The fall of agriculture production due to less rainfall coupled with low market prices for produced goods has affected the revenue growth of Sri Biotech, a Hyderabad-based agri-biotech company, this financial year.
This is one of the worst situations that agro-industry has faced in last 15 years. Sri Biotech, which is growing at 30 per cent to 70 per cent every year, had to limit itself with similar revenues in the previous fiscal, said KRK Reddy, chairman and managing director.
Talking about the industry, he said the use of bio fertilizers and bio pesticides in agriculture is growing at 10 per cent every year. Organic farming would take 20 per cent of the total farming in the next decade. It cannot take the whole market pie due to shrinking agriculture lands for industrialisation and growing demand of production proportionate to the increase of population.
However, the organic farming can be catered for rich communities. The production costs are 10-15 per cent high compared to the traditional farming methods.
The cost-benefit ratio for the farmer is high and there is also a premium for the production. The organic farming is a slow process and can give benefits to farmers in a long run.
Sri Biotech is investing 10 per cent of its revenues in research and development (R&D). The company is doing transgenic research and RNA interference technology research in the labs based in Pashamylaram industrial estate in the City. It has pan-India presence with 40 per cent of its production going to seven states. It also has plans to export its products to African countries this year, he said.
Non-BT companies faking
There are a lot of issues with the fake biotech companies. The term biotech is thoroughly exploited by non-biotech companies. The chemical fertiliser companies are also naming themselves as biotech companies. It is difficult for the farmer to differentiate between a reputed biotech company and a fake biotech company in choosing a product. There is a need for certification to acknowledge the authentic companies and its products, added Reddy.
Reaching the end-user is also a challenge for Sri Biotech. It is educating all the stakeholders down the supply chain that includes employees, dealers and farmers. The company is spending 30-40 per cent of its revenues on marketing compared to10 per cent of industry spend, he said.
The turnover the company is Rs.90 crore and the net profit is 15 per cent in the last financial year. The 1,000-employee company has 30 per cent of its shares held by India Agri Business Fund Limited, Mauritius.