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

Yes, myself [ Ashok Dahak ] I am calling from presently Bangalore. And I have already submitted my paper -- my set of questions. So I request our Chairman and his team to give the answers of the question. And I request -- as already our Chairman told that in Q3, we may expect a good result. So we hope that we -- it may translate into the stock price also. And as all other earlier shareholder investor, they requested for the bonus, so if company can think about this one. So I think it will be much better for -- as a stock investor. And I'm ending my speech here to use the time properly. Thank you.

Thank you, sir. I now like Mr. [ Shirish Mahadevia ] to ask his questions.

Respective Chairman, distinguished members of Board of Directors, including newly appointed Independent Directors, all the members of the management team, sir, and our Chairman Emeritus, Mr. Raju bhai Shroff. We'll let me first congratulate Raju bhai Shroff for devoting his entire life to UPL. And he has brought us at this stage, laying the solid foundation for many years of progress to come. Sir, my -- convey regards to her -- to him and wish him all the best wishes in the years to come. So now I also appreciate all the work excellent done by the company. It is well reproduced in the report. Therefore, I will not repeat all those things. Sir, I therefore put my questions. My first question is regarding the investment by promoters in the company, which is only 32.35%. FII investment is 38.68%. Sir, what I am concerned is that a short seller may not try to disturb our company as it has happened in Adani Group. So any explanation on that will help you. Sir, my next question is regarding the government policy promoting agriculture at every stage and also helping the e farmers. Sir, may I know in what way these government policies are helping our company and are we taking the maximum advantage of them or not? And if any PLI scheme has been initiated by the government and are we likely to take advantage of that particular thing? Sir, my next question is regarding your concern of environment, and we are aware that environment is more damaged by methane gas, which is released by Cattle. Sir, last year, you had given some explanation about growing of sugarcane and effort made by you. Sir, may I know what progress we have made in the last 1 year on this particular subject? Sir, my next question is that '23 has been declared as the year of millets and millets can solve several problems like environment, it can provide employment, it can give sufficient grains even for the whole nation, and it can help in the health of the people concerned. Sir, may I know what -- in what way we are involving ourselves in the growth and prosperity of millets and the millets growing farmers. Sir, my next question is regarding our exports, is -- they are INR 10,772 crores, our imports are INR 5,929 crores. So these are the figures as applicable from India -- from our Indian company. Sir, may I know to what extent we are playing a role regarding export in foreign countries, direct from foreign countries to foreign countries. And to what extent these operations are helping India in achieving from unnecessary imports? Sir, my next question is, you have talked about the fire our Ankleshwar factory and unfortunately, 2 people have died. May I know what is the cause of the fire, which is not mentioned? And I'm sure you would have taken sufficient step to avoid such a situation in the future. Sir, my next question is regarding our CSR work. We have spent INR 30.8 crores in CSR in the year under consideration. Sir, we are doing the excellent work. But what my question is, that after all CSR work has a multiplier effect, which is a ripple effect. The benefit to the society is much more than the actual amount spent by us. Sir, what I would like to know is, [ whether we've made ] economic study benefit to the society at large, such surveys are now being done. And if they are done, that will give the complete idea to investors and to all concerned about the contribution of our company to the society at large. Sir, I have not been able to go through the quarterly result if it is already declared. Sir, can you throw some light on the first quarter result of the current year and whether that trend is likely to be maintained in the year '23, '24? Sir, my last question is that you are an expert in acquisitions, you have done more than 24 acquisitions in the past few years. Sir are there any further acquisitions in the pipeline that can help us considerably in our business at large. In many ways, particularly in exports, where registrations are very difficult to get. Sir, with this, I wish our organization every success in the years to come. And I'm sure the effort made by the restructured Board of Directors and the efforts made by you and claimed in your report, I hope all of them will give beneficial results in the times to come. Namaste to all of you, from me. Thank you.

Thanks for your question, sir. I now request Mr. [ Suresh Jain ] to ask his questions.

[Foreign Language]

Yes, please.

[Foreign Language]

Thank you, sir. I now request Mr. [ Anil Mehta ] to ask his questions.

The person with the said name is not connected in the meeting. I now request Mr. and Mrs. Mascarenhas to ask their questions.

Hello?

Yes, we can hear you. Yes, Ma'am. Please go ahead.

Yes. Okay. Respected Chairman Emeritus, Rajnikant Shroff; Chairman and Group CEO, Jai Shroff; CEO, Mike Frank, other members of the Board, my fellow shareholders attending this VC meeting. I am Mrs. C. E. Mascarenhas and speaking from Mumbai. First of all, I thank the company's secretary, Mr. Sandeep and his team for sending me an annual report -- an annual report and also registering me as a speaker at my request. Thank you so much. And also giving me this platform to speak, which was quite easy to operate. Thanks once again. Now our annual report is well documented with all the facts and figures and at the same time adhering to all the norms of corporate governance. Our working is definitely good. Dividend is very good. But little bit -- I'm a little bit disappointed in the market capitalization. We -- our market capitalization is somewhat is going like the CI industries where their market is very much going up. So compared to that, like, I don't know, maybe next year, we may have a very good market capitalization. That is what is my only point. Now congratulations for all the awards and [ accolades ] all, as given on Page 49, EBITDA. Also, I appreciate the very good CSR work done. Now my queries I come to the ESG. Have we rated the ESG? And if it is rating, what is our score? And if it is a very good scope for like 75 plus, do you intend to [Audio Gap] UPL group companies and 600 plus other external B2B clients, how much revenues this will give us. My next question is our R&D facilities are 30 and the spend is 3% of the total revenue. And we have 1,000 R&D employees, is what is the average age of these employees -- every level percentage, patent granted is so far is 1,884. How many more are pending? 14% is the innovation rate. Next question, we have 13,000-plus employees, women are 15% of that. Who we have or how many we have percentage physically or mentally challenged people. We have crop protection insecticide, herbicides, fungicide and seed treatment. Which of these, among these give us a maximum revenue and margins? Our company has launched Batalium Amped, what is the response of this Batalium Amped? What I find is promoter group is 32.25%. I think it has heightened this should be done by keeping and increase it further and further because this is one of the very good companies. Rest, what is the CapEx for the next 3 years? And what is the future road map of our company. With this, I have supported all the resolutions. I wish my company all the breadth. I wish you all very good health so that health is wealth. And again, thank you so much, and [Foreign Language]. Now Mr. Mascarenhas will speak.

I'm the next speaker. Can I proceed? Next speaker, Mr. [ Elijah ] Mascarenhas. I've registered myself. Can I proceed? I will take only 1 question -- I have only 1 question. Can I proceed?

Yes, sir.

Respective Chairmans, very distinguished members of the Board and my fellow shareholders, my name is [ Elijah ] Mascarenhas, I'm a proud shareholder of this prestigious company. All the long -- goal is to come through walking to attend our meeting -- physical meeting, and we had a very good interaction with the Chairman, [ Rajn ] Shroff, Sandra and all the other directors. Now my question is only 1 because many of my questions are being put forward by my wife. So I have only 1 question from us, and that is about the unclaimed dividends and unclaimed shares. So how many people have been deprived of their dividend and how many people's shares have been transferred to investor education, protection fund. I would like to know because I'm a very old sort of -- aged. So I might have forgotten because if the share dividend is not encashed 7 years ago. After the subsequent dividends have been declared by virtue of that, such dividend goes just transferred, not only that the shares also get transferred. So I'm interested only in this so kindly look out. I'm seeing that not only me, but all the shareholders, money is not at stake with the IEPF fund, but they are -- written by mail or 100 [indiscernible] don't go by e-mail because many people are not friendly with your digital emails and all, send a physical letter to them, advise them to encash it as fast as possible. With this, sir, I end my speech. Wishing you personally, all the Board members and more importantly, all the employees, all the very best in the days and years to come. And we are in the midst of a festive season, so wish each one of you all a very happy festive season. With this, thank you very much for patience hearing. God bless you and our company.

Thank you, sir. I now request Mr. Anil Parekh to ask his questions.

[Foreign Language] Hello, Mr. Jai. I hope you are fine at your respective end and doing well. How is your father and mother, they are also very good. I give my regards to them.

Sure.

Many speakers have said already that our CS team is doing excellent work, they have contacted before the meeting. But since last 2 years, no assistance at all from your CS team to me at all, whether I received an annual report, whether I have received link or nothing like that. earlier before 2 years, Ajit was calling me. But thereafter, no assistance at all from your CS team. Finally, guide your CS team to assist us whenever there is a meeting or shareholders' grievances. Chairman sir, before me, many speakers have said about financials and better performance year-on-year. Sir, I also truly understand the way you are heading towards a big growth path, I would like to give my assent to all the resolutions proposed today. I have no any particular question However, I have some questions, which I will forward you on e-mail. And I hope, someone will reply from your end. Thank you for pleasant hearing, and I support today's resolution, kindly guide your CS team to contact me later on, sir.

Sure.

I now request Mr. Praful Chavda to ask his questions.

[Foreign Language].

Yes, we can hear you, please. Go ahead.

Thank you. Chairman, Board of Directors, [Foreign Language].

I now request the last speaker shareholder, Mr. Hariram Chaudhary to ask his questions.

Start my video. I started my video, I can connect, [Foreign Language]. Now I can connect. Mr. Chairman Jai Shroff as well as Mr. Secretary has helped me along with his staff members. Now, Mr. Chairman and Sandeep, I would like to tell you that I very often come to [indiscernible], which is the next building, behind you. And I would take a chance to meet you. Kindly give me your mobile number, so that I can inform you in advance. You can send me by e-mail also, and I will intimate you but I would like to meet you personally when I come to [indiscernible]. Now, Mr. Chairman, I'm Hariram Chaudhary speaking from [indiscernible] from my home in [indiscernible]. Now, I have a suggestion, let's hold all the meetings -- crucial meetings in hybrid system. Physical as well as online. We have in high court -- hybrid system. In my company, we have a hybrid system. And if it is hybrid system, online, you can join a session, all can join. If there are two meetings, you can join. If -- a shareholder from outside, we can also join. How many advantages are there. Especially we are [indiscernible]. If you want my technical person of my company can be contacted and he will help in all aspects. And now 1 suggestion is that have a get together of all members in the month of next -- Diwali get together in the month of November. And about CSR, kindly let us know how much amount we have spent? Whether this amount is more than 2% of the net profit, who is the Chairman of the CSR Committee and who are the members of the CSR Committee. Now, Me. Chairman, the annual report is prepared. I give my compliments to the Company Secretary. Now, I suggest that there should be a dedicated mobile phone in the Secretarial Department so that even if we are not able to contact, we can send our message. Now, kindly let us know whether we are using solar energy, whether we are imaging water harvesting, what are the latest digital technology that we have adopted, whether we are adopted artificial intelligence. And kindly let us know how much capital expenditure we have spent during the year 2022, '23. And Mr. Chairman, how many total shareholders we have and how many have joined today, kindly let us know about that. About unclaimed dividend. I will also suggest let's send 1 more reminder for those who have not claimed the dividend and shares. About factory visit, I would request to have a factory visit. And in the conclusion, I comment my businesses, for all the progress in profits in the company, Mr. Jai Shroff and Mr. Sandeep Deshmukh. Thank you very much. My name is Hariram Chaudhary.

Dear shareholders, we now take a break of 5 minutes, after which the shareholder queries will be answered. Please stay with us. [Break]

Welcome back, everyone. I now request the directors or management to reply to the queries.

I just want to emphasize that the business environment, agriculture companies is very, very challenging currently. And we are hoping that in the third quarter and the fourth quarter, the business will pick up. We are seeing positive tailwinds coming in today. Talking about some of the questions which were asked by the shareholders, I just want to emphasize, and I want to get some of our other members of the management team to also answer the questions. But I want to say that on agriculture, agriculture is facing -- agriculture and farmers are facing huge challenges due to climate change. At UPL, we are very, very focused on bringing up farmer resilience and focusing on technologies, which make farmers more sustainable and more resilient. Food security is a #1 subject in the world today in most countries. Particularly because of the war in Europe. The challenges of food security are related to water scarcity, floods, heat stress and similar activities. At UPL, we have been investing in technologies to help farmers combat these challenges, particularly in crops such as sugarcane, in potatoes, in other vegetable crops and in other row crops. We have developed and are introducing a large number of products in the past and in the future going to do the same, where we will be able to help farmers to adjust to these challenges. We have till today signed up 22 sugar mills in India to move to sustainable agriculture technologies, where they will be able to reduce water or fertilizer use and take care of soil health. We are doing the same around the world in many, many other crops. Today, at UPL, we -- our innovation rate and our new product pipeline is par excellence. And we believe that the new product being introduced by the company will continue to help us grow and really be a core part of farmers' agriculture practices. I just -- and I want to hand over to Anand Vora, to answer some of the other financial questions and then to Raj Tiwari to talk about some of our sustainable ESG readings and our solar initiatives.

Thank you, Jai. Good afternoon to all shareholders. Thanks for joining us on today's call. Referring to the financial questions that have been raised during the call as well as what has been sent to us. I would like to highlight here that on the Q1 performance, while I'll -- as you know, as I explained to you when we announced our Q1 results, as on 30th of October. We did -- those results are available on our website, but I'll take you through the main reason for our performance being a bit subpar is largely because of that we are seeing very high inventory in the market. We have also seen some pricing pressure because of low demand and aggressive competition from some of the Chinese manufacturers. And additionally, we did see that we had delayed monsoons in India. As you all know, this time, we started seeing good rains only in the month of July. Typically, all this starts in the month of June. For more details, I would request you to go through our presentation, which is put up on the website. As regards the query on the employee cost, why the employee costs are high in Q4 and low in Q1. I would like you to -- I would like to share that our company's results are largely seasonal in nature, and therefore, with our company is impacted by the seasonality. And therefore, it is best to compare the quarters like when you're comparing Q1 results, you should compare the same with Q1 of the previous year and not of the preceding quarters. Due to seasonality, you will see that costs would vary per quarter. So the best way to compare -- evaluate the performance of the quarter is to compare the same with that of the previous quarter. As regards, decline in our EBITDA and what corrective measures have been taken, as we shared during announcing our results in Q1, we have announced a reduction in SG&A expense to the tune of $100 million of which 50% of that reduction we will deliver in this -- by the end of this financial year. So we are -- the entire management team is working towards ensuring that how we protect our EBITDA and in this challenging -- very challenging time. There was a question as regards, the decline in growth in earnings per share. I think it's all a function of the decline in our results largely because of the market conditions. As explained when we announced our financial results at the Capital Market Day. The presentation of the same is available on our website, and we continue to see some of the headwinds as even during this financial year as we saw in our Q1 results. As shared during our announcement of Q1 results, we expect to improve our performance in H2, that's Q3 and Q4, and we hope to deliver on our guidance of revenue growth of 1% to 5% in revenue and of 4% to 7% of EBITDA. This is growth over that of the previous year. There was a question on rising trade receivables. I think the way to look at it is the trade receivables in absolute value increases with the increase in sales However, when you look at in terms of number of days of trade receivable, that is trade receivables as a function of total revenue for the year, our trade receivables have actually declined. As regards to the corporate realignment, we -- as we have said, this has been undertaken largely as we clearly have put all businesses in separate verticals and this would help us in better capital allocation as well as to focus on growth as we see tremendous opportunities in each of these verticals. With this, I will hand over to Raj Tiwari, he will take us through on some of the manufacturing-related issues. Thank you very much for joining us on the call.

Thank you, Anand. One of the questions was related to our ESG and the initiatives that are taken there and the progress what we have made. So the last financial year on all the major global indices, the rating agencies, whether it is DJSI or it is Sustainalytics, or the other agencies. We have been rated as #1, our score in terms of absolute number. Over and -- year-on-year, for last 5 years has kept on increasing. On Dow Jones Sustainability Index, our score is about 74 last year, which is the top quartile and we still strive to improve this year as well. In our sector, we have been rated as #1 and the work continues. On the CO2 front, which means on the green energy front, until last year, our footprint of green energy was about 7% to 8% of our overall consumption. Which this year, because of our investment, which we have done on hybrid, this should go up to about 30-odd percent here in India. And we also -- and then this will also keep on increasing. So our CO2 footprint will keep on decreasing. We also have -- I also -- we also got our SBTI targets approved, now in 1 single pass our SBTI goals has been approved. And we are there in terms of achieving those targets. But that's as far as the ESG is concerned. Sandeep?

Yes. Thank you, Raj. So there are a couple of questions about Secretary-related activities. So 1 question was about details of IEPF. So this entire information for all the relevant years is already uploaded on the website. So as regards to the shareholders who asked this question, our team will definitely get in touch with you just to check whether there is any share belonging to you, has been transferred. And if it is transferred, we'll help you to get those shares from IEPF. As regards to data with respect to mentally and physically handicapped people, this is already available at Page #160 of the annual report. There was a question about CSR spend. So a detailed information on CSR spend on the projects has been made available on Page #126 onwards. And there was a solution from one of the shareholders, Mr. Anil Parekh to coordinate with the shareholders better before the meeting. So sir, we take your point, and we ensure that we will in touch with you before the shareholders' meeting every time, each year. So that all your requirements are taken care of. Thank you so much. So I thank all the Board members, auditors and executives of the company and our shareholders for participating in this AGM. Mr. Bhaskar Upadhya, the scrutinizer is authorized to oversee the voting process. For those shareholders who have not yet cast their votes. The voting lines will remain open for 15 minutes. The voting results will be announced on or after before 19th August 2023 and shall be disseminated to the stock exchanges and will also be placed on the website of the company and on the website of Link Intime India Private Limited. Thank you so much.

Thank you to all shareholders, directors of the company, Chairman Americas. Thank you all for attending, and wish you all a wonderful holiday season and all the way back for yourself and your family, God Bless.

Thank you, sir. So may I request that chairman to announce the closure of the meeting please.

Yes, I announce the meeting closed. Thank you very much.

Thank you.

Thank you. Thank you, everybody.

We request all members have not yet cast their vote to do so within 15 minutes. Thank you. [Voting]

Dear members, the time for e-voting has lapsed for all members who have participated in the Annual General Meeting. This concludes the proceedings of the meeting. Thank you all for the participation.