India Pesticides Ltd

IPL continues to suffer from inventory overhang in global markets, and have pivoted towards selling more formulations in India. They announced setting up a marketing co for formulations in export market, something similar to Sharda Cropchem. Concall notes below

FY24Q2

• Inventory loss of 6 cr. in Q2
• Pesticides I didn’t know they make
  o Fungicides: Etridiazole, Dodine
  o Insecticides: Diafenthiuron
  o Herbicide: Flufenacet
• Industry scenario: Continues to face headwinds due to destocking in international markets and price declines resulting from oversupply of raw materials from China
• Domestic formulation: 15-18% EBITDA margin. Export formulation is higher margin but volumes are very low
• LATAM: don’t have direct subsidiary but are present through partners (8-10% revenue contribution)
• Company is planning to setup a subsidiary for marketing formulation in export market in an asset light business model (something similar to Sharda Cropchem)
• For new products, want to maintain 20-22% EBITDA margin & 43-44% gross margin
• Prosulfocarb: very high inventory in end market resulting in volume pressure for IPL
• Expansion
  o Intermediate block and technical block will be commercialized in Q4FY24. Will augment production capacity by ~2000 MT
  o Acquired land adjacent to Sandila plant for future expansion
  o Have spent 46 cr. in H1FY24 (budget of 110 cr. for Sandila + Hamirpur)

Disclosure: Not invested (no transactions in last-30 days)