UPL Limited here today announced the completion of its acquisition of Arysta LifeScience Inc from Platform Specialty Products for US$ 4.2 billion, following the related transaction signed in July 2018. UPL made this acquisition through its international arm – UPL Corporation Ltd – and stated that this acquisition further strengthens UPLs position as a global leader in agricultural solutions with approximately US$ 5 billion in combined sales and EBITDA of around US$ 1 billion.
UPL, in pursuit of its long-term vision to world leader in the global food network, also launched “OpenAg,” – meaning: building open-minded and win-win partnerships in its efforts at broadening space to create value along a wider food production network, Jai Shroff, Global CEO, UPL, said, adding that through OpenAg, the company aims to transform agriculture by creating an open agriculture network that feeds sustainable growth for all.
“Farmers need technologies with resilience and enhanced performance — because of climate change and sophisticated food systems – that UPL can offer through its vast portfolio of technologies in the field of crop protection to innovative hybrid platforms. Our combined biosolutions pipeline signals the dawn of a new era in sustainable agriculture as part of integrated pest and nutrition management programmes,” he said.
Earlier, Vikram Shroff, Vice-Chairman and Executive Director, UPL said that the company had completed 10 acquisitions since 2008 and the Arysta LifeSciences Inc. acquisition was due to that company’s presence in Africa, Russia and Eastern Europe with exposure to fast-growing market segments and niche crops, besides its association with Japan which has a vast history of molecule research and development.
“We are guided by 50% to 75% margin growth for this year even as we look at new farming yields and practices in India. Latin America is our highest-growing and largest customer geography in their growing season of October to March, while UPL’s growth is 1.5 times faster than the market,” he said, while pointing out that India with 60,000 tonnes of pesticides production is still small in comparison to the world market.
“We are seeking open innovation in our partnership with new companies and we have 40 lakh farmers on the UPL App,” he said while narrating the example of one enterprising Indian company doing business worth US$ 400 million in selling Indian food to Americans in the USA.
“While global food consumption has not gone down, we are always prepared for one market — out of the four markets we operate in – to not perform well. We track the planting seasons and position our products in those markets, while farmers planting depends on opportunities and their choice of consumers,” he said, adding “Major trends affecting us include weather, new pests (for example, an ‘Army Worm’ came from Latin America), water problems being real constraints (and in which UPL’s ‘Zeba’ – a patented soil enhancement technology – is an excellent water management tool that improves soil health, is environment-friendly and leaves no residue),” Shroff said.
Pointing out that the Arysta acquisition was completed with US$ 4.2 billion, Anand Vora, Global CFO, UPL, said UPL is into soyabean, corn, cotton while Arysta is into sugarcane and coffee – though both companies’ businesses are complementary in nature to each other. UPL is the 7th largest agriculture solutions player with strong presence in Hi-Growth markets through its 6,150 products — while Arysta is the global 10th largest such player focusing on specialty and other crops – with both companies’ having combined total 13,000 registered products.
Replying to questions, he said that in its debt ratio upto March 31 2019, UPL’s ‘cross-debt’ amounted to between Rs 3.8 billion and Rs 3.9 billion, while its ‘net-debt-ratio’ was around Rs 3.2 and 3.3 billion. UPL, with a Rs 7,000 crore turnover, would own 78% of its subsidiary Arysta, he said.
Sagar Kaushik, Global Head, External Affairs, UPL said that increasing population migration from rural areas to cities would witness, by 2030, urban areas having 38% rural people and leading to growth in crops consumption, while rising per capita income would touch US$ 2,000 per person in India. “Demand for food and nutrition security will be increasing amidst demand for more agrochemicals — which is positive for our industry – while the ageing population will be getting more nutritious and higher quality food, “ he said while also highlighting the fact that alongside productivity, sustainability (water availability, environment) had to be an importantly, integral part of any food company’s business strategy.
“At present, about 30% to 35% of horticulture goes waste due to lack of value chain and shelf life, even though there are technologies now available that can increase these products shelf life to anywhere between one month and seven months,” he said while also pointing out that lack of calcium led to softness in mangoes and UPL had introduced pheromone products to trap and eradicate insects that are harmful to crops.
Describing UPL as a ‘gamechanger’ for the agro-solutions industry, Sameer Tandon, Regional Head, India UPL, said the company’s presence is in 31 countries, besides business operations in 76 countries globally.
