CompanyWatch- Rallis India Ltd (More strategic tie-ups to come)
Rallis India is planning for more strategic tie-ups
rallisindia.com
(Anand Adhikari interviews Vijay Rai, Managing Director & CEO of Rallis India Ltd -HT Business 11/07/99)
Rallis origin dates back to more than a century and half when Ralli Brothers, a British partnership firm, started operations at Calcutta, procuring agricultural products for overseas market. Today, Rallis is a multi-product company with a product portfolio consisting of agrochemicals, fertilisers, pesticides, fine chemicals, pharmaceuticals and project exports.
Rallis shareholding, too, has changed hands and Tatas now hold a majority 50% followed by domestic financial institutions and public. "Rallis is the only company in India which is bigger than a multinational", Vijay Rai, managing director and chief executive officer of Rallis India Ltd, told our Mumbai correspondent Anand Adhikari in an exclusive interview.
At a time when the agro business has been experiencing a downtrend in most part of the world, Rallis is racing ahead. ?We are not banking on agrochemicals only. We are now giving a major thrust to the pharmaceutical sector. There are also plans for foreign tie ups in the area of marketing and distribution?, Rai said. He also discussed Rallis future plans for subsidiaries, financial performance, VRS and host of other issues at length.
Q: Over 80% of Rallis India Ltd?s turnover comes from agrochemicals & fertiliser division, while the balance 20% is shared by the other three divisions ? pharmaceuticals, fine chemicals and exports. Do you have any specific plan for these three divisions?
A: The plans are very much there to give emphasis to pharmaceutical division because its a very profitable division. And in terms of profitability, it is one of the best division in the company. A lot of thinking and planning is going on and we will be conceptualising the strategic plan in the next six months on how to expand the business further.
Q: You have been engaged in the pharmaceutical business for over 40 years Why is it that the contribution of this division is only about 12-15% towards the Rallis total sales turnover?
A: We have not managed it well and we haven't been able to put in the right amount of inputs. But in the last 3-4 years, we have put in the emphasis which is required and now the division has become profitable and started to grow. We are now planning two important strategic tie-ups ? one with a US-based firm and another with a German firm for plant based medicine. The focus of the pharmaceutical division is plant-based medicines and these two firms will helps us enter the world plant-based medicines market. It?s a market development arrangement not a joint venture per se.
Q: You recently picked up 30% equity in a Zimbabwe-based pharmaceutical company Caps Holdings Ltd. Can you tell us something more about it?
A: Its a major formulator and distributor of
pharmaceuticals in Zimbabwe, and also has sub-companies in the entire southern African development region. It holds about 60% share in the Zimbabwe market. It gives us the tremendous advantage of being able to export our bulk drugs into that market. Its the fastest way to achieve market share. We have already started exporting to these countries. In fact, we began exports the day we took over.
Q: You are also into garment exports which does not seems to be in line with your core competence. Your comments please?
A: We have phased out this division. In fact, it has become part of Trent, a retailing arm of the Tatas.
Q: Your business in the category 'technical services and project exports' experienced a downtrend in the fiscal 1998-99. What were the reasons?
A: We do generation of 'safety data' from our international quality laboratory at Bangalore. We evaluate safety, efficacy, residual and a variety of other parameters for chemicals.This will help people to evaluate whether the product is safe for human beings, environment, animals etc. We have a German-approved facility at Bangalore and this does evaluation for companies throughout the world. The exports is mainly of these services. Actually, it's like a software business of Rallis wherein the business of contracting our research and evaluation of safety is done. All these studies are very long term covering five-seven years. So, the delivery of the services keep on changing and so the profits in the book. Rallis India and Mosanto recently signed an MoU to jointly develop and launch rural development initiatives in India.
Q: What is the progress?
A: Rallis India is a rural distribution company and Mosanto felt that it will be useful to them to use the Rallis distribution network. So, we joined hands to become co- distributor with Mosanto. They have already started using our network and it has been a happy marriage.
Q: You have also pruned down your employee costs by offering VRS. Which are the divisions where you are offering VRS?
A: We have offered VRS to all those people who are not involved either in the manufacturing or selling. We are focussing our business on high-tech manufacturing and professional selling. We have given up low-tech manufacturing and people involved there are the ones whom we have offered VRS. People who are involved in functions other than selling i.e. administration and movements of paper have also been offered VRS. At the same time, we have substantially increased the number of people involved in research. The manpower strength has gone up from 50 to 400 plus in the last 4 year. The future lies in research and development.
Q: Can you tell us more about your new subsidiary Rallis Farm Management Services Ltd?
A: Its purpose is to independently develop different areas of the countries where farm management people educate the farmers about the latest techniques in farming; helping in selection of farming input; helping in managing the crop through its life parent and then variety of services to increase the profitability of farmers.
Q: You plan to re-activate your 'Finance and Investment company' and expand its operations in the future. What are your plans?
A: All types of agriculture activities are associated with financing. You plant one day and get money after almost 180 days. So there is an urgent need of financing in this sector. We plan to provide only agricultural finance under this new company.
Q: By what time will the losses of Rallis Industrial Chemicals Ltd be wiped out?
A: When we took over Rallis Industrial, it was in losses. But now things have started moving. We reported a net profit this year and we are going to wipe out the entire accumulated losses by fiscal end.
Q: Why are you not using the Tata logo?
A: We are using the word 'A Tata Enterprise'. We are very much part of the Tata Group. Tatas holds a majority 50% stake in Rallis. So far as the logo is concerned, Rallis has its own logo just like Voltas, Titan and other Tata companies. They ( Voltas, Titan) are all part of the Tata group and they fall in one classification. |
