Shares of Kaveri Seed Company under-pressure after Andhra Pradesh government issued a notice and cancelled the license of one company and suspended licenses of another 13 companies with relation to illegal sowing of herbicide-tolerant (HT) cotton seeds.
This will impact the company immensely considering its 40 percent market share in cotton seeds in the states of Andhra Pradesh and Telangana. The key concern here is that Andhra Pradesh itself contributes around 10-12 percent of its overall revenues.
In terms of cotton seed packets, the company sold around 3.2 million packets out of 6.9 million packets across pan-India in FY18. So, if we assume that they have a similar market share in the state of Andhra Pradesh as well, then they are selling around 0.7 to 0.8 million packets in the state of Andhra Pradesh. Thus, the overall cotton seeds contribute around 57 percent of the total revenues.