Managing Risks
Proactive Risk Management
Risk management is important to achieve our strategic goals and long-term sustainability. We are continually enhancing our risk management system to identify external and internal risks to develop right mitigation, especially in the current VuCA (Volatile, uncertain, Complex and Ambiguous) operating context.
We recognise that effective risk management and robust governance structures are fundamental in increasing organisations and stakeholders’ confidence in its ability to achieve its goals.
The infrastructure for risk and governance activities at the Company comprise the Enterprise Risk Management (ERM) framework. Our ERM is founded on sound organisation design principles. It helps in identifying, evaluating, managing, and reporting risks arising from our operations. It enables us to manage risks within acceptable limits by using risk mitigation techniques and allocating the necessary resources, thereby being resilient through volatile environments. Our ERM is designed to avoid incidents and maximise business outcomes by enabling the management to:
- Understand the risk environment and assess the potential exposure
- Manage overall potential exposure and determine risk mitigation strategies
- Monitor the effectiveness of the risk management
- Enhance controls and improve wherever necessary
- Report across the management chain all the way up to the Board on a periodic basis
Our ERM framework with its consistent and systematic approach for identifying and managing risk, both at the strategic and operational levels enabled the organisation to continue on its growth path. Deep culture of Risk Management that the organisation has achieved over the past years, based on clear accountabilities of risk and control, and backed by ongoing management processes including oversight by Board of Directors has enabled us to mitigate risks including the risk triggered by COVID-19.
Over the past few years, our Company has matured its Risk Management Framework which identifies, manages, monitor and reports both, the key risks, and the newly emerged risks – that can impact achievement of its strategic objectives.
It is customised for business segments and functions which enables effective management and governance of key risks and emerging risks. Risk management is reviewed based on the ever-changing external and internal environment to ensure decision-making is aligned with the organisation’s business strategy, improving the resilience of the organisation to generate sustainable value.
We leverage technological advancements to support the Risk Management Framework and it has significantly matured across all 4 major business segments.New businesses also adopt leading risk management technologies, processes, and the experience available in the Group to manage the risks better thus creating a common risk language to facilitate risk awareness across all in the organisation.
Employee Health and Risks
We are in a business where employees have to work with chemicals that may be hazardous. Their safety is essential to business continuity.
Mitigation actions:
- Presence of Central Safety Committee, comprising business heads and HSE professionals, to guide all safety-related aspects and conducts monthly HSE reviews
- Empowered Local Safety Committees across all locations
- Robust health and safety policies and procedures which are regularly reviewed and updated
- Digitalisation of major process to ensure better reporting and investigation of accidents
- HAZOP (hazard and operability) conducted across all plants
- Undertook regular sanitisation, changes in operations to ensure physical distance and regular screening of employees to ensure safety during pandemic
Sustainability Risks
Inability to ensure sustainable operations may result in severe damage to environment and lead to cancellation of licence to operate.
Mitigation actions:
- Our operations are aligned to Responsible Care, Together for Sustainability and Nicer Globe
- Dedicated policy for Employee Health, Safety, Environmental Protection and Quality
- Sustainable operations across all manufacturing facilities contributing to lower emissions and efficient energy and water management. Trees are also planted on yearly basis for a cleaner and greener environment
- Board and senior management level interventions on sustainability issues
Product Quality Risks
Inability to manufacture products in line with customers specification may reduce demand for our products and business goodwill.
Mitigation actions:
- All our manufacturing facilities are ISO 9001 certified
- Presence of quality control team who check all customer supplies and ensure they are approved for Certificate of Analysis & Material Safety Data Sheet
- Enhanced QA and QC labs with upgraded equipments
Business Risks
Low market demand for products and inability to secure new business due to capacity constraints may impact growth
Mitigation actions:
- Our diversified operation with wide range of products catering to multiple sectors across 30+ countries ring fences against sectoral or geographical concentration risk
- We are continually making investments in new chemistries backed by deep market research and supported by our expert R&D team who focus on innovating to develop new and better products
- We are undertaking calibrated capacity expansions across multiple plantsto meet the growing demand for our products
- We enjoy deep and long-standing relations with most of our customers who continue to do business with us because of better quality products, our system and processes, and ability to meet their needs
- We have focus on manufacturing new agrochemical and pharma intermediates, thus further diversifying our operations
Operational Risks
Inability to ensure operational efficiency and optimise cost may result in failure to meet business obligations as well as reduce our competitiveness.
Mitigation actions:
- Our state-of-the-art plants equipped with modern equipment and technologies enable us to achieve high level of productivity
- We have adopted best manufacturing practices at plant and continuously train our workforce
- We undertake process optimisation and productivity improvement initiatives on a continual basis
Funding Risks
Failure to procure sufficient, cost effective funding and ensure disciplined capital allocation may impact our capital structure.
Mitigation actions:
- Strong focus on making decisions with long-term perspective
- All investments committed after deep research and by adopting a calibrated approach
- We ensure adequate liquidity at all times and maintain healthy gearing levels through our prudent treasury and cash flow management capabilities. Our cash and liquid investments stood at Rs 220 Crores as on March 31, 2021
- We effectively use cash flows to finance expansion projects and to repay debts, resulting in a healthy Net Debt : Equity Ratio of 0.15x as on March 31, 2021
- We have improved our credit rating during the year strengthening our brand reputation
Digitalization Risks
Failure to implement digital technologies may reduce our business efficiency and thus impact our competitiveness.
Mitigation actions:
- Deployed digital tools along with process simulation software to expedite product innovation and ensure first time right scaling of new products
- Deployed automation technologies to drive efficiency
- Use of artificial intelligence and machine learning tools to make better use of data
Raw Material Risks
Failure to procure adequate quantity of raw material at right prices may impact business continuity and profitability.
Mitigation actions:
- Strong relationship with many suppliers
- Long-term contracts with suppliers to ensure sustained raw material availability
- Practice demand forecasting to better plan production and secure raw materials
