UPL Ltd Management Discussions

Commodity prices adjust as shocks fade

Crop commodity prices, which surged to historic highs during mid-2022, have gradually begun to normalise. This earlier surge was driven by a perfect storm of factors such as supply chain disruptions caused by the COVID-19 pandemic, geopolitical tensions following the war in Russia-Ukraine, and extreme weather patterns affecting harvests globally.

However, as the immediate pressures have begun to ease, prices of key agricultural commodities in western markets are trending back towards their pre-pandemic levels. Improved grain supply outlook and stabilising logistics have contributed to the overall softening of prices. Soybean markets remain particularly weak, with demand dampened by ongoing Chinese tariffs, which have challenged the global competitiveness of US growers. On the other hand, wheat prices may show a moderate recovery by late 2025, largely in response to declining stock levels and concerns over the quality of the 2023 24 harvest across Europe.

The broader market sentiment continues to hinge on weather conditions, geopolitical developments and trade policy shifts, all of which will shape pricing dynamics in the medium term.

Indian economy

Indias economy achieved robust growth of 6.5% in FY25, following a stellar 9.2% in the prior year. This is fuelled by resilient private consumption and durable investment. Retail inflation moderated to 4.6%, the lowest since FY19, prompting RBI to ease monetary policy. The RBI delivered a 50-bps rate cut and reduced reserve ratios in June 2025, aimed at reviving credit growth and supporting economic expansion. Liquidity measures have helped alleviate earlier tightness, bolstering both retail and MSME lending. External fundamentals remain strong with service exports rising and foreign exchange reserves stable. Meanwhile, the central government achieved fiscal consolidation, reducing its deficit by nearly 80 bps to about 4.8% of GDP, supported by robust tax revenues and RBI transfers. India is poised to benefit from the global diversification of supply chains especially in sectors like chemicals but needs to act swiftly to build the necessary infrastructure coupled with favourable policy support.

Resilience of Indias agriculture sector

India stands tall as a significant contributor to the global agricultural sector with around 55% of its population relying on it as a primary source of livelihood. The country has among the worlds largest areas planted for wheat, rice and cotton cultivation, apart from leading in the production of milk, pulses and spices.

With vast potential for value addition, the sector is primed for substantial growth, steadily enhancing its footprint in global food trade each year.* According to the Economic Survey 2024 25, the sector has displayed enduring resilience, growing at an average rate of 5% annually between FY17 and FY23, despite external challenges. This momentum persisted into FY 25 as well, and the consistent performance reflects the impact of sustained government efforts to boost productivity, encourage crop diversification, and enhance farmer incomes. As a result, agriculture remains a cornerstone of inclusive and sustainable economic progress.#

Industry overview

Global crop protection market normalising

The crop protection industry entered a pivotal phase of normalisation in 2024, marking a significant transition after a prolonged period of overproduction and surplus supply, particularly from China. Key global markets such as North America, LATAM and Europe, once burdened with high channel inventories, have now recalibrated to more sustainable levels, paving the way for a steady rebound in sales volumes. With the destocking cycle nearing its end, supply chains are now increasingly synchronised with on-farm demand, signaling a return to balanced, demand-led growth across most markets, whereas in some of them, the channel is moving towards just-in time purchasing, given the high-interest rate environment and lower than earlier Active Ingredient (AI) prices.

While pricing remained under pressure through most of the year, primarily due to the surplus Chinese supply that led to a sharp decline in crop protection prices to below 2019 levels, the latter part of 2024 saw signs of stabilisation. However, prices are trending below pre-Covid normal levels. This improvement was supported by normalised inventory positions, a more measured production environment, and a broader industry shift towards just-intime sourcing models.

The adverse impact of higher cost inventory is gradually diminishing and is expected to be supported by favourable trends in raw material prices. In response to lower pricing environment, manufacturers are proactively restructuring operations, focusing on tighter control of working capital and fixed overheads, to safeguard and enhance margin performance.

In 2024, the global crop protection (grower) market was valued at approximately $75 billion, representing the estimated sales of crop protection products at ex-manufacturer prices applied during the 2023 24 crop year. These figures broadly correspond with the 2024 calendar year for the northern hemisphere and the October September cycle of 2024 in the southern hemisphere. The non-crop applications are excluded from this estimate. The global crop protection market including biological products at grower end contracted by 6% in 2024, reflecting a turbulent year shaped by persistent oversupply and adverse weather patterns. Weakened pricing, combined with climate-related challenges in key agricultural regions, particularly Brazil, contributed to dampened market momentum.* The global crop protection market faced considerable headwinds in 2024, with application volumes falling by 3.4% year-on-year# largely due to unfavourable weather across Asia, South America and major cereal-producing regions of Europe. Prices on the farm continued their downward slide for the second consecutive year, heavily influenced by low ex-factory pricing from China particularly impacting southern hemisphere markets during the agricultural year. Market sentiment was further dampened by reduced corn cultivation in key geographies like the US and Brazil, coupled with challenging agri-economics marked by higher input costs, subdued commodity prices and costly borrowing. Globally, adverse weather events also dealt significant blows: erratic monsoons in India, delayed soybean harvests in southern Brazil, drought conditions in Australia and China, poor winter cereal yields in Europe, and extensive replanting in Russia, all converging to suppress market performance and delay price recovery across the board. Despite facing significant challenges, the industry in 2024 demonstrated resilience and adaptability. Additionally, high inventory levels across most regions suppressed price recovery and placed pressure on both producers and suppliers within the crop protection industry.

Tariffs reshaping supply chains

Escalating trade tensions between the United States and key global partners are expected to fuel inflationary pressure in the US, with potential ripple effects across its agricultural economy. As export demand for staples such as soybean and corn adjust and import prices of crop inputs climb, American farmers face the dual burden of rising costs and diminished export revenue, further straining farm incomes. In 2025, the US administration imposed a fresh wave of tariffs and following negotiations, they currently stand as follows: 10% on certain agrochemical imports from India (2024: nil), and 20% fentanyl tariff + 10% reciprocal tariff on China on top of previously existing rates of upto 25%. These are levied over a baseline import duty of 0 - 6.5%. Exporting nations, especially China, are subject to far steeper combined tariff rates, now ranging from 20% to as high as 55%. Indian reciprocal tariffs will be in effect till July 9 while China tariffs till Aug 12, following which, based on trade negotiations, these tariffs could undergo further change.

Further, while certain technicals may be exempt or have layered tariffs, formulations continue to bear the full impact of these duties. This has triggered a rapid evolution of global supply chains with US importers actively diversifying sourcing to markets like India. Meanwhile, Chinas retaliatory tariffs on US agricultural imports may further disrupt American farm exports, raising fears of a renewed trade standoff reminiscent of the 2018 2019 tariff war.

Biologicals are growing fast but remain a niche sector

Accelerating growth to 2028

Biostimulants projected to grow at 10.1% p.a. and biocontrol at 10.8% p.a. through 2028#

Wider use of biologicals in row crops is driving mainstream acceptance and market expansion

Facing competition from variable-rate application tech and innovative CCP chemistries

Climate change is hastening the move to sustainable cultivation and regenerative inputs

Growing interest in bionematicides, plant extract-based insecticides, fungicides and biological seed treatments

Generics dominate share in the crop protection market^*

Over the past decade, the crop protection industry has undergone a profound transformation with generic active ingredients emerging as the dominant force. Generics have steadily gained market share, rising from 52.7% of the total agrochemical market in 2011 to a striking 84.1% by 2023. This shift has been accelerated by the patent expiry of several high-value molecules, such as chlorantraniliprole and prothioconazole, expanding the addressable market for generic players. The generic crop protection market is set to expand further, with 36 active ingredients coming off patent between 2025 and 2029 with current estimated market size of ~$3.1 billion in 2023.*

As key active ingredients such as pyroxasulfone or saflufenacil approach patent expiry, they are expected to open new avenues for generic manufacturing, drive competition, and offer more affordable crop protection solutions globally. In the chart, proprietary products refer to those containing patented active ingredients, while proprietary off-patent products are those no longer under patent but still predominantly sold by the originator company. The total cost of discovering and developing a new crop protection product has risen considerably over time. Between 2000 and the 2005 08 period, expenses surged by 39.1%, followed by a further 11.7% increase during 2010 14, reflecting the growing complexity, regulatory demands and investment required to bring innovative solutions to market.^@ Despite surge in generics, research-driven companies still maintain a firm grip on the market, accounting for 60.4% total crop protection sales. This seeming paradox can be attributed to the breadth of their portfolios which encompass not only innovative proprietary molecules but also significant volumes of generics and proprietary off-patent products. As the sector continues to evolve, it is clear that while generics are now leading the charge, the strength and strategy of R&D-led companies remain integral to shaping the industrys future.

Herbicide

Herbicides have maintained their dominance within the global crop protection market, despite facing successive years of sharp price decline. In 2024, the sector continued to feel the weight of falling AI prices, which outweighed the positive impact of expanded cultivation areas for major crops. Persistently low prices of key non-selective herbicides, especially glyphosate, have placed considerable pressure on overall market value. Even regions in the southern hemisphere which were once shielded by seasonal application patterns, were affected by the ongoing decline in pricing during the most recent agricultural cycle. Ultimately, the sustained drop in pricing outpaced any gains from increased sowing, resulting in 6-8% decline in 2024.

Long term outlook

In countries where genetically modified (GM) seed varieties widely adopted, herbicides are primarily driven by herbicide-tolerant traits embedded within these technologies. The continued uptake of such technologies is set to benefit a range of herbicidal actives, cementing their importance in weed management strategies.

Recent innovations have seen the introduction of herbicide tolerance to ACCase inhibitors across several national markets, extending the application of this group into crops like rice. Meanwhile, additional tolerance platforms, including those designed for PPO-inhibiting herbicides are under development.

However, the rise of herbicide resistance has prompted a growing need for alternative control solutions. This trend is expected to persist, creating opportunities for established alternatives, alongside promising new entrants.

Insecticide

In the insecticide segment, subdued pest pressure across major markets such as India likely dampened growth, while China experienced heightened infestations, driving stronger demand. Brazil, a key player in the sector, saw expanded soybean acreage, providing a notable boost to insecticide use. Meanwhile in Argentina, the confirmed outbreak of African leafhopper, an important vector for corn stunt disease, has prompted increased application as farmers strive to safeguard yields. However, adverse weather across key cereal-growing regions of Europe has added to the sectors challenges. Overall, the segment declined by 5-5.5% in 2024.

Long term outlook

Over the long term, the insecticides sector is poised to gain from regulatory shifts phasing out older chemistries, particularly organophosphates and restrictions on neonicotinoids. As these low-cost legacy products exit key markets, demand is expected to shift towards newer, higher-value alternatives. Recent years have also seen a wave of innovation, with several advanced solutions targeting sucking pests. Broader uptake across new crops and geographies is set to drive growth for these novel offerings. Further momentum is anticipated from the rising adoption of targeted nematicides, as growers move away from traditional fumigants under increasing regulatory pressure. Additionally, biological insecticides and nematicides are expected to post robust growth, benefitting from both environmental preferences and supportive regulatory trends throughout the forecast horizon.

Fungicide

In 2024, the fungicides market grappled with pricing pressures and prolonged dry conditions particularly across Brazil. Further, unfavourable weather in Europes key cereal growing countries dampened demand and application. Simultaneously, tighter regulatory regimes in the EU and North America continued to steer the industry towards safer and more sustainable solutions. The segment is likely to have declined by 5-6% in 2024.

Long term outlook

The fungicides market is set to gain in value as the demand grows for innovative technologies and novel modes of action to tackle rising resistance challenges across key crops and regions. Regulatory developments are also poised to shape the sectors trajectory, with recent high-profile withdrawals of contact fungicides in several markets. These multi-site fungicides had long been favoured for their broad-spectrum disease control and affordability, as well as their vital role in resistance management. Their absence is creating opportunities for more advanced, targeted solutions to fill the gap.

Global seeds market

While the crop protection segment is expected to recover, the global seed market may continue to face headwinds in 2025, primarily due to ongoing pressure on farm profitability and weak underlying farm fundamentals. In South America, adverse weather conditions and crop disease have contributed to a reduction in corn acreage in Argentina and Brazil. Nevertheless, high production levels are still projected, which could further suppress global commodity prices. Although input costs are anticipated to decline, the extent of benefit to farmers will depend on how these savings balance against falling commodity prices. However, improvements in yield could help compensate for the reduction in area planted. The total commercial seed market, comprising both genetically modified (GM) and conventional seeds, is currently estimated to be valued at approximately $53 billion for 2024. In response to growing demand and innovation, several crop protection companies have developed substantial seed businesses, with portfolios spanning across genetically-modified (GM), gene-edited (GE), and conventional hybrid seed technologies. The global traded seed market is projected to grow modestly in real terms, averaging 0.9% annually through to 2028.

Performance across key markets^*8

The global crop protection market navigated a mixed landscape of headwinds and opportunities in 2024, with relatively better environment anticipated in 2025. The encouraging outlook will likely be supported by by stabilising agrochemical prices and improved weather conditions across Europe, Asia and Brazil. A more balanced inventory situation is also expected to bolster company performance, following recent years

* AgbioInvestor where higher channel inventory dampened sales in many regions. In North America, the agricultural sector continues to feel the squeeze of subdued commodity prices and escalating production costs, weighing heavily on farm incomes in both the US and Canada. Central and South America have similarly contended with low pricing and adverse conditions, though a recovery in Argentinas weather and crop areas remains a key monitorable. Europes market has been disrupted by erratic weather, yet signs of stabilisation are on the horizon for 2025. Across Asia Pacific and Africa, a dynamic mix of regulatory changes and weather-related challenges presents both risks and opportunities, particularly as markets broaden and innovation drives the rollout of next-generation crop protection products.

North America

The US agricultural sector remains under pressure due to low commodity prices, resulting in reduced farm incomes. Dry conditions and low agrochemical prices further impacted growth. Despite higher soy area, lower US corn and wheat areas held back market development. According to USDAs 2024 estimates, net farm income has dropped by 5.6%, driven by lower revenues and increased input costs. Cash receipts from crops fell by 8.3%. Overall, North Americas crop protection market declined by 4.8% in 2024, driven by lower commodity prices, reduced crop areas, and adverse weather conditions.^*

Outlook

+ Higher corn area, decline in soy + Normalisation of inventories + Steady pricing - Unfavourable farm economics

Farm economics in the US and Canada are expected to be challenging in 2025 as persistently low commodity prices will continue to challenge margins. Improved weather conditions could offer a welcome boost, while a more balanced inventory environment, particularly in the US should support stronger crop protection sales, aided by a shift towards just-in-time purchasing strategies. Crop dynamics are also shifting. In the US, corn plantings are set to rise as growers pivot away from soybeans, which are forecast to fall amid rising domestic and global stockpiles. Meanwhile, US wheat acreage is expected to decline while in Canada, wheat and canola plantings are expected to increase. Agrochemical prices are stabilising, yet US growers are likely to face increased chemical costs across major crops. Meanwhile, trade tariffs especially with China may offer some price support for crop inputs but could further strain the cost-income balance for growers, given continued pressure on commodity markets.

LATAM

In 2024, challenging weather conditions and increased disease pressure led to reduced corn acreage across Argentina and Brazil. Higher soy area in Brazil was also impacted by unfavourable weather. Furthermore, the agrochemical market faced challenges due to low prices throughout the growing season and unfavourable conditions in Brazil. However, Argentina crop production recovered somewhat from severe drought related declines in 2022/23. In Brazil, lower commodity prices hampered grower spending. Despite high pest pressures, including Asian soybean rust and insect pests, Latin American crop protection market degrew 6.3% in 2024. The region is now on track to deliver record harvests, which may intensify downward pressure on international crop prices. Furthermore, Brazils soybean expansion is likely to decelerate due to declining profitability, though recent upticks in cash prices may offer some upside potential. Historically driven by Chinese demand, the Brazilian soybean sector remains sensitive to any shifts in trade dynamics. Additionally, several major players in Latin Americas crop protection market are experiencing financial difficulties, including potential bankruptcies and channel problems. This is partly due to a combination of factors like falling commodity prices and overstocking.

Outlook

+ Improved weather + Higher soy area, recovery in corn + Stable agchem prices

The outlook for 2025 brings renewed optimism for South Americas agricultural sector. While agrochemical and commodity prices remain subdued by historical standards, the anticipated expansion of crop areas in Brazil and Argentina alongside improved weather prospects sets a positive tone for market recovery and growth.

In Brazil, soybean cultivation is on course to reach new heights, with the 2024/25 planted area projected to rise. This cements Brazils position as the global leader in soybean acreage, outpacing the US. Though the pace of growth has moderated, the shift from first-season corn to soybeans reflects a strategic response to market dynamics, ensuring continued expansion. Corn cultivation in Brazil is also holding steady, with total area expected to increase, despite the knock-on effects of delayed soybean planting on second-season corn. Cotton is enjoying renewed favour, with the area forecast to grow, fuelled by competitive pricing and increased profitability. In Argentina, soybean acreage and sunflower plantings are also expected to grow, as growers strategically pivot from corn. These trends signal a resilient and adaptive agricultural landscape, primed for steady growth in the year ahead.

Europe

In 2024, the crop protection market in Europe is estimated to have contracted by 4.5% in nominal terms. The market was primarily affected by challenging conditions in several regions, particularly impacting winter cereals, a key crop for northern and western countries. Wet weather hindered planting and crop development, as well as restricting field access for both planting and input applications. Southern regions, where there is less focus on cereals and oilseed rape, saw more varied conditions. While product inventory shortages had been a significant concern throughout 2023 and 2024, anecdotal evidence suggests that the situation in Europe is now easing. Purchasing patterns are shifting towards a more just-in-time approach, moving away from the high levels of pre-buying that had been common following pandemic-related supply uncertainties. Additionally, significant currency devaluations, notably the weakening of the Turkish lira against the US dollar, further compounded market difficulties.

Outlook

+ Recovery in winter cereals

+ Less intense pricing decline

+ New products due to resistance and regulatory issues

- Dry conditions in eastern and southern Europe

In 2025, the European crop protection market is expected to show positive signs, driven by a return to more favourable weather conditions, particularly in key cereal-growing regions. With 2024 crop production already impacted by weather events, reduced availability may help stabilise commodity prices ahead. While agrochemical pricing remains a challenge, the impact in Europe is less severe than in other regions, as it is less reliant on inputs from China. Costs in Europe have been influenced by various factors, notably energy prices, which have kept costs above those in other regions. Although prices are declining, the drop is not expected to be as steep as in other agrochemical production bases like China and the US. New product introductions, are expected to bring added value, especially in markets where regulation and resistance have limited product options.

Asia

In 2024, the crop protection market in the Asia Pacific region contracted by 7.5% in nominal terms. The market continues to be weighed down by low agrochemical prices, compounded by challenging weather conditions in key markets like India and China. In India, adverse weather prevented a significant reduction in existing agrochemical inventories, hindering market growth, particularly on the supply side. In China, the market faced disruptions from record heatwaves and drought, while excessive rainfall and flooding also posed challenges in certain regions.

Outlook

+ Improved weather - switch to ENSO neutral and La Nina

+ Agchem price stabilization

- Significant capacity additions limiting price recovery

For 2025, the crop protection market in the Asia Pacific region is expected to remain constrained by low agrochemical prices, although a recovery is likely in markets where weather conditions were less favourable in 2024, such as India. The ongoing expansion of developing markets in the region will also contribute to growth. A recent decision by the European Parliament to reject maximum residue levels for certain crop protection active ingredients banned in the EU could further benefit market development in countries exporting produce to the EU. This shift may see older, low-cost active ingredients likely to be replaced by newer, typically higher-priced EU-approved alternatives, boosting market value. Weather patterns in the regions are influenced by the La Nina El Nino cycle. ENSO (El Nino Southern Oscillation) is anticipated to diminish in strength in 2025 and is likely to benefit India and South East Asia. Australias agriculture continues to lean heavily on wheat, with cultivation projected to rise by in 2024-25. This marks a strong year-on-year increase, reaffirming wheats dominant role in the countrys cropping landscape.

Middle East and Africa

In 2024, the crop protection market in the Middle East and Africa is estimated to have decreased by 7.1% in nominal terms. The market faced several challenges, particularly adverse weather conditions, with hot and dry spells affecting key production areas. Despite these setbacks, the impact on the market was less severe when measured in local currency terms.

Outlook

Looking ahead to 2025, the European Parliaments recent decision to reject maximum residue levels for crop protection active ingredients currently banned in the EU could present significant opportunities for market growth in many African countries, where crop production for export to the EU is common. This shift could prompt a move away from older, low-cost active ingredients in favour of EU-approved alternatives, likely boosting market value. Moreover, African markets are now poised as key targets for new product introductions. Meanwhile, the developing La Nina conditions are expected to bring below-average rainfall to eastern Africa, while southern Africa may experience above-average rainfall, potentially influencing regional crop production patterns.

While the crop protection market is poised for a recovery in 2025, enabled by the easing of industry headwinds, the global seed market is expected to decline. Depressed farm fundamentals continue to weigh heavily on profitability, with record crop production across South America likely to further dampen global commodity prices, compressing farm incomes worldwide.

Globally, input costs are expected to decline, offering some relief to farmers; however, overall income impacts will hinge on the delicate balance between reduced costs and sustained commodity price pressures. Among crops, soybean, cereals and cotton applications are expected to drive growth in the crop protection market. A sharp drop in Chinas imports could drive commodity futures prices lower, significantly influencing planting decisions in both Brazil and the US. In India, the governments move to raise procurement prices for corn-based ethanol is anticipated to boost demand, potentially encouraging a shift in acreage from sugarcane and cotton to corn in the 2025 26 season. Further it is also expected to achieve record rice harvest on the back of favourable climatic conditions.

Performance in CY 2024

Regional

All regions showed negative growth; LATAM and APAC hit hardest due to inventory overhang and currency impact

Significant price correction impacted market value

Weak EU market due to adverse autumn weather

Low grower incomes led to reduced crop protection spend

Unfavourable weather in key markets (especially Brazil) constrained prospects

Sectoral

All sectors recorded negative growth in 2024

Herbicides led the market, but low prices dampened overall value

Insecticides performed relatively better due to favourable pest conditions

Steady product usage volume, but market value declined due to low active ingredient prices

Agrochemical leaders saw steady volume growth but low- to-moderate pricing

Outlook for CY 2025

Regional

Brazil issued R$4.2 billion rural credit support (Plano Safra) for 2024-25 to support macro economic conditions.

Farm economics remain subdued globally, impacting purchasing behaviour

Geopolitical factors (e.g., US China trade war) driving soybean area growth in Brazil for export competitiveness

Global grain/oilseed demand to stay resilient despite trade disruptions or planted area shifts

US dollar expected to weaken in 2025, improving regional performance in USD terms; inflation expected across geographies

Active ingredient prices likely to remain low but stable due to Chinese overstock, despite strong on-farm demand

Sectoral

Companies optimistic for stabilisation in 2025; biologicals adoption also improving prospects (though still niche)

Crop protection market expected to remain stable, with volume gains offset by continued pricing headwinds

Global agrochemical markets are expected to remain under pressure due to ongoing price re-alignments, falling commodity prices outpacing input cost reductions and other factors

Improved global weather, expanded crop acreage, normalised inventories and strong uptake of novel active ingredients are expected to drive recovery

Demand remains strong for yield-enhancing technologies; however, crop prices and margins have moderated

Emerging growth drivers for long-term

The global crop protection market size is poised to increase at a CAGR of ~2.1% over the next 5 years, following a prolonged phase of subdued agrochemical and commodity prices.

A key catalyst for this revival is the growing demand for advanced technologies to address the escalating challenge of resistance. Recent introductions of herbicides featuring novel modes of action are paving the way for more effective and sustainable weed control. Developing markets are witnessing a rise in the intensity of product usage, driving volume growth. At the same time, there is a marked shift towards higher-value, lower-volume products as technology adoption improves across emerging regions. Regulatory pressures in several countries are accelerating this trend, forcing the replacement of older, low-cost chemistries with more modern and valuable alternatives.

In export-driven markets, the European Unions increasingly stringent Maximum Residue Limit (MRL) regulations are influencing global product choice. This shift is prompting producers to align with EU standards, leading to a transition away from older solutions and cultivating a broader value uplift across the supply chain. The sector is also experiencing rising interest in biological crop protection products. This momentum is supported by increased adoption of seed treatments particularly insecticides and fungicides with robust growth anticipated in nematicides and biological seed treatments. Meanwhile, the penetration of new herbicide tolerant seed technologies, are reshaping weed control strategies, offering more targeted and resilient approaches. Further fuelling this transformation is the growing focus on high-value fruit and vegetable crops aimed at export markets which demand premium protection standards.

Long term structural drivers and disruptors

Tailwinds

Pest resistance development aids value

Developing markets (for example South and South-East Asia and Africa) drive volumes

Further uptake of seed treatments and biologicals

Novel modes of action for weed control

Headwinds

Increasing pressure due to new GM variety

Accelerating impacts of technologies such as variable rate applicators, on volumes

Commodity price pressure

Shifting dynamics in crop protection strategies

The landscape of crop protection is undergoing a significant transformation, driven by technological, regulatory, and environmental changes. In Brazil and Argentina, the rising adoption of insect-resistant crop varieties particularly soybeans are reducing reliance on traditional insecticides. Similarly, the growing penetration of genetically modified crops in China is expected to shift weed control strategies away from higher-cost selective herbicides. Meanwhile, the increasing use of precision and digital agriculture technologies is set to streamline input usage, potentially reducing volumes. However, this may be offset by a growing need for advanced formulation technologies and a greater emphasis on patented active ingredients, which could help preserve overall market value. Climate change is also beginning to reshape pest dynamics, with shifting weather patterns and persistent dry conditions altering pest pressures across key regions. Adding to these complexities are regulatory restrictions such as the EUs ban on neonicotinoids where the lack of viable alternatives risks eroding market value and leaving critical gaps in pest control options.

Indias crop protection market

India, the worlds fourth-largest producer of crop protection chemicals, continues to play a pivotal role in global agriculture by strengthening its foreign exchange reserves as a net exporter. In FY25E, Indias crop protection market (including exports) was valued at an impressive 667 billion, accounting for 13% of the global industry.* As the global spotlight intensifies on sustainable food production, the importance of Indias crop protection sector is only growing. In the face of mounting pressure to produce more with fewer resources, Indian companies have not only helped farmers enhance crop yields and reduce losses but have also positioned the country as a major exporter in this critical industry. Their contribution is especially relevant as the world transitions towards regenerative farming practices aimed

* CRISIL December 2024 at preserving environmental health while boosting productivity. Despite its strengths, the sector still grapples with regulatory bottlenecks and limited awareness among end-users. However, emerging trends such as population growth, digital transformation, and the rise of direct-to-farmer models including sales through Farmer Producer Organisations (FPOs) and e-commerce platforms are helping bridge this gap and redefine market dynamics.

4 th largest crop protection producer in the world

Indias crop protection industry is projected to reach ~ 702 billion in FY26 and ~ 807 billion by FY28. In FY25, the domestic market is estimated to have contributed 46%, while exports are expected to lead the way with a commanding 54% share. The sector is gradually moving away from generics towards premium offerings, spurred by domestic launches of safer, more effective products. In FY25, Indias crop protection sector witnessed a resurgence in demand after a decline in the preceding year spurred by generally favourable monsoon conditions that bolstered volume growth. Domestic revenues are expected to have risen in FY25, supported by favourable monsoon patterns and healthy reservoir levels, which are driving robust agricultural output. However, despite this encouraging recovery, a decline in agrochemical prices capped revenue gains. The sector continues to rely on a broad portfolio of products in crop protection agrochemicals, with the introduction of combination products emerging as a notable trend. Nevertheless, novel active ingredients consistently hold a premium place in the market, commanding priority in acceptance and adoption. Insecticides and herbicides are set for healthy growth, while fungicides will benefit from better rainfall. In medium-term, the domestic market is forecast to grow at a 5-6% CAGR between FY25-28P, bolstered by innovative chemistries and evolving pest management needs. In FY25 exports are likely to have grown by low to mid single digit, driven by inventory liquidation and Latin American demand. Indias cost-effective manufacturing and robust generic sector are set to support export growth to match FY23 peaks, growing at a 7-8% CAGR through FY28P.

For FY25, margins have remained healthy as players leveraged the earlier crude price dip. Overall, Indias crop protection industry is poised for stable growth and improved profitability in the long term.*

Indias foodgrain and oilseed scaling new heights

	Indias growing agriculture production (in million tonnes)
Particulars	Food grain production		Oilseed production
	Kharif	Rabi	Kharif	Rabi
CY 2021	150.6	160.2	23.7	12.2
CY 2022	155.4	160.3	24.0	14.0
CY 2023	155.7	157.8	26.2	14.2
CY 2024	156.7	157.7	24.1	14.3
CY 2025	166.4	164.5	27.6	14.0

Growth amid headwinds^*

Looking ahead, domestic growth in FY26 is expected to gain momentum, driven by favourable monsoon forecasts, stable commodity prices, and robust sowing activity. On the export front, a recovery is projected in the second half of FY26, as international markets stabilise and inventory destocking by distribution channels nears completion. However, historically low realisations will continue to weigh on growth, preventing a return to the double-digit figures. This comes despite ongoing pricing pressures from oversupply in China, albeit less acute than last year. This trend is expected to persist, resulting in fewer inventory write-offs. Moreover, improved volumes should bolster the sectors profitability. Operating margins are also on a slow path to recovery. Controlled debt and a gradual rebound in operating profitability will help sustain stable debt-protection metrics over the near to medium term.

Opportunities	Challenges
- Several firms are collaborating with international counterparts to introduce pioneering advancements in high-end chemistry	- Erratic weather conditions due to climate change such as El-Nino and La-Nina causes volatility in the crop protection products consumption, hampering industry growth
- Anticipated rise in commodity prices is expected to boost farmers inclination to invest in advanced agrochemicals potentially fuelling the industry growth	- Governments nod to the trials and development of GM seeds can impact the crop protection industry in the long run
- The emergence of new pests due to climate change offers an opportunity to innovate and develop solutions	- Stringent government regulations on product development, registration and applications
- Expiration of molecule patents will broaden the market for generic alternative, creating new revenue streams	- Development of pests which are resistant to the existing crop protection products poses a huge challenge for the industry stakeholders
- Trend of diversification of supply chains away from China will create opportunities especially for exporters	- Increased production capacity combined with the lower prices for finished goods from China, poses a risk of the Indian export market

Financial review

Income Statement

Particular ( in crore)	FY25	FY24
Revenue	46,637	43,098
Contribution	18,173	14,989
EBITDA	8,124	5,515
PAT*	1,700	(1,383)
Net Profit	897	(1,200)

*Profit before exceptional item and share of profit of associates joint ventures

Balance Sheet

Particular ( in crore)	FY25	FY24
Net Worth	29,213	24,807
Net Debt	13,858	22,174
Fixed Asset	19,631	20,572
Goodwill	21,998	21,449

Working Capital

Particular ( in crore)	FY25	FY24
Net working capital (days)	53	86
Net working capital	6,764	10,137
Inventories	10,316	12,777
Receivables	13,067	14,601
Payables	16,619	17,241

For more details, please refer to our Investor Presentation which can be accessed at https://www.upl-ltd.com/financial_result_and_report_pdfs/JUH0Hx3f4oqOOOmNGRN22WAgG9lyae05pdu7JFF5/FY2025_ CMD-Presentation-updated.pdf

Key Ratios

Particular	FY25	FY24
Debtors Turnover	3.0	2.4
Inventory Turnover	3.6	2.6
Interest Coverage Ratio	1.6	0.5
Current Ratio	1.7	1.8
Operating Profit Margin (%)	10.4	4.1
EBITDA Margin	17.4%	12.8%
EBITDA / Net Interest	2.6X	1.8x
Net Profit Margin (%)	1.8%	(4.4%)
Net Debt-Equity Ratio	0.6x	0.9x
Net Debt / EBITDA	1.7x	4.0x
Return on Capital Employed	10.3%	4.9%
Earnings per Share (EPS)	9.9	(17.5)*

*Previous year number restated on account of rights issue as per (Ind AS) 33

Risk management

Risk management is a core pillar of UPLs strategic thinking and decision-making. The company takes a proactive stance in identifying, evaluating and mitigating risks that could hinder the achievement of its goals. This approach protects its assets, preserves its reputation, ensures regulatory compliance and upholds stakeholder trust.

The companys Enterprise Risk Management (ERM) framework is underpinned by clearly defined roles, guiding principles, standardised tools and comprehensive training. Aligned with globally recognised standards such as ISO 31000 and COSO, the companys robust ERM system promotes a culture of independence, foresight and consistency in risk handling. By embedding this framework across the organisation, UPL is well-equipped to manage current and emerging risks, while seizing strategic opportunities to drive long-term value and resilience.

Risk Governance Board of Directors

Responsible for overseeing the risk management function and periodically evaluating significant risks that may impact the organisations long-term viability.

Risk Management Committee

Plays a crucial role in cultivating a risk-aware culture by setting the tone at the top. It also oversees the formal alignment of performance and risk management processes.

Audit Committee

It ensures the implementation of effective governance mechanisms and regularly reviews the key enterprise risks at the highest level.

Business Segment and Functions

It communicates the importance of risk management to both risk and control owners, ensuring the effective execution of risk management processes across the company.

Central Risk Management

Develops and maintains the Enterprise Risk Management (ERM) governance document, providing guidance to the team for the prompt identification and reporting of key risks at their respective levels.

Objectives

Informed decision- making

Integrate risk management with assurance function

Establish a resilient management framework

Identify, assess, treat and report business risks

Improve risk management through industry benchmarks

Utilise technology for efficient risk monitoring

Align risk response with the companys risk appetite

Risk management process

Risk identification	Risk assessment	Risk prioritisation	Risk response	Risk monitoring and reporting
To identify evolving business risks	Evaluation of the identified risks classified as critical, high, medium and low	Prioritising risks based on their outcomes	Relevant risk response strategy and controls are defined	Action plans are defined based on cost- benefit analysis

Human resources

At UPL, people are central to the companys success. Recognising human capital as a key driver of sustainable growth, UPL fosters a culture rooted in innovation, collaboration, and continuous learning to attract, develop, and retain exceptional talent across its global operations. The companys people strategy promotes diversity and inclusion while providing employees with robust opportunities for learning and development. From leadership development and succession planning to comprehensive well-being initiatives, UPL supports its workforce throughout every stage of their journey. Engagement is further strengthened through regular feedback channels, open communication, and meaningful recognition programs. By prioritising work-life balance, safety, and competitive rewards, UPL creates a dynamic and supportive environment where individuals can thrive.

Through ongoing investment in its people and aligning their growth with business goals, UPL is cultivating a future-ready workforce capable of driving long-term success.

12,000+ Employees as on 31st March 2025

Cautionary statement

The statements in the Management Discussion and Analysis section with regard to projections, estimates and expectations have been made as per the companys expectations, anticipations and experience. The achievement of results is subject to risks, uncertainties and less-than-accurate assumptions. Market data and information are gathered from various published and unpublished reports. Their accuracy, reliability and completeness cannot be assured.