`Integration gives access to full agri-business portfolio' -- Mr. Sekhar Natarajan, managing director, Monsanto Chemicals of India

Aarati Krishnan

WITH its genetically modified (GM) varieties capturing a significant share of the global crop protection market, Monsanto Company, US has, over the past couple of years, emerged a force to reckon with in this industry.

The company's agri-business interests in India have so far been represented by four different entities. The Monsanto Chemicals of India managing director, Mr. Sekhar Natarajan, outlines the modalities of the proposed consolidation and shares his views on the Indian market.

Excerpts from the interview:

Monsanto recently announced a consolidation of its agri-business interests in India, after functioning through four separate entities for several years. What was the immediate motivation for this move?

Our integration makes good business sense. This consolidation captures synergies in portfolios and markets; improves customer focus and builds sustainable competitive advantage for Monsanto Chemicals of India. It gives us access to the full agri-business portfolio -- seeds, herbicides and biotech enhancements. This integration demonstrates the parent company's commitment to Monsanto Chemicals. It also allows our shareholders to participate in Monsanto's agri-business interests in India in a transparent and fair manner. These have been the key drivers for this change.

As part of the consolidation exercise, Monsanto Chemicals is said to be taking over `agri-business related assets' from Monsanto Enterprises and Monsanto India Pvt Ltd. What are these `related assets'?

As part of this integration, Monsanto Chemicals will acquire the entire share capital of Monsanto Technologies, engaged in the research, production and marketing of seeds. It will also acquire the entire agriculture business of Monsanto Enterprises.

This covers all marketing infrastructure and marketing assets, including working capital assets, all existing distribution rights for seeds and agrochemicals, all rights to manufacture and sell all of Monsanto Company US' agrochemical products, present and future, in India, on commercial terms.

Monsanto Chemicals will also acquire the agriculture business related assets from Monsanto Chemicals of India comprising IT assets and software, office equipment, leases and furniture/fixtures. The above integration does not include moving our corporate R and D centre at Bangalore into Monsanto Chemicals.

Crop protection MNCs operating in India are hiving off their manufacturing units and focussing on the marketing and distribution aspects alone. Monsanto Chemicals, until recently, has been focussed on manufacturing. Do you see any reason to re-orient your focus to the research, marketing and branding aspects of the business?

Our effort now is to integrate all our Indian agriculture-related businesses under one entity and create a complete agri-business company. We realise that to be successful in an increasingly competitive environment, a company not only needs to be the lowest cost producer, but also needs access to R&D and a good marketing and distribution set-up. This is what the consolidation tries to do.

Having opened an R and D centre in India, does Monsanto Chemicals intend undertaking original research, by way of discovery of new molecules or biotechnology initiatives, in India?

With India being able to provide technically qualified people and with our increasing aptitude towards the use of information technology, many MNCs are setting up R and D bases in India. We see India being a good central place to conduct R and D activities. Our Bangalore R and D effort is a part of our global research programmes -- mainly in genomics. As indicated earlier, Monsanto Chemicals is not acquiring Monsanto's R and D set-up in Bangalore. However, it will continue to have access to Monsanto's global research efforts for product launches in India.

Traditionally over-dependent on the cotton crop, agrochemical companies in India have been trying to diversify across crops and segments. What have been Monsanto's efforts in this regard and are they paying off?

Monsanto has not been involved in selling insecticides, which is the largest segment of the Indian pesticide industry. Cotton -- the single largest crop for insecticides -- has not been our focus. Our key focus has been in providing weed-control solutions for rice, wheat, soyabean, vegetables, and plantations. We have been focussing our resources in market development activities and over the last several years spent significant resources educating farmers and demonstrating the benefits of our herbicides. We have had reasonable success in this effort.

Do you see a change in the composition of the Indian agrochemical market in favour of herbicides and weedicides as against conventional insecticides?

We believe that significant growth is still to come in the herbicides segment. Worldwide, herbicides account for approximately 45 per cent of the total pesticide industry; whereas in India herbicides account for only 12-15 per cent. This is likely to change.

Though products such as Roundup Ready soybean have been gaining ground in the US, there is considerable resistance to GM crops in India. What potential do you see for GM crops in India? Can they compete with or replace conventional agrochemicals?

We believe that biotechnology will become an important tool for scientists and researchers to improve crop yields and quality and in advanced medical research/treatment. Monsanto and several other companies have had over 15 years of experience in research of biotech crops and over four years of experience in commercialisation of this research. Yields in India in key crops are extremely low compared to even China and Latin America. One of the tools that can help us increase yields and provide environmental benefits is biotechnology. The Government and the Agriculture Ministry (through the Indian Council of Agricultural Research) have recognised the benefits of biotech in agriculture and are conducting extensive research programmes.

The Department of Biotechnology has an extensive process of review and approval for all biotech products. But we believe that to be successful, biotech products must demonstrate to the Indian farmer the sustainable benefits he can derive from the use of these technologies.