Rallis to commission Dahej facility by next month

Date:01-18-2011

Rallis India, an agri-business player and a subsidiary of Tata Chemicals, will commission its Dahej facility in the next six to eight weeks.

The unit will add more production lines for its existing products and make a room for introduction of new ones and for contract manufacturing. It will also help the company service its overseas clients better.

"The Dahej facility will have a combination of products that we already have and will also have headroom for new contracts,” V Shankar, managing director, Rallis India, said.

Rallis had initiated the spadework for the Dahej facility in January 2009 to meet growing demand for insecticides and also increase its international business.

Shankar said water trials had started at the site and some final approvals were awaited.

He said it is tough to state a capacity of the facility and a better reference point is the revenues it is expected to contribute.

"So far Rallis has invested up to Rs150 crore in the first phase of the project and the unit is expected to contribute up to Rs500 crore in the next three to four years,” he said.

This will be the first phase of the project.

"We have still not firmed up plans for the second phase, but as the production from the first phase streamlines we will start planning for it,” he said.
Shankar said Rallis, a major insecticide player in the country, has diversified into several other activities to derisk its portfolio and offset the impact of the seasonal business it is into.

"We have enhanced our focus on fungicides and herbicides and also on the international business so that the impact of lean quarters on our domestic business could be brought down,” he said.

The company has a 12% market share in the Rs6,000 -7,000 crore insecticide business, a vertical which is growing at 12% in India. This vertical contributes 60% to the company’s total revenues while fungicides and herbicides contribute the remaining.

It is also planning to increase its balance-sheet’s international exposure to 35% in the next few years from the current 25-30%.

Its net profit for the third quarter grew 40% to Rs34 crore as against Rs24 crore for the same period in the last fiscal. Net sales rose 32% on year to Rs268 crore on year.

However, on a quarter-on-quarter basis, the company’s revenues and net profit came down. “In the crop protection industry in India, usually first and fourth quarters are highly lean periods while the third quarter is moderately lean. But the second quarter, owing to the monsoon, is said to be the best quarter and hence the numbers in the quarter are always better,” said Shankar.