Coromandel International Ltd Management Discussions

1. Global Economy

Despite the pace and magnitude with which monetary policy rates went up since 2022, global growth has remained resilient - the world avoided a recessionary event, the banking system remained largely robust, and major emerging market economies did not suffer sudden stops. Higher household spending and larger than expected government expenditure has supported the aggregate demand.

Economic growth was stronger than expected in 2023 in the United States (2.5%) and several major emerging market and developing economies (4.3%). Euro area displayed the smallest upside (0.4%) reflecting weaker consumer sentiment and lingering effect of high energy prices. Chinas economy (5.2%) was affected by the enduring downturn in its property sector. Overall, for the year 2023 global growth stood at 3.2%, making a strong recovery from 2.3% in 2022.

After the surge in 2020 through 2022, headline inflation for advanced economies neared its pre-pandemic level for the first time in late 2023. There was a steep correction in commodity prices in 2023, with decline experienced in all the major segments viz fuel, metal, fertilizer and food. Going forward, IMF forecasts global headline inflation to fall from 6.8% in 2023 to 5.9% and 4.5% in 2024 and 2025 respectively.

With around 64 countries—representing 49% of the combined global population—heading for elections in 2024, the year is expected to witness political uncertainties. IMF projects global growth at 3.2% in 2024 on account of greater-than-expected growth in United States and Europe. Growth in China is projected to slowdown from 5.2% in 2023 to 4.6% in 2024 as post pandemic boost to consumption and fiscal stimulus ease and weakness in property sector persists. Faster disinflation is expected to lead to further easing of financial conditions. However, the conflict in Gaza and Israel escalating into the wider region, marine trade disruption in the Red Sea and the ongoing war in Ukraine poses supply side risks and can impact food, energy, and transportation costs.

2. Indian Economy

During the year, the Indian economy continued to expand at an accelerated pace, supported by fixed investment and improving global environment. As per RBIs April24 forecast, Indias real GDP growth stood at 7.6% for FY24, led by growth in manufacturing and services sector. Domestic economic activity was supported by an upturn in the investment cycle on the back of the governments continued thrust on capital expenditure, higher capacity utilisation, underlying resilience of the services sector, double digit credit growth, and healthier corporate and bank balance sheets. Inflation during the year moderated as 250 basis point rate hike tightened the money supply in the market. External account continues to stay comfortable with healthy services exports and lower merchandise trade deficits. Current account deficit remains comfortable in 0-1% range and strong foreign capital inflows provide a good backdrop for Balance of Payments surplus. Indias forex reserve stands at a record USD 646 billion (as on March 29, 2024) and INR has emerged as one of the most stable emerging market currency.

With the recent events disrupting the global supply chains and inducing vulnerability to business activities, governments globally have started pursuing onshoring and friend-shoring of production. As part of this, India became signatory to The India-Middle East-Europe Economic Corridor (IMEC), which intends to develop an economic corridor that aims to bolster development by fostering connectivity and economic integration between Asia, the Persian Gulf and Europe.

The year witnessed organizations taking significant strides towards adoption of Artificial Intelligence specially in Gen AI space. The Indian government has also shown increasing interest and investment in AI technology, recognizing its potential to drive economic growth and solve societal challenges. Several initiatives have been launched to foster AI development in India including launch of National AI Portal, which serves as a central platform for AI-related resources, policies, and initiatives. Additionally, the government has established AI research institutes and centers of excellence to promote research and innovation in AI. However, challenges such as data privacy, skill shortages, and ethical concerns remain significant barriers to the widespread adoption of AI in India.

India continued its green energy transition towards meeting its CoP 26 commitments. As part of this, India is aggressively expanding its renewable energy capacity and the Government has implemented various policies and incentives to promote green energy development, including subsidies, tax incentives, and renewable purchase obligations for utilities. Further, policy support towards developing electric vehicle value chain has seen increased interest from the industry.

Going forward, growth in India is projected to remain strong at 7.0% in FY2024-25 (RBI), reflecting continuing strength in domestic demand and a rising working-age population. With forecast of a normal monsoon, RBI has forecasted the Indian economy to grow at 7.0%, with CPI inflation falling to 4.5%.

3. Global Agriculture

After the surge in agricultural commodity prices in the last two years, 2023 experienced moderation in food prices. World cereal output is expected to move up by 1.1% to 2841 million ton in 2023/24 agricultural season, with marginal improvement in Stock-to-use ratio (31%) and decline in wheat output being made up by increased production of rice and coarse cereals.

The Food and Agriculture Organizations (FAO) price index, which tracks the most globally traded food commodities, registered a decline by 14% in 2023, with major drop coming in oil, cereals and dairy segments. Sugar prices experienced significant surge during the year, mainly affected by lower global supplies after unusually dry weather damaged harvests in India and Thailand, the worlds second and third-largest exporters. However, with strong pace of production in Brazil and reduced use of sugarcane for ethanol production in India, the prices have started easing.

Demand for biofuel feedstocks is expected to grow slowly over the next ten years. Most additional biofuel use of agricultural crops is expected to occur in India and Indonesia, driven by increasing transport fuel use and higher biofuel blending requirements.

There has been an increasing shift from traditional to technology-driven sustainable farming practices, which marks a significant stride toward ensuring agricultures long-term viability while reducing its environmental impact. Consumers growing awareness of agricultural environmental impact and preference for green foods and new regulations such as the European Unions Farm to Fork (F2F) Strategy is driving this move.

4. Indian Agriculture

Agriculture is the bedrock of Indian economy, holding second-largest agricultural land globally and generating employment to about half of the countrys population. Over the years, India has emerged as a leading producer of key agricultural commodities, achieving self-sufficiency in food grain output and servicing the nutrient needs of the world. With a production of 330 million tons of food grains in FY23, India ranks third in the overall global output, and is a leading exporter of agricultural commodities. Supportive policy measures by the Central and state governments to improve crop productivity, income support through farm subsidies and infrastructure creation has helped in propping up the rural economy. However, some of the structural challenges like low average land holding, low level of mechanization and seasonal dependence on monsoon persists, which continues to impact the productivity of Indian farms.

With around 14 crore agricultural farm holdings, Indian farmers have shown significant resilience and stood strong in face of environmental vagaries and business disruptions. Agricultural year 2023-24 was a challenging period for Indian agriculture as spatial and temporal variability in monsoons impacted the crop sowing resulting in drop in food grain production. Further, depleted reservoir levels, especially in Coromandels key operating markets affected the agri inputs consumption. As per 2nd Advance Estimates of major agricultural crops, foodgrain production for 2023-24 is estimated at 309 million tonnes (without summer crop), 1.3% lower than the final estimates of last year. The production of horticultural crops continued to surpass foodgrain output at 355 million, though it is estimated to be lower by 1.2% compared to 2022-23 levels. Real Gross Value Added growth in Agriculture & allied sectors has remained close to last year levels, experiencing a marginal 0.1% uptick vis-a-vis 4.7% in 2022-23.

Given its importance to the nation, agriculture is closely watched by the policy makers and is recognized as a priority sector. During the year, Government continued to support the farming community through its various welfare schemes. As part of PM Kisan scheme, more than 11 crore farmers were benefitted through direct income transfers. The Government approved a Central Sector Scheme for providing drones to the Women Self Help Group (SHGs) for the period from 2024-25 to 2025-26 with an outlay of Rs. 1261 Crores. The scheme aims to provide drones to 15000 selected Women Self Help Group (SHGs) for providing rental services to farmers for application of fertilizers and pesticides. Under this Scheme, Central Financial Assistance @ 80% of the cost of drone and accessories/ancillary charges upto a maximum of Rs. 8.0 Lakhs will be provided to the women SHGs for purchase of drones.

As part of Pradhan Mantri Kisan Samruddhi Kendra (PM-KSK), ~2.6 lakh numbers of fertilizers retail stores have been converted into model retail outlets. These stores cater to a wide variety of needs of the farmers and provide agri-inputs (fertilizers, seeds, implements), testing facilities for soil, seeds, and fertilizers, generate awareness among farmers, provide information regarding various government schemes and ensure regular capacity building of retailers at block/district level outlets.

Indian agriculture is swiftly transforming with increased focus on resource efficiency and technology adoption. As part of this, significant impetus is being given towards promotion of nano technology-based products. India has become the first country globally to adopt nano technology in plant nutrients and its applications can also be extended in adjacent agri inputs segments. In addition, with India swiftly developing drone-based infrastructure, its application in agriculture for crop spraying and diagnostics can improve the efficiency and yield of the farms.

Going forward, the outlook for agriculture and rural activity appears positive, with good rabi wheat crop, higher summer crop sowings and forecast of above normal south-west monsoon. Strengthening of rural demand, improving informal sector activity and moderating inflationary pressure lends optimism to the agricultural business environment in the coming periods.

Overall, integrating innovation, technology, and supportive policies with environmental stewardship is key to meeting the challenges of food security, climate change, and sustainability in agriculture. Collaboration among governments, farmers, researchers, and industry stakeholders is essential to drive meaningful change and ensure a prosperous and resilient agricultural sector.

5. Business Performance Summary

FY2023-24 was a challenging year for the Company - sub normal monsoon and falling reservoir levels in its key operating markets resulted in lower crop sowings and agri inputs consumption. Further, the drastic correction in nutrient based subsidy rates in fertilisers during 2nd half of the year and high channel inventories in agrochemical markets impacted the overall business performance. Despite the tough scenario, the Company has shown a resilient performance and progressed well on its key operational parameters.

Thirteen new products were introduced in nutrients, crop protection and bio products segments. During the year, Coromandel commercially launched its inhouse developed & patented Nano DAP product, positioning it amongst the pioneers in introducing nano technology in agricultural applications. It is a unique liquid fertilizer product that contains nanoparticles of Diammonium Phosphate. The small size of Nano DAP (< 100 nm) and high surface area drives the easy absorption by plant leaves.

Company continued to strengthen its infrastructural and backward integration capabilities. During the year, it completed commissioning of 1650 ton per day (tpd) sulphuric acid plant at its fertilizer plant in Visakhapatnam. In addition, it has announced setting up of 650 tpd phosphoric acid capacity and 2000 tpd of sulphuric acid at Kakinada. With the investment in mining company in Senegal in 2022, Coromandel has fully strengthened its presence in the phosphatic nutrient value chain. As part of its sustainability initiative, the Company has setup a 6 million litre per day desalination plant at Vizag to meet its additional water requirements. The Plant treats sea water and utilizes it within its process, meeting majority of its captive requirement. Company also completed the construction of 1 crore capacity Nano DAP plant in Kakinada and has received the regulatory approvals in 2024. In crop protection, the business has initiated infrastructure activities at its newly acquired 50-acre land in Dahej Gujarat, where it plans to set up muti product plants.

In addition to strengthening its core business activities, the Company is focusing on new opportunities in adjacent and step out areas. As part of this approach, Coromandel acquired majority shareholding in Dhaksha Unmanned Systems Pvt. Ltd (Dhaksha), a Chennai based differentiated drone start-up. Dhaksha is a leading player in drone space in India, providing complete range of Unmanned Aerial Systems (UAS) technology solutions across Agriculture, Defence, Surveillance and Enterprise applications. Company also acquired 16.53% equity in XMachines, an AI based robotics start-up focusing on a variety of agricultural operations such as Planting, Weed control & Pest Control.

As part of its plan to enter into CDMO and Speciality Chemicals space, Coromandel has initiated multiple activities including product identification & development, site selection and customer discussions. It has also started servicing the specialty products to the customers from its existing facilities.

Coromandel continues to invest in digital empowerment and enabling data-centric decision-making capabilities. Company has maintained its focus on leveraging technology to achieve organizational efficiency and enhance customer experience. During the year, Coromandel through Digital Data Centers identified analytics use-case projects for process improvements in various areas. Dealer Portal and Sales Force tools were introduced to strengthen CRM practices.

In terms of financial performance, the Companys consolidated total income stands at Rs 22,290 crore, and net profit at Rs 1641 crore for the year. Net debt-equity ratio stands at zero as of 31st March 2024. Companys working capital situation remained strong and cash and cash equivalents at the end of the year stands at Rs 2859 crores.

The company continues to take progressive steps in its sustainability journey. During the year, Coromandel was ranked within the top 5 percentile of global chemical companies in the Dow Jones Sustainability Indices (DJSI) Corporate Sustainability Assessment (2023), a globally recognized benchmark that evaluates companies on their economic, social and environmental performance. The company has finalized its ESG goals focusing on the theme of Minimizing Resource Use, Protecting the Planet and Inclusive Growth. With the strengthened governance structure in place, the targets are planned to be closely monitored to drive ESG culture across the organization.

6. Fertilizer

Global fertilizer scenario

The year 2023 saw a moderate revival of global fertiliser consumption by 3% to 191.5 million tons (N+P2O5+K2O) after a two consecutive year of cumulative degrowth of 8%. Fertilizer affordability improved during the year as fertilizer prices fell faster than most crop prices. However, direct transition from a triple dip La Nina event to an El Nino event in 2023 along with direct and indirect government policies influenced global fertilizer consumption.

Almost 80% of the increase in global fertilizer consumption in FY 2023 was led by Latin America, South Asia, West & Central Europe, Eastern Europe & Central Asia markets. In China, Governments plan to strengthen food security objectives encouraged cultivation on idle land and let to higher offtake, arresting a six year fall in consumption. In Europe, EU Green Deal objectives of reducing fertilizer use by at least 20% by 2030 is shaping the nutrients consumption and driving shift towards balanced practices.

On the supply side, deliveries have been resilient despite flaying of existing and local disruptions in 2023. Some of the key supply regions were centre of conflicts - Red Sea disruption impacting North Africa and Middle east fertilizer trade leading to skyrocketing of freight cost and increased lead time of raw materials, Ukraine and Belarus regions impacting ammonia supplies, curbing of urea and MAP+DAP exports in China in order to prioritise the supply of fertilizers to the domestic market.

As per the International Fertilizer Associations outlook, global fertilizer consumption is expected to grow by 2% to 195.4 Mt in 2024. With consumption gains expected in all the nutrients - N by 2% to 111.6 Mt, P2O5 by 2% to 47.1 Mt, and K2O by 3% to 36.7 Mt. Latin America, East Asia and South Asia are expected to drive global fertilizer consumption in FY 2024, accounting for two thirds of global growth.

Indian Fertiliser Scenario

Fertilizers play a crucial role in Indias agriculture, given the countrys heavy reliance on farming for food security and economic growth. India is the second-largest consumer and the third-largest producer of fertilisers globally.

The fertilizer scenario in India during FY23-24 was characterized by a mix of government interventions, market dynamics, technological advancements, and sustainability initiatives aimed at supporting agricultural productivity while addressing environmental concerns.

On the policy front, Government introduced PM Pranam Scheme during the year with an aim to reduce the use of chemical fertilizers and incentivize alternate fertilizers and promote integrated nutrient management. Under the scheme, the Centre will provide 50% of the subsidy savings to the states as a grant of which 70% can be used to create assets related to the technological adoption of alternative fertilizers and 30% can be used to reward and encourage farmers, panchayats, and other stakeholders involved in fertilizer reduction and awareness generation.

As part of Honble PM Modis mission of ‘Atma Nirbhar Bharat initiative and to achieve self-sufficiency in the fertiliser requirement for India, there has been a renewed focus towards building domestic capacities. This has resulted in establishing fertilizer and intermediate capacities in the country. In Urea, with the five new plants (Ramagundam, Gorakhpur, Sindri, and Barauni, Talcher) being commissioned, the imports have reduced drastically.

Precision agriculture has paved way for new revolution in the Indian agriculture space through Agri Drone spraying services and Nano Fertilisers. Adoption of Nano Fertilisers is likely to reduce dependency on conventional fertilizers, while the availability of drones for spraying services can drive precision practices and promote less water intensive practices.

During the year, Namo Drone Didi Scheme was introduced, which focuses on the empowerment of rural SHG women by providing them free drone and pilot training with the support of leading Fertiliser Companies. "One Nation One Fertiliser" Scheme rolled out in the previous year was implemented and ensured uniformity in bag designs across the industry players.

On the subsidy front, the government sharply reduced the nutrient based subsidy rates during the 2nd half of the year. This impacted the industrys viability as dropin subsidy rates were not in line with the raw material prices

During the year industry recorded DAP + NPK production of 139 LMT with 2% growth and consumption of 218 LMT with 3% growth over last year.

India - Fertilizer Trends in LMT
Fertilizers	Production				Imports				Consumption
	FY21	FY22	FY23	FY24	FY21	FY22 FY23		FY24	FY21	FY22	FY23	FY24
Urea	246	251	285	314	98	91	76	70	350	342	357	358
DAP	38	42	43	43	49	55	66	55	119	93	105	110
NPK	93	83	93	96	14	12	28	23	118	115	101	117
SSP	49	54	56	47	0	0	0	0	45	57	50	45
MOP	0	0	0	0	42	25	19	29	34	25	16	16
Total	426	430	478	503	203	182	188	177	666	631	630	646

Fertilisers - Business Performance

Coromandel has been present in the Fertiliser industry for close to seven decades and has continuously worked on supporting the growth of the farming community with a focus on the balanced nutrition approach. Coromandel is Indias largest private sector Phosphatic fertilizer company producing various differentiated NPK fertiliser grades.

2023-24 was another record-breaking year for Coromandel. Companys fertiliser units located at Visak, Kakinada & Ennore produced the highest ever cumulative volume of complex fertilisers, achieving 94.8 % utilisation of the installed capacity.

The company has been focusing on increasing its backward integration capabilities across key raw materials like Phosphoric acid, Sulphuric acid and Rock phosphate over the past few years. In line With Honble Prime Ministers vision for "Atmanirbhar Bharat" in the Fertiliser sector and with Coromandels long-term objectives to secure key raw materials for its fertiliser production, company commissioned its third Sulphuric acid plant at Visak. The plant was commissioned in record time of 18 months with an investment of Rs 400 Crores. With this new plant, Companys Sulphuric acid production has increased to 11 LMT annually thereby reducing its dependence on imports by 40%.

During the year company also announced setting up of a new Phosphoric Acid Plant (650 MTPD) and Sulphuric Acid Plant (2000 MTPD) at Kakinada, which shall be commissioned by 2026. With this new investment, companys all the NPK fertilisers units shall be backward integrated and will be able to meet a substantial share of its raw material requirement.

Companys strategic move of investing into overseas mining operations at BMCC, Senegal has helped in securing rock availability for its phosphoric acid plant at Visak. The company is setting up a fixed processing plant to stabilize it operations and increase throughput further.

The business has always continued to prioritize safe operations. Total Recordable Incident Rate (TRIR) during the year was 0.152 per million manhours which is lowest in the last 5 years. The companys Visak Unit received British Safety Council 5-star Rating and Sword of the Honour award, while Kakinada Unit was honoured with 5 Star Rating Award and the Kalinga Safety award in the platinum category.

During the financial year, an accident involving Ammonia gas leakage occurred at Ennore unit. The company took immediate steps through activation of emergency response systems, bringing the situation to normalcy in the shortest time. NGT, Southern Zone, Chennai took Suo Motu action to identify the cause of the accident and to access the environmental damage. After hearing the matter, NGT during 21 May 2024 disposed off the case directing the company to follow the directions issued by various authorities including TNPCB; and to obtain NOC for restarting the ammonia operations.

With its 8 SSP units spread across the country, Coromandel is leader in the SSP segment. Company acquired a new facility at Ennore (Tamil Nadu), which got commissioned in FY2024. The company has also improved infrastructure facilities across all its plants along with Quality Control labs to ensure quality products are being supplied to the farming community.

With a view to improve product fortification and drive productivity, Coromandel plans to introduce Urea SSP and Groplus Mg. Both these products were developed by the companys in-house R&D team. Gromor Urea SSP can be a potential alternative to DAP, which is currently amongst the most widely used fertilizer in the country and will help the nation to move towards self-sufficiency in fertilisers thereby reducing dependence on imported Fertilisers.

On the sourcing side, the company operated with desired agility to ensure availability of key raw materials in an uncertain supply chain scenario. It employed an optimum mix of long-term contracts and spot buying in addition to diversifying its sources to mitigate price variability and ensuring timely availability of inputs.

Company recorded phosphatic sales of 35.4 LMT - this was supported by consumption with PoS sale of 32.5 lakh MT. In SSP, the company has achieved sales of 6.5 lakh MT and retained its position as market leader in the category.

Coromandel sales

In lakh ton	Complex	DAP	Complex + DAP	SSP
FY19	24.2	6.1	30.3	5.7
FY20	26.1	5.4	31.3	5.7
FY21	28.1	5.4	33.5	6.7
FY22	28.3	4.9	33.2	7.6
FY23	31.2	5.3	36.5	8.1
FY24	30.3	5.1	35.4	6.5

Coromandel continues to support the farmers through its agronomic services through its ground fleet of agronomist & offerings such as soil testing, leaf testing etc through its 57 Nutri clinics spread across the country with the aim to promote balanced nutrition approach across geographies. In line with the Governments focus on promotion of new technology products and services, the company set up 12,885 PMKSKs across its key markets.

With the vision to be a leader in farm solutions and to meet the growing farmer needs, Coromandel introduced Gromor Drive - "a drone spraying service". Today, Gromor Drive is reforming the Indian agriculture landscape and has crossed 18000+acres of drone spraying in key Southern states of AP and Telangana, thus becoming the first fertiliser company to achieve this significant milestone. The farmers across regions have quickly adapted to this technology and services and the initiative received over-whelming response across crop categories.

The Companys Research and Development Center at IIT Bombay had developed Nano DAP and the product has received positive response from the farmers. The company plans to introduce nano tech-based products in the coming years and has set up a Nano Technology Centre at Coimbatore.

While striving towards digital excellence, Coromandel inaugurated State of the art facility at Visak- Center of Excellence - a hub to drive digital initiatives across all its plants. The Facility also houses an Experience Center which provides a walk-in and virtual experience of the companys genesis and journey. Business is also working on multiple other digital interventions across value chain to leverage data and provide timely inputs for decision making.

7. Speciality Nutrients

In the recent years, the Specialty fertilizers have become indispensable in Indian agriculture for addressing crop- specific nutrient requirements, enhancing soil health, promoting environmental sustainability, and ensuring food security in the face of evolving agricultural challenges. Coromandels proactive approach towards promoting specialty fertilizers has contributed significantly to its adoption in Indian agriculture, benefiting farmers, the environment, and the agricultural sector. It offers customized fertilizer solutions based on soil test results, crop requirements, and regional Agro-climatic conditions. By providing tailored recommendations and advisory services, the company enables farmers to optimize nutrient use efficiency and maximize crop yields sustainably.

Crop Nutriclinic plays a crucial role in modern agriculture by offering tailored nutrient solutions, improving crop yield and quality, optimizing fertilizer use, promoting sustainable practices, empowering farmers, and integrating technology for enhanced agronomic outcomes. Understanding the need, business has expanded its network of Nutriclinics in North, Central and West India.

The business deals with high performance products like Bentonite sulphur, Water-soluble fertilisers, Micronutrients, Liquid fertilisers, Organic soil health restoring agents, Organic manures, Organic Potash, etc. During FY 23-24, the business was committed to strengthening its production facilities and launching new products like Acumist Boron, Seaweed granule and NPK consortium-based products. The business has also commissioned Nano DAP plant in Kakinada in 2024. The commercial sales have started from the 2nd half of the year and the response has been quite encouraging.

The business continues to leverage its strength in smart sourcing and has been making conscious effort in diversifying its procurement of key raw materials and finished products. The business developed 4 new vendors and an In-house container freight system was introduced for Specialty Nutrients. During FY 23-24, despite the challenging agroclimatic condition, the business continues its emphasis on promoting balanced plant nutrition and enhancing farm productivity, that resulted in improved performance of focused product segments.

In the organic fertilizer space, the business refined its sourcing efficiencies and quality assurance protocols, that resulted in delivering superior-quality organic products. The business also strengthened the On-spot soil testing ecosystem, by introducing Sulphur-Boron-Zinc (SBZ) tests while continuing its emphasis on organic carbon (OC) tests. The business was able to conduct more than 60,000 Soil tests of Organic Carbon and SBZ in the FY 23-24.

By consistently delivering superior quality products and services, the business remains committed to sustaining its growth trajectory. Simultaneously, it is addressing the farming communitys concerns and actively contribute to fostering a sustainable agrarian economy.

8. Crop Protection

Crop Protection- Business scenario

After four years of continuous growth, the global agrochemicals industry experienced a steep decline during the year. High channel inventories, reduced product prices combined with unfavourable weather conditions in key agricultural geographies, lowering crop prices and currency headwinds limited the application prospects and impacted industrys performance. The global pressure in Agrochemicals was also reflected in the lower merchandise exports from India, which declined by 22% in FY23-24 to USD 4.2 billion.

Crop Protection- Business performance

Coromandels Crop Protection business registered a volume growth of 20% over last year, driven by growth in exports market and domestic formulations. The revenue de-grew by 8% over last year largely due to price erosion in the market for some of its key molecules.

The manufacturing plants continued to operate safely with increased emphasis on safety protocols. In addition to this, major thrust was given to improving automation, instrumentation and revamping infrastructure at all plants. The business has improved the cost position for its key molecules and is expected to reap the benefits of cost reduction initiatives in the coming years. The business continued its thrust on cost reduction initiatives through the ‘War-on-Waste to reduce specific consumption of RM and Utilities.

On the domestic formulations side, the Business introduced seven new products (including one in licensing patented molecule) spanning herbicides, insecticides, and fungicides. The new launches have received an encouraging response from the market. During the year, the share of new product in revenue increased to 15% of the total sales in the domestic formulations. The marketing team launched several initiatives such as adopting a crop-based approach, demand generation through farmer level activities, Gromor Suraksha Kshetra to improve engagement with the farming community.

The product development and regulatory teams have been fortified, conducting several high-quality in-house trials using world-class monitoring and analytics tools and receiving a high number of registrations across domestic and overseas markets. The business has received 2 unique combination registration during the year and applied for 6 more unique registrations. The business is leveraging its Japan desk to explore partnerships with innovator companies and launched its first product from its Japanese partner. The business took forward the CDMO initiative and is in advance stage with few customers for CDMO opportunities.

9. Bioproducts

The Business offers a range of biopesticides containing Azadirachtin for safeguarding crops and other biostimulants derived from plant extracts besides anti- transpirants and non-ionic spreaders. The cutting edge Azadirachtin manufacturing facility situated in Cuddalore, Tamil Nadu, is the largest in the world.

During the year, the Bioproducts business despite facing demand contraction in Azadirachtin export markets registered a volume increase. Neem oil-based crop protection products "Azamax" and "Adhiraj" launched in FY24 received good market acceptance. The business has carried out cost-intensive interventions to manufacture best-in class pure Azadirachtin to ensure neem seed supply and overcome quality related challenges.

As a diversification strategy, business plans to strengthen its focus on expanding its non-Azadirachtin portfolio including entry into other plant extract opportunities.

The Business has targeted to enter bio fertilizers and microbial crop protection products using the fermentation and microbial R&D capability developed inhouse. Business has obtained bio fertilizer manufacturing license during the year and intends to launch several offerings in domestic market during FY25. A range of microbial crop protection products are under development in collaboration with Tamil Nadu Agricultural University (TNAU) as the CRO. The business proactive investment in establishing neem plantations is expected to yield results in the upcoming years, which shall further support in ensuring raw material availability.

10. Retail

Coromandel, with a network of around 759 rural retail outlets across Andhra Pradesh, Telangana, and Karnataka, and its recent entry into Tamil Nadu has successfully pioneered the rural retail model in India. Supported by a 2,800+ member strong team, the Retail business is the face of the organization deepening its connect and engagement with farming community.

The Retail business continued to develop innovative solutions to leverage technology for Precision Advisory, e-commerce, Drone (10000+ acres sprayed), and Delivery Service. In addition, Farm Advisory solutions using AI and sensor-based Precision agriculture IOT devices were some of the key solutions introduced by the business during the year. These services empower farmers to enhance productivity and profitability, setting the retail business apart from its competitors and augment farmer loyalty.

The business adopted a focused approach by providing customized crop-based recommendations and solution based advisory services. Scientifically developed Crop specific packages aligning with growth stages are promoted alongside expert advice through the "Scientist at Store" initiative. This initiative received positive feedback from the farming community and helped in improving the crop productivity.

During the year, the business launched its quarterly e-bulletin - ‘Krishi Shastra. It provides an unbiased and curated content with in-depth understanding of the upcoming quarters agricultural scenario, considering weather forecasts, pest and disease conditions, and overall crop status. Krishi Shastra reaches HNI farmers via dedicated WhatsApp channel and other farmers through associated farmer groups at each store.

Retail business diversified products and services portfolio combined with its focus on integrated farming solutions continues to deliver enhanced farm yields and profitability for farmers. Additionally, the business is actively addressing challenges faced by farmers through accelerated digital capabilities and strategic partnerships. Retail has partnered with RBKs (Rythu Bharosa Kendram) in Andhra Pradesh and has been supplying fertilizers and crop protection products.

During the year, business registered strong growth despite a weak business environment. Retail launched new products like Adiraj, Tolibro 1&2, F20, Magwin among others, which has expanded its product offerings. Going forward, it plans to expand its footprint to new markets, introduce new technology solutions and service offerings and scale up drone based spraying operations.

11. Opportunities & Strengths

Opportunities

a. Nations drive towards achieving Atma Nirbharta in fertilizer production to support domestic capacity creation

b. With constrained factors of production like land, water and labour, the improvement in crop yields to be driven by higher agri inputs intake and balanced farming practices.

i . Relatively low crop protection consumption in India compared to global benchmarks offers significant headroom for growth.

i i. Adoption of Nano, slow-release, coated, and water soluble fertilisers by farmers shall improve nutrient use efficiency. Coromandel is only one of the few players who has obtained approval for its Nano DAP product, which is expected to be a game- changer in Indian agriculture.

c. Due to cost competitiveness, technical capabilities and increasing actions towards diversifying supply chains by global customers, India is fast emerging as an attractive market for Agrochemical, CDMO and Specialty & Industrial Chemicals manufacturing.

d. Increased consumer awareness towards sustainable farm produce is leading to increased adoption of biological products. Coromandels bio products and organic businesses are well placed to capture this trend.

e. Technology adoption in Agriculture to promote sustainable farm practices will provide opportunities in introducing novel solutions in products and application technologies. Coromandels investment in drones and robotics space is aligned to capture this growth opportunity.

f. Reformative policy measures by Central and State Governments to provide income support for farmers can ensure higher disposable income in the hands of farmers which can support the agri-inputs consumption

g. Strengthening of farm infrastructure - higher irrigation, storage capacities, mechanization thrust - can lead to higher crop acreage and improved consumption of agri inputs

h. Improved digital connectivity in rural India offers opportunities for increasing farmer reach and e-commerce opportunities

Strength

a. Strong corporate governance practices that promote transparency, accountability, and ethical business conduct.

b. Indias second largest phosphatic fertilizer manufacturer and marketer with strong backward linkages in intermediate chemicals like Phosphoric acid, sulphuric acid and rock production

c. Crop protection business of the company is Indias 5th largest player by size with capability to manufacture around 20 technicals and formulations. 1000+ global registrations supporting product sales in international markets.

d. Extensive rural retail network of 759 stores, establishing Coromandels direct consumer connect and offering customized crop solutions to the farming community

e. Leading player in neem based biopesticides globally and amongst the market leaders in organic fertilizer in India

f. The organization possesses 7 state-of-the-art R&D facilities for new product development across all its business units. It has a rich pipeline of products and partners with leading research organizations.

g. Pioneer in introducing Nano technology in agricultural applications globally with company holding patent for its Nano DAP product.

h. Strong capabilities in Drone manufacturing through its subsidiary Dhaksha. It offers solutions in defence, agriculture and enterprise segments and provides opportunity to diversify its customer base.

i. Coromandel has strategic partnerships for technology and sourcing - strategic investment in Tifert (in Tunisia) and Foskor (in South Africa) for upstream integration for Phosphoric Acid sourcing, partnerships with global Crop Protection organizations for new product and joint venture with Yanmar and Mitsui in farm mechanisation segment.

j. Strong balance sheet with cash surplus

12. Financial Review

The Company registered a resilient performance in FY 2023-24 in a tough business environment. Standalone revenue stood at Rs 22,029 crores compared to Rs 29,610 crores in the previous year. The Companys PBT was at Rs 2,272 crores compared to Rs 2,722 crores in the previous year. PAT was at Rs 1,719 crores compared to Rs 2,035 Crores in the previous year. Net cash from operating activities before working capital changes is Rs 2,403 Crores compared to Rs 2,938 Crores in the previous year.

	2023-24	2022-23
i Debtors Turnover (no. of days)	50	23
ii Inventory Turnover (no. of days)	100	63
iii Interest Coverage Ratio	14.15	15.46
iv Current Ratio	2.10	1.77
v Debt Equity Ratio	0.00	0.00
vi Operating Profit Margin (%)	10.90%	9.85%
vii Net Profit Margin (%)	7.80%	6.87%
viii Return on equity	19.91%	28.73%

13. Risk Management

This is covered under the section ‘Risk Management of the Integrated Report.

14. Human Resource Development

Coromandel recognises that its employees are integral to achieving its organisational objectives and has launched many initiatives such as Talent Development, Rewards & Recognition, Employee Engagement etc. The organisation proactively seeks to ensure that its policies are contextual, leveraging best practices to create a conducive environment for growth and success. Its comprehensive learning and development processes are designed to empower employees to unlock their true capabilities. By placing Human Resource Development at the forefront of its strategic priorities of forging new paths and fortifying the future, the company aims to foster a culture of excellence, inclusivity and innovation.

Talent Development

Coromandel invests in talent through a diverse array of capability management programs aimed at enhancing Leadership, Technical and Behavioural competencies to meet the unique demands of its business landscape.

Leadership Development: Enhancing its leadership internal talent pipeline is imperative to fostering growth. Coromandel launched Leadership Development Initiatives starting with assessing current proficiency levels in behavioural competencies based on the Competency Framework through a comprehensive Development Centre in collaboration with DDI and SHL.

Coromandel provided world class learning platforms to its leaders to enhance business acumen through Senior Leadership Development Program at ISB, Oxford Senior Executive Leadership Program and Program on elevating business insight.

VidhyaOnline: This initiative has helped in enabling seamless access to E- Learning Platform across domains. 16 modules were launched during FY2024. This includes 8 modules in manufacturing, and 8 modules in product, behavioural and governance.

Coromandel Knowledge Centre: Focused on fostering excellence in Safety, Manufacturing, Production, Operations, Engineering and Technology across manufacturing locations of Nutrient Businesses through wide spectrum of Training programs.

Sales Force Learning Academy: To augment agri-domain capabilities and managerial skills of its frontline and middle management fertilisers sales and marketing team, training programs like New Entrant Assimilation Training, Marketing Officer Resurgence and Excellence, Zonal Managers Excellence for Agri Leadership, and Agronomy Training were delivered.

Saksham, a key initiative in Crop Protection Business was introduced to equip employees in technical plants, on people and business skills through blended learning using varied facilitation methodologies and toolkits.

CoroXcelerate: Retail Business in collaboration with IMT Hyderabad conducted the program to learn about the latest developments in the areas of Category Management, Supply Chain Management, Field Marketing, Business Analytics, Business Financials and Importance of Team Building.

Drone Pilot Certification & Training: In continuation with the Drone project, Coromandel recruited 26 pilots and 6 copilots for AP & TG.

Partnering with Academic Institutions: Coromandel collaborated with some of the leading academic institutions such as ISB, Indian Institute of Management, IIFT, NAARM, MANAGE, VAMNICOM, NIAM for various programmes such as Sales Force Training Academy, STAR and LEAD for long-term development of employees.

Employee Engagement: In line with survey outcomes of Great Place to Work, the leadership team at Coromandel continued to review the key engagement agenda for the organization through specific action plans for

300 managers. Steering committees were formed at leadership level to nurture employee engagement through the identified pillars i.e. Performance, Communication, Rewards and Recognition and collaboration.

Motivational Rewards Program: I-CARE Success Story Drive in Crop Protection Chemicals business unit (Initiative, Communication, Action, Responsibility, Execution Excellence), BIG BULL program in Retail business unit, Achievers Club Awards, Performer of the month for the S&M function in Nutrient business, etc. were few programs aimed at recognizing achievements of the workforce.

Shine Awards are awarded to employees who go above and beyond the call of duty in consistently upholding Coromandel Values. The award is a fitting recognition for their commitment to the Five Lights - Integrity, Passion, Quality, Respect and Responsibility. This year, 20 employees were awarded for upholding the values of Five Lights.

HR Systems and Process: To strengthen and standardize its system and processes, Coromandel embarked on a journey for certification on ISO 30408 (HR Governance and Management System).

Prevention of Sexual Harassment at Workplace (POSH): Coromandel ensures that all categories of employees are made aware of the POSH policy through campaigns across locations and e learning module.

POSH cases are dealt as per Companys zero tolerance policy. During the year 2023-24, four cases were reported on POSH. All four cases were investigated, and actions were taken by the Management in line with Internal Committee recommendations.

Industrial Relations

Industrial relations remained harmonious across all Coromandel plants throughout FY2024. Long-term settlement was successfully completed at Kakinada plant. For plant operative employees, the Performance Linked Incentive Scheme (PLIS) was introduced, incorporating key performance parameters. To enhance overall governance and adherence to statutory compliances, Coromandel initiated cross locational process and compliance audits.

Unit level Workers education and training programs on safety & wellness and technical skills were effectively designed and delivered. Structured social gatherings, including Annual Communications Meetings, were organized to foster employee engagement.

15. Corporate Social Responsibility

Coromandel believes in a sustainable approach to development, which focuses on people, planet, and profit. Its Corporate Social Responsibility (CSR) strategy is aligned with the core values of empowering people, educating them, and improving the quality of their lives.

I ts CSR initiatives, which are based on principles of partnership and community ownership, enables the organization to build social capital in the communities where it works. The Murugappa Group has an overall focus on community-facing activities in education and healthcare. The AMM Foundation, which is an independent public charitable trust, is responsible for leading these philanthropic efforts, in alignment with the goals of the Murugappa Group. The organization works with local communities and other stakeholders to ensure continuous and smooth operations, which helps in building pathways for sustainable development in the regions where it operates. To identify the real needs of the communities and develop models for sustainable development, the business conducts need assessment studies and research and prioritize the projects based on their outcomes. Across thematic domains, Coromandels CSR initiatives are multifaceted and impactful.

CSR Spent:

In the fiscal year 2023-24, Coromandel allocated INR 42.40 crores towards CSR initiatives. Over time, the organization has steadily augmented its CSR expenditure, underscoring its steadfast dedication to social progress.

CSR Impact Assessment

During the year, Coromandel carried out Impact Assessment for the CSR projects through an independent agency. Based on the proprietary scoring algorithm, it assessed companys CSR Projects with a Platinum Category of Performance. The Platinum Category of the CSR Project performance demonstrates:

• Sustainability Commitment

• Leadership Visionary on Social Responsibility

• Stakeholder Partnerships and Multi-organizational Alliances