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Road Ahead : New challenges in the Agrochem industry during and post pandemic

2020 was not a normal year in any aspect. The COVID-19 pandemic caused wide spread disruption across all sectors everywhere in the world. Nothing like this has ever been witnessed in the history of mankind. The entire Indian Agriculture industry was pushed out of its comfort zone and saw its share of challenges which no one had foreseen. Agriculture provides livelihood for 58% of the Indian population and 44% of country’s workforce is employed in related professions.

Production and marketing were adversely impacted due to labour and logistical constraints during the pandemic. The northern states like Punjab and Haryana which rely on migrant labour coming from east India suffered the most. Another blow to the market came with negative income restricting access and increased food prices affecting consumption pattern. The pandemic has wreaked a substantial physical, social, economic and emotional havoc on all the stakeholders involved in the Indian agriculture industry. Seizing this crisis as an opportunity, will require a new approach and new strategies.

The Agrochem industry was categorised under essential goods, so manufacturing activities were permitted after the first week of lockdown. Private players in the industry recommenced their operations in phased manner beginning in the first week of April. However, restriction on manpower usage at plants limited the plant operating rates. Additionally, some local authorities limited permission to resume operations, movement of goods, labour due to Covid-19 cases in their respective territories.

Despite challenges in manufacturing, supply and logistics related activities, the Agro-chem manufacturers regained their strengths and started to serve the farmers as soon as the lockdown was gradually relaxed. Normal monsoon forecasts by the Indian Metrological Department (IMD) and good water reservoir levels across the country maintained a positive start for the upcoming Kharif season. In this way, demand remained resilient for the Agro-chem industry and manufacturers who were able to push their products to retailers are expected to show good performance in the second quarter.

The agrochemical Industry undertook various initiatives to protect employees, communities, and operations to ensure supply chain was not impacted. We encouraged non-critical operations to work from home and carry out interactions electronically while adhering to social distancing norms across its manufacturing sites.

The biggest impact of Covid-19 on agrochem players in India was witnessed in January-March quarter, however only partially towards the end of the quarter. A pronounced impact was experienced in April-June quarter during which the manufacturing operations were closed along with stress on logistics and supply chain, however the same was sporadic across some agrochem players. Nonetheless, strong demand momentum, lower input prices, onset of early monsoon, and good water reservoir levels is expected to benefit overall performance for the agrochem players in India.

Temporary disruptions in operations during the initial days of the lockdown resulted in partial deferment of the company’s revenues from the month of March to April-June quarter. Plant operations were resumed in a phased manner from the beginning of April as per Government directives. Since, the company’s product portfolio falls under essentials category, hence the company doesn’t foresee any major impact on the business due to the coronavirus pandemic. Due to rise in Covid-19 cases globally, the company’s management took a strategic decision to strengthen its balance sheet and focus on reducing inventory and cash collections in view of challenging times ahead.
Despite of the uncertainty because of the Covid-19 pandemic, the future looks bright for the Indian agrochemicals sector.

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