Godrej Agrovet Ltd (GODREJAGRO) Q4 FY23 Earnings Concall Transcript

Godrej Agrovet Ltd (NSE:GODREJAGRO) Q4 FY23 Earnings Concall dated May. 10, 2023.

Corporate Participants:

Neha Mehta — Investor Relations

Nadir Burjor Godrej — Chairman — Non-Executive

Balram Singh Yadav — Non-Executive Director

Anurag Roy — Whole — Time Director & Chief Executive Officer

S. Varadaraj — Chief Financial Officer and Head – Legal and IT

Analysts:

Aejas Lakhani — Unifi Capital — Analyst

Lokesh Maru — Nippon India Mutual Fund — Analyst

Sumant Kumar — Motilal Oswal — Analyst

Abhijit Akella — Kotak Securities — Analyst

Aniruddha Joshi — ICICI Securities — Analyst

Rikin Shah — Omkara Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q4 FY ’23 earnings conference call of Godrej Agrovet Limited, hosted by DAM Capital Advisors. [Operator Instructions]

I now had the conference over to Ms. Neha Mehta from DAM Capital Advisors. Thank you. And over to you, ma’am.

Neha Mehta — Investor Relations

Good afternoon, everyone, and thank you for joining us on the Godrej Agrovet Q4 and FY ’23 Earnings Conference Call. From the company we have with us Mr. Nadir Godrej, Chairman of the company; Mr. Balram S. Yadav Burra, Managing Director; Mr. S Varadaraj, Chief Financial Officer; and Mr. Anurag Roy, Chief Executive Officer of Astec LifeSciences. We would like to begin the call with brief opening remarks from the management following which we will have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today’s call will be forward-looking and a disclaimer to this effect have been included in the earnings presentation shared with you earlier.

I would now like to invite Mr. Nadir Godrej to make the initial remarks. Thank you. And over to you, sir.

Nadir Burjor Godrej — Chairman — Non-Executive

Good afternoon, everyone. I welcome you all to the Godrej Agrovet earnings call. I hope and wish you are doing well. Godrej Agrovet recorded consolidated revenue from operations of INR9,374 crore rupees in fiscal year ’23, growing at a 13% year-on-year. The growth was primarily driven by market share gains in animal feed and robust volume growth in branded products in our food businesses. Both of our food businesses delivered excellent top line performance in fiscal year ’23, growing at 28% year-on-year. Our in-licensed insecticide, Gracia, recorded robust volume performance in its first full year of launch. However, our profitability was impacted due to a drop in operating margins of crop protection, animal feed and the dairy businesses. Vegetable oil and Godrej Tyson reported margin improvement as compared to the previous year. In fiscal year ’23, our efforts to optimize working capital and improve cash flows yielded results. Net working capital days improved from 79 to 51. Consequently, net debt to equity ratio improved from 0.57 as of 31st March, 2022 to 0.47 as of 31st March, 2023. Coming to the key financial and business highlights of each of our business segments. In Animal Feed, we achieved a volume growth in quarter four and fiscal year ’23 led by the cattle feed category as we continue to gain market share. The segment margin, however, was impacted in quarter four by volatile commodity price movements and limited transmission due to pricing pressure mainly in poultry feed.

For the full year, a knee-jerk government intervention that resulted in decline in raw material prices in quarter one impacted profitability as high cost inventory had to be consumed. Our vegetable oil segment registered strong growth in fresh food crunch volumes in quarter 4. However, profitability was impacted by lower group palm oil prices as compared to the previous year. Despite a decline in CPO and PKO prices from the record high levels of fiscal year ’22, we maintain profitability in fiscal year ’23 driven by consistent volume and improved operational efficiency. In the standalone crop protection business, the top line growth was led by higher sales of our in-license insecticide Gracia, in-house herbicide portfolio and lower returns. Segment results declined due to the lower sales of plant growth regulator category and pricing pressure. The segment achieved a substantial improvement in the working capital cycle and collections in fiscal year ’23. For Astec LifeSciences, quarter four and full year top line was severely impacted by sluggish demand for the key enterprise products, tebu and propi and a sharp drop in realization. In addition to this, high-cost inventories led to the EBITDA margin contraction in fiscal year ’22 versus the previous year. Contract manufacturing business however, grew by 1.9 times year-on-year with improved profitability in fiscal year ’23. The Poultry segment recorded strong growth in top line as well as profitability.

Branded businesses, mainly a Real Good Chicken with 30% volume growth continued to drive the top line performance in quarter four for the full year. Godrej Tyson delivered strong volume growth in branded categories, Real Good Chicken at 53% and Yummiez at 34%. Profitability in fiscal year ’23 also significantly improved with consistent performance of the Real Good Chicken segment. For the dairy segment, volume growth was robust for quarter four as well as fiscal year ’23, backed by a 37% increase in value-added products for the year. The salience of value-added products in revenue increased to 32% in fiscal year ’23 from 29% in fiscal year ’22. However, partial pass-through of rising milk procurement costs adversely impacted profitability. GAVL’s joint venture in Bangladesh, ACI Godrej, recorded revenue growth of 25% year-on-year in fiscal year ’23, driven by a combination of higher realization and volume growth. That concludes our business and financial performance update 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

[Operator Instructions] We move on to the next question which is from the line of Aejas Lakhani from Unifi Capital. Please go ahead.

Aejas Lakhani — Unifi Capital — Analyst

Yeah, hi Sir, could you just spell out what are — what all has happened in each of the segments. Specifically, you could start with animal feeds and talk about, sir. There was a recovery that we were expecting in margins, EBIT per kilo. That has surprised us. And the outlook per segment, please, if you could start with first.

Balram Singh Yadav — Non-Executive Director

Let me start with animal feed. And I think it was a very tough year from the point of view of commodity ups and downs. And you know our first quarter was wiped out because of soya exports were allowed suddenly and all of us were having a lot of stocks of high-cost materials, and we made a loss in first quarter in animal feed. Now we expected this to recover, but unfortunately Q4 has been extremely bad for broiler feed, which pulled us down. And I must also say that whatever growth we got because of cattle feed, and that continues to be the situation in the new year also. So we are still trying to figure out what is happening because of the low prices of broiler, the placements was less. And you can see the life segment in Godrej Tyson also suffered. So my sense is that there is certain amount of stability which is coming now. I am not very sure that whether we will reach 5.3% EBIT margin which we had reached in Q4 of FY ’22. But definitely the steady rise in the margin was started happening. And the kind of indication which was expected in commodities has not happened. Hopefully, there are no price increases, definitely our margins will show major improvement over Q4 FY ’23 in the first quarter itself.

Aejas Lakhani — Unifi Capital — Analyst

Got it. And sir, could you speak about traditional crop protection and outlook on Astec as well?

Balram Singh Yadav — Non-Executive Director

Yes. So as said, I think Mr. Anurag is here, so he’ll talk about it. On normal crop protection business, I must say that I think we had a major housekeeping done for last 4, five quarters in this business. two of our seasons were wiped out because of COVID and very poor rains. And we had a lot of toxic inventory toxic outstanding, etc. So that we took product hit because of sales returns and you know story. But there have been a lot of improvements in working capital. We recovered, as a company, about INR1,000 crores of cash. Cash flow was positive by about INR1,000 crores. And major part of the cash flow came from the crop protection business. So we have put a lot of discipline, lot of controls which are now digital so that human intervention is reduced. We also have new product launches this year, last year, Gracia was launched, and we will build up on that. And my sense is that the new product [Indecipherable] is also going to do well. Having said that, I have said you two things which are likely to happen this year, apart from improved profitability, just because these molecules have a lot of full, huge amounts of field work we have done. We believe that our dependence on plant growth promoters, which were high margin but required a lot of credit and a lot of, I would say, bad debt are also generated because of that. We are under no pressure to sell to meet our profit targets. And I can assure that for crop protection business it will be [Indecipherable].

The other thing I also want to mention, the portfolio we are building. I would not say totally, but it is reasonably well-insulated from monsoon as compared to our portfolio two years ago. Oil palm plantation, the prices of palm, we are expanding in different areas. So 5, six years later there will be major jump in production of fruits because we will have planted almost 50,000, 60,000 hectares in Telangana and 15,000 to 20,000 hectares at Northeast till that time. We believe that oil prices will continue to be steady, and we will have steady margins in this business. As far as Godrej Tyson is concerned, the branded business has done well. That is the focus that you will see increasing failures of branded business and reduce failures of [Indecipherable] business. We started this process about two years ago and we will continue with that. Creamline Dairy, the problem was pass-through of cost. Otherwise, if you see the value-added products which are traditionally the money-spinner are growing very rapidly. Our failures is also improving. So we are happy in a way that the strategy is working as far as value added is concerned. But a few price increases are desired or a reduction in milk cost sales desired. And there is a possibility of both happening this year because we are seeing many plus already. Yes, Anurag, that’s it.

Anurag Roy — Whole — Time Director & Chief Executive Officer

Yes. So for Astec LifeSciences, we continue to face significant challenges, particularly from the last two quarters. And the entire agro industry is going through these challenges, particularly the first major one has been the inventory pile up in the channel post the COVID situation, supply chain disruption also led to the inventory stockpile. That was one. We also saw the erratic weather conditions which led to some of the enterprise products less demand in the last two quarters. And as we are now approaching into the Q1 of this year, what we are seeing from the customer is more of a wait-and-watch strategy because there has been lot of declinationtionary impact on the AIs which are coming from China and consumers are still thinking that the prices on some of these enterprise product might go down further. So they are waiting and watching. Our sense is that a lot of this inventory would try to balance out. There will be more supply-demand balance achieved by end of Q1 or getting into Q2. And lot will also depend on how the uptake for the next season, which typically starts from June across the globe will happen. So we had challenging last two quarters as Mr. Yadav was mentioning. But on the enterprise side of the business, we continue to see muted financial performance as we get into this year. But as the season picks up, we are very positive that enterprise business should be back up. On the CDMO side, we have done extremely well last year, almost doubled our business from the previous year. So that lays the fundamental foundation of our business very well. So we continue to focus on those foundational elements of the business and maintain the same run rate as we get into this financial year.

Aejas Lakhani — Unifi Capital — Analyst

Anurag just a follow-up, in the two key products on the enterprise side, what kind of price erosion have we seen from the two quarters prior? And do we expect that given that you mentioned that the season starts from June, do you foresee any uptick in those realizations? Or do you expect the same price points to continue?

Anurag Roy — Whole — Time Director & Chief Executive Officer

See, the kind of price decline on particularly these two products, which you’re talking about has been historically low. Never over the past decade have we seen such significant decline in four to five months. So tebu on one of the enterprise products, the price declines were as high as 69% from its peak four quarter back. On propi, the price declines were in the range of 42% to 44%. So that’s the kind of steep decline in prices, which we have seen over the last four to five months. Going forward, on propi particularly, the decline in prices were, because of the inventory pileup. There was a shortage of propi post COVID. There was plant shutdown from China. So that has led to inventory pile-up at customer sometime last year. And that’s why a lot of companies making this had shown good results last financial year. So there’s not been much uptake from these customers, and it was further worsened because of the erratic weather condition. So that led to complete shortfall in uptake of propi. So once the season returns, I believe or I feel that the demand for this should come back and the supply demand situation is pretty much balanced. On the tebu side, because of global factors, because of even muted demand within China and overcapacity situation there, we continue to see tremendous export pressure on the export prices for tebu as we get into this year as well. So I think tebu, we still feel that there will be challenges as we get into this year. But on propi, we expect once the weather comes back, we should be able to get back on track.

Aejas Lakhani — Unifi Capital — Analyst

Got it. And Balram Sir, just a follow-up on what you mentioned earlier. Sir, given that we are now in traditional crop production, doing the in-licensed products, which are relatively lower margins, how should we think about margins for FY ’24? Because the mix will keep now wearing. So what is the kind of range of margins that we should be thinking about for the traditional crop protection business?

Balram Singh Yadav — Non-Executive Director

To give you an indication, I think we will be back to our normal margin of 12% to 14% PBT on sales, which we used to make. The focus will be on ROC and working capital. I think we don’t want to lose that control.

Aejas Lakhani — Unifi Capital — Analyst

Got it. So you’ve given 12% to 14% is on PBT, right?

Balram Singh Yadav — Non-Executive Director

PBT on sales, yes.

Aejas Lakhani — Unifi Capital — Analyst

Okay. And sir, just one last thing is that, sir, on this dairy which continues to consume a lot of capital and is not generating returns for us, do we have any strategic thoughts in the current scheme of things? And also, have we taken any calibrated price hikes or have raw material prices softened already? Or is it showing you that any lease indication that the prices are softening for us to start breaking even in this segment? Because, sir, you had, I think, mentioned a couple of quarters back on the call that at 1,500 roughly we should be able to breakeven, right?

Balram Singh Yadav — Non-Executive Director

So if I correctly remember, I had said that same game contribution level about 2,000 [Indecipherable]. So I think most of the erosion of contribution has been because of our inability to take price increase because none of our competitors who are taking and continuous increase in the cost of milk. 2, three things we have done. I think last time I briefed you that we have engaged one of the big four consultancies to look at a lot of our efficiencies and our costs, etc., and possible pull out cost from both ends, procurement as well as sales. That is doing very well. I must also say that the value-added failures is likely to go up because the brands are doing well and weather permitting because South Asia has a couple bouts of rain. So April was a little subdued, but as it picks up, we believe that we will definitely register more than 20% to 30% growth in the value-added segment this year also. It may in case season is good, it will go to 40% also. So that is one of the builders of contribution. We have also built in in this that about 1% value restriction will still happen, that pass-through will not happen.

And with all this happening in case, we registered that 20% growth we are expecting in the overall business and about 40% value-added business. We believe that we will move closer to breakeven. I can assure you that whatever we are seeing in first few weeks at April which is now already with us I think we are right on that path maybe faster than we thought. And we believe that a little bit of help in case it is a plus, signs of which are already seen, I think we should be moving closer to breakeven this year. And I must also say that based on the experience we have in this business and talking to competitors, I think this kind of secular rise in milk prices for 8, nine quarters consistently without flush has been unprecedented. So in case it is a black swan event like that again or something else happens, I cannot tell. But whatever signs are, we are seeing an increase in milk availability, we are seeing tapering of the milk prices in the last few weeks. So I think all the signs are pointing out that we will improve significantly over FY ’23 performance.

Aejas Lakhani — Unifi Capital — Analyst

Got it. And sir, what is direct procurement today?

Balram Singh Yadav — Non-Executive Director

Direct procurement is about.

S. Varadaraj — Chief Financial Officer and Head – Legal and IT

23%.

Balram Singh Yadav — Non-Executive Director

There are two types of direct procurement. One is our own — the whole channel and one is through partners who only work for us. So if you take our own channel, it is 43% and growing, and partners who work for us would be — that should be close to about 50%.

S. Varadaraj — Chief Financial Officer and Head – Legal and IT

60%, 65%.

Aejas Lakhani — Unifi Capital — Analyst

But sir, the partners who work only for us are paid a small commission over and above, right? Or some sort of incentive?

Balram Singh Yadav — Non-Executive Director

So we have looked at that quite closely. So plenty of time in the year [Indecipherable]. Our milk costs are slightly higher than the partner’s milk cost because of their local knowledge, etc., they are able to drive down the costs. So if you see annually, I think, definitely we would like to move towards our own procurement, but we are not that badly off in partners. What you are referring also is that 25%, 30% of this contractual would be [Indecipherable].

Aejas Lakhani — Unifi Capital — Analyst

Tieups.

Balram Singh Yadav — Non-Executive Director

Tie-up procurements. Those tie-up procurements are very volatile. They reflect the supply/demand situation and that sometimes is 3%, 4% lower than our normal cost, or 4%, 5% higher than your normal cost. That is the segment we want to attack and that is segment want to reduce.

Aejas Lakhani — Unifi Capital — Analyst

Thank you sir.

Operator

[Operator Instructions] The next question is from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Thank you. Hi, sir. Just a simple question on what is the impact that you see on our different segments of conditions coming up. So one is also how have our segments performed during previous [Indecipherable]? And what is your expectation this time for different segments?

Balram Singh Yadav — Non-Executive Director

Definitely, poor monsoon affects the entire growth economy. And we will not be any different. So in case the monsoon failure is severe, what will get hurt most will be our crop protection business, even though the portfolio is becoming more and more insulated from bad monsoon but in a very, very bad season again it will be affected. I’m very sure that cost will go through the sky and cooperatives will bear most of them brunt. And so we will report to probably take those costs. So that is one big problem I see. I also feel that the positive side of poor monsoon or poor rainfall because El Nino is going affect large parts of Asia, I believe the certain amount of price increase will also happen in CPO. And that will be positive, but it will not be enough to take care of the kind of problems we will have in other businesses.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Thanks for our feed segment, maybe the green patches which are usually used for as fodder, raw fodder, that will be less maybe nine months from now or whatever [Indecipherable] during later part.

Balram Singh Yadav — Non-Executive Director

We have seen the cattle feed sales increases during drought. The only problem is that the other inputs become so expensive. But every time there is a drought we have seen some kind of a spike in our cattle feed sales.

Lokesh Maru — Nippon India Mutual Fund — Analyst

So that is the positive front. But on margins, also [Indecipherable] at this point [Indecipherable] coming up? And what is your expectation, like for the next — for this quarter per se, currently? [Indecipherable].

Balram Singh Yadav — Non-Executive Director

I can tell you [Indecipherable] statement that apart from Astec LifeSciences where things are steady, they’re still not improved. We still don’t see the green shoots we wanted to see in this quarter. And rest all our businesses, our margins are going to be better than Q1 of FY ’22.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Okay sir, got. Thank you.

Operator

Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.

Sumant Kumar — Motilal Oswal — Analyst

Yeah, sir. So despite a decent growth on top line, and we have seen cross-segment margin contraction. And in the past also we talked about the risk mitigating strategy for our margins. So what is going wrong? And what are we planning for the lower the volatility in the margin side going forward?

Balram Singh Yadav — Non-Executive Director

So let me just tell you that volatility is nothing new in this industry. Food actually has been volatile all over the world, and we have seen yoyo performance of very, very big companies also if you take data from the developed world also. Having said that, I think the journey started several years ago, and I’ve been briefing you in these conferences that one big thing for us to build a source of competitive advantage was research and development. And you have seen that in all areas we have invested — we invested in animal feed. And if you see, we have 7%, 8% CAGR in volumes ever since that time. Some years we have even grown 14%, 15%. So that is the nature of the industry. And we strongly feel that the 7%, 8% CAGR in feeds will happen because we have created that edge. One other example I will give you is that we created this brand called Samruddhi. And in cattle feed we have [Indecipherable] number one position in several states. Our growth in categories last year was 13%. And Samruddhi accounts were almost 30% of our cattle field volumes. So I think this is a product which has come out of R&D, it takes about 5, six years for something like this to happen. So R&D will drive most of the probably prevention from downside. The brands definitely have done well. You see [Indecipherable]. Unfortunately, we cannot deal in brand from commodity prices and good businesses. It has great bearing if you’ve seen the same thing happening in other industry, etc., etc. So we will always have our linkages. However, as the brands become big as the marketing expense increase, separately the premium we can charge will definitely be much more.

Then in the Astec LifeSciences the move towards PMO, the new R&D center, etc., which is open doors further for us and set us for every investment in Astec LifeSciences in several platforms, but also part of the strategy which was [Indecipherable] in 2017-’18. Our big problem is it takes five to seven years to implement several things because of infrastructure requirements, regulatory approvals and crop protection business, etc. One of the star products, for example, is Gracia. We will double the stake over last year if we get the material. But with the partner and registration [Indecipherable]. So we are well on that way. But if you really ask me, will we be dealing from volatility, the answer is no. The big thing will be that we will be moving away from more volatile to less volatile. [Indecipherable] will keep on coming down [Indecipherable] will come down as we go in the future. And that is how we are constructing our portfolio also. We are hoping that value-added dairy products will go upwards to 40%. Last year [Indecipherable] and Real Good Chicken, upwards of 20%, cattle feed, upwards of 18%, then in-house PDR in-licensing products, upwards of 44%. So I think the focus is in the right direction, but you will see some of the results coming not immediately, but in the next few years.

Sumant Kumar — Motilal Oswal — Analyst

Okay sir, thank you.

Operator

The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead.

Abhijit Akella — Kotak Securities — Analyst

Hi, am I audible?

Operator

Yes sir, please proceed.

Abhijit Akella — Kotak Securities — Analyst

Okay, thank you for taking my question, sir. Just on Astec to start with, the CMO business, would it be possible to just share how much the revenue was in the past year? You mentioned that it almost doubled. So is it somewhere close to INR200 crores now?

Anurag Roy — Whole — Time Director & Chief Executive Officer

So, yes, we closed at INR162 crores last year. That was almost double of what we did the year back.

Balram Singh Yadav — Non-Executive Director

INR172 crores.

Abhijit Akella — Kotak Securities — Analyst

Right. And is this largely driven by the new herbicide facility that we had commissioned? Or is it something else? And then if you could also please just update us on the status of the growth projects we had at Astec, particularly the — both this project, the herbicide one as well as, I think those three major triazole fungicides that we were sort of targeting. So what’s the thought process there? And what sort of investment are we looking at in the business over the next year or 2?

Anurag Roy — Whole — Time Director & Chief Executive Officer

Yes. So obviously, lot of the CDMO growth has come from our new investment in herbicide one plant. We had used those assets to build on the CDMO portfolio. And we are well on target or ahead of target of what we committed previously as well in terms of the utilization of herbicides plant 1. We continue to see a good pipeline of CDMO projects coming in. And hence, as you were asking, we are also investing in scaling up or putting another herbicide plant, which is likely to go commercial in this financial year. Around October, November this financial year, we’ll be commercializing under the herbicide plant. So that is the part of CDMO of growth will come from these assets. And then, obviously, we are utilizing our other assets, other sites as well for different reaction chemistries like [Indecipherable] as and when required to deliver on the CDMO part. On the fungicide or the herbicide product as a part of also our derisking strategy because we have been overreliant on few of the enterprise products. What we have now also taken up with the new R&D coming up is fast-pacing our development time cycles on some of the other enterprise products, which we are also expecting us to hit in this financial year, which not only will help us to derisk from some of these established products, but also give us delta improve the margins and revenues for the financial year.

Abhijit Akella — Kotak Securities — Analyst

Sure. Sir, just on the capex plan, if you could please help us both for Astec and for the overall Godrej Agrovet as a whole.

Balram Singh Yadav — Non-Executive Director

So we are in the process of formulating plans. So I think first and foremost, this R&D [Indecipherable] commission which is already capitalized. One more herbicide plant will be commissioned in October. We are already making plans to make first phase of a multipurpose plant, which will cost close to about INR500 crores. And most likely by the end of the year, we will start. We are still in the process of finalizing the location. And I think it will be announced very soon. So having said that, I think these are already on the anvil because we will need that multipurpose plant to produce products which are still — which are in process of development in R&D. So I think my sense is that we will be on track. We will be commissioning this multipurpose plant somewhere around December 24, which is the timeline we have in our plants.

Abhijit Akella — Kotak Securities — Analyst

Sure, sir. Apart from Astec, more significant capex plans in any of the other businesses?

Balram Singh Yadav — Non-Executive Director

All other businesses have [Indecipherable] for the company big chunks of capex in Astec. In other businesses, we have several debottlenecking projects, etc., but that will come close to about INR150 crores to INR200 crores in the current financial year.

Abhijit Akella — Kotak Securities — Analyst

Got it, sir. Just one last thing, if I may, if you’ll permit me. This was with regard to the decline in employee cost that we’ve seen this quarter. Seems quite significant. So what might have driven that? And also, as one previous participant was asking, if you could please just help us with the fresh fruit bunch number for the quarter and the full year.

S. Varadaraj — Chief Financial Officer and Head – Legal and IT

So Abhijit, this is Varadaraj here. On the employee cost, as you know, the current year has not been good, FY ’22-’23. And consequently, the variable renovation which we had sort of factored in our employee cost, that was not required to be provided for. And that’s the reason why in Q4 our employee cost has gone down. And in terms of fresh fruit [Indecipherable] arrival for the current Q4 FY ’23, that was around 56,000.

Abhijit Akella — Kotak Securities — Analyst

For the full year also, please.

S. Varadaraj — Chief Financial Officer and Head – Legal and IT

That wasd 5,44,000.

Abhijit Akella — Kotak Securities — Analyst

Thank you so much and I’ll come back in the queue for anymore. Thank you.

Operator

Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.

Aniruddha Joshi — ICICI Securities — Analyst

Yeah. Sir, thanks for the opportunity. See, in case of Creamline, what is our — in a way the business has remained in investment mode for a very long period of time. And I guess it is consuming the management bandwidth as well as the resources too. So how do you see the business? Maybe it may turn positive once the milk [Indecipherable] prices come down. But when do you see that business generating, let’s say, 15% plus ROA on a structural basis similar to the other dairy companies.

Balram Singh Yadav — Non-Executive Director

So in the last two years, lot of steps have been taken to improve efficiency, reduce costs, make some structural changes from brands, from commodity to brand, etc., with very good results. I just want to say that last year in value-added products [Indecipherable] about INR400 crores, we grew 48%, which is very, very heartening for us. And we are seeing steady improvement in margins without a drop in the milk cost because of our change [Indecipherable] improvement and other costs, I would say, reductions in the system. We are very, very confident that in case we get flushed this year, even if it is a minor one from a loss of INR56 crores last year, we will move closer to breakeven. So that is the expectation. And we are encouraged by what has happened in April. And what is likely to happen is yet to be seen. But we believe that I think what [Indecipherable] what we are also hearing from experts that this year we might come back to the normal cycle of flush during winter in this business. And if that happens, we will definitely break even. Now having said that, I think we have already invested a lot of money. We have invested in plants. We are seeing very good traction for our branded business. We strongly feel that [Indecipherable] branded business will grow considerably as we grow this business in future. And once this happens, once the brand becomes bigger, they will be then volatile. The growth will be more sustainable and insolated from milk costs. And we believe that in a year’s time, if we prove that model, we will be ready to make bigger investments and take the branded business probably national. I’m saying that as a company, we believe strongly we have the capability in branding products. And I think that will come into play once we prove that this is doable and doable consistently.

Aniruddha Joshi — ICICI Securities — Analyst

Sir, we have added now Godrej brand equity also to Creamline [Indecipherable]. So has that helped to improve the realization spend? Is there any better offtake at least in value-added products or —

Balram Singh Yadav — Non-Executive Director

[Indecipherable] value-added products, it really, really helps. [Indecipherable] how many of us [Indecipherable] closely every morning. But we definitely know what value-added products we are consuming. So that Godrej brand equity has definitely helped.

Aniruddha Joshi — ICICI Securities — Analyst

Okay. Okay. And sir, last question. In case of animal feed, which are the segments, I mean basically cattle feed, poultry feed and shrimp feed or fish feed, which are the segments which are facing maximum pressure right now? And do you see recovery in, let’s say, full quarter?

Balram Singh Yadav — Non-Executive Director

So shrimp is facing lot of pressure. We are a small I’m shrimp business. And definitely the market is also under pressure. Poultry feed is under pressure in the first few months because traditionally they are difficult months for poultry because of [Indecipherable], etc. I think cattle will be very, very steady. And fish feed just because of new plants getting commissioned in last year first quarter, it was not there, we are likely to see good growth in fish feed also. So I think [Indecipherable] this quarter, the drivers of growth will be fish feed and cattle feed.

Aniruddha Joshi — ICICI Securities — Analyst

Okay. Okay. And sir, I mean, no end to the problems in shrimp feed at all?

Balram Singh Yadav — Non-Executive Director

So shrimp feed actually, feed industry is dependent on the output.

Aniruddha Joshi — ICICI Securities — Analyst

Correct.

Balram Singh Yadav — Non-Executive Director

So you would know better than me what is happening. So I think but point is our stakes are not too big in shrimp feed. So we will be having 2% or 3% market share. [Indecipherable] where we have budgeted huge increases and we have the capacity. And our product is also accepted very well.

Aniruddha Joshi — ICICI Securities — Analyst

Okay sure. Okay, thank you.

Operator

Ladies and gentlemen, this would be the last question for today which is from the line of Rikin Shah from Omkara Capital. Please go ahead.

Rikin Shah — Omkara Capital — Analyst

Am I audible?

Operator

Yes sir, please proceed.

Rikin Shah — Omkara Capital — Analyst

Yeah. So on the Astec kind of things on the enterprise segment, [Indecipherable] I’m seeing a industry-wide weakness, I would say because of China coming back and inventory stuck in the system. But going forward, China would still be expected to be there on the supply side of things. So how would we be thinking about the same?

Anurag Roy — Whole — Time Director & Chief Executive Officer

Yes. So as I was mentioning earlier, obviously China is here post COVID, and we expect them to continue to be aggressive in the coming quarters or years to come. So the only way out there is expansion in our product portfolio or generating some differentiated advantage wherein we could compete head on with China. So in one of our key products, enterprise products, our cost structures, the supply-demand balance or the macros for us are equally favorable as to China. So we expect to maintain our cost position there. And we expect to maintain margins in those lines of products for us. For the products where we are hit directly and where we have little control and we are dependent on China, as I mentioned earlier, we have taken a very aggressive plan to broaden our product portfolio. We are putting in few of the [Indecipherable] enterprise products within the fungicides as well as herbicide area to expand our portfolio. And we’ll be balancing out our margins based on these expanded product portfolio. So broadly, these are the two strategies within the enterprise segment. And then at an overall business level, as myself, Yadav was also mentioning, we are heavily investing and focusing in the future on expanding our CDMO business through partnerships with innovators of the world across segments, which will give us good sustainable revenues and profit at an overall level. So I think with these 2, three strategies, we expect to move up the value journey for Astec from existing the portfolio products, which we have and then have much more stable and sustainable top line as well as profitability.

Rikin Shah — Omkara Capital — Analyst

Fair enough. So with everything that has happened in the last two quarters, we are still a bit compared to FY ’22 INR88 crores, we clocked in I think INR162 crores in the CDMO part. Is that fair?

Anurag Roy — Whole — Time Director & Chief Executive Officer

Yes. Yes.

Rikin Shah — Omkara Capital — Analyst

So going forward, can we still expect positive trajectory here?

Anurag Roy — Whole — Time Director & Chief Executive Officer

Absolutely. And that’s where most of the energy from the management side, top management side, investment side, we are heavily focusing there. And there is no reason we cannot expect similar kind of double-digit growth as we move into subsequent quarters.

Rikin Shah — Omkara Capital — Analyst

That’s all from me. Thank you.

Anurag Roy — Whole — Time Director & Chief Executive Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, as that was the last question for today I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Nadir Burjor Godrej — Chairman — Non-Executive

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 would 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.

Neha Mehta — Investor Relations

Thank you very much, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.