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Insecticides India in talks with PE firms

Insecticides (India) Ltd, or IIL, on Monday said it is in talks with private equity investors to raise Rs. 70-100 crore this year for its expansion, by diluting 7-8% of the promoter stake in the company. The Delhi-based pesticide maker has lined up investment plans worth Rs. 125 crore for the next two years for augmenting capacity and launching products.
“So far we expanded our business using internal accruals and bank debt, but now we thought it is prudent to raise funds through equity dilution,” said Rajesh Aggarwal, managing director of IIL, in which promoters held a 74.69% stake as of 31 March.
The company reported sales of Rs. 521.8 crore and a net profit of Rs. 33 crore for the year ended 31 March. It expects sales to grow at 45-50% this year.
But Aggarwal also warned of a tough period ahead “with costs going up and currency volatility.”The firm’s exposure to foreign exchange fluctuations is expected to be around Rs.200 crore in the year 2012-13, he said.
Shares of IIL declined 0.25% to Rs. 397.00 while the benchmark Sensex rose by 0.15% to 15,988.40 points.
“Given the generic nature of products, huge competition and pricing pressures in the domestic market, the margins are low for companies operating in the space of crop protection chemicals,” said Satish Kantheti of brokerage Zen Securities Ltd. “It’s important for companies like (IIL) to invest in licensing molecules with limited competition in order to improve their margins…”
Source: Livemint

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