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

Ladies and gentlemen, good day, and welcome to the Nath Bio-Genes Q2 FY '23 Earnings Conference Call hosted by Co-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, Inda. Good morning, everyone, and welcome to Nath Bio-Genes Limited Earnings Call to Discuss Q2 and H1 FY '23 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 conjunction with the risk that company faces. May I now request Mr. Kagliwal to take us through the company's business outlook and financial highlights, subsequent to which, we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Monali. Good morning, ladies and gentlemen. Thank you for joining us today for this earnings call. After a challenging last year, the first half of this year has been promising. Despite erratic monsoon this year, there is a general excitement in the farming community. It is also supported by a strong price environment, and we are confident of a good rabi season ahead. At Nath Bio-Genes, our highest priority has been providing our farmers with the best quality seeds, which have been developed through our stringent R&D, and which provide these farmers with not only significant pest protection, but also deliver the highest yield. For the last few years, we have several products in pipeline, and some of these are now in commercial production and sales. The performance of these products has surpassed our expectations on practically every front. And they are, by far, one of the best performance seeds in their respective segments. We introduced multiple products in different segments in all important cotton crops. These products have been liked by the farmers for excellent yield and high level of resistance to certain pests. For example, SANKET, one of the finest in this category, has been recognized by Government of India for its consistent performance through multiple All India Coordinated Trials. Our strategy of diversifying and strengthening our product portfolio in various crops and segments is also yielding good results. In the vegetable arena, a shift from conventional bidding a shift from conventional building to biotech integrated cross development platform has resulted in development of revolutionary products. For example, our tomato hybrids with multiple virus tolerance have witnessed strong traction and great light to other farmers. These are just a few of our success stories. The idea is to build a robust pipeline of exceptional products and use a well-invested pan-India distribution network for sales and distribution of these products to our farmer friends. Our portfolio of diversified products will take the company to a high growth trajectory and will also provide us with good opportunities in overseas markets. Friends, I will now hand over to Mr. Khurana to take you through the quarterly performance. Thank you.

Thank you, sir. Thank you, Mr. Kagliwal. Good morning, ladies and gentlemen, and thank you for joining us today for our earnings con call. I would also like to introduce and welcome Dr. Venkatesh Kulkarni, who is on the call, our research and development Chief; Mr. Amol Gupta, our AGM Finance and Accounts; and Mr. Dhiraj Rathi, our Company Secretary. As Mr. Kagliwal mentioned, we have had a good first half. I will discuss the results in detail. In operational highlights, our stated strategy of non-paddy and non-cotton continues to deliver strong results. Our portfolio continues to get diversified leading to derisking. The non-paddy, non-cotton segment, that is field crops vegetable and supplement, saw an 18% growth on a Y-o-Y basis in H1 FY '23. This was largely driven by strong performance in vegetables and other food crops. Vegetable continues to be our key product portfolio, and we are very happy with our product basket. During the first half, this segment saw a gigantic volume growth of almost 3x and a massive value growth of almost 4x. Our focus on this area has been hybrid tomatoes, chili, okra and goods. One of our hybrid tomato seeds, more popularly known as akhand is seeing strong traction in the market, and we expect good growth from this product in the coming years. In field crop, bajra was another star performer. This segment saw a 64% increase in quantity and 74% increase in value. In this particular segment, our crop bajra is also seeing a strong pull in the market and is growing at a fast pace. Paddy, the performance was slightly below par primarily because of our emphasis being shifted on hybrid paddy from the research paddy, where we expect strong moment with better margins. This segment is undergoing a transition and should be stabilized from next year onwards. Cotton. The performance is also better than expected. And despite the issue of illegal cotton, we are still being largely able to maintain volumes and values. Going forward, our model portfolio would continue to focus on non-cotton and non-paddy crops to ensure a balanced portfolio. Kindly note that we are not reducing our focus on cotton or paddy, but enhancing the focus on other field crops and vegetables. Coming to the financial performance. Top line. If we look at quarterly performance, then we have a strong growth of around 45%, largely driven by the strong performance of the vegetable segment. The H1 performance is also ahead of the last year's performance and clogged that to INR 231 crores. The EBITDA and net profit are down on H1 basis. The reason being, during H1 last year, we had made a provision of 19% as a scheme credit to be passed to the trade. However, due to changing market conditions, the actual rate credit went up to almost 26% by the year-end of last year. Accordingly, we have provided 26% trade credit in H1. Please note that the trade credit is the backbone of the business, and this ensures consistency of sales. Our gross contribution margin continues to remain at 50% plus, and we are confident to maintain these in coming times also. Rather, we are hoping to improve on this based on the change in product mix. We continue to maintain a positive cash flow which is a healthy sign for working capital controls. Our working capital is also regularly improving, and our banking lines are fully supporting the company. We continue to remain long-term debt-free company, and we will be maintaining that status. In guidance, we already achieved more than 83% of our last year revenue. And given the strong outlook of rabi season, we are confident of achieving a top line of around 15% to 20%. Our EBITDA and net profit margin should be around 15% to 13%, 14%, respectively. With that, I would now like to open the house for questions, please. Thank you.

[Operator Instructions] Our first question is from the line of from Yogesh Tiwari from Arihant Capital.

My first question is regarding the Bt-cotton hybrid SANKET.

Sorry to interrupt. Mr. Tiwari, we can't hear you very well. [Operator Instructions].

Yes. Am I clear now?

Yes, sir.

So my first question is basically on the Bt cotton hybrid SANKET, which we know is launched, wherein we are looking to have market share of 20%. So can you give us -- if you can give some background about what would be the competition and current market share? And what would be the margins on this product. Give us some background on what is the opportunity over here?

I would request Mr. Kagliwal to kindly please take this.

Yes. A very interesting question. The competition is from the segment of SANKET which is the medium boll segment of cotton and this is sold all over the country. Almost 50% of the cotton is medium boll segment and SANKET happens to be a little late mature. So again, the segment will be a little shorter. The competition [indiscernible] practically all the industry [indiscernible]. So we will -- we are competing with them? We are -- the SANKET is performing better than all the competition. And the question about margin. So margin continue -- will continue to be the same as they are in any other cotton hybrid, because we are constrained by the price control by Government of India as far as Bt cottons are concerned. So we hope to have increase in cotton selling prices this year also as like the last year, but we are constrained by the margin. So margins are a little less in cotton sales and as usual, since last 2 years ever since the cotton price control has started. So have I answered all your queries?

Yes, that is helpful, sir. And the other thing is on the competition, which was there from illegal Bt cotton. In the last quarter, it was like there was some reduction in the competition. So how is the situation now?

Illegal Bt cotton continues to be there, and there is hardly any control on it. It looks to be still vying for one reason at least that -- the performance of illegal Bt is not guaranteed by the supplier because it's not regulated as quality certification is not done. It's just illegal. So wherever performance is good, it will continue to grow, but there are several places where the performance is very bad, resulting in 2 people probably getting disliked towards illegal Bt. That itself have declined, society kind of thing. But hopefully, there is some check because we have -- now products like SANKET, which are competing and giving better results than even illegal Bt, which was basically for [indiscernible]. I think they are claiming [indiscernible], but SANKET also has a mechanism of escaping [indiscernible]. So that's probably a lot of positive for us.

Yes, sure. So it was like about 2 quarters ago, this illegal Bt cotton, it was taking away market share from organized fare. So is the situation similar or it's like things are reverse like organized fares are taking market -- more market share?

No, no, illegal continue to take market share from the organized sector. So cotton sales are by all the organized sector and illegal was getting away and taking share from the organized sector only.

Yes. But...

So that is -- the [indiscernible] is there, but hopefully, it will shrink because there are better products available in the organized sector, which are giving competition to where illegal Bt also.

Yes. Sir, just wanted to understand, if they were taking market share earlier from the organized sector, has that increased now? Has that decreased taking away the market share? What is the trend?

Last season, [indiscernible] is increased. It increased.

It has increased now?

Yes. Last -- the season for cotton is always, June, July. So last June, July, the estimate was that it has increased.

Okay. And what the approximate market share for this illegal -- approximately illegal cotton market share?

The approximate estimation is 15% to 17%.

Okay. Sure. And sir, anything that our company is looking at exports? Any opportunity in the export market? And what is the market on the export market?

I think Dr. Kulkarni can answer that.

Yes, yes.

Yes. I would like to say that we are happy that we are expanding to North Africa and Central Asia, wherein our vegetables are performing very well. We are also putting our cotton for licensing there, and that licensing is going on. However, our vegetable sales has been very good in the region. We have also done some in North Africa. It is performing well, and we are likely to build a value model.

Sure. And we also have this product...

Hello? Hello please. Yes.

Yes. So we had launched this product Win-Chi-Win as plant regulators. So what is the performance of that product? And what would be the growth potential for this?

In the market -- in the Indian market or US, overseas market?

The Indian market. Yes, Indian market.

Listen, Tiwari ji, this product has tremendous potential because this gives -- it's a booster. I mean this gives a boost to the plant productivity. It enhances productivity, it enhances quality of fruit and quantity -- size of the fruit and everything. So tremendous potential is there and is doing very well. We launched this product more than 2 decades ago, and it's growing every year. So it is useful for practically all the crops and across the geographies.

And what would be the like market share of this product if...

There is no -- I would say this has -- there is no documentation to know what is the real market size because there are several players, small and big. So I would hate to add that I will not be able to tell you what is -- I can only say it's very small market share that we have currently.

And how is the rest -- what would be the rate, growth rate for the industry -- PGR industry?

About 15% to 20%.

Annual growth rate, 15% to 20%. And sir, what would be your product mix between rabi and kharif?

Okay. In kharif, we have practically major crops, cotton, jowar, bajra, maize, then we also have paddy, right. And rabi, majorly it is mustard and wheat supported by maize and paddy in certain parts of the plateau. So rabi, majorly wheat and mustard supported by maize and paddy and kharif majorly is cotton and [indiscernible].

So what would be the percentage of product mix? How much of your product in terms of percentage?

Okay. I think let me handle that. See, we -- normally, all industries who are kharif-specific, they are 70%, 75% of the top line comes in kharif. That is in H1. And rabi, it goes down by about 30%, right? I had made a statement in the same forum a few years back that we are trying to balance this kharif and rabi portfolio because vegetables take a major share in the second half, and Win-Chi-Win or other supplements that we are introducing take a major share in the second half. If we are able to give an impetus to the growth of vegetables as well as Win-Chi-Win, then we will have a balance to it. Last year, we were floating around 60-40. This year, I don't know because it depends upon the rabi sales, obviously. But our aim down the line is to bring it to 55-45 to start with and subsequently 50-50 in kharif and rabi basically because this will keep the cash boxes turning on month-to-month basis.

And obviously, now coming up, we had this excess rain in North India and flooding. So do you see any impact on demand? And how do you see the rabi season?

I will try to answer that, Mr. Tiwari. I think you have really studied questions very well. The continued rains during -- especially in Bihar and UP is affecting the planting of -- harvesting of paddy and planting of mustard. So it's getting late. But there is no choice but to plan mustard by several farmers. So they, of course, have a choice of planting wheat. But given the economics, people will still try to go for mustard. So there may be some impact on mustard. So mustard may have a little bit of a setback, but this will take a booster. So there'll be balancing with that. Wheat and mustard balancing. So this delayed rains is definitely affecting paddy harvesting as well as the sowing of mustards. We are hoping that by this month end, mustards sowing will pick up and also be substantially high by this month end.

Okay. But has the season started slowly like...

Yes. Yes. Already started. The season is full swing wherever the rains are stopping this July like Rajasthan, like some parts of western region, it's full swing. In Bihar and UP where the rains are in season, there is delay.

Sure, sir. And just last 1 question on the financials. So if I look at gross margin, I just wanted to understand, in 1 half, the 1 half gross margin is about 52%. But Q2 is about 77%. So why is Q2 so high in terms of gross margin?

Tiwari ji, I have been requesting the analysts and investor community that they should only look at our results on H2H basis. As long as -- but let me answer your question, okay? When it comes to our declaration of quarterly results, we have a lot of provisioning to cater for. Because top line has gone, the margins have been made, sales returns are coming in. So Q2 -- sorry, Q1 and Q3 are basically results with provisions, whereas Q2 and Q4, that is H1 and H2, these are already like fully audited provisioned, sales returns booked, all expenses taken in. So as a result, that comparison becomes much better, that is one. Secondly, as far as our gross margins are concerned, and I call it as a contribution margin, we have been maintaining 50 plus, 51, 52, 53. We are still trying to improve that by changing our product mix so that it get better margin on hybrid in paddy and so on. So we will continue to maintain that. We are hopeful that we will continue to maintain that.

Our next question is from the line of Pratik Prajapati from Anand Rathi Shares and Stock.

I have a few set of questions. So we can see in the presentation that we have launched a few products in the cotton, bajra and vegetables, and it seems like they are gaining a good momentum in the market. So can you please throw some more light on those, specifically on SANKET? And what is the current revenue contribution from the SANKET to the cotton portfolio? And what kind of growth in the revenue are we expecting going forward?

Let me answer you on that. Firstly, so products, which have been put into the presentation are only few of the star products that we expect will be doing better than other products in the same segment, okay? So they have not been launched. They're in the process. They are launched means they are put into the market for sales. As regards to their potential is concerned, we feel that they are going to be our star leaders. This year, if you ask me for the contribution of these products, it is not something which can be very good because the other products which are already into the market are better than these products in sales because they are established and they are already there in the market for some long time. SANKET were introduced last year. This year, it has shown a fantastic potential. Coming years, if this product performs the way it is told they are supposed to perform, then this may become our leader in our cotton sales. I have a sale of around 11 lakh package only. In that SANKET may be the major contributor. Similarly, for Super 27 in bajra and similarly, for tomato sales in Akhand. Today, we are not putting a figure on how much they are selling. But if they actually become the leader in their own article segment and the company's performance, definitely that question will be financially answered.

Okay. Very well. And due to the SANKET, can we see the improvement in the margin for overall cotton segment?

This question was answered by Mr. Kagliwal. He said that the margins are restricted by the Government. So the margins in cotton cannot be improved because you have a fantastic product because the Government puts a cap on the top line. But because the product is better, it can always create inroads into other companies or other products.

And the last question, so what is the outlook on the cotton for the next year? And what kind of growth we are expecting in the quarter?

We are talking of industry growth or we are talking for company growth?

Industry.

Sir, would you answer that?

Yes. Industry -- see, there is a positive traction for cotton going as of now and which hopefully will continue to do so in season next kharif, that is June '23. So we expect increase in cotton area going forward next year as of now. The increase can be 5% to 10% basically because of these good prices, the cotton [indiscernible] for the first time, all of INR 100 per kg is a cotton rate, which was never thought of, never expected by many farmers. So we hope that area and the cotton will go up by 5% to 10%.

We'll take our next question from the line of Ramakrishna Nitin from Zen Wealth Management Services.

A couple of questions from my side. So just if you can help understand broadly in terms of the various R&D initiatives that you have been working on internally to scale up your product base. I mean that is 1 thing at a broader level. And second thing is your presentation says that last 4 years, the selling price of vegetables actually has gone up multifold. So trying to understand what are the driving factors. And the background by I'm asking this question is this kind of scenario, is there any risk that like government has been doing on the cotton front? Is there any risk that government might consider putting a price cap on vegetable prices also given the kind of steep uptick that is being seen in the sales price. Third question is maybe -- so I'm new to the company. So sorry, if I'm actually asking this. So what is the reason for the lower tax rate, it's 3%, 4%? So what is the reason for that?

Could you please answer the initiative on research and development, then I will take up.

Yes. Yes. Thanks for this question. As a research and development, we have first, strengthened our line development and product development portfolio. In our first basic part that we have shifted all our processes from conventional building to biotech-integrated product development wherein we use advanced tools like B&M, et cetera. After that, the testing capabilities should be enhanced is our one of our main aim, because hot spot locations, disease resistance, et cetera have to be immediate. So we made our product development and testing very, very strong. In that process, we are not only getting the good products like different [indiscernible]. We are also getting the wonderful products in the [indiscernible] prices and also tomatoes extra. So this is paving away as initially told by Khurana ji that when we have our 2 years or 3 years of cycle, the products are getting great traction because of these changes that we have worked. We have introduced the 6 stage gate product development process, which we are adhering to very strictly on that. Thanks to management. They have strengthened its whole department wherein the failures have been there. And this also gives us an opportunity to build a volume as well as value because we know the value of the products.

Any new products that you will be launching in the next 3 years kind of thing? And what will be R&D as a percentage of overall sales on an average.

This is a wonderful question. Actually, we had 3 patients of dream product mix, thanks to over the Managing Director who has actually initiated this. We identified -- we created a product stages and product mix. In that, we are going to give a late maturing right hybrid, which is our 1 of the priority in terms of its value. We are also 1 of the products that we are going to launch and which is our first product we have launched and again second product we are [indiscernible] bajra. Third 1 is in a very high resistance of okra. Then in cotton, we are coming up with at least 3 products to cater the needs of all the segments. In mustard, we will be 1 of the pioneers in -- we are actually a leader in yellow mustard. We are going to do juncea mustard also this or that. Whenever I'm saying the segment, it is not simply 1 product or 2 product. Actually, we are focusing on building a very strong pipeline. For example, SANKET has been released. Next, we have already got ready. We are already setting. So our focus is in that new platform, it's not only delivering, but what is next year also be answered to the management. This is what we are taking on.

And as far as your question on the expense on R&D was concerned, which was linked to the first question, we spend around INR 10 crores every year on research and development. And percentage wise, you can calculate it differently because when the sales were low, it was around 5%, now it's around 3%, 3.5%. So between 3% to 5% is what is our target on research every year after year, and we are getting good results because of that, okay. Second, you asked me regarding the slide on set to value ratio. This was the first time I attempted this slide and presentation for the investing community. I download the data between 2018 and 2022, and I found that in 2018, if the field crop was 38 crores, the sales was only 3,000 metric tons. So it gave me an average of INR 120 per kg. The same in '22 has gone up to INR 211 per kg. In vegetable, a similar comparison has taken the price of INR 480 per kg in 2018 to INR 982 per kg in 2022. Now this can be attributed to products with better margins. Even if the quantums go down and the values go up, we are getting a better product, a better product mix and a better value for the seed. Lastly, you asked a question on the low tax rate. Although this has been touched earlier quite many times, let me do it again for you, please note that the company is an agriculture company. And we are doing our sales on agriculture land. All production takes place on agriculture land so under Section 10 of the Income Tax Act it becomes an agriculture income. Because it is an agriculture income, it tends to become tax-free. Yet the company pays around INR 1 crore to INR 2 crores of tax every year. That is because apart from our agriculture production, we also have trading products like Win-Chi-Win, certain vegetables get imported. So these are our trading income. So on the trading income, whatever profit side, yes, I have to pay the tax. That is the reason for the low tax rate of the company.

Can I ask 1 more question related to your vegetable sales price? Just 1 clarification. You are talking about this per kg, this is a packet level in terms of the fee packet level that is a price increase?

No, no, no. I have not gone into the detail. Okay, let me say vegetable was INR 15 crores in 2018, with 319 metric tons, okay. And now I'm getting INR 29 crores with only 293 metric tons.

We'll take the next question from the line of Gunit Singh from CCIPL.

I just have 1 question, and it's a query again regarding the tax rate. So under the IT Act, the company is exempted from any taxation if the company has its own land and all the activities are in the domain of agricultural activities. But I see that competitors like JK Agri or even Kaveri Seed now government has demanded to pay tax. And in fact, JK Agri or a couple of other competitors, they paid tax rate of about 25%. So just to understand why is the taxes low despite existing higher tax. Is it because we own the land? Or I mean, I just would like to understand.

Let me answer you by taking your question into different aspects, okay? Firstly, your intuition or your contention that if the company has land and then only it becomes an agriculture produce is misplaced. Kindly go through that section of Income Tax Act. It also says that the leasehold land is also treated as a land on which production taken is agriculture income, Okay? So in that case, the company has almost about 20,000, 30,000 acres of leasehold land across the country on which we take up our own production. And because that production belongs to the company, it is done by the company, it makes it available for agriculture produce and agriculture income, okay? This is point number one. You are trying to compare this company with JK and other companies. Please understand every company has its own accounting standard, its own account principle for agriculture income. We have been going on this route for site since 2011. We have been cleared by even affiliate in income tax that this is an agriculture income. So I think we are good.

[Operator Instructions] Our next question is from the line of Niket Dhruv from GRUBBRR Systems.

[Foreign Language] There is an uncertainty that kind of geopolitics, which happens, which gives rise to an opportunity in this crisis. [Foreign Language] What is happening around the world is in case of palm oil, last -- I think, the last few months before few months, the supply of palm oil was completely stopped by the producing countries like Indonesia. I suppose they gone around 60% production of the world. Same thing happened with Russia and Ukraine [Foreign Language], it's dropped and the prices doubled. So as for my observation goals, there has to be same thing with a protective thing would continue in 2023 and things like that. So I was also reading an article where Indian government is very keen on starting palm oil production in India. And where I suppose India, out of the 100% oil product consumption, 50% is almost palm oil.

Can we come to your question, Mr. Dhruv? Mr. Dhruv, can we come to your question, please?

That's right. Yes. So my question is, sir, do we like -- how do we start the production -- the product in the pipeline. Do we have -- I mean, is there any way we can stabilize the forward-looking products, which we can include in our product base?

Yes. You see, we are into absolutely essential crops for the country. We are into all the major crops, all essential crops like we were oil seeds, which is absolutely strategic in terms of country's need to minimize the import of oil to oilseeds. We are into wheat and paddy, which are basic staple food for the vegetable, giving millions of population that we have. So we are into strategic crops. So we are trying to bring about more production to give enough, let's say, bring about food security in the country. So this is what is absolutely strategic. So whatever crops we are in are bound to have tremendous potential for the country -- for us. So we are strategically poised in those crops where the need for research and development is the great need for productivity increase is very high. And scope of [indiscernible] productivity also is very high. So in all these crops, there is scope for productivity improvement and value increase for the farmer is also there. So we are strategically placing all our crop selection in view of the strategic need of the country. Okay, Mr. Dhruv?

Yes, Understood. And sir, just another question. Sir, what would be the -- how is the response for the Python part, sir?

It is picking up. The response is good. Foodpack, it is independent company being managed very well and response is picking up now. Post corona, the response is picking up.

Our next question is from the line of Amresh Kumar from GeoSphere Capital.

I just wanted to understand, since you have to grow your -- for the next season not only, so how much have you stacked out for the coming season for your bajra and vegetable crops on a year-on-year basis, some idea?

See, what happens is, as far as stocking of H1 is concerned, for next year, cotton production has already taken place. We are expecting around 15% to 20% of growth in cotton next year sales. We need to stock even more than what we expect to grow for the simple reason because one is to ensure that there is no loss of opportunity. And second is because production cannot be finely tailored to the next year sale, okay? The same goes for bajra and jowar and paddy and all that. So basically, the stocking at the end of the year will be sufficient to ensure that the company's guidance for the next year sales is met. And we still have a little more stock than that, which pertaining to the seed industry, we can't help. But we are sufficiently and well stocked.

Okay. Got it. So on that count, the provisions that we made for last year, is there any scope for some clawback from those provisions or some write-back from these provisions? Is it possible?

We have taken almost all regions of actuals except for the provision for schemes and credit that is being given to the trade. We continue to push the marketing people to try and reduce it so that my bottom line can improve. Top line will remain the same, of course, in that case. We do always work, and we do push for that because bottom line is my lookout.

Okay. And sir, the mix has changed year-on-year between cotton, paddy and others. So how are you looking at the optimum between these 3 categories going forward?

I said that we had 60-40 or it was 65% and 35% initially and see that is cotton paddy put together was around 65% of our top line. And others were around 35%. This was around 2, 2.5 years back. So I had made a public statement at that time saying that we are trying to enhance the focus in other crops, not losing the focus in cotton and paddy. Now that is giving us results -- good results. So I think you cannot say there is an optimal mix because it will continue to change. Let us say SANKET becomes a blockbuster. And I can't say [Foreign Language], but let us say 50 -- 55-45, 50-50 in that range, all products, all crops will be given sufficient weightage so that the top line and the bottom line are maintained. That's my optimal way of doing it.

And sir, 1 other question. For example, how many years does it take for a good or a blockbuster product to be developed from an R&D perspective? For example, SANKET, how many years will it take?

We got it. Dr. Kulkarni, can please take on that?

Yes, it takes around 6 years.

Six years? Okay.

Six years to launch the product. Afterwards, they see its growth, it takes another 3 years.

So how many products would be in the pipeline having crossed 2, 3 years and there you see some good prospects going ahead?

It's an ongoing process. It's an ongoing process. Please understand R&D always has the line of children, which are ready to be launched into the market. Every product has a shelf life, memory life. The farmers tend to become bored by we want an iPhone every second, third year. So the same happens in these crops also or in the seed industry also. The research people have a pipeline of products then they go for Dream products. Let us say cotton has 15 products. They're doing very well or 5 products doing very well. Out of that also, there is like 1 which is doing very, very well and something like that. So we always have pipeline products. No issues with that.

And sir, after you launch a good product or blockbuster product, how many years does it take for its full potential to come because farmers pave way for its efficacy. I mean, they look at their neighbors, how they are doing and early next year, they buy the product.

It depends on 2 things. One is, of course, the product performance, which has to be generally exceptional. Then the effort put in by the company to showcase that product to the farming community. Because this is put into the villages into the fields. So what the marketing people do is they will create road show, they will take farmer mailer, they need a farmer mailers and they will bring people from all over and show that look at this product, it is doing very well. So let us say if it's x in year 1, it may become 3x in year 2, and then it may become 10x in year 3 and so on. By about 5 years, people tend to forget [Foreign Language]. That's the way life goes on.

Our next question is a follow up from the line of unit Gunit Singh from CCIPL.

My question has been asked by other participants.

Ladies and gentlemen, that was the last question. I now hand the conference back to Mr. Devinder Khurana for closing comments.

At the outset, let me thank everybody. Because I feel quite elated and quite happy with the kind of interest that is being shown in our company by all of you. And I'm generally grateful that you people are depicting what the company is doing in a genuine passion. Thank you very much. As regard to the company is concerned, I would like to reiterate the fact that we are into seed industry, whether it be hybrid or genetically-modified seeds with a strong research lineup. We continue to remain there, trying to grave better and better products every time through research efforts to the farming community at large. That may be called national service, but we always try and ensure that we also get good profits and good margins so that we can continue to pay a good dividend to our investors down the line. With that, I would like to thank everyone once again for all of you being there, and we will see you in the next conference call. Thank you, and thank you very much.

Thank you.

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