UPL to form speciality products JV with Japanese cos
Agrochemicals major United Phosphorus (UPL) will set up a joint venture company with Japanese players Ishihara Sangyo Kaisha (ISK) and Mitsui to produce and market specialty products in India.
By Prince Mathews Thomas, TNN |
MUMBAI: In its third international initiative in a month, agrochemicals major United Phosphorus (UPL) will set up a joint venture company with Japanese players Ishihara Sangyo Kaisha (ISK) and Mitsui to produce and market specialty products in India.
UPL and ISK will hold 45% each in the venture and the remaining stake will be held by Mitsui. UPL will manufacture and sell the products developed by ISK, while it will use its distribution network to supply the products across the country. The three companies have kept the option open to expand the partnership overseas.
ISK, one of the leading agrochemicals players globally, is known for its advanced research and development department, especially in developing molecules that contribute to 90% of its near $350m agrochemicals sales in the last fiscal year.
The near-$1bn company also produces inorganic chemicals and has interests in construction, real estate and transportation industries.
The venture will help the Japanese company enter the growing Indian market and will also have access to UPL’s eight manufacturing facilities in India and one each in the UK and Argentina. The proposed venture also plans to set up new facilities in India. The Vapi, Gujarat-based UPL, which posted revenues of Rs 1,259 crore last year, accounts for 8% of the Indian market.
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The venture also takes forward UPL’s partnership with the $34bn Mitsui Corporation, which holds 10% in the Indian company’s Japanese arm. Other than chemicals, Mitsui, Japan’s second-largest trading company has interests in iron and steel, energy, transportation and financial services. “We believe that this alliance will differentiate UPL from other generic companies as being the most cost competitive manufacturer with an access to new patented chemistries, which can be leveraged by the global distribution network set up by us. This will also complement some of the recent brand acquisitions,” CEO, Jai Shroff told ET.
Not only that, with 70% of global products coming out of patents and with increasing costs of developing and marketing new molecules, the partnership will make UPL one of the most competitive producer of agrochemicals in India, Mr Shroff added. The company has presence in 35 countries and markets its products in more than 80 countries.
The latest move is UPL’s third international initiative in a month. In early August, the company bought South Africa’s Cropserve and three weeks later it tied up with Germany-based Bayer CropScience to purchase the latter’s certain crop protection products for Rs 259.6 crore.
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