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Reaping Rewards of Seeds Sown Well

Kaveri Seed Company has become the fastest-growing seeds company, making a name in cotton hybrid market

In the past 38 years, Kaveri Seeds Company (KSC) has become one of the fastest growing seeds company in the country with both revenue and earnings per share growing by more than 50 per cent annually in the last five years.

Kaveri has made a name for itself in the crowded cotton hybrid market that has 1,100 varieties of seeds competing with each other. Kaveri's 'Jadoo' and 'Jackpot' hybrid brands launched in 2008 have edged out incumbents Mahyico and Naziveedu to capture 40 per cent market share in Andhra Pradesh and 17 per cent at the national level.

Cotton is not Kaveri's only success story. It has one of the largest crop germplasm in the country that allows it to develop other hybrids. The company has steadily made its mark in other crops too. It has a 13 per cent market share in both corn and bajra and nine per cent share in the hybrid rice market.

Making it into the rice hyrid market promises big payoffs. Hybrid rice seeds are used in only about 2 million hectares of farmland out of the total of 42 million hectares under rice production in the country. That gives hybrid seed manufacturers access to a big market to tap.

Building a distribution network that penetrates the lowest levels of the hinterlands becomes paramount for a seeds company. Kaveri has a network of 15,000 direct and indirect distributers in 15 key states, and is expanding further.

Short term hiccups. Cotton acreage in Andhra Pradesh and Maharashtra has not really grown in the last three years. These two states account for 75 per cent of Kaveri's cotton sales. But there are signs of improvement. The company's management has guided a 3-5 per cent growth this year as more farmers shift from sugarcane and soya to the better-realising and more-profitable cotton.

Kaveri is a long term buy. The usage of hybrid seeds will only increase as the years pass on. Buy Kaveri and Let it grow, let it grow, Let it blossom, let it flow.