bayer cropscience ltd share price Management discussions


1. Overview of Indian Agriculture

India has the second-largest arable land resource in the world. Indian agricultural industry, with its allied sectors, is the largest livelihood provider in India, providing primary source of livelihood to about 54% of India?s population, especially in the vast rural areas. It is also a significant contributor to the Gross Domestic Product (GDP). The Indian food industry is poised for huge growth, increasing its contribution to the world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food and grocery market is the world?s sixth largest, with retail contributing 70% of the sales. 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.

During the COVID-19 pandemic, the Indian agriculture sector faced major challenges, for example the harvesting process, which usually starts in mid-April, was thrown off balance completely, resulting in major liquidity issues. Labor scarcity also affected the supporting infrastructure around the agriculture sector. Due to heavily restricted movement across state borders the movement of crops was blocked which consequently affected the sales. Lockdowns across the country caused delays and backlogs in supply chains, exports faced transport and logistics problems, more stringent customs restrictions, etc.

In FY22, agricultural exports increased by about 20% to US$ 50.21 Billion despite logistical challenges posed by the COVID-19 pandemic. According to the Commerce and Industry Ministry of India, export of rice was the top forex earner at US$ 9.65 Billion among agri commodities during FY22, growing by 9.35% from the previous, and wheat exports also jumped to US$ 2.2 Billion in FY22 against US$ 567 Million in FY21.

The high proportion of agricultural land and diverse-agro climatic conditions for cultivating different crops are some of the factors favouring agriculture in the country. Schemes such as Paramparagat Krishi Vikas Yojana (PKVY) are helping in developing organic farming by promoting farmers to produce commodities free of pesticides and residue. Substantial increases in productivity can be achieved even with diminishing land and water resources provided the use of better and quality seeds equipped with better traits under superior crop agronomy in the country. With intensive cultivation using hybrids, the average yields under open field conditions in India have been steadily increasing.

There needs to be clear know-how of the problems of farmers at the grassroots which stretch beyond capital requirements. The solution to increasing farmers? income lies in increasing farmers? share in the final consumer paid price by decreasing the cost of marketing, transaction cost, and other intermediaries. The recently increased access to mobile connectivity in India has also increased the potential to solve problems of information dissemination and provide verified market linkages at both the demand and supply sides. This potential is being rapidly tapped into by private players offering transparency and working directly with farmers, by empowering them to make the first leap into digital transactions. Several players within the agritech ecosystem are working to provide customized solutions to the pain points of smallholder farmers.

Government Initiatives

The productivity growth in the agriculture sector is indicated to have the most sweeping impact on poverty reduction, twice that of manufacturing. Recognizing this, the government declared its goal to double farmer income by calendar year 2022. The Government of India through the Ministry of Agriculture is making all efforts to encourage agriculture growth by launching various policies. The government has been instrumental in the growth and development of agriculture in the country through the Agricultural and Processed Food Products Export Development Authority (APEDA), such as organizing B2B exhibitions in different countries, exploring new potential markets through product-specific and general marketing campaigns by the active involvement of Indian Embassies.

• The Ministry of Agriculture and Farmers Welfare?s budget has been enhanced from Rs 1.25 lakh Crore in FY21 to Rs 1.32 lakh Crore in FY22.

• NABARD will assist the creation of a blended capital fund with a focus on the agricultural start-up ecosystem which will be used to fund agriculture and rural enterprise startups that are related to the farm product value chain.

• The government is promoting the use of drones in agriculture by providing financial assistance through the ‘Sub-Mission on Agriculture Mechanization.?

• A network of 729 Krishi Vigyan Kendras has been established at the district level across the country to ensure that newer technologies such as improved variety seeds of crops, new breeds/strains of livestock and fish, and improved production and protection technologies reach farmers.

• In October 2021, the Union Minister of Home Affairs launched the ‘Dairy Sahakar? scheme in Anand, Gujarat. With a total investment of Rs 5,000 Crore, the scheme will be implemented by NCDC under Ministry of Cooperation, Government of India to realize the vision, "from cooperation to prosperity" by extending financial support to eligible cooperatives for activities such as bovine development, milk procurement, processing, quality assurance, value addition, branding, packaging, marketing, transportation and storage of milk and milk products, exports of dairy products within the overall objectives of "Doubling the farmers income" and "Atmanirbhar Bharat".

• In September 2021, the Prime Minister launched 35 crop varieties with special traits such as climate resilience and higher nutrient content.

• The Electronic National Agriculture Market (e-NAM), launched in April 2016 to create a unified national market for agricultural commodities by networking existing Agriculture Produce Marketing Committees (APMCs), had 16.6 Million farmers and 131,000 traders registered on its platform until May 2020. As per the Union Budget 2021-22, government announced that through e-NAM, ~1.68 Crore farmers were registered, and trade worth Rs 1.14 lakh Crore was carried out; 1,000 more mandis will be integrated to achieve transparency and bring competitiveness.

• Pradhan Mantri Gram Sinchai Yojana (PMGSY) aims to irrigate the field of every farmer and improve water use efficiency to achieve the motto, ‘Per Drop More Crop?. Overall, the scheme ensures improved access to irrigation. As per the Union Budget 2021-22, Rs 11,588 Crore was allocated to Pradhan Mantri Krishi Sinchai Yojana (PMKSY).

• The Prime Minister launched the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan). Benefits under the PM Kisan plan have been delivered to about 11.78 Crore farmers as of February 22, 2022, and Rs 1.82 lakh Crore have been released to qualified recipients across India in various payments. As per the Union Budget 2021-22, Rs 65,000 Crore was allocated to PM-Kisan and Rs 8,514 Crore was allocated to the Department of Agricultural Research and Education.

• In April 2021, the Government of India approved a PLI scheme for the food processing sector with an incentive outlay of Rs 10,900 Crore over a period of six years starting from FY22.

• To boost farmer incomes and growth of the agricultural economy, the Indian government released funds in June 2021 for farm mechanisation such as establishment of custom hiring centres, farm machinery bank and high-tech hubs in different states.

• In September 2020, the government launched the PM Matsya Sampada Yojana, e-Gopala App and several initiatives in fisheries production, dairy, animal husbandry and agriculture. Under this scheme, an investment of Rs 20,000 Crore will be made in the next 4-5 years in 21 states.

• In June 2020, Government introduced Pradhan Mantri Formalization of Micro Food Processing Enterprises (PM-FME) scheme. It is expected to generate total investment of Rs 35,000 Crore, generate 9 lakh skilled and semi-skilled employment, and benefit 8 lakh units through access to information, training, better exposure, and formalization.

• Agriculture Industry In India Size : 2022-27 : Industry Analysis (mordorintelligence.com)

• Agri Exports shoot by 20% to US$ 50 Billion in FY22 - The Vaultz News

• Unlocking the potential of India?s agricultural sector (indiatimes.com) Foodgrain production in 2020-21

According to the second Advance Estimates of Production of Major Crops for 2021-22, total food grain production in India is estimated at a record 316.06 Million tonnes, 5.32 Million tonnes higher than that during 2020-21 when production crossed the 300 Million mark. The production during 2021-22 is higher by 25.35 Million tonnes than the previous five years? (2016-17 to 2020-21) average production of foodgrains. This is the highest ever foodgrain production in India. The new record of foodgrains production is the result of hard work of farmers, efficient research of scientists and farmer friendly policies of the Government.

Source: https://www.pib.aov.in/PressReleasePaae.aspx?PRID= 1798835

2. Industry Overview

Impact of monsoon

The southwest monsoon seasonal rainfall during June to September for the country as a whole was normal at 99% of its Long Period Average (LPA) in 2021-22. The seasonal rainfall over the four homogeneous regions was normal over Northwest India (96%) and central India (104%), below normal over East and Northeast India (88%) and above normal over South Peninsula India (111%). Seasonal rainfall over the monsoon core zone, was above normal (>106% of LPA). 58% of the total area of the country received normal seasonal rainfall, 25% of the total area received excess rainfall and 17% of the total area received deficient season rainfall. The season was very uniquely placed in the historical record for its distinct and contrasting month to month variation. The rainfall over country as a whole was 110%, 93%, 76% and 135% of LPA during June, July, August and September respectively. A deep depression formed during 12-15 September and cyclonic storm "GULAB" during 24-28 September.

The formation and movement of the cyclone TAUKTAE, over Arabian Sea (during 14-19 May) and severe Cyclonic storm "YAAS" over Bay of Bengal (during 23 to 28th May) helped to increase cross equatorial flow and the onset of monsoon. Subsequent features favoured timely advance. However, monsoon covered entire country by 13th July against normal date of 8th July.

Source: end_of_season_report_2021.pdf (imdpune.gov.in)

Crop Protection

In India, farmers lose a significant part of their income as their crops are being attacked by pests and weeds. According to the Government, 15-25% of crops are lost due to pests every year. Indian farmers? major concern is safeguarding their crops from pests and diseases. Crop protection chemicals can play a vital role when judiciously applied, protecting the crop and produce from pests and increasing farm productivity.

During COVID-19 pandemic, the availability of fertilizers was significantly impacted due disruption in supply caused by the restrictions on the movement of vehicles and the closure of shops and markets, amidst lockdowns. The maximum shortage was observed for chemical fertilizers (46%) and biofertilizers (30%) compared to cow dung (18%) and poultry manure (6%), indicating that farmers tended to use more local materials compared to shop-based inputs. In India, synthetic pesticides have been extensively used for alleviating the estimated 45% gross loss of crops due to the infestation of pests and diseases. Major factors driving the Indian market include greater demand for food grains, limited availability of arable land, increasing exports, growth in horticulture and floriculture, and increasing public awareness regarding pesticides and biopesticides.

The number of global crop protection molecules is over 1,175, whereas India has just 280 registered molecules due to a lack of legal provisions for new product registration such as the protection of regulatory data. India has a much smaller market in crop protection as compared to other developed markets of North America and Europe, presenting huge potential for innovation and research & development.

Insecticides are widely used by Indian farmers to safeguard their crops. However, bactericides are expected to be rapidly adopted by farmers to fight against the growing of bacteria around crops.

Agricultural productivity is directly related to the input of crop protection. India uses just 307 g/ha as compared to 13 kg/ha in USA, China and other countries. As a result of which Indian farmers lose significant profits as their crops are attacked with weeds and pests. However, India is a net exporter of crop protection chemicals Because of the government?s initiatives for Atmanirbhar Bharat, Make In India and Go Global programmes. Various organisations and foundations are working towards educating farmers on effective and timely use of crop protection products to enhance yield and profits. The central government is likely to bring in PLI scheme for incentive-based agrochemicals use. The Indian crop protection chemicals market is projected to grow at 4.6% CAGR during 2022-27. The demand for crop protection will increase Because not in lieu of increasing food demands along with government support.

Source: India Crop Protection Chemicals Market Outlook, 2022-2027: Bayer CropScience Ltd., Syngenta, E.I. DuPont India takes Lead in Industry Among Others - ResearchAndMarkets. com - Fintech News

Source: India Crop Protection Chemicals Market 12022 - 271 Industry Share, Size, Growth - Mordor Intelligence

Seeds

The COVID-19 pandemic affected the seed industry, with the availability of quality seeds being the greatest challenge for farmers. The pandemic and the restrictions imposed by governments restricted the production, certification, and international trade of seeds, with serious consequences for farmers. Despite the various restrictions in the turnover of the seeds industry for 2021, vegetable seeds contributed the most with a 30% share, followed by cotton at 18%, maize at 13%, paddy at 10% and rest by other seeds.

There has been an increase in hybrid seed penetration in multiple crops in order to address the increasing food demand-supply gap in the country led by declining per capita arable land, poor crop productivity, etc. In India, hybrid seed penetration is high in cotton (90%), corn (60%), limited cereals, such as sorghum and pearl millet, and oilseeds, such as sunflower (hybridization 80%). However, penetration is still very low in major cereals, such as paddy and wheat (5%). Cotton hybridization is almost reaching saturation, as BT cotton is sown in over 90% of the cotton-producing area in the country. Hybridization in corn, paddy, and vegetables is estimated to drive future growth.

Substantial increases in productivity can be achieved even with diminishing land and water resources with the use of better quality seeds equipped with better traits. With intensive cultivation using hybrids, India?s average yields under open field conditions have been steadily increasing. The need for producing more from the decreasing per capita arable land to get higher returns can be possible with the use of high yielding varieties and hybrid varieties of seeds. This trend is encouraging farmers to shift their focus from conventional seed sources to packaged seeds that promise better returns.

The patenting process in India is not very vigorous, enabling companies to replicate better-performing seeds in the marketplace. In addition, after the discovery of a successful hybrid, seed multiplication needs many rounds of sowing. Therefore, the increasing government initiatives and investments by players are expected to drive the market. The Indian seed market is projected to record 6.8% CAGR during 2022-27.

Source: India Seed Sector Analysis Market : 2022 - 27 : Industry Share, Size, Growth - Mordor Intelligence

Environmental Science

According to World Health Organization (WHO) estimations, over 80% of the global population is at risk of one or more vector-borne disease such as dengue, malaria, zika, chikungunya, etc. Rising health concerns fuel the growth of vector control industry.

Rapid urbanization in India led to a significant rise in vector borne diseases such as malaria and dengue, escalating the demand for vector control chemicals. The coronavirus pandemic caused disruption in the supply chain and stopped the productionof vector controlchemicals. However, the focus has returned due to significant reduction in corona cases. India has a National Vector Borne Disease Control Program (NVBDCP), responsible for control and prevention of all these diseases. The vectors and the VBD control operations and preventions are implemented by the NVBDCP and National Centre for Disease Control (NCDC) at national level. Already, two diseases Guineaworm

(Dracunculiasis) and Polio have been successfully eradicated from India. WHO?s goal to reduce mortality due to vector-borne disease by at least 75% up to 2030 boosts the growth of the vector control market. Chemical method segment held the largest share among the various methods used for vector control with more than 30% share in 2019. The chemical method is preferred over biological and physical methods due to its effectiveness and ability to destroy vectors faster. Larviciding, indoor residual sprays, and space-spraying (fogging) are the most popular ways used for vector control in India. Recently, the health ministry, made it mandatory for the smart cities to have a vector-control component included in strategic planning for urban development. The Government is focusing on web-based reporting on vector-borne diseases and also working to make malaria treatment training mandatory for doctors and public health workers.

With most lockdown restrictions removed, Indian Pest Control Operators (PCO) have resumed their services and regained business stability to reach their pre-2020 performance levels. However, the industry?s inherent weakness continues to limit it, though the country?s economic growth presents a good opportunity for rapid and multifold expansion. With all service segments switching to digital mode of operations, customers now expect even PCOs to have digital processes and interactions. Digitisation replaces paper and enhances accuracy and business efficiency, leading to rapid growth without a PCO having to add employees in proportion to the business volume. PCOs try to dole out unique propositions to differentiate from competition by offering fast response time, ease of communication, effective pest treatments, results guarantee, solutions to pest problems others can?t solve, money-back guarantees, customer loyalty programs and expansion in complete home care. The PPM market presents good growth opportunities in both commercial and residential pest control segments.

Digital Farming

Agriculture, like every other industry or sector, is being digitalized at a fast pace. AloT (Agriculture Internet of Things), Artificial Intelligence (AI), Machine Learning, Block Chain, Big Data, Geographical Information Systems and Remote Sensing, Drones, Robots, and automated farm machinery are already being used in India.

These technologies have the potential to improve production, ensure quality, optimize resource use, lower farming expenses, and increase farm and farmer revenue. Recognizing the relevance of these new technologies in achieving the goal of doubling farmers? incomes, the Government is taking huge steps for future adoption of digital tech agriculture in India. In September 2021, the Digital Tech Agriculture Mission 2021-2025 was initiated to forward digital agriculture through pilot projects. The Digital Agriculture Mission 2021-2025 aims to support and accelerate projects based on new technologies, like AI, block chain, remote sensing and GIS technology and use of drones and robots.

3. Company Overview

Bayer CropScience Limited is a key player in the Indian agriculture industry. The Company?s operations include four key business areas: Crop Protection, Seeds & Traits, Environmental Science and Digital Farming.

• Crop Protection: The Company?s Crop Protection portfolio comprises a wide range of innovative chemical and biological pest management solutions. It also provides extensive customer service for modern and sustainable agriculture. Within this business segment, the Company focuses on Insecticides, Fungicides, Herbicides, and Seed Growth.

• Seeds & Traits: Through traditional and advanced breeding techniques, as well as research in biotechnology, the Company develops seeds and traits that provide farmers with new solutions. BCSL?s hybrid seeds make use of the natural genetic diversity within each crop family and can withstand environmental challenges like pests, disease, and drought while providing more choice for farmers. BCSL?s product portfolio consists of hybrid seeds for crops such as corn and paddy.

• Environmental Science: The Environmental Science business focuses on non-agricultural applications and aims to safeguard public health by protecting the spaces where people live, work, and play. It operates in the segments of Professional Pest Management and Vector Control.

• Digital Farming: This comprises software tools that integrate data from farm equipment, satellites, field sensors, irrigation systems, drones and other input sources and then analyze that data to empower farmers to make better decisions through data science and predictive analytics. With detailed, real-time assessments of growing conditions and crop health, Bayer?s digital tools such as FarmRiseTM and its Digital Prediction System support a sustainable, abundant harvest.

Transformative Initiatives for Indian Farmers

The Company has distinguished itself by leveraging its proven capabilities in innovation-driven solutions, sophisticated processes and technologies, world-class services, and superior business models. It continues to work closely with Indian farmers to help them surmount agricultural challenges. Several transformative initiatives have been undertaken by the Company to support Indian farmers. They include:

Supporting smallholder farmers

Agriculture is India?s largest employer with 140 Million smallholder farmers and an additional 100 Million people employed directly or indirectly in farming operations. Together, these 200 Million people represent more than 54 percent of India?s working population. Smallholder farmers own landholdings that are less than 2 hectares of land. Besides fragmented land, they grapple with limited access to natural resources, modern agricultural technologies, finance, credit, and market linkages. To ensure safe, affordable and enough food, it is important to tackle farmers? challenges around low productivity and income.

Better Life Farming: a multi-stakeholder partnership. As of 2022, more than 20 Million smallholder farmers across India were supported by Bayer?s agri-inputs, technologies, crop & farm advisory, and digital solutions. One of the key initiatives that have helped us reach out to smallholder farmers and create a conducive eco-system is the Better Life Farming (BLF) alliance, which works with partners across the agri-value chain to support smallholder farmers in developing economies to increase crop yields and farm incomes. The BLF alliance has global partners that include Bayer with its expertise in seeds, crop protection, and agronomy; IFC, the development finance institution for impact assessment; and Netafim for drip irrigation technologies. I

In India, the BLF alliance works with additional local partners including Yara Fertilisers and Fertis India Private Limited for soil and nutrient management, Netafim for drip irrigation technologies and Axis Bank for financing. Similarly, in smallholder markets in other developing countries, the BLF alliance works with strong local partners who can train farmers on good agricultural practices, financial literacy, and improved market linkages.

The Better Life Farming initiative has led to a doubling of crop yields and tripling of farm incomes among participating farmers while keeping an eye on water usage and integrated farm management. It has created price transparency in the marketplace, increased the bargaining power of smallholders and promoted clusters of rural agri-entrepreneurs. It has also created opportunities for women farmers to be integrated into mainstream farming operations and emerge as rural agri-entrepreneurs.

The BLF alliance?s agri-entrepreneurship model functions through Better Life Farming Centers run by local agri-entrepreneurs. At these centers, agri-entrepreneurs enable the transfer of technology to other smallholders on seeds, crop protection, crop nutrition, drip irrigation, mulching, etc. They also deliver services such as market linkages, access to inputs and crop advisory. Each center covers a group of 500 farmers from five to six nearby villages. These centers open up economic opportunities for smallholders by enabling knowledge and technology transfer on good agricultural practices (GAP) and delivering services such as market linkages, access to agri-inputs, financial solutions, and mechanization services as well as crop advisory.

Currently, over 1,300 Better Life Farming Centers are operational in India. By 2025, the Better Life Farming initiative aims to empower 2.5 Million smallholders in the Indian Subcontinent through access to modern agri-inputs and better public health. These smallholders will be served by five thousand agri-entrepreneurs across horticulture, corn, and rice crops. In states like Jharkhand, the BLF alliance has adopted a gender-smart approach by promoting women agri-entrepreneurs to serve women smallholder farmers.

Food Value Chain Partnership

Food Value Chain Partnership is an innovative business model developed by Bayer to serve the needs of the food industry. The concept was introduced globally in 2005 and in India in 2007. Globally, there are 365 Food Value Chain Partnerships across 39 countries in 64 different crops. Bayer?s Food Value Chain Partnerships focus on collaboration between farmers, processors, traders, and retailers to meet consumer demand for sustainable production of healthy, high-quality, and affordable food. With its Food Value Chain Partnerships in India, BCSL provides farmers with innovative crop protection products, seeds, and services, as well as advice on the optimal use of products and application technologies. It also helps farmers get certified and gain relevant knowledge and skills to successfully market their produce in local, regional, and international markets.

Project beneficiaries

• 75 Food Chain Partnerships across 365,000 acres and 16 crops, benefiting 90,000 farmers

• In 2021-22, Bayer conducted 29 BayG.A.P. training programs for 972 Indian farmers to help them learn good agricultural practices required for certification programs

• Our top five Food Chain Partners in India by volumes include: Reliance Fresh (fruits & vegetables), PepsiCo (potato), LT Foods (rice), Fortune (rice) & ITC (hot peppers)

Bayer Learning Center

In smallholder geographies, crop performance is held back due to low farmer awareness and limited access to quality agronomic support and advice. The majority of farmers depends on fellow farmers or channel partners for crop management advisory. Best practices and technologies don?t always reach farmers, which leads to low farm incomes and low returns on investment. To help meet farmer expectations and provide the right product and crop solutions at the right time, BCSL piloted a new market development concept of ‘Bayer Learning Centers? (BLC). The first such center was launched in June 2020 and 14 more BLCs were added across India throughout the year. Subsequently, 67 BLCs of solo and multi crops across India have been launched in FY 2021-22 to increase our footprint.

This initiative aims to provide seamless knowledge transfer, confidence and competency building for farmers as well as employees. The centers are designed to showcase product performance, technical positioning of innovations, crop system interventions, agronomy, etc. to internal stakeholders, influential farmers, Farm Producing Organizations (FPOs), Institutional Business and Channel partners. Academia & Research Associates from State Agriculture Universities and Officials from the Department of Agriculture have also Participated & appreciated Bayer?s effort in developing such platforms. The centers are also digitally-enabled to support live telecasting that can deliver consistent, high-quality communication compared to conventional methods such as in-house training, learning center visits etc. This had proven to be particularly beneficial and effective for knowledge transfer during the COVID-19 pandemic, which had made in-person visits and travel difficult.

Product Stewardship

Supporting our customers and partners in the safe handling of our seed and crop protection products is the cornerstone of our product stewardship strategy. Bayer markets Crop Protection products, seeds and services, which have been granted regulatory approval by the concerned Central and state authorities. All our crop protection products are safe for the operator and the environment when used in accordance with label instructions. We also observe the International Code of Conduct on Pesticide Management of the United Nations Food and Agriculture Organization (FAO). The principles of this code cover the entire life cycle of a product or technology, from its development to its application and beyond.

Our product stewardship measures also include displaying product information of highest mandated standards and transparency in line with the law of land for labelling of our products. In addition to product information, it also offers key information such as Direction for Use (DFU) that enables our customers to utilize our products in ways that generate maximum value for their enterprises including safety standards.

BCSL continues to offer regular trainings and awareness programs to help farmers identify and purchase authentic crop protection products in a developing digital ecosystem and to cater to the evolving needs of the farmers, in 2021, Bayer launched a digital agriculture platform "AgrowSmart" - One-Stop Agro Solution that delivers localized best in class crop advisory on seeds & traits, crop protection solutions and provides agronomic insights to both internal and external stakeholders in the parameterized form to support business and sustainability goals.

Bayer advisory service is utilized by farmers across the geographies of our operation. With the introduction of ‘Hello Bayer?, a centralized toll-free helpline, where farmers can reach out for agri-related queries, resolution and after-sales support, Bayer has supported more than 20 Million smallholder farmers across India for Bayer?s agri-inputs, technologies, crop & farm advisory and digital solutions.

Sahbhaagi (Advisor) is one of our new go-to-market approaches which we have introduced in India. Despite challenges such as COVID-19, we have successfully implemented the Sahbhaagi program across India. Sahbhaagis play a key role in connecting with smallholder growers for safe and responsible use of products and services and help us to register digitally enabled sales and generate grower transactional data and insights.

Supporting our customers and partners in the safe handling of our seed and crop protection products is a focus of our product stewardship. In this connection, we offer regular trainings and awareness programs to help farmers identify and purchase authentic crop protection products. Our training programs focus on the safe & responsible use of crop protection products and proper use of Personal Protection Equipment (PPE). Bayer Crop Science Limited is making PPEs available at the warehouses to be called in by the distributors and dealers to sell to farmers engaged in spray operations.

4. Financial and Operational Performance

Financial Performance including ratio analysis

In FY 2021-22, the Company registered Revenue from Operations of Rs 47,344 Million, compared to Rs 42,613 Million in the previous year, registering an overall revenue growth of 11%. Profit Before Exceptional Items & Tax stood at Rs 7,883 Million, compared to Rs 7,894 Million in the previous year.

Ratio Analysis

Ratio Formula Apr?21 - Mar?22 Apr?20 - Mar?21 Deviation
Debtors Turnover Ratio (times) [Revenue from Operations/Average Trade receivables] 5.4 5.8 -7%
Inventories Turnover Ratio (times) [COGS/Average Inventories] 1.9 2.1 -12%
Interest Coverage Ratio (times) [EBIT/Finance Cost] 62.1 63.7 -2%
Current Ratio (times) [Current Asset/Current Liability] 2.2 2.3 -4%
Debt Equity Ratio (times) [Debt/Shareholders Equity] - - -
Operating Profit Margin Ratio (%) [EBIT/Revenue from Operations] 16.9% 18.8% -10%
Net Profit Margin Ratio (%) [Profit After Tax/Revenue from Operations] 13.6% 11.6% 18%
Return on Net Worth (%) [Profit for the year (before exceptional item and after tax)/Net Worth] 23.8% 19.2% 24%

Operational Performance Crop Protection: We continue to strive for operational excellence, ensuring that we create demand for our portfolio and place products closer to the market and season and have optimum inventory in the channel. This not only affords us greater flexibility to react to market conditions and situations but also helps us in improving our collection efficiency. Last year some geographies experienced dry spells in between monsoons and our teams were able to react faster to cater to these changes in demand. Overall good monsoon also led to good crop protection demand in both,

Kharif and Rabi seasons. Crop Protection demand from key crops remained strong through Kharif with some challenges in horticulture in Rabi. Intermittent dry spells also presented a challenging situation for herbicides as a whole. Our focus on ‘Differentiated Portfolio? also bore fruit in identified segments.

In 2021-22, the Company commercially launched one new product in Crop Protection which is:

• Vayego: An insecticide, which gives broad-spectrum protection in rice and soybean crops

• Seeds & Traits: Our seeds & traits business benefited from successfully placing our hybrid seeds on time for the season. Commodity price-related challenges in corn and weather-related challenges in rice negatively affected acreages, and therefore our volumes were below the previous year. However, corn seed scripted a powerful comeback in spring. In 2021-22, the Company successfully launched the following new products in hybrid seeds:

• Dekalb 7204: Early maturity Kharif hybrid with higher yield and suitable for rainfed conditions in states such as Rajasthan and Madhya Pradesh

• Dekalb 8209: Medium maturity Kharif hybrid suitable for rainfed conditions in states such as Rajasthan, Madhya Pradesh, Himachal Pradesh and Jammu & Kashmir

• Dekalb 9217: Full maturity Rabi Hybrid with a higher yield, good standability and attractive grain colour in the states of Andhra Pradesh and Telangana

• Dekalb 9208: Full maturity Spring season hybrid with a higher yield, wider adaptability and good standability with attractive grain colour in Punjab and Uttar Pradesh

Environmental Science: 2021-22 marks an outstanding performance by ES India, and it continues to enjoy its position as the market leader in Professional Pest Control Management.

In 2021-22, the Company successfully launched Pest Expert 360?- a one-stop solution for all things ‘Pest?. The App has seen immense success and now boasts a rating of 4.8 and a family of 5,000+ members. The App has been designed keeping customer needs in mind and addresses all the needs of a Pest Control Operator. This is a big leap in our Digitisation journey, and in our vision to be Digitally forward.

5. Opportunities and Outlook

By 2050, the world will have 10 Billion people, with India accounting for 1.73 Billion (Source: United Nations). To feed India?s growing population, the yield per hectare needs to increase significantly especially keeping in mind the declining arable land in India. Further, India?s agricultural yield is far lower as compared to global averages. Extreme weather coupled with low penetration of high-yielding hybrid seeds, lack of awareness of modern agricultural technologies and inefficient use of agrochemicals are some of the factors behind the low yields. This presents a significant opportunity for the Company?s Crop Protection and Seeds & Traits business along with opportunities for expanding crop advisory and digital offerings.

Innovation in seeds, crop protection and digital farming solutions can go a long way in addressing the productivity problems affecting Indian agriculture. It will also help farmers get good commodity prices, encouraging them to spend on qualitative inputs for achieving higher yields. BCSL with its product offerings, distribution reach and a strong network of more than 4,500 field officers and strong value chain collaborations, is well-positioned to support Indian farmers.

Driving sustainable agriculture

While the population is increasing, arable land is decreasing, and farmers are grappling with limited natural resources and climate change. Extreme weather conditions such as floods, droughts and poor rainfall are lowering crop productivity and farmer incomes. This is especially detrimental to smallholder farmers who farm on less than two hectares of land and have limited access to resources and modern inputs and technologies.

The practice of sustainable agriculture can help ensure safe, affordable and enough food and overcome farmers? challenges around low productivity and income while conserving natural resources. India needs smarter ways to conserve its limited water supply and reduce the dependence on monsoons for a successful crop season. This means reviewing traditional agricultural practices and crop cultivation based on local ecological situations.

While measuring India?s success and growth in agriculture, we must focus not only on increased farm incomes but also on sustainability efforts to conserve water and soil, while increasing crop productivity with the limited land available for cultivation.

Conserving water and reducing emissions

Rice farming in India is more suited to states with better water availability, compared to states that have lower groundwater reserves and must rely on irrigation. If the land under rice cultivation in the North Indian states of Punjab and Haryana is diversified to include crops like corn and cotton, it will help to conserve water. To drive such crop switches competitively, farmers need reforms to the incentives and subsidy regimes. At the same time, the export competitiveness of rice has to be preserved by improving crop yields and quality. This requires the adoption of a holistic crop management system and driving more hybridization.

Strengthening supply and logistics infrastructure

The absence of a proper storage and processing infrastructure has prevented Indian farmers from getting the best prices for their produce. There is an urgent need to establish efficient farm-to-fork supply chains through public-private partnerships. Apart from that, deploying data analytics to forecast global production trends accurately will enable farmers to hedge their risk by diversifying crop production. These measures would ensure a steady and sufficient supply of diverse crops and would protect both consumers and farmers from price fluctuations.

6. Risks and Concerns

The Company has developed a comprehensive framework of robust mechanisms and processes to identify risks that may negatively impact its operations. It endeavours to review and identify threats and formulate mitigating measures to curtail them within set timeframes. It has well-placed risk monitoring systems for swift response to safeguard itself from the permanent loss of capital and ensure sustenance of operational performance.

7. Internal Control Systems

The Company has appropriate internal control systems for business processes with regards to its operations, financial reporting and compliance with applicable laws and regulations. The Audit Committee approves the Internal Audit Plan and internal audits are conducted at regular intervals across various locations and processes in line with the approved plan. Audit observations and follow-up actions are discussed by the Internal Audit team with the Management of the Company as well as the Audit Committee.

8. Cautionary Statement

The statements in the Management Discussion & Analysis, describing the Company?s objectives, expectations and forecasts may be forward-looking within the meaning of applicable securities laws and regulations. The actual results may differ from those expressed or implied, depending upon the economic and climatic conditions, government policies and other incidental factors.

For and on behalf of the Board of Directors
Pankaj Patel
Chairman
(DIN: 00131852)