Post on 30-Nov-2014
description
July 2012
Insecticides India
Contents
Sections
1 Indian agrochemicals sector 2
2 Company ovierview 5
3 Business description 9
4 Summary financials 15
5 Growth strategy 17
1
1. Indian agrochemicals sector
1.1 OverviewIndia is the 4th largest producer of agrochemicals by volume and 12th largest by value
Indian agrochemical industry (US$ bn) Domestic agrochemical consumption (by segment)
Split of consumption by crop type Split of domestic market by region
Source Broker notes, Company
Total c.US$ 1.6bn
Total c.US$ 1.6bn Total c.US$ 1.6bn
Significantly lower agrochemical usage in India implies strong growth of c.10% p.a. expected in the near term
Agrochemicals consumption in India skewed towards insecticides given the tropical climate and type of crop plantation
Crop losses in India range from 20% to 30% owing to suboptimal and inadequate usage of agrochemicals and is estimated to be worth c.US$ 20bn per year
1.6 1.7 1.9 2.5
2.8
4.9
-
1.0
2.0
3.0
4.0
5.0
6.0
2006 2007 2008 2009 2010E 2015P
US
$ b
n
Insecticides62%
Herbicides21%
Fungicides17%
AP24%
UP17%
Punjab 14%
Hary ana 10%
WB9%
Maharashtra7%
Gujarat6%
Others13%
45%
23%
9%
7%
6%3%3%2%2%
Cotton Paddy SorghumFruits & veg Wheat ArharGroundnut Bajra Others
1. Indian agrochemicals sector
3
1.2 Robust growth prospects
Arable land stagnation Rise in MSP
Low pesticide consumption Increased institutional credit flow
Structural enablers in Indian agrochemicals sector to catalyze strong growth trajectory
Rising pressure to increase food productivity given land shortage/stagnation and rise in population
Increasing awareness of farmers Rising prices of crops on the back of Minimum Support
Prices (MSP) Use of costlier hybrid seeds Current under penetration of agrochemicals in India
– Pesticide consumption amongst the lowest globally Labour shortage for agricultural activities on the back of
NREGA Continued financial support from Government through
subsidies and greater flow of institutional credit
India is expected to emerge as a hub for the procurement of generic agrochemicals as well as new generation products
105
110
115
120
125
130
135
FY
80
FY
83
FY
86
FY
89
FY
92
FY
95
FY
98
FY
01
FY
04
FY
07
FY
10
m h
ect
ares
880 980 1,030 1,110
1,080 1,100 1,120 1,285
2,000 2,300
3,000 3,200
-
700
1,400
2,100
2,800
3,500
FY09 FY10 FY11 FY12E
Rs
/ q
uin
tal
Paddy Grade A Wheat Arhar
17.0
12.0
7.0 6.6
2.5
0.4
-
3.0
6.0
9.0
12.0
15.0
18.0
Tai
wan
Japa
n
Kor
ea
US
A
EU
Indi
a
Kg
/ hec
tare
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
FY
00F
Y01
FY
02F
Y03
FY
04F
Y05
FY
06F
Y07
FY
08F
Y09
FY
10
RS
bn
Source Department of Agriculture, research reports
1. Indian agrochemicals sector
4
2. Company ovierview
2.1 Company snapshotInsecticides India (“IIL”) is an integrated agrochemicals company engaged in R&D, manufacturing, marketing and distribution of agrochemicals in India
Shareholding pattern
Outperforming the index
Listed company, established in 2001 Amongst top 10 agrochemicals company in India with
an estimated 5% market share Large and diversified product portfolio Track record of new product launches
– Judicious mix of in-house development, brand acquisitions and technical collaboration / marketing arrangements with global players
Wide sales & distribution network across India Established manufacturing infrastructure for both
technicals and formulations
– Recently commissioned new units with sufficient capacity to enable sustained long term growth
– New state-of-the-art technicals manufacturing facility and R&D facility is in pipeline
R&D center recognized by DSIR and Ministry of Science & Technology
Accredited with NABL (R&D facilities), ISO 9001:2000, ISO 14001 and OHSAS 18001
– GLP accreditation expected soon0
100200300400500600700800900
Jun-
09
Aug
-09
Oct
-09
Dec
-09
Feb
-10
Apr
-10
Jun-
10
Aug
-10
Oct
-10
Dec
-10
Feb
-11
Apr
-11
Jun-
11
Aug
-11
Oct
-11
Dec
-11
Feb
-12
Apr
-12
Jun-
12
IIL SensexNotes Figures have been rebased to 100
762
114
Promoters74.7%
FIIs5.9%
Others19.4%
Notes Shareholding pattern as on 31st Mar 2012
2. Company ovierview
6
2.2 History & development
Entered into 2nd collaboration with AMVAC (for Nuvan)Finalized marketing arrangement with Nissan
Insecticides India (P) Ltd. incorporated
Undertook establishment of manufacturing facility at Udhampur
IPO & listing on NSECommissioned technicals plant at Chopanki
Converted to Insecticides (India) Ltd.
Commissioned first manufacturing plant at Chopanki
Acquired leading brands of Montari Industries (Ranbaxy group company)
Commissioned 2nd manufacturing plant at Sambha
Received ISO 9001-2000 certificationSet up R&D lab at Chopanki
Acquired exclusive right to sell Thimet in India (collaboration with AMVAC, USA)
New R&D unit set up after receiving Govt. accreditation
Undertook establishment of multi-product manufacturing facility at Dahej
1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Acquired brand Monocil from NocilCommisioned Dahej and Udhampur plants
2011 2012YTD
2. Company ovierview
7
2.3 Management team
Finance
Pankaj GuptaCS
P.C. PabbiVice President
Production
Sanjeev AggarwalGM
Rajesh Aggarwal (MD)
Information Technology
Sandeep AggarwalCFO
H.C. SharmaDGM
H. C. Aggarwal (Chairman)
Marketing Admin & HR
K.V. PatelUnit Head
R. S. VermaSr. Manager
M.K. SinghalGM
V.K. GargGM
Sanjay VatsGM
Purchase
V.K. SinghalGM
Abhai ShankerGM
Anil TyagiProject Head
B.P.S. RanaDGM
S.K. ChoudharyProject Manager
Sanjay VatsGM
Venkat RaoGM
R&D
Dr. MukeshDGM
Ashok BangdeGM
2. Company ovierview
8
3. Business description
3.1 Diversified business model
Diversified by segment Diversified by geography
Strong presence across categories Strong in-house manufacturing
Highly defensible, backward integrated and diversified business model
Strong presence in insecticides and herbicides segments
– Segment focus and mix is strategically aligned to requirements of the Indian market
Formidable pan India presence with footprint across major crop producing regions in India
Catering to both Branded formulations (B2C) and Institutional sales (B2B) market
– Especially strong in Branded formulations
Focus on in-house manufacturing and backward integration
Diversified portfolio across segments, regions and customers; strong brand presence and recognition; in-house manufacturing and grassroots distribution infrastructure
Notes FY12 figures are provisional; All charts above depict segmentation of FY12P gross sales
61.5%
28.0%
6.7% 3.7%
Insecticides Herbicides
Fungicides PGRs
Total = Rs 5,541m
16%
17%
10%11%8%6%
32%
Punjab A.P. HaryanaMaharashtra UP KarnatakaOthers
Domestic Branded sales = Rs 4,341m
79%
21%
Branded formulations Institutional sales
Total = Rs 5,541m
92%
8%
Manufactured in-house Traded
Total = Rs 5,541m
3. Business description
10
3.2 Large product portfolio
Large portfolio across multiple segments Exceptional track record of new product launches and portfolio augmentation aided by
In-house product development through
– Backward integration
– Enhanced focus on R&D
Acquisitions of ‘high recall, but off-shelf’ brands and their successful re-launch into leading brands
– Lethal and Monocil are recent success stories
Technical collaborations with leading global agrochemical players
– Plan to repeat success of Thimet with Nuvan
Marketing arrangements with principal partners
IIL’s product portfolio comprising of over 120 branded products, over 10 technicals and over 750 SKUs
23
11
8
1
65
25
20
18
88
36
28
19
0 20 40 60 80 100
Insecticides
Herbicides
Fungicides
PGRs
Institutional Branded formulations
Track record of launch of new branded formulations
5 5
7
3
8
0
2
4
6
8
10
FY08 FY09 FY10 FY11 FY12P
3. Business description
11
Marketing initiatives Dedicated awareness initiatives provide
information to farmers on various aspects of agriculture and use of agrochemicals
Participation in national and international conferences, exhibitions and fairs
3.3 Sales & marketingIIL enjoys market leading positions in several of its major products - a testimony to its strong branding and marketing initiatives and the extensive distribution reach
Best-in-class pan-India distribution network 230+ sales personnel, 3,100+
distributors and c.50,000 retail outlets
26 depots across 24 locations Unparalleled reach to India’s
fragmented and dispersed end consumer base
Sales personnel split Branding activities Farmer awareness initiatives
Strong focus on Brand strategy Portfolio of over 120 branded products Top selling brands such as Thimet, Lethal, Monocil and
Victor enjoy leading positions in the market Aggressive focus on branding helped IIL gain market share Successful employment of “Umbrella strategy” to introduce
products for new applications and crops Pioneer in using electronic media advertisement
North, 93
East, 21West, 28
South, 80
Central, 15
Total = 237
3. Business description
12
3.4 Manufacturing capabilities
Strong manufacturing infrastructure In-house manufactured products
account for 90%+ revenues One of the best asset turnover
amongst Indian peers
Significant expansion in manufacturing capacity currently underway Expansion in technicals capacity to
provide a significant boost for the institutional segment
Ramp up in formulations capacity to provide sufficient capacity to enable sustained long term growth
Significant opportunity for CRAMS arising out of new facilities
Significant area available for expansion of facilities in Government approved industrial belt for agrochemical production
Udhampur, J&KLiquid capacity – 3.0m L
Powder capacity – 0.6m KgGranules capacity – 0.6m Kg
Sambha, J&KLiquid capacity – 5.5m LPowder capacity – 2.1m KgGranules capacity – 6.1m Kg
Dahej (Baruch), GujaratLiquid capacity – 4.0m L
Powder capacity – 2.5m KgGranules capacity – 12.0m Kg
Chopanki, RajasthanLiquid capacity – 7.8m L
Powder capacity – 3.5m KgGranules capacity – 7.5m Kg
Technicals capacity – 2.0m Kg
25% capacity expansion overall to be completed by H1FY13
Technicals capacity expansion of 10.0m kg to be commissioned by H1FY13
Granules capacity expansion of 7.5m kg planned in the new (third) pant; to be commissioned by H1FY13
NotesDisplayed capacity figures correspond to installed capacity as of 31st March 2012
3. Business description
13
Granules capacity expansion to be completed by H1FY13
International Collaborations & Tie ups
• Technical Collaboration with American Vanguard Corporation (AMVAC) for manufacturing and marketing of THIMET and NUVAN
• Tie up with Japanese giant Nissan Chemicals Industries Limited for Thiafluzamide and Quizalofop
• JV with Oatsuka Agritechno Japan for R&D Centre in India, focusing invention of new agro chemical molecules for international requirements
4. Summary financials
4.1 Summary financials
Net sales and margins
Exceptional annual growth in revenues over last 4 years
Notes FY12 figures are provisional
2,634
3,774
4,501
5,218
10.2%9.4% 10.1%
9.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
FY09 FY10 FY11 FY12 P
Rs
m
Net Sales EBITDA Margin
4. Summary financials
15
4.2 Competitive benchmarking
Revenue CAGR (FY08 –FY11) EBITDA margin (FY11)
Asset turnover (FY11) ROCE (FY11)
Notes FY12 figures are provisional
32%
26% 26% 26% 25% 20% 19%
17% 16% 16% 13% 11% 10%
0%
7%
14%
21%
28%
35%20%
17% 16%
15% 15% 13%
11% 11% 11% 10% 10% 10% 9%
15.8x
12.7x
6.5x 6.3x 5.9x 5.5x 4.2x 4.0x 3.8x 3.2x 3.2x
1.6x 1.1x
38% 35% 35%
27% 27% 25% 21%
16% 15% 12%
9.9% 6.7% 5%
4. Summary financials
16
5. Growth strategy
5.1 Growth strategy
IIL intends to leverage its expertise in successful brand launches, enhanced R&D focus and recently expanded manufacturing capacity to fuel its future growth
Marketing
Research &
development
Manufacturing
Continued focus on establishing strong brands
Employ IIL’s well-tested “Umbrella strategy” to introduce product extensions
Continued focus on R&D to reduce costs and manufacturing time
Capitalize on prior experience to achieve maximum number of technicals registration
Leverage R&D capabilities for CRAMS
Enhanced backward integration with increase in technicals manufacturing capacity
– Enhance margins
– Enable targeting institutional segment
Leverage on location advantage of manufacturing facilities
Exploit gains from upgraded and newly commissioned manufacturing facilities
5. Growth strategy
18