Mr. Rajesh Aggarwal, Managing Director., Insecticides India Ltd, is a commerce graduate. He possesses a Diploma in Marketing. In 1993 he joined his family's business as Marketing Incharge. Combining this work experience with utilizing state-of-the-art technologies, he took the additional responsibility of production and allied fields. Under his inspiring leadership, the company's turnover increased from Rs120mn in 1993 to Rs800mn in 2000. In the year 2002, he came up with a new banner of Insecticides (India) Limited and has been pioneering sterling performance in the organization since then. From an initial turnover of Rs320mn, today the company is ready to exceed even the Rs2500mn mark.
Insecticides India Ltd (IIL) is the fastest growing pesticides manufacturing company and one of India’s leading agro-chemical group. With more than 95 types of insecticides, fungicides, weedicides, herbicides, plant growth regulator for all types of crops and house hold pesticides, IIL products have helped even small and marginal farmers immensely in increasing their yield. This has enabled to build a strong emotional bond with the farmers along with wide acceptability of IIL's Tractor brand – its umbrella brand of agro products. Catering mostly to domestic market, the largest selling brands of IIL includes ‘Lethal’, ‘Victor’, ‘Thimet’, ‘Indan 4G’, ‘Hijack’ and ‘Sharp’. The company have also entered into Technical and marketing MoU with AMVAC Chemical Corporation USA to manufacture and market the product ‘Thimet’. ‘Thimet’ is one of the premier brands of the agro chemicals market. IIL has now commercialized nine processes in the technical plant and has applied for process patent in 2005 for products namely Imidacloprid and Acetamiprid. IIL has developed more than 20 technical processes in their In House R & D Centre till now.
Speaking with Jasmine Kohli of IIFL, Rajesh Aggarwal says, "The topline growth would be about 40% this year and 50% in FY12. We have a target to achieve Rs10bn in revenue by FY13."
Brief us about your brand strategy?
Insecticides India started as a pesticides formulation company. In 2002, we acquired some brands from Montari Industries Ltd. They had 21 brands; initially we acquired three of them. We saw a very good response out of these products and then we took over the complete portfolio of 21 brands in 2003. We launched some of these brands in the market and used their trademarks.
We have purchased ‘Tractor’, ‘Lethal’ and various other brands from Montari. We intend to keep on purchasing generic brands whenever there is an opportunity.
We also intend to create brands out of the new generation products. We have been advertising in both print and electronic media and maintain the recall of our brands through farmers’ meet and by participating in the various farmers’ fairs. We intend to keep on promoting our key brands in the future.
The brand strategy has worked really very well for us. With this, we penetrated into the entire country, as our Pharma brands were very popular. In 2002 we set up our first plant for pesticides formulation. It has been our core strength.
Which are your umbrella brands?
We are having ~95 brands in the market and we try to cater to all categories of farmers. Our top three selling brands are ‘Lethal’, ‘Victor’ and ‘Thimet’. Out of these leading brands, ‘Victor’ has been introduced by us and the brand ‘Lethal’ was acquired by us in 2003 from Montari.
We have entered into a Technical and Marketing MoU with AMVAC Chemical Corporation of USA under which we are permitted to manufacture and market our product under the brand name ‘Thimet’.
The top three brands constitute 33% of our total brand sales at roughly about Rs1.05bn; out of this ‘Victor’ commands Rs300mn, ‘Lethal’ Rs400mn and ‘Thimet’ Rs350mn.
We have extended the brands of ‘Lethal’ and ‘Victor’ further. This year we are going to introduce two variants of ‘Victor’ - ‘Victor Plus’ and ‘Victor Super’.
In the last 2-3 years we have introduced 4-5 variants of ‘Lethal’.
We regularly promote our brands in the market and do a lot of fieldwork and farmer training programmes. We train the farmers and educate them about the advantages of the pesticides. In fact, from sowing to harvesting we conduct training programmes for farmers.
Brief us about your distribution network?
We have 29 branches spread all across the country. We have around 4200 distributors and 50,000 dealers under them. North is one of our strongest markets. Similarly, south is also a big market for pesticides.
Any acquisitions of brands on the cards?
We are currently working on collaboration for marketing in India. We are also in talks for taking over one brand for the technicals. This is expected to be completed by this calendar year.
What is the growth strategy for Insecticides India?
The growth strategy for IIL is to capitalize on our strengths and industry consolidation to pursue external growth via product acquisitions and organic growth. We also plan to set up new manufacturing units and expand current capacities.
Insecticides India has been growing by almost 35% year on year. This growth rate is expected to accelerate in next three years with the current expansion.
The topline growth would be about 40% this year and 50% in FY12. We have a target to achieve Rs10bn in revenue by FY13.
The bottomline will also show improvement due to economies of scale, backward integration and introduction of new generation products.
What is the revenue contribution of each segment? Do you see the pie changing in the coming years?
Our strength is in insecticides and herbicides. Around 60-65% sales come from insecticides, 20-25% from herbicides and 6-7% from fungicides.
We are keeping the growth targets in both the direction - institutional sales as well as brand sales.
We see a growth of Rs1bn in brand sales in FY11, taking our total brand sales to Rs4bn and another Rs750mn in corporate sales.
In 2012, we see better growth as the Dhaej plant would also be functional.
Please give us a break up of sales between exports and domestic market?
Our exports at present are not much, a meager 1% of total sales come from exports. We are at present exporting to Nepal and Bangladesh. Nepal we do brand sales and Bangladesh we do bulk sales.
We are targeting South America, Africa, Middle East and few South East Asian countries. We have chalked out a target of Rs160mn by 2012 and Rs600mn by 2013.
What is the market share in agrochemicals and household pesticides?
Last year we did a turnover of Rs4bn; out of that Rs3bn was from brand sales and Rs1bn was from institutional sales. Out of the total turnover, 4% came from the household pesticides business (Rs160mn) and the balance 96% was from Agrochemicals. The market size of Agrochemicals is expected to touch Rs100bn by 2015. At present the domestic size is valued at Rs50bn and exports at Rs25bn.
The domestic agrochemicals industry is growing at a faster rate.
Brief us about your production facilities? Any expansion plans?
In 2004 we started our new formulations plant in J&K. With that we got a number of benefits like excise duty, sales tax and income tax exemptions. Initially we tied up with MNC's and started formulating our products at our Jammu plant by using the technical’s; value additions in this work was more.
We also started our R&D project in 2005 to establish a technology of manufacturing certain technicals. We started working on backward integration. We also plan to set up a new manufacturing plant for making technicals. We started setting up our plant at Chopanki.
We are building on existing market share with new technicals and are complimenting our product portfolio. We are establishing our fifth facility in Dahej in Gujarat, where we are going to manufacture our technical’s (concentrated chemicals) as well as some formulations. This facility has a capacity of 10,000 tons of technicals per year. Our current facility at Rajasthan has a manufacturing capacity of 2000 tons.
Apart from our Dhaej plant we are coming up with another new facility that will commence from August. That would be for pesticides formulations in Udhampur in J&K.
Tell us about your R&D initiatives?
We are a brand focussed company but we are also focusing on R&D. We aim to identify and manufacture high value products, besides complex new molecules. We also intend to introduce generic products as also eco friendly formulations.
The main aim is to develop new technologies and commercialize them. We have applied for registration of more than 25 technical grade products. Out of this, we have already received about 15 registrations.
Any plans for QIP?
No.
How do you source your critical raw material? What are the trends seen in raw material prices?
Certain raw materials are available in the country and a few we source from the rest of the world. The trend mostly depends on the markets.
If we see the agrochemical sector now as compared to the first quarter it was very bad. July is the peak season and this year I don’t see a major increase in raw material prices.
Please brief us about your financials?
In 2010, out PAT stood at Rs280mn; this year we are looking at a PAT of Rs440-450mn. We are investing around Rs500mn in the Dhaej project; more than 50% investment has already been done. In the Udhampur project we are investing around Rs50-60mn.
As of March 31, 2010 our total gross block was Rs290mn, investment in projects was ~Rs150mn, our working capital was Rs10mn and reserves were at Rs1.14bn. The source of funds would be through IPO proceeds of Rs200mn, short term loans of Rs100mn and internal accruals of Rs250mn.
What are your de-risking strategies?
Major risk we foresee is the monsoon. So if there is a drop in rainfall then the conditions become worse for farming. Since we cover the entire country, we are able to serve other regions in case there is a natural calamity in any part of the country.
We are operating eight technical plants and we plan to introduce six more plants. The idea is if one molecule fails then we have thee others. We are continuously working on R&D. We are trying to broaden our basket in order to minimize our risks.
What is your message to shareholders?
There is good growth potential in years to come and we target about 50% growth year on year. We are working towards making IIL a Rs10bn company by FY13 and a PAT of Rs1bn plus. We are positive about our future.