Nagarjuna Agrichem sets sights on exports

With the domestic agrochemicals market continuing to be fiercely competitive, Nagarjuna Agrichem Limited (NAL), a Nagarjuna group company, has set its eyes on expanding its export business.

In the next four years, the company intends to ensure that at least 50 per cent of its sales come from export markets. NAL has also targeted to achieve a turnover of Rs 700 crore by 2010.

In the last financial year, the company's export earnings stood at Rs 118 crore accounting for nearly 30 per cent of NAL's total turnover of Rs 405 crore.

In order to boost its exports, NAL is making substantial investments in upgrading its manufacturing plants, process development and business control/information systems. The company had invested Rs 55 crore in the past two years and earmarked an amount of Rs 45 crore for the purpose during the current year.

"We recognise that exports will be the best opportunity for business growth in future," NAL managing director G S Raju told Business Standard. However, NAL has no marketing operations abroad as 90 per cent of its export earnings were from custom synthesis services.

Commenting about the domestic agrochemicals market, Raju said that most generic companies were driving down product prices either to maintain or gain market shares.

Their key selling point had become product pricing, as opposed to product differentiation or brand-building. Besides, the pesticides dealers were taking advantage of the prevailing oversupply situation.

Another area of concern in the domestic market is stated to be regarding the future role of pesticides in the cotton crop, which continues to be the major pesticide consuming crop in the country.

Any significant reduction in consumption of pesticides on cotton due to continued advances in seed biotechnology is expected to translate into a negative growth in the overall domestic market.

Raju said that there had been a 10 per cent decline in the estimated Rs 3,300-crore agrichemical business in the country during 2005-06 on account of the spread of BT cotton cultivation and reduction in pest incidence due to conducive environment.