Companies

‘Progress of monsoon from here on is crucial’

Suresh P Iyengar Mumbai | Updated on January 18, 2018 Published on July 31, 2016

V SHANKAR, MD, Rallis India

Usage of crop protection measures may go up with the launch of new products, says Rallis India MD Shankar





Rallis India, a Tata Group company, is cautiously optimistic on the kharif season after the delayed onset of the monsoon. After cutting down on its crop protection inventories last two quarters, it is gearing up with new product launches. V Shankar, Managing Director, Rallis India, spoke to BusinessLine on kharif crop and way ahead for the company. Excerpts:

How do you see the progress of the monsoon?

The onset of the monsoon was delayed by over 10 days which was really worrisome because it was the third consecutive year of deficiency. So much of expectation was built up right from February-March as everybody was forecasting a good monsoon. We were actually disappointed when there were weather disturbances. The deficiency was high at 25 per cent but slowly it started changing. By June-end, the deficiency was reduced to 11 per cent in contrast to the same month last year when it was a drought year.



Going ahead, what is your outlook for kharif crops?

We are looking forward to have positive months of July, August and September. The forecast is that rains will be normal. As long as we do not have any long dry spells like last year the crop conditions will improve. Importantly, we also should not have short big burst of rains. We have to wait and see, but right now things have dramatically improved. Usage of our products have picked up. We expect conditions should improve next quarter. Progress of monsoon from here on will be crucial.

Have you implemented any price increase?

In the first quarter, we had lot of pricing pressure. We were also cautious and had tight control on our receivables and inventories, given the conditions were tough. We have done well on cash and control over our working capital. Our finance cost has come down due to reduction in working capital. In these conditions, we have also not placed lot of stocks in the market. Of course, the June quarter has been largely of seeds through Metahelix. We were planning for a better performance but during the Rabi season the yields got affected due to water shortage. Therefore, the availability of seeds for sale was less in cotton and few hybrids in paddy and corn. In crop protection, we expect the usage to go up. The launch of new crop protection Summit cotton, soyabean and chilli crops should also help.

Are farmers cutting down on expenses?

After consequent bad seasons for last couple of years, hopefully they will not do it. They badly need a good harvest. They will not cut down on their investments. They would really want to optimise on this season. Crop protection prices have been under pressure and it may relent in the second quarter. There has been a pressure on prices – particularly for generic products where the inventories are high. In June, there was a kind of anxiety situation with delayed rains. Now that things are looking up farmers may want to capitalise on it. The stressed condition on prices should ease.

After series of pest attacks how are you seeing cotton crop this year?

I hope there will be a rebound. Yield should not get affected like last year. Prices are also firming up and the overall acreage is also down. Luckily, this year rains have washed off the pests so we are not hearing a difficult situation like last year. We hope the cotton economy will bounce back.



Have you signed any new contract manufacturing for your Dahej plant?

We have been qualified by a couple of companies and talks have moved to next phase. Globally, things are a bit stressed. They are going through a big phase of restructuring. Things will look very different in a year’s time. With consolidation and restructuring globally, outsourcing to India will increase. Many corporates want to outsource manufacturing as a strategy because they want to be more efficient on capital. Traditionally, lot of contracts go to China but they are looking at India as a potential source for manufacturing. It is because costs are moving up in China and IP (intellectual property) consideration also comes into play. Also, they are looking to diversify as they do not want to put all eggs in one basket. They want India also to measure up to their standards in terms of agility, cost and scale. Timeline for getting the approval is one issue they face.

Published on July 31, 2016
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