Tata Chemicals Limited · NSE:TATACHEM
Tata Chemicals — Non-Deal Roadshow (August 2006)
58 slides from Tata Chemicals's roadshow presentation, Aug 7, 2006
Slide 1: “On the growth path”
“On the growth path” 7-8th August 2006 1
Slide 2: Table of contents
Table of contents India - Economic overview The Tata Group - overview Tata Chemicals - Business overview Segment overview Chemicals, including overview of Brunner Mond Fertilisers Financial overview 2
Slide 3: India - Economic overview
qe TATA India - Economic overview TATA CHEMICALS LIMITED
Slide 4: India – poised for strong economic growth...
India–poised for strong economic growth... World’s 4th largest economy (PPP), GDP FY07 : 7.6% (Est.) Net FII investment in FY06 crossed US$9.9 bn (14% up PY) Consumptions accounts for 64% of GDP Rapidly growing middle class of about 200mn people with significant spending power Infrastructure in
Slide 5: The Tata group - overview
The Tata group - overview 5
Slide 6: 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$2 billion Sales:6% and Fertilisers Sales:5% Energy Sales:8% Not
Slide 7: Tata Chemicals - Business overview
Tata Chemicals - Business overview 7
Slide 8: Tata Chemicals is…
Tata Chemicals is… • The 3rd largest soda ash manufacturer in the world • The #1 soda ash player in India • A market leader in edible salt market, largest STPP player in the country • The most energy efficient urea fertiliser manufacturer in India and amongst the most efficient globally • 1/3rd stak
Slide 9: FY 2006 - Global Footprints
FY 2006 - Global Footprints UK Netherlands Morocco Kenya India South Africa Manufacturing locations Markets 9
Slide 10: At a glance
At a glance Listing: Stock Exchange, Mumbai (BSE) Sales break-up – FY2006 and National Stock Exchange (NSE) Ticker: TTCH IN Soda Ash Founded: 1939 20% Salt 9% Market Capitalization US$ 915mm Urea Cement 20% 4% Revenue3 (US$mm): 795 STPP EBITDA3 (US$mm): 131 2% Others EBITDA Margin3: 17
Slide 11: Tata Chemicals, yesterday
Tata Chemicals, yesterday Localised operations, No 13 in Soda Ash capacity Asset heavy High exposure to single customer segment – detergents Integrated domestic facilities & access to raw materials Two main revenue streams Products – Commodities, useful but uninteresting Fertilisers –
Slide 12: Today ……..
Today …….. Significant player – Soda Ash - 3rd globally Turned threat to opportunity – Natural Soda Ash at Kenya – lowest cost producer Diversified customer base – glass, specialty chemicals Facilities strategically located – high growth regions Future business platforms – knowledge based,
Slide 13: Facilities in India
Facilities in India Mithapur – Soda Ash, Haldia – DAP, NPK Cement, Salt Babrala - Urea TBEM 2006 13
Slide 14: Beyond Boundaries, Brunner Mond …
Beyond Boundaries, Brunner Mond … Bruner Mond, UK – Soda Ash Morocco Africa Haldia India Bruner Mond, Netherlands – Soda Ash, Bicarb Babrala India TBEM 2006 Mithapur India 14
Slide 15: Beyond Boundaries, Brunner Mond
Beyond Boundaries, Brunner Mond Bruner Mond, Kenya, Lake Magadi - Soda Ash Dredge on lake Magadi, Kenya Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 15
Slide 16: Beyond Boundaries, IMACID, Morocco
Beyond Boundaries, IMACID, Morocco Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 16
Slide 17: Geographic diversification of revenue and capacity
Geographic diversification of revenue and capacity Before Brunner Mond, soda ash capacity 0.87mn tons in India Facilities now in Asia, Europe & Africa, close to high-growth markets India: India: Soda Soda Ash Ash Capacity: Capacity: 0.87mn 0.87mn tons tons BMGL: BMGL: Soda Soda Ash Ash Eastern Europ
Slide 18: Diversified business portfolio
Diversified business portfolio Chemicals & Revenues: Fertilisers Food Additives US$794mm EBIT : US$117mm EBIT margins : 14.8% Revenues US$299.7mm US$494.9mm EBIT US$ 72.6mm US$ 45.3mm EBIT margins 24% 9.2% Soda Ash – Mkt share 33% Urea – Market share 4% Key products Salt – Mkt share 40%
Slide 19: Strategic Direction - a balanced approach to growth.
Strategic Direction - a balanced approach to growth. Horizon 3 Horizon 2 Seed options consistent with desired business Horizon 1 profile, Build new business to accelerate intersection of Grow current transformation to chemicals, agri and core where raw new capabilities– food materials / Adjacent bus
Slide 20: Road Ahead ....
Road Ahead …. Chemicals Fertilisers Doubling Magadi Debottlenecking Barbala Building Global Bicarb Explore cheaper locations business for gas Modernisation of Mithapur Innovation – new crop specific higher value Increase Soda ash, cement fertilisers & Salt capacities • Securitising Inputs • Acquisit
Slide 21: Business segments
Business segments TATA CHEMICALS LIMITED qe TATA 21
Slide 22: Chemicals - soda ash
Revenue Mix Chemicals - Chemicals & Food Additives 40% soda ash 22
Slide 23: Global soda ash industry
Global soda ash industry The global demand supply situation favours producers with capacity utilisation of over 90% Global demand at 47 million mt, China - 21% of demand To grow at 4%pa led by glass Synthetic production dominates – 73% Cost structure increasing High natural gas, coal, coke
Slide 24: India - sector dynamics
India- sector dynamics Tata Chemicals is a dominant player with 32.8% market share Demand Supply Position Domestic demand 2.2 million 2.3 2.2 2.34 2.5 2.0 2.1 2.1 2.2 2.2 million mt mt growing at 4-5% 2.0 1.9 1.9 1.5 1.0 0.5 Demand driven primarily by 0.0 FY '02 FY '03 FY '04 FY '05 FY '06 the f
Slide 25: Overview of Brunner Mond Group
Overview of Brunner Mond Group 25
Slide 26: 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 •• Gives access to larger Asian and European markets •• Total Soda Ash production capacity ~2.0 million tons with three plants 9
Slide 27: 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 28: Competitive advantages of Magadi Soda Ash
Competitive advantages of Magadi Soda Ash Magadi has unique competitive advantages Close to key growth markets e.g. Middle East and Asia 9 Self-replenishing proven trona reserve - life of 100 years 9 Lower royalty fee 9 Duration - Lease extended for 30 years – upto 2053 9 Area – 227,000 acres Signif
Slide 29: Significant value accompanied with Magadi Soda Ash
Significant value accompanied with Magadi Soda Ash Before acquisition After acquisition TCL uses Solvay process - Access to natural soda ash & synthetic soda ash synthetic Sources key raw materials Diversification includes from nearby quarries and captive trona reserve at captive salt works Magadi -
Slide 30: The third largest global producer of soda ash
The third largest global producer of soda ash TCL moves from number 13 globally to 3rd position, maintains cost leadership, capacity from 0.87 mn tons to 3 mn tons Better pricing power 8 6 FY2006 Soda ash production capacity (mn ton) 4 2 0 SVM Sisecam FMC GCC TCL Solvay Sterlite Weifang Ciech Lianyu
Slide 31: TCL Standalone Markets
TCL Standalone Markets ASIA EUROPE MIDDLE EAST & AFRICA India Oman Bangladesh UAE Sri Lanka Indonesia Thailand 31
Slide 32: 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 32
Slide 33: Working with leading brands
Working with leading brands Gujarat Glass 33
Slide 34: Building a Global Sodium Bicarbonate Business
Building a Global Sodium Bicarbonate Business TCL Business BM Business • Global sales reach • Strong domestic focus • Complex & extensive • Simple grade portfolio grade portfolio • Very low fixed costs • Low variable, high fixed • Pricing comparable with costs Soda Ash • Pricing to add value to • Sa
Slide 35: Food additives
Inorganic Chemicals Food additives Revenue Mix Chemicals & Food Additives 40% 35
Slide 36: Food additives
Food additives • Market leader - 40% share in India Increased thrust on salt exports –Middle East Most Trusted Food 22% 5% 4% brand in India, 3rd year 15% in a row 50% Tata Salt Annapurna Captain Cook Aashirwad Nirma 36
Slide 37: Tata’s positioning in the domestic salt industry
Tata’s positioning in the domestic salt industry Tata Salt - largest salt brand in India, 40% market share ‘Tata Salt’ - pioneer in branded salt market High brand equity and premium perception “Superbrand” ranked # 1 food brand by Economic Times1 Nationwide distribution - over 40 million consu
Slide 38: Fertiliser segment
Fertiliser segment Revenue Mix Fertilisers 60% 38
Slide 39: Global Fertiliser industry
Global Fertiliser industry A large and mature market, growing fastest in developing countries 2005 sales ~ US$70 billion Fertiliser Consumption Forecast Consumption ~ 144mm tonnes A fr ic a Oc e a ni a (2002/2003) La tin 3% 2% Am e r ic a Consumption growth 3-4% pa, 9% Expected growth 2% over ne
Slide 40: Natural gas is the major cost driver for nitrogen…
Natural gas is the major cost driver for nitrogen… Cost structure for urea 250 Alaska 2003 Urea price1 200 1.5 Netherlands 0.7 150 $ / MT 3.7 Ukraine U.S.—Henry Club 1.5 100 5.4 Middle East 5.4 50 Trinidad 0.5–0.75 1.6 Algeria Indonesia 0 3 4 5 6 7 8 1.7 $ / MMBtu Other cash prod. cost Process gas c
Slide 41: The Indian Fertiliser sector
The Indian Fertiliser sector Third largest producer and consumer of Fertilisers Agriculture main driver, Installed capacity 20 million MT Plants use variety of feedstock, varying Fertiliser production capacity, technology and vintage 14.2 million tonnes Consumption skewed towards nitrogenous f
Slide 42: Domestic policy
Domestic policy Urea policy perspective Phosphatic Policy perspective Prices determined by Government – Feedstock prices based on • Feed stock price a pass through average international prices Equal playing field for efficient Price announcements often and non efficient manufacturers delayed b
Slide 43: 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 44: Financial overview
qe TATA Financial overview TATA CHEMICALS LIMITED
Slide 45: Growing revenue & operating profit
Growing revenue & operating profit Revenue Growth Operating Profit Growth & Margin 700 % R: 32 795 150 30 G CA 27 600 Merger of HLCL* 670 495 125 Merger of HLCL* 25 500 554 417 100 20 US$ million 400 18 338 17 17 % 300 318 75 131 15 139 115 50 101 10 200 86 300 253 100 216 25 5 179 0 0 0 FY '03 FY '
Slide 46: Distribution of Earnings – FY 2006
Distribution of Earnings – FY 2006 Other Retention Dividend 5% Income Others 4% 3% Financial STPP 5% 4% Taxes 3% Cement 8% 4% Soda Ash 19% Overheads Vacuum 5% Urea Salt Materials 19% 8% 62% Distribution Complex 9% Fertilizers 39% Employee 3% Rupee earned Rupee deployed 46
Slide 47: 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 900 812 9.7 (%) 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 48: Financial ratios
Financial ratios ROACE ROE 14 13.5 13.8 18.0 13.7 16.0 17.0 13 16.3 14.0 12.5 12.0 12.0 (%) 10.0 10.8 (%) 12 12.3 8.0 11.5 11.8 6.0 4.0 11 2.0 10.5 0.0 FY03 FY04 FY05 FY06 FY03 FY04 FY05 FY06 48
Slide 49: Credit Ratios
Credit Ratios 60 56 50 Interest Coverage ratio Net Debt/Equity 40 30 20 19.4 10 3.9 7.4 0.5 0 0.3 0.2 (0.02) -10 FY03 FY04 FY05 FY06 49
Slide 50: Financials – Revenue growth
Financials – Revenue growth 910* 900 4% 3 7 .9 115 GR 670 CA 554 in USD million 600 317 795 300 0 2003 2004 2005 2006 Consolidated financials include BMGL’s Q4 results and IMACID’s performance over 11 months * Post consolidation 50
Slide 51: Financials – EBIDTA
Financials – EBIDTA 200 166* 35 in USD million 115 86 100 100 131 0 2003 2004 2005 2006 * Post consolidation 51
Slide 52: Profit After Tax
Profit After Tax 97* 100 76 17 in USD million 48 50 41 80 0 2003 2004 2005 2006 BMGL staff costs are net of write back of USD 7 million crore of pension liabilities in an overseas subsidiary, consequent to actuarial valuation. According to Indian GAAP this amount has to be included in the P&L. Profi
Slide 53: FY2006 consolidated financials
FY2006 consolidated financials TCL consolidated income BMGL TCL IMACID Consolidated statement (USD mn) (Jan to Mar 06) Sales 795 54 81 910 Operating expenses -663 -40 -65 -744 EBITDA 131 14 17 166 Depreciation & amortization -31 -6 -5 -42 EBIT 100 8 12 125 Net interest expense -2 -1 -3 -6 Other inco
Slide 54: Financial ratios
Financial ratios FY05 Category Unit FY06 * 17% EBITDA Margin % 18% Profitability 11% Net Profit Margin % 11% 15.8 Earnings per share Rupees 19.9 93 Networth per Share Rupees 103 17% Shareholder Returns Return on Equity % 19% 5% Dividend Yield % 3% 1.5 Market to Book Value Times 2.0 115 Cash Generati
Slide 55: 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 56: Share price performance
Share price performance Tata Chemicals’ stock has outperformed the BSE SENSEX Equity market 300 Brunner fall in May-06 Mond Acquisition 250 200 (INR) 150 100 Acquisition of one-third stake in IMACID 50 - Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Tata Chemical SENSEX 56
Slide 57: Recent Recognition & Awards
Recent Recognition & Awards 57
Slide 58: Thank you
qe TATA Thank you TATA CHEMICALS LIMITED