Feb. 6, 2019
UPL has been growing at a CAGR of about 15%, whereas the industry has been growing at about 4-4.5%. Vikram Shroff, Executive Director, Sameer Tandon, Director-India, and Anand Vora, CFO, UPL, talked in an interview.
UPL has completed acquisition of Arysta LifeScience in a $4.2-billion cash deal. That is a huge deal? Why did you go for scaling up to this degree?
Vikram Shroff: First of all let us give a little bit of the background, the global agrochemical industry has been consolidating. Size does matter in our industry for launching new molecules, for having economies of scale, for the registration pipeline and things like that. So, you need to be of a critical size. Also, UPL has put together about 40 different acquisitions.
We have been looking at various companies from time to time, Arysta was a very exciting opportunity that came to us and we are very happy that the acquisition has gone through. Arysta adds a lot of good points to us -- the complementarity of geographies, the product portfolio, their huge strength in biological and new actives so these are the kind of things that really help us.
Talking specifically about the benefits, the acquisition was closed on 1st February. We still need to do a little bit more of a deep dive. In the next 12 to 24 months, we expect a lot of the benefits from the synergies to start kicking in.
Gharda Chemicals is another name which comes up on your radar. What is your take there?
Vikram Shroff: We look at every company that comes our way but our practice is never to comment on it or never to get excited because if things happen, it happens. We have a new board and all these decisions will go through that whole process. It is far away. I do not think there is anything that is going to happen any soon. There are companies in US, China that we are always engaging with. So, acquisition is part of our DNA but there is nothing that is going to be announced soon. We have a lot of good things to do and the final decision will be with the board.
Is the agrochemical space looking right now? There are a few companies which have become very large in the last couple of years. How are you seeing things develop and change from here on?
Sameer Tandon: Agriculture is improving and the consumer is demanding better quality and that is what is leading to companies like us, Vikram just told you that Arysta was a very big biological business. What we want to do is bring this biological and chemicals together to complement the offer for the farmer, so that he should be not only be able to produce but produce a very good quality, which is of global standards. That is something which is being differentiated.
At UPL, we have done much better than our peers. We have been growing at a CAGR of about 15%, whereas the industry has been growing at about 4-4.5%. So, we have done much better than our peers in this industry.
Let us put the spotlight on the numbers because numbers did make a lot of people nervous. An Indian company going ahead and buying out such a large company, does it makes sense?
Anand Vora: First, let us get the record straight. We have done about 40 odd acquisitions and very successfully integrated all of them. Needless to mention, this is a big one but we are very confident. The more we know about Arysta now, as we have access to data and financial information, the more do we get excited because there is so much complimentary business and opportunities to work together, that we feel it has been a perfect fit as far as UPL is concerned.