KAVERI SEED COMPANY -Future Perfect.

KAVERI SEED COMPANY – is one of the very few pure

listed  Indian  companies from hybrid seed sector.

Others from this sector are JK Agrigenetics ,Rallis,and

Advanta . Apart from these  other listed firms are

affiliates of foreign players like,Monsanto, Bayer

..etc. Kaveri Seed is a well managed Secunderabad

based firm promoted by Mr.GV Bhaskar Rao in 1976.

Company has grown a lot after that and now it is one

of the largest hybrid seed producer from South

India .Its product portfolio include seeds of

Corn, Cotton, Sorghum, Pearl Millet ,rice ,sunflower

and a wide variety of vegetables.Company also producing

various types of micro nutrients, plant hormones ,

bio-stimulants for different crops.Kavari also

producing organic plant protector under the brand

name ‘FIRE’. Other than this, company has a lot of

organic products to enhance yield from crops.

Recently Kaveri started operations in its  state

of an art facility for cob drying, seed processing

and cold storage which established in its owned 

farmland of 29 Acres in Medak district of Andhra

Pradesh. It added Red gram, onion, mustard and wheat

to is portfolio recently . This pure Indian player has

a very energetic R & D wing and introducing new

verities which can give good result even in bad

conditions like draught. Now in southern states of India

like Tamilnadu,Andhra and Karnataka ,precision farming is

gaining momentum and it is experienced as a great success.

This method requires hybrid seeds and scientific methods

of farming which is expected to bring big business to Kaveri.

                        In the financial front ,Company

is growing steadily and posted a turnover of Rs. 169 Cr

and a net profit of Rs.29 Cr in last financial year.

EPS for FY 2010 is Rs.21.20/-. Backed by good monsoon

compared with last year ,Kaveri is expected to post even

better result in this year. Its business is seasonal

and 90% income generated in first qtr.Company has an

equity base of Rs.13.7 Cr and out of this 63% is held

by promoters and 26 % by big investors including mutual

funds .Even from a low floating stock, promoters are

again buying from open market. In nutshell, with a clean

and dedicated management and excellent R & D Wing Kaveri

Seed  is a company to reap the benefits which is expected

to emerge in Farming sector ,going forward.This one stop

company for hybrid seed ,organic fertilizer and organic

pesticide  is quoting around Rs.272/-

BHAGIRADHA CHEMICALS AND INDUSTRIES - Cheaply Valued

Bhagiradha Chemicals & Industries was incorporated

in 1994 by Mr Koteswara Rao and D Sadasividu ,both

were previously working at Indian Institute of 

Chemical Technology.Company produces high quality

basic pesticides includes Chlorpyrifos Ethyl, 

Chlorpyrifos Methyl,Clodinafop-Propargyl and 

Triclopyr Butoxy Ethyl Ester ..etc. Such pesticides

are used on a wide variety of crops such as cotton,

chilly, rice, sorghun, soyabean, sugarcane, groundnut,

vegetables, and flowers. The company has a 

state-of-the-art R&D center at Hyderabad, 

which employs 30 scientists.It has a contract 

manufacturing agreement with Dow AgroSciences 

for the herbicide Fluroxypyr. Dow AgroSciences  

is the original inventor of Fluroxypyr.

With an increasing trend of MNCs to outsource

molecules that have gone off patent, opportunity 

of Bhagiradha is very large.At the end of last

financial year company started the production

of a new product ‘clodinafop’.Company’s financials

are also improving every year.Last year company

posted a turnover of 104 crore and a net profit

of 9.5 crore which translates into an   EPS 

of Rs.19/- .It also declared a dividend of 30%. 

Bhagiradha is now trading at a price of Rs 70/- 

which is at a P/E multiple of  just 3.5.

Sales growth in recent qtrs are subdued but 

company sources claims that the same will pick up

in near future. Agrochemical companies are started

to re-rated in stock market.So keep an eye on this.

ARIES AGRO - For a Fertile Portfolio

Mounting food inflation is a serious threat to the economies worldwide. But some companies are benefiting from this situation .All governments are forced to take steps to improve food production using scientific methods and most modern techniques. Companies from the agri- related sectors are the major beneficiaries of  government’s such efforts.In India micro irrigation sector is getting very big boost in every budget .Even though fertilizer companies are also important in this perspective ,government control on fertilizer prices limiting their potential. Along with fertilizers, micronutrients  are  also gaining acceptance among Indian farmers. Moreover micronutrients  are not subject to the regulatory constraints that fertilizers face. The micronutrients business has considerable potential in the Indian context. Factors such as low yields of major food grains and horticultural crops, high soil alkalinity and intensive cultivation are the key demand drivers for micronutrients. The market for micronutrients such as zinc, iron and copper in India, is expected to double over the next two decades. ARIES AGRO is the largest player in micronutrients from the organised sector in India. The other two players in this sector(from organized space)  is Ranade Nutrients and Karnataka Agrochem ,but both are only regional players. Aries has 65 branded products coming from six  manufacturing units in India , one each at Mumbai, Kolkatta, Hyderabad , Bangalore ,Ahmedabad ,Lucknow and one new factory in UAE which is mainly for catering middle east region and North Africa .Aries is in the process of launching new products which include Natural amino acid chelates,Boidegradable chelates and Boidegradable plant protection products. With the inauguration of its Ahmedabad factory company entered into a new space of  Bio fertilizers too. Company’s largest  distribution network of 5500 distributors and 76500 (seventy six thousand five hundred) retail outlets  across India  is the main attraction for a rural centric business like this. In future company can easily roll out allied products throughout this network without much marketing efforts. In addition to this distribution points company has added a fleet of 100 rural retail vehicles called ‘Krishi Vinjan Vahan ‘ in 9 states in India.This is mainly for improving company’s rural reach and advisory services.

Financial Perfomance

For the nine month ended in December 2009 Aries posted a net profit of Rs.10 crore which is more than 300 % increase from the last full year figure(3.1 crore).Company is expected to post an EPS of Rs.12/- for this financial year and an EPS above Rs.20 for FY 2011.  Going forward big corporates are expected to coming into the farming  sector of India in a big way. This will surely improve the prospects of  the products of  companies like Aries along with the initiatives of governments to increase food production. Company’s share price improved sharply in recent days and now quoting around Rs.108/- .This is expected to consolidate around Rs.100/- level which may take as an entry point in an emerging star from the agri-related space.