Monsoon hopes raise Godrej Agrovet's prospects

Hopes of a normal monsoon means good news for Godrej Agrovet, which filed its draft IPO paper to the market regulator on Wednesday. (IPO is initial public offering of shares.) A subsidiary of Godrej Industries, the nearly Rs 5,000-crore company is seen sharpening focus on animal feed, crop protection, dairy and poultry segments. The IPO move for one of India's largest agri-businesses comes as farmers increasingly turn to organised players for animal protein and agri-inputs.

Counted among the biggest organised players in animal feed, Godrej Agrovet clocks over a million tonnes in annual sales. 

The animal feeds market in India stands at 90-100 million tonnes, of which the organised part constitutes 10-12 million tonnes. 

Around 52 per cent of Godrej Agrovet’s revenue comes from animal feeds, analysts say. The rest comes from seeds, genetics, oil-palm plantations, poultry, dairy, crop protection, and others. 

In earlier conversations with Business Standard, Godrej group chairman Adi Godrej said his agri-business had significant potential, given that agriculture was a key sector in India, with 60-70 per cent of the country's population depending on it directly or indirectly.

In recent years, Godrej Agrovet has wrapped up two key acquisitions — of Creamline Dairy and Astec Lifesciences. These units have now been fully integrated with the company to tap segments such as dairy and even agrochemicals.

In dairy, Godrej Agrovet sells milk and milk-based products under the Jersey brand in the south and parts of Maharashtra. Astec Lifesciences, on the other hand, gives heft to Agrovet's agrochemicals business, which produces 10 chemicals and four chemical intermediaries, experts said.

Adi Godrej has re-iterated that his group is open to further acquisitions in the agri-space.

Further, to tap growth in this space, Godrej Industries hiked its stake in Godrej Agrovet last year by 2.9 per cent, analysts said. With this, the parent’s stake in Agrovet now stands at 63.67 per cent. 

Like consumer products and properties, agri-business is seen as key to the Godrej group’s vision of a ten-fold revenue growth in 10 years.