Monsanto India JV sues 8 seed cos over Rs 400-cr 'trait fees'

Date:10-20-2015

Monsanto India's joint venture firm MMB has moved court against eight domestic seed companies for refusing to pay over Rs 400-crore 'trait fee' for using its Bollgard Bt technology in the cotton hybrids, a top company official said.

The due amounts are mainly on sales of genetically modified cotton seeds - incorporating the patented technology - during the 2015 kharif planting season, Monsanto India CEO Shilpa Divekar Nirula said.

Monsanto partnered Mahyco to form an equal joint venture company MMB for sub-licensing the Bollgard II and Bollgard technologies to Indian seed companies. These seed firms are selling hybrid cotton seeds using this technology for last 10 years.

She said eight seed companies -- Prabhat Agri Biotech, Ajeet Seeds Ltd, Kaveri Seed, Ankur Seeds, Nuziveedu Seeds, Green Gold Seeds, Ram Agrigenetics and Amar Bio Tech -- have refused to pay the dues, citing the state governments' price control order on cotton seeds.

She charged that these seed companies have "breached the contracts" agreed mutually between the two parties and also attacked the Seed Association for "trying to project the bilaterial dispute as an industry issue."

"We have licensed our technology to 49 seed companies, including state-owned seed corporations, out of which eight have effectively refused to pay the trait fee of over Rs 400 crore," Nirula told PTI.

Refuting these seed companies submission that the state government has included the trait fee while fixing the maximum retail price of cotton seed, Nirula said, "This is far from the reality."

There is no law/notification under which the trait value has been fixed. Therefore, the trait fee as agreed under the contract between two parites is liable to be paid, she added.

"Unlike other commercial contracts where there is physical exchange of goods and service, here the technology was transfered several years back. It is an understanding that for the one-time transfer of technology, seed companies will pay the fee for using our technology every year," she said.

Nirula also questioned the intention of these eight firms and said other 41 seed companies are continuing to pay the trait fee as per the agreed terms under the contract.

Currently, MMB receives a trait fee of Rs 122.96 per packet for Bollgard I and Rs 183.46 per packet for Bollgard II technologies, inclusive of service tax. The trait fee has been constant for the last four years, the company said.

Cotton seed prices are fixed in the range of Rs 830-1,000 per packet (450 grams) in different states.

Asked if the company would seek the central government's intervention, Nirula said, "In our opinion, these are bilateral contracts, something that parties should sort out between themselves."

"The bilateral contracts do not need solution which is regulatory in nature, especially when there is willfully breach of contract," she added.

The Bollgard technology has been adopted on over 95 per cent of the India's cotton area of 12 million hectares.