Sharda Cropchem Limited (SHARDACROP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 Results Conference Call of Sharda Cropchem Limited, hosted by Emkay Global Financial Services [Operator Instructions] There will be an opportunity for you to ask questions at the end of today's presentation. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varshit Shah of Emkay Global. Thank you, and over to you.

Thank you, Margaret. Good evening, everyone. On behalf of Emkay Global, I welcome all the participants on this call. I would like to welcome the management of Sharda Cropchem and thank us for giving us the opportunity to host this conference call. We have with us today Mr. Ramprakash Bubna, Chairman and Managing Director; Mr. Abhinav Agarwal, Chief Financial Officer; and Mr. Dinesh Nahar, General Manager of Finance. I would now hand over the call to the management for their opening remarks. Over to you, sir.

Good day, ladies and gentlemen. A very warm welcome to everyone present here for the Earnings Call of Sharda Cropchem Limited for the Half Year 2021. Sharda Cropchem is represented by myself, Ramprakash Bubna, Chairman and Managing Director; Mr. Abhinav Agarwal, Chief Financial Officer; and Mr. Dinesh Nahar, General Manager of Finance. Talking briefly about first half year results. The revenues grew by 9.3% from INR 745 crores in H1 FY '20 to INR 814 crores this year mainly due to growth in Europe by 23.7%, NAFTA by 1.6% and LATAM by 23.3%. On the other hand, Rest of the World de-grew by 31%. During H1 FY '21, our volumes grew by 8%. Gross profit grew by 22.7% from INR 202 crores to INR 248 crores. Gross margins expanded by 333 bps to 30.5% mainly due to better sales realizations and lower raw material costs. EBITDA grew by 23% from INR 87 crores to INR 107 crores. During the half year, EBITDA margin expanded by 144 bps to 13.2%. Profit after tax stood at INR 47 crores versus INR 17 crores in the corresponding period last year. Net working capital days stood at 98 days as against 113 days in the previous year. Cash and cash equivalents as on 30th September 2020 stood at INR 314 crores as compared to INR 199 crores in the -- on the same date last year. With this brief overview, I would now like to hand over the call to our CFO, Mr. Abhinav Agarwal, for discussing our financial performance. Mr. Abhinav?

Thank you, sir, and a very good evening to all. I will give you the brief overview about the first half FY '21 performance. During the first half, our revenue grew by 9.3%. This was due to a favorable foreign exchange gain of 6.3% and volume growth of 8%. On the other hand, there was a fall in price realization by 5%. During the just-ended half year, our agrochem business revenue grew by 18.2%. Europe, NAFTA, LATAM and RoW grew by 23.9%, 11.1%, 17.7% and 4.1%, respectively. Our nonagricultural revenue fell by 16% due to fall in industrial, mining, construction and port activities. Cash profit stood at INR 125 crores in this half year as compared to INR 85 crores. And CapEx stood at INR 130 crores in this half year vis-a-vis INR 85 crores. Thank you. We now open the floor for questions.

[Operator Instructions] The first question is from the line of Bharat Gupta from Edelweiss.

Congratulations for a good set of results. I have a couple of questions. First, can you quantify Q2 FY '21 results in terms of volume, price in ForEx?

Q2 -- 1 minute. Q2 volumes were 55.40 -- INR 55,40,832 compared to INR 44,97,842, which is a growth of 23.2%. And revenue -- 1 minute. Revenues were -- this is the figure? 42 lakhs -- no?

425.

INR 425 crores as compared to INR 324 crores last year, which is a growth of 31.1%. Am I clear, sir?

Sir, out of the 31% growth, so volume contributed close to 23%. What was the amount of contribution in terms of pricing realization?

One minute. Pricing realization was 2.4%.

Sure, sir. Sir, my next question pertains to the regional performance. So Europe has seen a strong amount of growth. Can you just brief us about the reasons where such a strong growth in a lean period has been seen coming out from the European market? So can you give us a sense of demand in the region?

Sense of demand? I have not understood your question, sir. I can give the performance. Demand is something which I can't understand.

I mean to say in terms of industry demand out there in the European and the North American market, so how are you seeing the visibility of demand going ahead in those regions?

This keeps on changing from country to country. And say, like if you take United States of America, it's a big area. Some regions are having adverse weather. Some places are -- the autumn was not good. Other places, it was all right. I would say if you sum it up totally, both the regions of Europe and Northern America would be normal.

And sir, Latin American market, so the cropping season has just now begin. So how have you seen like in some areas in pertaining to Brazil and Argentina? So are you seeing that there has been some kind of increase in the demand in this season?

There's a slight increase in the demand, not very significant.

Okay. And sir, can you quantify the volume growth according to the regions?

Yes, sir. Volume growth in the European region is about 28%; NAFTA region, 32%; LATAM, 0.5%; and Rest of the World, 6%.

That's rally helpful, sir. Sir, I wanted to understand in terms of our growth coming on from the European markets, so is it on account of new product registrations which you have targeted?

Both new products as well as better penetration.

Okay. And sir, given the fact that there has been some sort of a moderation in the raw metal prices, so how do we see that trend going ahead? Do we see -- still see the gross margin to range in the range of close to 32% in number going forward in the subsequent quarters?

It should be in that range, plus or minus 5%.

[Operator Instructions] The next question is from the line of Somaiah V from Spark Capital.

Sir, following on the previous participant questions, for this current quarter, you mentioned volume growth of 23% and price realization of 2.4%. So that's a decline in price, a negative impact of 2%, sir, for the quarter?

I think it's positive. Price realization is 2.4% on the positive side.

Okay. Got it. And sir, also you did the volume breakup, I mean, at region-wise. So I mean do we have that number? So you mentioned the total number is INR 55 lakhs. So would we have the breakup of that number, sir?

I gave you the percentage. If you want to have breakup, Europe is INR 31,12,000 as compared to INR 24,33,000; NAFTA, INR 13,70,000 compared to INR 10,35,000; LATAM INR 5,60,000, and the previous year, it was INR 5,55,000; Rest of the World, INR 5,05,000 compared to INR 4,75,000 last year.

Helpful, sir. Sir, in terms of our gross margin, so this is the second quarter we have seen consecutive improvements. I mean what would be the reason? So one you mentioned about RM prices getting better. So how much of that? And also, I think because of our improved mix, because of the higher contribution from Europe, I think partly, that is also driving it. So how do you see both of them going forward, sir? And what is your expectation for gross margins for the rest of the year?

Sir, we should be able to maintain it.

Okay. And good amount of this is coming from RM price improvements, sir, China RM prices?

Yes, sir.

And you also see the logistics have also got relatively improved over the last few months vis-a-vis what we saw in April, May?

Sir, logistics is our challenge, as you know. The availability of shipping space and the cost of freight is increasing considerably. Of course, it doesn't form a very big part of our total cost, but it is an increase. And we can understand utilization of the spaces and availability of the ships and -- I mean there are a lot of constraints in the freight side and the logistics side. And that has contributed to increase in the costs.

Got it, sir. Sir, now I mean we had guided for top line growth of 5% to 10% range and margins of 17% to 18%. So that still holds good or they've had a very good quarter now. I mean we have -- I mean we kind of revisit these numbers. So how do we look at it, the FY '21 guidance?

Sir, I would like to comment one thing. Our second quarter last year was an aberration. It was a very weak quarter. So the starting point for this quarter base has been on the lower side. But overall, for the third and fourth quarter, we should be able to maintain overall growth of 5% to 10%.

So 2H, 5% to 10% vis-a-vis last year, so that's our expectation?

I beg your pardon?

For second half, so we've been probably able to do 5% to 10% growth compared to last year?

Yes, sir.

Our expectation?

Yes, sir.

Got it, sir. Sir, and one last question with respect to the CapEx plans. I mean you had mentioned that we have put -- I mean we have put in close to INR 130 crores in the first half. So what is our expectation for the rest of the year? Or on an annual run rate, what do we expect to do in this year and next year?

Sir, last year, our CapEx was about 100 and -- was it 175? -- INR 175 crores. This year, we may exceed INR 200 crores.

[Operator Instructions] The next question is from the line of Chetan Thacker from ASK Investment Managers.

Sir, just one question. Our other expenses continues to be higher in this particular quarter as well. So are there any one-offs there [Foreign Language]?

Sir, main increase is in the legal and professional fees, which has increased from -- this is 5-0 -- 50 -- I'd say INR 51 lakhs to almost INR 74 lakhs on the legal and professional. Freight has increased from INR 13 lakhs -- sorry, I'm missing the decimals, INR 13 crores, INR 13.75 crores to about INR 16.7 crores.

Yes, freight?

Pardon me?

This was freight, logistics cost?

Yes, yes, freight. I mean first was legal and professional. The second was freight and forwarding. On the other side, bank charges have gone down from about INR 9 crores to INR 7 crores.

The legal and professional was in crores or in lakhs, sir?

Sorry, I made a mistake, it is in crores, from INR 5.1 crore...

51.

Sorry, INR 51 crore to about INR 73 crores.

And this is -- sir, what is the main reason for this?

The cost of professionals are continuously on increase. We are operating into the developed world where the cost of professionals are exorbitant. And a lot of registration issues, if we receive some queries or some objections from the authorities, we have to resort to these professionals to draft a reply on all those things. There is no specific -- there were 2 litigation but not in this quarter, not in this half. This is mainly the cost of -- increase in the cost of professionals.

Okay. Sir, beyond the point, this increase will not...

Hello?

Hello?

Yes?

So beyond the point, this increase will not continue, right? That is the expectation?

I agree with you. Beyond the point, it will not. So I think we should be able to see some stabilization or maybe slightly downward trend in the second half.

Okay. Sir, for second half guidance that you gave, you said the 5% to 10% revenue growth compared to second half...

Sorry to interrupt you. Chetan, your voice is not clear, sir. It's breaking up. Can you please check?

Is it better now?

Yes, this is better.

Sir, just on the second half guidance that you gave, so second half revenue growth will be in the range of 5% to 10% compared second half last year?

Yes, sir.

[Operator Instructions] The next question is from the line of Resham Jain from DSP Investment Managers.

Congratulations on the good set of numbers. So my -- I have 2 questions. So first is on the depreciation. I think last quarter, you mentioned that our depreciation now we may not see any further. Is there any one-off in this quarter on depreciation?

The figures, just give me 2 minutes, sir. Depreciation was INR 33 crores last year in Q2, and this year, it is INR 42 crores mainly because of the higher amount of capitalization that has been done in the previous year.

Okay. And sir, is there any -- is this number going to remain like INR 40-odd crores for the coming quarters also?

Yes, sir. It would.

Okay. And sir, my second question is, last year quarter 3 -- as you mentioned, quarter 2 had a weak base. Similarly, quarter 3 also had a weak base, so -- and you mentioned about second half growth being 5% to 10%, so just wanted to just reconfirm that. It was my understanding...

Resham bhai, I don't have any precise calculations for this. This is a general impression that we are carrying as we are going through the business.

Understood. Understood. And sir, on the raw material side in China, can you help us explain what -- how is -- because last year, we had seen very -- a lot of aberrations in the sourcing supplies and other things and costs as well. How are the things looking like currently?

Last year, the biggest effect was due to closure of many factories by Chinese government who are not able to comply with the pollution control rules and regulations. This year, we filed that many of those factories have put in additional investment and efforts to comply with the pollution control regulations. And secondly, probably, the government is also not as strict as it was last year. They are also taking a more practical view. And the effect of both these factors is that the production are getting towards normalization. Earlier, the production was reduced because of these factors. And this year, the production is getting towards -- in terms of volume and capacity and tonnage. So the availability is better. And it's always guided by the law of demand and supply. The last prices were more artificial because of curtailment of production. This year, they are coming back to the original prices in many products which prevailed about 2 years back.

The next question is from the line of Prashant Biyani from Prabhudas Lilladher.

Sir, can we have the breakup of gross margin geographically this quarter and a similar figure last year?

Yes, sir. Just give me 1 minute. Yes, sir, gross margin in Europe region is 36.5% in this quarter compared to 32.3% in the previous year. NAFTA region, it is 19.4% compared to 17.4%. LATAM, it is 27% versus 28.4%. Rest of the World, it is 42.2% compared to 22.8%. Overall, 31.1% compared to 26.9% last year.

And sir, we are trying to increase our -- or expand our presence in various geographies globally. So I mean while any quantum may not be helpful, but in terms presence, I mean expanding presence in some of the major geographies, can you highlight what is our current penetration and how much we are targeting to increase maybe over the next 2, 3 years?

Sir, I don't have any ready-made figures or statistics with -- about this. But what I can tell you is that our presence into most of the regions is still at a very low level, not more than 5% to 10%. In some specific cases, it could be as high as 50%. But in other cases, it can be less than 5%. And one of the major reasons for this is that the innovators and multinational companies continue to dominate all the markets around the world, and they still control about 75% of the market share on an average -- overall average. So the generics have only about 25% market share to share among themselves. And that is why most of the generics are in the range of 5% to 10% each. Sometimes it can be 50%. Sometimes it can be 5%.

Sure. Sir, are we present in the Midwest region of NAFTA?

What is the Midwest NAFTA? NAFTA is, to my knowledge, Mexico, U.S. and Canada.

Yes. So in the Midwest region of U.S.A., which is a major agriculture region there?

Sir, we are present. We are present.

Okay. Okay. And then in your initial comments, you've told that, I mean, demand is quite normal. But despite that, we have seen such a sharp growth in Europe and NAFTA. So what would be driving this growth?

Sir, I would say that better recognition and acceptability of our company from our customers and better trust. And of course, also more -- we are bringing -- coming up with more and more molecules. So they're very happy that they're able to get some alternates to the multinational companies.

Then this accelerated pace of growth in Europe would continue at least for a while?

I think so.

Okay. And sir, lastly, can you give the breakup of registrations geographically?

One minute, sir. Sir, we have 1,270 registrations in Europe, 215 registrations in NAFTA region, about 740 registrations in LATAM and 235 registrations in Rest of the World; total, 2,461.

Okay. And sir, just one last question. On the depreciation side, sir, I mean while this quarter we have seen a higher depreciation, but over the last 2 quarters, it has been either down or flattish. And so if we are continuing with capitalization, then the last 2 quarters also should have seen a bit of a higher depreciation pattern. That was not the case. So I mean a bit of this kind of volatility, if you can explain 2 quarters of downward trend in depreciation, then again, it is on the accelerated path.

No, I do not have those figures of -- 1 minute -- in quarter 1, we had a depreciation of about 350 -- INR 35.5 crores compared to INR 35.2 crores, so it was more or less flat. And quarter 2, there is an increase. I am not able to immediately highlight. We'll have to go into the detail what has contributed, but there's nothing very significant which I can explain here.

But this should continue at, say, 25%, 30% up from the coming quarters?

I don't know whether you can say 25% to 30% up, but it would be on the higher side because, as and when we are getting more registrations and more CWIP is getting converted into capital block, the depreciation will also increase. This is better statement I can make.

The next question is from the line of Rohit Nagraj from Sunidhi Securities.

Congrats on a good set of Q2 numbers. Sir, the first question is in terms of you explained that availability of materials from China has improved, and it is now consistent of -- without any issues from COVID. How has been the pricing trend in the last 6 months that you have witnessed? So we have understood that RM prices have actually come down. But whether the trend has been slightly increased RM prices and incrementally, will it affect our Q3 and Q4 gross margins?

Sir, RM prices, I have commented that they are on the way down, and we expect the same trend in Q3 and Q4. As the Chinese factories are coming back to normal production, the availability is increasing. And that increases the competition among themselves. Earlier when the production was less, they were making a very big profit by increasing their prices, taking advantage of the shortage. That situation is reversing now. I do not know whether I've answered your question correctly, sir.

Yes, sir. It helped. That's it from my side.

Thank you, sir.

The next question is from the line of Vishnu Kumar from Spark Capital.

I just have a couple of questions.

Yes, sir.

Firstly, do you have a broad vision for the next 3 years or 5 years like this is what our revenue should be? This is -- or any strategy that you can do or that we are going to do over the next 3 years to probably take our revenue from X to, say, 1.5x or 2x? Any of the strategy that you can give us or internal targets that are kept in mind? Though you cannot give a specific target, at least if you could mention what are the things that you're looking for aspirationally over the next 3 years for your business.

Sir, you put a very difficult question to me. But I'll tell you, we have a target that we should be able to reach about INR 3,000 crores in the next 4 to 5 years. That is our vision.

Okay. Currently, we probably -- at the current run rate, we are -- last year, we were at INR 2,000 crores. So we are probably at INR 2,200 crores. So that will roughly convert to something like a 10% growth every year is what we are targeting?

On a very broad sort of approximation, yes.

Okay. Got it, sir. Sir, what are the things that we will do to get to this number? I mean, obviously, registrations and everything is broad, I do understand, but any specific reason that you will focus on any product category or anything that you can add color to it?

Sir, my first answer came without thinking was to work -- continue working hard, continue trying our best, looking for the opportunities and in catching up on them rather than allowing them to go or pass away, increasing our portfolio, getting new registrations and getting more deeper and taking more share of the market and being very alert all the time.

Understood. Understood. Sir, in terms of your manpower additions for your middle layer or probably -- how do we see that? Because as you grow bigger and bigger -- anyways, we all know you are extremely hard working, but is there a slightly -- will you take off a load and will be transitory, where a lot more middle management comes into play? If you could just give some idea on that.

I think this is a very difficult task for every company, for every management to get a middle management level who are committed, people team who are committed. Most of the professionals work like professionals. And when it comes to commitment, you find very rare. So we are making first conscious efforts to add to our mid-level management. We are working hard on that, and we are working very sort of with full efforts, full energies on that front.

Any change versus last year to now, sir? Has the count gone up? Is the number of people you have there, is there any change?

Well, our manpower strength is increasing. And on the overseas level, we are -- we have engaged so many consultants. The number of these consultants are increasing as we are increasing the penetration of -- into the different markets. In India also, there is an increase in the strength of our manpower.

Okay. Sir, when you mean consultants, these people will only help you do the registration aspect, right? I mean will they also help you kind of to manage the distribution, also speak to more distributors? Do they help in that also? Or they only work for registration part?

Mr. Vishnu, they are not our employees. We don't have employer-employee relationship with them. Our agreements in black and white is that there will be consultants, but they work very sincerely for us. We do not have employees. We don't have permanent establishments in most of the foreign countries, so we cannot hire people, and we do not want to hire people. We want to engage people who are evaluated, who are compensated based on the results achieved and not by the number of hours they contributed.

Okay. So they span even from registration to end of distribution?

Yes, yes. There are -- I mean they are experts of different kinds of different natures. Some are expertising in registrations. And a lot of them are expertising on the markets and their relationship with the customers.

Okay. Got it, sir. Got it, sir. So we would want to go at least to close to INR 3,000 crores in about 4 to 5 years?

Yes, sir.

Got it. Sir, secondly, on the margin front, you just give us always that this plus 5% to minus 5% is the range that is possible. But with the commentary on China, you're mentioning that raw material prices are on a downtick. Can we go to the 36% kind of number margin which you did about 2, 3 years ago? Do you see directionally that is something that we'll be able to achieve in the next 2 years if the prices remain soft and slightly bit is coming off?

Mr. Vishnu, we should not forget that we are living in the world of technology. And when the situation is coming on to me and you, it is being known to all our customers. And this is the effort of the customers to get the cheapest product and the best quality product. So we cannot keep this -- there used to be a time when these things were isolated, but those days are gone. So the customers also keep on telling us, look, in China, the prices have fallen down. But our biggest advantage in such situation is the entry barrier. But whenever the gap between the raw material cost and the market prices are high, there are always some tracks through which the margins get also lost. It's a very continuous and very fair practice, so we cannot say that we will continue to engage the same price. And in our business model, Mr. Vishnu, we do not decide the consumers' price -- our customers' prices. These are basically decided by the multinational companies, and we are only working under their prices to a discount of maybe 5%, 10% or 15% lower than them. If they reduce the prices, we have no scope to increase our prices.

Got it. But in your sense, in the last 6 months, with Chinese prices coming up, are they reducing or they're holding?

The prices are going down, sir. They are reducing. And in the last 2, 3 months, I'm finding that the Chinese currency is getting stronger. So that is going against our prices. They want to also -- they're giving an excuse that lower renminbi is going $1. So this currency factory is another factor which influences the pricing.

Okay. So this 32% margin at least is something that we'll be able to maintain?

We should be.

Got it. Sir, Europe, we used to do 40%, 45% margin. But now as you were mentioning, there is some uptick versus last year. But would we be able to go to the 45% again? Or do you think -- I mean I understand the U.S. market, but in the past, you mentioned that Europe is generally a good haven for us. There, will we be able to go to that 45% or will 40% something that we should settle at?

Again, Mr. Vishnu, a lot of people are watching us, and the Internet is reducing our scope to get such good margins. If we have to increase our market share, we have to sacrifice the margins.

Got it. That is a game we have to play.

Yes, sir.

Got it. And final question on the CapEx side of it, sir. We've been doing INR 150 crores, INR 200 crores annually. When will this run rate slow down? Because I know that you had in the past mentioned a lot of European registration -- re-registration CapEx have been on. Will we see this number come down to INR 100 crores, INR 150 crores in, let's say, 2 years out or it will continue at the same level?

Yes. I can only give you my impression because there is no calculation works here. And even the European authorities, the ministries, which were earlier working for the community, now they are working for their profits. Some of the ministry charges, which were, say, about $500 or $1,000, have increased to $4,000, and we cannot say anything. And they say they're not able to get proper qualified manpower unless they pay them very high prices, high salaries. So the cost on every front is increasing on all the fronts, including registrations, laboratories, ministries, trials. And the requirements of the authorities is also increasing endlessly. So registration cost, it is very difficult to explain. I feel it will be very difficult for us, for our business model to grow if we curtail our investment in registrations.

Okay. Got it. So this INR 200 crores number is something that we should expect to continue, INR 200 crore range should continue?

Near future. And our ambition to grow means more molecules. And one registration, larger label, If I have registration for INR 5 crores, I would like to increase it to INR 10 crores, all these things mean a lot of expenditure on registrations.

Okay. Sir, just a hypothetical question I'm asking, is there any internal target that you said that this set of registration should get to this kind of ROCs? Just then tell me what has been the outcome if you have a number like that.

Mr. Vishnu, we do some calculations, but none of them work out because we do not know. I am expecting some registrations maybe next month in November. It may get extended until April because of factors totally beyond our control. Ministry is not meeting their -- not even meeting. And all of a sudden, they're coming out with the last minute requirement that 2 more studies are required. So there are so many fronts on which we are -- I mean no quantum of forecast or planning helps.

I would request Mr. Kumar to rejoin the queue for follow-up questions. The next question is from the line of Dhruv M from HDFC Asset Management.

Sir, one quick question on the raw material price decline from China. Now we also hear that there is a rebate of 13% which China is giving on exports. It seems it has just come probably in March, and it has increased from 0 or 5% to about 13%. So is this also helping the raw material price decline? And if not, can it further help in your raw material price decline?

Sir, it has not come to our notice, which means this may be there in maybe some specific situations or specific products. Overall, the -- what they call -- or what we call drawback, and they get called duty back, in my opinion, is remaining constant. There might have been some instances of increase in some specific products, but overall, there is not much of a change on this account.

The next question is from the line of Deepak Kolhe B&K Securities.

Congratulations for a good set of numbers. Sir, my first question is, sir, how is the current situation in the belt segment? And are we seeing any improvement in that, sir?

Yes, sir, we are seeing some improvement. The segment has passed through the real impact of COVID and corona. All the material handlings, handlings in the ports, mines and other things, have got affected adversely, and this has impacted the demand of conveyor belts. As and when these activities are getting normalized, the demand is improving. So there is an improvement on this, and we hope we will get back to still better results in Q3 and Q4.

Okay. Okay. And sir, also, can you please share this registration pipeline as per geography, sir?

Yes, sir. See, we have about 1,030 registrations in pipeline, out of which Europe is 705; NAFTA, 120; LATAM, 138; and Rest of the World, 67.

Okay. And sir, so what is your -- can you please give us some guidance for the tax rate for the FY '21? Because we have seen some increase in the tax rate in the second quarter, so can you please give us some guidance for the FY '21 whole year, sir?

One minute. We feel that effective tax rate should be between 25% to 30% for the FY 2021.

Okay. Okay. Okay. And sir, if you look at the balance sheet, the inventories are like higher as compared to Y-on-Y and FY '20. So any reason for that, sir?

See, the reasons are very obvious. We want to be prepared. We don't want to come to a situation where there's a demand and we don't have the material to offer. And secondly, there's a trend in our agrochemical markets of preseason buying, and that trend is becoming more and more significant. So many people like to buy the products in the month of November, December or January when the actual requirement is in the spring. This starts from April. So it suits us, we are also very happy to deliver and put our foot on the door. And the customers are happy that they are secured for the availability of the product when the real need comes. So these are some of the factors. And then we have to keep the stocks ready. Most of the people, if they have a -- they give us a purchase order, they would like to have the goods on the next day. So all these things are -- if you have to -- if we have to prepare ourselves for this kind of situation, we have to be a little liberal on the inventories.

Okay. Okay. Sir, my last question, sir. Sir, if you wanted to register a product, then what is today's cost? And how much it was last year? If you can, sir, give us some brief idea or color on that, that will be great, sir.

Deepak bhai, this is a very difficult question to answer, and I don't think anybody has an answer for these things. First of all, registration cost depends upon product to product in the same country and from country to country for the same product. More developed the country, more are the stringent requirements. It may go up to, say, EUR 4 million in Europe, and the same product I may be able to register in Bangladesh for maybe about $100,000 because the requirements in Bangladesh -- I should not mention the name of any country, but -- and this is just an example. The demand of requirements for registration is lesser, the manpower to evaluate is also not so qualified compared to the developed countries, and the market size doesn't justify a very big investment. If these countries or authorities become very stringent, then they'll not find any companies interested in registering those products or supplying those countries. So to answer your question, it depends from country to country and product to product. The trend is, everywhere, the costs are increasing, even in a developing country or in a developed country, at a much faster rate in a developed country than in a developing country. Have I answered your question, sir?

Yes, sir.

Thank you, sir.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

This is for me?

Yes, sir. Any closing comments, sir?

Yes, sir, any closing comments?

Yes. Yes, madam, I am thankful to all the participants. They put intelligent and very relevant questions. I hope I've been able to answer to them. And these question-and-answer sessions are very enlightening for us. We also learn a lot from them, and I want to thank each and every one of the participants. Thank you.

Thank you.