Welcome to Brokers & Analysts Meet E.I.D. - Parry (India) Ltd

Transcription

1 Welcome to Brokers & Analysts Meet E.I.D. - Parry (India) Ltd 6 th May 2005 Mumbai 1

2 Disclaimer This presentation contains forward-looking statements which may be identified by their use of words like plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The companies referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. These companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise. 2 2

3 Murugappa Group and Vision for EID Parry Mr. A Vellayan Vice Chairman 3 3

4 Group Performance Highlights

5 Group Sales Trend Sales Contribution ( ) Sales (Rs. Billion) EIDP 12% CUMI 6% Others 13% TII 25% FIND 44%

6 Group PBT Trend PBT Composition ( ) PBT (Rs. Billion) Others 22.5% FIND 22% 5.5 CUMI 9.5% EIDP 23% TII 23%

7 Group PBT Trend PBT (% of Sales)

8 Vision for EID Parry To become India s No. 1 integrated sugar complex company in revenues as well as profits To become India s most preferred provider of high quality bathroom solutions To become India s Leading Organic Pesticide manufacturer and exporter 8 8

9 EID Parry(I) Ltd Mr. P Rama Babu Managing Director 9 9

10 EID Parry Performance Highlights

11 Sugar Division Brief Highlights ( ) About 80,000 MT Raw Sugar imported and processed to maximise capacity utilisation Launch of Refined Sugar and Parry Pure brand for retail market. Available at over 800 outlets across Chennai, Pondicherry and Bangalore Highest ever Fresh Cane Planting (60,600 acres - 24% percent higher than plan) Acquisition of the assets of New Horizon Sugar Mills, Pondicherry 11 11

12 Brief Highlights ( ) Parryware Capacity Increased from MT to MT & basic Infrastructure facilities improved Dedicated manufacturing facility for supply of Taps GTPL Bio Products Obtained registration in Argentina a major producer of organic and green food to North America Purchased patents in USA, Australia, Canada and Japan for exclusive marketing rights till 2012 for Process and 2020 for Formulation 12 12

13 Brief Highlights Corporate Superbrand Status Divested PCL- Parry Confectionery Ltd. Divested Small businesses : Netlon, Parry Travel, General Marketing Division (GMD) Interest cost at Rs. 3.5 Cr. - lowered from level of Rs. 45 Cr. in (for current set of businesses in EIDP) Effective Tax rate of 18% maintained through 80 IA benefits Investments Stock split : One equity share of Rs.10 will be divided into five equity shares of Rs.2/- each w.e.f 3rd June Merger of Santhana Lakshmi Inv. Ltd. A subsidiary company with EIDP w.e.f. 1st May,

14 Financial Movement Year Ended 31 st March 1.4 Gross Income (Rs billion) Gross Income PBT PBT (Rs billion) Earnings per Share (in Rs.)

15 Sugar Business 15

16 Global Sugar situation Short term: Consumption continues to increase and leads production for the second consecutive year, thus depleting global stocks Poor crops in India, Thailand, Cuba and Pakistan creating a deficit Brazil producing more Sugarcane To cater to higher Ethanol Domestic Use and Export market And hold stocks to benefit from the higher Brazillian domestic sugar prices Hence Sugar exports not likely to meet entire global demand deficit Good crop in EU but Russia likely to start stock buildup Medium term: WTO Ruling against EU Export subsidies likely to change global trade patterns & push international prices up Oil prices at a high and hence Ethanol demand and trade going up rapidly Thailand moving towards Brazilian model of Sugar and Ethanol mix and Kyoto Protocol will generate more demand for Bio Ethanol International prices likely to remain favourably firm 16 16

17 Indian Sugar Scenario Sugar production needs to grow at 19% CAGR for the next 5 years to be self-sufficient (India policy) meeting the 4% consumption growth and bringing back stocks to acceptable food security levels (4 months holding) Thus stocks will be low over the next 5 years and the Prices is likely to remain firm Government initiatives to encourage Green Power (Kyoto Protocol) through Cogen programme Domestic use of Ethanol for fuel blending Thus expanding the value chain Sugar/ Ethanol from cane is a potential export commodity in the medium to long term Indian sugar industry s competitiveness locational advantage (Indian Ocean countries- EU s traditional markets) Ethanol exports to Japan and others for their Kyoto Protocol compliance With global deficits expected to continue, exports are attractive 17 17

18 Sugar Demand and Supply Forecasts India: Demand - Supply estimates 300 Past Future 100% 90% % Lakh MT % 60% 50% 40% 30% Stock to Use % 50 20% 10% 0 Sep30, 98 Sep30, 99 Sep30, 00 Sep30 01 Sep30 02 Sep30 03 Sep30 04 est Sep est Sep est Sep est Sep est Sep est Sep es t Sep Sep 30 est 12 es t 0% Production Consumption Stock as % (no of months) of Previous Year Consumption Stock with Raws Imports and Rexport Assumptions for SY onwards 35% Increase in Production in SY ; then 15 % for 2 years and 10% for 2 more years before cutback in production to manage stocks; 4% increase in consumption y-o-y Thus Imports at 20 LMT for these 3 years is needed; as re-exports obligation kicks in 18 18

19 Price and Stock to Use Ratio Movements 80 17, ,100 14, , , , , ,245 16, ,500 16,000 15,500 15,000 14,500 14,000 13,500 13,000 12, FY Avg FY Avg FY Avg FY Avg FY Avg FY Avg FY Avg FY Avg 12,000 Price Stock to Use Ratio Mid point of year (%) 19 19

20 Why South India? Competitiveness in the Sugar Industry is driven by Mutual Inter-dependance between the Farmer & the Miller Thus Total Recovered Sugar per Ha (= Cane Yield, MT per Hectare X Recovery, Ton of Sugar per Ton of Cane) should be the key measure Agro climatic conditions Long crushing season Total Sugar recovered (MT per Ha) Tamilnadu Karnataka Maharashtra Andhra Pradesh Gujarat UP All India 20 20

21 EID - A Significant Player in TN EID Sugar Factories New Horizon 21 21

22 EIDP s Position in the Industry Sales - 4 year average PBT - 4 year average Balrampur Bajaj Dhampur EID Parry Sakthi Bannari Oudh Ugar Upper Simbhaoli K C P Dharani Thiru Arooran Rajshree Rana Balrampur Bajaj Bannari EID Parry K C P Rajshree Ugar Rana Dharani Nahar Source : Capital Markets, Myiris.com, Team Analysis 22 22

23 EIDP s position in the Industry ROCE - 4 year Average Market Capitalisation (31 Mar 05) Bajaj Balrampur EID Parry Balrampur K C P Ugar Bannari Simbhaoli Sakthi Rana Upper Oudh Dhampur Thiru Arooran Nahar Bajaj EID Parry Bannari Dhampur Sakthi Ugar Upper Oudh Thiru Arooran Rajshree Rana Simbhaoli Dharani Nahar K C P 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% Source : Capital Markets, Myiris.com, Team Analysis 23 23

24 Highlights Refinery commissioned & Parrys Pure Refined sugar launched Nellikuppam, India s First Sugar Unit, has been fully automated with DCS Cane Pricing on Average Recovery basis, will positively impact Sugar Division s profitability Derisking Projects Co-Products Commenced in two units 24 24

25 Performance Y o Y (%) Sugar Production ( LMT) Sugar Sales volume ( LMT) Sales Realisation (Rs / MT) Raws Processed (MT) Cane Planting (Acres) (11 %) 11% 24% - 60% 25 25

26 Sugar Business Financials (Rs in Mn) FY 2003 FY 2004 FY 2005 Revenue EBITDA EBIT CAGR 9% 46% 80% Capital Employed EBITDA Margin 9% 13% 16% ROCE 6% 10% 20% 26 26

27 The Way Ahead, De risking -Value from every part of cane stick Decontrol - Inventory, Product-Mix & Flexibility in operation Co-Products Projects in all units Management systems & processes Branding Technology for various grades Low Cost including Finance (2nd largest cost) Continous improvements; Leverage on Financial Soundness of the company for acquisitions 27 27

28 Extracting Value from Every Part of the Cane Stick Cane Molasses Sugar Bagasse Alcohol Refined Sugar Steam Fuel Ethanol Extra Neutral Alcohol (ENA) Power Process Steam Saleable Surplus Total Recycle of water from Cane (70% by wt) Cane Tops (normally trash) as fuel for Boilers Value added & Co - Products 28 28

29 Value Addition - Cost Structure Parameter Conventional Mill Basis: 1 MT of Cane at Recovery of 10% Integrated Plant (Nellikuppam model) Sugar 100kg 100 kg Molasses 40 kg X Ethanol X 10 litres Saleable Power X 75 kwh Co-product Revenue (Rs) Sugar Revenue (Rs) Total Revenue (Rs) Cane Price Contribution (Rs) Indicative only from Nellikuppam experience 29 29

30 Increasing the Flexibility Now Future Product - Sugar S- 30 & M-30; Refined grades Distribution Channels Raw Material Brokers & Civil Supplies Dept Cane & Institutions, Wholesalers & Retailers & Raws; Tolling during Off-season By Product - Alcohol Rectified Spirit & Ethanol, ENA Fuel for By Product Power Bagasse & Coal, Lignite & Agri - fuel and cane trash 30 30

31 Co-Products Projects CoGeneration of Power MW Alcohol/Ethanol Prod (mn Lt) Where we want to be Rs 166 Cr 77 Where we want to be Rs 80 Cr 42 Where we are today 24.5 Where we are today B Where we want to be Sugar Production LMT Rs 45 Cr 4.2 Where we want to be Crushing capacity TCD Where we are today Where we are today Progressing on schedule

32 Acquisitions New Horizon Sugar Mills, Pondy 2000 TCD Plant Successful bidder, confirmation awaited from Hon ble High Court of Madras Synergies with Nellikuppam Unit Opportunity to crush about 6 to 8 Lac MT of Cane Access to Port Possible tolling location in future Anticipated Consolidation in the Industry lends opportunity to acquire and turnaround poorly performing mills in South India 32 32

33 Bio Products Business 33 33

34 Market Scenario.. Consumer awareness and preference towards safer food Global conventions on environment and Persistent Organic Pollutants Regulatory changes to meet international obligations Emergence of Organic and Green movement.. Towards a safe and sustainable future 34

35 Shifting Trends in Global Pesticide Business Organic Green Combination Amber Conventional Red (8 billion US $ Stagnant) Bio-pesticides are applicable in the Green and Amber segments Value of global sales US $ 890 Mill Estimated to grow at over 10% 35 35

36 Bio Products Business Today Bio Pesticides for Clean & Green Crop cultivation, Home Garden, Turfs and Ornamentals and Public Green Major markets covered - North & Central America, Europe and India Over 70% of revenue come from exports 36 36

37 Products NEEMAZAL Technical - High Purity, High Quality (less than 50 ppb Aflatoxin) extract of active ingredients (mainly Azadirachtin A & B) from the Neem Seed Kernel NEEMAZAL Formulations - High Quality, Stable formulations for crop protection applications Neem Cake & Neem Oil 37 37

38 Production Facility Annual Capacity of 7500 kgs of 100% Azadirachtin Located at Tyagavalli near Cuddalore, TN State-of-the-art plant ISO Certified Certified by IMO for organic agriculture 38 38

39 Key Drivers Patent protection in target markets Patents in 21 countries; Process patents valid till 2012 and product patents valid till 2020 Regulatory Clearances in target markets including U.S.A., Mexico, Germany, Italy, Holland, & India (a total of 23 countries in all) State-of-the-art R&D, working on agriculture, veterinary, public health and human health applications of Neem. Organic Certification from IMO, Switzerland 39 39

40 Bio Products : Financials (Rs in Mn) FY 03 FY 04 FY 05 CAGR Revenue % EBITDA % EBIT % Capital Employed EBITDA % -1% 17% 26% ROCE % -4% 4% 18% 40 40

41 Parryware K E Ranganathan Vice President 41 41

42 Welcome to.. 42

43 The success story of 43 43

44 Indian Housing market 44 44

45 How did we go about in gaining a larger share of this market growth? 45 45

46 Parryware s operations A Snapshot 3 Plants (north/west/south) 12 Stock points 2500 products (SKUs) 4 Experience Centers 4500 outlets - shops New Plant 10 Customer Service centers 46 46

47 Major Exports Markets Exports contributes to 7% Parryware Sales Volume 47 47

48 Highlights- 2004/05 Continues to be No.1 Brand Parryware enters Taps category successfully Capacity enhanced by 16% on sanitaryware New 24% of sales drives growth Productivity enhanced higher yields Sales 25% - ahead of market 48 48

49 Business is all about customers Parryware Share of market More Customers Buy Parryware Share of wallet Buy More Parryware 49 49

50 Contemporary Brand Innovative Products Enhanced Experience Around the customer Assured Service 50 50

51 More Customers buy Innovative products Tapti Basin Cardiff Walvit Athena Range Contemporary designs 51 51

52 More Customers buy Innovative products Comfort pan Solid seat cover Ergonomics based based comfort 52 52

53 More Customers buy Innovative products Pluto basin Vienna Walvit pan Concealed cisterns Smart Smart new new ways ways to to save save space space 53 53

54 More Customers buy Innovative products Waterless urinals Integrated EFS E Taps Saving Saving water water resource, Touch Touch free free hygiene hygiene 54 54

55 Customers buy more Taps & Invisibles range Share of wallet! 55 55

56 Customers buy more Glamour range Milton Glasgow Ontario Glass Basin Clifton Shower Panel Niagra Shower Temple 56 56

57 New Colours Contemporary & Exciting Colour Offering from Parryware In Consultation with leading Colours experts To be in line with Current Consumer preference for colours 57 57

58 Brand Experience PW Experience centers Mumbai Delhi Chennai Bangalore 58 58

59 Array of Quality Certifications ISO 9001 : First Company in the Industry to get the certification for entire business operations ISO : 1996 For all three plants certified by British Standards Institution OSHAS For all three Plant certified by BSI Management systems Products certified to Indian, South African and Israel Standards 59 59

60 Parryware Business (Rs in Mn) FY 2003 FY 2004 FY 2005 CAGR Revenue % EBITDA % EBIT % Capital Employed EBITDA % 16% 15% 14% ROCE 21% 24% 24% 60 60

61 Business Mix 30% 28% 4% 66% Sanware Taps Allied 72% Entry into Taps Sanware Allied JADE PEARL EMERALD 61 SAPHIRE 61

62 Sales Value Trend Gr% PRW CAGR: 9% 9% Rs Mn % 5% 16% % -1% 5% '00-01 '01-02 '02-03 '03-04 PRW HSI (9 Months Sales) PRW Rs.1450 Mn HIS Rs.1180 Mn 62 62

63 Return on Capital Employed : Compared to competition 30% 25% 21% 24% % 20% 17% 15% 10% 12% 13% 10% 5% '01-02 '02-03 '03-04 PRW 12% 21% 24% 'HSI 13% 10% 17% 63 63

64 Going forward.. into

65 Key Growth Drivers Affordability First house at the age of 35 Desirability Own house, a dream come true Availability 40m homes shortage Upgradability Renovation 65 65

66 Key Strategies Sustain Enhance Brand Experience Market Leadership Taps Strengthen Premium Image Projects & Institutions 66 66

67 Manufacturing facilities Modernized plants with Good infrastructure facilities Geographically well distributed Assured Raw material availability Possibilities of Regasified Liquified Natural Gas (RLNG) availability Dewas, MP in FY07 Perundurai, TN expected from FY

68 Marching Towards World Class Benchmarks Improving Cost efficiency Continuous Yield Improvement More focus on Quality standards Build Capability to produce products of international standards Technical Assistance from CERAM UK in certain specialized areas New R&D Facility set up at Ranipet Ensure in process quality Try out new innovations 68 68

69 Capacity Additions Capacity addition at Dewas New Facility at South in MT '03-04 '04-05 '05-06 '06-07 Addn Extg

70 Taps & Fittings Major Growth Driver Tie-up with dedicated vendor National Presence Wider Range Same Brand Promise Topaz Citrine Triliant Agate Garnet Cascade DC e Tap 70 70

71 Future Plans Be the preferred brand choice of customers Parryware as ONE STOP solution Deliver brand promise on product, service & experience Grow ahead of market : Grow aggressively in all markets thru innovative products & services Appropriate investments for capacity Taps capture - 10% market share 71 71

72 Parryware : Summary Strong brand, well in sync with contemporary trends Only brand to offer well coordinated glamourooms with Sanware, Accessories & Taps Wider choice with latest collection Easy availability Constantly improve capability to manufacture and market products as per evolving customer requirements 72 72

73 Glamour Times ahead 73

74 Financials and Future Plans D. Kumaraswamy CFO 74 74

75 Structure E.I.D.- PARRY (INDIA) LIMITED SUGAR COGEN RECTIFIED SPIRIT & ETHANOL PARRYWARE (Sanitaryware, Allied products & Taps) Bio Products INVESTMENTS 1. Coromandel Fertilizers Ltd., 2. Parry Monsanto Seeds( P) Ltd., East India Sugars (P) Ltd., Trichy Distilleries & Chemicals Ltd., Espiem Plastics Ltd., Parry America Inc., PROPERTY CELL 75 75

76 Financials at a Glance: Income Statement (Rs in Millions) Description FY 2003 FY 2004 FY 2005 Sales EBITDA EBIT Interest PBT Extra ordinary Items Net PBT PAT CAGR% 12% 33% 51% 100% 76% 95% 76 76

77 Segment-wise :Revenue Trends FY FY Extraordin ary 3% Bio 2% Others 5% Extrordi nary 3% Bio 2% Others 3% Parryware 25% Parrywa re 24% Sugar 65% Sugar 68% Total Revenue: Rs.6414 millions. Total Revenue: Rs.8191 millions

78 Segment-wise :EBIT Trends FY FY Extrordin ary 15% Bio 1% Others 4% Sugar 53% Extraordi nary 18% Bio 3% Others 8% Sugar 53% Parryware 27% Parryware 18% Total EBIT: Rs.608 millions Total EBIT: Rs.1308 millions 78 78

79 Financials at a Glance: Balance Sheet (Rs in Millions) (Rs crore) BALANCE SHEET Particulars FY03 FY04 FY05 NFA NCA Investments Capital employed Networth D.Tax Liability Long Term Borrowing Other Borrowing Total

80 Segment-wise :Capital Employed EIDP Only FY FY Rs in Millions Others, 1674, 27% Others, 1879, 29% Bio, 297, 5% Parryware, 746, 12% Sugar, 3391, 56% Bio, 221, 3% Parryware, 973, 15% Sugar, 3463, 53% Total Cap Employed: Rs.6108 millions Total Cap Employed: Rs millions 80

81 Financials at a Glance: Key Ratios Particulars FY 2003 FY 2004 FY 2005 EBITDA Margin % 13.4% 14.5% 18.9% ROCE % 7.7% 8.4% 16.5% RONW % 8.0% 12.8% 25.0% EPS (Rs) PE Multiple * Dividend % 60% 75% 125% Dividend Payout % 45% 35% 31%** Book Value/Share * PE multiple for FY2005 is based on corresponding market price on 31 March, 2005 ** Dividend payout for FY2005 is 31% of PAT excluding Extra ordinary income 81 81

82 Future Plans 82

83 Proposed Investments Rs. Mn Mar06 Mar07 Total Sugar Division Sugar Cogen Distillery Sugar Division Total Funding Rs. Mn Proposal Mar06 Mar07 Total % Internal Accrual % Debt % Total % Parryware Division Total Investments New Horizon Sugar (Mn)- 502 SDF, Green Credit, TNPL Debt- 250 Internal Accruals

84 Consolidated Financials 84 84

85 Consolidated Financials Income Statement Rs in Millions Description FY 2003 FY 2004 FY 2005 Sales EBITDA EBIT Interest PBT Extra ordinary Items Net PBT PAT PAT (less minority interest + Profits from associate companies

86 Consolidated Financials Balance Sheet Rs in Millions Particulars FY03 FY04 FY05 NFA NCA Investments Capital employed Networth Minority Interest D.Tax Liability Long Term Borrowing Other Borrowing Total

87 Consolidated Financials Key Ratios Particulars FY 2003 FY 2004 FY 2005 EBITDA Margin % 12.0% 11.6% 12.5% ROCE % 9.8% 10.5% 15.7% RONW % 7.8% 13.4% 25.6% EPS (Rs) PE Multiple Book Value/Share

88 Financials of Major Subsidiary Company 88

89 Coromandel Fertilizers Ltd., Rs in Millions Description Description EPS Sales Market Price EBDITA P.E EBIT Paid up capital Interest EID group's Holding 68.69% 68.69% PBT Capital Employed PAT EBDITA Margin 11% 9% ROCE 13% 15% 89 89

90 EID s Share Price Performance 90

91 Indexed Stock Performance Market Cap: Rs.10,039 Millions , , , , , , , ,000 50, Oct-01 Mar-02 Aug-02 Jan-03 Jun-03 Nov-03 Mar-04 Aug-04 Jan-05 Apr-05 Volume (RHS) EID Sensex (Rebased) EID (incl. CFL shares issued on demerger) 91 91

92 Financial Calendar Annual General Meeting Q1 Results 1H Results Q3 Results 4th Week July 4th Week July 3rd Week Oct 3rd Week Jan 92 92

93 Thank you 93