Financial Daily from THE HINDU group of publications
Friday, Jul 23, 2004
Climate & Weather
Agri-Biz & Commodities - Pesticides
As monsoon plays truant Agro-chemical firms pin hopes on exports
Mumbai , July 22
THE country's crop protection industry, servicing a rain-dependent agricultural sector, has a critical fortnight ahead.
"We are nervous. If monsoon rains fail to arrive over the next 15 days, the industry could be in trouble," said an official of a leading agro-chemical company.
Officials of agro-chemical companies as well as industry representatives agree that the prospects for the current kharif sowing season appear far from bright. Sowing has been affected in states of Maharashtra, Andhra Pradesh, Madhya Pradesh, Rajasthan and other northern states. Re-sowing has been taken up across many tracts of land but due to absence of rains the use of pesticides could drop considerably.
However, Mr Pradeep Dave, President, Pesticides Manufacturers & Formulators Association of India, does not want to hazard a guess on the extent of the drop in turnover during the current fiscal. "As of now four lakh hectares of sown land in Maharashtra have gone waste. Second sowing has been taken up but if there are no rains in a couple of days this round also could end up futile," he said.
What comes to the rescue of the agro-chemical companies at this juncture is export. "If domestic sales get impacted due to absence of rains, companies would look at the overseas markets," said Mr Raju Shroff, President, Crop Care India Limited.
"Although there are worries about the monsoon, sale of pesticides has been brisk. There is no material available and plants are running to full capacities," Mr Shroff said. The offtake at the start of the kharif sowing was good, he said.
According to Mr Dave, a substantial portion of revenue of some of the leading agrochemical companies comes from exports. "Indian agrochemical companies have the entire world as their market in the event domestic markets fails. There is a robust demand from Europe, South America and several other countries," Mr Dave said.
Pesticides Manufacturers & Formulators Association of India (PMFAI) has estimated export turnover to go up to Rs 3,200 crore during the current fiscal from Rs 2,800 crore in the previous year.
As the country has a large exposure on insecticide, the failure of monsoon could impact its sales. The agro-chemicals industry has lost a significant part of the kharif sowing season. Much would depend on the extent of re-sowing, an official of a pesticide company said.
Notwithstanding that exports are expected to negate the adverse impact of a likely drop in domestic sales, companies like Rallis India Limited would have a critical first two quarter this season. Rallis had reported a net profit of Rs 25.55 crore for the year ended March 2004 as compared to a loss of Rs 77.27 crore in the earlier year.
The industry is also disappointed that the much-expected reduction in excise duty on pesticides from 16 per cent to 8 per cent did not materialise in the Finance Bill of 2004-2005. In a post-budget memorandum, PMFAI has urged the Government to slash the excise burden and has pointed to the fact that the second sowing is under threat.
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