Nov 21,2011. Investors Presentation

Transcription

1 Nov 21,2011 Investors Presentation 1

2 Disclaimer This presentation contains forward-looking statements which may be identified by their use of words contains plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures, and financial results, are forwardlooking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The companies referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. These companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise 2

3 Contents Global Megatrends 4 Key Nutrient Demand Drivers 6 Indian Fertiliser Scenario 9 Company profile 24 Fertiliser Business 28 Specialty Nutrient Business 37 Crop Protection Business 42 Retail Business 46 Financial Performance 51 3

4 Global Megatrends Rising Food Demand Global food demand to increase 1.5x by 2030 vs Changing dietary patterns especially in emerging countries Limited Resources Limited Land Availability Labour Shortage Depletion in Soil Quality High Volatility in Food Prices Globally, prices of staple foods increased more than 2x compared to prices in 2000 Innovation to Drive Productivity Improvements in small & commercial farm productivity to provide bulk of incremental supply Innovation and adoption of inputs technology seeds, chemicals, farm machines will be a key driver for productivity improvement 4

5 Global Megatrends Increase Value Chain Coordination Coordination across the agriculture value chain to improve farm extension, market linkage and infrastructure will increase 5

6 Key demand drivers suggest strong nutrient demand Key Nutrient Demand Drivers Global population growth Growing affluence leading to higher protein usage Bio fuel production Farm economics Planted area Application rates High Commodity Prices Global Fertiliser Demand ( Million Mt)

7 World N,P,K Fertilizer Market "N" World Market "K" World Market 11% 6% 13% 4% Ammonia Urea UAN AN/CAN 29% 1% MOP/SOP NPK Others 9% 5% 52% NPK DAP/MAP Others 70% K Market is 29 Million MT 17% N Market is 100 Million MT "P" World Market 6% 2% DAP/MAP NPK 48% SSP TSP Others 27% P Market is 39 Million MT Global Fertiliser Industry: Consumption is growing at % p.a. World nutrient production increased by 11% in 2009 and sales by 13% mainly due to potash sales India and China account for 40% of global consumption Bulk availability of nutrient fertilisers is concentrated in certain regions N nutrient in Middle East, USA & FSU P nutrient in North/West Africa, USA & Jordan K nutrient in Canada, FSU & Middle East 7

8 International Raw Material Price Movement Ammonia DAP Phos acid 600 Urea

9 Indian Fertiliser Scenario 9

10 Agriculture Impacts economic growth and large proportion of population Nearly 600 million Indians depend directly on Agriculture (54%) Agriculture contributed around 16.6% of GDP in and its share is declining 10

11 Indian Agriculture Production Crops % Share World Rank Wheat nd Rice nd Total Pulses st Groundnut rd Rapeseed rd Vegetables 9.1 2nd Fruits 8.4 2nd Potatoes 7.6 3rd Onion (Dry) 9.7 2nd Sugarcane nd Tea nd Coffee 3.4 6th Jute st Cotton (Lint) rd Tobacco leaves 8.2 3rd 11

12 Indian Crop Productivity Crop Productivity (Mt/ha) World India China Sugarcane Wheat Rice Corn Soybean To enhance the crop productivity, Nutrient consumption in India has to go up with improved efficiency. Rapeseed Peanut

13 Food Grain Production India will need additional35-40 Million Ton of food grain and much more fruits and vegetables to feed its growing & affluent population * * Million MT 13

14 India consumption ~ 15 % of global Nitrogen tons 000 Tons India Consumption World Consumption 14

15 India consumption ~ 19 % of global Phosphate 000 tons India Consumption World Consumption 15

16 India consumption ~ 15 % of global Potash 000 tons India Consumption World Consumption 16

17 N P K Consumption Balance (Ratio) An improving Trend 17

18 India s Fertilizer Outlook India s NPK Demand (Million Mt) N (LHS) P2O5 (LHS) K2O (RHS) Nutrient Demand growth rate: N ~ 3% P ~ 6% K ~ 5% Fertilizer Consumption Demand Driver: Irrigation High Yielding Seeds & Crop Diversification MSP/ Agri Commodity Prices 18

19 India s Nutrient Consumption is low Kg/Ha Nutrient Consumption among the Asian Countries India Bangladesh Pakistan Srilanka China India s Nutrient consumption (Kg/Ha) is lower than countries like China (333), Bangladesh (170) and Pakistan (135). 19

20 Fertilizer Subsidy Scenario New Nutrient based Subsidy Policy Nutrient Based Subsidy (NBS) policy introduced in April 10 has been received well by all stakeholders- farmers/industry/govt. Ensured timely availability of fertilizers through out the year supplemented by imports Subsidy reimbursement reasonably on time to meet the liquidity ( delay in last qtr. of FY 11) International prices were stable throughout the yr. MRP revised to offset the cost increases 20

21 Indian Fertilizer Industry Overview Yield (Kg/Ha) 30 Nutrient Consumption (Million MT) Fertilizer Use Efficiency : For the last 10 yrs., Crop yield growth rate has been only 1.20% where as Nutrient consumption has grown by 3.6%. Fertilizer use efficiency is the major concern in the Indian Agriculture Galloping Fertiliser Subsidy Bill: For the last 10 yrs, Fertiliser Subsidy Bill s growth rate is 21.53%. Though Fertiliser Subsidy Bill has gone up efficient usage of Fertiliser remains a major area of concern 100,000 80,000 60,000 40,000 20, Decontrolled fertilizer Subsidy Imported (Urea) Fertilizer Indigenous (Urea) Fertilizer

22 Subsidy Computation Pre Vs. NBS Import Parity Price Pre NBS NBS DAP DAP DAP Price : $ per MT Q 1 Q Fixed Farm Gate Price 203 (36%) Variable Farm Gate Price* 216 (29%) 334 (44%) 395 (48%) Variable Subsidy Amount 366 (64%) Fixed Subsidy Amount 354 (71%) (56%) 430 (52%) Pre NBS NBS Product Based Subsidy Fixed MRP and Floating Subsidy No import of complex fertilisers Input prices calculation- 1 Month lag for raw materials and 2 Month lag for finished product Exchage rate average of Daily RBI rate Subsidy is on despatch basis Nutrient Based Subsidy Fixed Subsidy and Floating MRP Import of complex fertilisers allowed Input prices fixed for the year to be reviewed for any update at the end of every season Fixed exchange rate Subsidy is on despatch basis *Farm gate price includes margin, Taxes and other cost 22

23 Emerging Scenario India a Growing fertilizer market for the world Subsidy system fast reforming Market will align to global market & development Growing role of Imports Use of micronutrients will increase due to crop diversification and balanced Nutrition Nutrient use efficiency will be a major concern Soil & crop specific Fertigation Integrated approach to nutrition Soil health correction Last mile delivery Infrastructure & Information dissemination will be the key to Agricultural production in future. 23

24 Nov 21, 2011 Company Profile 24

25 Snapshot of Coromandel Coromandel International Limited, established in 1961 is the flagship company of the 3.8 Billion USD Murugappa group, contributing 45% of the group turnover and 51% of EBITDA 55% Coromandel Other group companies Coromandel Share in Murugappa Group Turnover 45% Coromandel is India s second largest producer of Phosphatic Fertilizers In FY2011, Coromandel reported PAT of Rs.6,945 million on a turnover of Rs.77,161 million. Coromandel 49% Other group companies EBITDA 51% E.I.D. Parry (India) Ltd. holds 62.86% of Coromandel s equity Shareholding Pattern 15% 21% Murugappa Group Institutions Others 64% 25

26 Business Structure Phosphatic Fertilisers DAP Complex Fertilisers /SSP/MOP Sales 85% EBITDA 70% Coromandel Specialty Nutrients & Compost G-Sulphur Water Soluble Fertilisers Organic Manure Crop Protection Technicals Formulations 15% 30% Retail Agri Inputs Agri Services 26

27 Strategic Direction Farm Inputs Business Dominance in Fertilisers Non Subsidy Businesses Sourcing Strategic Alliances in Sourcing Long Term tie-up with Foskor, South Africa and Group Chemique, Tunisia TIFERT JV in Tunisia Supply agreement for Ammonia and Sulphur with Mitsui Potash from Canpotex Cost Leadership Low cost manufacturer of Phos acid - Visak and Ennore Kakinada - High Efficiency and Very low conversion cost Ex Plant/Rail deliveries - Low Freight Cost Low cost of borrowing Marketing Strength Wider reach and penetration Strong brand image in the home market Wide Product Range - Low P to high P Direct contacts with farmers - Mana Gromor Centers Extensive field promotions Specialty Nutrients/ Water Soluble Fertilisers/Micro Nutrients and Organic compost Crop Protection Technicals and Formulations Retail Farm Mechanization Services 27

28 Coromandel s Fertilisers Business 28

29 Coromandel Fertiliser Business Growth Story 29

30 Global Strategic Alliances 30

31 State of The Art Manufacturing Facilities Plants are strategically located in highly irrigated southern Indian states and in heart of fertilizer consumption market low freight cost Plant Facilities State of art with good infrastructure support and robust systems High capacity utilisation levels & continuous modernisation of facilities Backward integration into manufacturing the intermediate - phosphoric acid from rock Phosphate lowest cost manufacturer in India Captive jetty at Vizag, Own storage tanks and pipeline for raw materials: Ammonia & molten sulphur (Vizag & Ennore) - Lower handling and associated costs Captive power plants at Vizag & Ennore saves power costs Captive desalination plants at Ennore ensure water supply at low cost Visak Kakinada Ennore Ranipet Coromandel Lowest cost producer of complex fertiliser in the country 31

32 Tie ups for Phosphoric Acid Million MT Captive Production 0.23 Supply contracts with FOSKOR, ICL, GCT and Sterlite 0.60 New JV TIFERT 0.20 Spot Buying 0.20 Total 1.23 Acid tie up of 1.2 million Mt can cater to 4 million Mt Production of fertilisers Coromandel has successfully concluded Business Assistance Agreement (BAA) with FOSKOR in 2008 and picked up Sweat Equity in FOSKOR. Current equity holding in FOSKOR: Coromandel International Limited:2.18% CFL Mauritius Limited: 11.82% Coromandel holds 15% stake in TIFERT JV for Phos acid venture in Tunisia 32

33 Cost Leadership Visak Plant Captive Phos Acid Continuous de-bottle necking to increase production levels Value gap - imported Vs own acid Increased Gypsum generation Use of various sources /grades of rocks New belt filter technology- to use low grade rocks Sulphuric Acid Consistent production performance operating at 100% + capacity Air pre heater technology Total avoidance of LSHS/Furnace oil Increased Power generation Logistic Cost Ex Plant Deliveries minimizing freight cost Kakinada Plant Visak Production (Million Mt) Kakinada Production (Million Mt) Very High Efficiency N 99% P 98% K 94% Low Conversion Cost Availability of Natural Gas Increased through put of all trains Logistic Cost Increased rail dispatches minimizing freight cost to be in line with subsidy

34 Marketing Network Factory Wholesaler / Distributor West Bengal (WB) Orissa (OR) Andhra Pradesh (A.P) Karnataka (KN) Maharashtra (MH) Madhya Pradesh (MP) & Chattisgarh Tamil Nadu (TN) PDO Semi Wholesaler / Dealer Visak Retailer / Sub Dealer Kakinada Ennore Ranipet Farmer 34

35 Key Developments in C Train in Kakinada Adding a new granulation train to increase the production capacity by 8 lac mt Turn key order placed with Uhde India Pvt Ltd Project progressing on brisk pace Project is expected to be commissioned on schedule by Q

36 Key Developments in Contd.. SSP Plant at Bhatinda, Punjab Set up a greenfield800 tonnesper day (TPD) Single Super Phospahte(SSP) plant including 400 TPD granulator plant in the state of Punjab 36 36

37 Specialty Nutrient Business 37

38 SPECIALITY NUTRIENTS DIVISION (SND) G-SULPHUR WSF Micronutrients Organic Compost GROMOR SULPHUR GROMOR SPRAY Boron GROMOR POWER Zinc Sulphozinc 38

39 Basics of Water Soluble Fertilisers What is Water soluble fertilizers? 100% water soluble Available in double and multi nutrient combinations with or without secondary elements or micronutrients. Available in the Powder or liquid form and can be used for fertigation and foliar application. Why Water soluble fertilizers? To enhance fertiliser use efficiency High cost benefit ratio in Horticultural Crops To improve crop quality and Crop Productivity How to use Water soluble fertilizers? Foliar application Fertigation (with Drip) Fertiliser use efficiency Comparison Conventional Fertilisers (%) Nitrogen Phosphorous Potassium WSF (%) 39

40 Sulphur and WSF Business 40

41 Organic Manure Business Advantage of Organic Manure Improving the soil texture - contains N, P & K in micro quantities Builds up moisture holding capacity and improves Quality & yield Coromandel s Strategy 0.2 Volumes (Lac Mt) Coromandel pioneered the marketing of Compost from Municipal waste and Industrial waste(press mud) Scaled up volumes in short time ; Planning for 1 million Mt in Has pan India presence and tie up with key suppliers Market Leader in Organic Compost Segment 41

42 Crop Protection Business 42

43 Crop Protection business Wider range of Technicals Increased Global presence and registration Strong distribution with own retail outlets Acquired Pasura Bio Tech Jammu Unit II 2011 Sabero Acquisition -Open Offer process to get underway shortly 2006 Expansion to Latin America 1990 s Acquisition of FICOM and setting up Jammu Unit I Acquired pesticides unit of BPM Post Sabero acquisition, Coromandel moves into the top 5 players in Indian Agro Chemical market 43

44 Initiatives Operational Initiatives Jammu Expansion of technical plant capacity at Ankleshwar Export to more countries & increase the reach Focusing on high margin super specialities Leveraging on retail network in AP & Accelerated growth plan in all states Strategic Initiatives Acquired Sabero Organics Co-Marketing with MNCs Access to new molecules Tie up with BASF, Syngenta, Dupont R&D Initiatives & registraton capabilities Alternate sourcing from China New Products Introduction Foray into Latin American market Set up office in Brazil Ranipet 44

45 Recent Developments Sabero Acquisition Sabero is a Gujarat based Agro Chemical Product manufacturer with strong export base Coromandel entered into a definitive agreement to acquire 42.22% promoter INR160 per share Coromandel is acquiring 31% under open offer. Post acquisition, Coromandel will move in to the top 5 players in Indian Agro Chemical market (Rs. Mio) Turnover EBITDA % of Revenue Fungicides 56% 43% Insecticides 35% 41% Herbicides 5% 8% Others 5% 9% % of Revenue Domestic 42% 51% Exports 58% 49% 45

46 Mana Gromor Centers (MGCs) - Retail 46

47 Retail Business - Rationale Viable Alternative Develop Distribution Channel for Coromandel Reduce Dependency on Distributors Opportunities in Rural Areas Capture opportunities in Rural Areas Providing Lifestyle Products at nearest Location Earning Capabilities Supply Products and Solutions to improve earning capabilities of farmers Thereby improve their lifestyle Marketing Solution Provide Marketing Solutions for farm Produce 47

48 Retail Business Overview Over 500 ManaGromor Centers in Andhra Pradesh - servicing close to 2 million farmers Expanding to Karnataka and Maharashtra soon Targeting 1000 centers Products & Service Offerings Fertilisers Crop Protection Seeds Veterinary Feed SND FMS Other Agri Services Providing One Stop Solution to the Indian Farmers 48

49 MGC Retail Model The centre is located at Mandal HQ. (One Mandal for villages) Each centre covers villages having 5,000 farm families in a radius of 20 km Model envisages repetitive interaction between the centre and the farmer Primary focus is on technology transfer and providing services Convenience to the farmer and reliability will be the guiding factors More than 50% of retail outlets achieved break even out of 450 centres + 49

50 Farm Mechanization action plan o Covered over 5000 Acres in 1 st year of launch o New services like laser leveling, harvesting and power spraying o Targeting 1 lac Acres by FY14. 50

51 Financial Performance 51

52 Financial Performance Turnover ( RS. Million) EBIDTA (Rs. Million) & EBIDTA % 96,678 77,161 65,268 45,893 38,001 20,842 '06-07 '07-08 '08-09 '09-10 '10-11 H1'11-12 (Rs. mio) 13,200 11,200 9,200 7,200 5,200 3,200 1, One time exceptional income from Foskor EBITDA EBITDA % 2, ,554 9, ,586 7, , ,527 '06-07 '07-08 '08-09 '09-10 '10-11 H1' (%) PAT (Rs. Million) & PAT % ROE & ROCE (%) (Rs. Mio) 7,500 6,500 5,500 4,500 3,500 2,500 1, PAT (%) 6, PAT Margin 9.0 4, , , , '06-07 '07-08 '08-09 '09-10 '10-11 H1'11-12 (%) ROE ROCE '06-07 '07-08 '08-09 '09-10 '10-11 H1'

53 Income Statement H Revenue (INR m) 20,842 38,001 96,678 65,268 77,161 45,886 EBITDA (INR m) 2,181 4,554 9,490 8,430 11,344 6,527 PBT (INR m) 1,464 3,334 8,082 7,084 9,884 6,192 PAT (INR m) 1,007 2,098 4,964 4,682 6,945 4,382 EPS (Rs.) Debt / Total Capital (%) 48.5% 54.3% 58.8% 55.8% 42.6% 46.9% LT Debt / Total Capital (%) 20.3% 14.0% 4.2% 2.1% 4.2% 4.9% 53

54 Balance sheet INR mn (H1) Equity Debt Deferred Tax Liability Sources of Funds NFA Investments* Cash/ICD Bonds 5,124 7,944 11,271 14,350 19,041 23,440 5,490 10,429 17,199 19,178 14,712 20, ,327 19,198 29,265 34,382 34,567 44,859 3,824 7,354 7,918 8,173 8,532 9,124 1, ,633 2,110 2,123 3,570 1,695 1,072 3,415 8,099 9,020 8,843-2,790 8,803 8,600 4,300 - Inventory/Subsidy/Debtors/Other CA 10,042 15,614 25,046 16,923 28,383 38,857 CL Net CA Application of Funds 5,974 8,355 17,550 9,524 17,791 15,535 5,762 11,121 19,714 24,099 23,912 23,322 11,327 19,198 29,265 34,382 34,567 44,859 * Includes temporary surplus of Rs. 1,370 Million in Mutual Funds 54

55 Key Developments in contd Rewarding Coromandel s Shareholders Bonus Debentures 1.Face Value -Rs.15/- 2.Quantum of Bonus Debentures issued - 1BonusDebenture for every share of Re.1/each 3.Tenor -4years -Redemptionintheyears2/3&4 4.Coupon 5.Cash outgo 6.Allotment - 9%(Annual) - Rs.495 cr(incl. dividend tax) -likelytotake5 6months 55

56 THANK YOU 56