Pink-slips to 1000, Monsanto stock surges

Agriculture products major Monsanto on Thursday announced that it will cut another 1000 jobs, as it expands its cost-cutting plan designed to deal with crumbling sales of biotech-corn seeds and other financial storms faced by the company.

The additional retrenchment will bring the agriculture giant's total planned cuts to 3,600 jobs over the next two years, which is about 16 percent of its global workforce. In October the company first announced its restructuring plan, intended towards streamlining its sales, R&D and other operations. According to the company  it will cost around USD 1 billion for  implementation. Eventually the company expects to save around USD 500 million annually by FY18.

Reacting to this news the stock was up more than 5 per cent in early trade to hit an intra-day high of Rs 2533. Reversing the trend, it was trading in green throughout the day amidst a  global market meltdown, before closing at Rs 2410 up 2.70 per cent. The stock has been on a correction mode for a long time due to poor financials and business prospects.

Monsanto has struggled in recent quarters to deal with slumping corn prices in the U.S., which have reduced demand for its best-selling product: genetically-enhanced corn seeds. Monsanto's Indian subsidiary has also been facing problems due to two consecutive seasons of deficient rains which has drastically affected the sale of seeds, agro chemicals, herbicides etc. The poor rains have led to fluctuations in the financial performance of the company.

Financially the company has been facing pressure due to sluggish agricultural growth in the country. Monsanto India had posted a net loss of Rs. (26.38) crore for the quarter ended September 30, 2015 as compared to net loss of Rs. (4.81) crore for the quarter ended September 30, 2014.Total Income has decreased from Rs.90.37 crore for the quarter ended September 30, 2014 to Rs. 37.76 crore for the quarter ended September 30, 2015.

Going ahead, performance of the company would mainly depend upon the performance of agricultural sector as a whole. Plus the aftermath of the cost-cutting measures undertaken will reflect in the coming quarters.