Q2 & FY 2024-25

MANAAGEMENTT

MR. MMITHUN CCHAND ––EXECUTIIVE DIREECTOR –

Moderatoor

Ladies annd gentlemen, ggood day, and wwelcome to the Kaveri Seed CCompany's Q2 aand H1 FY

'25 Earninngs Conferencee Call. As a reeminder, all parrticipant lines will be in the listen-only mode andd there will bbe an opportunnity for you too ask questionns after the presentation concludess. Please note thhat this confereence is being rrecorded Joininng us today on this call is

Mr. Mithuun Chand, Execcutive Director.

Before wee begin, I wouldd like to mentioon that some off the statementss made in todayy's call may be forwarrd-looking in nnature and maay involve riskks and uncertaiinties. For a liist of such considerattions, please rrefer to the eaarnings presenttation. I wouldd now like too hand the conferencce over to Mr. MMithun Chand. TThank you, andd over to you.

Mithun CChand

Good evening, and welcoome, everyone,, to our quarterr 2 first half '25 earnings confeerence call.

We hope you have hadd a chance to review the preesentation of oour results, whiich is also available on our website. I would touchh upon the operrational and financial performaance of the company and then openn the floor for the question-aand-answer sesssion. First hallf financial highlightss. Revenue from operations rregistered a grrowth of 3% tto INR 889.844 crores as comparedd to INR 863 croores first half off last year.

EBITDA was at INR 2999.68 crores, reemained flat as compared to INR 298.87 croores in first half '24. NNet profit was at INR2 79.41 crores as comppared to INR 2278.55 crores. IIt remained flat. Cashh on book standds at INR 559 crores as againnst INR 732 croores in the corrresponding half year. For Q2FY25 revenues from operations waas at INR 81.766 crores. EBITDDA was at

INR 6.89 crores. Net proofit was at INR 3.49 crores.

The majorr highlights, Booard has recommmended a 250%% dividend that is INR 5 per eqquity share on a face value of INR 22 per equity sharre. Increase in vvolumes in hybbrid rice and sellection rice and maizee that resulted iin increase in rrevenues due too good realizatiions. Non-cottoon segment has grownn by 24% in thee first half of thhe year on accoount of major ccontributors likee selection, hybrid rice and maize haave done well.

Exports dduring the first half were imppacted by unresst in Bangladessh. This has resulted in a muted groowth rates at revvenue level andd further below EBITDA and PPAT. Increase iin volumes in both seelection and hyybrid rice and mmaize have resuulted in good ggrowth rate on account of good realizations. Comppany's exports to recover in tthe second halff of the year duuring Rabi season as the situation inn Bangladesh iss stable now. OOperational-wisee, the contributtion of new products, the volumes of Bajra was upp from 59% to 73%. Hybrid rice volumes inncreased by

18% and rrevenues increaased by 28%.

Selection rice volumes inncreased by 200% and revenuees by 34%. Maaize volumes inncreased by

9% and rrevenues were 24%. Vegetabble sales volumme increased 111%, where ouur revenue decreasedd by 13%. Expoorts sales standd at INR6.1 crores in first haalf of '25 as coompared to

INR25.93 crores in the ffirst half of '24.. The decline iss due to politicaal unrest in Banngladesh. I will now oopen the floor ffor question-andd-answer sessioon.

Moderatoor

Thank youu. We will noww begin the question and answer session. We have the first qquestion on the line off Dhruv Saraf ffrrom Bowhead IIndia.

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Novemberr 14, 2024

Dhruv Saaraf

Sir, if I juust look at yourr maize revenuue growth in H11 '25, which is at 24%. And if I were to just knockk off Q1 of thiss year. So what I see in Q2 maaize have degroown for the commpany Y-o-

Y to the tune of aroundd 30% to 40%%. So what couuld be the reasson, sir, given that other competitoors have shown good results in maize in Q2 sppecifically?

Mithun CChand

Dhruv, maajority of the saales were there in the first quaarter itself. Evenn though it's in the second quarter, itt's nothing but the spillover oof the first quarrter. So we hadd a good sale in the first quarter. I don't know about the other companies they might have doone the sale in the second quarter, buut it's all of a haalf-to-half compparison is a goood comparison.

Dhruv Saaraf

Right. Soo there could bbe some front-loading that haappens, which iis why Q2 was subdued, basically??

Mithun CChand

Not exacttly front-loadingg, but we take the actual liquiidation of the stock. But the aareas where we operatte, the liquidatioon might have ttaken place in thhe first quarter itself.

Dhruv Saaraf

All right. That helps. AAnd sir, just tto understand tthe difference between standdalone and consolidatted numbers foor this quarter. SSo we feel like INR 50 croress difference. Soo could you just tell uss what this diffeerence is on acccount of?

Mithun CChand

Sorry?

Dhruv Saaraf

The differrence between sstandalone and consolidated nnumbers. What explains the diifference? I mean, what leads to the ddifference betwween standalone and consolidatted number of QQ2?

Mithun CChand

You just wwanted to have the consolidateed for the Q2?

Dhruv Saaraf

Yes. So I mean, sir, consolidated for QQ2 is at INR 137 crores, whereeas stand-alonee is INR 85 crores. Soo there is a diffeerence of INR 550 crores that wwe see. What acccounts for thiss difference of INR50 crores?

Mithun CChand

So basicaally, we have oother 4 subsidiiaries in the coompany. One is Microteck aand Aditya

Agritech, these are the coontribution fromm those compannies.

Moderatoor

Thank youu. We have the next question ffrom the line off Gunit Singh frrom CCI.

Gunit Sinngh

Sir, I wannt to understannd with the neew tax regime, I mean, woulld we still be able to do buybacks going forward or buybacks arre out of the queestion?

Mithun CChand

Again, theere's a managemment decision thhat we need to take, but we haave still more tiime for the buyback bbecause we havve completed thee buyback in thhe last March. SSo we will decidde later.

Gunit Sinngh

Yes. I meean, you will deecide, but I'm ssaying that, I mmean, is it still ppossible with thhe new tax regime orr is it practicaally impossiblee now with thee new tax reggime? I mean, I want to understand the view of mmanagement on this.

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Novemberr 14, 2024

Mithun CChand

So that's all that we neeed to discuss annd decide. It's not an individuual decision. Itt's a Board decision. But we see hoow the sharehollders get beneffited out of it. IIn the next quaarter or so, we'll havee a clear clarity on it.

Gunit Sinngh

All right. So currently, yoou haven't havee a discussion reegarding this yeet?

Mithun CChand

Yes. Still,, we have some more time left for that.

Moderatoor

Thank yoou. We have thhe next questioon from the liine of Mr. Nittin Awasthi froom InCred

Equities.

Nitin Awaasthi

Wanted soome volume nuumbers. if youu could shed ligght on your 4 ccore products, how much was the saale in volume tterms for the firrst half of this yyear? That wouuld be cotton, hhybrid rice, selection rrice and maize.

Mithun CChand

You wantt the overall vollumes?

Nitin Awaasthi

Yes, sir, tootal volumes juust for these 4 pproducts.

Mithun CChand

So usuallyy, we are not ddisclosing volummes as of now, but if you waant, I can give the overall company volumes. For thhe first half of llast year, we haad done volumees of INR 3.97 crores kgs.

For this yeear, we have doone INR 4.39 crrores kgs.

Nitin Awaasthi

Okay. And what has beenn the realizationn in the first half per package oof cotton?

Mithun CChand

The realizzation is aroundd close to INR 7730 odd.

Nitin Awaasthi

Okay. So INR 730 odd. Sir, next thing I wish to undeerstand is how mmuch is the maaize market expandingg by? what wass our share? AAnd where do wwe indicate to ggo with the groowth in the market?

Mithun CChand

As of noww, if you see coompared to last half of this hallf year, the maize was up by cclose to 8% to 9%. BBut going forwaard, we see a goood acreage cooming in maize,, as the ethanoll plants are also comiing up, the maaize are good. IIt's much remuunerative for thhe farmer now.. We think going forwward, maize as a crop should ddo well.

Nitin Awaasthi

Sir, the mmarket share a biit?

Mithun CChand

Market shhare of Kaveri?

Nitin Awaasthi

Yes.

Mithun CChand

At presentt, we have a maarket share of 88% to 9%. Yearr-on-year, we thhink that we cann grow our market shhare, especially in maize. We have very good pipeline of hhybrids in maize. And not only that, even maize is much visible iin the first halff. You can see even though thhe cotton is down by mmore than 30%%, close to 30% in the first halff, we were ablee to match our rrevenues as we have iincreased our saales in both ricee and maize seggments. Overalll, you can say non-cotton segment. AAnd going forwward, which we see a very goood growth rate ccoming in for thhese crops.

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Novemberr 14, 2024

Nitin Awaasthi

Understoood, sir. But thee main season ffrom maize whhere you have tthe higher sales, maize is normally a crop where inn H2 sales are higher than H11. So this year again and goinng forward, you expecct a similar kindd of growth or mmore growth in H2 for maize?

Mithun CChand

I don't think so. Usuallyy, H1 contributes the majoritty of the maizee. Even for lasst year, the maize was around INR 1120 crores out of overall INRR 190 crores in H1. So H1 domminates the majority oof the time. Butt in the second hhalf sale, maizee is the only croop which contribbutes more to the reveenue.

Moderatoor

We have tthe next questioon from the linee of Harsh Voraa from D.R. Chooksey. Please ggo ahead.

Harsh Voora

My questiion is regardingg vegetable seggment. If you ccan just throw ssome light on tthe drop in revenues we had witnesssed in H1? Andd are you envissioning the groowth of this seggment over the next 3 years? And doo you see any exxport potential iin this segmentt?

Mithun CChand

So you're talking about eexport of cottonn?

Harsh Voora

Vegetablee seed.

Mithun CChand

Vegetablee seed, if you seee the overall ffirst half, there'ss a slight declinne of INR 2.5 ccrores, INR

3 crores, iin percentage terms, it comes to 12% odd. BBut the season jjust was delayeed this year because oof the rainfall aand heavy rainnfall in most oof the parts. WWe don't see anyy threat in vegetable seed. We are pretty confidennt that we'll groow in vegetablle as desired, thhat will be contributeed in the secondd half of the seaason.

Harsh Voora

Got it, sir.. And any expoort potential goinng forward?

Mithun CChand

Last year,, if you see the overall exportss of around INRR 65-odd crorees. We have donne close to

INR 25-odd crores in Baangladesh itselff. And other sale in Tanzania of INR 27 crorres, if you recollect llast year concalll, I said that's oone of the core ssales because wwe had done a ggovernment sale.

But especcially in terms oof Bangladesh, out of this INRR 24 crores, wee might lose INRR10 crores to INR12 crores in exporrt because we aalready lost the season becausee of the unrest, but we are trying to get that sale iin some other parts of the wworld because we are startinng in other countries like Vietnam, IIvory coast. Wee are getting orrders from theree. So we see thhat some of the revenuue should be coovered in those pparts.

But if youu see our overaall growth of exxports leaving thhis year like thhis. But overall,, if you see the good ggrowth in export as well as wee are trying to ggrow, as we aree entering into mmany other new counntries and we are getting verry encouragingg business fromm those countrries as our hybrids arre really doing wwell. We are faairly confident aabout export buusiness as well.

Harsh Voora

Got it sir. So you're plannning to do expoorts across all prroducts, right?

Mithun CChand

Yes, especcially all produucts under not cootton, but basiccally maize, ricee and vegetablees.

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Novemberr 14, 2024

Moderatoor

Thank youu. We have thee next question from the line oof Sanjeev S frrom DreamLadder. Please go ahead.

Sanjeev SS

I just wannted to get a sennse of how the ggovernment bussiness is planninng out?

Mithun CChand

Governmeent business forr? our companyy?

Sanjeev SS

Yes.

Mithun CChand

So we doon't participate much in the government suubsidies. If youu see the revennue of the company for this year, itt's hardly somee few crores, evven I doubt thaat it's in a singlee digit, not more thann that.

Sanjeev SS

Okay. And any new prodducts that have bbeen launched or how is the pipeline going foorward?

Mithun CChand

That's a continuous activvity what we doo. We always ttry new produccts in each and every crop segment. The launches aare in maize, ccotton, even in rice and otherr crops as well, including bajra and wheat and muustard. So that's regular activiity, and there aare more launnched apart from thesse hybrids whiich are launchhed, there are many other hyybrids, which are in the pipeline, wwhich are also --- have a good ppotential in the future years.

Sanjeev SS

So how mmuch would be tthe share of neww products launnched and the ovverall revenue??

Mithun CChand

That depeends on the croop-to-crop. Usuually, the hybrid which has laaunched in the last 3 to 5 years, we call it a new pproduct. The ooverall contribuution will be in between 20% to 35% in every yearr.

Sanjeev SS

Okay. And what would bbe the capex forr the current fiscal?

Mithun CChand

Most of thhe capex is alreeady done. Likee we might inveest over INR 255 to INR 30 croores for this year. Andd year-on-year, what we alwayys say, like INRR35 crores to INNR 40 crores, bbut INR 25 crores to IINR3 0 crores sshould be more than enough.

Sanjeev SS

Okay. Annd we have subbstantial investmments also. Andd since we havve most of the Capex, we have already undertakenn, is there anyy plan to distriibute surplus ccash to investoors through maybe higgher dividends or buybacks?

Mithun CChand

So if you see in the last 7 to 8 years, wwe have done more than 6 buybbacks, and everry year, we are a diviidend paying company. And we have just ccompleted our buyback in thee month of

February--March. So alwways, we try to distribute cash,, which is not rrequired for thee company.

So as earlier I answeredd the question, like regarding the buyback ttax has now chhanged, we need to taake a decision oon that. I think in the next comming quarters, wwe'll have clearr clarity on that.

Sanjeev SS

And sir, tthe reservoir leevels are like aalmost 87% fulll and are we ggoing to be goood growth because of this?

Mithun CChand

Sorry? Whhich levels?

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Novemberr 14, 2024

Sanjeev SS

Reservoir levels.

Mithun CChand

Okay.

Sanjeev SS

And we'ree expecting goood demand as wwell as output iin the rabi season. How should that kind of lead to increase in sowwing”

Mithun CChand

More or leess, Rabi for uss is a very lean quarter, usuallyy second half iss a very lean quuarter when comparedd to first half. MMost of the croops are like wheeat and rice, which are all sellection rice and somee sort of a maiize. So maize, we think it wwill be in line wwith last year'ss numbers.

Vegetablee is a very smalll segment for uus, but we see aa good growth iin vegetables. BBut overall, if you see second half, wwe should be in lline with last yeear's numbers.

Moderatoor

Thank you. We have thee next questionn from the line of Anurag Jainn, an Individuaal Investor.

Please go ahead.

Anurag JJain

Good eveening, sir. My qquestion is for tthe half year baalance sheet, thhe outstanding aamount for biologicall assets is at INNR 383 crores. This is the higghest ever in laast 4 to 5 years. So is this indicativee of the anticiipated growth for next yearr, is the comppany undertakiing higher productionn for the seeds for use in the nnext one year?

Mithun CChand

Yes. Thatt's one way to loook at it. But ass rightly said, thhe production iss pretty high thhis year and

I think wee have one of thhe largest produuction, what wee have taken in tthe company's hhistory. As we have mmost of the invventories are at aalmost zero levvel. So we are trrying to producce more. So that is onee of the reasonss where we see higher producttion. And the other thing is thaat we see a very goodd areas comingg up. I mean too say, very goood volumes, we are anticipatiing a good volume foor the next comming years. It's aa combination oof both. The prroduction is moore and that same is afffecting the balaance sheet.

Moderatoor

Thank youu. We have the next question ffrom the line off Dhruv Saraf frrom Bowhead IIndia.

Dhruv Saaraf

Mithun sirr, we had somee challenges in ccotton in terms of production over the half yeear. So fair to say thaat these challengges are now beehind us and the next cotton season should bbe good for us in termms of volume at least?

Mithun CChand

Yes, the kkind of producttion what we haave taken out thhis year and the current crop is what we see usuallly now unless aand until someething really baad happens withh the climatic cconditions.

Otherwisee, we'll get thee anticipated production and with a good yyield. So I donn't see any challengess in the producttion for the nexxt year, not onlyy in cotton, but iin most of the ccrops.

Dhruv Saaraf

I had a quuestion on highh-density planting. Recently, tthere have beenn some actions and things set by thee textile ministrry regarding prromoting the uuse of high-dennsity planting ppractices in cotton. Soo are you seeinng any action hhappening on thhe ground? Or is it just still mmore word than action?

Mithun CChand

Basically,, most of the coompanies includding Kaveri is wworking on highh-density planting. But we are yet to get a very suitaable hybrid, whhich give better yields. But the research is on, definitely,

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Novemberr 14, 2024 as the minnister said and tthe industry is ttrrying for it, deffinitely down thhe line the futurre of cotton field will bbe high-densityy plantation.

The otherr reason is thatt even getting daily labour iss difficult to get, especially tto pick the cotton seeed. The pickinng of cotton crop should be mmechanized. Soo that is also one of the reasons wwhy the industryy will move to hhigh-density plaanting.

Dhruv Saaraf

And so yyou have to lauunch the produuct, I think it's 9292. Was it specific for hiigh-density planting? Or is it, I meann, agnostic of thhat?

Mithun CChand

It's not exxactly for high-density plantingg, but if you seee the crop, it's slightly high ddensity, but it's not likke what is theree. High-densityy plantation is nnothing like thaat is more than double the yield rate what we saw nnow. It is more tthan that, but att least double.

Moderatoor

We have tthe next questioon on the line of Rohan Patel ffrom Turtle Cappital. Please go ahead.

Rohan Paatel

Considerinng that this yeaar, our base for the cotton is thhe lowest. And we expect thatt next year, there are nno more producction challengess. So with this llow sales base, how much can cotton can grow fromm here? Can wee get back to INNR 350 to INR400 crores base nnext year?

Mithun CChand

This year,, we have done close to INR 3440 crores this yyear itself.

Rohan Paatel

In your prresentation, is itt shown H1 thatt you did INR 2258 crores?

Mithun CChand

INR 258 crores, you're right, you're riight. Cotton, NNext year, it shoould be like at least 20% more thann what we had aat now.

Rohan Paatel

Okay. 20%% more than wwhat we had done. And conssidering that ouur non-cotton, tthe base is higher, wwe are growing in like aroundd like 25% to 330% in all of tthe hybrid rice,, selection, maize. Soo will this trend continue?

Mithun CChand

What we see is that overrall this year, wwe had a very mmuted growth bbecause there arre a couple of reasonss. One is the cootton, we are ddown more thann 30% and the other thing whhere we are slightly doown in terms off the exports, thhe exports have not as anticipaated for whateveer reason it is. So goinng forward, whhat we see is thaat a 10% to 12%% growth in revvenues and 15%% to 18% of the bottomm line should mmuch reflect.

But next yyear, as we see,, as cotton is alrready low, we'lll at least grow by 20%. And oother crops, we see a good potential in most of the crops. So nextt year, the growwth rate shouldd be in that

15% to 200%.

Rohan Paatel

15% to 200% should be thhe growth rate ffor next year?

Mithun CChand

Yes.

Rohan Paatel

And that wwould lead to liike 20% to 25%% growth in botttom line?

Mithun CChand

It should bbe more than 200% plus.

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Rohan Paatel

Okay. Annd we were going to bring soome market share back, we hhave lost market share in cotton duue to our hybridds being maturre enough and we were plannning to bring 22 to 3 new hybrids duuring the quartter to get back our market shhare. So how iss the progress ggoing over there? Havve we started.

Mithun CChand

Yes, for thhe next year, wwhat I'm sayingg of the 20% grrowth. Basicallyy, it's only becaause of the new launcch products. WWe are seeing goood traction in those productss, and we are giving good productionn for those prooducts as well. So those are thhe major contrributors for the growth of next year.

Rohan Paatel

Okay. Annd after we reacched back to INNR 350 crores, say, a base in cotton next yeaar. So how will cotton as a portfolioo grow from ovver there? Likee can we comee back to INRvv500 crores product off cotton , again,, like what we uused to have in the past

Mithun CChand

Sure. What we believe iinternally is thaat we have veryy good pipelinee products andd which are recently laaunched, are also giving very good results. WWe are pretty suure that we can go back to those prevvious levels what we had. It's aa matter of 3 to 4 years from here.

Rohan Paatel

Okay. And what about mmedium to long--term time horizzon. And the noon-cotton portffoolio should be growinng like at a rate of somewhere around 15%? CCan we assume??

Mithun CChand

Already, wwe are one of thhe biggest in thee non-cotton seegment and as aa crop, it's growwing, and as a companny, we are doing much betteer than the inddustry. So these 2 combinatioons should contributee, not particularrly the cotton, right, but we hhave many othher products likke mustard,

Bajra, Sorrghum and wheeat. There are mmany other products. So as a whole, if you ddivide both cotton andd noncotton seggment, as cottonn is with a low base, it should be in that 15%% to 20% in the next 33 to 4 years. Annd this should bbe in between 115% to 20%. OOverall, as a commpany, we see 12% to 15% growth cconservatively.

Rohan Paatel

Best of luck for future.

Moderatoor

Thank youu. We have thee next question from the line oof Mohammed Patel from Carre Portfolio

Managerss.

Mohammmed Patel

Sir, this iss a follow-up too previous partticipants. So thee non-cotton haas done really wwell in FY

'25 and thhe base is high. So should wee expect non-cootton growth too slow down inn FY '26 to single digit?

Mithun CChand

We don't see any single digit growth, itt should be a ddouble-digit groowth, may not bbe like that

25% or soo, but it should bbe in the 12% tto 15%.

Mohammmed Patel

Even on thhis higher base?

Mithun CChand

Yes.

Mohammmed Patel

Okay. Myy next question is, exports of INNR 6 crores in H1 FY '25. Whhat should be thhis number for H2 rouughly?

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Mithun CChand

Overall, wwe have done INNR 66 crores last year in termms of the exporrts. As I said eaarlier, there was a oneetime sale of INNR 28 crores froom Tanzania, wwhich we don't know whether we'll get it or not. Thhat again dependds on the goverrnment policy aand other thingss we have done like NR25 crores in BBangladesh. Soo INR 25 crores Bangladesh sale will be likee INR 12 o INRR 13 crores this year. We have alreaddy lost some salles in the seconnd quarter.

Whereas tthe decline in BBangladesh salees, maybe like IINR 6 or INR 77 crores might bbe covered in other pparts of the woorld like we haave Vietnam, IIvory Coast annd other countrries we are exporting,, so that we havve a chance to ccover. But in terrms of Tanzaniia, we need to see whether we'll get tthose type of quuarter or not. Buut going forwarrd, if you see exxport as a segmment, it will grow at mmore than 15% as a whole on a year-on-yearr basis. We neeed to take the bbase of this year. Thiss year, we can eeasily grow at 15% to 20% in vvegetable in expport market.

Mohammmed Patel

Then it shhould be INR 200 crores, excludding Tanzania?

Mithun CChand

It should be much better than that. If yyou see exactlyy like we havee done only INNR 6 crores from first half of export tthis year, next hhalf would be inn between INR 30 to INR40 crrores.

Mohammmed Patel

And excluuding Tanzania?

Mithun CChand

Overall. TTanzania, we doon't know, but it should be pluus or minus, shhould be INR 330 and INR

40 crores.

Mohammmed Patel

And on thhat base, we cann expect to groww at 15% to 20%%?

Mithun CChand

Yes.

Moderatoor

Thank you. As there aree no further queestions. This wwill be the end of the conferennce. Thank you for jooining the call. For any other iinformation, please be in toucch with Rama NNaidu from

Intellect PPR on 992-020--9623. On behallf of Kaveri Seeed Company Liimited, that conncludes this conferencce. Thank you ffoor joining us. YYou may now diisconnect your lines.

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