“diversified new portfolio. on the growth highway” · 2020. 2. 24. · lake magadi, kenya....

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“Diversified New Portfolio. On the growth Highway”

June 2007

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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

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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.

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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

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• 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 >>

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“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)

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• 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

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•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

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Soil Testing

Crop Loans

Farm Machines

Output Purchase

Insurance of input investment

Advisory Services

TATA KISANTATA KISAN

SANSARSANSAR

Tata Kisan Sansar - Offerings

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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

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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

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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

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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

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FINANCIALFINANCIAL

OVERVIEWOVERVIEW

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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


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


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*

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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

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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

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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


-

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Interest Coverage ratio Net Debt/Equity

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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


Rup

ees

454947

6157

4%

10%

5%5%

3%

0

10

20

30

40

50

60

70


%

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


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


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

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• 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

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• 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

“diversified new portfolio. on the growth highway” · 2020. 2. 24. · lake magadi, kenya....

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