Rallis India

The company posted a net profit at Rs.22 crore, up over 2.75 times on a YoY. This base effect was mainly on account of the cessation cost it had paid in Q3FY12 of Rs.24 crore. And sequentially, net profit was down 64% and this was because seasonally Q2 is much better, which is reflected in the company net sales for current Q3, which at Rs.340 crore, was down 29% sequentially. Moreover in Q2, the company had a forex gain of Rs.2.41 crore and in Q3, it was a forex loss at Rs.2.68 crore. So YoY, the performance “looks” good but QoQ, it is not so good. Yet, Q3 will be a landmark for the company as its net profit mark for 9MFY13 at Rs.108 crore is already more than the 12MFY12 net profit at Rs.101 crore.

If one may recollect, in Sept 2010, Rallis had acquired 53.5% stake in Metahelix, which has since been increased to 7.02%. 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. 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 and the second half will be more subdued than H1. Yet, it has nothing to worry as its performance for current fiscal is already much ahead of FY12.