“diversified new portfolio. on the growth highway” · 2020. 2. 24. · lake magadi, kenya....
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1
“Diversified New Portfolio. On the growth Highway”
June 2007
2
Table of contents
• The Tata Group - overview
• Tata Chemicals - Business overview
• Chemicals, including overview of Brunner Mond
• Fertilisers
• The Road Ahead – The Future Tata Chemicals
• Financial overview
3
An overview of the Tata Group
4
The Tata Group (Founded 1868)
Market cap: US$51.4bn1 Revenues: US$22bn2 PAT: US$2 billion2
India’s largest and most respected business group
8%
8%24%
24%
5%9%
22%
MetalsComposites
HotelsFinancial ServicesInternational Trade
BeveragesWatchesRetailing
AutomobilesEngg. ProductsEngg.Services
Basic ChemicalsFertilizerPesticides
PowerFuel & Feedstock
ServicesServices
MaterialsMaterials EnergyEnergy
ChemicalsChemicals
EngineeringEngineering
Consumer ProductsConsumer Products
SoftwareTelecom ServicesAutomation & Control Systems
IT & CommunicationsIT & Communications
Notes: 1 Market cap (approx.) as on March 31, 2006 2 F.Y. 2006 data
5
The Tata Group
96 companiesOperations in 40 countries
across all six continents
Markets across 140 nationsRevenues equivalent to 3%
of India’s GDP
Over 246,000 employeesStrong presence in all major business sectors
6
Tata ChemicalsBusiness Overview
7
3rd largest soda ash manufacturer in the world
#1 soda ash player in India
Market leader in edible salt market
Most energy efficient urea
manufacturer in India
1/3rd stake in IMACID, Morocco (one of the largest
Phosphoric acid manufacturers)
Presence in all threeAgri input categories
Tata Chemicals today is the>>Tata Chemicals today is the>>Mithapur Salt panMithapur Salt pan
8
Global Presence
MoroccoMorocco
UKUK
IndiaIndia
KenyaKenya
NetherlandsNetherlands
Facilities
MarketsSouth Africa South Africa
9
• Listing: Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE)
• Ticker: TTCH IN
• Founded: 1939
• Market Capitalization US$ 1363 mn
• Revenue3 (US$mm): 1337 (Chemicals – 725, Fertilisers – 612)
• EBITDA3 (US$mm): 232
• EBITDA Margin3: 17.3%
• Employees: 3,500
• Ownership: Sponsor Group 31.6 %Institutional Investors 33.8 %Indian Public 34.6 %
Note:
1: INR/USD Conversion rate of 43.47 as on 31st March 2007 for all financial data
2: INR/USD Conversion rate for Market capitalisation is 40.40 as on 29th May 2007
At a Glance
10
Fertilisers46%
Chemicals54%
Revenue Split
11
Sodium CarbonateSoda Ash’s most important use is in
the chemical make-up of glass.
When heated at high temperatures,
combined with sand and calcium
carbonate and cooled very rapidly,
sodium carbonate can be used to
form the transparent non-crystalline
material, commonly known as glass.
Glass is used in the construction
industry as well as in mobile phones,
consumer electronics and beverages.
Soda ash is also used to make
detergents.
12
International Markets Indian Markets
Soda ash industry perspective
Source: British Sulphur Consultants
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 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
13
Soda ash India - Mithapur
• Soda ash manufacturing Facility at Mithapur, Gujarat
• Existing Capacity of 875,000 tpa
• Produces equal volumes of light and dense soda ash
• Plant is in the process of being mordernised
• Plant also produces 500,000 tpa of Cement and 50,000 tpa of Sodium Bicarbonate
14
Soda ash Price Chart
Ten Year Price perspectiveSoda Ash Dense
6,000
7,000
8,000
9,000
10,000
11,000
12,000
1999
2000
2001
2002
2003
2004
2005
2006
15Brunner Mond Plant, Winnington, England
Overview of the Brunner Mond Group
The Brunner Mond Group
is a wholly owned subsidiary
of Tata Chemicals acquired in
December 2005 for Rs. 801 crore.
BMGL works with 1500 customers
and is Europe’s second largest
producer of soda ash with plants in
England, Holland and Kenya. This
acquisition made Tata Chemicals
the world’s third largest soda ash
manufacturer with facilities
spanning three continents.
16
Europe – 1.3mn tons Europe – 1.3mn tons Africa – 0.715mn tons Africa – 0.715mn tons
UK Netherlands
Magadi, Kenya
Terminal at South Africa
Soda ash capacity 2.0 mn tons
Soda ash capacity 2.0 mn tons
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
17
• Lake Magadi has one of the largest soda ash reserves of the East African Rift Valley Lakes
• Close to key growth markets like Middle East and Asia
• The capacity is being doubled to ~700,000 tpa
• Duration - Lease valid for 30 years – up to 2053
• Area – 227,000 acres• Close to 15% of India’s soda ash imports are from Magadi -
Acquisition strengthens Tata Chemicals’ India presence
Magadi Soda Ash – A perspective >>
Lake Magadi, Kenya
18
The Benefits of Natural Soda Ash
Lake Magadi, Kenya
• Magadi is the second largest Natural Soda Ash producer in the world
• The soda ash is obtained by washing and calcining Trona, (a naturally occurring form of sodium sesquicarbonate), extracted from Lake Magadi
• Cost of production of natural soda ash is about half that of synthetic soda ash
• Magadi has a self-replenishing proven trona reserve with a life of 100 years
• The use of trona makes Magadi Soda Ash the lowest cost soda ash producer in the world
19
MIDDLE EAST & AFRICA
OmanUAE
KenyaSouth Africa
NigeriaSaudi Arabia
Morocco
ASIA
IndiaBangladeshSri LankaIndonesiaThailandPakistan
PhilippinesVietnamMalaysia
EUROPE
UKNetherlands
GermanyFranceBelgiumSwedenIrelandNorwayDenmark
Tata Chemicals Tata Chemicals –– Soda ash markets >>Soda ash markets >>
20
Major Brands we work with >>
21
“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)
22
23
• Leading player in urea and phosphatic fertiliser segments
• Two plants at Babrala near Delhi and Haldia near Kolkatamanufacturing Urea and Phosphates respectively
• The Babrala plant has capacity of 864,000 tpa and is being debottlenecked and expanded by 33%
• The Haldia plant has a fertiliser production capacity of 750,000 tpa and was acquired from Hindustan Lever in 2003
• Dual feedstock Babrala facility - most efficient in India with energy consumption levels of 5.17 Gcal/ton; RIL’s gas finds to further reduce costs of energy
• Strategic stake in IMACID, Morocco ensures continuous availability of phosphoric acid
Tata Chemicals’ Fertiliser business
India is the third largest producer and consumer of Fertilisers
24
•Market Share in Core Command areas
• Urea: 16%
• DAP: 47%
• NPK: 59%
•Presence in high consumption north and east regions especially Punjab, Haryana and the Gangetic belt of Uttar Pradesh, Bihar, and Bengal
•Considerable share of high value fertilisers of Zinc
•YOY Revenue Growth of 15% for 9MFY07
•Operating growth of 7% to 32 crore for the same period
Tata Chemicals’ Fertiliser business
Dominant Market Share in Core Command Area – poised to take advantage of (inevitable) liberalisation of policy
Baroda(Nikohead office)
INDIABaroda(Nikohead office)
INDIA
Punjab Haryana
Uttar Pradesh
W. Bengal
Jharkhand
Bihar
Baroda(Nikohead office)
INDIABaroda(Nikohead office)
INDIA
Punjab Haryana
Uttar Pradesh
Jharkhand
Bihar
25
Soil Testing
Crop Loans
Farm Machines
Output Purchase
Insurance of input investment
Advisory Services
TATA KISANTATA KISAN
SANSARSANSAR
Tata Kisan Sansar - Offerings
26
Tata Kisan Sansar (TKS) - creating rural entrepreneurship
• Provide value add services (Soil Testing & Farm Management)
• Create a new distribution channel for agricultural inputs
• Improve supply chain efficiencies and provide farm-gate linkages to the market … NCDEX
• Create market driven R&D solutions
• Retailing of fresh agricultural produce – tie up with TOTAL Produce, Europe’s largest fresh produce Company
27
IMACID Plant entrance (above)
and Plant overview (right).
Tata Chemicals bought 33%
stake in IMACID (Indo Maroc
Phosphore) in 2005 to
securitise inputs for complex
fertiliser manufacturing
at its Haldia plant
The Moroccan Footprint
28A 160,000 Cr. market
The Fresh Produce Business
• Leveraging the TKS Network
• Focusing on what matters – the supply chain
• Partnering with TOTAL PRODUCE – 100 years of expertise
• Sequential roll-out – Punjab and West Bengal
• In 2007-08 – 2 Distribution Centres
• In 3 years – 20 Distribution Centres
• In 5 years – 40 Distribution Centres
29
1. Proposed 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)
The Bio-fuels Business
30
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
The Innovation Centre
31
FINANCIALFINANCIAL
OVERVIEWOVERVIEW
32
Financials – Revenue growth
554
317
918795
670
115
419
0
300
600
900
1,200
1,500
FY03 FY04 FY05 FY06 FY07
in U
SD m
illi
on
910*
* Post consolidationNote: FY2006 Consolidated financials include BMGL’s Q4 results and IMACID’s performance over 11 months
1337*
CAGR 43%CAGR 43%
33
Financials – EBIDTA
115131
158
86 100
74
35
0
50
100
150
200
250
FY03 FY04 FY05 FY06 FY07
in U
SD m
illi
on
166*
* Post consolidation
CAGR 28%CAGR 28% 232*
34
Profit After Tax
1776
80102
4148
20
0
20
40
60
80
100
120
140
FY03 FY04 FY05 FY06 FY07
in U
SD m
illi
on
97*
* Post consolidation
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.
CAGR 31%CAGR 31%
122*
35
Financial snapshot
1 After reducing provision of USD 58.7 mn for the deficit in BMG’s pension liability)
0.54
117
169
232
1337
Consolidated
20
45
74
442
IMACID / BMGL
0.48
102
123
158
918
TCL
FY 2007FY 2006
971680Net Income
0.450.37EPS
24
34
137
IMACID / BMGL (Jan to Mar 06)
147122EBIT
170134EBITDA
912795Sales
ConsolidatedTCL
** Exchange rate of $1=Rs.43.47 as on 31st March 2007
** Exchange rate of $1=Rs.44.25 as on 31st March 2006
36
Debt-Equity Perspective
412 429
502 592
0
200
400
600
800
1000
1200
FY 2006 FY 2007
USD
mill
ion
Total Debt Shareholder's Equity
1.41.3
0.8
2.0
5.9
0
1
2
3
4
5
6
FY 03 FY 04 FY 05 FY 06 FY 07
(%)
Reducing interest cost (% of sales)
1021914
FY 2007 Debt Split
19%
36% 44%
1%
FCCB Banks/Others
Term Loans Cash/ Packing Credit
37
Credit Ratios
10.1
3.9 7.4
12.9
19.4 0.6
0.2
0.3
0.7
0.4
0
5
10
15
20
25
FY03 FY04 FY05 FY06 FY07
-
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Interest Coverage ratio Net Debt/Equity
38
Financial ratios
* Post consolidation3248.4859No. of DaysCash cycle
4761.5964No. of DaysAvg Inventory
Turnover
5352.7849No. of DaysAvg Debtors Velocity
2.32.161.9TimesFixed Asset Turnover
Activity
10.112.9019.4TimesInterest Coverage
0.70.80.7TimesDebt : Equity Stability
232170115USD MillionEBITDA Cash Generation
2.0121.5TimesMarket to Book Value
3.63.55%Dividend Yield
11110393INRNetworth per Share
23.6219.915.8INREarnings per share
Shareholder Returns
91111%Net Profit Margin
171917%EBITDA Margin Profitability
FY 2007*FY 2006*FY 2005UnitCategory
39
Shareholder Returns23.6
7.0
10.910.3
19.9
15.8
8.0
5.0
6.55.5 5.5
7.0
224
4055
103
201
138
0
4
8
12
16
20
24
FY '02 FY '03 FY '04 FY '05 FY '06 FY '07
Rs.
per
shar
e
20
40
60
80
100
120
140
160
180
200
220
240
Rs
EPS Dividend Average Market Price
Consistent and healthy dividend payout
40
Shareholder ReturnsDividend amount per share per year
5.00
6.00
7.00
8.00
FY03 FY04 FY05 FY06 FY07
Rup
ees
454947
6157
4%
10%
5%5%
3%
0
10
20
30
40
50
60
70
FY03 FY04 FY05 FY06 FY07
%
0%
2%
4%
6%
8%
10%
12%
Dividend Payout Dividend Yield
41
Shareholder Returns
4150
78
96
117
0.45
0.36
0.230.23
0.54
-
20
40
60
80
100
120
140
FY03 FY04 FY05 FY06 FY07
USD
Mn
-
0.20
0.40
0.60
0.80
USD
PAT Basic EPS
42
Cash and Investments
Cash and Bank Balance
-
40
80
120
160
200
FY03 FY04 FY05 FY06 FY07
USD
Mn
Cash and Bank
Total value of quoted investments as on March 31, 2007:
USD 300 million
Investment in Mutual Fundsas on March 31, 2007:
USD 97 million
43
44
• Acquired Hind Lever Chemicals, extended presence across all agri nutrients
• Bought 33% stake in IMACID and securitised key inputs
• Acquired Brunner Mond Group of UK for 801 crore – became 3rd largest producer of soda ash in the world
In FY07 …
Achieved highest sales ever across all key products - soda ash, salt and urea
Capacity utilisation levels at all time high
Babrala facility most energy efficient in India, amongst the best globally
45
• Completion of expansion to double low cost natural soda ash facility at Magadi
• Debottlenecking and expansion of Babrala Urea plant
• Enhance Soda ash, cement & Salt capacities at Mithapur
• Further enhance existing capacity utilisation levels and strengthen efficiencies at all plants
• Mordernisation of Mithapur chemicals plant
• Build a global bicarbonate business
• Better processes to enable production of saleable gypsum
46
• Increase thrust in new business segments like fresh produce and bio-fuels
• Enhance presence in bio and nano technology
• Strong focus on research and development
• Identify viable acquisition opportunities
• Leverage the considerable potential of the agricultural sector
47
THANK YOU
© 2007 Tata Chemicals.
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