Rallis to triple non-pesticide biz

Rallis India, the crop-protection product manufacturing subsidiary of Tata Chemicals, is planning to increase the share of its non-pesticide business from the current 10% to 40% in the next few years.

While the company says the move is aimed at balancing its current product portfolio, analysts feel the step is for increasing the share of businesses that have higher margins.

Rallis is primarily a pesticide manufacturing company with exposures in fertilisers, seeds, contract manufacturing and household and crop chemicals.

Its core business of crop-protection is mainly cyclical and depends largely on the monsoon. Of late, analysts say, Rallis’s core business is growing slower than its newer business areas of seeds and agri-services, also referred as as the non-pesticide portfolio.

“As part of balancing its portfolio of business, the company is also focusing on growing an equally compelling portfolio for non-pesticides products like plant growth nutrients, seeds, micro-nutrients, contract manufacturing, etc. The aspiration continues to improve the share of non-pesticide business from current levels of 10% to 40% in the next few years,” said the company’s 65th annual report, released recently.

It said the company is building a robust non-pesticide portfolio of businesses to cater to the changing needs of the farmers and agriculture. This not only leverages the deep farmer connect the company has, but also provides a large platform to serve the emerging needs of the sector.

Through its Rallis Kisan Kutumba networking and marketing model, the company has access to over a million farmers in the country, claims the company, besides having a strong retail network of 40,000 outlets spread across all major districts.

Under the non-pesticide portfolio, the company mainly has three main verticals – seeds, plant growth nutrients and agri-services.

“Seeds offer very good margins of up to 20% while the plant growth nutrient market have margins of up to 25%, hence it makes sense to push to increase its sales,” said an analyst from a domestic brokerage.

He said the company is aggressively ramping up its seeds, contract and exports portfolio as they are expected to grow faster than the industry average of 10-12%.

Rallis acquired seed-manufacturing company Metahelix in 2011 and has already turned it around, besides introducing several new seeds.

V Shankar, managing director and chief operating officer, Rallis had told dna last quarter that the company will introduce several more hybrid seeds this fiscal.

An analyst with a domestic brokerage said the size of the seeds industry in the country currently is Rs 6,500 crore and growing at a rate of 12-13%.

Hybrid seeds, which Metahelix produces, are about 25% of the total domestic seeds market and there is a huge scope of growth.

Seeding growth
Through its Rallis Kisan Kutumba networking and marketing model, the company has access to over a million farmers in the country.

Rallis acquired seed-manufacturing company Metahelix in 2011 and has already turned it around, besides introducing several new seeds.

The size of the seeds industry in the country currently is Rs 6,500 crore and growing at a rate of 12-13%.