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TIME TOBLOOMRiding on a strong research backbone and
diversification into new markets, coupled withPE funding, Krishidhan is transforming
into a global seed company.AMIT BRAHAMABHATT
Early this April, the do-
mestic seed industry
woke up to the news of
the country's first private
equity investment in a
seed company. It was indeed a mo-
ment of accomplishment for the
Jalna-based Krishidhan Seeds, when
after four months of vigorous audit-ing, Summit Partners, a US-based PE
firm, announced an investment of
$30 million (about Rs 132 crore) in
the Rs 330-crore seed conglomer-
ate. The fact that the US-based PE
fund zeroed in on Krishidhan among
200-odd seed companies speaks vol-
umes about the fifth largest seed
company.
"The equity infusion will be used
for the company's research and de-
velopment (R&D), technology andproduct-related acquisitions, infra-
structure and international expan-
sion," underlines KSL's dynamic and
energetic Managing Director Sushil
Karwa.
The investment comes at a time
when many of its ambitious plans are
unfolding at a breathtaking pace.
"Krishidhan has the best of man-
power, top scientists, R&D facilities
and a clear vision for growth. The
company needed funds and not anyexpertise as such. So, we went in for
PE investment rather than strategic
partnership," reasons out KSL Direc-
tor O G Attal, a former banker who
looks after the commercial opera-
tions of the company.
It has been quite an eventful year
for KSL, which is celebrating its sil-
ver jubilee. The Karwa family-owned
enterprise has been moving from
success to success in the past six
months. Just months after the fundinfusion, Krishidhan moved overseas
by beginning its operations in Hol-
land, The Netherlands. The venture,
spearheaded by Krishidhan Seeds
Europe and led by industry veteran
Jan Tamboer as its CEO, opens new
vistas for the company to transform
into a multinational seed company
from a pan-India entity.
Meanwhile, the string of good
news continues. Recently, KSL got
the privilege of partnering with theCentre for Scientific and Industrial
Research (CISR) and Germany's Re-
search Centre Juelich for a path-
breaking research project. The
project, jointly funded by the govern-
ments of India and Germany, aims at
developing durable heat- and drought
-tolerant cotton across differing cli-
mate zones in the country.
"Krishidhan was short-listed from
a host of seed companies because of
its state-of-the-art infrastructure,years of rich experience and presence
across varying agro-zones,"
emphasises KSL Director Anup
Karwa. With a doctorate from Ger-
many, Anup Karwa heads KSL's bio-
technology centre in Jalna, the
nation's seed capital. He is steering
several genetically-modified (GM)
and non-GM projects that are likely
to take Krishidhan to greater heights.
Humble origins
If 2010 has brought in a deluge of
good news, it is because of years of
planning and hard work. The
country's fifth-largest seed company
has traversed a long and tortuous path
to reach where it is today. The en-
terprising Karwa brothers -
Jainarayan and Subhash Karwa - es-
tablished Rajendra Seeds in the
1973. The duo had cut their teeth in
Marathawada (central Maharashtra
region) as commission agents incotton trade. "In 1973, the
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Year of incorporation
1986
Areas of businessSeeds, plant nutrients
Revenue (Year ended Sept 2010)
Rs 329 crore
Head office
Jalna, Maharashtra
No. of employees
1,200+
No. of retailers
25,000 across 24 States
No. of clients
6,00,000+ farmers
Product portfolio120 seed varieties
Production area
1,00,000 acres
No. of processing plants
16
Major seed brands
Cotton:Pratik-9632, Rakhi-621,
Pancham-541, Trinetra-641
Maize:Super Maharaja-999,
Narendra M-909
Paddy:Komal, Silky
Soybean:KSL-441, KSL-20
Brinjal:Green Beauty
Tomato:Mahalaxmi
Krishidhan at a Glance
Maharashtra government banned cot-
ton purchase by private parties and
began procuring cotton directly from
farmers. This affected us and a lot of
traders in the region. My late brother
and I set up Rajendra Seeds Company
in the same year and began trading in
pesticides and seeds," reminisces
KSL Chairman Jainarayan Karwa.
Rajendra Seeds grew at a fast clip andbecame one of the largest distribu-
tors of State-owned National Seeds
Corporation.
As Rajendra Seeds made roaring
business, the Karwa siblings went in
for backward integration by setting
up Krishidhan Seeds in 1986 in Jalna
for processing and marketing of
seeds under the brand Krishidhan.
The company's R&D division was set
up in 1990, giving it a big boost in
expanding its product portfolio.Krishidhan maintained a steady
growth, upgrading its facilities year
after year. The growth gained mo-
mentum when Sushil Karwa, the el-
dest son of Jainarayan Karwa, took
the reins of the company in 1996. He
brought in young talent and infused
professionalism into the family-run
venture, which is today managed by
the six Karwa siblings.
Turning point
Interestingly, Krishidhan's spectacu-
lar growth coincided with that of the
domestic seed industry from 2002.
The year was marked by the commer-
cial launch of Bt cotton, a GM cot-
ton seed, by Mahyco Monsanto
Biotech (MMB) India. Krishidhan
was among the first three sub-licens-
ees of MMB India, which has
commercialised Bollgard-I (BG-I)
and Bollgard-II (BG-II) cotton hy-
brids in the country. It bought 16-acreland belonging to a sick oil mill from
INDIA BUSINESS JOURNAL NOVEMBER 2010 29
Krishidhan Seeds Jalna headquarters spread over an area of 16 acres
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Few companies canmatch KSL in scale
and sizeSUSHIL KARWA, Managing Director, Krishidhan Seeds
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As the Kharif season ends with a favourable
monsoon, what are the prospects, going ahead?
Cotton and most of the crops are set for a bumper
harvest, resulting in better remuneration for farmers.
Most of their income will be reinvested in equipment
and better seeds, which augur well for the forthcomingRabi season. We can certainly look forward to a
bright Diwali.
What is your take on the developments in the
domestic seed industry?
The seed industry is growing at a
steady pace of 10 to 15 per cent in
the last few years. Most of the seed
companies have adopted state-of-the-
art technology, which is the key for
future growth. The farmer is hungry
for new technology and new varieties
of seeds. Look at the way Bt cottonhas changed the fortunes of farmers
and the economy at large. There is a
3600 change with India turning into
the second-largest exporter of cotton
from an importer earlier. However,
some regressive government policies
are a cause for concern.
Would you elaborate on the
policy glitches?
Seed is the backbone of agriculture. But it is highly
neglected even as there are subsidies for fertilisers and
pesticides. To make matters worse, some State govern-ments have begun fixing the maximum retail price (MRP)
of some cotton seeds after bringing cotton under the Es-
sential Commodities Act. The cap on MRP dents the prof-
its of seed companies, forcing them to slash R&D in-
vestments. This is disturbing in the long term because
R&D holds the key to future growth.
But don't you think that some seed companies are
fleecing farmers?
Absolutely not, it is a widely-perceived misconcep-
tion. The cost of seed is a mere 8 per cent of the entire
farming cost, with fertilisers, pesticides, labour and trans-
port accounting for the remaining 92 per cent of the cost.
However, this 8 per cent investment can make a telling
difference to the crop yield. Today, the farmer is willing
to pay for quality seeds. However, petty politics is need-
lessly putting seed companies in peril.
Where does Krishidhan stand in a highly-competi-tive seed industry?
We are the fifth-largest seed company in the country.
The industry is certainly competitive. But we are much
ahead of the competition because of our focus on R&D.
Very few companies can match us in
scale and size of our R&D invest-
ment. Sitting in a remote place like
Jalna, Krishidhan is involved in re-
search, which has been acknowl-
edged by many renowned Indian and
global institutions.
What are going to be the focusareas for future growth?
Cotton continues to be our core
business, contributing 41 per cent to
our total revenue. However, we have
begun diversification with vegetable
seeds, other field crops and plant
nutrition, which are set to drive our
future growth. Besides, our high-end
R&D, the newly-launched Holland
venture and KRFPL's initiatives will drive the company's
growth manifold.
Where do you see Krishidhan in the next few years?
The company is in the midst of implementing a
Rs 150-crore capital expenditure plan, including a cold
storage, ultra-modern vegetable seeds processing plant,
cotton plant for further capacity enhancement and auto-
mation of processing plants. We are also upgrading our
IT set-up to integrate our IT network with a GPS system
to track our end-users' requirements and product move-
ment. A knowledge park is also on the cards for informa-
tion and customer service. The next three years will pro-
pel the company's growth manifold. We are eyeing a turn-
over of about Rs 600 crore next year and by 2013, we
hope to take it to Rs 1,000 crore.
KRISHIDHAN IS IN
THE MIDST OF
IMPLEMENTING A
RS 150-CRORE CAPITAL
EXPENDITURE PLAN. THE
NEXT THREE YEARS WILLPROPEL THE COMPANY'S
GROWTH MANIFOLD. WE
ARE EYEING A TURNOVER
OF ABOUT RS 600 CRORE
NEXT YEAR AND BY 2013,
WE HOPE TO TAKE IT TO
RS 1,000 CRORE.
K rishidhan Seeds Managing Director Sushil Karwa has given a new direction to the company after taking
charge in 1996. A commerce graduate, Mr Karwa has been a hands-on manager, thanks to his grasp of the seed industry's nuances. Mr Karwa has ensured the smooth transformation of Krishidhan from an agro-
trading company to a world-class seed processing and marketing conglomerate. In fact, Krishidhan stands
as a shining example of how a family-owned venture can reach dizzy heights by sticking together and
infusing professionalism. For an exclusive interview with India Business Journal, Mr Karwa takes time off
his marathon day-long meeting at the Jalna headquarters and shares his views on the seed industry and
future plans of his company. Excerpts:
INDIA BUSINESS JOURNAL NOVEMBER 2010 31
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With over 490 sales personnel and thousandsof trade partners, the company reaches out toover 6,00,000 farmers across the country.
KSL's 16 seed processing plants across varying climate zones cater to all major field crops and vegetables.
MIDC, Jalna for setting up its new
facility. Over the years, seed pro-
cessing plants, R&D laboratoriesand biotechnology centre came up
on the premises, turning
Krishidhan into a hi-tech seed
company.
"Post-2002, the Indian seed in-
dustry is in an exciting phase.
While the first phase of growth in
the domestic seed industry un-
folded between the 1960s and
1970s with the Green Revolution
unleashed by Dr Swaminathan and
Norman Borlaug, the second phasebegan with the launch of GM tech-
nology," notes KSL Executive Direc-
tor M R Suresh.
The GM technology unveiled im-
mense opportunities for the Indian
seed industry. It realised that hi-tech
research held the key to future
growth. Krishidhan and many other
seed companies began restructuring
their operations and investing heavily
in R&D.
During the same year, KSL set up
its biotechnology division to cash in
on the potential of biotech-driven
research. In 2008, the company in-
augurated a world-class, 30,000-sq
ft biotechnology facility in
Jalna, which is involved in pioneer-
ing research.
Over the past decade, Krishidhan
Seeds has grown exponentially with
its revenue jumping over 14 times
from Rs 23 crore in 2003 to Rs 330
crore in 2009-10 (The company fol-
lows an October-to-September fi-nancial year). It has emerged as an
integrated seed company engaged in
research, production, processing,
packing and marketing of seeds.
With its corporate office in Pune,
registered office in Indore and head
office in Jalna, spread over 16 acres,
Krishidhan is a pan-India seed com-
pany with presence in 24 States. It
has a well-diversified portfolio of
more than 120 seed varieties, rang-
ing from cotton, cereals, pulses, oil-
seeds and vegetables. KSL's reach is
quite expansive with its seed produc-
tion spread over 1,00,000 acres
across varying agro-climate regions
of the country. Besides, it has 16 pro-
cessing plants across the country
spread over 6,50,000 sq ft with a to-
tal processing capacity of over
85,000 mt per season.
"We have one of the best infra-
structure facilities in the country.
Our scientists and technicians con-
stantly provide us inputs to de-
velop infrastructure and we recip-
rocate accordingly," notes KSLDirector Vishnu Karwa, who is in
charge of infrastructure at
Krishidhan.
KSL's high-end R&D has en-
abled it to develop 61 proprietary
products so far. Moreover, it is tar-
geting to own another 170 prod-
ucts in the next five years to im-
prove yield of crops, enrich farm-
ers and grow the company mani-
fold. A strong pool of germplasm
- a collection of genetic resources -
is the backbone of seed research. The
company has around 18,000 entries
in its gene bank for various crops.
Besides, a pool of 51 scientists, 26
of whom are doctorates, is driving
KSL's high-end research.
"The life span of modern seeds is
very short. Every five years, a new
seed has to be developed to address
farmers' needs and improve their
crop yield. The farmer is willing to
pay any price, provided he gets value
for his money. Hence, R&D is thekey to growth," adds Mr Suresh.
Realising the significance of re-
search, the company intends to allo-
cate about 8 per cent of its turnover
for R&D each year. It has also en-
tered into research collaborations
with various national and interna-
tional institutes and universities to
yield immense benefits for all the
stakeholders involved in agriculture.
With a strong emphasis on qual-
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Krishidhan's 30,000 sq ft biotechnology facility in Jalna is at the hub of pioneering, cutting-edge research.
Patriarch Jainarayan Karwa:An inspiring tale
ity, Krishidhan boasts of quality stan-dards better than those set by the
government for its seeds. Its QA fa-
cility is equipped to handle more than
50,000 samples per annum.
A dedicated workforce of nearly
1,200 are yet another of the
company's assets. Apart from highly-
qualified scientists and technolo-
gists, Krishidhan a strong marketing
network of over 490 personnel
spread over 22 of its sales offices.
Besides, the company has 1,600 dis-
tributors and over 25,000 retailers
covering about 30,000 villages and
reaching out to more than 6,00,000
farmers. The sales personnel and
trade partners play a vital role by
reaching out to farmers, conducting
live demonstration of seeds and pro-
viding them the much-needed train-
ing too.
Krishidhan has not shied away
from harnessing technology. The
company's multiple operational cen-
tres spread across over 40 locationsin the country are linked through SAP.
It has invested over Rs 7 crore to
bring in automation and link all its
offices to cash in on the benefits of
information technology.
Rich harvest
Krishidhan Seeds, which is celebrat-
ing its silver jubilee this year, has
made tremendous progress in the
past few years. From Jalna, a remote
town of Maharashtra, the company
has grown manifold and moved over-seas too. Meanwhile, the seed
companys two core businesses, cot-ton headed by Madhav Dhande and
vegetable seeds headed by Mangesh
Kadgaonkar, is in the process of
realising many of its ambitious plans.
Cotton, with which Krishidhan
made a fortune initially, still contin-
ues to be at the core of its business,
accounting for about 41 per cent of
its total revenue. The company's cot-
ton seeds - Pratik-9632, Pancham-
541, Rakhi-621, Trinetra-641, Dia-
mond and Super Maruti-441 (all of
BG-II variety) - have become a rage
among farmers. It has recently ac-
quired a cotton seeds company hav-
ing 18 new products and a rich R&D
set-up.
Krishidhan, in the meantime, has
shifted its focus to other lucrative
segments like vegetable seeds, plant
nutrition and high-end R&D.Krishidhan Vegetable Seeds
(KVSIPL) was incorporated as a
separate company in 2007 to foray
into vegetable seeds business. The
fledgling company has 16,000 sq ft
of processing area. Besides, it is
powered by more than 100 profes-
sionals in its R&D, productions and
marketing divisions and has a net-
work of 600 distributors. KVSIPL's
vegetable seeds like Manaswani (hot
pepper), Gota (onion), Rasraj (water-
melon), Green Beauty (brinjal) and
Mahalaxmi (tomato), to name a few,
have been widely accepted in the
market. The company currently ex-
ports vegetable seeds to many coun-
tries in Africa and West Asia.
Last year, Krishidhan entered the
plant nutrition business under group
company Subhash Fertilisers. The
company, situated near Jalna on a
sprawling 11-acre campus, has en-
tailed an investment of Rs 8 crore and
has a manufacturing capacity of5,000 kilo litres per day.
Subhash Fertilisers manufactures
plant nutrients using gluconate, an
eco-friendly alternative to chemi-
cals, with the technology patented by
Jammu-based Indian Institute of In-
tegrative Medicine (IIIM). "We have
alliances with many reputed national
and international organisations like
New Delhi-based TERI, the Borex
Group of the USA and Denmark's
Novozynes, among others, to markettheir products in India," discloses
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The secret of Krishidhan's success is a fine blend of family values andhard-nosed professionalism.
The company has a well-diversifiedportfolio of more than 120 seedvarieties.
KSL Director Ashish Karwa, who
heads Subhash Fertilisers.
The product opens yet another
window of opportunity for the com-
pany. "The plant nutrient segment is
a high-margin business. The company
is in the process of making micro-
nutrients that can also be used in the
pharmaceutical sector. This will pro-vide a big impetus for future growth,"
points out KSL National Business
Manager Sanjay Sarda, an IIT
Kharagpur alumnus.
Moreover, Krishidhan is engaged
in pioneering research through an-
other group company Krishidhan Re-
search Foundation (KRFPL). Col-
laborating with many national and in-
ternational organisations both in pub-
lic and private sectors, KRFPL is ac-
tively involved in several path-break-
ing projects related to resistance toinsects and viruses, among others.
Combining classical, conventional
breeding approaches with state-of-
the-art technologies, scientists at
KRFPL strive to deliver value-added
quality products to ensure that farm-
ers get higher yields at a lower cost.
"KRFPL is collaborating with
many reputed institutions to take
their research to the commercial
stage. In short, we incubate technolo-
gies," emphasises Anup Karwa. Thecompany is developing insect-resis-
tant cotton and brinjal seeds and
broad-spectrum, virus-resistant to-
mato and capsicum seeds. The seeds
are currently undergoing regulatory
trials for bio-safety and are likely to
be commercially launched by 2013.
Early this year, Krishidhan created
history by incorporating Krishidhan
Seeds Europe in Enkhuizen, Holland.
"We are right at the centre of
Europe's seed valley, rubbing shoul-
ders with most of the top global seed
companies," says a beaming Mukund
Karwa, the KSL director, supply
chain management and IT, also look-
ing after international operations.The Holland venture provides
Krishidhan access to cutting-edge
R&D with a global perspective. It can
enable the company to transformconventional breeding in India to
highly-professional breeding driven
by hi-end technologies. The seed
company plans to grow its product
portfolio on a global scale by getting
access to germplasm in Europe. The
European foothold will also provide
Krishidhan any opportunity to fuel itsinternational exports.
"Landholding in India is fraughtwith problems. The same amount ofarable land and limited resources will
have to sustain the ever-growingpopulation of the country. The key tothis challenge lies in increasing yield
of crops and improving farmers' in-
come, both of which are possibleonly through R&D," notes Mukund
Karwa.Meanwhile, the rising standard of
living of a large section of the
country's growing population has re-sulted in major changes on the farmfront. There is a clear shift in con-
sumption from coarse to finer grains,resulting in unprecedented demandfor foodgrains. New varieties of
seeds developed through researchplay a vital role in bettering the yieldof crops.
The Rs 8,000-crore domesticseed industry is well aware of thechallenges and opportunities before
it. Since 2002, the industry has been
restructuring itself to address the vi-tal issues. According to analysts, the
domestic seed industry is set for over
three-fold growth in the next fiveyears to Rs 25,000 crore.
The Krishidhan Group - led byflagship company Krishidhan Seedsand group companies KVSIPL,
KRFPL, Krishidhan Seeds Europe,Subhash Fertilisers and Rajendra
Seeds - is on the cusp of cashing in
on the potential future growth. As theKarwas set a revenue target ofRs 1,000 crore in the next three
years, it may look ambitious, but the
pace unfolding events could provethem right.
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