Insecticides India Ltd Management Discussions

Global economy

Overview

The global economy displayed signs of recovery from geopolitical concerns, elevated inflation levels and tight monetary policy. In CY 2023, the global GDP expanded by an estimated 3.2%¹. In addition to this, the global inflation level fell from 6.8 in CY 2022 to 5.9 in CY 2024. This decline in the global inflation level was facilitated by the fall in the global energy price and tight monetary policies. Additionally, the growth in the emerging market and developing economies was 4.3%, on the other hand, the advanced economies grew by 1.6% in the reported year.

The US economy displayed resilience due to strong consumer and government spending, along with a rebound in international trade. This resulted in a growth rate of 2.5%². The European Union faced numerous challenges, with uneven growth across member states. Nonetheless, the EU as a whole saw modest growth, while the Euro area successfully avoided a recession. Chinas recovery was also slower, with a growth rate of approximately 5.2%³. It was impacted by difficulties in the property sector and subdued consumer confidence. In contrast, emerging markets like India, Vietnam and Mexico benefited from diverse economic strategies and foreign investments. This has led to positive growth trajectories.

Outlook

The global economy is projected to maintain a steady growth rate in CY 2024. While this growth may be modest compared to some historical periods, inflation is expected to continue declining. This suggests a potential ‘soft-landing scenario, where the economy avoids recession or major instability. Major central banks are preparing to ease monetary policy this easing reflects confidence in successfully managing inflation, adding to a cautiously optimistic outlook for CY 2024.

Inflation rate, average consumer prices (Annual % change)

Ratios	2022	2023	2024	2025*	2026*
Advanced economies	7.3	4.6	2.6	2	2
Emerging market and developing economies	9.8	8.3	8.3	6.2	4.9
World	8.7	6.8	5.9	4.5	3.7

Indian economy

Overview

Despite a sluggish global economy, India remained one of the worlds fastest-growing economies. Markets experienced volatility as geopolitical turmoil intensified, aggressive interest rate hikes by the US Fed occurred, and the global outlook deteriorated, dampening investor sentiment. Despite pressure from the foreign exchange market and portfolio withdrawals, Indian equity markets saw a slight increase in trading. This resilience reflects the robust economy and the increasing investments by local organisations. Forecasts by the National Statistical Office indicate that India achieved a real GDP growth of 8.2% during FY2024.

India GDP Growth rate (%)

The current account deficit was manageable at 1.2% of GDP during April-December 2023-24, a decrease from the previous year. Foreign Direct Investment also stayed strong at $59.9 billion during April-January 2023-24, signalling an ongoing investor confidence. External commercial borrowings also rebounded, with net inflows of $3.7 billion during April-February 2023-24, offering additional financing options for industries.

Moreover, the external debt/GDP ratio also decreased to 18.7% by end-December 2023 and the net International Investment position to GDP ratio improved to -10.8%, indicating a bolstering of the countrys external position.

Growth in the budget allocation in the Indian agriculture sector over the last 10 years

Budget allocation (in crore)

Outlook

Many high-performance indicators have shown strong growth in the Indian economy. Along with increased capex deployment by the government, strong tax revenue collections, burgeoning domestic demand and increasing capacity utilisation across sectors as well as the booming food industry, have all helped strengthen economic activity. Additionally, stable repo rates, government bond yields and healthy foreign exchange reserves indicate macroeconomic stability in the near term.

An above-normal rain has been forecast by the Indian Meteorological Department, (IMD) during the June to September monsoon. It is expected to boost the prospects of a bountiful agricultural harvest. This, in turn, is likely to ease inflationary pressures and bolster economic growth.

The agricultural sector is estimated to contribute 18 per cent to Indias Gross Value Added (GVA) in FY24. It serves as the cornerstone of the nations economy. Despite facing challenges stemming from the global health crisis and fluctuating climate conditions, the sector has exhibited remarkable resilience. It has also been pivotal in Indias economic rebound and progress. In FY23, total food grain production reached 329.7 million metric tons. This indicated a significant increase of 14.1 million metric tons compared to the previous year. Key agricultural commodities like rice, wheat, pulses, coarse cereals and oilseeds experienced notable production gains, showcasing Indias global dominance as the largest producer of milk, pulses and spices globally.

India also holds the status of the second-largest producer of fruits, vegetables, tea, farmed fish, sugarcane, wheat, rice, cotton and sugar. The horticulture sector achieved a milestone with production reaching 355.25 million metric tons. According to third-party advance estimates, this marks the highest ever output in Indian horticultural history. The sector has shown an improved performance. This is evident in the substantial surge in agricultural exports, which soared toH4.2 lakh crore in FY23, surpassing previous records. With ample opportunities and conducive policy frameworks, Indian farmers have demonstrated their capacity to meet global food demands. The potential for further growth remains significant⁴.

Industry Overview

Global agricultural industry

In recent years, global agriculture has experienced a profound transformation. It is driven by technological advancements and increased global engagement. Despite its evolution, agriculture remains the second-largest employer worldwide, following the services sector. The combined value-added generated by agriculture, forestry and fishing industries experienced significant growth, increasing by a huge per cent in real terms. Notably, China, India and the United States of America emerged as the leading nations in terms of value-added in the agriculture, forestry and fishing sectors.

As the global population is estimated to reach 10 billion by 2050, there is an imperative to significantly increase food production. This requires a greater reliance on technology-driven agriculture. as expanding land resources remains unlikely. The future of farming will experience the adoption of advanced systems, accompanied by a demand for improved planting materials, modern machinery, agro-processing equipment, soil health products, enhanced infrastructure and innovative value chain models.

India is one of the key agricultural players and is poised to actively engage in global food and agro trade. With Indian institutions offering expertise and collaboration on a global scale, it has emerged as a gateway to numerous Asian countries and the entire African continent. Indias share in global trade remains modest at 2%, despite its 8% contribution to the worlds food production.

Indian agricultural industry

India stands as a prominent player in the global agriculture sector. It serves as the primary source of livelihood for approximately 55% of its population. The country has several remarkable agricultural achievements, including having the worlds largest cattle herd (buffaloes) and the largest planted area for crops such as wheat, rice and cotton. Additionally, the country holds the title of being the largest producer of milk, pulses and spices globally and ranks second in the production of fruits, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice and sugar. India ranks second globally in terms of being the largest agricultural land. The agricultural sector in the country, provides employment for nearly half of the countrys population, highlighting the pivotal role of farmers in ensuring our sustenance.

In FY24, the Indian agricultural industry reached a size of INR 90,215.8 billion and is expected to reach a valuation of INR 227,059.9 billion by FY33. This growth is also expected to display a compound annual growth rate (CAGR) of 10.5% during the period of 2024-2032⁶. Several key factors act as growth drivers for the industry such as shifting dietary habits among the population, rapid population growth, changing weather patterns, increased occurrences of natural disasters and favourable technological advancements. Notably, advancements such as precision farming, data analytics, drones and automation also play a significant role in propelling the Indian agriculture market forward.

Key budget announcements for the Indian agriculture industry
Announcement	Description
Approximately a budget of H 1,27,470 crore is allocated for agriculture in Indias Interim budget 2024-25.	Acknowledging the importance of agriculture, the interim union budget has allocated Rs 1,27,469.88 crore for the Ministry of Agriculture.
	Within this allocation, Rs 1,17,528.79 crore is designated for the Department of Agriculture, while the Department of Agricultural Research and Education (DARE) has received Rs 9,941.09 crore.
H 20 lakh crore agriculture credit target	In the Interim Budget 2024-2025, the agriculture credit target was elevated to Rs 20 lakh crore, highlighting the commitment to farmer welfare.
	The continuation of funding is ensured for the Agriculture Accelerator Fund, introduced in the Budget 2023-24. It is aimed at aiding rural entrepreneurs and Agri-startups.
	Its objective is to provide innovative solutions to farmers challenges and modernise agricultural practices to improve productivity and profitability.
	The PM Kisan Samman Nidhi budget allocation remains unchanged at Rs 60,000 crore, sustaining direct financial assistance to farmers. This scheme is poised to benefit 11.8 crore marginal and small-scale farmers.
Funds allocated for the ongoing implementation of PMFBY	Acknowledging the challenges encountered by farmers, the Pradhan Mantri Fasal Bima Yojana (PMFBY) consistently receives funding for its ongoing implementation.
	This crop insurance initiative aims to offer security to four crore farmers, shielding them from unexpected events such as adverse weather conditions.
	The Government is also dedicated to improving the efficacy of crop insurance by creating awareness and accessibility in rural regions. This endeavour is expected to stimulate growth within the insurance sector.
Integration of 1361 mandis into e-NAM	The Indian agricultural markets are experiencing a digital revolution, evident in the increased integration of mandis with the e-NAM platform.
	The electronic National Agricultural Market (e-NAM), operating nationwide, serves as a trading portal, amalgamating State-run Agricultural Produce Marketing Committees (APMCs) and mandis. The interim budget devises plans to integrate 1,361 mandis, aiming to boost trading volumes to Rs 3 lakh crore by 2024-2025, benefiting 1.8 crore farmers.
	This initiative marks a notable stride toward establishing a more efficient and transparent agricultural market ecosystem.
Addressing post-harvest losses with public-private partnerships to improve infra and storage facilities	India faces a significant challenge of post-harvest losses, losing a decent per cent of its fruits, vegetables and other crops, including oilseeds and spices, from harvest to consumption, resulting in huge losses.
	To address this critical issue, the budget underscores the importance of building public- private partnerships to improve infrastructure and storage facilities. Mitigation of these losses can strengthen Indias food security and drive overall economic growth.
	The Government of India intends to encourage both public and private investments in aggregation, procurement, modern storage, as well as branding and marketing under the PM-Formalisation of Micro Food Processing Enterprises scheme, aimed at fortifying the micro-processing sector.
Atmanirbhar Oil seeds Abhiyan for self-sufficiency and food security	Edible oil, a crucial ingredient in Indian households, is predominantly imported, with annual imports surpassing Rs 1.5 trillion, posing a significant risk to our food security.
	The Atmanirbhar Oil Seeds Abhiyan initiative aims to address this issue by promoting research and development of indigenous oilseeds such as groundnut and mustard. The initiative will also concentrate on research aimed at creating high-yielding varieties of oilseeds, embracing modern agricultural practices, establishing effective procurement methods, establishing strong market connections, initiating value-added ventures and implementing crop insurance measures.
Reduce import dependencies with increased adoption of Nano DAP	In India, DAP (di-ammonium phosphate) ranks second only to urea in terms of fertiliser usage. Building on the success of Nano Urea, the interim budget for 2024-2025 suggests the widespread adoption of Nano DAP across all climatic regions. Nano DAP demonstrates itself as a cost-effective and efficient substitute for conventional DAP. Given that Nano DAP is produced domestically, this initiative is expected to diminish import reliance.

Key demand drivers for the Indian agriculture sector

The Indian agriculture sector is prepared for growth, driven by several key demand drivers:

Rising Population and Income: Indias population is estimated to reach 1.45 billion by 2024. It is leading to an increased demand for food grains, fruits, vegetables and protein sources like meat and dairy. Surging disposable incomes will also fuel demand for higher-value agricultural products.

Government Initiatives: Government initiatives can improve

Indias agricultural sector by focusing on several important areas. Investments in research and development of high-yield crops and sustainable practices can strengthen productivity. Various initiatives like PM Kisan, provide income support and e-NAM facilitates online market access to empower farmers. Upgradation of irrigation infrastructure and promotion of micro-financing schemes can further improve efficiency and financial security. By addressing these areas, government efforts can create a more resilient and profitable agricultural sector for India.

Urbanisation and Changing Diets: Urbanisation and evolving food habits present exciting growth opportunities for Indian agriculture. Rapid urbanisation creates a demand for high-value crops like fruits, vegetables and protein sources. This shifts the focus from staples. Coupled with rising disposable incomes, this fuels demand for processed food items needed a strong supply of raw agricultural produce. Catering to this changing demand and adopting practices like vertical farming for urban areas, Indian agriculture can capitalise on this trend and ensure a sustainable and profitable future.

Food Processing Industry Growth: Indias food processing industry is experiencing significant growth. This increases the demand for raw materials like fruits, vegetables and grains from the agricultural sector, to cater to the production of processed food items.

Export Potential: India has the potential to become a major exporter of agricultural products. Government initiatives like "Krishi Udaan" (Agriculture Flights) aim to improve logistics and connect farmers to international markets. Benefiting from a wide range of agricultural goods and a rising emphasis on quality standards, Indian farmers and exporters are seizing opportunities in the international markets. The broadening of export markets not only creates growth but also offers avenues for heightened revenue and profitability. This can increase additional demand for Indian agricultural produce.

Focus on Sustainability: Theres a soaring emphasis on sustainable agricultural practices. This includes organic farming, water conservation techniques and precision agriculture. The demand for organic products and sustainably produced food is rising among consumers, creating a niche market for Indian farmers adopting these practices.

Increasing investment in agricultural research and development (R&D): Surging investment in agricultural R&D can be a significant growth driver for the Indian agricultural sector. This ignites innovation in areas like high-yielding, disease-resistant crop varieties, improved irrigation methods and sustainable practices. It also helps develop better storage and transportation solutions, minimising post-harvest losses.

By strengthening farm productivity and efficiency, R&D can enhance food security, empower farmers with better tools and potentially increase agricultural exports, contributing to overall industry growth.

Key challenges in the Indian agriculture industry

Fragmented Landholdings: A distinct portion of Indian agricultural land is divided into small, fragmented plots. This makes it difficult to adopt modern farming techniques, and mechanisation and achieve economies of scale, impacting overall productivity.

Climate Change and Water Scarcity: Erratic weather patterns, droughts and unpredictable rainfall threaten crop yields. Water shortage due to overuse and inadequate infrastructure, hinders agricultural productivity.

Soil Degradation and Depletion: Non-judicious use of chemical fertilisers and unsustainable practices lead to soil degradation and depletion of essential nutrients. This reduces land fertility and necessitates higher fertiliser inputs which further impacts profitability.

Post-Harvest Losses: India faces massive post-harvest losses due to inadequate storage facilities, improper transportation infrastructure and inefficient supply chains. These losses can reach up to 30% for some crops. which can further impact farmer incomes significantly.

Integration with the Food Processing Industry: Strengthening linkages between farmers and the food processing industry can add value to agricultural produce. However, various challenges exist in terms of contract farming models, ensuring fair pricing for produce and minimising food waste within the processing chain.

Indian agrochemicals industry

The Indian agrochemicals market is expected to grow from USD 8.22 billion in 2024 to USD 13.08 billion by 2029, with a steady increase of 4% each year⁷. Pests, weeds and diseases cause a 15-25% loss in potential crop production in the country. To address this issue, a focus on using agrochemicals effectively has been taken up, to improve crop productivity. Pesticides are widely used, but theres also a growing trend towards eco-friendly methods. The government is also promoting sustainable agriculture, leading to a rise in biopesticide usage, which now makes up 15% of the market.

India is poised to become a global manufacturing hub, supported by government policies, R&D focus, and capacity building under initiatives like Make in India. The agrochemical industry, known for its efficient manufacturing and quality, aims to reduce imports and enhance exports, notably to the USA and Brazil.

Farmers are being educated on safe spraying practices and optimal pesticide use, with increasing adoption of drone technology for precision spraying. Indias stringent environmental norms classify the agrochemical sector under Category A, ensuring thorough Environmental Impact Assessments (EIA) for manufacturing plants.

The majority of Indian agrochemical companies adhere to strict wastewater discharge norms, emphasizing environmental sustainability alongside production efficiency and competitive pricing in the global market.

However, numerous challenges like shrinking arable land and crop loss due to pests remain. Despite these challenges, the agrochemical market plays an important role in strengthening agriculture output and supporting food security efforts.

Recent developments

In February FY25, a notable development took place at the Commodity Classic trade show: a range of agriculture equipment was launched, including autonomous high-horsepower tractors, air carts and sprayers equipped with weed-sensing technology, aimed at enhancing productivity, efficiency and sustainability in farming practices. Among these innovations was the Electric GUSS, which has been depicted as the worlds first fully electric autonomous herbicide orchard sprayer. Its advanced technology enables remote control of multiple sprayers and incorporates a sophisticated weed detection system, thereby reducing herbicide usage and promoting sustainability in agricultural operations.

Rising agrochemicals export from India

India has become the second-largest exporter of agrochemicals in the world. The country has outperformed the USA and is now closely following China in agrochemical exports. Over the last five years, exports have nearly doubled from US $2.6 billion to approximately US $5.5 billion. This indicates a significant growth potential. India has established itself as a prominent player in the global market.⁸ The majority of the market is dominated by generics, with about

75% governed by post-patent products. Despite the perception of focus, on new chemicals and green chemistry, there are concerns about the reduction in gross trade surplus due to imports. While imports stand at about 14,000 crores in rupee terms, exports are around 44,000 crores, resulting in a trade surplus close to $30,000.

The countrys success is primarily due to judicious chemical usage as per state government recommendations and the propagation of responsible chemical use among companies. Backward integration, capacity expansion and new restrictions propel the growth of the industry.

Growth drivers for the Indian agrochemicals industry

The Indian agrochemicals industry is predicted to maintain a positive growth trajectory in 2024, driven by several key factors:

Population Growth

Indias growing population continues to accelerate the demand for food, leading to a need for higher agricultural productivity. This gives rise to a rise in demand for agrochemicals like fertilisers, pesticides and herbicides to protect crops and enhance yields. Moreover, rising disposable incomes could also lead to higher spending on food quality, potentially influencing demand for residue-free produce requiring minimal chemical use. This, in turn, could drive innovation in safer and more targeted agrochemicals.

Focus on Crop Diversification

Government initiatives are also motivating farmers to shift from staple crops to high-value fruits, vegetables and pulses.

These crops are usually more prone to pests and diseases. It necessitates the use of specific agrochemicals. The trend towards adopting sustainable agriculture practices like Integrated Pest Management (IPM) could create a demand for bio-pesticides and other eco-friendly agrochemical solutions.

Soil Health Programs

Initiatives that promote soil health and nutrient management might lead to increased demand for fertilisers and micronutrients.

Precision Agriculture

The adoption of precision farming techniques like drone technology for targeted pesticide application can also improve efficiency and potentially boost demand for specialised agrochemicals.

Biotechnological Innovations

Advancements in biotechnologies like gene editing could lead to the development of new, more effective agrochemical products.

Export Potential

India can become a major exporter of agrochemicals. Government initiatives are set to improve manufacturing facilities and regulatory frameworks. This could further support this growth.

Outlook

Indias agrochemical industry has experienced remarkable growth in recent years. It has established itself as a key player in the global market. With a strong focus on partnerships and regulatory compliance, India is set to address both domestic agricultural needs and global challenges effectively. The countrys increasing income levels and youthful population are driving a consumption-driven economy. This leads to increased demand across various sectors. This situation enables Indian manufacturers to offer competitive pricing for generic agrochemicals. Thus, attracting global attention and driving export volumes. Indias reputation for cost-effectiveness and product quality positions it as a preferred destination for agrochemical manufacturing. The "Make in India" initiative by the government has also played a crucial role in advancing the agrochemical industry by promoting domestic manufacturing, reducing regulatory barriers and facilitating infrastructure development. Additionally, initiatives like Aatmanirbhar Bharat Abhiyan highlights the importance of self-reliance and resilience in key sectors like agrochemicals. This aims to reduce dependency on imports and enhance competitiveness. The proposed production-linked incentive system for the agrochemical sector is also expected to further boost domestic manufacturing, create employment opportunities and elevate the countrys global competitiveness.

Indias strict laws and regulations regarding chemical manufacturing, particularly fertilisers and pesticides, have earned global recognition. Mandated by the Insecticides Act of 1968 and The Insecticide Rules of 1971, India implements meticulous checks and balances before releasing pesticides into the market. Overseen by the Central Insecticides Board and Registration Committee, operating under the Industries (Development and Regulation) Act of 1951, ensures adherence to global standards. Such adherence to strict regulations not only ensures the safety of humans and animals but also builds trust among consumers worldwide. This reinforces Indias reputation as a reliable source of high-quality agrochemicals.

Opportunities for the Indian agrochemical industry
Capitalising on the Rise of Specialty Chemicals	Government initiatives, promoting crop diversification create a demand for speciality chemicals catering to fruits, vegetables and pulses. These crops are prone e to specific pests and diseases requiring targeted solutions. Indian agrochemical companies can develop and market these speciality products to meet the needs of the evolving agricultural landscape. The increasing emphasis on sustainable agriculture practices like Integrated Pest Management (IPM) presents an opportunity for bio-pesticides, bio-fungicides and other eco-friendly solutions. Developing and promoting these alternatives can position Indian companies as leaders in sustainable crop protection.
Opportunities for the Indian agrochemical industry
Embracing Technological Advancements	The adoption of precise farming techniques creates opportunities for more innovative agrochemical delivery systems. Developing targeted application solutions like specialised drones or formulations for minimal environmental impact can act as a growth driver. Moreover, utilising digital tools like data analytics, to create customised crop protection solutions, based on farm-specific data, presents a significant opportunity. This can further improve the efficiency and effectiveness of agrochemical use for farmers.
Strengthening Export Potential	The government of Indias initiatives aimed at improving manufacturing facilities, streamlining regulatory processes and promoting exports can open opportunities for Indian agrochemical companies in the global market. The focus on cost-effectiveness and quality can make Indian products competitive internationally. Moreover, targeting emerging markets in Africa, Southeast Asia and South America, with similar agricultural challenges can prove to be a strategic move. The development of region-specific solutions and establishment of strong distribution networks can unlock export potential.
Building Brand Trust and Innovation	Consistent brand quality and traceability of inputs are crucial for building brand trust and establishing a strong reputation in the market. This gains even more importance with the rising demand for residue-free products. Moreover, continuous research and development to improve product efficacy, safety and environmental sustainability is vital. An effective future- proof strategy can be exploring biotechnologies like gene editing to develop next-generation agrochemicals.
Challenges
Regulatory compliance challenge	The employment of strict regulations ensures food safety and minimises environmental impact. This can potentially be an optimistic development, but overly strict measures might make essential agrochemicals unaffordable for small and marginal farmers. As a result, it can impact agricultural productivity. Additionally, the industry also needs to navigate a complex web of regulations across various government bodies. Streamlining the regulatory framework and ensuring clarity on compliance procedures can provide a more predictable operating environment for companies.
Combating Price Volatility and Supply Chain Issues	Profitability might suffer adversely due to the global fluctuations in the prices of raw materials used in agrochemical production. Alternative sources or hedging strategies can help mitigate these risks. Also, geopolitical tensions and logistical bottlenecks can disrupt the supply chain for essential raw materials or finished products. Unforeseen disruptions can be eliminated by building resilient supply chains with diversified sourcing options.
Counterfeit Products and Brand Erosion	Counterfeit products undermine the market for legitimate agrochemicals. Fake versions of the insecticides could erode brand trust, leading to a loss of sales and revenue. Farmers using counterfeits might experience lower efficacy or crop damage. This can further affect the companys reputation for quality.
Rising resistance of pests to pesticides	Rising pest resistance to pesticides is a significant threat for the Company. If their current products become less effective, farmers may switch to competitors or abandon chemical control altogether. This could lead to declining sales and pressure on the Company to invest heavily in research of new, effective insecticides to stay competitive.

Company Overview

Since its inception, Insecticides (India) Limited (IIL), has emerged as a prominent player in crop protection and nutrition within the Indian agricultural market landscape. since its establishment. Starting as a modest formulations manufacturer, the Company has expanded its scope, now specialising in crop protection and owning the esteemed Tractor Brand.

2001

Year of Year of Commencement of Operations

With aspirations to become a recognised international brand, the Company prioritises accessibility, affordability and superior quality. In order to achieve this, the Company maintains the highest standards of product quality, competitive pricing and an expanded distribution network, making use of advanced technologies. This strategic approach has enabled IIL to build an integrated portfolio across key product categories. It aims to serve both domestic and export markets while contributing to the Make in India initiative and promoting sustainable growth for a brighter future.

The Company has a widespread presence across India and it operates six modern manufacturing facilities, producing a diverse range of crop protection products. Substantial investments have been made by the Company to augment manufacturing capabilities. This has positioned the Company competitively in the market. By aligning with market demands, IIL has achieved a competitive edge, offering a wide array of products including Insecticides, Herbicides, Fungicides and Biological and PGR. Brands like Green Label, Pulsor, Hakama and others within these categories are well-established and trusted. Insecticides Indias state-of-the-art manufacturing facilities prioritise operational efficiency, ensuring cost leadership in product offerings. Over time, it has developed differentiated products with unique characteristics, enhancing customer satisfaction.

Key strengths

With 4 R&D centres, the Companys R&D team continues to emphasise on new innovation in technical and formulation to enhance the efficiency and quality of premium Maharatna products.

• The Company is strategically positioned to meet the growing demand for sustainable and ecologically responsible crop protection and nutrition solutions through its expertise in biologicals and chemicals.

• The Company also has a notable intellectual property portfolio, with 24 granted patents.

FY24 Financial Performance Review

The Company recorded an impressive top-line growth of 9.16 % in FY24, reaching H 196.63 Million, compared toH180.13 million in FY23. The Profit After Tax (PAT) stood atH10.26 million, compared to the previous years H 6.29 million.

Key financial ratios

Ratios	FY24	FY23	% change	Reasons
Debtors turnover	6.63	6.16	7.63	-
Inventory turnover	1.76	1.86	-5.38	-
Interest coverage ratio	13.18	7.22	82.55	Higher of Profit has lead to increase in the ratio
Current ratio	1.90	1.62	17.28	-
Debt-equity ratio	0.09	0.18	-50.00	Reduction in borrowing and lease liabilites and enlargement in shareholders equity has lead to decrease in the ratio
Operating profit margin (%)	8.30	6.77	22.60	Higher of Profit has lead to increase in the ratio
Net profit margin (%)	5.22	3.50	49.14
Return on Net Worth- RoNW (%)	10.15	6.88	47.53	Higher of Market value of Investment has resulted to increase in the ratio

Risk management process

Identifying and assessing the risk

The most important, initial steps to risk management are identifying and assessing. Identifying also involves pointing out potential events that could create disruptions for the Company in achieving its goals. This can be done through brainstorming, analysing past issues and considering industry trends. Once identified, the Company assesses the risk by evaluating the likelihood of its occurrence and the potential severity of its impact. This also helps in focusing on risks according to their severity and resource allocation for mitigation strategies.

Prevention and control strategy

This is the heart of risk management after identification and assessment. It focuses on eliminating the impact of prioritised risks. This can also involve several tactics: completely eliminating the risk likelihood, lowering the severity, and shifting the risk to another party. Controls are also implemented, which are specific actions or procedures to execute the chosen strategy. Examples include installing safety equipment, conducting regular maintenance or having backup plans.

Monitoring

Risk management monitoring is, keeping a watchful eye on the organisations risk landscape. It involves continuous tracking of identified risks, their likelihood and their potential impact. These ongoing processes allow us to assess whether existing controls are effective and if new risks have emerged due to internal or external changes. Monitoring often utilises Key Risk Indicators (KRIs). These are measurable factors that signal the escalation of potential risks. Vigilance can help identify issues early and take corrective actions before they cause problems and ensure that the risk management plan stays relevant and adaptable.

Reviewing and reporting on the risk

Reviewing and reporting is considered as the final step in the entire risk management cycle. Its continuous improvements. The review process involves periodical evaluation of the effectiveness of its entire risk management process. This includes assessing if identified risks remain valid, if control measures are working and if new risks require attention. Reporting also communicates these findings to relevant stakeholders. Reports typically detail key risks, their current status, control effectiveness and recommendations for improvement. This transparency allows informed decision-making, resource allocation adjustments and fosters a strong risk management culture within the organisation.

Risk management

The Company has a dedicated risk management committee tasked with identifying a spectrum of internal and external risks unique to our operations. These include financial, operational, sectoral and sustainability-related risks, with special focus on

ESG considerations, as well as informational and cybersecurity risks, among others. The committee takes responsibility for the complete supervision and guidance of its risk management policy. The committee gives regular reviews of the policy, ensuring that any necessary adjustments to the risk management approach are recommended. The Company monitors the risks arising from both the internal operations and the external business environment through a comprehensive risk management framework. This proactive stance enables us to consistently deliver value to all stakeholders, navigating industry fluctuations and economic challenges effectively.

Our risk mitigation plan

The Board implements several measures as part of its risk management and mitigation plan to ensure comprehensive risk oversight and control.

Defining Roles and Responsibilities of the Risk Management Committee

The Risk Management Committees roles and responsibilities are clearly defined to ensure effective risk identification, assessment, and mitigation, enhancing the organisations overall risk management framework.

Establishing a Risk Appetite Framework

The Board establishes a Risk Appetite Framework to define the level of risk the company is willing to accept while pursuing its strategic objectives. This framework aids in making informed decisions and maintaining a balanced risk-reward ratio.

Developing a Risk-Aware Culture

Promoting a risk-aware culture across all organizational levels encourages employees to identify and report potential risks without fear of reprisal, fostering proactive risk management.

Conducting Regular Training and Awareness Programs

The Board provides ongoing training to employees on risk management policies and procedures, ensuring everyone understands their roles in the risk management process and remains vigilant.

Enhancing Communication and Collaboration

The Board fosters open communication channels between the Risk Management Committee, the Board, and other departments. This collaborative approach ensures a comprehensive and unified risk management strategy.

Engaging External Experts

Periodically, the Board engages external risk management experts to conduct independent reviews and provide fresh perspectives on the companys risk management practices, ensuring continuous improvement and adherence to best practices.

Risks and mitigations

Risks	Description	Mitigation strategy
Regulatory changes	Stricter regulations on pesticide use, production or safety standards may be introduced by the Indian government or other regulatory bodies like CIBRC. These regulatory changes could disrupt production processes, increase compliance costs or limit market access for certain products.	The Company thoroughly monitors all regulatory changes through their compliance management system and adapts production processes and product formulations to meet the new standards.
Shifting farmer preferences	With the demand for organic products increasing, farmers are likely to be drawn to such farming practices or alternative pest control methods. This in turn, may lead to a decline in demand for traditional insecticides.	The Company invests in R&D to develop new bio-pesticides or organic alternatives, in order to cater to the evolving farmer preferences and potentially enter new markets.
Competitive market	The increased competition from domestic or international players offering their products at competitive prices, might put pressure on the Companys existing market share and profitability. Fluctuations can occur due to disruptions in the global supply chain, rising energy costs or unexpected weather events impacting key ingredients.	The Company is exploring export opportunities and also expanding into new product lines beyond traditional insecticides. The Company has built long-term contracts with reliable suppliers, diversified its raw material sources and is prioritising the development of more cost-effective formulations to maintain affordability for farmers.
Raw materials price fluctuations	This can adversely affect the profit margins as the Company might struggle to pass on increased costs, entirely to farmers in a competitive market.
Unpredictable changes in climate	Unpredictable weather patterns like droughts or excessive rainfall can disrupt crop cycles. Which leads to the faltering of the demand for insecticides. Additionally, extreme weather conditions could damage production facilities or disrupt supply chains.	The Company focuses on researching and developing drought-resistant or adaptable insecticides that remain effective under adverse and dynamic weather conditions. Insecticides India is also investing in climate- smart production methods. This method involves adopting water-efficient technologies or utilising renewable energy sources to ensure that the production remains sustainable and less vulnerable to disruptions caused by extreme climatic conditions.

The Company operates within a clearly established organisational structure. Information flows are carefully defined, to prevent conflicts or communication gaps between various departments. Within each department, there are secondary positions, that ensure smooth continuity of operations in the absence of department heads. Strict policies are implemented for the maintenance of inventories, including raw materials, consumables, key spares and tools, to guarantee their availability for scheduled production activities. Continuous efforts are made to drive down production costs, adapting to evolving market conditions.

Internal control system and adequacy

The Company maintains robust internal control procedures tailored to its size and activities. It believes that safeguarding assets and enhancing operational efficiency are achievable through the implementation of adequate internal controls and the standardisation of operational processes. These internal controls and risk management mechanisms adhere to the principles and criteria outlined in the corporate governance code of the organization. They are seamlessly integrated into the overall organisational structure of both the Company and the Group, involving various personnel who collaborate effectively in fulfilling their respective duties. The Board of Directors provides guidance and strategic oversight to the Executive Directors and management, overseeing monitoring and support committees.

Human resources

The Company recognises its intellectual capital as its primary asset. The well-being and satisfaction of its team members is thus, extremely crucial for its prosperity. According to the Company, the growth of its employees will act as the major driver for its success. Insecticides India prioritises its aim of building an environment that encourages and supports personal development within a welcoming and secure atmosphere. Realising the importance of diversity, the Company highly values the contribution of each individual. Insecticides Indias

Total number of employees as of 31^st March 2024.

Human capital is the most valuable resource for shaping the Companys future and ensuring smooth operations. The strength as a group lies in the Companys cohesive teamwork.

Training and skill development are essential for both individual as well as organisational growth. The Company also organises regular sessions to empower its workforce. Additionally, it prioritises maintaining a flat communication structure to enable transparent dialogue between employees and management. These initiatives strengthen the Companys ability to attract and retain top talent, resulting in a committed and satisfied workforce. The Company has also successfully implemented HR initiatives and people management practices.

Health and safety measures

Prioritising the well-being and safety of its team, the Company places utmost importance on building a secure and healthy work environment. It acknowledges that such an environment, both nurtures the welfare of the team as well as serves as a foundational element for the sustainable success of the organisation. To maintain this commitment, the Company has established comprehensive health and safety policies and procedures. These policies are complemented by consistent training and awareness initiatives for all staff members. Navigating and mitigating potential occupational health and safety risks across all operations, the Company aims to induce a strong emphasis on occupational health and safety. This helps it cultivate a safety-focused culture that prioritises the welfare of its employees.

To strengthen these efforts, various safety measures have also been implemented across different corporate offices and manufacturing facilities. Mandatory safety training and participation in drills are essential for all contractors and workers at these facilities. Moreover, the Companys manufacturing sites hold certifications for its adherence to occupational health and safety management systems and compliance with ISO 45001 standards. These initiatives, collectively enhance the Companys ability to identify and address health and safety hazards while elevating its overall performance in these critical areas.

Cautionary statement

The statements made in the Management Discussion and

Analysis describing the Companys objectives, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the

Companys operations include economic conditions affecting demand-supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.