India crop protection industry confirms to consolidate

Date:07-13-2011

According to Business Standard India, in order to maximize efficiencies of scale the diversified group may explore ways to get into integrated pest management operation by bringing its crop protection operations under one roof. They are currently scattered in three different listed entities – Coromandel, EID Perry and Sabero.

"We are de-risking our linkages with the government consciously by increasing our non-subsidy portfolio, which the Sabero acquisition is part of that strategy,” said A Vellayan, executive chairman, Murugappa Group. “Fertilizer is the base, but we are looking at several add-ons like water soluble, organic manure, micro nutrients, soil testing and education.”

Being a regulated sector, fertilizer companies such as Coromandel see limited growth potential and technology-driven agrochemicals is becoming a natural and logical diversification. Currently, 12 percent of sales come from non-subsidized products and contribute to 27 percent of profits. After including Sabero, Vellayan sees that changing to 30 percent of total sales and half of profits in a few years.

Sabero, a producer of fungicides, herbicides, insecticides and specialty chemicals has global operations across three continents of Europe, Latin America and Australia besides a manufacturing facility in Gujarat. Since half of their turnover comes from exports, it will remain a key instrument.

Sabero will come in to new management in September. Their first focus will be to improve capacity by almost threefold and even Coromandel is undergoing a 900,000 ton of organic expansion in its Kakinada plant, which will be ready by July 2012.