Nagarjuna Agrichem to raise Rs 250 cr to set up Vizag plant

Pesticides manufacturer Nagarjuna Agrichem today said it will raise Rs 250 crore though private placement of shares and debt to set up a new facility near Vishakhapatanam in Andhra Pradesh.

The company, which is a part of Nagarjuna Group, has two pesticides plants and has chalked out a major expansion plan to become a Rs 1,000-crore entity in the next 2-3 years from the current Rs 600 crore.

"We are setting up a new plant near Vizag to manufacture active ingredients at an investment of Rs 250 crore in the first phase," Nagarjuna Agrichem Chief Operating Officer C M Ashok Muni told PTI.

The new plant would only cater to the export markets, which contributes about 37 per cent of its total turnover.

Asked about source of funding the project, he said it would be through debt and equity in 2:1 ratio.

While the debt part would be raised from banks, the company may go for either private equity route or qualified institutional placements to fund the equity part. "We will decide in next one or two months whether to go for private equity or QIP," Muni said.

Promoters currently holds around 79 per cent stake in the company.

The active ingredients unit at Vizag, which will spread over 108 acres of land within a special economic zone, would have an annual capacity of 8,000 tonnes in the first phase, to be completed by 2012.

In the second phase, the company plans to increase the capacity by an additional 8,000-12,000 tonnes at an investment of around Rs 100 crore. The entire project is expected to be completed by 2015.

Nagarjuna Agrichem is a leading player in the Rs 6,000- crore domestic pesticides market. It has an active ingredient manufacturing plant at Srikakulam and a formulation plant near Rajmundhry, both in Andhra Pradesh. Active ingredients are used to make formulations, which are familiar as pesticides.

While the Srikakulam plant has 6,000 tonnes active ingredients manufacturing capacity in a year, the Rajmundhry plant makes 30,000 kilo liters of formulations, 10,000 tonnes each of powder and granules.

Meanwhile, the company has started de-bottlenecking its existing plants with an estimated investment of Rs 100 crore, to be spent over the next two-three years, to increase its domestic market share now at around six per cent.

Nagarjuna Agrichem had recorded Rs 609 crore sales last fiscal of which around Rs 350 crore came from domestic retail sales, Rs 225 crore from exports and the rest from sales to institutions.

Post-expansion, the turnover of the company is likely to become Rs 1,000 crore, he said.