Mahindra EPC Irrigation Limited (523754) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mahindra EPC Irrigation Limited Investor Conference Call.[Operator Instructions] I now hand the conference over to Mr. Ashok Sharma, Managing Director. Thank you, and over to you, sir.

Thank you very much. A very good evening, ladies and gentlemen, and a very, very warm welcome to all of you at the eighth investor call for Mahindra EPC Irrigation Limited. On behalf of Mahindra EPC, I would like to thank each one of you for joining this call. And I'm sure all of you have a wonderful Diwali and a very nice start to the new year. Today, I will briefly just talk about the industry in terms of how the micro industry is impacting in an agriculture and water crisis basically. Then talk in more detail about how the industry is performing in H1 and the outlook for the industry? And how do we see the PC performance in 1 Q2? And going ahead, how would they look for our company. So I always just talk a little bit about the impact of this business on environment and how pushing it is in terms of creating in our water in the system. And all of you are aware that India is facing the huge change of water scarcity and population explosion. And we are moving from a water stressed to water scarce economy. And it's only going to get more charging as the country's population is expect to increase to $1.6 billion and very soon will be the most pops country in the world. So it means a lot in terms of water. Now agriculture consumes almost 80% of the fresh water, which is on country. So there's an option for a country like ours, but to save this water and that to single water in agriculture. Now the only year of savings, I would not say only aware about the best way of saving water is for micro-irrigation. And over the last 3 decades, we have seen that by using traditional practices, the impact has had a real effect on ground water quality and the soil health and productivity. And that's the macro relation is very important. Not only sales water also increases yields and lower the input cost for the farmer. And by applying the water diabeto root zone as you can visualize that the water goes right into the route, the time that is required and the comment required the overall losses are reduced and average of this, there is much higher productivity and much improved cost efficiency for the farmers. I am almost selling of 75% to 80% water efficiency on crops. And we have experienced increase in yield by 25% to 30% by using micro irrigation. So briefly about the industry. Now let me just talk about major EPC so that we are understanding that what is the company's strategy? And how are you working as for our overall vision, we clearly are excited about this whole industry in terms of its impact to the environment, in terms of our commitment to ESG and sustainability and making a difference in the lives of farmers by improving the farmer prosperity. We always focused on customer satisfaction, and that has been our key strategy for Mahindra EPC, and we used the test technology in water management. So that our farmers get the right kind of dips with proper technologies so that they are able to use it efficiently. And this has been our effort since many years and also our focus on good design of the maturation solution and proper installation to the farmer and explain to a farmer, the benefits of micro-irrigation on how it can be used effectively has been our setting, which in while unchanged in terms of the overall approach. Having said that, in the last few years, I have mentioned before also that we are now focusing on a very precise strategy in terms of focusing on the critical markets. And where we have seen year-on-year, we have been increasing our market share. And consciously, we have been moving to a portfolio which is more profitable, which is largely IP-driven. And over the last few years, to be were mindful about our Manager of working capital, and we try to maintain the balance of growth and working capital so that we are in a position that we are managing the company in a banned way. In the last 2 years, given the challenging environment, the focus on cost reduction has been phenomenal, and I'm very happy to say that we had some very good success in terms of lowering our cost. And also, we use this opportunity to get into more non subsidy businesses. So I will talk about it later that how we are trying to increase our non-subsidy business, so they are dependent on state women reduces. Now let us talk about the industry for this year. All of you who are following our company and veneer and they know for a fact that last 2 years, F '21 and '22 have been a very challenging year for the industry in terms of growth and also in terms of margins. And frankly, in '20, in H1 of '23, the challenge continues. The industry has a decline in its one-off this year. And we are still at a decline of around 25% largely in quarter 2. And let's understand what is the main reason for this drop in the last 6 months. So the main reason, as per our analysis is the drop coming from Tamil Nadu state. Last year, in H1, Tamil Nadu actually had an overall industry of approximately INR 300 crores. And our company has a dominant position there around 10% to 12% market share in that market. This industry has dropped by 90%, actually you was virtually no business in the first few months and then we recently started. So that will be a big contributor to the drop in the industry in H1 and largely Q2. Second reason has been Maharashtra. Maharashtra is a good state and normally, it has good business in Q1, Q2. It has also been impacted due to delay in subsidiaries to the farmer. And the farmers are now waiting for us as to come in. So new farmers are not joining them because they're still seeing loafer subsidy. Another interesting thing which has happened is that we have a good range overall, which is very good and good for the future. But in Q2, because of the continuous insistent range, there was less opportunity for companies to install the solutions, and that also impacted the industry in certain states like Maharashtra. Now on the posters. On the last call, to you were there, I had explained in detail that how we are expecting now the price increase from certain states. And on the AGM call also we talked about it. So I'm happy to share some data, which is showing a positive trend in the price increase. In June of this year, Gujarat, which is an important market for the industry increased the price by 10%, Planab 18% and 13%, which was in the fag end of June there should be impeding the price very soon. And that's what happened. In August, September, there was go price, and they've given a very increase of 18% each. So that is very positive for the industry, and that should actually bode well for the coming quarters. Having said that, the raw material challenge still continues. In quarter 2, the increase 24% in raw material price. However, last 8 to 10 weeks, we are seeing some kind of stability in the prices. And there are opinions that now the price increase should not be as steep perhaps it will be stable or might have some minor correction. There is no bisection expected downwards in this price. So this is on the industry for H1 now of course, the question for all of us is to think that was ahead and how we're looking for H2 and beyond. So when I look at beyond from a 2 to 3 perspective, clearly, I can see that this industry should go back to its levels of F 2021, and there has to be a good surge in the demand for nitration to various states. And only we have seen some time like last 2 years when interstates were not very active. Now they want to get active, they are having consultation of the industry, and they are showing interest. For example, Andhra, which has been very passive for the last 2, 3 years and have now resumed operation, which is very good news for the industry, we angrier one of the good markets, and we expect that Andhra should contribute almost INR 300-odd crores in H2 as an improvement over last year, INR 350 crores answering with a meals is now start operations. So that's the positive side. And states like Telangana also have now upped their game in terms of focusing on micro irrigation. So we expect some good business there. We expect some delay in Gujarat now with elections being announced reelections announced for almost 6 to 8 weeks, the government machinery is a bit disturbed. But from December, mid onwards, we expect Gujarat to again come back on the growth path, and they were a good H1. So Wila should be back. One state, which is still not picked up and still there is some lack of clarity in terms of pricing and attractiveness for the industry is Karnataka. So Karnataka is a question mark. Other states, we see are now all looking green in our calculations. And Karnataka also starts improving, then that's still better than the industry. But the positive news which I see is APL Karnataka, APL Tamnar, which are big states, they have now resumed operations and prices have gone up and all material costs should now be stable. That's the essence. Now let me talk about Lynda EPC in specifics in terms of how we have done in the results are there for you to see. Clearly, the results have not been as per our expectations, there has been a degrowth of 2% on the top line, which we believe is in line with the estimated industry degrowth, which is around 20%, 24%. So that is one key point to note and for us, since we have a good , we were also affected in this. And actually, the shortfall, which we have is almost the same amount. We have a software on INR 27 crores from Sanmina, which could be made up by other states. But overall, that has been the main contributor for our shortfall of 20.7% and termite was only INR 10 crores shortfall. Let me give you some specifics on the raw material price because we've been talking about it, and I would like to give you some data so that all of you understand. So if you look at H1 of this year, there has been a raw material price increase of 23.5% over the same period last year. This actually impact on the material cost is of 12.4%. So the impact on our margin was 12.4% on an H1 basis. Fortunately for us, due to the various initiatives taken on focusing on profitable markets, focusing on reps and a very strong drive on material cost savings. We also got some price increase in June and then August, September. So we could contain this whole 12.4% impact to only 3.8%. Balance, we could manage largely due to our internal measures and some support on price increase. And for the month of September, the price increase or impact was full. But for the 2 months, July and August, it was still not fully refiled. So as a result, our loss after tax actually has increased from INR 4.9 crores in H1 of previous year to INR 14.6 crores for this H1. On the working capital front, the company could show significant improvements. We could reduce our debt significantly by almost INR 40 crores. And despite the losses, because of efficient working capital, we could report a positive operating cash flow for H1 Clearly, this was not something which we are all excited about. But given the environment and given the industry, this seems to be a good balancing of our balance sheet in terms of managing or able efficiently and good cost control so that the impact on material cost was minimal for us. Q2, of course, we had a larger deal group. Again, the challenge was to a market. And also last year, we had an export order in this quarter, almost INR 5 crores, which are not there this year. So these 2 actually resulted in a 53% degrowth in quarter 2 and the corresponding impact on the bottom line. So now when we look at the remaining year, what are the positives? Positives are price increase, Terminal and AP, resuming operations? What are the risks? Material costs should not go ahead further, it should be stable or should improve. So that's good, but if it was increased for the burn for us. And Karnataka, currently, we're not assuming that it will become very dominant in H2. So as a result, we expect that the industry in should be favorable. And the drop which we have seen in nature of 25%, we should make up their drop and a reasonably optimistic situation, we might reach around 10% industry growth for the year. But for that, these 2 states have to be fully operational, which is Adrian termly, which seems to be the case. If that happens, then we can expect 8% to 10% growth or otherwise, we've been 5% to 10%. So let's say the range of growth we expect for the year is 5% to 10% for the industry, largely depending on these factors. And because of the increase in prices and assumption of no further raw material costs, we should see increased margins in H2 also. I've shared the exact numbers and details so that you understand -- what is our going in our calculation in our mind. So just to conclude this call and of course, we'll take Q&A and we can discuss more in detail. But in a rather challenging environment for the last 2, 2.5 years, we have done many things to make the company cleaner, smarter and stronger in terms of focusing on profitable markets, profitable products, focusing on non subsidy businesses tight focus on cost, and sharp focus on working capital. And as a result, our company has become now much more ready to exploit the growth opportunities which are coming ahead. And as the industry now is poised for growth, we think we are in a good position to maximize the game and always try to see how we can grow faster than the industry and create value for our shareholders. So with this, I'll for now, thank you. I'd like to thank each of you for your patience. And I'll be very happy to hear your comments, additions, questions and share, our perspectives. So please feel free to ask your questions. Thank you very much.

[Operator Instructions] The first question is from the line of [ Shriman Doria from Sri Capital.]

Yes. am I audible?

Sir, if you can take the phone of speaker, please... You're sounding a little tent Yes, sir, please proceed.

Yes. Ashok, thank you for the detailed opening remarks. A few follow-up questions on key remarks. Firstly, on the industry growth guidance, which we have given now 8% to 10% industry growth for the full year. And given that we've seen a sharp degrowth in the first half, just on the back of the annual calculation, should STC as high as 35% to 40% kind of a year-on-year growth is the assumption correct?

Is there any other question there? Can you complete all the questions and answer to weather?

Okay. Sir, the second question was on the situation in Tamil Nadu. You said that Q2 was quite weak for Tamil Nadu now is picking up. So was there any specific reason why the Tamil Nadu was weak? And for the full year, do you think that Tamil Nadu contribution would be lower than last year? Or it should still grow from the last year's growth in Tamil Nadu. That's the second question. Third question is also while you mentioned that the raw material prices look stable. But if you look at, say, the PVC prices that is being published by the manufacturers, there is a steep decrease in the prices that we are seeing -- and from the peak, I think what the data that we see is about 35% to 40% kind of a decline in the PVC prices -- are you also witnessing a similar trend? That's the first part. Second is in a situation where the raw material prices decline, would states roll back the price increases that they have recently announced. That's a question. And lastly, on the receivables. Out of the INR 138 crores of receivables as on 30th September, what is the contribution from the top 2 states, if you could quantify? And the backlog, which was there from Andhra, what's the status on that?

Is That's elaborate. So thanks for those questions. one. You're right. So clearly, when there was a 25% drop in H1, there has to be a 25% to 30% increase in H2. Do you keep in mind that H2 normally is a bigger half compared to the first half, historically. So we do expect that growth. And as I mentioned, I see if you path numbers. Last year, 1 market was around INR 1,500-odd crores and around INR 1,000 crores. And last year, H2 marketable around 1,900. Now when I'm saying these numbers, please pardon me. They are not published or very validated or industry numbers they are all estimates I could be wrong by 51%. So please pardon me for that. So if you see, around INR 2,000 crores was the industry. Last year, And we expect around INR 2,500 plus minus INR 500 crores this year. So this growth of INR 600-odd crores is largely coming from Andreas. Last year underproduced was actually it would be 0. So this year, we're expecting around INR 600 crores, INR 300 crores, INR 350 crores will come from Andhra. And we expect around INR 100-odd crores coming from Gujarat for the year. So they have done well. And coming out on your next question. So actually, Tamil Nadu will not grow at the same rate as last year. Actually, we see some degrowth in Tamil Nadu in H2 versus H2 of last year. But since H1, they were very low or 20% of there. So it will be a positive from a this year, that this is H2. But by it will be flat or minus we might see a 10% to 15% drop in Tamil Nadu. Then takes like Maharashtra and others, we see some marginal growth. So this INR 600 crores would largely come from INR 35 crores, INR 40 crores from Andhra and around 100-odd got from Gujarat and balance windfarms each other. So that's one. Now why is it picking up? That's a good question. See, what happened is that someone a change in the government at the start of this year, elections and then the new management, new structure came in, there were new bureaucrats that came in. And typically, you have seen when there is a change in the government, there are lot of changes which -- these projects in terms of new policies, new people and new procedures to as happen. And also the priority we set by the new government in terms of this industry. So now all that has happened. Now we can clearly see that the new omen is asking, and there is a trust words going back to the normal bit of business. So the whole thing is now that you made new structure in place, the new origin in place, and the government also given a positive same growth that's the belief. And we're already seeing some in October, November, we have seen that actually happening. So we would believe will continue. Now coming to the raw material costs, this pen has gone down, and also went up again in now the nail volatile. And also 2 of the major plants is now closed for maintenance and another big plant is going for maintenance. So we are a little bit cautious in terms of raw material costs. But on the positive side, global prices are lower than Indian prices. So we think it will catch up as we go forward. But today, we don't want to take our impression to all of you that raw material cost situation is fine and it's going to get better and better. We would rather be conservative because we still see crude oil not softening, the Ukraine issue is still on, Winter is coming in. So we don't know how that piece will play out. So we are being cautious. We would be very happy if the costs go down. But currently, we are assuming stable as reasonable, conservative base case. Now coming to the last point about INR 138 crores. So in that, of course, our big friend, Tamil Nadu is a big contributor, a large contributor. And then fortunately for us, Andhra used to be a perennial topper in this list of receivables, but they have actually been paying well. I don't know if they were following our call, to say INR 25-odd crores, there's AP government for some time. But last 8 months, you'll be happy to know out of INR 40 crores, INR 30 crores to INR 33 crores we have paid back. So that way that improve. So clearly for us, Tamil Nadu is a big one. And then others are routine, Gujarat would be lesser. So that's the way on the…

Right. So how much would be Tamil Nadu contribution in the overall resilient?

I would say significant almost at 60% 50%, 60%.

Okay, that's large. And I had this follow-up on the raw material and the price increases that you're getting from the state?

The role midpoint. So in the past, see, frankly, even with this price, if it stays stable or goes on the 5%, 3%. Still the margins would be not as good as the peak margins that the industry has seen. In good times, we've had 53% gross margins in F '20, if memory is right. So against that, we still have a long way to go. So we don't expect that past in neither. So we don't expect that, but we can't take a view on what can will do, but we would expect that because still there is a lot of that between what was the price historically and where we are today. So personally, I don't think it will happen. But you never know.

The next question is from the line of Aditya Shah from Vikram Advisory Services.

Sir, I have a follow-up question from the previous person. I just wanted some clarity on whether I understood it right on not that last year, FY '22, we had a total turnover for first 2 quarters, if we calculate, it is around INR 73 crores. So the remaining INR 139 crores for the full year is left to become in these 2 quarters, and we are expecting 10% or between 5% to 10% growth over this number or probably something else?

So Aditya, first of all, and you all has been coming for the call and your request is known to me. Very soon, we'll wait, so what I'm talking about is not about Mahindra EPC. And as you know, we never give our guidance in terms of our numbers, what I was talking about with the industry. And that is why I use figures like the industry H2R, and last year was around INR 2,099 crores, and the INR 500 crores. So this is for the industry, our outlook is 5% to 10% growth for the industry have. Now if I would ask me a follow-up question, what kind of word would EPC expect. See, our whole strategy and our track record is we always try to work hard to definitely grow faster than the market. And as a result, if you see, some of you have been long time investors, I'm aware, I saw the list of people who are here on the call, from a 2.5-odd percent market share in the last 8, 9 years, we have moved almost 7% market share. So slowly, we have increased our market share, and that trend will continue. So if industry was 11%, definitely, we would target to grow at that rate or slightly better.

Okay, sir. And one more question is about the non-subsidy business that did we do better than the September quarter last year in non-subsidy business? Or was it still on the same in level?

So No, excellent question. So see, last full year, FY '22, we have done 15% of our revenue through non subsidy full year. And in half 1, we had almost 20% business coming through non subsidy because it last year, remember, we had a well export order, which is not there this year. But this year also, we have done around 22% non-subsidy business. So yes, you have done better than last year, half 1 and clearly much better than the full year of last year.

And do we expect to maintain this in the next half as well, sir? I understand that this 22% or 20% is also good because the reduction in the government business -- now let's say, for the next half year, when we expect more government business, would we be able to maintain this 20% for the full year?

So that is our target. And there's a high product because what has happened the last 2 years because of the environment, we've also changed our strategies. And project market is an area where we are getting some success. And that will actually drive this growth for non-subsidy. And I'm also happy to inform all of you that recently, we have been awarded Class A contractor, so we can take larger projects also. And we expect the project market should already done well in hand that trend will help us to go beyond 20% of non subsidiary for the full year.

Okay. Wonderful. Congratulations for the future, and that's it from our side.

Thank you, Aditya. It's a trusted fit good investors like you, which keeps us going. So thank you for that.

The next question is from the line of Prem Raheja, an individual investor.

Our Thank you for giving the opportunity to take this question. And I orally had one observation to make Yes. So when we took over this company in 2012, '13, so our turnover was anywhere between INR 125 crores to INR 61 crores. And we are showing a profit of about INR 7 crores to INR 8 crores at that point of time. So now fast forward to maybe 2021, 2022, what is your estimate as to the investor community. What is the expectation they should have from EPC, sir, or after 10 years have gone by...

So , lastly, I know you asked this question about if when you took over the lower revenue was there and profitable share. What can happen then that we analyze that. And just to give you some numbers, in F '17, we are around INR 200 crores revenue and we may one 9 crores profit in F '17. And before that, we used to make INR 2 to 3 crores profit on a lower revenue of INR 130, INR 10, whatever numbers you are saying. But the big change has happened in this business model as the industry has grown. In those days, our maximum business is Maharashtra, FabGuard and AP, that order and last 4 or 5 years, the leptin exchange. EP and Tamil Nadu markets have become much more prominent. And there in those project markets, and that contribution has gone up. There, our cost of sale is higher. So our margins are lower compared to what they were to fall. That is one major reason. And second is, of course, over time, there is inflation there of costs are going up. But the good thing on fixed cost is if you look at our F20 costs and Fit costs, they're pretty much the same. So we have tried to really run a tight ship. And despite inflation, we have managed that. Now comes to your real question, which you asked in the end. And I can see your point that in terms of capital appreciation or in terms of value creation, it did not meet the objectives. And that point I fully understand. Clearly, that is some ongoing concern for us also that how do we create value for our shareholders. And the reason, as I mentioned, has been due to largely the factors of industry cyclicity and margins, especially as spares. But if you look at F '20, which was a very good year for the industry, where our performance was clearly in a nice growth trajectory. And I see in the future, as you were asking, how do you see the return for the future. Now with the H2, as you can see early signs of rival in terms of margins and industry growth. I personally see the 2024, '25 will be a good year for the industry, and we can expect to come back to those levels and maybe better. And now as we go into those years, we are going with almost 75% subsidiary, 25% non-subsidy business, which was not there before. We are going with a much higher contribution of 63%, 64%, which was not there before. We are going with a much better, tighter working capital situation, which was there some years, it was not some years. It has been volatile depending on government. I will not take too much reef working capital. It depends on state government. So with those factors, clearly, I think what you ask me, I'm quite optimistic about the industry for the coming 2 to 3 years. And I think the worst for the industry is perhaps over and that happening, surely EPC will continue to perform well. And always, we have kept our strongest commitment to governance, customer satisfaction, highest level of compliance and very transparent communication with our shareholders. So that is our DNA that continues at a major company. No question wait. So beyond that, artisans Pinjin, because how industry will grow, it's not like our other businesses where there is a set kind of a pattern. Here, there are these questions about state governments involvement. And that actually drives their own industry. So that's the pipe industry. Support.

I wish you all the best for the future.

Thank you very much. You have always been rely often our company. So thanks for your interest, and thank you very much for coming for the call.

[Operator Instructions] The next question is from the line of Rajan Shah net investor.

Yes, Without you, the meeting results completely. Thank you very much for joining us. Sir, actually, you mentioned in your opening remarks that the industry grew at 5% to 10% approximately this year. And we normally do mines normally does a little bit better than the industry growth. And last year, we reported about INR 212 crores of top line and a loss of about INR 9 crores. So sir, can we expect -- even assuming the industry grows at 5%, can we expect our turnover to be about INR 225 crores to INR 30 crores. I mean what I want to ask is that will the current year turnover be a little bit more than last year's turnover. So that was my first question. And the raw material prices, where they are right now and the price hike, which we have got about between 12% to 18% from various states. Do we expect margins to be better than last year on a full year basis? Okay. And sir, I have a lot of questions. I would request for a meeting, but I just ask another 2 questions. Sir, how are our products via the net assemblies for Finolex or generation? Are we superior? Are we in line with the quality of products? And if we are in line or if you are superior, why can't we take market from them? Because our share is at about 7%, as you mentioned. I think with what the brand we have, Mahindra brand, farmers are more well worked with the Mina brand than I mean Netatmo Rivoli or maybe Mahindra is popular, yes, but Mahindra is a brand which is known across the country. I mean across the world impact, but in the country, farmers are -- I mean Mahindra is a very prominent brand. So why can't we be a little more aggressive and grab the little market from the other staplers so to increase our revenue and maybe grow a little more fast. And that's also if you can give some -- and sir, '19-'20, we reported to INR 85 crores top line and a fabless profit of INR 24 crores. Do you expect with this raw material prices and with this price eye, we can expect something like that in '24, '25, which you said would be a much better year. So if you can throw some light on all this, yes.

Thank you, Raj. Thank you for all your questions. You are trying to ask to save question in a more precise at what I have to give you a very balanced after -- so go -- now you are asking me to come to 25 to 40, whatever I think that's a matter of mathematics. And what I can only repeat what I said to Adtalem. -- see the industry was 100%. Definitely, our attempt and efforts will be to manage that. And we think we are well poised... Million Why the Mahindra should grow at the industry faster industry one. What are the reasons? Our product quality, which actually your third question. power quality, actually, I can say with confidence based on our farmer feedback and dealer feedback is the best in the market. And I would say best and I had one more company, which is very close to us. So 4 of these companies with our naming the company are among the best in the market. So clearly, we see ourself from the top 2 companies in the product quality. What other good about our company is our series is our customer service. And in our business, customer service is not perhaps the routing customer service, it starts with the designing of the solution for the farmer. So there you take of efforts. And then we give good installation and good follow-up solves. So for select regular service on customer service , and we do this competition also, and we are ranked on the higher side and the pharma satisfaction. Third, as far as dealers are concerned, tenapanor is concerned, we have already transparent a very professional we are dealing. So we are also very comfortable in terms of growing with us. When you talk about market share, your third question. See, frankly, gimbals increased the market share 3x in the last 7, 8 years. It is pretty silica. Now we can go further. We can go more aggressive. But I told you another also before. In this business, we want to calibrate our growth because we see working capital as a big risk. Now for the axle, the real examples. No, there are 2, 3 companies that are not named on this call. We've been very aggressive in '18, '19, '20, and you had higher market share than us maybe? But currently, there are 2 there was no payment. Now those companies, I know the promoters, I know those companies, they have a tough time. Their whole business actually has gone to a big challenging phase. There is one company which is very heavy on Karnataka, a Calcutta-based company. And their money is to for. So we don't want to be in a situation where 2 aggressive in one state and have we have a very interesting model where based on the that model because that beyond this exposure in these states, you should not take from a risk arable perspective. And as you know, we are very elaborate this mine process to which we control, obviously, at that we did not go aggressive in Andhra in 1920, which is possible. And you're right, with our brand and this we can do that. And so we are always balanced. And when we are using the brand more in Masala -- these are doing very good in terms of other governance -- and data -- it is a Maharashtra, our sale and contribution from these states has been increasing year-on-year, just to put some numbers, in F2, Mansa in Gujarat contributed only 18% of our mines in F '20. This year, H1 is 56%. So we can all do that Andhra and Tamil Nadu down, hence, it has gone up. But in absolute terms, compared to F '20, you might be almost 80% to double in the 23 in these 2 states. So clearly, we are doing -- focusing on the states which are good for payments and good on margins, aggressively your market share. But those who are not sure on payments, you don't want to overexpose -- and now to me the second question, I am material the same, what is the margin per than last year? -- our own export analysts, so people know how to ask your questions in a very nice way. So let me look at my data. See, last year, if you look F '22, our gross margins were around 37% and F'21 on 48% F'22 was 5%. Against that, this year, H1 is 36%. So last year, this year is actually, so to say. The answer is yes. Clearly, margins for the full year will better than last year. So will they be in line with F '21? Answer is no. it will be somewhere in the middle. And particularly seems too far and peak, which is the fourth question. So to reach F '20 margins is a journey, but reach F '20 profit levels as the industry grows and is positively moving, we are ready because we have a good lineup in segments a lot. We are maniacal in Baroda in Mars in Combat. We are also able to put in one more location if required. So we are very close to the market. Our brand is well accepted. Customers are happy. We have a very good team. The other thing which we have not discussed in the call in our organization. So because we've been working with the company from the senior level. Our churn is very less. We have delegated recommitted professionals because of Mahindra we are able to attract good talent and we do go tale. So all those basics are very much in place, and we know the business now. In the first 5 years, you were new. Now we know the business, the market is good, we will definitely grow very aggressively and manage our working capital so that we don't take a means. So that also we have done in this game. So my short answer is industry grows interest in our company. Thank you very much.

All the best to you, sir. And I hope you and the team take Mahindra, to be to great levels.

Thank Yes, sir. That's our endeavor, all of us, or committed to that. And we are all very much keen that our company should be at the top for all the right things.

[Operator Instructions]

Thanks so detailed and so sharp, nothing is just to ask ever to answer whatever has to be answered for us has been answered.

As of now, sir, no questions like yes. So you want me to give more reminders?

No, it's not. I think it's time is over it's 45 minutes, which is what the planned time -- and I think you covered all the points. I don't think I have nothing new to add by and large, if you just repeat the same. So I'm happy to conclude this call. And once again, thank everyone of you and wish you a very happy you are ahead. And thanks for all your interest in the company. And I'm sure when we meet going forward, we'll be able to discuss the growth of the industry and see how the industry moves in the future in a positive way. So thank you, everybody and bye.

Ladies and gentlemen, on behalf of Mahindra EPC Irrigation Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.