Bimal Shah, Director, describes ambitious plans for the company and his thoughts on distribution, the educational process, and Make in India. Shah sat down with AgriBusiness Global at the AgriBusiness Global Trade Summit in Las Vegas on Aug. 7.
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Sulphur mills is obviously known for its namesake product, sulphur, along with the traditional range of agrichemicals. Can you talk about your plans to expand in biologicals?
We don’t see biologicals as a 100% complete solution to (replacing) agrichemicals, but definitely the market is increasing. Of course, bios have a problem with shelf-life and longevity of the product, which we’re trying to address through our formulation technologies. We are not commercializing yet, but I do see in a year or so we should be launching a biological range of products, starting in India and then through the rest of the world.
What are the product types, and why now?
Some of them have IP protection so not going to get into specifics, but we’re trying better solutions that can almost replace fungicides or insecticides that are being used, and also be classified organic. These are biocontrols.
We are now putting time and emphasis into getting into this area because we are spread out over (conventional) agrichemicals, so we thought this was a line we needed to re-think. We have some innovative things we have done that have looked very good at lab-scale, so we can see how we can grow the size economically.
It seems to be a logical move with sulphur being your hallmark product.
We are the largest sulphur fungicide manufacturer in India. In the world we are No. 3 in this particular formulation, which is an 80%-solution fungicide or miticide used mainly in grapes and fruits and vegetables. Apart from that, there is another sulphur formulation we introduced, which is a 90% formulation, and we were the first to come to market with that around the end of 2007-08. That product works at one-fifth the dose compared to a normal sulphur. This is an organic soil sulphur that works as a fertilizer, and we are now selling around 18,000 to 20,000 tonnes in India alone. We see further growth in India, as we have 300 to 400 field people who are promoting this day in and day out. Everybody knows sulphur, but until they use it, they don’t see it and therefore don’t see a return.
How does distribution work in India?
The manufacturing happens in our plant, then the product goes to our 40 warehouses. Each warehouse has 10 or 12 people associated with sales or marketing around each particular location. We have a 10,000-dealer network, but the sizes the dealers cover are small. There is a product development team that goes to farm- and dealer-level explaining what the product is. At the farm level, there are small demonstration trials showing side-by-side comparisons of product performance.
How would you describe the educational process?
It takes a lot of work and needs a lot of push and commitment. Once the farmer is convinced, the commercial or pricing is not a worry because he’s happy with the success. What we’re trying to give to the farmer is a product per kilo, but something that gets him a return on his investment for his harvest. Yield is one thing. Other catalyst we are changing in the crop space is the application seen in various products. Not a single crop doesn’t use this product. Sulphur is non-toxic and organic. We’ve come with different variants and newer formulations mixed with other nutrients which is going to grow the Sulphur base position in our portfolio.
What about new investments in facilities?
We have grown quite a lot. A couple of years back we were back at 25,000 to 30,000 tonnes of WG formulations. Now this year we should be at 60,000 to 70,000 tonnes and by the end of 2019, 100,000 tonnes.
Everything is made, formulated, and packed in India, and shipped to the 80 countries we operate in. In certain geographies there is more push. We have enough IP now gained in the formulation technology space to further expand.
In what markets are you focusing on more heavily?
South America is important. The market is big but of course the risks are also, with getting the money back around the distribution channels. The U.S. market is tricky, but we’re there. Distribution is a challenge.
There aren’t other companies in the world making the same high-end formulations we are.
What makes the U.S. trickier?
Distribution. It’s getting more fragmented. Earlier it was controlled by the top five, but I’ve been hearing there is less control now with smaller players coming into the space. The whole rebate system with the multinationals is also tricky. Here, you may have gold in you product and it won’t sell. The whole pull comes from the end-user, the farmer. You can talk to the head office but if his guys don’t want the product, the stores don’t want the product. Australia works similarly.
What is your perspective on Make in India?
I think it’s good in ways, but it may have been done a bit abruptly. What was happening was there was a lot dumping of bad-quality product. China is cheaper – that may be true, but quality was going down. There was no reliability or emphasis on quality first, and that was being taken for granted. A lot of material was coming and based on that they were having economies of scale. Now we’re seeing China changing too because of pollution; India was already having those issues and we’re trying to control that. So they said, whatever can be made in India should be made in India. There will be a gap in supply and demand. But they will look for alternatives.
Sometimes in a culture like India I feel crazy things could happen. If there’s a bigger barrier, people will try to jump over it even more. A lot of companies in India had a lot of manufacturing capacity and we didn’t even realize (the potential), because the Chinese government is giving a 15% rebate on what he is selling. In India you’re not going to get a rebate, so how is the Indian manufacturer ever going to be competitive? It could be the other way around – that a duty would be imposed on imports. They did the same thing with the car industry by imposing a 225% duty, but that’s how Tata became so strong.
But the automotive industry is not a necessity. Farming is a necessity, so you need to have more openness. I would prefer it if they would just increase the duty on the imports. On the other hand, if you put more barriers, cost, and requirements on the registrations, serious people are more apt to be in the business.
I’m fine with Make in India, but it has to be done in pace. Give the benefit to India.
Here’s an example: cartap. In India, there are probably 20 import registrations for cartap. Out of these, there are 17 or 18 who have a manufacturing registration (in addition to the import registration) – whether they make it or have ever made it is another point. There are one or two who can really make it. All of the product has still been imported thus far. But do these companies that have the manufacturing registration have the capacity? It will take time.