Dhanuka in talks with 2 global pesticide majors for possible JVs

Dhanuka Agritech Ltd (DAL) is in talks with two global pesticide majors to set up manufacturing facilities here for technical material or active ingredients that go into proprietary formulations being marketed by it in India.

"We are negotiating with two multinationals, one American and the other Japanese, to manufacture technical (raw) material that we are now importing from them. These could be joint ventures or production under licensing arrangements, both for our own formulation requirements and as well as for exports. It would work out much cheaper to manufacture these molecules here,” said Mr M.K. Dhanuka, Managing Director, DAL.

The Rs 500-crore company, which claims to be the fifth largest domestic branded pesticide formulation marketer after BayerCropScience, Syngenta, Rallis India and DuPont, currently has 24 products based on technical material sourced from Dupont, Chemtura Corporation, FMC Corporation, Dow AgroSciences, Sumitomo Chemical Company, Mitsui Chemicals, Hokko Chemical Industry and Nissan Chemical Industries.

REVENUE

These 24 formulations, out of DAL's total 80-plus branded pesticides portfolio, generate about 60 per cent of its total revenues. These include some Rs 160 crore from just four products – Rs 100 crore from ‘Targa Super' (a proprietary herbicide, with quizalofop-p-ethylactive ingredient, belonging to Nissan Chemical), Rs 40 crore from ‘Caldan' (a cartap hydrochloride-based insecticide of Sumitomo Chemical), Rs 15 crore from ‘Omite' (a propargite miticide of Chemtura Corporation), and ‘Dunet' (a methomyl insecticide of DuPont).

In the above four cases – besides also for Dupont's ‘Qurin' (chlorimuron-ethyl herbicide), and Chemtura's ‘Vitavax'(carboxin fungicide) and ‘Dimlin' (diflubenzuron insecticide) – even the brands are owned by the foreign firms, with DAL effectively being a distributor for these products. For the remaining products, DAL has created its own brands such as 'Sheathmar' (validamycin), ‘Nukil' (ethofenprox) and ‘Kasu-B' (kasugamycin), though their technical material is imported from Sumitomo, Mitsui and Hokko.

"Having built up a market for these molecules here, it would make sense to go for their manufacture. We have applied for 37 acres of land at Dahej in Gujarat, which could be the right site for this purpose to supply both the domestic as well as export market,” Mr Dhanuka told Business Line.

DAL's existing facilities at Gurgaon (Haryana) and Sanand (Gujarat) only manufacture formulations. “We have no intention of going in for manufacture of bulk active ingredients, barring the new generation molecules that we are now importing through our foreign tie-ups. There is no point in manufacturing generic technical materials such as cypermethrin, monocrotophos or glyphosate, where there are hardly any margins and we can very well source them cheaper locally from United Phosphorus, Excel Industries, Gharda Chemicals or Rallis,” he added.

But how sustainable is the company's model of being essentially a local distributor for multinational crop protection majors? “We have a huge advantage of 7,000-strong dealer network, reaching 70,000 outlets and 10 million farmers. Not many multinationals – except Bayer, Syngenta, DuPont or Monsanto – have this kind of distribution infrastructure in India. The Japanese, particularly, are not keen on investing in dealer depots, branch offices, godowns and marketing teams for selling just two or three molecules,” he pointed out.