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Insecticides (India) Limited
CORPORATE PRESENTATION
August 2012
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INDIAN AGROCHEMICAL INDUSTRY OVERVIEW
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Industry overview
The size of Indian agrochemicals market is expected to be around Rs 15,000 crores by 2015
Arable land stagnation Rise in MSP
Low pesticide consumption Increased institutional credit flow
Structural enablers to catalyse strong growthtrajectory going forward
Current under penetration of agrochemicalsin India with pesticide consumptionamongst the lowest globally
Rising pressure to increase foodproductivity given land shortage and rise inpopulation
Rising prices of crops on the back ofMinimum Support Prices (MSP)
Use of costlier hybrid seeds
Increasing awareness of farmers
Labour shortage for agricultural activities
on the back of NREGA Continued financial support from
Government through subsidies and greaterflow of institutional credit
105
110
115
120
125
130
135
FY80
FY83
FY86
FY89
FY92
FY95
FY98
FY01
FY04
FY07
FY10
mh
ectares
880 980 1,030 1,110
1,080 1,100 1,1201,285
2,0002,300
3,0003,200
-
700
1,400
2,100
2,800
3,500
FY09 FY10 FY11 FY12E
Rs/quintal
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
Ta
iwan
Japan
Korea
USA
EU
India
Kg
/hec
tare
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500
1,000
1,500
2,000
2,5003,000
3,500
4,000
4,500
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
RSbn
SourceDepartment of Agriculture, research reports
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COMPANY OVERVIEW
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IILs goal
Help farmers to reduce input cost and better their yields
Help to bring new generation products in reach of all farmers - big,small and marginal
Help increase awareness and lead advancement in agricultural practices
Value For Money
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Ju
l-09
Sep-0
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Nov-0
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IIL Sensex
Company overview
Incorporated in 1996 and listed in 2007
Large and diversified product portfolio providingcomplete solution for crop protection
Over 160 products, over 100 brandedformulations and over 750 SKUs
Track record of new product launches
Judicious mix of in-house development, brandacquisitions, technical collaboration andmarketing arrangements with global players
Wide sales and distribution network across India Over 230 sales representatives, over 3,000
distributors, c.50,000 retailers and 26 depots/branches
An ISO 9001:2000, ISO 14001 and OHSAS 18001
certified company
Large portfolio across multiple segments
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
Outperforming the index
Notes Figures have been rebased to 100
624
119
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Company overview (cont.)
State-of-the-art manufacturing facilities at Chopanki,
Udhampur, Samba and Dahej
Established manufacturing infrastructure for
both technicals and formulations
Recently commissioned new units with sufficient
capacity to enable sustained long term growth
New technicals manufacturing facility and R&Dfacility under construction
Strong R&D capabilities
R&D center recognized by DSIR and Ministry of
Science & Technology
Accredited with NABL
Successfully registered 27 technicals of which 15
technicals have been commercialized
Currently in advanced stages of registration of
about 20 technical grade pesticides
Udhampur, J&KFormulations
Sambha, J&KFormulations
Dahej, GujaratFormulationsTechnicals to be commissioned
Chopanki, RajasthanFormulations and Technicals
R&D centre
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Milestones
2002: Commissioning of plant at Chopanki (Rajasthan) for manufacturing wide range of innovative
end-to-end agrochemicals solutions
2003: Acquired all brands of Montari Industries
2004: Commissioning of another plant at Samba (J&K)
2005: Received ISO 9001-2000 certification, R & D Lab set up at Chopanki
2006: Acquired exclusive rights to sell Thimet brand in India from AmericanVanguard Corp, USA; Received ISO 14001-2004 certification
2007: Successfully concluded IPO; Commissioned Technical plant at Chopanki
2008: New R&D unit (at Chopanki) bagged ISO 18001:1999 certification
2009: Construction of new manufacturing facilities at Udhampur (J&K)
2010: Began construction for multi product technical plant with 10,000TPA capacity at Dahej (Gujarat)
2011: Bagged NABL accreditation; acquired Monocil, a popularbrand ; commissioned manufacturing units at Dahej andUdhampur (J&K)
2012: Launched Nuvan, Hakama and Pulsor in collaborationwith AMVAC and Nissan
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Management team
Finance
Pankaj Gupta
CS
P.C. Pabbi
Vice President
Production
Sanjeev Aggarwal
GM
Rajesh Aggarwal (MD)
Information
Technology
Sandeep Aggarwal
CFO
H.C. Sharma
DGM
H. C. Aggarwal (Chairman)
Marketing Admin & HR
K.V. Patel
Unit Head
R. S. Verma
Sr. Manager
M.K. Singhal
GM
V.K. Garg
GM
Sanjay Vats
GM
Purchase
V.K. Singhal
GM
Abhai Shanker
GM
Anand Banka
Project Head
B.P.S. Rana
DGM
S.K. Choudhary
Project Manager
Sanjay Vats
GM
Venkat Rao
GM
R&D
Dr. Mukesh
DGM
Ashok Bangde
GM
O.P. Karnani
Unit Head
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BUSINESS OVERVIEW
Product and Brand Portfolio Management
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Strong brand portfolio
IILs portfolio consists of several market leading brands
Thimet, Monocil, Lethal, Victor, Indan, Sharp, Arrow, Hijack,Care, Bravo and Avone are some of IILs key brands
New products launched in current year include Nuvan, Pulsor andHakama
Sales of top 4 brands Thimet, Lethal, Monocil and Victor -
constitutes about Rs 144 crores (26% of FY12 turnover)
Umbrella strategy applied for new product launches via brandextensions such as Lethal Super, Victor Plus, Victor Super etc.
Established the Tractor Brand of insecticides for easy recognition of
all IIL products Tractor Brand has high brand equity amongst farmers and is
leveraged during all new product launches
Continued focus on branding activities, promotion through brandambassador and other marketing initiatives
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Pan-India presence
RewariHazipur
Bhubneshwar
GhaziabadHissar
Bangalore
Coimbatore
Hyderabad
Bhatinda
Howrah
Karnal
Ludhiana
Jaipur
NagpurRaipur
Ahmedabad
Sriganganagar
Ranchi
Pune
Sindhanur
GuwahatiSiliguri
Gadarpur
Indore
26 depots across 24 locations Over 230 sales personnel and over 3,100distributors
Rajasthan
S: 8
D: 155
MP
S: 10
D: 180 Chhattisgarh
S: 5
D: 56
Jharkhand
S: 2
D: 18
Maharashtra
S: 14
D: 94
J&K
D: 18
Haryana
S: 15
D: 189
Gujarat
S: 6
D: 172
Karnataka
S: 14
D: 344
Orissa
S: 5
D: 39
Punjab
S: 36
D: 336
Bihar
S: 10
D: 44
Assam
S: 4
D: 29
Tamil Nadu
S: 14
D: 187
U.P.
S: 21
D: 203
Uttarakhand
S: 3
D: 47
AP
S: 52
D: 992
Total Sales personnel (S) : 237Total Distributors (D) : 3,107
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Re-launch expertise
IIL has a proven record of acquisitions of high recall, but off-shelf brands and theirsuccessful re-launch into leading brands
Lethal, acquired from Montari in 2002 is a shining example
One of the most successful Brands of IIL with several brand extensions
introduced Sales contribution of all Lethal variants in FY12 was Rs 37 crores (around 7% of
turnover)
Monocil, acquired from Nocil in 2011, is a more recent example
One of the leading agrochemical products in India and highly accepted among
the farming community Sales contribution in FY12 was Rs 33 crores (around 6% of turnover)
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IIL has successfully partnered with several global players to marketleading brands in India
American Vanguard Corp (AMVAC)
Thimet Technical collaboration initiated in 2006
Nuvan Technical collaboration started in 2012
Nissan Chemicals
Hakama New marketing collaboration started in 2012
Pulsar - New marketing collaboration started in 2012
Partnership arrangements with other companies such as BASF,UPL, Syngenta and Makhtesham Agan
Proven partnership experience
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BUSINESS OVERVIEW
Manufacturing and R&D Excellence
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Manufacturing facilities
Chopanki (Rajasthan)
Formulations and technicals facility
Samba (J&K)
Formulations facility
Income tax exemption (100%) expected from current year uponcompletion of capacity expansion, for a period of 5 years
Udhampur (J&K)
New formulations facility commissioned in FY12
Income tax exemption (100%) for 5 years, starting in FY2012
Dahej (Gujarat)
New state-of-the-art manufacturing facility; formulationscommissioned in FY12 and technicals to be commissioned inthe current year
Large area sanctioned in a PCPIR (Petroleum, Chemical andPetrochemical Investment Region) zone offering significantexpansion opportunity
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R&D
R&D center recognized by Ministry of Science and Technology andDepartment of Scientific & Industrial Research
Facilities are NABL accredited
New state-of-the-art R&D center in Chopanki (Rajasthan) expectedto be ready in the current year
Successfully registered 27 technicals with additional 20 technicalsin advanced stages of registration
Focus areas for R&D initiatives Identifying and manufacturing high value added products
Developing complex new molecules for introduction ingenerics market
Developing eco-friendly formulations
Leveraging expertise for CRAMS
Mission of
IILs R&Dinitiatives
EVERYBEST CAN BEBETTERED
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Farmer awareness initiatives
IIL actively organizes several farmer awareness initiatives to
familiarize them with the latest developments in farming practices andnew technology advancements
Dr. Dada:Novel concept introducing techno-commercialmembers as the expert for all queries in the field and to help trainfarmers in new technologies
Jagrukta Abhiyan: Campaigns and awareness drives organizedto educate farmers about best practices and new developments
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CSR initiatives
IIL is involved in a host of CSR initiatives aimed at raising farmer awareness and enabledevelopment. Some of the key activities where IIL is involved include
Encourage the farmers for the inclusion of pulses and/or vegetables in crop rotationto increase farm income
Promote new agricultural techniques amongst the farmers through crop seminars,farmer meeting, demonstrations and field days at farmers fields
Provide literature for the control of various pests, such as weeds, insects and diseases,to create awareness amongst the farmers
Educate the farmers regarding the safe and judicious use of agrochemicals
Adopt schools and encourage girl child education
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BUSINESS OVERVIEW
Financial Performance
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Growth trajectory of IIL
IIL has grown at approximately 33% year on year from FY2003-FY2012
We expect revenue growth to be around 45% this year and 35% in FY14,with IIL well poised to exceed Rs 1,000 crores of revenues in FY14
4275 106
133
184221
294
397
478
554
800
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FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E
Rscrore
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Performance across segments
Revenue split across agrochemicalsegments (FY12)
Revenue split across market segments(FY12)
61.5%
28.0%
6.7%3.7%
Insecticides Herbicides Fungicides PGRs
Total = Rs 554crores
79.1%
20.9%
Branded formulations Institutional sales
Total = Rs 554crores
Going forward, we expect our institutional sales to grow at a high rateon the back of increased technicals manufacturing capacity
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Diversity and focus
Revenue split across diverse regions(FY12)
Revenue split indicating strong in-house manufacturing (FY12)
Going forward, we expect to continue serving diverse geographicalmarkets and leverage our in-house manufacturing expertise
15.7%
17.1%
10.1%
11.2%
8.3%
5.8%
31.8%
Punjab A.P. Haryana
Maharashtra UP Karnataka
Others
Domestic Branded sales = Rs 434crores
91.9%
8.1%
Manufactured in-house Traded
Total = Rs 554crores
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Financials as on 31-3-2012
Summary Profit& Loss statement
Rscrores
Gross revenues 554
Net sales 522
EBITDA 56PBT 43
PAT 33
Summary BalanceSheet
Rscrores
Net worth 182
Non current liabilities 44
Current liabilities 294Total equity & liabilities 520
Net fixed assets(including CWIP)
143
Other non current assets 29
Current assets 349
Total assets 520
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FUTURE PROSPECTS
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Future prospects
Capitalize on IILs strengths and pursue
Product acquisitions to compliment our product portfolio
Marketing arrangement with global partners to enhance portfolio
Further growth of our existing product offerings and lines
Realize growth through commissioning of new manufacturing facilities andenhancing capacity and investing in R&D
Build on existing market share and achieve economies of scale withmanufacturing of new technicals
Introduce new generation products
Promote brands whose technicals is manufactured in-house
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Roadmap for growth
IIL intends to leverage its expertise in successful brand launches, R&D
focus and enhanced manufacturing capacity to fuel its future growth
Continued focus onestablishing strong brands
Enter into manufacturingand marketingarrangements with globalpartners
Employ an umbrellastrategy to introduceproduct extensions
Increase focus on exportmarkets
R&D focus includingin CRAMS segment
Focus on increasing
number of technicalregistrations
Enhanced backwardintegration with
increase in technicalsmanufacturingcapacity
Increase margins
Enhanceinstitutional sales
Significant capacity
enhancement informulationsunderway
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Growth through R&D
Focus on developing a strong pipeline of registrations
IIL has over 20 technical registrations in the pipeline, several of which are inadvanced stages of approval
Increased registrations shall enable the Company to enhance its presence in theinstitutional business
IIL has also invested in product registration in several other countries to diversifyits geographic footprint
New state-of-the-art R&D facility expected to be commissioned in FY13
Continue its focus on process efficiency and cost reduction
R&D activities to also focus on CRAMS business
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Growth through Marketing
New product introduction through tie-ups
The Company has already launched 3 new branded formulations in the current yearthrough tie-ups with global partners
Nuvan: generic insecticide to be manufactured in-house under technicalcollaboration with AMVAC
Pulsar: patented fungicide to be marketed in India by IIL under marketing tie upwith Nissan Chemicals
Hakama: new generation herbicide to be marketed in India by IIL undermarketing tie up with Nissan Chemicals
The Company expects to generate a turnover of around Rs 70 crores in the currentyear from the sales of Nuvan, Pulsar and Hakama
New product introduction through in-house development
IIL plans to introduce several new in-house manufactured branded formulationsproducts and institutional products over the next two years
IIL shall continue to leverage on its brand positioning to launch brand extensions
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Growth through Manufacturing
Manufacturing capacity expansion plan initiated in FY12 is planned tocompleted in FY13
IIL plans to invest around Rs 50 crores in FY13 for completion of the expansionplan
The Company shall set up substantial additional capacity across segments
Key benefits of manufacturing capacity expansion
Backward integration of several existing branded formulations leading toimprovement in margins
Enhanced capacity available for catering to institutional and exports business
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Growth prospects
Year(FY)
Turnover(Rs Cr)
EBITDA(Rs Cr)
BrandedFormulationsSales (Rs Cr)
InstitutionalSales (Rs Cr)
2012 554 56 438 116
2013E 800 95 620 180
2014E 1,080 130 730 350
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Growth prospects
Revenue growth in FY13 will be fuelled mainly by
Growth in established market leading brands
New product introductions
Enhanced institutional sales business
The Company expects its EBITDA margin in FY13 to be in the range of 12% - 13% on
the back of Backward integration of several branded formulations
Some of the new product introductions would have higher margins
Economies of scale
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KEY TAKEAWAYS
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IIL: Success factors
Positive industry dynamics
Demand drivers, genetic trends, gaps in food production and burgeoning demand
Participant in diversified markets Branded formulations, institutional sales & non-crop applications
Proven product acquisition model Successful repositioning of acquired products and technologies
World-class manufacturing capability High-quality, environmentally compliant and cost competitive
Growth potential in international markets and institutional business Strong fundamentals in place
Financial profile Excellent operating performance, strong financial control
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IIL: Key strengths
Growing participant in a healthy industry with significant growth potential
Successful and adaptable business model
Strong all India marketing network
Diversified end-use markets - Branded & Institutional; Crop & Non-Crop
Experience of handling leading brands in the country
Committed and dedicated team with low attrition rate Strategic, efficient, cost effective and compliant manufacturing
Organization committed to customers
Entrepreneurial and financially prudent culture
In the coming years, we intend to assume a leadership position in the marketby leveraging our strengths and capitalizing on our success factors
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Disclaimer
Whereas due care and caution is taken in furnishing the information contained herein, this documenthas not been independently verified and IIL disclaims all responsibility and/or liability directly orindirectly on any cause of action arising out of such information. To the maximum extent permitted bylaw, none of IILs employees or agents, nor any other person accepts any liability, including, withoutlimitation, any liability arising out of fault or negligence, for any loss arising from the use of theinformation contained in this presentation. No reliance should be placed on, the fairness, accuracy,completeness or correctness of this information or opinions contained herein.
Certain statements contained in this document may be statements of future expectations, forecastsand other forward-looking statements that are based on managements current view and assumptions.No representation or warranty, express or implied, is given as to the accuracy, completeness orcorrectness, likelihood of achievement or reasonableness of any forward-looking statements containedin this presentation. Such statements are by their nature subject to significant uncertainties andcontingencies and the actual results, performance or events may differ materially from those expressed
or implied in such statements. Readers are cautioned not to place undue reliance on any forwardlooking statement.
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THANKS