Safex Chemicals Group: Unleashing the Power of End-To-End Value Chain in The Agrochemical Industry

Date:10-29-2024

In recent years, India's agrochemical industry has gained significant importance in the global chemical industry due to its rapid development momentum. The swift rise of this sector can be attributed to policy support from the Indian government, growth in market demand, and technological innovation by local enterprises. Against this backdrop, Safex Chemicals Group has become an industry leader with a revenue CAGR of over 25% in the past five years, making its development history and strategic layout of great reference value to insiders in the industry.

In this interview, Mr. S K Chaudhary, the Founder Director of Safex Chemicals Group, will introduce the company's growth strategy and its operations on a global scale. He will share how the company has solidified its position in the global market through strategic acquisitions, such as the 2022 acquisition of UK-based Briar Chemicals.

Mr. Chaudhary also discusses how the company enhances its competitiveness through vertical integration and technological innovation to meet the challenges of the current global agrochemical market. Furthermore, he looks forward to the company's development prospects over the next 5-10 years, including the opportunities and challenges faced.

For industry readers, this article provides a window into how a leading Indian agrochemical enterprise positions itself in the global market, offering valuable insights to peer companies and inspiration for those seeking growth and innovation in the global market.

Mr. S K Chaudhary

Founder Director of Safex Chemicals Group

Please introduce Safex Chemicals Group, including its development history, current main business areas, and the scale of its operations.

Founded in 1991, Safex Chemicals Group has established itself as a force to be reckoned with in the chemical industry. Over the past five years, the company has shown impressive growth, with revenue CAGR exceeding 25%. This reflects Safex Chemicals' successful expansion across India and beyond, positioning itself firmly within the global value chain.

In October 2022, Safex Chemicals took a significant step in its international expansion plan by acquiring Briar Chemicals, a leading agrochemicals Contract Development and Manufacturing Organisation (CDMO) in the UK. This acquisition, the company's third major deal in recent times, has further solidified Safex's global presence.

Safex Chemicals operates seven manufacturing units across India and the UK, proving its strong production capabilities.

What do you think were the main driving factors behind the company's rapid growth? 

We attribute our growth to the following factors:

- Deeper penetration into the Indian subcontinent with latest products led by a dedicated management team with hands-on experience

- Gaining wider market share through research-oriented products in the home-care insecticides segment

- Access to more international customers

- Expansion into the contract manufacturing segment with our international acquisition

115 Acre Briar Campus at Norwich, UK

From agrochemical raw materials to formulations to sales channels, Safex seems to be continuously advancing vertical integration. Can you elaborate on the company's development strategy in terms of industry chain integration? How does this integration strategy enhance the company's competitive advantage and profitability? 

We always believed that vertical integration would be the best way for us to grow and hence, we have now expanded throughout the value chain: from technicals and intermediates to formulation to post harvest solutions which are widely distributed through a network of retailers to farmers. 

Having an end-to-end value chain helps us get competitive advantage in sourcing, economies of scale and assurance of a robust and reliable supply chain leading to enhanced productivity and profitability. 

In 2022, Safex took a significant step towards internationalization by acquiring Briar Chemicals in the UK. How do you think this acquisition changed Safex's position in the global agrochemical market? What were the main challenges the company faced in integrating the acquired assets and realizing synergies (including the acquisition of Shogun Lifesciences)? What achievements have been made? 

Our acquisition of Briar Chemicals has made Safex Group an important player in the agrochemical value chain. We have become a strong partner and supplier to some of the leading players of the agrochemical industry. Safex now has a unique and strategic advantage of offering products across geographies. We are able to integrate and offer the best of both Indian and European manufacturing ecosystems to our customers.

Every acquisition comes with its own set of challenges. But these, when worked upon, can be converted into opportunities. Technological integration is a long process that takes time, effort and money. We are currently putting all our energy into synergizing our strengths and are hopeful of seeing results in the near future.

We have fairly integrated our domestic and international businesses into our system and serve our customers as one team. In due course, we envisage larger participation in the global agrochemical market with products from both India and the UK. 

Please introduce Safex's current production layout. How does the company coordinate production capacities in different regions to optimize the product supply chain and meet the needs of different markets? 

All our current formulation facilities are strategically located to provide Indian farmers with good quality product in a timely and cost-effective manner. Furthermore, we are acquiring more facilities in order to streamline and strengthen our country-wide supply chain.  

Our Shogun facilities are located in the Western part of India, in the two major chemical hubs in the country: Maharashtra and Gujarat.

Our UK facility provides us with the European edge that is not available to most Indian manufacturers. 

We are currently working on various products that are of interest in the India and the Western world. 

As Safex's layout in various segments of the industry chain becomes increasingly complete, what are the company's main research and development or investment directions currently? Can you introduce Safex's current R&D pipeline? What innovative agrochemical products and solutions are about to be launched? What agricultural problems do they respectively solve?

Safex Group has come out with a blockbuster mosquito repellant: Renofluthrin, which has been commercialized this year. It is the first-ever patented molecule completely developed in India.

We are committed to come up with many more application and formats of this molecule while also working on other innovative products in this domain. 

Furthermore, we are currently working on combinations of various products, presently in the testing phase, which we hope to launch in the coming years.

We are committed towards providing farmers with solutions from seed to storage and are constantly working towards fulfilling their needs.

The global agrochemical market experienced some stagnation in 2023-24. How do you evaluate the current market situation? What strategic adjustments has Safex made in response to this situation? 

2023-24 has been a challenging year for the global market, with high channel inventories and a large number of manufacturing capacities that have developed over the past years. We feel the market is currently going through a correction phase and with the demand coming back, the inventories will liquidate, leading to improvement in the overall business scenario. 

Safex’s lean operations and agile nature along with diversification in various verticals helped reduce the impact of this market correction. 

Safex has particularly focused on tapping growth in the Indian agrochemical market through enhanced marketing efforts and good product profile. We focused our energies toward markets, where the penetration could be increased. We also used this time to commercialize the R&D pipeline and coming up with innovative products like Renofluthrin.

New technologies such as genetically modified and gene edited crops, drone application of pesticides and digital agriculture are changing global agricultural production methods. How do you view the development of these new trends? What plans does Safex have in these areas? 

Change is universal and trends keep coming. One must stay abreast of such developments and be open to adoption of technology in the best way possible. 

We, at Safex, constantly evaluate pros and cons of various trends. In particular, drones have had our keen interest and we are following their market response closely. 

Sustainable agricultural development and the HSE requirement are increasingly becoming the focus of international attention. How does Safex balance business growth with environmental sustainability? 

At Safex, we have a motto — sustainability and growth have to go hand in hand and one cannot come at the expense of the other. We are constantly working towards our sustainability goals while providing value to all our stakeholders. 

All our formulation units are zero discharge, ISO14000 and ISO 45000 certified. Our Speciality Chemicals businesses are Ecovadis Silver and Bronze certified. We feel environment, health and safety are the pillars of any great organization and an ever-evolving journey, which Safex Group is deeply committed towards.

As an international agrochemical producer from an emerging market, how do you view Safex's positioning and competitive advantages in the global agrochemical market in the next 5-10 years? What do you think will be the main opportunities and challenges facing the international agrochemical market during this period? How will Safex seize these opportunities and address these challenges?

In the next 5-10 years, we want to become a leading player in India in agrochemicals. Providing manufacturing base out of India and the UK is like offering best practices and capabilities from both the worlds. We can see a lot of opportunities coming to good manufacturing organizations, a large share of which can come to India and Europe post China’s saturation. 

Major challenges to our industry are reduced product life cycles and geopolitical situations, leading to disruptions and increase in tariffs. Such situations require amending old strategies as well as developing new ones as per the situation. Safex, by having geographically diversified operations, has the capability to navigate such challenges. Our vertical integration is another advantage that can help us address such issues easily. 

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This story was initially published in the 2024 India Focus. Download the magazine to read more stories.

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