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TRANSCRIPT
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Investor PresentationNovember, 2014
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Disclaimer
This presentation contains forward-looking statements which may be identifiedby their use of words contains “plans,” “expects,” “will,” “anticipates,” “believes,”“intends,” “projects,” “estimates” or other words of similar meaning. Allstatements that address expectations or projections about the future, including,but not limited to, statements about the strategy for growth, productdevelopment, market position, expenditures, and financial results, are forward-looking statements.
Forward-looking statements are based on certain assumptions and expectationsof future events. The companies referred to in this presentation cannotguarantee that these assumptions and expectations are accurate or will berealised. The actual results, performance or achievements, could thus differmaterially from those projected in any such forward-looking statements. Thesecompanies assume no responsibility to publicly amend, modify or revise anyforward looking statements, on the basis of any subsequent developments,information or events, or otherwise
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Agri Input Industry Overview
Company Update
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AGRI INPUT INDUSTRY OVERVIEW
4
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GLOBAL SCENARIO
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Global Mega Trends
6
• Global Food demand to increase 1.5x by 2030
• Changing dietary patterns, especially in developing countries
Rising Food Demand
• Limited land and labor availability
• Degradation of soil quality
Limited Resources
• Global staple food prices have doubled as compared with 2000 levels
High volatility in food prices with an upward trend
• Commercial and small farm productivity increases to drive supply growth
• Innovation in inputs technology to drive supply
Innovation to drive productivity
• Coordination across value chain – improve farm extension, market linkage, infrastructure
Increased Value Chain Coordination
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"N" World Market
4%
52%
5%9%
11%
6%13%
Ammonia
Urea
UAN
AN/CAN
NPK
DAP/MAP
Others
"P" World Market
48%
27%
17%
6% 2% DAP/MAP
NPK
SSP
TSP
Others
"K" World Market
70%
29%1%
MOP/SOP
NPK
Others
“N” Market is 108 Million MT
“P” Market is 41 Million MT
“K” Market is 29 Million MT
Global Fertiliser Industry:
� India and China account for 40% of global
consumption
Bulk availability of nutrient fertilisers is concentrated
in certain regions
•‘N’ nutrient in Middle East, USA & FSU
•‘P’ nutrient in North/West Africa, USA &
Jordan
•‘K’ nutrient in Canada, FSU & Middle East
World N,P,K Fertilizer Market
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Global Nutrient Consumption Outlook
108 109116
41 4145
29 2933
2012 2013e 2017f
N P2O5 K2O
2012-2017 CAGR
N 1.2%
P2O5 1.6%
K2O 2.2%
Million tons Nutrient
Source: IFA
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DAP – Global Production & Trade
MM tons
10 year CAGR
Production 2.9%
Exports 1.6%
Global production & trade of DAP have increasedChina, Saudi Arabia & Morocco account for all production increases
9
26
3133 33 35
10
15 1614 14
2008 2009 2010 2011 2012
Production Trade
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INDIAN SCENARIO
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India’s crop productivity is low by global standards - needs to increase to meet demand
3.1
4.3
5.1
2.2
1.9
1.6
4.7
6.6
5.5
1.6
1.9
3.3
2.8
3.3
2.3
0.91.1
0.9
Wheat Rice Corn Soybean Rapeseed Peanut
World China India
MT per hectare
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Positive factor: Irrigated Area in India has been steadily increasing
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The overall net irrigated area a percent of net cropped area has increased from 34% in the early 1990s to 45% in 2011
119
141 143 141 139 142
2131
4855
62 6418%
22%
34%
39%45%
45%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
20
40
60
80
100
120
140
160
1950-51 1970-71 1990-91 2000-01 2009-10 2010-11
Net cropped area Net irrigated area Net irrigated area as % of net sown area
Mio hectares
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Positive factor: Cropping Intensity has also steadily increased
13
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.
132
166186 185 189
199
119
141 143 141 139 142
111%118%
130% 131% 136% 140%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
50
100
150
200
250
1950-51 1970-71 1990-91 2000-01 2009-10 2010-11
Gross cropped area Net cropped area Cropping Intensity
Mio hectares
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India’s nutrient application rates will have to increase to improve productivity
Nutrient Consumption among the Asian Countries
India’s Nutrient consumption (Kg/Ha) is lower than countries like
China (396), Bangladesh (204) and Pakistan (184).
14
166138
204184
396
0
50
100
150
200
250
300
350
400
450
India Srilanka Bangladesh Pakistan China
Kg / Hectare
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Long-term demand drivers and fundamentals are strong in India
15
• Population growth, urbanization and resulting food demand will be primary
growth drivers
– Population growth
– Urbanization and higher income levels
– Changing dietary mix
– Impact of Food Security Bill
• Nutrient application rates will have to increase from current levels to sustain
supply response to demand
• Cropping intensity, irrigation and other agricultural factors are improving
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Fertiliser Subsidy Policy
Phosphatics decontrolled Nutrient Based Subsidy (NBS) policy effective from April1,2010.
The Salient features of NBS policy 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 Urea and “K” based on Potash and “S”
based on Sulphur
o Under the NBS Policy MRP/Farmgate prices has been decontrolled - Companies are
free to set the price
o The subsidy is announced for the year and any increase / decrease in cost of inputs
will have to be addressed by companies through change in farm gate prices – Fixed
subsidy & variable farmgate prices
Nutrient 2010-11 2011-12 2012-13 2013-14 2014-15
N 23.227 27.153 24.000 20.875 20.875
P 26.276 32.338 21.804 18.679 18.679
K 24.487 26.756 24.000 18.833 15.500
S 1.784 1.677 1.677 1.677 1.677
Subsidy - Rs. Per Kg
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Lower subsidy component…
Share of farm gate price of Complex Fertilizers in total realization has increased and the share of subsidy has decreased.
37% 40% 48%63% 65%
63% 60% 52%37% 35%
Pre NBS 2010-11 2011-12 2012-13 2013-14
Subsidy as percentage of Total Realization
Farmgate as percentage of Total Realization
Rs. Cr 11-12 12-13 13-14 14-15YoY
Growth %
Imported (Urea) fertilisers 13,883 13,398 15,544 12,300 (20.87)%
Indigenous (Urea) fertilisers 19,108 19,000 21,000 36,000 71.43%
Sale of decontrolled fertilizer with cons. 34,208 28,576 29,428 24,670 (16.17)%
Total Fertiliser Subsidy (B) 67,199 60,974 65,972 72,970 10.61%
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58.00
58.50
59.00
59.50
60.00
60.50
61.00
61.50
62.00
62.50
63.00
2-Apr-14 2-May-14 2-Jun-14 2-Jul-14 2-Aug-14 2-Sep-14 2-Oct-14 2-Nov-14
Stable exchange rate….
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… resulted in Stable MRP..
19
Rs per MT
9350 935010750
18200
24000
22500 2270023800
Prior to June '08 June '08- Mar '10 Mar-11 Mar-12 Oct-12 Apr-13 Apr-14 Oct-14
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118 98 10551
106
61 37
22
2011-12 2012-13 2013-14 2014-15 H1
Production Import
…which aided by lower imports resulted in depleting inventory and consumption revival…
20
224
DAP + COMPLEX: PRODUCTION + IMPORT
DAP + COMPLEX: SALES
Lac MTProduction -11%Imports -65%
159142
Stable exchange rate and raw material prices, combined with
good monsoon and a sharp decline in imports led to
reduction in pipeline inventory of DAP and complex products
217
164
140
74
2011-12 2012-13 2013-14 2014-15 H1
-36%Lac MT
73
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UREA SUPPLY & DEMAND
Lac MT
….Urea Demand has remained stable due to high levels of subsidy …
21
298 306 298
-20% -28%
MOP SUPPLY & DEMAND Lac MT
220 226 227
115
78 80 71
30
2011-12 2012-13 2013-14 2014-15 H1
Production Import
145
295 302 304
140
2011-12 2012-13 2013-14 2014-15 H1
Sale
40
24
32
20
2011-12 2012-13 2013-14 2014-15 H1
Imports
30
21 22
14
2011-12 2012-13 2013-14 2014-15 H1Sale
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…and negatively impacted N-P-K application ratios in recent years
22
7.7
6.9
4.3
6.9
8.9
6.3
5.8
3
3.1
2
2.96
2.7
2.6
1.9
1
1
1
1
1
1
1
0 2 4 6 8 10 12 14
2013
2012
2011
2000
1994
1990
1980
N P K
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COMPANY PROFILE
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Coromandel - Snapshot
24
Key Facts :
� Turnover: Rs.10,053 Cr
� Market Cap: Rs. 9,250 Cr
� Strong credit rating: ‘AA +’ (Stable outlook)’ with CRISIL India
� Employees: 2712
� International Linkages: FOSKAR,GCT, CANPOTEX, SQM, GETAX , QAFCO, ICL, Phoschem, OCP, YANMAR
etc
� International Market Serviced: Latin America, Africa, China, South East Asia, Middle east
Rs. Cr.
6,453 7,637
9,901 9,034
10,053
5347
769
1,056 1,054
768 805
09-10 10-11 11-12 12-13 13-14 14-15 H1
Revenue EBITDA
469<
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Business Structure
Coromandel
Phosphatic Fertilisers
Crop Protection
Retail
Specialty
Nutrients & Organic fert
DAP
Complex Fertilisers
/SSP/MOP
Technicals
Formulations
G-Sulphur
Water Soluble
Fertilisers
Organic Manure
Agri Inputs
Agri Services
64%80%
36%20%
Sales EBITDA
Non subsidy EBITDA share has steadily improved from 23% in FY08-09 to 36% in FY13-14
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Growth through acquisitions and JVs
26
2003 2004 2006 & 2007
2008 2009 & 2010
2011 2013 2014
Complex Fertilizers
Demerged fert.
Biz from EID
Parry
GFCL Acq1.5 MM tons
SSP Liberty Group
1MM ton SSP
Capacity
Crop Protection
FICOM Acq
Acq of Jammu
unit
SaberoAcq
Others / JVs BAA with
FOSKOR
TIFERT JV
JV with SQM
APGPCL15 MW
JV with Yanmar
and Mitusi
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Key StrengthsFarm Inputs BusinessFarm Inputs Business
Cost Leadership
Cost Leadership
FertilisersFertilisers Non Subsidy Businesses
Non Subsidy Businesses
SourcingSourcing
Strategic Alliances in
Sourcing –
• Long Term tie-up with
Foskor, South Africa
and Group Chemique,
Tunisia
• TIFERT JV in Tunisia
• Supply agreement for
Ammonia and Sulphur
with Mitsui
• Potash from Canpotex
• Low cost
manufacturer of
Phos acid - Visak
and Ennore
• Kakinada - High
Efficiency and Very
low conversion cost
• Ex Plant/Rail
deliveries - Low
Freight Cost
• Low cost of
borrowing
• Access to low cost
electricity – stake in
APGPCL
Marketing Strength
Marketing Strength
• Wider reach and
penetration
• Strong brand image
in the home market
• Wide Product Range
- Low ‘P’ to high ‘P’
• Direct contacts with
farmers - Mana
Gromor Centers
• Extensive field
promotions
• Specialty
Nutrients/ Water
Soluble
Fertilisers/Micro
Nutrients and
Organic compost
• Crop Protection –
Technicals and
Formulations
• Retail
• Farm
Mechanization
Services
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Coromandel’s Fertilisers Business
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Coromandel Fertiliser Business Growth Story
50 Lac Mt
� C Train Expansion
� LIBERTY SSP acquisition
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Global Strategic Alliances Alliances for Key raw
materials
Coromandel has successfully concluded Business Assistance
Agreement (BAA) with FOSKOR in 2008 and picked up Sweat Equity
in FOSKOR. Current equity holding in FOSKOR:14%
JV with SQM, Chile
Mitsui, Japan
Potash- Canada
Coromandel holds 15% stake in TIFERT – JV for
Phos acid venture in Tunisia with GCT
WSF and MAP
MOP
Ammonia and Sulphur
Israel , Togo Algeria
Rock Phosphate
Pact with QAFCO for supply of Urea and
Ammonia
FMS JV with Yanmar & co. Japan
“Shell “ Technology
Phos Acid Tie UpBrasil-Presence
Crop Protection
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State of The Art Manufacturing Facilities
Coromandel – Lowest cost producer of complex fertiliser in the countryCoromandel – Lowest cost producer of complex fertiliser in the country
• Plants are strategically located in highly
irrigated southern Indian states and in
heart of fertilizer consumption market –
low freight cost
• Plant Facilities – State of art with good
infrastructure support and robust
systems
• Phosphate – lowest cost manufacturer
in India
• Captive jetty at Vizag, Own storage
tanks and pipeline for raw materials:
Ammonia & molten sulphur (Vizag &
Ennore) - Lower handling and
associated costs
• Captive power plants at Vizag & Ennore
– saves power costs
• Captive desalination plants at Ennore –
ensure water supply at low cost
• High capacity utilisation levels &
continuous modernisation of facilities
• Backward integration into
manufacturing the intermediate -
phosphoric acid from rock
Visak
Kakinada
Ennore
Ranipet
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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 grade rocks
Sulphuric Acid
• Consistent production performance – operating at 100% + capacity
• Air pre heater technology – Total avoidance of LSHS/Furnace oil
• Increased Power generation
Cost Leadership
Very High Efficiency
• N – 99% P – 98% K – 94%
Low Conversion Cost
• Availability of Natural Gas
• Increased through put of all trains
Logistic Cost
• Increased rail dispatches – minimizing freight cost
to be in line with subsidy
Logistic Cost
• Ex Plant Deliveries – minimizing freight cost
Kakinada Production (Lac Mt)
Visak Production (Lac Mt)Visak PlantVisak Plant
Kakinada PlantKakinada Plant
9.410.0
7.0 7.4
10.5
9.19.8
7.0
8.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
10 11 11 11
13 1411
9
12.10
0
2
4
6
8
10
12
14
16
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Marketing Network
Marketing Channels
� Dealer Trade
� Retail Network
� Institutional segment
Target Markets
110 100 100 200 250
100 150 250
250
375
Bihar MP AP TN KN
DAP Complex
Kg /ha
Primary Market Industry Size:7.2 Million MTCoromandel’s Target : 2.35 Million MTPercentage Share: 33%
Tertiary Market Industry Size: 3.4 Million MTCoromandel’s Target: 0.25 Million MTPercentage Share: 7%
Secondary Market Industry Size: 3.5 Million MTCoromandel’s Target : 0.45Million MTPercentage Share: 13%
Higher complex fertilizer consumption in core markets
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Specialty Nutrient Business
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SPECIALITY NUTRIENTS DIVISION (SND)
G-SULPHURWSF Micronutrients
GROMOR SULPHURGROMOR SULPHUR GROMOR SPRAYGROMOR SPRAY
GROMOR POWERGROMOR POWER
ZincZincSulphozincSulphozinc
BoronBoron
MixturesMixtures
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Sulphur and WSF Business
Business Launch
G Sulphur
Zinc
Portfolio Expansion
WSF
Folibor
SQM JV
Crop and Soil Specific Approach with a dedicated
filed team
Cotton
Citrus
Banana
2003-05 2006-13 2013 ->
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� Continuous innovation to introduce customized products suitable to soil, region
and crop requirements - Improve nutrient use efficiency
� Leverage SQM to bring global best practices in crop nutrition management
� Independent & specialized marketing teams to bring crop focus- Developing
market based on total nutrition package
� Provide value-added services and relevant crop technologies
� Customer lock-in with the superior benefit-cost ratio
SND Strategy
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Sulfur Products
� Strong growth in Sulfur products in FY14
� Continues to be the market leader despite adverse market
conditions
WSF
� Both WSF and Sulfur markets continue to show accelerated
growth and their markets are expected to grow at CAGR of
20%
� Increased customer focus - introducing crop & soil specific
grades
Organic Fertiliser
� Focus on stabilizing supply chain for organic fertilizer
procurement
� Retail sales of Organic fertilizer showing strong growth
SND & Organic Fertiliser Business
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Organic Compost Volumes (Mt)
Sulphur products
33%
77%
Coromandel Others
16%
84%
WSF
Market Share
78171
119279
159169
178758
130217
64997
09-10 10-11 11-12 12-13 13-14 14-15 H1
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Crop Protection Business
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Acquisition of
FICOM and setting
up Jammu Unit I
Expansion to Latin
America
Acquired Pasura Bio
Tech – Jammu Unit
II
Sabero Acquisition
2006
2010
2011
2009
Acquired pesticides
unit of BPM
1990’s
• Wider range of Technicals
• Increased Global presence and
registration
• Strong distribution with own retail
outlets
Crop Protection business - Coromandel
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Crop Protection Strategy
� Increased R&D focus – Starting R&D center for crop protection business in
Hyderabad
� Gromor Suraksha – Umbrella brand for CPC launched and well accepted by
farmers
� Expand business in LATAM, Africa and APAC by leveraging strong
registration portfolio - 45% growth in combined export turnover in FY14
� Merger of Sabero organics expected to be completed in Q3 2014-15
� Synergies expected to crystalize from combined exports and domestic
operations
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Update on Sabero
(Rs. Cr) 10-11 11-12 12-13 13-14H1
14-15
Turnover413 358 515 724 490
EBITDA (before E/O Items)41 (6) 53 77 53
E/O Items(2) (28) (2) - -
EBITDA Reported39 34 51 77 53
PBT17 (77) 8 34 34
PAT11 (64) 8 32 21
% of TO 10-11 11-12 12-13 13-14H1
14-15
Domestic45% 48% 41% 38% 42%
Exports55% 52% 59% 62% 58%
• Increased production & Sales volumes – currently operating at 65-70% of
capacity
• Focus on sustaining & improving EBITDA margin from current levels
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Initiatives
• 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
• Acquired Sabero Organics
• Co-Marketing with MNCs – Access to new
molecules – Tie up with BASF, Syngenta, Dupont
• R&D Initiatives & registraton capabilities
• Alternate sourcing from China
• New Products Introduction
• Foray into Latin American market – Set up office
in Brazil
JammuJammu
RanipetRanipet
Operational InitiativesOperational Initiatives
Strategic InitiativesStrategic Initiatives
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Mana Gromor Centers (MGCs) - Retail
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Retail Strategy
� Positioning Retail as a complete “Farming Solutions” platform
� Constantly deliver significantly improved customer value proposition than
competition in terms of products & services
� Expand connect with farmers and provide technical advise based on
proven scientific practices
� Ring-fence markets in core addressable areas
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Products & Service Offerings
FertilisersCrop
ProtectionSeeds
Veterinary
FeedSND FMS
Other
Agri
Services
Providing “One Stop Solution” to the Indian Farmers
• 600 centers in Andhra Pradesh and 200 centers in Karnataka- servicing
more than 2 million farmers
Retail Business Overview
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Financial Performance
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Consolidated Financial PerformanceTurnover ( Rs. Cr)Turnover ( Rs. Cr) EBIDTA (Rs. Cr) & EBIDTA %EBIDTA (Rs. Cr) & EBIDTA %
ROE & ROCE (%)ROE & ROCE (%)PAT (Rs. Cr) & PAT %PAT (Rs. Cr) & PAT %
6,453 7,637
9,901 9,034
10,053
5347
09-10 10-11 11-12 12-13 13-14 14-15 H1
468
694 639
432 357
212
7.2
9.1
6.5
4.83.5 4.0
09-10 10-11 11-12 12-13 13-14 14-15 H1
PAT PAT%
829 1,008
659 770
469
227 46
109 35
-
11.2%10.2%
7.4% 7.7%8.8%
10-11 11-12 12-13 13-14 14-15 H1
EBITDA before PY Subsidy PY Subsidy EBITDA % - operating
40%
32%
23%19% 21%
27%23%
15%17%
21%
10-11 11-12 12-13 13-14 14-15 H1
ROE ROCE
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Income Statement - Consolidated
Amount in Rs. CrFY2010 FY2011 FY2012 FY2013 FY 2014 FY 2015 H1
Revenue before PY subsidy 6,191 7,410 9,855 8,925 10,018 5347
YoY (Growth) -34.29% 19.69% 33.00% -9.44% 12.25%
EBITDA before PY Subsidy 507 829 1,008 659 770 469
EBITDA % 8.19% 11.18% 10.23% 7.38% 7.69% 8.80%
PY Subsidy 262 227 46 109 35 -
EBITDA Reported 769 1,056 1,054 768 805 469
Extra-ordinary income / (expense) - - (36) - (13) -
PBT 709 986 911 557 517 326
PAT 468 694 639 432 357 212
EPS (Rs.) 16.7 24.6 24.2 15.3 12.6 7.4
Debt / Total Capital (%) 56.48% 44.41% 58.98% 63.04% 48.81% 52.30%
LT Debt / Total Capital (%) 5.83% 9.57% 13.25% 25.15% 11.62% 8.82%
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H1 Results update
50
Consolidated results – Rs. Cr H1 2014-15 H1 2013-14
Turnover 5347 5113
EBITDA 469 407
PBT 326 251
PAT 212 182
Stand alone Volumes – H1 ( Lac MT) H1 2014-15 H1 2013-14
Production – Phosphatics10.95 11.32
Sales – (Manf + Imported complex + MOP) 13.07 12.25
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THANK YOU
51