Rallis India

Thanks to the 11% (YoY) rise in consolidated net sales at Rs. 481 crore, the company ended Q2FY13, with a marginal 5.19% rise in net profit at Rs.61.56 crore. What also helped was the forex gain of Rs.2 crore and price hikes. EBIDTA margin was at 20%, down from 24% on a YoY and this was on account of a 10% rupee depreciation and 5% rise in total operating costs. Despite the slow start to rains and deficient monsoon, the company has done well.

If one may recollect, in Sept 2010, Rallis had acquired 53.5% stake in Metahelix, which ahs since been increased to 76%. This acquisition marks its entry into the seeds space, giving it access to the distribution network of Tata Chemicals and also of Metahelix. And more importantly, Metahelix which was making losses, has turned around and one can see contribution from this segment in the current fiscal. In an all-cash deal, funded through internal accruals, Rallis acquired 51% stake in Zero Waste Agro for Rs.29 crore and expects revenue of Rs.100 crore over next 5 years from this acquisition. Post this acquisition, it launched GoGreen, a special type of manure produced with bagasse purchased from sugar mills and proprietary technology. In the quarter, the company added more than 25,000 farmers and 60,000 acres under its grow More Pulses programme in Maharashtra, Madhya Pradesh, Karnataka and Tamil Nadu and plans to cover 150,000 acres and 100,000 farmers by the end of FY13. Q1 and Q2, are seasonally the best as it is the sowing season but monsoon has been delayed and the company expects Q3 and Q4 to be better though deficient rains in Andhra Pradesh and Karnataka could be a dampener.