Tata Chemicals Limited · NSE:TATACHEM

Tata Chemicals — JP Morgan conference (October 2011)

57 slides from Tata Chemicals's conference presentation, October 2011

  1. Slide 1: Serving Society through Science

    “Serving Society through Science”

  2. Slide 2: Business Perspectives

    Business Perspectives

  3. Slide 3: Low Cost Resource Base

    Low Cost Resource Base Potash Phosphate Agri Markets Nitrogen Soda Ash Detergent, Glass (Container & Float) Salt Edible / Industrial 3

  4. Slide 4: Distribution Based Businesses in India

    Distribution Based Businesses in India Agri Inputs Agri + TKS Agri Services Swach Pulses Household Edible Salt 4

  5. Slide 5: Evolving as a Low Cost Resource Play

    Evolving as a Low Cost Resource Play Potash Potash EPM Potash - (Trading) (Trading) Mining ~0.5* mn tn (2017) IMACID II Phosphatics Phos Acid in DAP in Haldia DAP linked to Phos (DAP in Haldia) Morocco Rock in Morocco ~1.0* mn tn (under evaluation) Nitrogenous Nitrogenous Fertiliser Gabon Fertiliser

  6. Slide 6: Evolving as a Low Cost Resource Play

    Evolving as a Low Cost Resource Play Investment Higher Margin in Low Cost Volumes Accretion Resources 6

  7. Slide 7: The NATURAL Advantage

    The NATURAL Advantage Mithapur - Salt Tata Chemicals Magadi – Natural Soda Ash Tata Chemicals North America – Natural Soda Ash 7

  8. Slide 8: The NATURAL Advantage

    The NATURAL Advantage Tata Chemicals Europe (British Salt) - Brine IMACID, Morocco – Rock Phosphate Gabon Fertiliser Unit – low energy cost – potential to be one of the lowest cost urea manufacturing facilities in the world 8

  9. Slide 9: Extensive and Efficient Distribution

    Extensive and Efficient Distribution Pan India network of Pesticides 2252 distributors and 40,045 retailers Fertilisers Strong reach to rural markets 150 districts Rural across 7 states. 700+ Specialty & Customised dealers and 1.2 lakhs villages covered Fertiliser 700+ franchise retail TKS outlets E

  10. Slide 10: Customer Profile

    Customer Profile Consumer • Salt Product • Swach Business • Farm Output Agri Inputs • Fertilisers – Controlled • Agri Inputs – Non-Controlled • FMCG Customers (Detergent Chemicals & Container Glass) • Construction and Automobile (Glass) 10

  11. Slide 11: Consumer Product Business

    Consumer • Salt Product • Swach Business • Farm Output Agri Inputs • Fertilisers – Controlled • Agri Inputs – Non-Controlled • FMCG Customers (Detergent & Chemicals Container Glass) • Construction and Automobile (Glass) 11

  12. Slide 12: Consumption Growth - India

    Consumption Growth - India Rising Disposable Income Consumption Growth (Per Capita USD) (Per Capita USD) 1,647 1,108 1,077 746 2010(F) 2014(F) 2010(F) 2014(F) Source: EIU Opportunity for sustainable growth by meeting demand through products backed by technology and Innovation 12

  13. Slide 13: Consumer Products Business

    Consumer Products Business  Tata Chemicals is the market leader with 62% market share in the Edible salt national branded segment  Tata Salt holds the number one position with market share of about 46.5% - reaches ~6.5 crore households every month through 11.3 lakh outlets  I-Shakti market share

  14. Slide 14: Consumer Products Business – i-Shakti Pulses

    Consumer Products Business – i-Shakti Pulses  India's first National brand of pulses – “i-Shakti dals” - launched 4 popular varieties of pulses (Chana, Toor, Urad & Moong)  i-Shakti dals sales at over 1,000 tonnes for FY2011  Currently present in 3 states - to be rolled out to over 12 states duri

  15. Slide 15: Agri Inputs

    Consumer • Salt Product • Swach Business • Farm Output Agri Inputs • Fertilisers – Controlled • Agri Inputs – Non-Controlled • FMCG Customers (Detergent & Chemicals Container Glass) • Construction and Automobile (Glass) 15

  16. Slide 16: Agri Growth Indicators

    Agri Growth Indicators Food demand to grow with rising . . . and given competing uses, land population and increasing awareness under cultivation cannot of nutrition needs increase significantly Permanent 100% = 329 million hectares Food Demand Crops: Growing 1.9x 850 demand for Million metric tonne

  17. Slide 17: Urea Price Trend

    Urea Spot Price 500 Finished Goods – Urea Price Trend (USD) 450 400 400 350 350 327 317 283 281 293 279 300 250 200 150 100 50 - Q2 FY11 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q3 FY11 Q4 FY11 Source: Industry Estimates – Prices FOB Arabian Gulf International prices ranging between ~USD 275 to ~USD

  18. Slide 18: Urea Production & Deliveries

    Production & Deliveries Urea Production & Sales Volumes 400 (‘000 MT)  Plant operating at full capacity 300 utilization 200 100  Urea de-bottlenecking of 0 50-100K tonnes under review Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Urea Realizations 11,500 50% Production Sales (`/

  19. Slide 19: Republic of Gabon (RoG)

    Republic of Gabon (RoG) RoG Snapshot  An oil rich country in Equatorial West Africa  Spread across 267,667 kms  Population: 1.5 million  Economy dominated by oil & mining  Third highest GDP in Sub-Saharan Africa: USD 14,000 (2009 est.)  Sovereign Rating similar to Philippines: BB- (S&P) 19

  20. Slide 20: Key Investment Highlights

    Key Investment Highlights  Entered into a competitive fixed price feedstock agreement with RoG to ultimately set-up 2 streams of 1.3 MTPA Urea - Execution activity at Stream 1 commenced and expected to be commissioned in 36 months  Time schedule for stream 2 execution to be mutually decided by Ola

  21. Slide 21: Funding

    Funding  Strategic investment of USD 290 million to acquire 25.1% stake in stream 1 to set-up Greenfield port-based ammonia-urea Fertiliser manufacturing complex in Republic of Gabon (RoG) - Balance share held by RoG (12%) & Olam (62.9%)  Funding through:  USD 82 million raised by the preferentia

  22. Slide 22: Project Highlights

    Project Highlights Leveraging Olam’s Strategically located network for developing near Gabon’s main local Urea markets at sea port higher realizations Potentially a low cost Urea manufacturing facility globally 10 Year Tax holiday Expected yearly after commencement of EBITDA of USD 300– commercial p

  23. Slide 23: Technical Advisory Service Agreement with Notore Chemicals, Nigeria

    Technical Advisory Service Agreement with Notore Chemicals, Nigeria  Notore is in the business of manufacturing Urea and owns a KBR ammonia plant and a Stamicarbon Urea plant  The Notore plant presently has a capacity of 350,000 metric tonnes (MT) of Ammonia per annum, 500,000 MT of Urea per annum

  24. Slide 24: DAP & NPK Price Trends

    DAP & NPK Spot Price 1,050 Phosphoric Acid Price Trend (USD)  Study underway to double phos acid 1,000 830 758 778 780 capacity along with ~ 1 million TPA 800 630 567 DAP capacity 600 509 523 400  Subsidy rates for DAP and MOP have 200 been increased to USD 612 and USD Q1 FY10 Q2 FY10 Q3 FY10 Q4 F

  25. Slide 25: Haldia DAP Production & Deliveries

    Production & Deliveries Haldia DAP Production & Sales 100 (‘000 MT)  IMACID stake safeguards 80 60 assured supply of phosphoric 40 20 acid 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Production Sales Haldia DAP Realizations & Contribution (`/MT) 30,000 25% 25,000 20% 20,000 15

  26. Slide 26: Haldia NPK Production & Deliveries

    Production & Deliveries Haldia NPK Production & Sales (‘000 MT) 150  Low subsidies combined with 120 90 higher input cost hindering 60 30 volume growth 0 Q3 FY10 Q1 FY10 Q2 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Production Sales Haldia NPK Realizations & Contribution (`/MT)  Targeting to exp

  27. Slide 27: Customized Fertilisers

    Customized Fertilisers Customized Fertilisers: Crop & Soil specific Formula Production Marketing Target Market: - 25 districts of UP - 5 key crops Production at Babrala has commenced: Capacity 130,000 MT/ year Target segments: 66 dealers, 351 star retailers, 197 TKS Evaluating option of setting up 2

  28. Slide 28: Rallis India

    Rallis India  Strong growth in domestic business driven by value added offering to farmers in the last four years – despite the setback due to unseasonal rains  Revenues up by 20% at ` 1,047 crore and PAT up by 25% at ` 126 crore for the year ended March 31, 2011  Acquisition of Metahelix Life Sc

  29. Slide 29: Chemicals

    Consumer • Salt Product • Swach Business • Farm Output Agri Inputs • Fertilisers – Controlled • Agri Inputs – Non-Controlled • FMCG Customers (Detergent & Chemicals Container Glass) • Construction and Automobile (Glass) 29

  30. Slide 30: Global Soda Ash

    Global Soda Ash Global Soda Ash Demand Capacities (Million Tonne) (Million Tonne) 55.7 58.2 80.0 70.7 60 53.4 68.9 70.0 66.1 46.8 47.7 44.8 49.2 51.3 70.0 60.8 64.6 50 56.9 58.8 60.0 40 50.0 30 40.0 30.0 20 20.0 10 10.0 0 0.0 FY12E FY13E FY14E FY15E FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 FY12E FY13

  31. Slide 31: Robust Glass Demand - India

    Robust Glass Demand - India 3.00 Projected Demand 2.50 Million MT 2.00 1.50 2000 – 09 CAGR =11.5% 1.00 2010 – 21 Expected CAGR =11% 0.50 0.00 2003 2000 2001 2002 2004 2005 2006 2007 2008 2009 2021 Source: Glassyug 2010, Glassweb and TSMG Analysis, ACMA report Past Indian Steady growth of 11.5% in do

  32. Slide 32: Global Energy Prices

    Global Energy Prices Spot Price 120-140 Coal CFR Price Trend (USD/tonne) 120 95 100 94 104 95 71 83 90 67 60 Spot Price 30 250 - Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Anthracite CFR Price Trend (USD/tonne) 300 254 250 200 204 219 195 200 153 169 146 150 Spot Price 100 530-5

  33. Slide 33: Soda Ash - India

    Soda Ash - India Market Share Industrial Usage Spread Tata Chem, Others, Others, 32.6% 26.2% 32% Detergent 42% Nirma + Sukem, GHCL, Glass, 20.1% 21.1% 26% Source: Industry Estimates  Mithapur facility operating at ~82% capacity utilization levels  ~ 65% sales on spot basis  Rising input costs (li

  34. Slide 34: Mithapur Production & Deliveries

    Production & Deliveries Mithapur Production & Sales (‘000 MT) 200 150 100 50 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Production Sales Mithapur Realizations & Contribution (`/MT) 20,000 60% 15,000 40% 10,000 20% 5,000 0 0% Q3 FY10 Q1 FY10 Q2 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 F

  35. Slide 35: Soda Ash – Tata Chemicals North America (TCNA)

    Soda Ash – Tata Chemicals North America (TCNA) Market Share Tata Chem Industrial Usage Spread SVM, 7.5% North America, OCI, 24.9% Glass, 17.2% Detergent, 54% 10% Other use, FMC, 12% Solvay, 29.1% 21.3% Chemicals, 24% Source: Industry Estimates  TCNA - one of the largest Soda Ash players in the US 

  36. Slide 36: TCNA Production & Deliveries

    Production & Deliveries TCNA Production & Sales (‘000 MT) 800 600 400  100,000 MT capacity 200 addition by FY2012 0 Q2 FY11 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q3 FY11 Q4 FY11 Prodution Sales TCNA Realizations & Contribution (`/MT) 10,000 60% 8,000 40% 6,000 4,000 20% 2,000 0 0% Q2 FY10 Q1 FY10

  37. Slide 37: Soda Ash – Tata Chemicals Europe (TCE)

    Soda Ash – Tata Chemicals Europe (TCE) Market Share Industrial Usage Spread Other Use, 7% Tata Glass, Glass, Chem Chemical, 67% 67% Others, Europe, 10% 6.7% 84.0% Detergent 16% ETI, 9.3% Source: Industry Estimates  Entire production sold in the UK - all sales through long term contracts  Container

  38. Slide 38: TCE Production & Deliveries

    Production & Deliveries TCE Production & Sales (‘000 MT) 300 250 Extreme climatic 200 conditions impact TCE 150 100 operations 50 0 Q4 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Production Sales TCE Realizations & Contribution (`/MT) 15,000 70% 12,000 60% 50% 9,000 40% 6,000 30% 20

  39. Slide 39: British Salt

    British Salt Volume by Industry Sector Market Share Water General Manufact Softening Ineos , 6% uring, Food, Chlor, Tata 10% 45% 42.0% Chem British Salt, 53.0% Chemical, 10% Imports, Detergent 5.0% 16% Source: Industry Estimates  Long-term customer relationships with leading food & chemicals compan

  40. Slide 40: Soda Ash – Tata Chemicals Magadi

    Soda Ash – Tata Chemicals Magadi Industrial Usage Spread Market Share Tata Chem Other Magadi, Use, 2% Glass, Imports, 92.0% 71% Mining & 8.0% Metal, 6% Chemical, 10% Detergent 16% Source: Industry Estimates  Standard Ash plant operating at ~85% capacity utilization levels  Project “Excel” contribu

  41. Slide 41: Kenya SAM UK Production & Deliveries

    Production & Deliveries Kenya SAM UK Production & Sales (‘000 MT) 100 75 50 25 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Production Sales Kenya SAM Realizations & Contribution 12,000 (`/MT) 80% 10,000 60% 8,000 6,000 40% 4,000 20% 2,000 0 0% Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1

  42. Slide 42: Financials

    Financials

  43. Slide 43: TCL’s Revenue Contribution

    TCL’s Revenue Contribution ~32% ~68% India 43

  44. Slide 44: Financial Trend (Consolidated)

    Financial Trend (Consolidated) Net Income from Operations 15,000 (` crore) CAGR Growth* – 12,652 12,000 18.3% 11,060 9,448 9,000 5,804 6,023 6,000 4,029 3,000 0 FY06 FY07 FY08 FY09 FY10 FY11 EBITDA (` crore) 2,000 1,773 1,864 CAGR Growth* 1,736 1,625 1,600 – 14.3% 1,119 1,200 833 800 400 0 FY06 FY07

  45. Slide 45: Financial Trend (Consolidated)

    Financial Trend (Consolidated) PAT (` crore) 964 1,000 CAGR Growth*: 7.3% 750 648 653 592 508 500 428 250 0 FY06 FY07 FY08 FY09 FY10 FY11 Diluted EPS (`) 40 37.9 CAGR Growth*: 35 10.0% 27.6 30 25.6 26.1 25 20 18.3 14.7 15 10 5 0 FY06 FY07 FY08 FY09 FY10 FY11 45 *CAGR Growth* – FY06 – FY11

  46. Slide 46: Dividend Track Record

    Dividend Track Record Dividends including Dividend Tax (` crore) 350 296 300 255 247 248 250 201 200 172 150 100 50 0 FY06 FY07 FY08 FY09 FY10 FY11 Dividend Payout Ratio* 70% 61% 60% 55% 51% 50% 45% 41% 40% 30% 23% 20% 10% 0% FY06 FY07 FY08 FY09 FY10 FY11 46 * On a standalone basis

  47. Slide 47: FY2011 Financial Highlights

    FY2011 Financial Highlights FY2011 FY2010 Particulars (` crore) TCL TCE IMACID TCNA Rallis CONS TCL TCE IMACID TCNA Rallis CONS Net Sales (Incl. Other 6,332 1,682 442 1,818 1,092 11,060 5,476 1,834 370 1,759 341 9,544 Operating Income) Profit from 893 192 53 538 203 1,864 899 306 59 511 63 1,840 ope

  48. Slide 48: FY2011 Performance

    FY2011 Performance FY11 Profit from Operations FY11 Net Income from Operations (` crore) (` crore) 1,880 12,000 8,000 1,840 11,060 1,864 9,544 4,000 1,840 0 1,800 • Firm markets and stable operating environment across most sites • Improving demand environment reflected in enhanced realizations 48

  49. Slide 49: FY2011 Performance

    FY2011 Performance FY11 PAT (Post MI) (` crore) FY11 EPS (diluted & annualized) 30.00 660 (`) 25.00 550 20.00 440 15.00 330 606 653 25.61 26.10 220 10.00 110 5.00 0 - • Strong performance by TCNA partially mitigates impact of increasing input costs, extreme winter in TCE • FY2011 Profit from operati

  50. Slide 50: Key Ratios (Consolidated)

    Key Ratios (Consolidated) Particulars As on March 31, 2011 As on March 31, 2010 Net Debt/Equity 0.76 0.81 Net Debt/Total Assets 0.36 0.37 Net Debt/EBITDA 2.34 2.08 EPS (Diluted & annualized) 26.10 25.91 Consolidated Cash and cash equivalents as on March 31, 2011: ` 1,345 crore 50 50

  51. Slide 51: Strategy and outlook...

    Strategy and outlook...

  52. Slide 52: Financial Objectives

    Financial Objectives Financial  Debt Equity 1:1 Objectives  ROCE 20%  Leadership Business  Innovation Objectives  Sustainability MEDIUM 52 TERM

  53. Slide 53: Living Essentials

    Living Essentials Objectives  Leveraging technology and customer relationships to create products for the masses Actions  Debottlenecking of additional 200K TPA domestic salt capacity at ` 180 crore expected by March 2012  Swach Water purifiers – Sales targeted to cross 1 million by FY2012  I Sh

  54. Slide 54: Industry Essentials

    Industry Essentials Objectives  Being the lowest cost Inorganic Chemicals Company in the world Actions  Debottlenecking of GCIP facility by 100,000 tonnes by March 2012  Study under progress to increase GCIP capacity by 400,000 tonnes  Magadi PAM PEP (Pure Ash, Performance Enhancement Programme)

  55. Slide 55: Farm Essentials

    Farm Essentials Objectives  Strengthen position in the Integrated Agri Input space while leveraging relationships with farmers to extend across the value chain Actions  Evaluating option of setting up 2 more Customized Fertiliser units in Haldia  Third DAP train of 300,000 tonnes under examinatio

  56. Slide 56: Innovation Focus

    Innovation Focus  TATA Swach:  Low cost water purifier available at price points of ` 749 and ` 499  The Tata Swach bulb, which shuts off water supply after its useful life, is priced at ` 299 and it can purify upto 3,000 liters of water  TATA Swach is available almost pan India except North Eas

  57. Slide 57: Slide 57

Tata Chemicals — JP Morgan conference (October 2011) on 6ix