|Face-To-Face||Monday, July 23, 2001|
In conversation with Nandkishor Kagliwal, chairman, Nath Seeds
The company has released eight new hybrids in the last year
Promoted by Nandkishor Kagliwal and his associates, Nath Seeds(NSL) belongs to the Nath group of companies. The company is one of the largest seed companies and its activities include research, breeding, production, processing and marketing of high-quality hybrid seeds for high-yield crops (cotton, sunflower, maize, jowar and bajra) and vegetables (tomato, cabbage, cauliflower, capsicum, etc).
Though the company is engaged in research, production, processing and marketing of hybrid seeds and seedlings, the present business of the company can be broadly divided into three categories, namely, (a) hybrid seeds and biotechnology, (b) agritech, i.e. commercial farming, and (c) teak plantations, real estate and investments.
Coinciding with the recent jump in bio-technology stocks across the globe and also in India, the companys share price managed to touch the three-figure mark in Feburary 2000 after a span of almost six years. However, it again crashed to Rs 22 and currently trades around Rs 30. The companys share price has seen wild swings in line with bio-technology stocks. Is this logical? How will shareholders benefit from the restructuring? Why was the company delisted in June 2000? Why has the company not declared results since June 2000.To answer all these questions and more, Nandkishor Kagliwal spoke at length with Capital Markets Harihar Koirala. Excerpts:
In July 2000, the National Stock Exchange (NSE) suspended trading in Nath Seeds
(NSL). What is the reason for this? Where did the company go wrong?
Kindly provide the companys results from June 2000 onwards. How has the company
performed? Why did the company not declare its quarterly results since June 2000?
NSL has plans to raise funds through a private placement to finance the companys
growth plans. Why was the plan to give 26% stake to a strategic investor dropped? It is
believed that the company was in advanced stages of negotiations with a multinational
company for the same. Where did the deal get stuck ?
The company can continue to add value to business on its own strength in the foreseeable future. Hence the company has now decided to place its shares privately rather than give a stake to a strategic investor.
Why was the demerger initiated? NSL has decided to demerge into three businesses?
Kindly give the details. When will the demerger take place? What is the strategy behind
the demerger? How will the shareholders benefit?
Pursuant to the restructuring plan, it is proposed that the businesses of the company should be vertically split into three different companies. Nath BioGene Ltd will conduct the seed business, while the business of corporate farming will be undertaken by Agri Tech India Limited. The balance business of plantation, real estate and investments will remain with NSL. NSLs investors will be fully protected and they will be given shares in the other two companies in the ratio of their present holding. The two companies will also be listed.
In order to further enhance shareholder value, the Nath group has merged all its biotech and seed-related business into NSL. As a result of this consolidation of the groups seed businesses, the new companyNath BioGenes (India) Limited will emerge as a major force in the Indian seeds and biotech industry
NSL has engaged the services of Rabo India Finance Pvt Ltd., a subsidiary of Rabo Bank of Netherlands, for rendering suitable advice. Rabo Bank has also been given the mandate to arrange for suitable equity placements for the company. The funds will be utilized for research, infrastructure and acquisition to provide further impetus for growth.
When do you plan to list the companies that will be demerged ? Give the break-up of
each of the de-demerged businesses as a percentage to sales in the FY ended March 2001?
Since the corporate farming project is under implementation and since there is no regular revenue from the teak plantation and real estate division, the turnover of activities other than seeds is negligible. Over 95% of the turnover of Rs. 50 crore for the year ended 30 June 2001 will come from the seeds business.
What are your views about the future of the biotech industry? How do you expect to
grow vis-à-vis the industry?
Whenever there are discussions about the biotech industry, NSL is also included as a
biotech company. In what way is your company a part of the biotech industry?
How many germ plasms do you have? How much did you add in the last one year?Can you
say something about the network of farmers growing seeds for the company?
How many new hybrids were launched in the last one year? How is the response to the
What will be the size of the global agri-biotech industry in the next 5-10 years?
What will be the growth rate?
What kind of competition do you face from the unorganized sector? Also give the
break-up of the total market size in terms of the organized and unorganized sectors
Give details about the number of stockists, distributors, dealers and retailers.
Which are the crops on which your research is focussed?
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