Best Agrolife Ltd (NSE: BESTAGRO) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Surendra Sai Nallamalli — Head – International Business
Vikas Jain — Chief Financial Officer
Analysts:
Unidentified Participant
Deepak Poddar — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and 9 month FY25 conference call of Best Agrolife Limited. As a reminder, all part. Participant clients will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touch tone phone. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantee 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 now hand the conference over to Mr. Surendra Sai for his opening remarks. Thank you. And over to you sir.
Surendra Sai Nallamalli — Head – International Business
Thank you very much. Good afternoon and welcome everyone to the earnings call post our third quarter and nine months ending of the financial year 2025. I will talk briefly about the industry landscape and will explain the business while Mr. Vikas will take you through its financial performance. So let me start by saying this season has not been kind to our former customers and the agricultural community, especially in the south. This is a region from where we expected much better performance. The recent cyclones in the South India brought unusual weather patterns, caused delays in the monsoon cycle and extended the period of rainfall. This pattern affected the crop cycle. Primarily the states of Andhra Pradesh, Telangana and Tamil Nadu were impacted the most. We had been expecting stellar performance from these states but these witnessed adult seasons. At the same time, chili prices have dropped by around 35% from an average of around 19,000 rupees per quintel in January of 24 to around 10,000 to 12,000 this year. This puts significant financial pressure on the farmers. They were in cash touch and making them and it made them reduce their outlook in terms of the crop protection products. The financial pressure also delayed some of our expected payments. A similar unexpected performance was also observed from cotton growers. We were very initially very confident that despite the delayed start of the monsoon, the season will pick up and result in good numbers. However, the work continues rainfall but disrupted critical herbicide application as well as the granule treatment. On the paddy side, farmers are generally habituated to carrying out at least five sprays per season. But this year they were able to manage only two sprays. All these at the end of the day impacted the demand side. We have observed that seasonality and a changing market scenario. Significant agility from our side to balance changing market dynamics and we need to be able to respond to the correct schemes and the correct sales push. This has become extremely important in our shift towards the B2C business. Given that we have been shifting towards the B2C model with an expanded branded product portfolio and an expanded dealer network, we observed this quarter the absolute need for Business Agile to focus on timely liquidation. We focus and this requires a huge amount of focus from the face of the marketing team. We will be implementing actions to identify areas where the performance has not been as expected and we are absolutely certain that we need to take corrective action. We realized that our B2C push needs us to be very sensitive to the changing ground dynamics. We intend to have this finely tuned. We have invested in building our sales team especially in the southern part of India and this shift was very essential for our long term growth and Pan India presence. This push also affected our profit margin in the short term due to a higher cost base. Although this change is crucial for our future, it is putting some pressure on our profits Right now. Correction and improvement are our primary focus. No doubt this current season was a tough one for us, but it also offers valuable lessons for us for the future. Products that need fewer applications will help the farmers stay productive even when the weather is not ideal. Our product portfolio are designed to improve or rather reduce the number of spring. We will continue to work on that. Development of resilient products are the key and focus on RNT and linking homegrown products to the farmer is important. Our portfolio of patents continues to grow but we will regularly and carefully introduce the key products coming to some important updates during the quarter during this quarter we have announced the formation of a strategic partnership between Bentz Agrolev and Shanghai Epon Chemical Co, which is a publicly listed agrochemical manufacturer based out of Basin Shine. I can this partnership formula and MoU will focus on joint research, manufacturing and developing new products for the global market. This partnership will also explore new opportunities for product registration and a potential factory cooperation through joint venture in leveraging best practices to define market reach. Eastern Chemicals specializes in production. And export of herbicides fungicides and the company holds a significant number of registration across a large number of international markets including Brazil and Yetta. We are very happy to move from a buy sell relationship to a cooperative RD based relationship for the global market. This was shift from a typical MOU between an Indian and Chinese companies. In another positive development the checklist has been granted a patent by the OAPI or the African Intellectual Property Organization. This is patent for long term and this is a 20 years valid patent. We also have been granted granted a patent by the Indian Patent Office for a new manufacturing process for Chenoxy Methyl Lyoxylate. This is an important patent for us as this is a precursor for the manufacture of Sorby fungicides. This adds to our plan of deriving backward chemistry for the manufacturing of important fungicide such as Thrasoxyn Methi and Shafroxy Strokin Concluding we recognize the need to enhance our marketing effort and optimize our sales structure for performance. We are increasing our focus in branding, awareness campaigns and demand generation activities to solidify our business in the market. Simultaneously, we are evaluating the structure of our sales team for agility, efficiency and performance. Let me put it this way, our complete results are not to our expectations. We view them as an opportunity to fine tune our operations for better margins. We intend to tighten our belt by reducing costs by optimizing our operations and extracting maximum efficiencies. Despite the challenges, we remain confident in our long term strategy. We understand that there will be demand fluctuation but we are focusing on delivering value to our stakeholders, strengthening the product portfolio and our R and D efforts will no doubt increase us. We will remain focused on stabilizing our financial performance in the upcoming quarter. We intend to bring down costs as a percentage of sales and be better equipped to navigate current and future challenges. Our primary focus as always continues to be on IT generation, technical R and D, new formulation, research and development of innovative products and we will continue with renewed seeds. Thank you for your support through this time. We look forward to addressing your questions that you will have during the call. I will now request our CFO Mr. Vikal Jain to take you through our financial performance over to you.
Vikas Jain — Chief Financial Officer
Thank you Saiji and good afternoon everyone. And then to our performance. The first few quarters of FY25 saw a strong demand for agrochemical products primarily driven by an on time. This led to all agrochemical companies, including ours, to push substantially stock into the market in anticipation of higher demand. However, as we entered Q3, we faced a shift in the market dynamics. While Q3 significantly impacted crude activity, the lack of supporting prices of key commodities like tomatoes and cheddar directly influenced farmers willingness to invest in the crop production solution. Additionally, with healthy crop conditions across the country, the natural resilience of crops further decreased the perceived need for pesticides. All these factors combined to create a challenging revenue environment and weak cash flow in the market. Adding to these challenges, in addition to weak market sentiment, increased competition drove down prices across the sector. The aggressive push for sale regarded a price war, further tightening margins across the industry. Our revenue from operations for Q3 of about 25 crores. 274 crores compared to 315 crores in Q3 of FY24. There was an increase in branded business by way of new product introduction and the volume growth from the existing products. This growth was compensated by reduction in the institutional business by around 72 crores. Further, there was around 20% reduction in the product prices. In terms of profitability at Q3FY25, EBITDA income was around minus 6 crores and we reported a loss of 24 crores for this quarter. There was significant improvement in the gross margins from 23% in Q3FY24 to 32% in Q3FY25 due to higher sales of branded products. The loss majorly is on account of foreign currency loss of approximately 11 crores. Further, due to lesser institutional business, there was impact on the top line and the bottom line. Also, the investments that we made on the manpower and branding affected our profitability in the short term. But we assured that this will benefit in the long term. All said, an important takeaway from this quarter is that we need to focus on improving cost efficiency by reducing fixed costs as a percentage of sales, we’ll be in a better position to handle the current challenges and strengthen our financial future. We are focusing on cost optimization this quarter and are willing to reduce cost further. With respect to cash flows. Cash flow from operations for nine months was positive, 177 crores. And for the quarter it was 132 crore. Hand over back to Saiji.
Surendra Sai Nallamalli — Head – International Business
Thank you very much. I guess as a closing remark, I would like to say that in short, Q3FY25 presented several challenges. But we are absolutely confident that this continued effort to optimize. Operations and strengthen our financial strategy. We will be better positioned to overcome these hurdles and we intend to be able to take a wake of sustained and profitable growth in the coming quarters. Thank you all for joining us today. We will be ready to take the questions now.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1. The first question is from Ram Tawa from Equinox Capital. Please go ahead.
Unidentified Participant
Yeah, hi, can you all hear me?
Operator
Yes, please go ahead. Yes please.
Unidentified Participant
So I have a couple of questions. So what baffles me is in the last earnings call which happened in the month of October, you are very optimistic that this quarter will be very good, even the next quarter and around 1800 crore something odd will be the top line for the next two quarters. And October means almost 45 days of the season might have gone but suddenly why is a poor performance of this sort that the performance was not so good then when compared to last year? Last year. So can we just add some color towards it?
Surendra Sai Nallamalli
Yeah. So as you mentioned, first thing is with respect to branded business, we are improving as we have been saying since last few quarters and that also can be seen in the improvement in the top line as well as in the gross margin. However, this quarter’s reduction is mostly because of the reduction in our institutional business and also that we have taken good provision for future expected sales returns. So last year’s facility done in Q4 was also higher. However we have taken cognizance of that and has provided in Q3 itself so that we don’t have a similar situation of Q4 like we had last year so that you see that we have little higher losses in this quarter. So this quarter Q4, what is the expectation and what will be the top line or bottom line? Closing numbers, tentative numbers by the end of the year. So still the season is going on. Only thing cannot give an exact number to say what could be top line, bottom line, but it will not be the. What we had last year, it will be a reasonable quarter even though we might have some losses but not to the extent what we had in previous year. So the top line like you promised, 2200 crores is not achievable this year. I mean last quarter you guys promised that it would be around 2000 plus crore top line. So is it achievable or is it not? So 2000 plus looks may not be able to achieve that in this year because of the factor that the technical sales were a little lower and also few of the important crops where we have very strong presence, especially in the south didn’t pan out the way we thought because it is just about November. We were pretty confident and pretty much on the target to achieve all those numbers. But based on current situation what we see, we will not be able to touch 2000 crore. But yeah, considering the profitability and all cost margins and all those working capital on those parameters will be improving but will not be like the worst situation like what we had in last year. Q4. So there are two things which is there. So, so overall we have what we wanted to achieve and what we wanted to expect in Q3. That expectation was what would have been carried forward and that optimism would have carried Forward into the Q4 and the eventual year closing. We have observed that the Q3 performance is not up to our expectations. We did expect too much better. This would certainly have any impact on the year closing. That said, the two things that are very positive for us but we see that the margins from the branded sale continues to be good. This is something that we take it forward. What we need to do is to be able to see ensure that the sales cycle and the marketing cycle is agile enough to be able to run on all cylinders despite challenges being on the crowd. Now this is something that is something that we are very serious about understanding the reason we will take these as a lesson. And yet we are already into the few 4, 45 years. These changes will take a little bit of time to be able to come into play. But we are very cognizant of the fact that our agility and our ability to handle the sales in a much better manner is something very, very important for us. I think I have repeated more than once but we consider this as a serious quarter but we will be taking action.
Operator
Thank you. The next question is from Raj from Arjun Partners. Please go ahead.
Unidentified Participant
Hello, Am I audible?
Operator
Yes. Q
Unidentified Participant
Quarter to fall. We said that quarter three is looking good and things are on track. So I just wanted to understand that where, when we said that what assumptions have been made and what exactly happened and where exactly we got it wrong. So with respect to expectation, I think the high expectation, including us and all the industry we had seen in November also. So where it went wrong was because if you remember that this year the rainfall had extended by one more month. So this additional rainfall, what we had that issued created issue with respect to various crops, especially the crops where we are a little stronger in chilies and tomato and cotton. So later on we were still hopeful because the rain got extended and we were still hopeful that the liquidation would happen. However, it did not happen as per our expectation. So it was just in the month of December that the market realized that. Okay, now that’s how it got reversed. May I not figure for sales return for Q3FY25? Sorry, I just wanted to know the amount of sales return we had in this quarter.
Vikas Jain
Sales this quarter was 274 crores. No, no, I’m talking about sales return. Yeah, sales return this quarter we had close to 180 crores. Sorry, 130 crores. 180 crores was in quarter 3 FY25 compared to 130 crores. And last year it was around close to 160 crores. So this, this year it was around 130 crores. Whereas till about mid of October, till end of October, November we were expecting it to be around 80 to 90 crores. So this additional 30, 40 crores backwards in our top line as well as bottom line. All right. And sir, going to Q4FY25 we had reported a loss of around 72 crores in Q4FY24. So this year’s Q4 is also looking the same as last year’s Q4. So I repeat again, will not have such high losses what we had last year. So this will be a better quarter than what we had last year. The losses will not be so high.
Unidentified Participant
All right, answer. How about FY26? Would you like to comment anything on that?
Vikas Jain
Fy26, I think few change in strategy which we are doing now with respect to our cost optimization. So what we have realized is okay, we have built up a good team across India. However, based on performance of various zones, what we have been having since last one month, we understand that there are various places, various territories and regions where we can consolidate. So we will be consolidating all those and ensuring that the per employee performance is much better than what we had this year. So this year we had much higher strength of employees. However, the per employee performance didn’t come to our expectations. So we are consolidating various regions to ensure that each employee we are getting the number what we expect. And based on that next year also that few of the products which we have presently close to eight patented products, wherein half of them were released this year itself, we see a full potential coming next year. So next year would be revenue would be for all these products with full potential plus with current cost optimization, what we are making will have a much lower opec. And already with respect to working capital, we see that there is an increase in working capital varying because of the dumping of last year we had much higher inventory. But this year we see that the inventory levels also will go down. So across all parameters, we see that the performance will be much, much better in FY26.
Unidentified Participant
All right. Okay, sir, thank you. All the best. Can I just add just a few lines onto that?
Surendra Sai Nallamalli
The key takeaway for us from this particular quarter is that there needs to be a very good way of being able to monitor each territory’s ability to change and take corrective action despite any changes, patterns and the cropping patterns. And that is something that we will be doing. We also have been able to identify certain areas of, I would say inefficiencies and which is what we’ll be addressing them on a strong footing.
Unidentified Participant
All right. Okay. Okay. So thanks. All the best. Thanks.
Operator
Thank you. Next question is from Deepak Podar from Sofia Capital. Please go ahead.
Deepak Poddar
Yeah. Am I audible? Hello? Hello? Yeah, I’m audible, right?
Operator
Yes.
Deepak Poddar
So. So, So I just wanted to understand. Now I have been tracking this company for some time now. I mean, what, what I have noticed that. Whatever we guide, we always fails to achieve, basically. So I mean where is the gap? I mean Even last year FY24 we were targeting some 30% growth, 20% EBITDA margin. We fell short by a huge margin. This year also I think we are targeting, we were targeting 15, 20%. I think we’ll have a negative growth, right, Given the. So where is the gap basically? I mean why is that we always fail to achieve what we have been guiding or what we have been saying. Hello, hello,
Operator
Yes we can hear you, so please go.
Vikas Jain
Could you please Repeat your question, Mr. Podar?
Deepak Poddar
Okay, so, so, so, so what I, I was asking that. I’ve been tracking this company for some time and what I’ve noticed is that whatever we have been guiding, even for last year also we had failed to achieve by a huge margin. I mean last year also we were targeting some 30% growth and 20% EBITDA margin. We failed miserably. And this year also I think the gap is too huge. I think we were targeting 15, 20% and we would be seeing a negative growth. So I mean where is this gap coming? I mean how is that always we fail to achieve what we have guided or targeted for ourselves. I mean can you throw some light on. That would be very helpful.
Vikas Jain
Yeah. So as I mentioned that we had built up a sales team considering that our numbers and the growth will become from this because we have built a Pan India team and also we had the products to back them. However this year, obviously two years we have been just about managing at the same level. So one is there is an improvement in the branded business and a significant improvement which is the way we are moving forward. So the reduction, what you see majorly is coming from the institutional business which is a conscious decision to reduce. So we are having success in building our brand and able to do it successfully. However, what you see is that the initial issue with respect to higher OPEC that has been built, however the benefit of which, which we should be getting in next two, three years. So yes, we are not being able to match the 20% number what we have been saying since last six months or so. But the main reason for this is that first we have developed 15 however that sales based on climatic conditions and the seasonal factors, we are not able to achieve that. So that we are rationalizing now in this quarter because we understood, okay, building a team immediately and trying to get results has not given immediate results but still able to give negative impact on this. We are optimizing our cost and we are consolidating our people to have that improved performance, so. Yes, we are learning from whatever we have done in last one year and certainly we see improvement in future as well. But I mean in terms of margins, I understood what you said. But in terms of top line also, I think we fell short with a huge margin. Right. I mean, is that something that our product are not getting traction? That’s why we are getting so high sales returns and our products are not good. So what is the thought process there? I mean there’s a huge difference of what we expect and what we are actually achieving. Not in this year. I mean it’s two year in a row, right? Yeah. So again that’s right. When we see number as a value figure, but when you break this number into various businesses, so branded business, we have done tremendously well. We have been growing since last two years at 50 to 70%. So that we have been able to do the top line reduction is basically because of two reasons. One is the institutional business which we are trying to reduce. That’s the reason you see that the similar top line not being able to achieve. And secondly, this year there has been a price reduction of close to 20%. So if you see current numbers with 20% reduction, our volumes have been much higher. But because of the 20% reduction we see at the same value. So when, when did this price reduction happen? I mean, I mean why we were as an investor, we were not kind of informed during the last call that this price reduction is happening. In my previous call also when you seen between June and September, we had indicated that there was a huge China dumping which has happened and in our previous quarters also this 20% was there and we had guided accordingly that there is a price reduction of 20% in earlier calls as well. And with respect to sales return generally the trend is that in case you want to grow, you need to place the material well in advance because almost all the players are having good amount of inventory with them and would be ready to place at any point earlier than the season. And which we also did considering we have pretty good products. But now once we are in the season, we see that various crops which vary, they are pretty strong, doesn’t work out as per our expectation, then there are little higher sales return. Yes. So we have factored. So if you see we had done provision last quarter as well and we have done this quarter as well for the coming quarter. So there might be some increase in the sales return here and there. But yeah, it doesn’t impact our. But in terms of price reduction, if you would have indicated, but you were quite positive on third quarter numbers, right? I mean, you were saying will not see any sales return and all. I mean, in spite of, I mean, this price return, if the price decrease you would have indicated last quarter. But you are still very positive on third quarter performance, right?
Surendra Sai Nallamalli
Yes. There’s a big disconnect right with what we were saying. In spite of you knowing that price were reducing, your performance would not be good then because price price is reducing and then it would be very difficult for farmers to then invest in in agrochemical product that you have. Yes. Mr. In fact if you talk about, you know, if you see what this third quarter there is, if you see, you know, our expense side that is much higher, but if you see our, you know, the gross margin are still there. So the basic thing is if I say now, you know, in a broader term, you can say we are into the B2C business where this kind of thing we have to take because B2C business we have increased a lot from last year to this year and the last year to the previous last year. So that you can say that is the main reason because when we go into the B2C their expenses and everything will be the same where if we the third quarter if sale is not there or either any impact so that will come. So we can say it is not for always but for this year it is there and we are hoping that this expenses we think like investment on our brand business that next year will be very good that we think.
Operator
Thank you. Mr. Mullar, we request you to rejoin the queue for follow up questions. We move to the next question from Preet from company Wealth Financial Advisors. Please go ahead.
Unidentified Participant
Yeah, sure. So good afternoon everyone. I still want to continue with what the last participant was saying. So here is I think the company that you guys are, you keep on doing same things in concals which you have no idea in following up.
Surendra Sai Nallamalli
Let me give an example. Last con call the numbers were released in the second week of October because the reason you said is that because the SAP system is there, you get all the information earlier, you will be able to give data and all subsequent results will be early now because the December results are bad. The results are pushed to now the 14th of this month. I mean this really says that calls information is given without any seriousness. And to me this is gross negligence also and significant lack of corporate governance. I mean why would you keep on saying anything that you say without any intention of following up or sending clarification which you don’t follow up. The management here is seriously lacking and should be held accountable for this kind of gross negligence.
Operator
Yes. Mr. Preet, thank you for your question.
Surendra Sai Nallamalli
In fact about the delay of this you are saying earning prime in the results that the delay is not for any intention on. Anything because that doesn’t serve any purpose. Sooner or later that has to be done. And we have declared our results, the results delay just because of our internal meeting with the brand business, with the reviews, with the next year planning. Because generally year plan we do from in January and February only. Even now, even our budget meetings are going on for the next financial year. That is the main reason which we are busy in this. That’s the only reason for delay. Your first question is delayed. That. That is the only reason.
Vikas Jain
Thank you. Yes, we’ll move to the next question.
Operator
The next question is from Komal, from SK Investment. Please go ahead.
Unidentified Participant
Yeah. How do you think you manage the balance sheet and what are the plans for fundraising? I mean currently you are having receivables over thousand crores and inventory over thousand crore. And no bank will give you debt and no equity investor would be interested. It all boils down to confidence. And how will you be able to go through this? That’s my first question. So with respect to working capital, so compared to last year’s cash flow, we have been able to generate close to 170 crores in nine months positive cash flows and 32 crores for this quarter. For inventory. Yes, last year it has. It was higher because of period reason and failure of complete richer. So inventory has been going down. So presently it’s only 700 crores. We make it clear because I’m not able to understand. Yeah, so I was saying that.
Surendra Sai Nallamalli
Okay, let me repeat. With respect to overall cash flows, we have been positive 177 crores for nine months and 32 crores for the quarter. Our working capital was much higher last year. And this year we have been able to generate positive cash flows. So our six months was profitable as well. Now this quarter, because of various reasons, what we had mentioned, we had some losses. Our inventory and receivables both put together are much lower than previous quarter as well as previous years. Our loans we have repaid during last nine months. So there’s no issue with respect to any bankers not giving us loans. Whatever we had, we in fact we have repaid loans in last nine months. So we don’t see anything with respect to balance sheet. What he had mentioned, what is the current borrowing currently? How much is the debt? Our current borrowing is to give you the exact number we are. About 500 crores.
Unidentified Participant
Okay. And are you sure that mostly, mostly is working capital side?
Vikas Jain
Yeah, all are working capital. Yeah. What about the preferential? Because you have allotted at some 650 odd rupees. Right. And are you sure that you’ll be able to receive the remaining amount? What are the thoughts there?
Surendra Sai Nallamalli
So we have already received the 25% committed amount from the investors. And with respect to balance, basically this is a long term investment which our investors have shown on us. So one quarter difficult performance will not rate with respect to our overall performance of the company in future as well. So we obviously see a better future for the company and we are pretty confident because people have invested at 640, we are pretty confident that our share price will be back to those levels so that they feel confident to pay the balance 75% as well.
Unidentified Participant
Okay, good. Coming to the business front, I have question. When you say you are doing branded 64% for H1 and rest 36% is B2B.
Surendra Sai Nallamalli
The 64% is totally manufactured. I mean whatever the hundred percent we are doing, right. How much is internally manufactured and how much is. I mean we are doing sort of trading. So, so the branded, when we say is oil manufacture itself, there’s no trading in the branded business. Most of it we produce all the important products and important products we manufacture in house. For few of the products. Obviously you buy from other companies and then sell directly. So that portion is pretty small. But most of our products are manufactured in house because most of our products still close to 50 to 60% is contributed by our specialty molecules and those are all in house. So when I take 64% branded, now you’re saying that totally manufactured by us and the 35% is patented.
Unidentified Participant
Right. And by next year how do you see this patented share going up?
Surendra Sai Nallamalli
So we had as we, as we said last 15, 20 days we have been moving around and having budget meetings with our solar teams. So we are pretty confident that and we have a special stress on our patented products. So we should be anywhere between 40 to 50% of our overall branded business coming from our patented products. So by next year what would be the branded and institution sales number? I mean percentage wise, overall we have been able to achieve the target itself to have around 65 to 70% of our business coming from branded the next year also. Will be in the same range. Okay, so next year you’re saying that patented share will go up, but institutional and branded will be same range.
Vikas Jain
Yes. So if I, if I may add just me, there will be some percentage of B2B business that will continue. Because at some point of time it does help us in multiple ways. Although yes, the margin may not be very high, but then the payment cycles are much more assured. And always in this sort of a business, what happens is we may be having certain products which are excess for us, but shortage for somebody. We may need some product which is a shortage for us, but excess is somebody. So it helps us a lot on the B2B business to be able to support the B2C. So the optimum percentage output would anywhere be between the 30 to 25 to 30 percentage for the B2B. So at this particular point of time, we wish to continue with the same strategy of maintaining a mix of around 65 to 70% as the branded business and anywhere between 30 to 40% as a B2B business. That is our strategy at this particular point of time. And what is the working capital days in B2B? So in. In B2B working capital days would be close to 90 to 120 days.
Unidentified Participant
And what about B2C?
Surendra Sai Nallamalli
Also we are falling in that range itself 4 to 120 days. But if, suppose if you want to lessen the balance sheet, what would be the strategy for us? Because we have to keep the balance sheet also in check, right?
Vikas Jain
Yes. We have done few policy thinking for last blended business. So with respect to various products, we will be getting cash prices for our product. So that will manage the balance sheet. So from we have enough bank loans to manage this and we are pretty comfortable with respect to the number what we have. And in fact, because we were carrying higher working capital from last year, which has been consistently decreasing quarter on quarter and this quarter also we are taking special stress on our working capital to reduce it further. So we will see improvement in our balance sheet going forward.
Operator
Thank you. Mr. Komal, we request you to rejoin the queue for follow up questions. We will move to the next question. The next question is from Saket Kapoor from Kapoor company. Please go ahead.
Saket Kapoor
Firstly, in terms with respect to the sales returns Sir, what were the sales written number for last time? Q4 as a percentage of sales also or just an absolute number. If you could get some color. So last year Q3 Q4 put together. So one was from the Karib season returned in Q3 till December and little bit in January and December’s return in Q4. So totally we had close to 22% from our sales which were sales written last year. Okay. Can you quantify the number?
Vikas Jain
Sir, as you were maintain maintaining that 130 was the Q3 number last year. This year it was 160 or 180. I think so 50 crore was the gap. Last year it was 160 and this year it was 130. Okay. Okay. So this was Q3 last. Last year. So. And what was Q4 then? Q4 we had around 70 crores last year. 70 crores. Okay. And this, this year since now the by now in the month of February you you would have an inclination how the sales return have been post the December quarter also. So any color you would like to give us on the same. So. So liquidations are still going on will not be give the number because still the season is going on. So this will be clear to us only by end of March. So by that time we’ll be able to give a have a clear picture. But you were. You were confidently mentioning that it will be much, much lower than the last year 70 crore number. So. Yes. Which understanding is correct? Sir, we need to wait or what you told earlier is correct. So both. Both are correct that way. So one is whatever expected sales we plan that is one thing. And the expectation expected return. So till now we are having a season which is going on and we’ve. We think that the returns will be lesser and our numbers last year because of even higher sales return from our key molecules were the reason that we had losses. But this time we have taken enough provision in December itself to ensure that we will not have negative gross margins like last year. So we have done provisions in December so that we take care of the returns what we will get in Q4 which was little lesser last year. Last year we didn’t add so much provision. But we have taken good amount of provision this year. Okay. And then now to the debt part. I think so that as on September we were not carrying any long term debt. So it is all the working capital requirement only that we we need for our business. Yes. As of now also whatever we have is all sort of working capital.
Saket Kapoor
Okay. And what portion is by in terms of foreign currency?
Vikas Jain
I think so. We had a 10 crore non cash item in terms of forex reversal, forex debit also to the pnl. So if you could just explain that part to us. How much is in foreign currency? Sir, so we have close to 400 crores which are payable which are in foreign currency. So that portion already. Because suddenly in December you would have seen there was a huge spike in the USD INR rates and which didn’t happen since last two years. But whatever deviation happened just about 30, 40 days. So yes, because of which this exceptional thing which was there in December we have close to 400 crores worth of foreign currency payable which we have to do.
Operator
Thank you. Mr. Kapoor. We request you to rejoin the queue before we take the next question. Request to participants to please limit your questions to one per participant. So that the management is able to address questions from all participants in the conference. The next question is from Hemant who’s an individual investor. Please go ahead.
Unidentified Participant
Hi sir. Good afternoon. Previous you are mentioning that you are trying to consolidate your sales P. But if I compare your B2C revenues with your dealer network on an average you are doing only around 10 lakh rupees per dealer per year. Which seems to be very less on the. Seems to be very less. Whereas other players are doing around 2525 lakhs to 30 lakhs per dealer per year. So don’t you think this number is very less?
Vikas Jain
Yeah. So you are right to two extent. One is okay compared to each dealer and number is lesser. And also as we mentioned earlier that compared to the number of people we have the per person efficiency also was lower. Because we expected based on our product portfolio that we’ll be able to ramp up our sales much faster. So yes, because of seasonal factors and all those reasons we’re not able to achieve those. But that is the target for next year. As you mentioned we have two distinct. One is to improve our dealer share, dealer wallet and also to ensure that our each employee has completed its performance target for the next year.
Operator
Thank you. Participants are requested to please limit your questions to one per participant. The next question is from Shagar SA who’s an individual investor. Please go ahead. Sagar Shah, you may go ahead with the question.
Unidentified Participant
Hello, I’m audible. Yes. Yes please.
Operator
Yes. Yes please.
Unidentified Participant
Good afternoon sir. Thank you for giving me opportunity to ask you the question. My question is similar to all the participants because we all always we try to optimize ourselves but quarter on quarter we promising to investors with huge in terms of gross margin, in terms of revenue and in terms of top line. But why we always failing? I’m also from last three years, three and a half years we also only checking your company but each and every year we are facing some loss in terms of loss in terms of our expectations. So is there any specific reason in terms of corporate governance or is there anything in terms of our capabilities to enhance our company portfolio?
Surendra Sai Nallamalli
I think for few answers we have just about answered this. The important part for us is that we are improving in our branded business strongly. We are improving in our gross margin strongly and we have a portfolio in future to ensure that whatever steps we have taken to go towards branded should help us in future. Obviously there would be a setback in this quarter wherein we are not able to match the performance what we had guided because even we were based on the season, based on the on time rainfall we’re expecting and the kind of investment which we had done on manpower and grant building didn’t come out specific. So there is a short term pain which we are taking that we don’t. We didn’t have seen results what we had expected. But the amount which we are spending on branding and all obviously will not go away because for the long term the farmer will ease accepting our products especially our patented products. So most of our patented products are doing pretty good which we’re not finding the industry that our the first patent product itself was crossing 300 crores and other that one is at 200, the other is at 100 crores. So this obviously will the good acceptance will give us benefit because all the branding amount which we have spent this year will benefit again benefit us in future. But as you rightly pointed out it didn’t come out the way we expected because we were also pretty hopeful. But we are taking corrective steps. Since last one month we have been as I said optimizing our cost to ensure that our future sales gross margin and all already we have achieved to those numbers. We’ll achieve higher sales growth with reduced number of people in the reused opex which will certainly improve the future. Profitability.
Operator
Thank you. Next question is from Murali who’s an individual investor. Please go ahead. Murali, you may go ahead with the question. There seems to be no response from the line. We’ll move to the next question. Next question is from Sanjay who’s an individual investor. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Operator
Yes.
Unidentified Participant
Yeah. Just quick question about. It was mentioned in last call that two more cutting edge insecticides are stated to release in Q4. So are you going to, are you going to be on track to release Those insecticides in Q4 or already done or you are on track. And about this income tax department which is the thing is still open, I mean right. Start from September 23rd. So anything you guys are doing to close this quickly because it is really creating uncertainty among the investors. So what is the update on that? I mean how quickly these things will get closed?
Surendra Sai Nallamalli
So with respect to income tax, I’ll answer with respect to product. So with respect to income tax, whatever we had issue last year later on there was no notices and no responses. Anything from the income tax side and what we believe is and what we understand from the department as well that the issue is closed from there. And even though we don’t have a formal, formal letter from them to say that it’s closed but there is no notice and nothing which has come out a single rupee for that whatever had happened.
Vikas Jain
Okay. Yes. Regarding the, you know, on track for you know, new products. So we had already been talking about shot down which is a proprietary herbicidal formulation which Haloxy pop and Imisa thyroid. So we are on track for this thing. We are just finalizing the the right strategy to be able to take this forward. But I would like to caution that the new products, whichever get introduced in the market, they take a little bit of a time to be able to settle down. So they do not have a big bang approach of showing the results in the first quarter itself. We are focusing on more in terms of being able to prove the product on the ground to the farmers so that there is a gradual, sustained and continuous revenue growth over the product. We have also been working on one more insecticide which is wetland. But this will see the traction in some traction in the Rabi season. Shorter will see some sort of a traction from the curry season. So we may be. To see the effect of shutdown somewhere in the next quarter. Coming.
Operator
Thank you. Next question is from Ram Tawa from Equinox Capital. Please go ahead. You’re right.
Unidentified Participant
Can you all hear me? So there is a news saying that the deviation in fund utilization. So can you just throw some light around that deviation in the fund utilization.
Surendra Sai Nallamalli
Sorry, we didn’t understand. No.
Unidentified Participant
There’s a deviation in the fund utilization from Crystal. There is a report which you have shared to the exchange.
Surendra Sai Nallamalli
Yeah, so there is. Yeah. So there is no deviation in the fund utilization. So whatever. For 150 crores the committed amount from the investor we have got 25% from them. There’s no deviation in the utilization because the balance 75% we are yet to get. So as was committed. So earlier for 200 crores we had mentioned that 70 crores will go for capex but now for 150 we have mentioned that 50 crores will go for capex and balance 100 crores will go for working capital. And the initial amount what we got we have utilized for the working capital purpose. But there is no. There’s no deviation.
Operator
Thank you. Next question is from Veeranna Savadi who’s an individual investor. Please go ahead.
Unidentified Participant
Yeah, hi. You can hear me right?
Surendra Sai Nallamalli
Yeah.
Unidentified Participant
Yeah. My question is simple question I have. I just wanted to understand what is your view on. On getting confidence back from FIIs and DIIs investors. Yeah. Looks like they all lost trust on your company due to non standing on your words. Whenever we have you guys have a call. So what is your view?
Surendra Sai Nallamalli
So yes you are right to say that based on. Because this is more a seasonal business and based on seasonal business if we are in June there is obviously an expectation which is built and how season is going to pan out, how we are going to sell and that’s how we build our expectation. And when we are done our June and September quarter based on those expectations we had given our commentary to say okay what we feel about the season and we are preparing our company based on those situation as of that date. So yes, we are not being. Been able to match that performance what we had been giving in June or September. But what we know is based on our product portfolio we feel that this is a short term setback what we are having and we are pretty sure that we’ll be able to come out of this considering that the changes, what we are doing with respect to our cost and the learnings what we are having from our PU season, if I may add. Actually I hear your point that you know, there would be a certain drop in the confidence of FIs and. But what I would like to say is that it is based on what our product portfolio, what we have demonstrated in terms of our R D, what we have demonstrated in terms of patent, that there are Chinese companies, there are Chinese very large manufacturers who have decided to work with us as an R and D collaborator. This is, it’s a good step in the right direction. They view us not just as a buyer of Chinese products but they view us as somebody who can sort of work with them and the relationship has been built on the that we can help them in their R and D, we can work together and we can utilize certain registrations which the Chinese company have already invested significant amount of money in the past year. That’s one area that I wanted to say. The other area is that, you know, we had not been able to kick start our export business. I can be happy to say that, you know, we have got the first export order which we started after some time and the number of queries and the number of deals which are in progress are a few. We will certainly be working on the export front also to be able to ensure that, you know, our dollar payment and the stress on the dollar is sort of mitigated overall, overall, in terms of our internal confidence. Yes, we are very clear that, you know, the way that the path that we are walking on in terms of R D, in terms of differentiated products, in terms of patented products, in terms of backward inte, in terms of being able to work on new molecules, in terms of developing R and D collaboration with important companies. We are sure that these things will yield results. Yet you are right in the perspective that we expected things to be able to fall in place much faster. But yes, they are a little bit slow. But we do look forward to good years to come.
Operator
Thank you very much. We’ll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Surendra Sai Nallamalli
Thank you. Thank you all for joining this conference. We will certainly work to keep the stakeholders value in our mind at the top of priority. Thank you very much.
Vikas Jain
Thank you very much. Thank you everyone.
Operator
Thank you everyone. Thank you. On behalf of Best AgriLife Limited that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.