Despite the net losses that it had incurred during the second half of the financial year 2011-12, Insecticides (India) Limited, a New Delhi-based agro-chemicals manufacturing company, is planning to continue with the capital investment by pumping in another Rs 200 crore to expand its manufacturing capacities in the next couple of years.
The company had invested about Rs 200 crore in the last couple of years while adding three more plants last year to take the total number of its chemical and pesticide manufacturing facilities to six.
“Though we had managed to grow our top line by 16 per cent, continuous dry spells in major agriculture states like Uttar Pradesh, foreign exchange losses and erosion in margins had dented the company’s profitability in the second half of the last financial year,” said Rajesh Aggarwal, managing director of Insecticides India.
While the company’s goal had been to increase its gross profit margins by one per cent every year, the above factors had played a spoilsport this time around, according to him.
However, with the increased usage of pesticides, particularly the new-generation molecules, in the country and the growing trend of herbicide usage due to the steep labour costs in rural areas, the company believes that its business would return to growth and profitability in future. Pesticide usage per hectare is far less in India compared to many countries including China and the US, he said.
The company on Monday launched two new products, Nuvan, in technical collaboration with US-based American Vanguard Corporation (AMVAC) based on a fixed royalty payment, and Hakama, an herbicide being supplied by Japanese company Nissan Chemical Industries Limited.
The company expects Rs 50 crore and Rs 20 crore sales respectively from the two products in the first year, while the potential market for Nuvan and Hakama are expected to be around Rs 100 crore and Rs 150 crore respectively, according to Aggarwal.
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About one-third of its Rs 554-crore revenues come from the top four products.
The company plans to bring in more new-generation pesticides through collaborations, and to tap the potential in the area of contract research and manufacturing (CRAMS) business. Aggarwal said they were aiming at Rs 800-crore top line in 2013.