We faced certain hiccups during Kerala floods: Balram Singh Yadav, Godrej Agrovet
Our consolidated income in Q2FY19 was of Rs 1622 crore, which was 13.1% growth over Q2FY18. Our profit before tax (PBT) stood at Rs 155 crore, which was almost 17.9% growth over Q2FY18, said Yadav.
Balram Singh Yadav, Managing Director, Godrej Agrovet Limited, in an interview with Swati Khandelwal, Zee Business, talks about the company's revenues of Q2FY19, the impact of Kerala floods and palm oil business, among others. Edited Excerpts:
Q: Godrej Agrovet has posted sound results in the September quarter. What were the key drivers for growth in terms of margins and profitability?
A: Our consolidated income in Q2FY19 was of Rs 1622 crore, which was 13.1% growth over Q2FY18. Our profit before tax (PBT) stood at Rs 155 crore, which was almost 17.9% growth over Q2FY18. For the first half, the income was Rs 3110 crore, which was over 11% high than Q2FY18 and PBT was Rs 265 crore, which is 13.7% higher than Q2FY18.
Q: Can you inform about the problem areas as we were able to see low profitability in the aquafeed business? Did the anti-dumping duty enforced by the US on shrimps have any impact on your business?
A: Export and price decline of the shrimps had an impact on every company associated with the aquafeed business. Besides, there was a volume growth of 19.5% in the animal feed business in the first half of the financial year, which is a record in any quarter. It is low in profitability and but it is a part of a strategy in which we are trying to increase the volumes at the cost of margins. The strategy is backed by our installed production capacity that is 2.3 million tonnes and our sales stand around 14 lakh tonnes. This is a business, where profitability will follow the volumes and we hope that volume growth will help us to increase our profitability in future quarters.
Q: Did Kerala floods had any impact on your business?
A: Our cattle feed business is quite big in Kerala and definitely, we faced certain hiccups due to the floods. The recovery process, which was fast, helped us in containing the problems within a fortnight or so. In addition, we also tried our best to provide animal feed to the affected regions during the crisis time.
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Q: Palm oil contributes to 14 per cent of your revenues. Do you think that postponement in the palm season will have an impact on your palm business? What is your outlook on the same?
A: There is a postponement of a month in the season but the October number suggests that we will be able to meet our planned growth target, which is to grow in double digits. Such shifts are available in crops, animal agriculture, pure agriculture as well as plantation and thus this shifting is not a new thing for Godrej Agrovet.
Q: You informed about your plans for capacity addition in crop protection segment and you were in collaboration talks with a Japanese firm. Kindly provide details related to it?
A: In-licensing arrangement is in the process and 5-6 molecules have been sent for registration, which will be launched between 2020-22. In fact, we are working with three-four companies and will be sending every molecule for being registered. I feel in-licensing molecules will be contributing (partly) into our crop protection business.
Q: On the international business front, Godrej Agrovet has witnessed degrowth in Bangladesh. What is a reason for that decline? What is your view on Agrovet's business in other markets?
A: The animal protein market, particularly chicken, eggs and meat, behaves on the global level. If there was a glut of milk in India then it doesn't mean that there was a shortage in other countries. Situations are similar in Bangladesh, where we have increased our chicken, egg and fish business but it didn't pay us off in past 6-9 months. But there is an improvement from the past three months. Cyclicity in the animal protein business is determined by the number of links in the global market.
Q: Do you think that there will be an improvement in international markets like Bangladesh?
A: Yes, there will be an improvement in Bangladesh and you will be able to see a growth in profitability.
Q: Did Rupee depreciation have any impact on your export business? Also, provide the quarter when the impact can be seen in your business?
A: Over 60% per cent turnover of Astec Life Sciences, which stands around Rs 300 crore, is exported and this depreciation has helped us in gaining at foreign exchanges. But, I would like to say that you will not be able to calculate it properly as we are also engaged in imports, which is half of our exports to see an uptick from Astec life sciences due to rupee devaluation.
Q: Can you provide an update on the amalgamation of Astec Life Sciences and Godrej Agrovet?
A: It is a process that is on and we will have to follow the procedures in the process. In fact, we will have to take a permission from NCLT and that's why I feel that the process will complete in the next 6-9 months.
Q: Do you have any plan for organic or organic growth? If yes, then provide details related to it?
A: There is no opportunity for inorganic growth in the next six months. As you know that the segment of our growth is a house of organic and inorganic growth and interestingly, we keep our eyes on opportunities that are available in the market. The favourable debt equity of about 0.86% can help us to look forward towards fund collections at the times of need, mainly for inorganic growth.
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