The Hyderabad-headquartered Kaveri Seeds Company has said that it has become the world’s first seed producer with more than one lakh acre under seed production in a country.
The vast majority of the newly acquired seed production area is focused to the non-cotton segment and mainly to high-margin hybrid rice, maize and vegetable seeds, and almost half of the territory is located in and around the Andhra Pradesh and Telangana.
With surging seed replacement ratios, where the farming community are collecting more hybrid varieties of rice and maize. The company with ₹ 930 crore annual revenue also has an annual margin of around 50 percent over the next 3-4 years compared to the current combined margin of 20 percent.
The product mix would also undergo a major change, with non-cotton seeds dominating around 60 per cent of the total revenue over this period. Currently, 47percent of the revenue comes from the sale of cotton seeds.
Currently, 47percent of the revenue comes from the sale of cotton seeds.
‘The shift to the high-margin non-cotton segment is primarily aimed at de-risking India’s dominant cotton-centered business model and creating new avenues for growth,’ Executive Director Mr. Mithun Chand said.
Hybrid rice, which presently contributes about a quarter of the revenue of Kaveri Seeds, has emerged as the second-largest contributor to cotton revenue.
‘The Indian hybrid rice rice seed market is currently estimated at around ₹ 10,000 crore in value and around 2 lakh tonnes in volume, with Kaveri seeing a 45 per cent increase in its hybrid rice business over the last five years compared to the industry average of around 8 per cent,’ he stated.
Thanks to a better and healthier mix of high-volume cotton and high-value rice, maize and vegetable seeds, Kaveri Seeds is estimated to grow 15 per cent per year, twice the industry average of around 7 per cent. The industry is also projected to have a high profitability of 15-20 percent.
‘With over 10 percent of the Indian hybrid seed market share as the second largest producer of cotton hybrid seeds, the third largest maize hybrid seeds and the fifth largest non-cotton hybrid seeds such as rice, zero-debt Kaveri Seeds would concentrate on high-margin niche segments and geographies, not only for export in India but worldwide,’ the Executive Director said.
The Hyderabad-headquartered company undertook on a de-risking model by cutting down the contribution of cotton seeds, which, despite being the highest acreage in India in terms of sowing, has been highly regulated by the government’s intense interference in the process of pricing of seeds that have affected seed production companies’ realisations. Kaveri Seeds also considers the high-margin non-cotton seed market to be attractive because it is largely an unregulated segment with a high penetration potential.
– Sowing of Rabi crops crosses last year’s level by 10%
– Cereals are harvested grasses and while pulses are leguminous
– Heavy rains, hailstorms struck standing rabi crops, Onion and grapevine