Kaveri Seed Company Limited (KSCL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Kaveri Seed Company Limited's Q4 and FY '20 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us on Kaveri Seed Limited's Conference Call. We are joined today by Mr. Mithun Chand, the Executive Director. Before we get started, I would like to point out that certain statements made or discussed on the conference call today may be forward-looking in nature and must be viewed in conjunction with the risks we face. The company does not undertake to update them. A statement in this regard is available for reference in the presentation. We will begin the call with opening remarks from Mr. Mithun Chand, who will share updates on the market environment and take you through the strategic imperatives of the company. He will also share his thoughts on performance of the company during the review period. We will then have the forum open for an interactive question-and-answer session. Now I would like to invite Mr. Mithun Chand to share his views. Over to you, sir.

Thank you, Rishab. Good day, everyone, and very warm welcome to all of you. We are happy with our performance in the year under review. Revenues have grown strongly by close to 15%. At an EBITDA level as well, we have seen a growth of close to 20%. We believe this should continue going forward. While acreages of -- acreage details of crops are concerned, cotton has increased by around 6.5%. Maize acreages are also up by 5%, close to 5%. Better commodity prices have helped in increase in rabi and compensated for the decline in Kharif. Jowar and wheat have shown a strong growth in acreages over the previous year, whereas rice and sunflower have reduced over the previous years. Where our crop wise performance is concerned, cotton volumes increased by 17% in financial year '20. Contribution of new crops went up from 14.85% to 23.11% of total volumes. Performance of Money Maker was appreciated by farmers across markets, reflected in improved sales during the year. Two cotton hybrids are under demonstration with farmers. Maize volumes have also increased in financial year '20 and revenues are up by 10%. This is mainly due to the improved product mix and price gains. Hybrid rice volumes increased by 60%, and revenues increased by 65.54% in financial year '20. Contribution of new products went up from 26.46% to 50.8% of volume. Introduction of new paddy hybrids helped translate to strong growth. Selection rice volumes have increased by 2% in financial year '20. In selection rice, there have been consistent performance across geographies. New product scale-up has been done with growth in Coastal King, Prize & Shireen across markets. In quarter 4 financial year '20, revenues stood at INR 51.91 crores as against INR 44.72 crores in quarter 4 '19, a growth of 16% over last year. And financially -- in quarter 4 '20, EBITDA, including other income stood at INR 19.76 crores as against rupees -- as against a loss of INR 3.56 crores quarter 4 '19. In quarter 4 '19, PAT was at a negative minus of INR 11.43 crores. In quarter 4 '20, PAT was at INR 9.35 crores. In financial year '20, revenues stood at INR 883 crores as against INR 768 crores in financial year '19, a growth of 14.86%. Operating margin, excluding other income, was at 27.12%. In financial year '19, PAT was at INR 214.72 crores. In financial year '20, PAT was at INR 251.26 crores on a stand-alone basis. Our balance sheet continued to be strong. Total cash on books as of March 31, 2020, is INR 337 crores as against INR 413 crores as on December 31, 2019. In January, the company also successfully completed its buyback program, purchasing 28 lakh shares of face value 2 at a price of INR 700. The total amount deployed towards this buyback was INR 196 crores. Overall crop performance in the year ended well, as I mentioned. We are hopeful that with government incentives for agricultural farmers that there will be strong performance moving forward as well. While we are all deeply concerned with this pandemic and would hope for normalization at the earliest, there's also a duty to make sure that we are able to deliver as a company since we form a part of essential services. Right from the first lockdown, till today, we have received strong support from the government in enabling us to achieve and move ahead. Initially, there were minor challenges in supply chain and labor, but that has now been addressed and operations are smoother and streamlined. The government has recently announced Fiscal Stimulus 2 that augurs well for the agriculture sector. We look forward to continued strong performance in the current year on the back of the expectations of a normal monsoon. On that note, I conclude my opening remarks. We would be happy to give our perspective on any questions that you may have. I would request the operator of this call to open question-and-answer session.

[Operator Instructions] The first question is from the line of Rahul Veera from Abakkus Capital.

Just wanted to understand what is the current feedback from the distributors that we are getting in terms of the volumes or discounts or -- I mean, what is the ground level situation as of now for the cotton seed, sir, specifically?

Yes. By seeing the present sentiment of the farmers and the realization, what they have realized last year for the cotton crop, we see it should remain same as last year with a plus or minus of 5%, more or less, it should remain same. In some areas, the cotton acreages are down, but in some areas, the cotton acreages are up. So overall, it should remain same as last year, not only cotton, when you talk about the other crops also, like maize, rice, it should remain the same as what it was last year.

Okay, okay. And sir, in terms of our hybrid rice seeds, are we seeing -- so this hybrids seeds margins are better than the cotton?

Usually, any noncotton crop segment is better than the cotton crop. Definitely, rice also is a part of that segment, and we have better margins in this product.

Okay. Okay. And any particular reason for the pressure on margins in Q4?

Q4 is a very lean quarter. So it's usually -- we cannot consider the margin for the quarter 4. But if you see for the entire year, the margins have improved by over 1% compared to last year.

The next question is from the line of Prashant, an investor.

Congrats on the great set of numbers. So -- so with respect to the cotton situation, as we know, there is a huge cotton crash -- price crash ahead of a global recession, and we're not seeing any sort of effect in terms of sowing activities and the acreages and stuff?

We don't see that as of now. I think the prices, what they have realized for the cotton last year, is they have realized a very good price. And we see some sort of an internal thing that the cotton should pick up going forward. So -- and the governments are also supporting for the cotton crop in some particular states. So I don't see any pressure on the cotton acreages as of now. I think it will remain the same. By seeing the placement as well and the sentiment -- by seeing the placement and the sentiment of the earlier season, usually like Punjab, Haryana, we have seen that even in Gujarat, we are seeing that the demand is slightly declined, but not as anticipated. I mean, to say it's almost same as last year.

Wonderful, sir. Sir, my second question is, given this constant acreage, are you still guiding for a 15% to 20% sales growth this year and 18% to 25% profit growth for FY 2021 as well? That is like we did like INR 40 in consolidated EPS this year. So next year, are we sort of guiding like INR 48 and above in terms of consolidated EPS?

Yes, we stick to our guidance what we have given earlier. We said that 10% to 15% growth in cotton and 20% to 25% growth in noncotton. Altogether, the company should grow in between 15% to 20% with a better margin. We still continue with the same guidance.

The next question is from the line of Abhijit Akella from IIFL.

Congratulations on a good year. Yes, just a query regarding the outlook for the kharif season now. In cotton, I believe the Telangana government has been sort of advising farmers to grow only cotton, if they want to get the Rythu Bandhu installments. So in that context, by how much will you expect Telangana cotton acreages to increase in this upcoming year?

Definitely, if you see the government is giving instruction to the farmers. We see the cotton acreages of Telangana should go up significantly. They are saying an acreage of like 75 lakhs acres should come under cotton. It's like 15 lakh acres more than last year. So I think that should -- that will happen as of now. And they have done enough research, the government source. They are saying that they will buy back the entire quantity from the farmers. So definitely, that will increase and there will be a reduction in the maize acreages to some extent. But as a company, we are present in both the segments. We don't see much of a stress on the volumes because as -- in maize, we are expanding in central and northern parts. So we should -- as a company, we should -- we will not have much of an impact on maize. Definitely for kharif, we have impact in maize, and that will be positive for cotton in Telangana. And the same government is saying that they will support maize in the rabi segment because they have enough water now. So they can take few crops. So as an overall basis, on year-on-year basis, even Telangana should come up with the same acreages what it has last year.

Okay. Understood. And second, just with the royalty cut in cotton now, royalty has been reduced to 0. So can we expect some expansion in EBITDA per packet in FY '21? And if so, could you give some sense of how much it could be in terms of rupees per packet?

So if you compare to previous year to this year, the royalty of INR 20 what we paid last year is 0 for this year. So technically, it should stay back with the company only. As of now, we don't have any plans to give it to the dealer. It should increase our EBITDA.

So can we assume that FY '20 EBITDA per packet would have been say about INR 110 or something like that? And that can increase to about INR 130 per packet or something like that?

Yes, INR 20 is a straight away positive. It should add to the EBITDA margin, but it should remain. But INR 2 or INR 5 here and there, but it should -- the entire amount should come back to the company only.

The next question is from the line of Sumant Kumar from Motilal Oswal.

Sir, my question is regarding maize. So maize prices -- price has corrected significantly. So assuming crop pattern shifts towards other crop, so how Kaveri is going to take their position in maize? And how are we going to grow in this segment?

I don't see a major decline in the maize acreages this year. If you see, only in Telangana government, the maize acreages are down, but if you the Northern India, especially like Punjab, Haryana, the government has encouraged the farmers to go for maize other than cotton. So overall if you see as overall acreages across India compared to previous year, I don't see much of a change in acreages, 5% plus or minus on each crop based on the rainfall. Otherwise, entire acreages should remain the same. And the other point, what we need observe her is that we had a very good monsoon last year, most of the tanks are full, ground water is also full, and we are expecting a very good monsoon this year also. Definitely, they will have a good scope of maize crop. And initially, the prices have corrected in maize, but if you see, as of now, they have good compared to the previous years, almost like a INR 1600, INR 1700 a quintal is a good price for them. Initially, it got corrected in the lockdown, but again, it moved up.

So you were talking about you were targeting north market. So as per my inform -- whatever the information I have, it has corrected 20%, 30% compared to previous year. So in that case, farmer might shift to other crop also in the north market, and where you are trying to expand the market?

North market, governments are telling farmers to go for maize. So -- and that's what happened in Punjab and Haryana also. We see like -- what I mean to say is that we don't see much of a pressure on the maize acreages. It only corrected 15%, 20% from the peak. Because last time, it was like INR 21 a kg, now it is INR 16, INR 17 a kg, even that's a very good price for the farmer.

Okay. And what is the guidance for the cotton packet this year?

So we said like 10% to 15% growth in cotton and 20% to 25% growth in noncotton.

So you are talking about the volume growth, right?

Volume growth.

Okay. And any production cost increase in this year, which you expected?

Not much. It is in line with last year. And in fact, in cotton, the production price is slightly lower than last year.

The next question is from the line of Madhav Marda from Fidelity.

I just have one question. I joined a little late. I don't know if you've already addressed it. But due to COVID, has there been any disruption in terms of our logistics or distribution of our seeds to the dealers? And are you seeing any sort of challenges in procurement from the farmers?

As of now, no. But initially, there was -- when the lockdown started in the March last week, so we have seen some sort of a difficulty in terms of the transportation, in terms of supply chain, like the transportation, getting the produce from the farmer to the factories and the labor issues. But as government rightly intervened and made -- seen us as essential commodity and most of the factories are operating in the lockdown period. As we have a very good infrastructure, we have divided the entire workforce into 3 shifts. And then based on the social distancing norms as directed by the Central Government, we have done our work. And we have placed the market -- we have placed the products in the market much before the time. When you compare to the last year, we are much ahead of last year. Because by seeing the pandemic, we started sending into the market a bit earlier than last year. So we don't -- as of now, we don't see much of an impact of that. Yes, internally, in some areas, where containment areas are there, there is a bit of an issue. But it's manageable. It's very small part across India.

The next question is from the line of Chirag Dagli from HDFC Mutual Fund.

Sir, in your opening remarks, you mentioned 33% of the hybrids volume was from new hybrids. This was for cotton, sir?

Yes, that was cotton.

And when you mean new hybrids, you mean launched when, sir?

2 or 3 years back, I mean to say that usually it takes 3 to 4 years to get to the level. Like Money Maker is also counted as a new market -- new hybrid only which we launched 2 years back. So that is all getting the volume.

So 3 years back is what we should -- you take it as a hard stop, all right? And…

0 to 4.

And sir, how much…

You can say.

0 to 4 years. Okay.

Yes. Because introduction, we did a very smaller thing, and it will -- from third year, it will pick up.

So this 33% is essentially everything that was sold or that was launched 4 years back?

Yes, 0 to 4 years.

0 to 4, correct. Okay. And how much inventory did we get into the season with -- for cotton?

We have roughly an inventory of close, say, 1 crore packets, which was almost same as last year.

That does not change. Okay. Understood.

Usually, we keep some as buffer. But yes, it's in line with our plans.

Understood, sir. And sir, this year, hybrid rice has seen a sharp volume growth. On this high base, should we assume some sort of tapering down of growth this year? Because -- or do you think that these new launches have some steam left?

See, last year, if you see the growth is more than 60%. And definitely, we see a tapering in the growth. But definitely, rice, as a market, we are increasing our market share, and we will definitely grow by more than 25%, 30% even this year.

Understood. And last question sir, on rabi -- maize for rabi, if you can just sort of talk -- take us through what sort of hybrids do we have for that market?

We have launched many hybrids in the recent years, say, around 3, 4 years back. And even we are continuously launching hybrids for the rabi markets. And if you see the revenue mix, in the opening remarks itself I said that the revenues are up by 10% in maize, even the volumes are not up in that fashion, but the revenues are up because we are selling as the product mix -- basically, we are selling in the high market -- high value markets, which are usually in the rabi in Northern India and central parts. So in that market, we are increasing our market shares. And we will -- planning to continually grow in those markets, as we are launching very good hybrids, and these are accepted by the farmers also there. And that's how we are fairly confident that we will grow in maize also.

So specifically for maize for rabi, what will be our new product introductions contribution to overall sales right now? And where do you think this can be, say, 3, 4 years from now?

In terms of the revenues, rabi is almost contributing to 50% of our revenue.

0.5?

Rabi and maize revenue, 5-0.

5-0.

Only maize.

For maize?

Only maize volumes should -- yes, only the maize volume. First 6 months, 50%. Later 6 months, 50% you can say, in terms of the price -- revenue. But in terms of the volumes, first, contributes to 65% to 70%, and the rest is 30% to 35%.

Correct. And where do we see this rabi maize portfolio say a couple of years down the line, sir?

Definitely, it should go up in the rabi markets. Rabi also contributes equally to the markets, and we are targeting them, especially in Bihar, UP, Maharashtra, and we have launched some hybrids in corn. So these are the markets which are adding on a regular basis. Definitely, going forward, even rabi should contribute same as what it is in the kharif part in terms of the volume and revenues will definitely go up. Rabi should come -- contribute more revenue in the maize in the coming years.

The next question is from the line of Rohan Gupta from Edelweiss.

Sir, first question is on this -- for the current year, which we're looking at FY '21 close to 10%, to 15% sort of revenue growth and slightly higher on bottom line, I believe because Q1 is the most important quarter, and we have just started June month, so almost 2 months in the current quarter is over. So I understand that despite COVID and the logistics issues, which you would have already faced, I understand that you must have a fair amount of visibility for the growth number or the guidance which we are talking about, right? It means that the fear related to the agri being impacted under the COVID is not on a -- I mean, not on ground reality, it's something different. Is it fair to assume that?

I think because if you see the placement in a normal year and this COVID year, we are able to place our products in the market, and the purchase is also happening. If you see Northern India, the earlier markets, early segment like Punjab, Haryana, part of Rajasthan, the earlier market, usually, rice moves there and cotton. Where we are seeing that the farmer has purchased the products and in some parts in Maharashtra, and some other parts, the farmer is purchasing a bit early than the normal year. If he has a chance to buy it, he is buying it. So going forward, as the norms are also now more or less relaxed, I don't see much of an impact going forward, and the farmer can also come and buy it. And with the monsoon season, definitely at the ground level, we don't see much of a difficulty in the agriculture operation.

Okay. So it will be for entire, I mean, agri market, I mean, not only for us, but all the agri input, do you see that the 10% to 15% kind of growth is fairly normal in the current year also?

See, I can't comment on the agri as a product, but if you see the agriculture as such, being good monsoon last year, and we are anticipating a very good monsoon this year, definitely, it should favor the agriculture operations, for sure. And the way the governments are also supporting the farmers and basically if you can go back, if you can hear the Indian Prime Minister is constantly saying that we need to increase the farming community to double the farm income, and he is always talking about the remuneration to the farmers, that will definitely help agriculture. And these type of monsoons will also help the -- improve the farmer sentiment and the yields. Definitely, agriculture should do well. And in terms of the seeds, we are already seeing that, it's like normal as compared to previous year. And in some areas, even the season is a bit early compared to previous year because they have enough ground water and tanks are full. I mean to say all the water sources are full.

Okay. Sir, second question is on corn. So you mentioned that even despite the corn prices have fallen a lot, despite that, you believe that the acreages are likely to remain at the last year's level. That's slightly confusing because we understand that almost 30%, 40% fall has been there in corn prices. So how do you see that the corn acreages are unlikely to be impacted? Just want to understand.

If you see the corn prices last year, it has gone up by more than 40%, 50% over the previous year. For example, usually corn used to trade in between that INR 12 to INR 15 a kg, but last year it went up to INR 21, INR 22, the peak of the season. Now they are trading around INR 17-odd. So I think even at INR 17, it's a very good price to the farmer. And the other thing what we need to understand here is that there's no other alternate crop, which is more remunerative than corn.

Okay. So you think that still at INR 17, corn is still remunerative than other crops?

Yes. By seeing the current water conditions, by the other climatic conditions, corn is remunerative for the farmer. And I think that I don't see much of a pressure on the acreages.

[Technical Difficulty] Nandan Vartak from Wealth Managers.

So just a small question about how we are supporting dealers this year. So normally, we don't provide credit for dealers, that is understanding. But are we so extending some support from our side for the special COVID scenario?

As of now, no, because the season just started and we have got good advances compared to previous year. And the dealer has given -- I mean to say, we have collected more money from the dealers from the last year in terms of the advances. And usually the cash flow of our business starts come late June once the monsoon is done, the sowing is done. Once the monsoon arrives, the sowing will be done and the dealer pays the money. It will go up to August end. But as of now, we don't see much of a pressure in terms of the cash flow. But yes, by seeing the other conditions, we can expect a bit of a cash delay, but that should not affect our operations or anything. And I don't think that will lead to any defaults.

Okay. Okay. And can you just give a number for dealer you are tied up with?

Sorry?

Dealer number, can you give that number? How many dealers do we get tied to?

So we directly or indirectly deal with more than 40,000 retailers across India.

Okay. And that would be compared to last year? Is there increase?

It will be more or less same because we have operations across India, and we are the only company who are present in more than 22 states, and we operate in many crops. And by seeing our portfolio, the addition of new dealers will not be significantly high when compared to the previous year because we are already there in new segments.

Okay. So penetration in North and Central area, whichever…

We are already there in Northern and Central India, the dealer network is already there. But we need to gain the market share. That's what we are doing now.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

First question, a bit confused on the volume growth that you are guiding for cotton because you said that the inventory that you're carrying is similar. Although if I see your balance sheet, the inventory values are much higher compared to the last year. And then again, the acreage -- and the acreage is the same and that you're guiding and prices are also down for cotton. So how are we seeing this 10%, 15% volume growth in cotton?

Yes, if you recollect, I said that the cotton acreages should remain the same. And we will be increasing our market shares in the states where we are operating. That's how we are getting a growth of 10% to 15%. And if you see the inventory, the other noncotton crops, the growth of 20%, 25%, what we are talking about 15% to 20%, definitely, the inventory of other crops are also higher. That's the reason we see a high inventory from better business. Also, combination of all crops.

No. But you said that the inventory of cotton is 1 crore packets, which is similar to last year. So hence, how are we able to get 10% to 15% volume growth if you don't have excessive volume?

If you take the volume last year, we have done only 70 lakhs packets. We have a buffer of about the 25, 30 lakh packets. Still we will have buffer of that. Usually, as a company policy, we -- based on the seasonality, we take up production and we put some buffer stock with us. So we manage it that way.

Understood. And since season will be almost over for you for cotton, so how much have we placed already in the system? Since the season for cotton is almost over, so how much have we already placed in the system? How much inventory have we placed?

The cotton season has not yet started. It will start once we receive the monsoon. Only in Northern India, which is a smaller part for us, where the season is going on, but if you take Maharashtra, Andhra, the combined Andhra, Karnataka, it has not yet started yet. It will start from the first week of June. And if you compare the -- if you see our placements compared to last year, we are -- our placements are slightly ahead of last year. And we are ready for the sales.

Understood. And secondly, sir, on the -- with the dealers because of the current COVID scenario, now these dealers will be selling many other products also. So…

Dealers will be…

For the dealers, we have to now collect the cash also later from them after the sale period is over. So how do you see the COVID situation impacting their cash position and hence the receivables, which are due to us?

As I mentioned earlier also, we don't see much pressure from the dealers as of now because we have collected more advances than compared to last year. And the agriculture operations are normal. And the cash flow, if you see, the cash flow is normal in the agriculture sector. It might be different in the other sectors. It's normal, and we don't see much of a threat. But anyhow, to a safer side, I tell that we can anticipate a bit delay in the payment, but that may not lead to the bad debts.

This is the operator. Mr. Gupta, may we request you to come back in the queue for a follow-up, please. The next question is from the line of Nitin Agarwal from IDFC Securities.

Mithun, 2 things. One is, a, we have government announcements which are there around the whole APMC -- I mean the whole APMC Act and all of that. And I guess there is this premise that this is going to impact…

Your voice is breaking, Nitin. I'm not able to hear properly. Your voice is breaking.

I'm saying there is this government regulations which have been there around reforms in the farm sector, around APMC law, repealment and all of that. I mean, structurally, do you think -- does it change anything meaningfully for the seed business?

As of now, for the current season, we don't see any change. We need to go to the Act and then see what exactly they are trying to get out, but nothing has come as of now. And we don't see any change in our operation when compared to the previous years. It will go up for this year. Again, once the act comes out, we need to see it and how it impacts for us.

But even in terms of -- obviously, we will go through the finalities of the finer points of the Act, but from a horticulture perspective, I mean, how are we sort of assuming that it gives a lot of trust and push the horticulture segment, how do you think we are placed while vis-á-vis to sort of leverage on this opportunity?

So basically, we don't deal with any horticulture crops. As a company, we don't deal any seeds in horticulture. It's all the field crops, I mean to say like it's all the short-term crops. And in the segments where we operate, I don't think that will make any much of an impact on us. And basically, they are trying to take the middleman out and they want to give more remuneration to the farmers. That will definitely help the farmer. Indirectly, they'll buy good seeds for us, which will definitely help us.

Right. And secondly, with all the liquidity situation, which is there in the market, are you seeing some pressure on the smaller companies, some unorganized guys, and maybe some market share gain possibility for people like yourself, the larger companies?

To some extent, yes, because anyhow the seed segment is dominated by the organized players only. More than 80%, 85% segment in the organized play -- the big players, the top 10. There are many smaller companies, this time, placement, the companies with no liquidity, like less of a cash flow, they are a bit impacted by this thing. And we think that may move to the organized segment. But yes, already, the segment is more than 80%, 85%, but slightly 1% or 2% here and there, should not do. But cash operations, definitely, they are taking a -- they will take a longer time to recover their cash and everything. But the companies like us, who are cash-rich companies, who sell the stock on demand, for them, I don't see much of an impact, and that will help the larger companies also.

And if I can squeeze one last one. What is the company's high other income which is there in this quarter?

So basically, other income is the income generated by investment activities because we have more than INR 300 crores, INR 400 crores invested in the funds and liquid, or whatever, the debt funds, and the interest income on top of it.

But this is something we can't analyze, right?

We can't?

We can't analyze this other income? There is some lumpiness in this other income or the interest income?

Sorry, I'm not able to understand you.

I mean is there some lumpiness in this other income? Maybe you get this interest payout once a year or something, which gives us this high amount? Or this is a number…

See we disclosed all the investments where we invest in. We have a sheet in the presentation and even in the annual report. I think that all depends on when you release it and how long where -- when that maturity falls. For example, last quarter, we had a buyback. So we already have many -- majority of them in line. And some might have matured in those years.

The next question is from the line of Sanjay Dam from Old Bridge Capital.

Yes, Mithun, just had one question. On an earlier call, when you were updating on the COVID impact, you had earlier said that some bit of 1Q may this time, may spillover into 2Q as well, so 1Q and 2Q would be a better way of looking at things vis-á-vis the base years. Do you still maintain that?

Yes, definitely. That all depends on the arrival of the monsoon. If the monsoon is a bit delay, then the same may fall in the second quarter. But it's basically that is spillover, say. The right way to look at is first half to first half to compare the actual numbers, but we can know by the end, like will it come in the first quarter or second quarter. But as of now, the monsoon looks on time. So this time, it should come in the first quarter itself if the monsoon arrives in the normal time.

Sure. And on your noncotton crop, if I look at the noncotton part of the revenue that you are estimating for FY '21, so if the total noncotton is 100%, how much was it in FY '20 and roughly to the extent you can sense, or, say, what do you expect these parts to be for FY '21, when you say that the noncotton will grow at 20% to 25%?

So basically, as I said, the acreages will remain same. And the cotton may see a growth of 10% to 15% as a company because we'll be increasing our market shares. But noncotton crops, especially, like rice, maize and other crops, vegetables, which where we are growing very fast. For example, if you take paddy, we have grown at more than 60% compared to previous year. So that will definitely help us to drive to our aim, saying that 40% of cotton and 60% of noncotton. And we are slowly moving in that direction. If you go back 2 years back, so…

So sir, in noncotton, today, the -- your noncotton is broken down into how much of rice, maize and veg?

Basically, our noncotton segment, if you take cotton, the last year, it was 52%, this year, it will be close to 50-odd percent. Now cotton and noncotton, it's almost like 50%, 50% now. And if you take out of 50% of noncotton, rice and maize contribute to like, close to 40%, and all the crops contribute to 10%.

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

Sir, what was the vegetable seeds revenues for FY '20? I think in FY '19 was close to about INR 14.5 crores, INR 15 crores?

Yes. FY' 20 is close to INR 20-odd crores. We have grown by more than 40% in vegetable seeds.

Okay. And this, we expect probably a similar kind of growth rate of, maybe, 30% plus/minus over the next foreseeable future, right?

Yes, definitely, it should be slightly above the 30-odd percent, even this year by seeing the crop what we introduced in the last couple of years, we see a very good demand for the hybrids, especially in okra and chili. So this will definitely add to the revenues. And we are hoping that vegetable will contribute well in the next 4 to 5 years. Definitely 30% plus growth we can witness in vegetables from this bottom -- this baseline.

Right. And sir, any update on the biotechnology, new R&D laboratory? I think we were going to invest almost INR 20 crores. So is it completely invested? And what are we expecting in terms of CapEx for FY '21?

As we say that R&D is a very continuous activity and every time we invest in R&D. And if you see the investments in the last couple of years, they increased more in R&D. For example, the lab what we have constructed, we invested close to INR 20-odd crores in that. And that is actually helping us to innovate more products. We are combining the normal traditional techniques with the biotechnology to get a better hybrid. And that's progressing well. And we do invest in that and it's operational now. And even for this season, if you see -- with the help of the biotechnology labs, we were able to analyze fast in terms of the quality checks in this current COVID situation. Because the analysis of what do, the techniques of what we use in biotechnology, we use to check the quality and all those things depending on markets considering traditional things. In that way, it is helping us and is enabling us to both in terms of the quality check and in terms of getting of hybrids with a -- in a faster time. And going forward, the CapEx INR 20 crores to INR 30 crores year-on-year CapEx, what we have said last year, that will continue for this year also, and we don't see a major capping on the mark on this too.

Right. And just last clarification. So our employee cost on a year-on-year basis have gone up by almost 23%, 24%. So incrementally, do we foresee a similar kind of increase or probably the rate of growth will come down to maybe a reasonable 10% to 15%?

Last year, it was close to 25% because we invested more. We have hired more people in biotech. We have invested more in R&D. And usually 10% to 15%, 10% is the increment what we give. And going forward, last -- it may not be like 25%, but it will be in line with the normal growth, not more than that.

Our next question is from the line of Deepak from B&K Securities.

As we have like surplus cash in our balance sheet, so this year also, we are going for the buyback or is there any other things you wanted to add?

We don't have -- as of now, I can't comment on that. But if you see -- we are saying that we don't have much of a CapEx, and we don't have much of a requirement of the cash. So if you see in the last years, we don't have a policy, but whatever we earned in the last 3 years, we have done 3 buybacks and every year we give dividend. And going forward, our policy is that. But anyhow that is subject to Board discussion, Board meet, Board outcome. But definitely, our intention is to reward the shareholders.

Okay. And sir, second question is on -- you have mentioned that noncotton has a better margin than the cotton. Can you just give us, sir, some -- like, color on that and quantify that what is the, like, margins, like, range? It will be like helpful, sir.

In cotton, the margins are basically -- usually 15% to 20%. In noncotton crops, it will be usually 30% to 35%. As the government controls the cotton prices, we don't have much room to increase the prices. That's the reason we see a pressure in the cotton prices, whereas noncotton crops, we are free to price, and we have more margins.

The next question is from the line of Saurabh Ginodia from Stewart & Mackertich.

Sir, if you can share the exports number for current year? And how do you see exports going forward?

See for the present year, we are just up by 10% compared to the previous years because we lost some order for Pakistan, before that was in the third quarter, not in the fourth quarter, that was in the third quarter, but we are slightly growing compared to the -- in exports compared to the previous year. Going forward, definitely, we see a 20-plus percent growth in exports also.

Okay. Okay. And sir, can you share the inventory write-off number for the current year?

As of now, I don't have the exact figure, but these are in line with the last year figures, not much of an inventory write-off, like about INR 17 crores to INR 18 crores.

Around INR 15 crores to INR 16 crores?

Yes, the INR 17 crores, INR 18 crores, whatever it is. And then that will be a routine process every year.

The next question is from the line of Abhijit Akella from IIFL.

Yes. Just to confirm, how much was the increase in advanced bookings this year so far?

Last year, it was close to INR 200-odd crores. This year, we got around INR 220 crores to INR 225 crores. And the difference between last year and this year is that last year, the majority of the advance has come from the cotton. This year, it was from the noncotton segment because we have discouraged dealers to pay the advances, as we don't have much margin to give it to them. Even in that scenario, we got as a combination of both, we got more advance than last year.

Right. So just to confirm, INR 220 crores compared to INR 200 crores last year. And what would the split be in terms of noncotton, if you could share that?

Last time, cotton was close to around, like, say, INR 135 crores, INR 140-odd crores. And noncotton was around INR 65 crores, INR 60 crores. This time, noncotton and cotton both are equal.

Okay, understood.

Both are INR 100 crores plus.

Right. Okay. Second…

I don't have the exact figures as of now, but these are in similar lines.

Right. No, that's helpful. And there's a note in the results about Genome Agritech, about the fact that it may require further fund infusion by Kaveri. So what are the plans in this regard? And if so, how much money might you be putting into that?

Nothing. You can see in the last 2 years, we have stopped the operations in Genome. We have started a new company by name Genomic, which is a 100% subsidiary. Earlier, it was 50%, 50% joint ventures. So we have stopped operations in that. That's the reason auditors have clearly mentioned that this may not continue going forward, that's the reason they have made a note of it, and we will not continue any operations in that company.

Okay, fine. And in terms of the roundup ready seed. What's the outlook for this year? Could there be a big decline in roundup ready acreages this year, just given the fact that the lockdown might be leading to disruptions for the smaller producers. So is there a chance for large companies like Kaveri to capture market share from the roundup ready segment?

It looks -- as of now, it looks like, because most of the smaller companies or the illegal segment or the unorganized segment, they were not able to, I mean to say, pack or produce, I mean to say, properly place in the market. Production has been already done for those products, but they were not able to place it properly because there were a lot of issues in terms of the packing and this counterfeit products were not that freely moved. So as of now, it looks like that may come to the organized sector, but we need to wait and watch it. Here in the ground level, we don't see that sort of a movement when compared to last year.

How much would the segment have been last year in terms of size?

For example, cotton, last time, it was close to around 45 lakhs to 50 lakhs, that we need to see how much it is coming in.

Okay. So about 10% of the market, 10% to 12% of the market.

Yes, yes.

Got it. Got it. And just one last quick thing. In the fourth quarter results, we've seen corn seed revenues have not grown by much, even though you had a very good third quarter. In fourth quarter, growth rates have slowed down and even the gross margins for the company all have come down. So if you could just talk about reasons for that?

Nothing. Fourth quarter is a very lean quarter for us. Some sale was not recognized because the season, it was a bit delayed in some parts. That's one part. And anyhow, the INR 5 crores or INR 10 crores of sale, which should have come, that's it. But if you see, as we have grown more inventory in cotton, our last quarter, the kapas' contribution, I mean to say the raw cotton contribution is more in fourth quarter. That's the reason we see some sort of an impact on the margins. But anyhow that fourth quarter, we should not take into conversation because any INR 1 crore or INR 2 crores here and there would make a larger impact.

The next question is from the line of Prashant, an investor.

Sir, so I see around INR 780 crores cash on the consolidated balance sheet. Can you sort of comment on that? Where the cash is located in terms of subsidiaries and what the company's plans are for that cash, INR 780 crores?

I don't see. Where exactly it is? We don't have INR 780 crores of cash in the consolidated thing.

Sir, in the cash flow statement that you published, cash and cash equivalents at the end of the period, it says INR 778.58 crore.

In the current result?

No, in the results that you published.

I don't have the results sheet as of now, but I'll just clear your doubt later on.

Okay. How much cash do you have on the consolidated level?

See, the majority of the contribution comes from the stand-alone basis. And whatever cash we have on a stand-alone basis, that's the cash what we have. As on March 31, it's like -- 1 second, we have a cash equivalent of INR 337 crores as on March 31.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

Sir, just one thing that you had commented earlier on the market share movement. So where are we gaining these market shares from which geographies, if you can give some color on that, sir?

So for each crop, we are getting in different states. For example, in rice, we have gained market shares in states like UP, Bihar, Chhattisgarh, Jharkhand, Northern India. And for cotton, we are gaining market shares in Gujarat, parts of Northern India and Maharashtra and even in Karnataka. In maize, we are gaining market shares in Central India and Northern India.

The next question is from the line of Karthi Keyan from Suyash Advisors.

So one question is the breakup that you gave of cotton revenues and the other components, is that a part of the consolidated or stand-alone basis? How to understand that? Because Aditya would be part of the consolidated, right?

Sorry, Karthi, your voice is echoing and…

Sorry. Can you hear me better now?

Yes. It's slightly better.

So I was asking you whether the revenue mix that you give is on a stand-alone basis or as a consolidated basis. As in -- are you including Aditya also in this? Both…

Revenue mix is a stand-alone basis. But Aditya, we believe, Kaveri only. But main final product goes from Kaveri. So we only take stand-alone.

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

It has been a pleasure interacting with you over the call. We thank you for taking time out and engaging with us today. We value your continued interest and support. If you have any further questions or would like to know more about the company, kindly reach our Investor Relations. Thank you.

Thank you very much, sir. Ladies and gentlemen, on behalf of Kaveri Seed's, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.