Dhanuka Agritech expects a revenue growth of 10 percent instead of its earlier estimate of 20 percent, on concerns over deficient rainfall, M K Dhanuka, Managing Director of Dhanuka Agritech told CNBC-TV18.
“In FY15, (when) the monsoon was 12 percent less, the growth was around 6.3 percent,” he said.
With the introduction of new products cover like DuPont and Hokko chemicals, the company is expected to deliver '10 percent minimum growth' irrespective of the shortfall in rains," he said.
DuPont is one of the highest selling insecticides available both in liquid and granular form, which would add 3-4 percent to the topline this year, he said.
If rainfall was deficit and the sowing area was less, there would be no consumption of agro chemicals, he said. This would impact the market in Rajasthan and Madhya Pradesh in particular, because there was no irrigation facility available, unlike in Punjab and Haryana.
He said the company believes in the Skymet forecast of 102 percent rainfall.
Production in Rajasthan facility is expected to start by third quarter this year, he said.
Mangalam: Earlier you had indicated that your sales will be impacted on account of deficient monsoons and with the MET Department lowering its monsoon forecast, how much do you think your sales will be impacted by in FY16?
A: In FY15 also the monsoon was 12 percent less, still the growth was around 6.34 percent. In my earlier negation, I have confirmed that if the monsoon will be below normal, then the growth can remain up to the 10 percent level instead of the 20 percent level. Since we, Dhanuka have now introduced new products cover with DuPont and with Hokko chemicals also. So, we hope that Dhanuka will be able to deliver 10 percent minimum growth irrespective of the downfall in the rainfall.
Ekta: Can you just explain to us, for example, more qualitatively that what happened last year in terms of sales for you to have achieved that six percent or for you to have not achieved the optimum amount you could have in light of a 12 percent deficiency that came through?
A: Ultimately, if the rainfalls are deficit and the sowing for the various crops reduce and if the sowing area is less, then there is no consumption of agro-chemicals in that area. So, ultimately, because of the deficit in rainfall, there will be an impact on the sowing and ultimately the consumption of the pesticides.
Ekta: The North-western area is expected to have a maximum amount of deficiency - 85 percent of the long period average (LPA). How much of your business is focused on the North-west area and how concerned would you be?
A: Frankly, I have gone through the Skymet forecast and they are still saying that we are confident that the rainfall will be to the extent of 102 percent. So, let us cross our fingers and wait and watch, and pray that the rainfall should remain normal. But if it is deficit, in Haryana, Punjab and Western Uttar Pradesh, which are the states to be majorly impacted as per Indian Met Department (IMD) forecast, the irrigation facilities are available and I do not think it is going to impact majorly. But Madhya Pradesh and Rajasthan will have an impact if the rainfall is to the extent of 85 percent. Mangalam: You indicated that irrespective of deficient rainfalls, you will still grow at 10 percent on account of your two new product launches. So, how much of an incremental benefit do you see from those two products with Nissan and DuPont and also what is the potential market size of these products?
A: The Rynaxypyr, which DuPont launched around four or five years before, this is one of the highest selling insecticides in India. DuPont is sharing this molecule now with Dhanuka in two formulations – liquid as well as the granule formulation. We hope that in first year, since we will be introducing, we hope that we will be able to do substantial business and it can add three, four percent in the top-line if the company.
Mangalam: And when do you expect your facility in Rajasthan to be commissioned by?
A: It is now expected to be commissioned, production will start from Q3 of FY16.
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