Why These Two Agrochemical Companies Shrug Off Monsoon Concerns

Agrochemical companies may be less impacted by the below-normal monsoon rains predicted this year, thanks to their business mix and new products launches.

Insecticides (India) Ltd. has a good product mix to deal with any shortfall in rains as well as drought, its Chief Financial Officer Sandeep Aggarwal told BloombergQuint in an interview. The company, he said, is also launching new molecules based on green chemistry—the design of chemical products and processes that eliminates the generation of hazardous substances.

Agreed Balram Yadav, managing director of Godrej Agrovet Ltd. “We cannot make sweeping statements that the whole sector will be impacted (by the below-normal rains).” The companies launching new products will be less impacted than the rest of the sector, he said. “We are a conglomerate dealing in several businesses, so a good or a bad monsoon does not impact us so much as the businesses hedge each other.”

The companies also said the impact of monsoon rains varies with their temporal and spatial distribution.

“Whatever forecast has been done, it has been done on the basis of average monsoons,” Aggarwal said. “If the time of the monsoon is good and the distribution is good, the average monsoon doesn't matter much.”

Yet, Godrej's Yadav said a slow monsoon in beginning of June and July could be a cause of worry as these are known to be “super critical” months for sowing. All agrichemical companies, however, have a “plan A, plan B and a contingency plan put in place as soon as the monsoon starts playing in the June first week”, he said.

Watch the full interview here: