Operator: Ladies and gentlemen, good day, and welcome to the Kaveri Seed Company Q2 and H1 FY27 earnings conference call. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference call will be recorded. Joining us today on this call is Mr. Mithun Chand, Executive Director. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation. I would now like to hand over the call to Mr. Mithun Chand. Over to you, sir.
Mithun Chand: Thank you. Good evening, and welcome everyone to our Q2 and H1 FY27 earnings conference call. We hope you had a good chance to review the presentation of the results, which is also available on our website. I will touch upon the operational financial performance of the company and then open the floor for a Q&A session. Revenue from operations was at INR 125.44 crore as compared to INR 96.61 crore in Q2 FY26, a growth of 29.84%. EBITDA was at INR 5.42 crore as compared to a loss of INR 6.47 crore. Net loss narrowed to INR 3.21 crore as compared to a net loss of INR 15.05 crore. On a segmental basis, non-cotton revenue were at INR 116.82 crore as compared to INR 90.53 crore, a growth of 29%, while cotton revenue were at INR 8.61 crore as compared to INR 6.0 crore, a growth of 41.7%.
Mithun Chand: Revenue from operations was at INR 940.44 crore as compared to INR 1,041 crore. EBITDA was at INR 286.68 crore as compared to INR 315.88 crore in H1 FY26, with a EBITDA margin of 30.48% as compared to 13.32%. Net profit was at INR 268.09 crore as compared to INR 301.45 crore. Cash on books stood at INR 178 crore. On a segmental basis, non-cotton revenue was at INR 718 crore as compared to INR 817 crore, a decline of 12.12%, while cotton revenue were at INR 224 crore as compared to INR 224.9 crore, a decline of 1.3%. The major highlights. H1 FY27 was shaped by El Niño and a delayed onset of the monsoon. The rainfall deficit impacted sowing across the major growth segments and reflected in lower interest towards premium high-value products, which weighed heavily on the first quarter.
Mithun Chand: The second quarter saw a recovery, with revenue growing at 29.84%, and EBITDA rising to INR 5.42 crore compared to INR 6.47 crore loss. Despite the lower revenue, the company broadly maintained an EBITDA margin at 30.48% of net revenue as compared to 30.32% of H1 FY26. Maize was the largest drag on the half, with the volumes down by 36% and the revenues down by 36.3%, owing to a nearly 30% drop in sowing acreages in Karnataka. New products continue to gain share, with new cotton products contributing 37.7% as compared to 21.4%. New single cross hybrids contributed a substantial 21.8% plus of the maize portfolio. The export business grew 2.63 times to INR 33.07 crore from INR 112.564 in H1. The board has declared an interim dividend of INR 5 per share. That is 250% of the face value of INR 2 per share.
Mithun Chand: Operational highlights, the contribution of new products of cotton was up from 21.4% to 37.7%. Cotton volumes were maintained vis-a-vis last year in spite of challenges like illegal cotton and reduction in acreages in H1 2017. Revenues at INR 222 crore as compared to INR 224 crore. In Q2, cotton revenues grew by 41.7%. In cotton, the company has established a strong foundation with new products in the northern markets of Haryana, Punjab, and Rajasthan, as well as in central and southern markets. Maize revenues were at INR 188.47 crore as compared to INR 295.84 crore, a decline of 36.3%. New single cross hybrids contributed a substantial 21% plus growth in maize portfolio. Hybrid rice revenues were at INR 264.4 crore as compared to INR 282.56 crore, a decline of 6.4%. In Q2, hybrid paddy registered significant growth to INR 17.33 crore from INR 2.37 crore, primarily due to the export business.
Mithun Chand: Selection rice revenues increased by 2% to INR 169.45 crore as compared to last year. In Q2 2017, selection paddy grew by approximately 22%. Vegetables revenue were at INR 25.99 crore as compared to INR 31.7 crore, a decline of 18%. Revenues from other crops at INR 70 crore as compared to INR 40.8 crore, a growth of 71.6%. To build on the export momentum, the board has approved the incorporation of wholly owned subsidiaries in Tanzania, Kenya, Vietnam, Thailand, Philippines, Indonesia, Zambia, and Peru, which will focus on product registration, research for seed and vegetable crops, and marketing and distribution. The company holds the globally recognized ISTA accreditation for the QC lab besides its ISO/NABL accreditation. The overall growth story remains intact.
Mithun Chand: The first half has been challenging on account of the weather, but the recovery in the second quarter, the rising share of new products, and growth in the export give us confidence in the direction of the business. We will continue to work on new variants across maize, vegetables, rice, and cotton, and to build our presence in international markets through the new subsidiaries. I will now open the floor for Q&A session. Thank you.
Operator: Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use a handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rishabh Shah from BugleRock PMS. Please go ahead.
Rishabh Shah: Yeah, hi. Thanks for the opportunity. My question is, we are expanding into 8 countries. We had also sent some samples to Philippines in the last quarter, but the results we were awaited yet. As you say that foreign country farmers are tougher to convince to use our products. Just wanted to know what is the thought process going behind expanding into so many countries, because earlier also we had tried Bangladesh, but we were not as successful as we thought we would be.
Mithun Chand: Basically, if you see our export business, compared to 5 years back to now, we have increased our export business hardly from INR 10 to 12 crores to almost INR 65, 70 crores now. Going forward, right now, if you see our model, we are exporting our seed and billing it to some distributor there, and they are selling our seed there. But going forward, we want to establish our own brand. To establish our own brand, we need to test there, which takes 3 to 4 years to test it. For that, we require registrations of the company, incorporation of the company, and trialing and registration of the hybrids under the company. Now we want to open up going forward. It will take some time, maybe 4 or 5 years.
Mithun Chand: It will take some time for us to test, trial, and then introduce hybrids and create our own brand there. That is the reason we are trying to incorporate the company. For example, in terms of Bangladesh, we have not failed there. We are successful. We are doing business in Bangladesh. The only thing is that still we are trying to develop the brand. Once we develop the brand, we will sell it in our name. Whereas in countries like South Africa, we need to register our hybrids, which takes 3 to 4 years for us. Already if you see our exports, we have done a good business in Tanzania, we have done business in Indonesia, Philippines, and Vietnam. So we are trying to develop our own brand there, which takes time.
Mithun Chand: At the same time, we will try to export our business to distributors, then we will try to build our own hybrids and name.
Rishabh Shah: Basically, I think the difference this time would be that in Bangladesh versus African countries, the registrations take more time as compared to Bangladesh, what we have seen.
Mithun Chand: Yes. But end of the day, if you want to sell our own hybrid and our own brand, we need to have registered there. For that, you require the local incorporation. Right now, we are just exporting our seeds. They are selling on their own brand.
Rishabh Shah: Okay. My next question is that we are a seed company, and in a previous call you have mentioned that this period is very challenging for us due to this El Niño of less rainfall and such sort of things. Just wanted to know that we have faced such tough times in the history of the company. I wanted to know what is different this time, and how are we tackling this situation differently?
Mithun Chand: If you see our sales right now, H1 is already done, where we have seen the majority of the impact. I do not see much impact will be there. Definitely, there will be some impact in the H2 as well. But we have already seen the impact. We are down by 10% in the overall sale. If you see the region-wise, if you take maize as a crop where we are down by more than 35% to 40%, and majority of that decline is from Karnataka, where we have seen more than 30% deficit rainfall, and especially in northern Karnataka. So that has impacted our maize sales a lot. Even then we were able to cope up in some areas, and overall the situation where we were strong in terms of sales, like Telangana, combined Andhra, or parts of Maharashtra, the rainfall and acreages are pretty down.
Mithun Chand: That has impacted us. Even in these tough conditions, we were able to maintain that. Except for in maize, we were able to maintain our market share and revenues close to what we had done last year. So this is one of the tough years where we have seen and I think you are all seeing the reports how difficult, how challenging is the season this year. We are in the seeds business, but it is one off year. Nothing to worry about the future. If you see our competence and by seeing the situation, I think we are really done well when compared to many players in the industry.
Rishabh Shah: Just one more thing on this market share. My question is on the illegal cotton front. We have always mentioned that the government is taking steps to stop this illegal cotton sale. But still, sir, companies like Kaveri, Rasi Seeds, who are leader in cotton seeds, have faced challenges in gaining or rather maintaining the market share in the cotton seed business. Every time there is an increase of illegal sale of cotton and smaller players are coming up in this cotton seed business. Since how are you tackling this situation of market share? Because every time we see some steps have been taken, but nothing curbs these smaller players to come and take our market share in the illegal cotton space.
Mithun Chand: There are two things in this. One is that the illegal cotton is going up year on year. It went up significantly high in the previous time. Right now it is just going marginally. But if you see, the government is also taking steps to control it. When we see in terms of the actual real practical problem, if you see in the last 10 to 12, in fact, in the last 15 to 16 years, we have not seen any new technology which got introduced in GM technology. The illegal Bt which is like versus a BG-II RRF, is already there in the market. That is taking road. That is the reason it is taking time. But when you see the market share of the new hybrid, that is going up. The market share of the older hybrid is coming down.
Mithun Chand: For us, we are able to maintain and will grow further because we have new hybrids which we have introduced in northern segment and central and southern segments, which are really doing well. That is the reason we think that even though the illegal Bt is there at this percentage, we will definitely grow next year in terms of the hybrids.
Rishabh Shah: Okay. My last question is, just wanted to know companies like Bayer have grown in certain seeds like maize, but we couldn't do so. You had mentioned that the problem is that we don't have the product for that particular state, like Maharashtra or MP. Are we planning to
Mithun Chand: I am not sure how much Bayer has grown because I don't have the exact figures compared to what. But yes, if you see the overall acreages in India, except for Madhya Pradesh, no other state has grown. If you see the overall maize yields, the latest yields, if you see the comparison compared to previous years, the yield will be lower by at least 20% to 25% compared to last year in terms of the maize output. That the initial figures what we get in terms of the productivity. But yes, in terms of Madhya Pradesh, it has really picked up in the last 4, 5 years. We are not that very strong in Madhya Pradesh. But if you see southern parts of India, especially Karnataka, combined Andhra, so we are pretty much strong than Bayer.
Rishabh Shah: Yes.
Mithun Chand: Bayer is not clear there, but yes.
Rishabh Shah: My question was on that front itself that there are certain states that we do not have products for that particular state, like Maharashtra or MP. We are stronger in the southern states.
Mithun Chand: We have product for Maharashtra, we have product for MP, but it is taking some time. We are late in entering the MP market.
Rishabh Shah: Okay. Thank you.
Mithun Chand: Going forward, definitely we will be increasing our market shares in MP also.
Rishabh Shah: Okay. Thank you so much, sir.
Operator: Thank you. The next question is from the line of Viraj Kacharia from SiMPL. Please go ahead.
Viraj Kacharia: Yeah, hi. Thanks for the opportunity. Just a couple of questions. First is on the cotton base, just an extension to what the earlier participant was asking. See, I understand there has been a sizable penetration of illegal cotton in the marketplace, and there is a material contraction in the acreage, what it used to be for cotton 3 or 4 years back. But if I look at our own last, say, 10 years sales growth, we have grown around 6% to 7% annualized growth. While the non-cotton has been growing at a very healthy double digit, the cotton piece is where it has shrunk. There is no material change in new technology, and everyone is just fighting into the value proposition on the second-level technology, either in terms of better yield or tolerance level or pest infestation. How should we understand our cotton portfolio growing from here?
Viraj Kacharia: Can it double over the next 3, 4 years? Or do you think it will be able to only sustain the current level based on the new launches we make? How are you looking at it?
Mithun Chand: Basically, if you see our portfolio, when you compare our portfolio six, seven years back to now, even though it looks like 5%, 6% mere growth or a flattish sale in the last five, six years. But if you see our product mix, as rightly pointed out, we have grown more in non-cotton segment than the cotton segment. In fact, we have de-grown in cotton. Where we had at the peak, we have close to 85% of our revenue was from cotton. Right now, it is less than 20% from cotton. So the product mix has changed. The product portfolio, I meant to say that portfolio has changed in terms of the contribution of the revenue. Yes, if you see our current sale when compared to previous year, whatever sale we are doing, majority of your sale is from the new hybrids, not from the older hybrids.
Mithun Chand: Going forward, as it takes a lot of time, you are very much aware that it takes a lot of time for us to introduce new hybrids. So we have done in the last two, three, four years, maybe 1.5 year delay we had because of the monsoon effect and everything. So we were not able to advance as what we thought. But if you see the present performance for this year, the hybrids are really doing well when compared to other competitors. Going forward, definitely we can double our sale in the next three to four years in terms of the cotton portfolio. Basically, we are pretty confident because of our product performance in the market. Definitely, from here on, we do not see our cotton going down.
Mithun Chand: Even in this stage, if you see overall cotton acreages are down, illegal cotton picking up, and there are new technologies, new segment which is coming up. Even in this tough scenario, we were able to maintain our volumes. That itself shows the strength of our product portfolio, and going forward, definitely we will see a positive trend in cotton as well.
Viraj Kacharia: Sir, what will be the age profile of the portfolio in cotton? Both when it comes to the new product and the old.
Mithun Chand: If you see in that, the growth which we are seeing, like 50% is all about new portfolio now. Going forward, majority, 85% to 90%, if you see in the next three to four years, 85% to 90%, more than 90% will be the new portfolio.
Viraj Kacharia: Incrementally for cotton, will the growth be largely new product driven? Or you think there are pockets in market in terms of geography or applications we are not there and that is where they help us grow. Because that INR 225 crore to INR 250 crore cotton portfolio, you would have the old products which after a certain age would go off the shelf. While the new products are scaling up, there is a negating effect as well. Just to understand, as we are kind of looking at doubling sales from INR 250 odd crore to INR 500 crore in three, four years, how are you looking at the construct of that?
Mithun Chand: That is what I was saying, even in the earlier statement I have given that whatever will be the sale after three to four years down the line, majority of close to 80% to 90% of the sale will be from new hybrids only. Whatever the incremental growth will be only from the new hybrids, not from the older one. Even that older one will be faded out, and entire market share from the older one will also be taken by the new one. By taking that scenario and situation, by anticipating that, I say that it will be 80% to 90% will be on new hybrid portfolio.
Viraj Kacharia: Okay, just two more questions. On the non-cotton, especially we were also looking at scaling up with segments like vegetables and fruits. But I think last few years we had minimum success. We have tried this earlier as well, but the segment competitive intensity is very high, and you have MNCs who are quite dominant in the space. When we are looking kind of breaking in, any color you can give where are we in terms of launches? How are we going about? Any color you can give on that?
Mithun Chand: Yeah. We are growing in vegetables also. If you see our portfolio before 10 years, it was almost zero. Last year we had done around INR 65 to 70 crores in vegetables itself. Yes. The growth, what we thought will be around INR 100 crores in the next one to two years, which is very much possible as of now. But in the last two, three years, we have seen seasons changing pretty fast. That has impacted much. But in terms of the competition, MNCs are not new for us. If you see our competition in most of the portfolio, product portfolio, we are competing with both domestic and MNCs. We are the only player in India who compete with both domestic and MNCs. If you see, except for cotton, in all our segment we always compete with MNCs.
Mithun Chand: The competition is not new, and we compete with them and we place our hybrids on par or much better than that. Then only the farmer will accept it. So we are not worried about the competition. Competition is always there, and definitely based on our product performance, we say that we will grow in those segments.
Viraj Kacharia: Okay. In terms of the export piece, the last question. See, as you said, because if we want to go our own brand, then we need to have entities and apply for registration. So typically, what is the timeline for one to get registration? For us to scale up in each of those markets, would we need to have investments in P&L in terms of feet on street, or how are we looking in terms of go-to-market?
Mithun Chand: There are two things to notice in this. One is that these are the entities which we are incorporating right now, only to register our varieties there, which requires a minimum cost in terms of the investment. That doesn't mean that we are stopping our exports. We will be continuing with our present model where we will be exporting, but directly we will not be selling under our brand. We will be exporting through distributors. They will sell on our brand or their own brand based on the country requirements. But going forward, as we are establishing and growing in export, we want to establish our own brand in those countries. That's the reason we are trying to incorporate those companies. It will take a long time, at least nothing less than four to five years to start a business there.
Mithun Chand: But somewhere we need to start, we are starting it right now. In terms of the investment, it is a very minimum investment.
Viraj Kacharia: What crop segments do you think have maximum potential for exports?
Mithun Chand: Basically, we are competing on maize and rice, and in some areas, GM cotton is also there. Again, that depends on the local provider there. But these are the three main crops that we are targeting, plus vegetables.
Viraj Kacharia: Okay. Thank you.
Operator: Thank you. The next question is from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Dhruv Saraf: Good afternoon, Mithun sir. Sir, just wanted to know about the inventory. We have seen inventory at INR 1,200 crores, and it is kind of not decreased from March levels, whereas historically, we have seen inventory kind of is seasonally weak in H1. It kind of comes down. Sir, what explains this buildup of inventory, and does it pose a risk of any big write-off? Because it is now at very high levels compared to your past, even if I look at the last two years or the last four, five years.
Mithun Chand: If you compare to last year, in terms of the absolute terms, in terms of the inventory, we are up by INR 150 crores when comparable on September to September basis, roughly INR 150 crores. That is what is reflecting in the cash on books as well. If you see the cash results also, it has gone because we have more inventory when compared to last year. The amount is close to INR 150 crores. In the last call also, we explained that one thing, the production was higher than anticipated in some crops because the yields were higher.
Dhruv Saraf: Yeah
Mithun Chand: The other thing is that especially in the actual sales for the projected sales anticipated sales were lower. That is the reason the inventory is piled up. But in terms of the risk factor, whether we are going to write off, the major inventory is with rice, cotton, and the other big crop is maize. In rice and cotton, it is not a difficult thing. Again, we have taken some sort of production in rice, in some varieties, and in cotton as well, where we have some scarcity. So these two crops, we are not worried about. Whereas in maize, we have completely stopped taking a production this year because we have inventory. In terms of the storing of the inventory, we have enough infrastructure. While receiving itself, it is properly stored there, and we do not see any write-offs as of now. It is properly maintained, and the results what we are seeing is an impact of post write-offs.
Mithun Chand: So what we anticipate in terms of the write-offs, it will be in line. We don't see any major write-offs coming forward. Because this inventory will be all used in the kharif, as we have now stopped, we have not taken any production plan for kharif or for rabi for maize this year. So this inventory we'll be using for the next year.
Dhruv Saraf: Okay. And this inventory will not be used for rabi this year, let's say, because the maize prices are strong.
Mithun Chand: We'll also use for rabi as well. But if you see the maize price, it saw a record high at INR 32 last night. It was around close to 32 at almost like a life high. But if you see the actual conditions here, Bihar is doing well, but most of the companies have got lot of inventory there. There are a lot of competition in Bihar. We'll also grow in Bihar and eastern parts to some extent. But the majority of the part like combined Andhra, Maharashtra, and Karnataka, still we have not seen rains. So definitely there is some impact in terms of the H2 sales in maize. So we don't anticipate much of a positive response in the H2 in terms of the maize. But yes, kharif looks good for us.
Dhruv Saraf: Kharif looks good for you?
Mithun Chand: Next kharif looks good. By seeing the maize price and the inventory levels, and with the production anticipation estimates, we see that maize coming up very well in H1 of next year.
Dhruv Saraf: Okay.
Mithun Chand: We should not. We are not worried about that.
Dhruv Saraf: Do you foresee any sort of shortage in terms of maize seed again next year? Is that what you are trying to imply?
Mithun Chand: No. Most of the companies have maize seed, and especially our company, Kaveri has enough maize seed for next year. What we are trying to anticipate is that by seeing the maize price right now, the maize acreages will definitely go up next year. Even if sentiment is good now, but the water is very low now. That is the reason we are saying that it might or might not come up now.
Dhruv Saraf: Right. You see the 9% to 10% sales decline in H1 of this year. What are your estimates for the whole year now? Do you expect to continue at this 9% to 10% or do you expect to grow in the H2, given what you have just spoken about maize? Maize is the largest crop in H2.
Mithun Chand: If you see in the H2 as a standalone basis, because I am not taking the consolidated one, because there are other two subsidiaries there. As a standalone basis, we have done around INR 270 crore to INR 280 crore in the H2.
Mithun Chand: Compared to last year, as of now, we see 10% plus and minus, because as we are anticipating a strong export in the H2 again.
Dhruv Saraf: Okay.
Mithun Chand: Which is doing well, and we slightly see a decline in other crops. It should be compensated or 10% plus and minus should be the initial call. Right now, you are very much aware that one cyclone which is affecting Andhra.
Dhruv Saraf: Yeah. Mm-hmm.
Mithun Chand: That is slightly a positive impact where you can see a maize. To what extent it will fill the tanks, that will make some impact on the maize and other crops. Even they are saying that will be extended for some parts of Telangana and parts of slight extent of Karnataka. That will be a positive trigger for us. But we need to wait for other week or so till this festival, Diwali.
Dhruv Saraf: All right, sir. I will come back again to you. Thank you, sir.
Operator: Thank you. A reminder to all participants that you may press star and 1 to ask question. The next question is from the line of Sonaal Kohli from Bowhead India Fund. Please go ahead.
Sonaal Kohli: Hello, Mithun Ji. How are you?
Mithun Chand: Fine, sir.
Sonaal Kohli: Mithun Ji, a couple of questions. Did I hear you correctly? You are saying that in the H2 of this year, you expect ±10% year-on-year growth. Did I hear you correctly?
Mithun Chand: Yeah, because I was just checking it out. Last year as a standalone basis, we had done INR 260 crores in the H2.
Sonaal Kohli: On a consolidated basis, you had done INR 317 crores. What is the difference in confusion about standalone versus consolidated? You could help us understand that.
Mithun Chand: We have other four subsidiaries where we do sale as well in that. So that are our INR 40, 50 crores. As a consolidated basis also, it should be less or minus 10%, not more than that.
Sonaal Kohli: I see. Any recent changes because of which we expect in your assessment, like in last few weeks?
Mithun Chand: Sorry?
Sonaal Kohli: Any recent changes in your expectations based on weather pattern in last few weeks, months?
Mithun Chand: Nothing much. What we have seen is that in terms of the cyclones and everything, usually in the H2 from October to 10 November or 15 November, you get many cyclones in parts of which we have rainfall in Andhra and Telangana. One we are already seeing now. If we are able to cover some parts then sale will be good. Other parts, Maharashtra, we are not seeing any sale in Maharashtra.
Sonaal Kohli: Since your EBITDA margins are down about 200 basis points for the first six months, would you expect the trend to remain for the full year also?
Mithun Chand: EBITDA margins are in fact up as a standalone basis and as a consolidated basis is down by only 1%. If you see at a PAT level.
Sonaal Kohli: On a six monthly basis.
Mithun Chand: Huh?
Sonaal Kohli: On a six monthly.
Mithun Chand: On a six monthly basis, the EBITDA margins if you.
Sonaal Kohli: Is down 200 basis points, 190 basis points.
Mithun Chand: If we see our EBITDA margins on a half-on-half basis, on a standalone basis, it is 30.48% compared to 30.32%. As a consolidated basis, it is like 29.85% compared to 30.8%. It is only down, but if you are seeing at the PAT levels, we had a more other income last year.
Sonaal Kohli: Okay. Somehow maybe there is a mix in my numbers. I will have a look. Whatever I have, it shows like-
Mithun Chand: In fact, as a standalone basis, the EBITDA margins are slightly up than last-
Sonaal Kohli: Sir, we look at consolidated because finally looking behind the consolidated-
Mithun Chand: Consolidated, we are down by 1%. Consolidated we are down by roughly around 1%. I am talking about EBITDA where nothing but minus other income. We are down because in subsidiaries we are not a majority of the subsidiaries, we do cotton, which we were not able to do that. And we have incurred more expenses there. That is the reason as consolidated level, there is a 1% down.
Sonaal Kohli: And sir, what is the average life of the seed inventory? So you know the inventory which has increased, at what point of time and how old once inventory becomes it is prone to being written off?
Mithun Chand: It is a continuous process. Every quarter, based on the seed variety, every quarter we test it. In terms of the life of the inventory and the shelf life of the inventory, most of the inventory is a new inventory. Usually for seeds like cotton, it stays between three to five years. For rice, it is three years. For maize, it is one and a half to three years. So in terms of the health, it is very good as we have maintained very well from post-harvest to till late. So we do not see any write-offs in terms of that. And most of the inventories have got good germination vigor as of now. So we are not worried about that. It should stay for next year.
Sonaal Kohli: And sir, how long do you say is the normal life of the inventory?
Mithun Chand: Based on the storage facilities, it will stay from one and a half to three years. Again, that depends on the crop to crop. For cotton, it will be close to five years plus.
Sonaal Kohli: For maize and rice?
Mithun Chand: Maize is the only delicate thing. Rice also stays there. Maize is the only delicate thing. For that, we have taken enough care, and by seeing the vigor and by seeing the proper storage, we are not worried about that. We do not see any major write-offs in inventory.
Sonaal Kohli: Maize is like one and a half years, or how long is maize?
Mithun Chand: Maize is like one and a half to three.
Sonaal Kohli: One and a half to 3. Okay. I assume last year maize inventory must have been negligible because it was in such a short supply.
Mithun Chand: Sorry?
Sonaal Kohli: Basically, what I am trying to understand is the maize inventory of last year must have been very low. It must be all new inventory, right?
Mithun Chand: No. Whatever inventory we have right now on all the crops is all new inventory. Nothing. It is all produced in this financial year.
Sonaal Kohli: Okay. From that perspective, that is why you think it is quite safe to.
Mithun Chand: Yeah.
Sonaal Kohli: Because it's not that old an inventory.
Mithun Chand: Yes.
Sonaal Kohli: Okay. And sir, margin-wise, what's the guidance you gave for this year, sir, in terms of decline or increase?
Mithun Chand: If you see the H1 margins, we have maintained, even though revenues were down, we were able to maintain in terms of the EBITDA margins. Going forward also, we should maintain the EBITDA margin, but by seeing the season that 5% to 10% that we need to see in terms of the sale, because anyway, H2 is a lean half for us. But we are seeing good exports, and we are seeing good traction in terms of the northern cotton market, which comes in the Q4. In that covers up, the margin should remain same or should be positive. Otherwise, slight impact will be there. But it's true, again, as we are anticipating some rains now, it's a bit early, but that we can give a clear, proper idea in the Q3 results.
Mithun Chand: But as of now, it looks 10% plus or minus of last year.
Sonaal Kohli: And sir, possible for you to share the trend of growth in the first six months for maize, cotton and the two types of rice you produce?
Mithun Chand: Sorry?
Sonaal Kohli: Possible for you to share the growth trend in maize, rice, and cotton, year-on-year for the first six months?
Mithun Chand: Well, we already shared that in the presentation. Maize, we are down by 30-odd percent. Varietal-wise, we have slightly grown. Cotton remained there, and rice slightly down by 2%, 3%.
Sonaal Kohli: I am sorry, sir?
Mithun Chand: The numbers are already there in the presentation.
Sonaal Kohli: Okay, I will take a look.
Mithun Chand: If you see the H1. Yeah, if you see the H1 to H1, except for maize, most of the crops will remain same or marginally up or down by 1% to 2%.
Sonaal Kohli: Okay. Thank you. Thank you.
Mithun Chand: Thanks.
Operator: Thank you, sir. The next question is from the line of Rishabh Shah from BugleRock PMS. Please go ahead.
Rishabh Shah: Hi. My question is, we have two subsidiaries, Aditya Agritech and Genomix Agri Genetics, which do nearly INR 100 crore plus revenue each and PAT of around INR 80 crore each.
Mithun Chand: INR 80 crore.
Rishabh Shah: crops?
Mithun Chand: I think we have in fact active three subsidiaries. One is Aditya, one is Kaveri Microteck, and the other one is Genomix.
Rishabh Shah: Genomix. Aditya Agritech and Genomix, they do a revenue of INR 100 crores plus each.
Rishabh Shah: And a PAT of INR 80 crores.
Mithun Chand: INR 80 crores? That is wrong. It may not be INR 80 crores. It should be INR 8 or INR 10 crores.
Rishabh Shah: Okay. In what crops are they focusing on, and what leads to such high profitability?
Mithun Chand: So in fact, I do not know where you are seeing those numbers. They are just marketing companies. They do not have that sort of a profit of INR 80 crores. One second. If you see the PAT of standalone on this year is INR 268 crores, and as a consol level, as a consol level, one second, as a consol level, it is only INR 271 crores. The PAT is slightly up by only 3%. In terms of the EBITDA minus other income, it is INR 286 versus INR 294. It is only INR 6 crores plus in terms of the EBITDA levels.
Rishabh Shah: They are just a marketing company. They do not deal in any of the-
Mithun Chand: Yeah. The entire research production is done by Kaveri. In terms of Genome Agritech and Aditya Agritech, Kaveri supplies seeds to them, they market it. That is the only thing what they do. Whereas Kaveri Microteck, that deals with micronutrients and bio products, that works on an independent basis. The revenue of that company is close to INR 35 to 40 crores, which is again, slightly profitable. That is it.
Rishabh Shah: Okay. My next question is, how high would be our dependency on hybrid like 468 for paddy and similarly maize? How would our revenue concentration be?
Mithun Chand: In terms of the rice, 468, we are very much dependent on 468. There are a couple of varieties also, but majority of the revenue in hybrid rice comes from 468. We have a large dependency on that. There are a couple of hybrids which we have introduced in the last 3, 4 years, but still that need to take volumes attraction. As of now, if you see the current year, we are dependent on 468. Whereas if you see crops like varietal rice or maize, there are many hybrids. There are tens of hybrids which we market. We are not dependent on that. Even in cotton, we are at 6 to 8 hybrids. Only in rice we depend on those 2 or 3 hybrids, 468, 9090. These are the 2 hybrids that we rely on.
Rishabh Shah: Suman, the last question is, we heard from some channel checks that few distributors are common for Kaveri and Genomix Agri Genetics, and there are few who are cannibalizing Kaveri's business. How do you ensure that such things are minimum? What is your overall channel strategy for our subsidiaries? How different are the distribution and retail margins compared to the Kaveri one?
Mithun Chand: One thing, first of all, what Kaveri sells and what Genomix Agri Genetics or Aditya Agritech sells are altogether different hybrids. There are no 2 same hybrids which we sell in different brands. All are different hybrids. 90% of our dealers are independent dealers. In some markets where we do not have any option, then they deal with 2 varieties. That is very minimal. In terms of the cannibalization, we do not see, at least from our own hybrids, own companies. As farmers with the intention of starting these companies are basically in crops like cotton, the farmer has a tendency to go for 3 or 4 crops of different varieties. That is the reason when we have a good research, we get many products which have different characteristics and different abilities. We market those hybrids in different companies.
Mithun Chand: The main importance will be given to Kaveri and then to the other companies. In very few or rare cases that will happen. Anyhow, I need to check it out. It is a very rare occasion, what we are hearing from it. Anyhow, I will check it out. It will not-
Rishabh Shah: How different are the distribution retail margins, sir?
Rishabh Shah: How different are the distribution of retail margins?
Mithun Chand: It all depends on hybrid to hybrid, variety to variety, and company to company. Kaveri has the highest realizations. In some areas, these companies have also got higher realizations than Kaveri. Those are all different varieties. There are very rich markets. One thing we need to understand is that the hybrid, what we sell in different companies are different hybrids. It is not the same hybrids.
Rishabh Shah: Okay.
Mithun Chand: Each has got different characteristics.
Rishabh Shah: Okay. Thank you.
Operator: Thank you, sir. The next question is from the line of Akshit Shetty, an individual investor. Please go ahead.
Akshit Shetty: Hello, am I audible?
Operator: Yes, sir. Please go ahead, sir.
Akshit Shetty: Yeah. First of all, congratulations on the Q2 2027 results, and thank you for taking my question. My first question is related to the consolidated revenue. I can see that in Q2 2027, the consolidated revenue was INR 244 crores against the standalone of INR 125 crores. In Q1 2027, it was reverse. Consolidated was INR 742 crores against standalone of INR 815 crores. On the Q1 2026 call, you said you would come back on this, but it has not been covered since. Secondly, for H1 2027, how much of the Kaveri standalone revenue was sales to its own subsidiaries, and how much the subsidiary sells to outside customers? Will you add consolidated figures to the presentation from Q3 2027?
Mithun Chand: I just need to check it out in terms of the presentation. If you see, the Q1 consolidated to the H1. Q1, what we see, we take the anticipated results and that will not give an effect in Q1, because that is the reason you see standalone sales are more than the consolidated. If you see, the best way to compare is from H1 to H1. We have already noticed this. We are trying to publish the figures from the next year Q1, which will be comparable. We will knock off the returns and then give the actual figures.
Akshit Shetty: Oh, okay.
Mithun Chand: If you see the H1 to H1, these are more relevant because most of the returns are already accounted. That is the reason you get this effect. In Q1, the returns are anticipated returns. That is the reason you see the knock-off effect.
Akshit Shetty: Oh, okay. Thank you for clarifying this doubt.
Mithun Chand: As I said, we are trying to publish the result from the next year on an actual figure for that. Because as we show only the liquidation figure, the returns are not physically get back to the company. That is the reason we are facing problem. But H1, most of the returns are already accounted. That is the reason you do not see any difference in H1 to H1 comparison.
Akshit Shetty: Okay. Thank you for clarifying that doubt. My second question is related to cash. On Q1 FY27 call you said the cash of over INR 267 crore at the end of, means Q1 FY27, would be close to INR 300 crore in the end of Q2 FY27. The Q2 FY27 press release show INR 178 crore of cash against about INR 410 crore at the end of Q2 FY26. The Q2 FY27 standalone loss was only INR 3.21 crore. So where did the roughly INR 90 crore go in Q2 FY27? Did it go to seed production, lower payable dividend or subsidiaries? What were the inventories and seed crops in the field at the end of Q2 FY27 compared with INR 1,130 crore at the end of Q2 FY26?
Mithun Chand: If you see the payables at that particular time, the payable at Q1 to Q2, we have paid most to the creditors. So that is all the production growers, we have cleared the entire payment for them. Whatever payment we have given in the last three months is for them. In terms of the inventory, as I said that the cash is low when compared to last year because the inventory levels are pretty high when compared to last year. The inventories are more than INR 150 crore plus higher than last year. So the cash got sucked away or is there in the inventory.
Akshit Shetty: Okay. You are saying that
Mithun Chand: Once we are able to realize that in the next year H1, then you get the entire cash back.
Akshit Shetty: Okay.
Mithun Chand: Because as we have minimized our production compared to last year, whatever cash we generate, that will be all of the free cash.
Akshit Shetty: Okay. Got it. Thank you for explanation.
Operator: Thank you, sir. The next question is from the line of Dhruv Saraf from Bowhead India Fund. Please go ahead.
Dhruv Saraf: Mithun, sir, just one question on the CWIP capital work in progress in the balance sheet. That figure has been stuck around INR 120, INR 130 crores. Can you give me some color as to when will this be capitalized? What does the CWIP pertain to?
Mithun Chand: Basically, one is that the machinery, and second is from the, we are buying some land, agricultural land that is not registered yet.
Dhruv Saraf: Okay.
Mithun Chand: Office and agricultural land. These are the two things. That will take another six to eight months.
Dhruv Saraf: Sir, so that entire amount is for agricultural land?
Mithun Chand: More than, say, 50% is for the agricultural land. 50% to 60%.
Dhruv Saraf: Okay, sure. Thank you.
Operator: Thank you for joining the call. For any further information, please be in touch with Rama Naidu from Intellect IR. Thank you, sir. On behalf of Kaveri Seed Company, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Mithun Chand: Thank you.
