Kaveri Seed Company Limited
Know the Company
Founded in 1976 and headquartered in Telangana, India, Kaveri Seed Company Limited (Kaveri) is a leading producer and distributor of hybrid seeds. The Company plays a pivotal role in India’s agricultural sector, focusing on essential crops such as maize, cotton, rice, and a variety of vegetables. Kaveri ensures the development of high-performing seeds tailored to meet the needs of Indian farmers.
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Kaveri boasts extensive infrastructure to support its production and distribution capabilities. This includes 170 outreach trial centers for field testing and research, a maize cob drying facility with a 4,500 metric tonne per cycle capacity, and seed processing operations with a throughput of 115 metric tonnes per hour. The Company’s cotton processing facilities feature de-linting and ginning capacities of 18 and 5 metric tonnes per day, each. With 10 lakh square feet of warehouse space and a cold storage capacity of 15,000 metric tonnes, Kaveri Seeds ensures seed preservation and seamless delivery through its network of 15,000 client touchpoints across 18 Indian states.
The Company’s diverse product portfolio includes high-yielding seeds for field crops like maize, rice, cotton, wheat, and sunflower, as well as vegetables such as tomatoes, chillies, okra, and watermelon.
Strengths
Kaveri has established a robust market presence, driven by its focus on innovation and a commitment to enhancing agricultural yields. Its well-recognized product portfolio includes BT cotton hybrids, maize hybrids, rice hybrids, and selected rice varieties, catering to the diverse needs of Indian farmers. The Company’s strong network of 65,000 farmers across 29 agro-climatic zones enables direct engagement, fostering better adoption of its seeds and cultivation practices.
Kaveri Seeds enjoys a reputation for quality and customer-centric practices, which enhances brand loyalty and allows for premium pricing. The Company’s extensive distribution network and strong brand recognition reinforce its ability to serve consumers efficiently and handle competition in the seed market. Additionally, its diversified product portfolio reduces dependency on single crops and addresses a broad spectrum of farmer needs, covering cotton, maize, rice, vegetables, and other field crops.
Kaveri has a market share of approximately 9% and sees significant growth potential, particularly in maize and non-cotton segments. Despite challenges in the cotton sector, the Company has demonstrated resilience by expanding sales in the rice and maize categories, supported by a strong pipeline of hybrids. This growth aligns with India’s status as one of the largest seed markets globally, driven by diverse agro-climatic conditions, extensive farming, and increasing commercialized agriculture practices.
Kaveri Seeds’ focus on research and development further strengthens its competitive edge. Its in-house R&D facility with more than 160 scientists, equipped with biotechnology labs and crop-breeding satellite stations, enhances germplasm quality and breeding processes.
Adhering to strict Indian Minimum Seed Certification Standards (IMSCS), the Company ensures genetic purity, high germination rates, and adaptability to adverse climatic conditions. Utilizing advanced biotechnological methods and molecular breeding technologies, Kaveri Seeds develops disease-resistant and high-yielding seeds tailored to specific regions. This approach ensures stability and productivity, even under challenging environmental conditions.
Kaveri Seeds demonstrates remarkable shareholder value creation through consistent dividend payments and share buybacks. Over the past seven to eight years, the Company has conducted six buybacks and continues to distribute excess cash effectively.
Kaveri needs a minimum capital expenditure for each year, for the current financial year it earmarked a capex of Rs 25–30 crores. Most of the capex for the current year already spent the company. For the next financial year, company expects around Rs 45 crore for capex.
The Company’s export operations also contribute to its strength, with seeds being exported to countries like Bangladesh, Vietnam, Sri Lanka, and Pakistan, while export sales fluctuate due to external factors. In the export market, Kaveri Seeds has achieved significant milestones, including Rs 66 crores in export revenue last year, with key contributions from Bangladesh, Vietnam, and other regions. However, uncertainties in certain markets like Tanzania, the Company’s diversified global footprint mitigates risks and supports consistent growth. By focusing on expanding its vegetable seed exports and leveraging its strong R&D capabilities, Kaveri Seeds aims to enhance its international presence and meet the growing demand for high-quality seeds abroad.
First half of the current financial year, Kaveri reported a muted growth. However, increased volumes in selection and hybrid rice, as well as maize, contributed positively to growth due to better realizations. Operationally, new products showed promising contributions. Bajra volumes rose from 59% to 73%. Hybrid rice volumes grew by 18%, with revenues increasing by 28%. Selection rice volumes increased by 20%, while revenues grew by 34%. Maize volumes rose by 9%, and revenues increased by 24%. Although vegetable sales volumes grew by 11%, revenue declined by 13%. Export sales totaled Rs 6.1 crore in the first half of FY25, a sharp decline from Rs 26 crore in the first half of FY24, primarily due to political unrest in Bangladesh.
The central government has launched several initiatives and budgetary supports aimed at improving farm incomes and promoting agro-based industries. Key programs such as the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and Pradhan Mantri Fasal Bima Yojana (PMFBY) have been instrumental in achieving these goals. Additionally, schemes like the Production Linked Incentive Scheme for Food Processing Industry, aim to create global food manufacturing champions and promote organic products, strengthening the agricultural value chain and agro-industries. The Company benefits also from favorable government initiatives such as ISOPOM and the Rashtriya Krishi Vikas Yojana, which promote advanced agricultural practices and create a supportive ecosystem for seed innovation.
Financials
Kaveri reported a consolidated net loss of Rs 0.67 crore for the September 2024 quarter (Q2FY25), compared to a net profit of Rs 13.72 crore in the corresponding quarter of previous financial year. Sales declined by almost 20%, amounting to Rs 137.5 crore in the Q2FY25, as against Rs 171.32 crore in the September 2023 quarter. Export performance during the first half was impacted by political unrest in Bangladesh, resulting in muted growth rates at the revenue, EBITDA, and PAT levels.
Revenue from operations in the first half of the current financial year grew by 3%, reaching Rs 890 crore, compared to Rs 863 crore in the first half of the previous financial year. EBITDA stood at Rs 300 crore, remaining relatively flat compared to Rs 299 crore in the first half of FY24. Net profit for the period was Rs 279.4 crore, marginally higher than Rs 278.5 crore in the same period last year.
Looking on the balance sheet, the Company’s cash reserves stood at Rs 559 crore as of the first half of FY25, compared to Rs 732 crore in the corresponding period of FY24. Buy back, concluded in first quarter of the calendar year cause a decline in the cash reserve.
Outlook
India’s agricultural sector, a cornerstone of the country’s economy, continues to expand rapidly. Contributing significantly to GDP and employing a large workforce, agriculture is increasingly important due to population growth and rising income levels in both rural and urban areas. This has driven higher demand for agricultural products domestically while positioning India as a net exporter of agricultural goods. Emerging technologies like precision farming and digital marketplaces are revolutionizing the sector, improving efficiency and providing farmers with better market access.
Food grain production remains vital for ensuring food security. Government initiatives, including a 73% increase in budget allocation for food processing in 2023–24, aim to enhance value addition and reduce post-harvest losses. These measures are expected to improve profitability and sustainability within the sector.
Agricultural credit also plays a pivotal role in driving growth. In FY 2023–24, banks disbursed over Rs 24.83 trillion in agricultural loans, exceeding the government’s target of Rs 20 lakh crore. This reflects the government’s commitment to supporting the agricultural economy.
Looking ahead, the Indian seed industry is poised for continued growth, fueled by sustainable practices, technological innovation, and a focus on R&D. Increased adoption of biotech crops and expanded farmer outreach programs will further strengthen the sector, ensuring high-quality seeds reach a wider audience. Kaveri is well-positioned to capitalize on these trends, driving long-term growth and contributing to the agricultural sector’s development.
Kaveri seed is poised for substantial growth, driven by robust production levels and strategic initiatives. The current financial year marks the highest production volumes in the company’s history, supported by depleted inventories and increasing market demand. The focus on ramping up production stems from the expectation of significant growth in volumes in the coming years. Furthermore, newly launched products are showing strong traction, contributing to an expected 20% growth in the next fiscal year. These new offerings, coupled with enhanced production capabilities, are set to be major drivers of the company’s performance, going forward.
Sector: Fast Moving Consumer Goods
Market Price: Rs. 856.60 as on today
FV: Rs 2/-
Stock Name: Kaveri Seed Company Ltd
BSE Code: 532899, NSE Code: KSCL
Market Cap.: Rs 4480 Cr
Book Value: Rs. 301
Segment: Agricultural Food & other Products
Incorporation: 1976
Headquarters: Telangana
