Reviewed the annual report of PI Industries….anyone interested in understanding the agri inputs sector should spend a couple of hours going through the MD&A in 2014 and 2015 PI Annual report
Agri Inputs
– Rice leadership is increasing for PI Industries. Nominee Gold expected to show continued growth for many years, and Osheen is well accepted to manage Brown Plant Hopper (BPH) in rice crop
– Two new agri input products – KEEFUN, an insecticide for vegetable segment initially launched on cabbage and okra (innovated in Japan, exclusive in-licensing agreement) and BUNKER, broad spectrum herbicide;
– KEEFUN will be extended to other crops and strengthen PI position in cotton and horticulture
– New pack of Biovita (specialty nutrition product) was launched, which was well received
– Key brands include NOMINEE GOLD, OSHEEN, KEEFUN, BIOVITA, KITAZIN, FORATOX, FOSMITE and ROKET
– Signed agreements to evaluate 10 new agri inputs for Indian markets
– Cautiously optimistic on agri inputs – dependant on monsoon pattern, performance of past product launches
Custom Synthesis
– 2 new molecules commercialized for CS exports (3 new molecules in FY14)
– Expect to commercialize 2 new molecules in FY16
– 8 new molecules progressed to the next stage of R&D
– R&D for Process improvements of 10 existing products undertaken to reduce cost
– Very bullish on CS potential and has a steady business with a large order book size
Other Key Points
– 170 crore investment in fixed assets, and R&D in FY15 (compared to 65 crore in FY14); Expected to invest 300 crores + in next 2 years on capex
– Jambusar SEZ facility is being enhanced with 2 new plants (CWIP shows 120 crore, compared to 35 crore in FY14), expected to get commissioned in H2 FY16 (Custom synthesis business)
– R&D facilities are being expanded – 2 story building is being constructed in Udaipur, which houses the current R&D facility
– Receivables increased significantly to 380 crore, vs 255 crore in FY14, resulting in Operating Cash flow coming down to 180 crore in FY15 from 216 crore in FY14; Doubtful receivables ~7 crore, which have been provisioned
– Due to the scheme of amalgamation of Parteek Finance with PI Industries, there has been no change in the paid up share capital and promoter holding remains the same as before the merger
– Internal auditor has been replaced to Grant Thornton from Protiviti
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