India's biggest agrochemical company, United Phosphorus Limited (UPL), has been making headlines for the last one week.

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Run by Jaidev ‘Jai’ Shroff, UPL has recently announced a buyback of shares valuing Rs 1,100 crore from shareholders in the wake of the company's stock, gaining about 13 percent over the last four trading sessions. Also, the company -- which has a market cap of Rs 36,354.36 crore -- is looking at a strong growth outlook on the back of improved prices and higher volumes, say market experts.

However, the reports that garnered the most interest were the ones that claimed UPL is attracting takeover interest from global rivals. The company -- founded in 1969 by Jai's father Rajnikant Shroff -- has been recording significant foreign investment for several years and now, its acquisition by a foreign enterprise is being speculated.

A look at UPL's journey

Hailed as India’s ‘Crop Protection King’, Rajnikant Shroff gave an impetus to the indigenous chemical industry and launched an avalanche of crop protection products by the 1980s. He consolidated UPL's market share in India. The 1990s witnessed the company's dominance being catapulted to a global level.

The cumulative impact of the market reform policies in 1991 and the taking over of Jai Shroff took the company to new heights by concentrating on international market, backed by manufacturing in India. In 1994, the company made its first international acquisition -- MTM in the United Kingdom.

Come 21st century, and Jai embarked on an acquisitional pursuit. The company's business grew manifold through a series of bolt-on acquisitions -- more than 40. The biggest acquisition so far was the $4.2-billion buyout of Arysta LifeSciences -- a company almost the size of UPL itself -- in 2018.

The acquisitions gave a scale to the company that enabled stronger negotiating powers with farmers and trade channels. At present, UPL has a customer base in 123 countries and 23 manufacturing facilities –– nine in India, two in Spain, four in France, three in Argentina, and one in the UK, Vietnam, Netherlands, Italy, and China. Besides crop protection and plant growth products, UPL also manufactures caustic chlorine, white phosphorus, industrial chemicals, and specialty chemicals.

Today, UPL is among the most profitable agrochemicals companies in the world. It is also among the 10 biggest companies in the segment globally. This is despite challenges like the COVID-19 pandemic and subsequent payment crisis in several nations, volatile currencies, tough negotiations with large farmer and distributor lobby groups, and coups in African countries, among others.

Financial conservatism is another big reason behind the company's profitability. In an interview, Jai had revealed that while he takes geographical risks, he avoids financial ones. "All my decisions are taken after factoring in the return on capital," he said. The company has stuck to its policy of hedging forex risks and maintaining unstretched balance sheets.

Earlier this year, the company reported an 18 percent year-on-year rise in net profit at Rs 937 crore for the December 2021 quarter compared with Rs 793 crore in the corresponding quarter in 2020. During the December 2021 quarter, the company also raised a sustainability loan of $700 million.

Lately, the company has also taken initiatives to reduce its carbon emissions. In a statement on January 31, the company said, "Furthering our commitment to the Gigaton Challenge (a global initiative to reduce carbon emissions), our digital platform ‘nurture.farm’ successfully completed its crop residue management program, thereby preventing the release of over 1 million tons of carbon emissions."

Read Also | UPL plans share buyback of up to Rs 1,100 cr

(Edited by : Thomas Abraham)