Rallis India Ltd Management Discussions

Economic Overview

Global Economy

As per the World Bank, global economic growth is estimated at 3.2% for 2023 and projected to remain same for 2024 and 2025. Advanced economies are expected to see slight increase in growth from 1.7% in 2024 followed by 1.8% in 2025. Emerging and developing economies are overall expected to experience stable growth of 4.2% in 2024 and 2025.

Expecting steady decline of inflation from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. Stronger global growth can be expected in case of faster defiation, slower withdrawal of fiscal support, faster economic recovery in China and artificial intelligence driven supply-side reforms. The down-side risk to the growth are commodity price spikes amid geopolitical and weather shocks, slower than expected decline in core inflation requiring tighter monetary policy stance, faltering growth in China and disruptive action on fiscal consolidation. On the policy front, central banks focus will be on managing the decline of inflation and carrying out calibrated fiscal consolidation to support durable medium-term growth.

Indian Economy

Domestic GDP growth is estimated at 7.6% for FY 2023-24 compared to 7.0% in 2022-23. RBI is outlooking FY 2024-25 GDP growth of 7.0% and India will continue to remain the fastest growing large economy. RBI views that recovery of Rabi sowing, sustained profitability in manufacturing and underlying resilience of services should support economic activity in 2024-25. Infiation is expected to moderate in 2024-25 to 4.5% compared to the estimated 5.5% in 2023-24 and 6.7% recorded in 2022-23. On the policy front RBI is expected to continue its focus on aligning inflation towards its target. Geopolitical, climate change, global indebtedness and technology disruptions are the biggest risks

On the policy front, central banks focus will be on managing the decline of inflation and carry out calibrated fiscal consolidation to support durable medium-term growth. which may impact Indias growth momentum. Agriculture sector growth estimated at 1.8% in 2023-24 compared to 4.0% recorded in 2022-23 as the country witnessed the hottest and driest August ever recorded over the century.

Amidst the above outlook , there are hurdles to navigate. Infiation, although slightly down, continues to hover above the RBIs target of 4%. Global factors like rising commodity prices and supply chain disruptions could spur inflation. Furthermore, the ongoing geopolitical issues and potential global economic slowdown pose a threat to Indias exports and foreign investments.

Despite these challenges, Indias economic fundamentals remain strong. The Governments commitment to increase capital expenditure in the coming year signifies its dedication to sustaining growth. The next few months will be critical in determining the future trajectory of the Indian economy, but the current momentum suggests a bright future.

Agriculture Sector Overview

Domestic Agricultural Sector

Indian agriculture continued to experience the impact of climate change. Amid El Nino conditions, Geographical and month-wise rainfall remained erratic, Southern Peninsula and Central India received deficit rainfall. These situations resulted in drought conditions in many parts of the country. Reservoir water levels towards end of the year was lower as compared to the same period last year and lower than last 10 years average, causing shift in cropping patterns, segmental shifts and lower crop pest incidence, etc. As per the Second Advance Estimate for 2023-24, total foodgrains production in the country is estimated to be 1.3% lower than the previous year. Production drops also estimated in Oil seeds (9.2%) Sugarcane (9.0%) and, Cotton (4.0%).

Agricultural Exports

Agri exports is expected to grow in the current fiscal compared to $53 Bn reported during the previous fiscal. Growth in exports of meat, dairy, cereal preparations, and fruits and vegetables are offsetting the challenges arising from restrictions placed on export of rice, wheat and sugar in a bid to rein in domestic prices.

Mega Trends in Indian Agriculture sector

Indias domestic agricultural sector is undergoing a significant transformation driven by technology and innovation. There is a growing emphasis on diversification and increasing areas under high value crops, increase in drip irrigation and demand for quality agri-inputs. Farmers are responding to the increasing demand for fruits, vegetables, exotic crops, organic produce, etc. to tap increasing domestic and export demand. Precision agriculture and data-driven approach allows for targeted resource utilisation, improved yields, and reduced waste. AgriTech startups are playing a crucial role in this transformation by developing solutions such as online marketplaces for farm inputs, weather forecasting and pest predictions. These advancements empower farmers with knowledge and resources, leading to better decision-making. Sustainable practices such as organic farming, water conservation methods, and biofertilisers are being adopted to reduce the environmental footprint of agriculture. Government initiatives of promoting digital literacy and rural infrastructure development aims to support the small and marginal farmers who often struggle to access technology and credit. By embracing technology, innovation, and sustainable practices, Indian agriculture can enhance productivity, empower farmers, and ensure food security for the nation.

Rallis outlook for the Indian agriculture industry is optimistic and is committed to adapting evolving markets. Rallis portfolio of crop protection, crop nutrition and improved seeds supported by a wide market reach aims to address emerging needs of Indian farming community. The Company is also committed to embracing IT and Digital for operational efficiency and improved customer experience.

Market Overview

Global Agrochemical Market

Global agro chemical market after two consecutive years of record growth is estimated to have degrown in 2023 driven by prolonged destocking and heightened pricing pressure. Crop commodity prices have declined from the recent peak levels though remain highbyhistoricalstandards.Highchannelinventorylevelimpacted

Rallis outlook for the Indian agriculture industry is optimistic and is committed to adapting evolving markets. Rallis portfolio of crop protection, crop nutrition and improved seeds supported by a wide market reach aims to address emerging needs of Indian farming community.

North and South American markets. Chinese agrochemical industry witnessed over capacity and price drop during 2023. Declining agrochemical prices and variable weather conditions dented agrochemical demand in most of the Asia Pacific countries. Agrochemical prices and demand were stable in Europe, though adverse weather conditions in some of the countries impacted overall consumption. Currency crunch also impacted supplies to certain African and Asian countries.

The inventory situation in key geographies like Brazil, US and EU were significantly higher and destocking likely to continue till Q2 of FY 2024-25. Raw material prices during the last two quarters of FY 2023-24 were at an all-time low and likely to continue till Q2 of FY 2024-25.

Sluggish scenario of global agrochemicals is also reflected in 22% drop in exports from India during the fiscal year compared to 10% growth in the previous fiscal year. FY 2023-24 exports of $ 4.2 Bn is lower than $4.9 Bn exports recorded for FY 2021-22.

Companys exports were also impacted by an overall reduction in agrochemical pricing. Global industry expecting continued channel de-stocking in H1 2024, and normalisation expected post that. Shipping routes were impacted by the Middle East conflict causing logistic challenges in terms of cost and delivery lead times. Companies are recalibrating their inventory and timing of purchase to address volatility. India is expected to benefit from the fast-evolving sourcing strategy of global players on medium to long term.

Indian Agrochemical Market

The agrochemical market is currently estimated around _ 40,000 crore. The market is highly competitive with multinationals having the advantage of proprietary molecules and domestic companies leveraging low-cost generics and accessing niche molecules through partnerships. It is estimated that India consumes more than 400 agrochemical formulations covering Insecticides, Fungicides and Herbicides. Combination products are gaining popularity in India as well, as it provides ease of use to farmers and cross resistance development, which help in extending the useful life of active ingredients. New formulation technologies supported by advancement in adjuvants is increasing effectiveness and safe handling of Crop protection products. India being a leading producer as well as consumer of Agri produce, needs to sustain Agricultural productivity to ensure food security of the growing population and Crop protection solutions will continue to play an important role in sustaining Agricultural productivity. Paddy, Cotton, Soybean, Chilli, Sugarcane, Grapes, etc. are the major crops and major agriculture states like Maharashtra, Madhya Pradesh, Uttar Pradesh and Southern states are the major geographies for consumption of crop protection chemicals.

In India, Insecticides is almost equal to the combined use of Herbicides and Fungicides in value terms. With the advancement of economy, there is scarcity of agricultural labour, which is prompting farmers to use herbicides as the cost-effective alternate to high cost manual weeding. The demand for insecticides is driven by the need to control the increasing incidence of pests across crops. Major crop pest segments are Paddy - stem borer and brown plant hopper; Cotton - thrips and whitefly and Vegetables - borer, thrips and sucking pests. The industry uses around 75 active ingredients for 165 formulations sold in the country. Active ingredients from Organophosphate, Diamides, Nicotinamides and Pyrethroids form the major chemicals classes. The major crops for Herbicides usage are Paddy, Soybean, Sugarcane, Maize and Wheat. Amino Acids, Triazines and Fop are the major chemical classes. There are 60 active ingredients used in 100 odd herbicide formulations sold in India. Fungicide usage is increasing due to the higher incidence of diseases impacting crop outputs significantly caused by hot and humid weather conditions. Blast, blight, powdery and downy mildew are the major fungal diseases found in Paddy, Fruits and Vegetable crops in India. Active ingredients from Strobilurins, Triazoles and EBDC are the most popular chemistries in India. There are 65 active ingredients used in 135 odd fungicide formulations sold in India. Like the global trends, Chlorantraniliprole, Azoxystrobin and Glyphosate are the leading active ingredients in insecticides, fungicides and herbicides segments respectively in India.

In FY 2023-24, the Indian Crop protection industry has faced several headwinds such as raw material prices drop caused by global market inventory overhang, El Nino impacted erratic rainfall and resultant low reservoir water levels. Category-wise trends are covered as below:

In India, Insecticides is almost equal to the combined use of Herbicides and Fungicides in value terms. With the advancement of economy, there is scarcity of agricultural labour, which is prompting farmers to use herbicides as the cost-e_ective alternate to high cost manual weeding.

Insecticides: Insecticides are the chemicals used to kill, repel, or control insects that feed on crops. Overall the insecticides segment has grown by about 6-8% this year. There have been ups and downs in different crop-pest segments. The Lepidopteran segment in Paddy, Chilli and Pulses and the Sap Sucking pest segment in Cotton, Chilli and Vegetables accounted for growth. There has been a decline, due to rains at the time of application in North India and less pest pressure and switch to low-cost generics in Soybean and Pulses.

Herbicides: They are often called weedicides, which are used to control undesired plants/weeds in crop field. The overall domestic herbicides segment has degrown 3-4 % due to El Nino impact and erratic rainfall leading to low moisture level in the field prompting Sugarcane, Soybean and Pulses farmers to skip the herbicide application.

Fungicides: Fungicides are another type of pesticides, but instead of targeting insects or weeds, they specifically kill or inhibit the growth of fungi and their spores, which grow on the crop. Overall fungicide segment has degrown due to poor erratic rainfalls. Kharif season was hit badly due to less disease incidence, dry spells and intermittent rains during fungicide spraying windows which lead to skipping of fungicide sprays.

Domestic Crop Nutrition

Crop Nutrition is a critical input for improving production, productivity and quality of farm produce. The Indian crop nutrition market is a two segment business comprising bulk fertilisers and the more diverse non-bulk fertiliser sector. Within non-bulk fertilisers, a variety of specialty products are offered, including organic fertilisers, bio-fertilisers, bio-stimulants, secondary and micronutrients, and water-soluble fertilisers. This segment is bustling with activity from smaller players, who often operate regionally or nationally, focussing on a few or all these niche categories. Organised Indian crop nutrition industry is estimated at 8,000 crore in FY 2023-24. Industry demand was impacted by poor rainfall and reservoir levels. The primary drivers contributing to the Crop Nutrition Industry in India are low fertiliser use efficiency, degrading soil health, increased areas under high value crops, increase in drip irrigation and demand for quality products. Farmers acceptability and usage increasing for biostimulants, biofertiliser, micronutrients etc. Soil health management and integrated crop care are the key issues which will have more importance in the near future. Industry is getting more and more organised and the Company is strategically positioned itself to tap the opportunity.

Domestic Seeds

Seed is a basic input for agriculture, containing live embryonic plants with a protective coat, that germinates into a new plant and instrumental for food security. The Indian organised seeds industry is currently estimated over 16,000 crore. The seeds industry is expected to witness continued demand for hybrid seeds in Cotton, Maize, Millet, Mustard and Vegetables. With focus on coarse Millets like Pearl Millet and Sorghum as climate resilient crops and providing healthier food options, the Millet seed market is likely to grow. However, in Paddy there is an increasing trend towards improved varietal seeds in some geographies linked to eating quality vis-?-vis hybrid. Climate change significantly impacted the key seed production season of Rabi and the industry is outlooking seed availability challenges for the upcoming season.

Company Overview

About Rallis

Rallis India Limited, subsidiary of Tata Chemicals Limited is one of Indias leading agro science companies. With more than 75 years of experience in servicing rural markets, the Company is popular across Indian farmers with the most comprehensive portfolio. Rallis is known for its deep understanding of Indian agriculture, sustained contact with farmers, quality agri-inputs, branding, and marketing expertise along with its strong product portfolio in crop protection, crop nutrition and seeds which is available through a vast distribution network of around 7,000 dealers and over 1,10,000 retailers across India. Crop Protection portfolio of active ingredients, bulk and branded formulations covers herbicides, insecticides and fungicides and caters to domestic and export markets. Crop Nutrition portfolio, which is largely focussed on the domestic market, consists of biostimulants, biofertilisers, biopesticides, organic fertilisers, water-soluble fertilisers as well as micro and secondary nutrients. Rallis production capacities and process development capabilities are complemented by International EHS standards and strict quality parameters to meet the global registration requirements. Rallis has partnered with customers to service 70+ countries and is a preferred partner for custom synthesis manufacturing. Rallis Seeds business portfolio covers key field crops Paddy, Maize, Millet, Cotton, Mustard, apart from select Vegetable crops.

Business Overview

Domestic Crop Care and Seeds

Rallis provides Indian farmers with a comprehensive range of sustainable crop care and seeds solutions. The portfolio includes insecticides, herbicides, fungicides, Crop nutrition products and Seeds – all designed to optimise farm productivity and improve the livelihood of Indian farmers. Rallis extensive field force works directly with farmers throughout the country, supported by a vast distribution network reaching 80% of Indias districts.

Exports Crop Protection

Rallis has emerged as a reliable source for technical grade agrochemicals, bulk formulations, and small pack formulations for serving global farmers directly as well as through its global partners spread over 70+ countries. Rallis leverages its process development and manufacturing capabilities supported by global EHS standards to extend custom synthesis manufacturing services to global partners.

Manufacturing and R&D

Five state-of-the-art crop care manufacturing facilities located strategically in Maharashtra and Gujarat are equipped to produce high-quality technical grade agrochemicals and formulations. Seeds business operates its own maize cob drying plant and has long-term partnerships for seed processing, packing, and storage near Hyderabad, the hub of seed processing in India. Rallis R&D efforts are driven by two dedicated Innovation centres, located in Bengaluru, underscoring Rallis commitment to innovation led portfolio development aimed at optimising farm productivity.

Business Performance

Rallis continued to stay resilient in terms of its performance. During the year, Rallis revenue reached to 2,648 crore as against 2,967 crore during FY 2022-23, a degrowth of 11%. The business was impacted by El Nino conditions and Global Inventory overhang.

Domestic Crop Care

Domestic Crop Care business is impacted by erratic rainfall amid El Nino conditions and low prices. During the year, the Domestic Crop Care business recorded a revenue of 1,594 crore as against

1,643 crore during FY 2022-23, a degrowth of 3% over last year. Under brand business, the Company successfully launched 13 products in the Crop protection portfolio and 6 products in Crop nutrition portfolio.

Insecticides

Rallis insecticide revenue has grown by 2% over last year generating 688 crore despite low pest incidents due to erratic weather conditions. During the year, the Company has launched 9 new Insecticides including Benzilla for the Paddy BPH segment.

Fungicides

Fungicides demand was relatively low in paddy and other relevant crops due to erratic weather conditions and low disease incidence. Fungicides revenue has declined by 4% compared to last year, reaching 406 crore. During the year, the Company launched a broad-spectrum combination fungicide, having multiple crops usage.

Herbicides

Rallis herbicides revenue declined by 18% due to erratic rainfall, impacting herbicide usage, and reached _ 282 crore. During the year, the Company launched one combination herbicide and a non-selective herbicide in line with the Company strategy of strengthening portfolio to tap increasing herbicide demand.

Crop Nutrition

Rallis has a range of unique and differentiated products in Organic fertilisers, Biofertilisers, Biostimulants, Secondary and micronutrients, Water Soluble Fertilisers and Biological categories covered under Crop Nutrition business. Rallis has launched 6 new products including 3 Water Soluble Fertilisers, an Organic Soil conditioner, a neem-based Biopesticide and a Micronutrient containing zinc. The upcoming manufacturing facility at Akola is expected to contribute to Water Soluble Fertiliser driven growth of Crop Nutrition portfolio. Segment registered a revenue growth of 0.9% over last year.

Innovation Turnover Index (ITI) for the Domestic crop care brand business

ITI, the revenue share of new products (up to 4 years from launch), stood at 16% for Domestic Crop Care business. ITI was 20% for Insecticides followed by 18% in Herbicides, 12% in Crop Nutrition and 7% in Fungicides.

Exports

The Exports business recorded a revenue of 639 crore during the year as against 979 crore, due to global industry headwinds. The recently commissioned multi-purpose plant expected to support the portfolio enhancement strategy, which is supplemented by registration investments. During the year, the Company has gained 3 new registrations in overseas markets, and added 2 new products under CSM business. These efforts will support the Companys growth in exports business going forward.

Seeds

The Seeds business was supported by strong performance by the Cotton hybrids reported revenue growth during the year.

Like other industry players, the Company is also facing hybrid seed production challenges which may restrict the growth momentum to some extent. Management initiatives focussed on optimising operating cost expected to drive medium to long-term profitable growth. During the year, the Company has launched 8 products across Maize, Millet and Vegetable crops.

Farmer and Channel Engagement

Farmer Engagement

Customer centricity as one of the stated values, Rallis has established a robust farmer engagement process aimed at enhancing farm prosperity. As part of the farmer engagement process, the Company carries out activities like crop seminars, village level farmer meetings, demonstrations followed by field days, field visits and individual farmer contacts which helps to stay connected with the farmers across the country. These advisory activities are also supported by ‘Dr. Vishwas, Toll Free Helpline and other digital and social media platforms. By end of March 2024, 1.7 lakh Facebook followers, 8.8k Instagram followers and 13.5k YouTube subscribers were registered.

Crop Care

Companys guiding principle of engaging with farmers is through Rallis Samrudh Krishi (RSK), a crop solution-centric approach to align the Companys Customer Connect activities with the seasons progress. During the year, the Company sharpened focus on identifying "Crop x Geography x Brand" set, to align planning and execution of sales and marketing activities comprehensively supported by Sampark and E-Sparsh digital platforms. For ensuring deeper understanding of evolving farmer needs and market trends, the Company organised Focussed Group Discussions (FGD) with farmers. Customer feedback surveys (bi-annually) and C-Sat studies (once in 2 years) as well as specific product research surveys and regular on-field engagements, provided greater understanding of market trends and customer needs.

Seeds

The Company has implemented various programmes and initiatives aimed at farmers and channels to build long-term relationships such as Dhaanya Progressive Farmer groups, which are designed to have an early look at our new or pipeline products and seek their feedback and comprehensively formulate the communication regarding the product to the general community of farmers when the Company market the seed on a large scale. During pre-season, the Company conducts group farmer meetings assisting them in selecting the most suitable seed products based on their local conditions.

Channel Engagement

The Company has a strong Channel partner base reaching 80% of Indian districts and working meticulously in various aspects of Channel management like, having the right set of Channel, Geography - Crop coverage, creating long-term relationships, enhancing loyalty, mutual growth and sustainable success in the marketplace.

Crop Care

Rallis has various channel engagement activities viz. MD Eliteclub and COO club for key distributors and Anubandh Retailer club. FGDs and Bhagidhari Sabha are conducted on annual basis to understand the concerns of key channel partners. e-Bandhan and Dealer management app supports regular interactions with channel partners.

Seeds

The Companys dealer engagement programmes Arohi, Milan, Milaap and Regal recognise and reward high performing channel partners. Some of these programmes involve the family members of channel partners, designed to engage them meaningfully. Dhaanya Edge Loyalty club program is dedicated to retailers.

For enhanced management of Retailers engagement, the Company is going to launch "Anubandh Edge" Retailer Loyalty App and digital platform, for both Crop care and Seeds.

Overall, Rallis Domestic market focus is on intensi_cation of marketing efforts, farmer outreach and advocacy programmes, product stewardship initiatives, expansion of the retailer network, and fostering channel loyalty. For Global markets, the focus is to expand global footprint, to tap the opportunities emerging in the new markets, taking inspiration from the evolving Indian market and the "India Plus" strategies of global peers.

Digital Integration

Rallis prioritises digital platform usage across operations for improved efficiencies and data-based decisions.

e-Bandhan: Dealer management application provides real-time information to dealers and front line sales team.

e-Sparsh: Application for Sales & Marketing team for dealer onboarding process and supports performance review and efficient customer grievance handling.

Sampark: Application for performance tracking of on-ground field force.

Plan Guru (SAP-IBP): Integrated Business Planning system for efficient forecast and demand fulfilment process.

Transport Management System (TMS): Logistics automation platform for improved transparency, efficiency, visibility and accuracy.

SeedSay: An advanced analytics tool for demand forecast to optimise placements.

SeedSure: Digital platform for end-to-end management of Hybrid seed production to enhance visibility and traceability of farm-level operations.

DRISHTI 2.0: A remote sensing and AI-based crop monitoring and weather forecasting system for internal and external customers. Rallis has partnered with large group Plantation customers to develop the DRISHTI tea plantation monitoring platform, which includes plant stress monitoring, irrigation decision support system, section-level pest forecast models, etc.

Dr. VISHWAS: Rallis farmer call centre, provides crop management advisory services in 10 different languages.

Anubandh Edge: A digital solution to enhance the visibility and traceability of retailer-level operations.

Research and Development

R&D Crop Care

Rallis has been focussed on developing differentiated and safe to use agri-input solutions for serving farming communities in domestic and key global markets. On the formulation front the Company adopt emerging formulation technologies such as oil dispersion, zeon concentrate, capsule suspension etc. for developing patent-protected e_cacious and ecofriendly agri-input solutions including combination products. Rallis leverage advancement in adjuvants technologies to improve product efficacy in terms of quicker penetration into plant tissues, rain fastness, improved retention on laminar surface, etc. Rallis has initiated development of route of synthesis and cost effective process for the identified active ingredients becoming off-patent in coming years to expand domestic and international reach and customer base of customs synthesis manufacturing business. Company has engaged with local and global biologicals companies to access technologies while building in-house capabilities.

• Filed 5 patent applications for formulation/processes for domestic market and one PCT application filed for international market. Three patents were granted during the year

• Developed and scaled up 2 new formulations

• Developed new and differentiated products in Crop Nutrition segment

• After successful university evaluation, the Company has submitted regulatory studies for drone-based application for 7 products

• Company has obtained 82 new registrations for India / export markets

R&D Seeds

Rallis continues to work closely with farmers to understand their emerging needs and use these as inputs in the R&D program. Drought tolerance is emerging as the key requirement for maize farmers and have built drought resilient hybrids. Company has deployed solutions to tackle the neck blast in paddy. Molecular breeding programmes in maize has discovered useful novel loci for disease tolerance and has developed a machine learning algorithm for genomic selection that helps in developing excellent hybrids. By a judicious combination of breeding process and molecular breeding technologies, the Company is entering an era of development of impactful hybrids at higher success rates. Rallis biotech program is focussed on developing insect resistance, herbicide tolerance and drought tolerance traits to deliver customised solutions. Received process patent in identifying and designing suitable DNA constructs to control Phytopathogens.

Financial Overview

Performance for the year ended March 31, 2024

Particulars	FY 2023-24	FY 2022-23	Change
	( crore)	( crore)	(%)
Revenue from operations (Net)	2,648	2,967	-11%
Other income	16	13	23%
Cost of materials consumed	1,578	1,943	-19%
Power and fuel	86	95	-10%
Freight, handling and packing	80	98	-19%
Employee benefits expenses	262	256	2%
Depreciation and amortisation expenses	114	91	25%
Finance costs	18	12	44%
EBITDA	311	218	43%
Profit after tax	148	92	61%

Note: Figures are rounded off to the nearest crore

Key Accounting Heads

Income

• During FY 2023-24, total income of the Company decreased by 10.6% from 2,980 crore in FY 2022-23 to 2,664 crore in FY 2023-24. This comprises revenue from operations and other income

• Revenue from operations decreased by 10.7% during the year, from 2,967 crore in FY 2022-23 to 2,648 crore in FY 2023-24, Mainly driven by de-growth in exports business. Other income increased by 22.7% from 13 crore in FY 2022-23 to 16 crore in FY 2023-24, which was due to higher level of current investments during the year

Expenses

• The Companys total expenses decreased by 13.4% from

2,852 crore in FY 2022-23 to 2,469 crore in FY 2023-24. Major expense items comprise the cost of materials consumed, purchase of stock-in-trade, power and fuel, freight, handling and packing, employee benefits, finance costs, depreciation, and amortisation expenses

• Cost of materials consumed (including stock adjustments and purchases) decreased by 18.8% from 1,943 crore in FY 2022-23 to 1,578 crore in FY 2023-24, due to lower level of sales and reduction in key raw material prices

• Power and fuel expenses decreased by 9.7% from 95 crore in FY 2022-23 to _ 86 crore in FY 2023-24, mainly due to the lower production

• Freight, handling and packing expenses decreased by 18.9% from _ 98 crore in FY 2022-23 to 80 crore in FY 2023-24 due to lower export sales during FY 2023-24

• Employee benefit expenses increased by 2.3% from _256 crore in FY 2022-23 to _ 262 crore in FY 2023-24. This increase was on account of regular increments

• Depreciation and amortisation expenses increased by 24.9% from 91 crore in FY 2022-23 to 114 crore in FY 2023-24. This is on account of commercialisation of projects in line with the capacity expansion strategy

Profitability

• EBITDA margins increased by 439 basis points (bps) from 7.4% in FY 2022-23 to 11.7% during the year under review. Increase in EBITDA margin was on account of improved margins in domestic formulation business coupled with reduction in other expenses. The reduction in other expenses was largely attributed to the optimisation of fixed costs achieved through the development of IT systems, coupled with ongoing efforts to optimise expenses. Performance in FY 2022-23 was impacted due to impairment of technical know-how and provision for slow moving inventory

• Profit After Tax (PAT) increased by 60.8% from 92 crore in FY 2022-23 to 148 crore in FY 2023-24. PAT for FY 2022-23 was impacted due to impairment of technical know-how and provision for slow moving inventory.

Analysis of Performance – Balance Sheet Non-Current Assets

Particulars	As at March	As at March	Change
	31, 2024	31, 2023	(%)
	( crore)	( crore)
Property, plant and equipment	661	520	27%
Right-of-use asset	127	30	317%
Capital work-in- progress	19	179	-89%
Investment property	1	0	900%
Goodwill on amalgamation	196	196	0%
Other intangible assets	23	12	92%
Intangible assets under development Financial assets	42	57	-26%
I. Investments	4	3	13%
II. Other financial assets	16	20	-21%
Income tax assets (net)	97	98	-1%
Other non-current assets	38	38	0%
Total	1,223	1,153	6%

Note: Figures are rounded off to the nearest crore

Non-current assets increased by 6.1% from 1,153 crore as on March 31, 2023 to 1,223 crore as on March 31, 2024.

The 27.2% increase in property, plant, and equipment was primarily due to the capitalisation of the Multi-purpose plant at Dahej along with other assets during the year. This corresponded to a decrease in capital work-in-progress, which dropped by 89.4%.

Working Capital

Particulars	As at March	As at March	Change
	31, 2024	31, 2023	(%)
	( crore)	( crore)
Current Assets
Inventories	808	793	2%
Financial assets
I. Investments	247	219	13%
II. Trade receivables	579	499	16%
III. Cash and cash equivalents	27	44	-40%
IV. Bank balances other than (iii) above	5	2	157%
V. Other financial assets	6	6	11%
Other current assets	106	78	36%
Assets classified as held for sale	3	4	-36%
Total current assets	1,780	1,644	8%
Current Liabilities
Financial liabilities
I. Borrowings	0	101	-100%
II. Trade payables	600	588	2%
III. Other financial liabilities	200	156	28%
IV. Lease liabilities	20	12	71%
- Provisions	11	7	54%
- Income tax liabilities (net)	2	3	-44%
- Other current liabilities	185	121	53%
Total current liabilities	1,018	989	3%
Working capital	762	656	16%
(Net Current Assets)

Note: Figures are rounded off to the nearest crore

• Working capital (net current assets) of the Company increased by 16.2% from 656 crore as on March 31, 2023 to 762 crore as on March 31, 2024. The working capital cycle increased to 98 days this year as against 84 days in the previous year. The current ratio was at a comfortable level of 1.75

• Key elements of current assets comprise investment, inventory, trade receivables, cash and cash equivalents and bank balances. Current investments stood at _ 247 crore as on March 31, 2024, compared to 219 crore as on March 31, 2023.

Inventory:

Inventory increased by 1.9% from 793 crore as on March 31, 2023 to 808 crore as on March 31, 2024. Inventory cycle increased from 163 days to 185 days.

Trade receivables:

Trade receivables increased by 16.2% compared to the previous year and debtor turnover increased from 58 days as on March 31, 2023 to 75 days on March 31, 2024. Increase in debtors was reported in Domestic Crop Care and International business.

Trade payables:

Creditors increased by 2.0% during the year mainly due to increase in credit period of imports and domestic vendors. Creditor turnover increased from 126 to 137 days.

Net cash flows:

Net cash flows from operating activities were 269 crore against

217 crore for the previous year.

Capital employed

Particulars	As at March	As at March	Change
	31, 2024	31, 2023	(%)
	( crore)	( crore)
Equity
Equity share capital	19	19	–
Other equity	1,810	1,711	6%
Total equity	1,829	1,730	6%
Financial liabilities
I. Non-Current	1	3	-59%
Borrowings
II. Non-Current Lease	112	21	433%
Liabilities
III. Current	0	101	-100%
Borrowings
IV. Current Lease	20	12	71%
Liabilities
Total Debt	134	137	-2%
Deferred Tax	1	12	-95%
Liabilities
Total	1,964	1,879	5%

Note: Figures are rounded off to the nearest crore

Capital employed increased by 4.5% to _ 1,964 crore as on March 31, 2024. Return on Capital Employed (ROCE) stood at 10.9% as on March 31, 2024 as against 7.5% as on March 31, 2023. Capital employed comprises net worth, non-current borrowings, current borrowing, non-current lease liabilities, current lease liabilities and deferred tax liabilities. Net worth increased by 5.7% from 1,730 crore as on March 31, 2023 to 1,829 crore as on March 31, 2024. It comprises equity share capital divided into 19,44,68,890 equity shares of 1 each and reserves and surplus of 1,810 crore. Return on Net Worth (RONW) as on March 31, 2024, increased to 8.3% from 5.4% as on March 31, 2023, due to improvement in profitability during the year.

The Companys debt decreased by 2.2% as on March 31, 2024. This includes non-current borrowings, current borrowing, non-current lease liabilities, current lease liabilities and deferred tax liabilities. The Companys Debt-Equity ratio as on March 31, 2024 stood at 0.07 as compared to 0.08 as on March 31, 2023.

Key Financial Ratios

Type of Ratio	2023-24	2022-23	Variance	Reason for Variance greater than 25%
Return on Equity (%)	8%	5%	55%	Increase is on account of increase in profit as compared to previous year. In previous year, factors that contributed to a lower profit, include steep cost inflation in key raw material prices and higher provisions on account of impairment of technical know- how of seed development technology and provision for slow- moving inventory in seeds.
Net Profit Margin (%)	6%	3%	81%	Higher net profit margin ratio is on account of increase in profit for the year as compared to the previous year. In previous year, factors that contributed to a lower profit, include steep cost inflation in key raw material prices and higher provisions on account of impairment of technical know-how of seed development technology and provision for slow-moving inventory in seeds.

 

Type of Ratio	2023-24	2022-23	Variance	Reason for Variance greater than 25%
Return on Capital Employed (%)	11%	7%	45%	Increase due to higher profitability during the current year as mentioned above.
Return on Investment (%)	8%	5%	55%	Increase due to higher profitability during the current year as mentioned above.
Current ratio	1.75	1.66	5%	NA
Debt Equity Ratio	0.07	0.08	(8%)	NA
Debt Service Coverage Ratio	2.00	0.61	226%	Variance on account of increase in earnings during the year by 23% and decrease in debt service by 62%. In previous year, there were certain one time impairments due to which earnings were lower. Also, Company had fewer repayment of borrowings on account of lesser loans taken during the year.
Inventory Turnover	1.97	2.25	(12%)	NA
Debtors Turnover	4.89	6.26	(22%)	NA
Trade Payables Turnover	2.66	2.90	(8%)	NA
Net Capital Turnover Ratio	3.71	4.30	(14%)	NA
Operating Profit Margin (EBITDA)	12%	7%	60%	Increase is on account of improved margins in domestic formulation business coupled with reduction in other expenses. The reduction in other expenses was largely attributed to the optimization of fixed costs achieved through the development of IT systems, coupled with ongoing efforts to optimize expenses. Performance in FY 2022-23 was impacted due to impairment of technical know-how and provision for slow moving inventory.
Interest Coverage Ratio	12.03	11.4	5%	NA

Opportunities and Outlook

As the Company marches towards India@100, technology-driven and knowledge-based economy expected to fuel rapid transformation of agriculture. Crops such as Cotton, Soybean, Maize and Sugarcane not only provides major export opportunities but also source for important input to the domestic industries to support Indias economic prosperity. To provide food security of growing population, India needs to sustain the production of food grains, fruits and vegetables which can also be leveraged to tap export market including value-added products. Country needs to address high import dependency on edible oil as well as pulses. Climate change and sustainability challenges are fast emerging as concern area for global agriculture, and it will make fragmented farmer base and agri dependent Indian rural economy more vulnerable. Leveraging technology across the agri value chain is critical for the sustainability of agriculture to support Indias march to further economic prosperity. Government policies are focussed on transforming the agriculture value chain for increasing farmer income for balanced economic growth and also address the emerging challenges in agriculture. Value chain partners like Rallis has an important role to play in transforming agriculture activities and Rallis has been strengthening its core to tap the emerging markets opportunities.

India is now second largest exporter of agrochemicals and has the potential to sustain the growth as the global agrochemical industry is increasingly looking at India in their supply chain diversification strategy. Government is providing policy support to leverage the emerging manufacturing opportunity. Rallis has been investing in enhancing R&D and manufacturing infrastructure, with a focus on product development to strengthen the portfolio and position the Company to capture emerging prospects.

Exports

Rallis will continue to leverage its strong position in four of its existing products with appropriate investment in registration and manufacturing capacity enhancement aimed at increasing the share of wallet from its existing partners and build new partnerships. Phased active ingredient portfolio expansion strategy for multi-fold increase of the addressable market will be supported by investment in registration in key markets of Europe, South and North America to service existing and new partners.

E_orts to widen customer base in custom synthesis and manufacturing business leveraging chemistry capabilities in process development and manufacturing is aligned with supply diversification strategies emerging from global agrochemical peers. The Research & Development team is undertaking process trials of pipeline projects which are expected to be commercialised and scaled up in a phased manner in the coming years. Recently commissioned multi-purpose plant capacity will be fully leveraged for providing contract manufacturing services and committed for further manufacturing investments based on emerging customer needs.

Domestic Crop Care

In Crop Protection, the Company will be focussed on new product launches and scale-up including recent launches not only to leverage strong presence in high crop care consuming crops such as paddy, cotton, fruits and vegetable crops but also to increase its footprint in crops like soy, sugarcane, maize, wheat, pulses and oil seeds. Patented and highly differentiated recent launches and pipeline is aligned with the emerging needs of the farmers. Crop Nutrition strategy is to sustain the growth momentum by increasing revenue from large area crops, which are underpenetrated. The Company will continue to leverage its strong presence in fruit and vegetable crops through the crop life cycle management approach. New products launched in the soil conditioner segment is specifically focussed to tap the niche crop segments. Water Soluble Fertilizer manufacturing infrastructure being commissioned shortly will fast track growth of the specific segment.

Market penetration strategy of increasing distribution and retail network will fast track market share gain driven growth of Crop Care business. Digitalisation initiatives such as e-Bandhan, e-Sparsh, Sampark and advanced analytics platforms such as DRISHTI is focussed on enhancing customer experience supported by the field force spread across the country.

Seeds

Management initiatives for stabilising revenue for profitable growth with calibrated fixed costs and operational efficiency will continue to be the near-term priority. Revenue growth will be driven by successful North Cotton portfolio and differentiated products in rest of the cotton segments and in other crops including recently launched products with market-relevant traits. Hybrid seed production will be stabilised leveraging digital platforms DRISHTI 2.0, SeedSure and SeedSay. Company will work with industry peers in addressing the regulatory challenges for commercialising promising biotechnology events which are undergoing regulatory and internal trials.

Risks and Concerns

The Company has developed and implemented a robust Enterprise Risk Management (ERM) Framework and a standard process to ensure a coordinated and integrated approach for managing Risks and Opportunities across the organisation. This framework reinforces the commitment to effectively identify and manage the existing and emerging risks and harness the underlying opportunities while safeguarding the business value to achieve its strategic objectives and to facilitate risk informed decision-making.

Risk assessment, monitoring and reporting with defined response action plans are regularly reviewed at appropriate levels within the organisation to maintain an ongoing oversight. Some of the key business risks are in relation to: Climate Change Impact, Human Resources, Cyber Security, Environmental, Social and Governance, new product pipeline etc. The Company has put in place adequate measures to mitigate these risks.

Safety, Health and Environment & Sustainability

Environmental health and safety management system

Safety is a core value at Rallis. The Company is committed to achieving "Target Zero", which signifies the elimination of any harm across all its operations and processes. This commitment is reflected in the Companys Safety Management System, which is in line with leadership dedication and continual process improvement. Company leverages a comprehensive set of voluntary standards, such as e Process Safety and Risk Management (PSRM), ISO 45001, ISO 14001, ISO 5001 & Responsible Care. This allows to benchmark safety, health and environment practices to refine companys EHS management system. These certifications demonstrate a structured approach to sustainability. It guides Company in minimising its environmental footprint through responsible practices to ensure a safe and healthy work environment for employees and community around us. Rallis follows the Responsible Care guidelines established by the Indian Chemical Council (ICC). This programme promotes continuous improvement in EHS performance within the chemical industry. Company have also implemented e OSHA Process Safety Risk Management standards across all manufacturing locations.

Safeguarding Employee Health through Proactive Measures

Rallis occupational health services play a crucial role in identifying and mitigating workplace hazards and risks. Conducts regular health checkups and monitoring programmes which help to identify early signs of work-related illnesses or potential health issues. Industrial Hygiene assessments are done to measure workers exposure to various physical, chemical, and biological hazards. Workplace accidents and incidents are investigated to identify underlying causes and potential hazards that need to be addressed.

Key actions to strengthen health and safety framework in FY 2023-24

Rallis strives for ‘Target Zero Harm, a philosophy that prioritises the elimination of all work-related injuries and illnesses. To achieve this ambitious goal, the Company have identified four key focus areas that align with the inherent risks associated with our business operations: Process Safety Management, Contractor Safety Management, Work at Height Safety, and Road Safety. The Company has partnered with industry experts to implement comprehensive Process Safety Risk Management (PSRM) program at Dahej SEZ and Ankleshwar and being expanded to Dahej CZ, Lote, and Akola units.

Behavioural-based safety is implemented at all sites and Daily Behavioural Safety Observations (BSO) rounds are taken by dedicated team comprising employees and associates.

Safety management software solution is implemented across location for reporting various safety-related events like safety incidents, near-miss observations identified through BBS (Behaviour Based Safety) programmes. A dedicated portal launched for Management of Change (MoC) initiatives. The various safety KPIs are provided in data analytics dashboard for real-time insights. Senior management actively participates in monthly safety review meetings, ensuring high-level accountability for safety performance across the organisation.

Conducted safety Felt leadership programmes specifically designed to equip line managers and business partners with the necessary skills to promote a positive safety culture within their teams. Company extends safety focus beyond its own operations. Rallis conduct ESG (Environmental, Social, and Governance) practice audits at its critical business partners facilities, ensuring that safety is a shared value throughout our value chain.

Progress on Zero Liquid Discharge (ZLD) Initiative

Rallis has successfully achieved ZLD status at its Akola and Dahej CZ manufacturing units. The Ankleshwar unit currently possesses

The Company has developed and implemented a robust Enterprise Risk Management (ERM) Framework and a standard process to ensure a coordinated and integrated approach for managing Risks and Opportunities across the organisation.

ZLD capability, the Company is actively working to optimise processes and further enhance water management practices at this facility to achieve full ZLD implementation.

Rallis in the process of converting Dahej SEZ and Lote units into ZLD capable facilities to reduce overall water footprint.

Energy & Emissions

Rallis established a significant milestone towards sustainability with the installation of a 4.4 MW solar power plant at the Dahej Chemical Zone in 2016. Rooftop solar projects installed at Akola and the Dahej CZ, along with utilising locally sourced renewable biomass fuels. More than 30% of energy mix now comes from renewable sources. As part of long-term plan, Rallis is planning 100% renewal energy source for its Thermal energy requirements.

Community Safety Awareness Programmes at Rallis

Rallis extends its commitment to safety beyond the workplace through various Corporate Social Responsibility (CSR) programmes. These programmes aim to raise awareness about safety practices in the community. Programmes to educate the community on safe driving practices and pedestrian safety for students and communities. Tailored-made programmes are designed to inform the community about potential hazards within the home and preventive measures to ensure a safe environment. Farmers and their families are given awareness sessions about the safety handling and use of crop protection products.

Human Resources

The Company has implemented various initiatives and programmes to create a positive and employee-friendly environment which empowers our employees to drive growth and innovation. This includes activities such as, reward and recognition programs, wellness programs, Flexible work arrangement, competency enhancement and skill development programs, career growth opportunities. The introduction of Performance Dialogue at periodical interval and the revamping of the internal job posting process for Career progression have helped creating opportunities.

Rallis talent pool has been nurtured to handle the challenges of tomorrow while helping deliver organisational goals of today. Adding to this is the diversity policy, which ensures that the workforce is balanced on various measures of diversity. The Company has established robust people processes and initiatives that nurture a high-performing and inclusive work culture. The Company believes in people-friendly workplace policies and constantly updates and refines them based on feedback received from employees. The Company has well-documented employee-friendly policies to enhance transparency, create a sense of teamwork, oneness and trust among employees and align employees interests with the organisations strategic goals. All the policies, benefits and guidelines are disseminated periodically. These policies assist in providing a holistic workplace environment and play a key role in the right talent onboarding, talent retention and leadership development. The Company has also developed well-designed and documented corporate policies such as the Whistleblower Policy and POSH (‘Prevention of Sexual Harassment) Policy, Guidelines on Human Rights, to prevent discrimination and harassment and to discourage wrong practices. The Company ensures equal access to opportunities in the areas of recruitment, learning & development, career progression and advancement. This is regardless of gender, age, racial/ethnic background, religion, or social status.

Some of the important HR initiatives include:

• Leadership Development programmes/ Assessment & Development Centre

• First time manager Development programmes, Managerial Effectiveness

• En-rich skill enhancement programmes through Global Gyan Academy

• "We Care" initiatives for employee physical & mental wellness

• Celebration of Family Day across locations

• Specific 2-days offsite programme for various functions

• Your Dost-Employee initiative provides counselling, financial and mental health guidance The employee engagement score stood at benchmark level. The survey outcome depicts valuable insights into the employees perceptions, sentiments, experience, and the areas which need to be improved. Recently Rallis has been awarded as the Best Employer 2023 by Kincentric which is a huge recognition to progressive people practices and vibrant workplace environment. It also signifies our urge to create a premium employee value proposition.

The Company has implemented various initiatives and programmes to create a positive and employee-friendly environment which empowers our employees to drive growth and innovation.

The Companys total permanent employees and permanent workers strength is 1,657, including 62 female employees as on the end of the financial year March 31, 2024.

Corporate Social Responsibility

Company continued to focus on following flagship CSR programmes:

Jaldhan: Rainwater harvesting initiative in 14 villages and Tribal wadis from Maharashtra & Gujarat. Harvested 3.92 MCM water during the year impacting 1.7 lakh villagers.

Rallis Ujwala Bhavishya Yojana: RUBY focusses on improving the academic performance of students by providing quality education and enhancing the capabilities of the teachers through exposure and training.

Unnat Gram: Holistic development and enhancing tribal living conditions covering 10 villages from Gujarat and Maharashtra focussed on health, education and skill development.

Saksham Gram: Improve quality of life of the villagers through education, skill development and livelihood covering 8 villages in Telangana.

Prithvi Mitra: Planted 32,000+ saplings (mostly edible fruits) with more than 90% survival rate and converted 82 acres of barren land into green cover. Developed green belts at Ankleshwar and Akola units.

TaRa: TaRa intervention focusses to empower women and youth through enhancing skills to lead a successful life. Partnered with Light of Life Trust to run 2 skill training centres in Maharashtra.

C-Safe: Was initiated to improve farm prosperity for small and marginal farmers through sustainable agriculture driving farm excellence. C-Safe works with 8 FPC covering Maharashtra and Karnataka and focusses on crop demo, capability building and farm mechanisation.

Information and Communications Technology

Recently Rallis has moved from Google apps to O365 as the email and collaboration platform. Patch management and network management systems are deployed to have better protection against cyber threats. The Company has bought new security appliances across locations to actively address the cyber security threat and to reduce the operational downtime.

The implementation of patch management and network management systems aims to enhance cybersecurity defenses. The current automated patching process replaces the previous manual approach, generating insightful reports that aid in assessing the overall health of all IT systems. It helps in maintaining the uptime of critical IT assets by proactive monitoring.

Business Excellence

Rallis has been relentlessly pursuing the journey of excellence while focussing on its sustainable profitable growth agenda. It has embraced the Tata Business Excellence Model (TBEM) since 1995, which has helped Rallis to navigate the journey of continuous improvement and excellence. The TBEM assesses the Company on its processes and results parameters to identify its level of maturity and improvement. The journey has helped build capabilities amongst the leaders who engage with various teams to improve operational efficiency & effectiveness with an eye on innovation and benchmark. Ralliites on Continuous Karma (ROCK) is one such impactful initiative that takes the excellence journey to every nook and corner of Rallis. The Company has been consistently recognised by various professional bodies. It has won several coveted awards like the prestigious Kincentric Best Employer Award, Tata Group JRD QV Award, CII Exim Bank BE Award, CII HR Excellence Award, Tata InnoVista and National Safety awards. Rallis has been part of Tata Chemicals Integrated TBEM Assessment since its inception.

Internal Control Systems

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

Cautionary Statement

Statements in the Management Discussion & Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include among others, climatic conditions, 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.