Managing Director’s Message to Shareholders

Dear Shareholders, This report looks back at a year characterised by volatility, favourable commodity prices and two years of significant growth of the global agrochemicals industry. Domestically, adverse climatic conditions like unseasonal rains, drought-like conditions and floods limited the growth in consumption of agrochemicals. At Rallis, we continued to make progress across all our strategic priorities whilst navigating a challenging external environment.

Aligning Agriculture with Indian Economic Prosperity

Agriculture with 18% share of GDP and engaging 42% of the labour force plays a critical role in providing national food security and stimulus to the Indian rural economy. The vision of a technology-driven and knowledge-based economy as we march towards India@100 is expected to fuel rapid transformation of agriculture going forward.

Overall, the industry is an important sector of the Indian economy and its continued growth and development will be critical for food security and promoting sustainable agriculture in the country. The success we achieved in the last 75 years is testimony of the hard work of farmers, proficiency of scientists and Governments’ farmer-friendly policies supported by the agri-input value chain partners.

The performance of the Indian agriculture sector has been buoyant over the past several years. However, growth in FY 2022-23 is estimated to be moderate at around 3.5%.

India continues to be the net exporter of agricultural products in recent years and total agriculture exports for the year expected to surpass USD 50 billion mark reported for FY 2021-22. As per the second Advance Estimate released by the Ministry of Agriculture and Farmers Welfare, Foodgrain production for FY 2022-23 is estimated at 324 million tonnes, 2.5% higher than in FY 2021-22.

Indian Agrochemicals Industry

Strong exports and stable domestic industry is favouring the Indian agrochemicals industry which is well positioned to tap opportunities from the supplier diversification strategy of global peers and molecules going off patent.

The growth of the crop protection market in India can be attributed to various factors, such as the increasing demand for food for the growing population, the need to improve crop yields and quality and the rising adoption of modern agricultural practices. To further the impetus on technology, the Ministry of Agriculture and Farmers’ Welfare, Interim approval for commercial use of drones for applying 477 registered pesticides is an important milestone to Indian agrochemicals and agriculture.

Domestic Business

The domestic business portfolio of Rallis is crafted to empower the farmers through sustainable and path-breaking crop input solutions. Field force, spread across the country, works closely with the farmers supported by an extensive distribution network which spans 80% of India’s districts.

Exports

Rallis serves select global farming communities directly and through global agro-chemical companies by exports of technical grade agrochemicals as well as formulations. Rallis also partners with customers to offer them contract manufacturing services.

Overall Performance in FY 2022-23

Your Company recorded revenues of ₹ 2,967 crore for the year ending March 31, 2023, an increase of 14% over PY of ₹ 2,604 crore. Profit before tax (before exceptional items) was at ₹ 127 crore as compared to PY profit before tax (before exceptional item) of ₹ 222 crore and the Profit after tax (after exceptional items) was ₹ 92 crore, as compared to PY profit after tax (after exceptional item) of ₹ 164 crore. Company’s performance in FY 2022-23 was also impacted due to reassessment of intangible assets under development which has resulted in impairment of technical know-how of seed development technology amounting to ₹ 30.41 crore. Also, reassessment of future sales potential has resulted in the company recognising the provision for slow moving inventory in seeds amounting to ₹ 52.81 crore. Revenue for Domestic Crop Care business grew by 12% (Crop Protection 8% and Crop Nutrition 22%) and Exports grew by 24% during the year. Whereas the Seeds business de-grew slightly during the year.