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Analyst Meet / AGM - Analyst Meet

Higher rainfall resulted in strong demand for herbicides shifting demand of pesticides and fungisides to Q2 FY'14

Rallis India

20-Jul-2013, 02:27
The company held its Analyst meet on 19^th July'13 and was addressed by Mr V Shankar MD Key highlights

As per the management, rainfall in June'13 was the best in last 12 years and the start of Khariff season could not have been better than this.

During Q1 FY'14, because of excessive and above normal rainfall, herbicides did very well. Demand for herbicides was exceptionally strong and slightly shifted the demand of fungicides and pesticides to Q2 FY'4. The real business of fungicides and pesticide thus will start from July'13 onwards and hence as per the management H1 FY'14 as a whole, should be looked at and would give a better picture. As per the management, just to update in July'13, things are working very well with strong demand and buoyant volume.

During Q1 FY'14, while domestic formulations business continued to do well, some of the export formulation business orders were deferred to Q2 FY'14 at customers request and hence same could not be billed during Q1.

Also there was margin pressure in Q1, largely due to higher power and fuel costs, rupee depreciation and general inflation. The good news is the company was able to pass on the entire price increases of raw material costs from Q1 end onwards, which it wanted to, pass on from past couple of years, but was doing it gradually. The market is good enough to absorb that.

Rupee depreciation still is a big challenge for the company and will continue to remain, as it is difficult to adjust with rupee around 60.

Q1 FY'14 was also all about Metahelix, the seeds entity of the company which reported 81% growth in sales and profits more than doubled. With bumper monsoon, the seeds business particularly the hybrid seeds were well in demand. Company by and large has good market in corn, bajra and paddy hybrid seeds and has plans to launch and introduce new variety and variants of hybrid seeds and work closely with farmers.

Overall at company level as a whole the ratio of crop protection business and a non crop protection business, will hover around 65: 35 level in next couple of years, with non crop protection business like seeds, agri services, contract manufacturing, shaping up well.

On contract manufacturing business, the management is working on with customers and will be able to share more only by end of this year.

Overall, management was very happy and satisfied about Q1 performance and the rainfall could not have been better for setting the right tone for Q2.