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Sumitomo Chemical to Launch Major Agrochemical Plant in India by 2027

Japan
s 4005.TSE Mid and Small Cap 2000
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Sumitomo Chemical is set to significantly expand its footprint in India’s burgeoning agrochemical market. The Japanese giant plans to construct a new plant in Gujarat, targeting completion by 2027. This ambitious project, representing an initial investment of over 5 billion yen ($35 million), is part of a long-term strategy with eventual expenditures expected to reach several tens of billions of yen.

This facility, set to be Sumitomo’s third in India, will focus on producing active ingredients for agrochemicals. Once fully operational, it is projected to boost the company’s Indian production capacity by 80%. Sumitomo Chemical, currently the world’s seventh-largest agrochemical maker, holds approximately a 9% share in the Indian market. With this expansion, the company aims to surpass U.S.-based FMC, the market leader with an 11% share, and become India’s top agrochemical producer.

In fiscal 2023, Sumitomo’s agrochemical sector in India generated sales of about $430 million. The company targets reaching a $500 million sales volume by fiscal 2025, tapping into a global market projected to grow to $82.5 billion by 2027.

India, with its rapidly growing population expected to reach 1.7 billion by 2060, presents a vast opportunity for agrochemical companies. The increasing demand for food and the challenges posed by unseasonable weather and pests make this market even more critical. Sumitomo’s move is timely, as India is predicted to soon overtake Japan as the world’s fourth-largest agrochemical market.

Other players, including Japan’s Nihon Nohyaku and Mitsui Chemicals, are also expanding their operations in India, alongside global competitors like FMC and Bayer.

This expansion is not just a business strategy for Sumitomo; it aligns with the broader objective of stabilizing India’s food production, which has global implications. With the world’s food demand expected to increase 30% by 2050, improving food supply is crucial.

Facing a downturn in its core petrochemicals business, Sumitomo Chemical views its agrochemicals segment as a key growth driver. Despite anticipating a core operating loss in the fiscal year ending March 2024, the company remains committed to investing aggressively in the agrochemicals sector, envisioning it as a cornerstone of its future growth.

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