It had been tough few years for Kaveri Seed, with the price control and then the Sebi ordering a forensic audit on its books. But now the company seems to have made it to the other side. It remains one of the largest home-grown seed companies in India and is amongst the top-five players in seed segments such as cotton, rice, maize and bajra.
Over the past few years, the seed producer has been working to transform its product portfolio in order to diversify its revenue base and improve profitability. It predominantly has been a cotton-seed producer. However, in the recent past, the revenue share of non-cotton products has been steadily rising and these command margins upward of 30% against around 20% from cotton.
Two periods of growth
The major diversification began post FY15. In fact, the company’s performance can be divided into pre-FY15 and post-FY15 (See: The pivotal year). In the five years from FY10, its sales had increased from Rs 1.62 billion to over Rs 11 billion, and profits increased from Rs 300 million to Rs 3 billion. At its peak, the company had a market cap of Rs 65 billion.
Then, in FY15, there were reports of pest attacks and declining yields, and this prompted farmer agitations that eventually led to the government regulating the prices at which cotton