ACI Formulations to separate agrochemical business

Date:06-15-2022

Bangladeshi agrochemical company ACI Formulations Limited's board has decided to separate the agrochemical – ‍such as pesticide – business from its diversified portfolio to avail of a tax exemption facility and enhance its focus on the crop care segment.

For this purpose, the board of the company also decided to form a company named "ACI AgroChem Limited" to run the agrochemical business.

According to a Dhaka Stock Exchange (DSE) filing, the new company's authorised capital will be Tk100 crore and the paid-up capital of Tk2 crore and it will run as a subsidiary company of ACI Formulations.

ACI Formulations will hold a 90% stake in its subsidiary. The decision will be implemented after approval from the regulators concerned.

A senior officer of the company, seeking anonymity, said with the expansion of agriculture, the use of pesticides is increasing in Bangladesh. However, ACI Formulations is doing business in the consumer sector as well. For this reason, the board has decided to separate pesticides to increase business.

He further said that there are many more companies in Bangladesh doing business in agrochemical only. So it has been decided to increase the capacity in the competitive market.

Besides, the government is providing various facilities in this sector. These can also be utilised, he noted.

He added that the decision would not hurt the company's shareholders. Because the business will remain under the company. Rather, the focus will be on this segment, which will increase its business.

Infographic: TBS

Currently, ACI Formulations earned over 80% of revenue from the agrochemical business. The rest amount comes from aerosol, mosquito coil, paint, floor cleaner and herbal products.

In the proposed budget for fiscal 2022-23, it has been proposed to provide advance tax exemption for the import of five materials such as pesticides, fungicides and pesticides used in the production of agriculture. According to an official of ACI Formulations, this will increase the profitability of the companies and farmers will be able to buy pesticides at affordable prices.

ACI Formulations said in its FY2021 annual report, that the mosquito coil plant has been closed for more than two years.

In addition, the dominance of non-brand coils in the market has made it difficult to do business in this sector. However, the company will produce coils of its own brand as well as coils of other companies on a contractual basis.

Also, ACI's paint and floor cleaner business is growing. Therefore, the company will focus more on marketing those products, the annual report said.

Meanwhile, shares of ACI Formulations rose 3% on Monday amid drops in the DSE index. The closing price of the company's shares was Tk168 each.

In the first nine months of this fiscal year, ACI Formulations revenue increased by 14% to Tk345 crore from the previous year at the same time.

Its net profit also increased by 36% to Tk24.73 crore during the period.