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Insecticides India

July 2012
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. Indian agrochemicals sector


                         1.1 Overview
                    India is the 4th largest producer of agrochemicals by volume and 12th largest by value


                          Indian agrochemical industry (US$ bn)                                       Domestic agrochemical consumption (by segment)
Significantly lower                  6.0                                                                             Fungicides                       Total c.US$ 1.6bn
agrochemical usage                                                                            4.9                       17%
                                     5.0
in India implies
strong growth of                     4.0
                            US$ bn


c.10% p.a. expected                  3.0                                  2.5
                                                                                       2.8
in the near term                                                   1.9                                        Herbicides
                                     2.0      1.6          1.7                                                  21%
                                                                                                                                                  Insecticides
Agrochemicals                                                                                                                                         62%
                                     1.0
consumption in India
                                       -
skewed towards                               2006         2007     2008   2009     2010E     2015P
insecticides given the
tropical climate and
type of crop              Split of consumption by crop type                                           Split of domestic market by region
plantation                                                   3%2%2%               Total c.US$ 1.6bn                           Others                  Total c.US$ 1.6bn
                                                           3%                                                                  13%               AP
                                                         6%                                                                                     24%
Crop losses in India                                                                                                Gujarat
                                                                                                                     6%
range from 20% to                                   7%
                                                                                 45%
                                                                                                              Maharashtra
30% owing to                                                                                                     7%
suboptimal and                                      9%

inadequate usage of                                                                                                   WB
                                                                                                                      9%                           UP
agrochemicals and is                                       23%                                                                                    17%
estimated to be worth                      Cotton                Paddy           Sorghum                               Hary ana
                                           Fruits & veg          Wheat           Arhar
c.US$ 20bn per year                        Groundnut             Bajra           Others
                                                                                                                        10%            Punjab
                                                                                                                                        14%


                         Source Broker notes, Company




3
1. Indian agrochemicals sector


                             1.2 Robust growth prospects


    Structural enablers in Indian agrochemicals                       Arable land stagnation                                                                 Rise in MSP
    sector to catalyze strong growth trajectory                                        135                                                                                  3,500                                       3,200
                                                                                                                                                                                                               3,000




                                                                                                                                                             Rs / quintal
                                                                                       130                                                                                  2,800
                                                                                                                                                                                                     2,300
       Rising pressure to increase food productivity given land




                                                                        m hectares
                                                                                       125                                                                                                 2,000
        shortage/stagnation and rise in population                                                                                                                          2,100
                                                                                       120
       Increasing awareness of farmers                                                                                                                                     1,400 1,080                    1,120
                                                                                                                                                                                                                     1,285
                                                                                                                                                                                                 1,100
                                                                                       115
       Rising prices of crops on the back of Minimum Support
                                                                                                                                                                             700
        Prices (MSP)                                                                   110                                                                                              880        980     1,030     1,110

       Use of costlier hybrid seeds                                                   105
                                                                                                                                                                                -
                                                                                                                                                                                          FY09      FY10     FY11      FY12E




                                                                                             FY80
                                                                                                      FY83
                                                                                                      FY86




                                                                                                                                            FY04
                                                                                                                                                   FY07
                                                                                                                                                   FY10
                                                                                                      FY89
                                                                                                      FY92
                                                                                                      FY95
                                                                                                                              FY98
                                                                                                                                     FY01
       Current under penetration of agrochemicals in India
                                                                                                                                                                                        Paddy Grade A        Wheat     Arhar
        – Pesticide consumption amongst the lowest globally
       Labour shortage for agricultural activities on the back of    Low pesticide consumption                                                              Increased institutional credit flow
        NREGA                                                                         18.0    17.0                                                                          4,500
       Continued financial support from Government through                                                                                                                 4,000
                                                                                      15.0
        subsidies and greater flow of institutional credit                                                   12.0                                                           3,500
                                                                       Kg / hectare   12.0                                                                                  3,000




                                                                                                                                                              RS bn
                                                                                                                                                                            2,500
                                                                                       9.0
                                                                                                                      7.0     6.6                                           2,000
                                                                                       6.0                                                                                  1,500
                                                                                                                                            2.5                             1,000
                                                                                       3.0
                                                                                                                                                    0.4                       500
                                                                                        -                                                                                           -
                                                                                                                      Korea

                                                                                                                               USA

                                                                                                                                            EU
                                                                                                              Japan




                                                                                                                                                     India
                                                                                                    Taiwan




                                                                                                                                                                                          FY04
                                                                                                                                                                                          FY05




                                                                                                                                                                                          FY10
                                                                                                                                                                                          FY00
                                                                                                                                                                                          FY01
                                                                                                                                                                                          FY02
                                                                                                                                                                                          FY03



                                                                                                                                                                                          FY06
                                                                                                                                                                                          FY07
                                                                                                                                                                                          FY08
                                                                                                                                                                                          FY09
                                                                     Source Department of Agriculture, research reports



                       India is expected to emerge as a hub for the procurement of generic agrochemicals as
4
                       well as new generation products
2. Company ovierview
2. Company ovierview


    2.1 Company snapshot
    Insecticides India (“IIL”) is an integrated agrochemicals company engaged in R&D,
    manufacturing, marketing and distribution of agrochemicals in India
       Listed company, established in 2001                       Shareholding pattern
       Amongst top 10 agrochemicals company in India with                                                          Others
        an estimated 5% market share                                                                                19.4%

       Large and diversified product portfolio
       Track record of new product launches                                                          FIIs
                                                                                                     5.9%
        – Judicious mix of in-house development, brand
          acquisitions and technical collaboration / marketing
          arrangements with global players
       Wide sales & distribution network across India                                                                                                                              Promoters
                                                                                                                                                                                      74.7%
       Established manufacturing infrastructure for both
        technicals and formulations                              Notes Shareholding pattern as on 31st Mar 2012

        – Recently commissioned new units with sufficient
                                                                  Outperforming the index
          capacity to enable sustained long term growth
        – New state-of-the-art technicals manufacturing          900
                                                                 800                                                                                                                                                                               762
          facility and R&D facility is in pipeline               700
                                                                 600
       R&D center recognized by DSIR and Ministry of            500
        Science & Technology                                     400
                                                                 300
       Accredited with NABL (R&D facilities), ISO 9001:2000,    200
                                                                                                                                                                                                                                                   114
        ISO 14001 and OHSAS 18001                                100
                                                                   0
        – GLP accreditation expected soon




                                                                       Jun-09




                                                                                                                              Jun-10




                                                                                                                                                                                    Jun-11




                                                                                                                                                                                                                                          Jun-12
                                                                                                           Feb-10




                                                                                                                                                                  Feb-11




                                                                                                                                                                                                                        Feb-12
                                                                                                                                                                           Apr-11




                                                                                                                                                                                                                                 Apr-12
                                                                                         Oct-09



                                                                                                                     Apr-10




                                                                                                                                                Oct-10




                                                                                                                                                                                                      Oct-11
                                                                                Aug-09




                                                                                                                                                                                             Aug-11
                                                                                                                                       Aug-10


                                                                                                                                                         Dec-10




                                                                                                                                                                                                               Dec-11
                                                                                                  Dec-09
                                                                                                                                           IIL                     Sensex
                                                                 Notes Figures have been rebased to 100




6
2. Company ovierview


                         2.2 History & development


                                                                                                                                          Entered into 2nd
    Insecticides India    Commissioned first    Commissioned 2nd    Acquired exclusive     New R&D unit set      Undertook                collaboration with
    (P) Ltd.              manufacturing plant   manufacturing       right to sell Thimet   up after receiving    establishment            AMVAC (for
    incorporated          at Chopanki           plant at Sambha     in India               Govt. accreditation   of multi-product         Nuvan)
                                                                    (collaboration with                          manufacturing            Finalized marketing
                                                                    AMVAC, USA)                                  facility at Dahej        arrangement with
                                                                                                                                          Nissan



    1996        2001      2002       2003       2004      2005       2006        2007       2008        2009      2010         2011       2012YTD




                                                          Received ISO          IPO & listing on       Undertook               Acquired brand
                                    Acquired leading      9001-2000             NSE                    establishment of        Monocil from Nocil
               Converted to         brands of Montari     certification         Commissioned           manufacturing           Commisioned
               Insecticides         Industries (Ranbaxy   Set up R&D lab at     technicals plant       facility at             Dahej and
               (India) Ltd.         group company)        Chopanki              at Chopanki            Udhampur                Udhampur plants




7
2. Company ovierview


                           2.3 Management team
                                                                       H. C. Aggarwal
                                                                         (Chairman)


                                                                   Rajesh Aggarwal (MD)




                                P.C. Pabbi                                                             Sandeep Aggarwal
                              Vice President                                                                 CFO




                                                                                                               Information
Production                   Purchase          Marketing                 R&D              Admin & HR                                  Finance
                                                                                                               Technology


             B.P.S. Rana      Abhai Shanker            Sanjay Vats              Venkat Rao                 Sanjeev Aggarwal         Pankaj Gupta
                DGM           GM                           GM                      GM                            GM                     CS


             H.C. Sharma                               M.K. Singhal             Dr. Mukesh
                DGM                                        GM                       DGM
                                                                                                       Sanjay Vats
                                                                                                           GM
         Ashok Bangde                                      V.K. Garg
             GM                                               GM
                                                                                                       R. S. Verma
                                                                                                       Sr. Manager
             K.V. Patel                                V.K. Singhal
             Unit Head                                      GM

        S.K. Choudhary
        Project Manager

          Anil Tyagi
         Project Head




8
3. Business description
3. Business description


                          3.1 Diversified business model


    Highly defensible, backward integrated and                   Diversified by segment                                      Diversified by geography
    diversified business model                                               6.7% 3.7%                Total = Rs                  Domestic Branded sales = Rs 4,341m
                                                                                                      5,541m



                                                                                                                                       32%               16%
    Strong presence in insecticides and herbicides segments
       – Segment focus and mix is strategically aligned to          28.0%                                                                                       17%
         requirements of the Indian market                                                            61.5%
                                                                                                                                          6%      8% 11%



                                                                                                                                                                 10%
    Formidable pan India presence with footprint across major                                                                    Punjab         A.P.             Haryana
    crop producing regions in India                                           Insecticides Herbicides
                                                                                                                                 Maharashtra    UP               Karnataka
                                                                              Fungicides     PGRs                                Others


   Catering to both Branded formulations (B2C) and
    Institutional sales (B2B) market                             Strong presence across categories                           Strong in-house manufacturing
       – Especially strong in Branded formulations
                                                                                                      Total = Rs                                                  Total = Rs
                                                                                                      5,541m                                                      5,541m



                                                                                                                                                8%
                                                                                21%
    Focus on in-house manufacturing and backward integration



                                                                                              79%                                                      92%



                                                                      Branded formulations     Institutional sales                   Manufactured in-house         Traded


                                                                Notes FY12 figures are provisional; All charts above depict segmentation of FY12P gross sales



                     Diversified portfolio across segments, regions and customers; strong brand presence
10
                     and recognition; in-house manufacturing and grassroots distribution infrastructure
3. Business description


                      3.2 Large product portfolio


     Exceptional track record of new product launches                               Large portfolio across multiple segments

     and portfolio augmentation aided by
                                                                                         PGRs 1             18        19


    In-house product development through
        – Backward integration
                                                                                    Fungicides         8         20        28


        – Enhanced focus on R&D                                                      Herbicides        11             25        36



    Acquisitions of „high recall, but off-shelf‟ brands and their successful re-
     launch into leading brands
                                                                                    Insecticides

                                                                                                   0
                                                                                                            23

                                                                                                                  20            40
                                                                                                                                         65

                                                                                                                                              60          80
                                                                                                                                                                 88

                                                                                                                                                                      100
        – Lethal and Monocil are recent success stories
                                                                                                             Institutional      Branded formulations




                                                                                    Track record of launch of new branded formulations
     Technical collaborations with leading global agrochemical players
                                                                                    10
        – Plan to repeat success of Thimet with Nuvan
                                                                                                                                                                8



                                                                                     8
                                                                                                                                     7
     Marketing arrangements with principal partners
                                                                                     6
                                                                                              5                   5

                                                                                     4
                                                                                                                                                    3

                                                                                     2


                                                                                     0
                                                                                            FY08                 FY09           FY10               FY11        FY12P



                      IIL’s product portfolio comprising of over 120 branded products, over 10 technicals
11
                      and over 750 SKUs
3. Business description


                            3.3 Sales & marketing
                            IIL 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                       Strong focus on Brand strategy                                  Marketing initiatives
distribution network                             Portfolio of over 120 branded products                         Dedicated awareness initiatives provide
    230+ sales personnel, 3,100+                Top selling brands such as Thimet, Lethal, Monocil and          information to farmers on various aspects of
     distributors and c.50,000 retail             Victor enjoy leading positions in the market                    agriculture and use of agrochemicals
     outlets                                                                                                     Participation in national and international
                                                 Aggressive focus on branding helped IIL gain market share
    26 depots across 24 locations                                                                                conferences, exhibitions and fairs
                                                 Successful employment of “Umbrella strategy” to introduce
    Unparalleled reach to India‟s                products for new applications and crops
     fragmented and dispersed end
     consumer base                               Pioneer in using electronic media advertisement




Sales personnel split                         Branding activities                                             Farmer awareness initiatives
           Central,         Total = 237
             15


                                     North,
                                      93
South,
  80




            West,         East, 21
             28




12
3. Business description


                         3.4 Manufacturing capabilities

                                                                                         Udhampur, J&K                    Granules capacity
                                                                                 Liquid capacity – 3.0m L                 expansion to be     Strong manufacturing
                                                                              Powder capacity – 0.6m Kg                   completed by
                                                                             Granules capacity – 0.6m Kg
                                                                                                                                              infrastructure
                                                                                                                          H1FY13
                                                                                                                                                 In-house manufactured products
25% capacity           Sambha, J&K                                                                                                                account for 90%+ revenues
expansion overall to   Liquid capacity – 5.5m L                                                                                                  One of the best asset turnover
be completed by        Powder capacity – 2.1m Kg                                                                                                  amongst Indian peers
H1FY13                 Granules capacity – 6.1m Kg
                                                                                             Chopanki, Rajasthan
                                                                                           Liquid capacity – 7.8m L                           Significant expansion in
                                                                                        Powder capacity – 3.5m Kg                             manufacturing capacity currently
                                                                                       Granules capacity – 7.5m Kg                            underway
                                                                                      Technicals capacity – 2.0m Kg
                                                                                                                                                 Expansion in technicals capacity to
                                                                                                                                                  provide a significant boost for the
                                                                                                                                                  institutional segment
                                                                                                              Granules capacity
                                                                                                                                                 Ramp up in formulations capacity to
                           Dahej (Baruch), Gujarat                                                            expansion of 7.5m kg                provide sufficient capacity to enable
 Technicals capacity
                            Liquid capacity – 4.0m L                                                          planned in the new                  sustained long term growth
 expansion of 10.0m
                         Powder capacity – 2.5m Kg                                                            (third) pant; to be
 kg to be                                                                                                                                        Significant opportunity for CRAMS
 commissioned by       Granules capacity – 12.0m Kg                                                           commissioned by
                                                                                                                                                  arising out of new facilities
                                                                                                              H1FY13
 H1FY13

                                                                                                                                              Significant area available for
                                                                                                                                              expansion of facilities in
                                                                                                                                              Government approved industrial
                                                                                                                                              belt for agrochemical production


                          Notes
                          Displayed capacity figures correspond to installed capacity as of 31st March 2012




  13
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. Summary financials


                   4.1 Summary financials


                   Net sales and margins

                            6,000                                                                                    12.0%


                                                           10.2%
Exceptional                                                          9.4%
                            5,000                                                           10.1%                    10.0%
annual growth in                                                                                        9.6%
revenues over
last 4 years
                            4,000                                                                                    8.0%
                    Rs m




                            3,000                                                                                    6.0%
                                                                                                    5,218
                                                                                        4,501
                            2,000                                                                                    4.0%
                                                                   3,774

                                                    2,634
                            1,000                                                                                    2.0%



                                -                                                                                    0.0%
                                                    FY09           FY10                 FY11        FY12 P

                                                                    Net Sales   EBITDA Margin



                           Notes FY12 figures are provisional




15
4. Summary financials


     4.2 Competitive benchmarking


      Revenue CAGR (FY08 –FY11)                                                       EBITDA margin (FY11)

        35%      32%
                        26% 26% 26% 25%                                                20%
        28%
                                              20% 19%                                        17%
                                                                                                   16%
        21%                                             17% 16% 16%                                      15% 15%
                                                                      13% 11%                                      13%
        14%                                                                     10%                                      11% 11% 11%
                                                                                                                                     10% 10% 10%
                                                                                                                                                          9%
         7%
         0%




      Asset turnover (FY11)                                                           ROCE (FY11)
                                                                                        38%
        15.8x                                                                                 35% 35%

                12.7x                                                                                    27% 27%
                                                                                                                 25%
                                                                                                                         21%
                        6.5x 6.3x 5.9x                                                                                         16% 15%
                                       5.5x                                                                                              12%
                                              4.2x 4.0x 3.8x                                                                                   9.9%
                                                             3.2x 3.2x                                                                                6.7% 5%
                                                                         1.6x 1.1x




     Notes FY12 figures are provisional




16
5. Growth strategy
5. Growth strategy


               5.1 Growth strategy




                                                                                          Enhanced backward
                                                                                           integration with increase in
                                                                                           technicals manufacturing
                                                                                           capacity
                                                            Continued focus on R&D        – Enhance margins
                                                             to reduce costs and           – Enable targeting
                                                             manufacturing time              institutional segment
                                                            Capitalize on prior          Leverage on location
                           Continued focus on               experience to achieve         advantage of manufacturing
                            establishing strong brands       maximum number of             facilities
                           Employ IIL‟s well-tested         technicals registration
                                                                                          Exploit gains from upgraded
                            “Umbrella strategy” to          Leverage R&D                  and newly commissioned
                            introduce product                capabilities for CRAMS        manufacturing facilities
                            extensions


     IIL intends to leverage its expertise in successful brand launches, enhanced R&D focus and
     recently expanded manufacturing capacity to fuel its future growth

18

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Insecticides India Ltd

  • 2. Contents Sections 1 Indian agrochemicals sector 2 2 Company ovierview 5 3 Business description 9 4 Summary financials 15 5 Growth strategy 17 1
  • 4. 1. Indian agrochemicals sector 1.1 Overview India is the 4th largest producer of agrochemicals by volume and 12th largest by value Indian agrochemical industry (US$ bn) Domestic agrochemical consumption (by segment) Significantly lower 6.0 Fungicides Total c.US$ 1.6bn agrochemical usage 4.9 17% 5.0 in India implies strong growth of 4.0 US$ bn c.10% p.a. expected 3.0 2.5 2.8 in the near term 1.9 Herbicides 2.0 1.6 1.7 21% Insecticides Agrochemicals 62% 1.0 consumption in India - skewed towards 2006 2007 2008 2009 2010E 2015P insecticides given the tropical climate and type of crop Split of consumption by crop type Split of domestic market by region plantation 3%2%2% Total c.US$ 1.6bn Others Total c.US$ 1.6bn 3% 13% AP 6% 24% Crop losses in India Gujarat 6% range from 20% to 7% 45% Maharashtra 30% owing to 7% suboptimal and 9% inadequate usage of WB 9% UP agrochemicals and is 23% 17% estimated to be worth Cotton Paddy Sorghum Hary ana Fruits & veg Wheat Arhar c.US$ 20bn per year Groundnut Bajra Others 10% Punjab 14% Source Broker notes, Company 3
  • 5. 1. Indian agrochemicals sector 1.2 Robust growth prospects Structural enablers in Indian agrochemicals Arable land stagnation Rise in MSP sector to catalyze strong growth trajectory 135 3,500 3,200 3,000 Rs / quintal 130 2,800 2,300  Rising pressure to increase food productivity given land m hectares 125 2,000 shortage/stagnation and rise in population 2,100 120  Increasing awareness of farmers 1,400 1,080 1,120 1,285 1,100 115  Rising prices of crops on the back of Minimum Support 700 Prices (MSP) 110 880 980 1,030 1,110  Use of costlier hybrid seeds 105 - FY09 FY10 FY11 FY12E FY80 FY83 FY86 FY04 FY07 FY10 FY89 FY92 FY95 FY98 FY01  Current under penetration of agrochemicals in India Paddy Grade A Wheat Arhar – Pesticide consumption amongst the lowest globally  Labour shortage for agricultural activities on the back of Low pesticide consumption Increased institutional credit flow NREGA 18.0 17.0 4,500  Continued financial support from Government through 4,000 15.0 subsidies and greater flow of institutional credit 12.0 3,500 Kg / hectare 12.0 3,000 RS bn 2,500 9.0 7.0 6.6 2,000 6.0 1,500 2.5 1,000 3.0 0.4 500 - - Korea USA EU Japan India Taiwan FY04 FY05 FY10 FY00 FY01 FY02 FY03 FY06 FY07 FY08 FY09 Source Department of Agriculture, research reports India is expected to emerge as a hub for the procurement of generic agrochemicals as 4 well as new generation products
  • 7. 2. Company ovierview 2.1 Company snapshot Insecticides India (“IIL”) is an integrated agrochemicals company engaged in R&D, manufacturing, marketing and distribution of agrochemicals in India  Listed company, established in 2001 Shareholding pattern  Amongst top 10 agrochemicals company in India with Others an estimated 5% market share 19.4%  Large and diversified product portfolio  Track record of new product launches FIIs 5.9% – Judicious mix of in-house development, brand acquisitions and technical collaboration / marketing arrangements with global players  Wide sales & distribution network across India Promoters 74.7%  Established manufacturing infrastructure for both technicals and formulations Notes Shareholding pattern as on 31st Mar 2012 – Recently commissioned new units with sufficient Outperforming the index capacity to enable sustained long term growth – New state-of-the-art technicals manufacturing 900 800 762 facility and R&D facility is in pipeline 700 600  R&D center recognized by DSIR and Ministry of 500 Science & Technology 400 300  Accredited with NABL (R&D facilities), ISO 9001:2000, 200 114 ISO 14001 and OHSAS 18001 100 0 – GLP accreditation expected soon Jun-09 Jun-10 Jun-11 Jun-12 Feb-10 Feb-11 Feb-12 Apr-11 Apr-12 Oct-09 Apr-10 Oct-10 Oct-11 Aug-09 Aug-11 Aug-10 Dec-10 Dec-11 Dec-09 IIL Sensex Notes Figures have been rebased to 100 6
  • 8. 2. Company ovierview 2.2 History & development Entered into 2nd Insecticides India Commissioned first Commissioned 2nd Acquired exclusive New R&D unit set Undertook collaboration with (P) Ltd. manufacturing plant manufacturing right to sell Thimet up after receiving establishment AMVAC (for incorporated at Chopanki plant at Sambha in India Govt. accreditation of multi-product Nuvan) (collaboration with manufacturing Finalized marketing AMVAC, USA) facility at Dahej arrangement with Nissan 1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012YTD Received ISO IPO & listing on Undertook Acquired brand Acquired leading 9001-2000 NSE establishment of Monocil from Nocil Converted to brands of Montari certification Commissioned manufacturing Commisioned Insecticides Industries (Ranbaxy Set up R&D lab at technicals plant facility at Dahej and (India) Ltd. group company) Chopanki at Chopanki Udhampur Udhampur plants 7
  • 9. 2. Company ovierview 2.3 Management team H. C. Aggarwal (Chairman) Rajesh Aggarwal (MD) P.C. Pabbi Sandeep Aggarwal Vice President CFO Information Production Purchase Marketing R&D Admin & HR Finance Technology B.P.S. Rana Abhai Shanker Sanjay Vats Venkat Rao Sanjeev Aggarwal Pankaj Gupta DGM GM GM GM GM CS H.C. Sharma M.K. Singhal Dr. Mukesh DGM GM DGM Sanjay Vats GM Ashok Bangde V.K. Garg GM GM R. S. Verma Sr. Manager K.V. Patel V.K. Singhal Unit Head GM S.K. Choudhary Project Manager Anil Tyagi Project Head 8
  • 11. 3. Business description 3.1 Diversified business model Highly defensible, backward integrated and Diversified by segment Diversified by geography diversified business model 6.7% 3.7% Total = Rs Domestic Branded sales = Rs 4,341m 5,541m  32% 16% Strong presence in insecticides and herbicides segments – Segment focus and mix is strategically aligned to 28.0% 17% requirements of the Indian market 61.5% 6% 8% 11%  10% Formidable pan India presence with footprint across major Punjab A.P. Haryana crop producing regions in India Insecticides Herbicides Maharashtra UP Karnataka Fungicides PGRs Others  Catering to both Branded formulations (B2C) and Institutional sales (B2B) market Strong presence across categories Strong in-house manufacturing – Especially strong in Branded formulations Total = Rs Total = Rs 5,541m 5,541m  8% 21% Focus on in-house manufacturing and backward integration 79% 92% Branded formulations Institutional sales Manufactured in-house Traded Notes FY12 figures are provisional; All charts above depict segmentation of FY12P gross sales Diversified portfolio across segments, regions and customers; strong brand presence 10 and recognition; in-house manufacturing and grassroots distribution infrastructure
  • 12. 3. Business description 3.2 Large product portfolio Exceptional track record of new product launches Large portfolio across multiple segments and portfolio augmentation aided by PGRs 1 18 19  In-house product development through – Backward integration Fungicides 8 20 28 – Enhanced focus on R&D Herbicides 11 25 36  Acquisitions of „high recall, but off-shelf‟ brands and their successful re- launch into leading brands Insecticides 0 23 20 40 65 60 80 88 100 – Lethal and Monocil are recent success stories Institutional Branded formulations  Track record of launch of new branded formulations Technical collaborations with leading global agrochemical players 10 – Plan to repeat success of Thimet with Nuvan 8  8 7 Marketing arrangements with principal partners 6 5 5 4 3 2 0 FY08 FY09 FY10 FY11 FY12P IIL’s product portfolio comprising of over 120 branded products, over 10 technicals 11 and over 750 SKUs
  • 13. 3. Business description 3.3 Sales & marketing IIL 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 Strong focus on Brand strategy Marketing initiatives distribution network  Portfolio of over 120 branded products  Dedicated awareness initiatives provide  230+ sales personnel, 3,100+  Top selling brands such as Thimet, Lethal, Monocil and information to farmers on various aspects of distributors and c.50,000 retail Victor enjoy leading positions in the market agriculture and use of agrochemicals outlets  Participation in national and international  Aggressive focus on branding helped IIL gain market share  26 depots across 24 locations conferences, exhibitions and fairs  Successful employment of “Umbrella strategy” to introduce  Unparalleled reach to India‟s products for new applications and crops fragmented and dispersed end consumer base  Pioneer in using electronic media advertisement Sales personnel split Branding activities Farmer awareness initiatives Central, Total = 237 15 North, 93 South, 80 West, East, 21 28 12
  • 14. 3. Business description 3.4 Manufacturing capabilities Udhampur, J&K Granules capacity Liquid capacity – 3.0m L expansion to be Strong manufacturing Powder capacity – 0.6m Kg completed by Granules capacity – 0.6m Kg infrastructure H1FY13  In-house manufactured products 25% capacity Sambha, J&K account for 90%+ revenues expansion overall to Liquid capacity – 5.5m L  One of the best asset turnover be completed by Powder capacity – 2.1m Kg amongst Indian peers H1FY13 Granules capacity – 6.1m Kg Chopanki, Rajasthan Liquid capacity – 7.8m L Significant expansion in Powder capacity – 3.5m Kg manufacturing capacity currently Granules capacity – 7.5m Kg underway Technicals capacity – 2.0m Kg  Expansion in technicals capacity to provide a significant boost for the institutional segment Granules capacity  Ramp up in formulations capacity to Dahej (Baruch), Gujarat expansion of 7.5m kg provide sufficient capacity to enable Technicals capacity Liquid capacity – 4.0m L planned in the new sustained long term growth expansion of 10.0m Powder capacity – 2.5m Kg (third) pant; to be kg to be  Significant opportunity for CRAMS commissioned by Granules capacity – 12.0m Kg commissioned by arising out of new facilities H1FY13 H1FY13 Significant area available for expansion of facilities in Government approved industrial belt for agrochemical production Notes Displayed capacity figures correspond to installed capacity as of 31st March 2012 13
  • 15. 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
  • 17. 4. Summary financials 4.1 Summary financials Net sales and margins 6,000 12.0% 10.2% Exceptional 9.4% 5,000 10.1% 10.0% annual growth in 9.6% revenues over last 4 years 4,000 8.0% Rs m 3,000 6.0% 5,218 4,501 2,000 4.0% 3,774 2,634 1,000 2.0% - 0.0% FY09 FY10 FY11 FY12 P Net Sales EBITDA Margin Notes FY12 figures are provisional 15
  • 18. 4. Summary financials 4.2 Competitive benchmarking Revenue CAGR (FY08 –FY11) EBITDA margin (FY11) 35% 32% 26% 26% 26% 25% 20% 28% 20% 19% 17% 16% 21% 17% 16% 16% 15% 15% 13% 11% 13% 14% 10% 11% 11% 11% 10% 10% 10% 9% 7% 0% Asset turnover (FY11) ROCE (FY11) 38% 15.8x 35% 35% 12.7x 27% 27% 25% 21% 6.5x 6.3x 5.9x 16% 15% 5.5x 12% 4.2x 4.0x 3.8x 9.9% 3.2x 3.2x 6.7% 5% 1.6x 1.1x Notes FY12 figures are provisional 16
  • 20. 5. Growth strategy 5.1 Growth strategy  Enhanced backward integration with increase in technicals manufacturing capacity  Continued focus on R&D – Enhance margins to reduce costs and – Enable targeting manufacturing time institutional segment  Capitalize on prior  Leverage on location  Continued focus on experience to achieve advantage of manufacturing establishing strong brands maximum number of facilities  Employ IIL‟s well-tested technicals registration  Exploit gains from upgraded “Umbrella strategy” to  Leverage R&D and newly commissioned introduce product capabilities for CRAMS manufacturing facilities extensions IIL intends to leverage its expertise in successful brand launches, enhanced R&D focus and recently expanded manufacturing capacity to fuel its future growth 18