PI Industries - A Unique Bet on Indian Agriculture & Patent Power


(deepali.kumar) #889

@Prdnt_investor

Although, the question is not directed towards me, it got me thinking.

In agri input companies, is there, any single listed company that has an integrated CSM service, like PIIND boasts to have? Pardon my ignorance, but I don’t know of any.

By “real competition is CSM space”, do you mean,

a. Companies, old or new, that can pose a threat to PI’s CSM business?

b. Or, the CSM space itself, is threatened by any substitute, which is highly improbable/impractical for companies to make molecules in-house.

I reckon, PI Ind, is an outlier in what it does, it has a niche (CSM space), which is a key growth driver too.


(Rudra Chowdhury) #890

I meant a) from your reply. When a company is peer less in a segment marred by very strong entry barriers, the scarcity premium will generally hold.


(deepali.kumar) #891

Oh, so my understanding, that, in CSM space PI is indeed peerless is correct.

If so , there is indeed a lot more steam left in the company. With the management taking steps in the right direction, and even by taking the management’s realistic view, as per the last concal, from the second half of FY 18, things should only get better for PI, I guess.

But it sure requires an awful lot of patience. Especially seeing so many garbage stocks/ companies making new highs, everyday, it sure is frustrating to see PI( a superior Company in so many aspects) almost at the same levels past 18 months or so.

Thanks for your response though.


(Kumar Saurabh) #892

Many times we do not have all the money available to put in stock of our choice ,considering either portfolio distribution or lack yo time to study deep. Such periods give us ample time time to do both n accumulate if thesis is right . Getting over the envy of neighbors cheap stock doing well against quality available at justified valuation (very important ) is far more difficult than finding quality stock .But if habit is developed, we may be in next stage of personal investment evolution.


(Rudra Chowdhury) #893

Comparing against return of other stocks is of no real use. Focus on absolute returns for the portfolio.

Generally value investors underperform in a bull market, but then they lose much lesser in the immediate bear phase that follows.

Do remember, even one large loss can be detrimental to long term returns and can ruin years of good compounding. So choose wisely.


(deepali.kumar) #894

@Prdnt_investor

“Comparing against return of other stocks is of no real use.”

Agreed to the core.

" Focus on absolute returns for the portfolio."

Exactly’ that is "when I get flustered. The problem in my PF is that of allocation. Since, I liked(like?) PIIND the most of all the companies that I am invested in, in all parameters, I allocated almost 40%(I know that is not a good strategy, ideally one should allot not more than 10-15% max in any one company)in PI. Now even when other companies are doing pretty well, my absolute returns for the PF are so so. Since PI’s ‘stock’ performance ,past 18 months, have been stagnant. Well, almost.

“Generally value investors underperform in a bull market, but then they lose much lesser in the immediate bear phase that follows.”

True indeed.

“Do remember, even one large loss can be detrimental to long term returns and can ruin years of good compounding. So choose wisely.”

Correct. But, I did think, and still do so, that I was making a wise decision, by investing in PIIND.


(Yatharth) #896

No doubt, PI is underperforming compared to its profit growth in the last 2 years. And that too when its PE is comparatively ok. In fact PE , in the last 2 years has gone down to ~24 from above 40 levels.
I think there are 2 reasons. Market still needs to see higher Sales growth from PI, preferably in double digits.
Second, there are concerns that effective tax rate for PI may be higher in the days to come and this may reduce NPM.
I have 10% of my PF in this.
Rudra - Can you please throw some light on above two assumptions?


(Rudra Chowdhury) #897

@Yatharth The quote seems misplaced as this is a generic comment - no way related to PI Industries.

Your assumptions seems to be correct.

The low double digit growth in FY18 (that too on the lower FY17 base) will be negated by the 20% tax rate as SEZ benefits wane out.


(deepali.kumar) #898

@prdnt_investor

Thanks Rudra. I got the answers about the underperformance of PI 's ‘stock price’ and recent stellar performance of its peer’s( well, almost peers). The answers that I had been looking for months now, have been found. Thanks to you.


(chets) #900

@Yatharth :slight_smile:
As per me, once the cobwebs in the mind become clearer about any business, the conviction gets stronger. Hence your decisions may be completely rational.


(Rudra Chowdhury) #901

@Yatharth Kindly refrain from these kind of statements as these might send wrong signals to newbie investors on the forum.

Discuss all the pros and cons like @Mahesh has done superbly in the above posts and let the informed readers make their own investment choice. Thanks.


(Yatharth) #902

I see nothing wrong in accumulating a stock that is consolidating nicely and has buy rating from atleast 5 or 6 reasonably good research companies with ~20% upside ( HDFC/Motilal/ICICI/Yes…).
It is still a great company and as per most, focus on agriculture will be more intense in the days to come. The worst is almost known and its growth in profits but flat price has made PE come down from 40+ to 24. But such is the nature of stocks when the price does not go up. Happened with PI in 2011 to 2013 as well.


(Mahesh Shah) #903

To defuse crisis, agriculture minister wants prices of pesticides and seeds brought down

New Delhi | Published: June 16, 2017 2:50 AM

Farmers in Madhya Pradesh’s Mandsaur, the epicentre of the unrest and an oilseed growing area, have been agitating over low prices and the lack of adequate arrangements by the government to purchase them.

To defuse crisis, agriculture minister wants prices of pesticides and seeds brought down
Farmers in Madhya Pradesh’s Mandsaur, the epicentre of the unrest and an oilseed growing area, have been agitating over low prices and the lack of adequate arrangements by the government to purchase them.
farmers, farmers protest, agriculture minister, Radha Mohan Singh, Radha Mohan Singh news, Radha Mohan Singh latest news

STEPPING UP efforts to resolve the farmers’ unrest, which is threatening to damage the image of the BJP and the central government, union agriculture minister Radha Mohan Singh on Thursday asked the pesticide industry to bring down prices and called for a meeting to press for the reduction of seed prices. Speaking to the Indian Express, a day after the Union Cabinet decided to enhance support for farm loan subvention to ensure more farm credit, Singh said that the government is expected to declare a substantive raise in the Minimum Support Price (MSP) for oial seeds and pulses. “The recommendation of the CACP (Commission for Agricultural Costs & prices) has come. The Cabinet will consider it and announce the MSP… There would be an increase of Rs 400 for oil seeds and pulses,” he said. Farmers in Madhya Pradesh’s Mandsaur, the epicentre of the unrest and an oilseed growing area, have been agitating over low prices and the lack of adequate arrangements by the government to purchase them.

Singh said he has called for a meeting Friday to seek the reduction in seed prices. “I will exhort private companies to reduce prices of seeds so that initiatives taken by the government for farmers are supported. The government’s attempts have been to reduce the cost of production in the agriculture sector. So, bringing down prices of seeds is very important,” he said. However, the minister indicated that the Centre did not want states to announce loan waivers. Asked about farmers in many BJP-ruled states demanding loan waivers on the lines of a decision by UP government, Singh said, “See, our priority is to empower farmers… we are investing in these efforts. We have invested in soil cards, neem-coated urea and crop insurance. We want their income to go up. That is the reason we have invested in allied industries, such as boosting productivity of bovine population to raise per capita milk availability… We want to reduce their cost of production.”

Asked if the Centre would support states in giving bonuses for farmers, Singh said that the food and civil supplies department wanted states to ensure that declared MSP is given to farmers. “Many states are not able to give MSP for farmers and many states are forced to buy grains from other states for rations. So the government is very particular that states would have to give the MSP declared to farmers. There are states that are not able to purchase produce at MSP rates and do not procure as per requirement,” he said.

“The government wants to help farmers by helping them reduce cost and by making a good market available to sell produce. Our schemes are focused on this,” Singh said. The union minister also accused the Opposition Congress of instigating farmers to “agitate violently” against BJP governments.


(Mahesh Shah) #904

Pesticides manufacturers to rollback price increase

Pesticides manufacturers have urged the government to reduce GST from 18% to 5%

June 16, 2017 Last Updated at 19:23 IST

Under pressure from the government, pesticides manufacturers have agreed to rollback prices of over a dozen of products to which they had increased by upto 5-10 per cent about two weeks ago.

Ahead of peak demand season, pesticides manufacturers had raised their products prices early this month which the Ministry of Agriculture noticed as unwarranted due to no such increase in their input cost. This means pesticides manufacturers had raised their products’ price voluntarily in anticipation of a rise in their demand during this kharif season. Normally, pesticides manufacturers raise products prices ahead of sowing season through an increase in the maximum retail price (MRP).

But, the Union Agriculture Minister convened a meeting of pesticides manufacturers on Thursday seeking explanations over a voluntary increase in their products’ prices.

We met with the ministry officials on Thursday and explained our positions. The industry had raised prices of over a dozen of pesticides products recently which we assured the ministry of rolling it back," said Pradeep Dave, President, Pesticides Manufacturers & Formulators Association of India.

Dave explained that 5-10 per cent rise in prices of technical grade products was due to Chinese agriculture season and rising demand. Further, the problem intensified with lesser available following shifting of 2-3 plants under expansion.

“These are technical material used in manufacture of formulations. There is enough cushion in MRP to absorb such price rise. There is no increase in prices of pesticide formulations used by farmers. This is a false alarm created by importers which we have explained to the concerned ministry,” Dave said.

The explanation note submitted to the agriculture ministry says that Indian pesticides industry is providing crop protection solutions to farmers at the most competitive cost. Domestic pesticides manufacturers blamed importers’ lobby for the entire fiasco.

Meanwhile, pesticides manufacturers have urged the government to reduce GST from 18 per cent to 5 per cent being the pesticides a major agri input.

“The reduction in prices of pesticides formulations will sustain only if GST is kept at a minimum of 5 per cent. Moreover, to consider any reduction in prices of generic pesticides, no operational cost or input costs have come down. Electricity tariff and oil prices have gone up. Price rise is justifiable with no concession in taxation, rising input costs etc.,” said Dave.


(Mahesh Shah) #905

Press Release on PI Industries and Kumiai Chemical to establish a Joint Venture in India

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/ae9c27e0-3428-4044-a08d-01a69eae0759.pdf


(zulfiqar) #906

The mentioned molecule in press release is that of nominee gold, correct me if I m wrong,so if my understanding goes that molecule would be jointly
produced here, disclosure: 10% holding for last 2 years


(Donald Francis) #907

http://www.piindustries.com/our-business/Our-Business/products-and-services/NOMINEE-GOLD


(Mahesh Shah) #908

Thinking seems to be logical and correct. Starting FY19, nominee might go off books of PIIND parent into jv. Why this is done might get clear few years down the line.

Rgds.


(Furkan Alam) #909

(deepali.kumar) #910

@Mahesh

I’m sure you didn’t mean it when you wrote that Nominee might go, " off the books".( 'Off the books 'in Accounting means something/payment that is not ‘officially’ recorded so that no tax is paid on it).

Anyhow…as for Bispyribas Sodium and the JV with Kumiai, currently PI industries is importing the product for distribution in India. The proposed JV is for the manufacture of the molecule, Bispyribas Sodium.

Manufacturing the same locally will provide operational and cost related efficiency which in turn will help the Company to position the product in the market.