New Delhi, Nov 1 (IANS) A rebound in exports after two years will drive up the revenue of the Indian agrochemical industry by 6-7 per cent this fiscal, a report said on Monday.

The development will be supported by a favourably timed revival in global demand and normalisation of inventories, just as domestic offtake slows due to a protracted monsoon that impacted kharif season sales.

The industry’s return to its long-term growth range of 8-10 per cent next fiscal, however, hinges on exports sustaining the momentum and domestic demand picking up, Crisil Ratings said in its report.

Steady realisations, stable raw material prices and limited US tariff impact will keep operating margins rangebound this fiscal and the next, the report added.

Additionally, modest capital expenditure and stable working capital will likely support leverage discipline, helping maintain credit profiles that have been under pressure in recent years.

According to the report, the agrochemical industry is seeing a recovery in export growth after two volatile years, driven by stabilising global supply chains and improving demand.

Over 65 per cent of the export revenue accrues from Latin America (34 per cent), North America (19 per cent) and Europe (12 per cent). Latin America is seeing modest growth, while Europe is recovering as inventories normalise.

The US remains steady, with 80-85 per cent of Indian shipments exempt from tariffs. Besides, India’s position in US trade remains strong, with the US sourcing 70 per cent of its agrochemical needs from China (50 per cent) and India (20 per cent).

“Improved farm sentiment globally will drive up export revenue by 8-9 per cent this fiscal. However, domestic demand will see the perils of excess rainfall causing crop damage, product returns and delayed field readiness,” said Anuj Sethi, Senior Director, Crisil Ratings.

With realisations stabilising after two years of significant adjustments, the overall growth outlook of 6-7 per cent remains more volume-driven than price-led, Sethi added.

Domestic agrochemical prices have stabilised as the post-lockdown inventory overhang of China eased. Realisations on agrochemical imports from China have held around $5 per kg, broadly in line with last year.

With inventories now balanced and firmer enforcement of environmental norms ensuring steadier supply flow, realisations are expected to stay steady through the year.

The report was prepared on an analysis of about 60 companies, accounting for nearly 90 per cent of the industry revenue of Rs 90,000 crore.

–IANS

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