Coromandel International Limited · NSE:COROMANDEL
Coromandel International — Investor Presentation (June 2011)
77 slides from Coromandel International's investor presentation, Jun 27, 2011
Slide 1: Investors Presentation
27, June 2011 Investors Presentation 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: Contents
Contents Company CompanySnapshot Snapshot 44 Global GlobalFertiliser FertiliserIndustry IndustryOverview Overview 77 Indian IndianFertiliser FertiliserScenario Scenario&&New NewPolicy Policy 11 11 Coromandel’s Coromandel’sJourney Journey 20 20 Strategic StrategicDirection Direction––Farm FarmInputs
Slide 4: Snapshot of Coromandel
Snapshot of Coromandel Coromandel Coromandel Share Sharein in • Coromandel International Limited, Murugappa MurugappaGroup Group established in 1961 is the flagship Turnover company of the 3.8 Billion USD 45% 55% Murugappa group, contributing 45% of Coromandel the group turnover and 51% of EBITDA Ot
Slide 5: Business Structure
Business Structure DAP Phosphatic Phosphatic DAP Fertilisers Fertilisers Complex ComplexFertilisers Fertilisers/SSP/MOP /SSP/MOP G-Sulphur G-Sulphur Specialty Specialty Water Soluble Fertilisers Water Soluble Fertilisers Nutrients Nutrients&& Organic Manure Organic Manure Compost Compost Coromandel
Slide 6: Financial Performance
Financial Performance Sales Salesand andSubsidy Subsidy(Rs. (Rs.Million) Million) PBT PBT(Rs. (Rs.Million) Million) CAGR – 53.65% CAGR – 32.78% PAT PAT(Rs. (Rs.Million) Million) EPS EPSand andDPS DPS(Rs.)* (Rs.)* 6,945 CAGR – 52.75% 4,964 4,682 2,098 835 1,007 2005-06 2006-07 2007-08 2008-09 2009-10
Slide 7: Industry Overview
Ind ustry Overview Coromandel
Slide 8: World Fertiliser Map
World Fertiliser Map EU Fertiliser Market DAP/MAP NPK UAN Nitrates USA Fertiliser Market 6% 3% 18% Urea 18% 7% 7% Other 14% 20% DAP/MAP China Fertiliser Market NPK 12% 2% 5% 7% UAN DAP/MAP 43% 26% Ammonia NPK 26% Urea ABC 27% Other Urea 59% Other DAP/MAP India Fertiliser Market NPK 14% Urea AS AS/CA
Slide 9: World N,P,K Fertilizer Market
World N,P,K Fertilizer 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 5% “K” Market is 29 Million MT “N” Market is 100 Million MT Global Fertiliser Industry: "P" World Market Consumption is growing at 2.0 - 2.2%
Slide 10: International Raw material Price Movement
International Raw material Price Movement Prices rising steadily (~10%) in 2011 Prices on the rise in April 20-30% Fertiliser raw material price increase happened in last 4 months Rise of 200 $ (~25%) since Outlook: December Prices expected to remain on high side; 10
Slide 11: Indian Fertiliser Scenario
Indian Fertiliser Scenario 11
Slide 12: India's Nutrient Consumption and Crop Productivity
India’s Nutrient Consumption and Crop Productivity Nutrient NutrientConsumption Consumptionamong amongthe the Asian Countries Asian Countries 333 India’s Nutrient consumption Kg/Ha (Kg/Ha) is lower than countries like China (333), Bangladesh 170 133 135 106 (170) and Pakistan (135). India Bangladesh
Slide 13: India's Food Production and Nutrient Consumption
India’s Food Production and Nutrient Consumption •Food grain consumption crosses 234 million MT – challenge to produce more from the shrinking arable land •Increased demand of food grains to drive nutrient consumption - to go up from 25 million MT to 29 million MT •Increasing yield key for future su
Slide 14: India's Fertiliser Outlook
India’s Fertiliser Outlook India’s India’sNPK NPKDemand Demand(Million (MillionMt) Mt) 17.00 N (LHS) P2O5 (LHS) K2O (RHS) 2.80 15.00 2.60 2.40 13.00 2.20 11.00 2.00 9.00 1.80 1.60 7.00 1.40 5.00 1.20 3.00 1.00 20 20 20 20 20 20 20 20 20 20 02 03 04 05 06 07 08 09 10 11 -0 -0 -0 -0 -0 -0 -0 -1 -1 -1
Slide 15: Fertilisers – The emerging scenario in India
Fertilisers – The emerging scenario in India • Fertiliser consumption – India contributes 16% of the Global 2010-11 consumption 16% • The year 2010-11 saw an unprecedented increase in import of 84% fertilisers Million Mt 2009‐10 2010‐11 % Increase DAP/SSP/TSP 5.8 7.4 28% India Rest Of World Urea 5.2
Slide 16: Fertiliser Subsidy Scenario
Fertiliser Subsidy Scenario New NewNutrient Nutrientbased basedSubsidy SubsidyPolicy Policy • Nutrient Based Subsidy (NBS) policy introduced in April’10 has been received well by all stakeholders- farmers/Industry/Govt • Ensured timely availability of fertilisers through out the year supplemented by
Slide 17: Subsidy rates for 2011-12
Subsidy rates for 2011-12 Subsidy in Rs. per 50 kg bag of fertilisers 2011-12 2010-11 % Change DAP 988 813 22% 20:20:0:13 606 507 20% 10:26:26 904 776 16% 12:32:16 894 756 18% 14:35:14 943 794 19% Due to sharp rise of international raw material prices , Govt increased the subsidy rate for FY 12 fo
Slide 18: Output prices have grown more than input prices
Output prices have grown more than input prices 18
Slide 19: NBS policy – Advantage Coromandel
NBS policy – Advantage Coromandel • Strong Brands in the highly irrigated and Agricultural dominated Southern states – Consistent agriculture • Very good infrastructure with port facility/captive jetty • Flexibility to produce wide range of complexes: low P to high P; Crop & soil specific grades; •
Slide 20: Coromandel's Journey
Coromandel’s Journey Coromandel A
Slide 21: Key Milestones in Coromandel's Journey
Key Milestones in Coromandel’s Journey • In the last 48 years Coromandel has evolved as a strong Agri player serving the Indian farmers by supplying quality Agri inputs and providing timely advice • 2nd largest player in Phosphatics segment • Strong operational focus & higher efficiencies • Grown 5
Slide 22: Key Developments in 2011-12
Key Developments in 2011-12 CCTrain Trainin inKakinada Kakinada Adding a new granulation train to increase the production capacity by 8 lac mt Turn key order placed with Uhde India Pvt Ltd Project progressing on brisk pace Over 50% of piling work completed Project is expected to be commiss
Slide 23: 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 24: Strategic Direction
Strategic Direction Farm Farm Inputs Inputs Business Business Dominance Dominance in in Fertilisers Fertilisers Non Non Subsidy Subsidy Businesses Businesses Sourcing Sourcing Cost Cost Marketing Marketing Leadership Leadership Strength Strength • Specialty Nutrients/ Water Strategic Alliances in •
Slide 25: Strategic Alliances for Key raw materials
Strategic Alliances for Key raw materials Rock Phosphate MOP 0.9 Million MT Potash- Israel , Togo Canada Algeria 0.50 Million Mt Ammonia and Sulphur 0.61 Million Mt Ammonia, 0.30 Million Mt Sulphur- Mitsui, Japan WSF and MAP JV with SQM, TIFERT Strategic Urea Chile JV - Stake in 0.25 Million Mt Arab
Slide 26: Tie ups for Phosphoric Acid
Tie ups for Phosphoric Acid Million MT Captive Production 0.23 Supply contracts with FOSKOR, ICL , GCT and Sterlite 0.60 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 27: Cost Leadership
Cost Leadership Visak Production (Million Mt) Visak VisakPlant Plant Captive Phos Acid • Continuous de-bottle necking to increase production levels • Value gap - imported Vs own acid • Increased Gypsum generation • Use of various sources /grades of rocks • New belt filter technology- to use low grad
Slide 28: Marketing Network
Marketing Network West Bengal (WB) Factory Factory Orissa (OR) Andhra Pradesh (A.P) Karnataka (KN) Maharashtra (MH) Madhya Pradesh (MP) & Chattisgarh Wholesaler Wholesaler //Distributor Distributor Tamil Nadu (TN) PDO PDO Semi Semi Wholesaler / Wholesaler / Dealer Dealer Visak Retailer Kakinada Reta
Slide 29: Production Capacity
Production Capacity Plant Volume (Million MT) Product •28:28:0 •14:35:14 Visak 1.30 •20:20:00 •10:26:26 •12:32:16 •14:35:15 Kakinada 1.50 •DAP •10:26:26 Ranipet 0.12 •SSP •20:20:00 Ennore 0.33 •16:20:00 Total 3.25 29
Slide 30: Specialty Nutrient Business
Specialty Nutrient Business 30
Slide 31: Speciality Nutrients Division (SND)
SPECIALITY NUTRIENTS DIVISION (SND) G-SULPHUR Micronutrients Organic Compost WSF GROMOR GROMOR SULPHUR SULPHUR GROMOR Boron GROMOR SPRAY SPRAY Boron Zinc Zinc GROMOR GROMOR POWER POWER Sulphozinc Sulphozinc 31
Slide 32: Basics of Water Soluble Fertilisers
Basics of Water Soluble Fertilisers What How Howto touse useWater Watersoluble Whatis isWater Watersoluble solublefertilizers? fertilizers? soluble fertilizers? fertilizers? •100% water soluble •Available in double and multi nutrient •Foliar application combinations with or without secondary •Fertig
Slide 33: SND Industry Trend
SND Industry Trend Global GlobalTrend Trend Global GlobalWSF WSFConsumption Consumption(Mio (MioMt) Mt) 3.5 Europe • Global WSF Business – 5.6 Million MT 3 America • Global giants like Yara, SQM, Haifa, 2.5 2 ICL increasing their capacity and 1.5 spread across the globe Middle East 1 • New capacitie
Slide 34: Specialty Nutrients Business Case
Specialty Nutrients Business Case Coromandel’s Coromandel’sStrategy Strategy--Increase Increasethe theshare shareof ofNon NonSubsidy Subsidybusiness business G-Sulphur G-SulphurMarket Market Coromandel’s Coromandel’sStrength Strength • Current market Size – 30,000 Mt • Separate focussed SBU • Projec
Slide 35: Organic Manure Business Case
Organic Manure Business Case Organic OrganicManure ManureMarket Market Coromandel’s Coromandel’sStrategy Strategy Global Scenario •First Mover Advantage • Globally very large market – US, Europe •Introducing variants and China nearly 50-60% of the total fertiliser used in the form of compost Indian
Slide 36: Crop Protection Business
Crop Protection Business Coromandel A
Slide 37: Crop Protection - Industry Scenario
Crop Protection - Industry Scenario Global GlobalScenario Scenario Indian IndianScenario Scenario • The total global agrochemical market • Indian Crop Protection Market is Valued at 55 Billion INR was USD 38 Billion in 2010. • Paddy continued its dominance in crop • Global markets are projected to g
Slide 38: Coromandel Products & Markets - Crop Protection
Coromandel Products & Markets -Crop Protection • Coromandel is one of the top 15 companies in Pesticides .“Coromandel pesticides product range includes Belgium – Insecticides : 27 Spain Korea Germany – Others : 8 Iran Vietnam Pan India presence Turkey Thiland • Introduced new technicals – Mexico Ban
Slide 39: Initiatives
Initiatives Operational OperationalInitiatives Initiatives Jammu 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 Strat
Slide 40: Recent Developments - Ban on Endosulfan
Recent Developments - Ban on Endosulfan • The April 2011 meeting of the Conference of parties to the Stockholm convention unanimously approved phasing out of endosulfan, a product listed as Persistent Organic Pollutants (POP), with exemptions for India (5 years initially – extendable by additional 5
Slide 41: Recent Developments – Sabero Acquisition
Recent Developments – Sabero Acquisition Sabero is a Gujarat based Agro Chemical (Rs. Mio) 2008-09 2009-10 2010-11 Product manufacturer with strong export Turnover 3670 4300 4130 base EBITDA 520 860 480 Coromandel entered into a definitive agreement to acquire 42.22% promoter % of Revenue 2009-1
Slide 42: Manufacturing Facilities
Manufacturing Facilities • Sabero has a manufacturing facility in Sarigam Industrial Area, District Valsad, Gujarat. • The plant is ISO9001 and ISO14001 certified • Expansion of Chloropyrophos and Monocrotophos facilities along with construction of a new Propineb facilitiy is underway and is expecte
Slide 43: Strengths
Strengths • Market leader in the products which it produces; Is amongst top 3 players in its top 4 products • Sabero has over 240 registrations in 50 countries • International presence with subsidiaries or affiliates present in 5 countries viz, Australia, Europe, Brazil, Argentina and Philippines. •
Slide 44: Mana Gromor Centers (MGCs) - Retail
Mana Gromor Centers (MGCs) - Retail 44
Slide 45: MGC Retail Model
MGC Retail Model The centre is located at Mandal HQ. (One Mandal for 20-25 villages) Each centre covers 30-40 villages having 5,000 farm families in a radius of 20 km Model envisages repetitive interaction between the centre and the farmer Primary focus is on technology transfer and providin
Slide 46: Retail Business - Rationale
Retail Business - Rationale Viable Alternative • Develop Distribution Channel for Coromandel • Reduce Dependency on Distributors • Capture opportunities in Rural Areas Opportunities in Rural Areas • Providing Lifestyle Products at nearest Location • Supply Products and Solutions to improve earning c
Slide 47: Rural Retail - Verticals
Rural Retail - Verticals Agri Products - Fertilisers •Products-SSP/DAP/NPKs/Urea •Micronutrients/Municipal Compost •Water Soluble/MOP •Soil Testing & Recommendation Lifestyle Products •Durables, footwear, apparels, non durables Agri Products - Pesticides •Diagnosis and Solution •Spraying •Entire Ran
Slide 48: Expansion Plans
Expansion Plans Currently 423 stores in operation in AP Achieved Breakeven at EBITDA level for FY 11 Stabilizing LSP operation 21 stores opened in Karnataka in Q4 in FY 11 Addition of 200 stores planned for 2011-12 : 75 centers in Karnataka and 125 centers in AP Farm mechanization: o Cov
Slide 49: Financial Performance
Financial Performance Coromandel
Slide 50: Financial Performance
Financial Performance Turnover Turnover((RS. RS.Million) Million) EBIDTA EBIDTA(Rs. (Rs.Million) Million)&&EBIDTA EBIDTA% % (Rs. mio) One time exceptional income from Foskor (%) 96,678 13,200 17.0 EBITDA 11,344 77,161 11,200 EBITDA % 14.7 15.0 65,268 7,904 8,430 9,200 1,586 13.0 38,001 7,200 10.5 12
Slide 51: Income Statement
Income Statement 2006 2007 2008 2009 2010 2011 Revenue (INR m) 18,747 20,842 38,001 96,678 65,268 77,161 EBITDA (INR m) 1,765 2,181 4,554 9,490 8,430 11,344 PBT (INR m) 1,154 1,464 3,334 8,082 7,084 9,884 PAT (INR m) 835 1,007 2,098 4,964 4,682 6,945 EPS (Rs.) 3.29 3.97 7.50 17.74 16.72 24.69 Debt /
Slide 52: Balance sheet
Balance sheet INR mn 2006 2007 2008 2009 2010 2011 Equity 4,380 5,124 7,944 11,271 14,350 19,041 Debt 4,263 5,490 10,429 17,199 19,178 14,712 Deferred Tax Liability 752 713 825 795 855 815 Sources of Funds 9,394 11,327 19,198 29,265 34,382 34,567 NFA 3,637 3,824 7,354 7,918 8,173 8,532 Investments 1
Slide 53: Annexures
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Slide 54: Annexures
Annexures Nutrient Based Subsidy Policy State of the Art Plants Fertiliser Technology Center Rural Girl Child Education Assistance Programme Coromandel’s Firsts External Recognition... 54
Slide 55: Nutrient Based Subsidy Policy
Nutrient Based Subsidy Policy 55
Slide 56: Indian Fertiliser Industry Overview
Indian Fertiliser Industry Overview Yield (Kg/Ha) 2000 30 Nutrient Consumption (Million MT) 25 Fertiliser Use Efficiency : 1500 20 For the last 10 yrs, Crop yield growth 1000 15 rate has been only 1.20% where as 10 Nutrient consumption has grown by 500 5 3.6%. Fertiliser use efficiency is the 0 0 ma
Slide 57: Nutrient Based Subsidy Policy - Rationale
Nutrient Based Subsidy Policy - Rationale Indian IndianAgriculture Agriculture Fiscal FiscalConsolidation Consolidation •Right Nutrient balance for •NBS policy will help Govt of optimum farm productivity India to contain Fertiliser •Encourage usage of other Micro subsidy Bill nutrients •Fertiliser S
Slide 58: Main features of the NBS
Main features of the NBS • Primary Nutrients viz. Nitrogen ‘N’, Phosphate ‘P’ and Potash ‘K’ and Nutrient ‘S’ will be eligible for NBS. • Any variant of the fertilisers mentioned above with secondary and micro- nutrient (except Sulphur ‘S’) as provided for under Fertilisers Control Order (FCO) are a
Slide 59: Main features of the NBS
Main features of the NBS • Import of all fertilisers covered by NBS including 15 grade of complex fertiliser is placed under open General License (OGL) • Urea will not be covered under NBS and Import of Urea will continue to be channalised during the first phase. • Fertiliser Companies have flexibil
Slide 60: Products under NBS
Products under NBS • Di Ammonium Phosphate (DAP, 18-46.0) • DAP Lite ( 16-44-0) • Muriate of Potash (MOP) • Mono Ammonium Phosphate (MAP, 11-S2-0). • Triple Super Phosphate (TSP, 0-46-0) • 15 grades of Complex fertilisers. • Ammonium Sulphate (AS – (caprolactum grade by GSFC and FACT) and • Single S
Slide 61: NBS - Win-Win Proposition for all Stakeholders
NBS -“Win-Win” Proposition for all Stakeholders • Certainity in Subsidy amount • Reduction in Subsidy outgo Govt of India NBS Industry Farmers Company NBS will help companies with • Access to new products • Strong Brand image and technologies • Intensive Extension activities 61
Slide 62: Subsidy Computation – Pre Vs. Post NBS
Subsidy Computation – Pre Vs. Post NBS Pre NBS NBS DAP DAP Commodity - IPP Price – 500 $ per Mt Price – 500 $ per Mt Price Farm Gate Price Farm Gate Price Fixed 203 $ per Mt Variable 235 $ per Mt Subsidy Amount Subsidy Amount Variable Fixed 297 $ Per Mt 377 $ Per Mt Minus Pre PreNBS NBS NBS NBS • Pr
Slide 63: Subsidy Calculation under NBS – 2010-2011
Subsidy Calculation under NBS – 2010-2011 Particulars Urea (N) DAP (P) MOP (K) Sulphur IPP (U.S $/MT) 310 500 370 190 Total delivered cost @ Rs.46/$ 15,994 25,618 19,147 8,920 Less: MRP (Rs. Mt) 5,310 9,350 4,445 Subsidy (Rs. Mt) (A) 10,684 16,268 14,692 1,784 (20%) Nutrient Content (B) 46% N 18%N a
Slide 64: Subsidy Calculation under NBS – 2011-2012
Subsidy Calculation under NBS – 2011-2012 Particulars Urea (N) DAP (P) MOP (K) Sulphur IPP (U.S $/MT) 350 612 420 180 Total delivered cost @ Rs.45.65/$ 17,800 30,513 21,109 8,386 Less: MRP (Rs. Mt) 5,310 10,750 5,055 Subsidy (Rs. Mt) (A) 12,490 19,763 16,054 1,677 Nutrient Content (B) 46% N 18%N and
Slide 65: State of the Art Plants
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Slide 66: State of the Art Plants
State of the Art Plants Kakinada ● 700 acres of land ● Located 2.7 kms from Kakinada, an AP sea port ● Flexible Production Facility Capable of producing upto 1.5 mtpa ● Adequate land for further major capacity expansion in future ● Adequate Power (co-owned), water and other infrastructure facilities
Slide 67: State of the Art Plants
State of the Art Plants ENNORE ● Certified for ISO 14001 for Environment ● Ammonia submarine pipeline for unloading ammonia – first of its kind in Asia ● Captive phos acid/sulphuric plants ● Captive power plants/ water desalination plant Ranipet ● First in Asia to install a fertilizer plant ● SSP un
Slide 68: Fertiliser Technology Center
Fertiliser Technology Center 68
Slide 69: Fertiliser Technology Center
Fertiliser Technology Center FTC FTC--Phosphoric Phosphoricacid acid &&complex pilot plant complex pilot plant 1. Phos Acid pilot plant 2. Granulation Pilot plant to study •New product formulations •Optimizing the granulometry (granule size, strength) •Efficacy of new defoamers, anti-caking agents,
Slide 70: Rural Girl Child Education Assistance Programme
Rural Girl Child Education Assistance Programme 70
Slide 71: Rural Girl Child Education Assistance Programme
Rural Girl Child Education Assistance Programme Objectives: • To empower Rural Women • To encourage the Rural Girl Child for higher education Programme launched in 2005 Landmarks: 1320 Schools 2640 Students Rs. 5.9 million worth of Scholarships Going An Extra Mile…………… 71
Slide 72: Coromandel's Firsts
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Slide 73: Coromandel's Firsts
Coromandel’s Firsts • First fertiliser factory in India (1906) – Ranipet Plant • First Integrated Complex fertiliser plant in private sector (1963) – Ennore Plant • First in India (1967) to commercially manufacturer UAP 28:28:0, a high-analysis complex fertiliser with highest nitrogen-phosphate cont
Slide 74: External Recognition
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Slide 75: External Recognition...
External Recognition... • D&B – Rolta Corporate Award • DMA-Erehwon National Award for Innovation in HR • CNBC Award for the Most Engaged Workforce • FAI Best Production Performance Award for the Phosphoric Acid Plant at Vizag, for the 10th time. • FAI Best Production Performance Award for Complex (
Slide 76: External Recognition...
External Recognition... • International Award for The VOICE magazine from IAVA, New York. • National Energy Conservation Award (Commendation Certificate) for efforts in Energy Conservation from Ministry of Power, New Delhi, for Kakinada Plant. • Ranked among the Top 20 Best Employers to work for by
Slide 77: Thank You
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Coromandel International — Investor Presentation (June 2011) on 6ix