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BW Businessworld

Seeding Growth

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A delayed monsoon seems to be a worrying factor for millions of farmers across the country as well as the government. But for investors of Hyderabad-headquartered Kaveri Seeds, it seems to have had no impact, as is amply evident from the relentless rise of the company’s scrip on the bourses. In the past  year alone, its share price has nearly trebled and the reasons for the market getting excited about the company are not difficult to see.

In 2013-14, when companies across the spectrum struggled to grow, Kaveri recorded 41 per cent topline growth, and this has been no flash in the pan. Despite a weak monsoon, Kaveri is expected to sustain its  growth record, which it has registered over the past four years.

India is the eighth largest seed market in the world and the potential for growth is immense. As farmers seek better quality seeds, players like Monsanto, Rallis, Kaveri and Bayer Science, apart from a clutch of other companies, have benefited. What sets Kaveri Seeds apart is the focused research bets it made.

Run by agripreneur G.V. Bhaskar Rao, it bet on hybrid varieties of both field crops and vegetables, which has paid off handsomely for the company. More than anything else, it is the hybrid cotton seeds which it markets under apt names like Jadoo and Jackpot that have powered the company’s growth and success. The company got about 60 per cent of its FY2014’s net sales revenues of Rs 1,002 crore revenue from BT cotton.

Rao is aware of the company’s over-dependence on hybrid cotton and is trying to increase revenue share from other segments of the market such as hybrid paddy, pearl millet, maize, vegetables and culinary herbs. Also, the company intends to go beyond seeds and plans to push other agri-products like micro-nutrients, plant growth regulators, bio-fertilisers and bio-pesticides.

Kaveri, which enjoys a healthy 20 per cent net profit margin, is emphasising on creating a strong research pipeline and a better revenue mix from different market segements to power  future growth.

This, Rao believes, will seed growth and help the company reap a richer harvest in the future.

(This story was published in BW | Businessworld Issue Dated 11-08-2014) ]]>