Project on Agri Finance

Research of Agri Input Industry

Submitted By

Aditya

under the guidance of

Dr. Firdos T. Shroff

Director, CRKIMR

A PROJECT SUBMITTED IN PART COMPLETION OF

MMS TO

Chetana’s R.K.Institute of Management &

Research

Bandra (East), Mumbai 400 051.

JULY 2010

Research of Agri Input Industry

JULY 2010

DECLARATION

This is to declare that the study presented by me to Chetana’s R.K.

Institute of Management and Research, in part completion of MMS

under the title “Research of Agri Input Industry” has been done under

the guidance of Mr. Sanjay Parekh and Mr. Mittul Kalawadia, Senior

Fund Manager and Equity Analyst respectively of ICICI Prudential

Asset Management Co. Ltd.

Aditya

CERTIFICATE

This is to certify that the study presented by Aditya to Chetana’s Institute of

Management and Research, in part completion of the MMS under the title

“Research of Agri Input Industry” has been done under the guidance of Dr.

J.Pandit

The project is in the nature of original work that has not so far been submitted for

any program of Chetana’s Institute of Management & Research or any other

University / Institute. References of work and related sources of information have

been given at the end of the project.

(Project Guide) (I/C director)

Dr. J. Pandit Dr. J.Pandit

ACKNOWLEDGEMENT

This project was a great learning and rewarding experience for me. It gave me an

opportunity to interact with top management people from the industry of my

research and ICICI Prudential Asset Management Co. Ltd. (ICICI PRU AMC) where I

did my summer training. I am grateful to all of them for their cooperation without

which this report could not have been completed.

I thank Mr. Parekh and Mr. Madan of ICICI PRU AMC, who extended all support

and guidance and also provided valuable inputs to me through out my training. I

must make a special mention of Mr. Shah, Deputy Managing Director who was a

constant source of guidance and encouragement to me.

I would like to put on record my sincere thanks to all the faculty members and

administrative staff of the college for their valuable cooperation. I am grateful to

my project guide Dr. Pandit12 without whose support and guidance I could not

have completed this project.

TABLE OF CONTENTS

1 2

Chapter No.

TopicPage No.

Executive Summary 7-8

1 Introduction 9 Background of the organization 10 Objectives of the study 11 Limitations 11 Structure 11

2 Literature Review & Data Analysis 12 Research Methodology 13 Agri Input Industry 14 Advantages of Consumable Inputs to farmers 15 Agri Input Industry- Growth Drivers 16

3 Companies in the sector covered 17 Names of Companies in the sector covered 18

Rallies India Limited 19-25 United Phosphorous Limited 26-30 Sabero Organics Gujarat Limited 31-35 Astec LifeSciences Limited 36-39 Tata Chemicals Limited 40-44 Coromandel International Limited 45-48 Kaveri Seeds Company Limited 49-51 Advanta India Limited 52-55 Conclusion 56 Bibliography 57

Executive Summary

Objective:

The Objective of the study is to understand Agri Input Industry, study it’s components, their relevance to the farmers, and to find out the future of Agri Input Industry in India as well as globally.

Structure:

The project report starts with a brief explanation of Agri Input Industry. Here it briefly explains the various segments falling under the sector, its functions and usefulness to the farmers. It then states the key growth drivers for the industry and throws light on the future prospects for the industry. The project then studies eight companies from the sector. Here it provides an overview of the company, its business areas, product portfolio, revenue mix, historical financial data and growth drivers.

Broad findings:

Agricultural input industry can broadly be classified into consumables like Seeds, Fertilizers, and Agrochemicals and durables like tractors, agricultural machinery, agricultural implements & tools. Agrochemicals play an important role in increasing agricultural production as they protect crops from insects, pests, plant diseases and weeds before harvesting and post harvesting.

Companies studied:

Rallis India Limited Tata Chemicals Limited

Coromandel International Limited Kaveri Seeds Company Limited

Advanta India Limited United Phosphorus Limited

Sabero Organics Gujarat Limited Astec LifeSciences Limited

Conclusions:

The foundation laid by a long term structural growth laid by food grain demand-supply dynamics coupled with robust global demand for agricultural output augurs well for agri input industry.

As supply side issues are likely to arise due to stagnant area under cultivation, decreasing per capita production and scarcity of land for further cultivation, yield optimization is the only feasible option for increasing supply to meet the growing demand for food grains.

Agricultural inputs provide a perfect solution for improving productivity of the existing area under cultivation. Government support and improved financing is likely to boost demand for all agri inputs. This makes the agri input industry growth a long term feature rather than a stop gap solution aimed at immediate yield improvement.

CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF THE ORGANISATION

ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED (ICICI PRU AMC)

ICICI Prudential Asset Management Company is the Investment manager for ICICI Prudential Mutual fund. ICICI Prudential Mutual Fund is the largest and amongst the fastest growing mutual funds in the country with a rapidly growing family of over 14.50 lakh investors.

ICICI PRU AMC is a joint venture between Prudential plc and ICICI Bank. ICICI Prudential Asset Management Company enjoys the strong parentage of Prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India.

ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with average assets under management of Rs. 73,822.45 Crore (as of June 30, 2010). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 230 cities in the country. As on 30 th June 2010 it manages 40 funds.

It also provides Portfolio Management Services (PMS) to individual clients through its PMS division. This division provides personalized services to select clientele who require focused portfolios to meet their investment needs. Currently its product range includes 16 types of portfolios with different investment objectives. The portfolio manager in consultation with the client selects the portfolio which best suits his investment objectives.

1.2 OBJECTIVES OF THE STUDY

To understand Agri Input Industry, study it’s components, their relevance to the farmers, and to find out the future of Agri Input Industry in India as well as globally.

1.3 LIMITATIONS

Availability and collection of data was a difficult task. The duration of internship was two months. I was also assigned two other projects during my internship. Despite this I worked to the best of my ability and beyond my normal office hours to complete the project in time as also to ensure that the quality of research did not suffer.

1.4 STRUCTURE

The project report starts with a brief explanation of Agri Input Industry. Here it briefly explains the various segments falling under the sector, and its functions and usefulness to the farmers. It then states the key growth drivers for the industry and throws light on the future prospects for the industry.

The project then studies eight companies from the sector. Here it provides an overview of the company, its business areas, product portfolio, revenue mix, historical financial data and growth drivers.

CHAPTER 2

LITERATURE REVIEW

&DATA ANALYSIS

Research Methodology

The methodology involved collecting, sifting, collating of data necessary for research. Sources of data were searched and following important sources were identified and exploited to get meaningful data and information:

Meetings with company executives

Equity Research reports

Company annual reports

Company websites

Company presentations

Agri Input Industry

Agri Input industry is involved in manufacturing agricultural inputs such as Seeds, Fertilizers, Agrochemicals and durables such as Tractors, agricultural machinery (Harvesters, thrashers, etc) and agricultural implements & tools (cultivators, levelers, wheel harrow, etc).

Agricultural input industry can broadly be classified into:

Consumables : Seeds, Fertilizers, and Agrochemicals. Durables : Tractors, agricultural machinery and agricultural implements & tools

Segments of Agri input Sector – Consumable Products, in the order of their use to farmers.

Seeds

Fertilizers

Agrochemicals

Advantages of Consumable Inputs to farmers

Seeds :

Quality soil and seeds are two of the most important farming inputs. High yields and good outputs can be achieved only when soil and seeds are used wisely. Seeds ensure higher quality crop output. In the market there are number of companies dealing & offering number of high quality seeds which include the innate traits of insecticides & pesticides.

Fertilizers:

Fertilizers are soil amendments applied to promote plant growth. They help in faster and healthier growth of the crops. They are added to soils to supplement the supply of inorganic nutrients required for plant growth in amounts necessary to eliminate the deficiencies that limit profitable crop and livestock production. The three principal nutrients required for plant growth are nitrogen, phosphorus—as orthophosphate— and potassium. They are usually directly applied to soil, and also sprayed on leaves ('foliar feeding').

Agrochemicals:

Agrochemical (or agrichemical), a contraction of agricultural chemical, is a generic term for the various chemical products used in agriculture. In most cases, agrochemical refers to the broad range of pesticides, including insecticides, herbicides, and fungicides. It may also include synthetic fertilizers, hormones and other chemical growth agents, and concentrated stores of raw animal manure.

Agrochemicals play an important role in increasing agricultural production as they protect crops from insects, pests, plant diseases and weeds before harvesting and post harvesting.

Agri Input Industry- Growth Drivers

Food grain demand-supply dynamics have laid the foundation for a long term structural growth trajectory in the agri input space.

Global demand for agricultural output is likely to remain robust.

But supply side issues are likely to arise due to stagnant area under cultivation, decreasing per capita production and scarcity of land for further cultivation.

Hence yield optimization is the only feasible option for increasing supply to meet the growing demand for food grains.

Agricultural inputs provide a perfect solution for improving productivity of the existing area under cultivation.

Thrust on better productivity coupled with government support and improved financing is likely to boost demand for all agri inputs.

Demand-supply mismatch likely to remain for a long time. This makes the agri input industry growth a long term feature and not a stop gap solution for immediate yield improvement.

Chapter Three

Companies in the sector covered

Names of Companies in the sector covered

Rallis India Limited

United Phosphorus Limited

Sabero Organics Gujarat Limited

Astec LifeSciences Limited

Tata Chemicals Limited

Coromandel International Limited

Kaveri Seeds Company Limited

Advanta India Limited

Rallis India Limited

Company Overview:

Rallis India Limited, a Tata Group Company is one of India’s leading agrochemicals company. It has more than 150 years of experience in servicing rural markets and a comprehensive portfolio of pesticides, herbicides, fungicides and plant nutrients for Indian farmers. The Company is known for its deep understanding of Indian agriculture, sustained relationships with farmers, quality agrochemicals, branding and marketing expertise along with its strong product portfolio. It is the third largest player in the domestic agrochemicals industry in terms of revenues. It enjoys a market share of 11-12%.

The company’s head office is in Mumbai. Its agro-chemical factories are located in New Mumbai, Akola, Ratnagiri in Maharashtra; Ankleshwar in Gujarat; Kaancheepuram in Tamil Nadu and Medak in Andhra Pradesh. Apart from these it has a fine chemicals factory at Cuddalore in Tamil Nadu.

It has the largest agrochemicals capacity in the country (10,000 tonnes per annum of technical grade pesticides and 30,000 tonne litres per annum of formulations). The company has a network of 1,500 distributors that reach more than 40,000 retail counters across the country with presence in more than 80% of India’s districts.

Business Areas

The company’s business areas include the following divisions:

Agri Business Domestic :

The domestic formulation business caters to the crop protection and yield enhancement needs of the Indian farmers through a wide portfolio of products that include Pesticides, Seeds, Fertilizers, Household products and Seed treatment chemicals.

Domestic Institutional Business :

The domestic institutional business caters to the bulk and technical requirements of institutional customers. It undertakes formulation and technical bulk sales to leading institutions like Bayer, Syngenta, Excel, UPL, Gharda, Cheminova, Dhanuka, Nagarjuna.

International Business :

The international business handles exports of pesticides to all parts of the world. The export basket includes technical-grade pesticides, branded formulations and contract-manufactured products. The company has strategic alliances for distribution with MNCs such as FMC, Dupont, Syngenta, Borax International, and Makhteshim Chemical Works.

Business Mix

Revenue Mix

Source: Company, Angel Research

Source: Company, Angel Research; Note - AI - Active Ingredients, CM - Contract Manufacturing

Product Portfolio

The company has a strong portfolio of 60 brands.

Key Products :Insecticides : Applaud, Daksh, Tatamida, Reeva, Rogor, Asataf, Takumi.Herbicides : Fateh, Tata Metri, Tata Panida.

Fungicides : Contaf and Contaf Plus, Master and Fujione.

Around 22-30% of its sales come from alliance products.

Around 30% of its revenues come from new products. (products launched in the last 3-4 years).

Alliances and Tie-ups

It has Contract manufacturing alliances with MNCs such as Syngenta, Kureha, Makhteshim, and Cytec Engineered materials. It also has tie ups with leading household pest companies.

It recently entered into an agreement with Syngenta for marketing the fungicide Azoxystrobin, which is effective in dealing with diseases in crops like rice, vegetables and fruits.

Growth Drivers

• New product launches :

The company recently launched a new product Ergon which could potentially become its best selling product with annual sales of around Rs.1bn or more, powering domestic sales growth. The company has obtained data exclusivity for a period of 3 years which means no competitor is likely to launch a competing product during this period, guaranteeing Rallis a virtual monopoly for the product during this period.

Another new product Balwan is slated for launch shortly in collaboration with Dupont.

• Strong growth in export revenues :

Expansion of Contract manufacturing business is likely to result in a double digit growth in total company revenues over the next 2-3 years. New plant at Dahej is expected to generate cumulative revenues of over Rs. 500 crore in its first three years of operations.

Financial Performance

(Rs. in Cr except per share)

* EBITDA does not include other income.

* In 07 & 08 PAT is higher than EBITDA as the company earned large amount of other incomes in these two years.

.

Particulars FY07 FY08 FY09 FY10

Net Sales 640.96 674.59 836.69 878.68

Growth (y-o-y) (%)

- 5.25 24.03 5.02

EBITDA 37.61 75.19 130.35 166.71

Growth (y-o-y) (%)

- 99.92 73.36 27.89

PAT 58.57 125.30 72.02 101.49

Growth (y-o-y) (%)

- 113.93 (42.52) 40.92

EPS 42.43 98.11 53.65 79.93

Growth (y-o-y) (%)

- 131.23 (45.32) 48.98

Key Financials

Cost Structure

Item of Expenditure

% of Sales

FY07

% of Sales

FY08

% of Sales

FY09

% of Sales

FY10

Raw Materials 56 58 58 55

Power & Fuel Cost 3 3 2 2

Employee Cost 9 9 8 8

Other Manufacturing Expenses

6 6 5 6

Selling and 11 11 8 9


Debt-Equity Ratio 0.17 0.15 0.24 0.02

Debt (Rs. Cr ) 35.85 46.63 82.48 8.11

Current Ratio 1.22 1.68 1.35 1.07

EBIDTA (%) 5.87 11.14 15.58 18.97

PAT (%) 9.14 18.57 8.61 11.55

ROE/RONW (%) 27.61 40.71 20.59 23.91

Tax (%) 26.36 15.79 32.84 33.55

Inventory (days) 75 80 65 62

Debtor (days) 53 55 51 31

Creditor (days) 124 77 85 108

Administration Expenses

Miscellaneous Expenses

8 6 7 6

United Phosphorous Limited (UPL)

Company Overview

United Phosphorus Limited (UPL) which was incorporated in 1969 and which is headquartered in India (Mumbai) is a leading global producer of crop protection products, intermediates, specialty chemicals and other industrial chemicals. UPL has its presence across value added Agri inputs ranging from seeds to crop protection and post harvest activity. It is the second largest player in domestic agrochemicals industry in terms of revenue.

Its range of products include Insecticides, Fungicides, Herbicides, Fumigants, PGR and Rodenticides. They operate in every continent and have customer base in 86 countries, making them a global player of crop protection products in the world. The company ranks amongst the top 5 post- patent agrochemical manufacturers in the world.

UPL has its own subsidiary offices in Argentina, Australia, Bangladesh, Brazil, China, Canada, Denmark, Indonesia, France, Hong Kong, Japan, Korea, Mauritius, Mexico, New Zealand , Russia, Spain, Taiwan, South Africa, USA, UK, Vietnam & Zambia.

UPL has 21 manufacturing sites (9 in India ,4 in France, 2 in Spain, 1 each in UK, Vietnam, Argentina ,Netherlands, Italy, China) having close support from on-site technical services and quality control. Each one operates to the strictest international quality standards.

Installed Capacities: As on March 2009 Pesticides (Intermediates) – 34872 Metric Tones Industrial Chemicals (traded) – 39600 Metric Tones Specialty Chemicals – 5318 Metric Tones Mercury Salts - 100 Metric Tones

Products

• Agro Chemicals

Key Products: Beetup Compact, Chlorban, Copter, Cyrux, Doom, Fenkill, Flora, SAAF.

• Specialty Chemicals

Key Products : 2-Hydroxy Quinoxaline (2-HQ), Diethyl Phosphite (DEP), Dichloro Phenyl Isocyanate (DCPI), Phosphorus Trichloride (PTC), Meta Phenoxy Benzaldehyde (MPBAD).

Industrial Chemicals

Key Products: Phosphorus Trichloride (PTC), Phosphorus Pentasulphide (PPS), Phosphorus Oxychloride (POC), Triethyl Phosphite (TEP)

Revenue Mix

Geographic Distribution

North America

23%

Europe28%

India22%

Rest of the w orld27% North America

Europe

India

Rest of the w orld

Segmental Break up

Key Growth Drivers

The company recently acquired the Mancozeb business of DuPont which will strengthen its fungicides business.

A diversified portfolio with improving mix towards high-growth segments of Fungicides.

Low-cost manufacturing and planned benefits of Cerexagri integration are likely to lead to margin expansion in FY2011E.



Net Sales 23,112 35155 48021 52900

Growth (y-o-y) (%)

- 52.11 36.60 10.16

EBITDA 4285 4905 8153 8288

Growth (y-o-y) (%)

- 14.47 66.22 1.66

PAT 2656 3733 4747 5399

Growth (y-o-y) (%)

- 40.55 27.16 13.73

EPS 13.93 12.80 10.37 11.97

Growth (y-o-y) (%)

- (8.11) (18.98) 15.43

(Rs. Mn except per share)

Key Financials


Debt-Equity Ratio

1.36 0.74 0.80 -

Debt (Rs.Cr) 2028.71 1654.49 2134.15 -

Current Ratio 1.94 1.89 2.17 -

EBIDTA (%) 18.54 13.95 16.98 15.67

PAT (%) 11.49 10.62 9.89 10.21

ROE/RONW (%) 17.76 16.68 17.76 15.76

Tax (%) 15.69 13.10 6.01 13.19

Inventory (days) 165 113 128 70

Debtor (days) 90 89 87 84

Creditor (days) 175 170 115 100

Cost Structure

Item of Expenditure

% of Sales

FY07

% of Sales

FY08

% of Sales

FY09

% of Sales

FY10


Power & Fuel 2 2 2

Cost

Employee Cost

8 11 10 9.50


6 7 5

Selling and Administration Expenses

12 12 11


4 6 4

Sabero Organics Gujarat Limited

Company Overview

Sabero Organics Gujarat Limited, founded by the Chuganee Group, was established in the year 1991 to manufacture specialty and crop protection chemicals. It is a publicly listed company on the Bombay Stock Exchange and National Stock Exchange in India. With its manufacturing

facilities located in Gujarat, India, Sabero is an ISO 9001 and ISO 14001 certified company with a diverse product portfolio, manufacturing and marketing a variety of fungicides, herbicides, insecticides & specialty chemicals. Sabero is among the lowest cost producers in the world for its key products and its chemical complex in Gujarat has been recognized as a pioneer industry by the government of India.

The company has an employee strength of over 700 people possessing competent managerial, technical, supervisory and administrative skills. The Research & Development department boasts of sophisticated analytical equipment and a well qualified team of scientists. Technologies of all products manufactured by the company have been developed in-house and are well accepted and acclaimed by customers.

Sabero has extensive manufacturing facilities with state-of-the-art sophisticated equipment and PLC based process control. The company has offices and subsidiaries in Europe, Brazil, Argentina, Philippines and Australia. It is also a recognized export house with over 60% of its revenues from international sales. It Supplies its products to over 1000 customers in 50 countries.

The company has entered into a joint venture in Brazil viz. Markan Agroquimica Ltda where in the company holds 44% interest in the shares of the jointly controlled entity and also has joint management control.

Products

Key Products

• Fungicides : Mancozeb

• Herbicides : Glyphosate

• Insecticides : Monocrotophos, Acephate, chloropyriphos

* Largest producer of Mancozeb and glyphosate in India and second largest in the world.

Revenue Break-up

Geographical Break up of Revenue

Rs. In lacs

Region FY10 Share in Rev. (%)

FY09 Share in Rev. (%)

India 18279 42 12374 34

Australasia 4870 11 8332 23

Europe & Africa

5823 14 6347 17

Americas 14060 33 9613 26

Total 43,032 100 36,666 100

Key Growth Drivers

Segment wise revenue :

Fungicides - 39%Insecticides - 34% Herbicides - 20%Specialty Chemicals - 7%

• The company is in the process of setting up a Greenfield project at Dahej SEZ in Gujarat at a capex of Rs.55 Cr, which is expected to be commissioned by Q3 FY2011.

• The company has been added as source of Glyphosate by multinationals in 11 countries and as a source for Mancozeb by a multinationals in 20 countries.

• Domestic sales to get stronger especially in Andhra Pradesh, Tamil Nadu, Punjab, Gujarat, and some parts of Maharashtra.


Particulars FY2008 FY2009 FY2010

Net Sales 207.34 377.35 430.32

Growth (y-o-y) (%) - 82 14

EBITDA 26.66 50.96 81.68

Growth (y-o-y) (%) - 91.15 60.28

PAT 6.33 20.44 38.53

Growth (y-o-y) (%) - 222.91 88.50

EPS 2.17 7.00 13.12

Growth (y-o-y) (%) - 222.58 87.43

Particulars FY2008 FY2009 FY2010

Debt-Equity Ratio 1.06 1.08 0.71

Debt (Rs.) 55.34 80.10 81.98

Current Ratio 1.12 1.09 2.40

EBIDTA (%) 12.86 13.50 18.98

PAT (%) 3.05 5.42 8.95

ROE/RONW (%) 12.13 28.1 33.50

Tax (%) 27.74 28.73 36.73

Inventory (days) 70 49 47

Debtor (days) 65 61 64

Creditor (days) 65 88

Key Financials

Cost Structure

Item of Expenditure % of SalesFY08

% of SalesFY09

% of Sales FY10

Raw Materials 65 67 58

Power & Fuel Cost 7 5

Employee Cost 4 3 4


2 1


6 5


2 4

Astec LifeSciences Limited

Company Overview

Astec LifeSciences Limited is a producer of agrochemicals and pharmaceutical intermediates. It was established in 1994 with a focus on the Agrochemical and Pharmaceutical industries.

Today, Astec manufactures a wide range of Agrochemical active ingredients and pharmaceutical intermediates. Astec’s considerable experience in the development and production of intermediates and active ingredients makes it an ideal partner. Astec has forged enduring relationships with large and small companies all over the world. Astec has an unshakeable reputation for providing quality products in manufacturing plants that meet global standards. It’s list of customers include reputed Multinational companies in USA, Japan, Europe and Asia. The company has invested in a joint venture in Europe which will be engaged in product registration activities.

The company has multipurpose production facilities at 2 locations. - Dombivli (50km from Mumbai) - Mahad - 2 plants ( 180 kms from Mumbai)

Major Customers & Key Products

Major Domestic Customers:

Indofil Chemical, Krishi Rasayan Exports Private Limited, Atul Limited, Syngenta India Limited, Hindustan Pulverising Mills Limited, Sulphur Mills Limited, Cinch Chemicals Private Limited, Cheminova, Hyderabad Chemicals Limited, Biostadt India Limited and United Phosphorous Limited.

Major International Customers:

Nong Company, Nufarm UK, Irvita Plant Protection, Repar Corporation, Sharda International FZE, Syngenta and Farma Tech International.

Key Products:

Hexaconazole, Tebuconazole, Metalaxyl and Propiconazole are some of the key products in the agrochemical segment.

Dicap- key Pharmaceutical intermediate product.

Revenue Mix

• Triazole fungicides, which include Hexaconazole, Tebuconazole, and Propiconazole contributed 65.81% of the total sales in 2008-09.

• Dicap, a key product in pharmaceutical segment, contributed 14.14% in 2008-09.

• Exports and deemed exports comprised 29.52% of the total revenue in 2008-09.

• Agrochemicals business contributed close to 85% of total revenues in FY2009.

• Top 5 and top 10 customers contributed almost 40 per cent and 50 per cent of the total sales of the company during FY 2009 respectively.


(Rs.Cr except per share)

Particulars

2010/03 (c)

2009/03 (c)

2008/03 (c)

2007/03

2006/03 2005/03 2004/03 2003/03

Net Sales 111.94 84.41 55.09 31.43 25.21 21.10 16.49 16.04

Growth (y-o-y) (%)

32.61 53.22 75.28 24.67 19.48 27.96 2.81 -

EBIDTA 26.47 21.25 15.56 6.41 5.03 2.41 2.27 2.13

Growth (y-o-y) (%)

24.56 36.57 142.75 27.44 108.7 6.17 6.57 -

PAT 13.21 10.73 7.94 3.62 3.48 1.35 1.08 1.22

Growth (y-o-y) (%)

23.11 35.14 119.34 4.02 157.78 25 -11.48 -

EPS 7.80 11.38 8.42 42.09 64.34 26.98 20.38 23.02

Growth (y-o-y) %

(31.45) 35.15 -80 -34.58 138.47 32.38 -11.47 -

Key Financials

Particular 2010/03 (c)

200903 (C)

2008/03 (C)

2007/03 2006/03 2005/03 2004/03 2003/03

Debt-Equity Ratio

1.38 1.49 1.54 1.64 0.77 0.48 0.64

Debt (Rs.) 43.97 33.15 23.07 15.26 4.63 2.36 2.57

Current Ratio

3.13 2.03 2.25 2.20 1.49 1.68 1.83

EBIDTAM (%)

24 25.17 28.24 20.39 19.95 11.42 13.77 13.28

PATM (%) 12 12.71 14.41 11.52 13.80 6.40 6.55 7.61

ROE/RONW (%)

33.74 35.68 24.13 36.59 23.68 22.09 30.42

Tax (%) 19 13.54 14.72 10.84 13 25.41 34.15 30.2

9

Inventory (days)

126 125 143 175 93

Debtor (days)

124 119 129 80 95

Creditor (days)

89 60 34

Cost Structure

Item of Expenditure

% of Sales FY 07 (Standalone)

% of Sales FY08

% of Sales FY09

% of Sales FY10


Power & Fuel Cost

- - - -



4 5 4

Selling and Administration

8 7 5

Expenses


- - -

Tata Chemicals Limited

Company Overview

Tata Chemicals Limited (TCL) is a global company with interests in businesses that focus on LIFE — living, industrial and farming essentials. It is the world's second-largest producer of soda ash. With manufacturing facilities in India, UK, US and Kenya, TCL is the world’s most geographically diversified soda ash company, with an efficient supply chain that can service customers across the globe.

Established in 1939 at Mithapur (in Gujarat, India), TCL is a part of the Tata group. It is a leading player in the agribusiness sector with a strong presence in crop nutrients (urea and phosphatic fertilisers) and crop protection products. The company is a pioneer and market leader in the Indian branded iodised salt segment through its pioneering brand Tata Salt. Along with soda ash (sodium carbonate), the company also manufactures sodium bicarbonate and bulk chemicals such as sulphuric acid, phosphoric acid, and sodium tripoly phosphate (STPP).

The company has extended its operations into the services sector and touches lives through applications in agriculture, animal nutrition, construction, consumer products, glass, metals, pharmaceuticals, soaps and detergents, and textiles and leather industries.

The company has entered into the following Joint Ventures:

• Indo Maroc Phosphore S.A. (IMACID) : A Joint-venture company established in Morocco for the purpose of securing supplies of Phosphoric Acid, in which the Company has a 33.33% shareholding.

• Khet-se Agriproduce India Private Limited : A 50 : 50 Joint Venture between the Company and Total Produce, PLC for sourcing and distribution of fresh fruits and vegetables.

• Tata Chemicals Asia Pacific Pte. Ltd. has entered into a Joint-Venture Agreement by investing SGD 15 million in JOil (Singapore) Pte. Ltd. The company holds 33.80% stake in JOil. By virtue of this agreement the company will get exclusive marketing rights for JOils Jatropha seedlings in India and East Africa and a preferential price for seedlings it requires for its own cultivation of Jatropha.

• Lake Natron Resources Limited, Tanzania.

Business Areas

Tata Chemicals broadly operates in three sectors — living essentials (household products), industry essentials and farm essentials (crop nutrition and protection) — giving it a wide and diverse customer base. It has also entered into new businesses such as Biofuels and Fresh produce (Khet-Se).

Living essentials:

Basic products for daily living, such as salt, sodium bicarbonate or baking soda products, fresh produce and water-related products

Today, the Consumer Products Business (CPB) comprises branded iodised edible salt, sodium bicarbonate and water purifiers, among other offerings. Besides the iconic brand Tata Salt, the company's products include a new refined salt brand called I-Shakti; Tata Salt Lite (contains 15 per cent less sodium than ordinary salts and caters to health-conscious low-sodium salt users); and Topp

Salt, a brand of edible salt created for export. I Shakti, a cooking soda, is marketed as a leavening agent.

Safe drinking water is still a pipe dream for the majority of India’s lower middle class and poor. TCL met this challenge by launching Tata Swach in December 2009. Tata Swach is a unique and innovative water purifier that combines low-cost ingredients such as rice husk ash with nano-technology. The product provides performance, convenience and, above all, affordability, and serves a basic human right of millions of consumers.

Industry essentials:

Products that form essential inputs to diverse industries across the glass, detergents, mining and chemical processing sectors

Soda ash, one of TCL’s main products, finds use in several industries, including the manufacturing of glass, pulp and paper, detergents and industrial chemicals.

Along with soda ash, TCL also produces sodium bicarbonate, bulk chemicals such as sulphuric acid, phosphoric acid, sodium tripoly phosphate (STPP), caustic soda, bromine-based products, chlorine based products, gypsum and cement.

Farm essentials:

Farm inputs needed to improve crop health and productivity, such as fertilisers, pesticides, specialty nutrients, seeds and agri-services.

The crop nutrition and agri-business unit has a presence across three key agro-nutrients – nitrogen, phosphorus and potassium. Nitrogenous fertiliser (urea) is manufactured at Babrala in the northern state of Uttar Pradesh; phosphatic fertilisers, DAP and complexes are manufactured at Haldia in West Bengal in eastern India; MOP is imported.

Revenue Mix

Soda ash35%

Urea10%Phosphatic fertilizer

23%

Salt3%

Phosphoric acid7%

Traded goods18%

Industrial chemicals4% Soda ash

Urea

Phosphatic fertilizer

Salt

Phosphoric acid

Traded goods

Industrial chemicals

http://www.tataswach.com/

Growth Drivers

• The nutrient based subsidy (NBS) policy should act as a stimulus for the DAP/NPK division of the company.

• Re-imposition of the ‘safeguard duty on Chinese Soda ash imports’ to be beneficial for all domestic players and particularly for Tata Chemicals. This will put to rest all concerns relating to the domestic soda ash demand and pricing for Tata Chemicals.

• Expectations of normal monsoon made by India Meteorological Department (IMD) could positively impact fertilizer sales.


(Rs. in Cr except per share)


Net Sales 5803.64 5981.68 12651.98 9448.49

Growth (y-o-y) (%) 43.85 3.07 111.51 (25.32)

EBITDA 993.64 1040.97 1675.18 1604.05

Growth (y-o-y) (%) 35.64 4.76 60.92 (4.24)

PAT 508.04 964.40 759.81 737.05

Growth (y-o-y) (%) 18.61 89.83 (21.21) (3)

EPS 23.62 43.51 27.59 25.61

Growth (y-o-y) (%) 18.63 84.21 (36.59) (7.18)

Key Financials



Debt (Rs.) 1864.20 4806.69 6283.81


EBIDTA (%) 17.12 17.40 13.24 16.98

PAT (%) 8.75 16.12 6 7.80

ROE/RONW (%) 19.59 25.83 15.90

Tax (%) 32.09 17.98 43.91 22.12



Creditor (days) 59 87 80

Cost Structure

Item of Expenditure

% of Sales FY07

% of SalesFY08

% of SalesFY09

% of SalesFY10


Power & Fuel Cost

13 16 11 11



8 7 4


12 12 8 11


4 2 7 2

Coromandel International Limited

Company Overview

Coromandel International Limited, a part of the Rs.13,617crores (USD 3.03 billion as on March 31, 2010) Murugappa Group, is in the business segments of Fertilisers, Speciality Nutrients, Crop Protection and Retail.

Coromandel manufactures a wide range of fertilisers and markets around 2.9 million tons making it a leader in its addressable markets and the second largest phosphatic fertiliser player in India with a

market share of 19%. In its endeavour to be a complete plant nutrition solutions company, Coromandel has also introduced a range of Speciality Nutrient products including Organic Fertilisers.

Coromandel's Corporate Office is located at Secunderabad in Andhra Pradesh. The Company's manufacturing facilities and marketing branches are spread across India.

Fertiliser plants at:

Kakinada & Visakhapatnam in Andhra Pradesh

Ennore & Ranipet in Tamil Nadu.

Crop Protection plants at:

Ranipet in Tamil Nadu

Navi Mumbai in Maharashtra

Ankleshwar in Gujarat

Jammu in J&K.

Its marketing branches servicing the farming community are spread across India.

It has established the following Subsidiaries: Coromandel Mauritius, Coromandel GETAX Phosphates Pvt.Ltd, Coromandel Brasil Limitada.

Coromandel was ranked among the top 20 best companies to work for by Business Today and was also voted as one of the ten greenest companies in India by TERI, reflecting its commitment to the environment and society.

Products and Services

Fertilizers : Contribute 94% to the companies revenues.

Manufactures and sells a wide range of Phosphatic fertilizers such as DAP, Complex fertilizers with different composition of nutrients and Single Super Phosphate.

Key Brands: Gromor, Godavari, Paramfos, Parry Gold and Parry Super.

Crop Protection : Contribute 3% to the companies revenues

Manufactures and markets Insecticides, Fungicides, Herbicides and plant growth regulators. Exports these products to various countries and also has tie-ups with MNCs like Nihon Nohyaku Co. Ltd., Syngenta, DuPont, BASF, FMC and Otsuka for marketing their products in India.

Specialty Nutrients : Contribute approximately 2% to the companies revenues.

Like Sulphur Pastelles, Water Soluble Fertilizers, Micro Nutrients and Organic Fertilizers.

Rural Retail Centers:

The retail arm of Coromandel was started in the year 2007 with 2 outlets and in 2008-09 the Company expanded it to over 425 retail centers in rural Andhra Pradesh. They offer the entire range of agri-inputs and lifestyle products.

Strategic Alliances

• Coromandel has long term alliances with global manufacturers for sourcing key raw materials.

• Has tie-ups with M/s Foskor, South Africa and M/s Group Chemique Tunisien (GCT), Tunisia for supply of Phosphoric acid and Mitsui, Japan for supply of Ammonia and Sulphur.

• It has entered into a Joint Venture with the GCT group for setting up a State-of-the-art phosphoric acid plant at Tunisia.

• Has tie-ups with MNCs like Nihon Nohyaku Co. Ltd., Syngenta, DuPont, BASF, FMC and Otsuka for marketing their products in India.

Growth Drivers

• Company will greatly benefit from the Nutrient based subsidy policy.

• Untapped potential in new businesses such as micronutrients, organic fertilizers and rural retail promises good growth for the company.

• Big supply deficit in the domestic fertilizer market augurs well for the company.


Particulars 2006/03 2007/03 2008/03 2009/03 2010/03

Net Sales 1851.79 2066.50 3757.34 9374.98 6394.73

Growth (y-o-y) (%)

21.03 11.59 81.82 149.51 (31.79)

EBITDA 149.59 199.36 412.78 652.1 710

Growth (y-o-y) (%)

24.72 33.27 107.05 57.98 8.88

PAT 95.38 116.72 210.09 559.50 467.68

Growth (y-o-y) (%)

21.69 22.37 80 166.31 (16.41)

EPS 7.51 9.19 15.02 39.99 33.40

Growth (y-o-y) (%)

(75.66) 22.37 63.44 166.25 (16.48)

( Rs.Cr except per share)

Key Financials

Particulars 2006/03 2007/03 2008/03 2009/03 2010/03

Debt-Equity Ratio

0.93 0.99 1.31 1.46 1.36

Debt (Rs.Cr) 427.09 549.32 1043.07 1770.80 2046.98

Current Ratio 1.74 1.96 2.33 2.16 3.50

EBIDTA (%) 8.1 9.65 10.96 6.96 11.10

PAT (%) 5.15 5.65 5.59 5.97 7.31

ROE/RONW (%)

20.70 21.18 26.40 46.16 31.15

Tax (%) 43.58 29.66 41.73 36.63 34

Inventory (days)

77 70 83 52 52

Debtor(days)

20 28 10 4 8

Creditor (days) 69 92 68 63 48

Cost Structure

Kaveri Seeds Company Limited (KSCL)

Company Overview

Kaveri seeds, now known as Kaveri Seeds Company Ltd was conceived as GVB Rao & Company in 1976 by Mr. G.V.Bhaskar Rao. GVB Rao & Company started off with seed production of public bred varieties of Corn, Pearl millet and Rice and subsequently also took up product distribution for a leading seed MNC.

From a small scale seed production company established over two decades back, kaveri seeds today is one of the most integrated agri-input companies in India with a sharp focus on three niche areas.

• Yield Optimization • Soil Enrichment

Item of Expenditure % of SalesFY07

% of SalesFY08

% of SalesFY09

% of SalesFY10


Power & Fuel Cost 3 2 0.66 1



4 3 2 2


8 6 3 6


2 2 2 1

• Crop Protection

kaveri seeds today, is synonymous with premium quality seeds enriched with genetically superior traits – A result of their commitment towards R&D and Innovation.

kaveri seeds’ domain expertise, focused research, qualified team and state-of-the-art infrastructure has helped it uniquely position itself as a complete agri-input company.

The company has manufacturing and processing facilities at Bellary, Gatla Narsingapur, Gundla Pochampally and Kandlakoi with combined capacity of over 18000 tpa. They have plans to increase the capacity to 30000 tpa.

Product Portfolio and Revenue Mix

Revenue Mix Product Portfolio

Seeds:

12 hybrid corn varieties 5 Sunflower varieties 6 Cotton varieties 23 varieties of Paddy Varieties of Bajra and Rice and grain sorghum. Also produces Micro Nutrients

Growth Drivers

• The company is likely to benefit from increasing thrust towards improving the seed replacement rate and growth in hybridization.

• FY09 onwards it has started taking initiatives to improve seed sales in Rabi season (3Q & 4Q). Earlier it used to focus only on Kharif season (1Q).

• Less than 1% of rice acreage and 50% of maize acreage under hybrid seeds implies abundant growth opportunities within the seed sector in the long term.

• Company intends to increase its presence in North India. This offers significant growth avenues for the company.

Corn27%

Cotton23% Bajra

7%

Sunflower8%

Micro Nutrients7%

Others28%

Corn Cotton Bajra Sunflower Micro Nutrients


(Rs. In Cr except per share)


Net Sales 65.77 96.57 123.05 162.14

Growth (y-o-y) (%) 36.54 46.83 27.43 31.77

EBIDTA 16.9 22.52 29 35.28

Growth (y-o-y) (%) 324.62 33.25 28.77 21.66

PAT 10.54 13.96 22.90 29.07

Growth (y-o-y) (%) 263.45 32.45 64.04 26.94

EPS 15.33 14.25 18.16 21.21

Growth (y-o-y) % (15.44) (7.04) 27.44 16.80

Key Financials



Debt (Rs.) 11.89 5.67 21.38


EBIDTA (%) 25.70 23.32 23.57 21.76

PAT (%) 16.03 14.45 18.61 17.93

ROE/RONW (%) 61.76 21.15 19.88

Tax (%) 33.75 34.02 10.10 6.83




Cost Structure

Item of Expenditure

% of SalesFY07

% of SalesFY08

% of Sales FY09

% of Sales FY10


Power & Fuel Cost

0 0 0

Employee Cost 5 5 5 5.3


12 12 17


24 26 30


1.5 3 3

Advanta India Limited

Company Overview

Advanta India Limited is an associate company of United Phosphorus Limited (UPL) a large Indian Agrochemical Company with a group turnover of Rs. 3500 Crores. Advanta India Limted is the holding company for the global business of Advanta.

The company is not only a leading player in the domestic vegetable seeds market but also a leading international agronomic and vegetable seed company with operations in 4 continents and 5 countries. They export their products to 25 countries in Asia, South America and Africa.

The company has established the following Subsidiary Companies: Advanta Holdings B.V., Netherlands, Advanta Seed International, Mauritius, Unicorn Seeds Private Ltd., India, Advanta Seeds Limited, Pt Advanta Indonesia among many others.

They provide seeds for the following Crops:

Sorghum, Sunflower, Corn, Rice, Canola, Mustard, Cotton and Wheat.

Recent Developments

• Acquired 100% Assets and Business of Crosbyton Seed Company (“CSC”) Crosbyton, Texas, USA. This move has further increased Advanta’s global sorghum business footprint which already includes operations in Australia, Argentina, India and Thailand.

• The company has incorporated two subsidiaries during the year 2009 at Indonesia and Brazil to expand their business locally in those countries and explore possibility of export.

• The company opened a new Biotech Lab in Hyderabad in 2009.• Started a new breeding station in France during this year.• During the year the company signed two major global exclusive licenses for acquiring GM

traits.

1- License for Nitrogen Use Efficiency (NUE), Drought tolerance and Salt tolerance traits in Sorghum from Arcadia Biosciences, USA.

2- License for drought tolerance trait in rice, cotton, mustard and sorghum from Bioceres, Argentina.

Revenue Mix

Product-wise:

%

• Sorghum 34• Sunflower 29• Corn 15• Vegetables 09• Canola 05• Sweet Corn 03

• Rice 02• Baby Corn 02• Others 01• Cotton 01

Region-wise:

%

• Australia 17• India 16• Thailand 14• USA 13• Argentina 12• Export to other countries 28

Growth Drivers

• Acquisition of Sorghum business in USA.• Initiatives for expansion of geographic presence.• Breakthrough in the research initiatives.• Commercialization of Nutrisun Oil.


Key Financials

Particulars 2007/12 2008/12 2009/12


Debt (Rs.) 316.96 426.69 471.05

Particulars 2007/12 2008/12 2009/12

Net Sales 456.85 640.52 698.39

Growth (y-o-y) (%) 53.32 40.20 9.03

EBIDTA 59.67 74.52 52.66

Growth (y-o-y) (%) 17.30 24.89 (29.33)

PAT 44.46 48.84 25.20

Growth (y-o-y) (%) (9.91) 9.85 (48.40)

EPS 26.25 28.83 14.79

Growth (y-o-y) % (66.30) 9.83 (48.70)


EBIDTA (%) 13.06 11.63 7.54

PAT (%) 9.73 7.63 3.61

ROE/RONW (%) 15.73 10.67 5.21

Tax (%) 59.96 22.30 100




Cost Structure

Conclusion

The foundation laid by a long term structural growth laid by food grain demand-supply dynamics coupled with robust global demand for agricultural output augurs well for agri input industry.

As supply side issues are likely to arise due to stagnant area under cultivation, decreasing per capita production and scarcity of land for further cultivation, yield optimization is the only feasible option for increasing supply to meet the growing demand for food grains.

Item of Expenditure % of Sales 2007/12 % of Sales 2008/12 % of Sales 2009/12

Raw Materials 31 25 33

Power & Fuel Cost 0.64 0.65 0.62

Employee Cost 15 15 16


6 8 9.50

Selling and Administration

Expenses

39 33 29


8.50 8 10

Agricultural inputs provide a perfect solution for improving productivity of the existing area under cultivation. Government support and improved financing is likely to boost demand for all agri-inputs.

This makes the agri-input industry growth a long term feature rather than a stop gap solution aimed at immediate yield improvement.

Bibliography

Meetings with company executives

Equity Research Reports

Company Annual Reports

Company Websites

Capitaline ( Software at ICICI Prudential AMC)

Company presentations

Project on Agri Finance

Documents

Transcript of Project on Agri Finance