Profit

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NSE
562.10
Change Change %
0.05 0.01%

Updated:20 Sep, 2019, 15:56 PM IST

BSE
562.70
Change Change %
0.45 0.08%

Updated:20 Sep, 2019, 16:01 PM IST

Chairman's overview: 

I am happy to present the 2012–13 performance of your Company.

Dear Shareholders,

The year 2012–13 was a mixed one for the industry as growth remained strong in Brazil, the US and Europe but under pressure in India due to an erratic monsoon and prolonged drought in various parts of the country.

Despite these realities, the Company recorded a 20 % increase in revenues, a 19 % increase in EBIDTA and a 23 % increase in PAT. What pleases me most is that despite the evident challenges, we reported profitable growth and maintained our EBDITA margins at 19%.

This performance was also a vindication of our core positioning as a multi–product, multi–crop, multi–season and multi–region organisation, where a decline in one country was more than covered by an improvement in the others.

Sectoral overview

Never before in the last few decades has the agrochemicals industry been as relevant as it is today.

The convergence of a number of factors emphasise the role of the sector in the survival of mankind. This reality stems from factors like high population growth, declining arable land and growing water scarcity. The message: the world needs to generate more food from less land.

The first signs are visible: food shortages, lingering malnutrition rising food prices and food–linked inflation. Just consider: it is estimated that crop loss through pest action is estimated to be between 26% and 40% of the world's potential crop output and this could double without crop protection products. A seventh of the world population – over 900 million people – suffer from malnutrition because of global food shortage due to crop losses arising out of pest attacks.

The result is that agricultural output needs to double in the next two or three decades to feed the world's growing population (more 1.7 billion mouths to feed by 2030). However, this represents a substantial barrier: it is estimated that each acre contains 50 to 300 million buried weeds and a crop plant needs to compete with 30,000 species of weeds, 3,000 species of nematodes and 100,000 species of plant–eating insects before it can survive and reach end–users. In view of this, crop protection chemicals have a critical role to play: to minimise pest action and keep food prices down.

Crop protection doesn'tjust protect; it enriches as well. It increases crop productivity by 20–50%, which helps mitigate the 20–40% of crop loss from pest attacks. The industry is estimated to reduce overall potential pre–harvest wheat loss of 50% to an actual loss of 29%. In the cultivation of sugar beet, for instance, the absence of crop protection measures could reduce yields by an average of 80%; some 20% of the entire world's agricultural production would be lost to post–harvest pest attacks if it were not for crop protection chemicals. The result is that crop protection makes excellent financial sense; farmers get back $14.60 for every $1 invested on agrochemicals, which allows them to invest in seeds and on other farming implements to grow more and better crops.

To feed a growing population in a sustainable way, a long–term approach is required that ensures farmers have access to tools and knowledge that make it possible for them to grow more food, bring in the harvest and get it to the market.

This critical intervention accounts for attractive prospects. Strong food commodity prices will induce farmers to use more pesticides. Developing countries like China and India are demanding higher volumes of nutritious food, which will in turn strengthen the demand for pesticides. Pesticides have established a strong track record of enhanced farm productivity in developed and developing countries. Recent innovations have shown pesticides to be environmental–friendly. The increased production of soybeans and sugarcane in Latin America is driving pesticides consumption in that region. The per acre crop protection chemical usage in India (800 grams compared to 16 kg per acre in the US) is beginning to correct upwards as the country moves towards its destiny of emerging as the food basket of the world. The result: the global pesticide industry is estimated to grow to US $68.5 billion in 2017, reporting a CAGR of 5.5% (Source: Lucintel).

UPL and the future

UPL is attractively positioned to capitalise on this transition for the following reasons:

We have created a global organisation with a balanced presence across all continents, which represents adequate de–risking from potential revenue losses arising out of a slowdown in any particular geography.

We derive around 81% of our global revenues from product manufactured out of India, arbitraging the country's ability to make the best quality products at the lowest costs coupled with our proprietary competence in extracting the most out of our research and assets.

We have acquired various units and companies the world over, built strong distribution channels and the result is that we can reach the largest volume of our products across the widest geographic range in the shortest time and at the lowest cost.

We have a team of scientists and engineers who are at par with the best global standards, continuously engaged in the development of innovative products that replenish our revenues streams.

We provide farmers with all–encompassing solutions – from seeds to pre–harvest and post–harvest protection – that helps us extend one–off transactions into enduring relationships.

We will continue to evolve our registration basket with close to 250 new registrations annually to deepen our access into new markets.

We respect the environment, employees and communities through responsible practices.

Outlook

Based on the industry optimism, we expect to double our revenues in the next five years and reinforce our position as the most profitable agrochemical manufacturer in the world.

Regards,

Rajju Shroff

Chairman 

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