Indogulf Cropsciences
- Indogulf Cropsciences is coming out with a 100% book building; initial public offering (IPO) of 1,89,08,566 shares of Rs 10 each in a price band Rs 105-111 per equity share.
- Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
- The issue will open for subscription on June 26, 2025 and will close on June 30, 2025.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 10 and is priced 10.50 times of its face value on the lower side and 11.10 times on the higher side.
- Book running lead manager to the issue is Systematix Corporate Services.
- Compliance Officer for the issue is Sakshi Jain.
Profile of the company
Indogulf Cropsciences is engaged in the business of manufacturing of crop protection products, plant nutrients and biologicals in India. It manufactures Spiromesifen technical with the minimum purity of 96.5% in 2019. It is also one of the first few indigenous manufacturers of Pyrazosulfuron Ethyl technical, with the minimum purity of 97% indigenously in India and commenced production in 2018. It is also a growing exporter of crop protection, plant nutrients and biologicals products and it exported its products to over 34 countries. It has been recognised as a ‘Two Star Export House’ by Government of India.
It commenced its operations in 1993 and primarily operate under three business verticals namely crop protection, plant nutrients and biologicals, to retail and institutional customers focused on improving the crop yield. It manufactures and markets extensive range of products in all types of available formulations such as water dispersible granules (WDG), suspension concentrate (SC), capsule suspension (CS), ultra-low volume (ULV), emulsion in water (EW), soluble granule (SG), flowable suspension (FS), etc. which can be in powder, granules and liquid form to its customers. Its diverse product portfolio caters to a broad spectrum of crops, including cereals, pulses and oilseeds, fibre crops, plantations, and fruits and vegetables. Its products are designed to improve crop yield while promoting sustainable agriculture and environmental stewardship.
The company also provides contract manufacturing services which are customizable to meet the specific requirements and formulations requested by its clients and deliver tailored solutions. Its longevity in the industry for over three decades is a testament to its ability to adapt to the evolving industry landscapes, business environments and customer requirements. It has built long - standing relationships with a number of its customers and has catered to major domestic and international brands, with some of its key customers. It has also established long-term relationships with a network of reliable suppliers who provide it with essential raw materials and components.
Proceed is being used for:
- Funding working capital requirements of the company
- Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company
- Capital expenditure of the company for setting up an in-house dry flowable (DF) plant at Barwasni, Sonipat, Haryana
- General corporate purposes
Industry Overview
Agriculture has been a cornerstone of India’s economy since independence, contributing significantly to GDP and supporting the workforce. While its share in GDP is expected to decrease to 13.2% in FY25, agriculture remains crucial for rural livelihoods, global trade, and sectors like food processing and textiles. Despite challenges like climate change, it continues to play a vital role in economic growth, poverty reduction, and social stability. Its growth is supported by government initiatives aimed at enhancing productivity, ensuring food security, and improving farmer welfare. India’s average crop yield is lower than the global average due to outdated practices, poor irrigation, and climate challenges. India, with 14% of the global crop-protection market, is a key player in boosting agricultural productivity. Demand for chemicals is projected to grow from 61,097 tonnes in FY20 to 89,170 tonnes by FY36. The industry is adopting sustainable practices and innovations, driving food security and reducing agriculture’s ecological impact, solidifying India’s leadership in crop protection. As per the latest forecasts by various agencies including the IMD, the monsoon is expected to be normal this year as well as no impact from El Nino effect is expected.
Agrochemicals (Crop protection products) are designed to protect crops from insects, diseases and weeds. They do so by controlling pests that infect, consume or damage crops. Uncontrolled pests significantly reduce the quantity and quality of food production. The Food and Agriculture Organization (FAO) estimates that up to 40% of food crops are lost due to plant pests and diseases annually. Furthermore, food crops must compete with 30,000 species of weeds, 3,000 species of nematodes and 10,000 species of plant-eating insects. Agrochemicals are the last and one of the key inputs in agriculture for crop protection and better yield. Notably, India is in top 5 global producer of agrochemicals. During 2019-2024, the market size of the global crop protection & nutrition industry grew at a CAGR of 6.2% on account of continuous growth in agricultural activities. After a steady growth till 2022, the industry observed a decline of about 2.4% in 2023 due to factors such as a slowdown in global demand, higher energy prices, and erratic monsoons. However, it is estimated to have grown by 2.2% y-o-y in 2024.
The Indian crop protection & nutrition market is poised for growth due to the growing demand for food products. The demand has grown substantially over the last decade on account of increased agricultural output, growing population, and favorable government initiatives such as Make in India and Aatmanirbhar Bharat Abhiyan. Despite challenges such as a slowdown in global demand, crop failures due to erratic monsoons, high energy costs, geo-political tensions, etc., consumption of nutrients and crop protection chemicals increased in 2024. Further, the rising population and depleting arable land are increasing the demand for food grains. The usage of nutrients and crop protection chemicals has increased to produce good quality crops and protect them from damage caused by pests and weeds. Also, environmental factors such as weather and rainfall patterns and warmer temperatures in various regions of the country have led to increased consumption of nutrients and crop protection chemicals and are expected to continue in future.
Pros and strengths
Diversified product portfolio and specialized products across all three verticals: The company has, over the span of three decades, diversified its product portfolio and has grown into multi-product manufacturer of crop protection, plant nutrients and biologicals in India. Its product portfolio has expanded from 198 products in Fiscal 2022 to 262 products in December 31, 2024, consisting of products that it manufactures using in-house innovative processes, which enable it to cater to a wide range of customers in domestic and international markets. It manufactures a wide range of product categories consisting, among others, water dispersible granules (WDG), suspension concentrate (SC), capsule suspension (CS), ultra-low volume (ULV), emulsion in water (EW), soluble granule (SG), flowable suspension (FS), which can be in powder, granules and liquid form.
Established distribution network in India and abroad: The company has a Pan-India sales and dealer presence in 22 states and three Union Territories in India and over 34 countries outside India with a dedicated sales and development force that provides customer service and undertakes product promotion. As of April 30, 2025, it distributes its products through its distribution network and its distribution network comprised 192 institutional business partners (b2b), 6,916 working domestic distributors (b2c), supported by 17 stock depots and 6 sales/branch offices supporting the distribution of its products in India and 143 overseas business partners optimizing its product distribution in over 34 countries.
Backward integrated manufacturing infrastructure: Backward integration is a strategic approach that enhances the company’s control over its supply chain, improves cost efficiency, and encourages innovation. However, its successful implementation demands careful planning, substantial investment, and a deep understanding of market dynamics. By evaluating the benefits alongside potential challenges, it determines if backward integration aligns with its long-term strategic objectives. It currently has four manufacturing facilities including formulation, technical and fertilizer plants having international quality standards located in (i) Samba, Jammu and Kashmir; (ii) Nathupur - I, Haryana; (iii) Nathupur - II, Haryana; and (iv) Barwasni, Haryana, collectively, spread across approximately twenty acres. Its manufacturing facilities are ISO 9001: 2015 and ISO 14001: 2015 certified, for quality management system and environment management system.
Strong R&D and product development capabilities: The company has substantial experience in undertaking R&D activities as part of its manufacturing operations. Its R&D laboratory is located at its Nathupur, Haryana facility with modern research and development infrastructure. Its R&D laboratory has received certificate of accreditation from the NABL which has assessed and accredited in accordance with the standard ISO/IEC 17025:2017. It has been able to diversify its products range mainly due to its R&D and product development capabilities. Further, it is currently in the process of developing and upgrading 39 products. Its R&D efforts are mainly focused on developing new products and processes, improving its existing production processes, adopting advance production technology, and improving the quality of its existing products coupled with cost efficiency. Its R&D efforts are important to maintain its competitive position in various business lines as well as to address evolving customer needs, industrial development and business models.
Risks and concerns
Significant portion of revenue is generated from sale of exports across Saudi Arabia, Ethiopia and Egypt: A significant portion of its revenue is generated from the sale of exports across Saudi Arabia, Ethiopia and Egypt. In the nine-month period ended December 31, 2024 and December 31, 2023, and Fiscal 2024, 2023 and 2022, gross revenue from operations from exports accounted for Rs 506.87 million, Rs 529.23 million, Rs 753.27 million, Rs 688.39 million and Rs 1,039.39 million, representing 10.46%, 12.48%, 13.17%, 12.11% and 20.52%, respectively, of its total gross revenue from operations in such periods. Therefore, any developments in the global agrochemical industry or the industries in which its customers operate could have an impact on its sales from exports.
Dependent on an extensive distribution network: The company distributes its products through its distribution network and its distribution network comprised 192 institutional business partners (b2b), 6,916 working domestic distributors (b2c), supported by 17 stock depots and 6 sales/branch offices supporting the distribution of its products in India and 143 overseas business partners optimizing its product distribution in over 34 countries. Its revenue recognition across its distribution network is subject to various complexities and risks, which could impact the accuracy and timing of its financial reporting. Due to the diversity of its distribution channels and the range of contractual terms with distributors, any misalignment in the timing or criteria for recognizing revenue could lead to discrepancies in its reported financial results. This may expose it to potential regulatory scrutiny, restatements, and reputational risks, as well as impact its financial condition and results of operations.
Geographical constrain: Certain portion of its revenues are derived from certain geographical locations in northern and eastern India. Its inability to diversify into various geographical markets, may lead to its dependence on certain geographical regions, resulting in risks relating to geographical concentration. Consequently, if it is unable to expand its sales volumes in its existing geographies, maintain its relationship with its key customers in existing geographies or diversify its customer base in existing geographies, it may experience material fluctuations or decline in its revenue and reduction in its operating margins, as a result of which its business, results of operations and financial condition could be materially and adversely affected.
Business is subject to climatic conditions and is cyclical in nature: The company’s business is sensitive to weather conditions such as drought, floods, cyclones and natural disasters, as well as events such as pest infestations. There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. Its revenue from sale of products used by the agriculture industry is significantly affected by weather conditions in the agricultural regions in which its products are used. The most important determinant of its sales of such products is the volume of crops planted. Adverse conditions early in the season, especially drought conditions, can result in significantly lower than normal plantings of crops and therefore lower demand for plant supplements, crop protection products and special formulations. This can result in its sales in a particular region varying substantially from year to year.
Outlook
Indogulf Cropsciences is engaged in manufacturing crop protection products, plant nutrients, and biologicals in India. The company manufactured Spiromesifen technical with 96.5% purity in 2019 and is one of the first indigenous manufacturers of Pyrazosulfuron Ethyl technical with 97% purity in India. The company has diversified product portfolio and specialized products across all three verticals. It also has strong R&D and product development capabilities. On the concern side, the company’s manufacturing facilities are concentrated in the northern region of India and the inability to operate and grow its business in other regions may have an adverse effect on its business, financial condition, results of operations, cash flows and future business prospects. A significant portion of its revenue is generated from the sale of exports across Saudi Arabia, Ethiopia and Egypt and any developments in the global agrochemical industry or the industries in which its customers operate could have an impact on its sales from exports.
The issue has been offering 1,89,08,566 shares in a price band of Rs 105-111 per equity share. The aggregate size of the offer is around Rs 198.54 crore to Rs 209.89 crore based on lower and upper price band respectively. Minimum application is to be made for 135 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 0.47%, from Rs 5,496.56 million in Fiscal 2023 to Rs 5,522.34 million in Fiscal 2024. Moreover, its profit for the year increased by 25.91% from Rs 224.23 million for Fiscal 2023 to Rs 282.33 million for Fiscal 2024.
The company will continue to leverage its ability to launch new products in order to increase its revenues and market share in its target markets. With the ever-evolving consumer needs and preferences, it intends to continuously work towards launching new products and categories at various price points with an aim to increase its market share. In this regard, it intends to further improve its product offerings and are looking at opportunities in similar product categories. It intends to continue to strengthen its existing product portfolio and to further diversify into products with prospects for increased growth and profitability. For example, it intends to increase its focus on plant nutrients and biologicals as these will provide it promising value propositions with comprehensive range of product offerings, far-reach, better profitability and create a niche market. Its product pipeline is aimed at offering long term visibility. Additionally, it intends to expand in Morocco, Turkey, Tanzania, South Korea, USA and Oman regions.
