Sustained growth. Global scale. March 2007 1
Table of contents The Tata Group - overview Tata Chemicals - Business overview Segment overview Chemicals, including overview of Brunner Mond Fertilisers Financial overview 2
An overview of the Tata Group 3
Tata Group India s largest and the most respected business group Market cap 1 : US$49bn Revenues 2 : US$22bn Materials Sales:21% IT and Communications Sales:19% Engineering Sales:31% Services Sales:10% PAT 2 : US$2 billion Notes Consumer Products Sales:6% Energy Sales:8% Chemicals and Fertilisers Sales:5% 1 Market cap (approx.) as on March 31, 2006 2 F.Y. 2006 financial data 4
Tata Chemicals Business Overview 5
Tata Chemicals today is The 3rd largest soda ash manufacturer in the world post the acquisition of the Brunner Mond group The #1 soda ash player in India A market leader in edible salt market, largest STPP player in the country The most energy efficient urea fertiliser manufacturer in India and amongst the most efficient globally 1/3 rd stake holder in IMACID, Morocco assured supply of key inputs A true partner of the farmer with a presence in all 3 agri inputs categories as well as an expanding number of Tata Kisan Sansars 6
Global Presence UK Netherlands Morocco Kenya India South Africa Manufacturing locations Markets 7
At a glance Listing: Ticker: Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE) TTCH IN Founded: 1939 Market Capitalization US$ 1051mn Revenue 3 (US$mm): 910 (Chemicals 431, Fertilisers 479) EBITDA 3 (US$mm): 166 EBITDA Margin 3 : 18.2% Employees: 3,500 Ownership: Sponsor Group 31.6 % Institutional Investors 33.8 % Note: Indian Public 34.6 % 1: INR/USD Conversion rate of 44.12 as on 29 th December 2006 for Market cap data 2: FY 2006 data, INR/USD Conversion rate of 44.27 3: Financial Performance relates to FY 2006 consolidated performance. These numbers include only 3 months of the BMGL s FY 2006 performance 8
Business segments 9
Chemicals - Soda ash Revenue Mix Chemicals 54% 10
Soda ash industry perspective International Markets Global demand at 37 million mt, China - 21% of demand; to grow at 4%pa led by glass Synthetic production dominates 73% Increasing natural gas, coal, coke prices & freight rates Selling prices increasing after seven years of weak prices Domestic Markets Domestic demand 2.2 million mt growing at 4-5% Demand driven primarily by the float glass segment Synthetic soda ash accounts for 100% of domestic production Capacity utilisation levels at all-time high Source: British Sulphur Consultants 11
Overview of the Brunner Mond Group 12
Brunner Mond a transformational acquisition Major step towards becoming a truly globally competitive company BMGL 2 nd largest producer in Europe ~1500 customers Total Soda Ash production capacity ~2.0 mn tons with three plants (Before Brunner Mond, soda ash capacity: 0.87mn tons) Facilities now in Asia, Europe & Africa, close to high-growth markets TCL combined turnover to go up ~40% Resultant synergies will drive Tata Chemicals profitability 13
Facilities within reach of major markets Facilities and transportation terminal strategically located to give access to major markets in Europe, Middle East, and South East Asia Europe 1.3mn tons Soda ash capacity 2.0 mn tons Africa 0.685mn tons UK Netherlands Magadi, Kenya Terminal at South Africa 14
Competitive advantages of Magadi Soda Ash Magadi has unique competitive advantages Close to key growth markets e.g. Middle East and Asia Self-replenishing proven trona reserve - life of 100 years Duration - Lease extended for 30 years upto 2053 Area 227,000 acres Significant cost savings for producing natural soda ash The use of trona makes Magadi Soda Ash lowest cost producer in the world Cost of prodn of natural soda ash ~ 50% of synthetic soda ash 15
TCL-BMGL Combined Markets ASIA EUROPE MIDDLE EAST & AFRICA India Bangladesh Sri Lanka Indonesia Thailand Pakistan Philippines Vietnam Malaysia UK Netherlands Germany France Belgium Sweden Ireland Norway Denmark Oman UAE Kenya South Africa Nigeria Saudi Arabia Morocco 16
Working with leading brands Gujarat Glass 17
Food additives Market leader - 47% share in India Superbrand - Ranked # 1 food brand by Economic Times High brand equity and premium perception Tata Salt - pioneer in branded salt market Nationwide distribution - over 40 million consumers Integrated operations at Chemical site - Embedded competitive advantage Business with social objective first Iodized Salt (goitre), now Fortified (iron deficiency) 18
Fertiliser segment Revenue Mix Fertilisers 46% 19
The Indian Fertiliser sector India is the third largest producer and consumer of Fertilisers Consumption skewed towards nitrogenous fertilisers: Urea constitutes 85% of nitrogenous fertiliser consumption and 58% of total consumption Recent gas finds create huge opportunity for urea business. Strong medium to long term outlook for DAP Urea policy perspective Prices determined by Government Feed stock price a pass through Equal playing field for efficient and non efficient manufacturers Phosphatic Policy perspective Feedstock prices based on average international prices Price announcements often delayed by Government Delay in settlement of raw material prices 20
Tata Chemicals Fertiliser business Source of stable revenues in a pre-dominantly government-controlled environment Leading player in urea and phosphatic fertiliser segments Dual feedstock Babrala facility - most efficient in India Strategic stake in IMACID, Morocco ensures continuous availability of phosphoric acid Presence in high consumption north and east regions Punjab Haryana Uttar Pradesh Bihar Tata Kisan Sansars, a one-stop shop for agricultural solutions INDIA Baroda (Nikohead office) W. Bengal Jharkhand 21
Tata Kisan Sansar 22
Tata Kisan Sansar (TKS) - creating rural entrepreneurship Provide value add services Create a new distribution channel for agricultural inputs Improve supply chain efficiencies and provide farm-gate linkages.. NCDEX Create market driven R&D solutions Retailing of fresh agricultural produce tie up with TOTAL Produce, Europe s largest fresh produce Company 23
Financial overview Standalone* *Pre Acquisition of the Brunner Mond Group 24
Facilities in India Mithapur Soda Ash, Cement, Salt Haldia DAP, NPK Babrala - Urea 25
Growing revenue & Operating profit Revenue Growth Operating Profit Growth & Margin 700 600 500 400 300 200 100 318 139 179 Merger of HLCL* 554 338 216 670 417 253 795 495 300 US$ million 150 125 100 75 50 25 86 27 Merger of HLCL* 18 17 17 131 115 101 30 25 20 15 10 5 % 0 FY '03 FY '04 FY '05 FY '06 Chemicals Fertilisers 0 FY '03 FY '04 FY '05 FY '06 Op profit Operating Profit Margin * Hind Lever Chemicals Ltd Decline in operating margins due to increased prices of raw materials and higher trading in line with strategy to expand and strengthen relationship with the farmer 0 26
Debt-Equity Perspective 2% FY 2006 Debt Split 45% 9% 44% FCCB Short Term Loans Term Loans Cash/ Packing Credit 14 12 Reducing interest cost (%) 900 800 Total Debt Shareholder's Equity 760 812 (%) 10 8 11.7 9.7 700 7.9 USD million 600 500 400 300 457 486 6 4 4.4 4.5 200 100 303 326 2 0 FY 2005 FY 2006 Debt : Equity at 0.66 : 1 0 FY 02 FY 03 FY 04 FY 05 FY 06 27
Credit Ratios 60 50 Interest Coverage ratio Net Debt/Equity 56 40 30 20 19.4 10 0 3.9 7.4 0.36 0.2 0.57 0.3 FY03 FY04 FY05 FY06 28
Financial overview Consolidated 29
Beyond Boundaries, Brunner Mond Brunner Mond, UK Soda Ash Morocco Africa Brunner Haldia Mond, India Netherlands Soda Ash, Bicarb Babrala India TBEM 2006 Mithapur India 30
Brunner Mond.. Brunner Mond, Kenya, Lake Magadi - Soda Ash Dredge on lake Magadi, Kenya Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 31
IMACID, Morocco Morocco Africa Haldia India Babrala India TBEM 2006Durban SA Mithapur India 32
Financials Revenue growth in USD million 900 600 300 317 CAGR 39% 554 670 910* 115 795 1053* 330 723 0 FY03 FY04 FY05 FY06 9M FY07 Note: FY2006 Consolidated financials include BMGL s Q4 results and IMACID s performance over 11 months * Post consolidation 33
Financials EBIDTA 200 CAGR 25% 166* 173* in USD million 100 86 100 115 35 131 52 121 0 FY03 FY04 FY05 FY06 9M FY07 * Post consolidation 34
Profit After Tax 100 CAGR 33% 76 97* 17 97* 18 in USD million 50 41 48 80 79 0 FY03 FY04 FY05 FY06 9M FY07 BMGL staff costs are net of write back of USD 7 million of pension liabilities in an overseas subsidiary, consequent to actuarial valuation. According to Indian GAAP this amount has to be included in the P&L. Profits in FY2006 are hence higher by same amount. * Post consolidation 35
Consolidated financials FY 2006 9M FY 2007** TCL IMACID / BMGL (Jan to Mar 06) Consolidated TCL IMACID / BMGL (Apr to Dec 06) Consolidated Sales 795 135 910 723 330 1035 EBITDA 131 31 166 140 53 192 EBIT 100 20 125 114 33 147 Net Income 80 16 97 79 97 EPS 0.37 0.44 0.37 0.45 1 After reducing provision of USD 58.7 mn for the deficit in BMG s pension liability) ** Exchange rate of $1=Rs.44.12 as on 29th December 2006 36
Financial ratios Category Unit FY 2005 FY 2006* 9M FY 2007* Profitability EBITDA Margin Net Profit Margin % % 17 11 18 11 17 11 Earnings per share INR 15.8 19.9 16.3 Shareholder Returns Networth per Share Dividend Yield INR % 93 5 103 3 Market to Book Value Times 1.5 2 Cash Generation EBITDA USD Million 115 131 121 Stability Debt : Equity Interest Coverage Times Times 0.7 19.4 0.8 22.1 Fixed Asset Turnover Times 1.9 2.2 Activity Avg Debtors Velocity Avg Inventory Turnover No. of Days No. of Days 49 64 60 65 Cash cycle No. of Days 59 72 * Post consolidation 37
Shareholder Returns 24 240 20 201 220 200 Rs. per share 16 12 8 4 0 7.0 40 5.0 10.9 10.3 55 5.5 103 5.5 15.8 138 6.5 19.9 * 7.0 180 160 140 120 100 80 60 40 20 Rs FY '02 FY '03 FY '04 FY '05 FY '06 EPS Dividend Average Market Price * Post consolidation (Standalone EPS : Rs. 16.41) Consistent and healthy dividend payout 38
The road ahead. Chemicals Doubling Magadi capacity Building a global Bicarb business Modernisation of Mithapur Increase Soda ash, cement & Salt capacities Fertilisers Debottlenecking Babrala Explore cheaper locations for gas Innovation new crop specific higher value fertilisers Securitising Inputs Acquisition Thrust 2 nd round of cost optimisation - with Mckinsey Develop R&D facility (Innovation Centre) Turnover - USD 2 billion by FY09, 1/3 rd from International Businesses Company Wide 39
The New Emerging Portfolio 40
1. Fresh Produce Business 1. Leveraging the TKS Network 2. Focusing on what matters the supply chain 3. Partnering with experience 100 years of expertise (TPL earlier Fyffes) 4. Sequential roll-out Punjab and West Bengal 5. In 2007-08 2 Distribution Centres In 3 years 20 Distribution Centres In 5 years 40 Distribution Centres A 160,000 Cr. market 41
2. Biofuels 1. Entry into both Bio Diesel and Bio Ethanol 2. Trial cultivation of non-food agricultural feedstock commenced in both cases 3. Dual approach conventional technology & advanced new technologies (concurrent development) 4. Development of novel technologies is the responsibility of the Innovation Centre (Pune) 42
3. The Innovation Centre 1. Based in Pune 2. Focus on the Bio-Nano space 3. 20 scientists going to 150 in 2 years time & ~500 in the longer-term 4. Current Focus Areas: Bio Diesel cleaner & simpler trans - esterification Bio Ethanol Enzyamatic Cellulosic conversions Nano Materials, Bio Materials & Advanced/Smart Materials 5. 25-30% Research into Blue Sky areas 43
Thank you 44