See 10-15% growth in Q3; demonetisation impact small:Kaveri Seed

Kaveri Seed reported a steady set of earnings for the quarter ended September 30. The total income was up 2.3 percent at Rs 67.8 crore versus Rs 66.3 crore reported for the same quarter earlier fiscal.

G Vijay Kumar, CFO of the company is very upbeat of growth continuing for the next two-quarters too. He expects a 10-15 percent growth in the third quarter due to good rains. He also expects the market share in Maharashtra to go up.

The quarter two other income was up at Rs 17 crore versus Rs 2.9 crore Q2FY16. Net profit too came in at Rs 7 crore versus a loss of Rs 42.5 crore in Q2FY16. EBITDA for the quarter stood at Rs 3.4 crore.

Demonetisation will be good for the organised players in the long-run. As for their business it only had a very limited impact, says Kumar.Below is the verbatim transcript of G Vijay Kumar’s interview to Anuj Singhal, Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Anuj: Your earnings have seen a lot of volatility over the last few quarters, if you could tell us how things are looking from here on and if you have any visibility for the next few quarters. A: Last two-quarters because last couple of years severe drought has affected this one. As mentioned earlier also, many farmers in India because of government intervention and government encouragement moved from hybrid cotton to pulses. Now, those things are again coming back because of good rainfall and all, rabi and all looks good. Next two quarters will be looking good and two to three years horizon also again farmers are coming back to the cotton and all because cotton prices have gone up and pulses prices are coming down. So, we are expecting that again farmers will come back to cotton and we will do very well. Latha: There have been problems in Maharashtra for cotton farmer perhaps with not enough being bought. Separately, is the cash crunch hitting you? A: Maharashtra, certain cotton seeds were affected. Our seeds were performing well and our market share in Maharashtra had gone up substantially. Certain companies seeds were not affected; I don’t want to comment on those but our seeds have performed well and we are expecting still our market share will go up in Maharashtra. Latha: About this cash crunch, any impact at all because people could not withdraw enough money? A: Demonetisation has little bit affected the industry. Demonetisation impacted variety of business like wheat since farmers used saved seeds. Some of the farmers were all doing late sowing. The demonetisation was affected and instead of buying branded seed, they used their own saved seed that was affected. However, in the long run, organised players to gain market share because the people will come to the banking transaction more so organised players will increase the market share. Latha: How much was the impact, 10 percent lower, 15 percent lower, what was the impact of demonetisation according to you? A: 5 percent lower. Sonia: What kind of volume growth have you seen and what are you expecting to see in the next couple of quarters? A: At least 10 percent growth we are expecting. Final quarter is not any season. Normally for seed industry, first quarter and third quarter is important. First quarter is kharif and third quarter is rabi. Third quarter, because rainfall is very good, we are expecting 10-15 percent growth. Anuj: What is the status of the Sebi inquiry and does the company need to take further write-downs in FY17 and FY18? A: Sebi, we have submitted all the information whatever they sought and from our side everything is over. Last three months we are not getting anything; hopefully, nothing will come out from the Sebi inquiry. Coming back to the other question, write-offs we are doing on a monthly basis. Now, whatever is any sub standard material or anything comes up, we are not accumulating. We are doing as a usual practice of every monthly we are writing it off. There will not be any surprises for the future.