Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

Rich On Cattle Feed

Photo Credit :

For farmers in Rajasthan and other states, what used to be feed for their cattle has become a cash cow. Guar gum, a product in which India is estimated to account for 85 per cent of global production, is a hot commodity; oil exploration companies use it for fracking — a short form for hydraulic fracturing, wherein fluid is injected into rock formations to widen cracks so oil and gas can flow more freely.

In the US and elsewhere, the demand for more gas, in particular, is driving the  exploration of shale gas. This is great for the only organised player in the guar gum business, Vikas WSP. Its promoter, chairman and managing director, B.D. Agarwal, has got his firm to enter into large contract farming to grow guar seeds, the raw material that is processed to make guar gum.

The company has had a chequered history; it was delisted by the Bombay Stock Exchange (BSE) in 2001 over concerns about volatility in the company's stock prices, alleged to have been driven by trading by the promoter family. In 2007, the exchange authorities allowed its relisting. Though volatility continues to dog the stock — in the last 52 weeks it has oscillated between Rs 9.36 and Rs 70, its attraction in recent times has been high.

The good news for Agarwal: experts say that there are almost no cheap alternatives to guar gum, despite advances in chemical technology, so there is unlikely to be a fall in demand. He owns just under 15 per cent of his company, but that has nevertheless made him a rupee billionaire. Vikas WSP has progressed to becoming a cash cow.

(This story was published in Businessworld Issue Dated 30-07-2012)