homebusiness Newscompanies NewsPrice reductions to continue with higher channel inventory, says Coromandel International
Price reductions to continue with higher channel inventory, says Coromandel International
"The overall situation in India is grim" says Coromandel International. Price reductions have happened over the past couple of quarters and the channel inventory is higher than normal levels.
Global chemical companies have issued profit warnings, which has raised concerns on the operating performance of such players. There has been a notable reduction in channel inventory, demand slowdown and pricing pressure globally.
Furthermore, India has witnessed incessant rains in various parts of the country. CNBC-TV18 in an interaction with Jayashree Satagopan, President-Corporate & CFO at Coromandel International on July 11, said the irregular rainfalls have not disrupted its operations. However, the sowing pattern is disrupted in some parts of India and hence, the acreage of crops like paddy are lower.
Coromandel International specializes in fertilizers, crop protein, bio pesticide, specialty nutrients, organic fertilizers, etc. Its business is divided in two main segments i.e. nutrient and other allied products (~85 percent of revenues) and crop protection (~15 percent of revenues).
She adds that as global chemical players are suffering, its impact can be seen in India as well. "The overall situation in India is grim". She adds that price reductions have happened over the past couple of quarters and the channel inventory is higher than normal levels.
The production capacities in China have been higher and hence there is dumping in India, due to which the the raw material prices in India are soft. Satagopan expects the raw material prices to continue being soft for the next few quarters given the adverse macro environment.
Furthermore, the company has increased its investments in technology. It has recently raised its stake in drone startup Daksha to 51 percent. The startup has a presence in agricultural industry, where Coromandel International is dominant. The drone maker shall expand its presence to other industries like defence, logistics, surveillance, trainings, etc. "This technology foray will mark a significant opportunity for Coromandel to expand beyond its core operations".
Drones are expected to play a significant role in the agricultural sector, specially at a time when labor shortages are prominent and costs are rising. Usage of this newer technology helps increase productivity of farmers by 20 to 25 percent.
The stock is trading 2 percent lower on NSE on July 13.
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