PI Industries: Inspired by Science, Innovation meets Collaboration to build a better tomorrow

What were the two-three high points of the business performance in the year gone by?

Mayank: From the strategic standpoint, the financial year 2019-20(FY20) brought many reasons to cheer upon. We completed a highly synergist acquisition of Isagro(Asia) Agrochemicals Pvt. Ltd. Post-acquisition, we also covered significant ground towards quick turnaround and integration of the acquired asset during the year. Successful scripting of the pharma foray, also accomplished during the year, would go on to attain historical significance as it helps PI transcend the agro domain and also bear testament to our robust research and technology platforms. The strategic decision of INR 2000 crore QIP taken in the last quarter of FY20 was the icing on the cake. With these three material events, FY20 fortified our foundations for pursuing many new opportunities as we usher into a new decade. 

Raman: FY20 was an equally significant year from an operational standpoint too. PI showed significant resilience in navigating disruptions in the global supply chains in the last quarter. We stayed the course to deliver all-round growth. Our revenues grew by 16.4% to reach INR 3306.8 crore, aptly aided by scale-up in export volumes. Our EBITDA and PAT grew at 21.7% and 8.4% respectively. Our performance could have been even better, but for the lockdown impact primarily in the domestic revenue. 

We commissioned two new multi-product plants(MPPs) and commercialized five new products during the year. We launched three new products in the domestic market, including one wheat herbicide which has been well received by farmers. We optimized our domestic product portfolio with the withdrawal of 5 products and label expansion of several other products. The farm application services model was piloted with nearly 150 spray machines. Farmers have appreciated this valued added service by PI as they face shortage and higher farm labor costs. Our research teams continued their good work towards developing the next-generation technologies and chemistries that are aimed at facilitating entry into adjacent verticals with the technological edge.

What makes the recent acquisition of Isagro special for PI? How has this acquisition panned out so far and what are your future plans with this asset?

Raman: Isagro Asia is the first acquisition of this size for PI and hence special. Also, it is value accretive to both the Custom synthesis business and also our domestic distribution business. For CSM business, Isagro’s manufacturing site which is adjacent to PI’s Panoli site will be repurposed to manufacture higher margin and newer products while also increasing capacity utilization. Domestic distribution business of Isagro will be transferred to Jivagro, a subsidiary of PI and focus on Horticulture and plantations market segments and will have a portfolio and field resource to address needs of farmers in this segment. With PI’s domestic distribution business focusing on row crops (Rice, wheat, sugarcane, cotton, pulses) and Jivagro focusing on horticulture and plantations we believe we will cater to the differential needs of these customer segments. The progress of the integration and business performance has more than met our expectations so far.

How has your protracted investment in research and development panning out? Tell us some success stories from the 12-18 months and also about the pipeline.

Mayank: At PI, we have steadily intensified our focus on research and development(R&D) besides collaborative R&D with customers, particularly in CSM business. We have invested steadily in R&D for the past six years with an objective to offer solutions to our customers based on the latest in science. The scale-up that our R&D assets – infrastructure, talent, processes, tools, knowledge – have accomplished so far enables PI to become a knowledgebased partner. 

Our research pans the entire value chain from discovery to go to market, and work together with our partners in developing IP. In addition, our research teams are developing next generation technologies and chemistries which would support our foray into adjacent verticals with a decisive technological edge in our CSM vertical. We have witnessed some initial success in the pharma domain during the year. We are confident of more successes with time. Our aim is to position PI as an organization which is always in the cutting edge of technology in life sciences with a rich haul of IP over the next four to five years.

Raman: At PI, we are proud of our research infrastructure and talent which compares with the best in the world. In the financial year 2019-20, we have filed about 22 patents. We continue to scale-up our R&D abilities. We are pleased with the progress we have made so far and are confident of creating significant value in the coming years. The inquiry flow and process scale-up increased during FY20. Nearly 20% of new inquiries are from the non-Agro segment, helping us further our strategic objective of diversification.

What would be the business priorities for FY21? How does the business outlook look like? 

Mayank: My view of FY21 is quite intriguing. COVID-19 has effectively blurred the vision and assessment prowess of all experts of the economy, industry and global trade. Set in this highly disruptive and volatile environment, PI Industry’s leadership teams are tirelessly addressing more than a plateful of strategic opportunities and operational challenges. The idea is to make up for the time lost during the intervening lockdown between FY20 and FY21, without losing sight of an exciting future that the teams have put in accelerated momentum with a lot of ingenuity, passion and hard work. 

Faster integration of Isagro, rapid scaleup and opportunity maximization in our COVID-19 pharma intermediate, structural enablement of our post-QIP plans, and successful closures in our acquisition spectrums are four strategic priorities that would fortify our new growth levers. In the traditional business spectrum, we have significant growth opportunities coming our way that I would leave for Raman to detail. 

Raman: In addition to what Mayank has already covered, we are happy to note two favorable mega trends positively impacting our domestic and export businesses. The far-reaching agricultural reforms and provisions coupled with a very good and evenly distributed monsoon rains augur very well for our domestic business. The global shift in CSM outsourcing space is coinciding with our recent technological success. The growth in the CSM inquiry pipeline, in quantitative and qualitative terms, is very encouraging. Thankfully, we are well prepared as we enter this growth cycle. My view of FY21 for PI is a year of accelerated growth and profit accretion. 

No discussion is complete these days without touching upon the new normal. What does the new normal mean for PI Industries and how are we planning to embrace it?

Mayank: For a company that was founded 73 years ago, PI showed tremendous agility and nimbleness in the face of the COVID-19 outbreak. Its intrinsic resilience draws strength from adaptability to a fast- changing world. I am happy to share that the Company collectively rose to the challenge not just to protect its assets–people, plants, processes, and business–but also went on to beat several odds to keep the supply chains running. You would be happy to note that PI managed to contain opportunity losses on account of lockdown and global impairment in supply chains to a very minimal level. The passion and commitment of our teams outshined the industry by successfully launching the COVID-19 intermediate in this period itself. The fact that all these could be accomplished while keeping our people safe leaves us with tremendous new learning for the future. 

Raman: Swift transition to and from the lockdown mode was accomplished with meticulous planning and immaculate execution. Taking the production back to pre-COVID levels and realizing almost 85-90% of unfulfilled orders, speak volumes of our preparedness to adapt to any difficult situation. 

Having successfully relocated a vast majority of employees to work from home(WFH), we unveiled a structured engagement doctrine. A slew of initiatives for encouraging WFH for non-operating staff and incentives for on-site operating teams, standard operating procedures(SOPs) for return to work, a safe workplace was put in place. Proactive digital connect protocols thru WebEx/MS team/zoom were arranged and activated for customers, large retailers and farmers. We took the help of customer surveys to assess ground reality and special needs besides frequently connecting with other stakeholders to reinforce trust. Our teams also stepped up various digital marketing initiatives to effectively substitute field marketing activities that came to a standstill due to lockdown. In addition, digitization of key business processes and investment in strategic digital areas are of high focus. 

Taking upon our larger societal responsibilities, we proactively worked with governments, local administrations, and NGOs in different states to support their fight against this pandemic. Whether it was disinfection of large public areas, distribution of PPEs, food, health check camps to the disadvantaged sections of our society, or helping local health centers in putting up the necessary infrastructure to tackle COVID-19, we actively contributed to supporting communities around us in these very difficult times for our country. 

PI is headed towards a new manufacturing world order. How do you view it shape the global chemical sector over the next two-three years? How is PI gearing up to navigate the shift?

Mayank: In the 25th year of WTO induced globalization, the flaws in overly concentrated global supply chains are getting amplified. COVID-19-induced disruptions and intensifying US-China trade war have further exposed the risk. Countries as well as companies with internal operations(scale) would need to redraw their global manufacturing and sourcing map in order to split the risk across more countries/regions. India shall find itself at a sweet spot for a range of manufacturing including chemicals, specialty chemicals in particular. While the shift would take time to crystalize and location departure would rarely be absolute, we are already seeing early signals in our own interactions. We find ourselves uniquely poised as the industry front runner with a decades-old track record. 

As part of our own de-concentration efforts, we intend to go a step closer towards becoming a global manufacturer with setting up our first overseas plant in the near term.

The article is from 2020 INDIA PESTICIDE SUPPLIERS GUIDE magazine.