Nath Bio-Genes (India) Limited ($NATHBIOGEN)

Good afternoon, ladies and gentlemen. I'm Akash, moderator for the conference call. Welcome to Nath Bio-Genes Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to hand over the floor to Ms. Deepika from Go India Advisors. Thank you, and over to you, ma'am.

Thank you, Akash. Good afternoon, everyone, and welcome to the Q4 FY '26 Earnings Call of Nath Bio-Genes Limited. We have on the call Mr. Satish Kagliwal, Managing Director; Dr. Devinder Khurana, Executive Vice President; Mr. Amol Gupta, Chief Financial Officer; Mr. Harish Pandey, Sales Lead; Dr. Venkatesh Kulkarni, Research Lead. We must remind you that today's discussion may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request the management to take us through the financial and business outlook, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Deepika, and a very good afternoon to everyone. Welcome to our Q4 and financial year '26 earnings conference call. Financial year '26 has been a year of purposeful growth, one where our strategy has translated into tangible results and where the trust that farmers, partners and investor place in us has been clearly rewarded. Before I speak about our own performance, I would like to set the context to the broader industry landscape because I believe this reinforces why the Indian seed sector, and Nath in particular, presents such a compelling long-term opportunity. India is the world's fifth largest seed market, valued at approximately USD 4 billion to USD 4.5 billion, and is expected to grow at a CAGR of 12% to 14% over the next 5 years. With over 140 million hectares under cultivation and the government India's push towards agricultural modernization, seed replacement rates, which are currently below 30% for several plants, represent a significant structural growth opportunity for quality seed companies. The union budget financial year '26 contributed strongly to agricultural stance, with enhanced allocation to PM Kisan, natural farming machines and the Digital Agriculture Mission. The government's focus on increasing crop yields per hectare through the high-quality hybrid seeds is a direct tailwind for companies like Nath. Additionally, with the Indian government's push to double farmer's income and the growing acceptance of hybrid technology in paddy, maize and vegetables, we believe the inflection point for seed adoption is accelerating. Climate change remains a definite challenge for Indian agriculture. Erratic monsoons, shifting crop patterns and extreme weather events have made farmers acutely aware of the need for resilient, disease-resistant seeds. This is precisely where Nath's decades of R&D investment and our DSIR-recognized innovation centers create a durable competitive advantage. Our ability to develop innovative products suited to diverse agroclimatic conditions is what makes Nath a trusted partner for the farming community. Our strategic progress in financial year '26. At the heart of everything we do is a simple yet powerful mission: to support farmers with seeds they can rely on. And it is our strong focus on research and innovation that makes this possible. Our scientists continue to strengthen our [indiscernible] and create hybrids that are not only high yielding but also offer better resistance against diseases and pests. Our lead product basket continues to perform well. Our flagship cotton hybrid, Nath Sanket and JUMBO, once again led the charge, with improved realization, reflecting strong farmer acceptance and product superiority. Bt cotton volumes also grew significantly, reaffirming our leadership in this key crop. Our strategic focus on diversification is bearing meaningful fruits. Paddy volume rose 25% year-on-year and the cotton-paddy combined portfolio now contributes 58% of our revenue mix, up from 52% last year, a strong indicator of deepening penetration in our core crops. In our non-cotton, non-paddy segment, maize emerged as the star performer finishing at [indiscernible]. Volume surged 54% year-on-year with value growth of 78%. Maize now contributes more than 10% to our top line, making it the highest growth crop in the non-cotton, non-paddy segment. This validates our deliberate investment in this category and we see significant headroom to scale it further. India's maize demand, driven by poultry, [indiscernible], and ethanol industries is growing rapidly and we are well positioned to capture this opportunity. Friends, on to international front, financial year '26 marks a historic milestone for Nath. Our joint venture in Uzbekistan contributed USD 1.6 million to our top line for the very first time, a landmark achievement in our global expansion journey. Marketing of seeds is currently underway. Results are encouraging and depending on how the season plays out, we intend to replicate this model in neighboring geographies. We remain cautiously optimistic about certain African markets as geopolitical conditions stabilize. Our infrastructure backbone has been significantly strengthened with state-of-the-art cold storage units, warehouses and conditioning godowns with a cumulative capacity of 25,000 metric tonnes. Combined with our scientific team's expertise and the depth of our [indiscernible], Nath is well positioned for a sustained leadership in the Indian seed industry. Now I'll come to outlook for financial year '27. Looking ahead, we are excited about the opportunities that lie before us. Our pipeline of new varieties across, cotton, paddy, maize, vegetables and the non-cotton, non-paddy segments is robust. We will continue investing in R&D, expand our distribution network, deepen farmer engagement and pursue our international growth agenda with stronger focus and vigor. The Indian seed industry is at an inflection point driven by rising farmer awareness, government support for hybrid adoption and growing demand for food security. I want to express my deepest gratitude to all our stakeholders, our farmers, employees, channel partners and investors for their continued trust and belief in Nath. We remain steadfast in our commitment to delivering consistent value, investing in innovation and building a business that creates enduring impact. Friends, with that, I would now like to invite Mr. Amol Gupta, our CFO, to share the financials and operational highlights for quarter 4 and financial year '26. Thank you.

Thank you, Mr. Kagliwal, and good afternoon, everyone. Thank you for joining and taking some time to join us today. Our earnings presentation has been uploaded on the stock exchanges, and I hope you have had the chance to go through it. Before we dive into the detailed financials, I would like to quickly walk you through some of the key operational highlights from FY '26. We are making steady and accelerating progress on our strategy to strengthen and diversify our crop portfolio. Bt cotton, we have sold 13.8 lakhs packets during FY '26, registering a 22.35% Y-o-Y volume growth and 28% value growth driven by strong demand for our flagship hybrids, Sanket and JUMBO. Production stability is expected to continue over next 2 to 3 years. Paddy, a core crop for us. Paddy volume grew 25% Y-o-Y to 75,619 quintals with value growth of 37 %. The cotton-paddy combined portfolio now accounts for 58% of our revenue mix, up from 52% in FY '25, a testament to our strengthening market position in this critical crop. Maize. Maize was the standout performer of FY '26. Volume surged 54% Y-o-Y to 9,639 quintals with value growth of 78%. Maize now contributes 10.72% to our top line, making it the highest growth crop in the NCP segment, which reflects our deliberate focus on expanding in high-potential categories. Vegetable seeds. While value were down by almost 11%, average realization improved by 6% from INR 1,178 to INR 1,244 per kg, reflecting a conscious pivot towards higher value premium products. We continue to invest in scaling high-potential products in this segment. Plant Nutrition segment. The segment saw a decline of 18%. This is mainly due to China export restrictions with disturbed supply dynamics. We expect this to normalize in the coming year as supply side pressure ease. Uzbekistan international milestone. FY '26 marks the first year our Uzbekistan JV contributed almost INR 15 crores to our consolidated top line, a landmark achievement in our international expansion journey and a strong validation of our global growth strategy. Now coming to financial performance for FY '26. In FY '26, the total revenue stood at INR 4,316 million, reflecting a strong 19% Y-o-Y growth, a clear testament to the momentum we are building across our core and diversified crop segments. Gross profit grew by 5% Y-o-Y to INR 2,403 million, maintaining a healthy gross margin of 56%. The year saw a major normalization of gross margin from the elevated 63% in FY '25 primarily due to a weaker product and market mix. Our underlying pricing discipline remain intact. EBITDA for the year stood at INR 525 million with a 12% margin. Profit before tax after adjustment of exceptional items grew by 11% Y-o-Y to INR 491 million for the year, demonstrating consistent improvement in bottom line performance. PAT for the FY '26 stood at INR 384 million with a PAT margin of 9%. It is important to note that the prior year PAT benefited from a lower effective tax rate of 5% versus 11% this year. Adjusting for this normalization, the underlying PAT performance remain healthy. EPS improved to INR 23.42, a more than 2x increase from INR 11.3 in FY '22, reflecting sustained and compounding value creation over the past 5 years. Total assets grew to INR 10,829 million. Cash and bank balance stood at INR 707 million. Inventory increased to INR 4,446 million in line with our planned scale-up for the upcoming season, reflecting our confidence in FY '27 demand. Trade payables also moved up to INR 1,305 million as we ramp production ahead of the season. Finance costs increased to INR 133 million from INR 96 million in FY '25, reflecting our deliberate working capital investment to fuel the inventory build for FY '27. We remain focused on efficient working capital management as volume scales. Now I would like to take you to see our 5 years track record. It is worth stepping back and reflecting on the journey over the past 5 years. Revenue has grown from INR 2,783 million in FY '22 to INR 4,316 million in FY '26, a 55% cumulative increase. EBITDA has expanded from INR 373 million to INR 525 million. EPS has more than doubled from INR 11.3 to INR 23.42. This consistent compounding is a reflection of quality of our business model and the discipline of our execution. All in all, FY '26 has been a year of meaningful operation and there was a very good operational progress and strategic expansion. We delivered strong revenue growth of 19%. A landmark Uzbekistan milestone, outstanding volume traction in maize and paddy, our infrastructure, R&D capability and distribution network position us strongly for sustained quality growth in FY '27 and beyond. With our robust product pipeline, deepening farmer relationships, growing global footprint and a committed team, we enter FY '27 with confidence and purpose. With that, I will now open the floor for the questions. Thank you.

[Operator Instructions] Is from the line of Mr. Deepesh Sancheti from Maanya Finance.

Am I audible?

Yes, sir.

Congratulations. And the Uzbekistan contributed about INR 15 crores to the top line for the first time. What crops are being sold? And what is the JV structure? And what is the revenue target from Uzbekistan over the next 2 to 3 years?

Okay. I'm Dr. Khurana. Let me answer the question. Uzbekistan, we had gone, as a special gesture for the government of Uzbekistan, to set up cotton production in that particular area. Uzbekistan cotton production is still not Bt type. We are still on the regular production. So we are trying to introduce our hybrid down the line for which Dr. Kulkarni is putting in some special efforts. Now we have been there for 2 years. This is our third year, and this is the first time we were able to sell whatever we had produced last year, or we had exported from India last year. So as of today, INR 15 crores was only a beginning, if I can conclude that. And down the line, we have not yet put in any target financially. Maybe by next year, the acceptability of the products will be known because whatever is sold will be grown this year. And depending upon that, maybe we will actually set up a growth target. But let me assure you that this is a good opportunity for the international step of the company.

No, but how big is -- I just wanted to know how big is the market of Uzbekistan? And how much of it we can take it in the next 2 to 3 years? We must have done some working when we went -- I mean, since you are there in Uzbekistan for about 2 to 3 years.

We are now into sales of cotton seeds there. Cotton market is about $100 million. And altogether, like cereals and other crops together, it is about $450 million market. It is one of the -- whole of Central Asia, this company is for whole of Central Asia. The whole of Central Asia together might reach about $1 billion market size in the coming 5 to 6 years because of the government's intervention for quality seeds and open -- market opening for new seed companies and new technologies.

So now your question of how much we can achieve in the next 2 to 3 years, it is almost a $500 million market. Let us first get established and then we can talk of our target.

So on similar lines, just wanted to understand what percentage of our revenues do we aspire to derive from the international operations over the next 3 to 5 years?

Not more than 10% to 15%.

Not more than 10% to 15%.

No, not yet.

Okay. So we don't see that in the next 5 years, we will not do more than INR 100 crores from the international business?

So you are expecting that my company top line will be INR 1,000 crores?

Yes.

Then in that case, yes. INR 100 crores to INR 150 crores, 10% to 15%. It is always better to under-commit and overperform. So we are being conservative because we are just getting settled there.

No, sir. I'm asking -- that's -- I'm asking for a long-term perspective, like what will be our targets? I mean I'm sure you want to lower the...

I would like to say something on this. Actually, last year, we had some field performances demos. And based on that, we were able to sell this time very good quantity. And honestly speaking, this is the first year wherein our product has gone out to a very large scale in different provinces. Last year, we did only in 2 provinces. So with this, what has happened is that this year, we give also a complete picture on how it goes. So I endorse Dr. Khurana's statement on that because it's a new territory, new products and new innovations have been there. Probably this question on Central Asia, we can answer in the next year's meeting, I feel.

Okay. Okay. Fine. So can you provide the revenue and EBITDA guidance for FY '27? I mean what will be the volume growth assuming -- I mean, assumptions across the key crops, cotton Bt, paddy and maize?

We have maintained a conservative line on cotton, but I've always said that the cotton will be growing around 20%. It has proved what I made the statement last year, it has grown to 22%. As far as paddy is concerned, paddy has also grown beyond 20%, 25%. And maize has given us the biggest booster this year. So we expect the top line to be growing between 15% to 20% around that time, and I'm again being conservative. But 15%, hopefully, yes. And EBITDA margin would be maintained with a slightly upward trend in EBITDA as well as in the net profit margin.

Sir, this is in spite of this being -- I mean India might be affected by El Nino?

I would like to speak on that. See, El Nino definitely has an impact on entire agriculture and it affects us differently in different crops, different geographies. But what we are talking about is a balanced growth that we are talking about despite of El Nino. There could be crop shift, crop changes, there could be geographical shift, there could be delayed planting, there could be things of that kind. But when it comes to seed sales, we'll maintain our growth pattern overall in terms of all the crops put together, in terms of volume growth and value growth. Okay?

Right. And Dr. Khurana want to add on this, especially on the El Nino?

El Nino is an environmental thing. We have faced certain conditions in the past also. So I have always maintained the statement that Nath Bio-Genes tries to place itself all over where it can sell so that the monsoon effect can be contravened from place to place. It makes me spread thin, I need more territories and more debtors for that matter. But the end result is that our top line is always protected. I may take a beating on the bottom line. But then once the top line gets maintained, the bottom line always follows. That's the principle of finance. So we are prepared, like what Mr. Satish Kagliwal just said, that we try to balance our products. We try to balance our areas of sales. We try to balance our production also for that matter. And we hope to achieve what we commit to achieve.

Right. Right, sir. And how are we placing -- I mean, how are we preparing for El Nino if there is any -- because that might affect our trade receivables or even the demand to some extent?

Actually, we are dealing with people -- I'll ask Harish also to intervene here. We are dealing with dealers, distributors, growers who are with us for many, many, many years. And there is hardly anything that we feel may go wrong. We only supply what is technically being sold. We trade the products right till the point of growing. So normally spreading the market is the forte that is being done by Mr. Harish Pandey. I would like him to add something more to this, please.

Yes. Good evening, everybody. See, it's not a first year where we are talking about El Nino on our side. We are talking about El Nino since 2, 3 years, right? So all the times, whenever we plan, we plan at least 1 year before further production. So whenever we plan, we always see what can go wrong. So this part is also being taken care since the preparation of production, right? So we know what can go wrong. So accordingly, the preparation has been made. And definitely, if such thing comes, we are in a position to do better than the industry. Whatever industry do, we may do better than the industry.

Can I have a small word?

Yes.

Yes. El Nino impact predicted is about 92% of the rainfall. That means to say wherever rain-fed crops are there, the impact is more. Rain-fed crops in India more are pulses and oilseeds and part of the rice. So in all these 3 crops, we are not there. Period swing might be one of the prediction. Whenever the sowing gets delayed, cotton becomes more predominant crop there. So in all these facets, together, we are in the right position and our products are in right position. They will not get impacted by El Nino impact.

We have a variety. See, we are not dealing with one kind of these things, right? We are dealing with the long-duration hybrid. We are dealing with the medium duration. We are dealing with the short duration. So whatever things goes, as per the situation, we change our strategy to overcome all the [ mishappenings ].

[Operator Instructions] The next question comes from the line of Mr. [ Ronak ] from Alpha Advisors.

Am I audible?

Yes.

So I have basically 2 questions. The first one is, are there any planned CapEx investments for FY '27 in processing capacity, cold storage or new geographies? And what is the total CapEx budget?

I think we can answer both in one line only. As a matter of policy, as a matter of strategy, Nath has not been investing much in CapExes. If you go through my balance sheet, so you will find that we have only land bank as CapEx and we also have vehicles as CapEx because which we need for ensuring sales production and things like that. But investing monies in processing plants and storages, we are averse to it. The reason is very simple because these are available across the country in various areas for rentals, including processing. And we find it is more economically viable because the requirement of such infrastructure is very limited. We need maize for about 15, 20 days. So why have a machinery for maize for the whole year. So CapEx budget for plants and such other things, just minimal. And vehicles, yes, that's it.

Okay. The second question is -- it's similar to the El Nino question, but a bit different. So how are erratic monsoons and climate change impacting the seed demand patterns? And how are you adjusting your product development and distribution accordingly?

I will just give the basics, then Pandeyji can add to that. Erratic monsoons have been here to stay for so many years, and they will continue to give us nightmares. So we are used to it. Like what Mr. Harish Pandey said, we prepare in such a way that we prepare for contingencies. We place our stocks much before the monsoon. We are ready to shift the stock from place A to place B in case there is a rainfall there or scanty rainfall there or scarcity of rainfall there. We have products which are there for various types of climatic conditions, whether it is less rainfall or more rainfall. We have products which are there for -- which are suitable to a particular territory. So we try and place our products well in time in all the places where we sell and that helps us in partially offsetting the erratic monsoon drama. And what happens is if something doesn't sell somewhere, something else will sell somewhere. So as a result, we are always able to clock our sales. You want to add something, sir?

No, no. Just to add, we are not supplying 100% or 90% stocks to the retailer or [ farmer line ] right? We are supplying these stocks to our branches. So in case if there is any rainfall changes, somewhere we get early rainfall somewhere else, so we can fix our stocks immediately. So this is a kind of preparation we do well in advance so we have plans for that. We have already told in detail.

The next question is from the line of Ms. [ Chaya ], an individual investor.

Am I audible?

Yes, ma'am.

I had a few questions. So basically, the PAT declined 8% Y-o-Y to almost like INR 384 million despite we having a revenue growth of 19%. And also on the tax rate front, it increased from 5% to 11%. Could you just let us know exactly what drove this increase? And what should we assume for the effective tax rate going forward?

Ma'am, profit after margin or after tax has increased in value as a percentage, it has taken about 1% dip. We attribute it basically to more finance cost and more cost spent on the schemes and marketing expenses because to clock that kind of top line, you have to spend monies on the expenses. But it would continue to be, on an average, in the same range, maybe 1%, 1.5% basis points more than what we had this year because the things have stabilized. Otherwise, the top line has grown, but the gross margin has also fallen like I made the statement last year. The last year gross margin was 64%, which was like something unique, which happened to our company. And that time, somebody had asked me, whether 64% is here to stay, and I said, sorry, no way. It will come down to 53%, 54%, that is our gross margin. So the top growth line, some part of it has taken into the production cost also, but we are still maintaining a healthy PAT line, and we would continue to maintain so.

Okay. I had another question. So cotton Bt volume grew 22% year-on-year. How does this compare to the overall industry growth rate? Like, are you gaining market share? And if you're gaining, so from whom? And average realization in cotton Bt also improved from INR 275 to INR 293. So do you see further headroom for price increase? Or is the market getting increasingly competitive on pricing?

I think let me and Harish handle that. We are sitting right in front of it. What she's asking is whether -- our cotton volume has grown by 22%. That is, ma'am, because our products like Sanket and JUMBO are very well accepted into the market. We have been facing production constraints over the last 2 years. And this year, they have been set aside and we are good. So next year, it may be even better. Secondly, your question of whom have we displaced. Now that is very difficult to predict in the cotton market. Everybody is selling cotton. Overall market is same, overall area under cotton production is almost the same. So as a result, we are all displacing each other. The government is not yet putting in more effort for cotton production area enhancement. So somebody must have dipped. And if your product is good and if it is in demand, maybe next year, we'll displace somebody else also.

And definitely, when we are -- we are taking the shares from someone. So definitely, the share will be taken from the leaders, those who are already leading in the cotton market.

[Operator Instructions] The next question comes from the line of Mr. [ Majid Ahmed from Pinpoint X Capital ].

Am I audible, sir?

Yes.

My first question is regarding -- you mentioned Sanket and JUMBO as flagship brand with production stability over the next 2 to 3 years. What is the product life cycle beyond that? And what is in your next-generation cotton pipeline?

Yes. So see, although Sanket and JUMBO has been launched 3, 4 years back, right, but if you see the performance is outstanding. Another thing is the kind of pipeline we have. We have a product 20/20, which is either similar or better to Sanket and we have so many other products, which we don't want to disclose now. But yes, definitely, we have better than Sanket and JUMBO. So now the competition is not with the industry. Now our competition is in-house, right? We have to beat our own products. So life cycle -- you can't say life. Sanket is having 4, 5 years life. Over there, we have so many other products better to Sanket.

Got it, sir. Sir, the cotton-paddy now contribute around 58% of our revenue. Is there a risk of over-concentration in these 2 crops? So how are you balancing the portfolio diversification while protecting your core strength?

If you can go through our earlier con calls that we had, about 3, 4 years back, I had introduced the concept of NCP crops, that is non-cotton, non-paddy crops because any seed company, which is reliant upon only 1 or 2 major crops has a fear of losing the sales down the line. So we were expecting NCP to grow. If you go through our system, you will find that NCP has still grown this year also, although albeit by only 4% for the simple reason because cotton and paddy themselves have grown a little more than regular. That does not mean that we are only relying on cotton and paddy. You run through my portfolio, you'll find maize, which has done exceptionally well this year. We have bajra, which had done exceptionally well last year. And this year, it has maintained line. We are concentrating on wheat and mustard. Both of them put together have also grown up and they have given us reasonably -- wheat and mustard have grown in 10% and 15% in value over last year. Maize has grown by almost about 78% over last year, right, in value and in volume by 54%. We are also concentrating on vegetables and nutrient supplement. So we have a very, very well-balanced product portfolio. And we have a very, very well-balanced [indiscernible] of the selling areas. So we are not only cotton-specific. Actually, when I introduced this NCP concept in the system, at that particular time, one of the investors had asked, sir, how can a seed company be a seed company without cotton being sold. So at that time, I had said, boss, we are not going to let go of cotton; our cotton products are getting lined up. However, we are also trying to give [indiscernible] to other products, that is seed crop products. So we have a balanced portfolio. Please don't be worried about that. We have a very balanced one.

Okay. Got it, sir. Sir, currently, for this financial year, we are seeing a negative cash flow. What is the main reason for it, sir? Majorly, like how are we improving our working capital going forward?

Two things in that. The negative cash flow has an issue in calculation for the simple reason because we have almost about INR 70 crores, INR 80 crores of cash and bank balances, which are lying in the bank at the end of March -- both years, last year also and this year also. Last year was around INR 85 crores, this year was around INR 70 crores. So that effect doesn't come in cash flow. Actually, that is a reduction of liabilities for advanced booking or maybe you can add it to the debtors. So if you calculate like that, you will find that the cash flow is not negative. However. As per the formula, it is definitely showing negative by about INR 13 crores, which is not a very big issue because we have almost about INR 70 crores of almost -- bank deposit lined up. But this year, the stock buildup has been a little more than earlier years for the simple reason because we were expecting the production of cotton to stabilize. Last 2 years, we are feeling that if we give 100, we get only 20. This year, when we gave 100, we got almost 70, 80. So good production has taken place and cotton has a long life -- very good long life in the shelf. So as a result, we are keeping it lined up, and we are stabilized for that. So minor cash flow negativity will not affect our working capital needs.

Okay, sir. Got it, sir. Sir, finally, going forward, like what is the sales and marketing spend as a percentage of sales for FY '27?

Sorry, can you please repeat it?

So going forward, what would be our percentage of sales in sales and marketing, sir? Percentage of overall sales going forward?

You're talking about expenses?

Sales and marketing expenditure, sir. How much are we looking going forward?

Okay. So sales and marketing expenditure, basically, there are 2 components to that. One is expenditure made into the market. And second is schemes which are given to the trade. This year, the schemes have reduced from 32% of last year to 28%, although as a volumetric -- sorry, as a value, they would have increased definitely. The other expenses into the market are commensurate to the demand of the market. So they increase at 5%, 7%, 10%, which is normal inflation. There's nothing much that is being done there, although we have to do a lot of showcasing of our products into the market. The major expense in sales and marketing is our schemes, and schemes are controlled based on the sales. So as a result, if the schemes go up, the sales definitely go up multifold.

When do we see the inflection point in this year in terms of higher sales growth?

Sorry?

Sir, when do we see the benefit of these expenditures translating into much higher revenue growth, sir, going forward?

Boss, as far as the selling expenses are concerned, they are not that high, and we don't go overboard in making selling expenses. We make the selling expenses based on the products that are being sold into the market and schemes are directly commensurate to the sales. So selling expenses do not have any [ inflectual ] growth of the sales. Sales grow because of the products that we introduce into the market and the research products, which Dr. Kulkarni is kind enough to put it to the marketing team. So it's a normal game.

[Operator Instructions] The next question comes from the line of Mr. Sandeep Kumar Verma, an individual investor.

I want to ask regarding cash flow statement. Cash flow statement inventory, if you see inventory, since March 2024, it was minus INR 22 crores. And in March 2025, it was minus INR 108 crores. And in March 2026, it is minus INR 113 crores. So is it means that we are not able to sell the product in the market and inventory is going up and up since March 2024?

That's a good question. The only thing which I don't tend to agree with the question is that if we are unable to sell the product into the market, then how is the top line growing by 20%? Just a matter to think, not to debate, okay? Now coming back to your question, inventory being negative in addition to inventory, like I said, the last 2 years, we are trying to stabilize the production for future. And in that particular case, our products which are not giving us the kind of production have started giving us over-production. Now if I have production lined up into the market, just because my inventory is going to increase, I cannot leave that with the producer because they will sell it elsewhere, my product will become fabricated, it will get siphoned out. So we are bound to take back the production because it is my production being done on my behalf. So this can lead in adding to the inventory. Please remember that if my inventory goes up, the next year production goes down. That's why Mr. Gupta said the stability of production over a period of 2 to 3 years. So I know carrying inventory is a little costly affair, but then it is not detrimental to the sales. And what my marketing people tell me is that whatever we have accumulated this year in cotton, we should be able to liquidate over the next 2 years. Cotton has a shelf life of 5 to 7 years, no issues with that. So next year, definitely, the production will go down, but the sales will increase. That's what I think.

Okay. So we can say, in 2 years, we will be able to sell our inventory?

Don't worry. By that time next year, again, the inventory will come back. We get inventory to sell inventory. That is why the top line is going up. And don't forget, every pie gives me 56% margin.

There are no further questions. Now I hand over the floor to the management for closing comments.

So in the end, I would like to thank everybody, especially my investing community for showing their continued interest in the company year after year, quarter after quarter, half year after half year. We have been making very conservative commitments to the community as such, investor community, and we have always tried to maintain. I can only make 2 lines that your company is well balanced in portfolio. Your company is well balanced in pan-India presence of selling. Your company is trying to escalate or step up international footprint also. We have good human resources very well lined up. And we hope to cross INR 500 crores of top line soon. No commitment. But with your enthusiasm, with your prayers and with your support, this company is here to stay and do well. Thank you. Thank you very much.

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call services. You may disconnect your lines now. Thank you, and have a pleasant evening.