CORPORATE PRESENTATION August 2012 INDIAN AGROCHEMICAL INDUSTRY - - PowerPoint PPT Presentation

Insecticides (India) Limited

CORPORATE PRESENTATION August 2012

INDIAN AGROCHEMICAL INDUSTRY OVERVIEW

Industry overview

The size of Indian agrochemicals market is expected to be around Rs 15,000 crores by 2015

Arable land stagnation Rise in MSP Low pesticide consumption Increased institutional credit flow

Structural enablers to catalyse strong growth trajectory going forward

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Current under penetration of agrochemicals in India with pesticide consumption amongst the lowest globally

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Rising pressure to increase food productivity given land shortage and rise in population

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Rising prices of crops on the back of Minimum Support Prices (MSP)

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Use of costlier hybrid seeds

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Increasing awareness of farmers

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Labour shortage for agricultural activities

• n the back of NREGA

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Continued financial support from Government through subsidies and greater flow of institutional credit

105 110 115 120 125 130 135 FY80 FY83 FY86 FY89 FY92 FY95 FY98 FY01 FY04 FY07 FY10 m hectares 880 980 1,030 1,110 1,080 1,100 1,120 1,285 2,000 2,300 3,000 3,200

• 700

1,400 2,100 2,800 3,500 FY09 FY10 FY11 FY12E Rs / quintal Paddy Grade A Wheat Arhar 17.0 12.0 7.0 6.6 2.5 0.4

• 3.0

6.0 9.0 12.0 15.0 18.0 Taiwan Japan Korea USA EU India Kg / hectare

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 RS bn

Source Department of Agriculture, research reports

COMPANY OVERVIEW

IIL’s goal

Help farmers to reduce input cost and better their yields Help to bring new generation products in reach of all farmers - big, small and marginal Help increase awareness and lead advancement in agricultural practices

Value For Money

100 200 300 400 500 600 700 800 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 IIL Sensex

Company overview

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Incorporated in 1996 and listed in 2007

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Large and diversified product portfolio providing complete solution for crop protection

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Over 160 products, over 100 branded formulations and over 750 SKUs

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Track record of new product launches

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Judicious mix of in-house development, brand acquisitions, technical collaboration and marketing arrangements with global players

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Wide sales and distribution network across India

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Over 230 sales representatives, over 3,000 distributors, c.50,000 retailers and 26 depots/ branches

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An ISO 9001:2000, ISO 14001 and OHSAS 18001 certified company

Large portfolio across multiple segments

23 11 8 1 65 25 20 18 88 36 28 19 20 40 60 80 100 Insecticides Herbicides Fungicides PGRs Institutional Branded formulations

Outperforming the index

Notes Figures have been rebased to 100

624 119

Company overview (cont.)

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State-of-the-art manufacturing facilities at Chopanki, Udhampur, Samba and Dahej

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Established manufacturing infrastructure for both technicals and formulations

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Recently commissioned new units with sufficient capacity to enable sustained long term growth

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New technicals manufacturing facility and R&D facility under construction

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Strong R&D capabilities

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R&D center recognized by DSIR and Ministry of Science & Technology

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Accredited with NABL

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Successfully registered 27 technicals of which 15 technicals have been commercialized

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Currently in advanced stages of registration of about 20 technical grade pesticides

Udhampur, J&K Formulations Sambha, J&K Formulations Dahej, Gujarat Formulations Technicals to be commissioned Chopanki, Rajasthan Formulations and Technicals R&D centre

Milestones

2002: Commissioning of plant at Chopanki (Rajasthan) for manufacturing wide range of innovative end-to-end agrochemicals solutions 2003: Acquired all brands of Montari Industries 2004: Commissioning of another plant at Samba (J&K) 2005: Received ISO 9001-2000 certification, R & D Lab set up at Chopanki 2006: Acquired exclusive rights to sell “Thimet “ brand in India from American Vanguard Corp, USA; Received ISO 14001-2004 certification 2007: Successfully concluded IPO; Commissioned Technical plant at Chopanki 2008: New R&D unit (at Chopanki) bagged ISO 18001:1999 certification 2009: Construction of new manufacturing facilities at Udhampur (J&K) 2010: Began construction for multi product technical plant with 10,000 TPA capacity at Dahej (Gujarat) 2011: Bagged NABL accreditation; acquired Monocil, a popular brand ; commissioned manufacturing units at Dahej and Udhampur (J&K) 2012: Launched Nuvan, Hakama and Pulsor in collaboration with AMVAC and Nissan

Management team

Finance Pankaj Gupta CS P.C. Pabbi Vice President Production Sanjeev Aggarwal GM Rajesh Aggarwal (MD) Information Technology Sandeep Aggarwal CFO H.C. Sharma DGM

• H. C. Aggarwal (Chairman)

Marketing Admin & HR K.V. Patel Unit Head

• R. S. Verma
• Sr. Manager

M.K. Singhal GM V.K. Garg GM Sanjay Vats GM Purchase V.K. Singhal GM Abhai Shanker GM Anand Banka Project Head B.P.S. Rana DGM S.K. Choudhary Project Manager Sanjay Vats GM Venkat Rao GM R&D

• Dr. Mukesh

DGM Ashok Bangde GM O.P. Karnani Unit Head

BUSINESS OVERVIEW Product and Brand Portfolio Management

Strong brand portfolio

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IIL’s portfolio consists of several market leading brands

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Thimet, Monocil, Lethal, Victor, Indan, Sharp, Arrow, Hijack, Care, Bravo and Avone are some of IIL’s key brands

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New products launched in current year include Nuvan, Pulsor and Hakama

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Sales of top 4 brands – Thimet, Lethal, Monocil and Victor - constitutes about Rs 144 crores (26% of FY12 turnover)

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Umbrella strategy applied for new product launches via brand extensions such as Lethal Super, Victor Plus, Victor Super etc.

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Established the “Tractor Brand” of insecticides for easy recognition of all IIL products

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“Tractor Brand” has high brand equity amongst farmers and is leveraged during all new product launches

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Continued focus on branding activities, promotion through brand ambassador and other marketing initiatives

Pan-India presence

Rewari Hazipur Bhubneshwar Ghaziabad Hissar Bangalore Coimbatore Hyderabad Bhatinda Howrah Karnal Ludhiana Jaipur Nagpur Raipur Ahmedabad Sriganganagar Ranchi Pune Sindhanur Guwahati Siliguri Gadarpur Indore

26 depots across 24 locations Over 230 sales personnel and over 3,100 distributors

Rajasthan S: 8 D: 155 MP S: 10 D: 180 Chhattisgarh S: 5 D: 56 Jharkhand S: 2 D: 18 Maharashtra S: 14 D: 94 J&K D: 18 Haryana S: 15 D: 189 Gujarat S: 6 D: 172 Karnataka S: 14 D: 344 Orissa S: 5 D: 39 Punjab S: 36 D: 336 Bihar S: 10 D: 44 Assam S: 4 D: 29 Tamil Nadu S: 14 D: 187 U.P. S: 21 D: 203 Uttarakhand S: 3 D: 47 AP S: 52 D: 992 Total Sales personnel (S) : 237 Total Distributors (D) : 3,107

“Re-launch” expertise

IIL has a proven record of acquisitions of ‘high recall, but off-shelf’ brands and their successful re-launch into leading brands

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Lethal, acquired from Montari in 2002 is a shining example

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One of the most successful Brands of IIL with several brand extensions introduced

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Sales contribution of all Lethal variants in FY12 was Rs 37 crores (around 7% of turnover)

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Monocil, acquired from Nocil in 2011, is a more recent example

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One of the leading agrochemical products in India and highly accepted among the farming community

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Sales contribution in FY12 was Rs 33 crores (around 6% of turnover)

IIL has successfully partnered with several global players to market leading brands in India

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American Vanguard Corp (AMVAC)

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Thimet – Technical collaboration initiated in 2006

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Nuvan – Technical collaboration started in 2012

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Nissan Chemicals

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Hakama – New marketing collaboration started in 2012

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Pulsar - New marketing collaboration started in 2012

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Partnership arrangements with other companies such as BASF, UPL, Syngenta and Makhtesham Agan

Proven partnership experience

Increasing institutional presence

IIL is increasing its presence in the institutional segment via sales of bulk formulations and technicals

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IIL’s current portfolio includes several technicals

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Thiamethoxam, Thiophanate Methyl, Glyphosate, Metsulfuron Methyl, Butachlor, Acetamaprid, Lamda Cyhalothrin, DDVP and Bifenthrin are amongst the key technicals

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The new multi-purpose technicals manufacturing facility coming up at Dahej shall help in broadening the portfolio

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IIL’s recent investment and initiatives towards achieving greater backward integration is expected to be one of its major growth drivers going forward

BUSINESS OVERVIEW Manufacturing and R&D Excellence

Manufacturing facilities

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Chopanki (Rajasthan)

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Formulations and technicals facility

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Samba (J&K)

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Formulations facility

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Income tax exemption (100%) expected from current year upon completion of capacity expansion, for a period of 5 years

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Udhampur (J&K)

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New formulations facility commissioned in FY12

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Income tax exemption (100%) for 5 years, starting in FY2012

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Dahej (Gujarat)

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New state-of-the-art manufacturing facility; formulations commissioned in FY12 and technicals to be commissioned in the current year

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Large area sanctioned in a PCPIR (Petroleum, Chemical and Petrochemical Investment Region) zone offering significant expansion opportunity

R&D

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R&D center recognized by Ministry of Science and Technology and Department of Scientific & Industrial Research

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Facilities are NABL accredited

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New state-of-the-art R&D center in Chopanki (Rajasthan) expected to be ready in the current year

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Successfully registered 27 technicals with additional 20 technicals in advanced stages of registration

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Focus areas for R&D initiatives

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Identifying and manufacturing high value added products

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Developing complex new molecules for introduction in generics market

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Developing eco-friendly formulations

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Leveraging expertise for CRAMS

Mission of IIL’s R&D initiatives “EVERY BEST CAN BE BETTERED”

BUSINESS OVERVIEW Initiatives and CSR activities

Farmer awareness initiatives

IIL actively organizes several farmer awareness initiatives to familiarize them with the latest developments in farming practices and new technology advancements

►

• Dr. Dada: Novel concept introducing techno-commercial

members as the expert for all queries in the field and to help train farmers in new technologies

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Jagrukta Abhiyan: Campaigns and awareness drives organized to educate farmers about best practices and new developments

CSR initiatives

IIL is involved in a host of CSR initiatives aimed at raising farmer awareness and enable

• development. Some of the key activities where IIL is involved include

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Encourage the farmers for the inclusion of pulses and/or vegetables in crop rotation to increase farm income

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Promote new agricultural techniques amongst the farmers through crop seminars, farmer meeting, demonstrations and field days at farmers fields

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Provide literature for the control of various pests, such as weeds, insects and diseases, to create awareness amongst the farmers

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Educate the farmers regarding the safe and judicious use of agrochemicals

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Adopt schools and encourage girl child education

BUSINESS OVERVIEW Financial Performance

Growth trajectory of IIL

IIL has grown at approximately 33% year on year from FY2003-FY2012

We expect revenue growth to be around 45% this year and 35% in FY14, with IIL well poised to exceed Rs 1,000 crores of revenues in FY14

42 75 106 133 184 221 294 397 478 554 800

• 100

200 300 400 500 600 700 800 900 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E Rs crore

Performance across segments

Revenue split across agrochemical segments (FY12) Revenue split across market segments (FY12)

61.5% 28.0% 6.7% 3.7% Insecticides Herbicides Fungicides PGRs Total = Rs 554crores 79.1% 20.9% Branded formulations Institutional sales Total = Rs 554crores

Going forward, we expect our institutional sales to grow at a high rate

• n the back of increased technicals manufacturing capacity

Diversity and focus

Revenue split across diverse regions (FY12) Revenue split indicating strong in- house manufacturing (FY12)

Going forward, we expect to continue serving diverse geographical markets and leverage our in-house manufacturing expertise

15.7% 17.1% 10.1% 11.2% 8.3% 5.8% 31.8% Punjab A.P. Haryana Maharashtra UP Karnataka Others Domestic Branded sales = Rs 434crores 91.9% 8.1% Manufactured in-house Traded Total = Rs 554crores

Financials as on 31-3-2012

Summary Profit & Loss statement Rs crores

Gross revenues 554 Net sales 522 EBITDA 56 PBT 43 PAT 33

Summary Balance Sheet Rs crores

Net worth 182 Non current liabilities 44 Current liabilities 294 Total equity & liabilities 520 Net fixed assets (including CWIP) 143 Other non current assets 29 Current assets 349 Total assets 520

FUTURE PROSPECTS

Future prospects

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Capitalize on IIL’s strengths and pursue

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Product acquisitions to compliment our product portfolio

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Marketing arrangement with global partners to enhance portfolio

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Further growth of our existing product offerings and lines

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Realize growth through commissioning of new manufacturing facilities and enhancing capacity and investing in R&D

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Build on existing market share and achieve economies of scale with manufacturing of new technicals

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Introduce new generation products

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Promote brands whose technicals is manufactured in-house

 

Roadmap for growth

IIL intends to leverage its expertise in successful brand launches, R&D focus and enhanced manufacturing capacity to fuel its future growth

 Continued focus on

establishing strong brands

 Enter into manufacturing

and marketing arrangements with global partners

 Employ an “umbrella

strategy” to introduce product extensions

 Increase focus on export

markets

 R&D focus including

in CRAMS segment

 Focus on increasing

number of technical registrations

 Enhanced backward

integration with increase in technicals manufacturing capacity – Increase margins – Enhance institutional sales

 Significant capacity

enhancement in formulations underway

Growth through R&D

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Focus on developing a strong pipeline of registrations

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IIL has over 20 technical registrations in the pipeline, several of which are in advanced stages of approval

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Increased registrations shall enable the Company to enhance its presence in the institutional business

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IIL has also invested in product registration in several other countries to diversify its geographic footprint

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New state-of-the-art R&D facility expected to be commissioned in FY13

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Continue its focus on process efficiency and cost reduction

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R&D activities to also focus on CRAMS business

Growth through Marketing

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New product introduction through tie-ups

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The Company has already launched 3 new branded formulations in the current year through tie-ups with global partners

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Nuvan: generic insecticide to be manufactured in-house under technical collaboration with AMVAC

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Pulsar: patented fungicide to be marketed in India by IIL under marketing tie up with Nissan Chemicals

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Hakama: new generation herbicide to be marketed in India by IIL under marketing tie up with Nissan Chemicals

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The Company expects to generate a turnover of around Rs 70 crores in the current year from the sales of Nuvan, Pulsar and Hakama

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New product introduction through in-house development

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IIL plans to introduce several new in-house manufactured branded formulations products and institutional products over the next two years

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IIL shall continue to leverage on its brand positioning to launch brand extensions

Growth through Manufacturing

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Manufacturing capacity expansion plan initiated in FY12 is planned to completed in FY13

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IIL plans to invest around Rs 50 crores in FY13 for completion of the expansion plan

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The Company shall set up substantial additional capacity across segments

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Key benefits of manufacturing capacity expansion

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Backward integration of several existing branded formulations leading to improvement in margins

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Enhanced capacity available for catering to institutional and exports business

Growth prospects

Year (FY) Turnover (Rs Cr) EBITDA (Rs Cr) Branded Formulations Sales (Rs Cr) Institutional Sales (Rs Cr) 2012 554 56 438 116 2013E 800 95 620 180 2014E 1,080 130 730 350

Growth prospects

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Revenue growth in FY13 will be fuelled mainly by

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Growth in established market leading brands

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New product introductions

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Enhanced institutional sales business

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The Company expects its EBITDA margin in FY13 to be in the range of 12% - 13% on the back of

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Backward integration of several branded formulations

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Some of the new product introductions would have higher margins

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Economies of scale

KEY TAKEAWAYS

IIL: Success factors

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Positive industry dynamics

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Demand drivers, genetic trends, gaps in food production and burgeoning demand

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Participant in diversified markets

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Branded formulations, institutional sales & non-crop applications

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Proven product acquisition model

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Successful repositioning of acquired products and technologies

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World-class manufacturing capability

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High-quality, environmentally compliant and cost competitive

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Growth potential in international markets and institutional business

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Strong fundamentals in place

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Financial profile

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Excellent operating performance, strong financial control

     

IIL: Key strengths

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Growing participant in a healthy industry with significant growth potential

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Successful and adaptable business model

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Strong all India marketing network

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Diversified end-use markets - Branded & Institutional; Crop & Non-Crop

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Experience of handling leading brands in the country

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Committed and dedicated team with low attrition rate

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Strategic, efficient, cost effective and compliant manufacturing

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Organization committed to customers

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Entrepreneurial and financially prudent culture

In the coming years, we intend to assume a leadership position in the market by leveraging our strengths and capitalizing on our success factors

Disclaimer

Whereas due care and caution is taken in furnishing the information contained herein, this document has not been independently verified and IIL disclaims all responsibility and/or liability directly or indirectly on any cause of action arising out of such information. To the maximum extent permitted by law, none of IIL’s employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. No reliance should be placed on, the fairness, accuracy, completeness or correctness of this information or opinions contained herein. Certain statements contained in this document may be statements of future expectations, forecasts and other forward-looking statements that are based on management‘s current view and assumptions. No representation or warranty, express or implied, is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forward-looking statements contained in this presentation. Such statements are by their nature subject to significant uncertainties and contingencies and the actual results, performance or events may differ materially from those expressed

• r implied in such statements. Readers are cautioned not to place undue reliance on any forward

looking statement.

THANKS