Rallis to exit seeds, chemicals

Rallis India is scripting a fresh restructuring plan under a new managing director. It has decided to focus only on its pesticides business -- it will no longer focus on its existing seeds and speciality chemicals businesses.

Even in the pesticides business, Rallis will discontinue some of its low-margin products. It is also planning to enter into manufacturing or marketing alliances with leading multinationals for pesticides.

The seeds division has already discontinued a marketing alliance with Monsanto, while its sourcing and branding agreement with local players is an area of de-focus. The earlier plan of getting into biotechnology has also been scrapped.

VS Sohoni, Rallis India managing director, told Business Standard, "Pesticides will be the key business, which we will grow with a clear focus on high-margin products. The seeds business is capital intensive, which we are not willing to grow right now."

The turnover of the seeds business has dropped to only Rs 6 crore. "Our seeds business will only cater to some crops like cotton, paddy, wheat and some vegetables," Sohoni added.

The speciality chemicals business -- largely leather chemicals -- no longer fits into the company's core business, as sales have stagnated.

A part of the chemicals business was sold in January for Rs 47 crore (Rs 470 million). Last year, the company had posted losses of Rs 77 crore (Rs 770 million).

"We are essentially rejuvenating our product portfolio. While some new-generation pesticides will be added, some existing low-margin products will be withdrawn," Sohoni said.

For instance, the company is taking a re-look at organo-phosphates, an old generation pesticide. Sohoni, however, refused to divulge specific details.

Rallis has also discontinued the distribution of bulk fertilisers and its arrangement with Tata Chemicals for the distribution of urea. Earlier, the fledgling pharmaceuticals business was also sold.

Rallis India is the second largest player in the domestic pesticides market, with brands such as Contaf, Rogor, Tatamida, Reeva and Tatametri. The company produces a range of specialty fertilisers like calcium nitrate, Tracel and Solubor.

The company has one of the most extensive distribution networks in the Indian agricultural industry, with an over 80 per cent penetration of the country's districts.