Boosting Crop Care and Nutrition: Rallis India's Strategic Growth and Innovation

 

India's agrochemical industry plays a vital role in safeguarding food security and enhancing crop productivity for over half of the population that depends on agriculture. As the fourth-largest producer of agrochemicals globally, India faces both opportunities and challenges, with the market projected to reach USD 289.56 billion by 2030.

Agrochemicals sector fall into three main categories:

1. Insecticides protect crops from harmful pests.
2. Fungicides combat fungal diseases, crucial for crop health.
3. Herbicides eliminate weeds, ensuring crops thrive.

The industry's performance is closely tied to India's agricultural seasons—Kharif (June to October) and Rabi (November to April)—each requiring effective crop protection strategies.

The agrochemical sector is showing mixed signals in global demand recovery. While volumes are increasing, lower prices are hurting revenue, and high production from China is squeezing margins. In India, erratic rainfall has caused floods and dry spells. The 2024 monsoon brought an 8% increase in rainfall, boosting Kharif sowings to 110 million hectares, but cotton sowing fell by 9%. Continuous rains have also limited pesticide use, particularly herbicides, affecting growth. Meanwhile, the export market’s recovery remains weak.

 

In this blog, lets decode one of India’s leading crop-care companies, Rallis, which has evolved beyond pesticide manufacturing to become a diversified player in the agricultural sector. Rallis offer a wide range of products essential for agriculture, including soil conditioners, hybrid seeds, plant growth nutrients, and plant-protection chemicals.

BUSINESS PERFORMANCE – Rallis demonstrated resilience in its performance in FY24, achieving revenue of ₹2,648 crores, a decline of 11% from ₹2,967 crores in FY 2022-23, largely due to El Niño conditions and global inventory challenges.

·       Domestic Crop Care-The Domestic Crop Care segment recorded revenue of ₹1,594 crores, down 3% from ₹1,643 crore last year, affected by erratic rainfall and low prices. Rallis launched 13 new products in crop protection and 6 in crop nutrition. Insecticides-Insecticide revenue grew by 2% to ₹688 crore, despite low pest incidents due to variable weather. The company introduced 9 new insecticides, including Benzilla for paddy pests. Fungicides-Fungicide revenue fell by 4% to ₹406 crore, as demand decreased in paddy and other crops. Rallis launched a new broad-spectrum fungicide aimed at multiple crops. Herbicide revenue declined by 18% to ₹282 crore, impacted by erratic rainfall. The company launched a combination and a non-selective herbicide to strengthen its portfolio.

·       Crop Nutrition-Rallis continues to innovate in crop nutrition, launching 6 new products, including water-soluble fertilizers and a neem-based biopesticide. The segment grew slightly by 0.9% over last year, with an upcoming manufacturing facility expected to boost growth.

·       Exports-The exports segment generated ₹639 crore, down from ₹979 crore, due to global challenges. However, Rallis gained new registrations and introduced two new products in its CSM business to enhance its export strategy.

·       Seeds-The Seeds business benefited from strong performance in cotton hybrids, although production challenges may hinder growth. Rallis launched 8 new products in maize, millet, and vegetables, while focusing on optimizing costs for long-term profitability.

Q2FY25 CONCALL TAKEAWAYS- In the recent earnings call, Rallis shared that they expect flat volumes and small price increases due to competition from Chinese suppliers. The company has spent ₹6.5 billion of its ₹8 billion budget and plans to invest ₹1 billion in a new R&D center. They noted that high production from China is squeezing margins and pointed out that heavy monsoon rains have increased Kharif sowing to over 110 million hectares, boosting pesticide demand. The domestic crop care segment grew by 7% year-over-year, mainly thanks to an 11% rise in domestic sales, while the seeds business jumped by 48% in Q2 FY25. Cotton is still the largest crop in their portfolio, but the export outlook is tough due to inventory issues in the US. Herbicides and crop nutrition categories grew by 25% and 29%, respectively. Rallis also completed pilot production of Flavocide for Bio-Gene Technology Ltd.

After facing a downturn post-COVID, Rallis is now on an upward trajectory. Its Q2 FY25 results have shown significant improvement, boosting investor confidence once again. This positive shift indicates a strong recovery, highlighting the company's resilience and potential for future growth.

CONCLUSION - India's agrochemical industry, with Rallis leading the way, is navigating a mix of challenges and opportunities. Despite facing competitive pressures and unpredictable weather, Rallis shows resilience by continually launching innovative products that cater to farmers' needs. The recent boost in Kharif sowing is driving demand for effective crop protection, putting Rallis in a strong position for growth.

While the export market faces challenges, the company is seeing solid domestic sales and is making smart investments in research and development. With the agrochemical market expected to reach USD 289.56 billion by 2030, Rallis is set to play a vital role in improving food security and supporting agricultural productivity for millions of farmers in India.