What business is PI Industries?
Today PI is one of the leading Agro-Chemical players in India. With a Pan India presence with more than 8,000 distributors, 35,000 plus retails outlets.
Products
It manufactures and markets agrochemicals, plant nutrients, speciality fertilisers & hybrid seeds
Some of the key brands include NOMINEE GOLD, OSHEEN, KEEFUN,
BIOVITA, KITAZIN, FORATOX, FOSMITE and ROKET
Custom Synthesis Exports
PI does Custom Synthesis & Manufacturing for agro chemicals active ingredients, intermediates and other niche
fine chemicals for global innovators.
Service Offering
Process R&D
Analytical method development
Synthesis of high-purity products and impurities for analytical reference standards
Five batch analysis under GLP conditions
Detailed engineering
Large-scale chemical manufacturing
What's exciting about the business?
- Proven track record of management
- Great set of numbers, for 10 years CAGR - Sales 25%, ROE - 28.3%, Profit Growth 58.3%
- Revenue grew 48% YoY
- Company enjoys a robust orders pipeline to be delivered
over next 4-5 years- the visibility of growth therefore remains
assured
- Custom synthesis is more than half the revenues and expected to grow further. Is an insurance against bad monsoons
- Jambusar SEZ facility
is being enhanced with 2 new plants,should offer lot of upside
- Domestic agri-input business grew 35%
- CSM business grew by 55% YoY
- Company has guided the Phase II & III of Jambusar to commence operation in the 3Q & 4QFY16
respectively, which will be the major growth driver for CSM business.
- Current order book of CSM business stood at US$ 578mn.
- Company is planning to launch 1-2 new domestic agri-inputs products and 2-3 new molecules every
year.
- potential of custom synthesis in the
fine chemicals
- With Population expected to be more than China by 2020, there'll be a greater demand for food and return per acreage
- India’s demand for food grains is expected to increase from 263mmt to 310mmt by FY24. This requires a minimum of 20% improvement in the overall yields in the next 10 years.
- India’s crop protection sector has grown at a CAGR of 10% over
the past decade. This market is
estimated to grow at a CAGR of 12% over the next 8 to 10 years
largely driven by exports. Exports have
grown at a CAGR of 17%
- The per capita consumption of crop protection products in
India is amongst the lowest in the world. The per hectare usage
of agrochemicals is only 0.6 kg in India, while for UK it is 7 kg
and for China and Japan it is 13 kg and 17 kg, respectively.
- India’s crop protection likely to grow at 12% CAGR and
take a 10% global share by FY19 from 8% in FY12
Concerns
Rains seem to have failed, and we could be facing a drought. Pesticide demand is linked to monsoons and in years of poor monsoons demand goes down drastically.
Increasing competition in the herbicide product segment, which accounts 35% of domestic business.
Modi govt doesn't seem to be all that benevolent when it comes to money to farmers.
Domestic Agriculture Industry
India’s food-grain production has grown at a CAGR of 2% during
the last decade from 213 million tonnes in FY04 to 263 million
tonnes in FY14.
India ranks top five globally
in the production of key crops like rice, wheat, cotton, sugarcane
and corn which accounts for over 85% of cropped area. Yet
regrettably, India does not feature even in the top 30 in terms
of productivity. Yields are typically 50-70% lower compared
to key crop producing countries like Brazil, China and USA.
According to the Planning Commission, India’s demand for
food grains is expected to increase from 263mmt to 310mmt
by FY24 (a CAGR of 1.7%). With the cultivable area likely to
remain constant, there is likely to be shortfall of 46mmt in
food grain production by FY24. In order to meet this shortfall,
the agricultural yields in India will need to grow to 2.6 tonnes
per hectare from 2.2 tonnes / hectare currently. This requires
a minimum of 20% improvement in the overall yields in the
next 10 years. One key focus area would
have to be the proper and adequate use of crop protection
chemicals, because over 30% of our crops are lost to pests,
diseases and weeds
The per capita consumption of crop protection products in
India is amongst the lowest in the world. The per hectare usage
of agrochemicals is only 0.6 kg in India, while for UK it is 7 kg
and for China and Japan it is 13 kg and 17 kg, respectively.
Pesticides and seeds account for only ~10% of the cost of cultivation, while their usage boosts yields by 20-60%
Pesticides usage (kg/hectare) in India is one of
lowest globally
