Excel Crop

Excel Crop Care has two reasons to celebrate – Q2FY14 numbers and the CAT orders. First the Competition Appellate Tribunal (CAT) order.  has pronounced an order on the company's appeal challenging the penalty of Rs 63.90 crore imposed by the Competition Commission of India on it. The Tribunal has reduced the amount of the penalty to Rs 2.91 crore, which is a reduction of 90%.

And then the Q2FY14 numbers wherein the company reported a whopping 3 times (YoY) surge in its net profit at Rs.23.24 crore on a 30% jump in net sales at Rs.269 crore. The higher net profit driven was mainly by higher sales as demand is best in Q2 given the seasonal nature of agriculture, lower interest outgo though much of it was offset by higher tax outgo. Its interest outgo came down from Rs.3 crore to Rs.85 lakhs (YoY). Tax out was at Rs.13 crore v/s Rs.3 crore in previous Q2 and this was on account of MAT Credit utilization.

Excel Crop Care is India's largest maker of endosulfan, controlling 60% of the total production. It is a controversial pest killer and the ban on the product continues. 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. 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 is seasonally weak thus we could see some tapering in the numbers.