India Pesticides Limited IPO

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India Pesticides Limited IPO is an R&D-driven agrochemical producer of technical with a developing Formulation business. It is among the quickest developing agrochemical organizations in India in terms of volume in Fiscal 2020. It is likewise the sole Indian producer and among the top five makers internationally for a few technical, for example, Folpet and Thiocarbamate Herbicide.

Since commencing the operations in 1984, they have diversified into manufacturing herbicide and fungicide technical and active pharmaceutical ingredients (“APIs”). They also manufacture herbicide, insecticide and fungicide Formulations.

Business Model of India Pesticides IPO

They have two distinct operating verticals, namely,


a) They manufacture generic Technicals that are used in the manufacture of fungicides and herbicides as well as APIs with applications in dermatological products.

Certain key fungicide Technicals they manufacture include:

a1) Folpet, used to manufacture fungicides that control fungal growth at vineyards, cereals, crops and biocide in paints.

a2) Cymoxanil, used to manufacture fungicides that control downy mildews of grapes, potatoes, vegetables and several other crops.

a3) Major herbicide Technicals they manufacture include 135 Thiocarbamate herbicides that have application in field crops, such as, wheat and rice, and are used globally.


APIs are substances or a mixture of substances intended to be used in the manufacture of a drug (medicinal) product and that when used in the production of a drug becomes an active ingredient of the drug/ product.

Anti-scabies drug– Used in the treatment of scabies and peduclosis.
Anti-fungal drug – Fungicidal drug that acts on fungal hyphae and inhibits squalene epioxidase.


They manufacture and sell various formulations of insecticides, fungicide and herbicides, growth regulators and Acaricides, which are ready-to-use products. As of September 30, 2020, they manufacture over 30 Formulations that include Takatvar, IPL Ziram-27, IPL Dollar, IPL Soldier and IPL Guru.

Revenue Contribution of Technicals and Formulations

Strong Focus on R&D

They have a strategic focus on R&D and the R&D capabilities include two well-equipped in-house laboratories registered with the DSIR. The efforts are led by a dedicated R&D team that comprises PhDs, masters graduates in chemistry and a biotechnological engineer. The R&D efforts have led to development of processes to manufacture three generic off-patent Technicals since Fiscal 2018 and they are currently in the process of developing processes for certain Technicals, including two fungicides, two herbicides, two insecticides and two intermediates.

As of September 30, 2020, their technical are sent out to more than 20 nations remembering Australia and different nations for Europe, Asia, and Africa.

Clients Base of India Pesticides IPO

It has a different client base that incorporates crop security item fabricating organizations, for example, Syngenta Asia Pacific Pte. Ltd, UPL Limited, ASCENZA AGRO, S.A., Conquest Crop Protection Pty Ltd, Sharda Cropchem Limited, and Stotras Pty Ltd. Company has set up associations with the clients a large number of whom have been related with the Company for more than 10 years.

Manufacturing Units of India Pesticides IPO

They currently have two manufacturing facilities located at UPSIDC Industrial Area at Dewa Road, Lucknow and Sandila, Hardoi in Uttar Pradesh, India that are spread across over 25 acres.

As of September 30, 2020, the aggregate installed capacity of the manufacturing facilities for agro-chemical Technicals was 19,500 MT and Formulations was 6,500 MT. The manufacturing facilities are equipped with modern plant and machinery capable of producing quality Technicals and Formulations.

Products approval taken from CIBRC

As of the date of this Draft Red Herring Prospectus, they have obtained registrations and license to manufacture from the CIBRC and the Department of Agriculture, Uttar-Pradesh for 22 agro-chemical Technicals and 124 Formulations for sale in India and 27 agro-chemical Technicals and 34 Formulations for export.

Competitive Strengths of India Pesticides IPO

(i) Strong R&D and product development capabilities.
(ii) Diversified portfolio of niche and quality specialized products.
(iii) Long-term relationship with key customers.
(iv) Strong sourcing capabilities and extensive distribution network.

Risk in the Business

(i) They are engaged in the manufacture of Technicals and Formulations and these products are required to obtain regulatory pre-approval.  As per Section 9 of the Insecticides Act, any person desiring to 28 import or manufacture any insecticide may apply to the registration committee, i.e. CIBRC, for registration of such insecticide and there is a separate registration for each insecticide.

So, if they won’t get approval for new products then launching them in the market would be difficult.

(ii) The agro-chemicals industry is characterised by technological advancements, introduction of innovative products, price fluctuations and intense competition. The laws and regulations applicable to the products, and the customers’ product and service needs, change from time to time, and regulatory changes may render the products and technologies non-compliant or obsolete.

(iii) As they are dependent on Agriculture sector, any adverse conditions early in the season, especially drought conditions, can result in significantly lower than normal plantings of crops and therefore lower demand for crop protection products.

(iv) They use third party transportation providers for the supply of the raw materials and delivery of the products to domestic customers. So, they are not a vertical integrated company.

Objects of the India Pesticides Limited IPO:

A) The Offer for Sale (700 Crores) B) Fresh-Issue (100 Crores)

India Pesticides Limited IPO Details:

Open Date: Jun 23 2021
Close Date: Jun 25 2021
Total Shares: 27027027
Face Value: ₹ 1 Per Equity Share
Issue Type: Book Building
Issue Size: 800 Cr.
Lot Size: 50 Shares
Issue Price: ₹ 290-296 Per Equity Share
Listing At: NSE,BSE
Listing Date: Jul 05 2021

Promoters And Management:

(i) Anand Swarup Agarwal, is the Chairman and non-executive Director of the Company. He holds a bachelor’s degree in law from the University of Lucknow. He has over 35 years of experience in agrochemical manufacturing. He is one of the Promoters and one of the founders of the Company. In the year 2003, the Government of India, Ministry of Finance (Department of Economic Affairs –Banking Division) nominated him as a part-time non-official director on the board of directors of Punjab National Bank for a period of three years from November 25, 2003. He has also been a director on the board of directors of PNB Gilts Limited. (ii) Rajendra Singh Sharma, is a whole-time Director of the Company. He holds a bachelor’s degree of science in agriculture from the University of Meerut. He has been associated with the Company for the last 22 years and was initially appointed as a director of the Company on June 10, 1998. (iii) Rahul Arun Bagaria, is the Non-Executive Director of the Company. He holds a bachelor’s degree in commerce from the University of Mumbai and is a Qualified Chartered Accountant. He has more than five years of professional experience and expertise in corporate law and taxation (iv) Adesh Kumar Gupta, is an Independent Director of the Company. He holds a bachelor’s degree in commerce from the University of Jodhpur and is a qualified chartered accountant. He is a registered insolvency professional with the Insolvency and Bankruptcy Board of India. He previously held the position of whole-time director and chief financial officer at Grasim Industries Limited and has also been a director at Ultra Tech Cement Limited.

Financials of India Pesticides Limited IPO:

Particulars (in Cr.) Mar-21 Mar-20 Mar-19
Sales 648 479 340
Cost of Material Consumed 330 256 194
Change in Inventories -19 -3 -7
Employee Benefits Expense 22 16 13
Other Expenses 132 116 74
Operating Profit 183 93 65
OPM % 28.21% 19.51% 19.16%
Other Income 6 10 5
Interest 3 5 5
Depreciation 6 5 3
Profit before tax 179 93 61
Total Tax Exps 45 22 17
Net Profit 134 70 43
NPM % 20.73% 14.76% 12.89%
No. of shares 11.18 3.18 3.18
EPS in Rs 12 6 4

Comparison With Peers:

Peers Sales (FY21) 3-year Revenue Growth 3-year PAT Growth OPM (FY21) ROE  (FY21) D/E P/E
UPL 38000 Cr 33% 38% 22% 14.00% 1.71x 21x
PI Industries 4577 Cr 27% 34% 22% 14% 0.048x 58x
Sumitomo Chemical 2643 Cr 9% 43% 18% 23% 0 54x
Rallis India 2429 Cr 11% 22% 13% 14.50% 0 31x
Dhanuka Agritech Limited 1387 Cr 17% 36% 19% 26.00% 0 21x
Bharat Rasayan 1093 Cr 5% 17% 20% 23.00% 0 34x
India Pesticides 648 Cr 36% 100% 28% 34% 0.00 24x

Recommendation on India Pesticides Limited IPO:

Review and Recommendation of India Pesticides IPO by IZ team is 6/10. Pros: 1. The company has well-diversified agro-chemicals products. 2. Strong R&D and product development capabilities. 3. Long-term relationship with key customers. 4. Experienced promoters and strong management team 5. P/E of 21x. Something has left on table. Cons: 1. The trade receivables days are high as compared to industry. 2. Company is not able to convert EBITDA into CFO efficiently. The ratio is just 45%. For other peers, it is in high 70% range. 3. Promoters are selling shares worth Rs.700 Crores.

Lead Manager of India Pesticides Limited IPO:

  1. Axis Capital Limited
  2. JM Financial Consultants Private Limited

Registrar of India Pesticides Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Swarup Cold Storage Compound, Water Works Road, Aishbagh, Lucknow 226 004, Uttar Pradesh, India; Tel: +91 0522 2653602

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