Thank you, Palak. Good afternoon, everyone, and thank you for joining us on the Godrej Agrovet Q1 FY27 earnings conference call.

From the company, we have with us Mr. Burjis Godrej, Chairman Designate; Mr.

Sunil Kataria, Chief Executive Officer and Managing Director; Mr. S.

Varadaraj, Chief Financial Officer; and Mr. Arijit Mukherjee, Executive Director and Chief Operating Officer, Astec LifeSciences.

We would like to begin the call with brief opening remarks from the management, following which we'll have the forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.

I would now like to invite Mr. Burjis Godrej to make the initial remarks.

Over to you, sir.

Thank you. Good afternoon, everyone, and welcome to Godrej Agrovet Limited's earnings call for the first quarter of financial year 2027.

Thank you for joining us today. During Q1 FY27, we delivered consolidated sales of ₹2,852 crore, representing year-on-year growth of 10%, despite a challenging operating environment marked by a delayed monsoon and inflationary pressures arising from geopolitical tensions.

The quarter saw strong performance in animal nutrition and oil palm, supported by healthy volumes, improved realizations, and operating efficiencies. Our Bangladesh joint venture returned to a broad-based growth trajectory, while Astec sustained its operational recovery and continued to be at EBITDA breakeven.

Dairy delivered double-digit revenue growth led by value-added products, and Godrej Foods continued to grow its branded portfolio. Crop care, however, was affected by the delayed monsoon and slower kharif sowing, which impacted volumes of key products and overall profitability.

Coming to the key financial and business highlights of each of our business segments. The animal nutrition business delivered a strong quarter with revenue growth of 12.6%, driven by robust demand, improved realizations, and 15% growth in cattle feed volumes.

Profitability improved significantly, with reported segment results growing at 29% and the underlying segment results increasing 36%, reflecting the benefits of strategic sourcing, operating leverage, and continued cost discipline. The oil palm business continued its growth momentum, with segment revenue increasing by 28.9% and the segment result growing by 14.4%.

Performance was supported by higher CPO and PKO realizations, increased sales volumes, and improved oil extraction efficiency. The fresh fruit bunch volume remained broadly stable against a strong comparable quarter, which had benefited from the early onset of the monsoon in the previous year.

The standalone crop care business was impacted by the significant delay in the monsoon and slower kharif sowing following a particularly dry June. This affected demand and resulted in lower volumes of key products, predominantly our in-house cotton herbicide segment.

Consequently, segment revenue declined by 16.2%, while the reduction in volumes also led to a contraction in segment margins. At the same time, our portfolio diversification initiatives in this business continued to gain traction.

Ashitaka, our maize herbicide, and Takay, our paddy insecticide, scaled up during the quarter and received encouraging market acceptance. We also launched Ghasnash in the soybean herbicide category.

Astec LifeSciences sustained its recovery momentum and continued at EBITDA breakeven, compared with an EBITDA loss of ₹11 crore in Q1 FY26. This improvement was driven by margin expansion across both the enterprise and the CDMO categories, supported by the turnaround initiatives undertaken over the past year.

Revenue was moderately lower due to a change in product mix, but the substantial reduction in losses reflects continued progress in the operational recovery of the business. The dairy business has reported revenue growth of 11.4%, led by healthy volume growth in value-added products.

The salience of value-added products increased from 42% to 49% of sales, reflecting sustained consumer demand and progress against our portfolio premiumization strategy. Profitability was affected by elevated milk procurement prices arising from industry-wide constraints in milk availability, together with inflation in certain other inputs.

We remain focused on calibrated pricing, procurement efficiencies, and cost optimization to mitigate these near-term pressures. Godrej Foods delivered broadly stable revenue despite the planned reduction in live bird volume.

Branded volumes grew by approximately 6%, while Yummiez volume increased by 22%, in line with our strategy of building a higher-quality, branded food portfolio. Profitability was affected by higher input costs and inflationary pressures related to geopolitical disruptions, which were only partly offset through calibrated pricing actions.

Our Bangladesh joint venture, ACI Godrej Agrovet, also returned to a strong growth trajectory, delivering double-digit growth in volumes, revenue, and PBT, supported by broad-based volume expansion and operating leverage. Finally, we maintained our focus on balance sheet efficiency and disciplined capital allocation.

Our average net working capital improved significantly year on year. This improvement supports our objective of strengthening cash generation and enhancing return on capital employed.

Nitesh. We can go ahead now.

Yeah.

We can start it. Yeah.

Good afternoon. Thank you so much for taking my questions.

The first set of questions I had was on the oil palm business. If you could please share your outlook for the volume growth in this business over a 3 to 5-year horizon, given the fact that your plantations are gradually maturing over the next coming years?

That was one. Can we expect double-digit volume growth, any expectations there?

Number two, on the value addition angle that we're working on in this segment, any metrics you could share there in terms of the amount invested in the value addition capacities, asset turns, margins, or return on capital on this investment? Finally, just putting it all together, what sort of EBITDA growth maybe can one expect in this segment over the next 3-5 years?

Last year you've done something like ₹426 crore of EBITDA. Seems like this year could be around 500.

Over a 3-5 year horizon, where could this number realistically go to? Thank you so much.

Hey,

hi Abhijeet. This is Sunil here.

Abhijeet, on the oil palm business, obviously this business has been doing very well for us and overall, as you see, there has been a sustained momentum in this business. On the FFB volume growth projections for let's say next 4 to 5 years, which is what is our long-range period as we have defined right now, I would say we can look for a growth in FFB volume of high single digit to early double digit growth.

I'm being conservative on this. I'll be very honest, because there can be some one-off year in this on the weather pattern sometimes.

Yes, I believe we'll target double digit. If I have to be a little conservative, I would say high single digit to early double digit, for sure.

That I think is the volume growth projections clearly on this business. Because this business has a lot of multiple pillars of growth which are going behind it in terms of volume growth.

First and I'll read out three of them. One is, first and foremost, that we are in the middle of a very large expansion, area expansion drive.

Last year we added some 17,000 hectares, and this year again we are on track to do the same. In fact, as we talk of the first quarter, we have been ahead of our internal plans of area expansion.

Obviously all this will fold into the LRP growth rates, so that's something one. Secondly, we are doing a geographic diversification, which is from now getting into the states of Telangana and Northeast in a very aggressive manner.

In fact, our entire LRP plan of moving from roughly around 80,000 hectares to roughly around 1,50,000 hectares, which is close to doubling, is going to come a lot from these new geographies. That's I think the second plus variable for us.

Third, I think which I had earlier mentioned also, that this is a business which has got a very sharp demographic dividend, as we call it now, built in. Roughly 50-odd percent of our plantations today are in the juvenile stage, which is 0 to 4 years.

They will start coming into the productive age, early productive age of 4 years plus, and then they will reach the peak of 8 years when they become the most productive. Now that's a very, very significant bumper which happens in this business.

The fourth is, we continue to do pretty well on our efficiencies, which lead to best-in-class OERs. If I put this together, I think this business is poised on a CAGR basis for a very, very strong momentum.

In terms of the investment in capex, I think the second answer on this would be, there is another important variable spanning out in this business, which I think would lead to a structural shift of this business even further. In fact, the four parts which I talked about are all in the upstream.

I call them even they are structural shifts for us. I think there is another larger structural shift which will happen parallel, which is that we are going to make this business over the LRP period from a pure upstream business to a full integrated value-added business from upstream to downstream.

That process has started. We just last month rolled out India's first integrated palm oil complex in Khammam.

We started the first stage, which is started with a nursery and a CPO processing mill. In a couple of years, we're talking in 18-24 months, if everything goes right, we should have a seed garden, which is very important for future genetic work.

Then there will be a refinery also, which is coming up. The second one, which is slated for roll-out in end August, early September, is our first refinery of specialty fats.

Now that starts by and large in early part of the second half, I would say September itself. Now that gives us the ability, as it scales up over the years, to convert a lot of our palm oil into value-added, differentiated products.

Then we become a full-fledged player from upstream to downstream. Now that downstream, when we start converting into specialty fats, actually takes us into beyond palm oils into a quasi-FMCG food ingredient player B2B, where we will be giving products which are additions to food industries on the FMCG side, which is chocolates, bakery, etc., etc.

That's a very significant value-add. We expect this downstream business, when fully scaled up, should add roughly around close to 200 bps to our overall EBITDA profile.

That's the second part of the question. The third is, on the capex as we

Continuing from where I left. The question was on the capex and the ROCEs behind this new assets.

We have a tight filter on this very clearly. This is a high ROCE business for us.

Nothing crosses our bridge broadly beyond unless until we are doing an IRR of around 16% to 18%, and this meets that bridge for us. I hope I have answered all the questions related to oil palm.

No, that's really helpful. Thank you so much for that, Sunil.

The second one I just had was on the crop protection business, and then one overall as well. Given the soft start to the year for crop protection, the domestic part, what sort of numbers can we expect for this upcoming year?

Should we expect some sort of recovery, given that you have an easy base as well for the remaining three quarters? Astec, how are you seeing things?

There was a revenue decline, but a moderation in the losses, but how do you see things on that front? Finally, at the overall consol level, I remember last quarter we had guided to something like mid-teens PBT growth for fiscal '27 for the consolidated company.

Do we still think that is something achievable? Okay.

That's one question, and you have four parts to it, Abhijeet. Okay.

Let me answer this one by one. On the crop care, yeah, the start has been tough primarily because, India has seen one of the worst June in last century, you know.

That's multiple theories. Some people are saying it's 100 years old, I mean driest June.

Some say it's even worse. Obviously this June turned out to be a 40% deficit.

The crops itself could not be sown. Now obviously our our business comes into play when this, the crop gets sown, first of all.

Obviously that's one largest variable which played out in this thing. Second is that given the dependence of Hitweed on, the way rainfall plays out spatially as well as temporally, so that has been also erratic.

While June has been better July has been better, but that erraticity has been, unpredictable. I would say yes, there has been a hit in the quarter one, which is very clearly come because of this weather pattern.

What we are going to do is, we are actually we we expect July to be we're seeing July turning out to be definitely better compared to the way we were last year, in terms of base that you're talking of. There is definitely much better growth planning out in July versus last year July.

We will be in a position to take a call on overall business where it how much it can recover, to be very honest, by end of September. The reason for that is that is by when we'll have a pretty decent handle on how, let's say, the cotton herbicide season has gone, which is a very significant part of our business in terms of profitability and revenue.

While it is still, sketchy and it is still unclear, I think I should we should be able to give you a sense of this more by September end. There are certain pieces, coming to the second part, when there is a soft base.

Yes, there is I would add like to add some things which I think are could be positive for us in the coming second half. One is, yes, there is a softer base at play.

The second is there are some four or five things which are new for us, which were not there last year, which I'm hoping will play out positively for us in the second half. One is, let me start with, last year India had seen a very, very abnormal rains happening in October and November, which had impacted our chilli and, grape product seasons also, which is Combine and Gracia.

Now, the way pattern is going right now, we don't expect October-November to have unseasonal rains, and it should be a normal October-November. We a expect that both our strong products of Gracia and Combine actually would do well this year, given the, the way weather pattern is playing out.

Second is, the chilli prices, which is what Gracia is targeted at, are looking reasonably firm right now. Now that's a good indicator because if the, as the prices are firm, the acreage goes up, the farmers are more interested in applying branded, insecticide products.

That is another indicator which, as it plays out, I'm very hopeful that the second year second half will get a bump-up of that. Third part is there are new additions to our portfolio.

As part of our diversification drive, and as we said we have said in earlier discussion, that over the LRP, this business in 5 years will be a very different business in terms of its dependence on multiple crops. We want to get out of that.

As part of that, the first maize herbicide has got off to a rollicking start for us. We have rolled out Ashitaka full-fledged in this season, and I'm happy to share that we are in we have gone beyond our initial internal plans, and it's done very well for us.

We have a small Ashitaka season coming up in South again in quarter three, we are having that as a opportunity. Another new product which we have just started rolling out right now is another insecticide product which is Takay.

It is scaling up. It's a product which spans out around 5-6 months.

It doesn't have one, one big window of seasonality like cotton herbicide has. It should play out and scale up, given our capabilities of distribution and marketing over the next 5 months, which was not there in the base last year.

The third is, we have rolled out a soybean herbicide, which is Ghasnash, which again has, multiple areas of, application. That again should play out again as a new product innovation for us.

If you see there are one, better weather patterns for our some of our two large products of the second half, and then I think there are three new interventions that we have in our portfolio. This, along with the subdued base of last year, gives me hope that we would do a decent recovery.

What that recovery exactly would be, I think depends on how the overall assessment of first half we can take. Give us time till September end to take a real point of view on that.

There are a lot of positives in this business which as we enter the second half. That was a crop care answer.

The other one on the on the Astec, what I would do is, I've got Arijit also with me, who's the, Chief Operating Officer of Astec. Arijit, maybe if you can come in and answer Abhijit's question on that.

Sure. Abhijeet, in the last earning call, we give our revenue projections of around 20%.

Now after Q1, we are confident that our growth will be now at least full-year basis, it will be more than 20%. You can consider our now guidance to be at least more than 20%.

Whatever is a 9% 8 or 9% dip in Q1, we'll cover up in the coming quarters. Regarding CDMO, now CDMO is also dependent on a little bit change in the demand and production shift of the customers.

Now we are seeing a little bit shift from Q1 from H1 to H2. Though the orders and discussions are going on, we will see more of the shift in terms of H2.

Overall, for the year, the salience will be around 50-52%. That's from my side.

Did I miss anything?

Yeah.

Abhijeet, the last question you had asked for is overall guidance for the year, right? Again, little early, right?

We had given a guidance of roughly around mid-teens. Again I said a lot will depend on the assessment we can take on the crop care business impact towards the second half.

I think one thing we'll still pretty confident of is that we will be able to target a double-digit growth still. Now where will that double digit end up in the range, I think I'll be in a better position to tell by the end of quarter two.

Right. Thank you so much.

That's really helpful. Just one last thing for Arijit.

Arijit, revenue growth I got, 20% plus. Anything on the margins that you might be able to comment?

CDMO margins is intact. In terms of enterprise margin, for the first quarter we had a little bit of advantage.

One advantage was because we were having some low-price raw material, and also because of the war and other changes, finished good prices increased. I think last 1 month, the prices are slowly coming down, margin is coming back to the normal.

CDMO will always be at a higher side and it is intact.

Okay. Thank you so much.

I'll come back in the queue for anymore.

Sure.

Thank you for the opportunity. Good afternoon, sir.

Just wanted to expand a bit on the palm oil business strategy shift that you spoke about. Just wanted to understand whether it will require any additional investment in the sense that will our capex run rate sort of go up to sort of make this diversification or is the integrated facility that we are putting up already covers the kind of flexible packaging and customized products that we are basically looking to launch as part of the moving towards the B2B consumer-facing initiatives that you spoke about?

No,

no, thank you, Probal. Probal, in any case we have given a guidance of roughly around ₹300-odd crore to ₹350 crore of overall capex at a business level.

All these are assumed already in this. This is no new investment.

It is a very planned investment which is going in phases over the maybe 3-4 quarters. It's part of the initial assumption that we have put in the guidance we have given.

That is very clear. The two key investments which have happened right now or are happening right now, one is the integrated complex, which is already kicked off, first phase of that is kicked off this year, the second phase will come in maybe the later on part, and the other one is specialty fats, all covered under the broad ₹300 to ₹350 crore of capex, and all working at a healthy IRR rate that we've talked of.

Understood, sir. The second question I had was with respect to probably the relative underperformance of the dairy and frozen foods business.

Obviously, there has been a fairly noticeable shift in terms of the share of branded products, but what kind of pricing pressure did we see in Q1, and has the environment changed at all in Q2 in the early half of Q2 from what we have seen? How can we sort of look at this business going forward, dairy and foods?

Yeah. Let me actually take the foods business, and I would like to take a little time to give a little bit of clarification on the foods business to all the stakeholders on the call.

Actually our Godrej Foods business is doing exceptionally well. Somehow maybe we have not been able to give a right clearance on guidance or clarity in the way numbers are coming out.

I would like to delayer it a bit on this. There are three parts to this Godrej Foods business, or the frozen foods business.

One is the live bird part. One is what we call within branded, but our branded has two parts to it.

One is the B2B part of the business, which is where we supply to the players like KFCs, food service restaurants, etc. The third part is pure consumer business, which is like any other foods consumer business, which is Yummiez as well as the Real Good consumer part of the business.

Clearly, the strategic shift which we have talked of, we are going to bring live bird trading down completely over the next 3 to 4 years, and it will remain only a back-end supply chain for our B2B and B2C businesses. That's one shift.

Whatever you're going to see the numbers, in cumulative numbers, that planned degrowth of 15-20% every quarter, every year would happen till we make it zero. Or zero, I would say maybe marginalize, maybe ₹20-30 crore over the 5-year period.

The second part is, what we are focusing on between the balance part of B2B and B2C, a truly branded business which we are focused now is branded B2C business, which is different from what till now we've been calling branded, in which B2B and B2C both have been there. Now, the entire shift is to genuinely become a proper frozen food or protein-forward food company in this business, where the B2C business scales up to a very significant level.

That business is, which is Yummiez as well as Real Good B2C business, actually is growing at a rate of 20% plus every quarter. We grew at 23-24% last year.

We have in this quarter again grown at a 28% volume growth, even on a growth of last year. This is a business where all investments are going in, and we can talk maybe separately if required at more detail on this.

There is huge amount of NPD pipeline which is coming into play, and I'll talk of a few NPDs. There is advertising investment going behind this play.

There is little bit of more investments going behind on our plants on automation to build this facilities forward. Because the intent finally is that we will have a big, mass scaled salience coming out of our B2C businesses.

Interestingly, this business itself now has reached 32% salience of the total Godrej Foods business. While we see this business growing at 28% volume and roughly around 20% value, overall growth seems something like 1 to 2%, and there's a question, I think, which is falling up on this, because we are doing a planned degrowth in our live bird business.

I think if we have to really put a true value to this business, the true value of this business is that this is going to become a B2C foods company which, in the future scheme of things, it should reach something around, I think, 65-odd 70% of this company should be, finally at the end of LRP period, a B2C company with a very healthy margin. The only difference is we'll be in an investment phase, hence, just like any other classical FMCG company which goes into investment phase, I would say next 3 to 4 years, we should see overall maybe EBITDA plus advertisement together till this business is fully scaled up.

Now that's the strength of that business. The NPDs, which we are investing behind, we have done a very large-scale extension of new products under Yummiez nugget products itself.

There is products like crispy bites and many more products which are coming with interesting additions of sauces which are going behind it, it's actually becoming a full cuisine product. Secondly, we have rolled out a new category, which we believe has a huge potential over a period of years.

It's a category creation job, which is momos, frozen momos, because India has a very large street food segment of momos. We have rolled out chicken momos and chicken cheese momos around 4 months back.

In another 3 to 4 months, we are looking at rolling out veg momos, so that opens a veg segment for us. Now, this will be a gradual climb like any other category creation, but it opens up a completely new portfolio for us.

The third is, we are betting heavily now on frozen chicken. The frozen chicken travels anywhere in the country versus fresh chicken, which doesn't travel beyond a few kilometers.

We believe that frozen chicken is an opportunity, which again is a category creation job, is a classical marketing and distribution category creation job, which, if invested behind, can over a period of time become a significant category where unbranded chicken to branded chicken can happen. We have an advantage there because we control the entire supply chain and quality and processing of chicken.

It actually comes from what we call is our own managed Godrej-managed farms. The business has to be seen in this light, that maybe we are at fault that we may not have given this clarity earlier, but this is a shape of this business taking shape, and the business that we want to build is growing at 20% plus.

Understood, sir. If you can just spend a couple of moments on the dairy part as well?

Yeah. Now coming to the dairy part.

The dairy business is another business which is in a bit of a transformation right now for us. I would say Godrej Foods business is in the middle of what I'll call my strategy a scale-up and shift to becoming a majority B2C business.

CDPL business is undergoing a bit of a correction and transformation right now. That's the piece which again is a large strategic piece taking shape.

We are doing a bit of a, first of all, consolidation of some geographies. We have very seriously looking at with a strong lens on which are the markets which are profitable for us, which are the markets we have right to win, and we are reconstituting our route-to-market completely.

That's going to be a roughly around a 18-month exercise to 20-month exercise in our mind, which is kicking off with a pilot in coming month. Then under the leadership of Gaurav, who's the new CEO, we are going to be rolling out this entire route-to-market transformation that we'll do.

That's pillar number one. While the question you have asked is here now, but I just want to take this opportunity to give that lens also of a bit of strategy to all the stakeholders.

Second piece obviously is that we are again pressing very hard on the value-added portfolio there. Our salience is going up, but the shift that we're going to do is we will double down on this value-added growth, and we will make it a more premium and more profitable.

There is some work happening on that because we believe we can command more contribution margins over a period of next 18 to 24 months on this business if our new NPDs and if our investments behind route-to-market and these products go right. That is a critical third pillar.

Coming to the third one which you're talking of is, how is our pricing piece playing out. The two good pieces which again gets hidden up in this first quarter of CDPL is, CDPL volumes have grown at 8% after quite a few quarters.

That is one good sign that we're having, that we have seen a very high single digit 8% volume growth, which has translated into a 11.5-odd percent of value growth. This is a first good top-line recovery that we are seeing.

Second piece is we have seen two extraordinary events spanning out. One which I believe is a bit long-term, and one is one-off.

The one-off one let me talk is the Iran war, the Middle East war, which led to LPG inflation and which led to packaging shoot-up linked to crude oil prices. Now none of us were prepared.

We tried to mitigate and pass some of it to the packaging part, but the industry did not pass off the full packaging part and we obviously were constrained by that. That itself has been a very significant part in our P&L.

Otherwise, if I were to just take out the packaging impact, our P&L would have a little different look, given that it's a threshold level for us. The second is on the milk prices.

Now milk procurement prices have been very inflated over the last four quarters. That we believe will right now stay same over the next 2 to 3 quarters.

That I think is a bit of a longish play which is happening in the industry. We have all been passing on roughly around 70-odd percent of pricing to the market.

There is a constraints which I think everybody is doing a balancing act between consumer acquisition as well as pricing pass-off. I think 70-odd percent is been passed off there.

These two impacts are what you would have seen impacting us in the quarter. We believe the packaging inflation impact led by Middle East will get over by August, because of certain inventories everybody's been carrying.

I think the milk prices will continue. The way we'll handle this is, there may be some impact coming still in the quarter two, but we are going to focus on growth.

We are done a lot of cost initiative projects internally. I had told about that we had done this project PI last year also, we have continued that.

We will try to double down on more cost initiatives to mitigate it over the second half of the year. Again, I think the focus is on driving value-added growth, driving value-added growth profitably.

A big chunk is the RTM transformation, which is going to play out for us in the interim period. These transformations, along with the NPD journey and investments, is going to make CDPL turn into a value-added products company.

Understood, sir. Thank you so much for the detailed insights into both the businesses.

I'll come back if I have more questions. All the best.

Sir, thanks for the opportunity. My first question was regarding the animal feed business.

We have seen a huge price increase in the maize prices, how much of that are we able to pass through, and how is it not impacting our volumes or is there some impact? The maize prices impact on the volumes and the margins and as well.

Actually, Vanshika, if you see, I think our teams have kind of managed the overall volatility of commodity, which have played out very, very erratically and violently, almost violently, I would say, given the impact which has come from the war to the industry. I think full kudos to our teams.

I think our procurement teams and strategic sourcing teams have done a very good job of navigating through. I think some very good skills and abilities that our teams have.

I think that's something I would say we have navigated much better than maybe the rest of the industry. That is one part.

We have roughly passed on roughly around, I think, 60% to 70% of this again to the market. If you see, despite all that, two things have happened.

That a, our volumes have grown. We have clearly last time also told the street here that our focus is going to be the dairy business and fish business, and we are going to be a little more selective about the poultry business in making choices in geography.

Clearly our cattle feed business has grown at 15%. Some of our other segments have grown very well.

Fish business has grown pretty well, and overall leading to a healthy 7% volume growth for us. Some of it is a planned choice making that we have let go in the unprofitable segments within poultry, geographies within poultry.

Those are conscious choices that we are making. This, if you see as a result, has led to a healthy revenue growth, healthy volume growth, and if you see our EBIT margins also have been holding up pretty healthily.

Overall, I think this is a journey that is playing out. There is definitely some benefit in this quarter result of us having bought commodity maybe more smartly than others, which may not be exactly structural.

I think there is definitely a structural play which is started panning out for us. Hopefully that should continue.

We are also being helped in a way a challenge of CDPL, which is the milk procurement prices. When milk procurement prices are high, it also structurally benefits the animal nutrition industry, because then if you're able to give them premium feed, which is actually delivering higher productivity, farmers tend to upgrade to such premium branded products.

That is something also which is happening. We have seen our premium products doing pretty well in this last 6 months as well.

At the same time maybe, I would also take this opportunity to talk about one again new disclosure that we are doing, and which we've not talked in the past, is within animal nutrition, we have a India business, but we also have a very exciting ACI Godrej Bangladesh business. That's a business which is coming back, which again is a focus area for us.

That's a business which is on a major turnaround right now. We have a new leadership team in place there.

We have started new initiatives in terms of product development there. The first quarter of that turnaround, I think, is started.

We have driven a very strong double-digit volume, value growth across most segments. Wait and watch.

I'm pretty hopeful of that business doing also strongly for us in the coming years.

Okay. Thank you, sir.

My next question was regarding the oil palm business. We had flat FFB volumes this quarter, and you said the reason was early onset of rain last quarter, but still, what is the volume growth we are seeing in the next quarters, and why has the margin declined this quarter?

Two parts to this. Understand there is a reasonable amount of seasonality which plays between quarters in this business.

The jury of this business should be really how do we deliver the year, rather than just only quarter to quarter, because sometimes this fruit bunches output from trees can vary with showers which happen early or later, right? Palm tree is pretty receptive to that.

Last year, very clearly if you see the whole India had seen very early onset of monsoon somewhere around April-May itself early May itself, which had lead to something which was a very high output of FFB in the first quarter. This year, in fact, India has seen the reverse.

We have seen the driest quarter. In fact, the palm tree has really, I would say, been very resilient to the driest of Junes, right, and still managed to hold on to last year's FFB.

That I think again talks of the strength of our work on the ground, that against a very strong early monsoon to a driest of Junes, we have actually been managed to hold on to our FFB. I think it's a great work on the extensions, plus it is also part of some of the demographic dividend which starts coming to us every year.

Having said that, coming to the second part, which again I like to reinstate is here, then comes the second part of this business strength is, what are your operating efficiencies? We have actually delivered again a very, very strong OER this year, right, which again is better than the OER of the same quarter last year, which again is a work that we are doing internally, and that again talks of the work which is being done by the team in the value chain.

The third part I would say is, while the margins may look a little smaller drop here, but I think overall in the year, as the season is a bit shifted, we by the end of the year should be able to make up almost this. I'm, as of now, no concern in terms of whether this is a anything bad structurally.

It's a maybe bit of a phasing of the season.

Sir, palm oil prices have been really high this year as of now, even despite the flat FFB volumes, OER has improved, why has margins not improved? You're saying we'll recover in the full year, but still, as of quarter one, why have the margins declined on a YoY basis?

I'll tell you what happens. There is some impacts in every month which sometimes come is that there is a formula of pricing which changes from the government intervention on a month-to-month basis.

There's a small impact of some formula which would have come into this quarter, which has happened, which I think we have enough initiatives to mitigate. We don't see this as a structural issue.

Again, I'm telling you that this is more of a one-off, maybe a quarter impact. I think we are expecting second and third quarter, which are our peak seasons, to behave differently, unless until some very disasters happen on the El Niño side, which palm trees don't react immediately to this.

That is something I still hold on that we'll do well. The second part on this is that, maybe I forgot to mention, that we are still believe that at the end of the year, we'll be able to give around high single digit to double digit FFB volume growth.

That should be happen, coupled with our OER efficiencies, coupled with some of these mitigation plans that we have and some other initiatives we also have on the value-added side, because our specialty fats factory will also start coming into play in the second half of the year, not full-fledged, not full steam, but the early ramp-up will happen. I think we should be managing our margins pretty effectively.

Sir. Thank you.

My next question was regarding the animal feed business only. I've seen the segment liability of the animal feed business have risen drastically in the last year.

What is the reason behind that? Are the payables also bloating, and what is the EBIT per ton guidance as the maize prices are increasing?

Vanshika, just give me a second, huh? Yeah.

Vanshika, first of all, as I said, obviously this has been an extraordinarily strong performance for us. If you see our EBIT per ton guidance has always been in the range of around 2,100 to 2,000 I would say 2,050 to 2,200 in that range, 2,150 in range.

We are actually delivered a EBITDA per ton again in this quarter again in that range. This is in fact slightly little higher, right?

It's a little much higher, I would say. If I were to give a guidance, I think you can safely take a guidance of around this

I think some part, as I was saying, is strategic sourcing, but I think we're still holding on to guidance of around 2,100 to 2,050 to 2,150 kind of a EBIT per ton. We are also doing premiumization of our portfolio.

We are doing geographic expansion of the markets. There are new geographies which have been focused.

We have done an NPD pipeline. I think that's are the more structural factors which will play out for us.

Sir. My next question was regarding the crop care business.

You said in the last concall that we were expecting some kind of recovery in quarter two of this year, and also this year monsoon has impacted our business. Are we seeing some traction there, and what is the share of Ashitaka and Takay in our segmental revenue as compared to 3%?

Vanshika, I think I have just answered the first part already in Abhijit's question. Maybe I'll just recap.

As I said that the first quarter obviously impacted as a crazy June which happened. The second quarter also is we've seen monsoon play a little erratic.

I should be able to give you a sense of the crop care business, as I said, as to what is the likely guidance for the year more by end of quarter two. At the same time, I've said there are so many positives for us in the second half, apart from the lower base, which I talked about those four, five new things that are playing out for us.

I think that's where the positive side lies for us in the second half. In terms of what the success of Ashitaka, which has happened till now, okay, I think Takay is early days.

In any case, Takay rolls out over a period of 5-6 months, so that months are still starting off. Ashitaka obviously the first phase of the year's big launch is over.

Happy to share that between Ashitaka and Takay put together, in the first year itself or the first season itself right now, they will be contributing close to 18% to 20% of our Q1 sales here.

Okay. Thank you so much, sir.

That's all from my side.

Yeah. My first question is on the crop care business.

How do you see the margins on Ashitaka, Takay, and Ghasnash compared with Hitweed? Where do you see the EBIT margins settling once the diversification matures?

EBIT margins for the business you're talking of, or yeah, for the business?

Crop care,

yes. Just give me a second, huh?

Yeah. On the Ashitaka, Ghasnash, and Takay.

One thing is that I would say maybe I would not like to exactly tell the full margins because of certain confidentiality reasons. Two parts are playing out.

This margins would be lower than Hitweed margins, because there's a difference between in-house products and in-licensing products. The profile of margin will be different, right, and that is one piece.

The second part of the piece is that we also double down as we get scale. Two benefits come our way.

One is the scale benefits starts coming our way even within licensing partners. We actually then can get a scale leverage, which we believe will happen once these products become successful as per our plans.

B, we are able to drive again back-end efficiencies ourselves in our operational chain itself. We do these cost projects, etc., which again we are working on already.

As going forward, I would say, not the Hitweed margin, because they are different, but still pretty healthy margins which where these products will be coming at. These are not generics, these are not specialties, these are pretty healthy, decent margins products for us.

That's why we're going to invest behind them and make them bigger for us, because we want this diversification to play out very, very strongly for us over the next 5 years. Overall, in terms of EBIT, I think we have had a industry-leading EBIT always.

I think we believe roughly we despite it being a tough year till now, we believe we can still hold on to roughly around 26-27% kind of EBIT margin.

Got it. The next question is on the animal nutrition business.

The cattle feed has grown by 15%, whereas the segment volume growth is only 7%. Does this mean the other feed businesses are dragging?

Is that a deliberate strategy, and how do you see the non-cattle verticals going forward? Okay.

There's a conscious strategy, as I said. We have done a full strategic exercise, as I've been talking about it in the last few months.

We have done a full strategic relook at our where to play, how to play, and what to play in every business. We clearly do not want to play in certain geographies of the poultry segment.

While we are not exiting poultry, we still believe within poultry there is a lot to do, but we'll do it in geographies of our choice. That's the call that we have taken.

That's where this whole the planned degrowth of poultry is visible to you. I can tell you what is happening as a result of this.

We are playing poultry in the geographies which we think are worth playing in terms of scope of growth as well as profit margins or contribution margins for us. Yes, some of the growth impact that you're seeing is a planned volume degrowth in the poultry segment.

At the same time, our other focus area, whether it is the fish feed, whether it is other feeds like swine feed, and the cattle feed, all three are growing pretty healthily for us. In fact, I can give you some other number.

Our fish feed volume actually has This is what?

Fish feed, yeah, premium. Okay.

Our overall fish feed business has actually grown at around 20% plus. It's ahead of even cattle feed business.

What would be the size of, compared to the total segment, the fish feed business?

It's a smallish business right now for us. It contributes to roughly around 7% of our business.

What is the cattle's share, the total business?

55 55-56%, cattle.

Got it. Also on oil palm business, see realizations were up 18% this quarter, and extraction ratio has improved, but as you said, the EBIT margin has fallen from 19 to 17%.

It appears the higher CPO prices, they largely are passed to the farmer than to the company. Your thoughts on this, sir?

No,

I think I just answered Vanshika's question on the same point. As I said, part of it is due to the certain formula changes which happens sometimes within the quarter itself.

I think that played out a bit, which is a pricing formula piece. I think the bigger part of that is the advantages that we get through the OERs and through FFB volume growths.

What has played out in this is that our FFB volume growth was flatish, which I've explained again is a pure seasonal piece, because last year was a bumper monsoon, this year was a bumper deficit, despite that we were able to hold on to FFB volume. A flatish FFB volume growth, but still overall our oil growth was higher because of the OERs.

Coupled with this formula, you're seeing this marginal drop in the segment margin percentage. We are pretty confident that over the course of the quarter, as overall FFB volume grows, we get more scale efficiencies, because the factories can also run at more efficiencies as more volume flows in.

There are a lot of moving parts in the back-end also of this business that if you get more volume flowing into your business, there are some very fixed overheads which start getting split up of the business. There's those nitty-gritties.

I think that will even out for us over the years.

Got it, sir. We also wanted to understand how this business segments interact.

Cattle feed, dairy, they are inversely linked. High procurement, they hurt cream line, but they seem to drive the cattle feed volumes.

Is there any correlation between your cattle feed and crop protection, sir? Have you done any such exercise?

No, we

okay, not that I have done any specific exercise in recent times ever since I've joined. No, I have not seen any exercise.

Intuitively, the knowledge that resides in the business, we have not come across any direct linkage or correlation between cattle feed and crop care. No, none.

See, crop care again is such a diverse business that within crop care, the segments itself can behave differently. Like, I can tell you the cotton herbicide is a segment which behaves in a very narrow window.

It is not about the overall quantum of rain. We have seen that a very crazy amount of heavy rain can also be detrimental, and obviously droughts are no good for any of the crop businesses.

That has its own very spark windows. Similarly, insecticides behave differently, and let's say maize herbicide behave differently.

I would say crop care has no relation to the cattle feed, and crop care has its own patterns within product segments. The synergy that we really see is, there are synergies between there were linkages between the milk prices which impact cattle feed and CDPL.

In fact, there is one synergy which we have not maybe driven enough, but I don't know whether we can drive at some stage, is whether we can drive some synergies between our back-end of our CDPL business and our animal nutrition business, which is a possible future synergy for us that we have a large-scale farmer network who supply us milk and they are also ready consumers of animal feed. Very honestly, between the two businesses, we have not driven that synergy till now.

Could be a possible work in the LRP period.

Got it. On the labor code wage hike, is there any additional provisioning or something that is planned for the next few quarters, or all the hikes have already been taken?

I'll ask SV to answer this.

Yeah. We have factored in all the impact of the labor code already, we do not expect any additional impact.

Okay. Thank you.

That's it from my end, sir.

Thanks for the opportunity, sir. A couple of questions.

Number one, as you mentioned about the reason for the decline in crop protection segment, but just want to know if you compare with the other listed players who have declared the result, their basically their volumes or in terms of the revenue, they have outgrown much more even in the weaker environment. Just want to understand whether it's only because of the volumes that is flowing through the dealer that has given their volume, or how is it or why we are lagging behind the what industry?

Hardik, very clearly, the segments behave very differently in this industry. The whole pattern of crops and the placement of products with portfolio within each company is very different.

Like I told you that we have right currently, we have that huge concentration of the crop care business historically over the cotton herbicide segment, which over the period of years, we have, let's say in last couple of years, we have built now the Gracia, which is a chilli segment product, insecticide, and we've talked of three new launches which are happening, which is gradually going to take us out of the dependence on the cotton herbicide. The results between it's better to compare whether there is an execution issue or whether it's a macro-environment question, which is the question you're asking, would be if we can compare the same segment to same segment performance between companies if that information is available, right?

We try to get that competitive information through our own intelligence. As per we have the information, it's not that we have lost out in any form to any competitive player out there.

It is more a macro-environment thing which is playing out for the cotton herbicide right now than anything else. Many of the other players have very other different segments, and that's what our intent is to become a multifaceted crop segment company over the years.

Got it, got it. That's really helpful.

Secondly, as you mentioned that our oil extraction ratio has improved on year-on-year basis, can you just repeat the number and along with the absolute FFB volume?

Just two seconds. Our number last year was 18.4% in quarter one, same quarter, and this year that number is 18.8%.

Okay.

FFB number is flat over last year, which I said I am pretty happy that it's flat despite the fundamental shifts of the two seasons. One is huge amount of rainfall happening last year, which helped palm trees immediately increases productivity, versus a driest June which happened that year.

I think it's a lot of credit to our teams and the extension work, and I think also the demographic dividend which came into handy for us also, which helped us hold the volumes, because we are expecting the season now to shift into the coming quarters.

Sir. That's really helpful.

Thank you, sir.

This is Burjis Godrej speaking. Thank you.

I hope we have been able to answer all your questions. If you have any further questions or would like to know more about the company, we would be happy to be of assistance.

Thank you once again for taking the time to join us on this call.