Rallis India Limited (NSE: RALLIS) Q1 2026 Earnings Call dated Jul. 15, 2025
Corporate Participants:
Unidentified Speaker
Gyanendra Shukla — Managing Director & Chief Executive Officer
Subhra Gourisaria — Chief Financial Officer
Analysts:
Unidentified Participant
Prashant — Analyst
Rohit Nagaraj — Analyst
Vishal Dudhwala — Analyst
S. Ramesh — Analyst
Abhijit Akela — Analyst
Saurabh Jain — Analyst
Chintan Modi — Analyst
Presentation:
operator
Ladies and gentlemen, good morning and welcome to the Railus India Limited Q1FY26 earnings conference call. As a reminder, all participant lines will remain 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 the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded. Ladies and gentlemen, we have with us today Dr. Gyanan Rajukla, Managing Director and CEO and Ms. Shubhra Gaurisaria, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today’s discussions may be forward looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation. I now invite Dr. Ganeran Shifla to begin the proceedings of the call. Thank you. And over to you sir.
Gyanendra Shukla — Managing Director & Chief Executive Officer
Thanks. Good morning. Just wanted to check if people can hear us.
operator
Yes sir. Please go ahead.
Gyanendra Shukla — Managing Director & Chief Executive Officer
Okay, great. Good morning everyone and thank you for joining us today on our quarter one fiscal year 26 earning call. As mentioned, I have got alongside with me Subra Gaurisari, our cfo. Let me begin the discussions by getting into industry landscape initially post which I will discuss rally for specific developments. The global agrochemical market is showing early sign of recovery after two challenging years of degrowth. Since 2023, inventory levels have normalized and the sharp decline in prices, particularly for generic products has largely come to a halt. While recovery is progressing at a slower pace in Latin America.
Back in Africa, these regions are gradually stabilizing. The shift reflects a broader improvement in global demand dynamics and potential turning out points for the industry. In India, market segment sentiments are improving on the back of early and broadly favorable monsoon, high reservoir level and supporting crop MSPs. The estimated crop production for 2425 stands at 354 million metric tons. That is 6% increase over previous year. Tecres also has expanded across key crops. In crops like paddy it went up by 7%. Seven soybean 4.5%, groundnut 51%, pulses 12.6% and coarse yield cereals above 17%. Field reports indicate a shift in cotton sowing patterns driven by better price realization through the issue of illegal RR BT cotton.
Though the issue of illegal BTRR cotton remains with low carryover stocks opening space for inventory replacement and the possibility of modest price increases. The Indian agrochemical market holds a cautiously optimistic outlook. Coming to Rallis specific developments, we had a robust Q1 performance on the back of strong volume growth and double digit growth across businesses. Our revenue stood at 957 crore, 20% up over previous year and profit after tax at rupees 95 crore versus 48 crore of previous year. Both crop care and seed business sold strong performance are up 16% and 38% respectively over previous year.
We witnessed double digit volume led growth of 13% in crop care 23% crop care and B2B businesses. EBITDA for the quarter stood at rupees 150 crore. It is higher by about 57% compared to the same quarter last year and CAT for the quarter stood at rupees 95 crore compared to the 48 crore reported during Q1 fiscal year 25. Getting more specific about the individual businesses starting with domestic crop care business, crop prices are relatively better particularly in crops like Basra, maize, oilseed, cotton and millets alongside broadly favorable monsoon as the primary growth driver for the business input prices were relatively stable during the quarter which in turn resulted in better margin for the business.
In terms of product categories I had been indicating herbicide is one area which is growing faster driven by the labor dynamics in the country and has performed well for us. As per our strategy, we have been strengthening the herbicide portfolio. During this quarter we have launched six products in the herbicide category namely Alato is a Padi herbicide, Penflow again a Padi herbicide and a D Weed which is a non selective herbicide among them. Also our new product Dodrio which is a fungicide for paddy seed blight and Master Gold fungicide for grapes and Fiplan, it’s an insecticide for cotton will fill the portfolio gaps.
During the quarter we have launched nine products in the crop protection business including B2C business. In the B2C business, soyin and plant health business is up by 33% in line with our strategy. As mentioned earlier, SPH business continues to be our strong pillar for long term growth and we will continue to invest in this segment. Our strategy is focused on driving growth by placing greater emphasis on developing differentiated products. Also, we are steadily enhancing our front end capabilities with customer centricity at the core. At the same time we are working towards building a more connected and agile organization by leveraging digital and artificial intelligence intelligence initiatives.
These technologies will enable us to scale efficiently and strengthen our engagement with both customers and farmers, bringing us closer to their evolving needs. Talking about crop care, B2B business revenues stood at rupees 203 crore of which export is higher by 75% compared to the similar period last year. We have grown in volume mainly from Metrobridge, thiophenate, methionine, metallaxyl and Hexachonazole. Our CSM business was impacted by phasing but it is on track for the full year in terms of our key product. SF8 continues to face challenges in Brazil and US pendimethylene operated at a low capacity but we are confident on the long term prospects of the technical.
Metrovision and Hexachonazole exhibited stimulus traction in the US and Southeast Asian markets respectively. Our B2B segment is focused on accelerating long term growth through building strengthening global customer partnerships, focusing on key markets including usa, Brazil and Japan and expanding our product portfolio that includes CSM formulation. We have made encouraging progress in initiating new relations with global measures of some of our technical products and our contract manufacturing segment. We are also actively working on expanding formulation partnership with international players to strengthen and diversify our portfolio. These efforts are aimed at building long term resilience and enhancing our strategic positioning.
Specific initiatives are underway to drive growth both by onboarding new customers and by deepening engagement with existing one. These excels are expected to significantly improve capacity utilization of state manufacturing facility in the hedge chemical zone. We are confident that this business will deliver meaningful contribution to both our top line and bottom line in the coming years. That summarizes our updates on the chemical front. Talking about seed business now, revenue has significantly jumped by 38% to rupees 305 crore versus Q1 of previous year. Despite the reduced cotton acreage and RRBT cotton expansion, our biggest north cotton has done very well.
However, we have challenges in maize and paddy due to supply constraints. Our seed say which is based on AI and ML forecasting abilities is helping with optimal placement in the market in terms of a long term strategy for the business. We are on the right path of sharpened portfolio choices and driving sustainability profitability with measures being taken across the value chain. In conclusion, I think the near term outlook for business driven by better farmer sentiments and positive demand for both domestic and export markets liquidation trends need to be watched across both crop and seed segments.
We are confident and optimistic about the overall growth prospects in medium to long term. That concludes my opening remark. Now I’ll hand it over to Subra our CFO for a detailed analysis of the financials. Subra, over to you.
Subhra Gourisaria — Chief Financial Officer
Good morning everyone. I’ll walk you through the financials and after that we can start the Q and A session. Our revenue stood at rupees 957 crore as against rupees 783 crore for the same period last year with PAT rupees 95 crore versus rupees 48 crore for the previous year. Importantly, the growth was led by robust volume growth across the businesses. EBITDA for the quarter stood at rupees 150 crore against 96 crore for the same period last year. In terms of crop care B2C business, it had a good growth of 13% whereas SPH business is up 33%.
Our trade inventory has also been satisfactory during the quarter. We believe sentiments have improved with broadly favorable monsoon and better crop prices. Moving on to exports business demand recovery has improved. Price fall has largely stabilized and an early price recovery is also seen in some products. We’re working on expanding our customer base and product portfolio to build a more resilient business. As far as seeds business is concerned, Our revenue is rupees 305 crore with 38% growth over previous year. We made calibrated placements considering the inventory level and I hope that and are hopeful that our liquidation trends will be favorable.
Our efforts continue to be directed towards driving focused execution both at the front and the back end. This includes portfolio optimization and looking at driving cost efficiencies and simplification across the value chain. As mentioned by Dr. Shukla, we launched nine products in crop care B2C and 14 in C. The reorganization has been completed for SMM teams for crop care B2C, B2B and seeds business. This is expected to enhance operational agility with revised business processes. We’ll continue to be relentless on improving working capital efficiencies both for fixed and working capital. We do have a very healthy cash and bank balance as of 30 June as well and continue to have no external debt borrowings.
Also very prudent in capex investment and envisage and expense. Total Capex investment would be in the range of 100 crore. Mostly related to plant upkeep and maintenance, R and D and capital solar plant. In summary, we are implementing various initiatives and a drive towards achieving consistent comparative and profitable growth. That concludes the opening remarks. We can now start the Q and A session.
operator
Thank you.
Gyanendra Shukla — Managing Director & Chief Executive Officer
So before we start Q and A, I think some of you would have also heard about the news. Subra, right? Because all of you probably many of you have been connected with her. She is moving on for a larger responsibility in another group company. Right? CE has been of a great service to Rallis India. Done fantastic job of overall managing business strategy as well as finances of the company. So I want to Put on the record. No. All the appreciation for all what she has done. I think she’s done been a fantastic person, great business partner to me.
But we’re going to miss her services here. Doesn’t mean she’s going away. She’s just 20 minutes away from the place I said. So I’ll continue to reach out to her for her advice on this strategic matter. So thank you Subra for all your great work you have done. And I wish you all the best. You move on to a larger company within the group. So that’s a testament of your abilities and recognition by the group of your capabilities. So thank you for all what you did for us. So we can move on to Q and A now.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchton telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Rahul Singh Bhadauria from Elara Capital. Please go ahead.
Prashant
Hi, this is Prashant from Elara securities. Congratulations on good set of numbers and congratulations to Subra ma’ am as well for your new role. So my first question is how much is the top line from the 9th new crop protection products and 14 new seed products that we have introduced. Am I audible?
Subhra Gourisaria
We have another question as well.
Prashant
Yeah, the next question is to Mr. Shukla sir. How has been. How has the cost structure altered now since the time you have taken over the range? I mean for example, how much was the fixed cost earlier as a percent of total cost and how much is it now? And same for variable cost also. Okay, do we take one by one or we answer one by one will be better. First question is to contribution from new products. Nine new products we have.
Subhra Gourisaria
So these products have got recently launched and I don’t think we can give you a precise number. Having said that, Prashant for cotton I think you are aware that we had some gaps in the southwest market and we’ve launched new products. And I would say that most of these products are showing good traction including the production plan that we have for the subsequent year. To look at it is ITI which actually measures that whether it’s moving in the right direction in terms of revenue from the new launches.
Gyanendra Shukla
So I think one other thing I would like to additionally comment is that look These are launches for curries. Season has just begun. But what we’re trying to communicate is that look, we said herbicide, fungicide, insecticide and new seeds are important. And we have launched out of nine products in crop protection, three are herbicides, two are fungicides and one is insecticides. So we are covering broad aspects from a portfolio. All of you may remember that we did talk about doing some strategy work with one of the big four agencies and this is all execution part of that strategy to say how do we bring products, new products and how do we phase out old product and how do we then start scaling up? So I think this conversation will be good.
Probably in the month of October. Can we have a half yearly result? What has been the volume where we had positioned, what has been customer experience from these products?
Prashant
Sure. And sir, on the cost structure part.
Subhra Gourisaria
So cost structure again, Prashant. I think so. What we are talking about is that when we take the fixed cost conversation first. So fixed cost, our endeavor would be you invest in the right places. And I think we covered some of the digital investments we are doing. How are we looking at the span of control and driving efficiency? So we have indeed looked into. The. Various levels that we had and collapsed some of them. But we are also going to make investments wherever required. I think on an overall basis we look at how do we so that we operate at minimal increase over the fixed cost rate so that we start getting operational efficiencies through scale in terms of variable costs. I think again it’s a question of while the plants, when the plants start getting fully utilized, lot of efficiencies start coming in because while the variable cost in terms of utility power and even to some extent contraction manpower, you start seeing scale related efficiency.
So I think our bigger focus will be on how do you drive growth which will ultimately help in reducing both fixed and variable cost.
Prashant
Ma’, am, efforts you have highlighted earlier. Also, I just wanted to get a sense on how much savings or whatever target we had set out for how much have we achieved on that.
Subhra Gourisaria
So there’s a different way that we look in management information. I can say the numbers are lower in terms of they’ve started shooting it lower on a yoy basis, which is where you’ve seen the margins improving far more than gross margin. And we are on ahead of the, we are ahead of our internal target.
Prashant
Okay. And the road we had set out for how much have we achieved on that? I know it’s a recurring thing every. Year, but. Whatever target we had set out for how Much have we achieved on that?
Subhra Gourisaria
So we don’t have a target per se to say that we have not gone to the market to say what is the target? Because this number will keep moving depending on the investments we are making. But I said, as I said we are in line with the target.
Prashant
Sure. Thank you so much for your time.
operator
Thank you. The next question comes from the line of Rohit Nagaraj from BNK Securities. Please go ahead.
Rohit Nagaraj
Thanks for the opportunity and congrats on very strong set of numbers and congratulations to Brahman for a new role. The first question is on cotton, our big Ridge hybrid which probably has performed extremely well during this season. About four years back I think we had some 20,000 packets and probably we must be touching couple of million now if you could throw that number. And second thing, historically we have seen that in a period of say three to four years, usually the sales peak out unless until we have a product to replace the existing product, there could be a possibility of stagnation and then decline.
So what are your thoughts on this? Thank you.
Subhra Gourisaria
So I think we have placed more than 1 billion packets and I think we are hopeful that the liquidation will be near or our safety return will be near zero. In terms of the in line with the earlier years we have also developed follow on hybrids to Vickers and while we don’t talk about it, many of them have also started showing good improvement. So in fact this year we will take one of the highest production for cotton. I don’t think that there’s any concern as of now, at least for the next two to three years.
Rohit Nagaraj
Sure, that is something. Second question on the exports business. So domestic we have done well. Exports also we have done well. But is it because of the lower days of last year when the exports market was impacted because of the inventory destocking issues and the export number probably will still we need to watch out for incrementally given that China still is a strong player in the global system. So just your perspective on the field, sir.
Gyanendra Shukla
See on export, look, nobody knows how this tariff and everything will evolve. So let’s keep that question for later stage and all these tariffs settled.
I would say tariff situation has been positive for some product, negative for some product, but overall it is stable. Now the general anybody who is in the export business generally would have benefited from. We have been talking about inventory levels reducing and all. But in our case it is a combination of recovery in the market as well as addition of new customers
Subhra Gourisaria
plus a few of our products. There’s also been some early purchases which has happened which may impact Q2 revenue.
Rohit Nagaraj
Sure, that is helpful. Thanks a lot and all the best.
Gyanendra Shukla
Thank you.
operator
Thank you. The next question comes from the line of Vishal Dudwala from Trinetra Asset Managers. Please go ahead.
Vishal Dudhwala
Am I audible?
Gyanendra Shukla
Yes.
operator
Yes.
Vishal Dudhwala
Good morning and thank you for the opportunity. I have two quick words. First, given the early volume and strong product placement, how are channel inventories looking specifically for herbicide and seed products? Are secondary fields creeping up or do you see any risk stock building up in Cornwall?
Gyanendra Shukla
I can take this question section by section. So cotton this year has been a soft year for north and there has been again this spurt in what we call illegal HDBT cotton in central part of India, particularly Maharashtra Cotton crop also is significantly down compared to last year. But given that we had a limited inventory, I do not see much risk in cotton.
We also had a little bit of shortage of rice and mills because of the processing challenges every company had to face in the month of April and May. So at this point of time on seed I do not see a large risk. Herbicide season will extend from so far. It is pre emergence. Now it’s getting into early post and post a lot of crop is still getting planted, I think all the way through July and crop getting planted. So at this point of time we have tried to factor in lot of risk related to seed and herbicide.
Now fungicide, fungicide and insecticide is something you place in the market. And this year because monsoon came early, there was also request from the trade early to place. So we have also placed the product I think here on a lot will depend on how insect, pest and disease pressure builds up. Right. So too difficult to say. But yes, given that commodity prices by and large most of the crops are good, grains are good. We would certainly need some rain free period for the farmers to spray. I think it has been too wet sometimes, right. Rain never comes in what do you call custom order.
So I mean those are the things we don’t control. I think that’s part of the business we are in. We try to factor in as much as possible those things.
Vishal Dudhwala
And the second one is on the digitalization how tools like plan Guru or Real time analytics help improving when selling and demand forecasting.
Gyanendra Shukla
So I think these tools are built so their ability to forecast builds on over a period of time when you start building the data. Most of these tools are in what you call second to third year of their introduction. So first year it was a trial and now they are all being implemented.
We certainly see value at the same time we also see some as we learn new things, we will go on improving these tools. I have a long term belief in these tools. We’ll continue to invest, they certainly help.
Subhra Gourisaria
So in terms of can they take.
Gyanendra Shukla
Some human bias out of decision making.
Subhra Gourisaria
If I may add, in terms of plan guru, it’s going to help us in SQ level forecasting and I think we have spoken in the previous calls about splitting the portfolio into abc. So we’re looking at how do we dynamically manage stocks by using. This is an SAP based tool. So we are going to extensively use it to do portfolio segmentation and decide the right stocking strategies.
Vishal Dudhwala
That’s it from my side. I will wait if it’s you for the next.
operator
Thank you. The next question comes from the line of S. Ramesh from Nirmal Bank Equities Private Limited. Please go ahead.
S. Ramesh
Thank you very much and congratulations and wish Subra all the best for a new assignment. So if you look at your seed performance that has been a key driver in this quarter, the margins are also led by the seed business. So and we already achieved EBITDA which is, you know, much higher than last year’s full year ebitda. So where do you see the overall, you know, negative share of seeds and crop care over the next three quarters in terms of the impact on margins and how do we read the, you know, long term big picture, say over the next two, three years in terms of seed business? Have we seen this kind of turnaround to give you a little more, you know, stability in terms of the earnings over the fourth quarters or will we continue to see the trend kind of sagged after the first quarter? How do you see that?
Gyanendra Shukla
So I think, let me address long term first.
I think we have very clearly articulated our long term strategy about three segment and using our existing assets to sort them out and also continue to not only domestic, also continue to expand global customer base so that we can also take advantage of the assets we have got. So the strategy doesn’t change. We are going to pivot on customer centricity and we are building tools as we speak. We keep testing new ideas so that whatever we launch on a larger scale is acceptable to the customer. I think all of our businesses are of scale and all of them require a minimum cost.
I think from here on what I see it’s very, very difficult to say which will go up and which will go down. But all three are very, very important for agriculture. A portfolio in soil and plant health, seed as well as crop protection, all of them will not have the Same trajectory. Some will do better than our expectations, some may not do better than our expectation. But our overall strategy remains to start growing our revenue in double digit. And if we achieve that, I think we’ll start getting into a situation our operating leverage becomes important.
We are able to add higher share of incremental revenue to the bottom line. That’s how I see it. These percentages are really ambitious goal. Yes. I do aspire and I keep talking about it. I want to grow high double digit and that’s where putting all our resources. But a lot depends on how things pan out.
S. Ramesh
Yeah. So just one more thought on your FY26 outlook. So yeah, when do you see the gross margins actually showing you bio Y improvement? This quarter you have seen the operating divers helped you in terms of the margin improvement. So when you see the gross margins improve on a sustainable basis.
And secondly on cotton structurally, there are some challenges which is actually hampering the cotton acreages. So how do you see that impacting the long term growth in cotton crop protection, chemicals and the feed business?
Gyanendra Shukla
So I think the important thing to understand is yes, I think if you say next two, three years, cotton is going to be very, very important. But we are developing a robust pipeline in case of other three important crops for us, which is rice, bajra and maid. And some of those products are being introduced this year. Maybe at the end of the season.
I can give you some idea in terms of what is likely to get a better trajectory and what is not likely to get. But yes, for coming two to three years the cotton is going to be a significant contributor. Having looked, the cotton has challenges. But cotton is grown on 12 million hectare. Out of that earlier now people are saying in Maharashtra, 25% of the cotton has become illegal. VT cotton, 6 out of 4 you take out 20%. About a million I think so I always say out of 12 million hectare you leave 20, 25% area out.
So we have to develop a product for the balance of the market, compete hard and as and when government approves new technology, we transition to new technology.
S. Ramesh
And on the outlook for gross margins, how do you read that?
Gyanendra Shukla
See, gross margin depends on the product mix. I don’t think so. We have a plan. Our aim is to, if not better, at least maintain the level of gross margin we have been delivering. Because the new products we are launching, some of them will give us higher margin. But that turnover has to change. Will it make material change this year? We will see.
But obviously the whole effort is to improve profitability at the gross margin. Level itself.
Subhra Gourisaria
Yes, will be more on operating margin. Because I think the business needs to start growing in terms of scale so that we are able to absorb the fixed cost. While gross margin will be influenced as Shukla said one by the product mix and also by the segment mix. Depending on exports, growth feeds grow and B2C business grow because each of them are a different business model.
S. Ramesh
Understood. Thank you. I’ll join the queue and wish you all the best.
operator
Thank you. Next question comes from the line of Abu from individual investor. Please go ahead.
Unidentified Participant
Hello sir. Am I audible?
Gyanendra Shukla
Yeah.
Unidentified Participant
Can you provide an update on the current demand trends for aciphate?
Gyanendra Shukla
So as a demand I think is more or less fixed. It primarily gets used in Brazil, US and India. These are the three key markets. Now we have seen some revival of SF8 but we are yet to see significant margin improvement on SF8 because it all goes to Brazil, US and all. And I think while volumes are there and we also have started using our plant and exporting, we are also waiting registration of a new formulation which is a possible granule. And I think once that happens, this is starting not only higher volume and margin improvement.
At this point of time I can say it is better than last year.
Unidentified Participant
All right sir. So how do you see the medium to long term outlook for asset rates?
Gyanendra Shukla
See I think when I look at long term forecast, I think we cannot. So SF8 is a great product for us because we have approvals and we have customer base. The way I see role of SF8 in Rallis India is one domestic business. This product remains a very very important product. B we have customer relationship which has started with SF8 across the countries particularly in Americas. And our opportunity is to really continue to add new products in those relationships and reduce our reliance on sfa.
Unidentified Participant
Thank you sir. Thank you very much. That’s it from my side.
operator
Thank you. The next question comes from the line of Abhijit Akela from Kotak Securities. Please go ahead.
Abhijit Akela
Thank you. Good morning. Will it be possible to share a breakdown of the croppy revenues between the domestic business and exports, please?
Subhra Gourisaria
So this quarter we did B2C 449 first and 203 for D2B business.
Abhijit Akela
Okay, sorry. So 449 is total domestic or just a B2C part B2C we now call.
Subhra Gourisaria
It B2C including soil and plant health, domestic and crop protection.
Gyanendra Shukla
So it’s about 13% growth over last year.
Abhijit Akela
Okay. Yeah. And just the export number please. So how much would that be? I believe last year it was 132 crores in one queue.
Subhra Gourisaria
It was not 132, it was more than that. But this year the number is 203. And here we count, it shows domestic and what we said. So we call it B2B. Now it is including of domestic and institutional sales, contract, manufacturing, exports, business.
Abhijit Akela
Okay. And this is up 23%.
Gyanendra Shukla
Yeah. So if I can give you further breakup on domestic, institutional business has also grown and including export, we have some CSM orders which probably will get executed later on.
Abhijit Akela
Okay, thank you. And within the seed business growth that we’ve seen 38%. How much of it would have been driven by cotton versus the rest of the portfolio?
Gyanendra Shukla
So cotton I would say is a large contributor followed by paddy and maize. We also have entered into another category called no research rice. And that also has contributed though on a smaller scale when from 5 crore has gone above 10 crore.
But that’s another category we think in future we’ll be able to grow. There has been, I would say Bajra availability has been less. We had equality. So Bajra might be marginally down. Now these are current estimates. We still have to reconcile returns and everything else. That’s why look at the number in October because by then at least return adjustments have taken place.
Abhijit Akela
Sure. And just finally on the breakdown between volumes and prices, if it’s possible to share some color for both the domestic and the exports pieces.
Subhra Gourisaria
So I think I mentioned that the volume growth is quite robust across most of the businesses. It will be difficult to give a specific split. But as I said, the growth is driven by volume, especially in seeds. We have had 20% plus volume growth.
Gyanendra Shukla
So if you really look at the broad categories, the way I see it, I think they have given you a split up domestic crop care and export. Now in terms of percentage on a smaller base, export has grown more than domestic. But domestic has a higher base. And I said has grown 13% and seed obviously is a good growth. But couple of it, a lot of it is also early planting and everything else. Some of these things do moderate as we move to quarter two.
Abhijit Akela
Okay, okay. @ least erosion in prices has kind of been arrested now.
Right. The prices are not declining anymore year on year by and large.
Subhra Gourisaria
I would say in fact year on year we’ve had a cost shift. So year on year some of the pockets, the rates have gone up.
Abhijit Akela
Okay, got it. Thank you so much and all the best.
operator
Thank you. The next question comes from the line of Saurabh Jain from hsbc. Please go ahead.
Saurabh Jain
Yeah, thank you for the opportunity. I hope my voice is clear.
Gyanendra Shukla
Yeah, we can hear you. Sure.
Saurabh Jain
So, wanted to know your views around the recent news flow which is suggesting there is some sort of shortage on the specialty fertilizer side from China. Wanted to understand have you benefited from this in the quarter that has gone by and any of these shortages from China, how does it change your strategy, what kind of expectations you will have from this segment in the future?
Gyanendra Shukla
So I think what we are referring here is more of a bulk fertilizer.
We are not into bulk fertilizer. In fact our business is more beyond bulk fertilizer. There are multiple segments there. But yes, that crop nutrition area is currently in the media. At this point of time I do not see any significant shortages. I think government must have carried forward some inventory and some. A lot of it is also getting produced, particularly domestically. But by and large I haven’t seen a lot of media on the shortages and all.
Saurabh Jain
I thought there was also some news flow suggesting water soluble fertilizers and all of that segment is also getting impacted.
So I was just curious to know. Your stand over there.
Gyanendra Shukla
See at this point of time I haven’t. I mean I think our water soluble fertilizer business also started very recently. So volumes are less. Not at this point of time. In fact, when bulk supplies becomes challenging, that’s an opportunity for water soluble supply just to grow because they’re requiring lesser amount per unit area.
Saurabh Jain
Sure, that is helpful. The other question I had, can you throw some more light on your progress on the CSM business in particular, some more understanding of that business will be. Very useful to us.
Gyanendra Shukla
So CSS is a long term business where you keep cultivating new customers. And so I think at this point of time because of the confidentiality reason we cannot give you specific detail. But yes, we continue to. Some of some of the things we talked about in the past, we continue to work with those customers. A lot of it is related to how their registration progresses. But I keep saying that we haven’t still cracked a 500 crore manufacturing opportunity yet.
Saurabh Jain
Okay, sure. Do you have any targets in mind when you think about this business? What part of what percentage of revenue this could form in three years or anything?
Gyanendra Shukla
I think that is the most difficult one to predict because you know a lot of these conversations happen and there’s also change in market dynamics. So very difficult to diverse any detail at this point in time.
Saurabh Jain
Sure. But your conversations are they more around the patented kind of products or it’s going to be more on your
Gyanendra Shukla
csm could be a combination of patent and unpatent as well. Could also be around formulation for some of the multinationals.
It’s always a mix.
Saurabh Jain
Yeah, sure. Thank you so much. And I’ll get back into.
operator
Thank you. The next question comes from the line of Manisha who is an individual investor. Please go ahead.
Unidentified Participant
Sir, my question was regarding the exports. The figure was 203 crores. What was the figure last year?
Gyanendra Shukla
1. If you compare base it was 160. About 160. 165 crore. Yeah.
Unidentified Participant
And quarter and quarter.
Gyanendra Shukla
Quarter on. I have given you quarter on quarter only preceding quarter.
Subhra Gourisaria
Yeah. So we had reached a 20200 broadly which was 160 crores of the previous year.
Unidentified Participant
I am telling Jan to March. Quarter.
Gyanendra Shukla
What was the number for Jan to March quarter?
Subhra Gourisaria
Jan to March was the lower.
Gyanendra Shukla
I’ll tell you. Hello.
Subhra Gourisaria
Yeah, we can tell you the number. Give us a minute. Jan to March was 182 crores.
Unidentified Participant
182 crores. Yeah. And the pricing has increased, ma’, am, from. In this quarter.
Subhra Gourisaria
So year on year it has increased. We are not seeing it quarter to quarter. But yeah, some of these technicals are showing an uptick.
Unidentified Participant
Thank you. Thank you for the answer.
operator
Thank you. The next question comes from the line of Bhavya Gandhi from Dalal and Baroj. Ashtok Broking. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. So is it possible to quantify the CSM business contribution for full year or maybe for quarter last. Last year.
Subhra Gourisaria
For confidential reasons because the customers are. We have limited customers so we’ll not be able to.
Unidentified Participant
Okay. On the business model of CSM is it like cost plus margin or how is it like if you can throw some light on that front as well.
Subhra Gourisaria
So it varies. In most cases margins are protected. But the business model varies depending on customer to customer.
Unidentified Participant
Okay. At least can you share the geography of the customers? Are these Indian customers Japanese customers? Who are we targeting? At least some broad level guidance if you can.
Subhra Gourisaria
Two of the key technicals which we speak about. One is in Japan. One is a US based customer. @ the same time we have Indian customers with whom we are working few more partnerships even with big MNCs in the pipeline.
Unidentified Participant
Okay, fair enough. And what would be the revenue potential of the nine products that we’ve launched? I mean what is the broad target that we are setting up for this new product launches? And are they better margin products compared to the existing product market? And what would be the margin differential compared to the existing products? I understand that you mentioned about 15% ITI but purely from this new nine products that you’ve launched, what would be the revenue target that you’re looking for?
Gyanendra Shukla
So I think maybe today is not the right time to give you all the details.
I guess a lot of it is calibrated. So we say all the products, quite a few of them are herbicides, two fungicides and one insecticide. All of them are in two broad categories with multiple uses in multiple crops. So I think the other thing is that we also have to start working on each of these products. Unless it is some products that is specific to rice. So they will only go to rice. But fungicide and insecticide can go on multiple crops. So I think they’re introducing them now. Let’s have this conversation in the month of October.
At that point of time we’ll be able to give more color on this because they are supposed to be large contributor with higher margin because they’re all mixture product.
Unidentified Participant
Okay. Okay. What would be the margin differential compared to the company level margins? If you can provide something on that front.
Gyanendra Shukla
Let’s wait till October.
Unidentified Participant
Sure. And just one last thing. I mean what could be the long steady state EBITDA margin guidance if you can provide? Because I think on cost front you’ve done phenomenal cost optimization and all. Now it’s largely on the gross margin and product mix. So if you can just provide some numbers, steady state EBITDA margin basis.
Gyanendra Shukla
So see long term what we have been saying is that we want it to come to 500 basis 5 basis point steady improvement from where we were right now.
Obviously quarters and quarters will change, but directionally we would like to operate in the range of 15 to 20% EBITDA margin over a period of time.
Unidentified Participant
Fair enough. Okay, that’s helpful. Yeah, thank you so much. That’s it for my.
operator
Thank you. The next question comes from the line of Chintan Modi from High Tong Securities. Please go ahead. Yeah, hi.
Chintan Modi
Thank you for the opportunity. Sir, my question is with respect to gross margins this quarter we have seen almost, you know, comparing to the historical trend, there is almost 200 basis point of decline. And considering that, you know, we had a good mix also of seeds business, which is typically a high margin, could you explain what was the reason for that and how should we see that going ahead?
Subhra Gourisaria
So fun. Obviously positive is what you touched upon seeds. The negative was B2B business. So exports in terms of gross margin is lower and hence I think. And within the segment itself there would be some negatives. For instance, cotton within seats makes lower margin compared to the Overall portfolio. And secondly, I think what we look at is not necessarily gross margin. Internally we look at gross contribution. So apart from raw materials, there are various other costs, including power, labor. We look at gross contribution at that level and for us the gross contribution is on the right track.
Chintan Modi
Understood. So it was largely a function of mix, you would say, rather than any other raw material cost increase. Okay, coming to the employee cost that was also quite well maintained despite the growth in the revenue. So you think that, you know, this current base of employees and the cost structure that we have broadly will continue for the full year and will be able to deliver the similar kind of trend in growth.
Subhra Gourisaria
So we did have. So to answer a larger question, I would say that it will be in the similar direction, but I think we’ll also make investments in few of the areas. So few special talent, few senior talent will continue to get recruited. I think employee cost, you can say will be in a similar direction, but not necessarily you can do Q1 into 4 and arrive at a number.
Chintan Modi
Okay, third question is slightly from a longer term perspective. Now we are into multiple businesses seeds. We have B2B where we have exports, also domestic, also slightly and B2C where we have the conventional agrochemicals plus the soil and health. Now wanted to understand like let’s say from a next three to five year perspective which according to you is most lucrative and where you can see a lot of opportunity playing out where we have kind of more competitive advantage compared to the peers.
Gyanendra Shukla
So obviously you know, it’s structurally you see all three businesses have a very different margin profile on a gross basis.
So seed tends to be depending on which crop you are, tends to be more high margin gross margin business followed by I would say soil and plant health portfolio. But in soil plant health portfolio also start relying more on the bulk fertilizer margins drop followed by crop protection. Now within crop protection also you know, if you have a unique mixture of patented product, you can make more money. If you’re in a generic category, if you make technical, you make more money. If you don’t make technical, you make less money. So always a blend. My feeling is that the way we are looking at, we’re looking at say farmers of the paddy farmer in some districts of up.
Am I able to supply them all what they need from crop nutrition perspective, seed perspective as well as sorry as a crop protection perspective. As a result you are able to actually optimize mix of your revenue and mix of profit. That’s how we are approaching and that’s what we call Customer centricity, how do we get very focused? How do we increase our frequency of interaction with the customer so that we are able to take a more share of the needs of the farmer?
Chintan Modi
Also, one more question if I can, from a landscape perspective, in India, agri typically has been growing at a, I mean at a slow pace only.
I mean the changes doesn’t come much rapid. But are you observing, considering the recent ministry level changes and some aggression coming in, like this year we are seeing the number of reservoirs have also gone up. So you think that, you know, over next three to five years there could be a drastic improvement in terms of the underlying, in terms of agriculture, the trend changing and which can kind of benefit the agrochemical companies.
Gyanendra Shukla
Yeah. So water is a very, very important element of agriculture. So every time there’s irrigation potential farmers will plant a crop and they tend to use more input because the possibility of getting a higher harvest goes up.
Having said that. So while reservoirs are getting added, we also lose some inefficiency if they’re not desilted and all of so on. So I think overall we need to see what is the net capacity of irrigation getting added every year including all kind of methods being tried with the government. Right. From micro irrigation to macro irrigation. Yes, irrigation has a positive impact but at the same time we have to see at the net level because some of our existing irrigation project also become inefficient over a period of time. So yes and no. Both.
Chintan Modi
Sure, sure. Thank you. That’s from my end. That was.
operator
Thank you. We take the next question from the line of S. Ramesh from Nelmal Bang Equities Private Limited. Please go ahead.
S. Ramesh
Thank you very much for the follow up. So in terms of your target for ROC and roe, when do you see that showing material improvement? And if you look at the current year, to maintain a current trend in top line growth, there has been increase in working capital. So on that higher working capital, would you be able to show an improvement in ROC this year? What is the thought here?
Subhra Gourisaria
So ROC is driven by two factors, right? One is your top, your margins and secondly is your capital prudence. So I think Dr. Shukla mentioned that we will strive to achieve 500bps improvement in margins. As far as capital is concerned, there will be certainly investment in working capital to support growth. But you would have seen our days on hand has come down. Actually the balance sheet is not released this quarter. But I can say that days on hand has come down compared to year on year. We are taking measures in terms of inventory Rationalization and relevant pockets.
So we are hopeful that the working capital will be kept under check as far as CapEx is concerned. I anyway mentioned that we will try to keep it at around 100 crores and large part of it will go behind support in sustenance investments. So as. And then the profitability I would say mix improves and the capex investments are kept under check and capacity utilization improves, you’ll start seeing an uptick in ro.
S. Ramesh
Understood. So one last word. I’m excluded. The Mandi prices are prevailing below the msp the case in Ravi and also for Khari. So is that something of a concern in terms of the farm incomes or are we comfortable in terms of the ability to collect and you know, place products?
Gyanendra Shukla
So Monday price again it’s a, is a factor of demand and supply. So we don’t deal with commodities so we don’t want to comment on that. My feeling is that look, Raheeli’s team has done a wonderful job of managing receivables so far and we haven’t relented on our effort to be efficient in terms of placing and collecting and what if that means sometimes short term we have to take that best how we do take back.
So there has been a very efficient capital management by the finance team and I don’t see that is going away and hopefully that will ensure that we don’t get into unnecessary large receivable issues.
S. Ramesh
Thank you very much and wish you all the best. Thank you.
operator
Thank you. The next question comes from the line of RITU from Antique Stockbroking. Please go ahead.
Unidentified Participant
Thanks for the opportunity. So regarding the new launches that we have done this quarter, nine product launches. So out of which only one product is 93, is that correct?
Gyanendra Shukla
Okay, I don’t have a specific detail right now handy with me But Fiplam is 9:3 for sure. Some of them I need to check. Maybe we can get back to you.
Unidentified Participant
Okay. And you have only mentioned six products name. So if you could name the other three products that you have launched this quarter.
Gyanendra Shukla
Yeah, we can provide at least because some of them actually might be targeted towards next season. So. So that’s the plan for the year.
Unidentified Participant
Okay, so understood. So nine products that, that, that may be in Q1 and Q2. That is correct.
Gyanendra Shukla
Yeah.
Subhra Gourisaria
Launches have happened but you have very soft launch.
Gyanendra Shukla
Yeah, we’ll get you a digital and seed. We have launched 15 new, 40 new products.
Unidentified Participant
Okay, understood. And in terms of you know, the seed business. So I, I think earlier the cotton seeds used to be appearing 2025 percent of the total seed portfolio. So how is the, how is the. Mix right now for cotton and the paddy?
Gyanendra Shukla
So of the total number we have declared for seed it is about more than 33% at this point of time. So it’s a significant number for cotton will remain significant for as I said in the beginning for next two to three years.
Unidentified Participant
Okay, and how much is the paddy for the portfolio?
Gyanendra Shukla
So paddy and hybrid may inch together, I mean and season is on, but I would say paddy and maze. So if it’s marketing and paddy and maize will be about 40% put together and balance will be mustard in Bajra.
Unidentified Participant
Understood.
Gyanendra Shukla
So.
Unidentified Participant
Moving forward our most focus would be on, you know, improving the maize portfolio or the other, other portfolio that we don’t have right now.
Gyanendra Shukla
I think all are important. I mean today the customer want new seed, new product every more frequently than what companies were able to do in the past. So it’s a continuous process. You keep launching product so that farmers and there’s a value to value in it for the farmers because every new products certainly hold high potential.
Unidentified Participant
Understood. And sir, this quarterly seed which we. Have registered roughly around 26% kind of EBITDA margin. Right. And which is I think like historical high margin in terms of the seeds business. So how sustainable is this margin or like how we can work with the margin going forward or what are the drivers for this?
Gyanendra Shukla
Majority of our business is lopsided towards quarter one right now obviously EBITDA margin we are looking at, you are also looking at quarter one cost only. So there will be quarters when there will be less sale or no sale. But cost will stay I think in seed. When I say overall 15 to 20% EBITDA margin on a long term basis I see delivering 20% and maybe crop protection at 15%. So somewhere we operate depending on the year which business grows more. That’s the target we want to keep in mind. Understood?
Unidentified Participant
Yeah. Thank you sir. Thanks for answering all my questions.
operator
Thank you. We take the next question from the line of Dhruv Muchal from HDSE amc. Please go ahead.
Unidentified Participant
Thank you so much, sir. So probably bit of a repeat but just wanted to have better understanding on the ground level pickup in terms of the ACKEM products. I think the first two months of the quarter are generally replacement months and the later follows the actual ground level. So if you can share any details on how is it in line with your expectation? Is it better as it was?
Gyanendra Shukla
So some parts, please. So I think seed we have a better clarity because majority seed which has to be planted where the farmers have purchased that is trying to check the channel level inventory. So seed we have a better handle. I think we had the good clarity crop protection. I think probably we need another 10, 15 days to get complete clarity because our herbicide which goes early I mean obviously we are done with say apple season which happened in April, May and June so. So it’s very difficult to predict I think. But yes we have a clarity on seed we have clarity on some level of clarity on pre emergence herbicide but crop is still getting planted and early post emergent herbicide.
Post emergence of herbicides will come later and then followed by insecticide and fungicides. Now they go concurrently. So love to have some patient and.
Unidentified Participant
Probably from some of our checks we understand there were some price increases and technical which were passed on to probably the channel also some in June, some in July. So just trying to understand have these prices sustained. Probably one can infer that from subsequent orders from dealers have these prices sustained where you’re able to sustain these price increases or there has been some recalibration.
Gyanendra Shukla
I think it’s product. It’s very product specific. I think SAP prices for example continue to be soft. There’s been some improvement in Metrovision prices but isochronazole and prices have not moved much. So it’s very product mix. I mean what we report is basically a blend. It’s very difficult to get into product.
Unidentified Participant
Two quick questions on exports. So from of course the growth is on a low base but just trying to understand is the delta more towards US market for you or it’s across regions so nothing specific to US primarily America. US and Latam both.
Gyanendra Shukla
Yeah.
Unidentified Participant
And has these this quarter been more towards. I’m just trying to understand is it because of the pre buying from US and all those reason which is driving. This Or I think it’s seasonal buying, right. I mean Latin is buying basically for the planting season which will begin in September October. US has been buying for their seasonal need because US has a very diverse planet north and south. So I don’t think anybody is buying and stocking. I think that mindset has gone away. Okay. Yes. People might put some order because when all this war has started, right. There’s an uncertainty around movement of CE and movement through C and also there must be a little bit of it but that has also quietly died down.
So I think right now we’re back to normal.
Unidentified Participant
And so lastly is you have a decent cash balance and given your capex requirement probably it will remain. You will continue to Accumulate cash. So any thoughts in terms of how do we plan to use it? Probably it’s a longer term thing but any thoughts that you can share?
Gyanendra Shukla
So the first use of money is to continue to do things related to doing current business better. Second thing is related to acquisitions. I think we all are very curious about such a reason. The marketplace and we objectively look at it, we want to make sure whatever we do becomes accretive to our income. These are the two primary uses right now. Sure, sir. Perfect.
Unidentified Participant
Thank you. And all the best.
operator
Thanks. Thank you. Ladies and gentlemen. We take that as the last question and conclude the question and answer session. I now hand the conference over to Dr. Gyanindra Shukla for his closing comments.
Gyanendra Shukla
Yeah, so I think it was a. I would say overall, I mean all of you know is an early onset of the monsoon and performance of the spar sector actually should be seen more on the seasonal basis which is, you know, actual basis. We shouldn’t read too much into what we call quarters. I think rainfall, there are some rainfall disparities. For example Bihar still has received less rain Northeast there’s been no slow rainfall patch and we’ll have more visibility on the liquidity by H1. And I think August, September is going to be very, very important as far as test and other things to be watched out from a cost and no other perspective.
Working capital management. We continue to be very, very focused and we continue to drive our business more towards profitability and we’ll continue to take action towards that. We are in for a long term business building. While it is very exciting to say I have delivered quarter but my focus is that get the train moving in the right direction and then we get into what you call velocity. So thank you for your time.
operator
Thank you on behalf of Rallys India limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.