Dhanuka Agritech Limited (NSE: DHANUKA) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
M.K. Dhanuka — Vice Chairman And Managing Director
Unidentified Speaker
Rahul Dhanuka — Joint Managing Director
Vinod Kumar Bansal — Chief Financial Officer
Analysts:
Riju Dalui — Analyst
Himanshu Upadhyay — Analyst
Rohit Nagraj — Analyst
Bharat Gupta — Analyst
Ramesh Sankaranarayanan — Analyst
Dhruv Muchhal — Analyst
Bhavya Gandhi — Analyst
Prashant Biyani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Dhanuka Agritech Limited Q3 FY ’25 Earnings Conference Call hosted by Antique Stock Broking Limited. As a reminder, all participant lines 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 conference call, please signal an operator by pressing the star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Riju Dalui from Antique Stock Broking. Thank you and over to you, sir.
Riju Dalui — Analyst
Thank you. On behalf of Antique Stock Broking, a warm welcome to all the participants on 3Q FY ’25 earnings call of Limited. Today, we have Mr. M.K. Dhanuka, Chairman; Mr Rahul Dhanuka, Managing Director; Mr. Harsh Dhanuka, Executive Director; and Mr V.K. Bansal, CFO, on the call.
Without any further delay, I would like to hand over to the call to Mr M.K. Dhanuka for opening remarks, post which we’ll open the floor for Q&A. Thank you, and over to you, sir.
M.K. Dhanuka — Vice Chairman And Managing Director
Thank you. Good afternoon, ladies and gentlemen. Mysel M.K. Dhanuka, Chairman of Dhanuka Agritech Limited. Welcome you all to the Q3 earnings call. I hope all of you are doing well and keeping safe. I have with me Mr Rahul Dhanuka, Managing Director; Mr Harsh Dhanuka, Executive Director; and Mr. V.K. Bansal, CFO of the company. As you are aware, Dhanuka is a leading Indian agrochemical company. Dhanuka is working with the vision of transforming India through agriculture. We have a pan-India presence in all major states to reach-out to more than 10 million farmers with our products and services. Dhanuka’s key focus has been on introduction of Novel chemistries and extensive product development distinguishing us from the rest of the industry. With four manufacturing units and 41 warehouses across India, we cater to around 6,500 distributors and around 80,000 retailers. Has a strong sales and marketing team to promote and develop new products. Strong R&D division has world-class NABL accreditated laboratory as well as an excellent team for new product registration and development. Dhanuka’s international collaboration with 10 leading global agrochemical companies from Japan, US and Europe, which helps us to introduce our latest technology in India quarter three is important from the perspective of rabi crops like rice in South and East India, wheat in North and Central India. This quarter is also important for farmers, for harvest of clock and selling the harvest to generate money for the next season. In segment, Q3 is key season for in North India, grapes in West India, chilly in South India. This year, the disease appearance in potato grapes and chilly was less resulting in lower sales of — from key fungicides, also due to carryover inventory of chilly from last season, the commodity prices remained low, resulting in fewer space in the crop. However, I’m happy to share that we got excellent sales and liquidation for key products, La Nevo as well as Micro Super in this season. Both these products were introduced in this year itself and have been well-accepted by the farmers across India. Further, we introduced one new 94 product,, Pyro Za, 85% WG to control in wheat clock and received good response from the market. In terms of financial performance for the Q3 FY ’24-’25, revenue from the operations stood at INR445.27 crores in Q3 of FY ’24-’25 versus INR403.24 crores in Q3 FY ’23-’24, representing an increase of 10.42%. EBITDA stood at INR75.56 crores in Q3 of FY ’24-’25 versus INR62.16 crores in Q3 of FY ’23-’24, up by 21.55%. Profit-after-tax charge stood at INR55.04 crores in Q3 of FY ’24 ’25 versus INR45.37 crores in Q3 FY ’23 ’24, up by 21 double 3%. Share of turnover for Q3 FY ’24-’25, North India, 22.63%, East India, 11.18%, West India, 27.57% and South India 38.62%. Product category-wise percentage share of turnover for Q3 FY ’24-’25. Insecticide, 29. Double 9%, fungicide 19.96%, herbicides 34.71% and others 15.34%. We have also informed that the company has acquired international rights to the active ingredient caram and Triadi Mineral invented by buyer AG Germany. With this acquisition, plans to expand its footprint in more than 20 countries, including the regions of Latin-America, Europe, Middle-East and Africa as well as Asia, including India. This acquisition will enable Dhanuka to embark on a journey of global market expansion. Dhanuka will be shifting the manufacturing of at least one of the products to India, leveraging the capabilities of our manufacturing unit at Dahej Gujarat consider itself responsible to our securing the farmer’s welfare and preserving full security of the nation. We continue to strengthen our association with the agriculture universities, and other critical institutions to impart knowledge and latest technology to the farmers. I’m happy that in-spite of a challenging environment, company has been able to deliver double-digit growth in top-line and around 21% growth in the bottom-line. So considering the low fast attack, low rainfall in the rabi season and challenging environment, I congratulate the team for the these reasonably good results. Thank you very much for your kind attention. And now we would like to open the forum to take the questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Himanshu Upadhyay from BugleRock PMS. Please go-ahead.
Himanshu Upadhyay
Yeah. Hi, good afternoon. My question was regarding the acquisition we made, okay. We bought a brand-name for Triada in minal, which is — we did not buy, okay, which is a larger product and the market-share is around 25% for the existing brands. Can you give some thoughts for it and our strategy here and when it’s a larger product and why we did not choose to buy the rights for that brand?
Unidentified Speaker
Yeah, thank you for your question. So the two products, hyprovely carb and, they both contribute about 55% 45 to the revenue. I probably is the larger revenue contributor out of these two products with respect to the brand-name around of, these were — at brand names in series of other products also with buyer and had buyer initials VAY in some of these products attached. So they cannot transfer these brands to. That was the reason not to acquire those brand names.
Himanshu Upadhyay
Okay. And outside India means the type of model we are thinking is of owning or or having a basket of products and brands and registration for these products will be ours. And generally it would be one national distributor who manufacturing maybe ours or from third-party, okay. So depending upon situation. So is this the type of business model we’d like to be building outside India for. So based on acquisition, should we understand this?
Unidentified Speaker
Yes, absolutely. So this is — this acquisition is for a couple of products. Of course, we have our own products right now from Dahej, which is, which is already there and we look at — we are looking at expanding this basket of products further in the future, maybe through organic or inorganic route, whatever will be feasible in the future. But yes, have a basket of products available for international markets where most of the countries we will appoint national distributors where the registrations are owned by us and they will be doing the sales of the products.
Himanshu Upadhyay
And what are the challenges in such a business model and what are the capabilities need to develop because currently when we are working in our country, the whole distribution is asked and we have a pretty good connect in all these in the country with the distributors from top-level to bottom and we have a pretty good understanding of the country and so what type of challenges are there and how do we overcome those challenges and the business model what we are trying to build outside India.
Unidentified Speaker
So I think one of the biggest challenges is around registrations, global registrations are time-taking process and to understand the registration process across different countries and their rules and regulations and doing the entire documentation work, that is the challenging work and of course, building the customer-base. So with these two products, we will get the customer-base and the existing registration for increasing the new products, adding new products within this customer basket and acquiring more customers, that is going to be the path forward. For building these skills, we are hiring — we have some team members already. We have created a specialist team for focusing on international business and we’ve identified few positions where we’d like to build — by — get capability from outside.
Himanshu Upadhyay
And are these products already present in India? What is the size of these products in India? And can you give what crops are they used in India for or they are not present in India currently?
Unidentified Speaker
Yeah. So hyprovely carb is present in India, the revenue — roughly the revenue would be in the range of about INR30 crores for last year and tridaminol is not present in India. The crops in which carb is used is hotticultural crops, grapes, tomatoes and other fruits and vegetables.
Himanshu Upadhyay
And one thing you stated in the last call when after the acquisition that we expect these products to grow by 10% to 15%, right? But last two years have been painful for these products. So what are the things you are planning or thinking that which can take the growth ahead for these products and gain market-share in those geographies or, let’s say, presence across the more countries. So some thoughts on that will be helpful. And that was the last question. Thanks from my side.
Unidentified Speaker
Yeah, thank you so much. And very interesting questions from your side. And yes, to revive the volumes of these products, we are working on a marketing campaign last two, three years due to a portfolio clashes within buyers’ internal portfolio, their intention to this product has been reduced and there has been no marketing spends on this product. Now we will be doing marketing spends for the — to enhance the volumes of these products over the next few years.
Himanshu Upadhyay
Yeah. Thanks for my side.
Unidentified Speaker
Thank you.
Operator
Thank you. So before we take the next question, we would like to remind participants that you may press star N1 to ask a question. The next question is from the line of Rohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Yeah. Thanks for the opportunity and congrats on the consistent set of numbers. First question is for this quarter of the 10% Y-o-Y growth, how much has been contributed from volumes and pricing?
Unidentified Speaker
You see, there is a difference of 125 basis-points. Value is 10.42 and volume is around 11.67 times.
Rohit Nagraj
Okay. So basically, there is still continued impact on the pricing for the product. So pricing has not improved, it is more or less stable to slightly plus-minus. Is that understanding correct?
M.K. Dhanuka
You see during this financial year, coming to quarter two and then quarter three.
Rohit Nagraj
Right, right.
M.K. Dhanuka
And thing in-quarter four should be value and volume must be similar.
Rohit Nagraj
Okay. So we expect in Q4 that the growth will be driven both from volumes as well as pricing?
M.K. Dhanuka
Absolutely.
Rohit Nagraj
Okay, fair enough. Second question is on the Dahej manufacturing facility. So again, similar question, what was the revenues in Q3, nine months and what was the EBITDA level negative contribution from the same for Q3 and nine months?
M.K. Dhanuka
So you see in Q3, the revenue is around INR4 crore and in nine months the revenue is around INR6 crore. In terms of EBITDA loss in Q3 is around INR4.25 crore and Nine-Month is around INR12 crore.
Rohit Nagraj
Okay, fair enough. Now coming to the products lineup, so we have mentioned that we will be having multiple set of products over the next two years, almost eight new product launches are planned. If you can just give us an idea about in FY ’26, which in all products and which categories are these products used for which we are planning to launch? Thank you.
M.K. Dhanuka
You’re talking about from Dahej or for the brand sales?
Rohit Nagraj
For the brand sales and if you can provide Dahej details as well.
Unidentified Speaker
Yeah. For brand sales, we have nine months lineup of products. In the next financial year, we’ll be launching one rice herbicide and a new fungicide for grapes and hoticultural crops. These are the two new 93 introductions plus few 94 products, introductions as identified by our portfolio gap. And moving forward also, we will have new products being used every year, 93 as well as 94. With respect to Dahej, we have developed many products in the lab. Right now, the commercial viability is slightly on the lower side and the fresh capex is not justified for a low viability products. So we have not in gone ahead for any new fresh capex in the H plant. But yes, we are working on some more new product development in the R&D and we’ll be coming out with some more products in next two to three years.
Rohit Nagraj
Sure. Just one last question again on the Dahej facility. Given that currently it is operating at low levels, what do we expect in terms of revenue and contribution in FY ’26, given that probably we’ll be only continuing back and for the timing. So any plans, how does FY ’26 look like from Dahej perspective? Thank you.
Unidentified Speaker
Yes, for FY ’26, we are looking at a revenue of in the range of INR60 crores to INR70 crores. And assuming only over there and the efforts around that is of course domestic sales is there and we are looking at international registration. Some of them are at advanced-stage, some of them are at early-stage. So we are working on international registration for.
Rohit Nagraj
Sure. That’s it from my side. Thanks a lot. All the best.
Operator
Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Bharat Gupta from Fair Value Capital. Please go-ahead.
Bharat Gupta
Hi, sir. Thanks for the opportunity and congratulations for a good set of numbers. A couple of questions from my side. So first, when we look particularly since you will be gearing up for the next reef, so how do you see the pricing of the RMs currently in-place? Like do you see a stabilization which is there in the RM prices?
Unidentified Speaker
Yeah. As per the discussion with the Chinese players, because China plays an important role in deciding the prices. So overall, the prices are more or less stable, but it differs from product-to-product. Some of the products, price increase is also there like in the car tab, in the Mancojab, in chlorobifast, etc. But overall, in general, the prices are stable and in near-future, we don’t foresee any major change in the prices.
Bharat Gupta
Right. Sir, particularly with respect to the regime change in US tariffs are one of the critical things which is being everything to do. So how do you see this particular thing playing out for us? Eventually, we are also one of the manufacturers in the technical side. So do you think it will be a sizable amount of opportunity which you’ll be getting and how do you see with respect to our core business?
Rahul Dhanuka
This will take time to play-out the impact of tariffs because China continues to impact the chemical industry globally because of their really low prices and almost eating into very sharp price that they have managed. In addition to that, in anticipation of tariffs, China has front-loaded various markets, including US in the last quarter, so that will have its own impact over next few months-to go. Yet China plus one story has more grounds to play-out as we see that this tariff regime as of now appears to be favoring Indian growth story and Indian chemical industry growth story and Indian partnership with US and other countries story. So that appears to be more favorable. Now impact of tariffs from US will have another side of it, which is if China will not be able to export to US, then Chinese prices will come down further for other countries. Now will that happen or not we are yet to see and few more months before we can really understand and break-through or see-through the impact.
Bharat Gupta
Right. The reason I was asking because in terms of, we’ll be procuring a majority amount of RMs. Our contracts should be in-place. So thereby my question was like whether there has been some sort of a moderation in the prices, it has stabilized or you anticipate that because of the actions that should be taking in-place, so the prices can see a further amount of correction.
Rahul Dhanuka
So as of now, like you said earlier, most prices appears to be balanced. Many product prices have already shown upward trend for Kharif. So we are looking at no further corrections, not major corrections for sure in next few months.
Bharat Gupta
And sir, with respect to the gross margin, so how do we — how are we looking at the FY ’26 like will there be any kind of an improvement which currently we are factoring in?
M.K. Dhanuka
You see the gross margin continuous improvement is really very difficult. This year the gross margin is almost best last five years. So maintaining the gross margin would be really difficult task in the year FY ’26.
Bharat Gupta
Right. And sir, my last question remains on the side. So like what is the overall revenue potential which we can factor-in from these two products?
Unidentified Speaker
So for the next year, part of the revenue will come in the P&L because the transition will be over a period of time. In the initial period price buyer continues to sell, they will be transferring royalties to Dhanuka. So in next FY — by the end of next FY, the entire 100% revenue will come on Dhanuka’s books. For FY ’27 onwards, yes, we are looking at 15% growth in the product revenues year-on-year for first five years.
Bharat Gupta
All right. So these two molecules are generic in nature, right?
Unidentified Speaker
Yes, that is correct. And like overall market potential for these two molecules in dollars or in INR terms, what it will be?
Bharat Gupta
In terms of value or volume really in terms of value?
Unidentified Speaker
In terms of value, both the products combined can go up to INR250 crores.
Bharat Gupta
That’s it from my side. Thanks so much.
Operator
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go-ahead.
Ramesh Sankaranarayanan
Thank you and good evening and congratulations on the results. So in the presentation, in the product mix you have shown, the other category seems to have increased the share. So is the margin improvement driven by this other category and what are these products and the other categories?
M.K. Dhanuka
The margin improvement is almost all-round, largely is driven by the lifeline category, which is specialty molecules. But in some of the molecules where the price drop was there, but that was not passed on into the broadly the same percentage, therefore in general there is an improvement in the see gross margins.
Ramesh Sankaranarayanan
So these other categories is what plant those regulators, what are these other categories, whether the 300 basis-point increase in
M.K. Dhanuka
Generics.
Ramesh Sankaranarayanan
They are the generics, okay. Okay. So — and secondly, on the buyer products, is there any cost you have booked and what is the overall acquisition cost because we don’t amortize that, right? So in terms of the P&L impact on the balance sheet, what is the cost you would book in your balance sheet in terms of the value of the acquisition and what will be the amortization per annum for that acquisition?
M.K. Dhanuka
You see overall cost would be around INR160 cr, which will be capitalized in the Q4,
Ramesh Sankaranarayanan
Okay. And how would the amortization be over the next four, five years?
M.K. Dhanuka
Everything we see it is under depreciation will be gain the depreciation.
Ramesh Sankaranarayanan
And there will all be registrations, right? So it will be under the higher-rate of depreciation.
M.K. Dhanuka
So our rate I need to share, but depreciation will be for the depreciation claim every year.
Ramesh Sankaranarayanan
Okay. And so yeah. So on — to the extent that you are seeing visibility on royalty and the income from sale of these products by the end of next year, when do you think you’ll be able to generate the kind of IRR you expect for this acquisition in terms of ROCE or IRR, whatever measure you’re using? Would it be visible from the second-half of FY ’26 or would it be more like towards FY ’27?
M.K. Dhanuka
I think in the second-half of the year of the next financial year, then will definitely be there.
Ramesh Sankaranarayanan
Okay. So one last thought. In terms of the volume growth for FY ’26, now this year we have seen very-high volume growth in most geographies, especially in the export market for you, of course, is the domestic market. So on the kind of performance we have seen in your company year-to-date and likely for FY ’25, what is the more realistic top-line growth we can expect next year and how much of that would be driven by volume growth in FY ’26?
M.K. Dhanuka
I think other than buyer volume growth, it should be around 15%.
Ramesh Sankaranarayanan
15% will be your top-line growth.
M.K. Dhanuka
Yeah, plus whatever you see revenue we will generate from the buyer molecules.
Ramesh Sankaranarayanan
Yeah. And this 15% growth, what is the ballpark volume growth you would expect?
M.K. Dhanuka
What is a volume growth? Volume, I am thinking almost similar.
Ramesh Sankaranarayanan
Yes, so mostly driven by volume growth. Okay, I appreciate it. Thank you very much, sir. Can thank you very much
Operator
Thank you. The next question is from the line of Dhruv Muchhal from HDFC. Please go-ahead.
Dhruv Muchhal
Yeah, thank you so much. Sir, if I look at the nine months volume growth versus the last year, it seems it has been reasonable and it’s not as if the last year was a very weak year. So just trying to understand, is there something which is structurally helping us or is it across the industry or if it’s structural, what’s aiding such decent volume growths? Just trying to understand what’s helping.
M.K. Dhanuka
Your question is not clear to me. Could you repeat that,?
Dhruv Muchhal
Yeah. So I’m — so if I look at the nine months numbers for volumes, the growth has been quite reasonable and it is not as if the last year’s base was weak. So there continues to be consistent volume growth. So just trying to understand what’s helping. Is it across the industry that volumes are strong or there are some fundamental factors which is aiding this.
Rahul Dhanuka
Okay. So what’s happening across the industry, of course, you would have a better idea in terms of the financial numbers, some have come in, some more will come in few days. I can say that at, our team is doing a good job in terms of reaching out to the farmer, educating them and servicing the retail channel, which is the secondary sales channel, which we are working on aggressively. In addition to that, the volume growth has been aided supported by the new products that we have introduced, La Nevo, a powerful insecticide, micro super, a soil health rejuvenator,, a very wonderful Japanese herbicide, Niako, again a Japanese mighty site and couple of other products. So they have done a good job and we have done a good job of introducing them and quickly commercializing them, ramping-up the volumes. So I think so that’s what’s behind our volume growth overall. Generic products in our portfolio have taken a beating. So I would say generic products across the industry have taken a sharp beating and overall, the season has not been very favorable that’s why generic products have taken a price as well as volume reaching.
Dhruv Muchhal
So for you, on a ballpark basis, if you split the business between generic and your specialty, what would be the decline in generic volumes be versus the special — and what is the specialty growth or whatever — what is the range of specialty and special — and generic growth in volumes?
M.K. Dhanuka
So in overall growth is largely driven by the specialty molecules. Generally, there is no-growth in terms of value. Volume could be 3%.
Dhruv Muchhal
Okay. And for you, the split between generic and specialty as you classify is about two-third, one-third, right,
M.K. Dhanuka
Yeah, largely.
Dhruv Muchhal
And sir, the second question is on the margins. So again, you’re also consistent steadiness in margins. So again, a same question I have been asking for some time. Is it just — is it primarily because of the fall in AI prices, which is probably not passed on to the market at some point that will happen or do you think these margins are now consistent, sustainable and can continue whatever had to be passed on is largely passed on.
Unidentified Speaker
You see gross margin in the range of 38% to 39%, I feel is sustainable, right? And beyond that, in this year exceptionally it’s in the range of around 40. So that is basically because of the decline in the prices and all. But in the long-run, I think between 30% to 39% gross margin is absolutely sustainable.
Dhruv Muchhal
So I’m just wondering, it has been more than a year now where the AI prices have been low and the market is probably in some sense, it seems absorbing the final formulation prices despite the low AI prices. So do you think there is a scope for correction or no, I’m just trying to understand what’s helping if the AIs are lower and the formulation is not passed on, but still the market is accepting it. So why do you worry that the margins can probably revert back?
Rahul Dhanuka
So you are repeatedly using a word called correction. So when you say correction, what do you mean by correction is my point, that is one. I will leave that question over there. And the second one is what is helping? So helping is our approach. Our approach of educating the farmer with Dhanuka doctors, servicing our primary channel, keeping robust relationship wherein rather than working with other competitors, they would prefer to work with Dhanuka and our efforts to work with the secondary channel, the retail network as we Call-IT, these are some of the dimensions of what is working in our favor in terms of why we are able to grow our specialty products and why we are kind of holding back margin loss on generic products. Having said that, demonstrating margin growth year-on-year may not work-out due to some seen and some unforeseen reasons. Still our commitment is to stay around 38% 39% bracket and that would be the effort.
Dhruv Muchhal
Got it. That’s helpful. Thank you so much and all the best. Thanks.
Operator
The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go-ahead.
Bhavya Gandhi
Yeah. Hi, thanks for the opportunity. Hope I’m audible. Sir, my first question is with respect to the Rabi season. How has been the January offtakes? If you can you can throw some light how have the offtakes been in the January month for the domestic market?
Rahul Dhanuka
So overall January and if I may say December, both the months have not been very great in terms of Rabi offtake. And the pest pressure, disease pressure has been pretty low in North India as well as in West India, including Chile or South India. So pest and disease pressure has been really low, unconventionally low for December and January.
Bhavya Gandhi
Okay. So we will be able to achieve the guidance that we mentioned around 14% sort of revenue guidance and 100 basis-points improvement in the margin in the 4th-quarter?
Rahul Dhanuka
That’s right. That’s right. We stick to that.
Bhavya Gandhi
We stick to that. Okay. And sir, just wanted to understand what would be the trade margins for the dealers and distributors, if you can throw some light on that front as well.
Rahul Dhanuka
Is it like trade margins is important to throw some light? Can we skip that? You can find out from your market visit.
Bhavya Gandhi
Sure, sure. And just wanted to know one more thing on the number of registrations that would be transferred from buyer to Dhanuka. How many number of registrations would be transferred for both the products?
Unidentified Speaker
So the product — the products are registered in almost if I talk about across all the formulations, the two products into two formations, each four formulations. Across the four formulations, almost 30 registrations will be passed on to Dhanuka. And at the same time, we are finding out from our market connects, there are some registrations which buyer has not renewed in the past. So there is possibility to renew those registrations as well.
Bhavya Gandhi
Okay. And is it possible to share any gross margin or EBITDA margin for these products and what would be like maybe a two-year forward guidance for these products? On gross margin and EBITDA?
Unidentified Speaker
Yeah. The EBITDA margins will be in-line with our existing EBITDA margins.
Bhavya Gandhi
Okay, fair enough. That’s it from my end. Thank you so much.
Operator
Thank you. The next question is from the line of Prashant Biyani from Elara Securities. Please go-ahead.
Prashant Biyani
Yeah, thank you for the opportunity. Sir, by when would you be shifting manufacturing for both the molecules to India?
Unidentified Speaker
Right. So one of the molecules we are planning to shift for sure that will take about 1.5 years, two years to get the regulatory approvals because it doesn’t have an India manufacturing approval to date. So it will take roughly two to three years. And the other product currently, we are not — planning to manufacture in India because it was already outsourced by buyer to a third-party. So cost-reduction and optimization over there will take longer. So that is not in the plan immediately.
Prashant Biyani
Okay. Then keeping it outside, I mean, would it be margin-accretive for us? Generally people shift manufacturing to India for the sake of lower-cost, India or China so keeping the manufacturing there wouldn’t be margin-accretive at current price
Unidentified Speaker
So for it is not being manufactured in Europe it is already outsourced to another country. So we believe it is at a fairly competitive price already.
Prashant Biyani
Okay. And sir, would you be looking at geographical expansion for these molecules? I believe one of the molecules is sold only in Brazil for you. I mean for buyers. So would you be eyeing some registrations in newer geography?
Unidentified Speaker
Yes. So for, the product registration is already only in Brazil, the part of the business that we have purchased. So in Brazil, as you are aware, is a high entry barrier country when new registrations take five to six years time for even for existing registered product. So that is why we have — it’s a critical acquisition for us. Expanding this product to other countries, we have to bring demand for this product in other countries as well because it is used in cereal crops also. But in Europe, it is restricted usage. So there are other countries like Australia and some countries in South Asia, which are looking-forward for this product as well.
Prashant Biyani
Yeah. And sir, for this molecule, I believe you bought only the LatAm business or Brazil business. So buyer might be selling this product in other geographies and can you compete with them on this?
Unidentified Speaker
In Brazil we have exclusive rights. And in other countries, currently we do not know buyers position.
Prashant Biyani
Okay. And next year is how much could be the top-line contribution from these molecules, these two
Unidentified Speaker
Top-line contribution? Top-line contribution from these two products in FY ’27 when the full revenue will come on the books of Dhanuka will be in the range of INR175 crores to INR200 crores.
Prashant Biyani
No, in ’26, I was asking.
Unidentified Speaker
In ’26, because the business will be in transition country-by-country. So once we appoint the distributor in each country, the revenue will start. Till that time, it will be in the form of royalty. It will not come in as a revenue on the books.
Prashant Biyani
And could you share the tentative royalty number, how much could it be?
M.K. Dhanuka
You see it depends when will see the things are transformed in the name of. So basically this trend, these numbers — sharing of this number is difficult. Revenue versus royalty split sharing is difficult,
Prashant Biyani
Okay. And once we start to book revenue, we will not receive any royalty after that.
M.K. Dhanuka
Yes, absolutely.
Prashant Biyani
Okay. And for these molecules, what will drive the 10%, 15% CAGR that you are expecting?
Rahul Dhanuka
One is for, there are new registrations in — for a new combination, which some of them are coming in ’25 and ’26. So that is one. Second is renewing the marketing efforts. So that will revive the volume. For also, there is a new registration of maybe four or five year-old in Brazil itself, which is already growing at a good pace and we intend to continue increasing that growth in the second formulation.
Prashant Biyani
Right. Okay. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go-ahead.
Ramesh Sankaranarayanan
Thanks for the follow-up. Sir, what is the sense to get on the channel inventory for your own company and the industry as of now? And secondly, is there any structural change you expect in terms of the Indian crop because of the budget focus on cotton, the pulses and oilseeds? How do you see that shaping up in the next two, three years?
Rahul Dhanuka
Right. So as a matter of practice at Dhanuka, we continue to clean channel inventory as and when it piles up December and we also do not front-load our channel. December has not been a very good consumption month. So we kind of picked-up whatever was unsold inventory. And we believe for, there is hardly any channel inventory out there, but we do believe that industry is normally conventionally front-loads the channel. So there should be quarter-ending channel inventory for most of the industry players. So that’s part one. Part two is the crop shift. So government’s focus on pulses has been like deep-rooted and pulses is costing us some forex. Pulses import has gone up by double to manage the inflation. So that is one area which is certainly going to dominate the acreage increase of, Channa, yellow peas and all. So these increase in pulse area, which will be nutrition management and protein management for the nation, gives a to Dhanuka as we have one of the best portfolio to service pulses, both in terms of weed management as well as insect management. We have a wide portfolio with label claims on most pulses. Cotton government is bringing in renewed attention to manage cotton loss caused by pink, cotton once revived and most states, Punjab, Riyana, Rajasthan, all the Western state central and southern states except for some Eastern states bank upon cotton for their agriculture revenue. So that will bring renewed energy and attention of the farmer for investments in cotton. Our products like Turga Super, Micro Super, various other insecticides, fungicides will find lot of opportunity in cotton. So these attentions, these focus will certainly bring a filip to our portfolio for sure.
Ramesh Sankaranarayanan
Thank you.
Rahul Dhanuka
I want to add one thing here that the government did not talk much about ethanol, yet the ethanol price correction from molysis was done just few days before the budget. This will give a boost to sugarcane economy where again, Dhanuka is really strongly positioned to leverage that opportunity.
Ramesh Sankaranarayanan
Thank you very much, sir. Thank you. Wish you all the best.
Rahul Dhanuka
Thanks.
Operator
Thank you. A reminder to all participants that you may press star N1 to ask a question. Ladies and gentlemen, if you wish to ask a question to the management, you may press star N1. You. The next question is from the line of Riju from Antique Stock Broking. Please go-ahead.
Riju Dalui
Hi, sir. So during Q3, if you could break it up like how was the domestic promotion business growth and the export formulation business growth for Q3 as well as for Nine-Month FY ’25.
M.K. Dhanuka
See entire growth largely from domestic export, there is no significant growth.
Riju Dalui
Understood. Understood. And sir, a few bookkeeping questions like this quarter we have seen a roughly 100% kind of rise in the interest costs. So how — like what has actually drive this kind of increase in the interest cost.
M.K. Dhanuka
You see, normally we are not using our limits for the last so many years, but there was some limit utilization at the time of buyback that was happening sometime in in September. So because of this limits were utilized in the month of October and there was zero intern in the month of November. And there is a provision we have — for this acquisition, we have taken a loan of TCR in the month of December or buyer acquisition and the rest INR15 crore is basically is met with internal accruals because of which the interest cost is increased, but the base is very nominal. Therefore, it appears to be significant. Otherwise this again as a percentage terms is very low as of now.
Riju Dalui
Understood. So sir, you have said that you have raised some borrowings for the — to fund the acquisition. So if you could quantify that number a bit broadly.
M.K. Dhanuka
50 cr.
Riju Dalui
Okay, 50 CR And this will — and this will be — will be repaid by when like maybe by next year or next — next year.
M.K. Dhanuka
So before December ’25.
Riju Dalui
Okay, understood. So this is short-term borrowings. Okay. And the another question that I had was like you said that you will get royalty in FY ’26. And if you could give us a sense like how much percentage royalty will get on a total revenue. So I will not ask about the number, but the percentage that you will get from the revenue.
Vinod Kumar Bansal
So that clarity is about to come from there, probably will be better-off by the end of February.
Riju Dalui
Okay. Okay. Understood, sir. Yeah. Thank you. That’s all from my side.
Operator
Thank you. The next question is from the line of Prashant Biyani from Elara Securities. Please go-ahead.
Prashant Biyani
Rahulji, I had a question for you. This was regarding sugar cane only. So we heard of red rock disease cropping up in UP from the Eastern side and then now it has spread to Central and Western. And what we hear from the company is that once a crop is invested, once sugar cane is invested with red rod, then you have to burn the crop, there is no other option. So I just wanted to check whether as an industry, do we have any solution? And if yes, why either or the industry has not been able to capitalize on it? Because the sugarcane variety which is getting infected with red rod is a very good or the best variety that was there available right now in terms of yield?
Rahul Dhanuka
Right. So thanks for that question. That gives me an opportunity to highlight the portfolio that we have. But let me try and address the second part first, which is why we have not been able to capitalize. So that’s not really true. Industry has really worked hard to deal with the red rod opportunity or let’s say, red rod crisis that the North Indian sugar cane faces. This brings to forefront the challenge of working in agriculture, which is the education of the farmer. How do you educate the farmer for a crisis which is looming large? And now this — as we talk on this call, this crisis has been on the horizon since 2019 because the Variety 238, CEO 60238, which is the highest yielding variety. Now any variety at any given point of time should not cross 25% of the total acreages because if and when a disease strikes, then it will become a pandemic for the entire variety. Now this variety, as you said, is most high-yielding variety. It has the highest sugar content. So this is covering more than 75% of the total sugar can acreage in North India, which also makes us almost disaster prone in our sugarcane production. The challenge is farmer education, the challenge is seed quality upgradation, the challenge is corrective work to be done in an integrated way by the Department of Agriculture, KVKs, universities, farmer bodies and the industry together. At Dhanuka, we are offering biological solutions as well as our product Godiva Super. We are exploring one more Japanese product with seat treatment trials, how it is performing. So there are various options we are putting it on the table for the farmer and educating the farmer. Yet to your point, the crisis is pretty eminent and out there.
Prashant Biyani
So I mean I thought that because sugar companies are also involved, so at least on the sugarcane side, there won’t be any problem regarding the imparting of knowledge to farmers because it might come from the sugar companies itself who are there in the interland. Is that not the case
Rahul Dhanuka
Your question is not clear to me. Educating through the sugarcane is what I know
Prashant Biyani
I was asking that I mean you told that I mean the flow of knowledge to the farmers might not have happened properly if I understood you correctly, but sugar cane farmers and sugar mills work-in very close association with each other and generally sugar mills advise them which seed to use or which crop protection products to use, which fertilizer to use. So I thought at least in that industry that the use of crop protection or correct right crop protection products to use is not a problem. Is that not the case?
Rahul Dhanuka
Well, the evidence in front of us puts it differently and it’s a chicken and egg situation because this is the most high-yielding variety. And the next variety, the yields are 25% to 30% lower than what this variety provides. There are certain sugar meals which are really managing it well and are able to generate a good sugar yield and are able to educate the farmer on disease management better than the others. Yet there are sugar meals, there are farmers and vast acreages which are not well-managed against red rot.
Prashant Biyani
Okay. And sir, last question on, government has opened FCI rice as alternative route. I mean it was all — and that were at a very attractive price, which has reduced the price of maize also, I think in. So would you expect that in the near — in the upcoming seasons or even in the rubby harvest maize farmers income may be under threat and hence the investment in crop protection in future may reduce.
Rahul Dhanuka
We are looking at maize acreages to go up because of its study nature, consumption in animal feed and other opportunities, including ethanol and starch extraction. So it male acreages are certainly going up. As of now, the economics have not become unfavorable. However, if the commodity prices and the economics become unfavorable at certain point of time, then yes, the agri input investments does get impacted. The current high temperatures that we are witnessing in North India is impacting wheat yields, wheat crop yields are getting impacted. This impact on commodity and wheat production can actually move the maize prices another direction, which means maize prices can actually go up again driven by the market opportunity of cross-balancing the nutrition of the carbohydrate required from — serviced by wheat versus carbohydrated service by maize. So there is actually opportunity of maze prices going up. Acreages will certainly remain stable or go up marginally.
Prashant Biyani
All right. Okay, sir. Thank you. That’s from my side.
Rahul Dhanuka
Thank you.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
M.K. Dhanuka
Thank you. Once again, I would like to thank all the investors and analysts for your support and confidence in Dhanuka. With the transition in management, we have embarked on our next era of growth and business success. I reassure our stakeholders that we are committed to the task of transforming the landscape of agriculture and farmers in India. Indiaka Pranam, Kisan ke naam. Thank you and goodbye. Until next time. Thank you.
Operator
On behalf of Tanuka Agritech Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.