Excel Crop

Excel Crop Care is India's largest maker of endosulfan, controlling 60% of the total production. It is a controversial pest killer  and given the current ban on the product is surely killing the company. A hazardous product, it is the mainfray of the company and beginning May 2011, the production and sale of endosulfan in the country was banned as it was blamed for causing ailments in humans following a petition filed by by Democratic Youth Federation of India -- the youth wing of the Communist Party of India-Marxist. After a long drawn legal battle, the pesticide is being phased out while it has already been prohibited in Kerala and Karnataka.  The obvious effect of this is reflected in the numbers of Excel Crop.

Seasonally, Q3 is weak but this time around it has been particularly bad. Net profit at Rs.43 lakh is down from Rs.7.6 crore in Q2FY13 and Rs.1.09 crore in Q3FY12. This was on a falling topline, which at Rs.153 crore was down 26% sequentially and down 5% YoY. Higher operating costs did not help. The company has stopped production of endosulfan and it is listed for a hearing in the Supreme Court in Feb’13. The Competition Commission of India (CCI) has also imposed a penalty of Rs.64 crore which the company has challenged and filed an appeal. The company has made a provision of Rs.16.30 crore with respect to endosulfan and this, the company says is enough to take care of the arising contingencies. The company is shifting its portfolio from dependence on the insecticides to weedicide, fungicides and we could see improvement once this entire transition is complete. H2 as such is seasonally weak so one cannot blame the entire poor Q3 number on the ban.