An interview with the cfo of the company taken sometime in july 2010. Since then the company has allotted 4.13 million shares to an fii-M/s India 2020 fund run by Lighthouse funds. This was done at a price of Rs 80.20 per share and after this allotment the aforesaid entity holds around 8.2% stake in the company. One of the directors made way for a nominee director of the above fund on the board.
Meanwhile the promoters have sold around 6.7% of their holding during late august and early sep 2010 to bring down their stake to the sebi mandated level of 74.99%.
**Mr. V.K Bansal, CFO, Dhanuka Agritech Ltd.****,**is a Commerce Graduate and Chartered Accountant joined the Company in 1990 as Internal Auditor. In the year 2009, he assumed the charge of CFO of the Company. During his service period the Company has grown continuously. He has played key role at the time of Rights issue, Merger of various Group Companies, ISO Certification and implementing ERP Project successfully.
Dhanuka Agritech Limitedis the umbrella company for the business of Agro-Chemicals, Fertilizers, and Seeds. The company reaches out to more than 10 million farmers with its eco-friendly high quality crop care products. The Agri-Division has a pan-India presence through its marketing offices in all major states in India. With a dealer network of more than 6000 across India, the Group has been able to make “Dhanuka” the preferred choice of farmers. With the promotion of DKKNT (Dhanuka Kheti Ki Nai Takneek) and the Groupas focus on extension activities coupled with strong R&D setup, Dhanuka has become a household name in the farming community across the country. Dhanuka Laboratories Ltd, another Group Company dealing in pharmaceuticals was started in 1998, with an objective of leveraging the groupsa expertise in providing solutions to Healthcare Industries.
Speaking withJasmine Kohliof**IIFL**, VK Bansal says, “The funds from FPO will be used to acquire a small size company; part would be used to expand production at Sanand, and for the renewal of our facility at Guragaon.”
Brief us about your business model?
**Dhanuka Agritech Limited is engaged in the manufacturing of a range of pesticides and fertilizers. The company manufactures a large number of herbicides/weedicides, insecticides, fungicides, plant growth regulators, plant growth stimulants and foliar fertilizers, in various forms - dust, granules, EC, SC and WDG.
We have four pesticides manufacturing units located at Gurgaon and Sohna (Haryana), Sanand (Gujarat) and Udhampur (J&K). We propose to set up a seed processing plant at our existing factory location at Mandideep in M.P. In addition, a seed processing cum Research Centre is under construction at Turkapalli in A.P.
Briefly take us through your various segments?
**We have Agro-Chemicals, Fertilizers, and Seeds as our main segments. Pesticides include herbicides/weedicides, insecticides, fungicides.
We are also in the business of seeds. In percentage terms, the seed segment accounts for a meager 2-3% of the business.
In Pharma business, we operate through Dhanuka Laboratories Ltd., the Pharmaceutical arm of Dhanuka Group. It is engaged in the manufacturing and marketing of Active Pharmaceutical Ingredients (API) and Advanced Intermediates in the field of Cephalosporin Antibiotics.
Our main suppliers are Ranbaxy, GlaxoSmithKline, Cipla, Alembic etc; two -thirds of this is generic and one-third is indigenous.
Tell us about growth rate, turnover and margins of your businesses?
**Pesticides are the main contributors to our revenues. As a group, our growth is in the positive terrain and our topline for this year (FY10) was Rs4.45bn for pesticides, in Pharma it was more than ~Rs1.5bn. Seed processing contributed ~Rs100-110mn.
Please highlight some of the key figures from your last quarter results? What reasons would you attribute to this growth?
**Growth in Sales was 21% and PAT at 57%. Reasons for this yearas growth are our constant efforts to tap markets for every single opportunity. India is a land of opportunities and has great potential for pesticides.
Please brief us about your capex plans? How do you plan to raise the funds?
**Capex would be around Rs30-50mn. We are coming out with a FPO, by December 2010. As of now the promoters holding in the company is ~ 90% and post the FPO we plan to dilute the same to 75%.
The funds raised from the FPO would be used to acquire a small size technical manufacturing company and part of the funds would be used for expansion of our production facility at Sanand and also for renewal of our facility at Guragaon.
How much do you plan to raise through FPO?
**We plan to raise Rs750mn approx. from the FPO. The amount may vary depending on the expansions at Sanand and Gurgaon
Who are your main customers? What are your growth drivers?
**The main target customers of Dhanuka are farmers, planters and pest control operators. Our growth drivers would be our potential to tap the markets, our field work to reach out to farmers and channel partners, and the schemes offered by us.
What edge do you have over your competitors?
**Our edge over the competitiors is our diverse product range and market reach, our customer base, our marketing strategies and our technical tie-ups. We add new products every year and it requires technical tie-ups. We are in the process of forming new technical tie-ups; as of now it is pre-mature to give out names.
What is your marketing strategy? What is your targeted ad spend for this year?
**We are very aggressive with our marketing strategies. For a pesticides industry, it is very important to use the right product in right quantity at the right time. For this, we conduct literacy programmes for farmers, by giving product demonstrations and providing technical advice to farmers on right use of technology and about specific crop related problems.
Our marketing team visits villages and with a well trained team we help farmers solve their problems. We also provide them with product literatures, product samples, demo kits etc. to provide on the spot solutions. We also conduct classroom and field training for safety and new products.
Media publicity about the products, diseases and insects is carried out at state and zonal levels apart from large scale campaigning supported by wall paintings and publicity in fairs, and below the line advertising and publicity. Advertising spend per se is not much and it would be ~Rs30mn.
Brief us about your brand portfolio? Among your brands which is the highest contributor to your revenue?
We have around 80 brands in our portfolio. We add new brands every year. This year we are planning to introduce Luster, a fungicide for Paddy.**The highest consumed product is Targa Super, and its contribution to the top line is more than 14%, it can be attributed to our technical tie-up with Nissan Chemical Industries Ltd., Japan.
The top three brands contributing to our revenue are: Quizalofop Ethyl, Cartap Hydrochloride, Propargite.
We have market presence for all the main crops, cereals, oilseeds, cotton, vegetables, plantation crops, sugarcane. We have around 30 depots across the country. We have more than 6000 direct customers. We also have many technical tie-ups with international companies like Nissan, DuPont, Dow, FMC etc.
What is the share of unorganized sector? Any plans to acquire small local player? What is your current share among organized players?
**Around 80% is organised and 20% is un-organised. Our market share among organised players is very small - around 6%.
We donat see any threat from small players, as in this industry size matters and you need to have a reach.
We have a pan India presence and we have an edge over the small players. So we do not foresee any such threats. We also do not have any plans to acquire any smaller company in our segment as of now. We also do not plan any acquisitions of patents.
What is the main raw material for your company? How do you procure your raw material? What are trend seen in raw material prices?
** Our main Raw material is Technical Grade Pesticide. We import a lot of raw material from Japan, China, USA and some of them are purchased from multinational companies as well as Indian companies.
Normally the Pesticide prices depend on Crude oil prices. If oil prices are stable, then it does not affect our prices. But if there is a rise in Crude prices, Pesticide prices also increase.
What is the revenue contribution from exports and imports?**
**Dhanuka Agritech has no exports. We are importing materials from Nissan Chemical Industries Ltd., Hokko Chemical Industry Co., Mitsui & Co., etc.
What is your message to the shareholders?
**We assure our shareholders that the management of the company shall put its best efforts in growing their wealth through continuous growth. We shall also be always fair and transparent to the shareholders.