1 sustainable & profitable growth - upl · corn, fruits and vegetables ... • utilisation of...

Sustainable & Profitable GrowthSustainable & Profitable Growth1


UPL CAPITAL MARKETS DAY

April 25, 2014


JAI SHROFF

CEO

Sustainable & Profitable GrowthSustainable & Profitable Growth

Financial Highlights - 2014

4

• Revenues crossed INR 100 bnmark

• Entered into agreement todivest entire stake in JV withSipcam in Brazil

• Increased stake in UPL doBrazil (formerly DVA Brazil) JVfrom 51% to 73%

• Returned INR 3,950 mn toshareholders (Buyback INR2,840 mn and Dividend INR1,110 mn) – 2nd Buyback intwo years

Revenues

EBITDA

PAT

17.3%

22.1%

30.9%

Cash Flow from operations

INR 9,310 mn

ROCE 18.9%


UPL’s Evolution: 2004–14

5

• India - the largest market

• Relatively limited presence in key markets -

North America and Europe

Currently Present in ~ 70% of Global CPP Market

Potential Geographies


2014INR 105,800 mn

Sales

2004INR 10,978 mn

2014INR 9,498 mn

Net Profit

2004INR 864 mn~10x ~10x

Balanced Product Portfolio Balanced Geographical Mix

CAGR 25% CAGR 25%


North

Americ

a, 20%

EU,

19%

RoW,

14%

India,

21%

LatAm,

26%

FY 2014

North Americ

a, 25%

EU,

19% RoW,

24%

India,

32%

FY 2004

Herbici

de,

24%

Insectic

ide,

44%

Fungicide, 5%

Others,

27%

FY 2004

Herbici

de,

28%

Insectic

ide,

28%

Fungici

de,

25%

Others,

19%

FY 2014



7

Herbicide Insecticide FungicideFumigants & Storage

Seeds Post Harvest

Participate across Value Chain


Unique Integrated Business Model

8

Integrated Business

Model

R&D

Strong

Manufacturing

Global Market Access

Regulatory


Sustainable Growth

9

SUSTAINABLE & PROFITABLE

GROWTH

28%

28%

25%

19% Others

Fungicides

Insecticides

Herbicides 20%

19%

14%

21%

26% LatAm

India

RoW

EU

North America

Seeds Herbicide Insecticide FungicideFumigants & Storage

Post Harvest

R&DStrong

ManufacturingRegulatory

Global Market Access

Unique Integrated Business Model

Participation Across Value Chain

Balanced ProductPortfolio

Balanced GeographicalMix


UPL Vision

10

UPL SUSTAINABILITY

PLATFORM

Robust Innovation

Pipeline

Strong Manufacturing

Adjacent Technologies

Continue Growth

Free Cash flows

Higher Growth

Geographies

Global Talent Pool

Improve ROCE


SAGAR KAUSHIK

COO – Global Business


Revenues By Region: FY 2014

12


India

13

• Significant improvement in business conditions with widespreadmonsoon. Hail storm damage in North and West in fourth quarter

• Higher yields in Rice, Cotton, Wheat, Pulses, Potato etc.

• New Products, Ulala & Atabron performed well during the year

• Continued Focus on Power Brands – Lancer Gold, Starthene Power,Saathi, Saaf, Phoskill

• Spike in growth of insecticides in cotton due to high incidence of suckingpest

• Price increases achieved to offset increase in COGS


Latin America

14

• Voluntary cut back in Glyphosate Business which improved profitabilityin Argentina

• Increase in Soybean and Cotton area due to higher commodity pricesand higher Heliothis infestation

• Brazil on strong growth curve with additional planted area in Soybean,cotton. Floods in north and drought in south has affected Safrinhaseason

• Sugarcane, Coffee, Citrus under pressure due to softening of prices

• Consumption of Agrochemicals faced disruption due to farmers strike inColombia

• Dry conditions prevailed in Argentina and Mexico. However, Mexicocould still maintain a good growth in business.

• New opportunities in Ecuador & Costa Rica (Trust & Bioquim) on Banana


Europe

15

• Prolonged winters and late spring affected herbicide sales in Cereals,Sugar beet

• Improved sales in Vine with our Fungicide range

• Microthiol, Cuprofix, Thiopron getting image boost with growth inOrganic farming

• Increased Mancozeb shares both with Brands & Institutional sales

• CIS countries (Ukraine) market getting disrupted due to political crisis

• Sugar beet acreage reduced between 7-15 % in different countries

• Higher inventories of herbicides in the channel, will be consumed incoming season


ROW

16

• Australia drought partially improved in last quarter

• Bangladesh business revived with Fungicides

• New distribution platform established with UPL brands in Pakistan

• “Grow Africa” Strategy under implementation

• Higher market access expected through increased registrations inAfrican countries

• Stronger competition on Pyrethroids affected price realisation


North America

17

• Market significantly impacted due to late spring and drought in Westernregion, a stronghold of UPL.

• Good acceptance of UPL herbicides in Soya against resistant weeds

• RiceCo increased treated area with rice herbicides. Though the nextcrop will be affected due to water cuts.

• Excellent position reached with Metribuzin; a growing herbicide in theUSA


Focus on Branding

18

• Marketing structures set up in all

regions globally to focus on

product branding

• Key brands like Microthiol,

Cuprofix, Thiopron are positioned

as partners to organic farming in

Europe

• Premium Brands positioning with

new products

• Rollout of UPL Global Branding

planned in 2014-15


Focus on Branding

19

Region Key BrandsBranded Sale (%)

North America

Manzate, Microthiol, Cuprofix, Weevilcide, Super Tin, Blazer, Surflan, Tricor 75%

Latam

Manzate, Vondozeb, Unizeb, Lancer, Quickphos, Unizeb Gold, Clorin, Zartan, Danado, Imida Gold, LancerGold, Portero, Glipotal TR 65%

EuropeDevrinol, Microthiol, Penncozeb, Cuprofix, Metafol, BeetUp

85%

IndiaUlala, Phoskill, LancerGold, Saaf, Saathi, Starthene, Atabron, Disect 80%

ROW Penncozeb, Kinalux, Quickphos, Asulox 80%


Complete Product PortfolioNew, Patented & Proprietary Products

20

Brands / Crops

New Technol

ogies/New

Products

Non-Crop Applications(UPL)

Public Health

NaturalAdulticidesEquipments

Crop Protection(UPL)

Ulala Phoskill Lagaam Saaf Saathi Atabron Starthene

Glory, Ranman, LaurelMixturesIris, ErosInnovative formZeba, ReonFlourishWuxal

Seeds (Advanta)

Sorghum, Corn, Rice, Sunflower, Canola, Mustard, Vegetables

FungicideInsecticdesHerbicidesSeed TreatmentUPDTBiologicalsCrop Nutrients

Post Harvesting(UPL)

Oorja Quickphos

CoatingsBiologicals


New Geographies - Focus Countries

21

• Mexico

• Andean region

• Indonesia

• Vietnam

• Thailand

Grow Africa

• Participate in top 108 cropsegments

• Good existing portfolio for Rice,Corn, Fruits and Vegetables

• New Products pipeline underdevelopment

• Team already positioned to closelywork with existing and newdistribution partners

• Partner company for new vision forAgriculture

Each country with growth potentialbeyond USD 50 mn opportunities overnext 5 years

In addition to continued growth in Latam and India


Customer Focus

22

Farmer Needs and Farm Advisory Services

• Develop farmer database and segmentation in to A, B, C

categories

• Utilisation of farmer segments by marketing through various

communication platforms

• CRM activities with Key farmers

• Through in-house Call Centre (under development)

• Personal contact by TM & FA’s on digital platform

Digital platform to improve sales force efficiency

Business Excellence with Digital Platform


Adjacent Technologies & Innovations

23

• TRUST+ - Service to Bananagrowers in Costa Rica

• NeoFog – Hot & Cold Fogging,Warehouse Disinfection, PreventingPotato sprouting

• Technologies for Vector Control

• UPDT for Drought Mitigation

• Biological solutions

• Crop Nutrients

Aspire to take Innovation Rate to > 15%


Sustainable Growth

24

SUSTAINABLE AND

PROFITABLE GROWTH

Complete Product Portfolio

Customer Focus

New / Focused

Geographies

Improved Margins

Adjacent Technologies

& Innovations

Focus on

Brands


K. R. Srivastava

COO – Global Supply Chain


Supply Chain –Source of Competitive Advantage

26

Manufacturing Technology Cost

Speed

Complexity

Environment, Health & Safety


Global Supply Chain

27

Manufacturing presence across 28 locations (13 in India and 15 international)

Colombia

Argentina

Brazil

India

Vietnam

Spain

Italy

France

UK

Netherlands

Turkey

Technical site - 13 Formulation site –15

2

3


Research and Development

28

• Innovating process technology ofpost-patent molecules

• Developing eco-friendly formulation

• Supporting manufacturing activities- Cost reduction & effluenttreatability

• Supporting registration (chemistrydata); Develop new analyticalmethod


R&D Capabilities

29

• India (6) – Synthesis, Formulation, Phosgene based chemistries,

Specialty Chemicals

• KOP, USA (1) – Formulations development

• Rotterdam, Netherlands (1) – Formulation & GLP Studies (5 batch,

Phys.chem )

• Le Canet, France (1) – Copper and Sulfur formulation

29

60

24

113

Ph.D

M.Sc.

M.Tech/B.E./B.Sc.

Total


Process Engineering

30

Continuous reduction in manufacturing cost is achieved by adoptingfollowing methodology :

• Yield improvement• Solvent norms reduction• Waste minimization• Enhancing conversions and selectivity through reaction Kinetics• Process intensification and miniaturization of equipment• Converting Processes from batch to continuous operation

Team of 40 engineers work on continuous improvements.

Tie up with premier institutes like IIT, UDCT, LIT for developing costeffective technologies and processes.


Managing Complexity

• Knowledge of multiple chemistry

• Expertise in complex technical process - multiple stages

• Skills to handle hazardous Chemicals and Chemistry

• Serving global needs in multiple SKUs, products andcountries

• Fluctuations in Market dynamics due to weather, cost,etc.

31


Speed of Implementation

32

• Detailed preplanning before starting the project execution

• Standardization of equipment's and vendors

• Three years visibility of purchases for vendor

• Faster execution techniques

• Use of simulation packages

UPH 203 – Green field project

Total no. of equipments - 120

Total steel structure used - 180 MT

Facility - Five storied plantCompletion in 83 days


Strict “EHS” Compliance

33

• Green Cell formed to reduce effluent treatment cost

• Unit has been converted to Zero Effluent Discharge by recyclingthe effluent

• Yield improvement

• Solvent recovery

• 3rd party audit against IS-14489

– Chill worth

– National Safety Council

– Tata AIG

• Audit by MNCs and certified for supply of products

• Overall safety index improved from 63 to 90%


UPL’s Manufacturing Uniqueness

34

Ability to deliver any product on time at

competitive cost with fluctuating

demand on a global basis

IN COMPLIANCE TO “EHS” NORMS


ANAND VORA

CFO - Global


Comparative Results – FY 2014

36


Financial Highlights - FY 2014

37

Revenues

EBITDA

PAT

17% to

70 bps to

100 bps to

Working Capital Days

Stable at

Debt/Equity Reduced to

ROCE Improved to

₹ 109,021 mn

20%

10%

93

0.48x

18.9%


Sale Analysis - FY 2014

38

FY 2013

Volume

Price

Exchange

FY 2014

₹ 90,102

₹ 7,745

₹ 2,172

₹ 5,780

₹ 105,800

9%

2%

6%

INR in mn


Working Capital Performance - FY 2014

39

INR in mn

FY - 2014 FY – 2013

Sales 105,800 90,102

86 118

111

93 84 111

103 92

Day

s

Mar-14

Mar-13


₹ 16,880

₹ 10,220

Without revaluationImpact ₹ 24,370Reval. Impact ₹ 1,010 After revaluationImpact ₹ 25,380

Debt Details - FY 2014

40

₹ 28,123₹ 22,543

₹ 14,327

₹ 13,057

₹ 0

₹ 5,000

₹ 10,000

₹ 15,000

₹ 20,000

₹ 25,000

₹ 30,000

₹ 35,000

₹ 40,000

₹ 45,000

FY 2013 FY 2014

Long Term Short Term CashINR in mn

₹ 42,450

₹ 35,600

₹ 25,570

Net Debt Net Debt


Cash Deployment - FY 2014

41

From Opening Cash Balance ₹ 6,660 mnChanges in Other Current Assets & Liabilities ₹ 1,500 mnPAT + Depreciation ₹ 13,570 mn

Total Operating Inflows ₹ 21,730 mn

Dividend / BuyBack

₹ 3,950 mn

Working Capital changes

₹ 4,260 mn

Repayment of Debt

₹ 7,860 mn

Investment/Others

₹ 5,660 mn


Trends - 3 years

₹ 75,342 ₹ 90,102 ₹ 105,800

₹ 0

₹ 50,000

₹ 100,000

₹ 150,000

FY 2012 FY 2013 FY 2014

Sales (INR in mn)

19.02% 19.00%19.70%

18%

19%

20%

FY 2012 FY 2013 FY 2014

EBITDA (%)

7.82%8.70%

9.70%

5%

7%

9%

11%

FY 2012 FY 2013 FY 2014

PAT (%)

14.50% 14.80%

18.93%

10%

15%

20%

FY 2012 FY 2013 FY 2014

ROCE (%)

0.61 0.55 0.48

-

0.20

0.40

0.60

0.80

FY 2012 FY 2013 FY 2014

Net Debt / Equity

113 92 93

0

50

100

150

FY 2012 FY 2013 FY 2014

Net Working Capital (Days)


Conservative Financial Management

43

Aggressive Business Model

Conservative Financial

Management• New Geographies

• New Products & Brands

• Adjacent Technologies

• Innovations

• Enhanced Manufacturing

Capacities

• Balanced Debt Profile –

maturity, currency mix,

security and covenants

• Prudent Working

Capital

• Global Credit Insurance

Programs

• Forex Hedges – risk

mitigation

• ROCE Focus

• Rigorous Investment

Evaluation Metrics


Thank You

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