Safex Chemicals maintains its business momentum; targets to close FY23 at 1800 Cr

By Nimish Gangrade, Editor, Global Agriculture (The article was originally published in Global Agriculture)

10 January 2024, New Delhi: In 2022, Safex Chemicals India Limited (Safex) announced the acquisition of Briar Chemicals (Briar), the UK’s leading agrochemicals Contract Development and Manufacturing Organisation (CDMO) provider. This was the first overseas acquisition for the company and the third in the last 7 years.

We spoke to S.K. Chaudhary, Group Director, Safex Chemicals on the financial performance of Safex in 2023, and how the agrochemical industry is progressing, including insight on inventory buildup.

Q1. Tell us about the acquisitions that Safex has done in the recent past?

Briar was Safex’s first overseas acquisition and forms part of the company’s strategy for global expansion in step with the substantial growth of the worldwide agrochemicals market, which is set to increase in value by over 11% from USD 62.3 billion in 2022 to USD 69.4 billion in 2026.

Acquiring Briar Chemicals will fast-track our company into becoming a fully integrated company, present in all industry verticals. Briar Chemicals is the UK’s leading agrochemicals Contract Development and Manufacturing Organisation (CDMO). It will help Safex to become an important player in the global agrochemical industry.

Earlier in 2022, we acquired Shogun Lifesciences. The company has been acquired by Safex through its wholly owned subsidiary Shogun Organics Ltd, a Pune-based manufacturer of Home Care Active Ingredients, now expanded to produce agrochemical active ingredients. Shogun Organics itself was acquired by Safex, a year back. Shogun Lifesciences is in the business of manufacturing Aluminium Phosphide and Zinc Phosphide, with manufacturing facilities near Ahmedabad. Aluminium phosphide is a very vital and sole molecule used for safe storage of food grains and fumigation of storage spaces. Zinc phosphide is used for the control of rats which cause extensive crop damage, and destroy stored food grains.

Q2. The first 6 months (H1) of the current financial year have been tough for the agrochemical Industry in India. Will Safex maintain its financial year outlook to achieve 1800 crore? What strategies has the company implemented to maintain its financial year outlook?

Yes, we are confident of achieving our goal and we are working towards it. The company is using its multiple verticals to drive its growth starting with brand sales to CDMO, home care & post-harvest solutions.

Q3. When do you think the agrochemical industry will recover from the current slowdown in demand and build-up of inventory at the dealer level?

The situation is not that alarming now. Although the monsoon has been erratic, the deficit is 6% only, which is well within the normal range. There were some hiccups due to falling raw material prices at the start, but the same has stabilized now. Except for Karnataka & some parts of Maharashtra, in the rest of the country, things have normalized. The exports have been hit adversely, due to inventory & falling prices. The industry has closed H1 on a positive note, despite the falling prices. We have closed H-1 (FY23-24), with a growth of 21% over FY22-23 H-1. Individual companies may have large inventories but this is not related to weather.

Q4. How has been the financial performance of Safex in the last 3-4 years?

Safex has maintained its business momentum since the pandemic began with major advancements and product developments. We recorded a revenue growth of INR 703 crore in FY20-21. Further in 21-22, we registered revenue of INR 782 crore. Acquisition of assets in England in FY22-23 i.e. Briar Chemicals has added to our growth which led us to close the financial year on 1437 crore. In the current financial year, we plan to close at 1800 crore.

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