Thread by @ValueEducator

#RALLISINDIA Concall Highlights Q3FY22 🌱

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Operational Highlights :

1. Q3 was challenging quarter due to unseasonal rains, pest infestation in chilli farms and change in regulatory framework

2. Revenue turned weak at 628 Cr (728 Cr in Q2FY22) due to challenges in demand and change in government regulations

3.EBITDA margins contracted to 11% (12% in previous quarter) due to high raw materials, freight and power expense

4. Export revenue grew by 19% whereas domestic revenue grew by only 9%

5. The growth was driven by value more than volumes as company mentioned about price hikes in previous quarter

Challenges in industry

1. The monsoon season this year has not favoured agri input companies as excessive rainfall continued into Q3 in the southern states
2. 50% increase in input costs due to tight supplies from China in Oct-Nov’21

3. Supply chain challenges continued into Q3 with availability being a challenge for certain intermediates as well as steep inflation in prices

4.The company faced logistic challenges and high international freight rates

5.Headwinds in the industry due to change in government regulations in certain states.

6. Reduced addressable market for cotton because of illegal cultivation

Business Strategy

1. Rabi sowing were up by 1% due to high water levels in reservoirs, this explains higher demand in rabi products portfolio
2. Working on environmental sustainable product and water soluble fertilisers
3. Looking for opportunities in crop nutrition segment

4. Company increased expenses on digital marketing initiatives.
5. Portfolio augmentation will help capture the demand in northern regions of UP, Andhra Pradesh and Rajasthan.
Acetamiprid, and Hexaconazole continues to stay strong
6.Focus on improving formulations share

7. Calibrated prices for products to pass on the incremental costs

Crop care segment review

1. 13.3% (YoY) growth in crop care segment
2. Focusing on increasing formulations in the international business
3. Metribuzin product showing signs of revival

4. International demand looks promising ,growth driven by good commodity prices

Seed segment review

1. Revenue were down 31% YoY
2. State action on ban of hybrid paddy seeds in southern states affected the demand
3. Bihar - change in regulatory environment, the new mandate

explains that the new products are to be sold only after approval by national authorities. Either state approvals or national approvals were accepted earlier.

New Product launch

1. 2 new crop nutrition products in Q3 - one biological nematicide and one nutrition product from agro waste
2. Launched 6 crop protection and 4 crop nutrition products in 9M.
3. Crop protection - 2 products launched in 9-3 and 9-4 each,

and two co-marketing products launched
4.Also launched Potash - rich organic manure product and new Maize hybrid in the hybrid seeds segment
5. Product in agro intermediate to be commercialised from the new MPP plant

Contract manufacturing

1. Revenue from CRAMS were largely impacted by lower offtake of PEKK due to subdued growth in the aviation sector.
2. Finalising 2 small contracts in the segment

Capex
1. MPP at Dahej is expected to be completed by H1FY23.

2. Pilot Plant at Dahej is already commissioned
3. Formulation facility Phase 1 commissioned, commercial production started
4.Two AI plants capacity enhanced and commercial production started at Ankleshwar(herbicide and insecticides)

Capex FY22E - ₹250cr, similar capex for subsequent financial years for new product

Debottlenecking largely completed

Overall outlook for demand seems strong with small headwinds from the regulatory authorities. Commercialization of existing capex will drive the future revenues