Rahul Dhanuka, COO, Dhanuka Agritech, talks about Q4FY21 numbers, price increase, Targa Super, agrochemicals and pesticides segments, tie-ups with global companies, speciality chemicals, international business among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts
Q: Numbers have been good on all fronts. Please share the highlights of the quarter and as there are talks related to normal monsoon, so are you upbeat with the numbers for the next quarter?
A: Due to a good monsoon last year, Dhanuka Agritech’s performance was very good. The main reason for this was our supply chain along with our reach and hold on to our channel partners. The other reason was the trust that farmers’ have in the products of Dhanuka and its quality as well as the new products that Dhanuka brings every year among the farmers. These are the reasons due to which we have posted a growth of more than 23% last year. This year as well due to a good forecast of monsoon, it seems that the entire agriculture sector will provide growth and Dhanuka will be leading in that segment.
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Q: COVID has its impact, specifically in April and May. What impact will it have on Dhanuka in the first quarter of this financial year? Is the situation improving now?
A: The problem of COVID has been huge and I would like to take an opportunity to thank our COVID warriors due to whom the situation seems to be getting better. The matter of happiness is that when the second wave of COVID struck, farmers were completing Rabi harvesting and was going to prepare for Kharif. Due to this, there has not been any significant impact on agriculture input. Going forward, it seems that COVID is coming under control due to the efforts of the central and states governments due to which there should not be any negative impact of COVID on agriculture. In fact, in the coming time, due to a mild fall in the COVID situation, there should be a good movement in agriculture and agricultural inputs.
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Q: During Q4 many companies had passed on the increase in raw material cost to customers. How much price increase has been done and will you be doing it again during Q1FY22?
A: We make the price hike in a very balanced manner keeping our customers in mind. So, the way there is a cost increase, we try to pass on the maximum cost increase to the customers. If there is a weak segment, i.e. if there is a shortage of rain in any area or there is a decline in agricultural productivity, we do not pass on our cost there. But like last year, we saw that all the segments, i.e. the crop segment and the geographic segment grew well. We were able to pass on all the increased cost to the market.
Q: Government has made special efforts to increase the oilseed acreages. What sort of growth do you foresee from your popular brand ‘Targa Super’?
A: Targa Super is a flagship brand of Dhanuka that is directly imported from Nissan Chemical Industries from Japan. It is a special product for Soyabean, Targa Super is a very useful product for Soyabean, Groundnut and Cotton and it is the favourite product of the farmers. The work that the government has done for the oilseed can be seen in three different ways and they are
The government is distributing the complete kit of the oilseed for free to the farmers for 73 lakh acres
For DAP, the government has increased the subsidy from Rs 10,000 crore to Rs 24,000 crore and DAP has an important use in oilseeds.
The government is increasing a lot of food processing, especially oilseed processing and fruit and vegetable processing. Agriculture and oilseed are also encouraged here.
The government of India is trying its best to reduce the import cost of oilseeds. India also imports pulses and it should also be reduced. And, Dhanuka has a very strong position in oilseeds and pulses in terms of our products.
Q: Your business has a presence in agrochemicals and pesticides segments. Going forward, where do you see more growth opportunity and where will you focus and invest? What revenue do you expect from these two verticals in the coming year?
A: Dhanuka is trying its best to reach the farmers in India because chemical protection to the agriculture is just 35% and 65% of agriculture of India is not protected chemically, due to which the farmers and the country have to bear a lot of losses. In this effort, we are engaged in backward integration and we are setting a chemical unit in Dahej, where Dhanuka will manufacture its chemical, pesticides, which will also be exported and will also use for internal consumption. We see a lot of scope of growth in direct marketing to reach the farmers. Also, there is a lot of growth opportunity in technical production.
Q: What are your plans related to pesticides? Also, speciality chemicals have emerged as a new segment and their growth and demand are more. How will you manage it?
A: Today, India is an insecticide dominant country. If we will talk about agrochemicals, then in it a huge share, about more than 44%, comes from the insecticides. However, due to the labour shortage and increasing labour cost farmers trend has shifted towards herbicides. Targa Super, Sempra and Max-Soy are few important herbicides and Dhanuka will launch other three herbicides this year for onion crop, soybean and groundnut. We are also launching one herbicide for the corn crop. These three are herbicide products. Amid the COVID situation and migratory labour and the labour issues that the farmers may face in the future, the farmers’ attention has shifted towards weedicide and Dhanuka will have a strong position in it. In the last few years, we along with American and Japanese partners have signed a long term agreement on insecticides due to which we will bring very strong insecticides, although we have a strong position in insecticides.
Q: You have talked about the tie-ups with global companies. So, can we expect some more tie-ups, which are on the cards? Also, update us about the way the international business is performing and what are your growth expectations from it?
A: Dhaunka Agritech has tie-ups with several Japanese and American companies. Through these tie-ups, we are able to bring patented products, exclusive products and environment-friendly products to the farmers. Last year, we brought Kirari from Nissan Agritech and Nissodium from Nippon Soda. These two are special fungicide were brought for export-oriented grapes in India through which we helped the farmers of grapes in growing disease-free and residue-free grapes. Grapes and tea are two big exports from India. Apart from this, exports of Paddy and Wheat have increased a lot – during the COVID period – to Middle East countries and African countries. They are importing a huge amount of food grains from India and Dhanuka has a strong position in all of these products. Dhanuka is continuously bringing new patented products and exclusive products from its Japanese partners. Going forward, we will launch two exclusive products every year and we are prepared for it. As far as international markets are concerned, there is a growth in export markets. India is an important export country for agrochemicals. Especially, the Government of India’s support for being an Atmanirbhar Bharat and for that purpose our Dahej unit will increase Dhanuka’s participation in exports.