Good monsoon will have positive impact on agrochemicals industry: Rajnish Sarna, Executive Director, PI Industries Ltd

The net profit of PI Industries, one of the leading players in the Indian agrochemicals industry, more than doubled at Rs 48.54 crore for the quarter ended June 30, 2013, compared to same period last year. In this interaction with Rakesh Rao, Rajnish Sarna, Executive Director, PI Industries Ltd, elaborates on the reasons for this robust performance and the company’s growth plans for future.

What led to PI Industries’ solid performance in Q1 FY2013-14?
PI Industries focusses on domestic agri-inputs and custom synthesis exports. There are mainly two reasons for good performance in Q1 of FY2013-14. The onset of monsoon was on time, rather somewhat early. The initial rainfall was good and this lifted the sentiments of agriculture community leading to increase in demand for our agri-inputs in the domestic market. As a resulted, there was about 38% rise in revenues from domestic market in Q1.
 
At the same time, the contract manufacturing business also experienced robust performance, thanks to huge demand for some of the products from overseas market. This significant jump in overseas demand resulted in 70% increase in revenue in Q1.
 
As a result of this huge jump in our revenues, we have enhanced operating leverage. Better margins and currency benefits during this quarter also helped us deliver stellar performance.
 
ALSO READ: PI Industries rallies on robust Q1 earnings

Are you seeing better prospects in remaining quarters in 2013-14?
Prospects are bright as sowing has increased and the season has extended. Hence, this will have positive impact on the industry. We also expect to show good performance in the 2013-14, with improved margins and robust revenue growth.
 
Do you see the current slowdown in economy posing new challenges in 2013-14?
Food and fibre businesses have not witnessed any significant impact of the slowdown. Demand for food continue to rise with increase in population. We are not witnessing any slowdown in demand in domestic as well as international market.
 
Kindly elaborate on your expansion plans for 2013-14 and 2014-15?
Few years back, we decided to invest in new manufacturing site since our facility in Panoli was running full capacity with no space for expansion. We selected Jambusar, Gujarat, for the new chemical facility.
 
In January 2013, we commenced operation of our first plant at Jambusar with various common infrastructure. This site has space for 5-6 plants. Our intention is to build more plants in phases depending upon the market requirements in future.
 
We are planning to start construction of second plant on this site in the second half of this year to manufacture fine chemicals. We are targeting to start the commercial production of the second plant by next year.
 
The investment, which may be of about Rs 60-70 crore, in the new plant will dependent on the capacity, type of chemicals to be produced, cost of machinery, etc.
 
The Indian patent system has come in for intense global scrutiny in recent times. Does this poses a challenge to your agribusiness business?
We are not facing any challenge in our custom synthesis business. In fact, this business is expected to be the growth driver for us as India continues to be a preferred destination for outsourcing custom synthesis and contract manufacturing related projects.
 
Are there any plans for expanding your domestic formulations business?
There are many products in pipeline, for which we are in process registration. We expect to launch a few of them in near future.