Bayer CropScience Ltd Management Discussions

1. Overview of Indian Agriculture

India has a geographical area of 328.73 Million hectares (m ha), spread over 15 Himatnagar-climatic regions. Indian agriculture sector is the bedrock of the nations economy, constituting ~18%¹ of Indias GVA in FY 2023-24. Despite global headwinds like the health crisis and variability in climate conditions, the sector has demonstrated remarkable tenacity and resilience, contributing significantly to Indias economic recovery and development. India has the second-largest agricultural land in the world and provides livelihood to ~58% of the total population. With the worlds largest cattle herd (buffaloes), India is the largest milk producer in the world. Also, it has the largest area planted for wheat, rice, and cotton, and is the largest producer of pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, and sugar. For India to become a fully industrialised and developed nation, agriculture is an essential component.

The Governmentinvestment inhas given priority to over 10 Crore small farmers in the countrys agricultural policy and schemes. With increased investments in agricultural infrastructure such as irrigation facilities, warehousing, and cold storage, it is expected that the agriculture sector will reap benefits in the next few years. The popularity of genetically-modified crops will likely improve the yield for Indian farmers. India is striving to become self-sufficient years led by the concerted effort of scientists to get early maturing varieties of pulses and the increase in minimum support price.

Indias agricultural GDP grew by only 0.7%¹ in 2023-24, down from 4.7% in 2022-23, as global headwinds such as the Red Sea crisis and Ukraine conflict hit exports.

During April-February 2023-24 period, agricultural exports declined 8.8% to US$ 43.7 billion², due to various factors including the Red Sea crisis, the

Russia-Ukraine conflict, and export restrictions on key commodities like rice, wheat, sugar, and onions to meet domestic requirements. Though the government is unlikely to lift the ban on exports of staples due to risk of food inflation, the agri-export strategy is being re-worked. As part of its plan to boost exports, the government has identified 20 agricultural products including mangoes, banana, ghee, buffalo meat and alcoholic beverages, with high export potential in markets such as United States, Europe and Japan. The Government has adopted and implemented several policies, reforms, developmental programmes and schemes for improving the agricultural growth prospects and incomes of the farmers. Supplementary income transfers under PM-KISAN yojna, increase in Minimum Support Price (MSP) for all kharif & rabi crops ensuring a minimum of 50% of profit margin on the cost of production, crop insurance under Pradhan Mantri Fasal Bima Yojna (PMFBY), better access to irrigation under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Agri Infrastructure Fund (AIF), new procurement policy under PM-AASHA, Kisan Credit Cards (KCC), promotion of Farmer Producer Organisations (FPOs), and National Mission for Sustainable Agriculture (NMSA) are some such schemes.

Significant agricultural infrastructure such as irrigation facilities, warehousing and cold storage, growing use of genetically-modified crops, growing awareness of use of agrochemicals and technological advancements are re-shaping the Indian agricultural market. These developments are aiding in increasing agricultural production. Technologies like robotics, temperature and moisture sensors, aerial images, and GPS technology are making farms more productive, efficient, safe, and environmentally sustainable.

Government support

Led by strong push from the government through numerous policies and schemes, the government has played a crucial role in providing financial support to farmers, alleviating their hardships and enabling them to sustain their families while contributing to the nations welfare. Policies such as Pradhan Mantri Kisan Maandhan Yojana (PM-KMY), Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), and PMFBY, dedicated for the well-being of farmers have been instrumental in offering financial and income assistance to farmers.

PMFBY is the largest crop insurance scheme in the world in terms of farmer enrolments as well as the third largest scheme in the world in terms of insurance premiums. Every year, crop insurance is given to

4 Crore farmers under PMFBY³. Under PM-KISAN SAMMAN Yojana³, direct financial assistance is provided to 11.8 Crore farmers, including marginal and small farmers.

Since the inception of the AIF³, Rs 35,262 Crore have been sanctioned for 48,352 projects. Major projects sanctioned under AIF include 11,165 warehouses, 10,307 primary processing units, 10,948 custom hiring centres, 2,420 sorting & grading units, 1,486 cold store projects, 169 assaying units and around 11,857 other kinds of post-harvest management projects and community farming assets.

Soil health cards provide farmers with the nutrient status of their soil and its composition. Till December 19, 2023³, 23.58 Crore soil health cards have been distributed to farmers.

The introduction of 100% neem-coated urea has led to substantial rise in urea production.

Under Paramparagat Krishi Vikas Yojana³, 37,364 clusters (20 ha each) have been formed, 8.13 lakh ha area covered (including LAC) and 16.19 lakh farmers have benefited.

As of January 31, 2024³, 7,950 FPOs have been registered. Equity Grant of Rs 142.6 Crore has been released to 3,183 FPOs. Credit guarantee cover of

Rs 246 Crore has been issued to 1,101 FPOs.

From within the funds of Sub-Mission on Agricultural Mechanisation (SMAM)³, Rs 141.41 Crore have been released towards Kisan drone promotion, which includes purchase of 317 Drones for their demonstration in 79,070 hectares of land and supply of 527 drones to the farmers on subsidy.

As of January 31, 2024³, 1.77 Crore farmers and 2.53 Lakh traders have been registered on e-NAM portal. The governments Kisan Rail project is proving beneficial to farmers. Till February 28, 2023³, 2,359 services on 167 routes have been operated.

In the Interim Budget 2024-2025⁴, several initiatives were undertaken aimed at cultivating a more robust and sustainable agricultural ecosystem:

• Rs 1.27 Lakh Crore allocated to the Ministry of Agriculture. Of this, the Department of Agriculture is allocated Rs 1.17 Lakh Crore, and the Department of Agricultural Research and Education (DARE)

Rs 9.9 Crore

• The agriculture credit target has been raised to

Rs 20 Lakh Crore

• Allocation continued for the Agriculture Accelerator Fund

• Allocation for the PM Kisan Samman Nidhi is unchanged at Rs 60,000 Crore to provide direct financial help to 11.8 Crore marginal and small farmers

• Continued push for the Pradhan Mantri Fasal Bima Yojana (PMFBY) to provide security to 4 Crore farmers against unforeseen events like adverse weather conditions

• Plans to integrate 1,361 mandis under e-NAM and increase trading volumes to Rs 3 Lakh Crore, serving 1.8 Crore farmers

• Plans to promote public and private investments in aggregation, procurement, modern storage along with branding and marketing under PM-Formalisation of Micro Food Processing Enterprises scheme

• Launched the Atmanirbhar Oil Seeds Abhiyan for self-sufficiency and food security

• Proposed the adoption of Nano DAP across all climatic zones as a cost-effective and efficient alternative to traditional DAP to help reduce import dependence

• The Animal Husbandry Infrastructure Development Fund within the Infrastructure Development Fund (IDF) was allocated Rs 29,610 Crore until 2025-2026 to encourage investments in areas like dairy processing, product diversification, breed multiplication farms, animal feed plants, waste management, and the setting up of veterinary drug and vaccine production plants

• Plan to formulate a comprehensive Dairy Development programme to empower dairy farmers and strengthen the sector

Other than the Budget, government initiatives during the year include:

• Government set up a special fund called the Food Processing Fund (FPF) of approximately US$ 265 Million in the National Bank for Agriculture and Rural Development (NABARD) for extending affordable credit to designated food parks and food processing enterprises in the designated food parks

• In October 2023, the President of India launched the Fourth Krishi Roadmap of Bihar

• In November 2023, India signed deals to export 5,00,000 tonnes of new season basmati rice in Europe and the Middle East

• In December 2023, NBCC signed an MoU with the National Cooperative Development Cooperation (NCDC) and NABARD for the construction of (1,469-grain storage units) the worlds largest grain storage plan in the cooperative sector

• In December 2023, NITI Aayog and IFPRI signed a Statement of Intent to strengthen policy frameworks for agricultural transformation and rural development

Foodgrain production in 2022-23⁵

According to the Second Advance Estimate of production of oilseeds and commercial crops for 2023-24, total foodgrain production in India (excluding the summer crop) is estimated at 309.35 challenges resulting Million tonnes (MT), as compared to 329.69 MT in 2022-23 which includes summer crop of 16.14 MT. Production of rice, corn, and other coarse grains is expected to be lower than the previous year, while wheat and barley production is estimated higher at new record levels.

2. Industry Overview

Impact of monsoon⁶

In India, rainfall over the country as a whole during monsoon season (June-September) 2023 was 94% of its long period average (LPA). Seasonal rainfalls over Northwest India, Central India, South Peninsula and Northeast (NE) India were 101%, 100%, 92% and 82% of respective LPA. The southwest monsoon seasonal (June to September) rainfall over the monsoon core zone, consisting of most of the rainfed agriculture regions in the country, received 101% of

LPA classified as normal (94-106% of LPA). Out of the total 36 meteorological subdivisions, 3 subdivisions constituting 9% of the total area of the country received excess rainfall, 26 subdivisions received normal rainfall (73% of the total area) and 7 subdivisions (18% of the total area) received deficient season rainfall. The 7 Meteorological subdivisions which got deficient rainfall are Nagaland, Manipur, Mizoram & Tripura (NMMT), Gangetic West Bengal, Jharkhand, Bihar, East UP, South interior Karnataka and Kerala. Monthly rainfall over the country as a whole was 91% of LPA in June, 113% of LPA in July, 64% of LPA in August, and 113%of LPA in September. Southwest monsoon current advanced to the south Andaman Sea and Nicobar Islands in time. However, further advance thereafter was sluggish. It set in over Kerala 7 days behind the normal date and covered the entire country 6 days ahead of normal date. Monsoon withdrawal commenced from west Rajasthan with a delay of 8 days. The forecast for monsoon onset over Kerala for this year was correct, which is the seventeenth consecutive correct forecast for this event except the year 2015 since commencement. The forecasts for the rainfall over the country during the season as a whole could be predicted well as the realised rainfall is 94% of LPA against the forecast of 96% ? 4%.

Crop Protection

With diverse climatic conditions, India enjoys favourable conditions for the cultivation of a wide range of crops. However, weeds, insect pests, and fungal diseases pose significant in substantial annual crop losses. Weeds account for 45% of the total annual crop losses⁷, insects 35%, and fungal diseases 20%. The growing incidence of crop infestation has resulted in growth of crop protection market. Farmers reply heavily on pesticides as their primary tool to combat crop losses. To counter losses in production due to weeds, majorly impacting crops such as rice, wheat, and maize, farmers prefer herbicides over manual weeding as it is costlier due to labour shortages and rising wages. It is estimated that annual crop losses could double without the use of crop protection products. Food crops are prone to infestation from 30,000 species of weeds, 3,000 species of nematodes and 10,000 species of plant-eating insects. This presents a strong case for the use of crop protection chemicals in farms to enhance yield.

The crop protection chemicals market in India was estimated at US$ 2.3 billion in 2022⁸, driven by factors such as increasing population, rising food demand, and the need to protect crops from pests, diseases, and weeds. Insecticides are the most used crop protection chemicals, with a market share of 72.5% in 2022, followed by herbicides and fungicides, with a market share of 13.4% and 8.9%, respectively.

While on the one hand, Indian population is increasing, on the other hand, the per capita size of land is steadily decreasing. This makes the use of pesticides mandatory to improve yields. Strong domestic consumption and growing exports, encourage farmers to use crop protection chemicals. The growth prospects for the Indian crop protection industry stems from both strong domestic consumption and export opportunities. With the use of proper strategies and sophisticated technologies the market holds humongous growth opportunities. Globally, India is ranked as the fourth-largest manufacturer of agrochemicals after the United States, Japan, and China and has emerged as the 13^th largest exporter of pesticides. The domestic pesticide consumption in India is still comparatively very low at 0.60 Kg/ha as compared to UK at 5 Kg/ha and Japan at 12 Kg/ha.

Seeds

The agricultural sector is highly dependent on the availability and quality of seeds for a productive harvest. It is estimated that the quality of seeds influences the total production to a large extent depending upon the crop. The seed quality is estimated to contribute 15-20% to total production and it can be further raised up to 45% with efficient management of other inputs. Rising penetration of the organised sector, growth in contract farming, mechanisation of agriculture, easy funding for farmers, rise of exports, use of agrochemicals and R&D investments, etc. are aiding the growth of the seed industry in India.

Growing awareness of genetically-modified seeds and its benefits in productivity has played a crucial in driving growth of the seed industry in India.

Steadily the use of outmoded open-pollinated varieties of seeds is getting replaced by hybrid seeds. The main reason for this change is the higher pest-resistant properties of these seeds leading to improved productivity and reduction in cost to farmers.

Farmers are increasingly shifting from conventional seed sources to packaged seeds with an aim to improve yields. Hybrid seeds dominated over open-pollinated varieties, accounting for US$ 2.3 Billion, in 2022. (Source: https://www.mordorintelligence.com/industry- reports/indian-seed-sector-analysis) As per IMARC⁹, the size of the Indian seed industry reached US$ 7 Billion in 2023 led by the commercialisation of agriculture and growing awareness among farmers. The introduction of advanced digital technologies to help farmers overcome the negative impacts of pests, climate, and other environmental factors is expected to help the market grow. The market is estimated to reach US$ 18.3 Billion by 2032 at 10.9% CAGR during 2024-2032. Multiple government initiatives like Integrated Scheme for Oilseeds, Pulses, Oil Palm, and Maize, and Rashtriya Krishi Vikas Yojana, etc, to encourage farmers and breeders bode well for the future of the seed market in India.

Digital Farming

Collaboration between governments, industry, philanthropists, innovators and farmers is imperative to create national frameworks for implementing digital agriculture programmes to be able to ensure food security and sustainability. Technology in agriculture is primarily aimed at collecting information and making farming more efficient, productive and predictable.

The government has taken several major steps to aid and enhance the agriculture sector with proven farming technologies and supportive policies. The National e-Governance Plan in Agriculture by the Ministry of Agriculture and Farmers Welfare strives to provide farmers with access to information and services related to smart farming. The government has launched the Pradhan Mantri Fasal Bima Yojana, to provide crop insurance to farmers to protect them against losses due to calamities, pests, and diseases.

Evolution of digital technology in farming is expected to help farmers to increase crop yields and enhance sustainability by reducing water consumption and the use of agrochemicals. Digital technologies, such as artificial intelligence (AI) and machine learning (ML), remote sensing, big data, block chain and IoT, are being increasingly adopted to transform agricultural value chains and modernise operations. The government undertakes several policies and initiatives to sensitise the farmers about the benefits of adoption of technology in farming.

The Digital Agriculture Mission 2021-2025 established in association with five corporates 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. Under this mission, an Agricultural Digital Infrastructure (ADI) solution has been developed that enhances farming and knowledge sharing. This ADI is likely to play a vital role in the data pool that will be created by the Department of Agriculture under the National Agri Stack. Similarly, the Jio Agri (JioKrishi) platform has been launched to digitise the agricultural ecosystem along the entire value chain by providing advisory to farmers.

DAM promotes the India Digital Ecosystem of

Agriculture (IDEA), farmers database, Unified Farmers

Service Interface (UFSI), funding to the States on the new technology (NeGPA), redesign of the Mahalanobis National Crop Forecast Centre (MNCFC), soil health, fertility, and profile mapping. Funding for digital agriculture initiatives utilising cutting-edge technologies, including AI/ML, the IoT, and blockchain is being provided to state governments under the NeGPA programme. Drone technologies, like use of spray drones for targeted application of pesticides, are increasingly being adopted. The government encourages agri-entrepreneurs and supports start-ups in the agriculture industry to encourage smart farming. National Agriculture Market (e-NAM) is a pan-India electronic trading portal that networks the existing Agricultural Produce Market Committee (APMC) mandis to create a unified national market for agricultural commodities. Digital services are provided to traders, farmers, Farmers Producer Organisations (FPO), and mandis through various modules of the e-NAM platform.

The Department of Agriculture & Cooperation, Ministry of Agriculture and Farmers Welfare has developed Kisan Suvidha, an omnibus mobile app to help farmers by quickly providing relevant information about weather, dealers, market prices, plant protection, agro advisories, soil health cards, cold storage and godowns, etc. The app is available in multiple Indian languages.

To improve agriculture infrastructure in the country, the government aims to provide debt finances facility for investment in viable projects for post-harvest management infrastructure and community farming assets through incentives and financial support through AIF.

The government is encouraging the adoption of smart farming practices through the application of technology and innovation in the agricultural sector. The Sub Mission on Agricultural Mechanisation, PM KISAN Scheme, integrated scheme for Agricultural Marketing schemes (AGMARKNET) etc., are all aimed at providing digital assistance to farmers and help them increase efficiency and productivity.

3. Company Overview

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

• Crop Protection: The Companys 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 focusses 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. BCSLs 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 choices for farmers. BCSLs product portfolio consists of hybrid seeds for crops such as corn and paddy.

Digital Farming: Modern farming method that uses technology to improve crop yield and efficiency while reducing waste and environmental impact. At the top end of the spectrum, it involves using various technologies such as remote sensing, IoT sensors,

GPS, drones, artificial intelligence, and data analytics to monitor and manage crop growth, soil quality, weather patterns, and other factors that affect crop production. Digital can also add value in market linkage, financial inclusion, access to farm machinery and labour and removing information silos. At Bayer, we are committed to bringing digital innovations at scale to benefit farmers in smallholder markets as well through FarmRiseTM and various other digital applications such as drones for spray services, etc.

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 overcome agricultural challenges. Several transformative initiatives have been undertaken by the Company to support Indian farmers. They include:

Supporting smallholder farmers

Agriculture is Indias 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% of Indias 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, market linkages and growing concerns of a shortage of labour. To ensure safe, affordable and enough food, it is important to tackle farmers challenges around low productivity and income.

BetterLifeFarming:amulti-stakeholderpartnership

As of 2023, more than 20 Million smallholder farmers across India were supported by Bayers agri-inputs, technologies, farm advisory, and digital solutions. One of the key programmes 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.

The Better Life Farming initiative has led to a doubling of crop yields, and a tripling of farm incomes among participating farmers while keeping an eye on water usage and integrated farm management. The initiative strongly aligns with the UN Sustainable Development Goals and strives to increase food security and alleviate poverty. It further promotes gender equality, sustainable agricultural practices and meaningful public-private partnerships.

The BLF alliances agri-entrepreneurship model functions through Better Life Farming Centres run by local agri-entrepreneurs. At these centres, 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 centre covers a group of 500 farmers from five to six nearby villages. These centres 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 mechanisation services as well as crop advisory.

Currently, over 2,000 Better Life Farming Centres are operational in India empowering over 115 women agri-entrepreneurs. By 2025, the Better Life Farming initiative aims to empower 2.0 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. The BLF alliance has also 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. Bayers 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

• 80 Food Chain Partnerships across 4,05,200 acres and 16 crops, benefiting 1,25,400 farmers

• In 2022-23, Bayer conducted 45 Bay G.A.P. training programmes for 1,400 Indian farmers to help them learn good agricultural practices required for certification

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, farm income or return on investment decreases due to inadequate crop performance. This is often due to a lack of appropriate agronomic advice, as most farmers depend on fellow farmers or channel partners for crop management advisory. To provide the right agronomic advice, BCSL piloted the Bayer Learning Centers (BLC) concept in 2020. Currently, there are over 37 BLCs established across India for single and multiple crops.

The centres are also digitally-enabled to support live telecasting that can deliver consistent, high-quality communication complementing the conventional methods such as in-house training, learning centre visits, etc. Through digital channels, we reached out to over 2.5 Lakh stakeholders.

This initiative aims to provide seamless knowledge transfer, confidence, and competency building for farmers as well as employees. The centres are designed to showcase product performance, technical positioning of innovations, crop system interventions, agronomy, etc. to internal stakeholders (Sales, Better Life Farming associates, Farmer advisors,

Bayer Gram), influential mers, Farmer Producer Organisations (FPOs), Institutional Businesses, and Channel partners. Academia & Research Associates from State Agriculture Universities and Officials from the Department of Agriculture have also Participated & appreciated Bayers effort in developing such platforms.

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 Organisation (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 the highest mandated standards and transparency in line with the law of land for labeling of our products. In addition to product information, it also offers key information such as Direction for Use (DFU) that enables our customers to utilise our products in ways that generate maximum value for their enterprises including safety standards. BCSL continues to offer regular training and awareness programmes 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 2023, over 3,00,000 farmers received trainings on how to use our products both effectively, to increase the yield and quality of their harvested goods, and also safely, with regard to human health and the environment. Bayer has launched a digital agriculture platform "AgrowSmart" – One-Stop Agro Solution that delivers localised best-in-class crop advisory on seeds & traits, crop protection solutions and provides agronomic insights to both internal and external stakeholders in the parameterised form to support business and sustainability goals. The crop protection products now have a QR code in each of the label to address counterfeiting issues.

Bayer advisory service is utilised by farmers across the geographies of our operation. With the introduction of ‘Hello Bayer, a centralised 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 Bayers 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. 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 training and awareness programmes to help farmers identify and purchase authentic crop protection products. Our training programmes focus on the safe & responsible use of crop protection products and the 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. Over 3.0 Million farmers were trained in the year 2023 alone by Bayer.

4. Financial and Operational Performance

Financial Performance including ratio analysis

In FY 2023-24, the Company registered Revenue from Operations of Rs 51,032 Million, compared to Rs 51,397

Million in the previous year. Profit Before Exceptional

Items & Tax stood at Rs 9,414 Million, compared to

Rs 8,863 Million in the previous year.

Ratio	Formula	Apr23 - Mar24	Apr22 - Mar23	Deviation (%)
Debtors Turnover Ratio (times)	[Revenue from Operations/Average Trade receivables]	5.3	5.2	2%
Inventories Turnover Ratio (times)	[COGS/Average Inventories]	1.7	1.7	-
Interest Coverage Ratio (times)	[EBIT/Finance Cost]	49.0	40.7	20%
Current Ratio (times)	[Current Asset/Current Liability]	2.4	2.2	12%
Debt Equity Ratio (times)	[Debt/Shareholders Equity]	N.A.	N.A.	-
Operating Profit Margin Ratio (%)	[EBIT/Revenue from Operations]	18.8%	17.7%	7%
Net Profit Margin Ratio (%)	[Profit After Tax#/Revenue from Operations] 14.5% 14.8% (2)%
Return on Net Worth (%)	[Profit for the year (before exceptional items and after tax)/Net Worth]	26.0%	25.0%	4%

# After exceptional items and tax

Operational Performance

Crop Protection: Our focus continues to be on liquidation which is driven by crafting customer-centric messages and creating brand awareness at scale amongst farmers. These efforts have delivered a modest growth in liquidation. Despite challenges such as higher material costs, our strategic focus on channel inventory has ensured sustained market outperformance. Further, this has helped us to be resilient to market conditions and drive the right product at the right time. Despite the challenges of a difficult monsoon season during the year, farmers could still optimise their investments because of our vast portfolio mix. We continued to cater to smallholder farmers through our ‘Differentiated Portfolio solutions. Seeds & Traits: Our Seed business kept growing because of higher customer acceptance, improved acreages and a few hybrid launches in Corn. We also saw a surge in demand for existing high-value delivering hybrids. Thus, the combination of new launches coupled with the success of existing hybrids helped in delivering favourable business outcomes. We were able to cater to the farmers need for a good seed brand that delivers a better ROI which was well supported by favourable commodity prices. Rice on the other hand managed to grow marginally owing to operational efficiencies, a couple of new launches and brand growth campaigns even while faced with delays in the arrival of monsoon.

In 2023-24, the Company successfully launched the following new products and hybrid seeds in Corn and Rice: Curbix Pro: Developed as a collaborative project with Crystal Crop Protection Limited, to tackle plant hoppers especially in paddy.

Acerbo: Broad spectrum fungicide for crops like chili, corn and paddy with a unique mixture of two separate active ingredients with different mode of action. DEKALB 9233: It is a Kharif season hybrid with good standability, high yield and having good grain colour. This is suitable for assured rainfall and rainfed conditions in geographies such as Karnataka.

DEKALB 9228: It is a Kharif corn hybrid with high yield potential, moderate in plant height and low cob placement for easy harvesting. It has big cylindrical cobs with more number of kernel rows. This is suitable for assured rainfall and rainfed conditions like Maharashtra.

Arize 6741: An early duration, extra-long slender grain hybrid that fits well in vegetable/potato & wheat crop rotation for the Uttar Pradesh market.

Arize 6585ST: An early duration long slender grain with excellent milling character especially for Gujarat and Jharkhand.

Arize 8433DT: A new generation hybrid with innovative dual trait technology (native trait) resistant to BPH & BLB well suited to conditions in the eastern as well as western states.

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 Indias growing population, the yield per hectare needs to increase significantly especially keeping in mind the declining arable land in India. Further, Indias 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 some of the factors behind the low yields. This presents a significant opportunity for the Companys 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 2,100 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, a shortage of labour 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 Indias 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. North Indian states like Punjab and Haryana are making a concerted effort to promote Direct Seeded

Rice cultivation and diversification of crops like corn and cotton, which will help conserve water. Incentives and subsidies are helpful in the adoption of such practices by farmers. 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 hybridisation. The Sustainable Direct-seeded Rice Cropping System is the need of the hour to address the multi-fold concerns of labour shortage, water conservation & efficient water management and emission reduction from rice cultivation.

Strengthening supply and logistics infrastructure

The absence of a proper storage and processing infrastructure especially closer to the fields 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 uctuations.

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 a 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 regard 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 Companys 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
Ahmedabad, May 24, 2024	(DIN: 00131852)