the result of our aggressive market campaigning and field promotions to support the launches of the new product in the market. The return on capital employed and return on equity has also improved in FY '25. So the ROCE is 18% and ROE is 13%, respectively, during the year. If you see the results, some working. So if you see the full year revenue growth, it is around 2% and quarter-on-quarter revenue growth is around 32%. B2C premium products versus generic, if you see during the full year, the premium products has increased from 59% to 61% in overall B2C sales. And during the quarter, it has come down from 52% to 51%. And you will see the sales by segment. So the basic improvement is there in B2C sales segment, which has increased from 69% to 75% and the corresponding decrease has come in B2B sales from 26% to it has come to 20% for overall year. Whereas during the quarter, the B2C sales has come down from 62% to 59% and B2B sales have increased from 24% to 27%. We will see the margins. The gross profit for the full year has improved by 28% and the gross profit for the quarter has been increased by 51%. So EBITDA margin also improved by 36% for the full year. So from 8.3%, it has come into the double-digit figure of around 11.1%. And EBITDA level for the quarter has also improved by 226%, from 3.2% it has improved to 7.9%. We will see the PAT. So full year PAT has also improved by 39%, from 5% it has come to 7%. And during the quarter, it has improved by 85% from 2.8% to 3.9%. So these are the basic financial highlights. So now we can open the session for question and answer.

[Operator Instructions] The first question is from the line of Bharat Gupta from Fair Value Capital.

So first of all, congratulations for a good set of numbers, sir. I have a couple of questions. So first, can you just speak to us about the volume growth which we have witnessed during the quarter 4 and for the full year as well?

So in the full year our volume growth has been roughly 10%. The average price decline during the year is around 8%. So the total growth in terms of number is showing about 2%.

And sir, for the quarter past, sir?

Quarter I'm not sure as such, but quarter we are showing an increase of 32%. So you can increase that roughly volume growth will be around 40%-odd.

Right. So sir, it's primarily driven by the -- like the pre-hit or the early onset of the monsoon or like can you just brief us about the good amount of growth which we have witnessed during the quarter?

Quarter is not very important actually. Quarter is just due to the sum-up because there were certain launches actually [indiscernible] this growth had come in, in the last year itself. So in the B2B segment, we could push some Stroke quantity and some other products were placed in advance. So generally, we don't do that very much, but we could manage to get some part of volumes from other segments like B2C, B2B and also from exports. So everything contributed and it was positive.

Right. Sir, secondly, with respect to the recently launched product, paddy herbicide, so can you just brief us about the estimated market size of this product? And does it complement Green Label, which is our existing product, in the paddy herbicide category?

Yes. These are all complementary products actually because this is peak herbicide which has to be used immediately after [indiscernible] like I have every type of solution at different price ranges because some of the generic solutions which we have are INR 300 to INR 400 per acre range. There are some specialty solutions that go up to INR 600, INR 700 per acre range. This is going to be expensive product, particularly for the farmers where the weed intensity is very high. And after using those generic solutions or even the new generation solutions, they are forced to use the labor also because of that high density of weed and the variety of which are not controlled by the generic products. So there, they are spending about INR 4,000 to INR 5,000 on the manpower per acre. So for those farmers we have brought this type of solution which will cost roughly INR 1,800 and this will save them the money and labor and this will increase the productivity in their fields. Why? Because the entire weed control is going to happen by the chemical solutions which will decrease the competition from the weed. So the crop yield and the crop rigor is going to increase actually for this farmer and we will pay this money. So the target -- initial target is in the luxury segment. And the basic target of achieving the sales is going to be from the east central part of the country and southern part of the country. So they will be the major markets for this product. And talking about the market size, paddy herbicide market is a very vast market actually. So if I talk about the generic product, then it goes in large volume. The [indiscernible] is very, very popular [indiscernible] then the mixture. So there are lot of products which are selling at very high volumes. So in terms of value, we can anticipate to begin with a modest number of INR 10 crores, INR 15 crores, but in the second year itself, we can touch INR 40 crores, INR 50 crores with this product. So at this moment, I'm putting it in Maharatnas. Next year, there may be a possibility of catching up Focused Maharatnas.

Right. Sir, with respect to herbicide only, how do you see the current level of demand playing out because of the early onset of monsoon? And what is the inventory position out there in the market with respect to the agrochemicals across the nation?

Generally, if we talk about the inventory position in the market, people don't keep the inventory. I want to say that distributor will never keep the inventory because after the season they tend to return it to the company…

Sir, sorry to interrupt, but your voice is not clear. Can you come a little closer to your speaker?

Yes, yes. So the inventory situation in the market is, I'll say, there has been the signals of shortages from 3, 4 months. So particularly, if I talk about the rice herbicide, the corn herbicides, there are shortages in the market. So we were building up, we were -- because we are the manufacturer of technicals for many of these products, so we were building up our brand and we are trying to place it in the market in the best possible manner. Even for the non-selective herbicide, the demand is going to start immediately and there are shortage signals from the market. So I can say that June should see a good demand for these herbicides better than usual. So now it depends how much we are able to place. We are in a good situation, but still the tightness we are also going to face in the month of June because there were manpower shortages which happened after the war. So luckily, the war settled fast. So things have started improving, but still the manpower, the entire manpower is going to take some time to come back.

Also sir, like you mentioned, there are shortages and -- like in respect to the quantities which are about to get dispatched. So just with respect to industry, so has the industry players taken advantage of the situation in terms of increasing or creating a price hike? And how do you see the trend of the raw materials placing out during the quarter? And how do you see it for the next quarter?

Demand and supply always plays an important role. For the herbicide, there's a small window actually. So yes, there is some price rise internationally also and the domestic market also, but not very big. But still, like I don't see that already some advantages people have started taking. But yes, if the shortage prevail, then there can be some price rise in the market, but we have to keep the fingers crossed for that.

But like Q-o-Q, we haven't taken any pricing hike in this particular season -- in the start of the season?

I didn't say that actually. Last year was a level of price where there was a price drop. There has been some price improvement in the month of April, so which has gone up to May, and there will be another price. So that's a regular practice actually. Every year, you have 2 to 3 revisions actually, generally till August. So first revision comes up in April -- mid-April or May. Second revision comes in somewhere in June. And if the season is good, then the third revision comes in July also. So last year, they were all negative because July was a very dry month, the monsoons were very, very erratic. So if the rains are good and the season is positive, then there will be positive revision.

Right, sir. And sir, like with respect to the raw material, how do you see that trend playing out?

Raw materials like you have to make an arrangement because it's a cyclic industry. That is one reason actually. We have to plan 4 months in advance. So generally, we'll keep always the stock for 4 months, 3 to 4 months. You cannot do it 100% for all the major requirements, you have to keep the raw materials in stock. So that's the industry practice which you have to, with our large variety and our, I would say, the integration. So sometimes we are forced to plan for technicals formulations, brands, everything to do that. So this year, I had to engage some more godowns, extra godown facility, which we did actually because we were preparing for this. So I can say that IIL is ready, but nobody can fulfill the 100% demand because our business is a stable type of business. When I say stable, like if the rainfalls are low, then you will end up selling 90%. If the rainfalls are big, you end up selling 110%. I cannot do 120%, 130% because achieving more than that target is very, very difficult because you cannot supply at that speed which the market wants sometimes.

Right. And sir, if the situation continues to remain as buoyant as currently it is, in terms of overall, like you have guided you are looking out for a double -- strong double-digit growth, how do you see the volume growth as well as pricing? Like in a range, what kind of a ballpark figure?

Actually it becomes very difficult to predict. So I'll continue with my guidance of double-digit growth only. We'll beat the industry. That is something I would say. I don't want to be very bullish that we'll do that. It will be just beating the industry as always.

Sure. And sir, last question with respect to Kaeros. So any progress which you can share on this? And going forward, how much benefit can it occur for us with respect to gross margin improvement?

Kaeros has been positive. In the first year itself, we have registered a profit of roughly about INR 2 crores. So in this fiscal, we can expect a profit of around INR 10 crores, INR 12 crores from this Kaeros business. But next year, it will multiply. Once we go into the larger chunk of business, then it will multiply. But again, we had bought this company for INR 5-odd crores, INR 6 crores maybe. So we'll make a recovery here too, 100%.

[Operator Instructions] The next question is from the line of Arnav Sakhuja from Ambit Capital.

I just wanted to confirm one thing you mentioned earlier. For Q4 FY '25, what was the volume and value growth?

Quarters are important, but it's the strategy which is more important, I believe. So we are buoyant on this fiscal FY '26, preparing for this. So in this preparation, yes, there has been some volume growth also and value growth also. Like in the last year, if we calculate in totality, we have calculated that there has been a value degrowth of 8%, means the volume has gone up by 10% and the value has gone up by 2%. So that way, it is the value degrowth. The price improvement would have been -- won't have been there in the last quarter. There is some price improvement in the quarter 1, which is the running quarter now. So further price improvement will be at the -- depends on the market, how the market moves further.

And just one more question. So you were talking about the CapEx which you completed, the INR 150 crores of CapEx. Just wanted to confirm this is for the Dahej plant?

We are going to capitalize the Dahej plant because we have got the approval for Dahej plant and we had spent about INR 150 crores in Dahej in the current fiscal. The Sotanala plant is our Rajasthan plant, which we are making. So we have spent about some INR 50-odd crores there already. And there will be additional investment of about INR 100 crores in the new projects, which will be majorly attributed to Sotanala now, major part. Rest will be all the maintenance CapEx because we keep on expanding small, small facilities across plants every year.

The next question is from the line of Sneha Jain from SKS Capital.

I wanted to ask how many new registration or new products are you going to launch in FY '26? And will the majority of them would be 9(3) registrations?

We are going to launch 6 products in FY '26 and all these are expected to launch soon. So the first product is going to be Altair which is a Japanese collaboration 9(3).then there is Centran SC which is again a mixture product which is 9(3). Brahmos will be my own technical which I made and I'm going to launch a formulation, formulation would be 9(4), the technical registration was 9(3). And [indiscernible] another mixture which is going to be 9(3). Victor gold was a good product, it's a launch of that, it is 9(4). Another product is Stroke which has already come in the -- not Stroke, it is Sparkle. Sparkle is going to be 9(3) again. It is patented product which is going to come in a collaboration.

Sir, I wanted to probe a bit about on the reciprocal tariffs of U.S. basically, both on us and on Japan, which is a mega trading partner for us. And will we be signing further JV contracts manufacturing in India with them?

Everything is going to be happening. You have to understand that pesticides are the commodities which are the restricted products. You have to register, then you can sell. So at the moment, I don't have any registration in U.S.A. and our major part of the business comes from the domestic market. About 95% business is domestic business, 5% is export. That does not restrict me from doing the international businesses because we are investing too much on registrations in Japan, in America, America including South America and North America, all the countries, Europe and many parts of the world. So many of my products are under registration because the major -- you have to understand one concept. The concept is China plus 1 and Europe plus 1. Previously, these were the manufacturers. Now people want to look at the alternative sources who can manufacture and supply to them. So India will also be one important partner for America. And if my product gets the registration and I am in competition, then they have 2 comparison. They have to compare me with China or any other Indian company. If I'm competitive, definitely, I'll get the market. And even if I'm a little expensive, then also because the other partner who is going to work for me in America or in any X country, he has invested money on me and he is banking on me, so he has to take some quantities from me which can be large or small it depends on the type of working we have. So the dependence comes in automatically. We'll get the share. So we expect that, yes, we are going to grow in the international market, but I don't want to give any big data for that. At the moment, we are a domestic play company with 95% contribution coming from the domestic market.

So can the Japanese company give outsourcing to us?

We are already working on this. I'll make the announcement once the business starts. We are already working with many companies for many products. The agreements are there.

Okay. And sir, last question would be what would be the growth levers for us in FY '26 and for the next 3 years? I mean, the outlook basically, what would be the growth levers?

The strategy is the premiumization. So we wish to bring the efficiency in the system. We wish to bring the premium products to the market. We wish to introduce newer, patented, IPR protected products. We wish to do new formulations, new technicals. We wish to do the CRAMs activities for the companies. So there is a lot of new technology products which are going to come from this stable of IIL. We are going to grow in the domestic markets as well as the international.

[Operator Instructions] The next question is from the line of Kartik from Samatva Group.

Many congratulations to the management of Insecticides India for a good set of numbers. My first question is what is the outlook on the exports? And is any of the CapEx that we have recently done and the one which is in pipeline aimed at increasing exports?

Exports generally don't need too much of CapEx. It's a routine CapEx, which I'm investing for the export market, because for exports, you have to invest on generation of data. We are having 3 NABL labs and the fourth one is also coming up. So I think it's 4 now, 1 GLP lab, which is in-house. So we develop the impurities in-house. We develop the technicals in-house. We develop all the reference standards in-house. And after that, we give it to the CRO. It's a regular practice that the R&D teams have to do. We have a team of more than 150 R&D scientists which are engaged regularly on working on development of products in different stages, formulations, technicals, improvement of recipes. So they are doing their work. So that is a regular salary which I'm paying. So it goes from there. So nothing big. When I sign the export agreement from any company, those companies have to generate the data in their countries, I have to give them the centralized data, which I keep on generating regularly as a regular practice. So there is no special expenses which I have to incur for exports apart from keeping an export office, which I have at Mumbai. Mumbai, there is a team of about 20-odd people who are sitting for the international businesses. So that is the expense I'm making. At the moment, my contribution from the international market is coming to roughly about 5%. That will grow slowly. There is not going to be any dramatic change. But yes, we are expecting some international orders from big companies. So once they start, then it will start changing. So once the business start happening because initially you get the trial quantities. After the trial quantities are successful, then you start getting the regular quantities. So once the regular quantities start happening, then yes, the international business will start growing directly. But at the moment, contribution is 5%.

The second question is on Slide #10, there we have a good practice of actually showing the product freshness index. And we have always witnessed an exponential growth in each of the preceding years. However, in FY '25, it seems to have at the 500-odd level. Is there any specific reason behind this or tapering is the reason, sir?

Very interesting point you have picked up actually. Sir, I would like to say, as we grow in the premium products, we have grown in the premium products here again in this fiscal. So in the B2C segment, it has been the growth. But in the B2B segment, I have suffered a degrowth of about 20%. In the past year, what was happening that when the new product is introduced, people take P2P. So when they were taking P2P, we are including it in the freshness index. But this year, they have taken bulk. So that showed a negative thing. I'll make the improvement in our presentation that from this year, I'll only show the brand, I'll not show the P2P product. So that improvement will be done and that will be visible. So in totality, I can say that the follow-up or the following of Insecticides India Tractor Brand products is very high in the market. The response is very good. And that is the reason that I'm able to add 4 more products to my FM segment. And all these 4 products were introduced in the last year. So I'm that confident with my products which I'm launching. So that confidence also goes with the freshness index. So incidentally, since in the past, the B2B were also covered. So that is showing negative trend, but that will improve. We'll remove B2B from it.

You mentioned that there could be a INR 100 crore outlook from this subsidiary. Are we sticking to that guidance, sir?

Could you repeat the question, please?

Sir, your subsidiary, Kaeros, which you have recently acquired. And last time when the acquisition news was shared with the shareholders, you have also given certain guidance that there could be a possibility of INR 100 crores in FY '26. Are we sticking to that guidance from this subsidiary in this financial year?

Yes. I have recently -- I just in answering to another question, I said we'll be registering a PAT of about INR 10 crores plus. So to reply your question, yes, we'll stick to INR 100 crores.

The next question is from the line of Kunal Tokas from Fair Value Capital.

Just 3 quick questions. First, just can you give us a brief about your joint venture with OAT Agrio from Japan and talk about progress has been made in new products from that joint venture?

Yes. It's the old story. We tied up with OAT Agrio in 2013. So now there are 12 years past. So what is the job of the JV? The job of the JV is to develop the new products, test them in Japan and test them in India and then give it to the 2 partners. So 2 partners are OAT and Insecticides India. So yes, they develop the product and pass it to us. And now we register these products in different geographies of the world and we have to launch. So the first product which was developed by them, so it has passed many tests and other things. So the name is given to it, the IPC name, the chemical name, the other things because it takes a lot of time in all the passing through all these stages. Scaling up is complete. So very shortly, we are going to make application in India. And after that, it will be applied in different parts of the world also.

Will this be the first product to be commercialized out of this joint venture?

Yes, this is going to be the first product which will be commercialized by the JV, but there are series of products which are after this. And let me tell you that these are the real inventions, which are the new chemicals. We call it, NCE, New Chemical Entity with different modes of action. So these are new modes of action, no copy products. I would say, long chain products, which has come after a lot of research because we have research more than -- like we develop more than 5,000 products every year. And in 12 years, we have tested more than 60,000. After testing 60,000, we got new 3.

Can you maybe also provide any idea about the potential of this new product or the other products that are yet to come?

I will only say, when you develop a new product and talk to a MNC, they will say, INR 10,000 crores will be expenditure in developing a product. That much only I'll say. I'll not say anything else.

All right. And the working capital gains that have increased, is this purely driven by the inventory buildup that you have...

Your voice is not very clear actually. Kunal, I have to make an estimate what you asked.

What about now, sir?

Yes, better.

Okay. The question was about working capital days that has increased. Is this only because of the inventory buildup that you are...

Yes, it's temporary because of the inventory buildup and you'll see the improvement in this fiscal because we are very, very serious on this. I already made a note on my earnings call.

And just the last question. So you talked about the direct effect that tariff would have, which would not be much on IIL. But do you think that tariff might induce China to maybe dump some products there and that can disrupt your business?

Again, voice is cracking, but I have understood that you are trying to discuss about the U.S.A. tariffs on India and China. Definitely, that will always have an impact, but it's the matter of registration. We are not a free product. We are not selling a free product. Every Chinese company has to register their product in the different country wherever they want to sell with every customer. Same is the case for India, register every product with every customer. So it's -- whosoever has the registration is expensive or inexpensive, the other person has to buy because he don't have other option. So if the other person has to buy, then how competitive your product is, it will depend on the quantum you get. So things are important. But overall, I can say there is no much stress in India due to this. The only thing is that the products are going to become expensive for American.

The next question is from the line of Agastya Dave from CAO Capital.

So most of the questions that I had have been covered. Sir, I have one question on the other expenses. There has been a significant rise in that. Can you point out any particular line items which have seen increase and any one-off items there?

I don't think there are any one-off items. I'll give it to the CFO for explaining it. Marketing expenses would have increased, but he'll explain better.

So there is an increase of around INR 57 crores in the total other expenses. If you see, the major expenses has gone up to the business promotion and field promotion expenses. As we are a company, we are in the new product launches. So we have to work very hard with the farmers in the field. So for that, you have to do some demonstrations also, you have to do -- show the product to the farmers, you have to show the IRs. So those expenses have gone up. So majorly those expenses. And if you see the exact, then I can give you the hybrid bifurcation also, but majorly is this.

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[Foreign Language]

Understood, sir. Sir, last question from my side is because there was an 8% drop in realizations, a lot of the line items are -- have moved around significantly if we consider them as percentage of sales. So for example, gross margins have expanded. So the current gross margins are indicating 52% gross margins. Should we consider them going forward and same with other line items because there is such a huge distortion in the realization? And a related question there is, what about the margins going forward? Given I'm assuming that the raw material basket has kind of stabilized now for pretty much everyone and the demand is looking good. So how do you see these things varying going forward?

Rajesh again. We have shown a 50% improvement in our profit margins. First, we would like to stabilize it around this. We are already on a growth path. I already said double-digit growth. I'm already talking about the premium product. We have been working on this strategy for the last 3, 4 years. We are cutting down our sales. Sale cutting is a regular exercise at IIL because whatever products are not paying, we are cutting them off. So all these things, the improvement which we had started 4 years back are paying off now. So they will continue paying off, but I'll not say any dramatic change. But yes, in 2, 3 years, definitely, we'll see 200 to 300 points change actually in EBITDA levels. So that is going to come.

Even from the base of FY '25, sir? Even on the base of FY '25, we expect now 200 to 300 basis points improvement?

Why are you taking it as a benchmark? Yes, there will be improvement, but it will be a slow improvement.

Sure, sir. I understand that, sir. Excellent, sir. [Foreign Language] Sir, employee cost and all that with Dahej plant is commissioned. How much employee cost -- how much do we need to invest in our employees?

[Foreign Language] because I cannot hire and keep them on the plant overnight. [Foreign Language] there are certain terms of the expenses per kg in terms of rupee and expansion [Foreign Language]

[Operator Instructions] The next question is from the line of S.A. Narayan from Capricorn Research.

Rajesh, I'm an admirer of the way you have led the Insecticides India over the years. I have -- given this progress that you have brought, I have 2 questions. The first one is given the PAT, profit after tax, has jumped from INR 102 crores in FY '24 to INR 142 crores in FY '25. Please give a response in one sentence what you did different in FY '25 that there is such an amount of significant improvement in performance?

Simple, the strategy of premiumization. We launched products continuously and we kept on improving the product mix and this is going to continue for future also.

Good. Given this level of performance that you have reached, what is that you plan to do in FY '26 to take the company to the next level?

We are continuously improving the product mix, like we named the product as FMs, Focused Maharatnas and Maharatnas. So we are focusing particularly around the Focused Maharatnas. We improved the number of Focused Maharatnas from 12 to 16, which is itself indicator that, yes, these are going to be the big products and we are going to work around these products, advertise these products, develop these products in the market. And my team and the trade also gets that information that, yes, this is coming in this segment, then company's focus is going to be around these. So this will continue and help us actually. And then we are having some mega launches actually in this fiscal also because there are 2 collaboration products and rest of the products also which are coming are mostly either by my own technical or they are the mixtures which have got IP protection. So these -- all these things are very, very favorable for the company and are going to support, because here, when we supply the type of solutions, then we become the solution provider company, not the product.

So given this, do I consider that FY '26 will be similar to the kind of growth that we have had in FY '25?

Growth will be good. We are very, very hopeful and positive. I cannot say, yes, there will be another jump, but it will be good.

[Operator Instructions] The next question is from the line of Manish Jain from Wealthcare Advisory Partners LLP.

Congratulations on a good set of numbers, sir. Sir, my question was that in your opening remarks, you posed that due to the war situation, there was shortage of workers. So will it affect the placements in the first quarter, sir?

Yes, if you have more people, then there is a chance of producing more. This year, we were prepared and we have been manufacturing...

Sir, your voice is not clear.

Okay. Yes, there is some shortage of manpower because when the war started, so people from Jammu fled actually. And not only there, there was impact at other plants also because people were worried and they were receiving calls from the people in the village come back to the village. So there was -- there is some pressure on the manpower. It will take time to recover. So I cannot do 100% what I want. But yes, definitely, it will have some impact actually because had that not been there, then the performance would have been much better than what it is going to be today. I can only say that we are already on a growth.

So we'll lose some market share, sir, in this quarter?

We never lose the market share. In the last 20 years, I have never lost the market share.

So we have enough stock in the market?

We always plan better from the market, from the competition. That is the reason we are able to grow better. So we have -- we prepare ourselves, we take risk, but these are calculated risks.

In short, we have enough stock with the market, right?

Why do you want your words to come from my mouth actually. We know the market and we are working.

Okay. Sir, my question next and the last question is that, sir, when we'll be able to do a 10% net profit margin? Maybe next year, possible?

No, it's a difficult question for me to reply upfront. So EBITDA levels, we have already crossed 11.5%. It will keep on improving. So when it will match the taxation, then we'll have it. I can say that it should be 2 to 3 years' target.

The next question is from the line of Kartik from Samatva Group.

You said that you were planning to hire for some senior roles and management level and this thing. Is that hiring done or are we expecting some more hiring to happen?

There are things in process. So as they will happen -- because you have to form a strategy, then you have to find the right type of people. And then people get free from their current assignments and join you. So we have been looking at people around. There will be joinings which will happen during this year also.

Okay. Can we [indiscernible]

Mr. Kartik, your voice is not clear.

I'll repeat once again. So the question is, the reason for asking this question is, is majority of costs related to senior leadership or management-related hiring already captured in FY '25 or are we to anticipate a majority of those costs to be reflected in FY '26?

I would say that the routine is going to cover that. So routine changes in salary this year may be between 15 -- about 15% plus, so which will cover the additional manpower required. In '26, again, when the Sotanala plant comes in, then there might be some hike. So it will depend that we have -- we are yet to give the numbers that how much will be the sales gain and what all. But yes, I think we should be able to maintain this 15% CAGR on our salary budget.

Great. And my second and last question, sir, is in the past, Q4 was always subdued when compared to Q3, not absolutely, but relatively, Q4 was always subdued relative to Q3. What has changed in this quarter at Insecticides that Q4 made similar revenue as compared to Q3? And is this sustainable in the future as well? Because are we expecting the lumpiness to settle down going forward as we have witnessed in this quarter?

Actually, we don't form our strategy quarter-wise. There was the pressure on the back of the mind that forced the Q4 and then the expectation from the new season was very good. And then we had certain new solutions which were selling in this Q4. So these were the reasons which kept the sales going in Q4. And then international market also responded, B2B market segment also responded because B2B was also trading behind and they were also under pressure. So I can say that pressure has come -- done some work. The strategy has done some work. And then, of course, the expectation from the new season was very, very positive because already the IMD and the other agencies had started making the announcement about good rainfalls for this year. So people needed the preparedness and the inventories in the market were too low. So people needed those products, so that's why it happened. So I must say that this is not repeatable. It should be repeatable in future.

Thank you very much. Ladies and gentlemen, due to time constraints, that was the last question. I now hand over the conference to management for closing comments.

Thanks all the participants for attending this session today. And with your queries, you have asked very important questions, which will be enlightening all other people who were not present in this call or even who are present in this call. Thank you very much for your positive enroll. Thank you.

Thank you very much. On behalf of Insecticides India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.