Rallis India, an agro products manufacturer, hopes that the Kharif season in the current year will be beneficial for the company based on the positive monsoon forecasts.
"We are looking towards a positive kharif both in terms of the way southeast monsoon will pan out as well as the interest in some of the key crops," V Shankar, MD & CEO, Rallis India told CNBC-TV18 today.
In the first official forecast on rains today, Jaipal Reddy, Science and Technology Minister said that monsoon rainfall in 2013 is expected to be within normal range.
The company today reported 13.7 percent annual increase in consolidated net profit at Rs 11.26 crore for the quarter ended March. The manufacturer of seeds, pesticides and fertilizers recorded a whooping 32 percent hike in consolidated income from operations at Rs 284.9 crore.
The company margins remain under pressure through out last financial year due to increase in power cost and erratic monsoon. Margins contracted by around 200 bps during 2012-13.
Below is the verbatim transcript of the interview.
Q: Let us run us through the numbers first starting with the margin picture. I have the net sales picture which looked quite good. On the bottom-line also you have delivered decent growth, but what about the margin picture?
A: On the revenue front we have indeed done well and we have crossed Rs 1,500 crore milestone on revenues for the year. For the quarter as well our growth has been over 35 percent and even in terms of the Profit After Tax (PAT) we have registered handsome growth. As far as the margin is concerned we have faced both environmental and business level challenges in the industry all through the year. Margins have compressed by about 200 bps; having said that, during the year we have been able to recover. Power costs have increased; pressures on the foreign exchanges had gone up. On top of that, very erratic monsoon both southwest and northeast also had impact on the business. In Q4 as you are seeing from the numbers our margin has bounced back and we are on the road to closing the gap.
Q: How do you see the numbers going from hereon in the Q1 and Q2? Do you see things picking up and improvement in margins as well as in volumes?
A: As of now I can look at a few pointers which look positive, one is in terms of the general inventory levels and the pipeline. They are a bit easier than what it was last year and second of course is the forecast which we see of the monsoon. Most of it is quite positive. So we are looking towards a positive kharif both in terms of the way southeast monsoon will pan out as well as the interest in some of the key crops.
Q: Do you expect anything positive coming in terms of policy in terms of being able to raise prices?
A: In terms of policy we have seen that the government has been quite sensitive to some of the costs, which have gone up and they have been addressing their Minimum Support Price (MSP) increases, so that kind of intervention has certainly helped the farmer income on many crops. For example, if you look at the farmer income on wheat this season, that has been generally okay. The crop health has been good and the MSPs and the cost profile also. But this has not been true in case of paddy across states like Andhra Pradesh, their incomes have been less. So the MSP intervention happening at the right time is certainly a booster in terms of the policy. The other one of course is in terms of the credit availability and steps like the interest subvention in terms of the farmers’ access to credit and the cost of it, so the policy moves there will also certainly come in handy. The key interventions which a farmer really looks for is availability of finance as well as whether he gets the right price when the output is ready. So on these two fronts any positive moves made by the government is certainly going to help going forward.