UPL – a story of growth, girth & complex operations

The year FY 2020 is a milestone year for UPL Ltd, it marks its 50th anniversary but then apparently the leading agrochemicals company is now in the news for all the wrong reasons. Its promoters called for an investor/analyst meeting on Thursday, December 10th evening to deny as false allegations of any wrong doing. This follows reports in the media quoting a whistle-blower alleging fund diversion by the promoters. During the day, the UPL stock took a big hit, slipping by 15 per cent after opening the day at Rs 479 and finally closing at Rs 416, down 10.94 per cent.

While questions of corporate governance are serious and while the company may deny it, it is for the regulatory authorities to investigate any wrong doing, if any, and if found, take appropriate actions. However, it may help our readers to know a bit about the company that seems to have expanded quite rapidly. Afterall, it sees itself as a behemoth in the crucial area of crop protection solutions.

Consider this: it was only in 1994 it first embarked on its international acquisition and since then has made some 40 acquisitions. The one it is most proud of is the one in FY 2019 to acquire a company Arysta LifeSciences in an all-cash deal worth $ 4.2 billion. With this under its belt, it sees itself emerge as the world’s fifth largest crop protection solutions company in the world with sales of US $ 5 billion in FY2020.

But it not just the 40 acquisitions, the company runs what may seem a rather complex structure with some 225 subsidiaries. That for a company which began in 1969 out of the then small town of Vapi in Gujarat making red phosphorus, is a long journey of aggressive growth.

The company has some marquee names on its board and on its important board committees. For instance, Pradeep Goyal, an engineer by training (a B.Tech in Metallurgy from IIT Kanpur) and known to some as the brother of Union minister Piyush Goyal, is a member of the audit committee. Then, there is Arun Aishar, the director finance, is a chartered accountant and a member of the Institute of Chartered Accountants of India.

Crucial perhaps since the company talks of a consolidated topline for 2019-20 of Rs 35,860 crore, a profit before tax of Rs 2,764 crore and a profit after tax of Rs 2,178 crore, which means Rs 568 crore in tax.

The notes to the consolidated financial statements however spell out the remuneration of the people at the helm. It says that as of March 31, 2020 it was Rs 12 crore for Rajnikant D Shroff, the chairman and managing director, Rs 57 crore for Jaidev R Shroff, the global CEO of the group apart from Rs 28 crore for Vikram Shroff, a non-executive, non-independent director and Rs 9 crore for Sandra R Shroff, also a non-executive, non-independent director.