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Rallis plans investment in backward integrationqrcode

May. 2, 2018

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Rallis plans investment in backward integration

Rallis India, a subsidiary of Tata Chemicals, plans investment in backward integration due to lower chemical supply from China and ease pressure on its profit margin.

The company imports about 40 per cent of raw materials from China. The prices of these imported raw materials have witnessed a sharp increase on account of supply side-constraints in China.

The Chinese government has ordered shut down of inefficient chemical plants due to environment concern.

V Shankar, Managing Director, Rallis India told that prices of chemical intermediaries used for crop protection has gone up substantially in last two quarters on the fall out of short supply and the company is exploring various other alternatives to source the raw material.

Meanwhile, he added, the company plans investment in backward integration to protect profit margins and sustainable production.

Rallis India reported 37 per cent fall in its consolidated net profit at ₹20 crore in the March quarter against ₹31 crore logged in the same period last year.

Total income marginally increased to ₹ 374 crore (₹ 372 crore) during the March quarter. The company's recently commissioned Dahej plant has secured new contract manufacturing order which will be executed through this fiscal, said Shankar.

Rallis plans to enhance its farmers outreach programme to help farmers increase yield per acre and double their income. Last fiscal, the company worked with over nine lakh farmers growing different crops across the country and plans to add another 10 lakh farmers this fiscal.

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