Aimco Pesticides Limited Date: 5 th January, 216 Stock Performance Details Shareholding Details September 215 Current Price : ` 47.75^ Face Value : ` 1 per share 52 wk High / Low : ` 82.9 / 3.9 Total Traded Volumes: 1,79 shares^ Market Cap : ` 44.1crore^ Sector : Agrochemicals EPS (H1 FY16) : ` 3.32 per share Equity Share Capital : ` 9.2crore P/E (TTM) : 15.6(x)^ P/BV (TTM) : 11.8 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : AIMCOPEST BSE Scrip Code : 524288 ^ As on 1 st January, 216 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 48,75,44 52.78 Total Institutional Holdings (FIIs & DIIs) 6,7.7 Public Holdings 43,54,373 47.14 Total 92,36,513 1. Background Aimco Pesticides Ltd, promoted by Mr. Pradeep P. Dave in August, 1987 is engaged in the manufacture and trading of Pesticides and Insecticides. It carries out agrochemical manufacturing, formulation and marketing since the last 45 years and is operating in the Insecticides, Fungicides and Herbicides, in India and across the world. The Company manufactures various technical grade pesticides, with some of the key products being Chlorpyrifos [ Ethyl & Methyl], Temephos, Cypermethrin, Permethrin, Hexaconazole, Glyphosate, Triclopyr & Fluroxypyr and also a vast range of pesticide formulations, like liquids, wettable powders, dusting powders, suspension concentrates and dry flowables. The Company has two wholly owned subsidiaries namely; Aimco Ecoscience Ltd. and Aimco International FZE. The Company's manufacturing plant is located at Ratnagiri, Maharashtra. Aimco has a full-fledged Research & Development department approved by Department of Science & Technology, Government of India, since 1996. It spends 1% of its turnover on Research & Development. The Company has obtained ISO-92 certification for the Lote-Parshuram site and Mumbai Office. It also expects to get the Environment Management System (ISO-14). Aimco is a Government recognized Export House. It has introduced 5-S and Kaizen Quality Systems at its Lote-Parshuram Plant. An Initiative of the BSE Investors Protection Fund1
Financial Snapshot Particulars Standalone (` Million) Income Statement H1 FY16 H1FY15 Income from Operations 558.2 977.1 Y-o-Y Growth (%) (42.9) 41.6 EBITDA 27.1 33. Y-o-Y Growth (%) (17.9) 83.3 EBITDA Margin (%) 4.9 3.4 Net Profit 3.7 33.3 Y-o-Y Growth (%) (7.8) 168.5 NPM (%) 5.5 3.4 Balance Sheet Fixed Assets 49.6 47.8 Cash and Bank Balances 16. 27.5 Inventories 165.2 192.1 Net Working Capital 493.4 (21.6) Net Worth 67.8 38.3 Balance Sheet Ratios ROCE (%) 35.8 69.1 RONW (%) 45.3 86.9 Source: Capitaline From the Research Desk of LKW s Gurukshetra During H1 FY16, the Company s Income from Operations dropped by 42.9% y-o-y to Rs. 558.2 million from Rs. 977.1 million reported in H1 FY15. Revenue generated from domestic business fell by 67.8% y-o-y from 69.2 million reported in H1 FY15 to Rs. 195.9 million in H1 FY16; whereas, revenue generated from outside the country fell from Rs. 367.6 million during H1 FY15 to Rs. 362.3 million in H1 FY16.The fall in revenue mainly from domestic operations affected the Topline performance of the Company. Material Cost dropped by 48.6% y-o-y to Rs. 429.4 million in H1 FY16 from Rs. 835.1 million in H1 FY15. Employee Expenses increased from Rs. 16 million reported in H1 FY15 to Rs. 19.9 million in H1 FY16. Other Expenses fell by 14.4% y-o-y to Rs. 8.3 million in H1 FY16 from Rs. 93.8 million reported in H1 FY15. The Company reported an Operating Profit of Rs.27.1 million in H1 FY16 which stood less as compared to Rs. 33 million in H1 FY15, due to lower Sales reported for the period under review. Consequently, the Company s Net Profit marginally decreased to Rs. 3.7 million in H1 FY16 as compared to Rs. 33.3 million in H1 FY15. EBIDTA and PAT Margins for H1 FY16 stood at 4.9% and 5.5% respectively. The Company s Inventories decreased by 14% from Rs.192.1 million in H1 FY15 to Rs. 165.2 million in H1 FY16. Debtors marked an increase of 15% y-o-y to Rs. 355.3 million in H1 FY16. Total Debt of the Company increased to Rs. 49.2 million in H1 FY16 from Rs..5 million reported in H1 FY15. An Initiative of the BSE Investors Protection Fund2
The Company is in the process of identification of various components of its plants and machineries. The process may take time for implementation therefore, the impact of the same, if any, will be reflected in the financials of the Company for the year ended 31 st March, 216. Performance on the Bourses 15 12 9 Stock Performance as on 29th December, 215 % 6 3 Aimco Pesticides BSE Small Cap Peer Comparison Aimco Pesticides Ltd. is engaged in manufacturing, formulation and marketing of Agrochemical products.it faces competition from the companies that are well established in the market and whose businesses are substantially larger; having a well defined product portfolio. The table mentioned below gives a snapshot of the Company s performance to those of its peers which operate in a similar business segment in the listed space for H1 FY16. (` In millions) Particulars Aimco Super Crop Bhagiradha Pesticides Safe Chemicals Income from Operations 558.2 476.4 785.7 EBIDTA 27.1 21. 18. Net Profit 3.7 11.2 (17.2) EBIDTA Margins (%) 4.9 4.4 2.3 PAT Margins (%) 5.5 2.4 (2.2) Book Value Per Share 4.2 13.5 97.2 P/E (x) 12.16^ 11.55^.^ P/BV (x) 9.27^ 1.16^.92^ RONW (%) 45.3 13.1 (3.6) Source: Capitaline Financials on Standalone Basis; ^ On a Standalone Basis as on September 215 (TTM Basis) An Initiative of the BSE Investors Protection Fund3
About the Industry Management Outlook The Indian Agriculture industry along with fisheries and forestry is one of the largest contributors to the GDP. It is estimated that over 58% of the rural households still depend on Agriculture as their occupation. India is ranked 3 rd in farm and agricultural output. The Agriculture and Allied sector registered a growth of 1.1% during the current fiscal. The Agro industry in India is divided into several sub segments such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains. Modern Agriculture depends on 4 main factors namely; water, fertilizer, seeds and pesticides. About 35-4% crop production is lost due to non usage of pesticides and insecticides. The crop protection market in India has experienced strong growth in the past and is expected to grow further at approximate 12% p.a. to reach $6.8 billion by FY17. This growth would be driven largely by Export demand which is expected to grow by 15-16%. The domestic demand will also witness growth owing to increasing awareness and willingness among the farmers to invest, increasing purchasing power, and innovative products available at competitive rates in the market. The Agrochemicals market in India is supported by strong growth drivers. Availability of cheap labour, favourable government policies, low processing costs have induced overseas companies to setup their manufacturing hubs in the country. Tropical climatic conditions and high production of crops such as paddy, cotton and other serials has driven the consumption of Insecticides. Increasing domestic consumption, employment of advanced technology and strategic moves by the agrochemical industry can actually raise the export capacity of Indian agricultural as well. The Union Budget for 215-16 has recognised importance for increasing agricultural productivity and made some important provisions to positively impact agriculture. Providing financial support to improve irrigation facilities, increasing the credit limit for the farm produce, fetching a fair price for the agricultural products are some of them. India s growing per capita consumption and demand for agriculture-related chemicals offers scope of growth for the sector in the future. The Indian Agrochemicals market is supported by strong drivers. There is low consumption of crop protection products in India as compared to the global average which suggests potential. The Company has been reacting proactively to changing market dynamics by coming up with new crop focused products. Its financial performance has been steadily improving from FY 213. Despite the competitive market scenario and not so favourable weather conditions during FY 214-215, the Company witnessed a growth in the turnover as well as profits after tax due to disciplined and object oriented approach adopted by them. Lower pest threats, unsupportive monsoons and unfavorable commodity prices moderated crop protection investments. The Company countered this reality by identifying growth markets, redeploying resources to enhanceawareness. The progress of the monsoon in India has been inconsistent this year with such an erratic pattern of monsoon might affecting the agrochemical market in India. However, the Company s market reach has been global, due to which it will have a limited effect on its sales and revenues. With a large range of products, entry into new markets and expansion of its business in the existing markets, the Company expects its sales to rise in the near future. However, despite the growth drivers, there are certain challenges faced by the Company like low farmer awareness, management of Inventory and Distribution Cost, rising sale of spurious pesticides, seasonal demand for the products etc. which may affect the sales and revenues in the future. An Initiative of the BSE Investors Protection Fund4
Financial Graphs 12 Net Income from Operations ` in Million 9 6 3 977.1 558.2 H1 FY15 H1 FY16 EBIDTA & EBIDTA Margins 4 6 ` in Million 3 2 1 4.9 3.4 33. 27.1 5 4 3 2 1 % H1 FY15 H1 FY16 EBIDTA EBIDTA Margins 4 PAT & PAT Margins 5.5 6 ` in Million 3 2 1 3.4 33.3 3.7 5 4 3 2 1 % H1 FY15 H1 FY16 PAT PAT Margins An Initiative of the BSE Investors Protection Fund5
Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements based on available data, and LKW s Gurukshetra shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW)commenced business in 1991 and is currently engaged in providing CAPITAL MARKET RESEARCH,INVESTMENT ADVISORY and STRATEGY services. GURUKSHETRA is the Research and Training arm of LKW. LKW Investment Advisers is the SEBI registered Investment Advisory arm of LKW. 5 Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office: B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai 4 53. Email: enquiry@lotusknowlwealth.com Tel: 22-41 5482 41 5483 Website: www.lkwindia.com An Initiative of the BSE Investors Protection Fund6