Coromandel International Limited · NSE:COROMANDEL
Coromandel International — Investor Presentation (June 2016)
55 slides from Coromandel International's investor presentation, June 2016
Slide 1: Investor Presentation
Investor Presentation Jun, 2016 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: Agri Input Industry Overview
Agri Input Industry Overview Company Update 3
Slide 4: Global Scenario
Coromandel <= GLOBAL SCENARIO
Slide 5: World N,P,K Fertilizer Market
World N,P,K Fertilizer Market Global N- Use by Product Global K- Use by Product Others 23% Others 28% UAN Urea 6% 56% MOP AN SOP 70% 7% 2% DAP/MAP 8% “N” Market is 110 Million MT “K” Market is 32 Million MT Global P- Use by Product Global Fertiliser Industry: Others 6% India and China account for
Slide 6: Global Nutrient Consumption Outlook
Global Nutrient Consumption Outlook 183 187 179 109 110 112 2013-2017 CAGR N 0.8% 41 41 42 29 32 33 P2O5 0.1% K2O 3.1% 2012/13 2015/16 f 2016/17f N P2O5 K2O Total Source: IFA
Slide 7: Indian Scenario
INDIAN SCENARIO 7
Slide 8: India's crop productivity is low by global standards
India’s crop productivity is low by global standards - needs to increase to meet demand MT per hectare 8
Slide 9: Irrigated Area in India has been steadily increasing
Positive factor: Irrigated Area in India has been steadily increasing Mio hectares The overall net irrigated area a percent of net cropped area has increased from 34% in the early 1990s to 45% in 2011 9
Slide 10: Cropping Intensity has also steadily increased
Positive factor: Cropping Intensity has also steadily increased Mio hectares Cropping intensity has gone up from 118% in early 1970s to 140% in FY11. A continuation of this trend is likely to push up demand for fertilizers 10
Slide 11: India's nutrient application rates will have to increase
India’s nutrient application rates will have to increase to improve productivity Nutrient Consumption among the Asian Countries kg/ha 439 231 151 164 137 India China Srilanka Pakistan Bangladesh India’s Nutrient consumption (Kg/Ha) is lower than countries like China (439), Bangladesh (231) and Pakis
Slide 12: Long-term demand drivers remain strong in India
Long-term demand drivers remain strong in India Crop MSP (Rs/Qtl) 5050 4220 3860 Rural wage growth 3000 2500 – MSP increase 2300 1470 1525 1365 – Higher allocation under MGNREGS 1000 1120 880 – National Agriculture Market- Price Discovery PADDY WHEAT* MAIZE ARHAR COTTON GROUNDNUT FY11 FY17 *Wheat: F
Slide 13: Fertiliser Subsidy Policy
Fertiliser Subsidy Policy Nutrient Based Subsidy (NBS) policy effective from April 1,2010. The Salient features are: o Policy applicable for P&K fertilisers only and not for Urea o Subsidy is fixed based on the import prices of various nutrients adjusted for the MRP. “P” based on DAP , “N” based on
Slide 14: Resulted in lower subsidy component
Resulted in lower subsidy component… 37% 40% 48% 63% 65% 65% 66% 73% 63% 60% 52% 37% 35% 35% 34% 27% Pre NBS 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Subsidy as % of total realization Farmgate price as % of total realization Share of farm gate price of Complex Fertilizers in total rea
Slide 15: FY15-16 Update
Coromandel <= FY15-16 UPDATE 15
Slide 16: Challenging agri environment
Challenging agri environment… Rainfall: June-Sep’15 Rainfall: Oct- Dec’15 India South Peninsula in mm Actual Normal Diff. Actual Normal Diff. Jun-Sep 761 888 -14% 606 716 -15% Oct-Dec 98 127 -23% 318 273 16% Jan-Mar 51 83 -38% 13 33 -59% Full Yr 910 1098 -17% 937 1022 -8% 16
Slide 17: Volatile exchange rate
Volatile exchange rate…. Average Exchange Rate (INR - USD) 68.2 67.3 67.0 66.6 66.2 66.1 65.1 65.1 63.8 63.9 63.6 62.8 Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Unexpected depreciation of Chinese yuan renminbi in Q2 Monetary tightening by US in Q3
Slide 18: Partially offset by soft commodity prices
Partially offset by soft commodity prices… Drop in feedstock cost ie, Coal, Crude and Natural Gas Global softening of agri commodities, stagnant demand and agro-climatic issues in key markets led to price pressures on raw materials Outlook to remain Soft to Stable in near term 18
Slide 19: Resulted in range bound farm gate price
… resulted in range bound farm gate price Rs per MT 19
Slide 20: China Policy Changes & Soft International Prices
China Policy Changes… & Soft International Prices DAP Imports from China (LMT) 34 China’s shift to flat tariff structure resulted in higher exports 24 25 19 17 Depreciation of the Chinese yuan against the US dollar led to price corrections by the Chinese suppliers FY12 FY13 FY14 FY15 FY16 20
Slide 21: Led to increased Phosphatics imports
…led to increased Phosphatics imports DAP+Complex: Production & Imports ( L MT) 106 62 61 41 37 118 113 122 98 105 2011-12 2012-13 2013-14 2014-15 2015-16 Production Import 51% increase in Phosphatics imports 21
Slide 22: Season failure resulted in lower consumption & higher industry stocks
But season failure …..resulted in lower consumption & higher industry stocks In L MT 191 189 153 150 147 72 60 60 25 25 FY12 FY13 FY14 FY15 FY16E Pipeline Consumption Source: Industry estimates 22
Slide 23: Urea demand has remained stable post NBS implementation
Urea demand has remained stable post NBS implementation UREA SUPPLY & DEMAND MOP SUPPLY & DEMAND Lac MT Lac MT 309 320 42 295 302 304 40 85 78 80 71 87 32 32 30 28 24 24 21 22 226 227 226 245 220 2011-12 2012-13 2013-14 2014-15 2015-16 2011-12 2012-13 2013-14 2014-15 2015-16 Production Import Sale I
Slide 24: Resulting in skewed NPK application ratios
…resulting in skewed NPK application ratios 2015 7.8 3.2 1 2013 8.4 2.8 1 2011 4.3 2.0 1 2000 6.9 3.0 1 1994 8.9 2.7 1 1990 6.3 2.6 1 1980 5.8 1.9 1 N P K Ideal Nutrient Ratio:: 4:2:1 24
Slide 25: Outlook
Outlook 4.2% Agri GDP 2.6% 1.2% Agri GDP expected to grow in FY16-17 -0.2% FY14 FY15 FY16 FY17 P Source: RBI Above normal monsoons- 106% - 109% of LPA Pipeline inventory normalization Stable commodity prices 25
Slide 26: Company Profile
Coromandel <= COMPANY PROFILE 26
Slide 27: Coromandel - Snapshot
Coromandel - Snapshot Rs. Cr. 14,000 1,056 1,054 1,200 12,000 853 772 1,000 769 768 805 10,000 800 8,000 600 6,000 11,306 11,522 9,901 9,034 10,053 400 4,000 7,637 6,453 2,000 200 - - 09-10 10-11 11-12 12-13 13-14 14-15 15-16 Revenue EBITDA Reported Key Facts : Turnover: Rs.11,522 Cr (FY15-16) M
Slide 28: Business Structure
Business Structure DAP Sales EBITDA Phosphatic Fertilisers Complex Fertilisers /SSP/MOP 84% 64% G-Sulphur Specialty Water Soluble Fertilisers Nutrients & Organic fert Organic Manure Coromandel Technicals 16% 36% Crop Formulations Protection Agri Inputs Retail Agri Services Non subsidy EBITDA share h
Slide 29: Growth through acquisitions and JVs
Growth through acquisitions and JVs 2003 2004 2006 & 2008 2009 & 2011 2013 2014 2007 2010 Complex Demerged GFCL Fertilizers fert. Biz Acq from EID 1.5 MM Parry tons SSP Liberty Group 1MM ton SSP Capacity Crop FICOM Acq of Sabero Protection Acq Jammu Acq unit Others / JVs BAA with TIFERT JV with APGP
Slide 30: Key Strengths
Key Strengths Farm Inputs Business Fertilisers Non Subsidy Businesses Sourcing Cost Leadership Marketing Strength • Specialty Nutrients/ Water Soluble Strategic Alliances in • Low cost manufacturer • Wider reach and Fertilisers/Micro Sourcing – of Phos acid - Visak penetration Nutrients and • Long T
Slide 31: Coromandel's Fertilisers Business
Coromandel’s Fertilisers Business 31
Slide 32: Growth Story
Coromandel Fertiliser Business Growth Story C Train Expansion LIBERTY SSP acquisition 50 Lac Mt 32
Slide 33: Global Strategic Alliances for Key Raw Materials
Global Strategic Alliances Alliances for Key raw materials Coromandel holds 15% stake in TIFERT – JV for Phos acid venture in Tunisia with GCT Pact with QAFCO for MOP supply of Urea and Ammonia Potash- Canada Ammonia and Sulphur Mitsui, Japan Rock Phosphate Israel , Togo FMS JV with Yanmar & co. Alg
Slide 34: State of The Art Manufacturing Facilities
State of The Art Manufacturing Facilities • High capacity utilisation levels & continuous modernisation of facilities • Plants are strategically located in highly irrigated • Backward integration into manufacturing the southern Indian states and in heart of fertilizer intermediate - phosphoric acid
Slide 35: Cost Leadership: Visak and Kakinada Plants
Cost Leadership Visak Plant Visak Production (Lac MT) Captive Phos Acid • Value gap - imported Vs own acid 10.5 9.8 • Use of various sources /grades of rocks 9.1 9.2 9.5 8.6 • New belt filter technology- to use low grade rocks 7.4 7.0 7.0 Sulphuric Acid • Consistent production performance – operatin
Slide 36: Marketing Network
Marketing Network Higher complex fertilizer Target Markets consumption in core markets Kg /ha Tertiary Market Industry Size: 3.4 Million 375 MT 250 250 100 150 200 250 110 100 100 Bihar MP AP TN KN DAP Complex Secondary Market Industry Size: 3.5 Marketing Channels million MT Dealer Trade Primary M
Slide 37: Locational Advantage
Locational Advantage Nutrient Consumption (Kg/ha) Primary markets maintains the balanced nutrient ratio • Market leader in Complex fertiliser segment • 2nd largest Phosphatics player in India • Highest producer and marketer of unique fertiliser grades Presence across major consumption pockets • Plan
Slide 38: Single Super Phosphate (SSP)
Single Super Phosphate (SSP) Market leader in SSP with 13.5% market share Presence across major SSP consuming crops- Kota Alternate to DAP in Pulses & Oilseeds Rae Baereli Improving quality perception and positioning of Udaipur Vadodara Nimrani the product: Pali Quick Test Kits Hospet Qual
Slide 39: Specialty Nutrient Business
Specialty Nutrient Business 39
Slide 40: Speciality Nutrients Division (SND)
SPECIALITY NUTRIENTS DIVISION (SND) G-SULPHUR Micronutrients WSF GROMOR SULPHUR GROMOR SPRAY- Boron Foliar Segment Sulphozinc Zinc GROMOR POWER- Fertigation Micronised Sulphur Mixtures 40
Slide 41: SND Strategy
SND Strategy Customer Lock-in through holistic precision nutrition solutions and customization to crops and regions for maximizing the profitability of the crops Leverage SQM to bring global best practices in crop nutrition management Independent & specialized marketing teams to bring crop foc
Slide 42: SND & Organic Fertiliser Business
SND & Organic Fertiliser Business Sulfur Products Value based Market Share Micronised sulphur variant launched Sulphur products WSF Market leader despite adverse market conditions 12% 32% WSF 68% 88% Expanded umbrella branding approach for SND products Crop based product launches- Speedfol C
Slide 43: Crop Protection Business
Crop Protection Business Coromandel ZZ
Slide 44: Crop Protection business - Coromandel
Crop Protection business - Coromandel 2015 • Wider range of Technicals • Increased global presence and registration 2011 Sabero Merger • Strong distribution with own retail outlets 2010 completed Sabero Acquired Acquisition Pasura Bio Tech – 2009 Jammu Unit II Expansion to 2006 Latin America Acquisi
Slide 45: Crop Protection Strategy
Crop Protection Strategy Capacity augmentation of key molecule Mancozeb expansion at Dahej and Sarigam Increase R&D focus Off Patent molecule synthesis and process improvements in existing range Improving souring efficiency Generate market information through China office Focus on Expo
Slide 46: Initiatives
Initiatives Operational Initiatives Jammu • Umbrella branding focus through “Gromor Suraksha” • Reducing conversion & treatment cost • Focus territory approach • Expand dealer network and customer engagement Strategic Initiatives Ranipet • Co-Marketing with MNCs – Access to new molecules – Tie up wi
Slide 47: Mana Gromor Centers (MGCs) - Retail
Mana Gromor Centers (MGCs) - Retail
Slide 48: Retail Strategy
Retail Strategy Positioning Retail as a complete “Farming Solutions” platform Constantly deliver significantly improved customer value proposition Nutrient recommendations based on “Gromor Nutrient Manager” program Knowledge dissemination: Gromor Webinar & “Gromor Scientist” Leverage farm
Slide 49: Retail Business Overview
Retail Business Overview • 600 centers in Andhra Pradesh and 200 centers in Karnataka- servicing more than 2 million farmers • Awards & Recognition • Retail Excellence Award by CMO Asia in Singapore • Flame Asia Award (ROI& Gromor Webinar) Products & Service Offerings Veterinary Other Crop Fertilise
Slide 50: Yanmar Coromandel AgriSolutions
Yanmar Coromandel AgriSolutions Expanded FMS coverage; Market leadership in TN, AP, Kerala Opened service centers in AP- To be expanded in TN, Odisha Synergistic approach through MGC operations Indigenization of spares Expanding portfolio to include other Yanmar models (Combine, Tractors)
Slide 51: Financial Performance
Financial Performance Comanantl
Slide 52: Consolidated Financial Performance
Consolidated Financial Performance Turnover ( Rs. Cr) EBIDTA (Rs. Cr) & EBIDTA % PY Subsidy EBITDA before PY Subsidy EBITDA Margin % 11,306 11,522 1,200 11.2% 12.0% 10,053 10.2% 9,901 9,034 1,000 227 46 7.7% 10.0% 8.2% 7.5% 7,637 6.7% 7.4% 35 - 800 - 8.0% 6,453 109 600 262 6.0% 1,008 400 829 853 4.0
Slide 53: Income Statement - Consolidated
Income Statement - Consolidated Amount in Rs. Cr FY2010 FY2011 FY2012 FY2013 FY 2014 FY 2015 FY 2016 Revenue before PY subsidy 6,191 7,410 9,855 8,925 10,018 11,306 11,522 YoY (Growth) -34.29% 19.69% 33.00% -9.44% 12.25% 12.86% 1.91% EBITDA before PY Subsidy 507 829 1,008 659 770 853 772 EBITDA % 8.
Slide 54: Balance Sheet- Consolidated
Balance Sheet- Consolidated Amount in Rs. Cr FY2010 FY2011 FY2012 FY2013 FY 2014 FY 2015 FY 2016 Equity 1,502 1,957 2,416 2,303 2,307 2,202 2,425 Debt and Other LT liabilities 2,047 1,664 2,977 2,976 1,873 2,318 2,274 Deferred Tax Liability 86 82 67 188 189 188 171 Sources of Funds 3,634 3,702 5,461
Slide 55: Thank You
Coromandel <= THANK YOU 55
Coromandel International — Investor Presentation (June 2016) on 6ix