The Hindu Business Line : Reliance to foray into medicinal farming

If the market pundits are to be believed, Reliance Life Sciences (RLS) may well emerge as one half of the blockbuster, double bill opening at the IPO box office some time next fiscal along with Reliance Infocomm. And laying the foundation to this foray could see it train its guns on the Indian farmers who are expected to become the backbone of the company's entry into the business of medicinal and aromatic plant extracts.

"Our endeavour in medicinal and aromatic plants, under the auspices of Reliance Life Sciences, is an attempt to create a new paradigm in farming for economic gains," Mr Mukesh Ambani, Chairman, Reliance Industries Ltd, told Business Line.

The chosen ones are about a dozen farmers whose land holdings happen to lie adjoining the Reliance Jamnagar refinery. One cannot call it contract farming, but effectively, the corporate house has assured the farmers a buy-back of their agricultural produce, provided they maintain the required quality. It is merely a pilot initiative involving farming in a 100-odd acres but the scope for scaling up is immense.

The RLS initiative, which embraces four genres, is now looking at plant biotechnology as closely as the other three - Medical Biotechnology, Industrial Biotechnology and Contract Research, in its endeavour to emerge as by far the largest life sciences company in this part of the world.

Thus, RLS has put under the microscope, the entire gamut of plant biotechnology, ranging from agronomy and tissue culture on the one side to metabolic engineering and extractions on the other.

According to Mr K.V. Subramaniam, Senior Vice-President, Reliance Industries Ltd, some of the pharmaceutical companies and cosmetics manufacturers were already in talks with RLS regarding aloe vera. The next stop would be beverages companies and export markets.

"Unlike with aloe vera, we started off with the tissue culture protocol, developed the plants and began selling them to farmers with patchouli. There is about 50 acres that is now under patchouli cultivation in and around Jamnagar. It is not contract farming but we would be happy to buy back the produce from these farmers," said Mr Subramaniam who agrees that there is tremendous scope to scale up once the first cycle of harvesting commences by the first quarter of 2005.

Patchouli can be cultivated in semi-arid conditions, get harvested every three months after five months and enjoy a life span up to four years.

At an annual yield of 5-7 tonnes per acre, the farmer could gross Rs 1-1.5 lakh per acre, with expenses at Rs 50,000. True, it does not hold a patch to the spectacular returns posted by the likes of vanilla down South, but then vanilla cannot boast of a corporate buyer like Reliance whose next effort would be to fractionate the patchouli oil for the perfumery industry.

Already in talks with potential buyers in Europe, RLS is also betting big on aloe vera spray dried powder whose current market price is Rs 7,000 per kg.

The company now has 60 acres of its land under aloe vera cultivation while the farmers have added another 100 acres. Little wonder that the company has just put up a 6 tpa extraction plant in Jamnagar.

Clearly, RLS seems ready with the business end of the value chain, having already spun off branded plant such as ReliCare Av (aloe vera), ReliCare Pa (patchouli oil), ReliCare Ge (geranium oil), ReliCare Ce (citronella oil) and ReliCare Le (lemongrass oil). It may take a while, however, before the new paradigm in farming falls into place.

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