Indogulf Cropsciences' ‘Kite’ flies high
Despite the government’s proclaimed efforts to promote biofertilisers, awareness about them among farmers is abysmal. Studies show their lack of knowledge about the concentration, time, and method of biofertiliser application – along with uncertainty about its efficacy compared to conventional fertilisers – poses a serious challenge to their wide-scale application and adoption.
Also, specific machinery and equipment are needed for the production and storage of biofertilisers, which, in turn, increases production costs. This leads to a lower adoption rate, limiting the growth of the biofertiliser market. The lack of effective regulation on biofertilisers is also among the greatest contributors to the low availability and adoption of the products.
Increasing the shelf life of biofertilisers also involves an extra cost element as a cool place is required for storage. The availability of biofertilisers is also seasonal. Thus, biofertilisers require extensive research on technology to develop formulations that can satisfy these requirements.
Hence, agri-chem products are bound to continue to be in demand, and this is where companies such as Indogulf Cropsciences Ltd (ICL) play a big role in crop protection methods.
It’s a crowded market with stiff competition from domestic as well as multinational players across market segments, geographies and product categories. “To remain competitive, we have to continuously focus on reducing operating costs and improving overall efficiency,” says Sanjay Aggarwal, MD of ICL.
What was started as a small family business by his grandfather in the 1950s has grown into separate, diversified crop science companies. Aggarwal’s first cousins also set up their own units in the same segment, separately.
ICL, which started operations in 1993, manufactures and markets an extensive range of products in all types of available formulations such as water-dispersible granules, suspension concentrate, capsule suspension, ultra-low volume, emulsion in water, soluble granule, flowable suspension, etc.
“We are into the manufacturing of crop protection products, plant nutrients and biologicals and sell them to retail as well as institutional customers focused on improving the crop yield,” says Aggarwal. “We manufactured Spiromesifen technical with a minimum purity of 96.5 per cent in 2019. We are also one of the first few indigenous manufacturers of Pyrazosulfuron Ethyl technical, with a minimum purity of 97 per cent, which we launched in 2018,” he says.
A growing exporter of crop protection, plant nutrients and biological products, the company sells its products in 34 countries and has earned the distinction of being a Government of India recognised ‘Two Star Export House’.
Over the span of three decades, ICL has diversified its product portfolio and grown into a multi-product manufacturer of 259 crop protection, plant nutrients and biological products. Its innovative packaging solutions, protected by three packaging patents, enhance product quality, safety, and sustainability. “These patented designs also contribute to its competitive advantage and provide added value to our customers. Marketing under the Patang (kite) brand, the products have gained considerable popularity and the farmer today specifically asks for ‘Patangawala Chemical’, Aggarwal says.
ICL has plants with international quality standards at Samba in Jammu and Kashmir; Nathupur and Barwasni in Haryana. The plants have earned ISO 9001: 2015 and ISO 14001: 2015 certifications for quality management systems and environmental management systems. The plants have an aggregate installed capacity of 19,620 KL for liquid suspension concentrate, 27,930 MT for granules and 1,980 MT for powder, as of 31 August 2024.
“Our technical plant has an aggregate capacity of 1,360 TPA for the production of insecticides, fungicides and herbicides. We source the raw materials for our manufacturing process through both our internal backward integration and external suppliers in India and globally,” says Sanjay Chaudhary, vice president, strategic affairs, ICL.
Historically, the company has sourced raw materials from multiple vendors in India and China. “The backward integration enables the company to manufacture key raw material for certain products, reduces dependency on imports, third-party supplies and logistics costs, apart from providing the flexibility to control the manufacturing processes and thus helping in improving the operating margins,” he says.
The company’s IT infrastructure enables it to track the procurement of raw materials, sale of finished goods, payments to vendors and contract suppliers, receivables from customers and the distribution network. It also utilises an enterprise resource planning solution that covers production, finance, sales, marketing logistics, purchase and inventory across all its offices and manufacturing facilities, and leverages SAP software to manage operations, finances and customer interactions efficiently.
Safeguarding crops
Plant nutrients enhance soil fertility, stimulate root development and boost crop yields. The company makes various types of speciality fertilisers, bio-stimulants and performance products under this vertical.
Crop protection products involve practices, techniques, and strategies employed to safeguard crops from pests, diseases, weeds, and other threats, thereby ensuring their healthy growth, development, and productivity. Under this vertical, the company offers a variety of insecticides, fungicides, herbicides and bio-stimulants. Crop protection products also include technical synthesis and special formulations.
Biologicals empower farmers with a comprehensive approach to crop management, offering novel solutions to combat pests and diseases, build resilience against abiotic stress, and unlock improved nutrient use efficiency. They also mitigate the impact of environmental stresses, optimise nutrient uptake and soil well-being, driving progress toward a more sustainable food system, ultimately leading to more resilient and sustainable agricultural practices.
ICL products are available in water-dispersible granules, suspension concentrate, powder and liquid form. “Our facilities are in proximity to agricultural states such as Haryana, Jammu and Kashmir, Punjab, Uttar Pradesh, Rajasthan and Uttarakhand. The Haryana plants are strategically situated near Delhi, a major transportation hub with access to highways, dry ports, and airports. This strategic positioning ensures seamless connectivity and efficient logistics operations, facilitating timely and cost-effective transportation of raw materials and finished goods,” says Chaudhary.
ICL finished products are stored in multiple locations, including on-site at its plants. The company has a network of four strategically located warehouses in the states of Haryana, Gujarat, Punjab and Uttar Pradesh with 17 depots to ensure efficient supply to customers through distributors. The inventory levels of finished products are adjusted based on the seasonal demand cycles for crops such as Rabi and Kharif.
“Inventory is aligned with confirmed and expected orders, as well as customer-provided annual forecasts, which vary according to the crop cycles. For instance, higher stock levels are maintained leading up to the Rabi and Kharif seasons to meet the increased demand from farmers during planting and growing periods,” adds Chaudhary. “We have implemented real-time tracking systems to monitor inventory movement, stock levels, and replenishment needs, enabling us to respond quickly to these seasonal fluctuations,” he says.
Asked about pricing, Aggarwal says it is closely tied to fluctuations in raw material costs, allowing the company to adjust prices accordingly to protect margins during periods of price volatility. “We use a transparent cost-pricing model that incorporates key cost elements such as raw materials, packaging, labour, utilities, insurance, and taxes,” he says.
One of the key elements of the company’s success is its speciality in curating informative content aimed at educating farmers, agronomists, and other stakeholders on the significance of crop protection and sustainable farming practices. It publishes a series of materials that highlight the benefits of specific products, innovative technologies, and management practices, such as Krishi Mitra, Indogulf Times, Handbook of Plant Nutrition, and the Indogulf Product Booklet. “The company is fully committed to leveraging digital technologies and platforms to enhance customer engagement, streamline communication channels, and facilitate seamless e-commerce transactions,” says Aggarwal.
Safety measures
“We are subject to a wide range of safety and environmental laws and regulations, including the Water Act, the Air Act, the Environment (Protection) Act, 1986, and the Hazardous Waste Rules, and are committed to ensuring a safe and healthy workplace for our employees while minimising our potential impact on the environment,” says Aggarwal. The company implements work safety measures to ensure a safe working environment, including general guidelines for health and safety at the plants, accident reporting, wearing safety equipment, and maintaining clean and orderly work locations. “We are committed to zero defects and zero environmental impact practices. A safety committee has been constituted to build a safety culture among the workers and management.”
“Strong and recognisable brands are a key attribute in our industry, which increase customer confidence and influence purchase decisions. We have 167 trademarks, seven copyrights, and six design registrations for our logo and branded products. Plus, we have 114 valid product registrations across 17 foreign countries. Additionally, we already have 113 trademarks and one copyright registration,” he says.
“The company’s revenue from operations increased from Rs549.66 crore in Fiscal 2023 to Rs552.23 crore in Fiscal 2024. Profit after tax increased by 25.91 per cent, from Rs22.42 crore for Fiscal 2023 to Rs28.23 crore for Fiscal 2024,” says Manoj Gupta, CFO. “We have substantial experience in undertaking R&D activities as part of our manufacturing operations. Our R&D laboratory is located at our Nathupur, Haryana facility, with modern research and development infrastructure. We have been able to diversify our product range mainly due to our R&D and product development capabilities. We are currently in the process of developing and upgrading 39 products. Our R&D efforts are mainly focused on developing new products and processes, improving our existing production processes, adopting advanced production technology, and improving the quality of our existing products, coupled with cost efficiency. Our R&D efforts are important to maintain our competitive position in various business lines, as well as to address evolving customer needs, industrial development, and business models,” adds Gupta.
As part of its expansion plans, says Aggarwal, the company plans to set up a dry flowable plant for manufacturing dry flowable formulations, which will be used to manufacture products in all three segments, where the active ingredient is finely ground and mixed with inert materials to create a dry, free-flowing powder.
This formulation is designed for ease of handling, storage, and application. The dry flowable plant will manufacture various dry flowable granules such as combinations of sulphur and tebuconazole, sulphur, imidacloprid, a combination of imidacloprid and fipronil, mancozeb, combinations of nitrogen, phosphorus, and potassium, along with other microelements, and fulvic, amino, seaweed, and humic.
ICL is going public and has filed its draft red herring prospectus (DRHP) with the market regulator, the Securities and Exchange Board of India (SEBI). The IPO, with a face value of Rs10 per equity share, is a mix of a fresh issue of up to Rs200 crore and an offer for sale of up to 38,54,840 equity shares by shareholders Om Prakash Aggarwal and Sanjay Aggarwal. In fact, Rs100 crore from the fresh issue will be used for funding the working capital requirements of the company; Rs40 crore for settling dues; and Rs14 crore for capex for an in-house dry flowable (DF) plant at Barwasni, Haryana, along with general corporate purposes.
Going forward, ICL will continue to leverage its ability to launch new products in order to increase its revenues and market share in its target markets. “With the ever-evolving consumer needs and preferences, we intend to continuously work towards launching new products and categories at various price points and ensure that our Kite brand continues to fly high,” sums up Aggarwal.