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Tata Rallis Ltd: Agrochemical Case Study

Rallis India is a leading Indian agrochemical company with a comprehensive portfolio of crop protection chemicals, seed varieties, and plant nutrients. It has faced challenges from competition and changes in the economic environment. The history of Rallis can be traced back to 1823 in London, with the company establishing operations in India in 1851 through the jute business. By the 1900s, the jute business was earning millions in revenue. In the global pesticide industry, competition has increased with consolidation of major companies, while Indian companies focus on generic products and applied research. Rallis India focuses on product development, manufacturing, and marketing of crop protection and nutrient chemicals in India, with its main business being agrochemicals.

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Bharat Siddeshwar
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474 views7 pages

Tata Rallis Ltd: Agrochemical Case Study

Rallis India is a leading Indian agrochemical company with a comprehensive portfolio of crop protection chemicals, seed varieties, and plant nutrients. It has faced challenges from competition and changes in the economic environment. The history of Rallis can be traced back to 1823 in London, with the company establishing operations in India in 1851 through the jute business. By the 1900s, the jute business was earning millions in revenue. In the global pesticide industry, competition has increased with consolidation of major companies, while Indian companies focus on generic products and applied research. Rallis India focuses on product development, manufacturing, and marketing of crop protection and nutrient chemicals in India, with its main business being agrochemicals.

Uploaded by

Bharat Siddeshwar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

A CASE STUDY ON TATA RALLIS LTD

Introduction
Rallis India is one of India's leading agrochemical companies, with a comprehensive portfolio
of crop protection chemicals, seed varieties and specialty plant nutrients. It has an extensive
nationwide distribution system supported by an efficient marketing and sales team. The
company has marketing alliances with several multinational agro-chemical companies,
including FMC, Nihon Nohyaku, DuPont, Syngenta, Makhteshim Agan and Bayer
CropScience.
Rallis India's business has been through steep highs and lows in the last 10-15 years. The
company's fortunes have yo-yoed up and down, its range of business areas have widened
and narrowed dramatically, and it has experienced significant changes in its economic
environment. Internally, it has faced diverse issues and problems such as spiralling wages,
under-productivity, competition from imports and multinational companies (MNCs), from
the '80s onwards. In the post-liberalisation economy, Rallis's businesses underwent strong
pushes and pulls, culminating in a phase of heavy losses in 2000-03.

Rallis: Empire and after


The history of Rallis can be traced back to the days of the empire, when a company called
Ralli and Petrocochino was established in 1823 in London with operations at five different
locations - Tabriz, Constantinople, Marseilles, London and Manchester. In 1851, Pandias
Stephan Ralli, head of the Ralli Brothers firm, decided to go into the business in India.
The firm began its Indian operations by buying full-pressed jute bales from press owners in
Kolkata. The jute business earned millions of rupees in revenue for the firm and continued to
retain its edge until the 1900s.
In 1861, during the American Civil War, the firm established a unit called Ralli Brothers
in Bombay (now Mumbai), under the management of Pandias Theodore Ralli and Ambrose
Theodore Ralli. The firm of Ralli Brothers grew rapidly until 1866 when the market
experienced a cotton crisis. That year, it was reconstituted under a strong management
established in London, and with its sights set on Indian trade.

The global pesticide industry


Agrochemicals are a cyclical industry requiring an enormous amount of understanding to
manage the complexities involved. The global market for chemical pesticides and other
agrochemicals was estimated at around $26.71 billion in 2003, with a growth rate of 6.2
per cent. Of this, herbicides comprised 44 per cent, followed by insecticides (27 per cent),
fungicides (20 per cent), and others (9 per cent). Since 1990, when the world market stood at
$23.17 billion, the industry had grown at a low annual average rate of 1.1 per cent. In
2003, market conditions turned more positive mainly because of unfavourable climatiC
conditions that affected north European countries, Canada, India, Australia and many parts of
Asia. The major factors that affected the market were a general increase in commodity.
SWOT ANALYSIS
STRENGTH AND WEAKNESS- The last decade has seen the market for chemical
pesticides undergoing rapid changes. The drop in the market can be explained partly by
changes in crop prices, greater efficiencies in the use of pesticides, improvements in pest
management practices and technology, increased adoption of genetically modified crops, and
Integrated Pest Management (IPM) techniques aimed at reducing pesticide use.
The global agrochemicals market is estimated to have recorded positive growth during 2004
and recovered from the impact of unfavourable factors that affected the market earlier.
Normal weather conditions benefited agrochemical usage, and economic recovery continued to
revive the agricultural economy. In Asia, while deficit rainfall conditions affected demand, the
Chinese government called for increased grain production and started paying subsidies direct
to cereal farmers.
Tough competition: The industry has seen a fair amount of competition in the last decade
with several major companies consolidating for strategic reasons - to achieve a competitive
edge over others, ease of market entry, gaining technological advantages, acquiring market
share etc.The six major consolidated companies are DuPont, Monsanto, Syngenta, Dow,
Bayer and BASF which together had 73 per cent market share in 2002, 81 per cent in
2003, and 77 per cent in 2004.

OPPORTUNITIES AND THREATS- Historically, Indian players in the pesticides and


agrochemicals market have focused on marketing generic and off-patent products, whereas the
multinationals have focused on high-end specialty products. Indian companies, playing to
their basic strength
low cost operations, have focused on applied research, which includes developing processes to
manufacture off-patent products, determining more effective methods of delivering existing
products

and

new

formulations

of

generic

products.

Generally

speaking,

Indian

manufacturers lack the financial and technical resources to undertake basic research.
On the other hand, MNCs have dominated the market for patented products. They have the
advantage of a developed research and development (R&D) pipeline and superior financial
resources. Inspite of the threat from sales of generic products, MNCs have introduced quite
a few of their top-selling global products in the Indian market. Monsanto, for instance, holds
Indian registrations for almost the entire set of its global brands. In India, MNCs have tried
to guard against the cyclicality of the domestic market, by identifying and sticking to niche
categories, crops and markets. They have worked to strengthen the linkages with farmers
through extension and advisory services. Many MNCs in India have entered into supply
arrangements with their base country to take advantage of the low costs in manufacturing
from India-based facilities.
The competition is not limited to MNCs alone. Two factors - the not-so-heavy capitalintensive nature of the industry and the government policy of encouraging the small-scale
sector - have led to intense competition in the sector. Distribution reach, new product
launches, and ability to extend credit to the farmers are the factors that have influenced
sales.
RALLIS IN INDIA
Rallis India's main areas of business are product development, manufacture and marketing of
crop protection and crop nutrient agrochemicals - solid and liquid pesticides, fertilisers,
leather chemicals, etc. Other activities include the manufacture and sale of pharmaceutical
products including tanning materials, and services like farming management services, tolling

manufacturing and sponsored research. The company's largest and most profitable business is
the agro-business segment, which is engaged in the development, manufacture and marketing
of pesticides.
PROBLEMS FACED BY RALLIS IN INDIA
In the domestic market, Rallis India holds a fairly strong position. The company has several
advantages, among which are branding capabilities and distribution reach throughout the
Indian market. It holds a product portfolio that is customised to the requirements of the
land and crops in India. It also has an extensive distribution channel that is supported by
initiatives such as the jeep campaign, farmer meetings, etc. Rallis has a near accurate
knowledge of Indian farm requirements and farmers' needs and expectations. Plus, as a
Tata company, it holds credibility in the Indian market.
R&D: Rallis India has invested heavily in research and development activities. Within the
sponsored research sector, the Rallis research centre (RRC) caters to the growing needs of
the agrochemical industry. This centre conducts studies on bio-efficacy, residue analysis,
analytical and product chemistry, ecotoxicology and regulatory toxicology for in-house needs
as well as sponsors from across the world. By regularly developing new products, it has
given Indian farmers top-of-the-line eco-friendly agricultural products.
Strong branding: Rallis India has a wide range of insecticides, fungicides and herbicides,
which have been designed to suit Indian crops, with emphasis on rice, cotton and vegetables.
Some of Rallis's popular products are fungicides such as Contaf, Contaf Plus, Master and
Fujione; weedicides such as Fateh, Tata Metri, and Tata Panida; and insecticides such as
Daksh, Tata Mida, Reeva, Asataf, Manik, etc. Rogor, an old Rallis brand of insecticide,
is still one of the strongest brands in the country.
Product range: Rallis's seed portfolio covers cereals, oilseeds and fibre crops. The company
produces and markets several hybrid varieties of maize, paddy, wheat, cotton and mustard. Its
fertiliser portfolio of imported 100 per cent water-soluble specialty fertilisers provides allimportant nutrients required by plants. These are highly suited for foliar spray and fertilisation
through micro irrigation. The company also supplies a range of essential micronutrients for
a wide range of crops and soil. Rallis manufactures mineral supplement products such as
phosphoryl, which is used in the poultry industry and for livestock.

CONCLUSION
From a long-term perspective, Rallis has improved its product portfolio
and introduction of new products, beyond the alliances it has signed. A
series of new product launched have been planned for the coming
years. Of the 200 molecules generated by R&D, four lead molecules
have been confirmed. This is an example of innovation in the company;
the

four new

molecules

have

been

registered,

out

of which

two

molecules have already gone into commercial applications.


To get into new value added activities, Rallis plans to strengthen its
operations in cottonseeds, as it expects a sizeable turnover to come from
the seeds business. The BT Cotton market size is expected to almost
double, and acreage under legally grown BT Cotton crops to rise almost
six fold by 2009-2010. Rallis has already introduced BT Cotton seeds to its
portfolio. The company has increased exports by 21 per cent, to reach a
figure of Rs. 1,530 million in 2005-2006.

Common questions

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Rallis India's strategy in product development and marketing has been instrumental in maintaining its competitiveness in the agrochemical sector by focusing on its extensive distribution reach, brand capabilities, and a portfolio customized to Indian agricultural needs . The company continually invests in research and development to create eco-friendly and effective agricultural products . It leverages its strong branding capabilities across a range of insecticides, fungicides, and herbicides designed specifically for Indian crops . Additionally, the introduction of new products and the strengthening of its operations in niche segments such as cottonseeds have allowed Rallis to capture new market opportunities .

The global pesticide industry has evolved significantly due to several factors. As of 2003, the market for chemical pesticides and agrochemicals was about $26.71 billion, with a growth rate of 6.2% . Several factors have contributed to the changes observed since then, including unfavorable climatic conditions in various regions influencing pesticide demand, changes in crop prices, greater efficiencies in pesticide use, innovations in pest management practices, the introduction of genetically modified crops, and the increased adoption of integrated pest management techniques . These factors collectively led to a more positive market outlook post-2003, as normal weather conditions and economic recovery bolstered the agricultural economy .

R&D has significantly impacted Rallis India's market position by enabling the development and introduction of innovative products tailored to meet local agricultural requirements . Through substantial investment in R&D, particularly at the Rallis research center (RRC), the company has been able to conduct studies on bio-efficacy, residue analysis, and product chemistry, which enhance its product offerings . The development of new molecules and eco-friendly products through R&D initiatives has fortified Rallis's competitive position, helping it address emerging market demands and environmental considerations .

Government policies have played a crucial role in shaping the competitive landscape of the agrochemical industry in India by fostering intense competition and supporting smaller players . Policies encouraging the small-scale sector and facilitating easier market entry have lowered barriers, enabling numerous domestic firms to enter the market. This has increased competition within the industry, challenging both multinational corporations and larger Indian companies . Additionally, government subsidies for cereal farmers and initiatives to increase grain production have indirectly stimulated agrochemical sales by enhancing crop cultivation prospects .

Strategic consolidation among major agrochemical companies has been driven by several key factors, including the desire to achieve a competitive edge, ease market entry, gain technological advantages, and acquire market share . The industry consolidation enabled firms like DuPont, Monsanto, Syngenta, Dow, Bayer, and BASF to strengthen their market positions, collectively controlling a significant market share . This consolidation has also facilitated access to broader distribution networks, synergized R&D capabilities, and allowed for better alignment with evolving market demands and regulatory frameworks .

Rallis India has leveraged its historical experience and brand equity by capitalizing on its deep-rooted understanding of the Indian agricultural landscape and maintaining a strong distribution network . The company's history dating back to its origins as part of the Ralli Brothers firm provides a legacy of credibility and trust, particularly under the Tata brand . Rallis optimizes these advantages by customizing its product offerings to cater to local crop needs and maintaining a robust relationship with farmers through initiatives like farmer meetings and product demonstrations .

Multinational agrochemical companies have strategic advantages over Indian companies due to their substantial financial and technical resources, developed R&D pipelines, and focus on high-end specialty products . They dominate the market for patented products and offset market cyclicality by targeting niche categories and maintaining tight linkages with farmers through advisory services . Despite competition from generic sales, they have successfully introduced top-selling global brands into the Indian market, which helps them maintain dominance. Additionally, alliances and supply arrangements leveraging low-cost manufacturing in India have further solidified their competitive position .

Changes in consumer demand and regulatory trends have significantly influenced the agrochemical market by pushing companies toward the development of safer, more efficient crop protection solutions . The increasing demand for sustainable and eco-friendly products has resulted in greater emphasis on innovation and the introduction of new formulations designed to minimize environmental impact and meet stricter regulatory requirements . Companies have also adapted their marketing strategies to articulate the benefits of integrated pest management (IPM) practices and their contribution to more sustainable agriculture .

Rallis India faced several challenges in the post-liberalization economy, such as spiraling wages, under-productivity, and increased competition from imports and multinational companies . These challenges affected its business operations by causing significant instability in the company's fortunes, reflected in the phase of heavy losses experienced between 2000-2003 . The liberalized economic environment exerted strong competitive pressures on Rallis, altering the dynamics of the agrochemical market in India, and necessitating strategic adaptations to sustain its market position.

Innovation is central to Rallis India's competitive strategy, enabling it to maintain an edge in the highly competitive agrochemical market. The company's investment in R&D has led to the development of 200 new molecules, with four lead molecules confirmed and registered, two of which have entered commercial applications . This focus on innovation not only enhances their product portfolio but also aligns with market demands for eco-friendly, high-performance agricultural solutions. The innovation efforts are also evident in the company's move into BT Cotton seeds, anticipating significant market growth .

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