Monsanto: hybrid growth formula

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: Monsanto India will find its revenue-enhanding parameters in increased presence in lucrative hybrid seeds business (39% share of the hybrid market by brands- Agrow and Dekalb), expansion into crops such as cotton and soybean, and its debt-free status.

Coupled with the research of its parent company, these come as an advantage in a business where investments in R&D and the period to develop new strains pose stiff entry barriers. Monsanto’s focus on Dekalb corn hybrids holds good considering these seeds have higher yield, oil content and longer shelf life.

The company is making an exit from the competitive and price-sensitive segments of the herbicide business and has tuned its portfolio closer to its parent’s-focussed mainly on seeds and traits.

It divested its Leader herbicide in 2006 and herbicides in 2008. Profits of Rs 45.8 crore from some of these divestments in 2007-08 enhanced Monsanto’s net profit, which was distributed to shareholders through a special dividend of Rs 180 per share in 2008.

Expansion into other target crops such as cotton and soybean also offers growth potential .

Monsanto India’s sales increased by 34.51% to Rs 239.84 crore. Its net profit increased by 24.97% to Rs 72.22 crore in the quarter ended June 2008 .