Management
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'Genetically modified Rice is a big opportunity'
Bhupesh Bhandari / New Delhi October 13, 2009, 0:22 IST In August, DuPont announced that it will drive its innovation engines to meet the increasing demand for food, protect people and the environment, decrease dependence on fossil fuels, and capitalise on growth in emerging markets. All four have strong resonance in India. Siemens to invest Rs 1600 cr in India Agriculture accounts for about 30 per cent of DuPont’s business of $500 million in the country, split equally between seeds and crop protection. Industrial polymers bring in 25 per cent, titanium-dioxide fetches 20 per cent, and the paints business another 10 per cent. The rest is protection and safety and so on. DuPont India President and CEO Balvinder Singh Kalsi says that the Indian operations of DuPont are profitable. Though other sectors were tough, thanks to the economic slowdown, the farm sector was robust in the last one year or so. All told, DuPont connects with around one million farmers in the country. Kalsi says he did not downsize his workforce when all others around him were doing so. In fact, DuPont seems to have upped the ante in India of late. It recently acquired two cotton seed companies and has set up a knowledge centre in Hyderabad. The facility is a cost centre, which means it fits into DuPont’s long-term strategy and the company is not looking for instant returns on investment. Kalsi, 52, has given a new rallying call to his 1,500-plus employees — Nova Invicta (never to be defeated). A chartered accountant by training, Kalsi has spent 18 years at DuPont. He spoke to Bhupesh Bhandari on the road ahead for DuPont in India. How does DuPont see India — a market or a resource centre for the world market? DuPont considers India a strategic market. We are very interested in growing our top-line profitably and aggressively. But it is not only about revenue. How do we fully leverage the benefits India has to provide for DuPont globally? And that is where the other aspect comes in. How do we do more research out of India, how do we do more design services out of India? It could be human talent sourcing or development of intellectual property. It could also be some selective essential material sourcing. So we are looking at India now from that comprehensive point of view. India could also be a base for us to try out new business models and see what works and can be replicated in other parts of the world. Business models like? How do you go to the market? Is there a different way to access that market altogether? Could you combine products and services together in certain areas? For example? In our seed business, we have an initiative called Uday where we don’t just sell our products to the farmers but we also provide a lot of agronomy services. We work with them very closely, we tell them what crop to grow, how will the weather impact the crop, what insecticide to use at what time, how to manage the crop better. So it is a very different model from the one where you just go and sell your product. Abroad, DuPont is very strong in maize (corn) and soya bean. (It runs the business through Pioneer.) But in India you seem to be taking a different track — you have recently acquired two seed companies that specialise in cotton. We participate in five different crops in India, which we normally do not do in most parts of the world. We are into corn, pearl millet (bajra), rice, mustard and now cotton also. Cotton is not there anywhere else in our portfolio. The starting point for cotton is India. Genetically modified cotton was a big hit with farmers initially. But there seems to be some disillusionment with it now. Its resistance to bollworm has come down and this has brought down the yields. The perception in the mind of farmers is that it is not a long-term solution to problems like bollworm. The good part about DuPont is that we participate in both sides of it. While we will play in the biotechnology side, we also have our chemical offerings. Over the years, the pest profile has changed. While genetically modified cotton controlled bollworm quite well, the incidence of sucking pest went up. But a new variety is out which is resistant to bollworm as well as sucking pest. This is nature. Anything you develop tends to develop some kind of a resistance over the years. What part of your seed portfolio is genetically modified? Currently, none of our seeds is genetically modified. All that we sell in the market are high-yielding hybrids, except cotton seed which we will sell. We have acquired Nagarjuna Seeds which has a very good germ plasm but it did not go out and sell it. The other company we have acquired is Nandi Seeds which has a good presence in the commercial market. It is a licensee for Monsanto. The first thing would be to sell Bt1 and Bt2. Over time, when we come out with our own traits, we should be able to integrate those into it. Some time in the future, we will come out with genetically modified seeds for other crops as well. We have added two corn research centres in the country. Such licences (like the one granted by Monsanto to Nandi Seeds) are normally for five years. By the time it runs out, will you be ready with your own genetically modified cotton? We hope so. But apart from cotton, we see rice as a big opportunity. Like Pioneer is known to be the corn company of the world, we hope in India in some time it will be known as the rice company. There is a huge opportunity. You have almost 43 million acres under rice cultivation and very little of it is hybrid — less than 2 per cent. In China, almost 50 per cent is hybrid. At some stage, in the next five to ten years, if India were to get to 50 per cent level of hybridisation, you are talking about a seed market of $500-600 million. This does not include any tricks. If we were to come out with insect- or weed-resistant rice, then those values are separate. Are you working on genetically modified rice as well? Yes. Our first level of focus is to work on the yields. So, we are working on high-yielding hybrids and on reducing our development cycle. If you go through a traditional breeding process, it will take you four or five years to come out with a hybrid. But with some of the new technologies that we have brought in, we can cut that cycle to about half. And then simultaneously we are working on traits. One of the traits we would be working on is insect control. Rice in the country is grown quite a lot in rain-fed areas. This year, because of low rains, the crop is 20 per cent lower. Are you working on a rice variety that can survive on less water? We are working on a technology called drought resistance. It means plants should be able to survive with lesser moisture and lesser nitrogen in the soul. Such technologies will be very helpful in times of deficient rainfall like this year. We are talking about this product being ready by 2013-14. There seems to be resistance from some quarters to genetically modified crops. You are right. There is resistance but if you talk to anybody in the government, there seems to be a lot of support. I think the key decision makers want to go in that direction but they also have to make sure that the regulations and the testing processes are right. But if you see it from a long-term perspective, there is really no option. Acres are not going up. With urbanisation, the land available for cultivation will become lesser and lesser. We will always have variations in the climate, irrigation levels are just about 37-38 per cent. So there is really no other option but to find new technologies to feed the growing population. This is one of the mega trends DuPont is working on. The research we are doing on rice could take us to other countries in Asean and our neighbourhood too. DuPont has set up a knowledge centre in Hyderabad. What is the brief for it? This is something unique that we have tried to do in India outside the US. This is the first time that we have called a centre a knowledge centre. Normally, these are called research and development centres. And the thought there was that we are going to bring in various knowledge services under one roof. So what we are trying to do at the knowledge centre at Hyderabad is basic research which is focused on agricultural biotechnology, industrial biotechnology, and some areas of the front-end of the discovery work for our top chemicals. We will have product application labs for our various businesses. We can bring our customers in, where our sales and marketing people can work with our technology team. Rather than saying this is the product I have and how do I sell it in the Indian market, they should be able to find application and uses which are relevant for India. Wouldn’t this often involve bringing the cost down? Also some unique applications which may not have use elsewhere. Like pearl millet and cotton seed in which we don’t participate elsewhere. We are developing very unique applications for Indian Railways, which we have not done anywhere else. We have developed components and parts that go into the carriages with our engineering polymers. This will replace the natural rubber used there which you have to replace every two or three years. Once you replace it with our polymers, this will increase the load-bearing capacity. And it lasts for eight to ten years. Your cost is also lower over the lifetime of the polymer. We have developed a polymer which can replace the rubber under the wooden or concrete sleepers on which rail tracks are laid. The tracks have to be ripped off every two or three years to replace the rubber. Our product could last for ten years. In our whole evolution, we go through three phases. One, when we try to establish our presence. Two, when we try to enhance our capability to serve the market. Three, when we try to optimise our presence in the country. In most businesses, we are in phase one or phasePages: [1] 2