nagarjuna fertilizers and chemicals limited sample report

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TABLE OF CONTENTS

1. Executive Summary: Nagarjuna Fertilizers and Chemicals Limited

2. Nagarjuna Fertilizers and Chemicals Limited Business Overview

2.1. Corporate Timeline

2.2. Major Investments in the Company Evolution

2.3. Nagarjuna Fertilizers and Chemicals Limited Ownership Structure

2.4. Nagarjuna Fertilizers and Chemicals Limited Organisational Structure

2.5. Nagarjuna Fertilizers and Chemicals Limited Restructuring of the Company

3. Nagarjuna Fertilizers and Chemicals Limited Product Portfolio

3.1. Trading of Fertilizers and Seeds

3.2. Manufacturing of Urea

3.3. Agri-Information and Plant Management Services

4. Nagarjuna Fertilizers and Chemicals Limited Financial and Valuation Analysis

5. Nagarjuna Fertilizers and Chemicals Limited Analyst Recommendations

6. Nagarjuna Fertilizers and Chemicals Limited SWOT Analysis

7. Nagarjuna Fertilizers and Chemicals Limited Key Professionals

7.1. Management Profile

8. Macro Analysis of Fertilizer Industry

8.1. Indian Fertilizers Industry Market Size, FY’2009-FY’2013

8.1.1. By Production and Consumption, FY’2009-FY’2013

8.1.2. By Value, FY’2009-FY’2013

8.2. Indian Fertilizers Industry Segmentation, FY’2012

8.2.1. By Inorganic and Organic Fertilizers, FY’2012

8.2.2. By Generic and Bio-Fertilizers, FY’2009-FY’2012

8.2.3. By Micronutrients and Macronutrients, FY’2012

8.3. Market Share of Major Players in Indian Fertilizer Industry, FY’2012

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8.3.1. By Revenue, FY’2012

8.3.2. By Urea, FY’2011-FY’2012

8.3.3. By DAP, FY’2012

8.3.4. By Micronutrients, FY’2012

9. Nagarjuna Fertilizers and Chemicals Limited Competitive Analysis

9.2. By Products Offered/ Revenue/ Business Strategy

10. Nagarjuna Fertilizers and Chemicals Limited Management Outlook and Future Projections

10.1. Nagarjuna Fertilizers and Chemicals Limited Future Projections

10.2. Nagarjuna Fertilizers and Chemicals Limited Financials Future Projections

10.3. Nagarjuna Fertilizers and Chemicals Limited Ratio Analysis

11. Appendix

11.1. Market Definitions

11.2. Abbreviations

11.3. Research Methodology

11.4. Disclaimer

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LIST OF FIGURES

Figure 1: Nagarjuna Fertilizers and Chemicals Limited Corporate Timeline 1985-2011

Figure 2: Nagarjuna Fertilizers and Chemicals Limited Ownership Structure in Percentage as on 31st March 2012

Figure 3: Nagarjuna Fertilizers and Chemicals Limited Organizational Structure

Figure 4: Nagarjuna Fertilizers and Chemicals Limited Restructuring

Figure 5: Nagarjuna Fertilizers and Chemicals Limited Product Portfolio

Figure 6: India Fertilizer Market Size on the Basis of Production and Consumption in Thousand Tonnes, FY’2009-FY’2013

Figure 7: India Fertilizer Industry Market Size by Revenue in INR Crore and Percentage Growth in the Indian Fertilizer Market, FY’2009-FY’2013

Figure 8: India Fertilizer Market Segmentation by Organic and Inorganic Fertilizers on the Basis of Contribution in Percentage (%), FY’2012

Figure 9: India Fertilizer Market Segmentation by Macronutrients and Micronutrients on the Basis of Contribution in Percentage (%), FY’2012

Figure 10: Market Share of Leading Companies in Urea Fertilizer Market on the Basis of Production in Percentage (%), FY’2012

Figure 11: Market Share of Leading Companies in DAP on the Basis of Production in India in Percentage (%), FY’2012

Figure 12: Market Share of Leading Companies in Micronutrients on the Basis of Production in Percentage, FY’2012

Figure 13: Nagarjuna Fertilizers and Chemicals Limited Future Projections on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore and Percentage, 2014-2017

Figure 15: Non-linear Regression Analysis and Scatter Chart Based upon Indian Fertilizers Industry Market size, FY’2008-FY’2013

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LIST OF TABLES

Table 1: Nagarjuna Fertilizers and Chemicals Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, FY’2009-FY’2013

Table 2: Nagarjuna Fertilizers and Chemicals Limited Major Investments in Company Evaluation on the Basis Deal Type, Stake, Deal Value and Implied Enterprise Value in INR Crore

Table 3: Nagarjuna Fertilizers and Chemicals Limited Ownership Structure, FY’2011 and FY’2012

Table 4: Nagarjuna Fertilizers and Chemicals Limited Quantity Manufactured, Sale and Traded, FY’2011 and FY’2012

Table 5: Nagarjuna Fertilizers and Chemicals Limited Products Offered on the basis of Segmentation of Micro Irrigation

Table 6: Nagarjuna Fertilizers and Chemicals Limited Financial Performance on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore, and Percentage, 2009-2013

Table 7: Financial Performance of Fertilizer Companies on the Basis of Revenue in INR Crore, FY’2008-LTM Year Ending 31st December 2012

Table 8: Financial Performance of Fertilizer Companies on the Basis of EBITDA in INR Crore, FY’2008-LTM Year Ending 31st December 2012

Table 9: Company Comparable Analysis on the Basis of Market Capitalization, Net Debt and Enterprise Value and Valuation Multiples in INR Crore and Multiples, LTM 31st December 2012

Table 10: Relative Valuation Analysis on the Basis of Deal Value, Deal Stake and Multiples in INR Crore, Percentage and Multiples

Table 11: Nagarjuna Fertilizers and Chemicals Limited Board of Directors and Management Profile

Table 12: Fertilizer Prices in India in INR per Ton, 2009-2012

Table 13: India Fertilizer Market Segmentation by Organic and Inorganic Fertilizers on the Basis of Revenue in INR Crore, FY’2012

Table 14: India Fertilizer Market Segmentation by Bio-fertilizers and Generic Fertilizers on the Basis of Production in Thousand Tonnes, FY’2009-FY’2012

Table 15: India Fertilizer Market Segmentation by Bio-fertilizers and Generic on the Basis of Contribution in Percentage (%), FY’2009-FY’2012

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Table 16: Market Positioning of Major Players on the Basis of Revenue in INR Crore and Percentage, FY 2012

Table 17: Leading Players in Urea Fertilizer Market on the Basis of Production in Thousand Tonnes, FY’2011-FY’2012

Table 18: Leading Players in DAP Fertilizer Market on the Basis of Production in Thousand Tonnes, FY’2011-FY’2012

Table 19: Company Profile of Major Competitors of Nagarjuna on the basis of Services Offered, Revenue and Business Strategies

Table 20: Nagarjuna Fertilizers and Chemicals Limited Balance Sheet, 2012-2015

Table 21: Nagarjuna Fertilizers and Chemicals Limited Income Statement, 2012-2015

Table 22: Nagarjuna Fertilizers and Chemicals Limited Cash Flow Statement, 2011-2015

Table 23: Nagarjuna Fertilizers and Chemicals Limited Ratio Analysis on the Basis of Liquidity, Asset Management, Profitability and Leverage Ratios in Multiple and Percentage, FY’2012-FY’2015

Table 24: Regression Coefficients of the Nagarjuna Fertilizers and Chemicals Limited

Table 25: Regression Intercepts of the Nagarjuna Fertilizers and Chemicals Limited

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EXECUTIVE SUMMARY: NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED (KAKINAND FERTILIZERS)

Nagarjuna Fertilizers and Chemicals Limited is a flagship company of Nagarjuna Group. The company is amongst the key players of plant nutrients in the Indian fertilizer market. The company is a manufacturer and supplier of both micronutrients and macronutrients in India with a brand name of “Nagarjuna”. ..

Key Differentiators

In south India, the company has the distinction of being the single largest investment in the private sector

Competition and Positioning

Leading position in the Indian Fertilizers market with 4th rank in terms of revenues in FY’2012

Key Developments

For the first time in FY’2012 the company installed automation micro irrigation system and rain guns in Tamil Nadu

Financial Summary

Nagarjuna Fertilizers and Chemicals Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, FY’2009-FY’2013

Particulars FY’2009 FY’2010 FY’2011 FY’2012 FY’2013*

Revenue

Growth%

Net Profit%

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CORPORATE TIMELINE

Nagarjuna Fertilizers and Chemicals Limited Corporate Timeline 1985-2011

NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED ORGANISATIONAL STRUCTURE

The company has 6 subsidiaries located in India and outside India. The company owned 99.8% shareholding in Jaiprakash Engineering and Steel Company Limited, incorporated in ~. Prime focus of this subsidiary is to utilize the land available for the company. Jaiprakash considered the various infrastructure projects of the company. Nagarjuna Mauritius Private Limited is a wholly owned subsidiary of the company. Nagarjuna Mauritius earned INR ~ crore of turnover and PAT of INR ~ crore in FY’2012 with an asset base of ~ crore as on 31st March 2012…

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Nagarjuna Management Services Private Limited provides the operational and maintenance services to the chemical process plants...

Nagarjuna Fertilizers and Chemicals Limited Organizational Structure

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NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED RESTRUCTURING OF THE COMPANY

The company was restructured in FY’2012. Oil division of the company was demerged and a new company Nagarjuna Oil Refinery Limited was formed. The deal was approximately of INR 298.0 crore…

Nagarjuna Fertilizers and Chemicals Limited Restructuring

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NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED PRODUCT PORTFOLIO

Nagarjuna Fertilizers and Chemicals Limited deal in manufacturing as well as trading of goods and services. The company has a wide variety of product portfolio of micro and macro nutrients for the Indian fertilizer market both in manufacturing and in trading segment…

The company has a prime focus on the trading of fertilizer product as trading of fertilizers contributes ~% of the company’s revenues in FY’2012…

Nagarjuna Fertilizers and Chemicals Limited Quantity Manufactured, Sale and Traded, FY’2011 and FY’2012

Particulars FY’2012 FY’2011 Change %change

Manufactured Products:

Urea Produced (tonnes)

Urea Sale (tonnes)

Micro Irrigation (meters)

Traded Products:

Bulk Products (MTS)

Seeds (MTS)

Customized Fertilizers (MTS)

Specialty Fertilizers (MTS)

Micro Nutrients (MTS)

Bio Products (KL)

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NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED FINANCIAL AND VALUATION ANALYSIS

Revenue of Nagarjuna Fertilizers and Chemicals Limited has shown an average annual growth rate of ~% from FY’2008-FY’2013. Over the years the company has witnessed such a growth due to the constant growth in the production capacity of the company…

In FY’2012 revenue of the company had shown a growth of ~% from FY’2011. The main reason for this increment was the restructuring process carried out by the company in the second quarter of FY’2012, which was effective from 1st April 2011…

In FY’2011 revenue of the company had shown an increment of ~% on y-o-y basis. Major reason for this increase in revenue was due to implementation of nutrient based subsidy (NBS) by the Indian government...

EBITDA of the company was a little under pressure as the average annual growth rate in EBITDA was ~% from FY’2008-FY’2013 as compared to revenue which was 20.1% for the same period...

As of 22nd April 2013, Nagarjuna Fertilizers and Chemicals Limited have been valued at INR ~ on company comparable basis. The company has been valued at average revenue multiple of ~x of several listed fertilizers company in India…

Over the years, the Indian fertilizer industry has witnessed a number of financial deal transactions. Some companies made private placements and some stakeholders’ purchases and sold shares through stock exchanges…

Table: Nagarjuna Fertilizers and Chemicals Limited Financial Performance on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore, and Percentage, 2009-2013

Particulars (in INR Crore and Percentage) FY’2009 FY’2010 FY’2011 FY’2012 FY’2013*

Revenue

y-o-y Growth%

EBITDA%

Net Profit%

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Table: Financial Performance of Other Fertilizer Companies on the Basis of Revenue in INR Crore, FY’2008-LTM Year Ending 31st December 2012

Revenue (in INR Crore) FY’2008 FY’2009 FY’2010 FY’2011 FY’2012 LTM

Chambal Fertilizers and Chemicals Limited*

Coromandel International Limited

Gujarat State Fertilizer & Chemical Co. Limited

Mangalore Chemicals & Fertilizers Limited

National Fertilizers Limited

Rashtriya Chemicals and Fertilizers Limited*

Zuari Agro Chemicals Limited*

Table: Company Comparable Analysis on the Basis of Market Capitalization, Net Debt and Enterprise Value and Valuation Multiples in INR Crore and Multiples, LTM 31st December 2012

(INR Crore, unless Stated) Last Twelve Months (LTM) Year Ending December 2012

Company Market Cap

Net Debt

Enterprise Value (EV)

EV/Revenue EV/EBITDA P/E

Chambal Fertilizers and Chemicals Limited

Gujarat State Fertilizer & Chemical Co Limited


Zuari Agro Chemicals Limited



Rashtriya Chemicals and Fertilizers Limited

Mean

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Relative Valuation Analysis on the Basis of Deal Value, Deal Stake and Multiples in INR Crore, Percentage and Multiples

Date Target Company Deal Type Deal Value

INR (Cr)

Stake % Implied EV/

Revenue

Implied EV/

EBITDA

Implied EV/ PAT

02-Apr-13 Mangalore Chemicals & Fertilizers

Block trade

29-Jan-13 PI Industries Limited Private Placement

10-Jan-13 Karnalyte Resources Inc.

Private Placement

04-Dec-12 Sree Ramcides Chemicals Private Limited

Inbound Acquisition

04-Dec-12 PI Industries Limited Block trade

04-Oct-12 PI Industries Limited Block trade

28-Sep-12 Shree Renuka Sugars Limited

Block trade

13-Jul-12 SD Agchem (Netherlands) B.V.

Outbound Acquisition

23-Apr-12 Zero Waste Agro Organics Private Limited

Domestic Acquisition

21-Mar-12 Bisco Bio Sciences Private Limited

Inbound Acquisition

03-Nov-11 Crystal Crop Protection Private Limited


31-May-11 Sabero Organics Gujarat Limited


31-May-10 Fertilizer Manufacturing Facilities in Chhattisgarh

Block trade

Mean

Median

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MACRO ANALYSIS OF FERTILIZER INDUSTRY

MARKET SHARE OF MAJOR PLAYERS IN INDIAN FERTILIZER INDUSTRY, FY’2012

BY REVENUE, FY’2012

Indian Farmers Fertilizer Co-operative Limited accounted for ~% of the market in FY’2012 and generated revenue worth INR ~ crore during the year…

National fertilizer limited is the second largest player in the fertilizer market in India. It accounted for a share of ~% in the overall fertilizer market in India and generated revenue worth INR ~crore in FY’2012. The company has ~ urea production plants with a total installed capacity of ~ million tonnes.

Table: Market Positioning of Major Players on the Basis of Revenue in INR Crore and Percentage, FY 2012

Leading Fertilizer Companies Revenue (INR Crore) Market Share (%)

Indian Farmers Fertilizer Co-operative Limited (IFFCO)


Zuari Agro Chemicals Limited

Nagarjuna Fertilizers and Chemicals Limited

Krishak Bharati Co-operative Limited


Gujarat State Fertilizer & Chemical Co. Limited


Chambal Fertilizers and Chemicals Limited

Madras Fertilizers Limited

The Fertilizers and Chemicals Travancore Limited

Rashtriya Fertilizers and Chemicals Limited

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Deepak Fertilizers And Petrochemicals Corporation Limited

Others

Total

NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED MANAGEMENT OUTLOOK AND FUTURE PROJECTIONS

Nagarjuna Fertilizers and Chemicals Limited has a dominating position in the southern region of India with approximately ~% of the company’s revenues came from the same in FY’2012…

After doing an extensive research on the fertilizer market of Africa, the company is planning to discover and capture the opportunities available in the uncover market of Africa…

NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED FUTURE PROJECTIONS

Nagarjuna Fertilizers and Chemicals Limited is planning to enhance the quality of its products by introducing advance tools to measure the actual nutrients requirements and status of the crop…

The company is planning to increase to expand its operational capacity. As of now the company has an operating capacity ~ million tonnes and Nagarjuna is expected to increase its capacity upto ~ million tonnes in the near future…

Nagarjuna Fertilizers and Chemicals Limited is expected to increase its geographical reach in the international market by covering different countries of Africa…

With the introduction of new products and covering different geographies it is expected that the EBITDA of the company will outperform the growth showcased from FY’2009-FY’2013. The company has showcased an EBITDA growth of ~% from FY’2009-FY’2013 and it is expected that the company will increase it to a CAGR of ~% from FY’2013-FY’2017…

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Nagarjuna Fertilizers and Chemicals Limited Future Projections on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore and Percentage, 2014-2017

NAGARJUNA FERTILIZERS AND CHEMICALS LIMITED FINANCIALS FUTURE PROJECTIONS

Over the year's shareholders’ funds of the company has shown a constant growth as the company is constantly generating after tax profit. Net worth of the company has shown a CAGR growth of ~% from FY’2011-FY’2013 due to huge growth in profit after tax of the company…

Outsider funds of the company include both long term and short term loan of the company. Long term loans constitute only ~% of the total outsider funds in as on 31st March 2013…

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

FY'2014 FY'2015 FY'2016 FY'2017

in P

erce

ntag

e

INR

Cro

re

Revenue EBITDA Margin Net Profit Margin

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nagarjuna fertilizers and chemicals limited sample report

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