Bharat Rasayan Ltd Management Discussions

INDIAN ECONOMY

India remains one of the fastest-growing major economies, demonstrating resilience amid a complex global environment. Preliminary estimates indicate continued growth momentum, supported by strong domestic demand and sustained government investments in infrastructure.

The Reserve Bank of India continues its calibrated approach towards inflation targeting while supporting growth. The economy faces headwinds from geopolitical uncertainties, climate variability, and global financial pressures, which require cautious monitoring.

Agriculture growth has stabilized, reflecting improved monsoon patterns and enhanced government support measures. The industrial and services sectors continue to drive economic expansion, propelled by digital transformation and increased integration into global value chains.

Exports of technology and professional services remain a key strength, benefiting from the global digitization trend and outsourcing demands. These factors, coupled with robust domestic consumption, position India favorably against the backdrop of global economic uncertainties.

The Governments focus on capital expenditure, infrastructure development, and policy reforms underpins a positive long-term growth outlook. Stakeholders remain watchful of evolving risks but are optimistic about Indias economic trajectory.

GLOBAL ECONOMY

The global economy demonstrated resilience in calendar year 2024, sustaining a growth rate of 3.3% despite challenges arising from geopolitical conflicts, trade tensions, and shifts in monetary policies. Advanced economies experienced modest expansion at 1.8%, while emerging markets and developing economies (EMDEs) outperformed with growth of 4.3%. The GDP of the United States and the European region grew by 2.8% and 0.9% respectively in CY 2024. Global headline inflation continued its downward trend, easing from 6.6% in 2023 to 5.7% in 2024. However, inflation dynamics varied regionally: advanced economies moved closer to their target inflation levels, whereas emerging markets grappled with persistent inflationary pressures driven by currency depreciation and ongoing supply chain disruptions.

Key factors that could accelerate global growth include faster easing of inflationary pressures, a more measured withdrawal of fiscal stimulus, a robust economic rebound in China, and transformative supply-side reforms driven by artificial intelligence. However, significant downside risks remain, such as potential spikes in commodity prices caused by geopolitical tensions and extreme weather events, persistent core inflation necessitating tighter monetary policies, slower-than-anticipated recovery in China, and challenges arising from fiscal consolidation efforts.

With easing inflationary pressures, major central banks began shifting away from restrictive monetary policies, initiating gradual interest rate cuts. At the same time, fiscal consolidation became a primary focus across economies, aimed at reducing elevated debt levels and strengthening financial buffers. Trade dynamics increasingly exhibited regionalization trends; however, global trade volumes remained resilient despite ongoing geopolitical uncertainties.

Recent developments in global trade policies, particularly the introduction of new tariffs, have posed significant challenges for businesses dependent on international supply chains. These measures have disrupted the seamless flow of goods and escalated tensions among major trade partners.

The agrochemical market consists of sales of chemical fertilizers, antibiotics, and plant hormones. Values in this market are factory gate values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

Herbicides segment is estimated to account for the largest share. Herbicides are widely used to effectively manage weeds at a cheap cost. They make up the main section of crop protection chemicals for most countries in all regions. Additionally, the use of Pesticides in agriculture has changed because of GMOs. Herbicide use has increased because of genetically modified (GM) crops that are herbicide resistant.

The main causes driving the worldwide herbicide market are changing climatic conditions, dwindling arable land, and rising food consumption. Integrated pest management is opening the door for pest control without endangering the environment, despite several regulatory norms limiting the use of Herbicides. This presents a fantastic opportunity for herbicide producers to capitalize on the market potential to produce green Herbicides, which are expanding more quickly.

Soil active herbicides also known as weed killers are herbicides that act on seeds, roots, or shoots of undesired plants, also known as weeds. Soil active herbicides are incorporated into the soil to control the growth of weeds and unwanted plants. Herbicides get rid of weeds that will otherwise compete for light, moisture, and nutrients with the crops, affecting the quality and quantity of produce. The main product types of soil active herbicides are synthetic herbicides, and bio-herbicides. Synthetic herbicides are made to mimic plant hormones affecting cell growth, development, and tropism and have the potential to influence plant disease by several mechanisms. These are used for cereals and grains, oilseeds and pulses, fruits and vegetables, and others in pre-plant, pre-emergence, and post-emergence uses.

The growth of the population and changing dietary preferences towards plant-based food are expected to drive the growth of the soil-active herbicides market going forward. The population is increasing due to an imbalance between births and deaths, lack of family planning, migration, and others. Plant- based food refers to food that is completely obtained from plants and has no dairy, or meat products. People in developed and developing countries are getting cautious about their health and maintaining a regular diet that includes plant-based food. The rise in population needs more production of food to feed which increases the use of herbicides and other natural or chemical fertilizer which gives higher yield. Thus, the growth of the population and changing dietary preferences towards plant-based food will drive the growth of the soil-active herbicides market.

INDIAN AGROCHEMICAL INDUSTRY

India continues to be one of the largest producers and exporters of agrochemicals, supported by a well-established manufacturing base and increasing demand from both domestic and international markets. The Indian agrochemical industry has demonstrated robust growth, registering a compound annual growth rate (CAGR) of 16% between FY 2021 and FY 2024. Looking ahead, the market is forecasted to expand from USD 9 billion in FY 2025 to USD 12 billion by FY 2030, growing at a CAGR of approximately 7%.

The rising focus on improving crop yields and ensuring food security has sustained strong demand for agrochemicals, including pesticides, herbicides, fungicides, and plant growth regulators. The sector is also witnessing evolving trends driven by regulatory changes, increasing export opportunities, and advancements in sustainable agricultural practices.

In India, pests, weeds, and diseases result in significant crop losses—estimated at 15-25% of potential yields. Enhancing crop productivity through effective pest control and weed management is critical for boosting agricultural output. These factors collectively drive the growing adoption of agrochemicals as a vital means to reduce losses and improve yields.

The market is highly competitive with multinationals having the advantage of proprietary molecules and domestic companies leveraging low-cost generics and accessing niche molecules through partnerships. It is estimated that India consumes more than 400 agrochemical formulations covering Insecticides, Fungicides and Herbicides. Combination products are gaining popularity in India as well, as it provides ease of use to farmers and cross resistance development, which help in extending the useful life of active ingredients. New formulation technologies supported by advancement in adjuvants is increasing effectiveness and safe handling of Crop protection products. India being a leading producer as well as consumer of Agri produce, needs to sustain Agricultural productivity to ensure food security of the growing population.

Crop protection chemicals are a type of pesticide that are used to protect crops against insects and pests. Crop protection chemicals are an important part of the chemical industry. Many crops would suffer significant losses if they did not exist. Plant diseases and pests have become more common because of changing environmental conditions. Also, climate fluctuations have a substantial impact on crop productivity.

The crop protection industry has been transforming over the years, with robust growth and changing crop mix trends and environmental regulations. Growing population, declining arable land, food security, trends of people shifting to vegetarian food and the need for augmented agricultural productivity are the significant factors driving the demand for higher agricultural output, thus boosting the growth of the crop protection industry globally. The market growth is dependent on pest attacks, crop yields, and agriculturists awareness levels and capacity to buy products depending on their availability of credit. Increasing demand for insecticides across the globe is also a major factor driving the market growth. Agriculture inputs play a decisive role in enhancing crop production. With arable land declining, production of crops can only be increased by using quality inputs through a scaled-up country-wide effort. Concerted efforts are being taken to transform agriculture, improve farm productivity and farmer prosperity, achieve food security and environmental sustainability.

Agrochemicals are chemicals that help boost crop productivity through prevention of destruction of crops by pests such as insects, weeds, fungus, etc. The global economy, in general, and Indian is facing a multitude of challenges such as to feed an ever growing population, reducing arable land bank and dealing with adverse climatic changes. Under such circumstances, the traditional methods of growing more crops are rendered inadequate. There is a growing acceptance to launch advanced agrochemical solutions to achieve higher field productivity.

The industry and policymakers are expected to work in the direction of bringing newer technologies, enhancing manufacturing infrastructure, and creating proper policy environment to help improve productivity as well as foreign investment in the country to increase the share of agrochemicals in the GDP of the country by utilizing the huge untapped market still available within India. The agrochemical sector is expected to emerge as a major global supply hub. To obtain a competitive edge, agrochemical companies will increasingly focus on incorporating next-generation formulations into their R&D capabilities and product mix.

It is projected that Indias agrochemicals business will grow more quickly because of the nation integrating farming practices and positive trends. The landmass can be utilized for agriculture, but because of the rising influence of urbanization, it is rapidly diminishing, which encourages farmers to use various agrochemicals to raise land productivity and maintain soil health.

India also plays a big part in the global supply chain, and the government has recognized the potential of agrochemicals as one of the champion pillars of its economy. Indias crop protection industry is increasingly making use of its R&D facilities as it advances to create better solutions that are safer, more efficient, and compliant with international standards.

The challenges for the domestic plays are compounding primarily on the back of a higher base of last year, coupled with higher inventory provisions amidst a falling raw material cost scenario and higher sales return (particularly in the insecticides grades, which, in turn, is likely to exert pressure on margins in the near term).

IMPACT OF CLIMATIC CHANGES ON INDIAN AGRICULTURAL PRODUCTION

Climate change poses significant challenges to agriculture in India, a country heavily reliant on its agrarian economy. With its diverse geography and climate, Indias agricultural sector is susceptible to the adverse effects of shifting weather patterns, rising temperatures, erratic rainfall, and extreme weather events. These changes disrupt traditional farming practices, jeopardize crop yields, threaten food

security, and exacerbate rural poverty. The impact of climate change on Indian agriculture is multifaceted, affecting crop productivity, water resources, soil health, and the livelihoods of millions of farmers. Addressing these challenges requires urgent adaptation and mitigation measures to build resilience and ensure the sustainability of Indias agricultural sector in the face of a changing climate.

Indias tropical location and relatively lower income levels make its agriculture sector more susceptible to the adverse effects of climate change. Rainfed agriculture, in particular, is at risk due to variability in rainfall and a reduction in the number of rainy days. The negative effects of climate change extend to crop yields across agro-ecological regions. Higher temperatures and altered water availability adversely affect rainfed agriculture, potentially leading to a decline of up to 25% in yields of major crops. Beyond crop yields, climate change influences soil fertility, pest infestation patterns, and water availability. These factors collectively impact not only crops but also animal husbandry and fisheries, further challenging the resilience of the agricultural sector.

Climate change is primarily attributed to disproportionately high cumulative emissions, both historical and high per capita annual emissions of greenhouse gases (GHGs) of the developed countries. Government of India is aware about the impact of climate change on agriculture and farmers lives. Extensive field and simulation studies were carried out in agriculture by the network centres located in different parts of the country. The climate change impact assessment was carried out using the crop simulation models by incorporating the projected climates of 2050 & 2080. In absence of adoption of adaptation measures, rainfed rice yields in India are projected to reduce by 20% in 2050 and 47% in 2080 scenarios while, irrigated rice yields are projected to reduce by 3.5% in 2050 and 5% in 2080 scenarios. Climate change is projected to reduce wheat yield by 19.3% in 2050 and 40% in 2080 scenarios towards the end of the century with significant spatial and temporal variations. Climate change is projected to reduce the kharif maize yields by 18% and 23% in 2050 and 2080 scenarios, respectively. Climate change reduces crop yields and lower nutrition quality of produce. Extreme events like droughts affect the food and nutrient consumption, and its impact on farmers.

Unseasonal rains, increase in number and intensity of tropical storms, prolonged drought conditions, prolonged heat conditions etc. impacted the normal life functions of many communities/countries. Climate change not only impacts agriculture sector but all the possible areas also. Various reports suggest that climate change will affect the quality and quantity of various crops. In serious situation this can also affect the food security of concerned region. It is also reported that impact of climate change will not be same for every sector and region. The possible effects would be high in tropical regions as compared to temperate regions. So, proper plans should be made according to the area. As far as India is concerned, it will face great challenge due to climate change. Most of the agriculture is dependent on monsoon rains.

The warmer and humid climate created due to climate change is creating more horizons for pest infestations. Those climate-resilient technologies that are technically sound and economically viable must be framed using an interdisciplinary approach to mitigate climate change. Climate change has the potential to increase the pest population and its migration, which can have an adverse impact on agricultural yields and even viability, as the pest population depends mainly on abiotic factors such as humidity and temperature.

The incidences of hailstorms, cyclones and flashfloods have been increased and have great impact on agriculture. These challenges have potential to limiting the income of farmers in the country. Climate smart agriculture should be adopted to minimize the effect of agricultural practices on the environment. Crop rotation, minimal tillage, integrated approach for minimizing use of chemicals and natural resources, livestock waste management etc. are some of the practices to be adopted widely. Integrating different fields of agriculture for using by-products and efficient work will definitely help in reducing some of the potential effects on environment. Development of relevant irrigation infrastructure will also help in reducing the effect of possible global warming.

OPPORTUNITIES AND OUTLOOK

The agrochemical industry is actively collaborating with the Government to secure necessary policy support and further organize agricultural activities. Recent transformative agricultural reforms are expected to accelerate the adoption of advanced technologies across the entire agriculture value chain. This will enhance both the quantity and quality of agricultural produce, creating significant growth opportunities in seeds, crop protection, and crop nutrition segments.

Demand for pesticides remains robust, with herbicides continuing to dominate the market, followed closely by fungicides. India is poised to benefit substantially from the global shift towards the China plus one sourcing strategy adopted by many companies. This trend is anticipated to provide strong momentum to the countrys crop protection sector.

The industry is working closely with government agencies to build an enabling ecosystem, positioning India as a future global agrochemical powerhouse.

MEASURES TAKEN BY THE ENTITY FOR SAFE AND HEALTHY WORK PLACE

Various safety measure taken at factory site

1. Work permit system	6. Close loop sampling for exposure control
2. Various training	7. Close loop charging system
3. Implementation of Process control	8. PSV, RD at critical equipment
4. Alarm	9. Providing job specific PPEs
5. Parcial PLC control

WASTE MANAGEMENT PRACTICES ADOPTED

Dedicated HAZ Waste storage areas for organic, inorganic, contaminated plastic and liners, used oil, spent solvents, e-waste, bio-waste are in place.

Disposal process is through Manifest generation and disposal to authorized disposer with appropriate MOU in place. Ensuring generated waste disposal before 90 days of its actual generation, Ensuring generated HAZ waste is within consented limits. TSDF vehicle meant to transport HZW waste to be equipped with GPS tracker for tracking the vehicles location during transit.

EFFLUENT MANAGEMENT

We have installed effluent treatment plant. All effluents generated at plant are segregated into hazardous and non-hazardous categories and they are effectively treated, recycled, and reused, wherever possible. RESEARCH & DEVELOPMENT

Being actively engaged in product and process development activities across various segments of its businesses, Research & Development (R&D) is an integral part of the Companys operations. We have dedicated R&D plant at Bahadurgarh, Haryana is certified by the Ministry of Science and Technology, Government of India with pilot plant having a qualified team. We also have R&D Plant at Dahej, Gujarat having NABL Certification from National Accreditation Board for Laboratories as a certified research lab, alongwith Pilot plant. Both the plants are working round the clock working on new chemistries. QUALITY

In addition to ISO 9001:2015 for Quality Management, the professional commitments of high order have earned the rating of ISO 14001:2015 for Environment Management System and also ISO 45001:2018 Certification for Occupational Health & Safety norms. The Company is also registered with global mercantile data compiler and rating agency Dun & Bradstreet.

BUSINESS PERFORMANCE

Your Company has highly qualified and dedicated team of professionals in various work profile to focus on quality improvement in existing products, marketing the products to prevailing customers and exploring new domestic and overseas customers for the Company. Your Company achieved a turnover of ?1,199.02 crores registering a growth of about 12.53% over previous year turnover of ?1,065.52 crores and earned a Profit before Tax (PBT) of ?169.19 crores and Profit after Tax (PAT) of ?125.10 crores.

Apart from loyal customer base that the Company is enjoying since last several years now, many newer domestic as well as overseas customers are added to the portfolio of the Company during the year & same is expecting to increase in near future due to Companys commitment of supplying high quality product in a time bound manner.

Moving ahead, the Company remains poised to implement key initiatives across functions to enable itself to face market challenges and leverage the emerging opportunities. It remains focused on improving revenue growth and profitability, driven by high growth segments such as seeds and nutrients.

The Company foresees huge untapped growth potential for Indias chemical industry and strives to bank on the growth opportunities by remaining committed to maximize its return on investment and create value for its esteemed stakeholders.

EXPENSES

The Companys total expenses increased by 7.71% from ?956.11 crores in FY 2023-24 to ?1,029.83 crores in FY 2024-25. Major expense items of the Company comprise cost of material consumed, power and electricity, freight & forwarding outward, employee benefits expenses, depreciation and amortisation expenses and finance costs.

RISKS AND CONCERNS

Risk management comprises all the organizational rules and actions for early identification of risks while doing business and the management of such risks along with identification of opportunities.

Despite the strong growth drivers, Indian agrochemicals industry faces challenges in terms of low awareness among large number of end users spread across the geography. Managing inventory and distribution costs is a challenge for the industry players in the wake of volatility in business environment.

The agrochemical industry is highly dependent on weather conditions. The uneven rainfalls affect the overall business.

The changes and fluctuations in raw material prices due geopolitical tensions, supply chain disruptions, inflation etc. can be a challenge to growth of the Company.

The performance of the crop protection industry and other agri-inputs is dependent on monsoons, pest and disease incidences on crops. As this years monsoon failure has shown, major fluctuations in total rainfall and its distribution affect the crop acreages and overall productivity and have a direct correlation with sales. Agrochemical companies face issues due to seasonal nature of demand, unpredictability of pest attacks and high dependence on monsoons.

Compliance to growing regulatory norms is a continuing requirement and could lead to delays in obtaining necessary approvals. Changes in guidelines or policies in various geographies may also lead to sudden disruption of business in specified products.

The Companys Internal Audit department plays a critical role in coordinating with various department heads to ensure strict adherence to processes established for key business risk identification. It recommends corrective actions to improve the Companys processes pertaining to risk identification and risk handling and ensures adequate mitigating measures are in place. The Company continuously reviews emerging risks such as global consolidation in the crop protection industry, regulatory changes and a probable ban on select active ingredients. These risks are also opening up new opportunities for the Company to grow and it continues to focus on developing novel, effective and compliant products and formulations to tap these emerging opportunities.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has created internal control systems which are commensurate with the size, scale and complexity of its operations. The Company has also identified entity level controls for the organization, covering integrity and ethical values, adequacy of audit and control mechanisms and effectiveness of

internal and external communication, thereby strengthening the internal controls systems and processes with clear documentation on key control points. The internal controls are formulated and implemented by the management with an objective to achieve efficiency in operations, optimum utilization of resources and effective monitoring and compliance with applicable laws.

The Internal Audit team is entrusted with the responsibility of overseeing internal financial processes, policies and providing recommendations for effective internal controls. Implementing these robust internal controls upholds compliance with the Companys adopted policies and procedures, thereby fostering seamless and efficient operations. These internal controls play a pivotal role in safeguarding assets, detecting and preventing instances of fraud or errors, and ensuring the accuracy and completeness of accounting and financial records. Furthermore, they contribute to the timely preparation of transparent, comprehensive, and accurate financial information and statements, aligning with the prescribed accounting standards and principles.

HUMAN RESOURCES DEVELOPMENT

The Company invested in a strong workforce and working environment to report sustainable growth, reflected in the continuous improvement in operating processes and new product introduction. The Company believes in a performance-driven culture.

The Company organized training programmes based on emerging requirements, covering technical, behavioral, customer orientation, safety, code of ethics, product training and other needs. The Company continued to recruit skilled scientific, technical and managerial personnel.

CAUTIONARY STATEMENT

Certain Statements made in this report relating to Companys objectives, outlook, future plans etc. may constitute "forward looking statement" within the meaning of applicable laws and regulations. Actual performance may differ materially from such estimates or projections, whether express or implied. Important factors that could make a difference to the Companys operations; include Government Regulations, Tax regimes, Economic developments within India and countries in which the company conducts business and other allied factors.