Optimistic on GM crops; eye 25% growth in 3 yrs: Dhanuka

Q: If genetically modified (GM) crops are allowed, what impact will it have on your company?

A: It is good for the country that Veerappa Moily is going to approve GM seeds in vegetables and other segments. In cotton, we had Bt cotton approval and the production in India has increased roughly 50 percent. If GM seeds are approved for other crops, the production will increase. There will be no impact on pesticide industry and on our company because huge opportunity is still available in India. We are consuming one of the lowest pesticides in the world. One-third farmers are using pesticides, so there is still ample scope for this industry to grow in coming years.

Q: Even if you look at the way your own company and your stock has performed, it has been quite a strong performance in the quarter gone by, your income was up 20 percent, profits were up about 35 percent. Can you give us an outlook on what the company will deliver in the second half of the year both in terms of revenue growth as well as in profits?

A: We have given 25 percent minimum growth for the year-end and till now, the performance is much better. First half, we performed 35 percent growth in topline and 41 percent growth in net profits and we can say that the growth is more than expectations.

Q: For the full year, is it quite likely that you will surpass your revenue guidance and from earlier expectations of 25 percent, could you close your year with a 35 percent revenue growth?

A: I cannot say 35 percent but definitely it will be more than 25 percent that we had projected earlier.

Q: What about your margin performance? Now Dhanuka Agritech is inching closer to 20 percent margin performance, in the quarter gone by it was around 17 percent, what does the outlook look like for the second half of the year?

A: I cannot share the exact information until results are approved by the board but definitely, they are going to be better than expectations.

Q: How is the business shaping up for the industry as a whole? If you look at the way your stock price has moved, in October, it was around Rs 134 and now it is inching closer to Rs 200, so in a span of three months, the stock has surged quite a bit and most of the companies, because of good monsoon in the agricultural industry have seen an upmove, what kind of industry growth do you see in 2014?

A: We foresee around 15-30 percent overall growth for our industry as monsoon was good. Overall, most of the pesticide industry as such has performed well. The rabi outlook also seems to be very good till now and we hope that in the remaining three months also, the overall industry and the company will do well. Monsoon is the biggest challenge for the industry and if monsoon is going to be normal then our company is going to have minimum 25 percent growth in next three years.

Q: In the previous quarter, you managed to reduce your inventory days from 210 days, in the coming two quarters can we expect a further reduction in your inventory days?

A: Yes, we are working on this on regular basis. Our outstanding as well as the inventory holding period has reduced and we hope that it will further reduce 10-15 days in coming quarters.