UPL CAPITAL MARKETS DAY · 2020. 2. 4. · economic and business conditions, ... industry, leading to sustainable and profitable growth. Doing Things Better Comparative Results

UPL CAPITAL MARKETS DAY

April 28, 2017

Doing Things Better2

This document contains certain forward-looking statements with respect to the financialcondition, results of operations and business of UPL Limited (UPL) and certain of theplans and objectives of UPL with respect to these items. Examples of forward-lookingstatements include statements made about our strategy, estimates of sales growth,future EBITDA and future developments in our organic business. Forward-lookingstatements can be identified generally as those containing words such as “anticipates”,“assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”,“forecast”, “outlook”, “projects”, “may” or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events andcircumstances and there are many factors that could cause actual results anddevelopments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, domestic and globaleconomic and business conditions, the successful implementation of our strategy and ourability to realize the benefits of this strategy, our ability to develop and market newproducts, changes in legislation, legal claims, changes in exchange and interest rates,changes in tax rates, raw materials and employee costs, our ability to identify andcomplete successful acquisitions and to integrate those acquisitions into our business,our ability to successfully exit certain businesses or restructure our operations, the rateof technological changes, political, economic and other developments in countries whereUPL operates, industry consolidation and competition. As a result, UPL’s actual futureresults may differ materially from the plans, goals and expectations set forth in suchforward-looking statements. For a discussion of factors that could cause future results todiffer from such forward-looking statements, see also Risk management, of our AnnualReport.

Safe Harbor Statement


• Welcome and Introduction– Anand Vora

• Global Performance– Anand Vora and Ajit Premnath

• Global Industry Update– Jai Shroff

• UPL Value Proposition: Crop Protection and Seeds

- Ajit Premnath

• Supply Chain- Debabrata Gupta

Agenda

Doing Things Better

Q IV 2017 and FY 2017 Global Performance

ANAND VORA AJIT PREMNATHCFO – Global COO – Global Business

4


Financial Highlights – FY 2017

Revenue growth of

16%

PAT up by

84%

EBITDA improved by

107 bps

ROCE of

21.4%

Net Working Capital

88 days

Cashfrom operations

Rs. 2,458 cr

* Based on normalized cash balance

*


UPL Organizational Changes

Sagar Kaushik will be President –Corporate Affairs & Industry Relations

Ajit Premnath will take over fromSagar as COO & Global Business Headfor Crop Protection

Carlos Pellicer will be COO & GlobalHead of Strategy, Innovation and NewProduct Development

K. R. Srivastava will be CEO, SpecialtyChemicals division

Debabrata Gupta will take over fromK. R. Srivastava as COO - Supply Chain

Ajit is working with UPL since 2003, starting as Regional head of

Latin America, then Regional Head for Europe and current

assignment as Global Marketing director in Mumbai. Prior to working

with UPL he has worked with Bayer, Aventis and Hoechst – industry

experience of over 30 years.

Debabrata joined UPL in May 2016 as the Chief Operating Officer

responsible for Supply Chain. He has worked in the Supply Chain

functions for Unilever, Coca Cola, Reckitt Benckiser and USV Limited

during his career spanning over 30 years.

Sagar will be leading Corporate initiatives and further solidify UPL’s

stature as a global, innovative and responsible stakeholder in Farm

to Fork value chain.

KRS will be leading this division to exploit opportunities in pioneer

chemistries that have not yet been harnessed in India by taking

advantage of UPL’s manufacturing capabilities.

Carlos will lead initiatives in Innovation, New Product Development, and

UPDT. He will help to create a proprietary portfolio for UPL in the

industry, leading to sustainable and profitable growth.

Doing Things Better

Comparative Results – Q4 FY 2017

7

Rupees in crore

Growth

Crores Crores % Crores Crores % %

Gross Revenues 5,391 100% 4,479 100% 20%

Domestic Revenues 487 9% 461 10% 6%

International Revenues 4,904 91% 4,018 90% 22%

Cost of Goods Sold 3,302 61% 2,768 62% 19%

Gross Margin 2,089 39% 1,711 38% 22%

Overheads 963 18% 830 19% 16%

EBIDTA 1,126 21% 881 20% 28%

Other Income / (Loss) 57 1% (121) -3% 148%

Depreciation & Amortisation 187 3% 199 4% -6%

Interest & Finance Charges 213 4% 174 4% 22%

Profit Before Tax 784 15% 387 9% 103%

Tax provision 56 1% 79 2% -29%

Profit After Tax 728 14% 309 7% 136%

Income from Associates 13 0% (42) -1% 130%

Minority Interest 1 0% 8 0% -92%

Profit before Exceptional items 740 14% 259 6% 186%

Exceptional items (1) 0% 75 2% 101%

Net Profit for the period 741 14% 184 4% 303%

Note: Other Income Includes Exchange difference on Trade Payable & Trade Recievables.

ParticularsQtr Ending

March 16

Qtr Ending

March 17


Sales Analysis for Q4 FY 2017

Q IV 2016

Volume

Price

Exchange

Q IV 2017

5,319

4,432

INR in crore

21%

-4%

3%

Overall Growth

20%


Income by Region - Q4 FY 2017 & Q4 FY 2016

North America

Q4 FY 2017

Q4 FY 2016

1,215 972

% to Total

23% 22%

Growth 25%

Latin America

Q4 FY 2017

Q4 FY 2016

1,646 1,405

% to Total

31% 31%

Growth 17%

Europe

Q4 FY 2017

Q4 FY 2016

916 759

% to Total

17% 17%

Growth 21%

Rest of World

Q4 FY 2017

Q4 FY 2016

1,127 882

% to Total

21% 20%

Growth 28%

India

Q4 FY 2017

Q4 FY 2016

487 461

% to Total

9% 10%

Growth 6%

Revenues, INR in crore

Doing Things Better

Reconciliation of Key Financials – Q4 FY 2016 v/s Q4 FY 2017

10

Doing Things Better

Comparative Results – FY 2017

11

Rupees in crore

Growth

Crores Crores % Crores Crores % %

Gross Revenues 16,680 100% 14,344 100% 16%

Domestic Revenues 3,334 20% 2,992 21% 11%

International Revenues 13,346 80% 11,352 79% 18%

Cost of Goods Sold 9,995 60% 8,733 61% 14%

Gross Margin 6,685 40% 5,611 39% 19%

Overheads 3,462 21% 2,993 21% 16%

EBIDTA 3,223 19% 2,618 18% 23%

Other Income / (Loss) 206 1% 93 1% 121%

Depreciation & Amortisation 672 4% 676 5% -1%

Interest & Finance Charges 735 4% 704 5% 4%

Profit Before Tax 2,022 12% 1,331 9% 52%

Tax provision 189 1% 165 1% 15%

Profit After Tax 1,833 11% 1,166 8% 57%

Income from Associates (19) 0% (85) -1% -78%

Minority Interest 6 0% 12 0% -48%

Profit before Exceptional items 1,808 11% 1,069 7% 69%

Exceptional items 81 0% 129 1% -37%

Net Profit for the period 1,727 10% 940 7% 84%

Note: Other Income Includes Exchange difference on Trade Payable & Trade Recievables.

Year Ending March 16Year Ending March 17Particulars


Sales Analysis for FY 2017

FY 2016

Volume

Price

Exchange

FY 2017

16,422

14,097

INR in crore

18%

-4%

2%

Overall Growth

16%


Income by Region - FY 2017 & FY 2016


North America

FY 2017

FY 2016

2,888 2,612

% to Total

17% 18%

Growth 11%

Europe

FY 2017

FY 2016

2,148 1,925

% to Total

13% 13%

Growth 12%

Latin America

FY 2017

FY 2016

5,396 4,273

% to Total

32% 30%

Growth 26%

Rest of World

FY 2017

FY 2016

2,914 2,542

% to Total

17% 18%

Growth 15%

India

FY 2017

FY 2016

3,334 2,992

% to Total

20% 21%

Growth 11%


Reconciliation of Key Financials – FY 2016 v/s FY 2017


Working Capital AnalysisWorking Capital Analysis

Rs. in Crore FY 2015-16 FY 2016-17

Turnover 14,097 16,422

98

121

117

102 92

120 124

88

Day

s

Mar-16

Mar-17


Cash Deployment FY 2017Net Cash from Operating

activities

INR in crore 2,458

Reduction

Doing Things Better

Net Worth Reconciliation – FY 2015

17

Particulars Rs. in cr

Networth As per Indian GAAP 5,860

Impact of Business Combination and Goodwill Adjustment

Goodwill Reduction (1,408)

Intangible and Tangible Assets 94 (1,314)

Advanta Merger Impact 403

Reversal of Proposed Dividend (IND AS impact ) 258

Deffered Tax Impact on Various Items 198

Functional currency impact 31

ECL Impact (37)

Fair Valuation of Various Assets (10)

NPV Impact (17)

Others (18)

Total of all Adjustments (505)

Networth As per IND AS and Merger Impact 5,355


India

• Market grew in the range of 8-9%

• Significant increase in pulses andoilseed planted area. Reduction incotton acreage - specially in the North

• Ullala, Saaf and Phoskill brands havejoined the INR 100 cr club

• Significant progress made oncustomer engagement activities

• Introduced Biological and Nutritionalproducts

• Strategic focus on Vegetable and Fruitcrops – substantial growth overprevious year

• Erratic rainfall adversely affectedplanting in Karnataka, Tamil Nadu,parts of Andhra Pradesh andMaharashtra.

India

Q IV

FY 2016-17

4%

3%

461

487

440

450

460

470

480

490

FY 2015-16 FY 2016-17

6%


2,992

3,334

2,800

3,000

3,200

3,400

FY 2015-16 FY 2016-17

11%



• Market de-growth of 6.6%

• Successful launch of 8 new products (6- Herbicides, 1 - Fungicide and 1 -Insecticide)

• UPL sales grew in all key countries inLATAM

• Resistant weed area expanding rapidly

• Significant currency volatility acrossthe region

• Low disease pressure on soybean inBrazil lead to reduced consumption offungicides

Latin America

Q IV

FY 2016-17

1,405

1,646

1,300

1,500

1,700

FY 2015-16 FY 2016-17

17%


4,273

5,396

3,500

4,000

4,500

5,000

5,500

FY 2015-16 FY 2016-17

26%



• Market de-growth of 1.9%

• Post, end of quotas sugar beet area in

Europe increased by 15% which

helped UPL portfolio growth

• Wet weather in North Europe resulted

in high disease pressure on potatoes

• Dry weather in southern Europe with

low disease pressure on vine and

vegetable crops affected consumption

of fungicides

Europe

Q IV

FY 2016-17

759

916

550

650

750

850

950

FY 2015-16 FY 2016-17

21%


1,925

2,148

1,700

1,800

1,900

2,000

2,100

2,200

FY 2015-16 FY 2016-17

12%



• Overall market de-growth of1.5%

• Good rains across Asia, speciallyAustralia after several years ofdrought

• Recovery of rice crop drivinggrowth in key markets

• UPL expanded its non selectiveherbicide to key markets,including China

• Established distributionpartnership in Nigeria resultingin significant growth of UPLportfolio

• We have created a regional basein Kenya to improve ourpresence in the African continent

Rest of World

Q IV

FY 2016-17

882

1,127

600

800

1,000

1,200

FY 2015-16 FY 2016-17

28%


2,542

2,914

2,200

2,400

2,600

2,800

3,000

FY 2015-16 FY 2016-17

15%



• Market grew by 1.1%

• UPL launched 3 newproducts: 2 - Herbicides, 1 -Fungicide

• 2016 harvest significantlyhigher than previous year

• Aquatics business grew by15% with 2 new launches

• Growers income continues tobe low, affectingconsumption of inputs

North America

Q IV

FY 2016-17

972

1,215

800

900

1,000

1,100

1,200

1,300

FY 2015-16 FY 2016-17

25%


2,612

2,888

2,300

2,500

2,700

2,900

FY 2015-16 FY 2016-17

11%



JAI SHROFF

CEO – UPL Group

Doing Things Better

FY 2016 & 2017 - UPL

• Grew by 16% in FY 2017and 10% in FY 2016

• In FY 2017 growth acrossregions was in the rangeof 11% to 26%

2015 & 2016 - Industry

• De-growth of 2.5% in2016 and 9.6% in 2015

• In 2016 most key playersreported flat to de-growth in revenues of19%

24

Industry …….. year gone by

Source: Phillips McDougall, March 2017


Consolidation in Industry …….. drivers

• De-growth in industry in lastfew years

• Poor performance andpressure to delivershareholder value

• Trend towards offeringintegrated solutions

• Economies of Scale –increasing R&D andregulatory costs


Implications …………… for UPL

• In the short term, mergedentities will be focusing onrestructuring and newstrategic alignments

• Product divestitures due to:o Anti-trust requirementso Portfolio rationalization

• Rationalization in distributionchannels will provide access tonew channel partners

• Access to talent / expertise

• Significant increase in gapbetween Tier I and Tier IIplayers – will lead toconsolidation amongst Tier IIplayers


• Supply Chain

• Portfolio

• Market Access

• Farmer Engagement

UPL continues to excel, by focusing on ……….


AJIT PREMNATH

COO & Global Business Head for Crop Protection Business


Shift in Market Share

CY 2014 CY 2016

Total Market: USD 63 bn

Source: Phillips McDougall

Total Market: USD 56 bn

Sales

(USD mn)%

Sales

(USD mn)%

53.2 84% Top 9 43.9 78%

1.9 3% UPL 2.1 4%

8.1 13% Others 10.4 18%

63.2 Global Market 56.4

2014 2016

TOP 9

84%

UPL

3%

OTHERS

13%

TOP 9 UPL OTHERS

TOP 9

78%

UPL

4%

OTHERS

18%

TOP 9 UPL OTHERS


Leading market position in crop protection industryUPL has consistently outperformed the broader industry by a significant margin

Source: Philip McDougall Agri-services (Mar. 2017) Industry Data*Industry Data is for the Calendar Years 2011 – 2016. UPL data is for the Financial Year-end from March 2012 to March 2017

2%

5%

-1%

9%

9%

14%22%

1%

17%

Industry UPL

Overall CAGR (FY12-17)Industry

CAGR(CY11-16)

UPL CAGR(FY12-17)

15%

0%

19%

India ROW

North America

LATAM

Europe


UPL segmentation over the years

Insecticide,

28%

Fungicide,

25%

Herbicide,

28%

Others,

19%

FY 2013-14

Insecticide,

26%

Fungicide,

31%

Herbicide,

32%

Others,

11%

FY 2016-17

Herbicides ……….. largest segment, in line with industry


o Herbicide Resistance

o Fungicide Resistance

o Insecticides

o Biologicals

Doing Things Better

Growing weed resistance ……… new global menace91 crops, 69 countries

0

20

40

60

80

100

120

140

160

ALSInhibitors

Photosystem IIinhibitors

ACCaseInhibitors

EPSPInhibitors

SyntheticAuxins

PSIDiverters

OthersMOA

90

48

26 22 18 18

35

158

73

4837 34 32

97

Y 2010 Y 2016

33

Imaza GroupSulfonyl Urea's

FopsDims DENS

AtrazineBentazonDMP

Glyphosate

24DDicamba MCPA Paraquat

Pig Weed Kochia

Conyza

Phalaris minorLollium

multiflora

• There are currently 479 unique cases of Herbicide resistance globally• Weeds have evolved resistance to 23 of the 26 known herbicide sites of action and to

162 different herbicides.• Recent MOAs like PPO’s too have come under resistance

Rag weedNo

. o

f w

eed

s

Mode of Action


UPL’s weed resistance management tools

• Lifeline, Interline and Fascinate brands - addressissues in soybeans, corn, cotton, canola and TNVcrops

• Shagun – an emerging Brand in India and other wheatgrowing markets to control resistance to PhalarisMinor and Lollium sps

• TRICOR brands - globally address most resistanceweeds as pre emergent herbicide in Soybeans

• IRIS - a lead brand in India for soybean to control allweeds resistance to ALS MOA


Fungicide resistance management platform

With Unizeb Gold Grower Practice

• Of USD 15 bn fungicide market, keysegments like Triazoles, Strobilurinsand SDHI are facing resistanceissues

• Key crops like soybean, cereals,vines and potatoes facing issues

• UPL leading global resistancemanagement strategy with itsMancozeb and Copper products -multi-site products help improveperformance

• UPL strategy to make pre-mixeswith own portfolio, as well asstrategic alliances


Insecticides Portfolio update

• Overall insecticides market has de-grown

• Introduction of INTACTA technology has impacted caterpillarsegment adversely

• Sucking pests segment growing faster

• UPL is innovating new products in this category with differentmodes of action to address the issue of pest resistance


Biologicals

• Moving from Plant Health to Plant Protection

• UPL is positioned as Preferred Partner - providing global market access

• UPL wants to provide Innovative and Disruptive technologies in the hands offarmer to make him resilient to weather risks and biotic stress

Bio Pesticides

Bio Stimulants

Bio Fertiliser

CURRENT MARKET

$ 4.7 bn


Biologicals


FY 20142.5%

FY 20155%

FY 201614%

• Ulala• Atabron• Acephate 97

DF

• Iris• Eros

• Unizeb Gold• Glory• Lifeline• Satellite• Interline

Maintain at 15%

FY 201715%

• Elixir• Banter• Avancer Gold• Moccasin• Wuxal


• Increase outreach to farmersby:

o Direct engagement though field staff

o Technology

o Services


ADARSH KISAN CENTRE

• Doubled the number ofgrowers registered withAKC

• Connecting seamlesslygrowers, AKC and UPLsalesforce

Farmer engagement

ADARSH FARM SERVICES

• Increased coverage underAFS –custom spraying forfarmers in India

• Plans to multiply coveragein FY 2018


Seeds update

•Geographical expansion in India, ASEAN region, BrazilFresh Corn

•Expansion in India continuesTropical

Corn

•Success in Brazil to be replicated in India, where germplasm testing is currently onSoybean

•Tropical and Sub-Tropical portfolio - drive to expand in other Asian countries to continue in Phase I

Vegetable Seeds

Wheat in Australia, Sunflower and Soybean in Argentina ………………….. continue to show robust growth


Trends – FY 2018

• Expected increase in acreages and low channel inventory of sugarbeet herbicides in Europe will have a positive impact in FY 2018

• Potential upside for Lifeline due to increased penetration of LLsoybean in North America

• Several countries considering banning Paraquat – excellentopportunity for Glufosinate in non selective Herbicides segment

• Multisite fungicides are becoming a necessity to manage resistanceto new fungicides

• Cotton acreages up in India and USA - opportunity for sucking pestsolutions

• Commodity prices expected to remain depressed - with the exceptionof cotton and rice

• Strict environmental norms in China leading to price increase


DEBABRATA GUPTA

COO – Global Supply Chain


SUPPLY

CHAIN

EXCELLENCE

Sustainability

• Environment

• Health and Safety

Cost Efficiencies

• Procurement

• Supply Chain capabilities


Sustainability Performance - India

Wastewater generation

CO2 Emission

SustainabilityKPI

Solid Wastegeneration

Water Consumption

27% Down

22%Down

6%Down

19% Down

Energy Consumption

9%Down

Performance

Continued focus on Sustainability


UPL focus


• Continuous improvements in safety standards across all sites

• Significant investments in upgradation of safety standardsacross factories

• Worldwide recognition of safety performances at manufacturingsites

National Level Golden Peacock Award for

Occupational Health and Safety in Chemical and

Fertilizer Sector for 2016 (Unit 5)

OSHA India – Second prize Innovation in HSE

Implementation. (Unit 8)

EKDKN – “EXCEED AWARDS 2017” – Silver.

under OHS Category in Chemical & Fertilizer Sector (Unit 5)

Safety


Cost efficiencies

• Automation and technology upgrades

• Energy efficient processes

• Reduction in energy consumption through conservation

• Process improvements

• Consolidation and optimization of vendor base to get best prices


China …… supply disruptions

• Economic downturn and sluggish economic growth

• Significant governmental strictures on environmental compliance

• Shrinking supply base leading to uncertainty in availability and cost pressures

Opportunities for UPL ……….

…….. Due to strong in-house manufacturing capabilities


Awards 2016-17

InternationalConference onOccupational RiskPrevention, UCPL inColombia wasawarded with the ORPInternational Award

Leaders category inPrevention, UCPL in Colombia

IRIM - India Green Manufacturing Challenge 2016 – Gold Award (Unit 1)

Silver Medal of India Green Manufacturing Challenge 2016 -International Research Institute for Manufacturing, Chennai (Unit 0)

IRIM - India Green Manufacturing Challenge 2016 – Silver & Special Award (Unit 2)

National Gold Award “Clean & Green Factory” by Govt. Of Vietnam

(Vietnam Association of Environmental Economics) (Vietnam Unit)

National Gold Award “BRAND ENVIRONMENT” by Govt. Of Vietnam

(Vietnam Association of Environmental Economics) (Vietnam Unit)

FICCI Chemicals and Petrochemicals Awards 2016 – Efficiency in Energy

Usage - Chemicals (Unit 2)

Certificate of Merit in chemical sector for National Energy Conservation Awards – (NECA-

2016) by Bureau of Energy Efficiency (Unit 1)

First Prize in chemical sector for National Energy Conservation Awards – (NECA-2016)

by Bureau of Energy Efficiency (Unit 2)

Doing Things Better

Q & A

Documents

UPL CAPITAL MARKETS DAY · 2020. 2. 4. · economic and business conditions, ... industry, leading to sustainable and profitable growth. Doing Things Better Comparative Results