Online

Date: February 17, 2020

Listing Department National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G. Block, Bandra- Kurla Complex, Bandra East, Mumbai-400 051

The Department of Corporate Services-Listing The Bombay Stock Exchange Ltd. Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400 001 Scrip Code: 507717

Symbol- DHANUKA

Sub: Outcome of Conference Call With Analysts/Investors

Dear Sir,

Please find enclosed transcript of Conference call organized with Analysts/Investors held on 13th February, 2020 post declaration of Unaudited Financial Results of the Company for the quarter ended 31 5 ^tDecember, 2019.

Please take above information in your record.

Thanking You,

Yours faithfully,

For Dhanuka A

Jitir;;:/;&a Company Secretar FCS-7612

Encl: a.a

"Dhanuka Agritech Limited Q3 FY2020 Post Results Conference Call"

February 13, 2020

ANALYST: MR. MANISH MAHAWAR- ANTIQUE STOCK BROKING

MANAGEMENT: MR. MAHENDRA KUMAR DHANUKA – MANAGING DIRECTOR – DHANUKA AGRITECH LIMITED MR. RAHUL DHANUKA – DIRECTOR (MARKETING) - DHANUKA AGRITECH LIMITED MR. VINOD KUMAR BANSAL – CHIEF FINANCIAL OFFICER – DHANUKA AGRITECH LIMITED

• Moderator: Ladies and gentlemen, good day and welcome to 3Q FY2020 post results conference call of Dhanuka Agritech hosted by Antique Stock Broking. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you and over to you Sir!
• Manish Mahawar: Thank you Tanvi. On behalf of Antique Stock Broking, I would like to welcome all the participants in the earning call of Dhanuka Agritech. From the management, we have Mr. M. K. Dhanuka, Managing Director, Mr. Rahul Dhanuka, Director (Marketing) and Mr. V. K. Bansal, CFO of the Company. Without further delay, I would like to hand over the call to Mr. M. K. Dhanuka. Over to you Sir!
• M. K. Dhanuka: Thank you Mr. Manish. Good evening friends. Myself, M. K. Dhanuka, Managing Director of Dhanuka Agritech Limited along with Mr. Rahul Dhanuka, Director (Marketing) and Mr. V. K. Bansal, Chief Financial Officer of the Company. Welcome all of you to share the unaudited financial results of the company for the quarter and 9 months ended December 31, 2019.

As you know, Dhanuka is part of plant protection, agrochemical industry. Agrochemicals work as plant nutrients and protectants from enemies like insects, pests, diseases, and weeds that affect the crops.

Dhanuka is a technology company that offers products to protect all major crops across all geographies of India. Dhanuka model is almost rural FMCG model. To service the diversity of Indian crops and needs of the farmers the Company has wide range of products in its portfolio, over 80 brands in pack sizes ranging from 2 grams to 200 litres. These products are in various forms liquids, dust, powder, and granules.

Dhanuka has pan India presence through our marketing offices in all major states across India. The three manufacturing units with 40 warehouses and network of over 14 branch offices across the Indian geography caters about 7000 distributors and dealers and approximately 80000 retailers. Dhanuka has more than 1500 technocommercial staff supported by a strong R&D division and a robust distribution network, which has Dhanuka to reach out to approximately 10 million Indian farmers with its products and services. Dhanuka's R&D division has world class NABL accredited laboratories and has international collaboration with the world's nine leading agrochemical companies from US, Japan and Europe, which helps Dhanuka to introduce the latest technology in Indian farmlands.

Coming to the results, the company has registered turnover of Rs.271.48 Crores for the third quarter and Rs.892.50 Crores for the nine months ended December 31, 2019 compared to Rs.216.79 Crores for the corresponding quarter and Rs.813.12 Crores for the corresponding nine months in the last year. Profit before tax for the quarter ended December 31, 2019 is Rs.37.62 Crores and Rs.130.32 Crores for nine months as against Rs.22.14 Crores for quarter and Rs.117.85 Crores for nine months in comparison to corresponding last year. The EBITDA is Rs.42.18 Crores for Q3 and Rs.144 Crores for nine months ended on December 31, 2019 in comparison to Rs.25.28 Crores during the Q3 and Rs.127.72 Crores for nine months in the corresponding last year. Dhanuka Agritech reported a net profit of Rs.27.67 Crores for the quarter and Rs.102.46 Crores for nine months ended December 31, 2019 compared to Rs.14.60 Crores for the quarter and Rs.85.82 Crores for nine months ended December 31, 2018. I am happy to inform that the Board of Directors have declared 600% interim dividend that is Rs.12 per equity share having face value of Rs.2 per share, which will absorb Rs.68.83 Crores inclusive of DDT.

Coming to the zone wise percentage share of turnover for Q3 and nine months ended December 31, 2019. The north has contributed 18% in Q3 and for nine months 24%. East zone contribution for Q3 is 13% and for nine months it is 11%. West zone contribution is 25% for Q3 and 36% for nine months and south zone contribution is highest in this quarter, which is 44% and for 9 months it is 29%.

Product category wise percentage share of turnover for Q3 and nine months ended December 31, 2019 is insecticides for Q3 is 38% and for nine months it is 42%, fungicides for Q3 is 15% and for nine months it is also 15%, herbicide is also similar for Q3 32% and for nine months it is 32%, others Q3 is 15% and for nine months it is 11%. As per latest information available on sowing of Rabi crops around 90% of the normal area under Rabi crops has been sown up to December 27, 2019. Area sown under all Rabi crops taken together has been reported 57.84 hectare at all India level as compared to 536.35 lakhs hectare in the corresponding period of last year and 554.66 lakh hectare normal area as on date. The Indian meteorological department has forecasted a normal monsoon for the coming monsoon season at 96% of long period average, which has brought smile on the faces of the farmers so it will be the second continuous year for a good monsoon. Therefore it is expected that the production of food grain expected to be much higher in the coming year also. Friends thank you very much for your kind attention. Now you are welcome to ask questions on the results of the company. Thank you.

Moderator: Thank you very much Sir. We will now begin the question and answer session. The first question is from the line of Prashant Biyani from Prabhudas Lilladhar. Please go ahead.

Prashant Biyani: Yes Thanks for the opportunity. Sir can you confirm whether north has grown by 5% only or the number is incorrect?

parameters. In addition to that the way at Dhanuka we manage our account receivables and

inventories is also very different as compared to what is happening out there and we do not load our channel with the inventories and do not run the huge risk of heavy goods return or frontloading the channel to meet the quarter so these are some of the structural differences that at Dhanuka we have.

Vihang Subramanian: Okay.

• Rahul Dhanuka: When we talk of industry I think so the industry would probably face challenge in terms of frontloading the channel and inability to handle the price fluctuations as sharply and as deftly, so at Dhanuka we are able to handle the price fluctuation challenge really very deftly.
• Vihang Subramanian: But all these other indicators are there right like water levels are higher and equators are up, etc, so this was not the case like in the last few quarters at least. Right now there is a lot of positive commentary around that so do you think that this performance that you have seen can like probably sustain on to the next kharif as well?
• Rahul Dhanuka: Of course so the significant depend upon the moisture content either through rainfalls or reservoir levels or ground water these water availability being favorable certainly ensures that the growth story remains favorable and positive very strongly, so while we are looking at Q4 to be really good in continuation to Q3 we are very hopeful of Q1 and Q2 next year also panning out really well with the reservoir water levels and ground water level being good.
• Vihang Subramanian: Okay Sir the water level has a lag impact then is it like that once it is high then basically it means that the next two, three quarters are automatically your availability issues are sorted out at least?
• Rahul Dhanuka: Absolutely.
• Vihang Subramanian: That is the right understanding and other thing on products like I basically like lot of people speak in the industry at least they complain a lot about the price competition and how intensely competitive the domestic agrochem industry is so do you see that for yourself as well or do you feel that your products are more differentiated?
• Rahul Dhanuka: Well I cannot discount the price competition and we have a relevant generic portfolio, which competes in the market at pricing level; however, with our field force of 1500 Dhanuka doctors we are able to educate the farmer on using our speciality products. We are continuously making an effort to move the farmer to a low environmental impact and high efficacy product, which we try and bring in from our multinational partners and Japanese collaborators so there is lot of education and goodwill generated at the farmer's level whereby he prefers Dhanuka products over other choices, so while we compete in generics on price front; however, there is a brand pool created by the demand generation being done at the ground level at the grass route level.

• Vihang Subramanian: So do you sort of see these farmers then like coming back to you then because of the goodwill is created they should be coming back to you for the same product, right?
• Rahul Dhanuka: Absolutely so not only he comes back for the same product, which is being advocated by our team, but then he expands his purchase with Dhanuka as an upward purchase and lateral purchase of other requirements as well.
• Vihang Subramanian: Okay and Sir lastly just on the raw material side there was lot of gross margin pressure I believe from China over the last one, two years again like across the industry not only for you, but do you think that has kind of abated and it will remain at low levels considering obviously that the virus has no role to play in this, but if the virus subsides and do you kind of see raw material prices that like they have currently softened and do you feel that whole period of having raw material inflation is behind you now?
• Rahul Dhanuka: I think so there will be a blip on the annual cycle of availability because of the logistics challenges that are going to be seen in China and likewise. We do not see the prices really going up at the backend; however, there could be a short-term jump because of delayed supplies.

Vihang Subramanian: Okay Sure sir. Thank you. That is it from my side.

• Moderator: Thank you. The next question is from the line of Monika Joshi from Hornbill Capital. Please go ahead.
• Monika Joshi: Sir we really appreciate your views on the pesticide bill that has been tabled, your thoughts on the individual parts of the bill would be appreciated on pricing, on restrictions in marketing, on packaging, whatever you know of the bill?
• Rahul Dhanuka: Well this bill has been in offering for quite sometime and the government has had an initiative towards making it favorable for the farmer in many ways so while on one side the label leaflet guidelines are already notified to be changed so that farmer has easy readability. It increases compliance load on the organization. Now organizations like Dhanuka, which were already compliant it is not that challenging to tweak ourselves to one align with the act as well as to make it easier for the farmer; however, it puts a lot of load on the noncompliant or unregulated markets, which is favorable for us. Then we also fear that there is a lot of unregulated spurious material and misbranded material available in the market, with the enactment of the new law and its formal execution I think so that would also be checked and the spurious products and the misbranded products would probably reduce in the markets if the law is executed and later in its spirit, which will again favor organized players like Dhanuka. It is more so because we are reaching out to the farmer and educating him with our powerful new products, which are low environmental impact and low residue impact on the main crop, I think so the pesticide management bill is overall going to favor the regulated industry.

Monika Joshi: There was some talk on putting some cap on pricing of the product? Rahul Dhanuka: So that at some point of time it was just a talk and as of now we are not aware if that is part of the pesticide management bill. Monika Joshi: That is good to hear. Sir any view because you do not disclose the balance sheet in December, but any color on the inventory and receivable days as of December 2019 and what was the comparable number in December 2018? M. K. Dhanuka: The inventory is declined by around 13 Crores as compared to December 2018, which means the inventory is lower as compared to December 2018 and debtor increased by around 7%, 8% as against the growth in that turnover is more than 25% in Q3 and overall is around 10% in the nine months. Monika Joshi: Sir the debtor days are lower is that correct is that understanding correct? Rahul Dhanuka: Your understanding is right. Monika Joshi: When you outlined your product launches for the coming quarter and probably the coming years if you could just give some color on what are your strategies in inlicensing products and expanding your pipeline across more MNCs and expanding more than the nine companies that you have already tied up with? Rahul Dhanuka: We are in a continuous endeavor to bring in new technology and new products to the farmer because in the ever changing landscape of agriculture our farmer has faced with new challenges and our effort is to help him deal with those challenges very cost effectively with the least impact on the environment and with the lowest residue on the consumable so in that direction we are brining in new products every year and this year also three products are lined up, two of them being herbicide and one of them being insecticide then there are some segments, which we feel farmer can benefit with our better offerings in future so we are planning to go aggressively in some of these segments where we feel we are relatively weakly present so that is going to be an effort in licensing products as well as in new 9(3) products are there in pipeline and as we see better visibility will be sharing on the concall 2. Monika Joshi: Thank you so much and wish you all the best. Moderator: Thank you. The next question is from the line of Madhav Marda from Fidelity Investments. Please go ahead. Madhav Marda: Sir just wanted to understand of course we are seeing raw material price pressure having come off more recently from the last two, three months, but you are indicating that the cost control, which we have done in the previous year might not be as tight as the sales picks up, so combining

• M. K. Dhanuka: You see as far as gross margin is concerned it is very difficult to mention, but we can say in the first half of financial year there should be definitely improvement in the EBITDA margins as compared to the year 1920.
• Madhav Marda: This is mostly led by decline in the raw material prices over the last year?
• Rahul Dhanuka: Yes.
• Madhav Marda: How is the growth being so far in Rabbi, is it proceeding well for us, the fourth quarter how is that going?
• Rahul Dhanuka: In Q4?
• Madhav Marda: Yes Q4.
• Rahul Dhanuka: Yes we are expecting a good Q4 this year.
• Madhav Marda: Sir momentum of Q3 is continuing basically for us?
• Rahul Dhanuka: So far yes.
• Madhav Marda: Got it. Great Sir. Thank you so much.
• Moderator: Thank you. The next question is from the line of Saurabh Kapadia from AMSEC. Please go ahead.
• Saurabh Kapadia: Congratulations on your good set of number. Sir firstly on the growth in the west zone so if I am looking you have grown about 46% in the west zone, was it because of the comarketing was allowed in Maharashtra?
• Rahul Dhanuka: I think so that was pretty late, comarketing opportunity opening up was pretty late, nonetheless I think so it is the rainfall and the overall opportunity in the market because of the rainfalls, which through up Maharashtra and also Gujarat as a huge opportunity. In fact comarketing opening up was notified earlier, but eventually translated into revenues in January.
• Saurabh Kapadia: How much was our revenue for comarketing prior to this restriction on annual basis?
• Rahul Dhanuka: That would be around for Maharashtra alone or for all India basis?

Rajat Setia: Alright and in terms of the revenue share of products, which we have launched in partnership with the global players what could be share of those products?

Buprofezin and Tricyclazole. Having said that at Dhanuka we have better offerings in shape of Pymetrozine, which is a replacement of Buprofezin and Tricyclazole. We have Pymetrozine, which is a replacement of Buprofezin. We have lunched Pymetrozine for controlling BPH and we received very good traction from our customers for APPLY brand in BPH control in rice which is a systemic product and control BPH like almost no other product. Similarly for Tricyclazole we have our Japanese product Kasu-B which is very effective control for blast and in our future pipeline also we have two very good rice fungicide offerings shaping up couple of years down the line, so at Dhanuka we would be insignificantly impacted if at all the ban takes shape.

• Deepak Gole: How is the dealer network currently?
• Rahul Dhanuka: We have direct channel partners of about 6600.
• Deepak Gole: Sir what is the capex plan for FY2020 and FY2021?
• M. K. Dhanuka: FY2020-FY2021 would be around 10-12 Crores.
• Deepak Gole: That is from my side. Thank you very much Sir!
• Moderator: Thank you. The next question is from the line of Somaiah V from Spark Capital. Please go ahead. The line for Somaiah has got disconnected it seems. We will move to the next question, which is from the line of Hemang Khanna from Kotak Securities. Please go ahead.
• Hemang Khanna: In regard to the new product launches you said that there are new plants for 1Q FY2021 what about for the rest of the entire year, could you give us some color on that and the second one was related to the Orchid Pharmaceuticals acquisition and the pledged shares over there, could you have some color on that please?
• M. K. Dhanuka: You see with regard to Orchid, share pledge is very insignificant with regard to the Yes Bank against the bank guarantee otherwise all these shares are unpledged within a week's time and with regard to your new launches in the next financial year.
• Rahul Dhanuka: So we are looking at 3 new 9(3) products coming in, in the next financial year, two of them fungicides and one of them herbicide. I did not pitch for it very strongly because we are waiting for our regulator Central Insecticide Board to really push the cases, they have been waiting in the wings, these two powerful fungicides are for grapes and are coming from Japan and another one is insecticide, which is also coming from a multinational partner, so we are looking at these three products coming in by the end of second quarter.
• Hemang Khanna: Right. Sure thank you so much Sir.