In June 2016, the promoter group of Excel Crop Care Ltd, the Shroff family, had entered into a definitive agreement to sell its 24.75% stake in the agro-chemicals firm to Sumitomo Chemical Company Ltd for ₹343 crore, Sumitomo Chemical also acquired around 19.98% in Excel Crop from private financial services firm Ratnabali Group (Public Shareholder of Excel Crop Care) for around ₹ 263 crore. These deals were struck at ₹1,259.36 a share, thus valuing Excel Crop at around ₹1,386 crore.

Moving on, Sumitomo Chemical Company (PAC) made an open offer to buy additional 30% stake in Excel Crop care through its Indian WoS Sumitomo Chemical India Private Limited, in which actuals were amounting to ₹277.29 Crore resulting in acquisition of 19.98% stake of ₹5/- per share at a premium of ₹1254.76.

Excel Crop Care Limited (ECCL) was incorporated in the year 2003 from a demerger of the agricultural inputs portfolio of Excel Industries Limited with the strength of three manufacturing units at Bhavnagar, Gajod and Silvassa. It is basically engaged in the manufacturing and marketing of Crop Protection, Soil Nutrition, Seed Treatment and Post-Harvest products. The current BSE market cap of the company is ₹4,204 Crores

Sumitomo Chemical India Private Limited (SCIPL), wholly owned subsidiary of Sumitomo Chemical Company, Limited, Japan (“SCC”) was established in year 2000 to drive the expansion of its Health & Crop Sciences business in India. SCIPL has 2 manufacturing plants, 1 Plant in Maharashtra and 1 plant in Gujarat.

Transaction

Synergy Benefits

  1. Post-merger Sumitomo Chemical India will have 5 manufacturing plants in West India. (2 plants of SCIPL plus 3 Plants of ECCL)
  2. The amalgamated company will have presence in both technical & formulation manufacturing. As SCIPL is into manufacturing formulations whereas ECCL is into Predominantly a formulation company with facilities for both formulation & technical.
  3. The company post-merger will possess 13,000+ distributors covering more than 85% of the geography pan- India – with improved depth and breadth of the distributors.
  4. There will be Optimal utilization of R&D facilities capable of creating new combinations using Sumitomo Chemical India’s chemistries.
  5. SCIPL is Specialty focused whereas ECCL is formulations focused, so post-merger, the product capabilities will consist of Specialty focused and Generic focused, thereby presence will be in complete range of products.
  6. Post-merger the company will emerge as Primarily an agrochemical company with presence in Animal Nutrition and Environment Health Products
  7. Well diversified product range covering multiple crop segments in both Kharif and Rabi season
  8. SCIPL has degree of engagement with farmers whereas ECCL has strong wide spread presence with the distributors/retailers, the amalgamated company will have strong presence with both the retailers and farmers.
  9. After acquisition by Sumitomo Chemicals, chances of it becoming a global supplier is very visible as Sumitomo has footholds in every country.
  10. Sumitomo Chemical might change that management style and may bring fresh blood and fresh thinking in the organisation.
  11. There will be a consolidation of major operations in India related to businesses of both the companies. However, further evaluation needs to be done whether there are any businesses in private company related to agriculture business.

Shareholding Pattern

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