India Insecticides Ltd (IIL) and Japanese firm Otsuka AgriTechno Co Ltd (OAT) have operationalised research and development facility at Chopanki, Rajasthan, last week. The joint-venture aims to invent two or three agro-chemical molecules in India over the next three years at the lab which employs about 50 personnel and is situated close to IIL’s plant in Bhiwadi.

IIL Managing Director Rajesh Aggarwal spoke to Business Line on his views on the venture, the state of the Indian agro-chemicals sector and where IIL is headed in the near-term. Excerpts:

What are the expectations from the R&D collaboration?

The invention of an agro-chemical molecule has never happened in India. We focus on bringing in off-patent technology since we are experts at generics. The belief is that such a venture would cost about ₹1,000 crore and take up to 9-10 years.

We have tied-up with OAT to bring Indian and Japanese scientists closer and the target is to file a minimum of 10 patents over the next three years and roll out products by 2018. We are also working with OAT on bringing their existing products here.

The vision is to invent products that can be sold at competitive prices even to marginal farmers who can’t afford new generation products at the moment.

What are the growth prospects for the sector and IIL?

Agro-chemicals market is growing at about 11-12 per cent with business split 50-50 between the domestic and foreign ones. The share of patented products is falling, it’s at about 22 per cent from its peak of 30 per cent and new molecules are not making an entry and that’s why we entered into the venture with OAT.

Almost 97 per cent of our sales happen in India. I see huge potential as exports are growing at 15-16 per cent while the Indian market is expanding at 8-10 per cent and that for us means exports surging in the next 3 years and I believe we’ll be doubling our business in the same period.

How are IIL’s financials looking?

Last year, we had a net turnover worth ₹864 crore.

This year, I believe we should be growing by 30-35 per cent on the back of creating new brands and introducing off-patent and patent technologies to hit ₹1,150-1,200 crore.

We made a net profit of ₹40 crore last year and I expect us to reach this amount by the half-year.

Almost 75 per cent of IIL’s revenues come from 17 brands, the ‘Navratnas’ and the ‘Super 11’. We are a fully-integrated company.

Do you see organic farming impacting insecticide manufacturers?

Organic farming cannot have an impact on the sector as it isn’t a practical solution for India which has 16-17 per cent of the world’s population but only 2 per cent of land that is arable. Deforestation has taken place with increased urbanisation over the last decade, none of which has been diverted into agriculture. Per capita land is decreasing; from about 3 hectares per person in 1947 it is expected to be just 0.6 by 2030. Organic farming, hence, is not feasible as yields will drop, particularly if there is a crop epidemic, for which insecticides are a protective cover. I’m all for technologies co-existing.

What are your expectations from the National Chemicals Policy?

Progressive agriculture, which isn’t possible without agro-chemicals, is the way forward but politicians only focus on fertilisers. The domestic crop protection industry is worth ₹15,000 crore but more than ₹70,000 crore goes into fertiliser subsidies. We are not being viewed as important by the Government.

The industry will develop on its own, however, more technologies and molecules will continue to enter India.

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