Coromandel International Limited · NSE:COROMANDEL
Coromandel International — Investor Presentation (November 2013)
66 slides from Coromandel International's investor presentation, November 2013
Slide 1: Investors Presentation
Investors Presentation November 2013 1
Slide 2: Disclaimer
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
Slide 3: Global Fertilizer Industry Overview
GLOBAL FERTILIZER INDUSTRY OVERVIEW 3
Slide 4: Global Mega Trends
Global Mega Trends Rising Food Demand • Global Food demand to increase 1.5x by 2030 • Changing dietary patterns, especially in developing countries Limited Resources • Limited land and labor availability • Degradation of soil quality High volatility in food prices with an upward trend • Global stapl
Slide 5: Key Nutrient Demand Drivers
Key Nutrient Demand Drivers Global Fertiliser Demand ( Million Mt) • Global population growth 212 • Growing affluence leading to higher 170 protein usage 136 • Bio fuel production • Farm economics • Planted area • Application rates • High Commodity Prices 2000 2010 2020 5
Slide 6: Global N,P,K Market
Global N,P,K Market "K" World Market "N" World Market 1% Ammonia 4% 29% 13% Urea MOP/SOP 6% NPK UAN 11% AN/CAN Others NPK 70% 52% DAP/MAP 9% Others “K” Market is 28 Million MT 5% “N” Market is 109 Million MT Global Fertiliser Industry: Global fertiliser demand for 2013 is projected to "P" World Ma
Slide 7: Global Fertilizer Demand (Million Mt)
Global Fertilizer Demand (Million Mt) K P N 187 189 192 182 177 179 170 160 32 33 30 31 29 28 27 23 43 44 44 45 41 42 36 40 107 109 111 112 113 114 101 103 2009 2010 2011 2012 2013 2014 2015 2016 N P K CAGR 1.74% 3.24% 5.29% 7
Slide 8: Indian Agriculture
Indian Agriculture 8
Slide 9: Agriculture impacts economic growth and large proportion of population
Agriculture Impacts economic growth and large proportion of population Agriculture Manufacturing Services • Nearly 600 million Indians depend directly on 100% 27 Percentage of Population Agriculture (54%) 80% 19 64 • Agriculture contributed 60% around 14% of GDP in 40% 54 22 2012-13 20% 14 0% Popula
Slide 10: Irrigated Area in India has been steadily increasing
Irrigated Area in India has been steadily increasing The overall gross irrigated area a percent of gross cropped area has increased from 34% in the early 1990s to 45.3 in 2009 10
Slide 11: Cropping Intensity has also steadily increased
Cropping Intensity has also steadily increased Analysis of cropping intensity has gone up from 118% in early 1970s to 138% in FY09. A continuation of this trend is likely to push up demand for fertilizers. 11
Slide 12: Food Grain Production
Food Grain Production India will need additional 35-40 Million Ton of food grain and much more fruits and vegetables to feed its growing & affluent population Food Grains Million Mt 259 256 244 234 231 217 218 209 198 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13* 12
Slide 13: Indian Agriculture Production
Indian Agriculture Production India Production Crop (million tons) World rank Sugarcane 342 2 Rice, Paddy 156 2 Wheat 87 2 Potatoes 42 2 Bananas 30 1 Vegetables 28 2 Maize 22 5 Tomatoes 17 2 Source: FAO 2011 13
Slide 14: India's crop productivity is low
India’s crop productivity is low Crop Productivity (Mt/ha) World India China Sugarcane 74 67 69.8 Wheat 3 2.8 4.7 To enhance the crop Rice 4.2 2.3 6.59 productivity, Nutrient consumption in India has Corn 5 2.2 5 to go up with improved efficiency. Soybean 2.2 0.9 1.6 Rapeseed 1.9 1.1 1.9 Peanut 1.6
Slide 15: India's Nutrient Consumption
India’s Nutrient Consumption Nutrient Consumption among the Kg/Ha Asian Countries 333 170 133 135 106 India Bangladesh Pakistan Srilanka China India’s Nutrient consumption (Kg/Ha) is lower than countries like China (333), Bangladesh (170) and Pakistan (135). 15
Slide 16: Long-term demand drivers and fundamentals are strong in India
Long-term demand drivers and fundamentals are strong in India • Population growth, urbanization and resulting food demand will be primary growth drivers – Population growth – Urbanization and higher income levels – Changing dietary mix • Nutrient application rates will have to increase from current
Slide 17: Indian Fertiliser Scenario
INDIAN FERTILISER SCENARIO 17
Slide 18: India's Fertiliser Consumption
India’s Fertiliser Consumption 6.7% Sales – L MT 301 282295 19.4% 25.5% 113 108 91 98 111 44.7% 73 38 29 21 Urea DAP Complex MOP 2010-11 2011-12 2012-13 18
Slide 19: India's Fertiliser Consumption, Imports and Production
India’s Fertiliser Consumption • India continues to remain one of the key drivers of growth of fertiliser demand in the World 78 80 74 66 69 63 Import – L MT 57 37 39 24 10 4 Urea DAP Complex MOP 2010-11 2011-12 2012-13 218 220 225 Production – L MT 88 78 62 35 40 36 Urea DAP Complex 2010-11 2011-12
Slide 20: India – Strong presence of private sector in fertilizers
India – Strong presence of private sector in fertilizers ‘000 Tons ‘000 Tons Urea Complex Fertilisers (Incl DAP) Cooperative 5,971 Cooperative 4,335 Private 7,614 Private 8,917 Public 2,164 Public 6,264 Major Players Major Players IFFCO IFFCO KRIBHCO Coromandel Tata Chemicals TCL (HLCL)
Slide 21: P&K Subsidy evolution
P&K Subsidy evolution Period Subsidy policy MRP Subsidy 1977 – 1992 Cost + policy for individual units Fixed Variable 1992 – 2007/08 Cost + policy for industry Fixed Variable 2008 – 2009/10 Import parity Fixed Variable 2010/11 – Current Nutrient Based Subsidy Variable Fixed Subsidy - Rs. Per Kg Nutr
Slide 22: NBS Evolution
NBS Evolution Subsidy as percentage of Total Realization 37.40% 35.44% 52.10% 62.90% 59.80% 62.60% 64.56% 47.90% 37.10% 40.20% Pre NBS 2010-11 2011-12 2012-13 2013-14 YoY Rs. Cr FY12 FY13 FY14BE Growth % Imported (Urea) fertilisers 13,883 13,398 15,544 16.02% Indigenous (Urea) fertilisers 19,108 19,
Slide 23: Nutrient Based Subsidy (NBS) – Win-Win Proposition for all Stakeholders
Nutrient Based Subsidy (NBS)– “Win-Win” Proposition for all Stakeholders Government Certainty of subsidy amount Farmers Improved Reduced subsidy availability to outgo for Govt. farmers NBS NBS will help Access to new companies build products & strong brand image technologies & intensive extension ac
Slide 24: Current Market Scenario
CURRENT MARKET SCENARIO murugappa Z Coromandel «<= 24
Slide 25: Volume growth
Volume growth All India - DAP 120.0 All 120.0 India - Complexes Lac MT 100.0 Lac MT 100.0 80.0 80.0 60.0 60.0 40.0 40.0 20.0 20.0 111 108 91 97 109 73 0.0 0.0 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 Volume Volume • Volume decline for DAP and Complexes in 2012 -13 over previous year levels •
Slide 26: MRP Trend - DAP
MRP Trend - DAP CAGR of 34% over the period 2010-2013 24,000 22,500 18,200 10,750 9,350 9,350 Prior to June June 2008 - Mar 10 31-Mar-11 31-Mar-12 31-Oct-12 1-Apr-13 26
Slide 27: Current market situation
Current market situation • Artificially low urea prices has resulted in its higher application levels • Relatively high P & K fertilizer prices has affected their demand • Low demand and a failed 2012-13 monsoon had resulted in high channel inventories • Good monsoon in 2013-14 has revived consumpti
Slide 28: Company Profile
Z Coromandel «<= COMPANY PROFILE aK murugappa 28
Slide 29: Coromandel - A Leading Agribusiness Company in India
Coromandel - A Leading Agribusiness Company in India 12,000 1,200 Key Facts : Revenue EBITDA 1,056 1,019 Turnover: Rs.9,034 Cr 10,000 1,000 768 Market Cap: Rs.6,254 Cr 769 8,000 800 Strong credit rating: ‘AA +’ (Stable outlook)’ with CRISIL India Rs. Cr 697 394 6,000 600 Employees: 2712 446
Slide 30: Strategic Direction
Strategic Direction Farm Inputs Business Fertilisers Non Subsidy Businesses Sourcing Cost Marketing Leadership Strength • Specialty Nutrients/ Water Strategic Alliances in • Low cost • Wider reach and Soluble Sourcing – manufacturer of penetration Fertilisers/Micro • Long Term tie-up with Phos acid
Slide 31: Coromandel's Fertilisers Business
Coromandel’s Fertilisers Business 31
Slide 32: Coromandel Fertiliser Business Growth Story
Coromandel Fertiliser Business Growth Story C Train Expansion LIBERTY SSP acquisition 50 Lac Mt 32
Slide 33: Global Strategic Alliances
Global Strategic Alliances Pact with QAFCO for supply of Urea and Ammonia 33
Slide 34: State of The Art Manufacturing Facilities
State of The Art Manufacturing Facilities • Plants are strategically located in highly • High capacity utilisation levels & irrigated southern Indian states and in continuous modernisation of facilities heart of fertilizer consumption market – • Backward integration into low freight cost manufacturi
Slide 35: Tie ups for Phosphoric Acid
Tie ups for Phosphoric Acid Million MT Captive Production 0.23 Supply contracts with FOSKOR, ICL , GCT and 0.60 Phoschem 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 Ass
Slide 36: Cost Leadership
Cost Leadership Visak Production (Million Mt) Visak Plant Captive Phos Acid 1.05 1.00 • Continuous de-bottle necking to increase production levels 0.94 0.91 0.98 • Value gap - imported Vs own acid 0.70 0.74 0.70 • Increased Gypsum generation • Use of various sources /grades of rocks • New belt filte
Slide 37: Marketing Network
Marketing Network West Bengal (WB) Factory Orissa (OR) Andhra Pradesh (A.P) Karnataka (KN) Maharashtra (MH) Madhya Pradesh (MP) Wholesaler & Chattisgarh / Distributor Tamil Nadu (TN) PDO Semi Wholesaler / Dealer Visak Retailer Kakinada / Sub Dealer Ennore Ranipet Farmer 37
Slide 38: Liberty Phosphate Group
Z Coromandel «<= LIBERTY PHOSPHATE GROUP murugappa 38
Slide 39: Liberty Group acquisition
Liberty Group acquisition • Coromandel announced acquisition of Liberty group in Jan 2013 • Completed acquisition of promoter stake in March 2013 and open offer of LPL in June 2013 • Propose to merge LPL & LUL with Coromandel • Liberty group has Seven Single Super Phosphate (SSP) manufacturing units
Slide 40: Status update
Status update LPL+LUL - (Rs. Cr) 11-12 12-13 H1FY14 Turnover 564 550 196 EBITDA 109 62 12 PAT 66 37 4 • Currently hold 79.61% stake in LPL and 100% of LUL • SSP demand affected by lower demand for Phosphatics • Liberty maintained market share in key markets 40
Slide 41: Specialty Nutrient Business
Specialty Nutrient Business 41
Slide 42: Speciality Nutrients Division (SND)
SPECIALITY NUTRIENTS DIVISION (SND) G-SULPHUR Micronutrients Organic Compost WSF GROMOR SULPHUR GROMOR SPRAY Boron Zinc GROMOR POWER Sulphozinc 42
Slide 43: SND Strategy
SND Strategy Restructured field team on crop basis for enhanced focus Develop crop and region specific complete nutrition solutions and market as a package Educate farmers on micronutrient deficiency and corrective measures Leverage growing drip irrigation acreage to grow water soluble ferti
Slide 44: Sulphur and WSF Business
Sulphur and WSF Business Market Share G- Sulphur 35% Coromandel Others 65% Water Soluble Fertilisers 20% Coromandel Others 80% SQM JV commissioned 2011 44
Slide 45: SND & Organic Fertiliser Business
SND & Organic Fertiliser Business Bentonite Sulfur Record turnover of Gromor Sulfur with y/y growth of 14%. Organic Compost Volumes (Mt) Continues to be the market leader despite adverse market conditions WSF 178,758 159,169 New WSF plant under JV with SQM completed one full year 119,276 of op
Slide 46: Crop Protection Business
Crop Protection Business Coromandel a
Slide 47: Pesticide consumption
Pesticide consumption Kg/ha Crop losses in India range from 10% to 30% each year depending upon the severity of pest attacks. I dia’s per hectare consumption of pesticide is 381g vs. the world average of 500g. Only 25-30% of total cultivated area in the country is under pesticide cover. 47
Slide 48: Crop Protection business
Crop Protection business • Wider range of Technicals 2011 • Increased Global presence and registration 2010 Sabero Acquisition • Strong distribution with own retail Acquired Pasura Bio outlets Tech – Jammu Unit 2009 II 2006 Expansion to Latin America Acquisition of FICOM and setting 99 ’s up Jammu U
Slide 49: Crop Protection Strategy
Crop Protection Strategy Enhance R&D and registration capabilities Pursue backward integration to produce intermediates Expand & redeploy production capacities at manufacturing locations Co solidate a d re ra d do esti for ulatio s usi ess u der GROMOR “URAK“HA u rella ra d Expand business
Slide 50: Initiatives
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 S
Slide 51: Update on Sabero Organics Gujarat Limited
Update on Sabero Organics Gujarat Limited Coromandel along with subsidiary Parry Chemicals currently holds 74.61% stake in Sabero Acquisition has helped Coromandel become one of the top players in the Indian Agro chemical market Access to Global markets; Synergies in Latin America operation
Slide 52: Synergies with Coromandel
Synergies with Coromandel •Expanded & Complementary Portfolio •Backward integration for supply of key technicals •Strong Global Presence – registrations in over 54 countries ( about 183 unique product / country combination) Coromandel + Sabero Herbicides 6% Insecticides 61% Fungicides 26% Others 7%
Slide 53: Sabero - Financials
Sabero - Financials (Rs. Cr) 10-11 11-12 12-13 H1 FY14 Turnover 413 358 515 401 EBITDA (before E/O Items) 41 (6) 53 47 E/O Items (2) (28) (2) - EBITDA Reported 39 34 51 47 % of TO 10-11 11-12 12-13 H1FY14 Domestic 45% 48% 41% 42% Exports 55% 52% 59% 58% 53
Slide 54: Sabero – update
Sabero –update • Achieved record H1 turnover of Rs.401 Cr Vs. Rs.266 Cr in PY • Achieved EBITDA of Rs.47 Cr. vs. Rs.24 Cr in the PY • Increased production & Sales volumes significantly – currently operating at 65-70% of capacity • Focus on sustaining & improving EBITDA margin from current levels and
Slide 55: Sabero – update (Contd..)
Sabero –update – (Contd..) • Completed improvements in environmental mgmt systems – – PCB approval obtained for operating at 75% Capacity – 75% consent on annual basis (Flexibility to increase production during peak season) – Already approached PCB for 100% consent – approval expected shortly • Impr
Slide 56: Mana Gromor Centers (MGCs) - Retail
Mana Gromor Centers (MGCs) - Retail 56
Slide 57: Retail Business - Rationale
Retail Business - Rationale Viable Alternative • Develop Distribution Channel for Coromandel • Reduce Dependency on Distributors • Supply Products and Solutions to improve earning capabilities of farmers Earning Capabilities • Thereby improve their lifestyle • Provide Marketing Solutions for farm Ma
Slide 58: Retail Business Overview
Retail Business Overview • Over 500 centers in Andhra Pradesh and 100 centers in Karnataka- servicing close to 2 million farmers • Expanding to Maharashtra soon • Targeting 1000 centers Products & Service Offerings Veterinary Other Crop Fertilisers Seeds SND FMS Agri Protection Feed Services Providi
Slide 59: Retail Strategy
Retail Strategy Positio Retail as a o plete Far i g “olutio s platfor Enhance prosperity of farmers through quality farm solutions to create sustainable value Constantly deliver significantly improved customer value proposition than competition in terms of products & services Enhance supply-
Slide 60: Business update - Retail
Business update - Retail 424 old stores in AP have completed 3 full years - out of this over 300 stores have turned profitable Total stores as on date 641 Entered into supply arrangements for the launch of own brands of paddy and cotton seeds and expanded the private labels in Agro chemicals
Slide 61: Financial Performance
Financial Performance Conran A 1 \ AGE
Slide 62: Consolidated Financial Performance
Consolidated Financial Performance Turnover ( Rs. Cr) EBIDTA (Rs. Cr) & EBIDTA % Extra Ordinary Item PY Subsidy EBITDA before Py subsidy and EO items EBITDA Margin % 9,901 9,421 9,034 1,200 10.2% 14.0% 11.2% 7,637 1,000 11.8% 7.4% 12.0% 8.2% 46 6,453 227 109 800 10.4% 159 10.0% 5,113 262 7.1% 3,791
Slide 63: Income Statement - Consolidated
Income Statement - Consolidated Amount in Rs. Cr FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 H1 FY 2014 Revenue 2,068 3,791 9,421 6,191 7,410 9,855 8,925 5,078 YoY (Growth) 83.30% 148.54% -34.29% 19.69% 33.00% -9.44% EBITDA before PY Subsidy & EO Items 214 446 538 507 829 1,009 659 359 EBITDA %
Slide 64: Balance sheet - Consolidated
Balance sheet - Consolidated Amount in Rs. Cr FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 H1 FY 2014 Equity 551 796 1,212 1,502 1,957 2,416 2,303 2,455 Debt & Other LT liabilities 549 1,002 1,771 2,047 1,664 2,977 2,976 2,333 Deferred Tax Liability 71 82 80 86 82 67 188 183 Sources of Funds 1,1
Slide 65: Q2 Results update
Q2 Results update Consolidated results – Rs. Cr CY PY Turnover 3,216 2,675 EBITDA before PY subsidy 297 238 EBITDA after PY subsidy 297 345 PBT before PY subsidy 220 198 PBT after PY subsidy 220 305 PAT 160 237 Stand alone Volumes – Q2 ( Lac MT) CY PY Production – Phosphatics 7.95 5.59 Sales – Phosp
Slide 66: Thank You
Z Coromandel «<= THANK YOU murugappa 66
Coromandel International — Investor Presentation (November 2013) on 6ix