Sumitomo Chemical India Ltd Directors Report

TO THE MEMBERS

Your Directors have pleasure in presenting the Twenty-Fifth Annual Report and the Audited Financial Statements, including Consolidated Financial Statements, of the Company for the year ended 31 March 2025.

1. FINANCIAL RESULTS

The salient features of the Companys working are:

(Rs. in Million)

	2024-25	2023-24
Gross Profit for the year	7,372.50	5,648.39
Less: Depreciation and amortization expense	632.61	614.92
Profit before tax	6,739.89	5,033.47
Less: Tax expense (current and deferred tax)	1,720.41	1,336.73
Profit after tax	5,019.48	3,696.74
Add: Balance of Retained earnings brought forward from the previous year	2,292.62	1,689.22
Available retained earnings	7,312.10	5,385.96
Other Comprehensive Income	(6.59)	1.36
	7,305.51	5,387.32
Final Dividend relating to previous financial year paid during the year	449.23	598.97
Interim Dividend paid in 2023-24	-	2,495.73
Transfer to General Reserve	3,250.00	-
Retained earnings carried forward to the next year	3,606.28	2,292.62

2. DIVIDEND

Your Directors have recommended a dividend of 1.20 (12%) [previous year final dividend of 0.90 (9%)] per equity share on 499,145,736 shares of 10 each aggregating 598.97 million (previous year 449.23 million). The Directors consider this appropriate having regard to the requirements for funds for business and future growth of the Company and in opinion of the Board the proposed dividend is in line with the Companys Dividend Distribution Policy.

3. OPERATIONS

During the year under review, the sales increased from 28,062.81 million in the previous year to 30,608.32 million. Domestic sales turnover increased from 22,509.79 million to 23,841.91 million and the export turnover from 5,553.02 million to 6,766.41 million. After making provision for depreciation, interest and tax, the Net profit during the year under report stands at 5,019.48 million as against 3,696.74 million in the previous year.

Overall normal monsoon in the year generally supported agricultural activities and output and demand for agrochemicals; however, excess rainfall in some regions impacted key crops. While normal cropping area for most crops indicated stable agrochemical demand, some crops, such as cotton, presented specific challenges. Low commodity prices for crops like cotton, chilies and soybean affected farmer earnings and their ability to invest in crop protection. Agrochemical prices, which were stable to a large extent through the year and in some cases lower than the previous year, positively impacted input costs and farmer affordability, thus affecting demand. The good Rabi season contributed to overall agricultural output and farmer income, boosting agrochemical use in the subsequent Kharif season. Importantly, the market was characterized by relatively low level of pipeline inventory, which influenced supply dynamics and pricing in the agrochemicals sector.

4. REGULATORY ORDER FOR GLYPHOSATE USE

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. Several industry players and associations have filed petitions before the Honble Delhi High Court ("Honble Court") challenging the Notification. The petitions are under hearing. The Central Government has undertaken before the Honble Court not to implement the Notification till disposal of the said petitions.

5. NEW PRODUCTS/IMPROVEMENTS/EXPANSIONS

The Company continues to maintain ISO 9001, ISO 14001 and ISO 45001 certifications for the manufacturing sites. The Company has also initiated implementation of 5S Workplace Management System, Total Productive Maintenance (TPM) System and behavior-based safety norms with a view to achieve higher efficiency, productivity and enhance safety management system. 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.

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. The Company continues to take initiatives for introducing new technical grade products and for expanding production capacities.

During the year under review, the Company introduced one new technical-grade product and five new formulation products. The Company continues to focus on ramping up newly-launched products and introduction of new products in agrochemicals and bio-stimulant segments - this is core to sustainable future growth. The Company has plans to introduce three new patented products during the financial year 2025-26.

During the year under review, the Company initiated its highly successful "Every Day Farmers Day" ("EDFD") campaign. This initiative, which grew beyond its original 100-day scope, redefined the Companys approach to demand generation, enabling in-person engagement with over one million farmers. This campaign was strategically designed to build lasting momentum by connecting with farmers and channel partners, underscoring the Companys dedication to excellence in agriculture. The campaigns success was supported by meticulous real-time digital tracking and engagement, providing leadership with continuous updates.

6. OUTLOOK

Agriculture remains vital to Indian economy, contributing approximately 15% to the countrys GDP and providing livelihoods to about 50% of the population. While the share of agriculture in Indias GDP has declined over the decades due to faster growth in the manufacturing and service sectors, its fundamental importance remains undiminished. The domestic agrochemicals market continues to be driven by a rising population and the consequent need for increased food production. Increasing emphasis on produce quality further boosts agrochemical consumption. Indian governments ongoing initiatives to protect farmers interests and improve their profitability, including minimum support prices, Kisan Samman Nidhi, and substantial budgetary allocations, are expected to strengthen rural economy and support growth of the agrochemical industry.

Indian agrochemical companies have emerged as important supply sources in international market - exports have substantial share in Indian companies turnover.

The outlook for the Indian agrochemical industry in 2025-26 is cautiously positive. While a normal monsoon and cropping area, coupled with stable commodity prices, are expected to support demand, the industry faces challenges related to rising input costs, and increasing competition. The potential impact of US tariffs also adds an element of uncertainty. The industry will need to navigate these challenges by focusing on cost management, product innovation, and strategic market positioning.

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 stakeholders and aims at achieving and sustaining high standards of performance. The Company also reviews and monitors these Quality, Environment, Health and Safety policies and sustainability activities to ensure continual improvement.

The Companys commitment to its safety management programs follows a top-down approach towards establishing, demonstrating, sustaining and improving the safety culture and incorporating the Companys core value of safety in peoples daily responsibilities. Safety audit, training programs and other safety management processes are carried out at regular intervals.

The Company has adopted plastic waste management process to minimize the amount of ‘post-use plastic waste 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, rain water harvesting and treatment of sewage water contribute to improving environment and conserving natural resources. The Company continues to work towards reduction of greenhouse gases for sustainable economic and social values. These initiatives are implemented through ‘Science Based Targets.

8. EDUCATION, LEARNING AND HUMAN RESOURCES

Building a strong workforce through learning, development, goal setting and performance management

The Company invests in attracting right talent and skill-sets to drive its sustainability-led business strategy. Its human resource framework is built around a model designed to create a skilled and productive structure. The focus is on addressing the existing skill-gaps and attracting new and industry-relevant skills which include functional/technical and on-the-job training programs. During the year under review, as a part of the leadership training initiative, the Company undertook strength-based intervention through Gallup International for seniors and a few second line managers from sales and marketing functions to enrich their competencies.

The Company has identified development of managerial capability as a key focus area for steering its growth plans. The Company has a robust goal- setting and performance-management process in place for aligning individual interests, goals, targets and achievements with the functional goals and finally with the corporate strategic goals, targets and achievements.

The employees receive real time feedback on their performance and improvement areas through a structured review process which is designed to evaluate and identify development opportunities. The Company focuses on empowering employees with skills in critical development areas identified pursuant to training-needs analysis, feedback and discussions. The Company aims at building a pool of leaders and ensuring succession planning across the organisation for critical and leadership 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 COMPANIES

Highlights of the financial performance of Barrix Agro Sciences Private Limited, subsidiary, are as follows:

	2024-25	2023-24
	(Rs. in Million)	(Rs. in Million)
Revenue from operations	582.75	320.42
Profit / (Loss) before tax	62.58	(85.69)
Profit / (Loss) after tax	63.13	(80.95)

The Company has obtained a certificate from the Statutory Auditors to the effect that the Company is in compliance with the FEMA Regulations with respect to the downstream investment made by it in Barrix Agro Sciences Private Limited.

Excel Crop Care (Africa) Limited, the Companys Tanzania based unlisted and non-material subsidiary, is under voluntary winding up process. The Company holds 99.9% of the equity share capital of Excel Crop Care (Africa) Limited. Its winding up is not likely to materially impact business, commercial activities or financial position of the Company.

Financial statements of the subsidiaries have been considered for preparation of consolidated financial statements. The Financial Statements and the Reports of the Board of Directors and the Auditors of Barrix Agro Sciences Private Limited are being posted on the Companys website: www.sumichem.co.in.

11. DISCLOSURE UNDER THE COMPANIES ACT, 2013

Information pursuant to various disclosure requirements prescribed under the Companies Act, 2013 and rules thereunder, to the extent applicable to the Company, is given below. Some of the disclosures have been included at appropriate places in the Corporate Governance Report which forms part of the Boards 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 2024 in form MGT-7 filed with the Ministry of Corporate Affairs is available on the Companys website https://sumichem.co.in/content/uploads/MGT 7 23-24 signed-website-30-09-2024-06-56-12.pdf Annual return as on 31 March 2025 in form MGT-7 will also be posted on the Companys website after the same is filed with the Ministry of Corporate Affairs.

c) Policy on Directors appointment, Remuneration Policy and information regarding remuneration:

Particulars of the Companys Policy on Directors 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:

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 arms 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 ("LODR"), all material related party transactions require approval of the members through a resolution. LODR define the term ‘material to mean a transaction with a related party which individually or taken together with previous transactions during a financial year exceeds 10,000 million or ten percent of the annual consolidated turnover of the Company as per its last audited financial statement, whichever is lower.

During the year, the Company entered into transactions with Sumitomo Chemical Company, Limited, Japan, the holding company, which are considered ‘material transactions in terms of LODR. The shareholders had accorded their approval to the transactions with Sumitomo Chemical Company, Limited through an ordinary resolution passed at the annual general meeting held on 30 July 2024.

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 2025-26 for an amount not exceeding 7,100 million.

Form for disclosure of particulars of material transactions entered into by the Company with Sumitomo Chemical Company Limited, Japan, a related party, as required under Section 188(1) of the Companies Act, 2013 on an arms length basis are summarised in Form AOC-2 in Annexure III.

The same are also given in note 38 to the Standalone Financial Statements.

The Companys Policy on related party transactions as approved by the Board may be accessed on the Companys website https://sumichem.co.in/pdf/25-26/modified related party transaction policy 2025 v6.pdf.

f) Business Risk Management:

The Board has constituted 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 identified 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 associated with exports and insurance adequacy risks.

In opinion of the Board, there is no element of risk which may pose serious threat to the existence of the Company.

g) Evaluation of 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 Companys 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 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 2025 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 subsidiaries:

Details of performance and financial position of the subsidiary companies are given in Form AOC-1 in Annexure IV. The Company has no associate company.

k) Corporate Social Responsibility (CSR) initiatives:

The Company has formulated its Corporate Social Responsibility Policy which is posted on its website https://sumichem.co.in/pdf/Corporate%20Social%20Responsibility%20Policy.pdf

A brief outline of the Policy and the Annual Report on CSR Activities is given in Annexure V.

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 VI.

m) Secretarial Audit Report and Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, M/s Saraf & Associates, Practicing Company Secretaries, (FCS:1596; CP NO.642), were appointed Secretarial Auditors to conduct secretarial audit for the year ended 31 March 2025. The Report of the Secretarial Auditors is attached as Annexure VII.

Regulation 24A(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 was amended in December 2024. As per the amended Regulation 24A(1), effective 01 April 2025, every listed company is required to appoint Secretarial Auditor for a term of five consecutive years with the approval of its members in its annual general meeting. Accordingly, the Company is seeking approval of the members, through an ordinary resolution at the ensuing annual general meeting, for appointment of Messrs M K Saraf & Associates LLP Practising Company Secretaries, as the Companys Secretarial Auditors for the five financial years commencing with the financial year 2025-26.

n) Secretarial Standards:

The Company has complied with the applicable ‘Secretarial Standards on Meetings of the Board of Directors - SS 1 and ‘Secretarial Standards on General Meetings - SS 2.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr Ninad D Gupte, Director, retires by rotation and being eligible, offers himself for reappointment.

The first five-year terms of Dr Mukul G Asher, Mr B V Bhargava and Mrs Preeti Mehta, Independent Directors, concluded in August 2024.

Mr B V Bhargava took retirement on completion of his tenure as Independent Director on 26 August 2024. The Board places on record its deep appreciation for Mr Bhargavas immense contribution in Board and Committee deliberations and in formulating business strategies and policies and business planning and in the areas of risk management, business systems, procedures and processes, internal control and governance.

Dr Mukul G Asher has been reappointed as Independent Director for the second term for the period from 27 August 2024 up to 31 August 2026. Mrs Preeti Mehta has been reappointed as Independent Director for the second term for the period from 31 August 2024 up to 30 August 2029. Mr N Sivaraman has been appointed as Independent Director for a term of two years from 01 September 2024 up to 31 August 2026. The appointments of the Independent Directors were made through Special Resolutions passed by the members at the annual general meeting held on 30 July 2024.

In opinion of the Board, Dr Mukul G Asher, Mrs Preeti Mehta and Mr N Sivaraman, the Independent Directors appointed / reappointed during the financial year 2024-25, are persons of high integrity and possess relevant expertise and experience.

At the said annual general meeting, the members passed a Special Resolution approving promotion of Dr Suresh Ramachandran, Whole-time Director, to the position of Deputy Managing Director with effect from 01 September 2024 for his existing tenure up to 31 May 2028.

13. DIRECTORS 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.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees and the managements assessment of adequacy and effectiveness of internal financial controls, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the year 2024-25.

Messrs BSR & Co. LLP the statutory auditors, who have audited the Companys financial statements for the year 2024-25, have given their report on the Companys internal control over financial reporting as defined by Section 143 of the Companies Act, 2013, which Report is annexed as Annexure B to the Independent Auditors Report.

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. AUDITORS AND AUDITORS REPORTS

At the previous annual general meeting held on 30 July 2024, the members appointed Messrs BSR & Co. LLP, Chartered Accountants, as the Auditors of the Company for a term of five consecutive years, in place of Messrs SRBC & CO LLP, the retiring Auditors.

The Independent Auditors Reports on Financial Statements, including Consolidated Financial Statements, of the Company for the year ended 31 March 2025, issued by Messrs BSR & Co. LLP, the Auditors, are enclosed with the Financial Statements in this Annual Report. The Independent Auditors 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 2023-24 were subjected to cost audit by Messrs GMVP & Associates LLP, Cost Auditors. The Cost Audit Report for the financial year 2023-24 issued by the Cost Auditors was filed with the Ministry of Corporate Affairs on 22 August 2024 vide SRN: F97613772.

18. ACKNOWLEDGEMENTS

Your Directors wish to place on record their sincere appreciation of the wholehearted co-operation received from the Companys 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
Mumbai, 26 May 2025	DIN:00488127	DIN: 07618601