4. 1. Indian agrochemicals sector
1.1 Overview
India is the 4th largest producer of agrochemicals by volume and 12th largest by value
Indian agrochemical industry (US$ bn) Domestic agrochemical consumption (by segment)
Significantly lower 6.0 Fungicides Total c.US$ 1.6bn
agrochemical usage 4.9 17%
5.0
in India implies
strong growth of 4.0
US$ bn
c.10% p.a. expected 3.0 2.5
2.8
in the near term 1.9 Herbicides
2.0 1.6 1.7 21%
Insecticides
Agrochemicals 62%
1.0
consumption in India
-
skewed towards 2006 2007 2008 2009 2010E 2015P
insecticides given the
tropical climate and
type of crop Split of consumption by crop type Split of domestic market by region
plantation 3%2%2% Total c.US$ 1.6bn Others Total c.US$ 1.6bn
3% 13% AP
6% 24%
Crop losses in India Gujarat
6%
range from 20% to 7%
45%
Maharashtra
30% owing to 7%
suboptimal and 9%
inadequate usage of WB
9% UP
agrochemicals and is 23% 17%
estimated to be worth Cotton Paddy Sorghum Hary ana
Fruits & veg Wheat Arhar
c.US$ 20bn per year Groundnut Bajra Others
10% Punjab
14%
Source Broker notes, Company
3
5. 1. Indian agrochemicals sector
1.2 Robust growth prospects
Structural enablers in Indian agrochemicals Arable land stagnation Rise in MSP
sector to catalyze strong growth trajectory 135 3,500 3,200
3,000
Rs / quintal
130 2,800
2,300
Rising pressure to increase food productivity given land
m hectares
125 2,000
shortage/stagnation and rise in population 2,100
120
Increasing awareness of farmers 1,400 1,080 1,120
1,285
1,100
115
Rising prices of crops on the back of Minimum Support
700
Prices (MSP) 110 880 980 1,030 1,110
Use of costlier hybrid seeds 105
-
FY09 FY10 FY11 FY12E
FY80
FY83
FY86
FY04
FY07
FY10
FY89
FY92
FY95
FY98
FY01
Current under penetration of agrochemicals in India
Paddy Grade A Wheat Arhar
– Pesticide consumption amongst the lowest globally
Labour shortage for agricultural activities on the back of Low pesticide consumption Increased institutional credit flow
NREGA 18.0 17.0 4,500
Continued financial support from Government through 4,000
15.0
subsidies and greater flow of institutional credit 12.0 3,500
Kg / hectare 12.0 3,000
RS bn
2,500
9.0
7.0 6.6 2,000
6.0 1,500
2.5 1,000
3.0
0.4 500
- -
Korea
USA
EU
Japan
India
Taiwan
FY04
FY05
FY10
FY00
FY01
FY02
FY03
FY06
FY07
FY08
FY09
Source Department of Agriculture, research reports
India is expected to emerge as a hub for the procurement of generic agrochemicals as
4
well as new generation products
7. 2. Company ovierview
2.1 Company snapshot
Insecticides India (“IIL”) is an integrated agrochemicals company engaged in R&D,
manufacturing, marketing and distribution of agrochemicals in India
Listed company, established in 2001 Shareholding pattern
Amongst top 10 agrochemicals company in India with Others
an estimated 5% market share 19.4%
Large and diversified product portfolio
Track record of new product launches FIIs
5.9%
– Judicious mix of in-house development, brand
acquisitions and technical collaboration / marketing
arrangements with global players
Wide sales & distribution network across India Promoters
74.7%
Established manufacturing infrastructure for both
technicals and formulations Notes Shareholding pattern as on 31st Mar 2012
– Recently commissioned new units with sufficient
Outperforming the index
capacity to enable sustained long term growth
– New state-of-the-art technicals manufacturing 900
800 762
facility and R&D facility is in pipeline 700
600
R&D center recognized by DSIR and Ministry of 500
Science & Technology 400
300
Accredited with NABL (R&D facilities), ISO 9001:2000, 200
114
ISO 14001 and OHSAS 18001 100
0
– GLP accreditation expected soon
Jun-09
Jun-10
Jun-11
Jun-12
Feb-10
Feb-11
Feb-12
Apr-11
Apr-12
Oct-09
Apr-10
Oct-10
Oct-11
Aug-09
Aug-11
Aug-10
Dec-10
Dec-11
Dec-09
IIL Sensex
Notes Figures have been rebased to 100
6
8. 2. Company ovierview
2.2 History & development
Entered into 2nd
Insecticides India Commissioned first Commissioned 2nd Acquired exclusive New R&D unit set Undertook collaboration with
(P) Ltd. manufacturing plant manufacturing right to sell Thimet up after receiving establishment AMVAC (for
incorporated at Chopanki plant at Sambha in India Govt. accreditation of multi-product Nuvan)
(collaboration with manufacturing Finalized marketing
AMVAC, USA) facility at Dahej arrangement with
Nissan
1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012YTD
Received ISO IPO & listing on Undertook Acquired brand
Acquired leading 9001-2000 NSE establishment of Monocil from Nocil
Converted to brands of Montari certification Commissioned manufacturing Commisioned
Insecticides Industries (Ranbaxy Set up R&D lab at technicals plant facility at Dahej and
(India) Ltd. group company) Chopanki at Chopanki Udhampur Udhampur plants
7
9. 2. Company ovierview
2.3 Management team
H. C. Aggarwal
(Chairman)
Rajesh Aggarwal (MD)
P.C. Pabbi Sandeep Aggarwal
Vice President CFO
Information
Production Purchase Marketing R&D Admin & HR Finance
Technology
B.P.S. Rana Abhai Shanker Sanjay Vats Venkat Rao Sanjeev Aggarwal Pankaj Gupta
DGM GM GM GM GM CS
H.C. Sharma M.K. Singhal Dr. Mukesh
DGM GM DGM
Sanjay Vats
GM
Ashok Bangde V.K. Garg
GM GM
R. S. Verma
Sr. Manager
K.V. Patel V.K. Singhal
Unit Head GM
S.K. Choudhary
Project Manager
Anil Tyagi
Project Head
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11. 3. Business description
3.1 Diversified business model
Highly defensible, backward integrated and Diversified by segment Diversified by geography
diversified business model 6.7% 3.7% Total = Rs Domestic Branded sales = Rs 4,341m
5,541m
32% 16%
Strong presence in insecticides and herbicides segments
– Segment focus and mix is strategically aligned to 28.0% 17%
requirements of the Indian market 61.5%
6% 8% 11%
10%
Formidable pan India presence with footprint across major Punjab A.P. Haryana
crop producing regions in India Insecticides Herbicides
Maharashtra UP Karnataka
Fungicides PGRs Others
Catering to both Branded formulations (B2C) and
Institutional sales (B2B) market Strong presence across categories Strong in-house manufacturing
– Especially strong in Branded formulations
Total = Rs Total = Rs
5,541m 5,541m
8%
21%
Focus on in-house manufacturing and backward integration
79% 92%
Branded formulations Institutional sales Manufactured in-house Traded
Notes FY12 figures are provisional; All charts above depict segmentation of FY12P gross sales
Diversified portfolio across segments, regions and customers; strong brand presence
10
and recognition; in-house manufacturing and grassroots distribution infrastructure
12. 3. Business description
3.2 Large product portfolio
Exceptional track record of new product launches Large portfolio across multiple segments
and portfolio augmentation aided by
PGRs 1 18 19
In-house product development through
– Backward integration
Fungicides 8 20 28
– Enhanced focus on R&D Herbicides 11 25 36
Acquisitions of „high recall, but off-shelf‟ brands and their successful re-
launch into leading brands
Insecticides
0
23
20 40
65
60 80
88
100
– Lethal and Monocil are recent success stories
Institutional Branded formulations
Track record of launch of new branded formulations
Technical collaborations with leading global agrochemical players
10
– Plan to repeat success of Thimet with Nuvan
8
8
7
Marketing arrangements with principal partners
6
5 5
4
3
2
0
FY08 FY09 FY10 FY11 FY12P
IIL’s product portfolio comprising of over 120 branded products, over 10 technicals
11
and over 750 SKUs
13. 3. Business description
3.3 Sales & marketing
IIL enjoys market leading positions in several of its major products - a testimony to
its strong branding and marketing initiatives and the extensive distribution reach
Best-in-class pan-India Strong focus on Brand strategy Marketing initiatives
distribution network Portfolio of over 120 branded products Dedicated awareness initiatives provide
230+ sales personnel, 3,100+ Top selling brands such as Thimet, Lethal, Monocil and information to farmers on various aspects of
distributors and c.50,000 retail Victor enjoy leading positions in the market agriculture and use of agrochemicals
outlets Participation in national and international
Aggressive focus on branding helped IIL gain market share
26 depots across 24 locations conferences, exhibitions and fairs
Successful employment of “Umbrella strategy” to introduce
Unparalleled reach to India‟s products for new applications and crops
fragmented and dispersed end
consumer base Pioneer in using electronic media advertisement
Sales personnel split Branding activities Farmer awareness initiatives
Central, Total = 237
15
North,
93
South,
80
West, East, 21
28
12
14. 3. Business description
3.4 Manufacturing capabilities
Udhampur, J&K Granules capacity
Liquid capacity – 3.0m L expansion to be Strong manufacturing
Powder capacity – 0.6m Kg completed by
Granules capacity – 0.6m Kg
infrastructure
H1FY13
In-house manufactured products
25% capacity Sambha, J&K account for 90%+ revenues
expansion overall to Liquid capacity – 5.5m L One of the best asset turnover
be completed by Powder capacity – 2.1m Kg amongst Indian peers
H1FY13 Granules capacity – 6.1m Kg
Chopanki, Rajasthan
Liquid capacity – 7.8m L Significant expansion in
Powder capacity – 3.5m Kg manufacturing capacity currently
Granules capacity – 7.5m Kg underway
Technicals capacity – 2.0m Kg
Expansion in technicals capacity to
provide a significant boost for the
institutional segment
Granules capacity
Ramp up in formulations capacity to
Dahej (Baruch), Gujarat expansion of 7.5m kg provide sufficient capacity to enable
Technicals capacity
Liquid capacity – 4.0m L planned in the new sustained long term growth
expansion of 10.0m
Powder capacity – 2.5m Kg (third) pant; to be
kg to be Significant opportunity for CRAMS
commissioned by Granules capacity – 12.0m Kg commissioned by
arising out of new facilities
H1FY13
H1FY13
Significant area available for
expansion of facilities in
Government approved industrial
belt for agrochemical production
Notes
Displayed capacity figures correspond to installed capacity as of 31st March 2012
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15. International Collaborations & Tie ups
• Technical Collaboration with American Vanguard Corporation (AMVAC) for
manufacturing and marketing of THIMET and NUVAN
• Tie up with Japanese giant Nissan Chemicals Industries Limited for
Thiafluzamide and Quizalofop
• JV with Oatsuka Agritechno Japan for R&D Centre in India, focusing
invention of new agro chemical molecules for international requirements
20. 5. Growth strategy
5.1 Growth strategy
Enhanced backward
integration with increase in
technicals manufacturing
capacity
Continued focus on R&D – Enhance margins
to reduce costs and – Enable targeting
manufacturing time institutional segment
Capitalize on prior Leverage on location
Continued focus on experience to achieve advantage of manufacturing
establishing strong brands maximum number of facilities
Employ IIL‟s well-tested technicals registration
Exploit gains from upgraded
“Umbrella strategy” to Leverage R&D and newly commissioned
introduce product capabilities for CRAMS manufacturing facilities
extensions
IIL intends to leverage its expertise in successful brand launches, enhanced R&D focus and
recently expanded manufacturing capacity to fuel its future growth
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