Excel Crop

The company declared its Q1 numbers yesterday before the market closure and the stock ended the day with an over 9% gain. The company has posted a good performance, with higher net profit driven mainly by higher sales, lower interest outgo and major jump in other income though much of its was offset by higher tax outgo. Net sales rose 21%  (YoY) at Rs.254 crore, Other income rose 122% and interest outgo came down from Rs.4 crore to Rs.2 crore. Even sequentially, this was down 33%. Tax out was up 105% at Rs.8.75 crore. The company ended the quarter with a net profit at Rs.20 crore, up 82% (YoY).

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 company has stopped production of endosulfan and is awaiting hearing and final disposal. This apart, 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. Q1 and Q2 seasonally are its best and one could see good numbers in Q2 too.