Portfolio Focus: Blackstone Investee Nuziveedu Seeds
Nuziveedu Seeds Private Limited, the flagship company of the NSL Group, is the largest hybrid seed company in India.
Blackstone invested R250 Cr ($54 Mn) in the company in 2010 through convertible instruments. An ET piece at that time had stated that the PE firm picked up 25% in the company.
The amount was to be used for R&D, production and marketing of hybrid cotton seeds and to fund its working capital requirements as well.
Nuziveedu Seeds, formerly known as NSL Seeds, is the largest Bt cotton seed company in India and claims to cover 35-40% of the total cotton acreage in India planted with its hybrid seeds.
It operates out of Hyderabad, Andhra Pradesh and produces hybrid seeds in excess of 32000 MT per annum spread over 68000 acres.
The company works on contract basis with farmers, who produce the seeds on behalf of the company, in return for which it provides the farmers with the latest technology and knowhow.
For that purpose, it utilizes its marketing network comprising of 8 regional offices, 6 C&F agents, around 2500 distributors and more than 59000 dealers laid out across 17 states in India.
The company was established in 1971 by Sri Mandava Venkatramaiah who then transferred the control to his son, M Prabhakar Rao in 1982. It acquired a couple of seed companies in the past three years which included Yaaganti Seeds, Pravardhan Seeds and Prabhat Agri Biotech over 2008,2009 and 2011 respectively.
Besides cotton, Nuziveedu Seeds is also emerging as leading producer and processor of seeds for field crops such as paddy, corn, sorghum, pearl millet, sunflower and vegetable crops.
The NSL group is also present in other fields of business like real estate (NSL Infratech), power (NSL Renewable Power – operating in the wind, biomass, hydel and solar projects), textile (NSL Textiles) and the sugar (NSL Sugars).
ReGen Powertech is a NSL group company that makes wind turbines at the facility near Tada in Andhra Pradesh.
Some facts on the Bt cotton market and hybrid seeds growth
- Farmer’s income from growing Bt cotton has risen by almost 67% in the last decade.
- Around 95% of India’s total cotton production of voer 32 Mn bales currently comes from Bt cotton. (1 bale = 170 kgs)
- India’s hybrid seed industry is pegged at R11,000 Cr and grew nearly 15% last year.
- Cotton seed contributes upto 30% to the total industry.
Contrasting with the above mentioned sector boosting facts, there are certain other data points which needs attention to get a complete view on the segment.
- Yields from Bt cotton have been stagnating around 500 to 550 kilograms per hectare from the 2002-03 levels of around 250 to 300 per hectare and to jump to a higher level of 750 to 1,000 kgs per hectare, seed companies need to devise technological solutions to new problems like sucking pests.
- Falling ground water levels in Andhra Pradesh and Maharashtra demanding drought resistant seed varities.
- Around 5-7% Bt seeds sold by small regional players in northern India and in Gujarat are fakes, according to rough statistical projections.
Nuziveedu's Listing Plans
The company had announced late last year to come out with an IPO to raise around R900 Cr in the current fiscal and a combination of fresh issue as well as secondary sale was planned.
Considering the highly volatile and seasonally lackluster performance of the stock market (as many as 25 companies have called-off their IPOs so far this year), the company might have shelved the plans to list this fiscal.
Sector Deal Activity
In January this year Crystal Crop Protection Pvt. Ltd., backed by Everstone Capital last year, acquired Rohini Seeds Pvt. Ltd. for an undisclosed amount.
Also this year Rabo Equity Advisors, investment advisors for India Agri Business Fund announced an investment of R50 Cr. in Super Agri Seeds Pvt. Ltd. by the Fund.
The Fund has already invested in Geepee Agri (edible oils), Sri Biotech Laboratories (crop protection and crop improvement products) as well as LT Foods and Daawat (both in the rice sector), Vacmet India (food packaging) and NCMSL (Warehousing and bulk handling).
This month, French company Groupe Limagrain acquired Century Seeds Pvt. Ltd. through its subsidiary Vilmorin. Vilmorin had earlier acquired 61.01% stake in Bisco Bio Sciences, a company engaged in the corn seed market.
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