UPL CAPITAL MARKETS DAY. April 28, 2017

Transcription

1 UPL CAPITAL MARKETS DAY April 28, 2017

2 Safe Harbor Statement This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of UPL Limited (UPL) and certain of the plans and objectives of UPL with respect to these items. Examples of forward-looking statements include statements made about our strategy, estimates of sales growth, future EBITDA and future developments in our organic business. Forward-looking statements can be identified generally as those containing words such as anticipates, assumes, believes, estimates, expects, should, will, will likely result, forecast, outlook, projects, may or similar expressions. By their nature, forwardlooking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forwardlooking statements. These factors include, but are not limited to, domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, the rate of technological changes, political, economic and other developments in countries where UPL operates, industry consolidation and competition. As a result, UPL s actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see also Risk management, of our Annual Report. 2

3 Agenda Welcome and Introduction Anand Vora Global Performance Anand Vora and Ajit Premnath Global Industry Update Jai Shroff UPL Value Proposition: Crop Protection and Seeds - Ajit Premnath Supply Chain - Debabrata Gupta 3

4 Q IV 2017 and FY 2017 Global Performance ANAND VORA CFO Global AJIT PREMNATH COO Global Business 4

5 Financial Highlights FY 2017 Revenue growth of 16% EBITDA improved by 107 bps PAT up by 84% ROCE of 21.4% * Net Working Capital 88 days Cash from operations Rs. 2,458 cr * Based on normalized cash balance 5

6 UPL Organizational Changes Sagar Kaushik will be President Corporate Affairs & Industry Relations Sagar will be leading Corporate initiatives and further solidify UPL s stature as a global, innovative and responsible stakeholder in Farm to Fork value chain. Ajit Premnath will take over from Sagar as COO & Global Business Head for Crop Protection Ajit is working with UPL since 2003, starting as Regional head of Latin America, then Regional Head for Europe and current assignment as Global Marketing director in Mumbai. Prior to working with UPL he has worked with Bayer, Aventis and Hoechst industry experience of over 30 years. K. R. Srivastava will be CEO, Specialty Chemicals division KRS will be leading this division to exploit opportunities in pioneer chemistries that have not yet been harnessed in India by taking advantage of UPL s manufacturing capabilities. Debabrata Gupta will take over from K. R. Srivastava as COO - Supply Chain Debabrata joined UPL in May 2016 as the Chief Operating Officer responsible for Supply Chain. He has worked in the Supply Chain functions for Unilever, Coca Cola, Reckitt Benckiser and USV Limited during his career spanning over 30 years. Carlos Pellicer will be COO & Global Head of Strategy, Innovation and New Product Development Carlos will lead initiatives in Innovation, New Product Development, and UPDT. He will help to create a proprietary portfolio for UPL in the industry, leading to sustainable and profitable growth. 6

7 Comparative Results Q4 FY 2017 Rupees in crore Qtr Ending Qtr Ending Growth Particulars March 17 March 16 Crores Crores % Crores Crores % % Gross Revenues 5, % 4, % 20% Domesti c Revenues 487 9% % 6% Internati onal Revenues 4,904 91% 4,018 90% 22% Cost of Goods Sol d 3,302 61% 2,768 62% 19% Gross Margin 2,089 39% 1,711 38% 22% Overheads % % 16% EBIDTA 1,126 21% % 28% Other Income / (Loss) 57 1% (121) -3% 148% Depreci ati on & Amorti sati on 187 3% 199 4% -6% Interest & Fi nance Charges 213 4% 174 4% 22% Profit Before Tax % 387 9% 103% Tax provision 56 1% 79 2% -29% Profit After Tax % 309 7% 136% Income from Associates 13 0% (42) -1% 130% Minority Interest 1 0% 8 0% -92% Profit before Exceptional items % 259 6% 186% Exceptional items (1) 0% 75 2% 101% Net Profit for the period % 184 4% 303% Note: Other Income Includes Exchange difference on Trade Payable & Trade Recievables. 7

8 Sales Analysis for Q4 FY 2017 INR in crore Overall Growth 20% 5,319 4,432 21% -4% Price 3% Exchange Q IV 2017 Volume Q IV

9 Income by Region - Q4 FY 2017 & Q4 FY 2016 Revenues, INR in crore North America % to Total Q4 FY 2017 Q4 FY , % 22% Growth 25% Europe % to Total Q4 FY 2017 Q4 FY % 17% Growth 21% India % to Total Q4 FY 2017 Q4 FY % 10% Rest of World Q4 FY 2017 Q4 FY , Growth 6% Latin America % to Total Q4 FY 2017 Q4 FY ,646 1,405 31% 31% % to Total 21% 20% Growth 28% Growth 17% 9

10 Reconciliation of Key Financials Q4 FY 2016 v/s Q4 FY

11 Comparative Results FY 2017 Rupees in crore Year Ending March 17 Year Ending March 16 Growth Particulars Crores Crores % Crores Crores % % Gross Revenues 16, % 14, % 16% Domestic Revenues 3,334 20% 2,992 21% 11% International Revenues 13,346 80% 11,352 79% 18% Cost of Goods Sold 9,995 60% 8,733 61% 14% Gross Margin 6,685 40% 5,611 39% 19% Overheads 3,462 21% 2,993 21% 16% EBIDTA 3,223 19% 2,618 18% 23% Other Income / (Loss) 206 1% 93 1% 121% Depreciation & Amortisation 672 4% 676 5% -1% Interest & Finance Charges 735 4% 704 5% 4% Profit Before Tax 2,022 12% 1,331 9% 52% Tax provision 189 1% 165 1% 15% Profit After Tax 1,833 11% 1,166 8% 57% Income from Associates (19) 0% (85) -1% -78% Minority Interest 6 0% 12 0% -48% Profit before Exceptional items 1,808 11% 1,069 7% 69% Exceptional items 81 0% 129 1% -37% Net Profit for the period 1,727 10% 940 7% 84% Note: Other Income Includes Exchange difference on Trade Payable & Trade Recievables. 11

12 Sales Analysis for FY 2017 INR in crore Overall Growth 16% 16,422 14,097 18% -4% Price 2% Exchange FY 2017 Volume FY

13 Income by Region - FY 2017 & FY 2016 Revenues, INR in crore North America % to Total FY 2017 FY ,888 2,612 17% 18% Europe % to Total FY 2017 FY ,148 1,925 13% 13% Growth 12% Growth 11% India % to Total FY 2017 FY ,334 2,992 20% 21% Rest of World FY 2017 FY ,914 2,542 Growth 11% Latin America % to Total FY 2017 FY ,396 4,273 32% 30% % to Total 17% 18% Growth 15% Growth 26% 13

14 Reconciliation of Key Financials FY 2016 v/s FY

15 Days Working Capital Analysis Mar-16 Mar-17 Rs. in Crore FY FY Turnover 14,097 16,422 15

16 Cash Deployment FY 2017 Net Cash from Operating activities INR in crore 2,458 Reduction 16

17 Net Worth Reconciliation FY 2015 Particulars Rs. in cr Networth As per Indian GAAP 5,860 Impact of Business Combination and Goodwill Adjustment Goodwill Reduction (1,408) Intangible and Tangible Assets 94 (1,314) Advanta Merger Impact 403 Reversal of Proposed Dividend (IND AS impact ) 258 Deffered Tax Impact on Various Items 198 Functional currency impact 31 ECL Impact (37) Fair Valuation of Various Assets (10) NPV Impact (17) Others (18) Total of all Adjustments (505) Networth As per IND AS and Merger Impact 5,355 17

18 India ,400 3,200 3,000 2,800 Revenues, INR in crore 4% 487 6% 461 FY FY Q IV 3% 11% FY Revenues, INR in crore 3,334 2,992 FY FY Market grew in the range of 8-9% Significant increase in pulses and oilseed planted area. Reduction in cotton acreage - specially in the North Ullala, Saaf and Phoskill brands have joined the INR 100 cr club Significant progress made on customer engagement activities Introduced Biological and Nutritional products Strategic focus on Vegetable and Fruit crops substantial growth over previous year Erratic rainfall adversely affected planting in Karnataka, Tamil Nadu, parts of Andhra Pradesh and Maharashtra. 18

19 Latin America 1,700 Revenues, INR in crore 1,500 1,300 5,500 5,000 4,500 4,000 1,646 17% 1,405 FY FY ,273 Q IV 26% Revenues, INR in crore 5,396 Market de-growth of 6.6% Successful launch of 8 new products (6 - Herbicides, 1 - Fungicide and 1 - Insecticide) UPL sales grew in all key countries in LATAM Resistant weed area expanding rapidly Significant currency volatility across the region Low disease pressure on soybean in Brazil lead to reduced consumption of fungicides 3,500 FY FY FY

20 Europe Revenues, INR in crore % 916 Market de-growth of 1.9% ,200 2,100 2,000 1,900 1,800 1, FY FY Q IV 12% 1,925 FY FY FY Revenues, INR in crore 2,148 Post, end of quotas sugar beet area in Europe increased by 15% which helped UPL portfolio growth Wet weather in North Europe resulted in high disease pressure on potatoes Dry weather in southern Europe with low disease pressure on vine and vegetable crops affected consumption of fungicides 20

21 Rest of World Revenues, INR in crore 1,200 1, % 1,127 Overall market de-growth of 1.5% Good rains across Asia, specially Australia after several years of drought 600 3,000 2,800 2,600 2,400 2,200 FY FY Q IV 2,542 FY FY FY Revenues, INR in crore 15% 2,914 Recovery of rice crop driving growth in key markets UPL expanded its non selective herbicide to key markets, including China Established distribution partnership in Nigeria resulting in significant growth of UPL portfolio We have created a regional base in Kenya to improve our presence in the African continent 21

22 North America 1,300 Revenues, INR in crore 1,200 1,100 25% 1,215 Market grew by 1.1% 1, FY FY Q IV UPL launched 3 new products: 2 - Herbicides, 1 - Fungicide 2016 harvest significantly higher than previous year 2,900 2,700 2,500 2,612 11% Revenues, INR in crore 2,888 Aquatics business grew by 15% with 2 new launches Growers income continues to be low, affecting consumption of inputs 2,300 FY FY FY

23 JAI SHROFF CEO UPL Group 23

24 Industry.. year gone by FY 2016 & UPL Grew by 16% in FY 2017 and 10% in FY 2016 In FY 2017 growth across regions was in the range of 11% to 26% 2015 & Industry De-growth of 2.5% in 2016 and 9.6% in 2015 In 2016 most key players reported flat to degrowth in revenues of 19% Source: Phillips McDougall, March

25 Consolidation in Industry.. drivers De-growth in industry in last few years Poor performance and pressure to deliver shareholder value Trend towards offering integrated solutions Economies of Scale increasing R&D and regulatory costs 25

26 Implications for UPL In the short term, merged entities will be focusing on restructuring and new strategic alignments Product divestitures due to: o Anti-trust requirements o Portfolio rationalization Rationalization in distribution channels will provide access to new channel partners Access to talent / expertise Significant increase in gap between Tier I and Tier II players will lead to consolidation amongst Tier II players 26

27 UPL continues to excel, by focusing on. Supply Chain Portfolio Market Access Farmer Engagement 27

28 AJIT PREMNATH COO & Global Business Head for Crop Protection Business 28

29 Shift in Market Share CY 2014 CY 2016 OTHERS 13% UPL 3% Sales (USD mn) % Sales (USD mn) % UPL 4% OTHERS 18% TOP 9 84% TOP 9 UPL OTHERS Total Market: USD 63 bn % Top % 1.9 3% UPL 2.1 4% % Others % 63.2 Global Market 56.4 TOP 9 78% TOP 9 UPL OTHERS Total Market: USD 56 bn Source: Phillips McDougall 29

30 Leading market position in crop protection industry UPL has consistently outperformed the broader industry by a significant margin Overall CAGR (FY12-17) Industry CAGR (CY11-16) UPL CAGR (FY12-17) Europe -1% 1% 17% 9% Industry UPL North America 2% 15% LATAM 5% India 9% ROW 0% 22% 14% 19% Source: Philip McDougall Agri-services (Mar. 2017) Industry Data *Industry Data is for the Calendar Years UPL data is for the Financial Year-end from March 2012 to March

31 UPL segmentation over the years FY FY Others, 19% Insecticide, 28% Others, 11% Insecticide, 26% Herbicide, 28% Herbicide, 32% Fungicide, 25% Fungicide, 31% Herbicides.. largest segment, in line with industry 31

32 o Herbicide Resistance o Fungicide Resistance o Insecticides o Biologicals 32

33 No. of weeds Growing weed resistance new global menace 91 crops, 69 countries Imaza Group Sulfonyl Urea's Pig Weed Kochia Atrazine Bentazon DMP Fops Dims DENS 24D Dicamba 48 Glyphosate MCPA Paraquat Conyza Rag weed 20 0 ALS Inhibitors Photo system II inhibitors Mode of Action ACCase Inhibitors EPSP Inhibitors Y 2010 Y 2016 Synthetic Auxins PSI Diverters Others MOA Phalaris minor Lollium multiflora There are currently 479 unique cases of Herbicide resistance globally Weeds have evolved resistance to 23 of the 26 known herbicide sites of action and to 162 different herbicides. Recent MOAs like PPO s too have come under resistance 33

34 UPL s weed resistance management tools Lifeline, Interline and Fascinate brands - address issues in soybeans, corn, cotton, canola and TNV crops TRICOR brands - globally address most resistance weeds as pre emergent herbicide in Soybeans Shagun an emerging Brand in India and other wheat growing markets to control resistance to Phalaris Minor and Lollium sps IRIS - a lead brand in India for soybean to control all weeds resistance to ALS MOA 34

35 Fungicide resistance management platform With Unizeb Gold Grower Practice Of USD 15 bn fungicide market, key segments like Triazoles, Strobilurins and SDHI are facing resistance issues UPL leading global resistance management strategy with its Mancozeb and Copper products - multi-site products help improve performance Key crops like soybean, cereals, vines and potatoes facing issues UPL strategy to make pre-mixes with own portfolio, as well as strategic alliances 35

36 Insecticides Portfolio update Overall insecticides market has de-grown Introduction of INTACTA technology has impacted caterpillar segment adversely Sucking pests segment growing faster UPL is innovating new products in this category with different modes of action to address the issue of pest resistance 36

37 Biologicals CURRENT MARKET Bio Fertiliser $ 4.7 bn Bio Pesticides Bio Stimulants Moving from Plant Health to Plant Protection UPL is positioned as Preferred Partner - providing global market access UPL wants to provide Innovative and Disruptive technologies in the hands of farmer to make him resilient to weather risks and biotic stress 37

38 Biologicals 38

39 FY % FY % Unizeb Gold Glory Lifeline Satellite Interline Maintain at 15% FY % Elixir Banter Avancer Gold Moccasin Wuxal FY % Ulala Atabron Acephate 97 DF Iris Eros 39

40 Increase outreach to farmers by: o Direct engagement though field staff o Technology o Services 40

41 Farmer engagement ADARSH KISAN CENTRE Doubled the number of growers registered with AKC Connecting seamlessly growers, AKC and UPL salesforce ADARSH FARM SERVICES Increased coverage under AFS custom spraying for farmers in India Plans to multiply coverage in FY

42 Seeds update Fresh Corn Geographical expansion in India, ASEAN region, Brazil Tropical Corn Expansion in India continues Soybean Success in Brazil to be replicated in India, where germplasm testing is currently on Vegetable Seeds Tropical and Sub-Tropical portfolio - drive to expand in other Asian countries to continue in Phase I Wheat in Australia, Sunflower and Soybean in Argentina.. continue to show robust growth 42

43 Trends FY 2018 Expected increase in acreages and low channel inventory of sugar beet herbicides in Europe will have a positive impact in FY 2018 Potential upside for Lifeline due to increased penetration of LL soybean in North America Several countries considering banning Paraquat excellent opportunity for Glufosinate in non selective Herbicides segment Multisite fungicides are becoming a necessity to manage resistance to new fungicides Cotton acreages up in India and USA - opportunity for sucking pest solutions Commodity prices expected to remain depressed - with the exception of cotton and rice Strict environmental norms in China leading to price increase 43

44 DEBABRATA GUPTA COO Global Supply Chain 44

45 Sustainability SUPPLY CHAIN EXCELLENCE Environment Health and Safety Cost Efficiencies Procurement Supply Chain capabilities 45

46 Sustainability Performance - India Sustainability KPI Performance CO2 Emission 22% Down Energy Consumption 9% Down Water Consumption 19% Down Wastewater generation 27% Down Solid Waste generation 6% Down Continued focus on Sustainability 46

47 UPL focus 47

48 Safety Continuous improvements in safety standards across all sites Significant investments in upgradation of safety standards across factories Worldwide recognition of safety performances at manufacturing sites National Level Golden Peacock Award for Occupational Health and Safety in Chemical and Fertilizer Sector for 2016 (Unit 5) EKDKN EXCEED AWARDS 2017 Silver. under OHS Category in Chemical & Fertilizer Sector (Unit 5) OSHA India Second prize Innovation in HSE Implementation. (Unit 8) 48

49 Cost efficiencies Automation and technology upgrades Energy efficient processes Reduction in energy consumption through conservation Process improvements Consolidation and optimization of vendor base to get best prices 49

50 China supply disruptions Economic downturn and sluggish economic growth Significant governmental strictures on environmental compliance Shrinking supply base leading to uncertainty in availability and cost pressures Opportunities for UPL... Due to strong in-house manufacturing capabilities 50

51 Awards International Conference on Occupational Risk Prevention, UCPL in Colombia was awarded with the ORP International Award Leaders category in Prevention, UCPL in Colombia IRIM - India Green Manufacturing Challenge 2016 Gold Award (Unit 1) Silver Medal of India Green Manufacturing Challenge International Research Institute for Manufacturing, Chennai (Unit 0) IRIM - India Green Manufacturing Challenge 2016 Silver & Special Award (Unit 2) National Gold Award BRAND ENVIRONMENT by Govt. Of Vietnam (Vietnam Association of Environmental Economics) (Vietnam Unit) National Gold Award Clean & Green Factory by Govt. Of Vietnam (Vietnam Association of Environmental Economics) (Vietnam Unit) FICCI Chemicals and Petrochemicals Awards 2016 Efficiency in Energy Usage - Chemicals (Unit 2) Certificate of Merit in chemical sector for National Energy Conservation Awards (NECA- 2016) by Bureau of Energy Efficiency (Unit 1) First Prize in chemical sector for National Energy Conservation Awards (NECA-2016) by Bureau of Energy Efficiency (Unit 2) 51

52 Q & A