Kaveri Seed sees 42% jump in June profit as it cuts dealers’ margins

HYDERABAD: A strategic move to cut down on dealers’ margins on its most selling hybrid cotton seeds have helped India’s second largest hybrid cotton seed firm Kaveri Seed Company see June quarter profit rising by 42% AT Rs 230 crore.

However, growing competition in the market resulted in the company reporting relatively poor growth of 12% sales turnover at Rs 827 crore during the quarter under review.

Though the company that earns nearly 80% of its revenues from sale of cotton seeds saw an overall growth of 20% across product portfolio, a negative growth of 10% in maize sales dented its sales in June quarter.

Kaveri Seed chairman and managing director GV Bhaskar Rao told ET, “Thanks to our strategy of cutting down on dealers’ margins, our realizations from cotton seed sales improved by Rs 40 per bag, significantly improving the overall profit margins in June quarter.”

Rao expects the company to see pick up maize seed sales during the Rabi season and help the company report an overall growth of 20% during the full year.

However, differing with this outlook, Kailash Gandhi, managing director, KRG Strategy Consultants said, “Going forward, I see muted sales growth on account of reduction in dealer margins and poor monsoon”.

Shares of Kaveri Seed Company closed on Wednesday at Rs 814.35, up by 2.07% on BSE, while the benchmark Sensex ended up marginally 0.15% to close at 25,918.95 points.