Kaveri Seeds looks beyond cotton, eyes more business from other crops

KV Kurmanath Hyderabad | Updated on August 21, 2019 Published on August 21, 2019

Hopes to get 60% of revenue from maize, rice, millets and vegetables

Kaveri Seeds, a major seed player, is looking to increase the share of its non-cotton seed business in the next 3-5 years as part of a de-risking strategy. The cotton business at present constitutes about 52 per cent of the Hyderabad-based listed entity, with the rest coming from other seeds.

“We would like to see the non-cotton seed business, which includes maize, rice, millets and vegetables, contributing about 60 per cent in the next 3-5 years,” C Mithun Chand, Executive Director of Kaveri Seeds, told Business Line.

The company registered a total income of ₹660 crore in the first quarter ended June 30, 2019, as against ₹599 crore in the same quarter last year. For the full year 2018-19, it posted revenues of ₹822 crore.

The company anticipates a compound annual growth rate (CAGR) of 10-15 per cent in the next 3-5 years in the cottonseed business, while the non-cottonseed business, including vegetables, is expected to grow at a CAGR of 20-25 per cent during the period.

Non-cotton business

In its drive to shore up the non-cotton seed business, the company sees huge scope in maize seed sales, which have a national aggregate potential of one lakh tonnes.

“Though we have a share of 10 per cent in this segment, the bulk of our sales comes from Andhra Pradesh, Telangana and Karnataka. We are targeting the North and Central regions, which are very strong maize markets, to push maize seeds sales,” he said.

Maize continues to be an attractive proposition as the average price went up to ₹2,147 in July 2019, as against ₹1,538 in the same month last year. The area under maize remained flat at 72.74 lakh hectares for 2019-20 against 72.83 lakh hectares in the previous year. The firm also sees good opportunity in the hybrid rice segment, which is still largely untapped.

The company, however, sees increased sales in the cottonseed segment in the first quarter as cotton acreage went up by about 5 per cent. The area sown with cotton went up to 119 lakh hectares as of August 9, 2019, as against 112.60 lakh hectares last year.

Cottonseed business

The company sold 66 lakh packets (of 450 gm each) of cottonseed in the first quarter as against 58 lakh packets in the same quarter last year.

“As the rains were delayed, we expect an additional sales of 6-7 lakh packets in the second quarter,” he said.

“Cotton farmers realised good prices last year. The average commodity prices went up to ₹5,754 a quintal in July 2019 as against ₹5,377 in 2018, making the farmers to increase the area,” he said.

Published on August 21, 2019
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