Going to be a very tough quarter for all global agrochemical companies: Rohan Gupta

economictimes.indiatimes.com:

«On an aggregate basis, we see that there is going to be roughly 10 to 15% kind of revenue decline. Now this revenue de-growth will be a function of two things. One is the price drop because raw material prices are falling,» says Rohan Gupta, Director, Nuvama.What is your view right now on the industry with the kind of commentary that we have been hearing from the likes of Clariant, FMC etc.?This is going to be a very tough quarter for all the global agrochemical companies.

The pain will be sharper for the generic agrochemical players, the names which you are talking about like even FMC, UPL. The primary reason for this is basically there is a lot of inventory in the system and we have seen that there is some slight pressure in demand. Also, what happens when the raw material prices which are falling very sharply right now, the trade is in mode of inventory de-stocking.

So all of these companies actually have to take a cut on the high cost inventory that is going to put pressure on their EBITDA, the profitability. And also, there is slight weakness in the demand side right now that is also putting the volume de-growth for all these companies. So that is where we see that there is a pressure across the companies in a global market.Just maybe give us a ballpark as to what exactly would be the impact on profitability? How much do you think there would be a reduction in overall volumes, maybe company specific or just from the sector as a whole?On an aggregate basis, we see that there is going to be roughly 10 to 15% kind of revenue decline.

Now this revenue de-growth will be a function of two things. One is the price drop because raw material prices are falling. We have seen that last year, a lot of raw material prices