Unseasonal rains to stretch working cap cycle: Camson Bio

A: You are right. It is not really different from the other agro-chemical companies or the agri-input companies, they also face the same issue across the country. If you have noticed over the last two, two and a half months, this unprecedented rains have really got the lodging of all these crops, especially wheat and the other ones which are coming across. What happens typically here is all of those farmers who actually wait for this harvest to happen and then go into selling and getting the money back.

The whole cycle tends to go through a delayed phase and hence the forthcoming receivables for companies like ours also face a delay as far as this is concerned. So the whole cycle goes through a delay of over 30-60 days, beyond this and hence the receivables and working capital tends to get a little stretched as far as the company is concerned.

Mangalam: Also wanted to know that going forward, you have spoken about the de-merger of the seeds business and the uncertainty over the receivables should decrease going forward, once the seeds business is de-merged?

A: The whole issue and the whole idea behind de-merging the seeds business is because seeds typically either drag because of the higher achievable cycle on the seeds business predominantly more because of the business per se but by itself business is much more lucrative in terms of the receivables cycle intact and in time.

So, it was getting literally clouded with the seeds thing there and hence we thought it is more prudent and in terms of giving a larger visibility so the technology that we have in the biocides business is to keep it as two separate companies and then run it differently.

Reema: Give us a few numbers. Currently what will be the receivables of the company say as of December, the last disclosed financials by the company and how much could the receivables jump up by?

A: It would go up by a few, maybe 20-30 days here and there. We are just still, yet finalising the numbers, we have not really closed our books as of now. So we just get to know all of it in the next 15-20 days time from now.

Reema: And what about the working capital? Where would it currently stand at and how much would that worsen by?

A: That will delay by that much is clear, maybe another 30-40 days, it will delay by that. It is not so much of so much of an issue.

Reema: Will it be in crores? Would it be possible for you to quantify it?

A: No, it is too early for me to give you that number. Maybe after I finalise the numbers I should be able to give you that.

Mangalam: Moving towards a slightly longer term, you expect the revenue share from biocides to go higher so what, how would that affect your lended margins? I believe you are working on around 13-14 percent earnings before interest, taxes, depreciation and amortization (EBITDA) margins right now.

A: Today still, if you see the business per se, biocides is only about a three, three and a half year old business. It has taken us that much more time for the farmers to actually get into the acceptance modes of this product.

So, having said, now we have seen the traction across and the growing at a decent 45-50 percent and we will continue the growth over the next two to three years irrespective of how the range behave. Having said, we also have few gross margins as good as 75-80 percent of the biocides business.

That would actually help us on that kind of margins to the dealers, the distributors and at the end to the farmers also. So we will start to see a good EBITDA numbers in terms of excess of 20-25 percent over the next two to three years from now on and that should go up from there.