About Dhanlaxmi Crop Science Limited

Dhanlaxmi Crop Science is a technology driven seeds company that develops, produces, processes and sells seeds for a range of field crops and vegetables, have more than 18 years of experience in the Indian seeds industry. They integrate traditional breeding techniques with biotechnology tools and seek to produce hybrid and open pollinated variety field crops and vegetable seeds that deliver higher yields, enhanced product quality and higher levels of pest and disease tolerance over naturally occurring varieties. The seeds are suitable for varying agroclimatic conditions, such as water availability, crop duration and soil attributes, across different geographic regions in India. The product portfolio includes field crop and vegetable seeds for Cotton, Wheat, Cumin, Bajra, Maize, Gram, Okra, Green Gram, SSG, Soyabean, Milky, Mustard, Groundnut, Black Gram, Guar, Castor, Sesame, Jowar, Coriander, Red Gram, Green Pea, Multifeed, Onion etc. 

As of September 30, 2024, the Company had filed a total of five applications under the PPV & FR Act, including three for cotton, one for wheat and one for green gram. Two applications of the Company are in the testing stage, the final stage prior to certification. Through their research, they have successfully developed and commercialised several hybrid seed products for cotton, such as Advance and Agniveer, Dhanvarsha, which they believe met with commercial success because of their superior quality and yields relative to other cotton seed products at the time of their launch into the market. The sales of seeds for field crops other than cotton, such as Wheat, Cumin, Bajra, Maize presently constitute the remaining portion of their business. Over the period, they have registered significant growth in their sales of vegetable seeds and seeds of field crops other than cotton.

In September 30, 2024, they produced 725 MT of raw seeds, comprising hybrids and open pollinated variety of field crops and vegetables. As of September 30, 2024, 2024, they had access to farmland in 4 states in India, primarily through contractual arrangements with over 45 Seed Growers/Organizers. The total strength of manpower as on date of this Red Herring Prospectus is 67 employees including the Directors.

AGRICULTURE INDUSTRY
India is one of the major players in the agriculture sector worldwide and it is the primary source of livelihood for ~55% of India’s population. Over 70 per cent of the rural households depend on agriculture as their principal means of livelihood. Agriculture along with fisheries and forestry accounts for one-third of the nation’s Gross Domestic Product (GDP) and is its single largest contributor. Agricultural exports constitute a fifth of the total exports of the country. India has the world's largest cattle herd (buffaloes), the largest area planted for wheat, rice, and cotton, and is the largest producer of milk, pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. The agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the country’s population. Thus, farmers become an integral part of the sector to provide us with a means of sustenance.

Consumer spending in India will return to growth in 2021 post the pandemic-led contraction, expanding by as much as 6.6%. The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry.

The Indian food processing industry accounts for 32% of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

Foodgrain production in India touched 330.5 million metric tonnes (MT) in 2022-23 (3rd Advance Estimate). India is the world’s 2nd largest producer of food grains, fruits and vegetables and the 2nd largest exporter of sugar. A total of 521.27 LMT rice has been anticipated for procurement for the upcoming KMS 2023-24, up from 496 LMT produced during the previous KMS 2022-23.

The role of agriculture and allied sectors in India has always been a significant contributor to India’s National GDP, though agriculture’s proportion has steadily declined due to the rise in other industries. Over time with improved technological interventions, these sectors have undergone significant change in terms of crop diversification, use of genetically modified crops and marketing strategies.

According to Inc42, the Indian agricultural sector is predicted to increase to US$ 24 billion by 2025. Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the sales. As per the First Advance Estimates for 2023-24 (Kharif only), total foodgrain production in the country is estimated at 148.5 million tonnes. Rabi crop area has from 709.09 lakh hectares in 2022-23 to 709.29 lakh hectares in 2022-23.

In 2022-23 (as per the second advance estimate), India's horticulture output is expected to have hit a record 351.92 million tonnes (MT), an increase of about 4.74 million tonnes (1.37%) as compared to the year 2021-22.

The Agriculture and Allied industry sector witnessed some major developments, investments, and support from the Government in the recent past. Between April 2000- March 2024, FDI in agriculture services stood at US$ 3.08 billion.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian food processing industry has cumulatively attracted a Foreign Direct Investment (FDI) equity inflow of about US$ 12.58 billion between April 2000-March 2024. This accounts for 1.85% of total FDI inflows received across industries.

During 2023-24 (April-March), processed vegetables accounted for US$ 652.42 million, miscellaneous processed items accounted for US$ 1,652.22 million and processed fruits & juices accounted for US$ 970.93 million.

Rapid population expansion in India is the main factor driving the industry. The rising income levels in rural and urban areas, which have contributed to an increase in the demand for agricultural products across the nation, provide additional support for this. In accordance with this, the market is being stimulated by the growing adoption of cutting-edge techniques including blockchain, artificial intelligence (AI), geographic information systems (GIS), drones, and remote sensing technologies, as well as the release of various e-farming applications.

In terms of exports, the sector has seen good growth in the past year. India’s agricultural and processed food products exports stood at US$ 35.18 billion in 2023-24 (April-December).

The exports for principal commodities in 2023-24 (April-March) were the following:
Marine Product: US$ 7.37 billion
Basmati and Non-Basmati Rice: US$ 10.43 billion
Spices: US$ 4.25 billion
Buffalo Meat: US$ 3.74 billion
Sugar: US$ 2.82 billion
Miscellaneous processed items: US$ 1.65 billion
Oil Meal: US$ 1.71 billion

The agriculture sector in India is expected to generate better momentum in the next few years due to increased investment in agricultural infrastructure such as irrigation facilities, warehousing, and cold storage. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the coming few years due to the concerted effort of scientists to get early maturing varieties of pulses and the increase in minimum support price.

In the next 5 years, the central government will aim US$ 9 billion in investments in the fisheries sector under PM Matsya Sampada Yojana. The government is targeting to raise fish production to 220 lakh tonnes by 2024-25. Going forward, the adoption of food safety and quality assurance mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP), and Good Hygienic Practices (GHP) by the food processing industry will offer several benefits.

Through the Ministry of Food Processing Industries (MoFPI), the Government of India is taking all necessary steps to boost investments in the food processing industry in India. Government of India has continued the umbrella PMKSY scheme with an allocation of Rs. 4,600 crore (US$ 559.4 million) till March 2026.

DHANLAXMI CROP SCIENCE LIMITED COMPETITIVE STRENGTHS
1. Integrated Seed processing unit with warehouse facility in one premise. 
2. Wide range of products backed by consistent quality
3. Their Research & Development Capabilities
4. Established brand
5. Customer satisfaction and revenues from long standing customer relationships
6. Experienced Promoter and Management Expertise
7. Proven track record of robust financial performance
8. Quality Assurance and Standards

DHANLAXMI CROP SCIENCE LIMITED GROWTH STRATEGIES
1. Venturing into high value segments
2. Venturing into new crops
3. Expanding into new potential markets
4. Custom-made Product Development
5. Continue investing in breeding and other R&D
6. Adaptability to new technology sharing and sales opportunities
7. Expand their marketing and distribution network to increase the sales opportunities
8. Attract and retain skilled and experienced professionals

DHANLAXMI CROP SCIENCE LIMITED RISK FACTORS & CNCERNS
1. They are highly dependent on the sale of cotton seeds.
2. Weather conditions, crop diseases and pest attacks could adversely affect the production of their seed products, as well as the demand for their seed product, which may adversely affect the business
3. Prices for their cotton seed products are subject to government controls.
4. The production facility is located in the state of Gujarat.
5. They cannot predict the effect of changes to the regulatory framework governing the Indian seeds industry.