Untimely monsoons have wrecked havoc for farmers and companies in the agri business. In what has anyway been a tough year, the ill-timed rains will lead to a 10 percent cut in revenues, says Rajesh Aggarwal, managing director and chief executive officer, Insecticides India.
Speaking to CNBC-TV18, Aggarwal says the sales that should have come in the month of March didn't not come through due to the rainfall.
However, he doesn't see a bleak picture for the upcoming quarters as the untimely rainfall will be good for the kharif crops he explains.
Below is the transcript of Rajesh Aggarwal’s interview with Latha Venkatesh and Anuj Singhal on CNBC-TV18.
Anuj: If you could tell us anecdotally how much impact was there on your sales because of the unseasonal rains?
A: This has been a very tough year all through though in the first half of this year we showed very strong numbers. However, this was a drought like condition which continued during the kharif season or the first season and even during the rabi it was all drought condition when farmer needed it the most.
In the month of March the crop is almost ready for harvest because generally the harvesting season is in the month of April. At this time these untimely rainfalls they have damaged the crops too much. The temperature came down and there were hailstorms particularly in the states of Maharashtra, Madhya Pradesh (MP), Punjab and a lot of other places. The entire North India and the central part of the country, it has got a huge hit.
So, the sales which should have come in the month of March has not started yet. Since last two or three days it is a sunny weather we are seeing and the temperature is also going up so I expect that there can be some small sale during the last days of March. However, we have missed it in the month of March in total. However, as such if we talk about the performance of the company, in Q3 we had lost a little but in Q4 we are trying to make it and I believe the way we are going we should be able to make it by institutional sale and also by the brand sale because the other areas wherever we are seeing the opportunities we are trying to push the material.
Anuj: Can you quantify the exact impact that we might see in your financial results?
A: We had given a guidance of Rs 1200 crore which was a increase of roughly about 30 percent and now we will be missing this target by almost 10 percent. So, in total if we see like company will be showing growth of say between 15-20 percent and whatever loss has happened, it has happened due to the climatic conditions.
Latha: Do you expect that this is only going to be a one season thing, an impact which will show only in this quarter, Q4?
A: I believe that this rainfall what has happened now, it is bad for the current crop which is standing but it is good for the crop which is going to be the next sowing for the kharif season. So, in a way it will be helping. So, I don’t believe that in the next year it would be harmful in any ways. So, I see positive out of it.
Latha: Your sales even in the last reported quarter, Q3 were down about 25 percent from year ago levels. Is this a persistent weakness then, is it got something with rural incomes or was that also a one-off?
A: There was a reason because it was a drought like condition and there were heavy stock returns during that quarter. However, as I told you that we are going to make in the Q4 and this quarter should show a good gain for us. Though we are not able to keep the complete guidance because we showed a fall in the Q3, so, in Q4 also the gain is going to come but not to an extent that it covers up the entire thing. However, in this quarter we will see the positive and I believe that this positive has to continue in the next year in all the quarters.
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