Highlights of the meet

Punjab Chemicals and crop protection (PCCPL) reported 50% increase in turnover for the quarter ended June 2008 to Rs 120.75 crore compared to corresponding previous year period. The OPM of the company improved 850 bps to 14.5% leading 265% rise in operating profits at Rs 17.54 crore. The bottomline of the company stood at Rs 8.75 crore compared to Rs 97 lakh in the corresponding previous year period.

PCCPL is a fully integrated company manufacturing basic chemicals such as oxalic acid, agrochemicals & formulations with synergistic pharma, industrial chemicals & international trading divisions. PCCPL’s products are well accepted in the domestic retail market & are also exported to large MNCs & brands across 60 countries covering 5 continents.

PCCPL agro Chemical division contributes 75% of the total revenues, Industrial Chemical division contributes 10% to the revenues, pharma division contributes 10% of the revenues and international trading contributes 5% of the total revenues.

Agrochemical industry in India is the fourth largest in the world (after US, China and Japan) estimated to be Rs 6,000-crore. Estimated global agrichemical market size is $40 billion. Prices of agrochemicals in India are one of the lowest in the world.

PCCPL being the world’s largest producer of oxalic acid has an installed capacity of 12000 MT per year of oxalic acid & 3850 MT per annum of oxalic acid derivatives. Sales of oxalic acid & derivatives account for nearly 25% of the agro chemicals division revenue. Oxalic acid is used in the production of various agro chemical bulks, textile processing, and leather finishing, metal treatment & in the manufacture of various chemical derivatives.

PCCPL supplies agro chemicals to several large global originators & creators across 60 countries with large quantities exported to Israel & Europe.

PCCPL acquired Sintesis Quimica SAIC, a leading Argentine agrochemical & formulation company for $10 million in FY’06. This gave PCCPL entry into regulated market of Latin America, Brazil (BRIC nation) & Argentina; provided a thrust to the development of biological products, cross sell products and widen product basket.

PCCPL acquired Netherlands-based, agrochemical company Pegevo Beheer BV (AgriChem) in FY ’08 for Euro 39.5 million.

PCCPL pharma chemical division manufactures anti-bacterial bulk drugs & intermediates of penicillin based antibiotics, Trimethoprim (TMP), Gallic Acid & its derivative products. Key clients include: GSK, Ranbaxy. This division also undertakes contract manufacturing for MNCs like GSK & Ranbaxy. This division comprises of the business of erstwhile Alpha Drugs which has merged with PCCPL under a scheme of merger. The manufacturing facilities are located on the Chandigarh – Ambala highway.

PCCPL industrial chemical division manufactures phosphorous based chemicals like phosphorus trichloride, phosphorous acid, phosphorous oxychloride, phosphorus pentoxide, phosphoric acid etc. This division comprises of the business of erstwhile STS Chemicals Ltd. which has merged with PCCPL under a scheme of merger. Key Clients: Dr Reddy, GSK, Ranbaxy, Pepsi, Coke, IPCA. The manufacturing plants are located at pimpri (near Pune) and Tarapur (Thane District, Maharashtra).

PCCPL international trading division explores opportunities in local trading i.e. importing products for local sales using inherent market understanding and market trend to identify product in high demand and importing to different domestic players.

PCCPL is looking towards value addition by forward integration for various agro chemical and industrial chemicals.

The company’s future strategy is to consolidate its presence in formulation market of Europe, South America, North America and foray into Africa & South East Asia through acquisition. The Major thrust is value-added agro chemical products in the international market particularly in Europe, US & Canada. The company is also exploring contract manufacturing opportunities.

The company is looking towards more acquisitions to provide growth momentum to the company while expanding the product portfolio.

The company is evaluating opportunities to backward integrate into phosphorus space.