Indian Economy
The Indian economy grew by 7.2% in FY 2022-23, as against 8.7% growth
in the previous fiscal year of FY 2021-22, as per the data released by the government,
With this, India continues to be the fastest growing emerging economy, relatively stronger
in comparison with other large economies and its emerging market peers. Indias recovery
from the pandemic has been stronger than earlier believed, with a steady gathering of
momentum, led by private consumption and supported by a rebound in government consumption
during FY 2021-22.
The economy, upon having rebounded post-easing of COVID-19 restrictions
in the previous fiscal year, faced inflationary pressures due to the Russia-Ukraine war,
prompting the central bank to reverse the monetary policy adopted during the pandemic. The
Reserve Bank of India (RBI) raised key interest rates by 225 basis points between
May-January 2023, the highest in three years.
Despite global uncertainty and headwinds, the economy performed well.
India remains a relatively bright spot in the global economy, as per the International
Monetary Fund (IMF). It is expected to remain the fastest-growing Asian economy and one of
the fastest-growing in the world. A conducive domestic policy environment, along with the
governments focus on structural reforms, kept domestic economic activity in India robust.
https://www.reuters.com/markets/asia/india-govt-forecasts-202223-economic-growth-7-government-2023-01-06/
Outlook for FY2023-24
The Indian economy has remained resilient amidst high tides of
uncertainty. Even as global growth is set to weaken, Indias economy is likely to maintain
the pace of expansion witnessed in FY 2022-23, according to RBIs "State of
Economy" Report. The Central Bank forecasts a real GDP growth of 6.5% for FY 2023-24
on the back of supportive domestic demand conditions and with demand on rural areas being
on the revival path. The governments thrust on capital expenditure, moderation in
commodity prices and robust credit growth are expected to nurture investment activity. The
Indian economy is intrinsically better positioned than many parts of the world, mainly
because of its demonstrated resilience and its reliance on domestic drivers.
Indias Agricultural Sector
Agriculture is one of the most important sector in the Indian economy.
Approximately 60% of the Indian population works in the sector, contributing 18% to
Indias GDP. Agriculture, with its allied sectors, is the largest source of livelihood in
India. Nearly 70% of rural households still depend primarily on agriculture for their
livelihood, with 82% of these being small and marginal. The Government has been taking
several initiatives to support farmers such as establishing effective agri-tech funds to
afford competition and higher profits and increased investments in the sector.
Outlook for FY2023-24
The Indian agricultural market, which reached a value of US$ 435.9
billion in 2022, is projected to grow at a CAGR of nearly 4.9% between 2023 and 2028 to
reach a value of US$ 580.82 billion by 2028. The country is one of the largest
agricultural producers globally. Presently, it is the third-largest agricultural producer
in terms of value, after United States and China. The demand for Agrarian commodities has
grown considerably as the population has grown.
Indias food and grocery market is currently the worlds 6th largest,
with retail contributing 70% of its total sales. The industry is expected to generate
better momentum in the next few years due to increased investment in agricultural
infrastructure such as irrigation facilities, warehousing, and cold storage. Furthermore,
the growing use of genetically modified crops will likely improve the yield for Indian
farmers. India is expected to be self-sufficient in pulses in the coming few years due to
the concerted effort of scientists to get early maturing varieties of pulses and the
increase in minimum support price.
Increasing initiatives in Indian Agricultural Sector and Recent
Developments
• The agricultural sector recorded a sharp increase in investments
with a cumulative FDI inflow of US$ 2,600.70 million between April 2000-June 2022.
• The Government is planning to launch Kisan Drones for crop
assessment, digitization of land records, and spraying of insecticides and nutrients.
• Indias agricultural exports increased 6% during FY 2022-23 to
US$ 43.37 billion, growing by 6% from US$ 40.90 billion in the previous financial year.
• Prime Minister Shri Narendra Modi inaugurated PM Kisan Samman
Sammelan 2022 and released PM-KISAN Funds worth Rs. 16,000 crores (US$ 1.93 billion).
• A Special Food Processing Fund of Rs. 2,000 crores (US$ 242.72
million) was set up with National Bank for Agriculture and Rural Development (NABARD) to
provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as
processing units in the MFPs.
• Minister of Agriculture and Farmers Welfare, Shri Narendra Singh
Tomar inaugurated four new facilities at the Central Arid Zone Research Institute (CAZRI),
which has been rendering excellent services for more than 60 years under the Indian
Council of Agricultural Research (ICAR).
Indias Foodgrain Production
Indias foodgrain production is estimated at an all-time high of 323.55
million tonnes in the current crop year ended June 2023, higher by 7.93 million tonnes
from the previous year. This is estimated to be driven by the projection of record output
of rice, wheat and pulses. Agriculture minister Narendra Singh Tomar attributed record
foodgrain output to hard work by farmers and agriculture scientists, and to government
policies.
Wheat production is estimated at a record 112.18 million tonnes in the
2022-23 crop year (July-June), up 4.44 million tonnes from the previous year. The previous
high in the production of wheat, a major rabi crop, was achieved in the 2020-21 crop year
at 109.59 million tonnes. Rice production is estimated at 130.83 million tonnes in the
2022-23 crop year, up 1.36 million tonnes from the previous year, an official statement
said. Apart from foodgrains, the ministry said that the oilseeds production is estimated
at record 40 million tonnes in 2022-23, up 2 million tonnes from the previous year.
By 2050, Indias agri-food production will face a formidable task of
feeding close to 1.7 billion people using limited cultivable land, water and energy
resources. Our net sown area has almost stagnated at around 140 million hectares, and
there is little scope to increase it. Natural resources, particularly soil and water, have
been degrading in the process of intensification of agriculture.
Agricultural Exports
Indias agricultural exports grew 6.04% between April 2022 to January
2023 at US$ 43.37 billion, in comparison with US$ 40.90 billion during the same period in
the previous fiscal year. It has been achieved in spite of unprecedented logistical
challenges in the form of high freight rates, container shortages. During the full year of
FY 2021-22, Indias agricultural exports touched the highest-ever level of US$ 50.21
billion. Rise in agricultural exports helps realise the Prime Ministers vision of
creating a positive impact on farmers incomes. The increase in exports is also paving the
way for the production of better quality products which requires better crop protection
technology.
Agricultural Exports from India (US$ Billion)
| FY 2015-16 |
FY 2016-17 |
FY 2017-18 |
FY 2018-19 |
FY 2019-20 |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| 32.08 |
33.87 |
38.21 |
38.54 |
35.09 |
41.25 |
50.21 |
43.37* |
Agricultural Inputs
Indias agri-inputs industry comprises three key sub-sectors viz., crop
protection (pesticides), crop nutrition (fertilizers), and seeds. Demand for agricultural
inputs such as hybrid seeds and fertilizers is increasing in India at a fast pace. The
current challenges in the agri-input markets are lack of quality seeds and emerging
technology policy conundrums in the seed sector, lower innovation and research and
development in the pesticide sector, and subsidy governance in the fertilizer sector.
Industry Overview
Global Agrochemicals Industry
The global crop protection chemicals market size reached US$ 88.0
Billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 116.5
Billion by 2028, exhibiting a growth rate (CAGR) of 4.28% during 2023-2028. Crop
Protection chemicals also provide a major role in producing high quality grain and forage.
Crop protection chemicals help in managing and minimising plant diseases, weeds and other
pests that damage agricultural crops. These chemicals also help in increasing and
maintaining year over year crop yield. Crop protection chemicals can be mainly classified
into herbicides, insecticides, and fungicides.
The demand of global crop protection chemicals market in terms of
revenue, which was valued at US$ 64.10 Million in 2021, is expected to reach around US$
76.09 Million by 2028, growing at a compound annual growth rate (CAGR) of approximately
2.90% during the forecast period 2022 to 2028. Crop protection chemicals aid in
controlling and reducing weeds, pests, and other plant diseases that harm crops. These
substances also contribute to crop output growth and maintenance throughout time. Crop
protection chemicals have been increasingly important over the past few decades due to the
need to raise agricultural productivity and guarantee a sufficient food supply for the
expanding global population.
India Agrochemicals Market
Indias agrochemicals market has reached a value of almost US$ 6
billion in 2022, driven by strong exports and stable domestic demand. The industry is
projected to grow by a CAGR of 8.5% between 2023 and 2028 to reach a value of almost US$
9.82 billion by 2028. India is the fourth largest manufacturer and the 13th largest
exporter of agrochemicals to the world. Per hectare consumption of agrochemicals is around
0.34 kg in India vis-avis 11.84 kg in the United States. With its inherent advantages,
agrochemicals are seen as the next growth enablers for the Indian chemicals industry.
Moving ahead, in FY 2023-24 also, it will continue its growth
trend and is projected to grow by 10-12% as India benefits from the
"China-plus one" strategy of global players and as patents on key molecules
expire. India has been at the forefront of the agrochemicals space during the last one
decade because of tightening of environmental regulations in China and its subsequent
fallout on global chemicals supply chain. Going ahead, supply chain disruptions, sharp
volatility in raw material prices, and the next monsoon season will be the key factors
affecting the sectors growth.
Key Growth Drivers for Agrochemicals
The need to enhance productivity to cater to the rising food demand of
our growing population as well as the improvement in the quality of produce has been the
key factor driving the use and application of agrochemicals in India.
• Rising population, accompanied by rising affluence, is creating
a shift in consumption patterns. Hence, there is a need to not just increase production to
meet demand, but also ensure that the nutritional needs are met.
• About 60% of the Indian population is still dependent on
agriculture for their livelihood. The increasing population creates a huge demand for food
products to feed the population.
• Supplying adequate plant nutrients is essential for the healthy
growth and production capacity of plants, thereby catering to the increased food supply.
• In India, 15-25% of potential crop production is lost due to
pests, weeds and diseases. The need to improve crop productivity with a focus on the
effective use of pest control measures and the adoption of weed management practices has
been recognized as an important factor in increasing agricultural output.
India Agrochemicals Industry- Market Segmentation
| Insecticides: 53% |
Fungicides: 19% |
Herbicides: 24% |
| Control insect |
Prevents and |
Prevents or |
| pests, which |
cures fungal |
reduces weeds, |
| reduces crop |
plant diseases |
which hamper crop |
| yield and quality |
|
growth and harvest |
Increase in Biopesticides usage
Bio-pesticides are the new age crop protection products, manufactured
from natural substances like plants, animals, bacteria and certain minerals. They are
eco-friendly as compared to chemical-based pesticides. Currently a small segment, the
bio-pesticide market is expected to grow in the future with government support and
increasing awareness on non-toxic and environment-friendly pesticides over non-ecofriendly
products. However, Biological products will act as complementary to agrochemicals.
India Agrochemical Market
The government initiatives increased the consumption of chemical
pesticides. According to the Ministry of Agriculture and Farmers Welfare, the consumption
of chemical pesticides reached 44,700 metric tons in 2021. Therefore, the increasing
government initiatives in the agrochemical sector to boost the production of major crops
are expected to aid the growth of the market in the coming years.
India Agrochemicals Market :
Consumption volume, in metric ton,
Chemical Pesticides, 2020 and 2021
Role of Agrochemicals in achieving Indias Vision Supporting
sustainable farming practices
Being one of the key inputs required for crop protection and better
yield during both pre-harvest and post-harvest stages, agrochemicals have a vital role to
play in making India achieve its vision of becoming a US$ 5 trillion economy. Judicious
use of crop protection chemicals supports sustainable farm management and delivers
socioeconomic benefits to meet the challenges of feeding Indias increasing population.
Thus, crop protection chemicals support in achieving global food, nutrition, health,
wealth and environmental security.
Increasing food demand
The demand for crop protection will increase in lieu of increasing food
demand over the forecast period, along with government support. Major factors driving the
Indian market include greater demand for food grains, limited availability of arable land,
increasing exports, growth in horticulture and floriculture, and increasing public
awareness regarding pesticides and biopesticides.
Agrochemical companies are investing in production and storage
facilities to cater to the increasing demand. In 2022, Indian agrochemical companies
increased backward integration and use of international storage warehouses to continue
producing and expanding in order to meet the increasing demand.
Reducing food wastage
Uncontrolled pests significantly reduce the quantity and quality of
food production. It is estimated that annual crop losses could double without the use of
crop protection products. Agrochemicals are one of the key inputs in agriculture for crop
protection and better yield.
Rising pest attacks
Agrochemicals also play a vital role in crop growth, showing improved
performance and noticeable results. They are highly important in obtaining increased
yields as these are necessary to prevent pests and diseases in the field. Higher
temperatures and moisture lead to a higher possibility of infestation from pests, which
leads to a decrease in productivity.
Precision Agriculture in India - A Perspective
Precision farming is one of the key solutions for sustainable
development of agriculture, which advocates applying right inputs in right amounts at
right time and at right place using the right technologies or techniques. Availability of
geo-referenced grid soil sampling permitted assessing variability in the field and the
composite sample based single recommendation for the entire farm could be done away with.
Satellite-based remote sensing technologies are widely used to guide
the global agricultural production from a regional to global scale. There have been
several efforts to use remote sensing to monitor crop conditions and utilize the
indicators in process- based crop growth models to generate production estimates.
Importance of Drones in Agriculture
Adverse weather conditions and uncontrolled pest issues lead to crop
failure. Hence, the quality and quantity of agricultural produce is sometimes compromised,
in spite of the relentless efforts of farmers. Use of drone technology in agriculture is
here to stay. Innovative solutions like agricultural-drones can tackle the problems ailing
the agricultural sector as crop surveillance leads to better chances of failure
mitigation. According to recent research, the global drone market within agriculture would
grow at 35.9% CAGR and reach US$ 5.7 billion by 2025. The emerging drone technology can
help reduce time and increase the efficiencies of farmers. Use of drones in agriculture is
expected to rise as the industry matures.
Key Benefits of Agricultural Drones
• Security: The drones are operated by trained drone pilots. So,
there are no chances of their misuse.
• High efficiency: Drones do not have any operational delays and
can work at double the speed of human labour.
• Water-saving: In comparison to traditional spraying methods,
agricultural drones use lesser volume of spray water (25 Itr/ ha in place of 375 Itr/ ha
in traditional spray), thus saving more water.
• Low cost and easy to maintain: Agri drones are sturdy, low in
cost, and require minimum maintenance. Some of the key features include a detachable
container, low-cost frame, precise spraying of pesticides.
Company Overview
Dhanuka Agritech Limited ("DAL" or the Company) is a leading
Agrochemical Company in India. The Companys strength lies in manufacturing formulations.
DALs pan India distribution network consists of around 6,500 distributors and dealers and
80,000 retailers, enabling it to have presence across 10 million farmers touchpoints.
Over the years, the Company has built strong strategic partnerships with leading global
innovators. The Companys collaboration with the worlds leading agrochemical companies in
the US, Japan and Europe has provided it access to the latest technologies which the
Company has effectively implemented in the domestic market. Dhanukas strong R&D
division has a world-class NABL-accredited laboratory as well as an excellent team for new
product registration and development. The Company has three manufacturing units situated
at Sanand (Gujarat), Keshwana (Rajasthan) and Udhampur (J&K). The Company is
establishing one plant for Technical Manufacturing of Pesticides i.e. Backward Integration
Process at Dahej, Gujarat. The Plant will be commercialized in the Financial Year 2023-24.
The product portfolio is largely distributed across the Insecticides,
Herbicides and Fungicides segments. Insecticides contribute a significant portion of the
overall revenues and the Company aims to ramp up its presence in the fast-growing
Herbicides segment. DAL is aggressively working towards the goal of "Transforming
India through Agriculture" through initiatives like doubling farmers income. The
Companys latest innovative sales process guides the farmers effectively on crop solutions
through channel partners and a dedicated team. It also ensures a smooth reach of products
to farmers with readily available stock on demand as per the latest market scenario. This
new-age sales process is managing issues like inventory cost, blockage of funds and
uncertain demand and supply. It also offers automatic order processing and complete
availability of the product in real time.
Operational Overview
Dhanuka has a healthy Net worth of Rs. 1061.31 Crores as on 31st March,
2023. ICRA has accorded credit rating [ICRA]AA (pronounced ICRA double A)for fund-based
limits and [ICRA]AI+ (pronounced ICRA A one plus) rating for non-fund based limits of the
Company.
During the year the Company received a registration certificate for the
import of Amisulbrom Technical u/s 9 (3) of the Insecticide Act, 1968. The Company has
launched one insecticide product under the brand name Decide containing Etofenprox 6% +
Diafenthiuron 25% WG for the control of Thrips
(Scirtothrips dorsalis), Mite ( Polyphagotarsonemus latus), White fly
(Bemisia tabaci), Fruit borer (Helicoverpa armigera) in Chilli crop u/s 9(3)- of the
Insecticide Act, 1968. The Company has received registration certificates for export u/s
9(3) of Clodinafop-propargyl 8% EC, Cypermethrin 40% EC, Thiophanate methyl 50% SC,
Ametryn 50% SC, Ametryn 80% WP, Pendimethalin 50% SC, Pendimethalin 40% EC, Atrazine 90%
WG, Atrazine 50% SC and Tebuconazole 25% EW. The Company has also received one approval
u/s 9 (4) of Insecticide Act, 1968 for indigenous manufacture of insecticide Dinotefuron
20% SG, used for control of Aphids, Jassids, Thrips and Whitefly in Cotton and Brown plant
hopper in Paddy crop and similar approval for one herbicide Bispyribac Sodium 10% SC, for
control of various types of weeds (Narrow leaf weeds, Broad leaf weeds and Sedges) in Rice
(DSR), Rice (Nursery), Rice (TPR).
Dhanuka has been granted a Patent for an invention entitled WATER
SOLUBLE GRANULAR INSECTICIDAL COMPOSITION, Insecticide named Cartap Hydrochloride 75% SG
for the term of 20 years from 29th March 2014 in accordance with the provisions of the
Patents Act, 1970. This product is used for the control of yellow stem borer and leaf
folder in Rice crop.
The Company has set up a state-of-the-art Research & Training
Center at Palwal. Dhanuka Agriculture Research & Technology Centre - DART was
inaugurated on 4th November 2022 by the Honourable Chief Minister of Haryana, Shri Manohar
Lal Khattar ji. It consists of 11 R&D laboratories, a training centre for internal
& external stakeholders and a well-developed research farm with precision technologies
with Artificial Intelligence (AI).
The Company has entered/signed MOUs with various universities to
jointly conduct research in crop protection including Netaji Subhas University of
Technology, New Delhi, Keladi Shivappa Nayaka University of Agricultural &
Horticultural Sciences, Shivamogga (Karnataka), Acharya N. G. Ranga Agricultural
University, Guntur, Andhra Pradesh, Govind Ballabh Pant University of Agriculture and
Technology, Pantnagar (GBPUA&T), Chaudhary Charan Singh Haryana Agricultural
University, Hisar, Sri Karan Narendra Agriculture University, Jobner, Jaipur, Lovely
Professional University, Punjab, Maharana Pratap Horticultural University, Karnal.
Financial Performance for FY 2022-23 (Standalone)
• Revenue from Operations increased to Rs. 1700.22 Crores in
FY2022-23 from Rs 1477.78 Crores in FY2021-22, 15.1 % up over last year.
• Profit Before Tax increased to Rs. 302.73 Crores in FY2022- 23
from Rs. 277.48 Crores in FY2021-22, 9.1% up over last year.
• Operating Profit Before Tax increased to Rs. 261.09 Crores in
FY2022-23 from Rs. 247.09 Crores in FY2021-22, 5.67% up over last year.
• Profit after Tax increased to Rs. 233.51 crores in FY2022-23
from Rs. 208.78 Crores in FY 2021-22, 11.8% up over last year.
• The Company reported an EPS of Rs. 50.35 in FY2022-23 compared
to Rs. 44.82 in FY2021-22.
Segment Performance
| Segments |
of FY 2022-23 Revenue(%) |
of FY 2021-22 Revenue(%) |
| Insecticides |
35% |
37% |
| Fungicides |
17% |
19% |
| Herbicides |
37% |
32% |
| Others |
11% |
12% |
Key Financial Ratios
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Debtor Turnover |
5.47% |
5.63% |
| Inventory Turnover |
3.22% |
2.92% |
| Debt Service Coverage Ratio |
36.54% |
32.62% |
| Current Ratio |
3.01% |
3.14% |
| Debt Equity Ratio |
0.03% |
0.03% |
| Operating Profit Ratio |
15.36% |
16.72% |
| Net Profit Ratio |
13.73% |
14.13% |
| Return on Equity Ratio |
23.10% |
23.77% |
| EBITDA Margin |
16.39% |
17.82% |
Business Outlook
The Company will work towards engaging with all the participants across
the value chain both upstream and downstream to deliver a strong kharif season and build a
solid momentum for the remaining part of FY 2023-24. As per the IMD Report, the monsoon is
expected to be normal in this year. Also, the high commodity prices will encourage the
farmers to protect their crops with higher investment and we expect higher consumption of
Agrochemicals this year. The Company has a strong pipeline of section 9(3) and 9(4)
products. This will drive revenue growth in the coming years.
The Company is working on its greenfield project at Dahej, Gujarat,
which will be commercialized in FY 2023-24 . Some new initiatives for business expansion
that the Company has taken in the last financial year are an investment in a Drones
Manufacturing Start-up, the establishment of a Biological Products Division, and a plan to
set up a new Exports Division to create new revenue streams for the Company for mid to
long term growth.
Material Development in Human Resources / Industrial Relations
As a Company, Dhanuka recognizes that people are at the core of our
success. One of our key initiatives is to enhance the strategic orientation of our senior
leaders. We believe this will lead to a significant improvement in our overall
performance. To achieve this goal, we have focused on refining and standardizing our
flagship performance management system, the Critical Operating Tasks (COTs). This system
has been instrumental in driving strategic conversations with SMART targets, which evolve
with the dynamic nature of our operations. In FY 22-23, we successfully extended the usage
of COTs to our DGMs and Senior DGMs. This has helped to create total alignment from
strategy to execution, resulting in winning outcomes.
Nurturing talent and developing leaders is a critical part of our
people philosophy. In FY 22-23, we saw exponential growth in the number of employees who
were included in our talent management program. Our leaders committed to concrete actions,
and Individual Development Programs played a key role in the career growth of our key
talent.
We also recognize the importance of aligning our organizations
structures with our long-term strategic goals. To achieve this, we refined the structures
of our core functions and established matrix reporting at multiple levels to bring synergy
between teams.
We are proud to report that our new hiring strategy has resulted in
exponential improvements in our turnaround time for hiring. We believe this will enable us
to attract and retain top talent, which is crucial to our continued success.
The Company had 1037 permanent employees as on 31st March, 2023.
Learning and Development of Employees
In todays rapidly evolving world, organizations recognize the
importance of fostering a culture of continuous learning and development to enable
employees to grow and thrive. At Dhanuka, we prioritize the ongoing capability building of
our employees through a variety of training programs tailored to their specific
job-related needs. These trainings are designed in consultation with our stakeholders and
are delivered through a range of modes, including classroom sessions, on-the-job learning,
and technology-enabled training platforms.
One of our key initiatives in this area is the Sales Academy- DARES
(Dhanuka Academy to Reach Excellence in Sales), which offers a specialized development
journey for our sales workforce. Through an optimal blend of technology and human
expertise, we are successfully equipping our sales team with the skills and knowledge they
need to excel.
In addition to our Sales Academy, we have also implemented new
initiatives in our factories to support the development of individual contributors and
managers. We have even nominated selected employees for development programs at top
institutions.
Environment Safety, Health and Energy Conservation
Safety at workplaces is of paramount importance to the Company. It
continuously strives to ensure various training and awareness programs are conducted
throughout the year. The aim is to maintain the highest standards of safety across
factories and workplaces and ensure that the latest best practices are implemented across
the business to bring operational efficiencies and save energy.
Stakeholder Engagement
The Companys endeavour is to maintain regular engagement with all its
stakeholders to ensure that their concerns are addressed and expectations are met. Dynamic
processes are in place within the Company to ensure the integration of feedback from
various stakeholders such as suppliers, customers, employees, and investors on a regular
basis. By trusting employees, partnering with suppliers and dealers, and engaging with
local communities, we work towards serving and delighting our customers.
Internal Control Systems and Adequacy
The Company has adequate systems of internal control in place, which is
commensurate with its size and the nature of its operations. The Company has designed and
put in place adequate Standard Operating Procedures and Limits of authority manuals for
the conduct of its business, including adherence to the Companys policies, safeguarding
its assets, prevention and detection of fraud and errors, accuracy and completeness of
accounting records and timely preparation of reliable financial information. These
documents are reviewed and updated on an ongoing basis to improve the internal control
systems and operational efficiency. The Company uses a state- of-the-art ERP system to
record data for accounting and managing information with adequate security procedures and
controls. The Company has its own in-house internal audit team which keeps checks on every
system operating in the Company. Internal auditing is an independent, objective assurance
and consulting activity designed to add value and improve the Companys operations. It
brings a systematic, disciplined approach to evaluating and improving the effectiveness of
risk management, control and governance processes.
A CEO and CFO Certificate, forming part of the Corporate Governance
Report, confirm the existence and effectiveness of internal controls and reiterate their
responsibilities to report deficiencies to the Audit Committee and rectify the same.
Risk Mitigation Framework
Despite the strong growth drivers, the Indian agrochemicals industry
faces challenges in terms of low awareness among a 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 the business environment. The performance of the crop
protection industry and other Agri-inputs is dependent on monsoon, pest and disease
incidences on crops. Agrochemical companies face issues due to the seasonal nature of
demand, the unpredictability of pest attacks and the high dependence on monsoon.
Compliance with 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. Many agrochemical companies have foreign exchange exposure either in
the form of forex loans or exports and imports. For companies that operate largely in the
domestic arena, any major forex movement may affect profitability due to fluctuating
import costs.
While on the one side input costs could increase, weak monsoon could
reduce pricing flexibility, thereby affecting margins. To minimize the risk, a
comprehensive and integrated risk management framework is followed by the Company.
Cautionary Statement
Statements in this Management Discussion and Analysis contain
"Forward-Looking Statements" including, but without limitation, statements
relating to the implementation of strategic initiatives, and other statements relating to
the Companys future business developments and economic performance. While these
forward-looking statements indicate our assessment and future expectations concerning the
development of our business, several risks, uncertainties, and other unknown factors could
cause actual developments and results to differ materially from our expectations. These
factors include but are not limited to, general market, macro-economic, governmental and
regulatory trends, movements in currency exchange and interest rates, competitive
pressures, technological developments, changes in the financial conditions of third
parties dealing with the Company, legislative developments, and other key factors that
could affect our business and financial performance. The Company undertakes no obligation
to publicly revise any forward-looking statements to reflect future/ likely events or
circumstances.
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