Insecticides India (IIL) is in talks with private equity (PE) investors and qualified institutional buyers (QIBs) to raise capital to fund expansion, managing director Rajesh Aggarwal told FE. ?We have funded our initial expansion programmes through internal accruals, but now we don?t want to put further pressure on our cash flow. So we are looking for investors,? he said.
The company, which is expecting a 38% rise in turnover to R650 crore in this financial year, is aiming to nearly double revenue over the next two years.
At present, promoters hold 75% in IIL, and with the issue of fresh shares by the company, their stakeholding will also drop by a single digit, Aggarwal said.
?We (promoters) would like to retain around two-thirds of the stake in the company (even after the dilution). We are open to both domestic as well as international investors,? he added.
As the domestic insecticide market is growing at a fast pace, with the government?s renewed focus on agriculture, the company is eyeing a substantial increase in annual revenue to R1,100 crore by the 2013-14.
At present, the company produces around 3 lakh tonne of formulation ? the raw product for the making of insecticides ? annually and aims to increase the capacity to 500,000 tonne in the next two years. IIL sells 105 products to cater for almost all crops and has hit brands, including Monocil, Victor, Lethal and Thaimate.
The company is also looking for tie-ups with multi-national agro-chemical companies abroad to have exclusive rights to sell their products in India and also manufacture items for them at competitive costs, Aggarwal said.
Most of the company?s revenue comes from domestic sales and it is now aiming to boost exports to maximise returns from good farm practices as well as higher pesticide consumption abroad. It seeking permission to register its products for exports to countries in West Asia, East Asia, South America and Africa, as it currently exports only to Nepal and Bangladesh.
India?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. The domestic market has immense growth potential because of the low level of consumption, industry executives said.