Sumitomo Chemical India Limited (SCIL), a subsidiary of one of the leading global chemical companies Sumitomo Chemical Co., Ltd., Japan and a leading player in Indian agrochemical, household insecticides and animal nutrition sectors, announced the completion of the merger of Excel Crop Care Limited (‘ECC’) with itself (SCIL).
The aforementioned merger process has been successfully completed and Effective Date for the merger is August 31, 2019. The merged entity will be Sumitomo Chemical India Limited.
In light of a vigorous expansion of food demand spurred by a population growth in India, SCC Japan established SCIL in year 2000 as its manufacturing and marketing base for crop protection products in the country. Thereafter, SCC Japan constantly endeavored to fortify the foundation of its crop protection business in the country through various initiatives, including the acquisition of an agro-chemical company New Chemi Industries in 2010 and the acquisition of certain products from a leading MNC in 2006. In 2016, SCC Japan acquired majority stake in ECC, an agrochemical company with strong brands and multiple sales channels, which helped solidify SCC Japan’s presence in India, the seventh-largest agrochemical market in the world, as of 2016, with high future growth prospects.
Given the similarity in businesses and high degree of operational complementarity, the merger is expected to usher in long term benefits by creating an enterprise of scale with comprehensive product offerings.
SCIL will fully leverage the rich product portfolio and established sales network of erstwhile ECC and SCIL in a mutually complementary manner and also make more focused and efficient use of their management resources so the company should become a leading player in the India’s crop protection market which holds the promise of a continued high growth. Some of the key operational synergies and process efficiencies that the merger is expected to create include the following:
– Highly complementary nature of both the businesses with ECC at 100% generics while SCIL’s stronghold of 63% proprietary products; merged SCIL will have broader business segments and product portfolio;
– Opportunity to boost sales through co-selling and by leveraging the expanded distribution network of more than 13,000 distributors across India;
– Operational synergy to assist in research, development and launch of new products thereby de-risking of business through expansion of product portfolio and reduction in customer concentration;
– In the International business, ECC’s products will gain further credibility by harnessing SCC Japan’s global presence and stand to gain by having an innovation driven company SCC Japan as its parent company.
On the occasion of completion of the merger, Dr Mukul Asher, existing Chairman of ECC’s board of directors and newly appointed chairman of SCIL’s board of directors said, “The merger is designed to better harness the strengths of ECC and SCIL in the dynamic global environment in which the business will need to be conducted. The merger will add capabilities to innovate, produce and market wide range of specialty and other chemicals, being a direct subsidiary of SCC Japan.”
Mr. Chetan Shah, existing Managing Director of ECC and newly appointed Managing Director of SCIL said “The merger shall create greater operational synergies, deliver maximum value for our shareholders and a superior experience for our customers. We expect synergies at multiple levels from the merger especially in expanded distribution reach and R&D capabilities and as it opens up possibilities to create novel combination products by combining specialty products and generic products.”
KPMG in India acted as project advisor to SCIL and ECC on tax and regulatory matters arising from the proposed consolidation. Pioneer Legal and DSK Legal acted as legal advisors to SCIL.
Kotak Investment Banking acted as a financial advisor to ECC. Kanga & Co. acted as a legal advisor to ECC.
Source: ECC
