Tata Chemicals Limited · NSE:TATACHEM
Tata Chemicals — Citigroup Conference (March 2007)
44 slides from Tata Chemicals's conference presentation, March 2007
Slide 1: Sustained growth. Global scale.
“Sustained growth. Global scale.” March 2007 1
Slide 2: Table of contents
Table of contents • The Tata Group - overview • Tata Chemicals - Business overview • Segment overview • Chemicals, including overview of Brunner Mond • Fertilisers • Financial overview 2
Slide 3: An overview of the Tata Group
An overview of the Tata Group 3
Slide 4: Tata Group – India's largest and the most respected business group
Tata Group – India’s largest and the most respected business group IT and Communications Engineering Market cap1: Sales:19% Sales:31% US$49bn Materials Revenues2: Sales:21% Services Sales:10% US$22bn Consumer PAT2: Products Chemicals US$2 billion Sales:6% and Fertilisers Sales:5% Energy Sales:8% Not
Slide 5: Tata Chemicals Business Overview
Tata Chemicals Business Overview 5
Slide 6: Tata Chemicals today is…
Tata Chemicals today is… • The 3rd largest soda ash manufacturer in the world post the acquisition of the Brunner Mond group • The #1 soda ash player in India • A market leader in edible salt market, largest STPP player in the country • The most energy efficient urea fertiliser manufacturer in India
Slide 7: Global Presence
Global Presence UK Netherlands Morocco Kenya India South Africa Manufacturing locations Markets 7
Slide 8: At a glance
At a glance • Listing: Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE) • Ticker: TTCH IN • Founded: 1939 • Market Capitalization US$ 1051mn • Revenue3 (US$mm): 910 (Chemicals – 431, Fertilisers – 479) • EBITDA3 (US$mm): 166 • EBITDA Margin3: 18.2% • Employees: 3,500 • Ownership: Spons
Slide 9: Business segments
qe TATA Business segments TATA CHEMICALS LIMITED
Slide 10: Chemicals - Soda ash
Chemicals - Soda ash Revenue Mix Chemicals – 54% 10
Slide 11: Soda ash industry perspective
Soda ash industry perspective International Markets • Global demand at 37 million mt, China - 21% of demand; to grow at 4%pa led by glass • Synthetic production dominates – 73% • Increasing natural gas, coal, coke prices & freight rates • Selling prices increasing after seven years of weak prices Do
Slide 12: Overview of the Brunner Mond Group
Overview of the Brunner Mond Group 12
Slide 13: Brunner Mond – a transformational acquisition
Brunner Mond – a transformational acquisition Major step towards becoming a truly globally competitive company 9 9BMGL – 2nd nd largest producer in Europe ~1500 customers Total Soda Ash production capacity ~2.0 mn tons with three plants • (Before Brunner Mond, soda ash capacity: 0.87mn tons) • Facil
Slide 14: Facilities within reach of major markets
Facilities within reach of major markets Facilities and transportation terminal strategically located to give access to major markets in Europe, Middle East, and South East Asia Soda Soda ash ash capacity capacity Europe Europe –– 1.3mn 1.3mn tons tons 2.0 2.0 mn mn tons tons Africa Africa –– 0.685m
Slide 15: Competitive advantages of Magadi Soda Ash
Competitive advantages of Magadi Soda Ash • Magadi has unique competitive advantages 9 Close to key growth markets e.g. Middle East and Asia 9 Self-replenishing proven trona reserve - life of 100 years 9 Duration - Lease extended for 30 years – upto 2053 9 Area – 227,000 acres • Significant cost sav
Slide 16: TCL-BMGL Combined Markets
TCL-BMGL Combined Markets ASIA EUROPE MIDDLE EAST & AFRICA India UK Oman Bangladesh Netherlands UAE Sri Lanka Germany Kenya Indonesia France South Africa Thailand Belgium Nigeria Pakistan Sweden Saudi Arabia Philippines Ireland Morocco Vietnam Norway Malaysia Denmark 16
Slide 17: Working with leading brands
Working with leading brands Gujarat Glass 17
Slide 18: Food additives
Food additives • Market leader - 47% share in India • “Superbrand” - Ranked # 1 food brand by Economic Times • High brand equity and premium perception Tata Salt’ - pioneer in branded salt market Nationwide distribution - over 40 million consumers Integrated operations at Chemical site - Embedded co
Slide 19: Fertiliser segment
Fertiliser segment Revenue Mix Fertilisers 46% 19
Slide 20: The Indian Fertiliser sector
The Indian Fertiliser sector India is the third largest producer and consumer of Fertilisers • Consumption skewed towards nitrogenous fertilisers: Urea constitutes 85% of nitrogenous fertiliser consumption and 58% of total consumption • Recent gas finds create huge opportunity for urea business. Str
Slide 21: Tata Chemicals' Fertiliser business
Tata Chemicals’ Fertiliser business Source of stable revenues in a pre-dominantly government-controlled environment • Leading player in urea and phosphatic fertiliser segments • Dual feedstock Babrala facility - most efficient in India • Strategic stake in IMACID, Morocco ensures continuous availabi
Slide 22: Tata Kisan Sansar
Tata Kisan Sansar TATA <p TATA Value - Add Services SOIL it ie » INSURANCE OF AGRI * TESTING INPUT INVESTMENT FARM MACHINE OUT-PUT PURCHASE CROP ADVISORY LOANS SERVICES TATA CHEMICALS LIMITED TATA CHEMICALS LIMITED
Slide 23: Tata Kisan Sansar (TKS) - creating rural entrepreneurship
Tata Kisan Sansar (TKS) - creating rural entrepreneurship • Provide value add services • Create a new distribution channel for agricultural inputs • Improve supply chain efficiencies and provide farm-gate linkages.. NCDEX • Create market driven R&D solutions • Retailing of fresh agricultural produce
Slide 24: Financial overview – Standalone
Financial overview – Standalone* *Pre Acquisition of the Brunner Mond Group 24
Slide 25: Facilities in India
Facilities in India Mithapur – Soda Ash, Cement, Salt Haldia – DAP, NPK Babrala - Urea 25
Slide 26: Growing revenue & Operating profit
Growing revenue & Operating profit Revenue Growth Operating Profit Growth & Margin 700 150 30 27 795 600 Merger of HLCL* 125 Merger of HLCL* 25 670 495 500 100 20 US$ million 417 554 400 18 17 17 338 % 75 15 318 131 300 115 139 50 101 10 86 200 300 253 25 5 100 216 179 0 0 0 FY '03 FY '04 FY '05 FY
Slide 27: Debt-Equity Perspective
Debt-Equity Perspective 2% FY 2006 Debt Split 9% 44% FCCB 14 Reducing interest 45% Short Term Loans Term Loans cost (%) Cash/ Packing Credit 12 11.7 10 Total Debt Shareholder's Equity 900 9.7 812 (%) 800 760 8 700 7.9 600 486 6 USD million 500 457 400 4 4.5 300 4.4 200 303 326 100 2 0 FY 2005 FY 200
Slide 28: Credit Ratios
Credit Ratios 60 56 Interest Coverage ratio Net Debt/Equity 50 40 30 20 19.4 10 3.9 7.4 0.36 0.2 0.57 0 0.3 FY03 FY04 FY05 FY06 28
Slide 29: Financial overview – Consolidated
Financial overview – Consolidated 29
Slide 30: Beyond Boundaries, Brunner Mond …
Beyond Boundaries, Brunner Mond … Brunner Mond, UK – Soda Ash Morocco Africa Brunner Mond, Haldia India Netherlands – Soda Ash, Bicarb Babrala India TBEM 2006 Mithapur India 30
Slide 31: Brunner Mond …..
Brunner Mond ….. Brunner Mond, Kenya, Lake Magadi - Soda Ash Dredge on lake Magadi, Kenya Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 31
Slide 32: IMACID, Morocco
IMACID, Morocco Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 32
Slide 33: Financials – Revenue growth
Financials – Revenue growth 1053* R 39% 910* 900 CAG 330 115 670 554 in USD million 600 723 317 795 300 0 FY03 FY04 FY05 FY06 9M FY07 Note: FY2006 Consolidated financials include BMGL’s Q4 results and IMACID’s performance over 11 months * Post consolidation 33
Slide 34: Financials – EBIDTA
Financials – EBIDTA 200 R 2 5% 173* C AG 166* 35 52 in USD million 115 86 100 100 131 121 0 FY03 FY04 FY05 FY06 9M FY07 * Post consolidation 34
Slide 35: Profit After Tax
Profit After Tax 100 G R 33% 97* 97* CA 76 17 18 in USD million 48 50 41 80 79 0 FY03 FY04 FY05 FY06 9M FY07 BMGL staff costs are net of write back of USD 7 million of pension liabilities in an overseas subsidiary, consequent to actuarial valuation. According to Indian GAAP this amount has to be inc
Slide 36: Consolidated financials
Consolidated financials FY 2006 9M FY 2007** IMACID / BMGL IMACID / BMGL TCL Consolidated TCL Consolidated (Jan to Mar 06) (Apr to Dec 06) Sales 795 135 910 723 330 1035 EBITDA 131 31 166 140 53 192 EBIT 100 20 125 114 33 147 Net Income 80 16 97 79 97 EPS 0.37 0.44 0.37 0.45 1 After reducing provisi
Slide 37: Financial ratios
Financial ratios Category Unit FY 2005 FY 2006* 9M FY 2007* EBITDA Margin % 17 18 17 Profitability Net Profit Margin % 11 11 11 Earnings per share INR 15.8 19.9 16.3 Networth per Share INR 93 103 Shareholder Returns Dividend Yield % 5 3 Market to Book Value Times 1.5 2 Cash Generation EBITDA USD Mil
Slide 38: Shareholder Returns
Shareholder Returns 24 240 220 201 20 200 180 16 19.9 * 160 Rs. per share 15.8 138 140 Rs 12 120 10.9 10.3 103 100 8 7.0 7.0 80 6.5 4 5.0 5.5 60 5.5 55 40 40 0 20 FY '02 FY '03 FY '04 FY '05 FY '06 EPS Dividend Average Market Price * Post consolidation (Standalone EPS : Rs. 16.41) Consistent and hea
Slide 39: The road ahead ….
The road ahead …. Chemicals Fertilisers • Doubling Magadi capacity • Debottlenecking Babrala • Building a global Bicarb business • Explore cheaper locations for gas • Modernisation of Mithapur • Innovation – new crop specific • Increase Soda ash, cement & higher value fertilisers Salt capacities • S
Slide 40: The New Emerging Portfolio
The New Emerging Portfolio 40
Slide 41: 1. Fresh Produce Business
1. Fresh Produce Business 1. Leveraging the TKS Network 2. Focusing on what matters – the supply chain 3. Partnering with experience – 100 years of expertise (TPL – earlier Fyffes) 4. Sequential roll-out – Punjab and West Bengal 5. In 2007-08 – 2 Distribution Centres • In 3 years – 20 Distribution C
Slide 42: 2. Biofuels
2. Biofuels 1. Entry into both Bio Diesel and Bio Ethanol 2. Trial cultivation of non-food agricultural feedstock commenced in both cases 3. Dual approach – conventional technology & advanced new technologies (concurrent development) 4. Development of novel technologies is the responsibility of the
Slide 43: 3. The Innovation Centre
3. The Innovation Centre 1. Based in Pune 2. Focus on the Bio-Nano space 3. 20 scientists – going to 150 in 2 years time & ~500 in the longer-term 4. Current Focus Areas: • Bio Diesel – cleaner & simpler trans - esterification • Bio Ethanol – Enzyamatic Cellulosic conversions • Nano Materials, Bio M
Slide 44: Thank you
qe TATA Thank you TATA CHEMICALS LIMITED