Rallis India Limited (NSE: RALLIS) Q3 2025 Earnings Call dated Jan. 17, 2025
Corporate Participants:
Gavin Desa — Investor Relations
Gyanendra Shukla — Managing Director & Chief Executive Officer
Subhra Gourisaria — Chief Financial Officer
Analysts:
Viraj Kacharia — Analyst
Ankur Periwal — Analyst
S. Ramesh — Analyst
Shaurya Punyani — Analyst
Prit Nagarsheth — Analyst
Abhijit Akella — Analyst
Siddharth Gadekar — Analyst
Archit Joshi — Analyst
Ranjit Cirumalla — Analyst
Shivaji Mehta — Analyst
Sanjay — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Rallis India Limited Q3 and 9M FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Gavin Desa from CDR. Thank you and over to you, Mr. Desa.
Gavin Desa — Investor Relations
Thank you. Good evening, everyone, and thank you for joining us on Rallis India Limited’s Q3 and Nine-Month FY ’25 Earnings Call. We have with us today Dr. Gyanendra Shukla, the Managing Director and CEO; and Ms. Subhra Gourisaria, the Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today’s discussion 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. Shukla to begin proceedings of the call. Over to you.
Gyanendra Shukla — Managing Director & Chief Executive Officer
Thank you, Gavin. Good evening, everyone, and thank you for joining us today on our quarter three fiscal year ’25 earning call. As mentioned by Gavin, I have alongside with me Subhra, our CFO. Let me begin the discussion by delving into the industry landscape initially, post which I will discuss Rallis specific developments. As far as crop sowings are concerned, Rabi sowings are roughly 16.5 million hectares versus — which are down by 0.5% over last year. That is the data available as on 27th of December. With oilseed lagging by 5%, wheat area is up by 2%, rice area is up by 5.6%, and pulse area is more or less same as last year. Reservoir levels are better compared to last year by plus 24% and 139% of the overall normal storage as of 26th December. While the overall headline for the monsoon is positive, special and timely distribution was uneven.
Also post-monsoon season with two cyclones; Dana in October, Fengal in December; created trade inventory pressure. Companies also resorted to aggressive trade schemes to liquidate the carryforward inventory creating pricing challenges. Seed production continues to face the challenges for the second year in a row with volumes under pressure despite a steep increase in input cost. Agrochemicals export demand continues to remain weak due to oversupply from China, price deflation, and reduced margin. In 2024, the Chinese agrochemical market underwent significant change marked by global companies adopting supply chains and exploring strategies like internationalization, increased transparency amid challenges of overcapacity, and strengthened partnerships. All the key regions have seen degrowth in agrochemical mainly in Central and South America followed by North America, Europe, and Asia-Pac and Middle East, Africa in 2024.
Moving to Rallis specific developments. During Q2 our revenue was INR520 crore, which is 13% degrowth and PAT was INR11 crore versus INR24 crore last year mainly due to volume drop in export. Domestic agrochemical business registered volume growth despite intense market competition. Export business continued to reel from market challenges resulting in a degrowth of roughly 38%. Our long-term effort to expand the customer base and improve cost competitiveness continues. Seed business was same as almost flat as last year at INR30 crore versus INR32 crores last year. Moving to individual businesses-wise performance. Our export business was down by 38% with volume dropping by 34% and price dropping by 4% over Q3 of previous year. We faced weak demand for most of our key products in Q3.
Hexaconazole is showing good traction with process debottlenecking helping the business reach to our highest-ever volume outlook for the year. Even in Metribuzin, our volumes are strong on YTD basis with positive outlook from one of the global measures. Acephate, as highlighted in the earlier calls, continues to face margin challenges due to steep volatility in the input cost material and high supply situation. We are working on several alternatives, including flexibilizing the plant and optimization of overheads to improve the profitability. Pendimethalin is facing pressure due to high inventory with the customers. In line with our strategy on improving the process efficiencies, we are going to go live with the continuous stirred tank reactor process in Pendimethalin this quarter.
We are also in the final stages of commercializing new technical Metalaxyl from our rivers engineering pipeline and are confident of the long-term potential of the product both for domestic and international markets.Even in the CSM business, our efforts on expanding customer base and working on new chemistries is progressing well. We have also setup labs for new chemistries and are working with 10 new customers. We are confident these efforts will start contributing meaningfully to our topline and bottom-line in the years to come. To drive synergies, we have also brought all B2 business — B2B businesses under one roof. This will help drive strategic partnership and alliances for both domestic and international markets. Moving to domestic market. Crop Care business grew volumetrically, but was down by 2% due to a steep price correction. However, on YTD basis, the Crop Care business has grown by 6% with volume growth.
Our key focus segment of Herbicides and Biologicals and Specialty solution have grown by 41% and 21% in volume, respectively, in domestic business during this quarter. Within Biological and Specialty solutions; Geogreen, Ralligold Green, Ralligold Granule, and Biostimulants significant did highest-ever sale on YTD basis. Water soluble fertilizer has also scaled up fast with 80% growth in the last nine months. However, we recognize these segments need far more focus and nurturing to improve resilience and drive both topline and bottom line improvement. Our innovator — innovation turnover index is in high teens in line with our ambition. We believe there is still a gap in our ability to launch and scale new product and are talking — and are taking efforts to revamp our go-to-market and 360 degree marketing approach.
Our digital-based influencer approach to improvement — improving engagement with the farmers is also being piloted and we expect to roll-out this nationally soon. We are also working on boosting the digital marketing approach and have gone live with WhatsApp for business to improve farmer connect. Moving to Seed business. We recorded INR30 crore revenue as against INR32 crore in previous year mainly due to lower Hybrid Mustard sales. However, this is in small quarter of the business. On YTD basis, business has delivered 1% revenue growth and 50% growth in profit before tax. This is in the context of product constraint, which limited our scale-up of the new launches. For example [Indecipherable], cotton has become the biggest crop with sale of more than INR100 crores and we are optimistic of the potential of this segment.
To conclude my opening remark, I know — I will now hand over the call to Ms. Subhra, our CFO, for a detailed analysis of our financials. Over to you, Subhra.
Subhra Gourisaria — Chief Financial Officer
Thank you. Good evening, everyone, and thank you today for joining us for Q3 and annual earning call. I’ll walk you through our financial performance for the quarter and nine months, post which we can commence the Q&A session. Starting with topline for the quarter. Our revenue stood at INR522 crores as against INR598 crores for the previous year. Domestic business registered volume growth of 3% in the backdrop of intense market competition as well as the improved margins in the domestic Crop Care business. Also in the domestic Crop Care business, Herbicides and Biologicals and Specialty solutions have maintained good growth momentum. Export business continued to face headwinds with business registering a degrowth of 38%. However, we are quite confident of the long-term potential with actions taken around expanding customer base and improving cost competitiveness. Seed business was INR30 crores as against INR32 crores for the last previous — last quarter same period.
Profitability for the company was impacted due to challenges in the exports business. Our efforts continue to be directed towards optimizing the overhead costs, including portfolio rationalization, refresh of the portfolio, territory rationalization, moving overlaps, and driving cost efficiencies and simplification across the value chain. Our inventory levels have been brought down without causing any business opportunity loss. Collections have also improved despite high market competition. We continue to have healthy cash and liquid fund balance of more than INR200 crores as of 31st December. We will continue to drive capital efficiency as the recent initiatives will help us in our pursuit towards consistent competitive and profitable growth. Our capex has been moderated in line with the demand and our focus is to firstly improve the utilization and ROI of the already invested capex. We have recently received Board approval for solar panel installation in our manufacturing unit, which will help reduce electricity cost and also carbon footprint.
That concludes the opening remarks. We can now commence the Q&A question.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Viraj with SIMPL. Please go ahead.
Viraj Kacharia
Hello.
Gyanendra Shukla
Yes.
Viraj Kacharia
Yeah. I just have couple of questions. One is if you look at the environment generally we are in and the segments performance we reported, exports seen a sharp degrowth with pricing pressure, you’ve seen — talked about pricing pressure in domestic and Seeds per se contribution is not that big in current quarter. So, what explains the sharp jump in gross margin? We have seen a very almost 300 — 300 basis point to 350 basis point increase in gross margin. So, can you just give some perspective what is driving this?
Subhra Gourisaria
So Viraj, gross margin I think one is of course I spoke about the domestic business has been able to improve margins through the actions taken on our pricing front and also ensuring that we keep our inventory levels at the right level. And also there is a mix factor which plays because the international business could not deliver then. So given both these factors have helped in improving margins. Seeds has been small as you said, but has still been able to improve both gross margin and profit before tax.
Viraj Kacharia
But generally say in terms of pricing also, even in domestic we have seen almost 5% decline in price realizations. Just still trying to understand the gross margin piece. I understand that can be a mix play between international and domestic. But even in domestic, we have seen a very good mid-single-digit kind of a decline in [Indecipherable]. So if you can explain that?
Gyanendra Shukla
As I have mentioned in the previous calls, look, so we operate in a very complex competitive environment. Our effort is to continue to drive margin as a primary thing because that is something is very, very important for long-term profitability of the business, sustainability of the business. But there are factors when you have a significant export business that goes down, obviously brings the averages up. We can get maybe more details at a later stage, but combination of factors. Sometimes you get advantage in terms of raw material cost and all. So various factors can help. But our effort will continue to remain that. And as we have been talking in the past, look domestic Seed, Biological and Specialty solution, which used to call Crop Nutrition in the past. We want to continue to drive domestic business because that’s where certainly — in spite of competition is still more certain given our brand equity.
Viraj Kacharia
Okay. Just two questions. One is on the portfolio. In the presentation also, we talked about churn or pruning in the portfolio and in last few quarters, we’ve been talking about more aggressive approach in terms of weeding out low profitable or loss-making products. Can you give a sense in last nine months or in Q3 what kind of a churn at the portfolio level we have seen? And is that exercise largely done or we would expect further some — any perspective where are we in that cycle? That’s one. And second is on the export, when do you expect that — the decline to kind of settle down given that we’ve been talking to MNCs for supplies? So, the two questions.
Gyanendra Shukla
So, first thing is on the portfolio. Look, when we talked about portfolio pruning, we were in the middle of the season. Now we have completed the exercise of portfolio rationalization and a lot of that effect you would see in the upcoming season because we also don’t want to waste the inventory or waste the packaging inventory and all. So that work impact of that should be seen in subsequent quarters, right? So, products are identified. What we have been very careful is that building inventory of those low margin or what you call tail products. So, that’s one. So, impact of that we will see in the future. Now on export side, you understand our portfolio, right? Our portfolio is really not — it’s not very new. As we have spoken in the past, look, Acephate had challenges. Pendimethalin now is facing challenges. Two products we had better opportunity was Metribuzin as well as Hexaconazole. We have a pipeline. For example we talked about Metalaxyl, which we have started making.
Our effort would be to not to continue to rely on these products, continue to participate because we have capacity, but also flexibilize the plan and keep looking at new opportunities and even in the existing products, we keep adding customers. And to that extent, we have started investing more time with the potential customers, developing new customers. And some of these things, they do take time because when you get a new customer, you have to supply them sample and they have to test the sample, they have to approve you as a vendor and all of that. But we know that we don’t have a very new portfolio; but within that, we are trying to really take maximum advantage of what we have, also trying to slowly switch over to newer portfolio. But given the global context of the market, I think global market forecast given the commodity prices of key commodities like corn and soybean including wheat remain low, the forecast for ’25 — 2025 I don’t think is very strong as far as international business is concerned and this is primarily driven by Americas.
Operator
Thank you. Mr. Viraj, please rejoin the queue for more questions. Next question comes from the line of Ankur Periwal with Axis Capital. Please go ahead.
Ankur Periwal
Yeah. Hi sir. Thanks for the opportunity. First question on the domestic crop protection business. If I heard the initial comments right, you mentioned YTD we are up 5%, 6%. Please correct me if I’m wrong. But I think in the first half we were up mid-high teens, probably more like 16%, 18%. So is there a sharp decline in Q3 and probably key reasons for the same?
Gyanendra Shukla
So one of the reason is that and I have probably alluded that in the past is that, look, Q3 depends on two factors. One is Q3 is a very strong herbicide business because in Q3; wheat herbicide business is big, sugarcane herbicide business is big, and rice herbicide business is big. And I have been highlighting we have weakness in the herbicide portfolio so some of the work we have started. So Q3 generally from herbicide perspective, that’s the largest segment, is weak for us. The other two big products which go in the Q2 are some specialty products in vegetable and then what recall there is a continuation of Kharif season and Rabi this year. All of you if you have noticed, there was an abrupt cessation of monsoon in the month of September, right? So it actually didn’t rain a lot in October, November like previous three years. So, I think it’s just portfolio weakness in Q3 and abrupt cessation of Kharif consumption as well as weak chili season. This year chilli prices have been very low. So, some of those things actually explain why Q3 is slightly weaker for us.
Ankur Periwal
Okay. Sure. Secondly, on the export side, you did mention that Pendi also is facing some pressure while if I’m not wrong, till last quarter it was largely Acephate wherein we were facing some challenges while Pendi was doing okay. So, any specific comments there? Inventory led issues again cropping up?
Gyanendra Shukla
See, our — I mean so I think look, Pendimethalin challenges are basically because of the inventory at the user level, right? That is what is causing problem. Another thing I think we probably need to — we cannot continue to undermine the Chinese overcapacity and their ability to undercut prices in the global market.
Operator
Thank you. Mr. Periwal, please rejoin the queue for more questions. Next question comes from the line of S. Ramesh with Nirmal Bang Equities. Please go ahead.
S. Ramesh
Good evening and thank you very much. In your presentation, can you give us a breakup for this INR492 crores of domestic revenue and the export revenue and for the bio and specialties, if you can break it up for us?
Subhra Gourisaria
So INR492 lakhs, proportion of it I would say has come from domestic Crop Care. Biologicals and Specialty solutions we have mentioned in the presentation as well has done well clocking 13% growth on Q3 basis and even on a YTD basis has done 24% growth. International business continues to be a challenge.
S. Ramesh
So is it possible to give the breakup of the international revenue number in rupees crores?
Subhra Gourisaria
It’s INR110 crores.
Operator
Thank you. Mr. Ramesh, please rejoin the queue for more questions. Next question comes from the line of Shaurya Punyani with Arjav Partners. Please go ahead.
Shaurya Punyani
Hi. Am I audible. Hello.
Gyanendra Shukla
Yeah.
Shaurya Punyani
Yeah. So, would you like to give a guidance as to the topline for FY ’26?
Subhra Gourisaria
So we don’t give any forward guidance, but we will talk about what — we will talk in this call on what are the challenges and what are the opportunities for us?
Shaurya Punyani
Okay. And sir, one more. Out of the international revenue, what country is the highest like in terms of percentage?
Gyanendra Shukla
It goes primarily — I mean most of our business is primarily American.
Operator
Thank you. Mr. R. Punyani, please rejoin the queue for more questions. Next question comes from the line of Viraj with SIMPL. Please go ahead.
Viraj Kacharia
Yeah, hi. Thanks for the opportunity again. Hello.
Subhra Gourisaria
Yeah. Go ahead, sir.
Viraj Kacharia
So just on the portfolio pruning part, can you give some perspective what kind of hit we can see in coming quarters? The portfolio is not that profitable or attractive for us to be in.
Subhra Gourisaria
Viraj, can you repeat your question? We’re not able to clearly understand.
Viraj Kacharia
So we talked about that in coming quarters, we would be done with the exercise in terms of review of the portfolio and we’ll be looking to prune a certain part of the portfolio in coming quarters. So just to give us — just to get a sense on this. What percentage of the portfolio you think is not that profitable and which we will be exiting in next, say, six months to a year?
Gyanendra Shukla
Yeah. So in terms of number of SKUs, it is very significant, right? I think we have a long tail. So, I mean it is very high double-digit number. In terms of revenue, I think maybe I cannot tell you now. But I can tell you I mean we can separately discussion on this.
Subhra Gourisaria
So Viraj, this is not a question of less profitable. I think what we are saying is the focus and the effort from the team goes a lot in serving pain [Phonetic], which is where we are looking. The impact is not going to be material on topline and bottom line perspective.
Viraj Kacharia
Okay. Second question is…
Gyanendra Shukla
What is important is that we — our sales team rather than trying to handle so many SKUs, they put all their energy on a smaller number of SKUs and it is improving supply chain complexity.
Viraj Kacharia
Understood. And from an ITI perspective say either for nine months or the quarter, what will be the ITI Index for us?
Gyanendra Shukla
So we consider — I mean I think for me healthy ITI is we can always keep above 15%, right? At this point of time, we probably are above 15%.
Subhra Gourisaria
I think it’s more to look at it on a longer term and what are the actions we are taking to refresh the portfolio, Viraj.
Operator
Thank you. Mr. Viraj, please rejoin the queue for more questions. Next question comes from the line of Prit Nagarsheth with Wealth Finvisor. Please go ahead.
Prit Nagarsheth
Yes. The question I have is related to your guidance for — the domestic guidance at least for quarter four. So are you seeing continued traction the way you have explained that Q3 has seen increase in volumes and herbicide obviously comes off and maybe insecticide, pesticides demands will increase in quarter four. So do you see a better domestic performance from your side?
Gyanendra Shukla
Yeah. So as I said, look, herbicide, we are strengthening our portfolio. Now a lot of what happens in quarter four from a consumption perspective. So crop — from crop area perspective, it is more or less similar compared to last year with a change in crop mix. For example mustard is down, but wheat is up in fact. So from crop area perspective, it is the same area as last year. A lot of consumption of fungicide and insecticide depends on the kind of pest pressure so it’s very difficult. So you always go by what is the normal pest expected, what is the normal volume vis-a-vis previous year, and what is the competitive situation. So, difficult to say what will happen. At this point of time, all I can say at least crop is there. Having said that, commodity prices are soft compared to even last previous years. So — but if pest pressure is high, farmers would tend to resort to use of chemicals to protect their crop. It’s difficult to say how things will evolve because there’s no solid mathematical model available to say what kind of pest pressure will happen.
Prit Nagarsheth
Right. I understand. My question is more in line with how poor the last year was for quarter four and for quarter three as well with a lot of inventory available in the Indian market. Do you see that the larger business scenarios are better off than what they have been and do you see a continuation of the growth that you’ve seen in Q3 continue in Q4?
Gyanendra Shukla
So business sentiment, I would say, remain more or less same compared to last year. If they are not better — they certainly are not better, they are more or less same depending on the crop. So, sentiments are very similar. And what happens next I think it depends on the external factor.
Subhra Gourisaria
The prices are low definitely, but volumes will be better [Phonetic].
Operator
Thank you. Mr. Nagarsheth, please rejoin the queue for more questions. Next question comes from the line of Abhijit Akella with Kotak Securities. Please go ahead.
Abhijit Akella
Yeah. Good evening. Thank you so much for taking my questions. Sir, first on the Rabi season in the Crop Care business, you did mention the fact that those cyclones had created additional trade inventory and maybe also created pricing pressure because of the trade scheme. So would it be possible to just give us some slightly more color in terms of how things stand at present? Are the inventories still elevated or have they been cleared out? And are you still seeing aggression in terms of pricing from the leading competitors?
Gyanendra Shukla
So I mean — I think from what I understand, pricing pressure continues in the market and there’s no shortage of inventory. I think everybody is sitting on the inventory and leaving in the market to — and because [Technical Issues]
Operator
Please go ahead.
Gyanendra Shukla
Yeah. So I mean, I think pricing pressure continues and inventory — there’s enough inventory in the market.
Abhijit Akella
Okay. And just last one from my side is on number one, the seed industry — seed rather production for next year. How is the output shaping up given it’s already been through a season I guess? And sorry, yeah, please go ahead.
Gyanendra Shukla
No, you complete your question. I’ll make a note.
Abhijit Akella
The other one was just with regard to how the CSM products are performing. For us, I guess Metconazole is important and then PEKK. So how those are doing? And then what kind of traction you’re seeing in terms of the newer ones? By when can we expect some meaningful contribution from them?
Gyanendra Shukla
Yeah. So on outlook of the seed production, I think seed production is challenging. Is it as challenging as last year? I think it’s probably slightly better than last year. But seed production area remains a constraint because farmers are always weighing option between growing a commercial crop versus seed crop, but I would say slightly better than last year, right, on the production side. On our CSM pipeline, I know you talked about PEKK and other products. I think look, our CSM pipeline is there, right; but we are adding to the portfolio. It will be very difficult for me to disclose name of the customers, but we continue to add more customers and we have inquiries. We are supplying samples for trialing and testing. I think there are few products in the pipeline. We did mention today Metalaxyl because that is something we have reached the stage of commercial. As we get more details about the other products, we will — when we get into commercialization more, then it’s a matter of talking. But yes, in other products we are adding customers particularly Metribuzin, Pendimethalin, and Hexaconazole.
Operator
Thank you. Mr. Akella, please rejoin the queue for more questions. Next question comes from the line of Siddharth Gadekar with Equirus. Please go ahead.
Siddharth Gadekar
Hi, sir, good evening. Sir, just wanted clarity on our multipurpose plant that we had commissioned last year. You were targeting to do Difenoconazole. Have we started anything in that plant or that plant is still idle?
Subhra Gourisaria
See, Difenoconazole we took some batches last year. This year also we are working on few contract manufacturing opportunities. One of them is with a global major. So, the plant is not idle. The plant is used for the purpose it was setup, which is working on various new opportunities.
Siddharth Gadekar
Okay. Got it. Thank you.
Operator
Thank you. Next question comes from the line of Archit Joshi with Nuvama Institutional Equities. Please go ahead.
Archit Joshi
Thank you, sir, for the opportunity. I just have one question. Sir, what would be your reading in the global landscape after six, seven quarters of the inventory destocking and that onslaught that we have been hearing of? And you also mentioned in your opening remarks about quite a lot of inventory still there in the system in products like Pendi. How do you see this panning out from a volume and pricing perspective in the — in this calendar year?
Gyanendra Shukla
So I think volumes are very comfortable and whenever there are comfortable volumes, it does put pressure on the pricing. The most important driver of consumption of these product is really commodity prices and that continue to — I mean I think if you track soybean prices, cotton prices, wheat prices, when you look at the [Indecipherable] prices, they continue to trend downward lower, right? And when the farm income because of the lower commodity prices, farm income are under challenging situation. And I think we understand this China supply dynamics as well. I believe while volumes will continue to grow, they’ll continue to grow because farmers are planting crop, they’re not leaving the crop shallow. There will always be pressure on the pricing.
Archit Joshi
Sure, sir. Thank you.
Gyanendra Shukla
And that’s why domestic becomes very important for us. I think I’ve been saying probably for last three, four calls, our primary focus is to drive domestic. We have lot of opportunities to fix in — I mean we have opportunities in CSM, we have opportunities to participate in international business. But given the scenario there, I’m more optimistic about domestic because that’s where we have a brand equity.
Operator
Thank you. Next question comes from the line of S. Ramesh with Nirmal Bang Equities. Please go ahead.
S. Ramesh
Yeah, Thanks a lot. So if you look at the outlook for the products which you mentioned are under development in the lab stage, the 10 products you’re working on, can you give us some sense in terms of what will be the target market size for these products? When you expect to commercialize them?
Gyanendra Shukla
So most of our CSM product, they are for diversified set of customers abroad and international businesses tend to primarily get focused towards Asia and Americas, right? So, that’s the kind of pipeline.
S. Ramesh
So and if you look at the Chinese strategy, I understand they are also trying to get into formulations. So, how would that impact Rallis’ business if you see the Chinese formulations supply hitting the international markets and your own markets?
Gyanendra Shukla
So, I think that is something we have not been talking in the industry and I think I’m glad you have brought that point because Chinese have started participating directly in those markets. That is something we have to wait and watch. But I believe there will always be opportunities from a diversification perspective from prospective clients to have alternate suppliers. I guess that’s where India is playing role and will continue to play an increasingly important role.
Operator
Thank you. Mr. Ramesh, please rejoin the queue for more questions. Next question comes from the line of Ranjit with IIFL Capital. Please go ahead.
Ranjit Cirumalla
Yeah. Hi sir. Thanks for taking my question. So, we have been focusing more on the domestic front this particular year and we continue to remain focused for the next few years and that is also a segment which has grown for us in the first nine months. So, just wanted to get a sense how has been the secondary demand by the farmers? Would it be a case of having a bit of a higher inventory and that might become a bit of a headwind for us next year or even the recent has been at par in line with our sales growth?
Gyanendra Shukla
So, volumes generally are good. I think it’s a pricing issue right now because this year Kharif was decent. I think it didn’t do well in the later part of Q3 and Rabi planting is good. So I don’t see it’s a volume issue. It’s largely an issue of pricing when supply is high.
Ranjit Cirumalla
The liquidation has been at par with the volume growth that we have been looking at.
Gyanendra Shukla
Volumes are higher, that means liquidation is high.
Ranjit Cirumalla
And that’s what we are carrying for the next couple of years or at least for FY ’26?
Gyanendra Shukla
I think the way I see it, look, there are probably [Indecipherable] because there are millions of farmers. There a lot of companies chasing the same set of farmers.
Operator
Thank you. Mr Ranjit, please rejoin the queue for more questions. Next question comes from the line of Shivaji Mehta, an individual investor. Please go ahead.
Shivaji Mehta
Hi. Thank you for the opportunity. Sir, one of the specialty chemical players in their earnings call had mentioned that China may start looking at increasing prices of various chemicals post the Chinese New Year. Are you expecting something similar post the Chinese New Year?
Gyanendra Shukla
So look, a lot of news goes in the media. I think I would really wait for — see, we have to see for some indications, right? For example recently there was a news that because Chinese have increased the price of some of the chloro chemicals related and suddenly there was a news and it died down very quickly. So, I think we will continue to monitor how it happens and then — it’s very difficult to predict. I don’t have any real insight to say how they would be happen.
Subhra Gourisaria
Sure. Actually anyway there’s the market…
Gyanendra Shukla
If there’s an opportunity, I think we would not leave any opportunity on the table if there’s an opportunity to increase the prices.
Shivaji Mehta
Right. Makes sense. Sir, and also over the next two to three years once things normalize, what is the stable asset turn that you foresee for your businesses excluding the Seeds portfolio?
Subhra Gourisaria
So Seeds, anyway we don’t have any fixed capital. So Seeds, the asset turn — it’s a working capital business. As far as Crop Care is concerned, I think I mentioned earlier is where we don’t look at asset turns, but IRR and IRR should be certainly more than that across the lowest assets that we look into.
Operator
Thank you. Mr. Mehta, please rejoin the queue for more questions. Next question comes from the line of Sanjay, an Individual Investor. Please go ahead.
Sanjay
Hello. Am I audible?
Gyanendra Shukla
Yes, Sanjay. We can hear you.
Sanjay
Yeah, good evening, sir. Thanks for the opportunity. Sir, my apologies. I joined the conference call by about 20 minutes late. So, very briefly if you could tell me what was the reason for drop in our profitability this quarter. And secondly, sir, I just wanted to know as an individual investor, obviously my query will be skewed towards the stock price performance. So if I see first of all, there is an underperformance in the last five years and also our revenue growth CAGR has not been that good if we compare to all the other competitors. Our CAGR is not even increasing by about 10% to 12%. It’s hardly 7% to 8%. So, how does our company foresee the next five years in terms of revenue and profitability?
Gyanendra Shukla
Yeah. I don’t know, Sanjay, if you have attended the previous conference calls. But I have been trying to articulate some of the steps we are taking to really turnaround this business and bring it in line with the industry or do better than industry. There are quite a few things we are doing. For example this product — this business is a product business. We are looking at significantly revamping our product portfolio. We have gaps in certain areas, particularly herbicide, and also we are working on those. We have now a decent seed business, which has taken a while to stabilize. I think we can continue to deliver on Seed. The other area where we are focusing from product perspective is Biologicals and Specialty solution because that’s another area where consumers are getting interested, farmers are getting interested.
So, we’re working on those. So, that’s on the product side. I think we are taking a lot of steps on really customer side because at the end of the day, this business is also demand generation business. If you’re a farmer and a villager, you are probably approached by 10 different companies in a day. So, how do you make decision which company to prioritize? Obviously product and product performance matters, but we are trying to intensify our customer relationship efforts and we are trying to get more focus rather than trying to be thinly spread and also trying to leverage on digital. So, we’re making a lot of investment on digital connectivity with the farmer so that we can serve them better. So, that’s on the customer side.
On I would say efficiency side, obviously we have some assets and we are also having old portfolios. We’re looking at even on manufacturing side of how can we make our products better to how can we bring down the cost on our production side, what are the other things we can do to add new products to the portfolio. We are also looking at some CSM opportunities. We have a pipeline of companies we are working on. But these things do take time, right? We are reorienting our people capabilities and also we are looking at people capabilities and various other things. So, series of the steps.
Sanjay
Okay. And sir, just very brief on the reason for drop in profitability this time. I’m sorry I joined the conference call late. That’s the reason.
Gyanendra Shukla
Drop in profitability. Subhra, you want to talk about?
Sanjay
Yes. Year-on-year, if we see our profitability has dropped significantly. So just what is the specific reason for that? Just a small pointer if you could provide.
Subhra Gourisaria
See, I think for us, seasonal profit — quarterly profitability is difficult to explain because it’s a small product and we said that exports business had challenge. On a YTD basis, we are largely flat on PBT basis despite the challenges in the market front. So this quarter the numbers are lower squarely because of the challenges in the exports business.
Operator
Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Gyanendra Shukla
So thank you, everybody, for participating on the call. Agrochemicals export demand continues to be weak. We will try to improve volume growth and margins in a tough environment. Seed business is impacted by availability of inventory. Domestic agrochemicals demand is positive, but lower prices across products are impacting revenues. Margins are steady with excellence around product mix improvement and cost optimizations. We remain optimistically cautious for Q4 overall business plans. Our endeavor would be to improve capacity utilization and take steps to improve market share across verticals. We will try to maintain EBITDA margin in the short term. Our long-term actions on improving business health is in the right direction and I remain positive for driving competitive, profitable, and sustainable growth to create value for all the stakeholders. Thank you very much.
Operator
[Operator Closing Remarks]