GODREJ AGROVET LTD (NSE:GODREJAGRO) Q3 FY23 Earnings Concall dated Feb. 09, 2023.
Corporate Participants:
NADIR GODREJ — CHAIRMAN
BALRAM YADAV — MANAGING DIRECTOR
VARADARAJ. S — CHIEF FINANCIAL OFFICER
Anurag Roy — Chief Executive Officer
Analysts:
Sumant Kumar — Motilal Oswal — Analyst
Lokesh Maru — Nippon India — Analyst
Abhijit Akella — Kotak Securities — Analyst
Aejas Lakhani — Unifi Capital — Analyst
Siddharth Gadekar — Equirus Capital — Analyst
Nitin Awasthi — InCred Capital — Analyst
Harsh Mantri — Flute Aura — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3 FY 2023 Earnings Conference Call for Godrej Agrovet, hosted by Motilal Oswal Financial Services. 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. [Operator Instructions] I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal Financial Services Limited. Thank you and over to you Mr. Sumant.
Sumant Kumar — Motilal Oswal — Analyst
Good afternoon everyone, and thank you for joining us on Godrej Agrovet’s 3Q FY23 Earnings Conference Call. From the company, we have with us Mr. Nadir Godrej, Chairman of the company, Mr. Balram S Yadav, Managing Director, Mr. S. Varadaraj CFO, and Mr. Anurag Roy, CEO of Astec LifeSciences. We would like to begin the call with a brief opening remarks from the management, following which we will have the forum opened for the interactive question-and-answer session. Before we start, I would like to point out that some statements made in today’s call may be forward-looking and a disclaimer to this effect has been included in the earning presentation shared with you earlier.
I would now like to invite Mr. Nadir Godrej to make the initial remarks, over to you sir.
NADIR GODREJ — CHAIRMAN
Good afternoon everyone. I welcome you all to the Godrej Agrovet earnings call. I hope and wish you are doing well. Godrej Agrovet continued to report a healthy topline growth of 12% in-quarter three fiscal year 2023 and 17% in the nine months of fiscal year 2023 year-on year. Most of our businesses, maintained robust growth in volume. However, profitability was impacted due to adverse sector specific macro conditions, unfavorable commodity price movement and limited transmission of input cost inflation. During the quarter, we successfully sold land situated at Ambattur, Tamil Nadu and the profit, net of expenses of INR68.4 crore has been included for quarter three fiscal years 2023 and 9 months fiscal year 2023.
Coming to the key financial and business highlights of each of our business segments in Animal Feed, we achieved the highest-ever quarterly volume in quarter three fiscal year 2023, recording a 7% year-on year volume growth. The volume growth was mainly led by market-share gains in the cattle feeds category as we further cemented our dominant position in the Western region. On the margin front also, the Animal Feed segment was able to sustain sequential recovery in EBIT per metric ton from INR1,381 in quarter two to INR1,507 in quarter three.
Our vegetable oils segment registered 13% growth in Fresh Fruit Bunches volume in quarter three fiscal year 2023, however, the average realization of crude palm oil and palm kernel oil declined from last year’s high base by 24% and 26% respectively in quarter three fiscal year 2023. As a result segment profitability declined year-on year. During the quarter, we signed an MoU with the state government of Nagaland for development and promotion of oil palm cultivation. The standalone Crop Protection business revenues more than doubled in-quarter three fiscal year 2023, driven by higher sales of in-licensed products mainly Gracia and lower returns as compared to the previous year.
Profitability also improved in quarter three fiscal year 2023 as compared to the previous year. Business maintained its steadfast focus on credit hygiene and achieved further improvement in working capital. For Astec LifeSciences, quarter three was a very challenging quarter as performance was impacted due to demand headwinds and pricing collection. Business was impacted on account of high inventories and reduced realization from last year’s high base. Contract manufacturing performance, however was in-line with our expectations. The poultry segment recorded strong growth in top-line as well as profitability. Revenues grew by 38% year-on year with EBITDA margin of 6.3% in quarter three fiscal year 2023, led by robust volumes in branded categories, coupled with a recovery in Live Bird prices.
Real Good Chicken RGC and Yummiez achieved volume growth of 45% and 46% year-on year respectively. For the dairy segment sustained volume growth in both value-added products and milk volumes was offset by continued drive in milk procurement prices, revenues grew by 21% year-on year in-quarter three fiscal year 2023, led by 22% growth in value-added products. Salience of value-added products portfolio was at 32% of the total sales in the nine months’ fiscal year 2023. Profitability continued to be impacted by limited transmission of rising procurement prices. GAVL’s joint-venture in Bangladesh, ACI Godrej recorded revenue growth of 31% year-on year in quarter three, driven by a combination of higher realization and volume growth.
That concludes our business and financial performance updates for the quarter. With this, I close my opening remarks, we will now be happy to take your questions. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] We have a question from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.
Lokesh Maru — Nippon India — Analyst
Hi sir. I just have one question. On the feed segment wherein since soymeal prices are down year-over-year what is, in general hurting the margin recovery as such as a segment for us?
BALRAM YADAV — MANAGING DIRECTOR
Your voice was not very clear. Can you please repeat the question?
Lokesh Maru — Nippon India — Analyst
Hi. I just have one question, on margins within the feed segment has been driven that soymeal prices have corrected quite significantly. What is hurting our margin recovery as such? And what is our expectations going forward, on margin front?
BALRAM YADAV — MANAGING DIRECTOR
I must tell you that particularly shrimp and poultry feed both layer and broiler, there is a shrinkage in the market side but we still are growing and our market-share is growing. Just because there is a little bit of intense competition, the transmission of increased raw material costs had not been fully transmitted, so we can see a little bit of — I would say price competition amongst the players, but my sense is that the margin recovery will start probably towards the end of this quarter when rapeseed etc, etc if available and we see further drop-in raw-material costs. So, I think I don’t see that happening in next three to four weeks, but definitely in six-weeks time things will start improving in the Animal Feed business.
And I must also tell you that we have a single-minded focus of going in for more-and-more volume growth that is more-and-more market-share in several markets where we were three and fourth in positions we have come to one or two in several segments and I think we have the initiative in case we are able to wait for the margin for a quarter or two I can definitely say that we will register a double-digit growth in coming quarters in the Animal Feed business.
Lokesh Maru — Nippon India — Analyst
Sure sir, got that. And within feed it should be a blend of like let’s say, soybean and wheat and wheat — grain prices being again [Technical Issues] inflationary pressured zone. What are you — from this blend of three, how are you seeing the margins actually on each of them turning around — as in coming along as of now?
BALRAM YADAV — MANAGING DIRECTOR
Our sense is that a blended margin will continue to be close to about INR1,500 whatever we got in Q3.
Lokesh Maru — Nippon India — Analyst
Sure sir, understood. Sir, within our palm oil business, we have seen some shrinkage in our extraction ratio. Any particular reason for that?
BALRAM YADAV — MANAGING DIRECTOR
So a lot of work has happened in production process, in handling and I think there is lot of efficiency, which have been built-up across the supply-chain. So, starting with now we have supervisors who tell the farmer when to harvest and that also helps us in scheduling the arrival of fruits in the factory, so that they are put in the mill within few hours unlike previous times when the fruit would have to wait on ramps for about 12 to 18 hours before being processed. So it is the entire supply-chain efficiency plus some improvements in our production process, which has resulted in this improvement in OER.
And I must say that the major movement has already happened, so you won’t see such quantum jumps in future, but marginally there is a scope of continuously improving OER, for next few years because of improved practices, improved germplasm and improved supply-chain.
VARADARAJ. S — CHIEF FINANCIAL OFFICER
I would add that on a quarter on quarter basis, there will be some minor variations in OER year because of oil content in the fruit. So those minor variations will be there, but overall [Multiple Speakers].
Lokesh Maru — Nippon India — Analyst
Got that. And sir, keeping the palm prices apart we have seen that our volume growth has been quite handsome, how do you guide the volume growth going-forward and where do we stand today in terms of acreage and any additions — potential additions because of this Nagaland approvals. So, any light on growth part volume part of the palm oil business. That’s my last question. Thank you.
BALRAM YADAV — MANAGING DIRECTOR
Let me tell you something futuristic that not only Nagaland, we have MoUs in place with Assam, Nagaland, Manipur, Tripura. Mizoram, and we are like looking to get more allocations in Assam. Apart from that, Tamil Nadu and Orissa have also renewed their program. So we are in a massive expansion mode as far as our nursery is concerned, say a year-ago we had a nursery of about a million seedlings, today we have nursery capacity of 2.5 million seedlings, that will result in area expansion of close to 10,000 to 12,000 hectares per annum, up from 3,000, 4,000 hectares, which used to happen in last few years including this year.
So, I think NMEO-OP scheme is doing whatever it was required to do and there is a huge focus of state and central government in this space so that is point number-one. Point number two is that we are also very worried about this volatility of oil price, so there have been certain investments made by us to insulate this business as much as possible, so we have set-up a 400 ton refinery, so that we are able to refine the oil and increase the shelf-life of that oil, so that there is no particular pressure on us to sell on daily basis because you CPO develops FFA which is then CPO goes at a discount to the market price, if FFA is higher.
And we also set-up a solvent extraction plant of 100 TPD mainly for certain by-products which come out of this process and we will extract more oil and make them usable for the Animal Feed business. So I think that these initiatives will continue. There are several other initiatives where we convert well wealth from waste, and I think that will continue. Our sense is that in a year’s time, significant part, when I say significant part, almost 25% to 30% of our profits will come from allied activities other than oil sales, so I think that is the effort.
Regarding the prices, I cannot say much Mr. Godrej, would you like to give some guidance from CPO prices?
NADIR GODREJ — CHAIRMAN
Yes. We do you expect that CPO prices will rise a little bit, but not very much.
Lokesh Maru — Nippon India — Analyst
Okay sir, got that, thank you so much for answering my question and all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Abhijit Akella from Kotak Securities, please go-ahead.
Abhijit Akella — Kotak Securities — Analyst
Yeah, good afternoon sir, thanks for taking my question. So, just a few from my side. One is on the Crop Protection business including Astec, if you could please just talk about your outlook for how that business is expected to perform given the inventory glut that seems to be underway across a lot of the world. Thank you.
BALRAM YADAV — MANAGING DIRECTOR
So I’ll request Mr. Anurag to talk about Astec first, then I’ll brief you about the Crop Protection business.
Anurag Roy — Chief Executive Officer
Yes, for Astec, as you might have seen the numbers, we have experienced significant headwinds, particularly in Q3 because of the muted domestic demand and the price erosion in the export market. And so that’s how our Q3 was, we are seeing some up takes in the market for supply-demand situation to balance out for most of our enterprise product, but that uptick pace is relatively lower than what we have seen last year. So, we continue to have very cautious next few months of volatility of coming in from the macros and we continue to focus on producing the highest efficiency product and strategic sourcing. So that’s in brief the outlook on Astec at least for the next three to four months. And I’ll turn it over to Mr. Yadav to talk about CP.
BALRAM YADAV — MANAGING DIRECTOR
So, I think CPB has been a mixed bag this year. If you ask me, our performance as far as this year is concerned there is no problem in the topline growth etc, and we have been extremely cautious not to get into that debtor and inventory trap. Now, our big problem has been a little bit of hygiene, which is I would say a hangover of last two years of monsoon failure and COVID during our main months April-May June-July in both the years and I think that cleanup has been the significant part of the dent, which has come in profitability.
So my sense is that from this quarter onwards, you will see things going up. I must also say that we are very encouraged by the huge success of Gracia and Hitweed this year and you can say what is the growth in Gracia. Yeah, so in crores nine months Hitweed and Hitweed Maxx last year nine months were INR105 crores, it is now INR183 crores and nine months, Gracia, last year was 47 and budget was 47 and we have done already INR150 crores, so I think that portfolio choices have been made whatever was supposed to be provided have been provided in spite of the fact that we believe that some part of it we will definitely recover in the coming quarters.
But from — for good orders’ sake we have provided so that we don’t continue with them. The team has also been changed, so I think all these things which were required to transform this division have been done and you will see a very, very big improvement [Indecipherable] in the coming quarters and I think we should get back to our normal PBT level, which used to be for last several years in this business.
Abhijit Akella — Kotak Securities — Analyst
Got it sir. So, on the standalone business basically I guess we are implying that the upcoming year will be significantly better in terms of margins, particularly. On Astec if you could share your thoughts on how you see industry shaping up, do you see these challenges persisting for some indefinite amount of time in the future or will it be more of a transient passing phase?
Anurag Roy — Chief Executive Officer
See for Astec, what we are seeing is clearly there were a host of factors that led to weakening of margins and volumes, particularly in Q3. One was the erratic weather conditions across the globe, which we spoke about in the previous calls as well, then China has also become extremely aggressive, particularly in the export market. One, because of their dual control policy in China has also been relaxed and they also have seen weakening in demand in the internal China market.
So, there have been two or three of these factors that has significantly contributed to weakening of volumes and margins, so for few of the product portfolio, which we have, we are still seeing an over-capacity or huge price competition from China — for the other we are clearly seeing that the supply-demand balance is about to be reached or we already see those product reaching the supply-demand balance, so I would say that the situation is temporary. It should have turned around a little bit quicker but as we currently see that it might take few more months before some of the balance in the market both from the supply-and-demand side would be achieved and then hopefully our margins and our profitability would be back on-track.
Abhijit Akella — Kotak Securities — Analyst
Got it, thank you. That’s helpful. Also, just on the oil palm business, so a quick bookkeeping question, is it possible to share the volumes for this quarter as well as YTD?
VARADARAJ. S — CHIEF FINANCIAL OFFICER
Sure. So this quarter we had and FFB arrival of around 1.59 lakh metric ton, which is almost a 10% growth over the same quarter last year.
BALRAM YADAV — MANAGING DIRECTOR
And area added is double of almost last year. We did about 1800 now we have done about 3300 hectares.
Abhijit Akella — Kotak Securities — Analyst
Yeah, and the OER are remains in the range of 18% odd sir, is that right?
BALRAM YADAV — MANAGING DIRECTOR
Actually, OER for the quarter is close to 20%.
Abhijit Akella — Kotak Securities — Analyst
Okay. And just one last thing from my side was actually on the Bangladesh business, where also margins seem to have declined quite substantially, so I expect these price controls to continue in the foreseeable future and how do we see margins progressing in that business?
BALRAM YADAV — MANAGING DIRECTOR
To tell you something about Bangladesh, their import dependence on food is very high. And for our sector also, if you ask me, almost 70% of the feed ingredients are imported and there the currency is depreciating almost every month, so I think that the country is in a little bit of fix and that is why just to make sure that there are almost INR18 crore, INR19 crore population is secured. They have brought in price controls and lot of essential food commodities. So I’m saying that, that is part of the game there and I must tell you the kind of hit we have had is that, if you see, our contribution in FY 2022 in poultry feed was about INR2,375 and nine-month of FY 2023 it is negative of INR1,123.
And I must say that the call of the government I think all the industries, including all feed companies have cooperated with whatever government has said. My sense is that, now they have acceded to most of the demands of IMF and they are likely to get I think a lot of relief from IMF and we are seeing the first signs of removal of price controls in some commodities. So, my sense is I think that not in next few weeks, but I think by April or May I think it will be business-as-usual for Bangladesh unless and until a global recession sets in and I think they suffer as an economy because a lot of their foreign exchange is because of garments to Western world and remittances from the Western world.
Abhijit Akella — Kotak Securities — Analyst
Got it sir, just to clarify you mentioned the contribution has turned negative contribution margin and yet we are seeing positive in associates. So how do we reconcile those two?
BALRAM YADAV — MANAGING DIRECTOR
It’s negative only in a particular segment. In cattle feed etc there is no control. Cattle and aqua is almost two-thirds of our business where we are getting very good and if you see — if you see nine months’ profit is about INR26 crores, that is INR52 crores, because it’s a 50-50 JV so it is already there, but I’m saying that, had there been no price control, we should have been close to almost INR100 crores.
Abhijit Akella — Kotak Securities — Analyst
I understand sir, and sorry if you’ll permit just one last thing from me, it’s on the portfolio management side so we have indicated some sort of thoughts in the past of — trying to restructure our overall business portfolio to sort of make it more efficient etc. So if you could comment on that and maybe also particularly touch upon the Crop Protection side, whether you see both Astec and the stand-alone business remaining separate or would there be some merit considering combination of the two at some point, what your thoughts on that are. Thank you so much.
BALRAM YADAV — MANAGING DIRECTOR
So. I think if you see our past as a group, investing in harvesting is part and parcel of our business, so I think buying and selling in non-core, core etc is something which we always continue to look at. So, I think, in case there is opportunity, which is not there right now because I think most of our businesses are under external challenges and I think, not a great time to probably look for any kind of consolidation, but I must say that definitely we will be — it is always on the table for us to review these things. Since you have asked about the Astec Life question I think we have put to rest the discussion that we will ever merge CPB and Astec, it is not going to be there.
We are just going to commission in six to eight weeks time a state-of-art R&D center which will launch us into CDMO and one of the requirements of CDMO is that it should have the ability of operating independently because I think lot of confidential work happens and lot of confidence of our associates and our partners will come from Astec being independent. So, we have understood it very clearly. I think we appointed consultants to understand that in greater depth and I can assure you that Astec LifeSciences will continue to be an independent company.
Abhijit Akella — Kotak Securities — Analyst
Thank you so much. That’s very helpful and all the best sir.
Operator
Thank you. The next question is from the line of Aejas Lakhani from Unifi Capital. Please go-ahead.
Aejas Lakhani — Unifi Capital — Analyst
Yeah, hi team, thanks for the opportunity. My first question was to Anurag. Anurag if you could call-out a couple of things; one is CDMO, second half is usually better. How is that trending in this year? Also if you could call out what kind of price erosion has happened for the enterprise product and more specifically for the two products that we have a good amount of revenues coming from tebuconazole and propiconazole, if you could specifically call-out what kind of erosion has happened? Is there inventories, which is still built-up at customers end and for the base business, what is the normalized margin range that we should think about 2024?
Anurag Roy — Chief Executive Officer
Right. I think there are three, four questions here, so I’ll first talk about the CDMO business. So as Mr. Balram was also highlighting for Astec LifeSciences we clearly understand that in our current product portfolio — on the enterprise side, there is a huge amount of volatility and a threat from China’s aggressiveness quarter-on-quarter or year-on year. So, in terms of our future strategy, clearly the focus has been on the CDMO part of the business, so that we can ensure sustainable and profitable growth year-on year and that we would kick-start once our R&D is coming on-board in a big way. In terms of our performance on CDMO we stay very much on track. If you see our numbers last year, we were roughly around INR84 crores or INR85 crores on CDMO revenues and we plan to almost double it this year and that’s the indication which we have given in the previous call as well.
And year-on year we plan to maintain healthy 30% to 50% growth on our CDMO business, as we are seeing a strong pipeline of inquiries building up as our R&D is also coming on-board. Coming back to the question of margin deterioration, the last quarter has been — we were expecting as we got into the quarter, significant margin deterioration but it deteriorated by more than what we were expecting. There were some cancellation of — some of the big orders from the customer beginning of the quarter that also took us by surprise, because there was lot of inventory buildup, primarily the poor [Indecipherable] in the domestic market and you would have seen that de-growth in the domestic business in the last quarter and then to particularly on one of our key zole products why we do not give product wise indication on the margin, but as you talked about tebuconazole on that product if you just see the price erosion that has happened over the last six to eight months, we are seeing a price erosion of high of almost $22 to $23 price of tebuconazole coming down to less than $9.
And there has been an over capacity situation from China, there has been muted demand which all is contributing to significant pricing pressure. So we are observing these trends and the exertion from the China. China relaxation of dual control policy and we are going-forward with the preparation that for some zole products will continue to see these margin threat and hence our strategy to quickly diversify and expand into CDMO business. So, the sooner we get there, the more we would be immune to these kind of volatility in the margin.
But talking specifically on these zole product, we still feel that it’s a temporary supply-demand imbalance, change in strategy or competitiveness from China and there has been some high-cost inventory buildup from our side as well, which will all start to ease out and we’ll start seeing some uptick in the coming months as we move forward, even on these products. But at a broad level, our vision or our strategy is very clear that we want to immune from this volatility by quickly increasing the share of the CDMO business and our overall revenue.
Aejas Lakhani — Unifi Capital — Analyst
That’s helpful. Anurag, could you call out the nine-month number for CDMO and base business, what kind of margin range, should we expect for 2024 or it’s too early to call it out?
Anurag Roy — Chief Executive Officer
See, for the nine month CDMO numbers — revenue numbers are I think already there around INR93 crores that’s where we are..
BALRAM YADAV — MANAGING DIRECTOR
And enterprise is INR407 crore.
Anurag Roy — Chief Executive Officer
Enterprises is INR407 crore, so as I mentioned for CDMO whatever indication for the year, we have given, we are well on-track on achieving that number.
Aejas Lakhani — Unifi Capital — Analyst
Got it, Balram sir, one question to you, you mentioned at the start of the call that in the Animal Feed business you’re expecting the INR1.5 per KG to sort of continue, you didn’t quantify the duration for that. So, are you expecting that for the subsequent quarter and also in the AF business, you mentioned a point that there has been a shrinkage of market size for poultry and shrimp, is that something which is just a temporary blip or is there something that we should read into further? And when do we expect to go back to that 5% to 6% range from an EBIT perspective in that segment?
BALRAM YADAV — MANAGING DIRECTOR
So, let me talk about poultry first. I think poultry have gone through some tough times and that is why the population has come down and it is a cyclical business, so I will not be very surprised if poultry market is back once the prices rise which will happen in next few months. So, my sense is that we will be back to poultry growth by — I’m not talking about poultry feed, I’m talking about poultry growth by say September-October this year because that is why this season will start.
So having said that, but we will continue to go for more and more volumes in poultry segment and increase our market share. As far as margins are concerned. I think that margins will continue at the same levels at least for next two quarters, Q1, Q4 and Q1. The reason being that these are off-season for most of our raw materials and the kind of price competition we are seeing, it is highly unlikely that transmission of all cost will be possible and maybe some players going — who want to go for volume may drop prices also. As far as shrimp is concerned, the problem real.
And as we are unseated by Ecuador from our number-one position as a shrimp exporter because a lot of our quality issues etc, shrimp is going to have tough time unless and until some correction is done. My sense is that this decline in the size of the market in shrimp is likely to continue next year also.
Aejas Lakhani — Unifi Capital — Analyst
Got it, that’s very helpful. And sir, just one last question on FFBs what kind of volume should one be thinking about for FY 2024 because. I think, on last call you had said that substantial amount should come in from 2025, so could you just call out how volume should be for the palm oil?
BALRAM YADAV — MANAGING DIRECTOR
So, my sense is that next year also we will see a 10% 12% growth. But FY25 or FY26 I think for agriculture and particularly horticulture crops, things can change by a quarter or two. And in your parlance, quarter or two, maybe a different financial year also. So, the issue is that time, definitely more-and-more acres are going to come into production, so we might see in FY 2025, 2026 another say 14% jump, 2027, 2028, all this increases of this year will start coming in, so you will see progressively the quantum of jumps increasing as we go along, because from next year onwards, we are very sure that from 3000, 4000, or 5,000 hectares per annum, our expansion will go to something 10,000, 12,000 hectares per annum and, I’ve already told you that we have doubled the size of nursery and now we going to triple it in next six to eight months time.
So, I think that is the opportunity which has been created by the central and the state government because of that NMEO-OP scheme. So, I think that will continue. You must have also read that we have already got very good allocations in Telangana, we have asked for more and Telangana itself in case the government support continuous, will be 10,000 hectares per annum in case everything fructifies.
Aejas Lakhani — Unifi Capital — Analyst
Got it, thanks I’ll fall-back in queue.
Operator
The next question is from the line of Siddharth Gadekar from Equirus Capital. Please go ahead.
BALRAM YADAV — MANAGING DIRECTOR
One sec. I just wanted to add one point in aqua feed, while shrimp looks bleak the fish is the next big thing in this country because of renewed support and I think the central government is so encouraged by that Pradhan Mantri Matsya Sampada Yojana, which was brought in 4 years ago and INR20,000 crores were spent, you cannot believe the kind of growth Inland Fisheries have had and that has encouraged them to put another INR6,600 crores in the coming year. So, my sense is that shrimp decline will definitely be compensated by the phenomenal growth you will see in fish. The constraints will be hatcheries now. Okay, ao ahead, please.
Operator
Thank you. We have Siddharth Gadekar from Equirus Capital in the question queue.
Siddharth Gadekar — Equirus Capital — Analyst
Yeah hi sir. So, just on the enterprise business in Astec, now given that we have spoken about the overcapacity in our flu products is there any way that over the next 1.5 to 2 years we can look at diversifying away from these products given that the competition from China will always be there and the margin volatility is likely to continue because of that?
Anurag Roy — Chief Executive Officer
Absolutely. So, that is what I mentioned earlier, getting into CDMO is obviously one diversification strategy for the having a sustainable margin and within the zole, our product portfolio, within the enterprise products as well we are working on further diversifying — looking at few of the products which could serve as high margins in the short-term duration. So, absolutely, that clearly one of the key strategies, which we would be seeing these muted margins in the coming quarter as well.
Siddharth Gadekar — Equirus Capital — Analyst
Okay, and secondly, in terms of our land acquisition and MPP, which was supposed to be starting work in this year, what is the status on that?
VARADARAJ. S — CHIEF FINANCIAL OFFICER
So it’s on-track and at the right time we’ll make that announcement, so the review process is still on-track and…
BALRAM YADAV — MANAGING DIRECTOR
The due diligences is on till then.
Anurag Roy — Chief Executive Officer
The due diligence has been conducted right now and as soon as anything is finalized, we will inform the stakeholders.
Siddharth Gadekar — Equirus Capital — Analyst
Sir, what will be the capex amount this year then because we had guided for INR375 crores for FY 2024?
BALRAM YADAV — MANAGING DIRECTOR
So, we already are implementing one more plant, so that will be commissioned in September-October…
Anurag Roy — Chief Executive Officer
So, let me — so I think this is what we mentioned earlier also, so there has already been a herbicide expansion plan, which has been taking in Mahad which we have already started working on and that should be up and running by this year September or latest by November December so that’s on-track. So, the projections for the capex what we have given for this year, we are on-track on implementing that.
Siddharth Gadekar — Equirus Capital — Analyst
Okay sir, got it. Thank you.
Operator
Thank you. The next is from the line of Nitin Awasthi from InCred Equities. Please go-ahead.
Nitin Awasthi — InCred Capital — Analyst
Hello sir, wanted to know your views on two things. [Indecipherable] is easing a little bit in the industry and the impact it will have on the company if any. One is the use of DDGS, so now there is this move of ethanol plants coming up ethanol need from grain and the byproduct DDGS is going out there in plenty, which was not there — available in parts of India previously. But what I understand from whatever is out there, sir, the synthesis of DDGS is not possible by everybody, it requires technological advancement by companies.
So, is Godrej looking at it, will Godrej be able to use it to a great extent? Does it matter to Godrej at all?
BALRAM YADAV — MANAGING DIRECTOR
So DDGS is going to be a very welcome thing for the feed industry in this country, because it is a very good source of protein and it’s very competitive also, so we would welcome that. But I must tell you that when DDGS comes out of the system, it has almost 80% moisture and I think that there is the biggest cost in DDGS is the energy cost to dry it.
Now, one of the issues which we are seeing with several ethanol plants, is that they are not making efforts or not investing enough to dry DDGS, they just want to get rid of it in the neighboring areas as slurry, which can be directly fed to cattle also, of course, not that it is the best way to feed DDGS, but we definitely will look for opportunities of collaboration where we can go invest and get that DDGS in right form available to us in feed business. But the bottom-line is that, in any combination DDGS is a very welcome change.
Nitin Awasthi — InCred Capital — Analyst
Understood sir. And is the part about synthesization true that only the blending will increase only once the protein is synthesized and that cannot be done in general by everybody?
BALRAM YADAV — MANAGING DIRECTOR
No, it’s not. I’m saying once we put a drier system on other things everything is handlable, it’s not a big issue.
Nitin Awasthi — InCred Capital — Analyst
Okay. And what percentage of DDGS can you mix to your normal feed normal — proportion. I think this is the highest in fish feed if I am not wrong.
BALRAM YADAV — MANAGING DIRECTOR
No, I’m saying that fish and poultry and everywhere and high-quality cattle feeds also this can be used. Now, since it’s a very good quality protein definitely it competes with other high-quality proteins like fish meal and fish meal in aqua feeds and soybean in aqua feeds and poultry feeds, so I think at different levels and different prices we run a linear program and include that, but according to me, easily anything between 5% to 10% in these feeds is easily usable which is going to be a very substantial quantity as far as feed industry is concerned.
Nitin Awasthi — InCred Capital — Analyst
Understood sir, understood. Secondly I wanted to know a little bit about the…
BALRAM YADAV — MANAGING DIRECTOR
Such is the attractiveness of this product that about a decade ago, we had given an application to Government of India to allow imports of DDGS into the country so that pressure on protein inputs can reduce, but unfortunately all the DDGS outside is GM and that is why their permission was not given. I think it’s a wonderful raw material.
Nitin Awasthi — InCred Capital — Analyst
Understood sir, understood, thank you. Sir, the next thing I wanted to understand was a little bit from the competition front. We had a lot of –agri-tech companies let’s call them that start-up and venture into kind of becoming the middlemen between the farmer and the products and now they have launched their own products. I’m talking about companies in particular, where they had now data mined what their customers want, their need and now they are trying to build that pipeline by themselves. One of these companies have started a direct Animal Feed product that competes with you. You have any thoughts whether these agri tech companies will be able to make a dent in the market?
BALRAM YADAV — MANAGING DIRECTOR
So, we have been watching this space, but I think that it is still time to form a judgment on this, so I would not like to comment, but I think, in case you have any specific questions, any specific company, any specific area, you want to discuss. I’ll be more than glad to enlighten you on what I know about that space offline.
Nitin Awasthi — InCred Capital — Analyst
Definitely sir, let’s catch up then on that. Thank you. That’s all from my side.
Operator
Thank you. The next question is from the line of Aejas Lakhani from Unifi Capital. Please go-ahead.
Aejas Lakhani — Unifi Capital — Analyst
Yeah, thanks for the follow-up. So just wanted to get a sense of the poultry business specifically. So what was the contribution of live birds and the branded business this quarter?
BALRAM YADAV — MANAGING DIRECTOR
Hold-on, let me just hunt the numbers. So, if you see, the branded business was about 51% and live bird business was 49%. Last year that number. You want in crores?
Aejas Lakhani — Unifi Capital — Analyst
No, that’s fine. I was just checking can you call that out for nine months as well, because your trajectory is more?
BALRAM YADAV — MANAGING DIRECTOR
Nine months, we are 46% live and 54% branded.
Aejas Lakhani — Unifi Capital — Analyst
Got it sir. And sir, could you just also just again validate that contribution margins for RGC in the low-teens and Yummiez is quite high, right that understanding is broadly correct right?
BALRAM YADAV — MANAGING DIRECTOR
Yeah, so you’re absolutely right. And live birds is close to about 8%.
Aejas Lakhani — Unifi Capital — Analyst
Okay, perfect. And sir, just wanted to get a sense that, again, the focus is could you speak a little bit on how though branded business distribution is playing out because your focus is to grow that part of the business to reduce volatility. So could you comment a little bit about that?
BALRAM YADAV — MANAGING DIRECTOR
So I think, I must tell you that we have a very stable RGC business now. We are processing close to 60,000 birds a day, in both our facilities and I must tell you that every bird is used up profitability in both our plants. We are the biggest suppliers to several QSRs. We are also one of the big suppliers to D2C company which is a very, very stable business and I must also tell you that we are only part suppliers to these companies, because we still have constraints in capacity is because we have our own-retail business also and we also have to produce boneless chicken for our Yummiez facility.
So, I can definitely say that margins are stable and we have top of the line customers also. And we work very closely with them to improve quality, as well as do a lot of value addition in our plants, which is needed by them. And I think one more round of upgradation of plants is likely to happen in next three to four months and we will increase our capacity by another 15% 16%. And that’ll be the focus for next year.
Aejas Lakhani — Unifi Capital — Analyst
Got it sir, that’s very helpful. And sir, just another recheck on the dairy business that at what levels of sales and value-add does that business sort of breakeven today?
BALRAM YADAV — MANAGING DIRECTOR
I think it’s a interesting question, but I have a slightly longish answer. Now, last two years are very, very different from what it has been because we have data for our Creamline Dairy business for last 25 years and we have never seen such low margin because, you know, and it is known to everybody and results of every company has showed that, that we are not able to pass-through all the cost increases of milk in price and that is because of cooperatives and several of our industry players are very reluctant to increase milk prices regularly, so I think that has hurt the industry.
So if you ask me, we will do of close to about INR1,500 crores as the current contribution and we will make a loss. Had we done INR2000 crores, we would have very close to break-even. And had we done — today, we have already reached 40% value-added products in first-nine months, which is a big leap over last year actually and now we have already invested in SIG line, so we will have the capability of making multiple packing also.
So, my sense is that we’ll try very hard to reach 50% value-added products. We will also try and take price increases wherever possible in value-added product because it is not that price elastic as milk is. And in case, we reach the number I talked about next year with 50% addition, we will be I think home as far as profitability is concerned.
Aejas Lakhani — Unifi Capital — Analyst
Got it sir, this was very helpful. And the direct procurement, which was, it’s still that one-fourth range broadly?
BALRAM YADAV — MANAGING DIRECTOR
I just want to tell you that where our confidence comes from. I’m saying that in first nine months, our total value-added product grown by about 45% — 48%, sorry.
VARADARAJ. S — CHIEF FINANCIAL OFFICER
Growth in volume of value added product is 39%.
BALRAM YADAV — MANAGING DIRECTOR
390% but value growth is [Multiple Speakers] 43% value growth 39% volume growth and salience has jumped to 41% already in first nine months. The second thing is the direct procurement, definitely I think that has been focused but it is a slow grind considering there is milk shortage and I think everybody is holding on to their supply-chain, but that has been a very, very important focus and that will continue to remain a focus. Some substantial results you will see in coming years but I can’t put a number, because the current situation is a little bit grim as far as milk suppliers are concerned.
Aejas Lakhani — Unifi Capital — Analyst
Got it sir, and sir, could you finally just call out what has been the capex for the first-nine months and what is it for expected for 2023 and outlook for 2024 on the capex? Capex for nine months full-year 2023 expected and 2024.
VARADARAJ. S — CHIEF FINANCIAL OFFICER
This is for Godrej Agrovet consolidated?
Aejas Lakhani — Unifi Capital — Analyst
Yes sir.
VARADARAJ. S — CHIEF FINANCIAL OFFICER
We will give it offline to you.
BALRAM YADAV — MANAGING DIRECTOR
So I must tell you that I think this year we will definitely cross about — I think we will capitalize, close to INR300 crores because it will be a spillover of some plants, particularly Astec plant, which is close to more than INR150 crores will be capitalized sometime in September-October. But, I can definitely say that we are in the process of finalizing AOP for next year, so I think within few weeks time we will be able to tell you offline.
Aejas Lakhani — Unifi Capital — Analyst
Got it sir. Thanks a ton and wish you the best.
Operator
Thank you. The next question is from the line of Harsh Mantri from Flute Aura Enterprises Private Limited. Please go-ahead.
Harsh Mantri — Flute Aura — Analyst
Hello sir. Sir, I needed to understand the break up of the market share of all the sub-segments in Animal Feed business. So as you mentioned that some business is having some volatile time and the aqua business may grow in future. So, what would be the future growth aspect, and whether you would be further diversifying 50% [Phonetic] revenue share, you are gaining from the Animal Feed segment, what is the future outlook on the same?
BALRAM YADAV — MANAGING DIRECTOR
I did not understand.
Harsh Mantri — Flute Aura — Analyst
Sir, I needed to understand the break up of the market-share of all the sub-segments in the Animal Feed business.
BALRAM YADAV — MANAGING DIRECTOR
Very difficult. So what we do is that we collect this data once in Q4 when we discuss our AOP, LRP so I think that process is on. But I cannot give you a number but in next definitely next time we have this, we will give you segment wise market-share, and for that also we make an estimation of the industry since the data is very, very scattered in this industry. So, I think the question is very good. The only thing is that we need some time to answer that.
Harsh Mantri — Flute Aura — Analyst
Sir, any broader guideline on the same? Not to be precise.
BALRAM YADAV — MANAGING DIRECTOR
So actually, we did not want the out for some months. So I think in a few weeks’ time, we will be able to share that, just make a note of it.
Harsh Mantri — Flute Aura — Analyst
Sir, a further question on the same, like as you are diversifying into different businesses and you’re using your revenue-share from Animal Feed business — getting more products from your top-line. So, would it continue in the future also, what is your outlook?
BALRAM YADAV — MANAGING DIRECTOR
So, Animal Feed business revenue-share can even increase in case there is inflation in raw-material prices. But, in volume terms if you’d see that the other businesses will grow much faster. The Animal Feeds is likely to grow by 11% 12% next year. But if you see crop protection business will grow faster than that, OPP will grow, up, oil palm plantation faster than that, CDPL or our dairy business will grow faster than that. So I think it depends on inflation numbers also. But my sense is that, salience of Animal Feed business slowly will come down because other businesses are likely to grow much faster on volume versus.
Harsh Mantri — Flute Aura — Analyst
Okay sir, thank you.
Operator
Thank you. The next question is from the line of Aman, Individual Investor. Please go-ahead. Aman is not in the queue anymore. [Operator Instructions] As there are no further questions I would now like to hand the conference over to the management for closing comments.
NADIR GODREJ — CHAIRMAN
Thank you. I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we will be happy to be of assistance. Stay safe and stay healthy. Thank you once again for taking the time to join us on this call.
Operator
[Operator Closing Remarks]