October 2007 | Cynthia Rodrigues
Ploughing back the profits
CEO and executive director of Rallis India, Veeramani Shankar, speaks about the key initiatives Rallis has launched to support the farming community
For years, Rallis Inia has been one of the Indian farmer's two best friends, the other being the humble earthworm. The company has worked very hard to promote the cause of Indian agriculture and its chief representative, the farmer, through its growth plans, businesses and research.
Following the consolidation of its business performance, the company is now seriously pursuing the Rallis poised-growth-programme, designed to further its growth agenda, through organic and inorganic means. Veeramani Shankar, CEO and executive director, refers to the plans as the 10-100-1000 goal. He says, "Our long-term business plan targets a profit before tax of Rs100 crore with revenues from organic growth in the existing businesses going up to Rs1000 crore in 2009-10."
The programme uses such key initiatives as Disha and Apollo towards this end. Apollo seeks to expand the international business. Disha is a value-enhancement initiative meant to improve the profitability of the business by looking for value-creating opportunities and trying to lower costs relating to the supply chain, manufacturing, etc.
This determination to grow aggressively has been adopted across the company in terms of the balanced scorecard. Shankar adds, "This, in turn, is translated in terms of the strategy deployment matrix, which links every department with the corporate goals. The department goals are then broken down to individual goal sheets of people, and are linked to certain projects.
Rallis is now eagerly considering expanding its international business without losing its focus on India. Shankar says, "We are market leaders in India. About 78 per cent of our revenues come from the Indian market while 22 per cent from the international market. Since our business is seasonal, we cannot afford to be skewed towards the Indian market, or else there will be swings in the performance. Going international balances the portfolio and de-risks it. Also, globally, the market is huge and our products, broadly called the generics market, have a big opportunity there."
The company hopes to increase the size of its business abroad, get Rallis registrations instead of going through an agent and rise up the value chain.
Getting into adjacent business areas is also on the agenda. Rallis is eager to get into the marketing of seeds. "This will balance our portfolio," says Shankar. "Right now our emphasis is on pesticides."
Custom manufacturing is another area whose growth Rallis, a forerunner in this area, is optimistic about. This business involves receiving the product, processes and technologies from multinationals and then using Rallis' own manufacturing skills to imbibe the technology and produce it to the client's specifications. India is particularly ready to reap the benefits of this business, owing to problems in manufacturing and higher costs in certain countries.
Being a part of the Tata group, Rallis occupies a rather favourable position. Multinationals are eager to do business with a company that is responsible and trustworthy, one that works with processes and systems and abides by its principles.
Even as it aspires to grow its international business, Rallis is not about to lose sight of the Indian market. "One of our strengths in the marketplace," says Shankar, "is that we have a robust product portfolio, one for every farmer's need. We have a panel of about 50,000 farmers who we meet three to four times a year to understand their needs and experiences, the ground situation and the latest practices and to help them access technology. They are all progressive farmers, who want to learn new things. We also have regular focus group discussions with our channel partners. We also tie up with some agricultural colleges for development work."
These interactions give Rallis valuable feedback on the current situation and the future trends, especially in terms of better techniques that can benefit the farmer. They also provide valuable pointers on new business areas that Rallis could get into. Interestingly, such studies have to be done separately in different places as soil and climatic conditions and dominant pests vary from state to state. Educating the farmer, thereby boosting the cause of agriculture, is another role that Rallis takes very seriously.
Shankar says, "We work for the farming community both as Rallis and through our associations. We conduct awareness programmes to teach them about safe handling of pesticides, precautions, modern agricultural practices, etc. We also have a call centre where farmers have their queries answered by specialists. We keep in touch with farmers and often call them ourselves."
The knowledge gleaned in these ways is ploughed either into Rallis' own R&D or used to source and market other company's products on an exclusive basis. Sometimes Rallis co-markets along with other companies. In this arrangement, both companies market the product, working on a particular margin and methodology. Of these, Rallis naturally lays the greatest stress on products from its own stable.
The company's responsibility towards the economy and mankind comes to the fore in a world in which land availability for farming is shrinking, and meagre returns are forcing the disillusioned farmer to other livelihoods to supplement his income. Even as the growing population places severe demands on existing resources, agriculture finds itself forced to meet the need for food, fibre and biofuels. There is a need for better seeds and fertilisers and enhanced crop protection chemicals to ensure better productivity.
With so much to look forward to, Rallis has just cause to be excited about the future.