To Our Shareholders and Investors
I’d like to take this opportunity to thank you sincerely for your continued support.
Since it entered into a capital and business alliance with Idemitsu Kosan Co., Ltd., SDS Biotech K.K. has continued to stand at the core of agribusiness for the Idemitsu Kosan Group and has endeavored to expand the business not only in Japan but also in the global agricultural market, particularly in Asia.
Meanwhile, we have acquired a 65% equity stake in the India-based Sree Ramcides Chemicals Private Limited (Ramcides), a firm engaged in the development, manufacturing and sale of agricultural supplies, and in January 2013, we converted them into a consolidated subsidiary. We will take advantage of our alliance with Ramcides to further accelerate our business expansion in Asia as we aim to boost our earnings power in overseas business.
In 2012, demand for agricultural products in Japan’s agricultural chemicals market was comparable to that of the previous year, although there was some special demand associated with the Great East Japan Earthquake recovery. Meanwhile, in overseas agricultural chemicals markets, demand tentatively declined in some regions due to droughts and other irregular weather conditions, but showed strong growth in 2012 as well, backed by expansion in the demand for agricultural goods associated mainly with the recent rising global population and economic growth in emerging countries.
Under these circumstances, our earnings for FY2012 declined from a year before, affected by the decrease in sales of fungicides for overseas markets due mainly to competition with the generic products segment and irregular weather conditions. However, we posted higher income year on year, primarily as a result of greater sales of the rice herbicide Benzobicyclon and cuts in production costs.
SDS Biotech projects that in FY2013, income will fall nearly 10% although sales will be slightly higher on a non-consolidated basis. This is mainly due to the increase in development costs associated with the expansion of Benzobicyclon in overseas markets. Given, however, the recent depreciation of the yen at a faster pace than expected, we recognize that the tide is running in favor of SDS Biotech, an export-driven company.
Although business performance in recent years has fallen short of our expectations, all SDS Biotech employees are determined to actively participate in putting forth concerted efforts to promptly recover performance and further expand our business as we focus on promoting synergistic effects with our parent company, Idemitsu Kosan Co., Ltd. and our subsidiary, Ramcides. By doing so, we will aim to be a company that is capable of satisfying the expectations and trust of all our stakeholders and investors.
We would greatly appreciate your continued guidance and support in our endeavors.
President & Representative Director