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UPL Ltd.

BSE: 512070 | NSE: UPL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE628A01036 | SECTOR: Chemicals

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Annual Report

For Year :
2019 2018 2016 2015 2014 2013 2003

Chairman's Speech

Dear Shareholders,

The year under review was one of the most memorable in UPL Limited''s history.

The Company acquired Arysta LifeScience in an all-cash US$ 4.2 billion deal, which was completed within a record six months.

This helped the combined entity emerge as the fifth-largest crop protection products company in the world with combined sales of US$ 4.7 billion in FY2019 (trailing twelve months basis).

Explaining the acquisition

Over the last few years, the global crop protection products industry has undergone consolidation, warranting a greater need for scale across serious players.

Scale enhances economies of scale, ability to attract fresh talent, ability to launch differentiated products and a stronger registration pipeline.

UPL, over the last 25 years, has made 40 acquisitions and been successful in accelerating growth in a profitable manner.

The Arysta LifeScience acquisition represents the largest in our existence and possibly the most important. Arysta LifeScience (formed in 2001) is present in the proprietary post-patent space, a segment growing faster than the mainstream sector.

As the pace of discovery of new active ingredients has declined and an increasing number of products are going off-patent, Arysta LifeScience possesses one of the world''s best supply chain systems as well as a broad products portfolio comprising herbicides, fungicides, insecticides, bio-solutions and seed treatment targeted at specialty crops and applications.

UPL''s landmark acquisition bodes well for a number of reasons.

One, UPL has a strong manufacturing presence with plants in 34 global locations (26 for active ingredients / formulations and eight for seeds). On the other hand, Arysta''s asset-light model outsources most manufacturing operations (with formulation plants in 14 locations), electing to focus largely on marketing. The coming together of the companies will empower UPL to provide strong manufacturing support to Arysta on the one hand and leverage the latter''s deep distribution capability on the other - a win-win.

Two, Arysta possesses a proven expertise in the realm of certain proprietary molecules. Following the acquisition, UPL will gain access to these proprietary molecules.

Three, the two companies possess complementary portfolios: UPL''s crop protection products are goto products for row crops, while Arysta''s products are preferred for the cultivation of specialty crops like horticulture. The complementary product portfolios of the two entities have helped create a company with a larger and relatively de-risked application presence. This was evident in the unconditional approval from 40 anti-trust regulators, without requiring any portfolio divestments.

Four, the two companies also enjoy a presence in complementary markets. Arysta enjoys a strong presence in Eastern Europe and CIS countries; UPL possesses a similar presence in Western Europe and Latin America. Arysta enjoys a relatively large presence in Africa, Russia and Ukraine, where UPL is less conspicuous. Following the acquisition, UPL will be able to tap deeper into these territories.

Five, following the acquisition, UPL''s product registrations more than doubled - from 6,150 to more than 12,400. Considering that it takes between two to five years to get a product registered, this acquisition has strengthened the Company''s long-term prospects.

Six, both companies complement each other in managing risks and financial resources. One of the primary reasons for UPL''s success in Latin America has been its ability to manage market volatility, which holds true for Arysta''s performance in sub-Saharan Africa, where the Company dealt with currency and political risks. The coming together of UPL and Arysta provides a neat complement that will disproportionately strengthen the overall complement.

I am optimistic that this acquisition will broaden UPL''s positioning as a global company of Indian origin. More than 83% of UPL revenues are derived from global markets. UPL has recruited globally and locally, strengthening its terrain familiarity and the ability to take decisions closer to the ground. The result is that the Company reported sustainable and profitable growth despite monetary, political, climatic, regulatory and economic challenges.

Need for specialised solutions

Falling crop commodity prices over the past few years impacted the demand for crop protection products, resulting in industry consolidation and relevant counter-strategies. Urbanisation and climatic vagaries affected sectoral growth. Changing climatic conditions are increasing pest disturbance, increasing their population and enhancing their appetite, threatening global food security. The need of the hour is to provide specialised solutions that protect yields and minimize pre-and post-harvest losses.

Scientists have found that globally, pathogens and pests have affected crop yields by 10 to 40% for major food crops like wheat, rice, maize, soybean and potato.

Besides, the global population of 7.6 billion is expected to grow to 8.6 billion by 2030 and 9.8 billion by 2050, making it imperative for companies like UPL to come up with specialised crop protection products with greater speed than ever.

This priority is also evident in India, one of the largest agricultural markets of the world. Around 70% of India''s rural households depend primarily on agriculture; around 86% of India''s farmers are categorised as ''small and marginal'' and own less than 2 hectares, which is the equivalent of two football fields. A number of measures were undertaken by the Government of India, including enhanced minimum support prices for a number of crops. The Central Government also aims to double farmers'' income by 2022 through measures like Pradhan Mantri Krishi

Sinchayee Yojana, Pradhan Mantri Fasal Bima Yojana and National Food Security Mission, among others.

At UPL, we believe that crop protection products addressing pre- and post-harvest losses play a pivotal role. The Indian Council of Agricultural Research estimated that around 30%-35% of the annual crop yield in India is lost to pests. India''s pesticide consumption is one of the lowest in the world; the average hectare in India consumes just 0.6 kilograms of pesticide compared to 5-7 kilograms per hectare in the US and 11-12 kilograms per hectare in Japan, a large headroom. We believe that the sector has an important role to play at a time when the country is engaged in strengthening farmers'' income.


Following the acquisition of Arysta LifeScience, UPL has evolved from being just a product-based company to a solution-oriented organisation covering all major crops.

The new UPL is attractively positioned to address the existing and emerging needs of farmers across a wider global footprint with a larger basket of products.

We believe that the new UPL will enhance value for its stakeholders. I thank our large family of stakeholders for their trust and assure that we will continue to enhance value for our Company in the foreseeable future.

RD Shroff,