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

Ladies and gentlemen, good day, and welcome to Kaveri Seed Company Limited Q4 FY '21 Earnings 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.

Thank you. Good day, everyone, and thank you for joining us on the Kaveri Seed Company Limited's Q4 and FY '21 conference Call. We have with us today Mr. Mithun Chand, Executive Director. Before we begin, 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 that the company faces. 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 address updates on the market environment and take you through the strategic imperatives of the company. We will then have the forum open for an interactive question-and-answer session. I would now like to invite Mr. Mithun Chand to share his views. Over to you, sir.

Thank you, Rishab. Good day, everyone, and thank you for joining us on this call. I hope everyone is safe and healthy amid this pandemic. I'm delighted to connect with you at the end of the year wherein Kaveri Seed Company became the first seed producer in India with more than 1 lakh acres under seed production. Let me share some perspective with you regarding performance during financial year '21. The year, the [ prospect ] was one that was driven by robust growth. For financial year '21, revenues stood at INR 1,003 crores versus INR 930 crores last year, a growth of about 11.39%. Operating EBITDA margins, excluding other income, stood at 28.76% versus 27.22% in financial year '20. PAT at INR 311 crore versus INR 259 crores in financial year '20. Cash on books as on March '21 stood at INR 533 crore. Fourth quarter for financial year '21, revenues stood at INR 64 crore -- INR 64.25 crores versus INR 63.12 crore in quarter 4 '20. Moving on to crop-wise performance. Cotton acreages are marginally higher on a year-on-year basis by 1.9%, which is equivalent to 2.38 lakh acres. Increases were seen in the states of Telangana, Karnataka and Punjab but lower acreages in AP, Gujarat, Tamil Nadu and Maharashtra. Overall maize acreages were almost stable, increasing by about 1%. The area in Kharif were higher, while Rabi area was lower due to poor commodity prices. Acreages increased in Karnataka, Punjab and Tamil Nadu. Rice area has increased 8.1% year-on-year. The main increase has been witnessed in main states of Telangana, West Bengal, MP, Jharkhand and Bihar. Our performance during the year as well as our outlook is driven by the intense focus on R&D and supply chain. Contribution from new products continues to be high. Selection rice volumes were up by 47.11% in financial year '21. New products have scaled up on the back of growth in Chintu, 828, Sampurna and KV99. Hybrid rice volumes have increased by 48.26% in financial year '21. Introduction of new hybrid 7299, 471, 473 helped towards increasing growth. Contribution of new hybrids went up from 51.05% to 68.17%. Vegetable sales volumes increased by 56.19%. Major growth was driven by hot pepper, tomato, gourds and okra. In hot pepper, growth came from KHPH 1213, KHPH 1217 and KHPH 1225. In tomato, growth came from KTH 354 and KTH 355. In okra, from KOKH 1107. From being predominantly a cotton seed company, we have diversified strongly into maize, rice, hybrids and vegetables. While cotton may continue to be a largest contributor to our performance, our [ thrust ] will continue to expanding our noncotton revenues. I'm happy that the year has ended on a positive note. Although quarter 4 is usually a linked quarter, we are more than glad with our achievements through the pandemic with strong focus on R&D, automation, cost rationalization and supply chain as well. With that, I conclude my opening comments, and I have the floor open for an interactive Q&A.

[Operator Instructions ] First question is from the line of Rohit Nagraj from Sunidhi Securities.

Congratulations on a good FY '21. So the first question is in terms of the last couple of months, I think April and May. So we have seen another wave of COVID and lockdowns. So have we faced any kind of logistics or supplier-related -- supply chain-related challenges? And have they affected our product placement?

Yes, we have seen challenges in this pandemic time. But as we are facing it for the last 1 year, in fact, the last year also, it was much severe than this year, we were able to manage it. With that experience, now we are able to manage it much better. Even though we have challenges, they are -- overcome most of the challenges. And the placement as compared to the competitors as compared to the -- our internal estimates, it's in line, and we are not much affected with that. All the placements are very much there in the market.

All right. Understood. Sir, second question is in terms of the vegetables market. So we have been quite confident about it. We have reached about INR 40 crores of sales, INR 100 crores over the next few years. So what is the strategy that we are using here? Are we using the same channels that we are using for our other products? Or there is some different strategies to penetrate this market?

As we were saying from a couple of years as we have intensified our R&D program in the last 18 years and we have a very good set of pipeline, hybrids, main focus for us like tomato, okra, hot pepper and gourds. So these are the markets where we are focusing more, and we have very good hybrids, which are launched in the previous year, and that is what has been driven the revenue. And if you see, year-on-year basis, we have grown by more than 50% for the last 3, 4 years. And even this year, with a decent base of INR 24 crores, we have grown by about 54%. I think the vegetable segment is growing as a segment, is growing much faster than the normal trail crops, and we are focusing more on vegetables. And with the current set of hybrids which are already placed and the set of hybrids we are going to launch in the coming years, we are fairly confident that we can easily reach to the INR 100 crore mark in the next 2 to 3 years.

Right. Just an aligned question to this. In terms of our distribution and reach to different geographies, how are we placed? And are there any nascent geographies where we have not yet entered and those probably would have further growth potential?

We are there in almost all parts of, of course, India. I think we are the only company in India has got the largest distribution network across India. Why? Because we have a diversified portfolio, and we are strong in most of the areas where we operate. There are very few areas where we are left out. In fact, we operate in more than 26 states across in India. There are very few states where we don't operate, wherein the demand for our seeds -- I mean to say the areas like [indiscernible], somewhere like we don't see much of a demand for our products what we sell. But overall, if you see the overall of the markets, then we are almost there in most of the areas. Yes, in some areas, we are less penetrated. In some areas, we are [indiscernible], but we are trying to increase our network and penetration in areas where we are not having the stronghold. But there's a continuous activity, and we intend to do that moving forward and we enter new segments.

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

Sir, first question is on the buyback. So last quarter, you had said that since 12 months have just recently expired, you will discuss it in future Board meetings and let us know. So is there a change in the stance with respect to the cash distribution to the shareholders given that we are well past the 12 months gap, which is a regulatory requirement for the buyback from the last buyback? So that is question number one.

Yes. In terms of the buyback, the Board is continuously working on it, on a strategy to reward shareholders and to increase the share, I would say, to have a formulated strategy to have a growth for the company and we can reward the shareholders. Definitely by next quarter end, we might formulate the strategy for that. And definitely, we'll let you know once the Board clears it. We are continuously working on it. I think quarter 1 or quarter 2 formulate a strategy on that.

But this INR 200 crores sort of a buyback that we have been doing in the last 3, 4 years, is that expected to continue? Or is there any change because we continue to generate equal amount of cash as we were in the previous year?

Yes. As for our intention is that we want to reward shareholders. But as we are doing for the last 3, 4 years, the Board has signed to formulate a strategy for the growth of the company as well with regarding -- keeping in mind the shareholder interest. So definitely, by next quarter end, we'll definitely get back with a strategy. Because of the pandemic and other being the season -- start of the season, we were not able to formulate a strategy. But definitely, by next quarter end meeting, we'll have a clarity about that.

Secondly, sir, our employee cost has seen a 25% increase this overall year, while -- where sales growth is only 10%, 11%. So I could not understand why we will see such a high increase in the employee cost. Are there some one-off payment to directors or something else which has happened? What is the reason behind it?

Nothing. If you see the employee cost, we are continuously improving our strength in the R&D. Compared to previous year, the employee account -- headcount has also gone up by more than 12% to 15% compared to previous year as we are investing more in R&D and we want to focus more on newer areas. That is one part of it. And the other thing, regarding the ESOP, what we have allotted into the employees, but also emotional cost, which is carried in the fourth quarter. That also ranges to 4 crores to 5 crores, the emotional cost to be in the P&L account. Yes, 4 crores to 5 crores of the employees because you all are aware that we have given option to the employees in our trust. So that the additional costs which are looking -- which is [ hitting ] employee costs. Apart from that, nothing, no, no -- I mean to say, no incentive or nothing is paid to the director or any other employee.

Okay. On the cotton business, sir, this year, I saw your inventories are higher by around 10% compared to last year. So what is the outlook now that we have already reached end of May? So what is the kind of outlook on the packets -- number of packets for this year in terms of growth versus last year given also significant increase in the cotton prices compared to last year?

I don't know whether I got the number of the inventory of the 10 lakh higher than last year. But...

I'm just going by the inventory value on your balance sheet as on 31st March.

There are other costs as well. The inventory value has gone up being made and -- right, which is a growing cost. And we want to give some books now for that. I don't think cotton as an inventory has gone up, I mean to say, like 10%, 15% last year. It should be in line with last year in that terms. We will give a clarity later on. But in terms of the pricing, yes, the cost -- the price -- the MRP has been included as a 4% or 5% this year. The last year [indiscernible] compared to previous year. So that further reflect point for the company, what you can retain that we need to see now. I mean in terms of the sentiment for the quarter drop, it should remain stable. On the alternate also done well. Even though the commodities prices are up, but the sentiment among the farmers are [indiscernible] sentiment. In some crops, the other crops, for example, Gujarat, Maharashtra, so alternate process, and [indiscernible] also have performed well last year. Only in Telangana we see a positivity for quarter. But overall, if you see the cotton acreage, it remains stable compared to previous years.

Okay. So against the earlier long-term guidance of maybe 10% of growth in cotton and 20% growth in noncotton, for this year, should we assume that there will be 0% or 5% growth because of the sales price increase in quarter, 0% to 5% in cotton and 20%, 25% in noncotton? Is that sort of a guidance for this year?

Yes, you see, last year, we have said if you see the growth in noncotton segment more than [ 20%, 24% ] compared to previous year; and cotton, we are slightly lower. We still seek the guidance of 10% to 15% of overall growth. Saying that [ 5% to 10% ] in cotton and 10% to 15% in noncotton, we still have the same guidance. But that might be a contribution of the price and some with the contribution of the volume. As we are increasing our market share in some of areas, so that also translate for our growth in cotton. But anyhow, as I said that cotton should be a stable crop, but noncotton crops are doing well. So we are focusing more on noncotton growth. Overall, we should be in the 10% to 15%.

We'll move on to the next question. That is from the line of Sumant Kumar from Motilal Oswal.

My question related to cotton. So what's your view on acreage sowing increase for cotton, number one? Number two, is the -- if there is a -- you're talking of 5% to 10% growth, so overall, the major growth is going to happen through volume as well.

So as we can see, the overall acreage, as I explained earlier, the cotton acreage should remain stable. I mean to say, it should be more plus or minus 2% compared to previous year. And in terms of the prices, the prices are up by 4% to 5% this year. And we see a slight increase in volume. So the cotton growth, both in terms of the price and in terms of the volume, it should be in between 5% to 10%. So we still will stick with that guidance.

So overall, the sales volume in FY '22 should cross FY 2011, 7.23 million minimum?

Sure. It looks like it should be slightly in line with last year. But it's too early between the demand and the level of demand, and I just [indiscernible], it should not impact cotton crop, but we need to see. As of now [indiscernible].

So your commentary is overall cotton sowing is likely to be a couple of percentage higher than FY '21 level. So...

No. What I mean it should be stable, plus or minus 2% [indiscernible].

Okay. So in that case, if we are saying 5% to 10% and if the 5% growth is going to happen in the cotton side, so can we assume that FY '20, we have sold 7.23 million packet? And FY '21, we have sold 7.1 million, right. So overall, FY '22 should be a level of FY '20 or higher than that volume, sir, done?

Yes. We are seeing 2% to 5% growth in the volume that we made. It should be in line with that number. [indiscernible] I guess -- what we see the 5% growth in the revenue segment and 2% to 5% growth in the volumes.

Volumes. So in that case, are we not gaining market share in the cotton seed?

Definitely we are...

[indiscernible] level.

Yes, we are gaining market share in most of the places. Only in Telangana and Andhra we lost market share, but it was all [ differentiated ] market shares.

Okay. So overall, can you talk about how much market share we have in pan-India and how much market share we gain in FY '21?

So we are close to 0.5% or so last year in terms of the market share. We are close to that 17% outcome.

Okay. So we are expecting a further market share expense?

Yes. Yes. Yes. We are even seeing a good growth in Northern India this year and even in Telangana also.

So overall, what -- the overall we are hearing, there is a higher oilseed prices. So I mean this will be higher sowing in this time. So are we -- are the cotton area is going to [ sell ] inside any crop pattern shift? Can you talk about in your key markets?

When we talk about the across -- overall India, that's where the [ rate ] should be stable because in some areas like Maharashtra or Gujarat, it may come down, whereas in Telangana and AP, the cotton should -- might go up. Even in Karnataka, the cotton might grow. So overall, if you see here in Maharashtra, there are some areas where the cotton should come down, then the cotton should go up. There are some areas. So overall, we see it should remain stable.

Okay. And what about the maize, the current scenario, the overall -- all the prices are up. So is crop pattern shift is going to be stable maize? Or still maize is likely the similar level of FY '21?

Maize last year, [indiscernible] was good, rabi was bad, [indiscernible]. But rabi, the prices are pretty low, so that also impacted. And the late crop also impacted maize of last year in terms of rabi. But right now, in the last 12 months, maize commodity prices have also improved. So the sentiment has likely come back in terms of maize. So we see the maize acreage also simply in line with last year [indiscernible]. So it should be good.

[Operator Instructions] The next question is from the line of Viraj from Securities Investment Management.

Most of my questions have been answered. I just have one question. For maize and rice, how will I [ thought ] of mix in terms of core seeds and new seeds that have changed? And what is our market share now in the new seeds?

In terms of the mix, we already given in the presentation right now. I don't have the presentation as on hand, but it's already there in the presentation. The contribution of the new products, of all the crops. Can I go to your next question? What was the other one?

Next question was on the market share for maize and rice. What is the market share now overall and also in new seeds?

We have increased market share in rice the last 3 years. We are almost close to 10% market share in rice in the last year, and we still see the market share growth even this year. And even in maize, we are improving our market share, we are close to the [ 10%] of market share in maize.

Who are we gaining from, sir? I mean just to understand because the market is a little more concentrated in these 2 crops. So...

So it's very, very difficult to say who we are getting from because we had just gained 0.5%, 1% or 2%. So that should not take that much of the parties. There's so many players in the industry. So some weaker parties are leaving. We can't clearly point out that something we are gaining in that. But overall, we are leading in market share.

The next question is from the line of Aashiesh Agarwaal from Pareto Capital.

First of all, congratulations on a good financial year, and I hope you and your families are keeping safe and fine. Sir, I have 2 questions regarding your growth plans. So one, I noticed that you've crossed 1 lakh acres of farmland and the cultivation for production of seeds. Until last year, you were reporting this number at 65,000 plus. So I wanted to understand what is the core percentage increase that you're seeing? I mean, like what was -- let's say, last year, say, about 70,000 or 80,000 and what is it this year? And do we expect a similar trajectory in revenues going forward?

It is clearly talking about the production acreage is somewhere more than 25% compared to previous year. And most of the acreages have gone up in the production for maize and rice. And there are other products also like bajra and [indiscernible] have also gone up. We can't really -- I have to pause -- to your question, we can't directly relate that to -- the increase in the production area doesn't translate to the revenue. Sometimes we plan in ahead for our inventory and for the buffer stock.

I'm sorry, I missed the...

[indiscernible] crop to crop.

Sorry?

[indiscernible] demands crop to crop.

Okay. So basically, you're saying that this has gone up by 25%, but it may not necessarily translate similarly into revenues. Is my understanding correct?

Yes, yes.

The second question is you've been also investing a lot in manpower resources, as you mentioned. So if you could just like quantify where from -- your employee strength has gone up from where to where. And of course, one part of it is in R&D. So if you could throw some light as to what kind of increased number of personnel in R&D that you are looking at and whether you require additional manpower investments in your other lines of activities also.

So it's clearly employee costs, determined employee costs like 1,050 -- close to 1,050 compared to 930 last year, up by [ close to 12% to 14% ]. Majority of the employees have gone into R&D and the supply chain. And supply chain, it will be production also. So these are the 2 areas where we have seen increase in the majority of the [indiscernible] and some in the marketing part where we are entering into new segments [indiscernible].

So do you think that your manpower requirement will increase at a similar pace? Or do you think you're good for -- at this level for the next, say, 2 or 3 years?

It should be good for that unless the market will grow much faster than what we estimate. Otherwise, you see what we are spending even now. We want the majority of the headquarters will increase in R&D. So that translates to the [indiscernible] a couple of years. [indiscernible] we're investing for that. But in terms of the market, for your question in terms of the market, we are very much [indiscernible] demand for [indiscernible] really in terms of the marketing.

The next question is from the line of [ Adatnish Manen ] from Master Capital.

Sir, my question is regarding your subsidiaries. Like I could see on your website, there were -- the numbers are given only till 2018. So you had a subsidiary Microteck, which was, I think, doing crop protection, some fungicide, pesticides and bio fertilizers and all you started. So how do you see that? I mean, is it still there? And how is that business growing? And we have so much cash, we -- are we planning anything, employing -- deploying some cash over there and growing that side of business, which is, again, a very big business as far as you're concerned, crop protection and micronutrients and all that?

Yes. As you rightly said, we deal with micronutrients and bio products. Bio products include bio pesticides and bio fungicides and including the [indiscernible] products. Basically, it's all about bio. We don't have any capital activities for these new [ plants ]. So we are focusing on that. We are in -- developing those products. Year-on-year, they are growing by more than 10% to 15% overall revenue, but it is a small base. We are basically compensating on these products. In terms of the cash deployment, it's a cash-generating company. It's a zero debt company. And every year, we generate cash from that entity as well. So we don't defer any cash deployment as well. But as you said, that's a very big market and a growing market. But it's a very crowded market and a very competitive market because every -- most of them have some sort of molecules or those type of chemicals. It's not like a [ basic ], like a [ fish ] product. So we are focusing more on the product spend. After the product spend, you can easily market across it. Then we are slowly adding some space there. Down the line, next 3 years, given that, should have a good contribution to the top line.

Okay. Cash deployment was -- I meant was that we have so much cash on the book. So maybe if we are looking out for some acquisition in that, like if you're not able to grow, so maybe we can acquire some brands or some small companies available in those lines, in the crop protection and...

It will depend. As of the moment, we are not looking to acquire any companies in that -- those segments because we have enough products, and [indiscernible] has already been done in the company. And then we are marketing. And if you see the majority of the revenues are from [indiscernible] and Karnataka because we have already started in those 2 states. In the recent 3 or 4 years, we expanded to other 6 states. So that is also picking up. Once you...

[indiscernible] Sorry, sir. [indiscernible]

No, no. We operate under a different company itself. The employees are different, the status is different, because it's a year-long business whereas there's a very short window.

Okay. Okay. And sir, my second question is regarding the seed business. There also, are you looking to use this cash for some -- because the company is growing at 10% to 15%. Like is the management's vision like if we want to grow at 20%, 25%, so what are the thinking on those lines in acquisitions of some seeds business or some products where we are not available -- not present right now?

We are already working on that. For example, if it is the vegetable segment, which was even though we're very weak in that segment, in the last 8, 10 years, we are focusing more on that, now you have seen as a decent size of the vegetable segment. We are all available 40% vegetables compared to less than 1 crore for [indiscernible]. So we are focusing on those crops. Even [ master ] we have entered in the last couple of years where we [ master ] [indiscernible] good crop. So we are exploring more other options. And that's the reason we have said that the Board is formulating a strategy to utilize the cash in a proper way for the growth. That's the reason where we are working on it. Once the strategy is formed, definitely, we'll get back to the investors and tell you what those plans are going forward.

We'll move on to the next question from the line of Mr. Nitin Awasthi from East India Securities.

The first question would be there was an article which stated that Monsanto and [indiscernible] settlement on their whole seed dispute. Now where do we stand in that whole dispute? And what is the settlement? How does it impact the previous judgment of royalty and everything in the big debate that happened for so many years?

Frankly, I don't have the idea about their judgment and the settlement. But we'll come back to our company, it's not center. We don't have any pending litigation as such. All the litigation was clear [ long bars ], and we don't have any at all. And that will not impact our royalty portion for the period [indiscernible] based on that basis.

Okay. Noted, sir. Sir, second question would be this oilseed acreage is expanding rapidly in the country and the government has been giving it a bit of push. And in the conversation itself, you had mentioned [ master ] some time back. So I would just like to ask you, what's the portfolio -- out of the total portfolio revenue-wise, what is the portfolio size of oilseeds? What is the dominating oilseeds? And how is the focus and growth upcoming in that division? Because what I'm seeing is a lot of these government institutes are doing a lot of work and thinking a lot of things around this. So are we also gaining ground on the oilseeds front? Do you see an actual path where oilseeds could become the next big thing in India?

Yes. If you see the oilseed, most of them in [indiscernible]. But we work only in the places where the hybridization is [ prominent ]. So we are waiting and [indiscernible]. Now we are working in [ master ]. Wherever there's a scope for hybridization, we are present in that segment. Rightly said, going forward, [ master ] is a very good spot for us because the government is also saying that doubling of the farm income and we are importing more solely oil from other states, other countries. So the market looks good for us. That's the reason we are focusing on [ master ] in the last couple of years. As of now, it's very small, but going forward, it might be good.

The next question is from the line of [ Rohan Modi ] from [ RRN Advisors ].

How do you maintain your working cycle throught the year by quarter-by-quarter? Can you explain it?

Sorry?

How do you maintain your working capital cycle throughout the year by quarter-by-quarter? Can you explain quarter-by-quarter your working capital cycle?

So we get advances and the payable in the month of -- in the last quarter of the year that we utilize for [indiscernible] farmer -- production farmer. And after due, we get the amount from the distributors and [indiscernible]. So usually, we don't see any [indiscernible] as such. And here, we have the enough cash to use for the working capital. In fact, if you see, it should be a negative working capital for us.

So you are maintaining by taking advance and payable to the farmer.

Yes.

So how much you pay to the farmers...

Farmers -- in the sense there's production product, not the normal commercial products. What we pay for, the raw material.

Yes. So which state you pay the farmers?

That all depends on the crop location and operation, area to area. So that each have different terms, but most of the payment is there after [ we sell ] the crop.

So you are growing in rabi season...

Across the year, we produce different crops, we produce across India. For example, cotton we produce in Kharif and the duration is also higher. The other crops, we produce in Kharif wherein the duration is lower, but that all depends on the crop to crop, area to area, [indiscernible]. It all depends on that.

Okay. Okay. So some payment done on production and some payments are done after [indiscernible].

Yes.

The next question is from the line of [ Himanshu Babe ] from PGIM Indian Mutual Fund.

My first question was on the cotton side. The government has allowed for a price rise of INR 37 for this financial year of crop sowing. How has that INR 37 flowed in the market? And have people raised the prices? Or you think price rise has been much minor in the market? Can you elaborate on that?

Definitely it's a government order, the market increased more than INR 37. So that is close to 5% of the previous year. That all depends on the company to company, how much they realize from the included product. As we sell on demand and we don't push and we bill the -- as they say, bill from the farmer side, we think all of this [indiscernible] are looking at least [indiscernible] for the company. At the INR 37, we need to see as of now. That's because we need to share with the distribution channel or not. But [indiscernible] will be the company side.

Okay. Okay. And see, in the -- some of the markets, AP and Telangana, on cotton where we have lost certain amount of market share, okay, over last few years, what would be our strategy to get back market share or grow? Or any thoughts you can provide on that on how you are thinking about those things?

Yes, we are -- definitely we lost some market share in the last couple of years, but we are working back taking our market share. And this year, we think that we can slightly improve our market share compared to previous year. We have identified new products. We have identified dealers, good areas where we kept up without giving much of a credit. So these are the studies which we are following, and we have done enough farmer engagement program also. So we should see that -- how we can -- how best we can [indiscernible] the market share this year. We have put our effort in that.

The next question is from the line of [ Sami Sabnis ] from Pareto Capital.

So I would like to ask what is the state-wide contribution in rice and cotton?

Pardon? State-wide contribution?

State-wide revenue contribution in rice and cotton.

As a company policy, we have stopped giving state-wide contribution. [indiscernible] we have stopped that already.

Okay. And for FY '22, can you give me the projections of volume and value in cotton, maize, hybrid rice and selection rice?

I've already explained it earlier saying that cotton between 5% and 10%, 5% to be value and [ 2% to 5% ] should be volume. And whereas other government, it should be a combination of both. Majority of that will be driven by the volume.

Okay. And regarding cotton, your product, [ ATM ], that seems to be quite old right now because it launched way back in FY '14, and I think it still contributes the lion's share of your revenue. So in cotton, do you see growth there or like products like [indiscernible] and Money Maker will also contribute to the growth?

I think as of now, Money Maker is the largest contributor the company, not [ ATM ]. And [ ATM ] will continue to be one of the strongest contributors in the -- for the next 2 to 3 years. The other products are deployed and other hybrids. What we have launched definitely have to be revenue. But this will continue to be top 3 or 4 revenue makers in next year or 2 years.

The next question is from the line of Chetan Thacker from ASK Investment Managers.

Sir, just 2 questions. One was what was the overall maize, rice in terms of tonnage last year? And second is if you can throw some light into the profitability for the cotton portfolio anticipated in '22 given the cost benefit that we are likely to witness and even the some amount of price increases that we can retain.

Regarding cotton, we see at least 4% to 5% increase in the realization compared to previous year. So that should directly come to the bottom line. Our 3% from the -- 2.5% to 3% is from the increase in the price and 2% to 3% from the decrease in the cost of production. So overall, it should be like 5% to 6% should be contribution of -- growth in the cotton segment. What was the other part?

The total maize market price last year.

The market size last year...

In terms of [indiscernible].

Hello?

Yes, sir. Sir, just a broad estimate in terms of tonnage.

Yes. It was between [ 85 tonnes to 97 tonnes ].

The next question is from the line of Nishith Shah from Aequitas Wealth.

Sir, I recently read that your states have banned life [indiscernible]. So how do you think that will impact our demand?

Sorry? Sorry? [indiscernible]

That's what I was saying that recently, some of the states have banned sale of life [indiscernible]. So how...

[indiscernible]

Yes. So how do you think that will impact this HTBT and ultimately our cotton seed sales?

We don't do anything in HTBT. It shouldn't be illegal, too. Definitely the government is trying to cut down the illegal entity [indiscernible]. Most of the state governments are doing for the last couple of years, but they are not successful in doing it. But we need to [indiscernible]. But as a company, we don't do with HTBT, so it should not impact us much at all.

Okay. Sir, I wanted to understand more on the side that it will have a positive effect on us this year. Or will it start impacting us next year positively?

I don't see that we'll have much of a positive impact because last couple of years also, we have seen governments banning it, but still the farmers are using it and getting it [indiscernible]. But right now because the COVID condition has gone up, most of the state governments are even imposing [indiscernible]. We need to see how they can control it. But I don't see much of a decline really into this year compared to previous year.

The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Pvt Ltd.

Firstly, can you give us how much was the sale from export this year? And how do you see it next to 1 -- let's say, next 3, 4 years where it can reach?

Compared to previous year, the exports are slightly down this year because of the pandemic situation. We are not able to export it [indiscernible]. We have seen a 10% to 12% decline in export, but going forward, exports will contribute well. And we see at least 15% to 20% growth in export component in the next 4 years.

How much was the sale for export this year?

It was close to INR 20 crores last year. It was something like INR 17 crores, INR 18 crores this year.

Okay. And one last question from my side. So just -- I'm sure you must have clarified that in earlier calls, but since I was missing this call for the first thing, can you mention why some of the seed companies are paying income tax and we not paying income tax?

It all depends on the company policies that we can't comment as such. But we are claiming agriculture [indiscernible].

The next question is from the line of [ Manoj Shah ] from [ Laxglow Investments. ]

Yes. My question is with respect to the cash on the books. Do you have any plans to go for any acquisition of the companies in the near future?

As you see in the last year -- previous year, they already distributed to the shareholders by dividend or the buyback. But this year, we are formulating a strategy as a long-term strategy for the growth of the company and to reward shareholders. So that strategy we are formulating it. It will take a couple of months more. Like most probably the next quarter, we can do a clear strategy. What we are working there will be both [indiscernible] the long term.

Okay. But specifically, but we will be able to get a clarity once the strategy is formulated. That's what you're saying for the acquisition?

We are open for -- we are always open for the acquisition. Last time also, many years I've also said that we are open for acquisitions but provided that we repeat to rightly fit into the company products. So that we are always exploring. If we are not able to utilize cash properly, definitely, we want to reward it to the shareholders.

Okay. And how is the trends for this quarter? Like this April to June quarter is your main quarter where you have a bit of a larger chunk of the revenue. So how has these 2 months have fared so far?

So it's too early and [indiscernible] to arrive. So majority of the sale comes only after the -- a month into it. So right now, it's just a placement, not much of a liquidation as being done. But in terms of the placements, we -- in line with our expectations.

[Operator Instructions] The next question is from the line of Sarvesh Gupta from Maximal Capital.

Just one question on this cotton seed price increase. So out of this 5% hike, so this will straightaway flow to the bottom line, right? I mean all of it?

In the earlier question, I explained that out of the INR 37 [indiscernible], INR 20 should come back to the company. Another INR 17 will decide whether -- that all depends on the market condition, whether that need to be shared with the distributor or someone else [indiscernible]. That INR 20 [indiscernible].

Sorry, 20 -- what was the number, sir? I could not hear properly.

INR 20, INR 20. Out of the INR 37, I think INR 20 can be retuned by the company. Another INR 17 [indiscernible] based on the market conditions.

Yes. That is between you and your dealer network, right?

Yes.

And out of the company, I mean, compared to the last year on a per packet basis, is there any cost increase or anything? Or this INR 20 should directly flow to our bottom line?

This INR 20 should go down to the bottom line.

Okay. So the INR 20 into whatever, 6 million, 7 million, 7 million packets will flow to the bottom line.

The next question is from the line of [ Mukesh Panjwani ], an investor.

Sir, my question is that what kind of revenue should we expect from vegetable and rice segment 5 years from now?

Rice as a compounded, it should grow at more than 20% for the next 5 years, and the rice market itself is growing. And [indiscernible] are doing well, not going to be [indiscernible] where the pipeline and this will grow. And we -- now we are developing other [indiscernible] to enter the other segments. So definitely we see a more than 20% growth in hybrid rice. And vegetable is definitely more than 25% year-on-year for the next 5 years. So the vegetable markets are growing and agriculture is also doing well and will do much better than the industry. 20%, 25% that we can take for potential.

The next question is from the line of [ Nishit Mansanta ], an investor.

So on the gross margin side, I saw that in the fourth quarter, we got around 12 percentage points more margins compared to Q4. So is that sustainable going forward? And like what were the drivers behind that?

It's a very linked quarter. We can't compare that on a year-on-year basis because a few lakh rupees make that difference. But overall, if you see the overall cost, almost a same 0.5% less [indiscernible] previous year.

The next question is from the line of [ Sarvesh ], a retail investor.

My question is regarding Talangana market share. Most of the irrigation projects will go into complete in coming 2 to 3 years given there will be a 20% or 30% increase in acreages. So what are the strategies Kaveri is following to gain the fresh market there?

Sorry, I don't understand your question. Can you just repeat it, please?

As most of the irrigation projects in Telangana state will go into complete in 2 to 3 years -- commence 2 to 3 years, giving chance to increase in acreages, nearly 20% to 30% increase in acreages. So what are the strategies Kaveri is following to gain the fresh market there?

See, it's good that the Telangana government is [indiscernible] irrigation products. And in fact, [indiscernible] 20% to 30% irrigation land has gone up, not the river land. But it's good for the state and it is -- most of the area is already in the right situation. So the farmer will have a different option to go for that. And we have enough products and enough basket to cater all the requirements of the farmers. So definitely, it's a good point for the company and the Telangana-based company definitely will [indiscernible].

The next question Is from the line of Nandan Vartak from Wealth Managers.

So my question is about we have recently crossed 1 lakh mark on acreage under cultivation for seed production. Can you split that between regional like south and north? And I had another question after this.

As of now, I don't have the exact figures of south and north, but we have increased across India. Majority of the production locations are in south, south and central part of it. So we are increasing in those parts.

Okay. So basically, what I'm trying to understand is that at new addition, if that is a central or north part of India, will that have an impact on distribution cost and better availability in [indiscernible] like we are targeting now in central and north region?

So wherever the huge production area, we see that the productivity is higher and it's nearer to our sourcing plants. And definitely, we keep in mind the value, the cost of production as a whole. So there will [indiscernible] that most of the ports have taken care in setting up production locations. So definitely, we will try to [ decrease ] production costs.

The next question is from the line of Bharat Shah from ASK Investment Managers.

What will be the percentage of the total profit pool from the non-seeds business for the last year?

Sorry, Bharat, non...

The total profit pool, how much would be -- sorry, noncotton seeds portfolio would have accounted for?

So more than 70% of the profit is from the noncotton segment.

The next question is from the line of [ Vikram ], an investor.

What [indiscernible] both of them?

Sorry, [ Vikram], we are not able to hear you clearly.

Yes. I wanted to understand the difference between hybrid rice and selection rice and the opportunity in both.

So hybrids are like what we have with pollination process in this area in hybrid rice, wherein selection rice, it's a [indiscernible] process, but these are the [indiscernible] which are developed within the company. So it's a [indiscernible] by the company, so that's the reason we [indiscernible] the selection rice. And the hybrid where the artificial pollination is required, that is all as a [indiscernible]. Both the markets are growing, and that's the reason we focus on those markets.

Is there a difference in the quality or the product itself?

The process itself is different and would the product itself.

The next question is from the line of [ Tushar Karana ], an investor.

Sir, my first question is on the export side. So as per the presentation, I could see that we are going to enter new markets. So what could be the contribution coming from some exports in the coming future for, say, next 3 to 5 years? What is the vision?

In terms of the competition, we don't see new competition coming in because it's a very long gestation industry. So the competition is just there. Now it only come in the next 5 to 12 years. So we need to completely [indiscernible].

But sir, in terms of percentage, what could be the contribution coming from the exports?

Sorry?

What could be the contribution in terms of percentage in overall revenue in the coming years that we could anticipate from exports?

So you're talking about the exports.

Yes, yes.

Right now, it's like INR 20 crores, it's just 2% of our total revenue. We can double revenues in the next 4 to 5 years. So that should be around the same [indiscernible].

Okay. Okay. And my second question is, sir, like what could be the top line -- how can it grow in the next 3 to 5 years? Any new target that we have set for ourselves?

We are still -- we have given guidance saying the 10% to 15% top line growth and 15% to 20% bottom line growth for the next 3 to 5 years.

Okay. And then my last question, sir, maybe it would be a repeat question because I was not earlier. The cash on the books that we have, so how are we going to utilize that cash? Is there a buyback on the [ cards ]?

We are always doing buyback for the last 3 years. Definitely, that is one of the options we have.

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

Thanks all for the participation. And for any further queries or inquiries, you can just reach out to investor deck, which is mentioned in this presentation. Thanks. Be safe. Bye.

Thank you. Ladies and gentlemen, on behalf of Kaveri Seed Company Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.