In an interview to CNBC-TV18, Mayank Singhal, MD & CEO, PI Industries share shis views on the company’s order book as well as how the year is likely to pan out for the industry.Below is the transcript of Mayank Singhal\\'s interview with Ekta Batra & Reema Tendulkar on CNBC-TV18.
Ekta: The agrochemical sector has shown phenomenal growth in the last couple of years. What is your view on the industry going forward?
A: Looking ahead in the next one year the agrochemical business is poised for growth as you have seen the trend over the last few years. The agricultural production and demand is there and the demand for the farmer to put better inputs to get better quality of products and yield is one of its key requirements. If you look at the trajectory, India has been poised as one of the fastest growing markets in the world and I do foresee that the agrochemical business will continue to grow as it has been growing over the last few years.
Ekta: Will the monsoons play a key factor in terms of determining the growth going forward?
A: Monsoon is something which is unpredictable. So, it is something which is dependent on nature but clearly monsoons do a play a role. But if one looks at it overall, the industry is still expected to grow by 12-14 percent this year even while monsoon had not been at the very best. So, monsoons do have an impact but have a marginal impact in terms of the proportion of growth that maybe expected.
Reema: Let us talk a bit about the individual verticals, the Custom Synthesis & Manufacturing (CSM) business has been a huge revenue driver for the industry, what is PI industries’ outlook on it and how much can it contribute going ahead?
A: When we look at the CSM business has been growing very aggressively for us over the past five years. We have been growing at an average compounded annual growth rate (CAGR) of more than 25-30 percent and we do expect this to continue and presently PI is sitting on a USD 520 million order book position for which investments are going in place and then over the next two years these revenues are well chalked out to continue to keep the growth pace.
Reema: You had earlier said that you will do better in the second half of this fiscal year. Are you on track for H2 to be better than H1 and walk us through what the order book currently stands at?
A: The order book position is spanned over the next two-three years so it is not about the half of the year but going forward in the half of the year, we are very much on track as per the business plans and I am sure by the end of the year we should be meeting our plans.
Ekta: So what are the new products or the product launches that PI Industries is looking at in the next two-three years?
A: We have about two-three new products which will be launched over the next two-three years in the business and we expect to have at least one product launch in the next year and another one new product coming up in the year after if not two in the next year itself.Ekta: Can you tell us about the incremental benefit of the new products or the numbers?
A: Every new product -- the initial phase as you see there is a development phase of the product so it usually takes about two-three years to get the product out in the market to get any substantial incremental revenues going up. But overall we have already an existing bunch of products which are there which are growing and these new products will definitely add to the growth profile of the company in the business.
Reema: There has been stiff competition from MNCs in this sector, what is your outlook on that?
A: Clearly, Bayer has had a good run, they have been able to do a bunch of good products this year which has given them a substantial growth this year as mentioned. But I think all the Indian companies -- vagaries do impact your portfolio on the crop segment that you are in, do impact the sell and revenue growth and it is not that this business is only growing by new products, obviously the quantum and scale of which Bayer is able to introduce new products very different than the Indian companies hence they have been able to achieve good growth rate but overall as I would say, the Indian companies also have a good opportunity of growth and I do not see that in the long-term this would have any key challenges and generic space is also growing pretty aggressively in the Indian market.
Reema: There has been no specific MNC preference from farmers, right?
A: The farmers are looking for a better solution consistently and any company, which is coming out with a better and more economical solution which is creating value for the farmer, that is what the farmer is looking for. So yield is subjected to not only the product but yield is subjected to many other inputs which go into the production of crop.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
