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

Ladies and gentlemen, good day, and welcome to the Kaveri Seed Company's Q3 and 9M FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference call will be recorded. Joining us today on this call is Mr. Mithun Chand, Executive Director. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation. I now hand the conference over to Mr. Mithun Chand. Thank you, and over to you, sir.

Good evening, and welcome, everyone, to our quarter 3 and 9 months financial year '22 earnings conference call. We hope you have had a chance to review the presentation of our results, which is also available on our website. I will touch upon the operational and financial performance of the company, then open the floor for question and answer session. We are moving from pandemic to endemic, and I hope there will be -- there will not be any tailwinds from COVID in the next future. The Indian economy has emerged the fastest-growing economy at an estimate of 9.2% during the current year and expected to grow at 8% to 8.5% for the next year. Gross value add in agriculture is estimated to grow by 3.9%, which is good for us. [indiscernible] policy makers across the world, however, be sure that growth will eventually take over inflation. The digitalization theme will be the backbone for new investments in agriculture, which will streamline government payments and procurements, which in turn will increase the cash flows in the hands of the farmer for increasing adoption of new hybrid varieties across the crop segments. Encouraging start-ups and mechanization in agriculture are going to increase the investment in agriculture. We should, in turn, increase the pace at with the new technologies and hybrid varieties are adapted for better yields in the country. Food and agriculture startups attracted a record INR 22.3 billion in venture funding last year. That's twice as much as the segment sales in 2019, which is making agriculture not only attractive, but also data rich. This will revolutionize the sector as a whole, and we are going to be one of the biggest [indiscernible]. Coming back to the financial highlights. The income from operations for the quarter stood at INR 102.08 crores, which is 2% higher on a year-on-year basis. The EBITDA stood at INR 16.32 crores, up by 8.22% on a year-on-year basis. PAT stood at INR 9.08 crores, up by 21.88%. Cash on book stands at INR 314 crores. Segment wise highlights, as we were discussing cotton and non-cotton crops, hybrid rice volumes increased by 22.38% in first 9 months of financial year '22. The introduction of new hybrids has helped to achieve this strong growth. The contribution of new hybrid rice products were up from 67.93% to 75.68%. The contribution of new products were up from 9.55% to 25.45% of volumes in maize. More than 60% of the revenues come from noncotton crops, like rice and maize and vegetables this year. In line with our focus on noncotton segments, contributing in financial year -- the 9 months of '22 has increased to 62% from 53% in 9 months of '21. We have witness a significant growth in both revenue and volumes from hybrid and selection rice and vegetable segments. We have completed a buyback of share worth of INR 119.95 crores during the quarter. Working activity actually to launch new products for mustard and wheat crops, which have huge potential. Hybrid rice is just 9% of at 4 million hectares out of 42.7 lakh hectares, million hectares of rice market, even 10% shift in hybrids is a huge opportunity for us. Contribution from our new products across each segments is stable during the year, which shows more upwards in the years to come. And this is the biggest driver for the organization. Company always tried to deliver a consistent growth on both revenue and profitability, better margins, build sizable new products, invest in R&D to have new pipeline products, looking for breakthrough technologies in the market to utilize surplus cash in the books of the company. The company has delivered 16% CAGR in revenue and 23% CAGR in PAT in the last 10 years. Current low-yielding situation calls for reduction of hybrid varieties, which is happening on the ground. We currently have 17 advanced production facilities, 1 lakh large farmer base and 40,000 dealer network, it's a broad portfolio of across and 1 lack acres under seed production. And 145 R&D team and with 900 acres of dedicated R&D farms. I would like to further state that the company has generated good cash flow from the last 15 years of the listing since 2007. The company has started declaring dividend from the year 2009. Since then, the last 13 years, the company has divided [indiscernible] with more than INR 920 crores worth of cash, either in the form of dividends or buyback of shares. Moreover, the company has distributed close to INR 820 crores in the last 6 years either in the form of either dividends or buybacks. Company's motto is to deliver consistent growth on both revenue and profitability, better margins with sizable new products. invest in R&D to have a new pipeline of products. All -- any major shift in adoption of hybrid and selection rice increasing demand for green fuel and increased protein demand in maize are going to drive the volumes for us. Now I would -- now open the floor for the question-and-answer session.

[Operator Instructions] The first question is from the line of Tarang from Old Bridge Capital.

So just a couple of questions [indiscernible] I mean.

Your voice is breaking, can you a bit loud.

Audible.

Hello?

Am I audible?

Yes. Yes, slightly better, but, okay, fine.

So just trying to check in the cotton [indiscernible].

Hello.

Hello, am I audible now?

Yes.

Apologies. So you just wanted to check the CAI estimates for cotton output for the current Kharif is at about 34.8 million bales, which is roughly at the same levels of the last year. So where do you see this moving now going forward, especially the first quarter, we saw a lot of disruption in slowing from the unorganized players. So how should we look at it for the upcoming season?

If you see the current sentiment for the cotton crop is very positive. If you see the prices with the cotton is trading at, it's like all-time high. In the normal market, it's like more than 9,000 a quintal. If you see as such, the sentiment is good. And compared to previous year, we see a positivity in the cotton crop coming up this year. And regarding the other question, like whether it will move to the branded segment or the illegal or the unbranded segment, this time, we are slightly confident that if we move to the branded segment as last time the unbranded segment or the illegal seed has given mix results for them. So we see a good rise in the branded quarter this year. There is a first pulse of the farmers. So we are quite positive regarding quarter of this year.

Okay. And sir, any -- I mean, 1 of the factors which impacted our maize business was the tender piece from government. So any indications that you're getting on that activity might be better this year versus [indiscernible]? And would that actually will [indiscernible] rabi as well?

Basically, the tender business comes in the first half of our first quarter or slightly in the early of this second quarter. So we can take it the first quarter -- first half. So we already love that business at the government couldn't call for tenders. And we don't expect any business coming this year. But going back, as we see the normalcy coming back, we don't see much of an issue in that. But anyhow, as a company, our tender business, we don't bank much on that. But if you see the other segment like the normal trade business as. We are doing well and most of our hybrids have gained well in terms of the market share. Even in the tough conditions in rabi, we have seen an excess rain in most of the parts in the second quarter, in the third quarter, where they were slightly down in terms of the creation in terms of maize and in terms of vegetables. Even in these tough conditions, we are able to do better than the competition and then the industry. So we are quite optimistic about maize crop in the coming years. And maize as a crop, we see a lot of positivity, not only in the coming 1 or 2 years, but in the long run as it -- as the prices have also firmed up and the yields have also improved and the usage of maize have also gone up. So maize as a crop has a great potential going forward. And we are in line -- we are hybrids, whatever we are doing in research in terms of launching of new hybrids in different segments, we are doing well. And definitely, we can see a good growth coming -- going forward.

Okay. Sir, just 2 questions. I mean, so on the tender bid, do you anticipate the tender business to not resume in the next kharif also? Or it is you're getting early signs that maybe perhaps you will have that activity coming in kharif [indiscernible]?

What I meant is that because of the COVID conditions, they couldn't call for tender this year, that is '21 and '22. But going forward, definitely, we think that it should come to normalcy and they should again call for tenders and we might participate in that. What I specifically said is that we don't bank much on tender business because it's a onetime business. We usually work on the trade, which was -- which is a [ construction ] business.

Understood, sir. Sir, and the final question, what would be the closing inventory, sir, for cotton this year?

It should be like -- it's too early to predict, but it should be meeting that 8 million to 9 million. It should be in line with last year.

[Operator Instructions] The next question is from the line of Abhijit Akella from IIFL Securities.

Just wanted to understand the performance of a couple of segments this quarter. One is hybrid rice seems to be down for this quarter year-on-year. Is that because of the government's encouragement to farmers to move away from rabi paddy cultivation in both Telangana and Andhra Pradesh? And how do you see that impacting the -- impacting our hybrid paddy business going forward?

Not exactly. But last year, there was some sort of slower sales, which was carried in the third quarter. But if -- and the -- to some extent, what you said was right because this year, the selection rice moving a lot in terms of the hybrid paddy. But that's a very small portion on the smaller base. It looks like you have lost sales in hybrid rice. But as an overall segment, this year, we have done very well in terms of the hybrid rice as compared to the industry. If you see the industry figures, industry figures are down by 5% to 7% and more. But we have grown by more than 20%, 25% in hybrid rice. So that's a very small -- on a very small basis, that's not a significant one. Going forward, we see a very good adoption of hybrid to segments going forward.

Okay. Okay. So no change to our expectation of, say, 20%, 25% in hybrid rice going forward?

No, as of now still maintain the same level.

Okay. Got it. And in vegetables also, there is some 3% decline in the third quarter. And also YTD, it's grown only around 8%, which is a bit low given the small base. So what exactly happened there?

As I mentioned earlier in the opening remarks, like in the earlier question, excess rain in Northern India and some parts of Central India, [indiscernible] Vegetable business in the third quarter, where we couldn't do a good sale in okra and the other crops, okra being the major contributor in the third quarter, that currently couldn't, again, these sales as anticipated. And there was so much of returns which were lying. So we have taken that into account. That's the reason we are not growing much in the third quarter. But if you see the fourth quarter, and if you compare on a year-on-year basis, vegetables will grow on a year-on-year basis and on a fourth quarter-to-quarter basis. Already, we had a good start in the fourth quarter. We can see a good sales coming in the fourth quarter.

Okay. Got it. Then just on the Madhya Pradesh government provision that we have taken in cotton in first quarter, has that been reversed yet or not yet?

Not yet. We are pursuing it, we might get in the fourth quarter or in the first quarter of next year. We are pursuing it. But even though it's getting delayed, we are not bothered about the payment as I think it will be sorted out and the company will [indiscernible].

Okay. So whenever it's reversed, it will be INR 15 crores added to the profit for the company?

Yes, yes, yes.

Got it. And one last thing was on the Bayer CropScience has recently reapplied to the Indian government for this Bt cotton GM technology approval. So given that it's happening after so many years and there is finally some positive movement on the GMO front, I would appreciate your perspective on where you see this whole GMO technology going forward?

That's a very positive news for the industry, and we are quite optimistic and confident that the government will also encourage and allow new technologies to come into the Indian agriculture. And Bayer is acting very proactively and they're working aggressively with both in terms of the technical team and in terms of the government in explaining the advantages to the agriculture and as a whole to the country. That's a very good move. And once it is true because after we rightly said, after a long time, we are seeing some sort of a technology movement at the government level. It's a very positive move. And once it gets approved we might see a lot of new technologies coming into both non -- even in the non I mean to say food crops as well, edible crops as well. So that's a very good move. And that's the reason we are fairly confident about the future of the Indian agriculture and many more new technologies come into agriculture which is already there in other countries, and they're just waiting for the approvals. And I think even from the government side, when we interact with the government, even they are also active -- they're also willing to introduce new technologies. Of course, they will check the implications of it, but they are positive in getting new technologies even at the government in, there's a good sign. So we can see some sort of development in terms of introduction of new technologies in the coming years.

Okay. Great. One last thing, if I can come back. Regarding the government tender business, there is 1 school of thought that because Telangana and AP have started giving the subsidies in the form of Rythu Bandhu, Rythu Bharosa, that therefore, those state governments will not come back with tender business anymore in the future. So what are your thoughts on that?

Basically, if you see the tender business, what you say, both Andhra and Telangana never views this type of tender business. For example, they just give a subsidy of INR 5 or INR 10 a kg whoever buying maize. So that will not impact much. If you see the actual outflow of the government, this is very few crores only. Whereas the tender business, what we are mentioning is about the central states where the government buys and give it to the farmer on a free basis. Here, the government, for example, the farmer pays 90% of the amount. So that will not much impact much to in these states. Tender business doesn't make much difference in these states, even in Karnataka these subsidies higher tender basically that's it.

[Operator Instructions] The next question is from the line of Anurag Jain, an individual investor.

Kaveri has been on the lookout for acquisitions for some time. Now in the last few months, Bayer India had sold its cotton, mustard, pearl millet and grain sorghum seed business including the brands like Proagro and Surpass to Crystal Crop Protection. Now let's say, theoretically, Kaveri would have participated in this transaction, then would Kaveri have been eligible? Would the Competition Commission allow Kaveri to acquire other smaller seed companies given that Kaveri is a major player already? And then in the seed business, there is no new companies that are coming, it's not even possible for a new company to come in. So in that situation, you -- like you know if you could throw some light on what kind of acquisition opportunities you've been looking at, and how do you see yourself vis-a-vis getting approval from Competition Commission for any possible acquisition?

Yes. We are open for acquisitions, and we are looking for companies also -- but at the same time, we are very conscious in acquiring companies. As we should add value to the company in the sense like we are strong in most of the crops where we operate, and we are 1 of the largest, strongest network in terms of the distribution and in terms of the research. So we are looking for companies where which can actually have some research base and with new product base, which where we are not present or the new varieties where we are not present. So we are looking at definitely -- we will look for acquisitions. We'll acquire a company which makes sense for in improving the revenues and in terms of the profitability and, of course, the shareholders. And in terms of the Competition Commission, definitely before acquiring any company, that's subject to the approval with the Competition. And as we have not acquired any companies, we are not approaching any Competition Commission of India for any approval. If that happens, definitely, will take their approvals and then do it.

Okay. And another question I have is on, sir, last year, basically, the branded seed market had lost market share for the first time after many years due to illegal seeds. So now, for the next season, is the industry like cotton -- there are 2 seed associations in India. So any of these are working? And they had planned to merge these association. So is the association now planning to do some activity with farmers on educating them about the ill effects of illegal seeds? Or how do you see this situation of illegal HTBT seeds in cotton market pan out?

Both the associations, even though when they're working independently, but both the associations were working with the farmers in educating about the quality seed and not going for illegal seed, not only the associations even from the government spend they were working aggressively to educate farmers and to create awareness. And as individual companies were also working on that. So now what we see is that, at least in the next coming years, with the awareness that created by the company, by the organization by the government and there were several stringent laws which have enforced by the government. For example, even the Telangana government and Andhra booking [ Seed Act ] for the companies who are doing illegal seeds. So these type of actions are taken by the government. So definitely, what we see is that the awareness has gone up. And I think -- we think the illegal -- movement of the illegal HTBT should also come down next year. Anyhow that we need to see. But as of now, it looks like it should come down as a percentage compared to this year to next year.

Okay, sir. And I missed your answer to the previous participant question like INR 15 crores was written off. So do you expect this to recover in what time period?

Might be in the 3 to 6 months, we are expecting the money should come back to the company.

The next question is from the line of Srikant Varma from State Bank of India.

Sir, I have a question, please. What will be the [indiscernible] pricing on the raw material confer?

Sorry?

Where the duty inflation, commodity prices are raising. What will be the effect of your EBITDA margin from day-to-day raw material price increase?

Increasing the prices is a routine activity in the business. And most of the time, we pass it on to the farmer to the end-farmer. So what we try to do is that we try to maintain our EBITDA margins. So as of now, it doesn't -- we don't see any stress on the EBITDA margin as of now.

The next question is from the line of Samay Sabnis from Pareto.

This is Aashiesh Agarwaal here. Sir, I understand that your rice business is doing very well and noncotton is especially doing very well and congratulations on that. So my question is with respect to the cotton part of the business, and apologies if you've answered that before, -- but cotton still remains a large part of the business. And there, we are -- we are seeing the business kind of slow. So do we expect this to remain like this? How is cotton growing overall? How is our market share moving and what is our thought and strategy on that? If you could throw some light on that part of the business.

Even though cotton, as a contribution to the overall revenues, have come down, but cotton is a very important crop for us. We still focus on cotton. We are developing many hybrids in cotton for the new segments and launching of new hybrids in different segments is a continuous activity. And cotton, even though -- I rightly said, even though cotton is contributing lower. But as a crop, even it has a good 35% to 40% of revenue contributed from cotton. As a crop, we don't want to lose any focus on that. But as the noncotton segments are growing much faster than the cotton crop, so we are talking more about noncotton segment. But as a cotton, internally, we see a positivity coming back this year and last 2, 3 years were tough years in terms of the cotton business. And with the introduction of the new technologies, rightly mentioned earlier -- in the earlier questions, like introduction of new technologies like [indiscernible]. And most of the new technologies are also lined up for cotton business and the cotton definitely will have a very big share in -- both in terms of the company and in terms of the Indian agriculture. So cotton as a crop, we can't neglect and we still continue to be focusing on cotton crop.

To understand in the last 2, 3 years, like you mentioned that cotton has been weak and is obviously reflected in your numbers also. So if you through some light whether this has been for across the industry or have we lost market. So if you could share some trends about that? And is it only a question of our product pipeline that will change it or is there something more to it?

If you see the cotton as a crop, as an Indian crop, cotton is also down by more than 20%, 25% from the peak levels close to 30% from the peak levels of 2014, 2015. And the other part, even the illegal Bt has also taken up some shares. These 2 have impacted the branded seed segment. In terms of the market shares, we have slightly lost market share in a couple of states, especially like Andhra and Telangana where we are very strong. But if you see the other states like Maharashtra, Gujarat, MP, we gain market shares, including Karnataka. So if you see as the overall market share, we are slightly down in terms of the branded seed percentage down in terms of the market share -- market share when compete as a seed. But if you see overall this cotton market has come down. That has impacted.

Just to belabor on the point, sir, you mentioned that we've lost some share in 2 states, which is a large one. So is it a question of dealer margins? Is it a question of our product? I mean how do you see that? And how do we go about addressing that?

Basically, it's a combination of both. One is the product and the second one is the dealer because our products are pretty old and new products couldn't make much dent in these markets as like the earlier for as we did. And in terms of the margins, dealers, we are in line with the competition. We realized slightly more than the other players do, and we don't -- but because we don't do much of a credit to the dealers, that's slightly impacted us. But see, overall, we have developed some -- we are introducing new products in this segment, and we are pretty confident that we think that we'll get back on market share. And that's not a major worry for us. And as I said earlier, it -- we slightly lost as a poll by half percentage and half not more than that.

So what kind of volume growth, can you anticipate for the cotton segment of the business for say in the next 12 months?

We maintain only 10% growth this year, even though we see a lot of positivity in cotton crop coming on this year. We want to be a little bit conservative in giving the guidance for the cotton as we need to again check the illegal Bt and the nonbranded seed segment. But as also the first look, it looks like it will move to branded seeds. Not at least...

Just for an industry-specific thing that what is the usual time when we can actually start -- I mean, when does the cotton seed sales start hitting our P&L? So what is the cycle like? I'm kind of missing on that if you could shed some light on that again.

Well, basically that comes from the second half of May to July 15. That all because each state has got different sales window. And again, that depends on the rain fall also. So in that 1, 1.5 months' time, we get a clear picture.

Got it. So basically, the month of July is to taken from a sales point of view. And the dealer portion, I mean, dispatches to dealer would be happening sometime in May, June? Is that the right way to look at.

Yes. It starts from May starting April, and to May start based on the state and it moves up to June into July 1st week. If you did a nearby state from our model, it most last. It could be far away as a sort of bit early.

Got it. And if you could also throw some light on the margin profile on say, cotton and on rice and on maize?

So if you see the margins as of non-cotton crops are getting -- we are getting better margins in noncotton crops. Cotton is slightly and -- but if you see as an industry, we are still realizing more than the industry. And I think it's already reflecting in the results for a couple of years. So if you see the -- for the 12 to 14 months, the margin should be in line with the previous years.

Sorry. So basically, you're saying that in the next 2 to 4 months, the cotton margins will go back to the previous level. Is that what you're mentioning, sir?

It was whereas the previous margin itself [indiscernible].

[indiscernible]

Apart from this year, the margins which we are used to maintain in the early years that will come back. This year, as the revenues were down and the other sales returns were high and some impact in terms of the government receivables, that has impacted the margin. Otherwise, in terms of the operation, the margins remains the same and that will [indiscernible].

The next question is from the line of Anurag Jain, an individual investor.

I'm coming back on the cotton business for Kaveri. Basically, Cotton Association of India has projected that based on the current high prices, for the next cotton planting season, they are saying that in early -- 10 main cotton-growing states, the cotton acreages are likely to go up between 20% to 25%. So in light of this projection, you have taken a very conservative view that you expect cotton volumes to grow 10% for Kaveri. So now -- but just to understand, you are taking this conservative view of volume growth of 10% only on the -- although the last year decline was 26% of volumes. So -- and despite only a 10% growth, you think you can come back for the margins -- you can come back to the previous year margin, it just 10% volume growth?

Yes, in the earlier question, I'm taking a very conservative approach in terms of the cotton. Sentiment as of now looks very good. But we are very bullish on the noncotton segment where we grow in between the 20% to 25% in noncotton segment. Overall the company growth should come back to that 15% to 20%, and we'll get back those 2 previous margins. So in that way, we are not very much worried about it. But yes, I understand the start of the statement, I said that, we are taking a very conservative approach in terms of the cotton: one, because the illegal -- we may also need towards the illegal Bt movement.

So basically just like for me to understand currently, even with only a 10% volume cotton volume growth, you expect to come back to our previous year margins?

Yes.

[Operator Instructions] The next question is from the line of Yogesh Mittal and investor. As there is no response from the current participant, we will move on to the next participant on the line Sumant Kumar from Motilal Oswal.

Mithun. My question is for the cotton seed volume. You have guided 8.5 million to 9 million package, right, and this is a historically high. I think in the past, we have done 8.5 to 9. So assuming overall, this kind of volume, what kind of assumption? Apart from the volume it will increase in the cotton because the prices are high, right? And -- but overall, there is also a threat of emergency. So within that, can you -- can you say, and can you talk about what kind of risk do you have in the 8.5 million to 9 million package assumption?

So in terms of the inventory, there was a couple of questions within it. One is regarding the sales and then one is the going to be the inventory part of it. Regarding the inventory part of it, we are pretty conscious about the longevity of the seeds and in terms of the inventory management. The production, whatever we have is like the immediately previous year production off of with this year production and that will last for -- that we can use for next 2 to 3 years. We don't see any sort of a threat in terms of the write-off, instead of not using the seeds. And you will be -- for the next year program based on this thing, we will reduce the production or increase the production based on the sentiment in the first half -- or the initial beginning of the season. So we don't see much of a threat in terms of inventory management, and we don't see any write-offs coming from the inventory threats on the cotton part. Regarding the sale, with the present inventory if we can easily supply to the market. And if there's some sort of much of a positivity than what we expected, even then we can manage the present inventory what we have.

Okay. So overall illegal seeds has an impact on cotton in this year, right? So what industries are doing, what government -- is the government is doing in that?

I answered this in earlier questions also that both the companies would most of the government organizations and in the private organization then the government bodies are creating awareness among the farmers not to go for the illegal seed. And they're educating about the disadvantage of going for that. And they have -- many governments have imposed strict action if something -- someone deals with illegal seeds. So these are the major where the government is taking on. And with that sort of initiatives that this time we might see a decline in this. You say your illegal or the seeds compared to the previous year. That is the current year.

And assuming overall, the Indian cotton requirement and globally China cotton has been banned by U.S. and the requirement of Indian cotton has increased and yarn has increased, so what's your view on the technology side? Should we adopt new technology? Should we -- do we have a new technology to increase the yield apart despite, or you say acreage increase of the cotton because that is not a solution. That can create an imbalance of the other crop also in the area of particular crop it's going to reduce, the price of that is going to increase. So what governments are doing and what we are doing for that technology side in the cotton?

So both the government and for the company, and most importantly for the farmers, increase in yields is much required factor. And if you see a real when compared to the other developed countries or other countries where they are coming in agriculture, we are much lower in that. So we always acquire technologies and even I think the government is also [ pro ] getting the technologies. As I said earlier, they are seeing what are the adversities in the introduction of the new technologies in terms of the biological or the other tests and diseases. So that they are working on. And whenever they introduce new technologies, they check all those things and use it. And as a company and personally, we encourage new technologies to come into the agriculture filed, and we are up for it.

But still, we are waiting for the new technology in the cotton seeds. We have still old [indiscernible]. So we are waiting for the new technology in the cotton seeds to increase the yield?

Yes, companies like Bayer has applied for new technology that is approved. There are some other companies also might follow it. And we, as a company, will take those technologies and then make seeds through and that boost technologies.

So how much time it will take?

Each technology takes a different time, but it's too early to comment on that. Once we get the approval, then we can say to you almost a little bit.

The next question is from the line of Rohan Modi from RSM Advisors.

Sir, my question is, in Q1, Q1 of 2021, we are impacted in the gross margin due to the late placement of our packages in the market in due to the COVID scenario.

We're talking about Q1 of '21 or '22?

This Q1?

Okay.

Is it right?

Yes. Continue with your question.

Yes, yes. Okay. So we are more impact in cotton packages or another crop pop in a write-off?

Hello?

Hello, sir. Sir, my question is we are impacted in gross margin in this Q1 due to the cotton or other crop?

Both the crops. If you see the margins impact. One is we are down in terms of the revenues than compared to last year? The other expenses, especially as the employee cost and the other expenses have gone up. And we -- as we have not received the government money that is also impacting the margins. And to some extent, the write-off in the crops because we have placed that in the market in all the crops are including maize and cotton. Cotton, very few portion in cotton, but basically in rice and maize, we have lost because of write-off, the other impact on the profitability.

Sir, my second question, 1 of our competitor in the cotton seed industry, you said, gaining continuous market fit in the last 5 years. And right now, it's market, there is [ 2x ] of our market, sir.

[indiscernible].

The company which is one of your big competitor in cotton market, has gained market share in last 5 years from [indiscernible] another year. And we are retaining our market. But he is continuously gaining market share. So I'm talking about the Rasi Seed. So what is your view on that? What is their market? What is your increase over [indiscernible]. It's products are better than us or something like...

So they are the biggest players as of in the market shares, and we don't like to comment on other competitor's strategy in terms of the business. But yes, they are #1 players in cotton. They have more -- we gained market share in over 5, 6 years, they have gained from other players. So they are doing it. In fact, they are in line with the market.

Okay. So but I'm just move from our point of view. But it's a difference in product or it's a difference in market strategy? What is your view?

It might be both, but basically in terms of the product interaction. As we said that we have lost market share in a couple of states and we gaining market share and things, a couple of its that clearly gives an indication that our product is faring well in those states and not doing well in the other states, we lost market share. Their product was doing well. They have gained market shares in Northern India. That's how they gain the market shares.

And so my last question, we've done an open market buyback and thank you for considering our feedback as an investor. So I would like to ask that in future, we are more about open market or tender by [indiscernible] what's your experience from open market?

Again, again, that will go to the Board decision as of when the new buyback comes in, definitely will intimate it. We will have a discussion with the Board meeting and definitely, we'll have a final outcome and then let you know. But as the company's point of view, you always see in dividing the shareholders, and we think are very larger [indiscernible] shareholder. That's our prime motive and we'll work on that.

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

Good evening, and thank you for opportunity. Sir, I would like to understand export opportunities for us, what are the steps we're taking for increasing our export market share?

Export is a very big market. Indian exports have a good contribution in the total overall export through export of seeds to Asian countries and especially the African countries. We are working on that. Yes, we couldn't -- our work as per our anticipation in a couple of years due to some COVID conditions and we couldn't test it in the normal markets. But we have samples in many states, and most of the samples and the results are very encouraging. Exports will be a definitive focus area for us, and we are pretty confident going forward. exports will also contribute to the revenues.

Sir, currently, what is the exports revenue last 9 months?

So if you see in the last 3 years, we have not grown much in exports, it were flattish. We are doing around INR 20-odd crores plus or minus of INR 20-odd crores in the last 3, 4 years, we couldn't increase our sales in the exports. There were some of the other issue in terms of the operations or in terms of the testing, updation of this testing results that took some time. So we don't do that. But even in this tough 2, 3 years of pandemic years, we were working with the local countries, the local state governments or the countries where we are trying to operate. We're doing the trial in purpose driven trial, we are completing the trialing procedure and we have given many samples there. So definitely, we are progressing in that direction, but not as per our anticipation.

[Operator Instructions] The next question is from the line of Yogesh Mittal an Investor.

Hello. Am I audible?

Yes.

Sir, first of all, I would like to congratulate the team -- the whole team of Kaveri, especially the scientist and the developers who -- based on whose research and development, the seeds performed well and are received well by the farmers. And one thing I want to ask is about the development that what are the talent retention policies we take to basically calculate and develop and retain the talent in this? It seems to be very critical in this field. Number 2 question is, please -- basically apologize -- I would like to apologize to ask this question again about the HT variety, Herbicide the Tolerant variety. As it seems that it is now affecting like on the last few years in the cotton, is this herbicide tolerant kind of technology being used only in the cotton or other kind of seeds other kind of seeds as well in India or outside India in any of the developed ones? So these are the 2 questions I want to ask.

Yes. I'll just take the second question first. In terms of the hybrid HT, there are many crops even in other crops also based technology used -- HT technology have used. But as of in India, the HT approvals -- I mean to say, companies have only applied in cotton seed for HT as Indian government only allowed GM crops in nonedible crops, and that is only in cotton as of now. So as of now, in India, HT is only applied for cotton, but in other countries that the food crops also have HT. Going down the line, the government is -- takes a policy to give -- allow GM in food crops than that technology might also come into India. Regarding the first question in terms of retaining the employees, that's a very critical part in our industry as it takes a very long time for the leaders or for the company to launch hybrids and it's a continuous activity, even though the company is only [indiscernible], which creates a critical part in developing hybrids. At the same time, breeders and a good team not only just not reader, but in terms of the scientifically right technology and the scientist and the product development team, everyone plays a very critical role. So employee retention is one of the main prime focus area. And we are very keen to retain employees. And then in terms of the company, we have -- we follow all the standards in terms of being the employee benefits and in terms of the compensation. And moreover, that we even given shares, a lot stock options to employees that we have already seen in a couple of years, in the last 2, 3 years, we have got -- we have created trust and bought some shares and giving it to the employees probably long-term retention. That is a continuous activity what we are doing in the company for last 10, 12 years.

There is one last thing if I may as a follow-up. Then we said that some of the other countries have allowed the HT technology being used in cotton or other seeds as well. Is it been received -- is this technology being received well in the developed world in some of the countries? Or -- I just wanted to understand whether both the reason that Indian government has not allowed this basically because of the impact on the biodiversity and the other harmful impacts on the other [indiscernible] on or around it?

Yes. Wherever the technology is used -- wherever the technology is used their results are encouraging. And there's a mix we are about using the technology or not, but the companies which are -- countries in which they are using, they are using it regularly and they're gaining market share continuously. In terms -- coming back to Indian, the government has not made any policy in terms of the edible crop, that is a food crop in getting GM technology. If the government is clear about the policy, then we can see a worthy move to new technologies coming into the Indian country.

Ladies and gentlemen, that is the last question. For any further details or meetings, planned visit, please be in touch with Rama Naidu from Intellect IR. You can contact him on 9920209623. On behalf of the management of Kaveri Seeds Limited, we conclude today's conference. We thank you for joining us, and you may now disconnect your lines.