Industry Monitor

Agri-biotech

Vol.910 October 2009

CONTENTS

INDUSTRY AT A GLANCE ....................................................................................................2

KEY DEVELOPMENTS ..........................................................................................................3
RESEARCH AND DEVELOPMENT..................................................................................3
REGULATIONS:...................................................................................................................6
INDUSTRY STATISTICS .........................................................................................................8
PRODUCT FOCUS ...................................................................................................................9
Advantages..........................................................................................................................9
Disadvantages .....................................................................................................................9
Indian Scenario ...................................................................................................................9
Government Initiatives .....................................................................................................10
Production in India ...........................................................................................................10
Global Scenario.................................................................................................................10
Outlook ............................................................................................................................11
COMPANY FOCUS ................................................................................................................12
Products & Segments ........................................................................................................12
Company’s Performance at a Glance.................................................................................12
Key Financial Ratios..........................................................................................................12
Performance Analysis........................................................................................................13
Common-size Comparison................................................................................................14
Cost Structure Analysis .....................................................................................................14
Stock Market Performance................................................................................................14
Outlook ............................................................................................................................15
STOCK SCAN .........................................................................................................................16
UPCOMING EVENTS ...........................................................................................................17

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Industry Monitor – Agri-biotech October 2009

INDUSTRY AT A GLANCE
RESEARCH AND DEVELOPMENT
• USDA/PVPO grants protection to 13 new plant varieties, USA
• The field narrows for cover crops in biofuel production, USA
• High yielding cassava for East Timor, USA
• Ashtabula Nontransgenic Soybean released, USA
• Two new rapid test kits for the detection of novel traits in bulk soybeans and corn USA
• Biotech wheat gains supporters, USA
• Genetic discovery could break wine industry bottleneck, accelerate grapevine breeding, Germany
• Potato genome sequence released, Scotland
• Crossbreeding GM crops may increase fitness of wild relatives, Bristol
• Novel breeding strategy for plant resistance, The Netherlands
• Rust-resistant wheat with DNA technology, Australia
• Algae leads way to sustainable biofuel, Australia
• Pest-resistant Bt brinjal developed, India

REGULATIONS:
• Nelson joins other senators on biofuel legislation , USA
• British Crop Production Council welcomes new BBSRC Strategic Plan, United Kingdom
• Empowering the seed sector,Africa
• Vietnam to label Genetically Modified foods, Vietnam

COLLOBORATIONS:
• Makhteshim-Agan and Cibus Global to Co-develop Proprietary Crop Protection Traits, Israel
• FuturaGene to develop Enhanced Poplar for the Chinese markets, Israel

INVESTIMENTS:
• Bayer CropScience accelerates expansion with investments of around EUR 3.5bn, Germany

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Industry Monitor – Agri-biotech October 2009

KEY DEVELOPMENTS

RESEARCH AND DEVELOPMENT

Americas:
USA: USDA/PVPO grants protection to 13 new plant varieties
The U.S. Department of Agriculture has issued certificates of protection to developed new varieties of
seed-reproduced and tuber-propagated plants. They include bean, bentgrass, bluegrass, lettuce, fescue,
soybean and wheat. The certificates are being issued under the Plant Variety Protection Act. The
certificates require that the varieties be new, distinct, uniform and stable. The owners will have the
exclusive right to reproduce, sell, import and export their products in the United States for the duration
of protection. USDA’s Agricultural Marketing Service administers the Plant Variety Protection Act, which
provides time-limited marketing protection to developers of new and distinct seed-reproduced and tuber-
propagated plants ranging from farm crops to flowers.

USA: The field narrows for cover crops in biofuel production

An Agricultural Research Service (ARS) scientist is looking for cover crop perennials that provide the best
balance in biofuel production between agronomic success and environmental sustainability. This work is
being supported by the Sun Grant Initiative, a national network of land-grant universities and federally
funded laboratories working together to study, produce, and commercialise renewable, biobased energy
technologies. ARS agronomist Jeremy Singer is conducting this research as part of a three-component
study of optimising corn cultivation for biofuel production. The agronomist is evaluating perennial grass
crops to assess their potential for mitigating soil erosion and enhancing soil organic matter even in fields
where every bit of corn and stover—stalk, leaves and all—is harvested either for grain or cellulosic
ethanol production. Perennial groundcovers’ root systems may contribute enough carbon to the soil to
offset the loss of carbon when stover is removed. Cover crops also provide habitat for beneficial insects,
facilitate water infiltration, help hold nitrogen in the soil, suppress weeds and reduce the runoff of
agricultural chemicals.

USA: High yielding cassava for east Timor

Two new high-yielding cassava varieties have recently been released in the country through 'Seeds of Life'
food security program. Funded by the Ministry of Agriculture and Fisheries, AusAID and the Australian
Centre for International Agricultural Research, the program aims to reduce hunger by lifting yields of
staple food crops through improving varieties. Cassava is an important staple crop in East Timor, where
most families suffer from chronic food shortages and rationing for up to six months of the year. The new
varieties, Ai-luka 2 and Ai-luka 4, have been well received by farmers, who are who are keenly anticipating
yield increases of 51-65% over local cassavas.

USA: Ashtabula Nontransgenic Soybean released

Ashtabula, a conventional nontransgenic soybean variety, has been developed and released by the North
Dakota Agricultural Experiment Station. It is not resistant to glyphosate and will be killed if glyphosate is
sprayed on this cultivar. It has a high yield that is very competitive with private company Roundup Ready
cultivars of similar maturity. It has good lodging resistance and early maturity. According to Ted Helms,
leader of the North Dakota State University soybean breeding project, Ashtabula will fill a need for a
high-yielding soybean in areas that need a cultivar that is earlier in maturity than Sheyenne. It is
moderately resistant to iron-deficiency chlorosis and has the Rps6 gene for phytophthora root rot
resistance. The Rps6 gene is superior to Rps1c and Rps1k genes because it confers resistance to races of
phytophthora root rot that are common in the Red River Valley. Ashtabula is resistant to phytophthora
root rot races 3, 4 and 25.

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Industry Monitor – Agri-biotech October 2009
USA: Two new rapid test kits for the detection of novel traits in bulk soybeans and corn
EnviroLogix has released two new rapid test kits for the detection of novel biotechnology traits in bulk
soybeans and corn. Bulk Soybeans provides quantitative and traceable results for adventitious presence in
beans. Designed for use in the new QuickScan system, the QuickComb Kit simultaneously detects the
presence of PAT/pat protein in LibertyLink soybeans and CP4 protein in Roundup Ready soybeans.
QuickScan quantifies these traits in a range relevant to identity preserve grain traders. The QuickStix Kit
for Cry2A Bulk Corn identifies the presence of the Cry2Ab protein at levels typically expressed in corn
varieties such as Genuity™ VT Triple PRO™. The QuickComb Kit for soybeans is made up of two
individual test strips – one for Roundup Ready and one for LiberyLink beans. These strips can be run in a
tap water Common Extraction, with test results in five minutes. Strips for each trait are also offered
separately.

USA: Biotech wheat gains supporters

Biotech wheat development got a boost when producers, millers and bakers released an eight-page paper
supporting the research. The paper says biotechnology has the potential to help reverse the loss of wheat
acres in the United States and "ensure adequate supplies to feed a hungry world." There has been a
change in opinion on biotech wheat over the last few years, said National Wheat Growers Association
secretary-treasurer. “The bakers have realised that has a stable, safe supply of wheat, the Secretary said.
"When we talk about biotech, we are talking drought resistance, gluten-free and nitrogen efficient variety
development." The industry paper in support of biotech wheat emphasizes there is "no silver bullet to the
competitiveness problem." It does conclude that the rapid adoption of biotechnology traits in other crops
produced around the world and grower testimonials in support of the traits lends credence to the idea
that biotechnology can make significant contributions. Industry leaders hope the development will lead to
greater wheat supplies. Wheat association leaders have set a goal to increase wheat acres by 20% in the
next decade. It's hoped biotech varieties will help the industry meet that goal.

Europe:
Germany: Genetic discovery could break wine industry bottleneck, accelerate grapevine breeding
One of the best known episodes in the 8000-year history of grapevine cultivation led to biological
changes that have not been well understood – until now. Through biomolecular detective work, German
researchers have uncovered new details about the heredity of Vitis varieties in cultivation today. In the
process, they have opened the way to more meaningful classification, accelerated breeding, and more
accurate evaluation of the results, potentially breaking a bottleneck in the progress of the wine industry.
Their discovery removes a major obstacle to a development already under way – that is, a shift toward
grapevine breeding guided by highly specific genetic markers. It may even point the way toward
production of European-tasting wines from North American cultivars, free of the "musty" or "foxy"
flavours associated with New World grapevines. Beginning around 1860, the introduction of two North
American pests – an aphid and a fungus – nearly destroyed the wine industry, particularly in France. A
century ago, many hybrids were in use, but the wine they produced was judged to be so inferior in flavour
that winemakers were prohibited from blending them with higher-quality traditional wines.
Scotland: Potato genome sequence released
The Potato Genome Sequencing Consortium (PGSC), an international team of scientists including
researchers at SCRI and the University of Dundee, has announced that it has released the first draft
sequence of the potato genome. The PGSC started work on the project three years ago. The resulting
'blueprint' of how the potato works could revolutionise breeding programs. The potato genome has 12
chromosomes and is estimated to be 840 million base pairs. At the onset of the project, the PGSC
employed an approach in which the work was allocated to each consortium member based on
chromosomes and was focused on the diploid line RH89-039-16 (RH) of cultivated potato, Solanum
tuberosum. However, in the past two years, the advent of new sequencing technologies led to a significant
change of approach within the PGSC and in 2008, the consortium initiated sequencing of the doubled
monoploid DM1-3 516R44 (DM) potato derived from a diploid landrace of potato in order to simplify
and complement the RH effort. In June 2009, PGSC members came together in Carlow, Ireland to plan
the final phases of the project. Currently, the PGSC is busy with finalising the sequence data for both RH

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Industry Monitor – Agri-biotech October 2009
and DM with an end goal of a high quality draft sequence of both of these potato lines by the end of
2009. Currently, genome coverage is greater than 70X using a combination of data generated by using
three different sequencing platforms including two of the Next Generation Sequencing Platforms.
Bristol: Crossbreeding GM crops may increase fitness of wild relatives
A new study has investigated the effects of interbreeding a genetically modified squash crop with its wild
relative. The findings demonstrate that it could cause wild or weedy relatives to become more resistant to
disease. Genetic Modification (GM) can be used to develop crops that are resistant to specific pests.
However, there are concerns that if a GM crop interbreeds with its wild or weedy relative the resistance
could be transferred. This could potentially make wild plants more competitive. The study investigates the
possible risks of a GM cultivated squash crop (Cucurbita pepo) crossbreeding with a wild squash crop.
The researchers compared the resistance of wild squash and plants that were a hybrid of the cultivated
and wild squash varieties to viruses. One half of the hybrids were GM, containing a gene that rendered
the plant resistant to zucchini yellow mosaic virus, and the other half were conventional non-GM plants,
which had not been specifically bred for virus resistance. Second and third generations of the crossbred
squash plants were exposed to the virus over two years and compared with squash plants which were not
exposed to the virus. The research measured the fitness of the plants in terms of variables such as number
of seeds, flowers and fruit, pollen production, and plant mass. It also investigated vegetative traits such as
leaf area and length between nodes where the leaves grow from the stem.
The results indicated that the presence of the virus dramatically decreased the fitness of both the wild
squash plants and the non-GM hybrids. In comparison, the GM hybrid plants continued to be resistant to
the virus over the two generations.

The Netherlands
Novel breeding strategy for plant resistance
Disabling certain plant genes instead of adding resistance genes is a promising strategy for giving crops
long-term resistance to diseases. Researchers Yuling Bai and professors Evert Jacobsen and Richard
Visser form Wageningen UR explain the new breeding strategy in the last issue of Molecular Breeding.
Switching off genes, better known as gene silencing, has been used for many years to improve crop
quality, but has not been used to increase resistance of crops to pathogens in order to mimic recessive
mutations. The dominant strategy in resistance breeding is to add dominant resistance genes (R genes)
into a crop. Over the past few years, scientists have obtained a better understanding of how pathogens
cause diseases in plants. Pathogens exploit effector molecules to interfere with specific genes in the plants.
Some of these plant genes play a negative role in plant defense and these genes are so called susceptibility
genes or S genes. 'By using these S genes, pathogens reprogram the plant cell', says Bai. 'S genes give
pathogens an entrance to the plant. If you switch these genes off, you block the entrance of the pathogen.
As a result, the plant becomes resistant.'

Asia Pacific:
Australia
Rust-resistant wheat with DNA technology
Commonwealth Scientific and Industrial Research scientists are breeding new varieties of disease-resistant
wheat in an effort to improve crop yields and avert a potential food supply crisis. In recent years the
growth in demand for staple food crops such as wheat, rice and corn has outstripped the growth
in supply, causing worldwide concerns about food security. Population growth, climate change and
increased production of biofuels are recognised as key drivers behind an emerging food supply crisis.
Compounding this problem are four wheat diseases – stem rust, leaf rust, stripe rust and powdery mildew
– which are threatening worldwide crop yields and grain quality. in 2002 a new virulent strain of the stripe
rust pathogen appeared in Australia and has continued to cause serious annual crop losses ever since. It is
a constant battle for wheat breeders to try to develop new cereal varieties with effective and long-lasting
rust resistance.CSIRO's rust resistance research team, headed by plant molecular biologist Dr Jeff Ellis, is
part of the Australian Cereal Rust Control Program that is always on the lookout for more effective ways
to breed new rust-resistant cereal varieties. 'It is vital that we continue to develop more effective controls
to combat all four rust diseases to minimise their broader economic and social impacts,' says Dr Ellis.

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Industry Monitor – Agri-biotech October 2009
Australia: Algae leads way to sustainable biofuel
The Australian Biofuels 2009 report declares that algae has significant potential advantages over existing
biofuel crops. Alternative fuel sources are becoming an imperative as Australian crude-oil production
declines and imports increase. SA has the right strain of algae with high oil content, good sunlight, water
and land and the intellectual resources. It is a high-yielding crop, an absorber of carbon dioxide, low cost
and does not compete with other plants as a source of food. A benefit of algae is that it is many times
more productive than canola or other similar food crops. 100 square miles of algae farm can produce
Australia's diesel requirements.

India: Pest-resistant Bt brinjal developed

A team of researchers at the University of Agricultural Science (UAS) has succeed in genetically
engineering a widely grown vegetable crop in India to manage fruit and shoot borer pest with the
development of six Bt brinjal varieties popular across three south western states. The pest-resistant
transgenic varieties of brinjal were developed under a centrally funded project spread over five years,
using a process similar to the one used in the development of Bt cotton. Bt brinjal incorporates `Cry1Ac'
gene, expressing insecticidal protein targeting the pest larvae. A senior team member associated with the
project told `The Times of India' that when ingested by the larvae, the gene is activated in the insect's
alkaline gut and binds to the gut wall, which later breaks down, allowing the Bt spores to invade the
insect's body cavity, killing the larvae within a few days..

REGULATIONS:
Americas:
USA: Nelson joins other senators on biofuel legislation
U.S. Sen. Ben Nelson has joined several other Midwest senators in introducing federal legislation they say
is aimed at protecting the region's biofuels industry. The Nebraska Democrat has put his name behind
one measure intended to boost ethanol consumption and another that would prevent the U.S.
Environmental Protection Agency from implementing a rule he says could hinder biofuels production.
The first measure - introduced Tuesday by Nelson, Sens. Tim Johnson, D-S.D., John Thune, R-S.D, and
Chuck Grassley, R-Iowa - would direct the EPA to allow gasoline to contain up to a 15 percent ethanol
blend. Ten percent is the current maximum allowed to be sold in the U.S. Nelson said the measure also
could help fulfill federal rules that call for as much as 36 billion gallons of renewable fuel to be used
annually nationwide by 2022 to meet clear air targets. It also would prevent ethanol production from
outpacing the amount of ethanol-blended gasoline allowed, he said. Although some have suggested higher
ethanol blends could affect automobile performance, Nelson said many experts believe vehicles that can
operate on E10 also can run on 15% blends.

United Kingdom
British Crop Production Council welcomes new BBSRC Strategic Plan
BCPC (British Crop Production Council) has welcomed the Biotechnology and Biological Sciences
Research Council's (BBSRC) consultation within its proposed Strategic Plan for 2010 – 2015, particularly
in terms of one of its key strategic priorities – Food Security. Global demand for food, resulting from
population growth, increasing affluence and dietary transition, will need to increase by an estimated 50%
by 2030 and double by 2050 to meet the Millennium Development Goal (MDG) on hunger.

Africa:
Empowering the seed sector
Urgent government measures and increased public and private investment in the seed sector are required
for the long term if agriculture is to meet the challenge of food security in the context of population
growth and climate change. This was the declaration of the Second World Seed Conference held at the
Food and Agriculture Organisation of the United Nations (FAO) Headquarters in Rome recently.
Obongo Nyachae, the CEO of the Seed Trade Association of Kenya (STAK), shared that one key area
that touched on Africa was on the need for international organisations such as FAO. In addition, seed

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Industry Monitor – Agri-biotech October 2009
for relief purposes should be sourced through national seed associations, where they exist, and that
priority should be given to improved seed rather than investing in Quality Declared Seed systems even
where national legislation exists that fully supports development of formal seed supply systems.

Asia pacific:
Vietnam: Vietnam to label Genetically Modified foods
Vietnam’s Government is drafting a decree governing the safety of biotechnology-based foods, so the
labeling of genetically modified foods is expected to start from 2015. According to Duong Hoa Xo,
director of the center, Government had provided guidelines for the testing of gene modification on some
farm produce. According to the draft decree, foods that are over 5% genetically modified must be labeled
as biotechnology application before going to the consumer. Vietnam’s biotech scientists said that Vietnam
was working on a pilot scheme for using biotech to grow corn, soybean and some other crops, so the
country would need to develop a GM food labeling law.

COLLOBORATIONS:
Israel: Makhteshim-Agan and Cibus Global to Co-develop Proprietary Crop Protection Traits
Makhteshim-Agan (MAI) and Cibus Global (CIBUS) announced that they signed Strategic Development
Alliance and Strategic Equity Alliance agreements. Under these agreements, MAI will invest up to US$37
million over five years, based on certain milestones, in a Joint Venture with CIBUS to develop proprietary
crop traits in five major crops with a European focus. Separately, in another agreement, MAI has entered
into a Strategic Equity Alliance with CIBUS that allows MAI to gradually acquire up to 50.1% of CIBUS
equity. Under the terms of the Strategic Development Alliance, CIBUS committed to developing
proprietary performance enhancement traits for the Joint Venture that include both performance
enhancement traits as well as crop protection product tolerance to a spectrum of crop protection
products that MAI markets. These traits will be commercialised in high-performance seed lines in
cooperation with leading seed companies and will allow MAI to participate in capturing the value of trait
based crop protection.

Israel: FuturaGene to Develop Enhanced Poplar for the Chinese Markets

FuturaGene PLC, a leader in plant genetic research and development for global forestry, biofuel and
agricultural markets, has entered into an Agreement with the Chinese Academy of Forestry ("CAF") to
develop new enhanced poplar with increased yield, processability and abiotic stress characteristics for the
Chinese domestic market. Futuragene will provide proprietary genes and technical assistance to Professor
Liwang Qi, Chief Expert on Silva Genetics at CAF in Beijing. The programme aims at improving yield,
drought and salt tolerance of short-rotation poplar for the biofuel and biomass markets. Woodchip from
poplar produced in sustainable, renewable plantations provides a carbon-neutral fuel source for co-firing
coal-burning power stations, significantly reducing environmental damage. Poplar is also being developed
for the production of second generation cellulose-to-ethanol biofuel. The rapid growth rate of poplar
makes this species an ideal candidate for renewable biomass for energy production reducing the need to
use food crops as a raw material for liquid fuel production.

INVESTIMENTS:
Germany: Bayer CropScience accelerates expansion with investments of around EUR 3.5bn
Bayer CropScience is accelerating the extension of its biotech and seed business. The company is
continuing its strategy of expansion, aiming systematically to expand its fast-growing business in seed and
plant traits in the coming years. The intention is to more than tripple sales in the BioScience segment to
around EUR 1.4 billion by 2018. According to Dr. h.c. Friedrich Berschauer, Company’s objective is to
become the farmers' first choice as a partner worldwide and to offer “innovative and sustainable solutions
all the way from sowing to harvesting. The growth strategy revolves around three elements: chemical crop
protection, plant traits, and high-quality seed. The Company is developing from a classical supplier of
crop protection products into a supplier of integrated solutions for farmers which comprise not only
products but technologies and services as well, Berschauer explained.

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Industry Monitor – Agri-biotech October 2009

INDUSTRY STATISTICS
Monthly Wholesale Price Index of Tobacco in India
(Base Year 1981-82=100)

Month 2002 2003 2004 2005 2006 2007 2008 2009

Jan 165.40 178.80 175.30 204.50 213.30 226.90 234.50 277.90
Feb 171.00 174.30 176.90 202.30 215.30 227.80 237.80 277.90
Mar 170.50 167.60 179.20 199.40 216.60 227.40 240.50 273.50
Apr 163.30 168.20 182.40 199.20 217.00 230.60 237.30 269.50
May 156.30 162.90 188.80 205.70 220.90 230.60 235.80 -
Jun 163.70 162.40 191.70 204.70 221.70 230.30 239.10 -
Jul 172.10 161.50 192.50 206.00 219.90 224.40 248.30 -
Aug 175.40 157.80 195.50 205.50 218.80 224.60 255.70 -
Sep 177.20 161.20 199.00 207.10 221.20 221.10 259.00 -
Oct 176.30 171.40 196.60 211.40 222.90 222.50 264.90 -
Nov 178.10 175.20 197.10 213.60 220.50 227.30 272.20 -
Dec 179.60 171.70 201.20 213.40 223.20 229.40 275.20 -
Source: Ministry of Commerce and Industry, Cygnus Research

Wholesale Price Index of Tobacco in India

290 2007 2008 2009
Base Year 1981-82=100

280
270
260
250
240
230
220
210
200
Jan Feb Mar Apr

Source: Ministry of Commerce and Industry, Cygnus Research

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Industry Monitor – Agri-biotech October 2009

PRODUCT FOCUS
Hybrid Rice
Hybrid rice is the commercial rice crop from F1 seeds of cross between
two genetically dissimilar parents. Good rice hybrids have potential of
yielding 15-20% more than the best inbred variety grown under similar
conditions.

Advantages
• Average yields of hybrid are more when compared to high yielding varieties.
• Quantity of seed used in hybrid rice was significantly less than the seed used in conventional
high yielding varieties.
• Average productivity and total return to total input cost was relatively higher for hybrid rice
than for conventional high yielding varieties.
• Hybrid rice cultivation is economically viable if management level is above 60%.
• The nursery area required for transplanting unit area is less when compared to conventional
high yielding varieties.
• Hybrids are short duration with resistance to major pests and diseases.
• Hybrids are non-lodging varieties.

Disadvantages
• Management responsiveness was nearly 30-35% more for hybrid rice than for conventional
high yielding varieties.
• At an average management level, the grain yield of hybrid (0.8 t/ha) was lower than the
minimum required (1.4 t/ha).
• Seed cost was almost 2.5 times more for hybrids than for conventional high yielding
varieties.
• The expected output price was lower for hybrid rice grain than actual price for conventional
high yielding varieties.
• The hybrid rice seed production usually requires more labour specially to accomplish certain
critical farm operations like row planting, supplementary pollination, leaf clipping, gap filling,
rouging and GA3 application etc. Hence the cost incurred on seed production was found to
be high.
• Hybrids require more doses of fertilisers.
• Hybrid seed is not suitable for second crop.

Indian Scenario
The hybrid rice produces between 1 and 1.5 tonnes more rice per hectare than the available
conventionally-bred high-yielding rice varieties. The present countrywide average rice yield is
only around 2.12 tonnes a hectare though it is as high as 4 tonnes a hectare in Punjab and around
3 tonnes in Andhra Pradesh. India also initiated efforts to develop its indigenous hybrid rice
technology in 1970s but the research work got a real boost only by around 1990. A large number
of rice hybrids have since been developed by the ICAR research network and the private
companies and released for commercial cultivation in different parts of the country.

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Industry Monitor – Agri-biotech October 2009

A major constraint in the expansion of hybrid rice production in India is the high cost of the
hybrid seed because of the complex technology involved in its production. Besides, the farmers
need to buy fresh seed every year. Only around 5% of the country’s total paddy acreage of over
40 million hectare could, consequently, be brought under hybrid rice cultivation till now. About
450,000 quintals of hybrid rice seed will be needed to cover 3 million hectares under such rice.

The rice yield growth in India at current rate is estimated at 1.18% and needs to be accelerated at
1.75% consistently for a decade, otherwise at 1.18% growth rate, India’s rice production would
reach at levels of 108 million tonnes by 2020 against its projected requirement of 118 million
tonnes. In such a scenario, India would naturally become a net importer of rice. So, here is also
an urgent need to develop new high yielding/hybrid varieties of rice and promote extensive use
of the same.

Government Initiatives
India has a well organised seed industry both in public and private sectors and this can be
effectively utilised for hybrid rice seed production. Realising the potential of seed industry,
enough encouragement was given to the seed sectors to take up hybrid seed production.
Required parental lines were made available to the interested companies and their personnel were
imparted training on hybrid rice seed production technology. This step has really helped many
companies and some of them have established full fledged R&D facilities for hybrid rice. Now
the seed industry has fully geared to meet the seed requirement and it also needs to create
demand by well organised transfer of technology activities.

Production in India
Among public sector seed agencies––National Seed Corporation (NSC), State Farms
Corporation of India (SFCI), Andhra Pradesh State Seed Development Corporation (APSSDC),
Karnataka State Seed Development Corporation (KSSDC), West Bengal State Seed
Development Corporation (WBSSDC), and UP and Terai Seed Development Corporation
(UPTSDC) are presently engaged in hybrid rice seed production on much smaller scale.

Global Scenario
Achieving self-sufficiency in rice production and maintaining price stability are important
objectives in low-income countries, where rice as the staple food provides the basis for national
food security and generates employment and income for poor people. Asia produces and
consumes 90% of the world's rice. Most rice-growing countries in this region have done
remarkably well in meeting their rice needs over the past three decades using green revolution
technologies. But the future poses a major challenge. By 2030, the world must produce 70%
more rice than it produced in 1995 to meet demand created by increasing population and rising
incomes. Increasing the yield potential of rice varieties is considered an important strategy for
meeting this challenge. Currently, 17 national programs are involved in developing hybrid rice:
Bangladesh, Brazil, Colombia, Egypt, India, Indonesia, DPR of Korea, the Republic of Korea,
Japan, Malaysia, Myanmar, Pakistan, the Philippines, Sri Lanka, Thailand, the United States, and
Vietnam. Hybrid rice research programs in National Agricultural Research Systems (NARS) are
in different stages of development. Although China has the strongest national network in hybrid
rice, programs in Brazil, India, Japan, and the United States are well established. Other countries
may take 3-5 years to develop such programs. Several private companies in Brazil, India, Japan,
and the United States have developed a strong research base in hybrid rice while some are still
developing this and others are involved solely in seed production activities.

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Industry Monitor – Agri-biotech October 2009

Outlook
Hybrid rice is likely to become popular and will be adopted in large acreage during the next
decade. Huge quantities of hybrid rice seed will be needed. Thus, there is ample scope for all the
private and public sector seed agencies in India to produce large quantities of hybrid seed in the
years ahead to popularise rice hybrids. Successful development and large-scale dissemination of
hybrid rice technology will have a major impact on the seed industry, in view of the fact that rice
is a staple food crop in Asian countries. Usually, the private sector does not play much of a role
in the early stage of technology development. At this stage, the public sector has to play a leading
role.

Once the private sector is convinced that there is a demand for hybrid seed, it is willing to invest
in commercial seed production, since hybrid seed production is quite profitable. Public sector
research institutions in Asia (IRRI and NARS) have already made great progress in the
development of suitable rice hybrids, and have also developed many parental lines that are freely
available to the private sector. A number of private seed companies (including 15 in India, six in
Bangladesh, three in the Philippines, and one in Vietnam), and a few NGOs and farmers'
organisations, have already begun to produce hybrid rice seed.

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Industry Monitor – Agri-biotech October 2009

COMPANY FOCUS
BASF India Ltd
BASF India (BASF), a subsidiary of Germany-based BASF
Aktiengesellschaft, manufactures and markets agrochemicals, industrial
performance products, plastics and fibers. The company operates in different
segments - agricultural products and nutrition includes agrochemicals like
pesticides and herbicides; performance products includes tanning agents,
leather chemicals, textile chemicals, dispersions and specialty chemicals;
plastics and fibers includes expandable polystyrene, engineering plastics and polyurethane business;
chemicals includes inorganic chemicals, intermediates and petrochemicals; others include technical fees
and research and development projects. The company has production sites in Mangalore,
Mumbai/Thane, Dadra and Dahej as well as R&D centres in Thane and Delhi.

Products & Segments

Segments Products
Chemicals Inorganics, Petrochemicals, Intermediates
Plastics Performance Polymers, Polyurethanes
Performance Products Dispersion Pigments, Care, Paper and Performance chemicals
Functional Solutions Catalysts, Construction Chemicals, Coatings
Agricultural Solutions Crop Protection
Oil & Gas Oil & Gas

Company’s Performance at a Glance

Performance at a Glance
Item(Rs m) 2004-05 2005-06 2006-07 2007-08 2008-09
Net Sales 7401.80 7716.40 7685.30 9072.00 11241.50
OPM % 12.24 12.31 11.77 11.89 11.09
NPM % 5.13 5.88 6.52 6.54 6.11
Depreciation 244.10 220.50 108.70 136.00 151.60
Interest 61.10 23.60 15.10 12.80 14.90
PAT 379.70 454.10 500.90 593.70 686.40
Source: BSE India; Cygnus Research

Key Financial Ratios

Key Ratios at a Glance
2004-05 2005-06 2006-07 2007-08 2008-09
Debt-Equity Ratio 0.03 0.00 0.00 0.00 0.00
Long Term Debt-Equity Ratio 0.00 0.00 0.00 0.00 0.00
Current Ratio 2.19 2.66 2.18 2.09 1.84
OPM (%) 12.24 12.31 11.77 11.89 11.09
NPM (%) 5.13 5.88 6.52 6.54 6.11
ROCE (%) 27.38 25.39 28.07 28.91 29.48
RONW (%) 14.97 16.42 16.50 17.47 17.81
Source: BSE India; Cygnus Research

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 12

Industry Monitor – Agri-biotech October 2009

Performance Analysis
Performance Analysis
Quarterly Performance Financial Year Performance
AMJ09 AMJ08 Var (%) 2008-09 2007-08 Var (%)
Sales 3841.50 3808.20 0.87 11241.50 9072.00 23.91
Other Income 0.00 29.20 -100.00 0.00 46.90 -100.00
PBIDT 702.40 603.10 16.46 1246.60 1078.80 15.55
Interest 2.20 2.10 4.76 14.90 12.80 16.41
PBDT 700.20 601.00 16.51 1231.70 1066.00 15.54
Depreciation 68.70 35.00 96.29 151.60 136.00 11.47
PBT 631.50 566.00 11.57 1080.10 930.00 16.14
TAX 221.00 199.50 10.78 393.70 336.30 17.07
PAT 410.50 366.50 12.01 686.40 593.70 15.61
Source: BSE India; Cygnus Research

The net sales of the company during 2008-09, have increased by 23.91% to reach Rs11241.5m when
compared to that of Rs9072m in 2007-08. The agriculture segment of the company recorded higher sales
due to higher realisations, marketing initiatives and rationalisation measures undertaken during the year
and effective working capital management. The operating profit of the company has also increased by
15.55% to reach Rs1246.6m and the net profit has also increased by 15.61% to reach Rs686.4m aided by
higher capacity utilisation, improved operating results of the agricultural products, performance products
and chemicals businesses.

During AMJ09, the net sales of the company have registered a slight increase of 0.87% to reach
Rs3841.5m, when compared to that of Rs3808.2m in AMJ08. The operating profit of the company has
registered an increase of 16.46% to reach Rs702.4m and the net profit of the company has also increased
by 12.01% to reach Rs410.5m.

12000 Product Mix 2008-09

Net Sales
Rs m

Agricultur
al
Solutions C hemical
33% Plastics s
9000 13% 3%

Perfor-
mance
Products Others
6000
49% 2%
2004- 2005- 2006- 2007- 2008-
05 06 07 08 09
Source: BSE India; Cygnus Research

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 13

Industry Monitor – Agri-biotech October 2009

Common-size Comparison
The overall operating cost of the company Common Size Comparison for 2008-09 (% of sales)
accounted to 89% as a percentage of sales, BASF Aarti Balaji
while it is 83% for Aarti Industries and 85%
for Balaji Amines Ltd. The interest expenditure Other Income 0.00 0.16 1.13
of the company stood at 0.13% as a percentage Raw Material Consumed 54.01 50.93 62.08
of sales, while it is 6.33% for Aarti Industries Other Expenses 15.53 22.80 20.04
and 4.05% for Balaji Amines. Staff Expenses 7.89 2.10 3.36
With respect to growth of sales for the year Purchase of traded goods 13.58 6.92 0.00
2008-09, BASF India has registered a growth Interest 0.13 6.33 4.05
rate of 23.91%, while Aarti Industries Depreciation 1.35 2.74 1.91
registered 50% growth rate and Balaji Amines PBT 9.61 8.17 9.89
registered a growth rate of 16%.
Tax 3.50 2.16 3.81
Coming to the bottom-line, the net profit of PAT 6.11 6.01 6.09
the company stood at 6.11% as a percentage of Source: BSE India; Cygnus research
sales, while it is 6.01% and 6.09% for Aarti
Industries and Balaji Amines Ltd respectively.

Cost Structure Analysis

Cost Structure as Percentage of Net Sales
2004-05 2005-06 2006-07 2007-08 2008-09
Raw Material Consumed 45.04 43.95 55.03 54.80 54.01
Other Expenses 13.37 13.32 15.07 15.82 15.53
Staff Expenses 6.56 7.41 8.90 9.01 7.89
Purchase of Traded Goods 15.35 10.61 9.26 9.92 13.58
Depreciation 3.30 2.86 1.41 1.50 1.35
Interest 0.83 0.31 0.20 0.14 0.13
Tax Charges 2.98 3.26 3.64 3.71 3.50
Source: BSE India; Cygnus Research

The company’s overall cost including operating and non-operating cost stood at 96% in 2008-09 whereas
it is 94.9% in the year 2007-08 showing an increase of 111 basis points. This increase in the cost structure
is mainly because of rise in the costs of purchase of traded goods at 366 basis points i.e. 13.58% as a
percentage of sales in 2008-09. All other costs of the company have declined during 2008-09, when
compared to 2007-08. The raw material cost of the company has declined by 78 basis points. The other
expenses have also declined by 29 basis points. The staff cost of the company has also declined by 111
basis points.

Stock Market Performance

The sensex has seen a perfect turnaround scenario since February 2009. During April the sensex has
crossed 11000 points registering a growth of 17%. The sensex further increased to 14625 points in the
month of May 2009 registering a further growth of 28%. The reviving consumer demand has revived the
investor confidence. The share prices of the company have registered a growth of 22.9% from September
2008 to August 2009. The share prices started to show increasing trend since February 2009.

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 14

Industry Monitor – Agri-biotech October 2009

140 Relative Market Cap Share Holding Pattern

Performance
120
BASF Public
BSE Sensex 19%
100
Insti-
tutions
10%
80 Pro-
moters
71%
60
Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jul-09

Aug-09
Jun-09

Source: BSE India; Cygnus Research

Outlook
The net sales of the company are expected to increase by 15% to reach Rs12927.72m during 2009-10.
Agriculture products are increasing in the total revenues and profit contribution. The agrochem industry
is witnessing good growth following the thrust on agriculture by the government and greater emphasis on
improving agricultural productivity. Plastics segment is also picking up in contributing to the revenues of
the company. The company, with an aim to cater the increasing demand from automobile industry, has
set up a plant for engineering plastics with a capacity of 9000 tonnes.

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 15

Industry Monitor – Agri-biotech October 2009

STOCK SCAN

BSE Sensex Relative Market Cap Performance

120 Bayer
Monsanto
J.K. Agri

105

90
17-Aug

18-Aug

19-Aug

20-Aug

21-Aug

22-Aug

23-Aug

24-Aug

25-Aug

26-Aug

27-Aug

28-Aug

29-Aug

30-Aug

31-Aug

1-Sep

2-Sep

3-Sep

4-Sep

5-Sep

6-Sep

7-Sep

8-Sep
Source: BSE India; Cygnus Research

17 Aug-21 Aug 24 Aug-28 Aug 31 Aug-04 Sep 07 Sep-15 Sep

Sensex ended on a Sensex ended on a Sensex ended on a Sensex ended on a
positive note with positive note with positive note by positive note with an
an increase of
an increase of increasing slightly increase of 2.74% to
3.08% to 15,240.83 1.88% to with 0.14% to 16,454.45 bps due to
Sensex bps on increased 15,922.34 bps as 15,689.12 bps signs of US economic
capital inflow by fund houses driven by bullish recovery added to the
funds as long-term picked up stocks Asian markets and a upbeat hopes for
investors looked tofollowing strong strong start in robust quarterly
enter the market. global cues. European bourses. earnings.
Share prices have Share prices have Share prices have Share prices have
Bayer increased by 10.14%further increased declined by 4.83% increased by 10.18%
during this week. by 5.66%. during this week. during this week.
Share prices have Share prices have Share prices have
Share prices have
Monsanto have increased by declined by 3.39% increased by 4.31%
declined by 1.09%.
1.69%. during this week. during this week.
Share prices have Share prices have Share prices have Share prices have
JK Agri declined by 4.86% increased by 12% declined by 5.16% declined by 2.39%
during this week. during this week. during this week. during this week.

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 16

Industry Monitor – Agri-biotech October 2009

UPCOMING EVENTS
1. Event XXIII Lusoflora
Date Oct 08-11, 2009
Venue Santarem National Center of Exhibitions. Santarem, Portugal
Highlights XXIII Lusoflora is the leading exhibition for Plants Nurseries & Gardening
Sector in Santarem. This event brings together Landscape architects,
contractors, maintaining agencies and input suppliers to showcase products and
services to a large gathering of Professionals and trade visitors under one roof.
Contact Details ExpoSan, Lda. Praceta Albertino H. Barata, N 4, Santarem, Portugal
Tel: +(351)-(243)-370174; Fax: +(351)-(243)-370175
2. Event AGROSALON-NITRA
Date Oct 27-30, 2009
Venue Fairgrounds Agrokomplex Nitra, Slovakia
Highlights Agrosalon-Nitra is one of the leading trades for agricultural machinery and
technology industry. This is the exhibition where the Public get the agriculture
machine information and have the opportunity to buy directly from the
manufacturers. This is the unique opportunity to meet senior buyers & decision
makers from all facets of the user industry.
Contact Details Agrokomplex-Vystavnictvo Nitra. Vytavna 4, 949 01, Pripevkovaorganizaia,
Slovakia. Tel: +(421)-(37)-6572111; Fax: +(421)-(37)-7335859
3. Event BioMalaysia 2009
Date Nov 17-19, 2009
Venue Kuala Lumpur Convention Centre (KLCC), Kuala Lumpur, Malaysia
Highlights BioMalaysia 2009 is an annual global event that showcases the progress of the
Malaysian biotechnology industry in the field of agriculture, health care,
industrial and bio-informatics. It provides an avenue for networking among
industry players and knowledge sharing by experts in the field of biotechnology.
Contact Details Protemp Group of Companies. No. 38-3, Jalan PJU 5/9, Dataran Sunway, Kota
Damansara, 47810 Petaling Jaya, Darul Ehsan, Malaysia
Tel:+(60)-(1)-61406666; Fax:+(60)-(1)-6140 8833
4. Event World Tobacco Middle East
Date Nov 23-24, 2009
Venue Dubai World Trade Centre (DWTC), Dubai, United Arab Emirates
Highlights World Tobacco Middle East will give companies across the globe the ideal
opportunity to access this growing market. It will also offer the local tobacco
industry a forum to build links and demonstrate their products and services to
the Middle East, Africa & Asian sub continent tobacco community.
Contact Details Dubai World Trade Centre. P.O. Box. No: 9292, Dubai, United Arab Emirates
Tel:+(971)-(4)-3321000; Fax:+(971)-(4)-3322866
5. Event AGRIBEX 2009
Date Dec 02-06, 2009
Venue Brussels Exhibition Centre, Brussels, Belgium
Highlights AGRIBEX 2009 is one of the biggest agricultural fairs in Europe. More than
450 exhibitors from all the agricultural sectors are presenting their products and
services on a surface of more than 60.000 m2. The major parts of the 185.000
visitors visit the fair to make a purchase or to get informed about an eventual
purchase.
Contact Details Fedagrim, Boulevard De la Woluwe, 46 bte 4/, Bruxelles, Belgium.
Tel:+(32)-(2)-2620600; Fax:+(32)-(2)-2620402

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 17

Industry Monitor – Agri-biotech October 2009
6. Event EIMA AGRIMACH INDIA 2009
Date Dec 03-05, 2009
Venue IARI, PUSA , New Delhi, India
Highlights EIMA AGRIMACH INDIA 2009 is the first International Exhibition &
Conference on Agri-Machinery & Equipment. It is an ideal platform where the
whole world gets acquainted with the developments in the Indian farm-
equipment scenario as it brings the best and latest of farm equipments.
Contact Details Federation of Indian Chambers of Commerce & Industry,
Federation House, 1, Tansen Marg, New Delhi - 110 001, India.
Tel: +(91)-(11)-23738760 -70; Fax: +(91)-(11)-23320714/23721504
7. Event VITICULTURE & VINICULTURE
Date Jan 27-30, 2010
Venue Budapest Fair Centre, H-1101 Budapest Albertirsai ut 10, Budapest, Hungary
Highlights Viticulture & Viniculture is the largest agriculture exhibition in the Hungary. It
is the largest gathering of industry professionals and an ideal forum to launch
new products and services, make new contacts and expand existing ones.
Contact Details Hungexpo. 1101 Budapest Albertirsai ut 10, Expo ter 1, Pf. 44, Budapest,
Hungary. Tel:+(36)-(1)-2636000; Fax:+(36)-(1)-2636098
8. Event Agritech Asia
Date Feb 06-08, 2010
Venue Karachi Expo Centre, Karachi, Pakistan
Highlights Agritech Asia is a professionally organised exhibition of International standards
that will showcase all related products from around the world and will be
instrumental in procuring trade from all over the world. Discover the latest
innovations in Advanced Equipment and Technologies, Agroindustry Startups,
Cost Saving Production and many more.
Contact Details E- Commerce Gateway Pakistan Private Limited. 18, C. P Berar Society, Off
Amir Khusro Road, Karachi, Pakistan.
Tel:+(92)-(21)-4536321; Fax:+(92)-(21)-4536330
8. Event Agrotec Bogota
Date Feb 25-26, 2010
Venue TBA, Bogota, Colombia
Highlights It will provide a unique platform to meet the professionals and entrepreneurs
from agriculture industry under one roof. The event will feature technological
solutions for the important vegetable and fruit sector, which focused regional
trade fair, especially designed for farmers and friends of agriculture in the north
of the country.
Contact Details EasyFairs SA/NV. B. L. V. D. Louis Schmidtlaan, 97, B-, Brussels, Belgium.
Tel:+(32)-(02)-27401070; Fax:+(32)-(02)-7401075
9. Event MERSIN 5th INTERNATIONAL AGRICULTURE FAIR
Date Mar 03-10, 2010
Venue Larissa Fair Center, Mersin, Turkey
Highlights MERSIN 5th INTERNATIONAL AGRICULTURE FAIR is a multi-focused
economy, where trade industry, agriculture, university and domestic tourism
develop altogether. The fact that Mersin has an international harbour,
opportunity of accelerated highway transport, a modern marina and developed.
All kinds of consumer and industrial products, services, machinery and
technology and will be of high standard and attract a large number of
participants and visitors.
Contact Details Mr. Eren Balamir
SK No. 4 A. Ovecler, Cubuk, Turkey.
[[
Tel: +90-312-473600076; Fax:+(90)-(312)-4736010

© Cygnus Business Consulting & Research Pvt. Ltd. 2009 18