TO THE MEMBERS
Your Directors have pleasure in presenting the Twenty-Third Annual
Report and the Audited Financial Statements, including Consolidated Financial Statements,
of the Company for the year ended 31 March 2023.
1. FINANCIAL RESULTS
The salient features of the CompanyRs s working are:
(Rs in Million)
|
2022-23 |
2021-22 |
| Gross Profit for the year |
7,072.66 |
6,306.12 |
| Less: Depreciation and amortisation expense |
518.62 |
447.92 |
| Profit before tax |
6,554.04 |
5,858.20 |
| Less: Tax expense (current and deferred tax) |
1,519.67 |
1,520.87 |
| Profit after tax |
5,034.37 |
4,337.33 |
| Add: Balance of Retained earnings brought forward from the
previous year |
1,633.67 |
1,418.42 |
| Available retained earnings |
6,668.04 |
5,755.75 |
| Other Comprehensive Income |
20.33 |
27.24 |
|
6,688.37 |
5,782.99 |
| Dividend Paid during the year |
499.15 |
399.32 |
| Transfer to General Reserve |
4,500.00 |
3,750.00 |
| Retained earnings carried forward to the next year |
1,689.22 |
1,633.67 |
2. DIVIDEND
Your Directors have recommended a dividend of Rs 1.20 (previous year Rs
1.00) per equity share on 499,145,736 shares of Rs 10 each aggregating Rs 598.97 Million
(previous year Rs 499.15 Million). The Directors consider this appropriate having regard
to the requirements for funds for business and future growth of the Company.
3. OPERATIONS
During the year under review, the sales increased from Rs 30,314.02
Million in the previous year to Rs 34,732.57 Million. Domestic sales turnover increased
from Rs 23,654.30 Million to Rs 26,068.92 Million while the export turnover increased from
Rs 6,659.72 Million to Rs 8,663.65 Million. After making provision for depreciation,
interest and Tax, the Net profit during the year under report increased to Rs 5,034.37
Million as against Rs 4,337.33 Million in the previous year.
The year saw erratic monsoon in several regions of the country
negatively impacting pesticides consumption. The year also saw large price increases and
volatility for several raw materials, intermediates and other inputs. The Company was able
to pass on most of the cost increases to the market.
4. ORDERS BY REGULATORY AUTHORITIES
In October 2022, the Central Government issued a Notification mandating
that Glyphosate, a broad spectrum weedicide and an important product
for the Company, will be used only through Pest Control Operators.
Industry players and associations filed petitions before the HonRs ble Delhi High Court
("HonRs ble Court") challenging the Notification. At the hearings of the
petitions before the HonRs ble Court, the Government counsels stated that the Government
will look into the difficulties being faced by the farmers and will revisit the matter and
take a conscious decision which will be communicated to the HonRs ble Court. The counsels
also stated that the Notification shall not be implemented until then. The next date of
hearing is fixed for 19 July 2023.
The Central Government has issued an order in February 2023 banning
three insecticides and prohibiting use of eight insecticides on some notified crops. The
Company deals in some of these insecticides. The overall impact of the regulatory order,
however, is not significant for the Company.
On 24 February 2023, an industrial accident took place in one of the
manufacturing structures in the CompanyRs s Bhavnagar site. In view of the same, on 03
March 2023, Gujarat Pollution Control Board ("GPCB") ordered closure of
operations of the Bhavnagar site. On 18 March 2023, GPCB has passed an interim order
revoking its Closure Order for three months, subject to fulfillment of certain conditions
and requirements. The Bhavnagar site has since resumed manufacturing and other operations.
5. NEW PRODUCTS/IMPROVEMENTS/EXPANSIONS
In the year under review, your Company continued to pursue initiatives
to optimise utilisation of its manufacturing facilities, launch new products and install
manufacturing capacities to supply new products in domestic and international markets.
During the year, the Company obtained from the regulatory authority registrations for
several new products and launched them successfully to the channel partners and farmers.
The Company continues to take initiatives for introducing new technical grade products and
for expanding production capacities. Your Company continues its efforts in the area of
product and process improvement for optimising process and manufacturing costs for staying
innovative and competitive. Your Company also continues to focus on adopting energy
conservation and innovative waste management process.
The Company continues to maintain ISO 9001, ISO 14001 and ISO 45001
certifications for the manufacturing sites. The quality of products is maintained and
upgraded to the applicable national and international standards through rigorous pursuit
of the quality management systems. The Company continues to enjoy the reputation of a
consistent and reliable quality supplier.
6. OUTLOOK
Agriculture sector is one of the important segments of Indian economy.
It contributes about 18% to countryRs s GDP and provides source of livelihood to about 50%
of the population. Share of agriculture in the countryRs s GDP has declined over the
decades as manufacturing and service sectors have grown faster.
F.Y. 2022-23 was the first normal year of operations after two
consecutive years of Covid-19 pandemic. All our activities were back to normal with
employees working in full strength. However, due to geopolitical situations viz.,
Russia-Ukraine war, China Covid situation, depreciating local currency etc., the situation
remained unpredictable for most part of the year. Further, uncertainties continued for
major part of the financial year due to erratic monsoon. Logistics costs eased out during
the course of the year. Southwest monsoon season rainfall for the country during
June-September 2022 was normal (96-104% of Long Period Average). Though the monsoon of
2022 has been categorised as normal due to the quantum of rainfall received during the
monsoon
period, the spread of rainfall was not conducive for the agricultural
operations. Initial phase of monsoon was good, but was followed by a long dry spell and
thereafter plenty of rains extending into October. Some parts of the country received very
poor rainfall during the year. Agrochemical demand in export markets was robust and the
industry capitalised on the same.
Due to restricted supply of material from China, the industry faced
challenge of increasing raw material costs for several generics products. Further,
increase in energy and fuel costs led to increase in overall costs exerting pressure on
profitability. Despite all these odds, the Indian agrochemicals sector grew at a
satisfactory rate. The raw material costs and prices of products started to ease from the
second quarter of financial year.
The domestic agrochemicals market is driven by rising population, which
spells the need for increasing food production. Increasing focus on quality produce
continues to boost consumption of agrochemicals. Government of India has taken a number of
initiatives to protect interest of farmers and improve their profitability. Providing
minimum support prices for several agriculture produce, Kisan Samman Nidhi, large
budgetary allocation for farming sector are some such initiatives. The Government has also
extended the period for free supply of ration for the poor. These initiatives are expected
to improve rural economy which in turn will help in the growth of agro-chemical industry.
The commodity prices are robust and farmers are expected to continue to invest in
agrochemicals to safeguard the harvest. Though there are conflicting reports and claims by
different meteorology agencies regarding occurrence of El Nino phenomena and its impact on
2023 monsoon, the Indian Government is preparing district-level contingency plans to
mitigate eventuality of abnormal monsoon effects. From a long term perspective, the
agrochemical industry is expected to grow in a robust manner due to domestic demand and
export opportunities.
7. SAFETY, HEALTH AND ENVIRONMENT
The Company continues to work on reducing environmental load, enhance
safety, improve quality and reduce cost. The Company continues to play the role of a
responsible corporate citizen in the fulfillment of its objectives of protecting and
enriching the environment and human health and safety. The Company has also adopted
Responsible Care Policy and its initiatives demonstrate its commitment towards
comprehensive approach for safeguarding environment, health and safety of all stake
holders and aims at achieving and sustaining high standards of performance. The Company
also reviews and monitors these Quality, Environment, Health & Safety policies and
sustainability activities to ensure continual improvement.
The CompanyRs s commitment to its safety management programmes follows
a top-down approach towards establishing, demonstrating, sustaining and improving the
safety culture and incorporating the CompanyRs s core value of safety in their daily
responsibilities. Safety audit, training programmes and other safety management processes
are carried out at regular intervals.
The Company has adopted plastic waste management process to minimise
the amount of Rs post-use plastic wasteRs in the environment through a plastic credit
platform dedicated to collection, segregation and recycling of such waste.
The green initiatives of the Company in the form of harvesting wind and
solar energy and treatment of sewage water contribute to improving environment. The
Company continues to work towards reduction of greenhouse gases for sustainable economic
and social values. These initiatives are implemented through Rs Science Based TargetsRs .
8. EDUCATION, LEARNING AND HUMAN RESOURCES
The endeavour is to develop and enhance competency of employees by
facilitating holistic development that enables personal and organisational growth.
Employees are encouraged to work in collaboration with different teams and functions to
enhance their overall experience and exposure. The overall objective of these learning
journeys for individuals and teams is to improve their capability and help them achieve
their fullest potential. The Company conducts several functional capability-building
training programmes to upgrade employee-knowledge and ensure their holistic growth. In
F.Y. 2022-23, around 90% of the employees have undergone these learning initiatives. The
Company has built a robust framework focused around developing employees with right
mind-set and skillset to enable them to excel in their work and keep on learning
continuously. The employees get opportunity to board on any of the learning journeys based
on their interest.
Some of the key training programmes the employees have undergone are:
• Value-based capability building programmes where the focus is on
enabling the employees to build the right mind-set and skillset to effectively demonstrate
the right values at the workplace
• Transition programmes for lower and middle level management
cadre to build leadership capabilities for excelling in current and new roles
• Leadership development programmes for emerging leaders
• Training programmes in areas of EHS, SOP, IMS, Responsible Care,
OJT etc.
• Implementation of 5S at manufacturing sites Through these
learning journeys, the employees develop a sound understanding of the overall business
complexities as well as build competencies to lead high level organisational positions.
9. INSURANCE
The Company continues to carry adequate insurance cover for all its
assets against foreseeable perils like fire, flood, earthquake, etc. and continues to
maintain the Liability Policy as per the provisions of the Public Liability Insurance Act.
10. SUBSIDIARY
Highlights of the financial performance of Excel Crop Care (Africa)
Limited, Tanzania, the subsidiary company, are as follows:
Excel Crop Care (Africa) Limited, Tanzania
|
2021-22 |
|
| Revenue |
198 |
757 |
| Loss |
310 |
81 |
| Loss after Tax |
230 |
71 |
Excel Crop Care (Africa) Limited, Tanzania has declared a dividend of
Tanzania Schillings 20,000 per share i.e. 20% for the year F.Y. 2022-23.
The Financial Statements and the Reports of the Board of Directors and
the Auditors of Excel Crop Care (Africa) Limited are posted on the CompanyRs s website:
www.sumichem.co.in.
11. DISCLOSURE UNDER THE COMPANIES ACT, 2013
Information is given below pursuant to various disclosure requirements
prescribed under the Companies Act, 2013 and rules thereunder, to the extent applicable to
the Company. Some of the disclosures have been included in appropriate places in the
Corporate Governance Report which is part of the BoardRs s Report.
a) Energy Conservation, Technology Absorption and Foreign Exchange
earnings and outgo:
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies
Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in Annexure
I.
b) Annual Return:
Annual return as on 31 March 2022 in form MGT-7 filed with the Ministry
of Corporate Affairs is available on the CompanyRs s website
https://sumichem.co.in/pdf/22-23/Annual%20 Return.pdf.
Annual return as on 31 March 2023 in form MGT-7 will also be posted on
the CompanyRs s website after the same is filed with the Ministry of Corporate Affairs.
c) Policy on DirectorsRs appointment, Remuneration Policy and
information regarding remuneration:
Particulars of the CompanyRs s Policy on DirectorsRs appointment,
Remuneration Policy and information pursuant to Rule 5(1) of the Companies (Appointment
& Remuneration) Rules, 2014 are given in Annexure II.
d) Particulars of Loans, Guarantees and Investments:
The details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the notes to the
Financial Statements.
e) Related Party Transactions:
All contracts/arrangements/transactions entered by the Company during
the financial year with related parties were on an armRs s length basis.
All related party transactions are placed before the Audit Committee
for their approval. Prior omnibus approval of the Audit Committee is obtained for the
transactions which are of a repetitive nature. The transactions entered into pursuant to
the omnibus and specific approvals are reviewed periodically by the Audit Committee.
Pursuant to the provisions of Regulation 23 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("the said Regulations"), all
material related party transactions require approval of the members through a resolution.
The said Regulations define the term Rs materialRs to mean a transaction with a related
party which individually or taken together with previous transactions during a financial
year exceeds ten percent of the annual consolidated turnover of the Company as per the
last audited financial statement of the Company.
During the year, the Company entered into transactions with Sumitomo
Chemical Company, Limited, Japan, the holding company, which are considered Rs material
transactionsRs in terms of the said Regulations. These transactions were approved by the
shareholders by an ordinary resolution passed at the previous annual general meeting held
on 29 July 2022. The Company is seeking approval of the shareholders, through an ordinary
resolution at the ensuing annual general meeting, for the transactions entered into /
proposed to be entered into with the holding company during the Financial Year 2023-24 up
to an amount not exceeding Rs 9,500 Million.
The Company had no transactions during F.Y. 2022-23 requiring
disclosure in the Form AOC-2 under the Companies Act, 2013.
The Policy on related party transactions as approved by the Board may
be accessed on the CompanyRs s website https://sumichem.co.in/
pdf/20220603121214.pdf?v=1.0.
f) Business Risk Management:
The Board has formed Risk Management Committee pursuant to the
provisions of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 to identify and monitor risks faced by the Company. The Committee
deliberates on the major enterprise and business risks identified by the management,
analysis of their impact and mitigation measures for addressing the risks. The major risk
areas relate to risks associated with material procurement, and manufacturing operations,
regulatory risks, cyber security / IT related risks, human resources related risks,
currency risks, credit risks mainly relating to exports and insurance adequacy risks.
g) Evaluation of the performance of the Board, Committees of Directors
and Individual Directors:
The Board has adopted a formal mechanism for evaluating its performance
as well as that of its Committees and individual Directors, including performance of the
Chairman of the Board. As a part of this mechanism, a structured questionnaire, approved
by the CompanyRs s Nomination and Remuneration Committee, is used to carry out evaluation
of performance of the Board, Committees of Directors and individual Directors. The
questionnaires take into consideration various criteria and factors.
h) Material orders passed by the regulatory authorities or
courts/material changes or commitments:
There are no significant material orders passed by regulators or courts
which can impact the going concern status of the Company and its future operations. There
are no material changes or commitments occurring after 31 March 2023 which may affect the
financial position of the Company.
i) Internal Financial Controls and their adequacy:
The Company has adequate system of internal controls to safeguard and
protect from loss, unauthorised use or disposition of its assets. All the transactions are
properly authorised, recorded and reported to the management. The Company is following all
the applicable Accounting Standards for proper maintenance of books of accounts and for
financial reporting.
j) Performance of the subsidiary company:
Details of performance and financial position of Excel Crop Care
(Africa) Limited, the subsidiary company, are given in Form AOC-1 in Annexure III. The
Company has no associate company.
k) Corporate Social Responsibility (CSR) initiatives:
The Company has formulated its Corporate Social Responsibility Policy
which has been posted on its website https://sumichem.co.in/
pdf/Corporate%20Social%20Responsibility%20 Policy.pdf
A brief outline of the Policy and the Annual Report on CSR Activities
is given in Annexure IV.
l) Particulars of Employees:
The information required under Section 197 of the Companies Act, 2013
read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is given in Annexure V.
m) Secretarial Auditor and Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules made thereunder, M/s Saraf & Associates, Practicing Company Secretaries,
Mumbai (FCS:1596; CP NO.642), were appointed Secretarial Auditors to conduct secretarial
audit for the year ended 31 March 2023. The Report of the Secretarial Auditors is attached
as Annexure VI.
n) Secretarial Standards:
The Company has complied with the applicable Rs Secretarial Standards
on Meetings of the Board of Directors - SS 1Rs and Rs Secretarial Standards on General
Meetings - SS 2Rs .
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr Hiroyoshi Mukai, Director, resigned on 31 March 2023. The Board
places on record its appreciation of Mr MukaiRs s contribution to the CompanyRs s business
and the Board deliberations.
Mr Masanori Uzawa, Director, retires by rotation and being eligible,
offers himself for re-appointment.
Mr Pravin D Desai, Vice President & Company Secretary, retired on
31 March 2023. Ms Deepika Trivedi is appointed Company Secretary and Compliance Officer
with effect from 01 April 2023. The Board has appointed Dr Suresh Ramachandran as
Whole-time Director with effect from 01 June 2023
and designated him Rs Whole-time Director & Chief Commercial
OfficerRs . The appointment of Dr Suresh Ramachandran as Whole-time Director is subject to
approval by the members in the annual general meeting through a special resolution.
The Board has reappointed Mr Chetan Shah as Managing Director and Mr
Sushil Marfatia as Executive Director with effect from 01 September 2023 subject to
approval by the members in the annual general meeting through special resolutions.
13. DIRECTORSRs RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors
confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and that no material departures have been made
from the same;
(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and are operating
effectively; and
(f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and are operating
effectively.
14. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Business Responsibility and Sustainability Report prepared in the
prescribed form pursuant to
Regulation 34 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, in relation to initiatives taken from environmental,
social and governance perspective, forms part of the Annual Report.
15. CORPORATE GOVERNANCE
Your Company is committed to the principles of good corporate
governance and the Board of Directors lays strong emphasis on transparency, accountability
and integrity. Your Company has complied with all the requirements of the Code of
Corporate Governance contained in SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and, pursuant thereto, Management Discussion and Analysis and the
Corporate Governance Report are annexed and form part of the Annual Report.
16. AUDITORSRs REPORTS
The Independent AuditorsRs Reports on Financial Statements, including
Consolidated Financial Statements, of the Company for the year ended 31 March 2023, issued
by M/s SRBC & CO LLP, the Auditors, are enclosed with the Financial Statements in this
Annual Report. The Independent AuditorsRs Reports are unmodified and do not contain any
qualification, reservation or adverse remark.
17. COST RECORDS AND COST AUDIT REPORT
The Company prepares and maintains cost records as specified by the
Central Government under Section 148(1) and rules made thereunder. The cost records for
the year 2021-22 were subjected to cost audit by M/s GMVP & Associates LLP Cost
Auditors. The Cost Audit Report for the financial year 2021-22 issued on 09 August 2022 by
the Cost Auditors was filed with the Ministry of Corporate Affairs on 05 September 2022
vide SRN: F23723729.
18. ACKNOWLEDGEMENTS
Your Directors wish to place on record their sincere appreciation of
the wholehearted co-operation received from the CompanyRs s Shareholders, Bankers, various
authorities of the Governments and business associates.
| For and on behalf of the Board of Directors |
|
| CHETAN SHAH |
SUSHIL MARFATIA |
| Managing Director |
Executive Director |
| DIN: 00488127 |
DIN: 07618601 |
+91-9892691696
