Indian agrochemical sector expects uptick in exports next fiscal
Feb. 20, 2018
Latin American nations, which account for large exports from Indian agrochemical firms, reported a fall in growth rate to 4% against 10% growth reported earlier. This has led to higher inventory levels of agrochemicals in those markets.
With agro-commodity prices looking up in Latin American markets, coupled with fall in exports from China, sectoral analysts now expect a growth of 10-14% in export revenues for Indian agrochemical sector next fiscal. Further, new product launches could help in improved business volumes. India is the fourth largest global producer of agrochemicals after the US, Japan and China with an industry size of around $4.9 billion in FY17 with exports accounting for nearly half of it,says rating agency IcraBSE -2.28 %. Latin American markets, which account for nearly a third of Indian agrochemical exports, suffered slowdown in both the last fiscal and ongoing fiscal, said Rahul Veera, assistant vice-president, Elara Capital. This, he said, was mainly due to low agro-commodity prices arising out of a deflationary trend in the global markets.
“Also, rupee appreciation from ₹70 in FY17 to ₹64-65 currently to a dollar also contributed to subdued export revenue growth.”
United Phosphorous (UPL), one of India’s largest agrochemical companies with nearly 80% exposure to exports, saw its growth in Latin America slowdown to 5% in nine months of the current fiscal, down from 31% growth reported during the same period in the last fiscal. It began to see improvement from third quarter onwards and anticipates improved exports to these markets next fiscal.
“We have recently acquired a company in Brazil for over ₹500 crore and have partnered with the biggest farmer cooperative to jointly market our products. We are also setting up a big unit in the United States,” said Rajju Shroff, promoter of UPL, which has a market of ₹5,000 crore in Brazil alone.
UPL had reported total sales of over ₹17,000 crore last fiscal. “We are also looking to increase our product launches with improving market scenario and greater demand for generic products in export markets,” said Shroff.
Apart from Latin America, other export markets are also showing signs of revival, said sectoral analysts.
K Ravichandran, senior vicepresident at Icra said, “Major exports regions like Asia, North America and Europe have also witnessed moderate improvement over last year’s growth.”