UPL Ltd Fully Paid Ord. Shrs (NSE: UPL) Q1 2026 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Unidentified Speaker
Anurag Gupta — Head of Investor Relations
Vikash — BROOK Chief Financial Officer
Jaidev Rajnikant Shroff — Non-Executive Chairman of the Board, Group Chief Executive Officer
Mike Frank — CEO
Analysts:
Unidentified Participant
Sourabh Jain — Analyst
Aditya Jawar — Analyst
Taran Agarwal — Analyst
Siddharth Garakar — Analyst
Ramesh — Analyst
Abhijit Akhila — Analyst
Nitin Agarwal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the UPL Limited Q1FY26 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. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anurag Gupta, head of Investor Relations. Thank you. And over to you sir.
Anurag Gupta — Head of Investor Relations
Thank you, Yusuf. Good evening everyone. On behalf of the UPL management team, I thank you for joining us today for discussing the financial performance for Q1FY26. The investor presentation, press release and the financial statements have been made available on our website. And we take it that you have read the safe harbor statement from the management team. We have with us today Chairman and Group CEO Jaish Rao, Group Chief Financial Officer Dikash Prasad, CEO of Global Crop Protection Business Mike Sunk, CEO of India Crop Protection Platform Ashish Dobal, CEO of Speeds Business Advanta Groupin Dubai, CEO of Specialty Chemistries Platform Raj Tiwari and other members of the leadership team.
Before we begin, I would like to introduce you all to Vikash, our new BROOK Chief Financial Officer. Vikash has joined UPL earlier this year in January and has officially taken over from 1st June 2025. Vikash will be taking us through the overall performance for UPL Limited for the quarter. This will be followed by Mike who will share his detailed remarks on UPL Corporation followed again by Vikash who will cover the other platforms. In brief, we will have the Q and A session. Post that. With that I now hand it over to Vikash. Over to you.
Vikash — BROOK Chief Financial Officer
Thank you, Anraj. Good evening everyone and a very Warm welcome to UPL’s Q1 FY26 earnings call. Thank you for taking the time to join us today. Before presenting the financial highlights, I would like to take a moment to express my sincere gratitude for the opportunity provided to me to serve as the group CFO of uplifting. It is a privilege to join a company with such a distinguished legacy of growth, transformation and innovation. And I am committed to advancing UPS mission of sustainable value creation for all shareholders. Cuban presented a challenging macroeconomic landscape particularly across Brazil and broader Latin American market where lower commodity prices led farm income stress.
Higher interest rates and volatile currency continue to impact distributor performance. Additionally, ongoing geopolitical uncertainties including concerns around US tariffs continue to influence market sentiment. And trade flows. Further, China oversupply related AI pricing pressure continues to exacerbate overall business climate before we delve deeper into the financial performance, I would like to take and share key updates on our liquidity and ratings development, the first being prepayment of scheduled $250 million long term loan due in September 2025 paid with a strong liquidity generation in Q4 FY 2025. Second, we exercised redemption of potential bonds at the first call totaling 400 million in May 2025.
Earlier this year the third update is the Rights Issue Committee approving payment of the second and final call of rupee 180 per partly paid equity share aggregating to 1688 crore or 200 million. This amount represents 50% of the total issue price of rupee 360 per share comprising rupee 1 towards face value and rupee 179 towards share premium. The record date has been set as today that is Friday August 1st, 2025. We expect the proceeds to come in by end of September subject to regulatory clearance. The final update is on the recent outlook upgrade by two global ratings agencies, Fitch and SNP from negative to stable.
I am pleased to add this is a strong endorsement of our financial resilience, strategic clarity and commitment to sustainable value creation. Our actions reflect our continued focus on capital efficiency, deleveraging and long term stakeholder confidence. Starting with the Q1 FY26 performance overview we had a strong start to this financial year 2026 delivering a robust first quarter. Our EBITDA reported a double digit growth led by significant improvement in contribution margin. Additionally we also improved on our leverage ratios while lowering our working capital underscoring our financial discipline and relentless execution towards operational excellence. In Q1FY charges we reported revenue of 9216 crore around 2% higher versus last year.
This was driven by 1% increase in pricing and favorably supported by exchange impact. At the platform level we reported double digit growth in UPL SaaS, our India crop production business which grew by 13% versus last year an Advanta which was up by 20%. I’m pleased to share that the growth in both these platforms was driven by a mix of volume and pricing indicating our strong market presence and good acceptability of our products. Supporting this growth was Superform, our newly rebranded super specialty chemicals platform which was up by a robust 9% led by rollums, our global crop protection business.
UPL Corp. Had some seasonality related challenges in Brazil mainly in the insecticide volume resulting in overall decline in the revenue by 3% versus last year. My colleague Mike will cover this in detail in his remarks. Among key reasons growth was driven by India up 21% and was supported by North America and Europe, both of which grew by 8% each versus the previous year. This was partially offset by decline in Latin America, mainly Brazil as highlighted earlier and rest of world where we faced some challenges on seed and crop protection. Both these regions declined by 10% versus last year our contribution increased to 4001 crore, a significant 12% jump.
Versus last year the margin was over 43%, an improvement of around 390 basis points versus previous year. This performance was driven by improved product mix, favorable pricing apart from higher capacity utilization and lower income input costs mainly in the crop production segment. This also reinforces our commitment to operational efficiency and strategic sourcing leading to favorable cost position. The SGN expenses amounted to 2,698 crore and 11% increase year on year. This was mainly due to one off Brazil distributor restructuring impact. It is to be noted that this is non cash in nature and will subsequently unwind over the period of recovery horizon.
Despite increase in SGMA we delivered a strong EBITDA of 1,303 crore up 14% year on year. I’m also pleased to share that EBITDA margin stood at over 14%, improved by 150 basis points versus last year driven by improved contribution margin profit before tax or PBT at a loss of 190 crore significantly lower versus a loss of 455 crore last year. This movement was driven by EBITDA at 1303 crore up from 1145 crore last year. Depreciation and amortization expenses increased from 660 crore to 731 crore as planned. Significant reduction in net finance costs down from 740 crore to 631 crore this year, mainly driven by lower working capital requirement and debt prepayment.
Increase in net exchange losses from 143 crore to 178 crore, mainly from higher cost of hedging in Brazil as a result of increase in local interest rates. Our hedging strategy continues to provide a risk mitigation tool against extreme currency fluctuations in key markets. Share from associates and joint increased from a loss of 32 crore to a gain of 18 crore in this period. Additionally the exceptional items declined to 9 crore from 49 crore previous year. Profit after tax or PAT narrowed to a loss of 176 crore, a significant improvement from a loss of 528 crore last year.
Reported ACME or Profit after tax and minority interest stood at a loss of 88 crore, an improvement of around 300 crore versus last year driven mainly by improved EBITDA, lower net finance cost and exceptional license. Moving on to key balance sheet items, our net working capital in June 2025 was 11,025 crore, a significant 3,300 crore lower versus the previous year same period. This positive development was supported by continuous focus on inventory management and tighter credit controls led improved collections. In terms of days, net working Capital was at 86 days lower from 121 days in the previous year, a reduction of 35 days.
Inventory days stood at 110 days, a reduction of 7 days, while payables were at 152 days up from 131 days the previous year. The receivables were at 129 days lower by 6 days versus the previous year. We also saw a reduction in non course factoring by around $45 million on year on year basis, equivalent to about three days lower in US dollar terms. Moving on to the net Debt as of June 2025 net debt is 21371 crore or $2,492 million, reflecting a reduction of 6,129 crore or $806 million compared to 27,500 crore or $3.298 billion in June 2024.
However, net debt increase sequentially versus March 2025 largely due to the impact of perpetual bond redemption 3409 crore or $400 million and higher working capital requirements in line with business seasonality. I’m also happy to share that our key gearing ratios that is Net debt to EBITDA and net debt to equity have shown remarkable improvement compared to Q1 last year. The net debt to EBITDA improved from 5.4 times last year to 2.6 times driven by strong operational performance and capital efficiency. This ratio was at 1.7 times in March 2025 due to seasonality led higher collections in that period.
Simultaneously, the net debt to equity ratio improved from 0.9x to 0.6x versus last year. As I hand over to my colleague Mike who will take you through the performance of our global crop production business or UPL Corp. I would like to highlight that our business has shown remarkable resilience in this quarter, underpinned by improved operational efficiency and prudent financial management. Further, our effective capital management, significant reduction in net debt and improved gearing ratios reflect our continued focus on strengthening the balance sheet and creating long term sustainable value. I now hand over to Mike who will take you through the details of UPL Corp.
Mike Frank — CEO
Thank you. Yes, thank you Vikash and hello everyone and welcome to our first quarter earnings call. Before we review the quarter, I’d like to start by providing some color on the global crop protection market. We continue to see strong egg chem demand at the farm gate level despite low commodity prices for row crops. Farmer margins are under pressure in most markets and this is creating more demand on the post patent side of our business. The financial health of our dealers and retailers is generally steady with the exception of parts of Brazil where a few retailers continue to have liquidity challenges.
As we have previously indicated, channel inventory levels for UPL stock have returned to normal levels and we are seeing restocking occur as expected and positively to meet growing demand. As a positive indicator, we currently have a stronger order book compared to this time last year. So turning to our Q1 performance in the first quarter we posted slightly lower revenue compared to a similar period last year. However, our contribution margin and EBITDA growth showcases our resilience of our business model and the value of the productivity initiatives that we’ve implemented. While our Q1 revenue was down by approximately 3%, I’m pleased to report a 13% increase in our contribution versus Q1 of last year, expanding our margins by almost 500 basis points.
We also posted 23% growth in EBITDA compared to Q1 of last year, reflecting a margin expansion of more than 135 basis points. Overall margin expansion was a result of COGS improvement and higher capacity utilization, a proof point that our efforts focused on supply chain efficiency are paying off. The lower revenue versus last year is primarily due to product phasing along with pricing pressure in the insecticide segment, specifically in the Latam region. Other major segments such as fungicides posted both volume and robust revenue growth led by Mancozed. In Brazil and North America. Herbicides benefited from volume and revenue growth resulting from strong in season demand for key products such as Clethodim and Metribuzin.
In Brazil, Europe and North America. Our insecticides portfolio in the first quarter faced seasonal headwinds due to pricing pressures, particularly in Brazil and some product phasing closer to use. As I mentioned earlier, our NPP biosolutions business benefited from a mix of improved pricing as well as higher volumes led by Europe. Turning to our sga, we continue our strong discipline on discretionary spend. However, as mentioned by Dakash, we had a key distributor in Brazil phase their payment plan as part of an extrajudicial process which created a $13 million ECL accrual impacting this quarter’s result. This is a non cash impact and we do expect it to unwind over the recovery period.
Let’s now review the Q1 performance for our regions. In Latin America, our revenue declined by approximately 12% as already indicated. Brazil was impacted by pricing pressure on some molecules as well as a shift in phasing of some of our products from Q1 to Q2. We are optimistic that our focus on operational efficiencies through strong execution and adoption of a sellout model, coupled with our increased customer focus and strong product portfolio, we will see a recovery in Q2 in LATAM with good growth in the second half of the year. In North America we grew by 6% versus last year.
This region continues to experience strong in season demand for our products with normal to low levels of channel inventories. Our growth was driven by a robust herbicide portfolio with molecules like Metribuzin, Clethidum and Estimatulaclor exceeding last year’s Q1 sales. We also posted higher revenue from key molecules such as Mancozeb and acephate. Turning to Europe our quarterly performance over the previous year. Revenue growth was driven by higher volumes in key herbicides such as Flufeneset and supported by fungicides such as Captan as well as growth in Thiopron, which is a bio fungicide product that sits within our NPP portfolio.
We continue to see high growth specifically in Germany, Italy, Belgium and Spain. In Africa and Asia Pacific, we posted commendable growth in markets such as Indonesia, Japan and both Eastern and Western Africa. However, this was offset with headwinds primarily related to pricing in China and a few other markets, resulting in a net 2% lower revenue compared to the same quarter last year. Turning to our outlook for the second quarter and the full year, we remain confident in our growth targets for FY26 and as we indicated in our Capital Markets Day presentation in May, the growth this year will be weighted towards the second half of the year.
From an SGA perspective, we are continually leveraging tools and technology to transform how we operate across all functions, improving our operating model and driving efficiency throughout the enterprise. Our focus on cash generation continues and we are optimizing our inventories and driving best in class working capital management as you can see in the results. On the marketing excellence front, we continue to strengthen our new product pipeline, positioning ourselves firmly to deliver on our commitment of $130 million of new revenue from product launches. This year, mostly coming in the second half of the year. In closing, I want to thank our team for their unwavering dedication and our valued channel partners for this quarter’s performance.
I’m confident that we will achieve robust growth and in both revenue and margin as the year progresses. With that, I’ll now hand it back to Vikash who will take you through the performance of our other platforms.
Vikash — BROOK Chief Financial Officer
Thank you Mike. Let me now also provide a quick update on our other three platforms which are our India Crop Protection Business or uplsat. Second Advantage, our Seats platform and third our specialty chemicals focused platform Superform. At UPLSTAS we posted a strong quarter with revenue growing by robust 13% versus last year, led by a strong 9% growth in volume and supported by 4% improved pricing. This was driven by service sites and supported by favorable seasons. Further, our successful new launches such as Centurion Easy and Canora Easy also supported improvement in product mix. Our contribution margin was 32.7% up by around 450 basis points and led by a favorable mix.
This also drove EBITDA margin to 22.3%, an improvement of 540 basis points. At Vanta, our Seeds platform delivered double digit revenue growth year on year fueled by robust volume expansion of 12%. Key contributors to this growth included corn in India and Thailand as well as grain, sorghum and sunflower in Argentina. A strong price increase helped mitigate the impact of higher production costs and lower recoveries in Thailand. Despite overall margin pressure and increased investments for new market entries and product launches, our platform EBITDA rose by 5%. Superform’s growth was primarily driven by higher volume. Our Super Specialty Chemicals or SFC segment grew by a strong 21% versus last year.
The platform reported 50 basis point improvement in contribution margin at 24.9% driving its EBITDA up by a strong 7% versus last year. I would also like to take this opportunity to highlight that our robust financials and business performance have been enabled by our continued focus on the sustainable initiatives and actions. We have strongly delivered on our five year ESG commitments for FY25 helping create long term stakeholder value. Further, we are now setting up an ambitious target for FY30 in which we target to reduce water consumption, carbon dioxide and waste generation by 60%. We also remain committed to empower our communities through institutions of excellence built over the decades and create sustainable livelihood in rural areas.
Whether it is endangered species, conservation, forestry initiatives or water savings, we remain committed to protect and uphold our biodiversity. UPL takes pride in its exemplary governance driven by a strong and experienced board both at group level as well as platforms, and heavily supplemented by a passionate and experienced global leadership team. I’m also pleased to share that this is reflected in creating a highly motivated and productive workforce as evident from our superior engagement score well above the industry benchmark. Our strong practices have also led to several international accolades including global accreditation by FTSE and DJSI and other awards and recognition.
To summarize, Q1 has been a positive quarter with broad based improvement in the overall quality of earnings. On the PNL front, our revenue grew by 2%, a strong contribution margin at over 43% and improvement by 390 basis points. Double digit EBITDA growth with margin improvement of 150 basis points and lower interest expense and exceptional cost led reported profit after tax and monetary interest improvement of around 300 crores. Similarly, on the balance sheet, our working capital days improved by 35 from 121 days to 86 days with a reduction of 3300 crore improved net debt red with a reduction of over $800 million post redemption of perpetual bonds in May 2025amounting to $400 million.
To conclude, we remain cautiously optimistic on Q2 and for the rest of the year, which we broadly expect to be margin acquisition led growth. We maintain FY26 guidance as already shared during our Capital Markets day earlier this year at 4% to 8% growth in revenue and 10% to 14% EBITDA growth versus last year. Finally, I would like to thank our team for their efforts and our valuable stakeholders around the world for their trust and support. I’m confident on delivering our financial commitment in FY26. Thank you and I look forward to your questions. With this we are now open for Q and A.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press Star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question is from the line of Sourabh Jain from hsbc. Please go ahead.
Sourabh Jain
Yeah, thank you gentlemen for the opportunity. Good performance I would say in most of the businesses. I have a few questions relating to the recent industry developments. The first thing we recently China has kind of been looking to introduce certain measures in terms of trying to support the chemical prices wherein they wish to kind of take some old capacities out of the system. Given that you also have a fair presence in China, what would be your take on the situation? How these measures you see, can they create a meaningful impact on the pricing and any views over there would be helpful.
Mike Frank
Yeah. Hello, Sirab, thank you for the question. It’s Mike here.
Mike Frank
Look, as. As we are continuing to experience, you know, from China, I would say overcapacity continues and the pricing that we’ve seen over the last 18 months is also, you know, quite similar. There’s a few products where we’re starting to see, I would say some green shoots where, you know, either there’s been some reduction in capacity or some, some consolidation. And so we are seeing a few products where prices are starting to increase. But generally speaking, at this point in time, we’re not seeing a significant movement in pricing. Our base plan this year assumes that pricing remains consistent out of China.
Obviously, if there is further actions that would be upside to our business case, as you can see from the growth in our contribution margins, we are very competitive with our manufacturing capability to compete in even at these low prices. And if there is any improvement going forward that will be constructive to our margins.
Sourabh Jain
Can you share some more details over here? Which products you are noticing price increase and if possible, have you taken any price increase in any of your key molecules in China or globally?
Mike Frank
Yeah, I would say there’s a couple of key molecules in our portfolio where we’ve seen some increase in price. One would be Clethidim, another one would be Mancozeb, where we are starting to see some prices increase out of China, which is giving us the opportunity to also review our prices in the marketplace around the world, which we are doing. So those would be a couple of examples that are important to our portfolio. Maybe the third one would be Esmatulacor, which is also a significant product for us. We’re also seeing prices out of China start to increase in Esme Tulipor.
So those would be a couple of examples of what we’re seeing. Again, some what I would call green, what we’re seeing from China.
Sourabh Jain
Okay, so the price increases, is it already a part of your 1Q results or it has been more of a recent action which will be reflected in 2Q.
Mike Frank
Yeah, I would say a little bit of both. Obviously. Q1 for our global crop protection is a small quarter. It only represents about 15 or 16% of our full year. So that is one aspect to consider. I would say throughout Q1 specifically with Esmatoolcore and with Mancozeb, the prices have strengthened as we’ve gone through Q1. So I would say the opportunity on pricing is presenting itself as we go through the rest of the year more so than Q1.
Sourabh Jain
Understood. My second question is regarding your seed business. So the last transition, the Advanta transition, we had raised about $100 million which was supposed to be funding the future growth of Advanta. So keeping that in mind and also thinking about some of the recent news reports wherein one of the global ad major new firm we have explicitly highlighted they are looking to divest their seed businesses which is branded as new seeds. So can you give some color because there was some chatter that UPL has shown interest in terms of looking to acquire the seed business of nufarm.
So any clarity on that chart will be very helpful.
Unidentified Speaker
Bhupin, would you want to answer that question?
Mike Frank
Yeah, sure. Thank you so much. Thank you for the question. We also heard the same chatter on the media. Advanta, very similar to our parent upl, continues to explore inorganic options as part of our core strategy. You are very much aware about it. Hence we diligently scout for assets that are great feed for our portfolio as a routine part of our business. Now that you mention it, a new seed is an interesting asset given its geographic spread and portfolio offering. Moreover, it also fits well with Advanta in terms of revenue and cost synergies. However, there is a significant litigation ongoing between two companies which centers around the enforcement of the license agreement and some critical intellectual property.
Atwanta remains committed to protecting its IP and commercial rights and are pursuing all necessary legal avenues to protect its asset. The matter is ultimately set for trial scheduled for next year in Federal Court of Australia. Lastly, since the matter is currently subsidized, we are restricted in terms of sharing our further information. In this regard, what we can confirm is that we are.
operator
Sorry to interrupt. Sir, your voice is not coming. You are not audible. Sir, we have lost the collection for Bhupin. Sir.
Unidentified Speaker
Can you just, you know, provide some color to that? As you know, Bhupin was mentioning. Could you just conclude that as well your thoughts? Sure. Andrew. As saying that the matter is ultimately set for trial. It is scheduled for next year in the Federal Court of Australia. Since the matter is currently subjugious, we are restricted in terms of sharing any further information. In this regard, what we can confirm is that we are unable to explore this specific opportunity until the litigation is finalized. Next question please.
Sourabh Jain
So I had a follow up over here. So what is the future, you know, growth track of Advanta? How we should see this business going and your USD 100 million where you know, you see an appropriate use of that means.
Mike Frank
Are you there?
operator
No, sir, his line is not connected. No, but no, I’ll take it later then. Thank you so much and I’ll join back with you.
Mike Frank
Thanks.
operator
Thank you. Next question is from the line of Aditya Jawar from investech. Please go ahead.
Aditya Jawar
Hi, thanks for the opportunity. Just you know, wanted some sense on the recent tariff announcement that how is UPL position from exporting from India to the US market which are the, you know, categories of a product which would be exempted and for which category what percentage of revenue would be impacted and how is our competition placed whether in China or in the domestic US manufacturing specifically on those products where we are exposed to tariff.
Anurag Gupta
Mike, could you answer that please?
Mike Frank
Yeah, sure. Thanks Adit. So firstly I would say, you know, obviously this is pretty fresh news of the 25% tariff. If you go back to April timeframe, the original announcement was 26% tariffs on India. And so this was definitely part of our planning scenario. You know, I would say, you know, firstly and most importantly, we don’t expect it to have a material impact on our business either positive or negative. We continue to have a, at this point in time a beneficial comparative tariff rate versus the Chinese competitors and producers, you know, at 25% in India versus, you know, roughly 55% from China.
The other thing to take into consideration as you mentioned is.
Anurag Gupta
The line for Mr. Mike got this.
Anurag Gupta
We.I think pipe got disconnected. Could you share your thoughts on this please?
Vikash
Yeah, so what I think Mike explained before he got disconnected was that last year the duty differential was 25% between China and India and after the new duty announcement the duty differential is 30%. So still we are better off compared to the last year. However, as an organization we always anticipated and planned for this scenario. And therefore this recent announcement doesn’t change our financial outcome expectations for this year for market. The new crop year prices will be announced in the coming weeks and this tariff will be a consideration in our pricing decisions.
Unidentified Speaker
Yeah, so because what percentage of our. Portfolio of North America is exposed to tariff and is there competition outside China where possibly there is a lower tariff whether it’s Vietnam or the domestic supply.
Vikash
I think our exposure will be less than 10%. America, if you look at our turnover is between 600 to $700 million. And out of that what is getting exposed to this tariff will be less than 10%.
Aditya Jawar
Fair enough, fair enough. And you know, take a follow up offline. Our second question is on impairment on Brazil. So we have taken an impairment of about 112 crore in this quarter. So looking into the subsequent quarters, how is the situation? Are we, you know, should we anticipate more impediment that could potentially come in the subsequent quarter as well?
Mike Frank
So as I spoke during my initial briefing that this impairment was a non cash transaction and this will get reversed over the recovery horizon. There was a restructuring that was done for a distributor in Brazil and where many lenders and major suppliers including UPL were involved and they supported and UPL remains a preferred partner for this distributor. Various actions have been planned to recover the outstanding amount. There are some discussions and some agreements we have agreed into with this distributor which we will not be able to share as it is very commercially sensitive information. But what we can tell you is that our exposure compared to what it was earlier have reduced only from the accounting perspective, an accounting standard perspective, we had to recognize this.
But overall our net credit exposure has reduced. We have taken this impact and accounting non cash impact. But we feel that over the period of recovery this entire amount will get reversed.
Unidentified Speaker
And maybe Bakash, if I can just. Add another comment on top of that. Just with respect to any other issues, you know, firstly from a concentration standpoint, you know there’s not a significant concentration of customers. So. And when we look at our the financial strength of the rest of our customers in Brazil, we wouldn’t anticipate any further ECL issues as we go throughout the rest of this year. That’s very encouraging to hear. That’s it for my side. All the best. Thank you.
Aditya Jawar
Thank you.
operator
Thank you. Next question is from the line of Taran Agarwal from Old Bridge. Please go ahead.
Taran Agarwal
Hi, good evening. Quite a few questions. First of the financials, Prakash. You know we’ve been consistently seeing reduction in debt but it not translating into reduction in interest cost. So I understand there are multiple factors. Historically you’ll used to give us a more granular disclosure. So if you could please comment. How should we see the interest cost number moving from here on And a follow up on that if you could just give us some sense on how is your costing when it comes to your payables versus your cost of factoring.
Vikash
Sure. So as I discussed earlier that we have done the prepayment of our September maturity and the tightening working capital, reducing working capital that has really actually led to a reduction in the net finance cost. If you just look at the finance cost which is on the borrowings, on the different limits on the working capital and adjusted for the financial Income in dollar terms, our finance cost has gone down by 17% from $89 million during the last year to $74 million during the last year. What do you see that in our published financial? That includes some impact of the exchange losses as well.
But the right way to look at it would be to just look at the interest cost excluding the impact from the exchange losses.
Taran Agarwal
Okay. This cost on the borrowing, it has gone down by 17% compared to last year’s same period. So because, I mean because we don’t have these disclosures, right. It’s difficult for us to probably evaluate what portion of interest cost is on borrowings and what portion is otherwise. So would request for you to probably disclose this going forward. That’ll be very helpful. Second, the number is ballpark of about thousand crores. Okay. $74 million translates to roughly 650 crores. So what is this balance? 350 crores.
Vikash
Yeah, so I said that the net interest cost was 74 crore. $74 million in INR terms is 631 crore. In addition to that we had about exchange loss of 271 crore which is totaling to 1007 crore adjusting for the interest income of 105 crores.
Taran Agarwal
Got it, Got it.
Vikash
And we’ve seen a sharp rise in payables and we’ve seen a reasonable deduction in factoring. So from a financial lens standpoint, which is better? And how do you decide when to increase payables and when to take more factoring?
Taran Agarwal
Sure, I think. Thanks for the question as a very pertinent question in the current. So first I will talk on the factoring part. So if you look at considering the market volatility like the commodity prices, geopolitical conflict, tariff uncertainty and still elevated interest cost, continued credit concerns, we consider factoring to be a strong risk mitigation tool. Acted as it is on a non repos basis. We expect our factoring numbers to be in a similar range like last year, subject to seasonality which should be in the range of say billion dollar that we have guided earlier this particular quarter the securitization number or the factoring number has gone down by $45 million.
But it is in line with the seasonality. What happens?
Mike Frank
The number goes up during Q4 and then from Q4 the reduction starts happening. So once we will get into the Q3 and Q4 you will see that this number will start increasing and from Q1 the numbers will start going down. So this quarter you will see on a like to like basis $45 million reduction compared to in March, you will see a reduction of about $350 million. That’s on the securitization program. The second, I think again, good question you asked on the payables that how do we look at and what is the pricing that additionally we are paying on the payables front? I mean, looking at our strong performance in the last few quarters last years and continued a strong performance in Q1, now the suppliers are willing to give us much better terms and the number of days they are using higher terms as well as the pricing we are able to get better from them.
So I am not sure that we are getting any additional impact because of the higher stable days. It is more commercial discussion and the comfort of the suppliers on our balance sheet.
Taran Agarwal
Correct. That helps. Mike, in your opening address you did call out that you are looking at a stronger order book at time the same time of the year. Was it the same time last year? Was it specifically for your Latin America business or is it pervasive across geographies?
Vikash
Yeah, good question. So, yeah, primarily the order book concept is a Latin America concept. You know, specifically in Brazil where, you know, typically the dealers and retailers at this point in time of the year are negotiating terms for the upcoming season and then placing orders. So that’s where we carry a significant order book. And so yeah, it would be geared towards that specific region.
Taran Agarwal
Okay. In Europe, Mike, you know, if I adjust for the currency depreciation because rupees depreciated materially this quarter, you know, the European business in euro terms has been broadly flattish. While I understand Q4 of financial year and Q1 of financial year, these are really the March quarter and the June quarter are the bigger quarters. But if I just look at the June quarter in euro terms, it’s broadly flat. So how should I look at it? Should I just look at the June quarter or is it more prudent to look at it on those two quarters together?
Vikash
Yes, look, I think as you think about the crop year in Europe, it really is more on the calendar basis that’s products are serving the crop year that’s currently being grown. Overall, again, we feel good about our performance in Europe this quarter in our Q1 in US dollars, we are up slightly and as you may know, there’s been a lot of hot weather across many parts of Europe impacting a little bit the fungicide business. But our portfolio performed very strong. And so I think on balance our performance in Europe both in Q4 of last year and Q1 of this year has been really Good.
Sure.
Taran Agarwal
Just a couple of more on Advanta. Were there any exceptional spends done this year? Because the clip from, you know, the gross profit to EBITDA has been relatively narrow. So just wanted to get a sense on that. And one on Superform. Just wanted to understand what proportion of superfarm revenues are within UPL and what proportion are outside of upl. Thanks.
Anurag Gupta
Bhutan. Are you there very much here? Thanks. Bhupin, could you take the first question please? Sure.
Unidentified Speaker
So thank you again for your question. I think there are two important elements contributed to this phenomenon. Number one is the cost of procurement of raw seed has gone up. You must have seen in this couple of countries we have, the corn prices are quite faster. You know, the non GM tropical yellow corn segment. And second was the recovery from a rock on to the fresh packed one. The recovery also has declined because time of harvest there was some rain in some countries and that had impacted our yield recovery. So that phenomena is reflected in that difference.
Going forward, I think things are likely to be improving significantly.
Taran Agarwal
But yeah, Bhubhen, that gets captured in gross margin, right? But if you see your gross profit increased by 15%, but your EBITDA growth has been about 5%. So to give some numbers, your gross profit increased by about 90 crores. EBITDA increased by about 12 crores. So there’s about 78 crores that got spent in between. Which is what I was coming to.
Unidentified Speaker
These two major elements. Third would be overhead, which if you see that line item there for the new year now recruitment has started. So that is third element which comes to my mind. Okay, so would it be more one. Time in nature in your view? I mean, how should we see it? I mean for the full year, if one were to look at it. This. Element which I indicated is this one time in nature because already taken care of in terms of the finished good inventory which are already ready in our factory. So that part of it, the overhead part of it, there are two components in terms of the permanent employees and the seasonal employees. Since the permanent employees are part of our capacity building for next 3, 4 quarter, which is regular activity, which happens in quarter one. But seasonal employees which are there for its time of harvesting, packaging, et cetera in the plant, that will now come. That will now come down in a month or so, that element will come down.
Taran Agarwal
Sure. Thanks. Thanks, Bhuban.
Anurag Gupta
Last on superfarm, Raj, could you please take that question?
Mike Frank
Yeah, sure. So on superfum, I think your question was related to how much is the UPL part of the business and how much? So our anchor customer business, you know, share as a part of the total business is about 75% and 25% is all super specialty. Okay, super. Thanks Saj.
operator
Thank you, sir. Next question is from the line of Siddharth Garakar from Aquirus. Please go ahead.
Siddharth Garakar
Hi sir. Good evening. My question is for Ashish. First. Yesterday, one of the larger competitors in. India have decided to exit the Indian market. Can you throw some color in terms of what kind of opportunities this could. Open for the Indian market and. How. Do we see growth going into next year? Because FNP was one of the largest players in the insecticide markets in India. May I request. Mike. Mike, if you could take that question instead.
Unidentified Speaker
Sure. No, happy to. Yeah. So obviously we read the same information just yesterday. So it’s early days. Look, I think there’s a couple ways to think about it. Obviously it indicates how highly competitive the India market is. And when you look at our results this quarter and over time, it really shows the durability of our business model and our portfolio and our team. So I think that’s kind of one takeaway. Specifically with respect to this asset. You know, like any development in the industry, we’ll evaluate, you know, I’d say purely on its merits. You know, we’ll look at our strategic priorities in terms of deleveraging as well as opportunities in terms of asset additions in terms of how it would impact the long of our shareholders.
And so I would just say it’s so early that we don’t have a specific point of view, but it’s something of course that we’re going to look at and see how it unfolds.
Siddharth Garakar
So the second question is on the. Pricing side we had last, last, in last two, three calls we had alluded. That the pricing decline would start getting. Restricted in UPL Corp. But going ahead now, how should we see that in the next 2, 3 quarters? Will it entirely be volume growth or we will have some positive pricing impact also going ahead?
Unidentified Speaker
Yeah, that’s a great question. Look, I think in this quarter, as you saw in our results, we did have a 1% decline in in pricing which is quite modest. Specifically, as we think about growth in Q2 through Q4, we are expecting growth to come almost exclusively from volume. Again, there’s going to be some parts of our portfolio where we will see some price and margin expansion as I talked about earlier. But for the most part, I think on a blended average basis, the price is going to be relatively flat. Flat to pricing that we experienced last year.
Siddharth Garakar
Just one Last question on this quarter. The pricing impact, was it largely to do with the product mix or we. Have seen a substantial decline in any of the product?
Unidentified Speaker
Yeah, again, the pricing decline was quite modest at negative 1%. And yeah, when we look at where the pricing was impacted, there was a couple products in China and the Philippines that had some impact from pricing. But primarily it was in the insecticide portfolio in Brazil where there’s a couple of categories of products that have gotten a bit more competitive and retailers and dealers are negotiating very hard on those products. And so we did adjust some pricing specifically in our insecticide portfolio in Brazil. We’re going to wait to see how that unfolds through the year.
But it did have some negative impact in Q1 on us.
Siddharth Garakar
Okay, thank you so much.
operator
Thank you. Next question is from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.
Ramesh
Good evening and thank you very much. So if you look at the UPL Corp. P&L, your cogs has come down. So how do you explain that? Is that something which is sustainable over the next few quarters?
Unidentified Speaker
Yeah, very much so. You know, one of the benefits that we’ve seen by reducing our inventory and you know, relatively holding as we think about it now, about a three month forward look in terms of inventory, we, we came into the year with really fresh inventories and our replacement inventory is at a lower cost than the inventory that we came into last year with. So, you know, so the benefit that we experienced in Q1, we would expect it to carry over through the rest of the year. And so this margin expansion that we saw in Q1 largely on COGS reduction, will carry as we go into the rest of the year.
Ramesh
Okay, so in terms of the utilization rate, can you share what is the benefit you got in terms of the operating leverage on EBITDA margin and is that also something that will sustain over the next three quarters this year?
Unidentified Speaker
Yeah. So the specific benefit of the COGS improvement in Q1 in US dollars was about 58 million. Approximately 30 million of that was a result of of lower cost of goods, again being new or fresh inventory. The rest of it, approximately 20 million, was as a result of utilization rates. You know, again, if you think about last year, as we really managed our inventory down, we were reducing our production, you know, throughout the year, but especially in the first half of the year. And so as we’ve now started to ramp up our production and our plants back to normal levels, we’re seeing the benefit of that come through the income statement.
Ramesh
Now on the housekeeping, you look at the reversal of the mark to market on receivables and payables that’s a positive of 93 crores or 930 million rupees. So is that something which is sustainable or will it again go back to a negative number? What is the trend there? The cash? I’ll turn that to you.
Unidentified Speaker
Yeah, sure. So then the FX has two components. The first is revaluation on the balance sheet, evaluation of the balance sheet which is mainly the trade receivables, trade repayments that we have to do end of each month, each quarter. The second component is the realized and realized and unrealized losses on all our borrowings or any other loans or intercompany loans that is. So there are two components from the numbers perspective. What appears in the P and L, it’s splitted part of it on the balance sheet part. You can see it on the face of the P l which is minus 93 crores compared to say 45 crore of last year.
And the second component which is the realized and unrealized losses on the borrowings and the loan which I just briefed earlier is included in part of under finance cost. Almost 271 crore is included under finance cost. So if we want to look at it, we have to combine the two to understand the net impact. So while the 271 is included under finance cost, 93 crores credit is sitting on a separate line item. So my, I mean recommendation would be that we should look at combining the two and then looking at it from an assets policy point of view.
We clearly said that we have a very robust assets policy in place and we cover our short term assets exposure, the working capital exposure regularly through the various structures that we have either foreign Exchange covers or MDs where we are not able to get covered in a country. And the cost of hedging is the cost of doing business in these geographies which is effectively passed on to the market. So one leg is sitting say on the asset. The corresponding leg or the adjustment has to happen through the pricing. But the way our Indian accounting standard is that we have to look at these two separately from generally a presentation point of view and all that.
Most of the other organizations will look at it in line with the turnover and the EBITDA that we are making. But just to answer your question, there is a debit balance sitting under the finance cost amounting to 271crore. And this is going to be always there. So FX impact will always be there. It’s not there one time, it will always be there. We operate in different jurisdiction. Depending upon the jurisdictions, the volatility can be different. So we are present in all the francophone countries in Africa. The euros are the local currency is set to euro.
There is no volatility between the local currency and euro. And then euro dollar we cover separately. If you go to Europe again, it’s a very stable and we do take cover between euro and dollar. And when it comes to in some of the emerging markets like Latam or the anglophone part of Africa, or some of the countries in Southeast Africa, when we say export stocks to those market against those inventory, we will have intercompany payable or third party dollar payable. And when we sell support during this period, if the currency has moved from the historical rate to say a new rate, that will go to the FX line item.
However, as the business we always look at what is the currency appreciation or depreciation that has happened and that corresponding impact ideally should be passed on to the market through the sales price. There might be a lag and we might not be able to sometimes fully pass on to the impact to the market also. But then we will look at it between how we do our pricing decisions and what is the impact coming at the FX line item. Only just looking at the FX line item will not give you a true picture because the corresponding impact is also sitting it through the increased EBITDA line item.
And if you just combine the two line items of FX cost in this particular quarter, it has slightly gone up compared to the last year from $17 million to $21 million. And this cost has gone up because the cost of borrowing in Brazil has slightly gone up. And similarly in some of the other emerging markets the local borrowing costs have gone up considering the volatility and still higher inflation rate in some of these markets. And this is nothing but reflecting the local cost of financing. Today, when we say export our products to those countries, the payables are in dollar.
Now we have two options. Either we continue our exposure in dollar at 6, 7% dollar rate or we move to the local borrowings rate and different countries will have a different rate. Like say Brazil will have now 15, 16%. So there’s always a choice between your interest arbitrage, between the dollar rate and the local financing rate and the currency devaluation. In these emerging markets we don’t want to take any exposure and hence we remain fully hedged. And for remaining fully hedged, we have to pay for the cost of hedging, which is nothing but the interest rate differential between the dollar financing rate and the local financing rate.
And then obviously it is consideration while taking the pricing decisions which will reflect in the ebitda. I know it’s a complex topic, but probably sometimes we can take it offline and we can discuss it much more in detail.
operator
Thank you, sir. So the line for the current participant is disconnected. So we’ll move to the next participant. The next question is from the line of Abhijit Akhila from Kotak Securities. Please go ahead.
Abhijit Akhila
Yeah, good evening. Thank you so much. Just a couple from my side. One is within the cost of goods sold line. Seems like there’s been a significant increase in the inventory built up. You know, it seems to be about 2,200 crores. This is footnote number eight I’m looking at. So, yeah, just what exactly was the thought process there? And then should we expect that the production rate at our plants will actually come down a little bit, slow down a little bit in the next quarter or two as we digest this inventory?
Mike Frank
Raj, do you want to take that question?
Unidentified Speaker
Yes, Mike. So Raj here. So you know, if you look at our business, you know, quarter one, quarter two is where. And you know, part of quarter three as well, where we have an inventory buildup. And then over December, January, February, March, you’ll find that, you know, because that’s where some of the bigger geography seasons are there when everything gets sold. So this is nothing unusual. This is part of, you know, normal business. Also, if you look at our capacity utilization perspective, the best capacity utilization are in quarter one, quarter two, quarter three and quarter four.
Generally, depending upon the demand aspect at that point in time. We adjust our plant output in quarter four. So this is nothing unusual. And we don’t have a very large inventory buildup like it used to happen. I mean, it used to be earlier. The forward cover is only about 90 days.
Abhijit Akhila
Got it. Thank you. The second thing was just on the impairment loss item, so 192 crores is shown on the face of the P and L. We’ve described this 112crore item pertaining to the Brazilian distributor. What would the remaining 80 crores have been attributable to?
Unidentified Speaker
Yeah, so $13 million or 112 crores we explained, which was for a distributor in Brazil. The remaining is, I would say, broadly similar to what we had last year. We had some ETL provisions in Africa. In Latin.
Abhijit Akhila
Okay, understood, thank you. And just one last thing. On the debt balance, is there any guidance that we can sort of hold out? I know last Quarter we did not for this year. But any thoughts on that front?
Unidentified Speaker
Clearly I mean last year we had not given any guidance on cash flow and the net debt or leverage ratio because we were quite comfortable. A year ago the market was concerned about our our liquidity ratios. When we exceeded four times last year after all the initiatives our leverage ratio reduced to 1.7 times. So we said that now we are within the comfortable range and hence we have not given any specific guidance to the market. But as you look at it now, what we have done, we have repaid the $400 million of power out of the strong cash position that we had at the beginning of the year.
Second, $250 million of September obligation also has been repaid. Additionally we are going to get $200 million from rights by end of September and we continue to drive cash generation from operations supported by our disciplined working capital management. And as it is evident in our Q1 financial results as well, you can clearly see that. So considering these factors for the current year we are quite comfortable with our cash position and definitely see that our gearings will be at a lower level than last year even after repayment of the perpetual bond. However, as we continue to evaluate various strategic options on unlocking value across platform, our focus would be to significantly deleverage our balance sheet in the next year or two.
So we are clearly focused on further deleveraging. While we are comfortable with the leverage now as of now on a business as usual basis. But on the next one to two years time I can say that we are extremely focused on further deleverage our balance sheet and we are evaluating various strategic options. At this point in time we do not have anything material to share with you but as and when there is something material we’ll definitely share with you.
Abhijit Akhila
Got it. Thank you so much. All the best.
operator
Thank you. Next question is from the line of Nitin Agarwal from Dam Capital. Please go ahead.
Nitin Agarwal
Thanks. So just taking off from the point that you mentioned, I just you know, referring back to the press release comments from Mr. Jaishoff regarding the restructuring that the firm is looking to pursue. If you can share some thoughts around what are we any thoughts around the option that we’re considering on that account?
Unidentified Speaker
This is too early. As you would have read it in the press release that we are engaging advisors now and there are various discussions, various options which will be evaluated. As of now there is no form decision on any structures but the idea of engaging the advisors is to look at unlocking value for all the platforms and when there Is again, as I said, there is any material development we will let all of you know.
Nitin Agarwal
Is there a time frame to in your assessment right now by when we have some clarity on this way forward.
Unidentified Speaker
On this account depends upon how the advisors are guiding us and what are the options that we are selecting. The time will depend upon the choices that we make. I think it will be too early for us to comment on this.
Nitin Agarwal
Thank you so much.
operator
Thank you. Next question is from the line of Somaya V from Evander Spark. Please go ahead.
Unidentified Participant
Thanks for the opportunity.
Mike Frank
Yes you are. Please go ahead.
Unidentified Participant
Yeah, thanks Mike. Just wanted to understand in terms of the season progress both in the US And Latam, your thoughts on that, how it’s kind of progressing? That’s one. And second question is on the farm economics. So this has been a bit subdued almost a year after from CY22 23 coming off. Is it because the produce is so high, the demand, what is our expectation maybe six months out? Can this reverse a bit? Can farm economics start getting better which is going to present a bit of a price?
Mike Frank
Yeah. Thank you for the question. So in terms of the Latin America and US Crop progress, I would say for the most part, as you would know in Brazil the crops have been harvested from this year. They had both a strong soybean and a strong corn crop. So from a supply demand standpoint, there was additional supply which was impacted. I think some of the pricing that we’re seeing now in the marketplace. In the US Again, the corn and soybean crop for the most part is looking quite strong and the anticipation is it’s going to be a very large corn crop.
So what we’re seeing right now is the current Chicago border trade. Prices on both corn and soybeans and wheat are subdued. It’s a little bit of a mixed signal. Ending stocks, I would say are high in soybeans, but relatively still short from both the corn and wheat. I think this is the lowest stocks to use ratio that we’ve seen in over a decade. That being said, the entire segment right now is, is looking soft. If we look forward six months, you know, we are seeing some strengthening in future prices, but still in a range that I would say would keep growers, you know, somewhat cautious in terms of investment and well below the peaks that we saw a few years ago in commodity prices.
And so, you know, unless there’s a real catalyst, you know, in the next six months, you know, we would expect the current crop prices or the future indications to likely be close to what we’re going to be experiencing as the year plays out. Thanks Mike. Just one follow up. I think we did mention that there is a bit of a movement from Q1 to Q2 in Brazil. What would be the reason for the shift from Q1 to Q2? Yeah, again as we’ve talked about for us it’s not about, you know, destocking. For the most part our channel partners have the right amount of stock. I would say in Brazil there’s additional negotiating going on specifically in the insect portfolio. Again, if you think about the upcoming season, it’s the soybean season that’s going to get planted in say 45 to 60 days. So a lot of the herbicides have been committed. The insecticides that get used a little bit later in the season, they’re still being negotiated. Whereas this time last year year there was less, I would say delay in being able to fill that demand.
So that is part of it. I would say that’s kind of a market back perspective. Then the other side of it is just our phasing of when we’re shipping some of our inventory into the channel. Again we’ve got a strong order book in particular in Brazil. And so we are purposely phasing just to manage our working capital. We’re phasing some of the business into Q2 and so that’s what gives us a lot of confidence as we look forward to Q2 and beyond where we can see a good growth opportunity in some of these markets that had a little bit of degrowth in Q1 for us specifically in Latin America.
Unidentified Participant
Thank you. That’s OK.
Mike Frank
Very good. Thank you.
operator
Thank you. Next follow up question is from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.
Ramesh
Thank you very much for the follow up. So if you look at your segment numbers across the various platforms, the EBITDA adds up to a number which is lower than the consolidated EBITDA of 1303. I get a number of 1238 versus the consolidated reported EBITDA of 1303. So if you can reconcile that that will be useful so that you know, if somebody wants to do evaluation across these verticals, you know it helps them. And secondly, if you look at your segment numbers, there is a non aggro revenue of 639crores. Is that part of the external business that you do in super form? What exactly is that?
Unidentified Speaker
Yeah, so yes, it’s a super firm. Coming back to your first question on reconciling the EBITDA number, you would have noticed that in the press release and other documents also we have given, we have tried to reconcile that and whatever the other part is there or the corporate eliminations are there, we have clearly called out and reconciled with the final turnover for the group plus each platform. Second, in terms of the ebitda, if you look at it, we gave the EBITDA number for the four Sol Play platforms. However, in addition to the four sure Play platforms we also have other businesses.
One is like say UPL Limited as a standalone company which also has some plans. So there are certain EBITDA number that booked Under UPL Limited we have a Deco business which is a post harvest business. So those numbers are also consolidated. But since the focus was more on the four pure Play platforms we have included that and we are called out. And the other numbers adjusting for any corporate eliminations are any which way included in the group numbers.
Ramesh
Okay, so that 65 crore difference is mainly coming from the UPL standalone, right?
Unidentified Speaker
Up in the standalone, yes. Which includes up in the standalone plus other businesses which is under UPL. Let’s say majority, majority of that is a. You can say deco business which is also included under others.
Ramesh
Yeah. So one last thought. On the deferred tax credit, you’ve been showing that for some time now. So how much of deferred tax credit you have still left with you for the next few quarters? And when does that end?
Unidentified Speaker
No, it’s not like that. It will end and it’s. It will be regular. Like there will be a new details which will get initials. There will be therefore tax liability details which will get unwound. So this will be a regular at all. We cannot say that this balance will become zero. This balance, the old balances will be cleared, the new balances will come up, but these balances will never be zero. So how do we look at. Just to call out the big detail or adjusting for detail that we have compared to last year, these numbers have gone down for Brazil, it has gone down for usa.
So for the key reasons where we have these balances the numbers have gone down. And another difference that can come up, I think we need to understand from the accounting aspect that if the inventory is more, if our business growth is more on the inventory which is say due to the or because of the intercompany, the unrealized margins are eliminated. So when those unrealized margins are eliminated that time you also create a deferred tax in the books which will get again unwind when you sell the inventory. Right. So some of these balances while accounting wise it comes but it’s not really impact commercially.
So I have a separate conversation on this and take you through. Our inventory balance was significantly higher by almost 4,000 crore compared to say March. And because of the higher inventory balance there is about 120 crores of DTA that was. That was created largely due to the unrealized margin on the additional inventory balance.
Ramesh
What would be the effective tax rate when you start generating or moving towards more profitable operations?
Unidentified Speaker
Yeah, so the effective tax rate is for the group. If you look at it, there are multiple factors. And first is the geographical mix. There are zero to low single digit tax rate. There are geographies where will the tax rate ranging up to say 40% as well. So it’s a geographical mix that we have to look at it. And each quarter or each year this mix can slightly change and hence our the profit and the effective tax rate can change from that perspective. But our always guidance to the market is I would say on a sustainable basis between 15 to 17% for the group.
When you are modeling it, you do consider between 15 to 17% for the group. But these numbers can change. I mean quarter on quarter. But we have to look at it as a 15 to 17% if there are no anomalies in the market.
Ramesh
Thank you very much and wish you all the best.
Mike Frank
Thank you. So do we have anybody else in the queue? I think we had all the participants, you know, had to ask their questions. I think they have asked it. So thank you very much and on behalf of UP Limited that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you. Thank you everyone.
operator
Thank you, sir.