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Analyst Meet / AGM - Analyst Meet

Soil is full of moisture which is good for farmers but in a way bad for the industry

Rallis India

23-Oct-2013, 06:17
The company held its Analyst meet on 22^nd Oct'13 which was addressed by Mr. Veeramani Shankar Managing Director & CEO

Key highlights

Domestically, most of Q2 FY'14 growth was of volume growth and less of price hikes, while internationally, growth was a combination of both price hike and volumes, supported by weaker rupee. All the sub segments of the company be it crop protection, outsourcing, agrichemicals, institutional sales, seeds business etc did well in the quarter.

As per the management, on an all India basis, different geographies behaved differently and were surrounded by different incidents. Floods in Gujarat, Bihar and MP resulted in some crop loss. Factory operations were disrupted in Utrakhand and in AP due to cyclone and other natural calamities.

Further, after some softness of Chinese imports, some imports have started which also hurted the crop protection industry. As such industry was carrying high inventory in Q1 as better than expected monsoon, created higher hopes. So competition intensity was high. Overall, the industry would have lost about Rs 1000 crore of business due to various above mentioned reasons.

Also on the other hand, above 6% higher than normal monsoon, has led to increase in sowing of crops. Soil is full with moisture and while this is bad for crop protection and agri chemical industry players, it is good for productivity of crops, which in turn will help farmers. Increase in MSP will also result in higher income for them.

Cotton standing crop has been damaged in AP due to cyclone Phailin as well as heavy rains in Gujarat. October rains have caused water logging in few regions that has delayed Kharif harvesting and obstructed Rabi sowing.

Metahelix net sales grew by about 60% in Q2 FY'14 and overall net sales were higher by 80% in H1 FY'14. Detailed figures will be revealed only by the year end, but as per the management, the prospects are extremely bright, and the division will give higher margin than the crop protection and agrichemical business.

Management does not expect any further investment in Dahej plant and the plant is ready up and running.

Accumulated losses of Metahelix will continue for couple of more quarters and hence as a result of which the overall consolidated tax rate is lower.

Overall, management still believes that H2 FY'14 looks good although the expectations from the overall industry is very high, which is difficult to meet.