Dhanuka Agri's FY25 Growth Outlook | NDTV Profit
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00:00If you see Dhanuka Agritech's revenue, revenue was up 33% while EBITDA margin is at around 15%.
00:07So to talk to us more about the numbers and the outlook going forward,
00:12I am joined by Mr. M.K. Dhanuka, who is the Vice Chairman and MD of the company.
00:16Happy to have you, sir, on the show.
00:18Starting with my first question, given the strong momentum that we have seen in Q1
00:23with 34% year-on-year revenue growth,
00:26do you believe that this is the right time to just revise the guidance from 18% to maybe 20% to 25% for FY25?
00:34No, actually the July has not gone well.
00:38We were expecting good rainfall in July but scattered rainfall was there in the month of July
00:46and from 25th July onwards the rainfall has picked up.
00:51So the consumption of VD side has basically been very low
00:57and the VD side which was placed in the month of May and June that has been returned back.
01:04Some quantities of that has been returned back by the dealers and distributors.
01:09So that's why we are continuing with our guidance of 18% to 20% growth in the top line for FY25.
01:18Alright, and also on your EBITDA margin side,
01:22so do you see your EBITDA margin going to around 21% to 22% given the current performance?
01:28No, we have rather given the guidance of 100 pips degrowth in the EBITDA margin
01:35because of the introduction of new molecules and expenses being incurred on marketing for promotion of new molecules.
01:44So that's why there can be a dip of 100 pips approximately in the EBITDA margin over last year.
01:51Is there a chance that we go to our EBITDA margin of 22% to 23%
01:58because I think in last September 2023 we had around 23% of EBITDA margin.
02:03So was that a one-off or extraordinary thing that we did last year?
02:08You see, the second quarter is the best quarter, ours is a seasonal industry.
02:14So quarter wise the revenues and the EBITDA margin differs.
02:19So second quarter is the best, so that's why the EBITDA margin in the second quarter is also higher.
02:26But overall we are given guidance of 18% EBITDA margin for the whole year.
02:32Also regarding company's engagement with innovator partners for manufacturing patented technical molecules,
02:40how has the engagement been progressing?
02:43No, it is at initial stage only we are having discussions with our Japanese partners
02:51and considering our relationship of more than 25 years,
02:55we do hope that sooner or later we will get the molecule from the Japanese companies.
03:01Japanese companies are slow in taking the decision but once they decide then it is for long term.
03:08So let us wait for some time and we hope that something will definitely happen in this direction.
03:15Also can you provide a breakdown of volume versus price led growth in the current quarter?
03:22Yeah, the volume growth was 39% while the value growth was 33%.
03:30So the prices has reduced to the extent of 6% in the first quarter.
03:36As you said that Q2 is our best quarter, so how are you seeing Q2 shaping up right now?
03:43As I told you July has not gone well, so August and September we are dependent
03:50because the maximum consumption of insecticides and fungicides is in the second quarter in August and September.
03:57So we are confident once the south season will start, we will be able to coop up
04:04and August and September will turn out to be good months overall for the company and the industry.
04:12Also I wanted to understand on the volume side, so we have seen almost 39% volume growth which is actually very good.
04:19Now how do you see the industry for the quarter?
04:22What kind of growth are you anticipating for the industry in the current year?
04:26I expect that the industry should have gone half in comparison to what Dhanuka has grown
04:33because we introduced some new molecule PARS, LANEVO and MICROSUPAR
04:38for which we got a very good response from the market which has boosted our revenues in the first quarter.
04:46But the other companies have not been able to launch some new molecules
04:51or they have not got that much success in the new molecules.
04:56So these new molecules have played an important role in our top line.
05:01And also on the speciality side, so what is the revenue mix,
05:05I mean what is the contribution of speciality chemicals to overall revenue?
05:10Overall speciality is around 50-50, 50% speciality and 50% is basically generics.
05:19And in terms of non-availability and rising freight cost, how is the scenario now?
05:26I mean is it still same or it has started improving and are you able to pass on the increased freight cost to farmers?
05:37Yeah, definitely it takes some time in passing on the cost to the farmer
05:42because initially in the system, in the pipeline, the old cost inventories are available.
05:51So when the other peers also increase the prices only then it is possible to increase the prices.
06:00Speciality portfolio, there is no change in the prices,
06:04but only it happens in the generics which are coming from either China or from the domestic manufacturers.
06:12So definitely the prices are now either stable or they are on the rising trend.
06:21And the freight cost which went 4-5 times has now come to double only.
06:30So some freight has been reduced now from China to India
06:35and we are confident that as the season will further progress,
06:40we will be able to pass on the cost to the consumer.
06:44Alright, well thank you so much sir for answering our questions and all the best.
06:49Thank you, thank you Varsha ji.