Japan’s Nihon Nohyaku, an agrochemical manufacturer, keen to tap into the Indian agrochem growth story, has taken the plunge by deciding to invest over ₹500 crore to acquire a 74 per cent stake in Hyderabad Chemicals.
Expected to grow at 12-13 per cent per annum to reach $7.5 billion by FY19, the Indian agrochemical industry was estimated at $4.25 billion in FY14.
Domestic marketThough the Indian market is an important one for Nihon Nohyaku's main agrochemical product, Applaud (buprofezin) and Phoenix (flubendiamide), the fact that 50 per cent of India’s crop protection products are exported was a major draw for the Japanese firm.
KPMG corporate finance acted as the advisor to Nihon Nohyaku in signing the deal and also provided due diligence services.
Officials said the Japanese company had been working to expand sales of its proprietary products in Japan and overseas.
With a group target of net sales of ¥100 billion by fiscal 2018, India was a natural target for the Japanese company, keen to accelerate sales, research and development activities in the region. Moreover, with food production expected to grow in India, it would increase demand for agrochemicals.
Though the company registered strong sales in the European market and the Americas last quarter, “sales were sluggish in South Korea, China and India, the major markets in the Asia region,” the company said in an investor briefing last month.
The Japanese company aims to become one of the world’s top-ten research and development focussed companies.
Its acquisition of Hyderabad Chemicals will certainly help.