UPL Limited (UPL.NS) Earnings Call Transcript & Summary

Good morning and good evening, ladies and gentlemen. And I hope all of you are doing well. Thanks for joining us today for the Capital Markets Day event and the results for the quarter and full ended 31st March 2021 for UPL. During the event, we will be referring to a presentation that you can see on the webcast and is also available for download on our website. We take you as having the safe harbor statement. From the management, we have with us Global CEO, Mr. Jai Shroff; Group CFO, Rajendra Darak; COO Carlos Pellicer; and Diego Casanello. As has been announced earlier, Carlos will be taking over from Diego as the new COO for UPL. We're also joined by Adrian Percy, Chief Technology Officer; Anand Vora, Global CFO; Raj Tiwari, Global Chief Supply Chain Officer; Farokh Hilloo, Chief Commercial Officer. We also have with us today all our regional heads and other global leaders. As far as the agenda is concerned, we will start the presentation with an overview from Jai, followed by the business update from Diego, a strategy update from Carlos and the R&D update from Adrian, followed by a financial update from Anand. [Operator Instructions] With that, let me hand over to Jai. Jai, over to you.

Thank you very much, Radhika. Welcome. Thank you, everyone, for joining the call today. Good afternoon and very warm welcome to all of you. Thank you very much for joining us today. We sincerely hope that you and your families are safe at these very difficult times. 2020 was certainly a challenging year for each one of us and the world economy as a whole. Despite being an incredibly tough year, UPL has shown unprecedented growth by continuously transforming and innovating and adapting to constantly changing situation as best it can. We have had a good year overall. We delivered strong operational and financial performance despite the challenges thrown to us. We began the year with the news of a new, unknown virus that spread across the world and endangered lives. We saw the situation for what it was, a shock to the global economic system. It was clear that it was going to present a challenge to the health systems, supply chain and in the end markets everywhere. Our -- one of our core values is always human. And recognizing the need of the -- UPL's COVID response team began work in March 2020. We put as many resources as we had at our disposal to provide relief. We -- our crop protection -- our crop spraying machines were used by frontline providers immediately to help sanitize 700-plus public spaces using 4 -- 5.4 million liters of disinfectant solution that were manufactured to combat the spread of the virus. We were also able to manufacture and distribute hand sanitizers, PPE kit, food, water to frontline respondents. Would we like to see the film now? [Presentation]

Thank you. Being agile is another core value of UPL. We have lived up to our being a pioneer in ideating the conversion of captive nitrogen plants to produce oxygen to support the unprecedented demand from hospitals. Within 72 hours of the second wave hitting India, we mobilized our resources to convert 4 nitrogen plants to oxygen and install them at hospitals -- 4 hospitals. We have 6 running today. We have also shared the detail with 100-plus industry players and institutions to help them to make similar conversions. We -- where they were having similar equipments. We continue to do our bit to bolster the COVID care capabilities across the world. Here is a small -- we have already seen the video. UPL is growing and improving its model to best meet the global challenges of feeding the world. This can be achieved by driving sustainability in agriculture. By being innovative and partnering with innovative companies and institutions, we can -- we call this OpenAg. Because we realize that no other company has all the solution to solve the challenges faced by the food industry in the 20th Century (sic) [ 21st Century ]. We are leaders in agri solutions space, through our differentiated product, biosolution, collaborations across the food value chain, in advanced technologies, digitization, take the center stage. Through our purpose of OpenAg and reimagining sustainability, we -- with an open network to create sustainable growth for all, no limits, no borders, we continue to deliver this, as we would -- as we will discuss later by Diego, Adrian and Carlos. Our stated mission is we want to change the game to make every food product more sustainable. We deliver sustainable outcomes in everything we do, one example being spraying services that we do in India that cover 5 million acres currently and deliver 20% yield increase and 25% reduction and a 40% cost reduction. Sustainable product portfolio will be discussed more in details later. In ending this on a positive note, I would like to reiterate that we have created -- and what we are most proud of not just that we have created the fifth largest company in our sector, but we have the #1 portfolio for biosolutions and that we hold the top ESG ranking in our sector according to the leading rating agencies Sustainalytics. We also delivered a whopping 21% 5-year annual growth rate and 26% 5-year EBITDA growth rate compared to the market growth of 4% to 5%. We are #1 supplier for products in 8 countries, India, Mexico, Costa Rica, Colombia, Mozambique, Cuba, Cameroon, Ivory Coast, and we will be #1 player in Chile in this year. Also, although we -- he needs no introduction, I would like to welcome Carlos Pellicer as the new COO. Carlos has been a key architect to UPL's integration of Arysta. He originally joined UPL with the acquisition of DVA in Brazil and played a strategic role in creating a strong global position for UPL. I would like to thank Diego, who has served as UPL's CEO for the last 2 years and played a key role in Arysta integration with UPL and delivered an outstanding performance in a tough market environment and helped UPL march towards sustainable agriculture. In conclusion, how companies respond to challenges is what defines them. We at UPL have made it our mission to reimagine sustainability in everything we do. It's a form -- informs the basis for every project we start, every purpose -- process we design and every business we launch. I am optimistic about the next 10 years. The world is going to reimagine sustainability in agriculture. We at UPL intend to be the heart of the solution. I have a total confidence we will be there. With an ever-expanding portfolio of differentiated and sustainable products, our deep research and development pipeline of innovative projects and cutting-edge digital team, building a new digital service offering for farmers with -- the future of UPL is brighter than ever. I thank you for your time today and your faith in UPL as we strive to achieve our vital mission. Please take care of yourselves and stay safe. I'll hand over to Diego now.

Thank you, Jai. Thank you for your trust these 2 years. And also, thank you to my team for the last 2 and 4 years also with Arysta. It has been an incredible privilege to be able to serve in this position. And I'm -- with Carlos, passing the baton to Carlos, I am more than certain that the wheel is in the right hands, and I wish Carlos also the best. Let's maybe talk a bit about the year, and then Carlos is going to take forward to discuss about the strategy moving forward. For many of us, this has been the most unusual and challenging market environment in our careers. COVID has turned literally everything upside down. Not only it has caused a terrible toll on human life, but it also put the sustainability of our food systems under an incredible test. More personally to UPL, we also suffered the loss of employees in a fire at our factory in Jhagadia, India. Our hearts and prayers are with their families. UPL puts the highest priority on safety standards, and everyone in the company is committed to continue to improve them. We have investigated this incident fully and have implemented new protocols to make our employees safer. Our employees in -- and our team in UPL is strong, and we altogether have managed, despite these challenges, to make sure that we help farmers around the world to grow crops and to prevent that the COVID tragedy becomes also a food crisis. We are all very proud about that. It is, therefore, quite remarkable that our UPL team has been able to deliver such a great performance, a great business performance, in a challenging year like this one. We have outgrown the market and most of our competitors. On the back of a strong Q4, we finished the full year growing revenues by 8%. We did this despite significant currency headwinds from a weak Brazilian real. So what drove this revenue growth? The launch of new products, I would say, first of all. We continue also to cross-sell the legacy portfolios from UPL and Arysta. And we are selling complete solutions now instead of single products. So you will hear more about that during this presentation. We're also very pleased to have managed to increase our margins by 46 basis points in an environment that is marked by inflation and currency headwinds. This is particularly a great achievement in a year like this. Our teams have done this by increasing their focus on higher margin, differentiated products; by implementing cost synergies, especially in production; and by increasing prices for selected products. All this, together with a stringent focus on fixed cost management, led to a significant EBITDA growth of 15%. So moving to the next slide, I want to share a little more detail about our regional results. We are seeing growth in every region led by India with 22%. India growth is due largely to our expanding portfolio in key crops like rice and cotton, but also thanks to our application service offer. We had a great monsoon condition last year, which helped us position our biosolutions brands and allowing us to demonstrate to farmers the outstanding results that these products can bring. In Latin America, we continue to suffer from significant currency devaluation, especially in Brazil. But nevertheless, we were able to outperform the market and grow our business by 8%. This is in part due to the progress made with our sucking pest and fungicide resistance management platforms for soybeans in Brazil. We now have the portfolio that we need to be the leader in LatAm and believe me that we are working on that every day. In North America, we were impacted by supply constraints in Q4 for some of our herbicide products. Still, we've been able to improve margins here, too, by increasing sales of differentiated solutions and ramping up glufosinate sales. Some of these supply constraints, we still have orders. We have the orders on hand and will be delivered in these months, but we have to basically suffer from these constraints in the last quarter. Well, the European Commission continues to eliminate active ingredients based on regulatory reviews. We are taking steps to remain a net winner in this trend. As you can see, we managed to achieve a significant growth this year by shifting our portfolio focus to more environmentally friendly products and supporting new product launches such as Argos, which is our biological solution, a part of our anti-sprout platform for potatoes. Argos, which is applied in conjunction with Fazor, delivered significant sales last year, and you can see the results of these efforts with strong 12% growth across the region. In Asia, we achieved double-digit growth, especially in Southeast Asia and China. Our investments in expanding our go-to-market in China are paying off here. Also, the acquisition that we made last year of Yoloo has helped us significantly to expand our portfolio and our presence. And I want to use also this chance to thank all the UPL teams across the world for this outstanding performance. Really, our thanks goes to them. Moving to the next slide. UPL has been a story of consistent and reliable growth with 21% CAGR over the last 5 years. And during that time, we have been on a journey really to transforming from a reliable product supplier, as we call it, to -- with a portfolio of predominantly post-patent products to a smart farming partner. With this, we mean a partner to the farmer that offers a complete solution throughout the entire season, not only crop protection but also biosolutions, in some cases application service, agronomic advice, all of this supported by an increasingly digitalized platform. Thanks to this approach, we have already doubled the share of our business with differentiated and sustainable solutions. This is improving our margins and creating also barriers for competitors to claim market share in these segments. And in the following slides, you will see -- we will update you about our plans to continue to expand this year and the future. I want to again thank everyone at UPL for the tremendous efforts to achieve what we have over the past years. With that said, I am thrilled to introduce Carlos Pellicer, recently appointed the COO of Crop Protection, who will be presenting the strategy moving forward. Thank you very much.

Thank you, Diego. Thanks so much for a job well done since integration, giving significant growth to the UPL in the last 2 years while implementing our OpenAg purpose. We issue great success in your new endeavor. It had been a pleasure to be working together, Diego, since the first day of the integration. And for sure, you'll be together with us in our hearts forever. Thanks so much, Diego. And I'm very happy to be here and very excited to be here. I believe some of you know I joined UPL 10 years ago when UPL acquired DVA and since there have been an amazing journey, the transformation that we have done together in Brazil, and then came to be part of the leadership team. Jai invite me to be part of leadership team and now to be responsible to lead the team for the next transformation. I'm really excite -- and I'm really excited to present today our strategy update and to share with you how we are reimagining sustainability to further drive our OpenAg purpose. Adrian Percy, our Chief Technology Officer, will also provide an update on our excellent growth made in R&D. Next slide, please. We are always seeking ways to be closer to farmers, providing ways to sustainably grow more and prosper. This includes new ideas, new ways and new answers. Next, please. We believe that OpenAg business model is a distinct advantage versus the traditional discovery-driven push model. This is the OpenAg business model. Our OpenAg Innovation pull model is driven through our OpenSkies strategies. Commenced last year in full year '21, these country-specific OpenSkies strategy are designed to develop platforms of solution to address key farmers' pain points, often reinventing or creating new segments. This proven model enables UPL to bring solutions with more agility, to lower innovation cost, lower risk and with faster time lines, with an open approach to collaboration. We have access to a broad set of technologies and AIs to address farmer pain points. Ultimately, farmer pain points drive our R&D and lead to higher return on invested capital. Next, please. OpenAg brings solutions to farms at all stage of the crop life cycle, from soil to sale, to make every single food product more sustainable. We see a great opportunity to solve farmer pain points in these expanding market segments, which are growing above the industry average. Next one, please. This is something that I love. I would like to share an example of a very successful platform that had been developed in Brazil and has now expanded into neighborhood countries. The Soybean Resistance Management Platform was developed to address a very, very serious pain point for Brazilian farmers. Quality [indiscernible] in soybean was suffered, caused by the inability to control fungi due to the loss of efficiency of established solutions and higher disease pressure. Since soybean is the largest crop for Brazil, accounting for almost 50% of the market, it was a very serious issue. In full year '11, UPL began a [ forum ] to find solution to address the anticipated pain point. By 2014, full year, we already had our innovation solution in that market, demonstrating tremendous agility, the launch of Unizeb Gold, a resistance management tool. A new -- completely new protected segments had been created. Since then, other solutions have been developed focusing on complementary, disruptive, unique and patented solutions. Four years from our initial launch of Unizeb Gold, patent Unizeb Glory was launched, followed by Tridium and [ Trezema ]. This year, in 2021, we are very excited to launch the patent-pending product, Evolution, highly effective against leaf spots and soybean rust. Our OpenAg innovation engine did not stop there. In full year 2024, we are planning to launch our first formulation of the patent Fluindapyr, our Fluarys. Next, please. As new solutions have been brought into the market with complementary benefits to address the pain point, our total available market has grown. When we started with the Unizeb Gold in 2014, our total available market was estimated at $0.8 million, and it is expected to grow up to $4 billion by 2024 with a spending offering. It is important to mention that the solution of this platform, such as Unizeb Glory and Fluarys, is already IP protected until 2034 and 2033, respectively. Furthermore, more patent applications related to this platform are pending to approve, and we expect soon to have that granted. Next, please. Another example of our OpenAg innovation pull model includes our control of sucking pests platform with a total available market of $1.1 billion. As a result of the introduction of soybean GMO traits, in fact, reduce the use of insecticides targeting caterpillars led to a growing sucking pest population in Brazil. Our platform to address this anticipated pain point includes Sperto, Perito and soon Perito Ultra. Still in the pipeline, Perito Ultra will come soon. Sperto was launched in 2017 to control sucking pests in soybean, and it is widely used solution by farmers now. It is a patent optimized formulation of 2 known chemistry, both systemic and contact insecticides, that achieved fast-track registration because of the anticipated pain point and the huge problem that was to the farmers in Brazil. On the right-hand side is an example from Europe of our anti-sprout platform for potatoes composed of Argos, Fazor and [ Dormine ]. In this case, UPL anticipates the potential pain point related to the weight loss of potatoes from the formation of sprout during storage. In 2020, the ban of CIPC, the industry standard for anti-sprout, would have left harvests without an adequate solution. In Europe, OpenAg innovation addressed the pain point with agility and creativity by launching a biological solution, Argos, in last year, full year 2021. Argos works in combination with Fazor to control the formation of sprouts as a sustainable solution for a very important problem. Next one. As we have previously described, we are driven by our OpenAg purpose to become an OpenAg smart farming partner. Now I -- we will share 4 key elements of how we plan to grow into the future: OpenSkies strategy, driving ambition into action, developing the platforms of solutions; OpenAg innovation, translating farmer pain points into opportunities for creative solutions and to build that platforms; OpenAg collaboration, leveraging our network of parties and collaborators to accelerate growth; OpenAg digital and service to transform our current business through digitalization and developing tools to help farmers. Next slide, please. To put UPL's strategy for innovation into action, we have launched the OpenSkies program last year, full year '21. OpenSkies is, first and foremost, a customer-centric approach to identify major pain points of farmers and unlock solutions in our most important markets. Through OpenSkies, UPL will expedite the development and launch of platforms of solutions similar to the examples that I have previous shared in this presentation to create sustainable solutions and growth for all. Through this proven approach, we will -- as we demonstrate, we will invent, we will execute and will patent-protect our platform solutions. Now I would like to transition to Adrian Percy, our CTO, to explain how UPL's OpenAg innovation engine can expand capacity to develop and deploy validate solutions to the farmers and to the ability to create the platforms. Please, Adrian?

Thank you, Carlos. Thank you, Carlos, and hello, everybody. Today, I'm going to share with you how our R&D organization is supporting UPL's OpenAg's purpose while reimagining sustainability. Well, as you know, sustainability is at the core of what we do at UPL. And from an R&D perspective, it's really exciting to have such strong support for developing new technologies. UPL is truly interested in upending their traditional assumptions of what's possible in agriculture, and we're doing that not only through internal research and innovation but through partnerships and our open network of collaborations. Next slide. Now our R&D mission is built on addressing key farmer pain points, as you heard from Carlos. These are the 4 pillars which drive our R&D strategy: first of all, innovating within the universe of proven technologies; then using deep market insights to create needed solutions to farmer pain points; using collaborations and networks to broaden UPL's access to technological solutions; and finally, effectively deploying capital to manage risks and maximize returns. Our OpenAg innovation is leading to a lot of opportunities. And at the current time, we have already under evaluation 103 new technologies, and we are working with 78 external partners. Our OpenAg innovation means that UPL is seen as a powerful potential partner by many innovative startups bringing novel and disruptive technologies to our industry. We're working with these partners on unique projects that are truly in the forefront of agriculture such as enhancing molecular activity to overcome resistance issues and developing biologically inspired molecules to support environmentally friendly biocontrol. I would like to share a little video with you to explain a little bit more about the newly inaugurated OpenAg Center here in Research Triangle Park, North Carolina, where I'm talking to you from. Here, we've put together a team of world-class scientists who work out of state-of-the-art laboratories and greenhouses and are located right in the heart of the ag industry here in the United States. So Radhika, could you please play the video? [Presentation]

I will move onto the next slide. Thank you. So at UPL, we place a high priority in R&D investment, and we've grown our reinvestment to over 2.5% of annual revenues. Now if we want to continue to lead in a sustainable agriculture, we know how important it is to add capabilities and commit resources where they can be most effective. We now have a network of more than 20 R&D facilities around the world supported by more than 750 R&D employees and have ambitious plans for even further expansion to support OpenAg innovation. Now one of the priorities in the near term is growing our network of field research stations around the world. We have 2 opening this year and 2 more planned for the coming year. In addition to the OpenAg center, last year we launched a 25,000-hectare OpenAg farm in Brazil, a very innovative concept to support research and development on cutting-edge trends in plant health and sustainability. Next slide. The OpenAg farm is truly an innovative approach to connecting R&D to large-scale farming on this massive 25,000-hectare of farmland. And by farming at scale, we can leave the farmer pain points that we're actually looking to solve. Now through that experience, we can create and validate the amazing groundbreaking solutions that are making agriculture more prosperous and sustainable. The OpenAg farm is a great example of the convergence of OpenAg innovation and OpenAg collaboration. And let's see another video, please. [Presentation]

Great. Thank you. If we'll move to the next slide. Okay, thank you. So this is what we can share with you about the OpenAg innovation pipeline. On the left, you can see that our innovation rate has been at 20.8% for the last 2 years but is set to grow to 21.8% this year. This is on track, thanks in part to the launch of Evolution, which Carlos described earlier. Now we've seen a nice increase in our peak pipeline value to over $4.5 billion. This improvement over the last year comes as a result of increase in projects, partnerships and go-to-market strategies. We can also see a promising $2.5 billion in risk-adjusted revenue that will contribute to the business in the next 5 years. Furthermore, we can see the proof of UPL's strategic plan to transform its portfolio. Diego showed us how we have transitioned from 14% differentiated and sustainable solutions to 29% in 5 years. With our current pipeline containing 80% of the protected revenue on the higher value-added portfolio segments, we envisage that this will be the single greatest driver, enabling us to move to a 50-50 company. Next slide. And here are 2 more examples of innovation that highlight the pipeline potential in soil and seed health, a particularly fast-growing, high-margin segment. First, Flupyrimin is a systemic insecticide that controls key paths in multiple crops when applied both as a seed treatment or in-furrow. With increasing regulatory pressure on many existing solutions, this product addresses a strong need farmers have for a new way to protect their seeds and seedlings during the vital crop establishment period. We've licensed this patent-protected molecule from Meiji Seika Pharma with a new mode of action that affords resistance management and has a favorable regulatory profile against pollinators. We expect this to be launched in the 2025/'26 fiscal year. Another example is GAXY, a proprietary biosolutions product developed in-house by UPL. GAXY targets abiotic stresses experienced throughout the growing cycle and has been proven to improve nitrogen use efficiency, root architecture and reproductive health -- heat stress tolerance. We expect this product to be launched in North America in 2023/ '24. And with that, I'm going to hand right back to Carlos. Thank you.

Thank you, Adrian. We are so excited to see the R&D transformation, our vision for solutions to farmers' pain points into real products and platforms that we can offer to growers. And thank you, Adrian, for the very good doubling our perspective in terms being able to launch all these innovations. Next, please. One of the most important aspects of our OpenAg strategies is through our uninhibited pursuit of partnerships. Across every part of the organization, in every geography, UPL is seeking ways to collaborate with incredible companies and people leading the industry forward. Collaborations is our way of life in UPL. And we are -- aspire to be the go-to choice for growers, innovators, distributors to foodservice providers, digital technologies, academy and many more. We see no limits to the potential we have when we work with partners to grow. While Adrian mentioned 2 beautiful examples of collaboration in OpenAg farm and our work with Meiji, these are only 1 simple -- 1 part of what UPL partnership means. We -- let me expand on how these types of partnerships enable UPL to fulfill its mission. Please, next one. A very significant partnership we just announced in March 2021 is our agreement with FMC to gain early access to Chlorantraniliprole or otherwise known as CTPR. As a leading insecticide we expect total addressable market of $5 billion. This due -- immediately adds a core, new active ingredient to our portfolio. We are so excited about the future launch of our many innovation -- innovative, high-value solutions for farmers containing CTPR. We currently have at least 17 formulation concepts in development. In addition, to support FMC and maximize the penetration of this important active ingredient, we have agreed to toll manufacture CTPR to FMC in India. This strategic relationship with FMC clearly shows how committed we are to OpenAg collaboration in our OpenAg purpose to create an agricultural network that feeds sustainable growth for all. Next, please. Here is another agreement that demonstrate the power of OpenAg collaborations. While Adrian highlight the crop establishment example utilizing Flupyrimin, I am pleased to share how the collaboration made on Flupyrimin expands beyond just that application. We have also partnered with Meiji to license the rights to develop and commercialize formulations and applications focused on rice in India and certain countries in Southeast Asia. The mood for agreements show the potential that one agreement can open the door for many others in future as well grows together. Flupyrimin is a new patented insecticide with a novel mode of action subgroup with total addressable market of about $2.5 billion with particular efficacy in rice. We see great potential in our latest agreement, adding Southeast Asia to our exclusive agreement already in place. This also gives UPL a complete portfolio solutions to rice, and we will be able to build up amazing platforms using that base. Please, next. Here, a few more examples of collaboration showing the breath of agreements we have made in the last couple of months. TeleSense is a fantastic company, innovative digital solution for post harvest. TeleSense provides a scalable on-farm sensors combined with machine learning and artificial intelligence to drive insights on how grain is handled, stored and transported. As they say, once grain is harvested, it never improves in quality. Those are the high stake making grains storage very challenging. Our collaboration speaks directly to our mission to sustainable feed the world. TeleSense contributes importantly to reduce food waste and improve food quality. The next partnership is the very recently announced Soil Health Institute partnership. The Soil Health Institute mission is to safeguard and enhance the vitality and the productivity of soil through scientific research and advancement. In collaboration with the Soil Health Institute, we'll be studying, training and innovating on soil health management around select UPL research and development food stations. This is another very important collaboration working towards reimagining sustainability. Next. As Jai noted, we are seeing a technological revolution in agricultural digital solutions. The way that digital technology is changing the world around us grows every day. What is truly important is that UPL see this technology as vital to helping farmers be more resilient by making agriculture simpler, more predictable, more precise and sustainable. Next. UPL's OpenAg digital strategies is to accelerate the offer of smart farming solutions. We're focusing on 4 main areas to develop solutions: farm management that provides real-time agronomic advice to farmers such as efficient irrigation, early pest detections, [indiscernible] predictions and carbon sequestration; commercialization platforms enable farmers to order inputs and sell outputs online, reduce cost to serve and increase choices; financial tech could leverage farmers' data access to offer better insurance or credit with better and customized rates; business intelligence service can be offered to farmers and distributors that help optimize their business such as CRM tools for distributors or access to sectors, trends and competitive information. You can expect to hear more from us on this exciting frontier of the UPL business. Next, please. Today, we hope that we have clearly shared a few key message to all of you. UPL have -- has consistently delivered. Not only has UPL delivered growth, but UPL lights our purpose of reimagining sustainability. Nothing shows that more clear than the commitment in our fight against COVID. UPL has delivered on its promises to investors to achieve profitable growth in challenging circumstances such as currency volatility and COVID market shocks. In addition, we have shown why UPL is unique positioned to deliver growth in the future. With a powerful business model, a customer-centric strategy and a proven capacity to deliver, we are certain that we are on track to become the OpenAg smart farming partner. As this happens, we will continue to grow on these -- are some of these -- or our commitments to the future. Long-term revenue growth ambition of 7% to 10% a year. OpenSkies strategies will focus our effort to create unique platforms of solutions that will address farmer pain points. We are committed to execute and deliver our $4.5 billion at-the-peak R&D pipeline. We are ready to further transform so that our 50% of revenue that will come from differentiated and sustainable solution by full year '26. To do that, we must accelerate biosolution adoption. And this year, with the commodity price at the level that is soybean, corn, wheat, cotton, we believe this will be amazing year for us to increase our biosolution adoption. Use a customer-centric approach to create new biological solutions and continue to expand our ProNutiva offerings. Next, we committed to implement our OpenAg digital strategies. Lastly, we will -- while we deliver this growth, we will maintain sharp focus on increase our return on capital. I'm very excited about the future of UPL. And I hope all of you are, too. I'm sure that our team will do amazing job, as they have done. We have an incredible team, and we will be sure that our future of UPL will be delivered again. I would like to -- now to hand over to Anand to do the review of our financial performance. Thank you very much.

Thanks, Carlos. Before I take you through the key numbers for the fourth quarter and the full year financial year 2021, we take as read the safe harbor statement. As was earlier mentioned by Jai and other members, financial year 2021 was a tough year due to the COVID pandemic. While some parts of the world recovered during the year with business coming back to normalcy, some others are still struggling. During this period, UPL has been able to demonstrate the strength of its business model and come out more stronger and resilient. I'm proud to say that all our teams are taking the challenge head-on and are truly demonstrating agility by enabling delivery of our commitments, both in terms of revenue and EBITDA, and also helping in reducing the net debt in this tough environment. As you can see on the slide, UPL is one company that has delivered very strong performance through the cycle. We have outperformed the peers, and that's reflected by the annualized growth not just on revenues but EBITDA and PAT as well, while being financially prudent and reducing the debt. While the markets have grown less than 3% CAGR over the last 5 years, we have delivered a revenue growth of around 21% and EBITDA growth of 26%. We have also been consistently delivering on the guidance which are given at the commencement of the financial year. Next slide, please. As you are aware, the fourth quarter is the strongest of all for UPL, and it added the momentum to growth in revenue and EBITDA at the back of strong demand and excellent or probably all-time high crop prices. Revenues were up 15% with volume growth of 18%. Gross margins was up 150 basis points and EBITDA margins were up 300 basis points over last quarter of financial year 2020. EBITDA growth was above expectation, and it rose by over 30%. They were due to favorable -- this was due to favorable mix with high-margin, differentiated and sustainable solutions and synergies which have been achieved well above the stated target and also despite partially offsetted by the higher fixed costs. So we continue to deliver both in terms of better margins as well as in terms of better EBITDA. Exceptional items for the quarter was an expense of about INR 81 crores mainly on account of the shutting down of our Rotterdam plant and some -- and the unfortunate incidents at Jhagadia. The net profit for the quarter stood at INR 1,065 crores. Next slide, please. Revenues. This -- revenues for the full year were 8% higher, and EBITDA was higher by 20%. Considering the PPA adjustment in the previous year, the EBITDA increase was 15%. Here In this slide, we are comparing with the reported numbers. And therefore, based on the reported numbers, the EBITDA is higher by 20%. Fixed cost during the year was higher mainly due to higher employee costs that were created as a part of our transformation to bring in smart farming partners, as has been mentioned by Jai and Carlos. Exceptional items for the year was an expense of INR 238 crores primarily on account of Rotterdam closure and planned employee redundancies. This was part of the integration initiative, which we started 2 years back at the time of acquisition of Arysta. The net profit for the year was at INR 2,872 crores and thereby delivering an EPS of INR 36.42 per share, up 57% against that of the previous year. This time, I'll -- given important - next slide, please. I've provided an additional slide this time on breakdown on the finance cost. As you would see on this slide, we lowered the interest cost both during the quarter and for the full financial year 2021. However, the finance charges have gone up during the quarter and full year only on account of exceptional onetime costs, which were USD 35 million, that have been incurred due to prepayment of bonds and loans. Overall, the result of our debt management efforts can be seen in the lower interest costs, and this lower interest costs will continue in the next -- in this coming year, too. On working capital, in line with the seasonality of business, where working capital releases in Q4, net working capital days stood at 71 days, lower by 9 days compared to last year. The payables for the quarter increased by 12 days, while inventories increased by 9 days and receivables were reduced by 5 days. This is better than our guidance that we had given at the beginning of the year. Next slide, please. Here, we have put up a summarized cash flow. During the year, we generated a strong INR 4,506 crores cash from business. Almost 50% of our -- which represents almost 50% of our EBITDA. Against this, we had a financial and investing cash outflow of INR 6,406 crores, including the repayment of debt made during the year. During the year, we have brought down the gross debt to INR 23,774 crores as of 31st March 2021, a reduction of INR 5,040 crores from that of the previous year. The net debt stood at INR 18,922 crores, a reduction of INR 3,140 crores. And the net debt-to-EBITDA on this basis was at 2.2x. We maintain our commitment to maintain investment-grade rating. While we continue to reduce the gross and net debt, the lower than the exceptional contribution margin and cash outflow on account of marginally higher CapEx and few bolt-on acquisitions led to a shortfall of about INR 700 crores in our net debt reduction. And in other words, we were -- we fell short -- we had guided for a net debt-to-EBITDA of 2. We have ended up with a net debt-to-EBITDA of 2.2x. That 0.2x represents roughly about INR 700 crores, which I just explained we fell short during this year. Moving on to next slide, our guidance for the coming year, that's FY '22. Summarizing, we believe that the price corrections to cover the currency devaluation, higher proportion of differentiated and sustainable products, which both Carlos and Adrian talked about, and the strong demand growth will enable us to deliver strong results going forward. Our guidance for FY '22 is 7% to 10% revenue growth and 12% to 15% EBITDA growth for the financial year 2022. With this, allow me to end the presentation and hand over to Jai for his closing remarks. But before I do that, I wish you all to stay safe and stay home, if I may say so. Thanks, everyone, for the attention, and over to you, Jai.

Thank you very much, Anand. Thank you very much, Carlos, Diego, Adrian, for your presentations. I think the -- our stakeholders, shareholders will be very happy to see the progress made. Reimagining sustainability is our goal. We are -- in every project we do, every investment we make, we are looking at how do we make the food systems and every food crop more sustainable. Today, at UPL we are in an amazing possibility to make a big difference. We have validated projects in banana crops, in crops where we can reduce the chemical use by almost 50%. We have demonstrated and launching projects to reduce water and fertilizer requirements in sugarcane by 30%, respectively. We have so many exciting projects to make food more sustainable, and we are working closely to see how we can reduce the impact of agriculture on the environment. We believe that in the next few years, agriculture can really contribute the -- can really contribute well to solve the challenges on climate change. Agriculture is not only the biggest -- agriculture receives the most amount of damage because of climate change, and farmers face the highest amount of risk because of climate change. But changing practices in agriculture can actually reduce the carbon emissions in the world. And we believe that we are uniquely placed with our technology platform, being the leading supplier of biosolution products and our huge product pipeline, we can make a big difference. And the other slide. These are some of the examples on -- which we are dealing with today in banana plantations in Costa Rica and Central America, where we are able to reduce the chemicals used in banana plantations. We are working with rice farmers, sugarcane farmers, cocoa farmers in different parts of the world to actually make them more sustainable.

Thank you. Thank you, Jai. With that, we'll now take the questions. [Operator Instructions] In the meantime, I just have some questions that have piled up, so I'll just go one by one on them. I think, Jai, the first question is, will you -- from an investor [indiscernible]...

Radhika, if you can speak a bit louder, you're not audible.

We lost you.

Okay. The first question is how do you define or categorize differentiated and sustainable products?

Radhika, I believe you need to repeat the questions because your line have been cut.

The first question is that how do you define the differentiated and sustainable solutions.

Thank you. No, today, the agriculture and the challenges faced by farmers are huge. And sustainability is not a priority for a farmer. A farmer's -- the biggest challenge for a farmer is to end the year with a profit than dealing with all the challenges he's facing. When you talk about sustainability, a sustainability project for a farmer is something which reduces its risk, which reduces his cost and which improves the probability of him being profitable. UPL is completely focused on developing technologies, which not only are better for the environment and sustainable, but also for the farmers' resilience, for the farmers' livelihood to reduce risk. When we have products and technologies like Zeba, we see the impact it makes if there is a longer dry spell. And these -- the amount of benefit they get because of germination and the benefits to germination help the farmer become more resilient. Not only that, it reduces the requirement of water and fertilizer for the farmer through the growing cycle. It also reduces fertilizer leaching in the groundwater, which is one of the biggest pollutants in the world. And so we are very excited about bringing in these technologies, whether it's [indiscernible] or its other biosolutions products, which actually reduced the requirement of chemicals. We believe that this portfolio today at about 12% to 15% of our revenues will continue to grow disproportionately in the future.

You're on a journey of becoming a product to a solutions company. How important it is to have a strong seeds franchise as well? And any numbers on how big the revenue business -- the revenue from the solutions business will be for you?

Today -- thank you for that question. Today, we are piloting the solutions -- the outcome-based solution business in about 1.5 million acres of land in India. And we are doing the same in different parts of the world in Africa and in Central America, et cetera. These will become mainstream in the next 2, 3 years, where I believe that substantial part of our revenues will come from outcome-based, ProNutiva-type projects where we actually offer farmers solutions based on outcomes for them. I do not have exact numbers on that, but it will continue to grow much faster than the rest of the UPL business.

Adrian, could you talk about the key focus areas for UPL's R&D in terms of platforms? What more could we expect there?

Yes, certainly. So as Carlos said, we are in the process of identifying farmer pain points from around the world, and that is the starting point for our R&D activities. And then we look to apply, first, individual products and solutions and then platforms to actually solving those pain points, not just immediately in the next year or season but also on a long-term basis. So there are a number that we're working on, and I won't go through all of them, but Carlos already made reference to some. For instance, looking at treatment of diseases, particularly Asian soybean rust in geographies such as Brazil, where we're already very far along in capturing a very extensive platform. We're also looking at different insect populations, sucking pests or net adoption as well. And so we are also looking at solutions in those areas. We're very intent on trying to solve for issues of resistance, whether they're in the herbicide area, the fungicide area or the insecticide area. So that's another big area of focus. And maybe one more to mention is just in the soil health, which I did allude to. We believe that there is an enormous white space here to help farmers understand better how to improve their soil health over time and to apply different products and solutions to help them do that. And so that's another area of focus that we have and expect in the future to have a wide and broad range of products and solutions to help deal with.

Radhika, just one complement to Adrian here is that the carbon sequestration platform. I say we are working deeply on that, how we can design soil bees as Adrian explained on the carbon sequestration slide, that is a very important areas of focus for us.

Europe has been delivering good growth. What should be we expecting from Europe? Will a similar kind of growth can be expected from Europe? And what are the areas?

Radhika, I would like to ask -- to Felix to answer that question, please.

Well, fully, in Europe, we are going to continue to gain market share. The market in Europe is a market that is not growing -- or not growing significantly. But we are looking to influence all the farmers, as Carlos said earlier. In the case of the new product, ARGOS, last year was no longer -- not the countries. We're going to cover new countries, so we are going to do product. And with the 6 to Bio that we are doing, we are into [indiscernible].

Jeroen, do you want to complement any other point to Felix?

Yes, thank you. As mentioned by Felix, yes, of course, we keep rolling out our new products. Also, we keep investing in our teams. So in some of the countries, the market share of UPL can still grow then because we were underrepresented in countries -- big countries like Germany. We will keep investing in the team growing our market share. Also, we are investing in [ U.K. ] to create demand of biosolutions. And so this is also a spearpoint for us where we expect to be able to grow both the average market expectations right.

Very good. And Felix, we have this Celadon project to be launched this year in some countries, right?

Yes. And we it's an beside for the onset of the that UPL is no -- has nobody presence, that we are increasing the presence. We have a program to grow in city [ as corn and corn ]. [indiscernible] interesting that [indiscernible] will be applied in these properties. A new molecule is innovation that we are going to harvest [indiscernible] segment in the market. So it's a new opportunity as well.

Radhika, back to you.

Yes. There are a lot of questions on the potential of the FMC and the Meiji deal. What does it do to the revenue and margins over the next few years? And why is this important for us?

Yes. I believe -- Vicente, can you talk a little bit about the FMC CTPR deal? This is a very important agreement that we have worked and we have closed. Can you talk a little bit about that perspective, please.

Yes. Sure, Carlos. Thank you for the opportunity. As we have already presented, so CTPR and the Flupyrimin are giving new realities for us, right? Flupyrimin is completely new, patent AI. And we are developing several formulations on the CTPR that will allow us to play even more in Asian rice. And we grow also on seed treatment on both CTPR and Flupyrimin. So this will help us to increase our reach in the soil health, right, and also play on one of the questions that came out upon the differentiated solutions. So this is helpful to continue to develop new differentiated products, new products that will reach to the market and patented product, that's most important, right? So both collaborations with Meiji and with FMC will increase and will help us to drive to the target to have at least 50% of our business coming from differentiated and sustainable solutions.

Great, Vicente. And what is important, to say, this, this will be the first year for us, right, Vicente and we are looking to launch CTPR in Brazil, in Mexico, in South Africa, in Kenya and in India during this full year '21-'22. So these countries, we will be already -- the first launch will be happen inside of this year.

That's correct.

Radhika, back to you.

Yes, yes. Yes, Carlos. So as you grow your differentiated and sustainable solutions SKUs, how should we think about the R&D spend? Should we see that it will increase as we go on increasing the proportion of sustainable and differentiated solutions?

Radhika, I will ask to Adrian to answer that question. But for sure, our focus in sustainable solutions and biosolutions is huge. And Adrian, can you talk a little bit about that, please?

Yes. So sure. So in terms of building out our R&D efforts, we've made great steps over the last year, as I described, with the OpenAg Center here in RTP, but also with the completion of the purchase of a number of research farms across the world. That effort will continue. I mean the way we see our R&D spend going up with time is in parallel with increased sales. So our target right now is to keep round about 2.5% of revenue. So that is how we see moving forward. In terms of where we're spending that money, of course, there's been quite a shift from some of the more generic-type molecules that we've developed in the past, the more sustainable products, as Vicente described, but also working a lot now in biocontrol, biostimulants, these types of products, which actually, on an individual basis, are not as expensive to develop as an individual synthetic active ingredients. So we have a lot of projects within the company ongoing. We're very excited about the potential of those projects to deliver that 4.5 billion of revenue at peak over the coming years.

Yes. And very interesting that this investment that Adrian is talking about, we will work to design biosolutions, organic solutions, sustainable solutions, the idea to combine the productive approach where we design and we develop that together, getting margin that -- what we did in 2014, that we develop all these platform for resistance management. If we have combined that already with the biosolutions and biocontrol, what we cud have now. I say this is what we are doing now. So we are combining the technology and we are putting that in a smart way. And this investment is going in that direction of productive approach, too. Go ahead, Adrian, please.

Yes. Sorry, just to add to that point, Carlos. I mean, we have a very, very large toolbox already within UPL of different molecules, of different biological products that we can do this combination with. And now we are supplementing that toolbox with working with external partners, as I described. And there are a huge number of early-stage companies with really interesting technology that we are engaged with, that we believe we can combine some of their technologies with our internal molecules that we already have in-house to produce new high-value products to the market.

Thank you, Adrian. Back to you, Radhika.

Yes. Another question is on any supply chain or logistic constraints that you're facing? And anything expected for the current quarter?

Can you repeat the question, Radhika, please?

Any supply chain and logistics constraints that the company is facing? And anything in specific for the current quarter?

Yes. I'd like to ask to Raj to answer that. Raj is working so well on that and have done a so good job last year that have been a very, very challengeable year. And Raj, can you come with this answer, please?

Thanks, Carlos. Yes, I mean, there are signs of supply chain constraints in the industry in general, as well as modest channel inventory overhang for the industry in certain countries. However, UPL is well positioned to limit this impact at the back of the investments it has made in setting up a backward integrated manufacturing model and the sustained cost efficiencies due to this.

Very good, Raj. And I'd like to ask to Jai to add a little bit on the resilience that UPL have had during the last 20 years, where it was easy to us to stop investing so much in manufacturing. Jai, can you comment a little bit on that, please? Jai?

Unmute and my camera. Yes. No, I think supply chain constraints are 2-ended challenges. In a difficult year like last year, we had supply chain constraints on anticipating what kind of demand, there will be, which crop prices will be there, where the farmers will be investing, not investing, and how do we divert our resources in areas which we're going to continue to grow and which farmers were going to be more profitable. In a year like this, where you're seeing a huge update -- growth in value for crops, I believe farmers across -- the field crops across the world are going to overinvest and aim to get maximum yield. So the challenge comes from a different viewpoint. I believe that the demand for this year will be very, very strong, so we expect robust growth in our business from that point of view. We will -- we also face certain raw material price increases, we're also passing through those cost increases across the value chain, across the product portfolio, has to be done. But I believe that the profitability of the farmers is going to be so good that it should not be a problem to pass through the cost increases across.

And Jai, how resilient have been you on these 20 years to really, really being able to sustain the focus on manufacturing? And now it's a very important moment to us, right?

Yes. So UPL has constantly invested in manufacturing and constantly backward integrated to really be truly resilient and independent on most of the key raw materials. Today, because of that, we are able to gain market share in almost all markets we operate in. Today, UPL has been able to consistently, over the years, be competitive, be aggressive, but also have the highest margins in the industry. This has actually been because we have constantly invested in manufacturing, we invented our cost position, reinvested a lot of money in backward integration, and this gives us a much more resilient growth trajectory. And we can predict a lot more growth and we can control a lot more of our costs than if we had not done this. So we feel quite confident that where we are today, it's a very, very strong position.

Very good. Jai, thank you. And I just want to come back to Raj. Raj, taking consideration this question to related supply chain issues, I believe it's something that is disrupting many parts of the industry. And what you are seeing -- what we are doing to protect our team in the factories to be able to manage this COVID time? Can you comment with that, please?

Sorry, I was on mute. So Carlos, 2 main things. I mean, one is, of course, once the COVID started with the behavior, and the kind of precautions we had taken in terms of readjusting our manufacturing activities. And the second very important piece is on vaccinating our people. So the faster we can vaccinate and we make our workforce much more safer. And that's what we are concentrating on globally across all our [ 48 ] manufacturing plants, we are ramping up the vaccination program for our employees. And we have a good success there in terms of getting our employee vaccinated.

That is very important. We have an important part of our team already vaccinated in the factories is really a big, big precaution. And in India, there are, as a priority, right. The team -- the people that work in the factories are a priority, right?

Yes, in the factories, that is the priority. In India, just to give one data point, more than 45 years employees, 93% of employees has already been vaccinated.

Very good. Thank you, Raj. Back to you, Radhika.

So there's a question that the increase -- or the strong commodity prices, do we see that the consumption of agrochem is going to increase? And does that also then give us some room to increase the prices?

Radhika, I will answer that question. It's -- in a year like this, we have saw this in the past, but now it's even higher in some aspects. So today, soybean prices more than $16.4 per bushel. Corn have been more than $4.3 per bushel. The price of cotton is quite strong. I'd say we are seeing increase in planted area of these crops in an important week is limited by the amount of machinery, the farmers you have to do that. So the produce -- the inventory of these crops are quite low and some of them very low, like soybean and corn. It's very, very low. And so in this type of situation, farmers try to use their best technology. They try to use the better way they can do to capture the most value per hectare they can. So it's a year that we expect The demand will be quite high. Some countries, we have already amazing amount of orders in hand. It seems to be a quite interesting year. We will need to manage and say, the biggest challenge will become too high, you'd say the demand will be quite high. And I believe it to be an amazing year for our biostimulant area because our biosimulant products, they delivered an increased yield to the farms. So our team is working very hard to be able to prepare to teach the farmers how to use more debt and better debt. And we believe that our biostimulants will be an important growth this year. And our platforms, it will be another one that will be growing quite fast because it's a really incredible price of the commodities, and we are expecting a quite interesting demand in the following months. And we are seeing what's happening in fertilizer, what we are seeing, what's happening in machinery and it's the same -- it is happening -- and will happen to the crop protection part and biostimulant part. Radhika, back to you.

What is the likely impact of the recent dry conditions in Brazil and U.S.?

I would like to give first to Craig to talk about U.S., what is happening there, this cold weather at the beginning. This is one of the reasons that soybean prices going up, too. Can you talk a little bit about, Craig, about the weather situation in U.S., please?

Thanks, Radhika and Carlos. It is -- we do certainly have areas that are on the dryer side. But when you look at the California market, we're seeing some dry weather, and we're seeing some dry weather through parts of the Midwest on soybean. But I will comment that it's still relatively early in the season. So we're just putting the crops in now. And nobody would write off a crop at this time of year in the season. So we're waiting anxiously. At this point, growers are actively putting in their crop. It's coming out of the ground. So I wouldn't be overly pessimistic at this point, but it is a little bit on the dryer side. And we are seeing momentum because of that in things like our insecticide and miticide portfolio. We're starting to see that early just to make sure that they're protecting the crop and those type of conditions.

Very, very important, Craig. Thank you. I'd like to ask to Fabio to say -- to explain about Brazil. We know that Fabio have been a part now of the global team. He's coming to lead our biosolutions globally. And Roger, you have taken the position as the CEO for Brazil. And as Roger just started 2 days ago, I will ask to Fabio to talk about Brazil. What is your view about this drought in Brazil. Fabio, please?