Sharda Cropchem Limited (SHARDACROP) Q2 FY23 Earnings Concall Transcript

Sharda Cropchem Limited (NSE: SHARDACROP) Q2 FY23 Earnings Concall dated Oct. 21, 2022

Corporate Participants:

Manish Mahawar —

Ramprakash V. Bubna — Chairman and Managing Director

Ashok Vashisht — Chief Financial Officer

Analysts:

Sameer Deshpande — Fairdeal Investments — Analyst

Sonal — Prescient Capital — Analyst

Rajesh Jain — NB Investment — Analyst

Anuj Sharma — M3 Investments — Analyst

Manish Mahawar — Antique Stock Broking — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Sharda Cropchem Q2 FY23 Earnings Conference Call hosted by Antique Stock Broking. 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. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, sir.

Manish Mahawar —

Thank you, Lisa. On behalf of Antique Stock Broking, I would like to welcome all the participants on the call of Sharda Cropchem. From the management, we have Mr. R.V. Bubna, Chairman and Managing Director; Mr. Ashok Vashisht, CFO; and Mr. Dinesh Nahar, GM, Finance on the call. Without further ado, I would like to hand over the call to Mr. Bubna for opening remarks, post which we will open the floor for Q&A.

Thank you, and over to you Mr. Bubna.

Ramprakash V. Bubna — Chairman and Managing Director

Thank you, Mr. Manish. Good evening and very warm welcome to everyone present here on the call. I hope all of you are keeping safe and healthy during these times. Along with me, I have Mr. Ashok Vashisht, our Chief Financial Officer; Mr. Dinesh Nahar, General Manager of Finance; and our Investor Relations Advisors.

Hope you’re all — you have all received our investor deck by now. For those who have not, you can view them on stock exchanges and from the company website. We are an agrochemical company with crop protection — I mean, it’s a good position in the generic crop protection industry. We are engaged in the process of marketing and distribution by procuring wide spectrum of formulations and generic active ingredients fungicides, herbicides and insecticides across the globe.

Extending this rich experience, we have also entered into biocides segment to cater disinfectants market, leveraging our experience and product registration capabilities, we have carved out a niche for our sales and built a robust code and identifying generic molecules, repairing dossiers, seeking the decisions, marking and — marketing and distribution.

The Company continues to identify opportunities in the generic molecules and corresponding formulations and generic active ingredients, repairing dossiers, seeking the decisions in the relevant jurisdictions. Sharda Cropchem’s total product registration stood at about 2,750 as on September 2022. Additionally, 1,120 applications for the product registrations globally are at different stages of approval. The capex for H1 2023 stood at INR230 crores.

Every jurisdiction has different legal and procedural requirements for seeking registrations. With its rich experience, the company has successfully obtained and — obtained the necessary regulatory approvals from these jurisdictions. The company is well-equipped to respond to the potential issues such as — issues as well as the readiness to efficiently respond and comply with the regulatory requirements. We maintain healthy relationship with multiple manufacturers in the agrochemical industry, mainly in China and India sourcing from multiple manufacturers, helping the company in getting quality products at optimal price and thereby derisking its sourcing capabilities. Over the years, we have built a strong brand franchise within our global markets. We are benefiting through the economies of scale in our portfolio and leveraging value of our supply chain to deliver value to our customers across the globe.

For Q2 2023 revenues grew by 12% to INR722 crores and for H1 FY23 the revenues grew by 22% to INR1,546 crores. Growth was led by better product mix and price realizations. Gross margins have been impacted by weakening euro against dollar as well as INR leading to increased input cost and impact of general inflation across geographies.

Major currencies have depreciated against the USD in the last six months. Due to the ongoing war between Russia and Ukraine, over 45% of H1 FY23 sales from agrochemical business have been in Europe whereas majority of the company’s raw material is imported from China [Technical Issues] and payments are done in US dollars. This has impacted the company’s gross margins overall profitability temporarily as the Euro had considerably depreciated against the dollar.

We are now taking certain measures to reduce the adverse impact of forex. We have increased our sales focus on NAFTA region. We have begun sourcing in euro currency. We are optimally hedging our currencies and we are seeking price increase from customers to negate this forex impact.

We have accelerated focus on revenue, generating investments and are continuously looking to improve the operational efficiencies which will help us improve margins.

Our incessant efforts to explore newer markets and geographies while penetrating deeper into our existing ones is aligned to our endeavor of serving customers globally. We consistently strive to emerge higher from the global scale and our approach to think global at global — has continued to navigate and challenges.

Further, our asset-light business model enables us to expand the number of products across our entire spectrum of product offerings. Our efforts on diversifying our product portfolios, widening global reach, build supply chain capabilities, and strengthening our distribution network enables us to enhance our performance year-after-year.

Moreover, through our expertise disciplined approach, experience and commitment to create value for our shareholders, we are exploring better opportunities emerging as a prominent global brand and enhancing our overall business performance persistently.

With this brief overview, I would now like to hand over the call to our CFO, Mr. Ashok Vashisht, for discussing our financial performance. Thank you.

Ashok Vashisht — Chief Financial Officer

Thank you, sir. Good evening, everyone. Coming to Q2 FY23 financial performance, revenues stood at INR722 crores versus INR643 crores in quarter two FY22, registering a growth of 12% year-on-year. Revenue growth was led by a better product mix and better price realization during the quarter. The company is focusing on value-based [Phonetics] network.

Gross margin for Q2 FY23 stood at 23% as against 28% in quarter two FY22, so the margins are slightly lower than Q2 FY22 but better than Q1 FY23 where it was 25.4%. EBITDA for Q2 has grown by 3% to INR107 crores whereas there is a marginal decline in percentage EBITDA to 14.8%. This was mainly due to lower gross margins driven by weakening of euro against dollar — US dollar as well as Indian rupees. Additionally, the general inflation and strengthening of global workforce to support the future growth has also marginally impacted the EBITDA.

PAT for the quarter Q2 FY23 stood at INR12 crores against INR32 crores in quarter two FY22. PAT was impacted by high freight costs to the tune of INR38.7 crores Q2 FY23 mainly driven by a weakening of euro against dollar and INR. If we exclude forex loss for the quarter, PAT has actually grown by 12% due to favorable product mix and better operational efficiencies.

Coming to the split of agrochemical business which [indecipherable] by 14% year-on-year basis to INR576 crores and non-agro grew by 4% year-on-year basis to INR146 crores. In the agrochemical space, Europe grew by 11%, NAFTA grew by 28% and LATAM grew by — de-grew by 10%, and rest of the world grew by 18%. Europe continues to contribute higher in terms of contribution to the total agro business at 41%, NAFTA 40%, LATAM 11% and rest of the world 8% of the agrochemical business for Q2 FY23.

In non-agrochemical space, Europe grew by 22%, NAFTA grew by 19%, LATAM grew by 26% and rest of the world grew marginally by 1%. Europe contributes 22%, NAFTA 57%, LATAM 7% and rest of the world 14% of the non-agro business for Q2 FY23.

Now coming to half year performance for H1 FY23, revenue stood at INR1,546 crores against INR1,265 crores in H1 FY22 registering a high double-digit growth of 22% on year-on-year basis. Revenue growth was led by a better product mix and better price realization. Gross margin for H1 FY23 stood at 26.3% as against 28.6% in H1 FY23. So since there was a increase in margins in Q2 over Q1, say FY23, so the GAAP for the six months is narrowed down in Q2.

EBITDA has grown by 4% to INR218 crore whereas there is a marginal decline in percentage EBITDA margin to 14.1%. This was essentially due to gross margin driven by the weakening of euro against dollar as well as INR, general inflation and strengthening of our global force to support future growth.

PAT stood at INR35 crores in H1 FY23 against INR70 crore in H1 FY22 where it was impacted by forex losses to the tune of INR81.9 crores in H1 FY23. Excluding [indecipherable] losses, PAT has actually grown by 62% due to better product mix as well as better operational efficiencies. Coming to the split, in agrochemical business, grew by 15% on a year-on-year basis to INR1,119 crores whereas non-agro business grew by 56% year-on-year basis to INR356 crores. In the agrochemical space, Europe grew by 18%, NAFTA region grew by 19%, LATAM de-grew by 6% and rest of the world grew by 18%. In terms of contribution, Europe contributes 46% for the first half of the year FY23, NAFTA 36%, LATAM 12% and rest of the world, ROW, 6% of the agrochemical business.

In the non-agrochemical space, Europe grew by 39%, NAFTA grew by 82%, LATAM 81% and rest of the world 7%. In non-agro business, in terms of contribution Europe contributes 26%, NAFTA 56%, LATAM 6% and ROW 12%.

Now coming to working capital efficiencies, as on 30 September ’22, in terms of number of days, it stood at 91 days. We are a net cash company. Our total debt as on 30 September ’22 stood at INR17 crores and our cash and cash equivalents as at 30 September ’22 stood at INR283 crores.

With this financial overview, we can now open the floor for questions. Thank you.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions]

The first question is from the line of Sameer Deshpande from Fairdeal Investments. Please go ahead.

Sameer Deshpande — Fairdeal Investments — Analyst

Good evening, sir.

Ramprakash V. Bubna — Chairman and Managing Director

Good evening.

Sameer Deshpande — Fairdeal Investments — Analyst

Sir, looking at the Q2 results, the problem of euro depreciation continues because we have around INR39 crores of last time return of this year quarter two, along with INR42 crores was in Q1. Sir, you have mentioned that you have taken certain measures like price increase that is regarding this sourcing in euro versus the dollars which we were doing earlier. So how far we have been successful in these two initiatives in the Q2? Or — and how much percentage of our sourcing will happen going forward in euro?

Ramprakash V. Bubna — Chairman and Managing Director

See the percentage, I mean, the task is not so easy.

Sameer Deshpande — Fairdeal Investments — Analyst

Yeah.

Ramprakash V. Bubna — Chairman and Managing Director

The seller is also very much aware that euro is likely to strengthen once again. So he wants to also take a very cautious steps and he is not giving us a fair exchange rate conversions. We are making efforts but the task is equally difficult.

Sameer Deshpande — Fairdeal Investments — Analyst

And sir but, actually, has this situation deteriorated after Q1 on 30 June, I think the euro was quite favorable. But after that in September, it is now some 0.98% or so. At the current provision, which we have made are for INR39 crores loss, now we have receivables to the tune of around INR1,000 crores and payables — trade payables around INR1,135 crores. So have you taken the full impact on the receivables and payables also at this point at the current euro rate?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, please.

Sameer Deshpande — Fairdeal Investments — Analyst

So going forward, the scenario currently, is it 0.97%, 0.98% or something to the euro to the dollar. If the situation goes down further then only we’ll be facing problems, but have you done some hedging also?

Ramprakash V. Bubna — Chairman and Managing Director

See the options for hedging is also very limited. Because everybody is in two minds, there are some opinions we said that euro is going to start strengthening from here and the other opinion is which is say that it all depends upon the Ukraine-Europe war — Ukraine-Russia war. So the views are not very clear. Wherever we see some light, we try to pursue that path and we are always vigilant to — as and when we get some chances.

Sameer Deshpande — Fairdeal Investments — Analyst

Okay. Have we been successful in taking some price increases also?

Ramprakash V. Bubna — Chairman and Managing Director

Yes. To some extent, yes.

Sameer Deshpande — Fairdeal Investments — Analyst

Okay. Thank you, and all the best.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sonal from Prescient Capital. Please go ahead.

Sonal — Prescient Capital — Analyst

Hi, am I audible?

Operator

Yes.

Ramprakash V. Bubna — Chairman and Managing Director

Yes. Go ahead.

Sonal — Prescient Capital — Analyst

Sure. So, sir, my question is a follow-on to the gentlemen who was in the queue before me. If I were to just take some numbers roughly 50% of your sale is to the European region. And if I were to say just quantify what part of your — let’s assume 50% of your raw material is being procured for Europe as we speak right now, assuming similar margins. What part of this has been converted from USD to euro? Sir, I want to just understand, if you could just give a ballpark just to understand how far are we?

Ramprakash V. Bubna — Chairman and Managing Director

Sir, your question is not very clear. Can you speak a little louder and slower?

Sonal — Prescient Capital — Analyst

Sure. Sir, am I — Is my voice more audible now?

Ramprakash V. Bubna — Chairman and Managing Director

Now your voice is more audible but then some of the words are getting mixed up.

Sonal — Prescient Capital — Analyst

Okay, I’ll speak slow sir. So I am saying sir, roughly 50% of your sales is to the European region. Now I wanted to understand that the raw material which is sourced for the European region, what part of that raw material is now getting procured in Europe so that there is no [Speech Overlap]

Ramprakash V. Bubna — Chairman and Managing Director

Very small part. It could be 5% to 7%.

Sonal — Prescient Capital — Analyst

Okay. And sir, for the remaining year, basically, if you were to make sales to this particular region, are there any contractual changes you have done to sales or this is largely spot sales that you either can sell or you cannot sell? Just wanted to understand your obligation for the remaining year for the European region. Just to understand that, sir.

Ramprakash V. Bubna — Chairman and Managing Director

See, as I’ve explained in our previous meetings also, we do not have a long-term contract with any customer or any supplier. The businesses are negotiated from purchase order to purchase order even in the same season.

Sonal — Prescient Capital — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

So we are very flexible and nimble-footed as far as the — we don’t have very long-term obligation either to our customers nor to our suppliers.

Sonal — Prescient Capital — Analyst

Got it. So how easy — Just to understand, sir. How easy or difficult is it for us to redirect the sales for the European region to the NAFTA region given that there are different dynamics, different competition. Just want to understand that, if you could explain that a little more that’ll help.

Ramprakash V. Bubna — Chairman and Managing Director

Well, we have been successful in the last quarter and our efforts are going on. We are having a better access and deeper penetration into the NAFTA markets and the customers are appreciating our product’s quality and service. So we hope to make some progress in that direction.

Sonal — Prescient Capital — Analyst

Okay, sir. Sir, any broader guidance can you give for your sales and maybe the forex basically — just trying to understand because I factor this in the gross margin [indecipherable] so can we assume that the — our gross margins will be squeezed by a similar amount. So example, for Q2, if our [indecipherable] just take H1 sir, our gross profit was roughly INR400 crores and we lost roughly INR100 crores in currency depreciation, INR80 crores in currency depreciation. So basically we are losing roughly 5% odd. Sir, can we just assume that for the balance of the year, the gross margins would be in the range of 20% because — or is it difficult for you to pinpoint?

Ramprakash V. Bubna — Chairman and Managing Director

See our gross margin should be in the range of 28% to 30% or I would say 26% to 30%.

Sonal — Prescient Capital — Analyst

Okay, sir. All right. That’s it from my side. I’ll come back in the queue.

Ramprakash V. Bubna — Chairman and Managing Director

Yes, please.

Operator

The next question is from the line of Rajesh Jain from NB Investment. Please go ahead.

Rajesh Jain — NB Investment — Analyst

Hello, good evening. Am I audible?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, please.

Rajesh Jain — NB Investment — Analyst

Sir, congratulation on a good set of numbers under the challenging environment. Sir, I just want to ask you the basic information. One is regarding the registration that we had, it is there in which companies we hold all these registrations?

Ramprakash V. Bubna — Chairman and Managing Director

What was the last part of your question?

Rajesh Jain — NB Investment — Analyst

In which company’s name that we hold so many registrations that we have?

Ramprakash V. Bubna — Chairman and Managing Director

Which countries or companies?

Rajesh Jain — NB Investment — Analyst

No. Look, I think we have registration numbering upto I think some 2,600 or 2,800.

Ramprakash V. Bubna — Chairman and Managing Director

Yes.

Rajesh Jain — NB Investment — Analyst

They are in Sharda Cropchem name or is it in the subsidiary’s name?

Ramprakash V. Bubna — Chairman and Managing Director

It is in both. Wherever the authorities insist that they will give the registration to a local entity, we form a subsidiary and we obtain the registration in the subsidiary’s name but the investment for the registrations is done from the principal company, mother company. And the mother company is the beneficial owner. The subsidiary companies are, in majority of the cases, not even trying to bring the transactions unless again the local rules prohibit, that we have to do the transactions through the subsidiary companies. So ultimate beneficiary is always the mother company.

Rajesh Jain — NB Investment — Analyst

So what I have understood is, it is either in the name of Sharda Cropchem or wherever the particular country demands then only in a subsidiary — in the company’s subsidiary name. Is the understanding is correct?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, sir. And the capital investment is only from the mother company. The root can be the subsidiary company and the beneficial owner is also the mother company.

Rajesh Jain — NB Investment — Analyst

Okay. Now we have so many subsidiaries.

Ramprakash V. Bubna — Chairman and Managing Director

Yes.

Rajesh Jain — NB Investment — Analyst

This is basically been created based on the demand or the requirement in each country. Is that is correct?

Ramprakash V. Bubna — Chairman and Managing Director

Yes.

Rajesh Jain — NB Investment — Analyst

Okay. Sir, my next question is, does promoters hold stake in any group companies which are in the same line of business?

Ramprakash V. Bubna — Chairman and Managing Director

No. Only in the Sharda.

Rajesh Jain — NB Investment — Analyst

In this field, it’s only in Sharda Cropchem?

Ramprakash V. Bubna — Chairman and Managing Director

Yes.

Rajesh Jain — NB Investment — Analyst

Okay, sir. That’s all from my side. Thank you very much.

Ramprakash V. Bubna — Chairman and Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Anuj Sharma from M3 Investments. Please go ahead.

Anuj Sharma — M3 Investments — Analyst

Yeah. Thank you. Sir, few questions. One is, can you just give some highlights into the demand situation in Europe?

Ramprakash V. Bubna — Chairman and Managing Director

Pardon me.

Anuj Sharma — M3 Investments — Analyst

Could you just give some thoughts or explain some outlook on the demand situation in Europe?

Ramprakash V. Bubna — Chairman and Managing Director

In Europe?

Anuj Sharma — M3 Investments — Analyst

Yeah, European geography. That’s right.

Ramprakash V. Bubna — Chairman and Managing Director

Yeah, the demand situation is normal. In fact, it has been better than the previous quarter last year.

Anuj Sharma — M3 Investments — Analyst

Okay. The second question is, these currency upheavals would also have affected competitors and pricing, so what — how has the pricing outlook or the cost dynamics of the competitors evolved?

Ramprakash V. Bubna — Chairman and Managing Director

Sir, everybody is on the same boat.

Anuj Sharma — M3 Investments — Analyst

Right.

Ramprakash V. Bubna — Chairman and Managing Director

The competitors don’t have any special thing and more — many of the multinationals are also slowly switching over to — sourcing from China, because in order to save the cost of manufacturing which is higher in their own countries.

Anuj Sharma — M3 Investments — Analyst

Right. What — do you see scenarios of price increase by competitors as well? Because many times you have alluded to that you wait for the competitors or MNC to increase their pricing for you to make an attempt. So are you seeing that already happening?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, that is happening.

Anuj Sharma — M3 Investments — Analyst

Okay. And what is the quantum of price rise we could see?

Ramprakash V. Bubna — Chairman and Managing Director

What is the what?

Anuj Sharma — M3 Investments — Analyst

What is the quantum of price rise? Yeah.

Ramprakash V. Bubna — Chairman and Managing Director

It is difficult to calculate in terms of percentage but the price rise is happening. And part of the effect of the cross-currency exchange rates, we have been able to pass very slowly and silently to the customers.

Anuj Sharma — M3 Investments — Analyst

Okay. And sir, is there substantial manufacturing in Europe as well because of the energy situation? Is the cost of manufacturing in Europe raising and hence our competitive advantage increases?

Ramprakash V. Bubna — Chairman and Managing Director

The cost of manufacturing is increasing in Europe because of the increase in the cost of energy.

Anuj Sharma — M3 Investments — Analyst

Right.

Ramprakash V. Bubna — Chairman and Managing Director

And this is also pushing the manufacturing to be more towards China and less in Europe.

Anuj Sharma — M3 Investments — Analyst

Okay. Roughly, sir, what percentage of manufacturing would be coming out of Europe today?

Ramprakash V. Bubna — Chairman and Managing Director

What percent of manufacturing coming out of Europe? You mean, globally or I mean, overall?

Anuj Sharma — M3 Investments — Analyst

No. [indecipherable] in Europe and suppliers — All right, sir. And sir —

Ramprakash V. Bubna — Chairman and Managing Director

[Speech Overlap] these are all very confidential and nobody reveals these things.

Anuj Sharma — M3 Investments — Analyst

Okay. And my last question is, this currency movement, historically, if you go back, when was the last time you saw this currency movement that we are seeing now for Sharda?

Ramprakash V. Bubna — Chairman and Managing Director

Again, please repeat the question. It’s not that clear to me.

Anuj Sharma — M3 Investments — Analyst

Yeah. I’m saying that this currency movement if you go historically when was the last time we saw these movements for Sharda and how did we play the game last time?

Ramprakash V. Bubna — Chairman and Managing Director

No, I can’t understand. We didn’t play the game. What do you want — your question is not clear at all, sir. Currency movement for Sharda?

Anuj Sharma — M3 Investments — Analyst

Yeah, I’m saying —

Ramprakash V. Bubna — Chairman and Managing Director

Currency movement for everybody?

Anuj Sharma — M3 Investments — Analyst

No, no, I’m saying —

Operator

Sorry to interrupt, Mr. Sharma. Sir, may we request that you return to the question queue? There are participants waiting for their turn.

Anuj Sharma — M3 Investments — Analyst

All right, madam.

Operator

Thank you, sir. The next question is from the line of Rajesh Jain from NB Investments. Please go ahead.

Rajesh Jain — NB Investment — Analyst

Thanks for the opportunity once again. Sir, I had two questions. One is that most of the innovators companies they have manufacturing base in — either in Europe or US? Or most of them have shifted to China?

Ramprakash V. Bubna — Chairman and Managing Director

I won’t say most of them have shifted but some of them have shifted to China because the cost of — this cost of energy is being very prohibitive in Europe. It is impacting everybody very adversely during this — particularly because of this Russia-Ukraine war.

Rajesh Jain — NB Investment — Analyst

Otherwise, before this war, all of them were manufacturing at Europe or US only?

Ramprakash V. Bubna — Chairman and Managing Director

No, sir. Even at that time, they were sourcing some part of their products or business from China. This is gradually happening for the last 10, 15 years that manufacture in china is increasing and manufacture in Europe and USA is decreasing. It’s a continuous process.

Rajesh Jain — NB Investment — Analyst

Continuous, okay. With your experience being in this field for such a long time, is it possible to know how much percent has been shifted?

Ramprakash V. Bubna — Chairman and Managing Director

No, sir. My experience [indecipherable]

Rajesh Jain — NB Investment — Analyst

Why — no, why I’m asking this question is, see, you are sourcing from China or so and giving at a lesser price. If the innovator companies were to shift their entire manufacturing requirements to China, then still will you have any price difference?

Ramprakash V. Bubna — Chairman and Managing Director

Sir, I think you have not understood the word shift — shifting very practically. When we say shifting, that means that they are reducing their production. The facility still remain in Europe, they are reducing their production in Europe and the sourcing from China is increasing.

Rajesh Jain — NB Investment — Analyst

Correct. So once they start sourcing from —

Ramprakash V. Bubna — Chairman and Managing Director

[Speech Overlap] full capacity in Europe and they are slowly — because they find their sourcing from China much swifter, more convenient and cheaper.

Rajesh Jain — NB Investment — Analyst

Correct. So since they now start getting their product manufacturer at lower cost, so for Sharda the price difference, whatever was there earlier, it will keep shrinking in future?

Ramprakash V. Bubna — Chairman and Managing Director

We don’t see it on the — in the reality. We don’t see it in the reality. In fact, our market share is increasing in these geographies. Of course, we are a very small player, so we don’t see any adverse impact on Sharda’s business.

Rajesh Jain — NB Investment — Analyst

Okay. Sir, my second question is regarding this currency fluctuation with the whatever the bad experience we had for last two quarters. In future, are we going to take any precautions in that regard?

Ramprakash V. Bubna — Chairman and Managing Director

Sir, as we have — I think this question is being repeated, even the previous gentlemen has aksed the same thing, we are making efforts on three or four fronts.

Rajesh Jain — NB Investment — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

To shift more efforts — I mean, more concentration in the NAFTA region where we’re not impacted by the currency — foreign exchange effect at all.

Rajesh Jain — NB Investment — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

Secondly, we are trying to convince our customers in Europe that is becoming very expensive for us. And some of the customers are understanding, realizing, and I think they also don’t have much of an option but to accept our request for increase in the margins — increase in the prices.

Rajesh Jain — NB Investment — Analyst

Okay. Okay. Okay.

Ramprakash V. Bubna — Chairman and Managing Director

These are the two main factors — main things that we have.

Rajesh Jain — NB Investment — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

Yeah.

Rajesh Jain — NB Investment — Analyst

Okay, sir. Thank you.

Ramprakash V. Bubna — Chairman and Managing Director

Thanks.

Operator

Thank you. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead.

Manish Mahawar — Antique Stock Broking — Analyst

Yeah. Bubna, just I needed some data points from you for the quarter. Can it possible to share the sales breakup in terms of volume, price and currency for the quarter?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, sir. One minute. You said volume?

Manish Mahawar — Antique Stock Broking — Analyst

Yeah. Volume growth for the quarter.

Ramprakash V. Bubna — Chairman and Managing Director

As for as the volume is concerned, there is a degrowth in the last quarter, degrowth to the extent of about 23%.

Manish Mahawar — Antique Stock Broking — Analyst

23%. And price and exchange — price or our product mix?

Ramprakash V. Bubna — Chairman and Managing Director

You mean revenue?

Manish Mahawar — Antique Stock Broking — Analyst

Yeah. Realization or product mix [indecipherable]

Ramprakash V. Bubna — Chairman and Managing Director

Real price and product mix, there is an improvement to the extent of 34%.

Manish Mahawar — Antique Stock Broking — Analyst

Okay. And currency sir?

Ramprakash V. Bubna — Chairman and Managing Director

2%.

Manish Mahawar — Antique Stock Broking — Analyst

2%. And what was the number for our first half?

Ramprakash V. Bubna — Chairman and Managing Director

One minute. Which number, Mr. Manish?

Manish Mahawar — Antique Stock Broking — Analyst

Volume, price, and exchange sir, same number for the first half. This is for second quarter you have given.

Ramprakash V. Bubna — Chairman and Managing Director

No. I have given — this is the difference. You’re asking for the H1, okay. First half you said?

Manish Mahawar — Antique Stock Broking — Analyst

Yeah.

Ramprakash V. Bubna — Chairman and Managing Director

Our product and price mix impact is plus 36%.

Manish Mahawar — Antique Stock Broking — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

Volume is degrowth by 13%. Forex is 0.5%.

Manish Mahawar — Antique Stock Broking — Analyst

0.5%. Okay. And sir, can it possible to share the breakup — regional volume breakup for agrochemical business?

Ramprakash V. Bubna — Chairman and Managing Director

Yes.

Manish Mahawar — Antique Stock Broking — Analyst

So, in Europe, NAFTA, ROW and LATAM volume, sir.

Ramprakash V. Bubna — Chairman and Managing Director

One minute. This is — the total you want or agro plus non-agro?

Manish Mahawar — Antique Stock Broking — Analyst

No. Agrochemicals, sir. Generally, used to give each and every quarter, so basically agrochemicals and volume breakup in terms of regional, I’m talking about.

Ramprakash V. Bubna — Chairman and Managing Director

Yeah. Volume in Europe is 33,010,000 [Phonetics] as against INR34 million in the last quarter — last year’s quarter.

Manish Mahawar — Antique Stock Broking — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

NAFTA, it is INR19 million — INR19 lakhs versus INR23.5 lakhs in the previous year. LATAM, it is INR6 lakhs versus INR14 lakhs in the previous year. Rest of world, it is INR7.5 lakhs versus about INR10 lakhs in the same quarter last year. Total INR63 lakhs versus INR81 lakhs in the previous year.

Manish Mahawar — Antique Stock Broking — Analyst

Previous year.

Ramprakash V. Bubna — Chairman and Managing Director

Minus 22.7%. Yes, sir.

Manish Mahawar — Antique Stock Broking — Analyst

Okay. And gross margins, sir, for regional gross margins?

Ramprakash V. Bubna — Chairman and Managing Director

Gross margin for agro or again overall?

Manish Mahawar — Antique Stock Broking — Analyst

Overall sir.

Ramprakash V. Bubna — Chairman and Managing Director

Overall.

Manish Mahawar — Antique Stock Broking — Analyst

You used to give an overall breakup.

Ramprakash V. Bubna — Chairman and Managing Director

Gross margin in Europe is 29% versus 33% last year. NAFTA 26% versus 28% last year. LATAM 24% versus 15% last year. Rest of the world is 30% versus 20% last year.

Manish Mahawar — Antique Stock Broking — Analyst

Okay. Sure. That’s all from my side. Thank you.

Ramprakash V. Bubna — Chairman and Managing Director

And overall is 27.3% versus 28% last year. So it’s more or less at the same level overall.

Manish Mahawar — Antique Stock Broking — Analyst

Sure sir. That’s all from my side, sir. Thank you.

Ramprakash V. Bubna — Chairman and Managing Director

Thank you, Manish.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sonal from Prescient. Please go ahead.

Sonal — Prescient Capital — Analyst

Hi, sir. Sonal this side. Am I audible?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, please.

Sonal — Prescient Capital — Analyst

Sir, I wanted to understand from H1 perspective, the reason for the degrowth of sales in LATAM, if you could explain that?

Ramprakash V. Bubna — Chairman and Managing Director

Degrowth of sales?

Sonal — Prescient Capital — Analyst

Yes, sir. I am on the agrochem — I’m talking about the agrochemical side. Yes. [Technical Issues]

Operator

Hello?

Sonal — Prescient Capital — Analyst

Sir, I’m on Slide number 22 of your presentation.

Ramprakash V. Bubna — Chairman and Managing Director

That’s much easier then.

Sonal — Prescient Capital — Analyst

Yes, sir.

Ramprakash V. Bubna — Chairman and Managing Director

22. You said there is a degrowth from INR150 crores to INR146 crores?

Sonal — Prescient Capital — Analyst

Yes, sir.

Ramprakash V. Bubna — Chairman and Managing Director

You asked me — what’s the question? What is the reason?

Sonal — Prescient Capital — Analyst

Yes, sir. Sir, I wanted to understand why is this happening. If you could just explain this that will be helpful.

Ramprakash V. Bubna — Chairman and Managing Director

Sir, this is a very small change. There can be many factors. It is not something very significant so that we can point out and say that this has been the main factor.

Sonal — Prescient Capital — Analyst

Okay.

Ramprakash V. Bubna — Chairman and Managing Director

It can mainly — it can happen to the — because of the product mix, there was one product, which was doing very well in the last 12 months. So one quarter, it may be a little less, one quarter it could be a little more.

Sonal — Prescient Capital — Analyst

Sir, I have a second question on — you just — to the — gentleman who was on the line before me, you gave the numbers for the volume for the agrochemical business. You said that the total and total we sold 61 lakh on the volume front compared to 81 lakh tonnes. So what is the guidance for the whole year, sir, if you could just explain that. If you could share that?

Ramprakash V. Bubna — Chairman and Managing Director

See, we are expecting the revenue to grow by 15% to 18% and EBITDA to also grow by 15% to 18% overall.

Sonal — Prescient Capital — Analyst

Okay. Sir, could you explain a little bit how do you come to this math because, for somebody who is tracking the company basically like if I’m an outsider, I would basically like to believe that there is a volume growth, there is a realization growth which basically adds up to 15% to 18%. But what is happening is there is a negative volume growth and there is a very high realization growth which is leading to your 15% to 18% guidance which you are giving. So I just wanted to understand this, that how do you come to 15%, 18%? So like 15%, 18% [Foreign Speech]

Ramprakash V. Bubna — Chairman and Managing Director

One minute. Sir, I can only say in general that there is a better product mix. We are coming out with newer molecules in our registrations which is giving us a better realization. And the older products are becoming commodities. So they were having good volume, but the net gain was not so much. So, those products are getting phased out and newer products with better margins and better prices are taking their position.

Sonal — Prescient Capital — Analyst

Got it, sir. Understood. And these newer products, there is no — how much of commodity inflation is actually baked in in the pricing of these products?

Ramprakash V. Bubna — Chairman and Managing Director

No. I’m very sorry. Again the question has not been very clear to me. Can you kindly repeat it once again? Hello?

Operator

Sonal, can you repeat your questions? Sonal, are you able to hear us?

Sonal — Prescient Capital — Analyst

Yes, I am able to hear you. Are you able to hear me?

Operator

Yes, sir.

Ramprakash V. Bubna — Chairman and Managing Director

Hello?

Sonal — Prescient Capital — Analyst

Hello. Sir, am I audible?

Ramprakash V. Bubna — Chairman and Managing Director

Now you are audible.

Sonal — Prescient Capital — Analyst

Okay, sir. Okay. So I was saying, I understand that your product mix is improving — hence your realization mix is improving, till that part, I think the explanation was, sir, well understood. I wanted to understand that how much of the commodity — the price rise in the commodity are we carrying in our product mix? And do you see, let’s say — let’s take a product X right now sir for example which we’re also selling last year, product X which we’re selling last year to product X which we’re selling this year. Do we expect that product price and realization to come down because of the commodity prices easing off? Am I clear in that, sir? Or should I —

Ramprakash V. Bubna — Chairman and Managing Director

No, sir. I want to tell you something. When I use the word commodity, I did not mean agricultural commodities. I’m [phonetics] was trying to say that when a product becomes older, the number of registrants becomes more, the agrochemical product itself becomes like a commodity. And when I say commodity that means, plenty of availability and lesser margins. It is not to do with the agro commodities which are agricultural product. Am I clear?

Operator

Thank you, sir. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Manish Mahawar for his closing comments.

Manish Mahawar — Antique Stock Broking — Analyst

Yeah. Thank you, Lisa. On behalf of Antique Stock Broking, I would like to thank the team of Sharda Cropchem for providing us an opportunity to host the call. Bubna would you like to make closing comments, sir?

Ramprakash V. Bubna — Chairman and Managing Director

Yes, there’s some small brief statements. I would like to thank everybody who has joined us for the call. I hope that we have been able to answer all your queries. We look forward to such interactions in the future. We hope to meet your expectations in future. In case you require any further details, you may contact us or our industrial relations team of [indecipherable] and also to us sometimes. We also take this opportunity of wishing you all a very happy and safe Diwali in advance. Thank you.

Operator

[Operator Closing Remarks]