upl ltd share price Management discussions

Global economy

In 2022, the global economic landscape faced a range of challenges that impacted its growth trajectory. These challenges included geopolitical tensions, disruptions in supply chains, inflationary pressures and tightening monetary policies.

Furthermore, China experienced setback in its growth due to a surge in COVID-19 cases following the relaxation of its restrictions.

The International Monetary Fund (IMF) reported that the global GDP grew by 3.4% in 2022, against 6.3% reported in 2021. Led by supply chain disruptions, Russia-Ukraine conflict and high energy prices, inflation remained stubbornly high across the globe. As a result, Central Banks across the globe increased policy rates to tame inflation. These factors underscored the need for careful navigation and adaptation in the face of uncertainty.

Inflation persisted throughout 2022

Global inflation remained multidecade high during 2022. According to the IMF, inflation for 2022 was 8.7%. In the US, inflation reached a four-decade high while Germany reported double-digit inflation for the first time since 1951. The key drivers of inflation were soaring fuel and food prices across the globe. Consumer goods prices were already increasing at the beginning oRs. 2022 owing to the lingering impact of COVID-19 on supply chains.

Further, Russias invasion of Ukraine disrupted the global scenario. Sanctions on Russia pushed global oil prices. Food prices are pushed up by fertiliser and transportation costs as well as Russias blockades of grain exports from Ukraine, a major wheat producer.

Global inflation rate (%)

2019 2020 2021 2022 2023(E)


3.5 3.2 4.7 8.7 7

Advanced Economies

1.4 0.7 3.1 7.3 4.7

Emerging Market and Developing Economies

5.1 5.2 5.9 9.8 8.6

Source: IMF


During 2023, the emerging and developing economies are expected to outpace advanced economies in terms of growth. However, global trade volume is predicted to decline by 2.7% in 2023, mainly due to increasing trade barriers and the appreciation of the US dollar. Despite these challenges, the IMF forecasts a 2.8% expansion in the world economy for 2023. Its important to note that geopolitical issues, such as US-China trade tensions and the Russia-Ukraine conflict could hinder the growth of inter-country trade, which is a crucial driver of global economic growth. As we navigate these complexities, finding solutions to reduce trade barriers and resolve geopolitical tensions will be vital for sustaining and fostering global economic development.

Indian economy"

Despite the external setbacks, the Indian economy remained largely resilient and reported a growth oRs. 7.2% in FY23, largely driven by buoyant domestic demand, favourable government policies and continued push by the Government to drive the countrys infrastructure sector. The agricultural GVA grew 3.3% as compared to 3.5% in the previous year. The financial, real estate and professional services sectors witnessed GVA growth oRs. 7.1% during the year as against 4.7% in FY22. The GVA of the trade, hotels, transport, and communication sectors, as well as services related to broadcasting grew 14%, marginally betterversus the previous year. However, inflation remained a cause of concern and the Reserve Bank of India revised the key policy rates northwards in a bid to contain it.

The RBI has projected a GDP growth oRs. 6.5% and an inflation rate oRs. 5.1% for FY24, indicating a favourable economic outlook. The governments focus on improving public digital infrastructure will generate ample prospects for individuals and businesses, stimulating economic resilience and fostering comprehensive development throughout the country. This emphasis on digitalisation is expected to enhance efficiency, accessibility, connectivity, driving economic growth and empowering various sectors of the economy.

Indias economy has undergone a significant transformation, leading to positive outcomes for businesses through formalization and increased transparency. This sets the stage for a strong growth trajectory in the future. Indias potential as a manufacturing hub has gained traction, with companies and countries looking to diversify their manufacturing sources.

The Governments initiatives like Aatmanirbhar Bharat and Make in India is expected to bolster the manufacturing sector.

Product prices, favourable weather drive significant growth in crop protection market in 2022

The global market for crop protection products, including both synthetic and biological solutions experienced significant growth of approximately 10% in 2022, reaching a value of around $79 billion. The primary driving force behind this growth was the increase in product prices.

Additionally, favourable weather conditions in key markets played a role in supporting growth. However, currency headwinds had a limiting impact on the market, as several major currencies weakened against the USD throughout the year.iv

Crop protection market 2016-2022**

2016 2017 2018 2019 2020 2021 2022

World Crop Protection Market (US$ million)

61,628 63,489 67,251 66,702 68,407 71,604 78,715

Of which biocontrol products

2,317 2,420 2,585 2,788 3,040 3,344 3,562

Nominal change on previous year (%)

-6.0 +3.0 +5.9 -0.8 +2.6 +4.7 +9.9

**On basis of S&P Globals restated historic data, including Biocontrol products, PGRs, fumigants and pheromones

Crop-wise growth of agrochemical market












Fruits and vegetables


(Source: S&P Global)

Total sales of crop protection products, including those used in non-crop situations are estimated to have increased by ~9% during the year to $88 billion. Analysis of historic performance suggests that non-crop growth largely follows trends in GDP.iv

Product sector performance in 2022

In 2022, the global crop protection market experienced robust growth driven by factors such as elevated agri-commodity prices and price adjustments to counter cost inflation from a substantial increase in active ingredient prices. The Americas, especially the US and Brazil, witnessed a substantial growth oRs. 14-17%, benefitting from high prices of agrochemicals like glyphosate and glufosinate, along with a strong agriculture economy.

Chinas crop protection trade in 2022 saw a notable increase in both prices and volumes, contributing to its overall value. A further surge in prices in 2022, estimated at around 40-45%, was driven by factors such a; the suspension of factory production in northern China for the Winter Olympics and the governments carbon neutrality initiatives, which limited the availability of raw materials. China also gained a substantial share in key importing countries on a year-on-year basis, highlighting its growing influence in the global crop protection market.iv

Category-wise growth in global markets (US$ Terms)

Share of global market YoY growth rate
Herbicide 46% -14%
Insecticide 26% -6-7%
Fungicide 25% -7-8%
Others (Includes PGRs, fumigants and pheromones) 3% -2-3%

(Source: S&P Global)

Herbicide Market

The herbicide segment emerged as the largest and fastest-growing segment in the global crop protection market, outpacing the growth rates of insecticides and fungicides. This significant growth was primarily driven by better pricing. The sales of herbicides were particularly boosted by the high prices of key non- selective herbicides like Glyphosate and Glufosinate.

Insecticide market

The demand for insecticides was primarily fuelled by the presence of insect pressure and an expansion of crop area in Brazil. Chlorantraniliprole, a leading insecticide active ingredient based on diamide chemistry, has recently gone off-patent in some geographies. This development is expected to drive growth in volume terms for Chlorantraniliprole in the future. The effectiveness of this active ingredient in controlling insects is increasingly contributing to its popularity in the market.

Fungicide market

The sales of fungicides in key markets such as the US and Europe were negatively affected by adverse weather conditions. However, the fungicides market experienced relatively robust demand in Asian markets, leading to high-single-digit growth for the year. Despite challenges in certain regions, the overall performance of the fungicides market remained positive.

The crop protection market in North America had a positive performance in 2022. In the United States, the soybean sector benefited from favourable area and yield prospects, while the corn market was supported by higher product prices. However, the US cotton market experienced a decline of approximately 8% due to a reduction in harvested area. On the other hand, Canadas crop protection market showed optimism, with an expansion in the wheat-harvested area driven by favourable prices and strong global demand. Additionally, improved weather conditions contributed to increased yields in wheat and a growing canola market in Canada.

The crop protection market in Latin America saw a strong recovery in the past year. Brazil, being the largest market benefitted from improved weather conditions, leading to substantial increases in corn yields. The soybean market in Brazil showed good growth, driven by expanded areas, high product pricing and an upsurge in export demand. In Argentina, the market experienced growth fuelled by robust corn areas and favourable product pricing.

Despite a declining trend in recent years, the European agrochemical market experienced growth of -6.5% in 2022. This growth was primarily attributed to favourable weather conditions that supported the growth of winter crops. Additionally, economic sanctions against Russia led to increased agricultural production in Europe to ensure food security, driving the demand for agrochemicals. However, the severe drought experienced in several areas adversely affected summer crops, particularly maize. The market performance was further impacted by the Euros weakness against the US Dollar. Furthermore, the Ukrainian crop protection market faced a significant decline of nearly one-third due to the impact of the Russia- Ukraine conflict.

The Asia-Pacific crop protection market witnessed a growth oRs. 5% in 2022, primarily attributed to high active ingredient prices in China and India. Unfavourable weather conditions limited volume growth in these regions. Additionally, the market benefitted from the recovery in key markets such as Australia, Thailand, Indonesia and Malaysia. However, the overall growth was offset to some extent by the depreciation of major Asian currencies against the USD and the weak performance in Japan, where the demand for crop protections remained limited.

The Middle East and Africa market experienced an estimated growth of around 6% in 2022. The performance of the market in recentyears has been significantly influenced by weather conditions, particularly in South Africa, where persistent drought has limited the demand for crop protection products. Although the acreages of key crops were positive for the 2021-22 season in the country, low yields were observed due to the prevailing dry conditions.

After two years of record growth, the Global Agrochemical Industry is expected to see a subdued performance in 2023. This is primarily due to the normalisation of Agricommodity prices, which limits the markets capacity to absorb further increases in crop protection prices. Additionally, prices of Active Ingredients (AI) are stabilising as channels are stocked, supply improves post-pandemic restrictions, particularly from China and prestocking requirements with supply chains return to normal. The global crop protection market is expected to decline by 5.2% at grower level in the 2023 harvest year. Of this total, prices are expected to decline by 9.5% whereas volumes are expected to increase by 3.6%. Active ingredient prices are expected to be high in 2023 but less than the record highs experienced in 2021 and 2022. Global acreages are expected to grow in all major crops including corn, soybeans, rice, wheat and cotton in 2023 over 2022 boosting volumes. Global currency rates against the USD are expected to positively impact the market as major currencies including the Brazilian real, Euro and Japanese Yen are expected to appreciate in 2023.

Large distributors are taking a cautious approach towards postpatent products, particularly non- selective herbicides like glyphosate, resulting in a "wait-and-watch" strategy. However, there is positive underlying demand from growers for the next crop cycle, driven by tight crop inventories. The performance of major listed Chinese companies indicates a volume push at or below manufacturing cost, suggesting a bottoming out of prices in the future. Destocking is expected to continue for most oRs. 2023. Specialty molecules have shown steady performance and prices, providing support to the overall industry performance in the first quarter oRs. 2023.

The potential for recovery from adverse weather conditions in the USA and Europe are expected to drive growth in the agrochemical industry in 2023. The anticipated breakout of the El Nino event is likely to alleviate the dry conditions in southern South America. However, reduced rainfall is expected in southern Asia and the Pacific region. Although fertiliser and energy costs remain high, there is an expectation for them to decline in 2023 compared to the peak levels experienced in 2022.v

Long term growth drivers for Global Agrochemical Market over the next few years:v

- Removal of several older products, with high- priced alternatives.

- Increasing issue of B.T resistance

- Increasing requirement for new technologies, including novel modes of action, to combat resistance issues for fungicides and herbicides markets

- Increasing product use intensity in less developed markets, driving volumes

- Regulatory restrictions in certain markets driving technology uplift and subsequently boosting overall value

- Increased seed treatment adoption benefitting insecticides and fungicides

- Increasing penetration of new herbicide tolerance technologies (primarily 2, 4-D and dicamba) leading to a shift in weed control strategies

- Increasing focus on high-value fruit and vegetable crops for export markets

Potential Challengesv

- Increased adoption of insect- resistant soybean, leading to lower insecticide use

- Uptake of GM maize in China, with penetration of glyphosate tolerance traits expected to lead to a shift in weed control strategies away from generally higher cost selective herbicides

- Accelerating the shift to natural products, impacting conventional chemistry

- In specific regions, the changing climate patterns may bring about a reduction in pest pressure. As dry conditions become increasingly prevalent and persistent, it could limit the prevalence of diseases. Nonetheless, this shift also opens-up possibilities for the emergence of novel technologies that can capitalise on the changing environmental conditions.

El Nino to return In 2023 following a three-year La Nina phase - largely positive For global crop acres; negative For few regionsvvi

The National Weather Service (NWS) predicts an -80% probability of transitioning to an El Nino phase by the third quarter oRs. 2023, marking the end of the prolonged La Nina period. El Nino events are characterised by a rise in global temperatures of approximately 1.95?C and a significant increase in atmospheric rivers impacting the US West Coast. During El Nino, certain regions experience increased rainfall, including parts of southern South America, the Southern United States, the Horn of Africa and Central Asia. However, it can also lead to severe droughts in Australia, Indonesia and parts of southern Asia.

El Nino typically has a mixed impact on crop yields worldwide. Approximately 33% of global crop acres experience improved yields, while around 20%-25% of acres see a decline. Soybean yields, on average, benefit by 2%-5% globally, with Argentina experiencing a larger increase oRs. 7%-14%. However, corn, rice and wheat yields are usually reduced by 1%-4%, and crops like palm oil, coffee and cocoa face more significant challenges during El Nino periods.

The negative impact of El Nino on Indias weather is expected to be less significant in 2023 due to the positive phase of the Indian Ocean Dipole (IOD), which will reduce its intensity and provide support for the monsoon.

Regional outlook

North America

Crop production in the USA is expected to experience significant growth, particularly in corn and cotton, driven by expanded acreages. Soybean production is also projected to increase due to improved yields. Similarly, in Canada, higher production is anticipated for cereals and canola. However, the value of the crop protection market may be impacted by lower prices for active ingredients compared to 2022.iv

Central & South America

The crop protection market is projected to either remain stable or experience modest growth. Brazil is expected to be a key growth market, with expanded areas for corn and soybeans leading to increased production in 2023. Additionally, corn exports are forecasted to rise as China looks to Brazil as an alternative source due to supply disruptions in Ukraine and Argentina.iv

Despite the expected growth in Brazils crop protection market, the overall performance may be dampened by weaknesses in Argentina (lower yields) and other markets with lower prices for corn and soybeans. However, it is important to highlight that the increasing demand for the export of fruits and vegetables has contributed to a rise in the value of crop protection use in these markets/


The crop protection market in 2023 is expected to be driven by favourable weather conditions in several countries, leading to increased production of key crops such as rice in China, canola and wheat in Australia, and cotton in India. However, the market may be impacted by high channel inventories, particularly in India, as well as softness in agrochemical prices and weakness in key currencies, resulting in a nominal USD impact. The Asia-Pacific region is experiencing rapid growth, fuelled by the focus on boosting production to maintain an exportable surplus and ensure quality for export markets/


EU requirements for reduced crop protection volumes may limit the value development in Europe, but emerging markets in Eastern Europe are expected to drive demand. Favourable autumn conditions have benefitted winter crop sowing in the northern and western regions of the continent/

Cereal exports are expected to rise, driven by the resumption of Ukraines Black Sea exports and the larger wheat crop, as well as the price competitiveness of wheat from the EU and the UK. Dry conditions remain a concern in France, while Ukraine is also severely impacted by the destruction of the Kakhovka Dam/

India crop protection market

Agriculture sector resilient in 2022-23 with growing production and exports

The agriculture sector which was crucial for post-pandemic economic recovery and food security, experienced a positive trajectory in FY 2023. Favourable rainfall, government support and global demand contributed to its growth for four consecutive years. Farm incomes improved, driven by higher crop prices. In 2022- 23, agriculture and allied activities demonstrated resilience, with gross value added (GVA) increasing by 3.3%." Total foodgrains production reached an estimated 330.53 million tonnes, a 4.7% year-on-year increase, largely attributed to the growth of rabi crops, which saw a 9.5% year-on-year expansion.

Domestic crop production - strong run of bumper foodgrain and oilseed production especially over the last 4 years

Indias Growing Agriculture Production (In million tonnes)


Food Grain Production

Oilseed Production

Kharif Rabi Kharif Rabi

FY 2006

109.87 98.73 16.77 11.21

FY 2007

110.58 106.71 14.01 10.28

FY 2008

120.96 109.82 20.71 9.04

FY 2009

118.14 116.33 17.81 9.91

FY 2010

103.95 114.15 15.73 9.15

FY 2011

120.85 123.64 21.92 10.56

FY 2012

131.27 128.01 20.69 9.11

FY 2013

128.07 129.05 20.79 10.15

FY 2014

128.69 136.35 22.62 10.13

FY 2015

128.07 123.96 19.22 8.29

FY 2016

125.09 126.45 16.70 8.55

FY 2017

138.33 136.78 21.53 9.75

FY 2018

140.47 144.55 21.01 10.45

FY 2019

141.52 143.7 20.68 10.85

FY 2020

143.81 153.69 22.25 10.97

FY 2021

150.58 160.17 23.72 12.22

FY 2022

155.36 160.25 23.97 13.99


155.12 175.42 25.94 15.06

Source: Third Advance Estimates of crop production for 2022-23, Ministry of Agriculture

Government initiatives to strengthen agricultural sector

The Indian Government is actively focused on the development of the agricultural sector by implementing various measures. These efforts aim to increase productivity and bolster agricultural production. Research institutions and stakeholders are working collaboratively to develop high-yielding crop varieties, innovative fertiliser and crop- specific machinery suitable for small fields. Additionally, initiatives are being undertaken to improve soil health, strengthen credit facilities, crop insurance and infrastructure. A notable initiative, the "Digital Agriculture Mission," has been launched to modernise the agricultural sector and leverage the benefits of digital technologies. These collective endeavours are aimed at driving growth and ensuring the sustainability of the agricultural industry.viii

Budget 2022-23 continues to support agriculture and its allied sectors through innovative and structural changes

The Union budget for this year prioritised various aspects of the agricultural sector. The Ministry of Agriculture & Farmers Welfare (MoA&FW) witnessed a 5% increase in allocation, focusing on infrastructure, technology, crop insurance, irrigation, and improving farmers income. Additionally, the Department of Fertilizers (DoF) reduced fertiliser subsidies by 22% in response to changes in raw material prices. The Budget also emphasised the development of the agri startup ecosystem, agricultural research and education (with a focus on climate-smart technologies and inputs), and the creation of digital infrastructure. Support was extended to allied sectors like fisheries and the export of value-added food products through the Production-Linked Incentive (PLI) scheme for the food processing industry.

Key crops such as long-staple cotton, high-value horticultural crops and millets were given special attention. Furthermore, the budget addressed the need for sustainable micro-irrigation by aiding the Upper Bhadra Project in Karnataka. This initiative will benefit crops such as cotton, maize, ragi, and red gram by ensuring access to sustainable microirrigation facilities.

Other key budget announcements:

- National mission on natural farming has been introduced with Rs 459 crore allocation

- Facilitate 1 crore farmers to adopt natural farming and set up oRs. 10,000 bio-input resource centres

- A decentralised storage capacity set up to assist farmers in storing their produce

- Modernisation of agriculture through introduction of Agriculture Accelerator Fund and Digital Public Infrastructure for Agriculture, with a focus on affordable, innovative farming solutions

- Agricultural credit target raised by 8% to Rs 20 trillion.

- Allocation under Department of Agricultural Research and Education (DARE) increased 10% to Rs 9,504 crore to help develop newer technologies and adopt better farming practices

- Increased allocation for the PLI scheme in the food processing sector will boost export of value-added products, thereby fetching higher realisations for food processors

- Higher allocation to support oilseed production (Rs 1,500 crore budgeted for next fiscal) is expected to reduce import dependency to 36% from 52% in the next five years

Indian agrochemical industry

India holds a significant position as the fourth largest crop protection producer, commanding a 13-15% share in the global crop protection market. In fiscal year 2023, the crop protection market in India was estimated to be around Rs. 765 billion. The countrys strong foothold in the global market contributed to significant growth in Indian agrochemical exports, driven by value-driven factors. The growth in agrochemical exports was primarily led by an increase in formulation prices and the appreciation of the dollar during FY23. India has been benefitting from the China+1 strategy adopted by global players and the expiration of patents for certain molecules, further boosting its position in the market.

The domestic crop protection industry experienced a year-on-year growth of approximately 9-10%. This growth was supported by an expected rise in per hectare expenditure, driven by an increase in crop protection prices and the expansion of acreages under key crops. Farmers preference for high-end chemistries also contributed to this growth. The price rise of formulations, averaging around 7-8%, and the introduction of new products in the last two years played a significant role in driving the industry forward. However, volume growth was limited due to factors such as skipped sprays in cotton caused by erratic monsoons and lower infestation of pests like brown planthoppers in crops such as paddy. On the other hand, herbicide penetration continued to increase, driven by heavier weed infestation in dry conditions, as herbicides gained preference over manual labour. During the last quarter of FY23, the performance of Indian agrochemical players was impacted by high channel inventories and the influx of low-priced Chinese generics. These factors posed challenges for the industry and influenced its overall performance.™

India agchem market outlook

The agrochemicals industry in India is expected to experience growth driven by various factors. Assuming a normal monsoon, the governments focus on improving farm incomes, strong export performance and stable domestic demand will contribute to the industrys expansion/The market is anticipated to face challenges due to a significant influx of generics from China, potentially impacting domestic players generic portfolios, particularly in the upcoming Kharif season. The pricing and competitive landscape will be closely monitored as these developments unfold.ix

In the fiscal year 2024, agrochemical players may encounter margin headwinds due to the liquidation of high-cost inventory and pressure on product pricing. This could put pressure on their profitability. While there are expectations of healthy growth in the insecticide segment, margins may remain volatile for domestic players/


- Over the next three years upto FY 26, ~US $4.2 billion worth of technical are expected to go off-patent, increasing the expor potential of India which has a strong presence in generics

- Government initiatives to provide credit facilities to farmers at low interest rates and other cash incentives

- Increase in commodity prices expected to improve the farmers per hectare expenditure and pave way to the industry growth

- New product launches, younger active ingredients and new technologies to boost the industry

- Climate change has resulted in development of various new crop damaging pest like black thrips

- Indias capability in low-cost manufacturing, a strong presence in generic crop protection segment, availability of technically trained manpower, seasonal domestic demand and unutilised capacity is expected to drive export growth in next 3 years at a CAGR oRs. 14-15%.


- Unfavourable climatic conditions like erratic rainfall can disturb the spraying windows

- Increased supply of lower-priced agrochemicals from China

- Stringent government regulations on product development, registration, and application

Financial review

FY 2023 was a challenging year with headwinds in the form of supply chain uncertainties and rising costs. However, our resilient portfolio allowed us to enhance the value of our offerings and better our operating profitability. The landscape shifted notably in the fourth quarter as concerns over supply chain reliability diminished, with distributors shifting their focus towards efficient inventory management.

The Company delivered a resilient performance and met the revenue and debt reduction guidance provided to the market at the beginning of the year, however fell short on EBITDA and ROCE.

Income Statement


FY 2023 (Rs in crore) FY 2022 (Rs in crore) Growth Rate (in %)


Rs 53,576 Rs 46,240 16%

Gross Margin

Rs 21,593 Rs 19,002 14%


Rs 11,178 Rs 10,165 10%


Rs 4,427 Rs 4,627 -4%

Net Profit

Rs 3,570 Rs 3,626 -1%

1 Profit before exceptional item and share of profit of associates & JV

Balance Sheet


FY 2023 (Rs in crore) FY 2022 (Rs in crore)


Net worth 1

Rs 26,858 Rs 21,675


Net Debt

Rs 16,902 Rs 18,906


Total non-current assets

Rs 46,549 Rs 42,951


1 Net worth does not include the amount pertaining to perpetual bonds

Working Capital


FY 2023 FY 2022


Net Working Capital

64 days 69 days


Net Working Capital (? in crore)

Rs 9,388 Rs 8,632


Inventories (? in crore)

Rs 13,985 Rs 13,078


Receivables (? in crore)

Rs 14,969 Rs 14,287


Payables (? in crore)

Rs 19,566 Rs 18,733


Key Ratios


FY 2023 FY 2022


20.9% 22.0%

EBITDA/Net Interest

3.8x 4.4x

Net Profit Margin

6.7% 7.8%

Net Debt-Equity Ratio

0.6x 0.8x


1.51x 1.86x

Return on Capital Employed

15.3% 15.6%

Earnings per share

Rs 45.79 Rs 45.87

Risk Management

Risk management is an essential aspect of UPLs strategy and decisionmaking process. We identify assess and mitigate potential risks that could impact the achievement of our objectives. It helps us safeguard our assets, reputation and financial stability. Effective risk management enables UPL to make informed and confident choices, anticipate potential challenges and seize growth opportunities. It also ensures compliance with regulations and enhances our stakeholder confidence.


In todays volatile and ever-evolving business landscape, it is critical for an organisation to focus on managing enterprise-wide risks effectively and proactively to achieve its strategic business objectives. UPL has developed a robust Enterprise Risk Management (ERM) Framework based on the fundamental elements of global risk management standards such as ISO 31000 and COSO. The framework emphasises a coordinated and an integrated approach to manage enterprise-wide risks and opportunities across UPL, which is essential to establish a culture of independent, proactive, and systematic risk management. UPL has defined clear roles and responsibilities, principles, consistent templates, enablers and training measures for effective and uniform implementation of ERM framework across the organisation.

The goal of the ERM Framework is to strengthen UPLs commitment to effectively manage both existing and emerging risks while capitalising on opportunities to achieve our strategic objectives and safeguard stakeholders value. To facilitate risk-informed decision-making, UPL has defined a vigorous risk governance mechanism leveraging our fully integrated ERM Framework.


- Promote and ensure risk-informed decision-making

- Integrate risk management processes with other assurance providing functions

- Formulate a resilient and robust methodology to manage and mitigate risks

- Identify, assess, prioritise, treat, monitor and report business risks arising out of internal and external factors that can affect strategic business objectives

- Continuously improve risk management process by benchmarking it with leading industry ERM practices, regulatory requirements and global risk management standards, such as ISO 31000 and COSO

- Encourage technology-enabled effective and efficient monitoring of risk profile across UPL

- Identify the risk appetite of the Company to align the risk response strategy

- Define roles and responsibilities, expectations from key stakeholders, reporting templates and training measures adopted with an objective to establish risk-aware culture

Risk Identification

- UPL conducts a rigorous risk identification exercise, including identification of emerging risks, in linkage with the strategic business plans and business landscape with inherent uncertainties. The UPL risk universe, which is updated periodically in consistence with evolving business context is leveraged across functions and businesses to conduct ongoing risk assessment based on business operations.

Risk Assessment

- Identified risks are evaluated to ascertain their risk exposure levels that is, potential impact and likelihood of occurrence using the standard risk assessment scale. Risks are further classified into Critical, High, Medium and Low based on their overall assessment score.

Risk Prioritisation

- Risk prioritisation is done based on the outcomes of the risk assessment and risk rating score considering the potential consequences for the Company if the risks were to materialise, and the likelihood of those risk events occurring. Risk prioritisation enables optimised deployment of the Companys resources for effectively managing the risks that matter.

Risk Response

- Relevant risk response strategy and controls are defined for the identified risks based on exposure vis-a-vis the Companys overall risk appetite. These include risk treatment, risk transfer, risk tolerance and risk termination.

Risk Monitoring and Reporting

- Effective risk response action plans are defined, based on cost-benefit analysis, to reduce the impact and likelihood of identified risks. Risks and defined response action plans, along with quantified Key Risk Indicators (KRIs) are regularly assessed, updated and reported at appropriate levels within the organisation to maintain an ongoing oversight.

Risk Description Mitigation Measures
Credit risk Failure in dues payment or in meeting contractual obligation by a customer or counterparty can lead to financial loss - Permissible and enforceable collaterals and guarantees.
- Review adherence to contractual obligations on a periodic basis.
- Credit insurance to cover default by customer.
Liquidity Capital market volatilities could impact our capital access - Regular monitoring of cashflows across business units and putting in place early-warning systems to address liquidity issues well in time.
- Ensure sufficient credit lines are in place across subsidiaries in the required currency.
Foreign currency fluctuations Selling products in 140+ countries in multiple currencies, exposing it to the risk of fluctuating exchange rates. - Remaining fully hedged through forward covers and natural hedges.
- Developing reports in the ERP system to identify and monitor mismatches in foreign currency exposures and taking appropriate steps to address these mismatches.
Cybersecurity Global operations lead to greater reliance on internet-based applications. This increases the risks of breaches in data privacy and integrity. - Consistent investments in latest IT security systems
- Setting up of adequate firewalls and disaster recovery systems.
- Continuous event-monitoring and defining appropriate access controls
Regulatory Changes Increased regulatory oversight and adverse changes to regulations in key markets. These changes can impact operations at the front-end (ban on sale/reduced usage of products) as well as back-end (ban/restrictions on manufacturing). - Stay abreast of proposed changes in regulations
- Organised planning to fine-tune and adjust product portfolio in accordance with anticipated changes.
Environmental Health - Changes in EHS rules and regulations - Staying updated on proposed changes in environmental laws
and Safety risk (EHS) - Explosion and fire hazards - Proactive planning to adjust with the anticipated EHS changes
- Failure of mechanical, process safety and pollution control equipment. - Ensure adequate allocation and upgradation of safety tools
- Ensure regular checks for spills and chemical discharge.
- Contamination, chemical spills and other discharges or release of toxic or hazardous substances. - Develop robust awareness initiatives, foster EHS focused culture.
Warehousing and supply chain - Manufacturing facilities are exposed to risks from natural calamities, accidents, breakdowns, failure to modernise, and so on - Usage of technology (ERP system) to build sufficient safety stocks.
- Logistical chains too can be disrupted by natural calamities on a regional and global scale. - Wide geographical manufacturing footprint.
- Procurement of raw materials and other products, in terms of supplies and costs, can be adversely impacted if there are disruptions at vendor level. - Reduce dependence on selected vendors and diversifying vendor base for critical supplies.
- Procuring appropriate insurance covers with adequate coverage levels.
Climatic conditions/ - Frequent weather changes-drought, dry weather, and floods. Strong presence in key agricultural markets of Asia, Africa, Latin America, Europe and North America helps in reducing dependence on a particular country/region.
Climate Change - Fluctuations in temperatures, excessive snow, and so on. Efficient and agile supply chain capabilities enabling requisite and timely adjustments to product supplies depending on weather conditions.
Research and Development - Inability to launch innovative products -

- Not keeping pace with emerging technologies

Strong R&D teams focused on launching innovative formulations, mixtures and combinations resulting in a steady stream of post-patent products, which offer greater value than those offered by peers
- Failure to identify opportunities in terms of emerging trends Focused approach by maintaining annual targeted Innovation
- Developing and launching products that do not generate commensurate returns. Rate to ensure that there is no flagging in efforts in launching innovative products.
Changes in market dynamics/market and Industry - New market entrants Wide product portfolio to address varying customer needs globally
- Change in marketing strategy by competitors Broader and less concentrated customer base in every country.
- Increase in competitive intensity Regular farmer and customer engagement to understand evolving requirements.
- Emerging and disruptive technologies/ marketing practices viz. genetically modified/hybrid seeds, digitisation, biotechnology, organic farming, online sale of crop protection products, and so on. Gathering relevant and reliable market intelligence. Continuous investment in latest technologies.
Partnerships with players with expertise in newer technologies.
Pest Resistance - Due to natural evolution and over- usage, pests are increasingly developing resistance to crop protection products. Developing and launching differentiated and innovative products - combinations/mixtures.
- Instances of weeds and insects becoming resistant to proven formulations are on the rise. Keep making tweaks to formulations to keep pest resistance at bay.
High intensityand regularfarmer and customer engagement to understand trends.
Tax - With 204 subsidiaries globally, we adhere to local tax rules and regulations, subject to amendments. Regular monitoring of the tax framework and ensuring compliance of respective tax rules and regulations
- There could be diverse interpretations of these regulations. Keeping abreast of key proposals for changes in local tax regulations
Talent Talent retention and engagement is critical to retain high performing talent for effective implementation of business strategies Clearly defined KPIs to ensure quantitative performance management
Competency and succession planning for critical roles
- Continuous engagement with employees

Periodic review of reward structures and optimisation (as required)
- Focus on employer value proposition and job purpose