Rallis India to focus on receivables, cutting costs

Date:01-28-2016

Rallis India plans to improve working capital by focusing on trade receivables and cutting cost with the agriculture sector bracing for another challenging season.

Speaking to BusinessLine, V Shankar, Managing Director, Rallis India, said farmers’ sentiment is poor after facing four bad crop seasons in a row which is a rare phenomenon in India. “In this scenario, we are playing it safe and not dumping our products at the retailers’ end. The progress of rabi sowing has also been very slow and needs attention of the government,” he said.

Sowing of wheat and other rabi crops, including pulses, have been affected because of less soil moisture due to two years of consecutive drought.
Planting of rabi crops starts in October and harvesting begins in January.

As per initial reports, the total area sown under rabi as of January 15 was down three per cent at 577 lakh hectares against 596 lh in the same period last year.

Sowing of wheat, the main rabi crop, is lagging at 289 lh (303.51 lh), while that of pulses and paddy is down 136 lh (140 lh) and 19 lh (20 lh), respectively.

The sowing was lagging in States such as Uttar Pradesh and Madhya Pradesh that grow the cereal crop under rain-fed areas.

The sudden fall in commodity prices has also impacted ability of farmers to invest money in the busy rabi season.

“Globally, the agriculture output is expected to fall nine per cent, while it may be a low single-digit growth in India,” said Shankar.

Contract manufacturing

Rallis India expects to finalise a deal on contract manufacturing at its Dahej plant by end of March quarter.

“We are working on plans to enhance capacity utilisation at our Dahej plant which undertakes contract manufacturing for international chemical companies. The global pesticide industry is going through restructuring and we should finalise a firm plan by end of this quarter,” he said.

In a bid to bring down cost of production, the company recently commissioned 4 MW solar power plant over 25 acres at Dahej with an investment of Rs30 crore.

Metahelix Life Sciences, the seed subsidiary of Rallis, was also hit by poor demand.

The company posted a loss of Rs10 crore during the third quarter.

Exports, which form 30 per cent of consolidated sales, were impacted by declining crop acreage in Brazil and the US.