With cottonseeds becoming a low-margin business, Kaveri Seeds is shifting gears away from its cotton-centric business model. It is now focussing on high-margin seeds such as rice, maize and vegetables.

With its reduced impetus on the cotton business, the Hyderabad-based seeds major is focussing on increasing its non-cotton business, which includes rice, maize and vegetables.

“The cottonseed business now constitutes only 47 per cent of our revenues as against 53 per cent last year. This will further come down to 43 per cent by the end of the financial year,” C Mithun Chand, Executive Director of Kaveri Seeds, told BusinessLine .

The firm is looking at a 40:60 breakup between cottonseed and non-cottonseed business in the next financial year.

“The hybrid rice seeds business, which never took off for years in the country, is now witnessing a sharp growth. While the country is growing paddy on 40 million hectares, the contribution from hybridisation is only 3.5 million hectares.

“There is a huge opportunity in this space. While the industry (rice seeds business) has grown by 8-10 per cent, we have grown by over 48 per cent during the nine-month period (ended December 2020). The portfolio has become so important to us that rice is contributing about 25 per cent to our revenues,” he said.

The company, which registered a net profit of ₹7.45 crore in the third quarter ended December 31, 2020, saw increased profitability in the quarter as the share of cottonseed business reduced.

The firm posted net sales of ₹100 crore in the quarter as against ₹98.50 crore in the comparable quarter last year. For the nine-month period, it registered a net profit of ₹319.63 crore on a turnover of ₹932 crore.

“Our strategy to reduce the dependence on cotton business has paid off. The contribution from non-cotton business has grown up by 34.18 per cent. This growth was driven by both volume growth and price appreciation in key products,” he said.

Despite a dull market for maize in the rabi season, maize volumes have gone up by 19.11 per cent and revenues by 13.60 per cent.

Outlook

In its outlook for the year, the company said it had short-listed nine countries with potential for exports. “We are looking at opportunities in countries such as Bangladesh, Nepal, Indonesia, Vietnam, Thailand and a few in Africa,” Chand said. There is export potential for maize, rice and vegetable seeds in these countries, he added.

Exports contributed about ₹20 crore to the company’s annual revenues.

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