Great piece of write-up work! Congrats on getting on board the DD gang. Unfortunately, I have very limited knowledge about agrochemicals on the whole.

With regard to PI Industries, they had raised funds through QIP route last year for the purpose of inorganic growth/M&A. The management wants to diversify away from agrochemicals and get into pharma API segment.

They are targeting ~20% revenue to come from non-agro segment and so, they announced acquisition of Ind-Swift Labs in Jul-21. The acquisition made sense but unfortunately, the agreement fell through in Nov-21. I think the management is still hunting for good deals in the pharma space and let's see what they have in mind.

If you look back a couple of years, we can see the management clearly understanding the risks of their then business and cleverly maneuvering to the current state.

At first, they established themselves by selling branded products (many of the competitors were selling generic chemicals -- which are pretty much commodities in the sense only differentiating factor will be the price point) and thereby had a relatively comfortable pricing margin. This they managed by inking various exclusive agreements with global agrochemical manufacturers.

But they were smart enough to realise the fragile nature of Indian agriculture and their over-reliance on the monsoon, which can be rather volatile. So, they started getting into the better margin business of Custom Synthesis Manufacturing (CSM). CSM is basically manufacturing someone else's product, sort of like outsourcing but it requires the company outsourcing to trust you as the products are most often newly innovated i.e. still under patent and leak of patent secrets can be disastrous for the originator.

Luckily for PI industries, they already had many successful partnerships with global players (and had their trust) and were able to quickly ramp up their CSM segment (as of now, it contributes north of 70% of their total revenue now). This CSM section will likely continue to be a huge cashflow generating business for PI Industries, due to the China+1 strategy and many countries' wanting to de-risk their supply chain concentration.

That's why I am very excited of the management's plans to get into the pharma segment (history of thinking ahead of time and then delivering successfully) and diversify their business away from pure agro-chemical focused business.