Vikas WSP to invest Rs 200cr for contract farming project

Rajasthan-based Vikas WSP, the only manufacturer and exporter of guargum polymer and derivatives in the country, has proposed with the Rajasthan government to acquire 5000 acres of semi-fertile land at an investment of Rs 200 crore.

The company proposed to grow guarseed in the identified field near Bikaner to grow and supply seed to strengthen its ongoing expansion drive for its guargum polymer production.

“We have urged the Indira Gandhi Canal Project (the land owner currently under Rajasthan government) to hand-over identified land which is fertile, but has been idle for the last several years. The government can better utilise it which will not only add to the government’s revenue but also generate employment of about 100 farmers directly and hundreds of others indirectly," said B D Agarwal, managing director to Business Standard.

Emphasising heavily on contract farming, Vikas WSP has sent the 50:50 proposal seeking government's equal participation through subsidy, tax relief etc under rural employment scheme. If the government does not agree to 50 per cent participation, still we will go ahead with the project, Agarwal added.

The company currently owns 2000 acres of certified organic land. It has also tied up with dedicated farmers for about 7000 acres. Accumulatively, the company harvested 27,000 tonnes of guarseed last year in the area under its own command which extracted about 9000 tonnes of guargum.

“With the additional area from the government we would be able to feed 50 per cent of our total requirement of guarseed from our own certified organic land from 25 per cent as on today,” Agrarwal said.

Proposed to be funded largely by internal accruals, the investment would fetch better margin for the company because of growing demand from food and industrial sector.

Vikas WSP produces guargum polymer and derivatives, which is utilised by the oil & gas sector.

Last year, the company recorded an output of 46,825 tonnes as against its installed capacity of 46,200 tonnes. The use of guargum polymers by the oil & gas sector jumped 54.91 per cent in FY08 from 44.02 per cent in FY07.

Meanwhile, Vikas WSP is planning to develop organic guargum products in Bikaner at an investment of Rs 202 crore. Its commercial production is slated to commence by 2010.

Additionally, it has also proposed to invest Rs 52 crore to produce guar polymers for food in Sriganganagar. A project developing guar derivatives for oil & gas and personal care industry is set to come up in Baroda at an outlay of Rs 377 crore with a planned commencement in 2011.

With favourable climatic condition, India produces about 90 per cent of world output while Pakistan accounts for the remaining 10 per cent. Last year, India produced about 7 lakh tonnes of guarseed in about 38 lakh hectares while the same is estimated to increase to 7.5 lakh tonnes in 40 lakh hectares.