TO THE MEMBERS
Your Directors have pleasure in presenting the Twenty-Fifth Annual
Report and the Audited Financial Statements, including Consolidated Financial Statements,
of the Company for the year ended 31 March 2025.
1. FINANCIAL RESULTS
The salient features of the Company's working are:
(Rs. in Million)
|
2024-25 |
2023-24 |
| Gross Profit for the year |
7,372.50 |
5,648.39 |
| Less: Depreciation and amortization expense |
632.61 |
614.92 |
| Profit before tax |
6,739.89 |
5,033.47 |
| Less: Tax expense (current and deferred tax) |
1,720.41 |
1,336.73 |
| Profit after tax |
5,019.48 |
3,696.74 |
| Add: Balance of Retained earnings brought
forward from the previous year |
2,292.62 |
1,689.22 |
| Available retained earnings |
7,312.10 |
5,385.96 |
| Other Comprehensive Income |
(6.59) |
1.36 |
|
7,305.51 |
5,387.32 |
| Final Dividend relating to previous financial
year paid during the year |
449.23 |
598.97 |
| Interim Dividend paid in 2023-24 |
- |
2,495.73 |
| Transfer to General Reserve |
3,250.00 |
- |
| Retained earnings carried forward to the next
year |
3,606.28 |
2,292.62 |
2. DIVIDEND
Your Directors have recommended a dividend of ' 1.20 (12%) [previous
year final dividend of ' 0.90 (9%)] per equity share on 499,145,736 shares of ' 10 each
aggregating ' 598.97 million (previous year ' 449.23 million). The Directors consider this
appropriate having regard to the requirements for funds for business and future growth of
the Company and in opinion of the Board the proposed dividend is in line with the
Company's Dividend Distribution Policy.
3. OPERATIONS
During the year under review, the sales increased from ' 28,062.81
million in the previous year to ' 30,608.32 million. Domestic sales turnover increased
from ' 22,509.79 million to ' 23,841.91 million and the export turnover from ' 5,553.02
million to ' 6,766.41 million. After making provision for depreciation, interest and tax,
the Net profit during the year under report stands at ' 5,019.48 million as against '
3,696.74 million in the previous year.
Overall normal monsoon in the year generally supported agricultural
activities and output and demand for agrochemicals; however, excess rainfall in some
regions impacted key crops. While normal cropping area for most crops indicated stable
agrochemical demand, some crops, such as cotton, presented specific challenges. Low
commodity prices for crops like cotton, chilies and soybean affected farmer earnings and
their ability to invest in crop protection. Agrochemical prices, which were stable to a
large extent through the year and in some cases lower than the previous year, positively
impacted input costs and farmer affordability, thus affecting demand. The good Rabi season
contributed to overall agricultural output and farmer income, boosting agrochemical use in
the subsequent Kharif season. Importantly, the market was characterized by relatively low
level of pipeline inventory, which influenced supply dynamics and pricing in the
agrochemicals sector.
4. REGULATORY ORDER FOR GLYPHOSATE USE
In October 2022, the Central Government issued a Notification mandating
that Glyphosate, a broad spectrum weedicide and an important product for the Company, will
be used only through Pest Control Operators. Several industry players and associations
have filed petitions before the Hon'ble Delhi High Court ("Hon'ble Court")
challenging the Notification. The petitions are under hearing. The Central Government has
undertaken before the Hon'ble Court not to implement the Notification till disposal of the
said petitions.
5. NEW PRODUCTS/IMPROVEMENTS/EXPANSIONS
The Company continues to maintain ISO 9001, ISO 14001 and ISO 45001
certifications for the manufacturing sites. The Company has also initiated implementation
of 5S Workplace Management System, Total Productive Maintenance (TPM) System and
behavior-based safety norms with a view to achieve higher efficiency, productivity and
enhance safety management system. The quality of products is maintained and upgraded to
the applicable national and international standards through rigorous pursuit of the
quality management systems. The Company continues to enjoy the reputation of a consistent
and reliable quality supplier.
In the year under review, your Company continued to pursue initiatives
to optimise utilisation of its manufacturing facilities, launch new products and install
manufacturing capacities to supply new products in domestic and international markets. The
Company continues to take initiatives for introducing new technical grade products and for
expanding production capacities.
During the year under review, the Company introduced one new
technical-grade product and five new formulation products. The Company continues to focus
on ramping up newly-launched products and introduction of new products in agrochemicals
and bio-stimulant segments - this is core to sustainable future growth. The Company has
plans to introduce three new patented products during the financial year 2025-26.
During the year under review, the Company initiated its highly
successful "Every Day Farmers' Day" ("EDFD") campaign. This
initiative, which grew beyond its original 100-day scope, redefined the Company's approach
to demand generation, enabling in-person engagement with over one million farmers. This
campaign was strategically designed to build lasting momentum by connecting with farmers
and channel partners, underscoring the Company's dedication to excellence in agriculture.
The campaign's success was supported by meticulous real-time digital tracking and
engagement, providing leadership with continuous updates.
6. OUTLOOK
Agriculture remains vital to Indian economy, contributing approximately
15% to the country's GDP and providing livelihoods to about 50% of the population. While
the share of agriculture in India's GDP has declined over the decades due to faster growth
in the manufacturing and service sectors, its fundamental importance remains undiminished.
The domestic agrochemicals market continues to be driven by a rising population and the
consequent need for increased food production. Increasing emphasis on produce quality
further boosts agrochemical consumption. Indian government's ongoing initiatives to
protect farmers' interests and improve their profitability, including minimum support
prices, Kisan Samman Nidhi, and substantial budgetary allocations, are expected to
strengthen rural economy and support growth of the agrochemical industry.
Indian agrochemical companies have emerged as important supply sources
in international market - exports have substantial share in Indian companies' turnover.
The outlook for the Indian agrochemical industry in 2025-26 is
cautiously positive. While a normal monsoon and cropping area, coupled with stable
commodity prices, are expected to support demand, the industry faces challenges related to
rising input costs, and increasing competition. The potential impact of US tariffs also
adds an element of uncertainty. The industry will need to navigate these challenges by
focusing on cost management, product innovation, and strategic market positioning.
7. SAFETY, HEALTH AND ENVIRONMENT
The Company continues to work on reducing environmental load, enhance
safety, improve quality and reduce cost. The Company continues to play the role of a
responsible corporate citizen in the fulfillment of its objectives of protecting and
enriching the environment and human health and safety. The Company has also adopted
Responsible Care Policy and its initiatives demonstrate its commitment towards
comprehensive approach for safeguarding environment, health and safety of all stakeholders
and aims at achieving and sustaining high standards of performance. The Company also
reviews and monitors these Quality, Environment, Health and Safety policies and
sustainability activities to ensure continual improvement.
The Company's commitment to its safety management programs follows a
top-down approach towards establishing, demonstrating, sustaining and improving the safety
culture and incorporating the Company's core value of safety in people's daily
responsibilities. Safety audit, training programs and other safety management processes
are carried out at regular intervals.
The Company has adopted plastic waste management process to minimize
the amount of ‘post-use plastic waste' in the environment through a plastic credit
platform dedicated to collection, segregation and recycling of such waste. The green
initiatives of the Company in the form of harvesting wind and solar energy, rain water
harvesting and treatment of sewage water contribute to improving environment and
conserving natural resources. The Company continues to work towards reduction of
greenhouse gases for sustainable economic and social values. These initiatives are
implemented through ‘Science Based Targets'.
8. EDUCATION, LEARNING AND HUMAN RESOURCES
Building a strong workforce through learning,
development, goal setting and performance management
The Company invests in attracting right talent and skill-sets to drive
its sustainability-led business strategy. Its human resource framework is built around a
model designed to create a skilled and productive structure. The focus is on addressing
the existing skill-gaps and attracting new and industry-relevant skills which include
functional/technical and on-the-job training programs. During the year under review, as a
part of the leadership training initiative, the Company undertook strength-based
intervention through Gallup International for seniors and a few second line managers from
sales and marketing functions to enrich their competencies.
The Company has identified development of managerial capability as a
key focus area for steering its growth plans. The Company has a robust goal- setting and
performance-management process in place for aligning individual interests, goals, targets
and achievements with the functional goals and finally with the corporate strategic goals,
targets and achievements.
The employees receive real time feedback on their performance and
improvement areas through a structured review process which is designed to evaluate and
identify development opportunities. The Company focuses on empowering employees with
skills in critical development areas identified pursuant to training-needs analysis,
feedback and discussions. The Company aims at building a pool of leaders and ensuring
succession planning across the organisation for critical and leadership positions.
9. INSURANCE
The Company continues to carry adequate insurance cover for all its
assets against foreseeable perils like fire, flood, earthquake, etc. and continues to
maintain the Liability Policy as per the provisions of the Public Liability Insurance Act.
10. SUBSIDIARY COMPANIES
Highlights of the financial performance of Barrix Agro Sciences Private
Limited, subsidiary, are as follows:
|
2024-25 |
2023-24 |
|
(Rs. in Million) |
(Rs. in Million) |
| Revenue from operations |
582.75 |
320.42 |
| Profit / (Loss) before tax |
62.58 |
(85.69) |
| Profit / (Loss) after tax |
63.13 |
(80.95) |
The Company has obtained a certificate from the Statutory Auditors to
the effect that the Company is in compliance with the FEMA Regulations with respect to the
downstream investment made by it in Barrix Agro Sciences Private Limited.
Excel Crop Care (Africa) Limited, the Company's Tanzania based unlisted
and non-material subsidiary, is under voluntary winding up process. The Company holds
99.9% of the equity share capital of Excel Crop Care (Africa) Limited. Its winding up is
not likely to materially impact business, commercial activities or financial position of
the Company.
Financial statements of the subsidiaries have been considered for
preparation of consolidated financial statements. The Financial Statements and the Reports
of the Board of Directors and the Auditors of Barrix Agro Sciences Private Limited are
being posted on the Company's website: www.sumichem.co.in.
11. DISCLOSURE UNDER THE COMPANIES ACT, 2013
Information pursuant to various disclosure requirements prescribed
under the Companies Act, 2013 and rules thereunder, to the extent applicable to the
Company, is given below. Some of the disclosures have been included at appropriate places
in the Corporate Governance Report which forms part of the Board's Report.
a) Energy Conservation, Technology Absorption and Foreign Exchange
earnings and outgo:
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies
Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in Annexure
I.
b) Annual Return:
Annual return as on 31 March 2024 in form MGT-7 filed with the Ministry
of Corporate Affairs is available on the Company's website
https://sumichem.co.in/content/uploads/MGT 7 23-24 signed-website-30-09-2024-06-56-12.pdf
Annual return as on 31 March 2025 in form MGT-7 will also be posted on the Company's
website after the same is filed with the Ministry of Corporate Affairs.
c) Policy on Directors' appointment, Remuneration Policy and
information regarding remuneration:
Particulars of the Company's Policy on Directors' appointment,
Remuneration Policy and information pursuant to Rule 5(1) of the Companies (Appointment
& Remuneration) Rules, 2014 are given in Annexure II.
d) Particulars of Loans, Guarantees and Investments:
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the notes to the
Financial Statements.
e) Related Party Transactions:
All contracts/arrangements/transactions entered by the Company during
the financial year with related parties were on an arm's length basis.
All related party transactions are placed before the Audit Committee
for their approval. Prior omnibus approval of the Audit Committee is obtained for the
transactions which are of a repetitive nature. The transactions entered into pursuant to
the omnibus and specific approvals are reviewed periodically by the Audit Committee.
Pursuant to the provisions of Regulation 23 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 ("LODR"), all
material related party transactions require approval of the members through a resolution.
LODR define the term ‘material' to mean a transaction with a related party which
individually or taken together with previous transactions during a financial year exceeds
' 10,000 million or ten percent of the annual consolidated turnover of the Company as per
its last audited financial statement, whichever is lower.
During the year, the Company entered into transactions with Sumitomo
Chemical Company, Limited, Japan, the holding company, which are considered ‘material
transactions' in terms of LODR. The shareholders had accorded their approval to the
transactions with Sumitomo Chemical Company, Limited through an ordinary resolution passed
at the annual general meeting held on 30 July 2024.
The Company is seeking approval of the shareholders, through an
ordinary resolution at the ensuing annual general meeting, for the transactions entered
into / proposed to be entered into with the holding company during the financial year
2025-26 for an amount not exceeding ' 7,100 million.
Form for disclosure of particulars of material transactions entered
into by the Company with Sumitomo Chemical Company Limited, Japan, a related party, as
required under Section 188(1) of the Companies Act, 2013 on an arm's length basis are
summarised in Form AOC-2 in Annexure III.
The same are also given in note 38 to the Standalone Financial
Statements.
The Company's Policy on related party transactions as approved by the
Board may be accessed on the Company's website https://sumichem.co.in/pdf/25-26/modified
related party transaction policy 2025 v6.pdf.
f) Business Risk Management:
The Board has constituted Risk Management Committee pursuant to the
provisions of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 to identify and monitor risks faced by the Company.
The Committee deliberates on the major enterprise and business risks
identified by the management, analysis of their impact and mitigation measures for
addressing the risks. The major risk areas identified relate to risks associated with
material procurement and manufacturing operations, regulatory risks, cyber security / IT
related risks, human resources related risks, currency risks, credit risks mainly
associated with exports and insurance adequacy risks.
In opinion of the Board, there is no element of risk which may pose
serious threat to the existence of the Company.
g) Evaluation of performance of the Board,
Committees of Directors and Individual Directors:
The Board has adopted a formal mechanism for evaluating its performance
as well as that of its Committees and individual Directors, including performance of the
Chairman of the Board. As a part of this mechanism, a structured questionnaire, approved
by the Company's Nomination and Remuneration Committee, is used to carry out evaluation of
performance of the Board, Committees of Directors and individual Directors. The
questionnaires take into consideration various criteria and factors.
h) Material orders passed by the regulatory
authorities or courts/material changes or commitments:
There are no material orders passed by regulators or courts which can
impact the going concern status of the Company and its future operations. There are no
material changes or commitments occurring after 31 March 2025 which may affect the
financial position of the Company.
i) Internal Financial Controls and their adequacy:
The Company has adequate system of internal controls to safeguard and
protect from loss, unauthorised use or disposition of its assets. All the transactions are
properly authorised, recorded and reported to the management. The Company is following all
the applicable Accounting Standards for proper maintenance of books of accounts and for
financial reporting.
j) Performance of subsidiaries:
Details of performance and financial position of the subsidiary
companies are given in Form AOC-1 in Annexure IV. The Company has no associate
company.
k) Corporate Social Responsibility (CSR) initiatives:
The Company has formulated its Corporate Social Responsibility Policy
which is posted on its website
https://sumichem.co.in/pdf/Corporate%20Social%20Responsibility%20Policy.pdf
A brief outline of the Policy and the Annual Report on CSR Activities
is given in Annexure V.
l) Particulars of Employees:
The information required under Section 197 of the Companies Act, 2013
read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is given in Annexure VI.
m) Secretarial Audit Report and Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules made thereunder, M/s Saraf & Associates, Practicing Company Secretaries,
(FCS:1596; CP NO.642), were appointed Secretarial Auditors to conduct secretarial audit
for the year ended 31 March 2025. The Report of the Secretarial Auditors is attached as Annexure
VII.
Regulation 24A(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 was amended in December 2024. As per the amended
Regulation 24A(1), effective 01 April 2025, every listed company is required to appoint
Secretarial Auditor for a term of five consecutive years with the approval of its members
in its annual general meeting. Accordingly, the Company is seeking approval of the
members, through an ordinary resolution at the ensuing annual general meeting, for
appointment of Messrs M K Saraf & Associates LLP Practising Company Secretaries, as
the Company's Secretarial Auditors for the five financial years commencing with the
financial year 2025-26.
n) Secretarial Standards:
The Company has complied with the applicable ‘Secretarial
Standards on Meetings of the Board of Directors - SS 1' and ‘Secretarial Standards on
General Meetings - SS 2'.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr Ninad D Gupte, Director, retires by rotation and being eligible,
offers himself for reappointment.
The first five-year terms of Dr Mukul G Asher, Mr B V Bhargava and Mrs
Preeti Mehta, Independent Directors, concluded in August 2024.
Mr B V Bhargava took retirement on completion of his tenure as
Independent Director on 26 August 2024. The Board places on record its deep appreciation
for Mr Bhargava's immense contribution in Board and Committee deliberations and in
formulating business strategies and policies and business planning and in the areas of
risk management, business systems, procedures and processes, internal control and
governance.
Dr Mukul G Asher has been reappointed as Independent Director for the
second term for the period from 27 August 2024 up to 31 August 2026. Mrs Preeti Mehta has
been reappointed as Independent Director for the second term for the period from 31 August
2024 up to 30 August 2029. Mr N Sivaraman has been appointed as Independent Director for a
term of two years from 01 September 2024 up to 31 August 2026. The appointments of the
Independent Directors were made through Special Resolutions passed by the members at the
annual general meeting held on 30 July 2024.
In opinion of the Board, Dr Mukul G Asher, Mrs Preeti Mehta and Mr N
Sivaraman, the Independent Directors appointed / reappointed during the financial year
2024-25, are persons of high integrity and possess relevant expertise and experience.
At the said annual general meeting, the members passed a Special
Resolution approving promotion of Dr Suresh Ramachandran, Whole-time Director, to the
position of Deputy Managing Director with effect from 01 September 2024 for his existing
tenure up to 31 May 2028.
13. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors
confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and that no material departures have been made
from the same;
(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and are operating
effectively; and
(f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and are operating
effectively.
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, the work performed by the internal,
statutory and secretarial auditors and external consultants, including the audit of
internal financial controls over financial reporting by the statutory auditors and the
reviews performed by management and the relevant board committees and the management's
assessment of adequacy and effectiveness of internal financial controls, the Board is of
the opinion that the Company's internal financial controls were adequate and effective
during the year 2024-25.
Messrs BSR & Co. LLP the statutory auditors, who have audited the
Company's financial statements for the year 2024-25, have given their report on the
Company's internal control over financial reporting as defined by Section 143 of the
Companies Act, 2013, which Report is annexed as Annexure B to the Independent Auditor's
Report.
14. BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT
Business Responsibility and Sustainability Report prepared in the
prescribed form pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, in relation to initiatives taken from environmental,
social and governance perspective, forms part of the Annual Report.
15. CORPORATE GOVERNANCE
Your Company is committed to the principles of good corporate
governance and the Board of Directors lays strong emphasis on transparency, accountability
and integrity. Your Company has complied with all the requirements of the Code of
Corporate Governance contained in SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and, pursuant thereto, Management Discussion and Analysis and the
Corporate Governance Report are annexed and form part of the Annual Report.
16. AUDITORS AND AUDITORS' REPORTS
At the previous annual general meeting held on 30 July 2024, the
members appointed Messrs BSR & Co. LLP, Chartered Accountants, as the Auditors of the
Company for a term of five consecutive years, in place of Messrs SRBC & CO LLP, the
retiring Auditors.
The Independent Auditor's Reports on Financial Statements, including
Consolidated Financial Statements, of the Company for the year ended 31 March 2025, issued
by Messrs BSR & Co. LLP, the Auditors, are enclosed with the Financial Statements in
this Annual Report. The Independent Auditors' Reports are unmodified and do not contain
any qualification, reservation or adverse remark.
17. COST RECORDS AND COST AUDIT REPORT
The Company prepares and maintains cost records as specified by the
Central Government under Section 148(1) and rules made thereunder. The cost records for
the year 2023-24 were subjected to cost audit by Messrs GMVP & Associates LLP, Cost
Auditors. The Cost Audit Report for the financial year 2023-24 issued by the Cost Auditors
was filed with the Ministry of Corporate Affairs on 22 August 2024 vide SRN: F97613772.
18. ACKNOWLEDGEMENTS
Your Directors wish to place on record their sincere appreciation of
the wholehearted co-operation received from the Company's Shareholders, Bankers, various
authorities of the Governments and business associates.
|
For and on behalf of the Board of Directors |
|
|
CHETAN SHAH |
SUSHIL MARFATIA |
|
Managing Director |
Executive Director |
| Mumbai, 26 May 2025 |
DIN:00488127 |
DIN: 07618601 |
|