Pesticides maker Dhanuka Agritech is planning to buy at least 25% stake in a seed company to diversify its business, and is also in talks with two multi-national companies for a joint venture to tap growing domestic market, its managing director MK Dhanuka said.
The company has hired a Mumbai-based consultant to assist in its search for a seed company. ?Initially, we want to have a minority stake in it to gain some experience in the seeds sector. Then, in a course of two to three years, we would like to either buy the company out completely or hold a majority stake in it,? Dhanuka said.
India offers immense growth opportunities for manufacturers of agro-chemicals and seeds as it needs to prevent crop losses and also boost output by using high-yielding seeds and adopting better farm practices, Dhanuka said.
The country?s per capita pesticide consumption of 567 gm is far below its major Asian peers? ?1.5 kg in China and 10 kg in Japan. While the country produces around 16% of global food items, it accounts for just 2% to 3% of the pesticides used globally, according to a study.
The company, which has been witnessing a compounded annual growth rate of 24% for the past five years, wants to form a joint venture with an MNC to expand capacity as well as sustain the growth momentum.
?If the JV partner wants to provide technology, Dhanuka will set up the plant, or else, we will find another suitable mechanism. The talks are in an advanced stage,? Dhanuka said. The company has already applied to the Gujarat government for 37 acres of land in the chemical zone for this purpose, he added.
It expects domestic pesticide consumption to rise with a renewed focus on agriculture as well as growing demand for food, benefiting the agro-chemicals industry. The firm aims to double its turnover to R1,000 crore by the financial year through March 2014 from R541 crore in 2010-11.