The present invention relates to an improved granular formulation of neem seed extract containing azadirachtin having enhanced storage stability, and the ability for gradual release of azadirachtin for application to plant rhizosphere. The formulation contains inert particulate as a carrier, at least one lipophilic substance as a deactivator/binder, optional colorant and neem seed extract containing azadirachtin. The formulation provides the gradual release of azadirachtin and effectively at the point of application. The invention also relates to a process for the preparation of the formulation by coating the carrier with a lipophilic substance, subsequently impregnating the coated carrier with neem seed extract followed by optional coating with a colorant and finally lipophilic a substance, such as by spraying and drying at a temperature below 50.degree. C.