Aries Agro - Micronutrient player


(Mayank Narula) #47

I researched this company few months back and keep visiting the thread from time to time. However, my sense is that rather than working on improving the business, company plays too much to the gallery. Investor ppt, con-calls are good, but first there should be visiting changes in balance sheet and underlying business to report changes.


(Kuldeepjadeja) #48

All this put together aries agro tries to behave like a multinational !!!
They are truly puting their efforts to bring company at new highs in terms of brand creation, network building (They have 70000+ retailers and 190000 outlets selling their products) building products portfolio for future, catching export market of 19 countries.
Once all this efforts start giving numbers then it will be huge…currently all this things available at MCap of 320 cr only…


(Mayank Narula) #49

Will definitely catch it at 500 :wink:


(Kuldeepjadeja) #50


(Kuldeepjadeja) #51

Sales 105cr against 75cr previous year.
Net profit 8cr against 1.2cr previous year.
Highest ever quarterly sales achieved…


(arpitjain305) #52

Please recheck your numbers before posting on this forum.
Previous year sales during the same period were 84.7 Cr and net profit 6.6Cr.
Your numbers imply 7x profit numbers as agains previous year.


(Bhaskar Jain) #53

I did not look into the numbers but you have to deduct excise duty from sales figure for last year. This year the sales figure shown is after deducting GST so no adjustment needed.


(Mridul) #54

I am not sure how difficult it would be to market micro-nutrients if one day an established player plans to venture into this space. Well awareness in improving, distributors/dealer network is already established for an established player in similar space (for instance pi or excel or some seeds company), much deeper pockets than AA, so why cannot this be replicated?

Dealer network cannot be called moat. Same dealers are probably dealers of seed companies and other crop chemical companies.

It might be that the pie is too small for larger companies to look at this business vertical at the moment. What if the pie actually increases?

This is a clean company and with order book to start with, this does look like an improving business. I myself understand how important micro-nutrients can be for soil health (first hand experience). But again, these are not very difficult products to manufacture, or are they? What will it take for a PI, or for that instance UPL or excel to enter into this space seeing the growing opportunity size?

Also, who are the competitors in this business? I saw Zuari Agro offers micro-nutrients. Who else?


(Kuldeepjadeja) #55
  1. SUSTAINABILITY :-
    One of the biggest priorities/challenges worldwide is to increase the yield per acre of arable land. Arable land is always in limited supply so governments of every country are trying to figure a way out to get more from the same space. This makes the business a very important one, giving me some confidence on the sustainability of it.

  2. EXPANDING MOAT:-
    it has a small but expanding moat. The distribution network has been painstakingly created. The management has, over the years, gone state by state, village by village to create awareness. It now has a very large distribution network, covering almost every state in India. Farmers did not know what they had been missing out on by not using micronutrients. This has been a very tedious job. There is no easy way for even a large established player to replicate this. Farmer education requires time, money and effort and AA clearly has the headstart here

  3. KEY TRIGGER “FLASH SALES”:-
    One of the biggest problems the company faced was that it has to customize its offerings for every state. So the number of SKU’s needed were extremely high. Also they received money at a later date, even though sales had been effected. These factors put together, made it a working capital heavy business. The success of ‘Flash sales’ could change the balance sheet of the company forever. For the first time in the history of AA, it has an order book to work with. As per the disclosures on the BSE website, they targeted a 100cr orderbook but ended up with more than 200cr. Being present at the event, I witnessed first hand how a Flash sale works.


(Mridul) #56

You have repeated the same points. I know about expanding opportunity and imoortance of micronutrients. What i am not sure about is if aries can exploit this opportunity. If they are able to make 16% profit in a vertical, it won’t take time for the things to get crowdy. Dealer network isn’t a moat. Similar product with better deal from someone else, n the dealer wd shift.

Who are the competitors?

Also, regarding flash sales, it is not a guaranteed order book or advances. They hope to convert around 75% of the same. So if they are not receiving advances, how is working capital getting reduced? Instead they have to keep more inventory. No?

Lets not get swayed by eminent investors like vijay kedia or shyam shekhar being invested here. I would like to understand why they wd be able to keep the competition at bay. Growing pie with good margins will definitely attract new players.


(Kuldeepjadeja) #57

Currently they have 3 4 competitors but that number could increase as demand increase…
That risk is always there in all businesses…


(Kumar Saurabh) #58

Spoke to few people industry and the feedback i got is -

  1. There is a clear cut need for micro nutrients to improve farm productivity
  2. Lack of farmer education is biggest issue and who is willing to spend money on that is key question

Now, did some research to gain further understanding

As per this report, not only lack of farmer education but smaller agricultural land parcels are another big issue and some major regulatory changes in legalization framemwork would be required to boost agricultural sector and farm productivity:

http://www.prsindia.org/uploads/media/Analytical%20Report/State%20of%20Agriculture%20in%20India.pdf

Good part is Govt has realized that the additional focus apart from NPK is required where Govt has put a dedicated focus on Soil Health Management(SHM) Under National Mission for Sustainable Agriculture(NMSA)(W.E.F,1st April 2014) which covers micronutrients also. A specific budget and KPI baed targets has been assigned under the same

http://pib.nic.in/newsite/PrintRelease.aspx?relid=106668
http://soilhealth.dac.gov.in/Content/blue/soil/about.html

The initial research says that Zinc and Boron are highest deficient micro nutrients. Would be interesting to map revenue share by micronutreint type for Aries and see if they are catering and leading in this space (zinc looks sure sht candidate). Here are reports with how Govt has performed on soli health checks target vs achieved:

Here is a report on all the soil health checks done and respective deficiency %:

This website is very useful as it is dedicated to promotion of soil health education and support which will have a direct impact on Aries agro business

Some more websites to track overall story:
http://nmsa.dac.gov.in/RptAllocationReleaseProgress.aspx
http://www.soilhealth.dac.gov.in/Content/blue/soil/assets/img/Statewisefundreleased&unspentScheme.pdf
http://www.soilhealth.dac.gov.in/Content/blue/soil/assets/img/Statewisefundreleased.pdf
http://soilhealth.dac.gov.in/

So, far 2016-17 performance looks good except UP. I am not sure how to factor 2017-18 progress.

If there is someone from this industry, Please shed further light as education and awareness and some legal changes could be inflection point for this business and then need to identify market sizing, competitive positioning and entry barrier analysis etc.


(Kumar Saurabh) #59

This is one more report which validates the point that majority of deficiency eblongs to zinc and boron highlighting key districts under various states and by crop

http://www.nfsm.gov.in/Micronutrient.pdf


(Kumar Saurabh) #60

Attached is excel having progress report of soil testing govt targets vs achieved by state:
ProgressReportCycle-I-English.xlsx (19.1 KB)
ProgressReportCycle-II-English.xlsx (20.0 KB)


(Kuldeepjadeja) #61

Sir

  1. Mr.Kumar saurabh very much appreciable above details represents macro perspective of micronutrients scenerio, upcoming demand etc its better if someone can explain micro perspective or company specific situation.
    2)What about their aqua culture foray ? http://ariesagro.com/fisheries-animal-nutrition/

Disc:- Invested 25% of portfolio.


(Kumar Saurabh) #62

Please don’t call me sir.i m just a learner learning from very respectable senior members here. Yes I also saw aqua n though it’s small share with 3 percent revenue contribution ,need to understand growth potential . I was looking for some data on market sizing. Though the report is costly one, it gives hint of companies in this space . May be digging their annual report can throw some information . This is from the marketing page of a research agency on micronutrient market
Uniform and quality yield is of utmost importance among micronutrients product manufacturers, agrochemical manufacturers and other key participants in the agriculture industry. Agricultural micronutrients are plant nutrients, which are used in small amounts for obtaining better yield. Some of the plant nutrients required include iron, zinc, chloride, manganese, copper, boron and molybdenum. Companies operating in the agricultural micronutrients market are focused on opting for agreements with the regional players, in order to gain significant share at the local level and maintain the competiveness in the market.
Global agricultural micronutrients market is anticipated to witness significant growth during the forecast period. This is attributed to bio-fuel crop production, rising agriculture contribution in overall GDP, soil quality improvement and others. Furthermore, increasing consumer inclination towards nutrient rich food especially to overcome deficiencies and concerns for healthy food have led food manufacturers to focus on improving product quality by improvising nutritional content, thus bolstering agricultural micronutrients market growth. However, lack of awareness among farmers and infrastructure availability especially in certain developing countries is restricting the agricultural micronutrients market growth. Since, animal and human health is affected due to enrichment of plant materials, quality and yield of agricultural products.
Asia Pacific holds largest market in terms of revenue share, followed by North America. Agricultural micronutrients market in North America is expected to record robust CAGR during the forecast period.
The global agricultural micronutrients market is segmented on the following bases:
Crop Type
Cereals
Pulses and oilseeds
Fruits and vegetables
Others
Application
Fertigation
Foliar
Soil
Seed treatment
Others
Product Type
Boron
Copper
Iron
Manganese
Zinc
Others
Geography
North America
US
Canada
Europe
UK
Germany
Rest of Europe
Asia-Pacific
Japan
China
Rest of APAC
Latin America
Middle East and Africa
Key Players Identified for Anti-aging nutraceutical ingredients Market Include but are Not Limited to:
The Dow Chemical Co., Verdesian Life Sciences, LLC, Akzo Nobel N.V., DUPONT DE NEMOURS AND COMPANY, ATP Nutrition, Compass Minerals International Inc., Merck KGaA, Monsanto Co., Syngenta International AG, Sigma-Aldrich Corporation, DAMA Agricultural Solutions Ltd., Sumitomo Chemical Co., Ltd., Yara International ASA, Nutra-Flo Company (K- Flo), Grow More Inc., Stoller USA, Inc., Auriga Industries A/S, Micnelf USA Inc., BASF SE, Bayer Crop., Brandt Consolidated Inc., Agrium Inc., The Mosaic Company, Baicor, E. I., Land O’Lakes Inc. and Kay-Flo.
This report offers:
An overview of the global markets for agricultural micronutrients
Market trends assessment for the period 2013-2023, with historical information for 2013 &2014, and projections through 2023, with respective CAGRS during 2016-2023
Qualitative assessment tools such as market drivers, challenges and future prospects for agricultural micronutrients
Market competition scrutiny tools such as market share analysis, fractal map assessment, attractive investment proposition
Focus on each level of market segmentation based on product approvals, launch, and current and anticipated market dynamics
A general overview of the industry structure
Company profiles highlighting key information about the major players operating in the agricultural micronutrients market


(Kuldeepjadeja) #63

Vijay kedia increased his stake from 4.99 to 5.78 %


(Saravanan B) #64

Why is this stock put in T2T segment?


(Kuldeepjadeja) #65
  1. It posted highest ever revenue and all over excellent performance in Q3.
  2. It has coming out of t2t.
  3. Budget have all the good news for AA.

Then why it is coming down nd down…!!


(vishwa7000) #66

It is a cyclical business, Q4 normally very subdued in terms of margin, no near term trigger.
Disclosure: Invested.