IMD’s forecast of above normal monsoon is spreading cheers to many agriculture input companies. Many companies are also pinning their hopes on the second “Green Revolution” in the eastern India, which Prime Minister Narendra Modi has highlighted. Speaking to Bloomberg TV India, Dhanuka Agritech Ltd Managing Director MK Dhanuka says business prospects in FY17 have increased after the better monsoon forecast and the sales may grow more than 20 per cent. Launch of three new products coupled with capacity expansion in Jammu & Kashmir unit will also drive growth, he said.
With the IMD predicting above normal monsoon, what does it mean for your business?
Our business is directly dependent on monsoon. And if the monsoon is good, there be better sowing throughout India and there will be more consumption of pesticides. That’s why this will be very beneficial for our industry. We, at Dhanuka Agritech, hope to deliver more than 20 per cent growth with above normal monsoon.
Given the dismal rains last two years, will it be realistic to believe that the FY17 will see a growth level back to 20-25 per cent?
The last two years have been bad for the monsoon. Last year, there was a 14 per cent deficit in rainfall while for the current year the forecast is 106 per cent. So in that way there is a difference of about 20 per cent in the rainfall itself. If there is 20 per cent more rainfall in comparison to 2015, we expect 20 per cent growth to come automatically with increase in crop acreage.
Last year, there has been uneven distribution of rainfall across the country. Eastern India on the whole has received stronger rainfall but Western and the South have suffered a lot. Divisionally, have you seen a split in your business?
Definitely, the equal distribution of rainfall is equally important apart from the average rainfall. And we are very strong in South and Western India.
But overall, because of the better irrigation facility in those regions, we were able to perform very well in both Southern and Western India.
Eastern part — Bengal, Bihar, Odisha, Chhattisgarh — is still under-developed. We have to wait till most of the farmers start using pesticides products and agriculture growth accelerates on realisation of the government’s announcement that the second revolution will come from the eastern zone.
So let us hope for the best that eastern zone will perform better in times to come. So if we talk about FY17, what kind of growth numbers are you looking at? Is it going to be in terms of a volume play or in terms of margins? Are you looking at new launches as well?
Yes, we are planning three new 9(3) molecules in FY17. Maxsoy is one product for soyabean, which will be a combination of three molecules — Sakura, chlorine neuron and a surfactant. Apart from that we are going to launch Conika, which is a fungicide from Hokko Chemicals, Japan. And thirdly, we are going to launch an insecticide from Otsuka Chemicals of Japan.
Your Udhampur unit has doubled capacity. What is the kind of investment you are looking at and any timeline for its completion? Actually, there was a government scheme that you if you invest 25 per cent more in plant and machinery, you can opt for a substantial expansion scheme. So we have done that already and that is why we were able to get this approval substantial expansion from the J&K government. Our capacity has increased from 5,900 tonnes per annum to 11,800 tonnes. And with this, we will be able to get the excise refund benefit for the next ten years from the J&K government.
If you avail excise duty refund for 10 years from this unit, can you quantify this in terms of financial benefit? Till now, the approximate refund amount was around ₹10 crore. With the capacity expansion and as we utilise the expansion, I hope that this will also grow by 20-25 per cent every year.
(As published in The hindu business line April 17, 2016)