Rallis India Q4 profit halved due to lower spending by farmers

Rallis India, an Indian crop protection company of the Tata Group, has reported that its net profit was halved in the March quarter.

Net profit was at Rs 98.8 million against Rs 188.1 million recorded in the same period last year. Sales were down 13% at Rs 2.06 billion (Rs 2.38 billion).

The company has announced a dividend of Rs 1.20 a share. It provided Rs 70 million as charge for cessation of operation at its Turbhe plant in the outskirts of Mumbai.

Rallis, which started operation at Turbhe in 1970s, decided to shut the plant as the surrounding area has developed into residential locality.

V. Shankar, Managing Director, Rallis India, said the profitability has been hit by lower use of crop protection products by farmers due to lower earnings of farmers and erratic rainfall.

"The cost of cultivation had gone up in the last few months, but prices of most commodities have fallen. While cost is expected to settle at the current level, the mismatch will ease out in coming quarters,” he added.

For the financial year ended March, Rallis’ net profit was down 21% at Rs 990 million (Rs 1.26 billion), while sales were up 17% at Rs 12.45 billion (Rs 10.66 billion).

Acquisition

The company has acquired 51% stake in Zero Waste Agro Organics for Rs 290 million (AgroNews 2012-04-26). The all-cash deal will be funded through internal accruals. The company has three manufacturing facilities in Maharashtra and one in Uttar Pradesh. With acquisition of Zero Waste, Rallis has launched Go Green, a special type of manure produced with bagasse purchased from sugar mills and proprietary technology.

Each plant can produce about 15,000 units of this manure which will improve productivity by 8-15%, said Shankar. “We will progressively acquire the entire stake in Zero Waste. A series of product launches will happen in the organic manure business in the coming days. Over the next five years, we expect revenue of Rs 1 billion from this business.” he added.