Ksl-IBJ Cover Feature

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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

28 NOVEMBER 2010 INDIA BUSINESS JOURNAL

COVER FEATURE


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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


COVER FEATURE


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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:



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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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