Best Agrolife Ltd (NSE: BESTAGRO) Q2 2025 Earnings Call dated Oct. 21, 2024
Corporate Participants:
Vimal Kumar — Managing Director
Vikas Jain — Chief Financial Officer
Surendra Sai — Head – Strategy and Overseas
Analysts:
Balakrishnan — Analyst
Unidentified Participant
Preet Nagarsheth — Analyst
Ankur Kumar — Analyst
Dishika Rathod — Analyst
Saket Kapoor — Analyst
Ram Tavva — Analyst
M. Hemant — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY25 Conference Call of Best Agrolife Limited. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions].
This conference call may contain forward-looking statements about the Company which are based on the beliefs, opinions, and expectations of the Company as on date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Today, from the management side, we have with us Mr. Vimal Kumar, Managing Director; Mr. Surendra Sai, Head of Strategy and Overseas; and Mr. Vikas Jain, Chief Financial Officer.
I would now like to hand over the call to Mr. Vimal Kumar for his opening remarks. Thank you. And over to you, sir.
Vimal Kumar — Managing Director
Yeah. Thank you. Good afternoon, everyone. Welcoming everyone to the Earnings Call for our Second Quarter and Half Year Financial Performance.
Let me begin talking about the industrial landscape. This year India’s monsoon rainfall has been the highest since 2020 with above-average rainfall for three consecutive months. This has helped the country recover from last year’s poor rainfall situation. In India, a good annual monsoon is very important for the farmers for our industry as well. A good monsoon provides nearly 70% of the water needed to irrigate, farm, and fill up reservoirs. A good monsoon supports our $3.7 trillion economy. However, the above-average rainfall that happened in September was due — delay monsoon withdrawal, and that caused damage to some summer zone crops like rice, cotton, soybean, corn, and pulses in some areas.
On a positive note, India’s water reservoirs has seen a significant boost with 155 reservoirs at 88% of total capacity, this is 14% above normal levels. The water storage situation in the Western and Southern regions of India including Gujarat, Maharashtra, Karnataka, Madhya Pradesh, Andhra Pradesh, Telangana has been particularly good with above 90% of reservoirs being full. This is encouraging for our agricultural landscape and we are expecting a good rabi season — upcoming season, rabi season. Coming to our company and the second quarter of this financial year, I am happy to report a strong performance driven by our strategic focus and market knowledge.
Our strategic focus in R&D and growing our brand business is helping us in making the best of farmer brand. Our three core pillars are innovation, products, and farmer. We know this will drive a sustainable and profitable growth for Best Agro. We have been investing in developing patented products for our farmer and working on backward integration of technicals as well as intermediates.
During the first half of the year, we secured three key patents for our innovative formulations. We aim to establish leadership in the patented crop protection segment. Our branded product continue to perform exceptionally well across regions driving overall revenue growth. As a result of these efforts, we saw an improvement in profitability with our gross margins expanding from 26% to 34% year-on-year.
Looking ahead, we are enthusiastic about our reboost product pipeline for the upcoming quarters. In the third quarter, we plan to launch our patented herbicide Shot Down along with the new insecticide. Additionally, we have two more innovative insecticide scheduled four release in Q4 which will further enhance our product portfolio and strengthen our market competitiveness.
Thank you. And I now invite Mr. Vikas Jain, our CFO to address the financial performance for the quarter ended Q2 and H1 FY25. Thank you.
Vikas Jain — Chief Financial Officer
Thank you, Mr. Vimal ji and good afternoon everyone. Coming to our financial performance, our revenue from operations for Q2 FY25 stood at INR747 crores compared to INR811 crores in Q2 of FY24. Although seasonal conditions were generally more favorable compared to last year, some regions experienced excessive and continuous rainfall which resulted in fewer crop spreads. The decline was primarily due to strategic focus on building the branded business and lower institutional sales.
Our focus on strengthening our branded business is yielding positive results. So our branded business is now accounting for 65% of our overall revenue. Branded sales have grown by more than 15% this year. In Q2 FY25, notably branded has experienced a volume growth of 35%. From this 35%, 24% was attributed to newly launched products and 11% from our existing offerings. The growth was offset by a price variance of 25% — 20%, primarily resulting from reduction in prices for products such as CTPR, Pymetrozine, and others.
On the other hand, institutional sales saw a decline of 41%, with a 26% reduction in volume and a 15% decrease in prices. This decline is largely due to price reductions combined with our strategic shift from institutional sales to branded products. Several generic products sold last year are being slowly deprioritized. Institutional sales, which was hitherto focused on generics is on the downward trend now.
Our subsidiary company that we acquired last year, Sudarshan, contributed to INR213 crores in H1 FY25 as against full-year sales of INR242 crores in FY24. This revenue reflects a 74% growth on a quarter-on-quarter basis. In terms of profitability, our Q2 FY25 EBITDA excluding other income was around INR147 crores, enhancing the EBITDA margin to around 19%. The increase in margins was account of stability in raw material prices and higher sales of branded products. The Q2 FY25 PAT stood at INR95 crores and PAT margin stood at 13%.
Talking about H1 FY25, revenue from operations stood at INR1,266 crore as compared to INR1,423 crores in H1 FY24. EBITDA stood at INR202 crores with a margin of 16%. PAT is INR116 crores with a PAT margin of 9%. Our opex for Q-on-Q is higher due to consolidation of Sudarshan which was acquired in March ’24. We have made significant progress in strengthening our balance sheet, our debt-to-equity ratio has improved to 0.59 as of September 30, 2024, compared to 0.90 on March 31, 2024. As we expect a good rabi season, we expect a significant improvement in our working capital as well.
Additionally, we have completely liquidated high-cost inventory. We have seen a significant improvement in the cash flows from operating activities rising from INR5 crores in H1 FY24 to INR125 crores in H1 FY25. We are expecting an in principle approval for the preferential allotment and we will be hoping to complete the preferential allotment and 25% payment will be received within 15 days of receipt of all regulatory approvals.
I now hand over to Mr. Sai to speak for further business updates.
Surendra Sai — Head – Strategy and Overseas
Thank you, Mr. Vikas ji. Good afternoon, everyone. Thank you for joining us here today. As Mr. Vimal ji shared, during the first half we have received three patents for our important products. One of the patents is for our novel ternary’s logistic pesticide formulation, that combines Isoprothiolane, Pymetrozine, and Trifloxystrobin. We have also received a binary patent for a novel synergistic herbicide [Phonetic] that combines the technical Trifloxystrobin and Valifenalate. These will be released as products in due course.
Our water product is for our release. Our third patent is for our released product which is a synergistic insecticide formulation Nemagen. This is a combination of CTPR, Novaluron, and Emamectin. This product is designed to handle multiple pest infestations in different crops. It is a one-shot solution for most of Lepidoptera and sucking [Indecipherable]. This product has been well accepted by the farmers and we look forward to doing INR100 crore plant business in this full year of induction itself.
These recent patent approvals highlight our commitment to innovation and our focus on developing effective solutions for the agricultural industry. With our focus on product innovation, R&D, and technology combined with expanding our brand presence, we are well-positioned to capitalize on the opportunities in the agrochemical market and drive a profitable and sustainable growth going forward.
We continue to build upon our robust pipeline of patents. We intend to release at least two to three new products per year. This year we have incorporated a subsidiary in China as a strategic decision. This subsidiary will be focused on developing deeper cooperation with our suppliers. And increasing our collaboration for R&D in newer technicals and intermediates. We continue to work on registration for products in large markets such as Brazil, Australia, and other geographies. We will be aligning our first registration with the newer products we developed.
This is all from our end. We are now open the forum for Q&A session. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Balakrishnan from Exelon Investment Management. Please go ahead.
Balakrishnan
Good afternoon sir. My first question is related to the search that was conducted by Income Tax department. Is there any update on the final conclusion of the proceedings? Or what is our assessment of the outcome of the proceedings?
Vimal Kumar
Yeah. Thank you. Thank you, Mr. Balakrishnan. You are asking for the income tax. Income tax, we have fully updated with the proceedings. And as of now, we don’t have any extra demand, whatever level we are paying that on time always. That is our advanced checks and everything. And according to us there is no demand we are expecting for this income tax. No extra demand, I mean.
Balakrishnan
Okay. With regard to your full-year guidance for the current year in terms of revenue. So do you expect to achieve the full-year guidance for the revenue considering that we have two quarters which were either flat or lower than last year? And the prime quarters, the two main quarters in which we do business has already been, they are flat.
Vimal Kumar
Yeah. Mr. Balakrishnan, you are asking about the third quarter and fourth quarter, correct?
Balakrishnan
Yes.
Vimal Kumar
Yeah. The third quarter and fourth quarter, of course, last year it was very weak, of course, last year financial year. But this year we have planned such a way, and you can see our second quarter growth from first quarter, it is — there is a good growth. But if you talk about the number — revenue number that is lesser than last year, that because of — because you know, we are expecting 20% at least growth in the second quarter or third quarter also that we have planned in such a way of the sales in B2C because major hit was B2C in the third quarter and fourth quarter. So we have taken the good provision for that also. That’s why you can see the number of around INR746 crore which has to be expected maybe INR900 crore.
And moreover last year third quarter was badly heated and — but this year, as in my commentary also I said because of the delayed season and the third quarter mainly, we have November, December, and January. These all months are for the rabi. And if we talk about the October because the season has delayed, so our October month is also going very well and we are expecting very good number if you compare to — there is no comparison from last year. We are expecting very good number in this coming third quarter and fourth quarter. Third quarter which is running and the fourth quarter.
Balakrishnan
And the last question is related to QIP. So when do we expect to receive the funds? I mean, when are we expecting to conclude the filing and all the stuff?
Vikas Jain
You are talking about preferential which we have done?
Balakrishnan
Yes. Yes.
Vikas Jain
Okay. That is in QIP, that preferential we did the last month. Of course, that is approved by our general Board meeting in Annual General Meeting that is already approved in end of September. So first week we have applied to the authorities and hopefully, within November we will get all that amount which is prescribed there, like 25% or whatever. Once we get the approval, after that we will get that money into the company.
Balakrishnan
That’s it. From my side. Thank you.
Vikas Jain
Thank you. Thank you, Mr. Balakrishnan.
Operator
Thank you. The next question is from the line of Raaj from Arjav Partners. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Vimal Kumar
Yeah. Yeah, Mr. Raaj.
Unidentified Participant
Actually, I wanted to ask on the preferential allotment. So overall you are expecting to raise around INR189 crores, right?
Vimal Kumar
It is INR200 crore.
Unidentified Participant
Around INR200 crores. Okay. Okay. Hello?
Vimal Kumar
Yeah. Yeah. Please. Mr. Raaj.
Unidentified Participant
You are expecting to raise around INR200 crores, right?
Vimal Kumar
Yeah. It is complete INR200 crore.
Unidentified Participant
All right. And how are you planning to utilize this fund?
Vimal Kumar
Mostly we are expanding our backward integration as technical and intermediate. In that, we are giving almost INR80 crore to INR90 crore, and the balance we will use for the working capital.
Unidentified Participant
All right. All right. All right. So working capital will be around INR110 crores then?
Vimal Kumar
Yeah. Yeah. INR110 crore, INR120 crore, and INR80 to INR90 crore, [Indecipherable] go in our extension of the backward integration.
Unidentified Participant
All right. And okay — and I wanted to understand you. You mentioned that in Q2 FY25 you had earlier planned to do sales of around INR900 crores, right? And instead of that number, you achieved INR746 crores. Why is it so?
Vimal Kumar
Just because of the — I told you, you know, because in the second quarter, and that is pushed because of the rain. Because there was a heavy rain in the full quarter. So some pushed sale in the October only. So that will reflect in the third quarter. Just that pushed in the 15 days, so whatever the sales need to be happen by the September 30, it will come — it will reflect in the month of October. I mean, the third quarter only.
Unidentified Participant
All right. Understood. And sir, I wanted to know your full-year guidance for FY25 and FY26.
Vimal Kumar
Yeah. Earlier also we have given that guidance. That is approx — of course, that is we have given 15% at least growth we will get. But we are expecting more than that, because our rabi season we can see it is good and we can get easily, we can say the full year. So 16% EBITDA and at least 16% EBITDA we will get in the full year. And if you talk about the top line revenue, that will be also more than INR2,000 crore.
Unidentified Participant
For FY25, right?
Vimal Kumar
Yeah. FY25.
Unidentified Participant
And for FY26?
Vimal Kumar
FY26, 26, we are expecting 20% growth in the top line.
Unidentified Participant
And about the EBITDA margins, any guidance you would like to give?
Vimal Kumar
EBITDA margin will grow, you can see drastically there is a change in the second quarter from 26% to 34%. If you see last year, the second quarter, it was 26%, now it is 34% gross margin. So of course the gross margin will increase because our focus is on always on our proprietary molecule, either in our patented molecule that we are focusing. So by this way, it will increase year-on-year — quarter-to-quarter and year-on-year.
Unidentified Participant
Okay, so how much is our drop?
Vimal Kumar
More business in with the B2C only.
Unidentified Participant
All right. So how much is the gross margin on the B2C side compared to institutional sales?
Vimal Kumar
Yeah. B2B and B2C, there is depend on the product to product which product we are selling. But in a general life, if you talk about the B2C margin is near about gross margin. We can say 45% or 40%. And wherever B2B business, if we talk about that will come around 20%, 25%.
Unidentified Participant
20%, 22%, okay.
Vimal Kumar
No, 20% to 25% depend on the product to product. [Speech Overlap] some product has 30%, some product have 20%. So we can say conservatively that is 20% to 25%. And B2C, we are getting 40% to 45%. Now, this year it will be happen because our so many product we have launched this year, which is our patent. So this will also increase year-on-year.
Unidentified Participant
And just how much is the gross margin on the patented products?
Vimal Kumar
No, I am giving you the average. But some of the product, like we have some of product where we have even 70% of margin also there. If you talk about gross margin and some of the 30% depend, because whenever we go to the market, we have to see the farmer need and farmer — how much farmer can spend. Either we are replacing farmer mindset from others to go to our product. Then we have to see how it is comfortable to farmer pricing. We have to see accordingly we get the margins. So it is not decided by directly on the product. That has to decide on the field how the farmer is getting alternate product. So we have to keep that way the pricing. So that’s why it looks good, otherwise, that is our patented molecule. We can take a big margin also, but we always keep in mind that we have really — we have to really see the farmer benefit also how they are getting benefits from our products. So that’s why it’s sometimes it is 70%, sometime it is 50% and sometimes it is 30% also.
Unidentified Participant
And that’s [Speech Overlap] capex where you’re expecting to do for FY25 and FY26?
Vimal Kumar
This is capex.
Vikas Jain
Initially, we’re planning to do, as Vimal ji mentioned, INR80 to INR90 crores from the preferential allotment. And then there is future growth planning as well, but that we will consider once we start this one and complete this project.
Unidentified Participant
All right. And how much time it will take for us to complete the capex of INR90 crores?
Vikas Jain
Right. So this particular capex for the INR90 crores is going abroad in, you know, multiple phases. There is a Phase 1 that we are doing it on a priority basis. And the Phase 2, which will consume the large amount of the capex, which is the INR80 crore to INR90 crores, we will be completing it at least before the year. So I would say in six to nine months because we are sort of well used to be the art of creating technical plant at rapid pace. So we know how to be able to build technical plants at a good pace. So I would say within two to three quarters, we will be able to complete the plant.
Unidentified Participant
Two to three quarters, so you are expecting the capex to come on stream around quarter one and FY26?
Vimal Kumar
Yeah. The next [Indecipherable] quarter two. Yeah, next year quarter one to quarter two, around that timeframe, because after the plant completion, there would be trials and other things for the new molecules, so that takes at least around one to two quarters to stabilize.
Vikas Jain
Maybe [Indecipherable]
Unidentified Participant
So it is a greenfield capex?
Vimal Kumar
No, this will be a brownfield.
Unidentified Participant
It is a brownfield capex, all right. Okay, sir. Thank you. All the best.
Vimal Kumar
Thank you.
Vikas Jain
Thank you.
Operator
Thank you. The next question is from the line of Preet Nagarsheth from Wealth Finvisor. Please go ahead.
Preet Nagarsheth
Yes. Hi. So I think the question that I had was, do you still see any negative impact of rain? Because there are still some parts of the country that are receiving rain even in October. So how does that impact your projections for the quarter call?
Vimal Kumar
You are talking about excess rain?
Preet Nagarsheth
That’s correct.
Vimal Kumar
Okay. Okay. No, of course, there is some part where somewhere, because if you talk about the southern region, it is always delayed, delayed means the first season comes for us is the North India, then it goes to Central India, then it goes to the Southern India if you talk about the Kharif crops. What you’re talking about some rains are there, there is no impact at all, because there was very heavy rainfall, which was in the second quarter, I mean, the — not in second quarter, which started from June end and then it is till September it was. So that will give even good impact on the land because you know, some — when the rains come, it goes to the deep in the land, so it will give always good impact when there is a — I would say, the rain is not like some of the big, I can say, like a flooding situation and all that, this is not anywhere, that kind of situation in a country of any part. So there is no negative impact. Of course, negative was some delay on the season that was there and some negative we can say some area because that time has left. So some area already they don’t, in my commentary also I said, there was no sowing. So that we can say, otherwise, overall, it will be — give a really good boost to the everywhere in our industrials and as well as agriculture.
Preet Nagarsheth
And so what is the impact on the Chinese dumping that was very strong and prevalent as that kind of reduced or stabilized or what’s the update on that in prices of products?
Vimal Kumar
Yeah. Now I can say because in the last two quarters also, even know last four quarters, I would say in the last one year, there was a thing, you know, we can say there is a China dumping and this and that. But right now, we can say to stabilize because once any of the factory in China, they are under the cost when they are producing, so they have to stop because under the cost, they cannot survive. So now I would say the situation is there, their prices have fallen down a lot. And now the situation is that the factory has to stop because they cannot run at that level. So I would say now the position is stable from last two months and it will be stable because it is almost the lowest cost for the intermediate and the chemicals, which we use in agrochemical, I mean.
Preet Nagarsheth
Right. So you are guiding for at least 15% or more top line guidance for FY25, right? Now, if that is what you are saying, that it will mean that your top line should at least cross INR2,100 crores for the full year, right? Because INR1,873 crores is what you had done for last year. Now, that means that at least in the next two quarters, a total INR800 crore plus worth of business has to come for you to get to those numbers. So that would mean getting kind of numbers that you’ve never ever done in the history of the organization because Q3 is generally better, is not as bad, but Q4 generally is obviously going to be the weakest. So how do you see generating that kind of revenue in Q3 and Q4?
Vimal Kumar
Definitely, as you said, you know, it is around INR18 crores, which is very easy because we are outcoming from the generic products and mostly we are selling our specialty molecule and patented only. But we have new products, one is herbicide, which is Shot Down. That is in the particular segment of soybean and the groundnut, that is the best one of the molecule and there’s a new chemistry. No one has that molecule in the — as a chemical also not introduced by any company, that is — that Shot Down, Haloxyfop that is not even in the market as of now. So, you know, that segment is itself, it is more than INR2,000 crore. So very easily this INR800 crore sales we can achieve, there is not a problem. But always the conservative side, that we will grow more than INR2,000 crore this year. But definitely, it will give us — 15% we can achieve more than INR2,100 crore.
Preet Nagarsheth
Yeah. The other questions that I had was regarding the herbicide usage. Is it true that the utilization of herbicide is going to keep on increasing as a pattern? Is that something you see? What’s your take on that?
Vimal Kumar
No, it’s a general statement everybody gives like because herbicide is confirmed sale. And when rain is good so herbicide is more for sure because that is with the rains, when rains is more so herbicide usage is more. But insecticide, as well as the same. And fungicide also is the same like we are — probably in chemistry, we are working from last many years so many problems we have so that will also boost up. And also, we have herbicide in our pipeline and in our basket also already. So that — there is a true that herbicide sales we say sometime it is confirmed sale and sometime insecticide sale, we don’t say that is confirmed sale till sometime pest and according to the segment sometime it will go 10% up and down but herbicide sometimes we say when we plan like INR500 crore so definitely we will achieve INR500 crore. This is the only difference we can say, not much difference we can say like, herbicide and…
Preet Nagarsheth
Understood. Thank you so much, sir. And wishing you all the best.
Vimal Kumar
Thank you. Thank you, Mr. Preet.
Operator
Thank you. The next question is from the line of Ankur Kumar from Alpha Capital. Please go ahead.
Ankur Kumar
Hello sir. Thank you for taking my question and congrats for the improved numbers. Sir, I wanted to ask regarding the same question. The INR800 crore in second half. So is it like, the season is much better and we don’t expect any comeback of sales also. Because last year, I think that also hurt us in the second half. And in terms of bottom line also do we — as in last year we had losses in the last two quarters. So how should we look at bottom line also?
Vimal Kumar
Yeah. Definitely, Mr. Ankur, that your question is relevant. Because last year everybody has seen third quarter and fourth quarter as a Best Agro, it was negative. So it was — for us also it was a learning. Because once we placed and it get returned some percentage and it was our more than provision. So this year in conservative we have taken the good provision for that which is provision is more than last year. But again provision is more, but expectation is less to return back because return back is not that much, because we can see now we have a good system of SAP, which is again this year only because that we have started from 1st of April. So we can see the liquidation from the dealer, distributor, and each of our territory managers also they’re involved in each of this SAP. So we can see, the liquidation is very good. So we are not expecting big return. Even the provision which we have taken now we can say there will be a growth in third and fourth quarter because of the less return according to provision given.
Ankur Kumar
Got it, sir. And sir, since first half is our seasonally strong period. So in terms of FY26, the next year, how are we preparing to have good numbers in that time?
Vimal Kumar
Yeah, because any of the product, because we are working on the new chemistry, new molecule. When we are talking about the new chemistry, new molecule, any of the molecule, when we start that of course in one year we cannot create that market. If you talk about our product which is our Ronfen, that is a brand name. That we have started in 2023 — ’22, exactly. But it was half year we got. So first year sale was around INR100 crore. Second year sale was around INR200 crore. So this year, I mean, this financial year, we will cross more than INR270 crore.
If you talk about that kind of number, because any of the product, either it is a very good product for the farmer, very unique product. Still it has some time to create its own market in the — and farmer mindset. So each year it will grow. Because our product which we are launching that we are not launching 100% which we have patent, we are launching which is really commercial viable and also benefited to Indian farmers. Then that product we are launching and that we can show them what benefit they are getting out of it.
Less carbon load product. Because there is one example, I would say, like any product, if there is a 50% of the AI and we are giving that same product, same efficacy and the same in the 25%. So that create a really good value for the farmer. But farmer only will believe once they use and the first year use always will be less of any good product. And secondary will be high. Third year will be high. So — and each year we are again launching our at least two to three product which is in the different segments like a herbicide, fungicide or insecticide.
So if you see in that way, it is confirm, I can say that financial year ’26 will be a really good year. And again the coming year will be again very good. Because we have changed our entire selling pattern. It was earlier were B2B and was generic. Now slowly, slowly each and each year we will be a fully brand company to B2C company FY27. It will be 100% sales by our — two of our — both of the brand, Sudarshan and Best Agro.
Ankur Kumar
Got it, sir. Thank you so much.
Vimal Kumar
We are very confident about that. Yeah.
Ankur Kumar
Yeah. Got it. Thank you.
Vimal Kumar
Thank you, Mr. Ankur.
Operator
Thank you. The next question is from the line of Dishika Rathod from Bhairavi Finserv Consultancy. Please go ahead.
Dishika Rathod
Hello, sir. Am I audible?
Vimal Kumar
Yeah.
Dishika Rathod
I had just one question. Sir your receivables have gone up a lot. Can you comment on that please?
Vimal Kumar
Yeah, receivable — Yeah, so receivables are in-line with what we sold in last four months. So the receivables, if you take the revenue and if you add 18% GST. So more or less we are close to that kind of receivable. So otherwise there is no receivables which are pretty old also. So mostly these are all coming from the recent season.
Dishika Rathod
Okay, sir. Thank you.
Vimal Kumar
Thank you.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Saket Kapoor
Yeah. Namaskar, Vimal Ji and team, Vikas ji, and Sai, sir. Thank you for this opportunity. Sir, firstly, I would like to congratulate the team to come up with the results very early in the first 20 days of the ensuing quarter. So we hope that, sir, this practice will not be a one-off and we would be adhering to these good standard of corporate governance where good company — many companies are looking how investors can benefit with results also being declared within a fortnight. So firstly, I hope, sir, that we continue with this exercise and it is not a one-off. Secondly, sir, if you could give us some understanding on the sales return part. The number for the second quarter and also for the first half?
Vimal Kumar
Yes. Mr. Saket, thank you. Thank you very much, to give your encouragement and definitely we will try our best and to give result in the third quarter and fourth quarter also. And we will keep trying — and we always trying to give our stakeholders to give the comfort with the results dates and with our results also. And definitely because of the third and fourth quarter last year was not so good. So we have this year planned in such a way our system has strong and like, SAP is giving us really good thing. Because earlier, we have to merge the number, we have to take the number. Now everything is ready. So that is one of the example which we have given the result earlier. That is one of the things.
And if we talk about — what was the question? Yeah, sales return, right? Which, Mr. Ankur also asked the same question, so I have the reply. Because this year, season is good. And our product, we are chasing liquidation as dealer, distributor level also, as our particular TSM level also, so — and provision is also there. So I don’t think so that will give third quarter and fourth quarter. The provision is higher according to us, which liquidation we can see now. So there will be no big surprise that side. But of course, it can be a little surprise on the positive side because when there is no return which we are provisioning again, it can give us the good results for certain quarters.
Saket Kapoor
So we can expect the reversal, that is, the provision which we have made, we can write back the provision. That is what you are addressing?
Vimal Kumar
Exactly, Mr. Saket.
Saket Kapoor
Sir, what commentary — I heard you during the AGM and now today also. It seems that we are transiting into a different Best Agro altogether than what the company was. And now with the steps which you alluded in your opening remarks also with SAP implementation and also now our — taking inroads in the Southern market. So if you could just explain to us in somewhat more brief detail. What is this transition journey currently, which gives you the confidence that things would look very different than what the company used to be earlier?
As you very well mentioned about FY25, not only for FY25 but also now you are giving numbers for FY26. So if you could just explain to us what gives you that confidence and also in the Southern market, I think so, last time during the quarter one, you did mention that we have done lot of work wherein we will be capturing lot of market or we will be having our presence in the Southern market. And I think, so Q3 and Q4 are very relevant markets, very relevant periods for these markets. So if you could just dwell how — what are our preparations and how are things going likely to be?
Vimal Kumar
Thank you, Mr. Saket, for the question. Regarding the transformation, yes, certainly, the last two, three years has been a change in how we have been operating. What is our strategy been? What we would like to make, and what we would like to sell? And these transformations has not been based on the last two, three years, it has been based on multiple years of effort.
In terms of our R&D getting to a mature level where we are able to get patents, we are able to get the registration for the new patented formulation. And we are able to create a whole infrastructure which is agile enough to take care of the various geographies right from the North to South, East to West, and be able to deliver a good product to the farmers. This transformation has — is a little different from any other agrochemical company, I can say that. I can say that with a lot of confidence.
While we work on the patents, we have been able to transform these patents into products and we have been able to make these products successful in the market. It is a difficult challenge to be able to introduce a new product, get the farmer acceptance to be able to do INR50 crores plus to INR100 crores, even more than that in the first year of introduction of launch. This transformation has also helped us understand that we need to be able to reduce our B2B business which was obviously giving us a lower margin than the B2C business. The B2C business has also been effective in helping us to make a brand presence. And that is, the farmer is now able to understand that there is a brand which is called as Best [Phonetic] and which provides newer patented formulations which are affecting on the field.
This said, the whole Pan India distribution mechanism which is digitally now linked with SAP is also an important factor in our operational efficiency. There were certain learnings that we had from the last year which was in terms of increase in terms of our returns which was also the reason for that, was that fact that — there was our ability to understand the market demand and requirements. Those things have been put in place to the extent that we are now much more confident about what is the channel inventory and how much has been the channel liquidation.
This said, your second part of your question was on the Southern market. We’ve traditionally were strong in the Northern part of the Indian belt and to some extent the Central belt. We had a presence in the Gujarat, Maharashtra, Madhya Pradesh, Haryana, Punjab. Whereas our presence in the Southern market was a little bit on the weaker side. Today I can say confidently, we have a good, strong presence in Andhra, Telangana. And with the completion of the Southern market which is a very important part of the Indian geography and [Technical Issues] market, we hope to be able to have that complete Pan India presence. And this is very necessary, as the years go by and we introduce one molecule, two molecules, three molecules patented formulation per year. This will help us to be able to become, I would say, confidently a very good brand in India.
I hope, I answered your question.
Saket Kapoor
So sir, the confidence which you are alluding for quarter three and quarter four to be good — posting good numbers is on our penetration in the Southern market and better understanding of how things are in the Southern market. That will all attribute to growth, that is what you are alluding to?
Vimal Kumar
Yeah. That is in addition to that, some season has pushed because of this rain. Again I’m mentioning that October is also going well. So that is also one of the reason, adding to what you said.
Saket Kapoor
Okay. Sir, and about the international market, if you could just give an understanding, where are things in terms of the — developing our registration process in the different geographies of the world? And what kind of numbers can we expect in terms of revenue from the international market, sir? If some color would be given?
Vimal Kumar
Thanks for the question. The international business market development has been going on for the — I would say the last year. So we had a good number of registrations in international market, but some of these registrations were for older molecules and older formulations. We see that the opportunity for good margins and for good growth as well is under pressure from Chinese competition. And that is where we have been creating a strategy for the international markets also to be working on your molecules, your chemistry, which is one of the — which is the strombolian chemistry.
And we are also — one of the questions which was asked earlier was on the herbicide segment, which is something that we will be doing in terms of developing a market for herbicides and developing a production facility for herbicides also. We are also working on trying to get a little bit more into the bulk formulations and other things for our patented molecules. These things will take a little bit of time because registration process in many countries is an extended effort which could anywhere between one year to two years, three years.
And if you look at the Brazilian market, it could potentially go up to six years. So this is something that is a work in progress. The expertise that we have been able to gather in the Indian geography in terms of being able to market our newer products and new — and value that newer products bring to the farmers, we would like to be able to replicate that across the world. The last part of the answer would be that.
Being competitive with respect to vis-a-vis China is an important factor in our whole international strategy. And we are actively working on that. The development of China subsidiary is a step in the same direction, where we are looking at collaborative R&D to be able to explore international markets. We hope to be able to develop India as a manufacturing base where we can produce and be able to develop products, fungicides and herbicides to some extended patented formulations for the international market at a price which is very competitive, possibly the best possible price in the world. So those are some of the areas that we are working on.
Saket Kapoor
Sir, small point on the inventory. We have closing inventory of INR873 crore for September. So can you provide the split between herbicide, fungicide, and insecticides in percentage terms? In terms of the closing inventory.
Vimal Kumar
Yeah. Actually if we talk about herbicide because the more major which is INR873 crores, you’re talking about the major inventory which we have. We are selling in fact now in the third quarter because again I mentioned that October is pushed from the second quarter sale which we are doing in October. So that is also the inventory in the insecticide segment and the fungicide. And again, herbicide which we are preparing our new formulations and the rabi season. So that is the whole inventory which will be — end of the year like March ’25, you will see there will be significant changes in the inventory level.
Saket Kapoor
Okay. And then sir, currently, can you provide the mix [Foreign Speech].
Vimal Kumar
Exact product wise, I don’t have in front of me, but approx, I can tell you which can be number minus or plus but I can tell you majorly INR300 crore of insecticide and I can say the total INR200 crore can be the fungicide and the other will be the herbicide, like the balance. It will be approximate number because I don’t have exact number in front of me. Let’s just say….
Saket Kapoor
And Q3 sales would be majorly for herbicide as a product which we are doing for the rabi cost. That is the major sales proportion will be generally.
Vimal Kumar
Generally it is like this only. What you are saying, generally it is like this only. But this year have some changes. Changes because of the push season. The push season also will give us insecticide and fungicide sales also. And the herbicide as well as, herbicide is there already. Because third quarter majorly is for herbicide as you said, correctly as you said.
Saket Kapoor
And one small observation, sir. If we could state our numbers in terms of lakhs or crores that, that would be more suffice than reporting in millions. That is a small suggestion. And also in terms of the investor presentation that got uploaded today morning at 11:00 if we could work out with uploading the same in few hours after post the results that would provide us some more time to go through your investor presentation as these are meant for us only to go through. So only two hour time is there and this is a busy earnings season. So we’ll request the management and the IR team to take note of these two points also and if they deliberate merit then kindly look into the implementation.
Vimal Kumar
Thank you for your suggestion, Mr. Saket. And definitely we will work in it and from next time we will give it at the time of the result. Thank you for your suggestion.
Saket Kapoor
Thank you, sir. I will join the call and listen to all the slides [Phonetics]. Thank you.
Vimal Kumar
Thank you.
Operator
Thank you. The next question is from the line Ram Tavva, an Individual Investor. Please go ahead.
Ram Tavva
Yeah. Hi. Thank you for the opportunity. So I know that these patented products we’ve been claiming as game changer products from now and as well as the future. But I want to understand how is the feedback from the farmers on the effectiveness and the efficiency of these products. Except for Ronfen, the rest of the patent products, majority of them were launched this quarter, this half year, right? I want to know how is the feedback from the farmers.
Vimal Kumar
In fact, feedback with the numbers you can see, because feedback is very good. Not only for Ronfen, there is a one product Tricolor. And we believe this Tricolor one year will be the number — if I am talking about the number, the product is all are great products. I’m talking about the numbers. If you talk about the number of the Tricolor and the Warden Extra it will be bigger than Ronfen. I am telling you because the fungicide segment is bigger, the crops are more for this product. But again because these products like Tricolor, Warden Extra these are — the first year we have Ronfen. So this is now — this year we will reach up to INR270 crore. The Tricolor if you talk about this is again second year. So we are only at the level of INR122 crore. But one day we believe because that product is so great and multi crops. So this will be bigger than Ronfen if you talk about the number.
So you can assess, because these numbers is not so easy for any of the product in the country. If any product, any new chemistry, any new thing it will take much, much time to develop that product. But the product, if you don’t have the right efficacy right — if they not benefit the farmers. So definitely we cannot get this kind of number. If you talk about the growth of the patented molecule in our — in Q2 or even that has grown up to 38%. That is our PPT also, you can see, which we have loaded there. So that is 38%, approximately, we have you know the patented product in branded sale.
So if you see that number is not easy, INR100 crore any molecule in India, you can count. Because there is no that such big market, you cannot. So that is — in the second year, if we are INR100 crore plus. So you can assume that will go up to INR250 crore, INR300 crore each product. So that without efficacy, without result it is impossible. Farmer is very smart. Because for farmer this cost is not only the cost of bottle, for the farmer the cost is as a percentage per hectare or per acre I would say.
So per acre, the cost is approximate for the pesticide seed. And if you talk about the fertilizer, that is the only input cost goes for the farmer. So they are very smart, whenever they get the benefits from any product then only they will use and this kind of number we can get.
Ram Tavva
Okay. But I remember a couple of years back when you launched Ronfen that you’d be achieving around INR800 crore numbers starting Ronfen [Phonetic] in the next coming two years or so. But now we are lagging behind in a significant way of just INR270 crores after two years’ launch. So is this a pattern that this will slowly grow or there is something you’re missing or there is some inflection point that is still pending over this?
Vimal Kumar
Yeah, Mr. Ram Tavva, we — there may be some communication gap because I don’t remember we have said somewhere this INR800 crore, it is INR8,000 crore we have said already always. and INR8,000 crore means the Ronfen in which segment we are giving in the second batch that is INR8,000 crore of segment where we are using Ronfen product. That was the commentary which I [Speech Overlap]
Ram Tavva
INR8,000 crores, I remember you mentioned 10% what is the market share in the next couple of years?
Vimal Kumar
Yeah. Yeah. Definitely, definitely, definitely. It can be definitely INR800 crore. There is no doubt, but it will take some longer time. It cannot be one year or two year because any of the product if you seen an insecticide, I would say, the name because that is our product also CTPR. So that product in first year itself was maybe not even they are able to sell the company not able to sell INR120 crores. But the — but after 15 years, the product they were selling it was INR2,800 crore of single product in the country. So that is the example there. So, it will take some time because first year there is a INR10 crore sale and after 15 years the sale is INR2,800 crore. So always we are ambitious about our product, but definitely the 10% you’re talking about INR800 crore. So also, hopefully, we will get in any of the year, but it will take some longer time, of course.
Ram Tavva
So, when do you get the feedback pertaining to this newly launched patent product just half year like Nemagen, Warden Extra? From the field when will you get the feedback on the efficacy and efficiency?
Vimal Kumar
Again, I will say you because we have number of patent but which we introduce to the market only which have really, really commercially viable to the farmer, to the company also we have good profit, we take that you know advantage only with that commercially which is viable product to the farmers so Warden Extra or Nemagen they’re fantastic products which we are getting the feedback from the market itself in the first year. Even Nemagen we have launched just a few months back like two months back and in two months we are getting more than INR50 crores of sale of Nemagen. So, we are expecting this year if we can cross INR100 crore that will be big achievement for the Nemagen kind of product because that is again CTCAP [Phonetic] there. And in earlier commentary, because you remember my — maybe a rare commentary, so you have also seen I have always given the guidance like CTPR, we are not focusing only on the CTPR but for the combination we are talking about. So that is an Nemagen one of the example where the CTPR, Novaluron, and the third molecule. So there is a combination of CTPR which are upcoming not this one only, more also in the pipeline. So definitely Nemagen this year we are targeting like INR100 crore and hopefully, we will get that. But it was a little delay in the registration, so if not, but next year it will be very big product, Nemagen also will be very big product.
Ram Tavva
Okay. So without Sudarshan Farm Chemicals numbers, I reckon the Best Agro numbers would be less than the last year because solution from chemical systems are recorded at INR240 crores odd in H1. So, it means that without Sudarshan Farm Chemicals we are running negative in terms of top line as well as bottom line, with the Best Agro products.
Vimal Kumar
No, that’s not the case. So Sudarshan Farm Chemicals last year was like a third party and we were supplying to them. So some part of our sales was going as an institutional business to Sudarshan Farm. But this year because we are consolidating it, it’s like our own entity. So it’s not that last year was low and certainly this year entire Sudarshan [Indecipherable]. So last year we were selling it as an institutional sales to Sudarshan Farm.
Ram Tavva
Okay. And are we anticipating any more patented products this year? I know, first half you already launched three products. So any more in the next six months.
Vimal Kumar
Yeah. Yeah. That I already mentioned in my commentary also, there is one herbicide which is Shot Down that is also coming in the third quarter. But third quarter only have few sales for the Shot Down. But in fourth quarter you can see the results for this Shot Down also that already we got the registration last month, I mean, this month October we already covered that Shot Down, and that we will start selling in third quarter and more two product which I cannot announce right now but that product also in the pipeline which we will quarter four and quarter one of the next year — financial year we will launch.
Ram Tavva
Quarter one and quarter four of the…
Vimal Kumar
[Speech Overlap] you can say, yeah, quarter three one product, and quarter four and quarter one again will be one product. So three product which is upcoming in the coming months.
Ram Tavva
Got it. Yeah. Thank you. That’s all from my side.
Operator
Thank you. The next question is from the line of M. Hemant, an Individual Investor. Please go ahead.
M. Hemant
Hi sir. Good afternoon.
Vimal Kumar
Good afternoon.
M. Hemant
Yeah, my first question is related to this B2C business, where we have done around INR800 crores in H1. So with the help of SAP are you getting any number, how much of this INR800 crores was already consumed by farmers?
Vimal Kumar
How much consumed by the farmer, that is your question, Mr. Hemant.
M. Hemant
Yes. Yes. Out of this INR800 crores still date.
Vimal Kumar
Of course, we have some data from the dealer distributors and our managers, but really I cannot say how much used by our daily farmer because farmer use one bottle. So, I cannot say the real number of the farmers, but definitely, we can assess and we can give an idea, mostly says how much sales is the liquidation — completely, say, liquidation. Because one what we think you know when farmer buy any product which is liquidation only because farmer doesn’t give any return to any distributor or dealer that is what we know. So, we cannot see the farmer sale, we always think it is an end sale for any of the company.
M. Hemant
What is the farmer sale out of this INR800 crores?
Vimal Kumar
You are talking about the inventory of the dealer and distributors?
M. Hemant
Yes.
Vimal Kumar
Yeah, that is, that I can say that mostly say, again I’m repeating the same thing. Mostly sale has happened and there is no much because we have taken suppose provision of INR100 crore for the return from the dealer and distributor. So that we can say that is not even INR10 crore you will get, as of now that is the situation. But as a number — conservative number, we always keep that provision.
M. Hemant
Okay. Okay. Sir, and whatever product portfolio we have for herbicides, so do we have any products that are high margin which will be sold in Q3 and Q4?
Vimal Kumar
That is again Shot Down and last year also we have along the Pyroxasulfone and we have given to some MNCs company, this year again we are giving, so that sale will be in third and fourth quarter. Pyroxasulfone is one of the herbicide which is a wheat herbicide which is the user that is particularly wheat segment. And if you talk about the soybean, groundnut, that all four, we are upcoming with our patented molecule that is Shot Down.
M. Hemant
Okay. Okay. Sir to achieve this INR400 cores — INR450 crores of revenues per quarter maybe for next two quarters. If we compare it with last year, I know the season is very good this year. But subsequently, prices were down maybe 20%, 25% for most of the formulations. So is it really possible for us to do more than 100% volume growth in Q3 and Q4? So then only we can achieve this 450 number.
Vimal Kumar
Yes, Mr. Hemant, your question is itself is answer for company like Best Agro because you’re talking about the — you know, the price is reducing for the generic, not for the specialty molecule that is in our hand only because we calculate as a per acre or per hectare, which goes to farmers, not as a chemical prices, chemical prices in down that is benefit to company like us because we are selling our proprietary molecule, not the generics. So that — you can say about generic there is a problem, but if you talk about specialty molecules, there is not a problem even it is a benefit to the companies who are doing specialty molecules.
M. Hemant
So even this 100 — more than 100% volume growth is possible.
Vimal Kumar
100%, 100%. So, it is not 100%, it is INR800 crore which is easy to achieve.
M. Hemant
Sorry, sir.
Vimal Kumar
It is INR800 crore, which is easy to achieve.
M. Hemant
It is easy to achieve. Okay. Sir, and in terms of this Ronfen, Ronfen and Cubax Power, this combination is go to product in our region for chili crops majorly. So are we planning to get any patent on the technical that is there in Cubax Power?
Vimal Kumar
100%, because Cubax Power is not our patented molecule nor Ronfen is our patented molecule but better than Cubax Power that product we will launch in the next financial year, I hope quarter two. That will be better than Cubax Power and…
M. Hemant
That will be patented products or…
Vimal Kumar
Patented — it will be a patented product to the Best Agro.
M. Hemant
Okay. Okay. Because most of the farmers they are having this Cubax Power for [Indecipherable]. The feedback is also good for this product when it is in combination with…
Vimal Kumar
Yeah. Yeah. That [Speech Overlap] our Cubax Power also have very good technology for formulate and that is also going not only this one and also going for the black grapes also which is very big problem for the chili, especially chili farmer in Southern region. So that we are coming with a very good solution, effective solution and no one has that kind of solution in the country that will — we will launch in second quarter of next year.
M. Hemant
Second quarter of next year, okay. Sir, and how many patented products we are planning to launch in next two to three years?
Vimal Kumar
Two to three years if you are talking about, as of now if you talk about the commercial sale we majorly only have five product which this year we are selling. If you talk about last year there were three products. If till now we would talk about we have five products, but in the pipeline, we have three product which is again very good in quarter four, quarter three, quarter one of next year. So I can say, two to three product at least minimum three product, I would say each year we have in the plan, but definitely I cannot say it is a three product or four product because it depend on the how we get the patent and how fast we can — registration, it depend on that.
If you talk about the pipeline, pipeline is very strong. We have — as of now if you talk about the applicant of the patent and registration that is more than 100 products which we have but we have to select which product for which segment we have to launch. That way we are working on.
M. Hemant
Sir, when you say two to three products per year, is it the patented products or total overall products?
Vimal Kumar
No, only patented, [Indecipherable] because your [Speech Overlap]
M. Hemant
Only patented will be two to three per year for the coming years.
Vimal Kumar
Yes, Mr. Hemant.
M. Hemant
And majorly in the market what I am seeing, if you see the product like Ronfen. If you see the technicals inside Ronfen formulation, those are generic technicals. So because of that, we are having high competitions from products like SLR, 125 [Indecipherable]. So, do you have any plans to launch patented products with some specialty technicals or patented technicals?
Vimal Kumar
Yes. Let me come to the point, because Ronfen, you are correctly said, the Diafenthiuron, Pyriproxyfen, and Dinotefuran. Dinotefuran again there is a chemistry, which is new chemistry, which is the Ronfen. If you talk about tricolor that is a Trifloxystrobin which is again a new chemistry nobody has launched this product in India except one MNC, which is the biggest MNC in India, they have this product and after that we are the in that chemistry. And no — the third company as of now in this chemistry. And as we can see the pipeline coming five years nobody can come because of some registration reason and because anybody has to come with a new registrant of this product because of which product we have registered that is patented to us. That is again new.
If you talk about Warden Extra, again there is Trifloxystrobin. If you talk about Nemagen, there is a CTPR, Novaluron that is again not very usual, I would say. And Defender, again there is a Pyraclostrobin which is again new chemistry. So of course, Ronfen out of three, there is a two, which you can say you are correctly said there is a product which is available in the market. But third one also available, of course, another one is also available, but I would say is the specialty molecule out of that. But then in other product, we are — we also have in our mind that, that should be one or two products in each combination should be specialty molecule [Indecipherable].
Operator
Thank you, Hemant, for your question. Ladies and gentlemen, we’ll take this as a last question. I now hand the conference over to Mr. Vimal Kumar for closing comments.
Vimal Kumar
Yeah. Thank you. Thank you, everyone. We remain committed to leveraging on our product innovation, investing in R&D and technology, enhancing our brand presence while maintaining strong financial discipline to drive sustainable and profitable growth in the coming quarters. If you have query — further query, please feel free to contact with our Investor Relation team. Thanks for your questions and thanks for your support. Thank you to all the participants today. Thank you.
Operator
[Operator Closing Remarks].