Sumitomo Chemical India Ltd:Annual Report 2023-24 Analysis

Sumitomo Chemical India Ltd: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Sumitomo Chemical India Ltd. was established in 2000 as a subsidiary of Sumitomo Chemical Co., Ltd., Japan. Sumitomo Chemical Co., Ltd., traces its roots back to 1913.

Headquarters Location and Global Presence #

The company’s headquarters are located in Mumbai, India. As a subsidiary of Sumitomo Chemical Co., Ltd., it benefits from its parent company’s global presence and network.

Company Vision and Mission #

• Vision: To contribute to creating a sustainable society through chemistry.
• Mission: Likely aligned with Sumitomo Chemical’s broader goals of addressing global challenges through innovative solutions in diverse fields.

Key Milestones in Their Growth Journey #

• 2000: Incorporation of Sumitomo Chemical India Ltd.
• Focus on Agriculture: Establishing a strong presence in the Indian agricultural sector with a focus on crop protection and plant nutrition products.
• Expansion: Expanding product portfolio and geographical reach within India.
• Investments in Manufacturing: Making investments in local manufacturing facilities to cater to the growing domestic demand.

Stock Exchange Listing Details and Market Capitalization #

Sumitomo Chemical India Ltd. is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The current market capitalization can be found through financial websites like the BSE, NSE, or Google Finance.

Recent Financial Performance Highlights #

• Review recent quarterly and annual reports available on the company’s investor relations page or financial news websites to get current performance.

Management Team and Leadership Structure #

Details of key management personnel, including the CEO, CFO, and other senior leaders, can be found on the company’s website.

Notable Awards or Recognitions #

Check the company’s website or press releases for any recent awards or recognitions received for their products, sustainability efforts, or business performance.

Their Products #

Complete Product Portfolio with Categories #

• Crop Protection: Herbicides, insecticides, fungicides, plant growth regulators
• Animal Nutrition: Feed additives, supplements
• Environmental Health: Products for pest control and hygiene
• Other Specialty Chemicals: Polymer additives, materials for IT applications

Flagship or Signature Product Lines #

Examples include insecticide brands like “Sumitomo’s Pyriproxyfen” or fungicide lines.

Key Technological Innovations or Patents #

Refer to the company’s R&D reports or patent filings to identify specific technological innovations and patents.

Manufacturing Facilities and Production Capacity #

The company operates manufacturing facilities in India. Specific details regarding locations and production capacity can be found in their annual reports or investor presentations.

Quality Certifications and Standards #

ISO 9001 and ISO 14001

Any Unique Selling Propositions or Technological Advantages #

Focus on innovation, high-quality products, and solutions tailored to the specific needs of the Indian market.

Recent Product Launches or R&D Initiatives #

Refer to recent press releases, investor presentations, or the company’s website for information on new product launches or R&D initiatives.

Primary Customers #

Target Industries and Sectors #

• Agriculture
• Animal health
• Public health
• Industrial chemicals
• Household

Geographic Markets (Domestic vs. International) #

Predominantly focused on the Indian market.

Major Client Segments (agricultural, industrial, residential, etc.) #

• Farmers (small and large landholders)
• Plantation companies
• Government agencies (public health)
• Industrial clients (chemical processing)

Distribution Network and Sales Channels #

The company likely utilizes a network of distributors, dealers, and retailers to reach its customer base.

Major Competitors #

Direct Competitors in India and Globally #

• Bayer CropScience
• Syngenta
• UPL Limited
• PI Industries

How they differentiate from competitors #

• Technological expertise of Sumitomo Chemical
• Focus on sustainable solutions
• Strong distribution network

Future Outlook #

Expansion Plans or Growth Strategy #

• Expanding into new geographic regions within India
• Increasing investment in R&D to develop innovative products
• Strengthening its position in the animal nutrition market

Sustainability Initiatives or ESG Commitments #

Details can be found in sustainability reports on their website.

Industry Trends Affecting Their Business #

• Increasing demand for sustainable agricultural practices
• Growing awareness of food safety and quality
• Government regulations related to pesticide use
• Climate change impacting agricultural production

Long-term Vision and Strategic Goals #

Aligned with the parent company, which emphasizes sustainable growth through innovation and contributing to a better future.

Performance Overview: Key Financial Metrics and Strategic Initiatives #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue: Decreased from ₹34,732.57 million (FY2022-23) to ₹28,062.81 million (FY2023-24).
• Profit Before Tax (PBT): Declined from ₹6,554.04 million (FY2022-23) to ₹5,033.47 million (FY2023-24).
• Profit After Tax (PAT): Decreased from ₹5,034.37 million (FY2022-23) to ₹3,696.74 million (FY2023-24).
• Return on Net Worth: Decreased from 23.39% (FY2022-23) to 15.34% (FY2023-24).
• Earnings per Share (EPS): Decreased from ₹10.09 (FY2022-23 consolidated) to ₹7.41(FY2023-24 consolidated).
• Debt Service Coverage Ratio: Increased from 18.10 to 18.97, showing stronger debt service capability.

Business Segment Performance #

• Domestic Sales: Decreased from ₹26,068.92 million (FY2022-23) to ₹22,509.79 million (FY2023-24).
• Export Sales: Decreased from ₹8,663.65 million (FY2022-23) to ₹5,553.02 million (FY2023-24).
• Segment Composition (FY2023-24): Insecticides (43%), Herbicides (24%), Plant Growth Regulators (9%), Fungicides (9%), Metal Phosphides (8%), Other businesses (7%).
• Segment Composition (FY2022-23): Insecticides (44%), Plant Growth Regulators(12%), Fungicides(10%), Herbicides(15%), Metal Phosphides(10%), Other Businesses (9%).

Major Strategic Initiatives and Their Progress #

• New Product Launches: Introduced nine new products in the last 18 months, including three fungicides, four insecticides, and two plant growth regulators. Launched Derecho®, a proprietary fungicide. Plans to launch three new patented products in FY2024-25.
• Manufacturing Capacity Expansion: Completed a capex cycle with two new plants for global requirements and initiated commercial sales. Acquired 50-acre land in Dahej for future expansion.
• Acquisition: Acquired a majority stake in Barrix Agro Sciences Pvt Ltd. to strengthen the portfolio in eco-friendly pest management solutions.
• Digital Transformation (DX): Implemented SAP, ERP, and training portals; reached 22 million farmers through digital campaigns.
• Green Transformation (GX): Investments in renewable energy (wind and solar power) to meet ~38% of energy consumption. Replaced fossil fuels with biofuels, reducing CO2 emissions by 4,250 MT in FY2023-24.

Risk Landscape Changes #

• Geopolitical and Economic Risks: Increased due to global economic slowdown, inflationary pressure, and geopolitical situations (Russia-Ukraine conflict, Red Sea issues).
• Regulatory Risks: Remain high due to complex product registration processes and potential restrictions on existing products (e.g., Glyphosate Notification in India).
• Climate Change Risks: Erratic monsoon patterns and extreme weather conditions impact crop yields and, consequently, the agrochemical industry.
• China Dependence Risk: Dependence on China for raw materials and intermediates continues.
• Counterfeit Products: A significant portion of revenue is still being impacted by imitation products in the market.

ESG Initiatives and Metrics #

• Environmental:
  • Renewable energy (wind and solar) constitutes ~38% of energy consumption.
  • CO2 emissions reduced by 4,250 MT in FY2023-24 by replacing fossil fuels with biofuels.
  • Recycled 2,823 MT of plastic waste.
  • ~50-55% of industrial water requirement met through wastewater processing and recycling.
• Social:
  • CSR spending of ₹11.6 crores, benefiting over 110,000 community members.
  • Focus on education, rural development, women empowerment, health, and environmental conservation.
  • Employee strength: 1,649 permanent employees as of 31 March 2024.
  • Commitment to diversity and inclusion, with specific programs for grooming women leaders.
• Governance:
  • Compliance with Corporate Governance Code and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
  • Established Risk Management Committee to identify and monitor risks.
  • Whistleblower Policy and Code of Conduct and Ethics in place.

Management Outlook #

• The management indicates a positive outlook for the Indian crop protection industry, with double-digit revenue growth expected due to strong exports. The Indian Meteorological Department’s forecast of an above-average monsoon in 2024 supports a favorable outlook.
• Focus will be on ramping up production volumes, and new product launches in the domestic and international markets.
• Leveraging advantages such as low manufacturing costs, the “China + one” procurement model.
• Exploiting technology such as drone for pesticide applications.

Detailed Analysis #

Financial Analysis #

3-Year Comparative Analysis (Consolidated) #

Significant Changes in Major Line Items (>10% YoY) - (Consolidated) #

Working Capital Trends (Consolidated) #

Asset Quality Metrics #

Debt Structure and Maturity Profile (Consolidated) #

Off-Balance Sheet Items (Consolidated) #

Operating Performance Analysis #

Revenue Breakdown by Segment/Geography with Growth Rates #

• Agro Chemicals Domestic: FY24 revenue was ₹19,854.31 million, a decrease from FY23’s ₹23,501.99 million.
• Agro Chemicals Export: FY24 revenue was ₹5,553.02 million, down from FY23’s ₹8,663.65 million.
• Others Domestic: FY24 revenue was ₹119.76 million compared to FY23 revenue of ₹361.83 million.
• Others High Seas Sales: FY24 revenue was ₹2,535.72 million, slightly up from FY23 at ₹2,205.10 million.
• Geographic, India: FY24 at ₹22,509.79 million, a decrease of 13.64% from FY23 at ₹26,068.92 million.
• Geographic, Outside India: FY24 at ₹5,553.81 million, a sharp decrease of 35.90% from FY23 at ₹8,663.65 million.

Cost Structure Analysis #

• Cost of Materials Consumed: Decreased from ₹18,567.73 million in FY23 to ₹14,033.95 million in FY24.
• Purchase of Stock-in-Trade: Decreased to ₹2,797.22 million in FY24 from ₹2,674.77 million in FY23 for standalone, Increased to ₹2797.22 in FY24, and 2674.77 in FY23 for Consolidated
• Employee Benefits Expense: FY24, the expense saw an increase of 4.18%, at ₹2,262.09 million from FY23 at ₹2,170.88 million, for the consolidated statement, the increase was 6.26% from FY23 at ₹2,183.73 million, to FY24 at ₹2,320.15 million
• Other Expenses: Decreased slightly from ₹3,556.47 million in FY23 to ₹3,605.15 million in FY24 for standalone, increased to ₹3,622.80 million in FY24 from FY23 at 3,553.69 for Consolidated.

Margin Analysis #

• Net Profit Margin: decreased to 13.05% in FY24 from 14.34% in FY23, for standalone figures. For consolidated figures the Net Profit Margin slightly decreased to 13.00% in FY24, from 14.30% in FY23.

EPS Analysis #

• Basic and Diluted EPS: Decreased from ₹10.09 in FY23 to ₹7.41 in FY24 for standalone financials. For consolidated financials decreased from ₹10.06 in FY23 to ₹7.40 in FY24.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• Aims for market leadership in the Indian agro-solution sector, increased penetration into the Indian market, and export expansion, but faced a sales dip in FY 2023-24.
• Focuses on sustainable and eco-friendly products through the acquisition of Barrix Agro Sciences and investment in Green Transformation (GX) initiatives.
• Geographical diversification is evident, with exports to over 50 countries and leveraging Sumitomo Chemical’s (SCC) global presence, particularly in Latin America.
• Focused on the growth of all business verticals and to bring new technologies to farmers’ by regular launch of products.

Competitive Advantages and Market Positioning #

• Positions itself as a diversified leader in the Indian agrochemical space with a balanced portfolio of generic and specialty products, and a strong marketing network.
• Leverages a strong brand value, extensive distribution network (15,000+ distributors), and a large field team (600+ sales officers, 1,200 field staff).
• Presence across all product segments (insecticides, weedicides, fungicides, etc.) and business verticals provides diversification.
• SCC parentage provides access to proprietary molecules and technologies, enhancing market competitiveness.

Innovation Initiatives and R&D Effectiveness #

• Introduced nine new products in the last 18 months, showcasing R&D capabilities and agility in responding to market needs.
• R & D expenditure amounts to 0.42% of total turn over.
• Has three DSIR-approved R&D labs and focuses on developing off-patent products and novel formulations.
• Strategic investment in R&D is planned, leveraging SCC Japan’s chemistries to improve production efficiency.
• Emphasis on biological and plant growth regulator products aligns with the growing demand for sustainable agricultural solutions.

M&A Strategy and Execution #

• Acquisition of a majority stake in Barrix Agro Sciences Pvt Ltd in December 2023 reflects a strategic move towards integrated pest management (IPM) and eco-friendly solutions.
• Integration with Excel Crop Care (ECC) was completed with the commencement of SCIL 2.0.
• The voluntary winding up of Excel Crop Care (Africa) Limited, a loss-making subsidiary, indicates a focus on streamlining operations.

Management’s Track Record in Execution #

• The board of directors has recommended a final dividend of ₹0.90 per share, after a special interim dividend of ₹5 per share.
• FY 2023-24 was challenging (geopolitical issues, erratic monsoon, lower demand, declining prices), leading to a decrease in sales and profits.
• The company has been managing its financial risk and forex risk.
• Management adapted to challenges by implementing strategies like liquidating high-cost inventory.
• Capex cycle completed with 2 new plants, with plans for further expansion (Dahej site acquisition).
• Dr. Suresh Ramachandran has been promoted as Deputy Managing Director.

Capital Allocation Strategy #

• Completed a capex cycle with two new plants and initiated commercial sales. Focus on ramping up volumes from these plants.
• Acquired a 50-acre land parcel in Dahej for future expansion, indicating a long-term growth strategy.
• Significant investments in R&D facilities and infrastructure improvements.
• Commitment to renewable energy projects (wind and solar power) to reduce the carbon footprint.
• Declared an interim dividend and is proposing final dividend.

Organizational Changes and Their Impact #

• Ms. Deepika Trivedi was appointed as Company Secretary and Compliance Officer, succeeding Mr. Pravin D. Desai.
• Dr. Suresh Ramachandran promoted to Deputy Managing Director.
• Adoption of a decentralized strategy with the DX framework and a focus on the Phygital format.

ESG Framework #

Environmental Metrics and Targets #

• Renewable energy constitutes 38% of total energy consumption, significantly reducing carbon footprint.
• Reduced CO2 emissions by 4,250 MT in 2023-24 through biofuel usage.
• Recycled 2823 MT of plastic waste in 2023-24.
• Industrial water requirement met through waste water processing is ~50 to 55%.
• Plans additional capital expenditures for capacity expansion and has acquired land.

Social Responsibility Programs #

• Spent ₹11.6 Crores on CSR initiatives, benefiting over 110,000 community members.
• 47,000+ community members and animals were beneficiaries of healthcare programs.
• CSR programs focused on education, rural development, women empowerment, health, and environmental conservation.
• Dedicated women empowerment & gender equality initiatives and is working towards supporting local growers.

Governance Structure and Effectiveness #

• The Board includes Independent Directors, fulfilling regulatory requirements for independence and oversight, with a balance among Executive, Non-Executive and Independent Directors.
• Dedicated committees (Audit, Nomination and Remuneration, Stakeholders Relationship, CSR, Risk Management) exist.
• A whistle-blower policy is in place.
• The company has a decentralized strategy, and every department is working within the DX (Digital Transformation) framework.

Sustainability Investments #

• Implemented a capex cycle by setting up 2 new plants and plans to invest in Green Transformation (GX) initiatives.

Regulatory Compliance and Future Preparations #

• Maintains ISO 9001, ISO 14001, and ISO 45001 certifications across manufacturing sites.
• Keeping up with changing regulations, standards, and requirements in different countries.
• Addresses the regulatory risk associated with the crop protection industry, including the complexities, expenses, and time involved in the product registration process.
• Faces regulatory risks, exemplified by the government’s move on Glyphosate use and proposed restrictions on older generic pesticides.
• The QR code mandate is expected to mitigate the threat of counterfeit agrochemicals.
• Adheres to ‘Secretarial Standards on Meetings of the Board of Directors - SS 1’ and ‘Secretarial Standards on General Meetings - SS 2’.
• Highlights the adoption of Responsible Care Policy and initiatives that demonstrate its commitment towards comprehensive approach for safeguarding environment, health, and safety.

Segment-Wise Financial Analysis #

Agro-Solutions Division (ASD) #

Management Guidance and Assumptions: #

• Management assumes a balanced portfolio of technical and formulation products, with backward integration for some molecules, will contribute to its leadership position.
• Continued focus on promoting branded business to increase customer interface.
• Products are expected to promote a sustainable ecosystem.

Market Growth Forecasts: #

• Overall Indian agrochemicals industry is expected to grow at a CAGR of 8-10% until 2025.
• The domestic segment is expected to witness a steady increase in the acceptance of new-generation molecules.
• Exports are expected to grow at about 15% in the near future, driven by the ‘China + one’ procurement model.

Planned Strategic Initiatives: #

• Plans to launch several new products for both domestic and export markets, leveraging SCC Japan’s proprietary products.
• Acquisition of Barrix Agro Sciences Pvt Ltd to expand into eco-friendly pest management solutions.
• Focus on ramping up recently launched products and introducing new products:
  • Derecho Fungicide introduced.
  • 3 fungicides, 4 insecticides, and 2 plant growth regulators launched in last 18 months.
  • Three new patented products planned for launch in FY 2024-25.

Capital Expenditure Plans: #

• Completed a capex cycle by setting up 2 new plants for global requirements.
• Immediate focus to ramp up volumes from these newly built plants.
• Acquired a 50-acre land parcel at Dahej for medium to long-term manufacturing expansion. Applied for environmental clearance.
• Strategic investment plans to augment R&D facilities, focusing on SCC Japan’s chemistries.

Efficiency Improvement Targets: #

• Implementation of ISO 9001, ISO 14001, and ISO 45001.
• Initiated 5S Workplace Management System and Total Productive Maintenance (TPM) System.
• Continued pursuit of initiatives to optimise manufacturing facilities.

Potential Challenges and Opportunities: #

• Challenges:
  • Increasing fragmentation of farmland holdings and the need for improved productivity.
  • Rising costs of agri-inputs and farm labor, and low technology adoption.
  • Uncertain monsoon and unstable climatic conditions due to global warming.
  • Dependence on China for raw materials and intermediates.
  • Threat from counterfeit, spurious, and illegally imported pesticides.
  • Regulatory risks, including the potential restriction on Glyphosate use.
• Opportunities:
  • Low agrochemical consumption in India (0.6 kg/ha) compared to other countries, indicating growth potential.
  • Increasing demand for better quality and nutritious food, opening opportunities for fungicides, plant growth promoters/regulators, and nutrients.
  • ‘China + one’ procurement model driving export growth.
  • Adoption of drone technology for pesticide application.
  • Expansion of Digital Transformation (DX) and Phygital formats.

Environmental Health Division (EHD) #

Management Guidance and Assumptions: #

• Focus on Household Insecticides and Professional Pest control with modern formulations.

Market Growth Forecasts: #

• The household insecticides market is expected to grow at over 10% in the coming years.
• Growth in household insecticides segment is driven by increased health and hygiene awareness, growing incidence of insect-borne diseases.

Potential Challenges and Opportunities: #

• Challenges:
  • Regulatory changes.
  • Public health concerns.
• Opportunities:
  • Intensive research activities for product development.
  • Introduction of new products for professional pest control.

Animal Nutrition Division (AND) #

Management Guidance and Assumptions: #

• The company distributes methionine-based products used as feed additives.
• The company is engaged in the domestic marketing of proprietary products of SCC in the animal nutrition segment.

Market Growth Forecasts: #

• The animal nutrition business, catering to the country’s animal feed market, has good growth potential.

Potential Challenges and Opportunities: #

• Challenges:
  • Competition from established players.
  • Feed costs and disease outbreaks.
• Opportunities:
  • Growing demand for animal feed.

International Business/Exports #

Management Guidance and Assumptions: #

• Leveraging synergies with Sumitomo Chemicals Latin America (SCLA) for new possibilities.
• SCC’s proprietary molecules manufactured in India fuel its International Business.

Market Growth Forecasts: #

• The share of exports in overall domestic industry’s revenue is expected to rise.
• Demand remains robust in the export market, driven by food security needs.

Planned Strategic Initiatives: #

• Increase exports by leveraging synergies and presence of the parent in major markets like Central and South America and Europe.

Potential Challenges and Opportunities: #

• Challenges:
  • Dependence on China, posing potential threats due to its opaque policies.
  • Global warming and climate change leading to erratic weather conditions impacting yields.
  • Drastic movements in the foreign exchange market.
• Opportunities:
  • ‘China + one’ procurement model is a key tailwind.
  • Strong presence in over 50 countries

Scenario Analysis and Sensitivity: #

Scenario Analysis: #

• Optimistic Scenario: Above-average monsoon, successful new product launches, and increased market share in both domestic and export markets could lead to higher revenue growth.
• Pessimistic Scenario: Below-average monsoon, increased regulatory restrictions (e.g., Glyphosate ban), raw material price volatility, or a global economic slowdown could result in lower revenue growth or even decline.

Sensitivity to Key Assumptions: #

• Monsoon: A significant deviation from the IMD’s above-average monsoon prediction could substantially impact agricultural output and, consequently, agrochemical demand.
• Raw Material Prices: SCIL’s profitability is sensitive to fluctuations in raw material costs, especially those sourced from China.
• Regulatory Changes: The Glyphosate issue presents a material risk. An unfavorable court ruling could significantly impact revenue.
• New product performance.
• Exchange Rates: A depreciation of the Rupee would increase raw material costs, whereas the appreciation would decrease the export revenue.
• Competition: The intensity of competition, both domestic and international, can significantly affect pricing power and market share.

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• The Independent Auditor’s Report offers an unmodified opinion on the standalone and consolidated Ind AS financial statements, indicating a true and fair view in conformity with generally accepted accounting principles in India.
• The auditor’s report highlights a matter related to the accounting software’s audit trail feature, noting that it is not enabled for certain changes made using privileged/administrative access rights, for the Holding Company and its subsidiary.

Key Accounting Policies and Changes #

• The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) and Division II of Schedule III to the Companies Act, 2013.
• Accounting policies have been consistently applied, except for changes resulting from the adoption of new or amended Ind AS standards, effective April 1, 2023:
  • Amendments to Ind AS 8 clarified the distinction between changes in accounting estimates and changes in accounting policies.
  • Amendments to Ind AS 1 now require disclosure of ‘material’ accounting policies instead of ‘significant’ accounting policies.
  • Amendments to Ind AS 12 narrow the scope of the initial recognition exemption, now requiring the gross basis disclosure of the deferred tax.
• The changes had no impact on the measurement, recognition, or presentation in the standalone reports, except for the changes caused by the application of the amendments of Ind AS 1. The changes in the consolidated report were the impact in disclosures and presentation.

Internal Control Effectiveness #

• The auditor’s report expresses an unmodified opinion on the adequacy and operating effectiveness of the Group’s internal financial controls over financial reporting with reference to the consolidated and standalone Ind AS financial statements, based on the internal control over financial reporting criteria.
• Management represents maintaining adequate accounting records, safeguarding assets, and preventing/detecting fraud.

Regulatory Compliance Status #

• The Company has complied with the requirements of the Stock Exchanges/SEBI and other statutory authorities on all matters related to capital markets.
• There were no penalties or strictures imposed on the Company by the Stock Exchanges, SEBI, or other statutory authorities relating to capital market requirements.
• The Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).
• The Company and subsidiaries have complied with section 45-IA of the RBI Act, 1934.

Legal Proceedings and Their Potential Impact #

• The Company discloses the impact of pending litigations on its financial position in the notes to the financial statements (Note 44A to the standalone Ind AS financial statements and 45A consolidated).
• There are ongoing litigations related to tax matters (income tax, service tax, customs duty, VAT/sales tax, and GST) where demands have been raised by authorities.
• The Company is challenging a 2022 Central Government Notification restricting Glyphosate use to Pest Control Operators.
• The Company does not expect these proceedings to have a materially adverse effect on the financial statements.

Related Party Transactions #

• All related party transactions during the financial year were on an arm’s length basis.
• The Company has disclosed transactions with Sumitomo Chemical Company, Limited, Japan (the Holding Company), which are considered ‘material transactions’ under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• Shareholder approval has been obtained for material related party transactions at the previous AGM, and is being sought for the ensuing AGM for transactions with SCC during FY 2024-25 up to ’ 9,500 million.
• Details of transactions and outstanding balances with related parties, including subsidiaries, fellow subsidiaries, key management personnel, and entities controlled by them, are disclosed in Note 38 to the Standalone financial statements and Note 39 to the Consolidated Financial Statements.

Subsequent Events #

• The Board of Directors has proposed a final dividend for the year, subject to shareholder approval at the AGM (Note 20(f) to the standalone, Note 20(f) to the consolidated).
• Except for the proposed final dividend, there are no other significant events after the reporting period that require adjustments or disclosures in the financial statements.

Accounting Quality and Regulatory Risk Assessment #

• Accounting Quality: The adoption of Ind AS, regular review of estimates, and the independent audit with an unmodified opinion suggest a high quality of financial reporting. However, the noted exception regarding the audit trail feature in the accounting software indicates a potential area for improvement in internal controls.
• Regulatory Risk: The Company faces regulatory risks, particularly in relation to product regulations (e.g., the Glyphosate Notification). The ongoing litigations highlight this risk, although management does not anticipate a material adverse impact. The Company’s compliance with various regulations and prompt payment of statutory dues, with minor exceptions, demonstrate generally sound regulatory risk management. The reliance on China for raw materials and intermediates is also noted as a cause for concern in the Management Discussion and Analysis.