TITLE - COMPETITVE ANALYSIS AGROCHEMICALS

TITLE - COMPETITVE ANALYSIS AGROCHEMICALS

1. Introduction

The Chemical Industry of India forms the vertebrae of the manufacturing and agricultural growth of the country and offers structuring chunks for downstream businesses. Moreover, India stands fourth in the production of agrochemicals internationally, after China, United States and Japan (The Hindu Business, 2012). Moreover, the agrochemicals industry has a noteworthy influence on the Indian economy. Furthermore, the Indian agrochemicals market rose at a rate of 13% from USD 1.50 billion in FY10 to an around USD 2 billion in FY11 (The Economic Times, 2012). Moreover, it is estimated that the Indian agrochemicals industry will cross around $ 5-6 billion in 2017 (The Economic Times, 2012). In addition, the consumption of agrochemicals in India is one of the lowest in the world with per hectare consumption of just 0.60 Kg compared to US (4.8 Kg/ha) and Japan (12 Kg/ha) and the maximum share of the consumption of pesticide is around 30%, followed by cotton consumption of around 22% (Pub Articles, 2012) .

2. Objectives of the Study

The study has following objectives:

Ø  To analyze and study the secondary data available on Indian Agrochemical market

Ø  To examine the key trends as well as key challenges and opportunities in the Indian Agrochemical market

Ø  To do competitive analysis and complete bench marking to understand their sustainable competitive advantage

3. Literature Review

3.1 Structure of the Indian Agrochemicals Industry

The Indian agrochemicals market is differentiated and categorized by low capacity utilization. The total installed capacity in FY10 was around 152,000 tons and total production was 90,000 tons leading to a low capacity utilization of 59% (DnB, 2012). Additionally, the agrochemical industry of India undergoes from high inventory (due to irregular and seasonal demand on account of monsoons) and long credit interludes to farmers, therefore creating operations ‘working capital’ rigorous and exhaustive.

India due to its intrinsic strength of low-cost production and skilled low-cost manpower is a net exporter of agrochemicals (for example, pesticides) to countries such as USA and Europe & Africa. Moreover, exports produced are around 55% of total industry revenue in FY10 and have attained a multifaceted Annual Growth Rate (CAGR) of around 32% from FY08 to FY11 (DnB, 2012).

3.2 Competitive Background

The agrochemicals market of India is extremely sectioned in environment with over 900 formulators. The competition is severe with huge amount of players of structured segment and considerable allocation of specious pesticides (agrochemicals) (Pan-UK, 2012). Moreover, the market has been observing acquisitions and mergers with big players buying out petite producers (companies).

Key market participants include, Rallis India Ltd, Meghmani Organics Limited, PI Industries Ltd., United Phosphorus Ltd, Gharda Chemicals Ltd, Bayer Cropscience Ltd, BASF India Ltd, Syngenta India Ltd, etc. (Indian Chemical Council, 2012). Top ten players manage approximately 85% of the market share ((DnB, 2012).The market share of big players is principally dependent on product portfolio and introduction of new products. Strategic alliances with other players are frequent to decrease threats and provide a broader consumer base.

3.3 Key Trends

3.3.1 Market Trends

Ø  Focus on producing environment friendly and secure agrochemicals by the industry as well as the Government. Moreover, the Department of Chemicals has commenced a national programme for “Development and production of neem products as Environment Friendly Pesticides (agrochemicals)” with monetary support from United Nations Development Programme (UNDP) (PIB, 2012).

Ø  Focus by bigger organizations on brand building by carrying out camps for farmers in order to create awareness and provide absolute solutions for critical problems.

Ø  Rise in strategic alliances among big companies for bigger reach in the market and acquisitions of smaller players internationally in order to expand their product portfolio (Biotech Monitor, 2001). For example: Rallis has a marketing agreement for key products with FMC, Bayer and Nihon Nohayaku, Dupont and Syngenta. Additionally, Meghmani has a series of petite acquisitions internationally to penetrate new geographies and achieve product proficiency.

To read more…….

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