The stock of agrochemical major Rallis India slumped over 5 per cent in trade on Wednesday following the dismal performance in the December quarter. While revenues dipped 3 per cent, the company's profit took a sharp knock, falling 23 per cent over last year due to a weak operating performance. The operating profit margin slipped by 1.5 percentage points to 13 per cent, compared to the same period last year, primarily due to higher other expenses.

Decline in crop yields for the kharif season and lower realisation for key crops dampened farmer sentiment. Contrary to expectation, deficient rainfall during the North-East monsoon season led to reduction in crop acreages in Andhra Pradesh, Maharashtra, and Gujarat. Both these factors have impacted sales of crop protection chemicals.

In addition to challenges in the domestic market, pricing pressure and demand moderation in key overseas markets added to Rallis’ woes. Even as Metahelix — the agri-biotech acquisition focused on developing seed traits — managed to grow revenues during the quarter, its losses continued to widen. Rallis with its vast distribution network and strong brand recall is fighting challenges in the domestic market by relaxing dealer credit norms to arrest its fall in market share; the result of which remains to be seen.

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