Bangalore, November 5, 2022: Godrej Agrovet Limited (“GAVL”) has announced its financial results for the second quarter and half-year that ended September 30, 2022

HIGHLIGHTS OF FINANCIAL PERFORMANCE (Q2 and H1 FY23)

· Q2 FY23 consolidated total income increased to Rs. 2,454.2 crore from Rs. 2,159.7 crore in Q2 FY23, a growth of 13.6% year-on-year

· Company reported consolidated EBITDA of Rs. 159.1 crore in Q2 FY23 as compared to Rs. 196.1 crore in Q2 FY22

· Company reported Profit before tax* of Rs. 87.3 crore in Q2 FY23 as compared to Rs. 138.1 crore in Q2 FY22

· H1 FY23 consolidated total income increased to Rs. 4,972.8 crore from Rs. 4,162.9 crore in H1 FY22, a growth of 19.4% year-on-year

· Company reported consolidated EBITDA of Rs. 328.4 crore in H1 FY23 as compared to Rs. 376.0 crore in H1 FY22

· Company reported Profit before tax* of Rs. 190.1 crore in H1 FY23 as compared to Rs. 264.2 crore in H1 FY22

* Profit before tax excluding share of profit from associates and exceptional items

MANAGING DIRECTOR’S COMMENTS Commenting on the performance, Mr. B. S. Yadav, Managing Director, Godrej Agrovet Limited, said: Q2 FY23 was a mixed bag for Godrej Agrovet as we achieved solid topline growth of 13.6% in Q2 FY23 and 19.4% in H1 FY23 over the corresponding previous periods. However, profitability was impacted due to commodity price volatilities, sustained cost inflation, limited transmission, and an unfavorable macro environment.

Uneven monthly as well as the geographic spread of the southwest monsoon led to lower sowing of Kharif crops, mainly paddy and foodgrains. Prices of rice bran jumped sharply in Q2 due to strong demand while Maize prices continued to trend higher. Crude palm oil prices, after reaching record levels in May’22, corrected sharply owing to high inventories in two key exporting countries – Indonesia and Malaysia coupled with the resumption of supplies post-lifting of the exports ban. In the Dairy sector, milk procurement prices continued to increase further with the limited transmission. For the Poultry sector, Q2 is a seasonally weak quarter due to the festive season resulting in a sharp decline in live bird prices.

Our Animal Feed business successfully maintained volume growth momentum and achieved sequential improvement in margin profile. The Oil Palm business recorded double-digit volume growth which was offset by a drop in oil prices. Standalone Crop Protection business was impacted by the reduced application of PGR and Insecticides coupled with input cost pressure. However, the business registered marked improvement in the working capital profile as a result of continued focus on credit hygiene practices. Astec Lifesciences continued to report strong year-on-year topline growth backed by higher volumes as well as realizations. EBITDA margin also recovered by ~300 bps sequentially, although year-on-year performance was impacted by an increase in raw material prices coupled with higher fixed overheads. Both of our Food businesses continued to report strong volume growth year-on-year. Our Dairy subsidiary, Creamline Dairy recorded 27.0% year-on-year topline growth driven by robust volumes under the Value-added products (VAP) portfolio. Profitability was impacted by the limited transmission of higher procurement costs. The poultry and Processed Food business continued with strong volume growth led by RGC and Yummiez categories while the bottom line was impacted by seasonally weak live bird prices.

On the ESG front, Godrej Agrovet remained on track to achieve 2025 sustainability targets. During the quarter, we completed the submission of disclosures on Climate, water, and forest to CDP. The share of renewable energy in the overall energy consumption mix stood at 72% in H1 FY23 as compared to 67% in H1 FY22 with solar rooftop/ground-mounted system installations at more than 20 manufacturing plants. Our teams have successfully reduced specific GHG emissions by 10% year-on-year in H1 FY23. Under our integrated watershed management programs, we have achieved water sequestration of

6.5 million cubic meters which amount to 4x of our entire footprint. 4 lakh trees have been planted to date covering a total area of 4,837 hectares.

· Animal Feed segment recorded sustained year-on-year volume growth in Q2 and H1, mainly led by Cattle-feed category (+15% in Q2 and +14% in H1) on account of market share gains

· Segment margin has recovered sharply to ₹ 1,381 / MT in Q2 from ₹ 694 / MT in Q1. Lower results as compared to the previous year were on account of soft realizations and limited transmission of input cost inflation

· Strong y-o-y volume growth was offset by lower crude palm oil prices resulting in a flat topline in Q2 FY23. The average realization of crude palm oil and palm kernel oil declined by 16% and 3% respectively in Q2 FY23 vs Q2 FY22

· However, Q2 witnessed a strong recovery in FFB volumes, which grew by 15% y-o-y; more than offsetting lower volumes recorded in the previous quarter

· Oil extraction ratio remained at higher levels in Q2 FY23 while improving marginally as compared to the same period last year

· Topline growth in Q2 was led by higher sales of in-house herbicide products. However, sales growth was constrained by reduced application opportunities of Plant Growth Regulator (PGR) and Insecticide products as Kharif sowing was impacted due to erratic monsoon post-mid-July

· Margin profile of the Crop Protection business was impacted due to higher raw material prices, limited transmission, and unfavorable product mix

· Working capital cycle has improved substantially driven by concerted efforts in maintaining credit hygiene

· The robust growth in topline was driven mainly by higher sales price realizations in both domestic as well as export markets coupled with strong volume growth in export markets. It should be noted that our performance for Q2 FY22 was impacted by flooding at the Mahad facility

· Exports accounted for 69% of the revenues in Q2 FY23 and grew by 136% year-on-year. The domestic sale also grew by 41%

· EBITDA margin was lower at 18.7% in Q2 FY23 vs. 21.4% in Q2 FY22 on account of an increase in raw material prices for some of the enterprise products with limited transmission and higher fixed overheads related to herbicides plant. Sequentially, EBITDA margin recovered by ~300 bps in Q2 FY23 as compared to Q1 FY23

· Sustained volume growth in both value-added products (+27% year-on-year) and milk (+10% year-on-year) in Q2 FY23 driving overall revenue growth

· Our value-added products (VAP) portfolio has grown by 49% year-on-year with a salience of 34% in H1 FY23 driven by Curd, buttermilk, and milk-based flavored drinks

· However, performance was adversely impacted on account of the continued rise in procurement costs which could not be fully transmitted

· Godrej Tyson achieved 13.7% year-on-year growth in segment revenues in Q2 FY23 driven by RGC and Yummiez categories as volumes grew by 69% and 65% year-on-year, respectively

· However, Q2 is a seasonally weak quarter for the Live bird business due to the festive season and as a result, live bird prices were considerably lower resulting in a sharp decline in the EBITDA margin

· In Q2 FY22, Godrej Tyson benefitted from pent-up demand post-easing of Covid restrictions and hence, not strictly comparable with Q2 FY23

ACI Godrej Agrovet Private Limited, Bangladesh

· ACI Godrej posted revenue growth of 22.5% year-on-year in Q2 FY23, mainly driven by higher realizations.

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