Upl Limited · NSE:UPL
Upl — Investor Day (May 2019)
73 slides from Upl's investor day presentation, May 17, 2019
Slide 1: Capital Markets Day 2019
CAPITAL MARKETS DAY 2019 MAY 17, 2019 1
Slide 2: Safe Harbor Statement
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
Slide 3: Agenda
Agenda • Welcome address – Anand Vora • UPL Story – Jai Shroff • Business Update - Diego Casanello • Integration Update - Carlos Pellicer • Financial Results Update – Anand Vora 3
Slide 4: UPL Story – Jai Shroff
UPL Story – Jai Shroff 4
Slide 5: UPL's crop protection leadership team
UPL’s crop protection leadership team Legacy Arysta Legacy UPL Jai Shroff CEO Diego Casanello COO – Crop Protection Paula Pinto Farokh N. Hilloo Rico Christensen Fabio Torretta Vicente Gongora Global Head Chief Commercial Chief Marketing Region Head Region Head Strategic Alliance Officer Officer Bra
Slide 6: Our story
Our story I want to take you on a journey – the story of UPL. 6
Slide 7: It starts in India – set to become one of the world's top economies
It starts in India – set to become one of the world’s top 3 economies by 2050 – and the source of our ‘nothing is impossible’ mindset. 7
Slide 8: It revolves around the people on our planet, rising to 9 billion
It revolves around the 7 billion people on our planet, rising to 9 billion by 2050, and then onto 8 11 billion people by 2100.
Slide 9: And serving them, 500 million farmers, in every corner of the globe
And serving them, 500 million farmers, in every corner of the globe –truly the uncelebrated 9 heroes.
Slide 10: 11 billion people eating 33 billion meals per day
11 billion people eating 33 billion meals per day. That’s the scale of the challenge. 10
Slide 11: How do we feed the world as resources become more scarce?
How do we feed the world as it gets more crowded and our resources become more scarce? 11 Image credit: Agence France-Presse
Slide 12: How do we create new solutions for people who grow the world's food?
How do we break out of a finite, closed-loop system? Too many companies are stuck in an old-fashioned way of doing things, using old solutions to solve age-old problems. How do we create new solutions and experiences for people who grow the world’s food? 12
Slide 13: How do we make agriculture climate smart and resilient?
How do we make agriculture climate smart and farming more resilient to the increasing impact of climate change? How do we make new technologies affordable to every farmer, so that the benefits of greater profitability and reduced environmental impact are shared by all? The answer has to be by thinki
Slide 14: The only way to meet this challenge is with a new model
The only way we can meet this challenge is with a new model. A model that brings together all 14 the different players in the food system.
Slide 15: A new purpose: OpenAg
From farmers, to food producers, to supermarkets, to consumers – with a new purpose. A purpose we call OpenAg. 15
Slide 16: A purpose where we play a new role
A purpose where we play a new role. We are creating the network that changes the way a whole industry thinks and works. Opening it all up, to new ideas, new ways, new answers. 16
Slide 17: With OpenAg, we will generate a much deeper impact on society
With OpenAg, we will not only change the game, we will generate a much deeper impact on society, where agriculture is properly valued, food is sustainable, and farmers grow and prosper. 17
Slide 18: In our story, everybody wins.
In our story, everybody wins. 18
Slide 19: Embedded video
19 <EMBEDDED VIDEO>
Slide 20: OpenAg
OpenAg An open agriculture network that feeds sustainable growth for all. No limits, no borders. 20
Slide 21: Business Update – Diego Casanello
Business Update – Diego Casanello 21
Slide 22: Critical trends impacting the industry
Critical trends impacting the industry 1 Industry Consolidation 2 More Expensive Active Ingredient Discovery ▪ Reduce operating costs to ▪ Innovation focus shift “from the Cost to discover and register a new Active Ingredient in $mill reach the farmer lab to the field” 286 256 184 152 1995 2000 2008
Slide 23: Together UPL and Arysta have created a new Global Leader
Together UPL and Arysta have created a new Global Leader Creating a tier 1 player with the scale to win with expanded geographic reach Agile company with great customer intimacy End to end offerings from seeds to post- and customer insights driven innovation harvest Best-in-class Asset and R&D effic
Slide 24: 1+
1+ 4 24
Slide 25: Traditional agriculture value chain
Traditional agriculture value chain Input Distributors Farmers Food Food Food Consumers suppliers traders Manufacturers Retailers 25
Slide 26: Evolving value chain
Evolving value chain Media Ag Chem distributors NGOs Food wholesalers/ traders Government Food producers Industry associations UPL Food retailers Co-ops Farmers Consumers Restaurants 26
Slide 27: OpenAg in action
Opendg in action Open Access Open Open Manufacturing Innovation Open Solutions
Slide 28: OpenSolutions
Solve the farmer’s problems with OpenSolutions sustainable offerings spanning from seed to post harvest and services 13000+ product Extensive partnerships with registrations food and fibre value chain Growing digital service Leaders in bio solutions offerings 28
Slide 29: Complete solutions package to protect and enhance crop yield
Complete solutions package to protect and enhance crop yield in all phases of the Crop Cycle, combining BioSolutions and Crop Protection 29
Slide 30: Complete spray program for soybean in Brazil
30 Complete spray program for soybean in Brazil Weed Facts # of Unique Glyphosate Resistant Weeds Chemical Soybean Growing Season (November - April) First glyphosate resistant Fallow / Burndown weed found in Brazil in 2003 (May-October) and since then the number of weeds continue to expand 30 SOURCE
Slide 31: Plant Stress & Stimulation: Example of UPL Solution Offer
31 Plant Stress & Stimulation: Example of UPL Solution Offer Physiological growth stage… Roots/emergence Stems & branches Leaves/chlorophyll Flowering/fruit set Fruit sizing ▪ Root mass & ▪ Root architecture ▪ Leaf area ▪ Flowering ▪ Movement of architecture ▪ Thicker stems ▪ Chlorophyll ▪ Pollinati
Slide 32: OpenAccess
Create a network with our partners to OpenAccess be able to access all farmers across our wide geographic reach Highly diversified business across all key crops and geographies Leading positions in fast growing segments such as Crop Leading position in emerging markets Establishment, Weed responsibl
Slide 33: Advanced crop performance monitoring in Africa
Advanced crop performance monitoring in Africa UPL’s drone fleet solutions ▪ An initiative for using drones, UAVs and other aerial/ vision technologies to make recommendation to growers Conventional crop Advanced crop ▪ One of the main objectives being, performance monitoring performance monitoring
Slide 34: Satellite enabled application services in India
Satellite enabled application services in India UPL’s Adarsh Farm Service (AFS) offering ▪ UPL offers farm services in India using state of art spraying machines specially adapted to small farms ▪ The sprayers are supported by georeferenced Conventional Application sensor systems that monitor the co
Slide 35: OpenManufacturing
Reliable supply and competitive OpenManufacturing offerings to customers through own manufacturing and cultivating strong supplier partnerships 48 manufacturing facilities Supply reliability through multi-sourcing strategy Unique combination of UPL's in house active ingredient manufacturing & Arysta
Slide 36: UPL manufacturing sustainability performance
UPL manufacturing sustainability performance Sustainability Specific Value Specific Value Reduction KPI 2015-16 2018-19 CO2 1517 1320 13 % Emission Kg/Ton Kg/Ton Water 7.54 7.30 Our DJSI score in 2018 has 03 % Consumption M3/Ton M3/Ton improved 57% from 2017 score Wastewater 3.90 3.47 11 % Discharge
Slide 37: Our response to supply challenges from China
Our response to supply challenges from China Supply challenges from China UPL response Frequent supply disruptions Definitive steps Strategic on increased partnership in-house with other Uncertainty manufacturing manufacturing in India players Rising costs due to capacity closure Strong and increase
Slide 38: Awards
Awards Frost & Sullivan and TERI Golden Peacock Occupational 7th FICCI Safety Systems Sustainability 4.0 Health & Safety Awards Excellence Awards 11th Annual Global CSR Summit Gold Award "Brands for Gujarat Cleaner production award & Awards 2019 Environment“, 2018 (Vietnam) (Govt. of Gujarat ) 38
Slide 39: OpenInnovation
Drive collaborative innovation to continuously OpenInnovation and swiftly map and resolve the customers' future needs leading to significant gains 3,000+ projects; $3B+ of peak sales value potential1 550+ R&D Professionals of which around 50% is proprietary active ingredients 1,000+ strong network w
Slide 40: Sustainable yield increase for cocoa farmers in West Africa
Sustainable yield increase for cocoa farmers in West Africa West Africa accounts for more than ~70% of the total cocoa production worldwide Average yield increase with BANZAÏ Sustainable farming ensuring a healthy crop and better farmer Kg/ha +40% incomes is of utmost importance 915 UPL, with its te
Slide 41: OpenHearts
Invite all stakeholders to join us in our OpenHearts efforts to drive positive change in the lives of farmers and the communities around us Strong resolve to eliminate all forms of child labor in seed supplier farms and to ensure education for children Rural development projects across emerging coun
Slide 42: UPL and AGRA (Alliance for Green Revolution in Africa)
UPL and AGRA (Alliance for Green Revolution in Africa) Both organizations will work together to support farmer's access through village based advisor models and demo plots Countries covered under the partnerships are Kenya, Tanzania, Ethiopia, Ghana, Nigeria, Mali, Burkina Faso, Malawi, Mozambique,
Slide 43: OpenAg platform
OpenAg platform OpenSolutions OpenAccess OpenManufacturing OpenInnovation OpenHearts Solve the farmer’s Create a network with Reliable supply and Drive collaborative Invite all stakeholders problems with our partners to be able competitive offerings to innovation to to join us in our efforts sustain
Slide 44: Integration Update – Carlos Pellicer
Integration Update – Carlos Pellicer 44
Slide 45: Integration has been structured in three phases
Integration has been structured in three phases Day 1 Closing IMO Kick-Off February 1 One team, August 29-30 one face to customer Announcement April 1 July 20 Phase 1: Phase 2: Phase 3: “Mobilization” “Integration planning” “Integration” 45 45
Slide 46: Integration team structure and core deliverables
Integration team structure and core deliverables Steering committee Integration Leaders IMO Core Team Business Unit Integration Teams Functional Integration Teams Master Planning Value Creation Marketing Sales Finance/Tax IT Org Design & Talent Culture Procurement R&D HR Legal Communications Core po
Slide 47: Integration Leaders – Paula Pinto and Carlos Pellicer
Integration Leaders – Paula Pinto and Carlos Pellicer 47
Slide 48: Intense activity prior & after Day 1 to drive integration
Intense activity prior & after Day 1 to drive integration Org Design Pre-close workshop webinars Nov 13- 16 Jan 29-30 Deal Kick-off Day 1 Business integra- Pre close Culture Day 1 announcement Summit Bootcamp tion summit Summit workshop Feb 1st July 20 Aug 29- 30 Sept 24- 27 Oct 15- 17 Nov 28 - 29 J
Slide 49: Communicating and engaging our people
Communicating and engaging our people 49
Slide 50: Integration planning and strategy
Integration planning and strategy 50
Slide 51: Commercial workshops and trainings
Commercial workshops and trainings 51
Slide 52: Engaging with our customers
Engaging with our customers 52
Slide 53: Building up our Purpose OpenAg
Building up our Purpose OpenAg 53
Slide 54: Building trust and having fun
Building trust and having fun 54
Slide 55: Revenue synergy of USD 350+ Mn identified and validated
Revenue synergy of USD 350+ Mn identified and validated from the merger Revenue synergies run rate, USD Mn Major Levers 350+ Complementary portfolios (solution selling) – Meet grower/channel needs through 1 complimentary AI portfolio and access to new crops with a broader base of generic and proprie
Slide 56: Cost synergies of USD 200+ Mn
Cost synergies of USD 200+ Mn EBITDA growth, run rate, USD Mn Major Levers COGM OHDS 1 Optimizing manufacturing footprint 200+ 2 Increasing procurement efficiency 40% 3 Increasing R&D efficiency – Insourcing R&D 120+ activities to boost efficiency and expanded 25% bandwidth to access new technology
Slide 57: ERP integration to bring all of the business into a single platform
ERP integration to bring all of the business into a single platform by December 2019 Challenge Progress Target 63 60% 100% different ERP systems of the business is already of the business to be in legacy Arysta live on SAP live on SAP by December 2019 57 57
Slide 58: Integration team structure and core deliverables
Integration team structure and core deliverables Culture and Day 1 readiness Value capture Communications ▪ Secure business continuity ▪ Identify cost synergy (USD ▪ Develop the purpose for the new organization - – one face to customers 200 Mn+) and revenue defined synergy (USD 350 Mn+) ▪ Legal and
Slide 59: Most important – Our people
Most important – Our people 59
Slide 60: Financial Results Update – Anand Vora
Financial Results Update – Anand Vora 60
Slide 61: Proforma UPL Financial Highlights: FY2019
Proforma UPL Financial Highlights: FY2019 (Excluding Arysta acquisition) Return on Capital Revenue Growth - consistently growing year-on- 14% Employed 21.3% year - slight dip over last year due to higher working capital EBITDA growth Net Working Capital 95 18% - sustainable profitability - within ta
Slide 62: Proforma UPL Financial Results: Q4 FY2019
Proforma UPL Financial Results: Q4 FY2019 Reported Financials Arysta Acquisition Proforma Legacy UPL Acquisition Q4 FY2019 Arysta* PPA** Proforma Q4 FY2019 Q4 FY2018 Change Particulars Related INR crore % INR crore INR crore INR crore INR crore % INR crore % % Total Revenue from operation 8,524 100%
Slide 63: Proforma UPL Sales Growth: Q4 FY2019
Proforma UPL Sales Growth: Q4 FY2019 (Excluding Arysta acquisition) INR in crore Overall 6,466 Growth 15% 3% Q4 FY2019 5% Exchange 7% 5,621 Price Volume Q4 FY2018 CER growth of 12% Fourth consecutive quarter of price increase 63
Slide 64: Proforma UPL Financial Results: FY2019
Proforma UPL Financial Results: FY2019 Reported Financials Arysta Acquisition Proforma Legacy UPL Acquisition FY2019 Arysta* PPA** Proforma FY2019 FY2018 Change Particulars Related INR crore % INR crore INR crore INR crore INR crore % INR crore % % Total Revenue from operation 21,837 100% 1,968 19,8
Slide 65: Proforma UPL Sales Growth: FY2019
Proforma UPL Sales Growth: FY2019 (Excluding Arysta acquisition) INR in crore Overall Growth 19,625 14% 3% FY2019 4% Exchange 7% 17,117 Price Volume FY2018 CER growth of 11% Consistently delivering double digit growth 65
Slide 66: Proforma UPL Income by Region: FY2019
Proforma UPL Income by Region: FY2019 India Latin America Revenue Growth 4% Revenue Growth 25% INR crore % to Total 17% % to Total 36% • Growth in key insecticides & 19,868 • Sperto & Unizeb family of 182 herbicides 380 products driving growth • Launch of non-selective herbicides • China disruption
Slide 67: Purchase Price Allocation: INR crore
Purchase Price Allocation: INR crore 31,457 962 3,178 7,162 348 141 8,940 807 3,574 15,034 769 Purchase Fixed Assets Intangibles Net Working Debt Others Step up: Fxd. Step up: Step up: Net Step up: Goodwill Consideration + Capital Assets + Intangibles Working Others Investments Invest. Capital Negat
Slide 68: Proforma UPL Balance Sheet: FY2019
Proforma UPL Balance Sheet: FY2019 Arysta Acquisition-related Ajdustments Without FCTR Impact Legacy Audited Sources of Arysta Book PPA Step PPA Acquisition Balance Sheet (Jan. 2019 - Total UPL FY2019 Funding Value up Adjustment impact Mar. 2019) March'18 FY 2019 Equity Share Capital 102 0 102 102 R
Slide 69: Proforma UPL Working Capital Analysis: FY2019
Proforma UPL Working Capital Analysis: FY2019 (Excluding Arysta acquisition) 137 125 122 116 Days 101 97 95 84 + - = Inventory Receivables Payables Net Working Capital INR in crore FY2018 FY2019 Turnover 17,117 19,625 69
Slide 70: Cash Flow: INR crore
Cash Flow: INR crore 8,530 172 55 1,605 100 1,048 21,967 822 For Investing 424 (INR 32,566 cr) From Financing INR 30,127 cr From Operations INR 2,394 cr 1,633 1,671 555 354 73 * 2,896 2,851 30,989 Opening PBT Non Cash W.C. Taxes paid Borr Arysta Int and Dividend Adia TPG Share FA Invt Sundry PC Arys
Slide 71: Debt Profile: FY2019
Debt Profile: FY2019 BRL, 2% Others, 1% Secured, 2% Others, 11% INR, 4% JPY, 9% 3-year Maturity, 12% USD, 48% 10-year Maturity, 7% EUR, 36% 5-year Maturity, 70% Unsecured, 98% USD EUR JPY INR BRL Others Unsecured Secured 5-year Maturity 10-year Maturity 3-year Maturity Others By Currency By Security
Slide 72: Guidance: FY2020
Guidance: FY2020 Revenue growth 8% to 10% EBITDA growth 16% to 20% Working Capital 100 to 110 days Debt reduction (INR crore) 3,150 to 3,500 72
Slide 73: Q&A
Q&A 73