Astec LifeSciences: A bet on Godrej Agrovet

On Aug 10, 2017, Godrej Agrovet bought 2.08 lakh shares of Astec at an average price of ₹556.
On Aug 11, 2017, Sundaram Mutual Fund bought 3.07 lakh shares of Astec at an average price of ₹542.

Godrej Agrovet is a game changer for Astec, has ambitious plans and this will drive growth.

Astec LifeSciences is a subsidiary of Godrej Agrovet. Astec is a producer of agrochemicals and pharmaceutical intermediates. Astec operates in the off patent proprietary segment with a focus on fungicides. Astec has over two decades of experience in the chemical industry.

Astec has three production plants and an R&D site in India. Astec has a team of scientists and chemists focused on product development and process optimization.

Astec derives 85% of its revenues from agrochemicals and 15% from pharma intermediates.

Products:
Astec manufactures fungicides with a special focus on Triazole fungicides. These products are used on paddy, fruits, vegetables, cereal, potatoes and soyabean to control various types of fungal diseases. Astec’s pharma intermediates are mainly used in the manufacture of antifungal pharma products.

Astec has 214 product registrations across 32 countries including 139 product registrations in India.

Astec derives 83% of its revenue from its top five products.

Clients:
Astec’s clients includes 6 of the top 15 agrochemical companies in the world, including Syngenta, Makhteshim Agan, Nufarm, UPL and Cheminova.

Astec also offers contract manufacturing services and has excellent relationships with multinationals.

Astec derives close to 60% of its revenue from its top five customers.

Indian Agro-chemical Industry:
India is the fourth largest manufacturer of agro-chemicals. The Indian Agro-chemical industry is estimated to be around USD 4.3 billion.

India holds the second largest agricultural land after USA. However, 60% of total land area under agriculture (157 million hectares) has been stagnant for a while now. This implies that India needs to produce more in less area – a significant improvement in productivity is required.

India’s consumption of agro-chemicals is amongst the lowest in the world. It is measured that annual crop loss in India due to pest attacks is close to ₹50,000 Crore.

Japan’s pesticide consumption per hectare stands at 11 kgs, USA stands at 4 kgs, whereas India stands at a low of 0.58 kgs.

Contract manufacturing business holds immense promise for the Indian Agro Chemical sector. Molecules worth $5 billion will go off patent in the next 5 years.

Investors:
Godrej Agrovet holds 56% of the company
Vijay Kedia holds 1% of the company
Sundaram Mutual Fund holds 1.5% of the company

 

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