Agro-chemical firm Dhanuka Agritech on Wednesday said declining prices of agrochemicals would undoubtedly have an impact on the company's margins as the delayed onset of monsoons across the country has raised concerns for agrochemical producers, leading to later sowing and increased inventories.

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Speaking exclusively to CNBC-TV18, Mahendra Kumar Dhanuka, vice chairman and managing director, said as the monsoon progresses, the delayed sowing could affect the demand for agricultural inputs, potentially leading to reduced volumes and the need for price cuts, as experienced in the previous low and delayed monsoon period of FY15-FY16.

While these challenges exist, Dhanuka Agritech remains vigilant and prepared to address the potential consequences, he said.

"Right now it is not a much worry but if it is further delayed then definitely it will be worrisome. Because of further delay, overall sales and consumption will impact and there will be a big impact on growth and sales of the agrochemical companies,” he noted.

Despite the concerns surrounding the delayed monsoon, Dhanuka expressed optimism regarding a favorable outcome. The agricultural industry heavily relies on monsoons for adequate water supply and timely sowing, which ultimately determines crop yields. He is hopeful that the monsoon will catch up and support the agricultural sector, mitigating the negative impact on the industry.

In light of the current situation, Dhanuka Agritech has decided to hold on to its guidance for the fiscal year 2024. Instead of making premature adjustments, the company will closely monitor the progress of the monsoon before revising its projections.

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First Published:Jun 21, 2023 3:45 PM IST