Nath Bio-Genes (India) Limited (NATHBIOGEN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nath Bio-Genes Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Monali Jain from Go India Advisors. Thank you, and over to you, ma'am.

Thank you, Mayank. Good evening, everyone, and welcome to Nath Bio-Genes Limited earnings call to discuss the Q4 and FY '22 results. We have on the call Mr. Satish Kagliwal, Managing Director; and Mr. Devinder Khurana, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conduction with the risks that company faces. May I now request Mr. Satish to take us through the company's business outlook and financial highlights, subsequent to which, we'll open the floor for Q&A. Thank you, and over to you, sir.

Thank you. Good evening. I have great pleasure in welcoming you all to discuss results financial year '22 and future outlook of Nath Bio-Genes. The entire seeds and farming community is absolutely d***** with unprecedented farm produce prices currently prevailing in the country. Never before farm produce prices have been so high and so good. The news of [indiscernible] monsoon has also added with cheer. With all these things, we expect a fantastic Kharif season this year. Recently, Government of India has approved usage of gene-editing technology in the country. This technology would lead to faster development of innovative and novel products in [ saving ] crops. We, at Nath Bio-Genes, are actually working on several projects in important crops with this technology. During the period of illegal Bt cotton continues to be disturbed and effect Bt cotton sales. The seed industry has been pursuing, has been lobbying with the government for approval of the much-awaited HTBT technology. Despite of above, the future outlook for the entire seeds industry and especially our company is very positive. We will continue to harvest genomics and modern seeding technology to develop superior seeds. We plan to launch several tailormade [indiscernible] products in different crops and segments. Our focus, as we go forward, would be mustard, forage and wheat crops. This is besides working on the current portfolio of cotton, paddy, maize and bajra. We'll be growing in vegetable and PHM verticals as well, now that our team building efforts are complete, it should be much faster. We also would expand our presence offshore as we introduce our products and get government approvals in next few countries. With the above welcome from my side, I will now hand over to Mr. Khurana.

Thank you, sir. Good evening, ladies and gentlemen, and thank you for joining us for the Nath Bio-Genes earnings call to discuss financial year '22 results and outlook hereafter. I hope you would have seen the presentation which has been uploaded on the stock exchanges. Dr. V.N. Kulkarni, our Research and Development Chief, would have joined this conference, but he is currently in Sudan, trying to seek permission for our cotton seeds from the government of Sudan. We wish him all the luck. As you are all aware, the entire seed sector has been facing significant stress on account of climate vagaries and influx of illegal seeds in cotton. That goes apart from the problems faced by the farming community because of COVID. We too have been facing these headwinds. However, despite these challenges, we have been able to maintain our performance on various parameters, and I will discuss those in detail. A few years ago, we had embarked on an exercise to derisk our business model and diversify the revenue contribution from our product portfolio. We had mentioned that we are making efforts to reduce the revenue contribution from cotton and paddy to around 50% of the top line. And at the same time, increase the contribution from noncotton, nonpaddy segment. I'm happy to report that this strategy is delivering and contribution from cotton and paddy segments has gone down to 59% from 62% last year. Similarly, the company has started working on rationalization and improving of the working capital cycle. I am happy to report that despite an extremely challenging environment, we have been able to reduce our working capital cycle. We have also been able to rationalize our receivable days, which has come down from 130 to almost 115 now. Overall inventory has decreased, and we expect the inventory levels to normalize further over the next 2 seasons. While we are discussing the balance sheet, I would also like to discuss the provision that we have created this year. These provisions are created against the advances, which has been given to our contract farmers to grow the seed, a usual practice in this sector. We have been working with over 50,000 contract farmers over the last 3 to 4 years and have had a natural cycle of production. However, the situation has been on a decline over the last 2, 3 years, primarily on account of COVID. Our farming community has been facing undue stress, either on account of climate vagaries or due to loss of life of the key family member on account of COVID. While we are working on an amicable solution with the farmers and growers to recover our advances, as a matter of abundant precaution, we have made a provision for the potential bad advances to the farmers. The company would continue to make all the necessary efforts to recover these payments through recovery or through future production. However, we would ensure that our farmers are not aggrieved further and all viable options are worked out with them. I will now discuss the operational and financial performance in more details. As I mentioned earlier, this was a challenging year for the sector as a whole, and we have been facing our own headwinds. The biggest challenge has been cotton segment where the industry is still reeling from the pressure of illegal Bt cotton. The country saw a record rise in the sale of illegal Bt cotton with sales of over 70 lakh packets, almost 20% of the national sales and growing further. While we are working closely with industry body and government, there is insignificant impact on the ground for these stocks, and the situation continues to remain the same. Our marketing teams have been collaborating closely with the farmers to educate them. And because of their efforts, we have been able to maintain our cotton sales in line with what we delivered last year. We sold approximately 12 lakh packets of cotton in FY '22, which is on par with FY '21. However, we are confident that our efforts with farmers will yield results and we should be able to achieve a decent volume growth this year. Coming to paddy. Paddy volume saw a decline of almost 29% this year. However, the decline in value was much lower at only 18%. The reason for the same was our focus on hybrid paddy, which is high-value, low-volume product. We have been consciously working through our research and development team towards increasing the products and sales of hybrid paddy over OP paddy and hence, this aspect and impact. Going forward, while there could be a volume stagnancy in paddy, the revenue and margin from these segments are expected to remain high. Coming to vegetable and PNS segment. We had created separate verticals for these 2 segments with resolute leads and teams and have tried to penetrate new territories in both these segments. However, these areas are yet to stabilize and hence, there has been some decline in this segment. However, here also, we are trying to create a suitable product mix with low volumes but high revenues, and we expect this to grow. Other field crops like bajra, maize, mustard and wheat have shown strong value growth of more than 27%. This is in spite of the volume reduction of 12%, thereby proving our efforts to create low-volume, high-value products and the effort would continue to boost this segment in future also. I will now touch on the financial performance. Revenue was down 9.5% year-to-year, primarily due to reduced sales of paddy. However, I'm happy to inform once again that the contribution margin was maintained at 55% this year. EBITDA fell to around 13% due to enhanced credit passed through the trade, the same was done to ensure trades in these turbulent times -- sales in this turbulent time, but we expect this to be covered this year. We have had, in spite of all the issues, an operating positive cash flow of around INR 17 crore. And the Board has once again recommended a 20% dividend for financial year '22. Coming to our future growth outlook. In cotton, we are confident of achieving a volume growth of around 10% to 15%. Paddy would be again on similar lines. In vegetable and non-field crops, we are confident of achieving a 20%-plus growth rate. This should help us to achieve a revenue growth of 10% to 15% in FY '23. We are once again confident that our gross margins will be maintained at 50%-plus. With this, I will open the floor for questions. Thank you.

[Operator Instructions] We have the first question from the line of Varun G. from Dimensional Securities.

Sir, I have 2 questions. Firstly, if you could let us know that in the other crops, what impacted the volumes in Q4?

If you go through the presentation, you would be able to get these figures right. But let me tell you, in cotton, there was no volumetric decline. Paddy declined by about 29% in volume and 18% in value. Field crops...

Sir, in other crops, what -- which crop impacted the volume overall? Because till Q3, the overall volumes were better than FY '21.

Let me repeat, cotton I said, paddy I said. Field crops, we club crops like bajra, jowar, maize, wheat and mustard. This one showed a 27% rise in value. And in vegetable and PNS segment, the volumetric growth was down by 41%, but the value was down by only 28%. We basically cover cotton separately, paddy separately, field crop separately and vegetables and PNS separately.

So the other crop's volume was down because of vegetables?

Sir, you cannot say other crop volume was down. Other crop volume was okay. Vegetable volume was down and paddy volume was down. Other, there was a rise and cotton was the maintenance.

Okay. Secondly, you mentioned -- you guided for 15%, 20% growth in paddy, so that would be on what level on this 59,000 on this low base or would it be on the previous year base?

My request would be that when I made a statement, I'm trying to say that we are trying to create a low volume, high-value [ mix ]. So even if the volumes go down, technically, the value should go up. This is exactly what happened in paddy. We dropped in volume by 29%, but we dropped the value by only 18%. Hybrid is a better contributing and better paying rice with the lower volumes. So the company can be judged from drop in value, not by drop in volumes. That's my request.

Okay. So overall, the revenues grew in paddy in FY '22?

Yes.

And how are you seeing the overall demand for the kharif crops and Rabi crops going forward? Due to climate change, there has been some drop in yields of wheat and other crops. If you could throw some light on that?

I would request Mr. Kagliwal to let you know on that, please.

Can you please repeat the question, please?

Wanted to know the outlook for the crops, the overall -- like wheat and all I have been reading that there has been the overall production impact due to heat wave and all. So -- and even other crops, if you could give us -- throw some light on how do you see the overall production and demand?

See, like Mr. Khurana has already explained, we are working on 15% to 20% growth in practically all the crops. In terms of in paddy, we are talking about minimum -- the value growth will be more and volume growth will be less. In cotton, we have talked about maintaining last year and this year, there will be a slight growth. In terms of production, there have been challenges in production of seed because of climatic changes. But we will be able to do [ major ] up to the requirement and with our stocks that we hold and also the production which has been taken up. So we -- overall, we'll be growing by, I would say, 20%-plus.

Okay. 20%-plus, so that would be around 10% over FY '21 because this year, the revenues have degrown, approximately 10%?

Yes, you can calculate like that. You can calculate like that. No problem.

And could you throw some light on the new products which were launched this quarter, this year?

We have launched several new products -- we will be launching several new products this year and we have very interesting names. We have in cotton, a product called Sanket. We have in paddy hybrid, we have product called Bharat Gold. And [ Dhoom09 ] and we have [ Dominator Gold ] in maize, and we also have [ NBH07 ] in bajra. So we have several crops. We have a big line up of products being launched this year coming up from our research and development wing. Several products are coming up.

And this would increase the realizations with the new products on the revenue?

Yes, yes, yes. Obviously. See, the idea is to do better genomics, better products, superior product and also increase volumes and value growth.

And what guidance do you provide on the EBITDA margin? For FY [indiscernible] moving forward?

We have been working on that. See, what happens is EBITDA fell this year basically because of additional credit which was given to the market. We were trying to maintain the top line, which did get maintained. We dropped only by about 8%, 9%, which is okay in a bad year. Our employee cost has also gone up based on our expectation for this year. Now they will not increase. Financial costs will not increase, and the employee cost will not increase. So EBITDA margin is going to go up. It has been around, say, around 25-plus, but it should reach such around 20%.

Around 20%?

Yes. This is a wild guess, please.

We have the next question from the line of Pratik Prajapati from Anand Rathi.

My first question would be on the revenue side. What were the major causes of revenue decline, especially on the paddy volume decline? If you can give me some explanation on that?

Pratik, I put it down categorically in my opening remarks that the top line has taken a beating basically because of paddy. Paddy, there was a volumetric decline because we are trying to switch from OP to hybrid paddy. And the overall decline of paddy has brought down my top line by about 8% to 9%. This is a strategic shift in which we are trying to create -- introduce -- you see when the new product is introduced into the market, it doesn't get accepted the same day. It takes a year, 2 years, 3 years for the same to be accepted. So this revenue decline is a temporary setback. This will be recovered in over next year, 2 years.

Okay. On the EBITDA margin, in the previous question, you have just said that there would be a 1x effect. So that would be the reason for the margin decline for the current year from 13% to earlier 21%? And what we can see for the next 2, 2, 3 years would be the EBITDA margin...?

Like I -- sorry, like I said that EBITDA margin has taken a beating because of additional incentive that was passed to trade. Normally, we give around 18%. This year, it went to almost about 26% to 27%. And that would be remaining same even based on the top line. So that will help. And the employee cost and other expenses will not change. So automatically, I expect EBITDA to go back to -- if not to the original level immediately, then maybe at least to 25%, I was being conservative.

Okay, sir. Sir, one more question on the outlook side. What is the outlook on the ongoing kharif season? How do you expect it to be for the rest of the year?

We have placed all our products already into the market. Like Mr. Kagliwal said, the monsoon news is good. Our products are already lined up with the dealer distributors and people are waiting for the proper range to set in so that the goods can be lifted. So hopefully, by the time this quarter ends, we should be in a good position. Cotton has been placed, paddy has been placed. All other field crops have been placed.

Okay. And one more last question on the cotton side. How do you see cotton production this year? Will it be a little bit better? And what are the early trends suggesting regarding the cotton production standard demand?

Sir, would you like to answer?

Cotton production this year? Cotton production?

Yes. Yes. Production in the cotton...

Cotton production has been affected. The cotton production has not been to the level expected. But naturally, those who are having inventory are managing with the inventory. So there is definitely a little bit of a shortage in supply of cotton in certain products. Not all products, certain products.

On the demand side, anything would you like to say in the cotton demand side?

Demand side also is very good. There is an expectation that cotton overall sale will grow for the entire country by 15% to 20%. It may vary from state to state, but there is an upswing in cotton sales because farmers are preferring cotton. So there can be a growth of 10% to 15% minimum in cotton sales vis-a-vis last year. It's only affected by illegal Bt, which has been making inroads back to rural areas. So the illegal Bt or the illegal HTBT is where they are growing. So we are hoping that this year, at least it doesn't grow. But then current news or information is that illegal Bt has already been supplied and is growing. So outlook for cotton is minimum 10% to 15% growth.

Industries-wise, you said, right?

Yes.

Yes. And then last question on the cotton pricing side. So we have recently seen the pricing cotton pricing has risen. So how can one see the current pricing happen in the quarter? It will be on the rising trend or would be the stable or you can see more consolidated...

I'm not able to hear you clearly. There is some disturbance, I'm not able to hear clearly your question. Can you repeat, please?

Yes, yes. I will repeat you. So recently, we've seen the price rise in the cotton, so how can one see the current pricing in the cotton, sir?

No, current price, the government has permitted the increase of 5% to 8-1-0, INR 810 a packet. So the -- naturally, the farmer -- the farmers are buying at a higher price compared to last year.

Okay. So do you think that price would be corrected or maybe sustainable at that level or maybe you have a chance to rise more from this level?

Mr. Prajapati this varies from product to product, area to area, time to time. This is a little bit of a [indiscernible] like fixed price. It varies. There is an effort to increase the price by the company and dealers. And demand-supply, obviously, this is a big thing, but there is a -- there will definitely be an improvement in trading price compared to last year.

Sir, let me enter. Pradeep -- Pratik, sorry, the cotton price and government regulation, we do nothing about it.

Okay.

Saving cotton, it is market demand and supply, which creates the whole sale, okay? So when the boss says the price will be increased, he's talking of all other crops, cotton is government regulated. Government has given INR 810; okay, INR 810. Next year, if they say INR 800 or INR 830, INR 800 to INR 830, okay? That's the government -- that comes under the government regulation, please.

[Operator Instructions] We have the next question from the line of Priya Harwani from Perpetuity Ventures. [Operator Instructions]

Yes. Sir, the first question is on vegetable segment. So how we are seeing growth in this segment? And have you introduced any new categories or products, sir?

Ma'am, I said that in vegetables, we expect to grow 20%-plus year-to-year. Our research team has been working. We have a dedicated research team headed by Dr. Chandra Pathak and he looks after vegetable research only. We have 5, 7 breeders working under each crop like be it tomato or okra or be it gourd or be it chilly or brinjal or cucumber and others. So constantly, new products are introduced into the market. And vegetable, we expect to be one of our stronger segments down the line.

Okay. Okay. That's helpful. And sir, one more question. What are the growth prospects on Win-Chi-Win?

Win-Chi-Win, we had extremely high hopes. Government regulations are penning it down. We are trying to fight it out because this product needs to be regulated and licensed in each state. And without that, it cannot be sold. So as a result, we find that we had expected Win-Chi-Win to grow around 30%-plus, which currently, it is not growing, although the product deserves to grow like that. So we are hoping that it will be maintained at 20%-plus for a year or so until the government regulations and the state licenses are placed in place. Once that is done, we'll go back to 30%-plus. It's a beautiful product.

We have the next question from the line of Anirudh Agarwal from AAA Investment.

My first question was actually on cotton. So how many packets have we placed this year?

It is around INR 16 lakhs, INR 17 lakhs.

Okay. And so you are expecting sales return to be lower this year, that is the source of volume...

Yes, last year was 27%, bro. This year, we are hoping to be maintained at about, let us say, 15% upper limit. This is what the marketing has showed me. Let's hope it stays that way.

Right, sir. Got it. And secondly, sir, in terms of vegetables, I mean I got the answer on Win-Chi-Win, but vegetables, a couple of years back, we were expecting it to be a really high-growth segment, right? So what has changed or what is impacting us there in terms of growth?

Nothing has changed there. We were expecting it to be a high-growth segment. It continues to be our high-growth segment. I made a statement that if other products, our other segments are growing at 10%, 15%, and this one will grow at 20%-plus. We had a change of leadership last year. So the whole team had to be changed because the leader wanted the team based on his system. Plus, we added more cattery which takes a little time to establish. Please understand agriculture is a slow-growing process. You put a very good product this year and if people like it next year, it grows by about 10% and the next year, it grows by 40%. So consistency in product, consistency and effort is still on at our level. Research is also continuing to get in more products over a period of time, and we are still very upbeat on the vegetable segment.

Understood, sir. Okay, my next question, sir, was on the advances write-off. So I mean, how are we going to protect ourselves because this advances is the core of our business, right, or the nature of our business. So what steps are we going to take to protect ourselves from this like recurring in the future?

I think that's a very nice question. It covers one area which I have touched upon during my presentation. Please understand that this company has been business for almost about 20, 25 years now. And we have never reached the situation where our advances have gone bad. I always create a provision for bad debt year after year. Any bad debt, any customer which doesn't pay me within 3 years, I provide for it, and I get out of the system by taking a hit on the profit and loss account. Advances, we have never faced the situation. This was a unique situation. The last 3 years, the entire farming community was reeling under pressure. The farmers were either dying or they were committing suicide. At this particular juncture, if you force them for recovery through whatever fair-unfair means, this will create a very bad effect on the farming community. We, as a company, do have the strength to take a hit as and when required. So your question, why it will not be -- or what we are doing to ensure that it will not happen in future? The answer automatically, it has never happened before. So we don't expect it to happen again. Even if you find that some grower is unable to give the required supply, we covered it in the next production. But here, year after year, the poor guy has got stuck. So as a result, we can't wish it away. So that's why we have taken a beating this year, one for all. So that then next year also you can start with the first part. But to add it to this, I am not saying that they are being written off. I have only created a provision for this. We will continue in our efforts looking at in firmer or the grower. If we have a capacity, I will give them production next year, maybe pay him only 50% and get 100% reduction -- or sorry, production, and that will reduce his bad debt or advances thereby showing recovery in the coming years.

Right. So this amount I'm our understanding must have been accumulated over the last 3, 4 years, right? Because...

Yes, I have said it has accumulated over the last 3, 4 years. Basically, this is a COVID's hit to my company.

Understood. Understood, sir. Right. And sir, in terms of cotton, what is the price differential that you're seeing in the market between the illegal seeds and say, our product?

Sorry?

What is the price differential between the illegal seeds that are plaguing the market and the official rate at which we are selling?

Like I said, that our price is controlled by the government. So this was INR 810 this year. MD sir, would you know what is the illegal case which is sold at?

Yes, yes, yes. Yes, there is nothing standard about it. So it varies from place to place. Some products which people are commanding, say, premium is even selling at INR 1,500 a packet. This is the information we have. We have no proof. And some people, even when they are introducing the product, they can even set at INR 600, INR 700. So it is varying from place to place, but they are wanting to command a premium saying that this is a technology and the farmers who get convinced even pay up to INR 1,500 a packet.

We have the next question from the line of Niket Dhruv from Grubbrr Systems.

My first question is on climate change and inflation, any crisis which comes across. I mean I'm an avid reader for many years, and I've been knowing that this is going to come. In fact, I keep sharing my articles to the company. So climate change and inflation, I see this as an opportunity for a company like us, which is a research and science-oriented company. So how do we see this as a company because this is going to be the theme for next 5, 10 years? And how -- as a research and science-oriented company, how do we see the future? Yes.

Yes. Actually, we -- it's a big challenge because climate change is affecting particularly our entire agriculture -- all over the world. Now basically, it's a heat, the temperatures are rising practically everywhere. So this is one point. So let's say predicting what kind of a climate change is going to happen? And based on those changes, what kind of a crop? What kind of changes it will bring in the crop is a little bit -- so like let me give an example to you? We have been working on heat tolerance in a big way in India because there is hardly any production of any vegetables in summer. Planting beginning in January, February and growing in the month of May, June. So we had absolute drought of vegetables, especially tomatoes and things like that. So we have developed a tomato hybrid called Nath Akhand. And we, last week, only our team harvested this product in Rajasthan at 47 degrees temperature, absolutely firm and tasty and growing fantastically and since we have a collection of such a product development I can say the picture is fantastic. So we have been developing working on high heat tolerance. We have been also working on, let's say, free holding capacity for things like paddy. Supposing the crop gets [indiscernible] in rains because of exceptional rains, so that crop should not be damaged. There should be no fungal stress coming in. So we have been working on introducing certain more tolerance abilities in the crop. So that our crop when it is found in the [indiscernible] of climate, we are able to survive in those. So I gave just a few numbers we are particularly working in several crops in different, different regions and different segments so that farmer doesn't get that much loss because of the climatic changes which happens.

Okay, sir. And...

It's a big challenge because to predict what changes are going to happen and then to do research in that direction is not easy, but we have a plan. We have a plan to develop several climate-resilient products.

Exactly, sir. So because that is -- I mean, that crisis can be an opportunity for a company like us.

Absolutely. Absolutely. It's an opportunity and a challenge. So take that as a challenge.

Yes, sir. And 1 more thing, I last asked Devinder-ji also. So inflation, is the inflation -- I mean, in general, inflation is good for our company because that is also again a theme for the next 5 years.

What happens is please understand, seed cost is only 8% to 10% of the overall input that the farmer puts into the field. So even if there is an inflation of, say, 8%, 10%, the price will go up by only 1% in his overall system. So inflation generally doesn't help us much, especially in cotton where the government doesn't bear to implement the inflation into the rates of the cotton. But if you have good products with good demand and they're doing good yield and the farmers are happy, automatically, the price rise that happens is much more than the inflation.

All right, sir. Sir, one more thing. You said like we are focusing on premium products rather than volume. So being in an -- I mean, in India as a business -- from a business background, sir, do you think how should we keep revisiting our strategy? Because India is basically a high volume, low margin in many cases, so is this strategy -- how would it pan out?

Let me answer that. I did not say premium products. I only said low volume, high-margin product, okay? So if you take cotton and gets it all hybrid. There's no regular cotton there. But if you take paddy, and if you sell a hybrid seed, it sells at INR 120, INR 130, INR 140 a packet per KG, whereas the other one sells only INR 30 or INR 40, INR 35. So as a result retail hybrid gives you better yes. So when I say we are going for low volume, high yield, high value products, they're also please understand high-yield products.

Understood, sir.

Otherwise, farmer will not take a high-value product with lower yield.

Exactly, sir. Exactly.

Okay.

Okay. Sir, 1 more thing. So last year, the government had a statement saying that they would like to double the farmer income. So I mean, do we see that as a big positive in our business [ overall ] how is it?

Yes, sure, surely. So a big positive. You see, as you see the government has already increased MSP by about 50%, 60% from paddy of INR 13 that has become INR 19. Wheat was almost INR 14 has become INR 20. So MSP has an increasing of the major commodity prices. So when the price is good, farmer is getting a price, he is ready to invest more in seeds, which is very good for the seed industry as well as he himself at really good prices is, I would say, good for the entire agriculture system.

Yes, sir. Sir, one more thing. I have been reading about buybacks, sir. So any plan since the stock is available at a good price. So is there any plan to execute the buyback?

Devinder?

Buyback we -- listen, we have thought about it. My existing bankers are saying either you for dividend or you go for a buyback as of now.

[Foreign Language]

Your point is well taken. We have not rolled it out. Only thing is we have continued to maintain our dividend for this year also in spite of top line, bottom line, whatever. We deserve that -- we feel that the investing community deserves that much or more down the line. I know that the price is very lucrative at this juncture. Mostly, it must be floating less than the intrinsic in value. We have full faith in our company, and I'm sure investing community also has full faith. Let's currently stay with it. We will continue to argue with our bankers and the moment it comes through, we'll come back to you.

Okay, sir. Sir, lastly, any plan to modernize our website where -- is there any chance in agriculture where we can directly have something like an online portal where the farmers can directly buy seeds from us which can also be a small initiative, but it can reduce our cycle costing?

See, this is a beautiful point. We are working towards digital marketing. We are also trying to tie up with this Amazon and places people like that, so that even our vegetable kits can be put on to the site and you can go and buy directly from either our site or the e-commerce portal or if that doesn't happen immediately, than maybe from other site. But please understand digital marketing, retail marketing is a different concept all together. We are into distributed marketing, putting our products with the farmer on the field and teaching them how to grow it. But we are definitely working on it. It would come through down the line.

Just an example, sir, if I'm a farmer, let's assume I consistently use our seeds. So in that case, I can also go online to our website directly and have a discount where there's no middleman.

We would love that. We would love that. We would love to pass a dealer distributed discount directly to the farmer. We don't want to earn anything out of it. But please understand, in villages, the distributor or the dealers are supreme.

Agreed, sir.

The moment I start circumventing the gentlemen, the whole visit will be told, Nath [Foreign Language] and I don't have an option in that, but we are trying to get into the urban population. We would like to grow our seeds -- like you would like to create a kitchen garden behind your house or even in your [indiscernible] for that matter in Mumbai, we are trying to cater to that first, okay?

Exactly, sir. So [Foreign Language] one more thing, one more segment, which is coming, as we know, organic and all natural segment where the urban sector is looking for seeds and home crops or home cultivation so that can also be...

Now in that, what happens is, let us say you go to the market and you pick up organic tomato, the seed still remains the same. It's a way of growing. So the farmer will ensure that whether he uses organic fertilizers or he uses NCP or whatever he wants to use.

Correct, sir. So we are viable for that...

We are viable for that segment. That segment is likely to grow on its own depending on the demand coming from the educated sector.

Yes, sir. Sir, last question. So we have taken a hit based on receivables -- sorry, our loans. So is this -- I mean, that seems to have impacted our profitability, which you have maintained from last many years. So is this an industry prone issue or maybe it just happened to company -- to us to our company, how does it...

I answered this acuity in the last one. I'll reiterate on that. Firstly, it is not a loan, it was an advance given for seed production. Secondly, this is definitely not a regular feature. It happens once in a mile -- and if it happens once in a while, we would drop of everything. I don't want to unnecessarily carry the legacy over a period of time. Thirdly, this has only happened by profitability as an exceptional item. It has not have hampered by profitability of the [indiscernible] and this is the onetime feature, it doesn't happen every day.

Due to paucity of time, that was the last question. I would now like to hand the conference over to Mr. Khurana for closing comments, please.

At aside, let me thank everybody. It's not easy to be coming at around 5:30. But then since we are in the peak of season, we also did not have much time. And -- for your information, Mr. Kagliwal landed in Aurangabad only at 4:00 in the morning today, and he is attending with you. Thank you for being with us. My only request to the investing community and the analytical company is that once in a while, if I like to knock off certain things which happened as a temporary setback, the company doesn't stop growing. Our research for all the verticals is beautifully in place. We have a vertical for cotton and paddy and vegetable and other field crops. Scientists of review are heading back, company is giving good production year after year. They are being well accepted by the farming community also. Our cotton is -- continues to remain first, second in the ICI trials conducted by an independent government body. So we are here to stay and grow. Please stay with us. Thank you.

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you. Thank you very much. Bye-bye.