Shivalik Rasayan Ltd Management Discussions.


Agrochemical Landscape in India

India is currently the 4th largest manufacturer of agrochemicals after the United States, Japan and China. Currently, its agrochemicals market is valued at $4.1 billion and is expected to grow at a growth rate of 8.3 percent to reach $8.1 billion by 2025. Exports are expected to fare even better and are expected to grow at a rate of 8.6 percent to reach $4.2 billion by 2025. In spite of these achievements the country lags in terms of usage of agrochemicals. Per hectare consumption of agrochemicals is currently less than 1 kg which when compared to other developed countries, is less in volume terms.

In the past couple of years there has been a significant reduction in the exports from China. This is owing to the implementation of stringent environmental norms by the Chinese Government, crackdown on the polluting chemical industries and impending duties from US on Chinese products. There has been a large scale shutdown of plants which are causing pollution, relocation of chemical plants to far off industrial areas as well as compulsory effluent treatment plants for every chemical plant. As a result Chinas exports have been severely dented. On the other hand Indian Chemical Industry performed extremely well in terms of exports. In the case of manufacturing of agrochemicals, India is being noticed as a manufacturing hub. The Government of India through its ‘Make In India initiative has been inviting various National and International Companies to manufacture and expand operations in India. Many Companies are now looking to source chemicals from India in order to de-risk their sourcing from China.

Internal Controls Systems and Adequacy

The Company has adequate systems of Internal Control in place, which is commensurate with its size and the nature of its operations. The Company has designed and put in place adequate Standard Operating Procedures and Limits of Authority Manuals for conduct of its business, including adherence to Companys policies, safeguarding its assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

These documents are reviewed and updated on an ongoing basis to improve the Internal Control systems and operational efficiency.

The Company uses a state-of-the-art ERP system to record data for accounting and managing information with adequate security procedure and controls.

Risk Management

Risk Management is an integral part of business practices of the Company. The framework of Risk Management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. The Company has developed and implemented a comprehensive Risk Management System to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised Risk Management System, leading standards and practices have been considered.

The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board. The Audit Committee periodically reviews the Risk Management System and gives its recommendations, if any, to the Board. The Board reviews and guides the Risk Management Policy.


-layout-grid-align:none;text-autospace:none>Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the Risk Management System as per the guidance of the Audit Committee. The Company has Risk Management Oversight Structure in which each Sub-segment has a Chief Risk and Compliance Officer.

The Management at various levels takesreductioninthe accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and the Board.

Growth Opportunities

The current Indian Agrochemical scenario presents an exciting growth opportunity for chemical manufacturers. The agriculture industry is set for a fast paced growth, which will lead to increased use of agrochemicals. Also with the current manufacturing capacities being under-utilised there is major scope to improve capacity utilisation for export production. These increasing volumes will lead to significant increase in employment, exports, new product development, decrease in imports, which will support the ‘Make in India campaign and ease of doing business. However while gearing up for this growth phase we must also ensure that the growth is a Sustainable one.

The global market for the manufacture and supply of APIs is changing rapidly. Fuelled by the aging population, government initiatives, regional penetration, patent expiration of prominent drugs and an increase in global access to treatment, the pharmaceutical market is growing. Financial and efficiency incentives are driving the Pharma industry to outsource an increasingly large share of their API production. The API market is expected to grow 5% annually, reaching approximately $219 billion by 2023. However, strict validation and safety guidelines stated by the WHO and fragmented market are some factors that might obstruct the API market growth.

For the overall industry, increasing healthcare needs/awareness has resulted in increased healthcare expenses. Moreover, the rise in chronic diseases such as cardiovascular diseases, obesity and diabetes has increased the need for APIs of the respective therapy area in the market. Also, the need for reduction in healthcare expenses in the West underpins increased generic penetration and off take.

For and on behalf of the Board of Directors

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Rahul Bishnoi

Place: New Delhi


Dated: 14.08.2019

(DIN: 00317960)