SL Agritech enters India, sets issuance of P2-B CP
MANILA, Philippines — SL Agritech Corp., the largest producer of hybrid rice and seeds in the country, is expanding its foothold overseas with its entry into India through a seed-growing deal for one of its high yielding varieties.
The firm on Thursday signed a memorandum of agreement with Indian government-owned National Seeds Corp. Ltd. for the importation, production and marketing of its SL-8H variety which can yield as much as seven metric tons (MT) to 14 MT of rice per hectare.
“We have started sampling last year. And after the tests, the Indian government approved the variety. Following the due process, it really passed our criteria and standards,” said NSC senior manager Kuldeep Singh.
Under the deal, SL Agritech will sell hybrid rice seeds to NSC for cultivation on an initial 10-hectare area in the province of Karnataka.
Adopting hybrid varieties will greatly boost production in the country as the average yield of native varieties are only three MT per hectare, Singh said.
Covering 46 million hectares of rice land, India has the biggest rice land globally and it produces over 90 million MT of rice, but it is also the second most populated country in the world.
Of its land, only 2.5 million hectares are planted with hybrid, yielding an average of a little over three MT per hectare.
“We want to double it to five million hectares of hybrid within five years. We are also looking at other varieties of SL Agritech,” Singh said.
With the introduction of Philippine hybrid rice technology in India, Singh said the government may also explore other hybrid varieties like SL-12H and SL-18H.
Meanwhile, SL Agritech plans to issue up to P2 billion worth of commercial papers to fund its continued expansion program. The company was assigned an issuer rating of PRS Aa with a positive outlook by local credit watchdog Philippine Rating Services Corp.
A company rated PRS Aa (corp.) differs from the highest-rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates.
A positive outlook is defined as: “There is potential for the present credit rating to be upgraded in the next 12 months.”
In arriving at the rating, PhilRatings took into account SL Agritech’s market position as the frontrunner in hybrid rice technology in the Philippines, its sustained high-growth trajectory, with profitability margins expected to improve going forward, strong shareholder support, and the potential upside given a favorable regulatory environment, complemented by its international business expansion.
SL Agritech has established itself as one of the leading rice companies in the Philippines. It grows premium rice in farms in Laguna, Nueva Ecija and Mindoro, selling it under the Dona Maria brand locally as well as in the US and the Middle East.