Bharat Rasayan Ltd Management Discussions.


The Indian economy is estimated to decline by 8% in FY 2020-21, the first year of contraction since 1980. Indias economic decline was sharper than other key economies due to strict and early lockdowns to control the spread of COVID-19. However, growth has continued to recover and was back in positive territory (+0.4%) in Q3 FY 2021 after a decline of 24.4% and 7.3% respectively in Q1 FY 2021 and Q2 FY 2021. India saw a V-shaped recovery as most consumption and industrial indicators were back in positive growth territory in the September-December quarter after being in deep negative in the June quarter. FDI and equity FII flows were strong, driving Indias forex reserves to an alltime high of US$580 billion by the end of FY 2020-21, against US$475 billion by the end of FY 2019-20. The Reserve Bank of India (RBI), and the central and state governments provided critical support to the economy during the crisis. The RBI maintained loose monetary policy, cutting repo rates by 115 bps during early CY 2020. To keep funding markets easy, the RBI maintained liquidity surplus through various monetary measures.


The global economy contracted by 3.3% in CY 2020, as all major economies barring China slipped into recession with COVID-induced lockdowns. Despite the steep global decline in CY 2020, global GDP decline was lower than initially feared primarily due to unprecedented monetary policy support from global central banks and fiscal stimulus from governments. The global economy is expected to see a rebound in 2021 with the International Monetary Fund (IMF) expecting 6% growth, with US stimulus and vaccine optimism leading to further opening up of the economies. The growth recovery is likely to be led by the US and China - the US is estimated to grow 6.4% in 2021 and China by 8.4%. Governments and Central Banks are expected to maintain supportive policies until the recovery is firmly underway. The strength of recovery will depend on vaccine roll-out.


Despite the decline, it continues to be the largest source of livelihood for about 58% of Indias population and its growth ensures inclusive economic growth of the country.

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, in particular, is facing a multitude of challenges such as to feed an evergrowing 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.

Agriculture which contributes to approx 16.5% of the GDP and provides employment to nearly half of the countrys population, plays an important role in the Indian economy. India is a leading farm producer as well as an exporter of many agro-commodities. Its agro-economy faces multiple challenges which is reflected in the relatively lower productivity compared to the advanced economies of the world. Science provides solutions to address some of these challenges and in turn, these provide opportunities for businesses involved in agriculture inputs.

In the past, the agriculture productivity enhancement happened mostly with intensive use of the land already under cropping aided by improved farming practices, irrigation, improved varieties, modern inputs, etc. These trends are expected to continue to ensure that supplies match the increasing demand for agricultural produce in the near future.


The Company continued upstocking raw material to avert production disruption due to potential supply chain issues. The Indian agrochemical industry largely depends on the key imported intermediates, particularly from China. Uncertainty of raw material supplies, logistical constraints, price fluctuations and the lockdown impacted the Companys operations in the earlier part of the year and higher prices towards the latter part of the year exerted pressure on the margins.


Climate change is a global threat to the food and nutritional security of the world. As greenhouse-gas emissions in the atmosphere are increasing, the temperature is also rising due to the greenhouse effect. The average global temperature is increasing continuously and is predicted to rise by 20C until ,

 2100, which would cause substantial economic losses at the global level. The concentration of CO2

which accounts for a major proportion of greenhouse gases, is increasing at an alarming rate, and has led to higher growth and plant productivity due to increased photosynthesis, but increased temperature offsets this effect as it leads to increased crop respiration rate and evapotranspiration, higher pest infestation, a shift in weed flora, and reduced crop duration. Climate change also affects the microbial population and their enzymatic activities in soil. Climate change is projected to have a deleterious impact on agricultural productivity. The raised temperature and altered precipitation are most likely to on plants. The warmer and humid climate created due to

 offset the positive impact of increased CO2

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.

During FY 2020-21, Indian agriculture experienced a normal monsoon which resulted in normal crop acreage in Kharif and increased acreage in Rabi due to better water availability.


In the midst of COVID-19, we concentrated on business continuity, making it safe for essential staff, such as factory workers and sales teams, to return to workplace. We did so with extremely strict protocols to protect everyones safety, such as protective equipment, social distancing regulations and frequent health checks, including on peoples mental health.

We seamlessly transitioned to 100% remote working for all our office-based employees. Each person needed the right equipment and systems to perform their roles and the Company provided the necessary support. We rolled out guidelines on working from home and our teams swiftly found their own rhythm and cadence of working effectively. People presence has been a key unlock to stabilising our operations. Our frontline leadership teams ensured this through focused interventions, dynamically adapting to the challenges.


The global agricultural input market is expanding rapidly on account of growing food demand from a world population that is estimated to reach 10 billion by 2050. The rising population, coupled with declining arable land, is significantly changing farming practices to achieve higher yield per acreage. Crop care and crop protection markets worldwide are adapting to these changing needs and playing an important role in improving farm productivity, environmental sustainability and farmer prosperity.


The industry is closely working with the Government for necessary policy support and on making agriculture activities even more organised. The transformative agriculture reforms enacted will lead to faster adoption of necessary technologies across the agriculture value chain and improve the quantity and quality of the agriculture produce providing growth opportunities to seeds, crop protection and crop nutrition.

India is projected to be a key beneficiary of the global move towards China plus one sourcing strategy of companies, which is expected to provide further momentum to Indias crop protection sector. Industry is collaborating with the Government in building an enabling ecosystem to make India an agrochemical powerhouse.


Crop protection chemicals play a major role in increasing agriculture productivity. They help in minimising plant diseases, weeds, and other pests that damage agriculture crops, and thus increasing and maintaining year-on-year crop yield. Around 25% of the global crop output is lost due to attacks by pests, weeds and diseases. India is the 4th largest producer of agrochemicals, after the US, Japan and China. In India, better timing and spatial distribution of rainfall, higher pest incidence, and steps by the Government to improve farm income are expected to increase the application of agrochemicals. The industry faces several challenges due to strict environmental regulations. Crop protection comprises of insecticides, fungicides, herbicides and bio-pesticides. Indias pesticides consumption is currently one of the lowest in the world among other economies.


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.


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.


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.


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 1099.13 crores registering a decline of about 10.78% over previous year turnover of 1231.87 crores and earned a Profit before Tax (PBT) of 215.95 crores and Profit after Tax (PAT) of 164.47crores. Apart from loyal customer base that the Company is enjoying since last several years now, many more new 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 Companys total expenses (excluding depreciation and finance cost) decreased by 13.69 % from

989.11 crores in FY 2019-20 to 853.74 crores in FY 2020-21. Major expense items of the Company comprise cost of material consumed, purchase of stock-in-trade, power and electricity, freight & forwarding outward, employee benefits expenses, depreciation and amortisation expenses and finance costs. Cost of materials consumed decreased by 15.98 % from 798.99 crores in FY 2019-20 to 663.79 crores in FY 2020-21 owing to increase in major raw material prices.

Power and Electricity expenses increased by 18.80 % from 24.08 crores in FY 2019-20 to 28.61 crores in FY 2020-21, largely due to increase in prices of utilities.

Employee benefit expenses increased by 15.75 % from 69.09 crores in FY 2019-20 to 79.97 crores in FY 2020-21 owing to increase coming from annual increment and new recruitment.

Finance costs decreased by 76.44 % from 15.62 crores in FY 2019-20 to 3.68 crores in FY 2020-21, subject to regrouping as per Ind-AS.


The COVID-19 outbreak with its disruptive effects on global manufacturing and trade would continue to pose challenges for the Companys operations in FY 2020-21, and it may affect offtake of the Companys products and exert pressures on its margins. However, following the Governments declaration of agriculture as an essential service, the Company has resumed its operations and does not foresee material impact on its business due to the relaxing of lockdown norms.

Risk management comprises all the organizational rules and actions for early identification of risks in the course of 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 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 co-ordinating 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.


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 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.


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.