Contributing to India’s Agricultural Growth Story Ft Dhanuka Agritech

Dhanuka has a pan-India presence through its marketing team and warehouses in all major states across India. With three manufacturing units and 41 warehouses across India, we cater to around 6,500 distributors and dealers and around 80,000 retailers. Through this extensive network, Dhanuka reaches out to approximately 10 million Indian farmers with its products and services. Dhanuka has more than 1,000 techno-commercial staff, supported by a strong sales and marketing team to promote and develop new products. 

Mr Mahendra Dhanuka, Vice Chairman and Managing Director

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Company description:

Dhanuka Agritech Limited is one of India’s leading agrochemical companies, specializing in the manufacture and marketing of a wide range of agrochemical products, including herbicides, insecticides, fungicides, and plant growth regulators. Established in 1985, Dhanuka Agritech has a significant presence in India and also exports its products to various countries. The company’s mission is to contribute to India’s agricultural growth by providing innovative and effective solutions to farmers.

Business segments:

The company has 300+ product registrations across Herbicides, Insecticides, Fungicides and Plant growth regulators. About 90 Products across all segments.

1. Crop Protection Products:

Dhanuka Agritech’s core business revolves around the development, manufacturing, and distribution of crop protection products. These include herbicides to control weeds, insecticides to combat pests, fungicides to prevent fungal diseases, and plant growth regulators to enhance crop yields.

2. Biologicals:

In recent years, the company has ventured into the biologicals segment by introducing eco-friendly and sustainable agricultural solutions. These include biopesticides and biofertilizers, aligning with the global trend towards organic and sustainable farming practices.

3. Seeds:

Dhanuka Agritech also has a presence in the seeds segment, offering a range of high-quality hybrid and non-hybrid seeds for various crops. This complements its crop protection product portfolio, providing farmers with comprehensive agricultural solutions.

Business Model:

Dhanuka Agritech follows a business model centered on innovation, research and development, and customer-centricity. Key aspects of its business model include:

1. Research and Development (R&D):

The company invests significantly in R&D to develop new and improved agrochemical products. This focus on innovation helps farmers combat evolving challenges in agriculture.

2. Distribution Network:

Dhanuka Agritech has a vast distribution network that reaches farmers across India. This extensive reach ensures that its products are readily available to farmers when needed.

3. Technical Support:

The company provides technical support and guidance to farmers, including information on product usage and best agricultural practices. This support enhances the effectiveness of its products.

4. Sustainability:

Dhanuka Agritech is increasingly incorporating sustainable and eco-friendly solutions into its product portfolio, aligning with global trends and environmental concerns.

New Product Launch:

In FY22, it launched two new products namely ‘Tornado’ and ‘ONEKIL’. It has been granted Patent for the new herbicide combination of Halosulfuron Methyl and Metribuzin for control of various weeds in sugarcane. Product launch is expected in 2023.

Manufacturing Capabilities

At present, the company has three manufacturing units situated at Sanand (Gujarat), Keshwana (Rajasthan) and Udhampur (J&K). It is in process of setting up a plant for Technical Manufacturing of Pesticides i.e., Backward Integration Process at Dahej, Gujarat.

Distribution Network

The company has a pan-India distribution network that comprises 40 warehouses, 7,000+ distributors and 80,000+ retailers, enabling it to have a presence across 10 million farmers touchpoints.

International Collaboration

The company has international collaboration with 10 leading global agrochemical companies from the US, Japan and Europe, which helps it to introduce the latest technology in India. 

Business Expansion:

As a part of its business expansion strategy, the company has invested in a Drones Manufacturing Start-up. Additionally, it has established a Biological Products Division, and is planning to set up a new Exports Division. 

Strategic Tie-ups

The company has tied up with upcoming online platforms like AgroStar, Gramophone and Plant It for online sales of Dhanuka products through their platform. 

Financials:

What we like:

1. Ramping up of Biological products to drive growth:

During 4QFY23, DAGRI had launched a new range of Biological products under the sub-brand name BIOLOGIQ, with an initial portfolio of 3 products. Further, the company launched 3 more products in 1QFY24. These products are currently being sourced from the best third party vendors in the industry. While on the crop protection side, DAGRI launched 2 new 9(4) molecules in 1QFY24 namely Implode- maize herbicide and Mesotrax- selective herbicide for maize and sugarcane. Going forward, management intends to launch 2-3 new 9(3) and 3-4 new 9(4) molecules in FY24 to drive growth.

2. Capex plans well on track:

Management had earlier guided for Rs 3 Bn capex to be spent over FY22-24. Capex is largely towards setting up of formulation units and 2 MPP’s (Multi-purpose plant of pesticides in Dahej. The formulation unit is delayed by 4 months and is now expected to be operational by August 23 (2QFY24) and technical unit by FY24. The company targets to achieve Rs 500 Mn of revenues in FY24 with loss at EBITDA levels, as the plant would be underutilized in FY24. Going forward, they intend to gradually improve the plant utilization and are in continuous talks with Japanese partners for supply of intermediates. On a longer term they intend to do Rs 3 Bn per annum from the technical plants with EBITDA margins in the range of 12-15%

3. Market Leader:

Dhanuka Agritech is a recognized leader in the Indian agrochemical industry. Its long-standing presence and market dominance contribute to a strong brand reputation and trust among farmers.

4. Diverse Product Portfolio:

One of the company’s key strengths is its comprehensive range of agrochemical products. Dhanuka Agritech offers a wide variety of herbicides, insecticides, fungicides, and plant growth regulators. This diversification allows the company to cater to a broad spectrum of agricultural needs.

5. Research and Development (R&D) Focus:

Dhanuka Agritech places a significant emphasis on research and development. It consistently invests in R&D to develop innovative and effective agricultural solutions. This commitment to innovation ensures a pipeline of new products that can address evolving challenges in Indian agriculture.

Factors to consider:

1. The agrochemical industry is subject to stringent regulatory requirements. Changes in regulations can impact the company’s product offerings.
2. Dhanuka Agritech faces competition from both domestic and international agrochemical companies, requiring ongoing efforts to maintain market leadership.
3. The company’s revenue is seasonal and depends on agricultural cycles, making it susceptible to factors like monsoons and crop health.

Conclusion:

Dhanuka Agritech Limited is a prominent player in the Indian agrochemical industry, known for its diverse product portfolio, R&D focus, and extensive distribution network. While it enjoys a strong market position, it faces challenges related to regulations and seasonal revenue patterns. The company’s expansion into sustainable and biological solutions aligns with changing agricultural practices and positions it for future growth. As with any investment, thorough research and monitoring of industry dynamics are essential when considering Dhanuka Agritech as an investment opportunity.