Insecticides (India) limited

CORPORATE PRESENTATION
 Presentation at a Glance

About Agrochemical Industry

Company Introduction
Manufacturing Capabilities
Collaborations and Tie Ups
Research & Development
CRAMS Advantage
Network
Financial Snapshots
IIL Strategy
IIL Take Away
Lets start from a Fresh Prospective

Technology grows, so are the expectations

Nobel Prize winning products DDT & BHC are now extinct
products, as the requirement than was production, which is
same today, but today we can think far ahead of the same.

What do we want today, or lets take it this way

What do Crop protection companies today

aspire for ???
1. New technology with Least / No residue products

2. Specific products for specific pest/insect with

control related to the life cycle of the pest/insect

3. Minimum possible dosage with ease of use

4. Products that result in protection of Friendly Insects.

5. Products that can reduce the no. of sprays.

6. Products with better soil stability.

7. Products with higher efficacy in the adverse weather

conditions.

8. Products with Preventive action.

 Agriculture in India is changing
It is becoming economically viable.
In past it was more by default not by choice.
If farmers son was not educated & not getting a job
then was doing agriculture
Todays agriculture is the commercial activity
Various factors influencing growth in agriculture
Food prices - going up
Land available for agriculture - Shrinking
(Area of Food Crop is shared by commercial crops like
cotton)
Population is increasing
 Key trends in the Industry
Innovation &
Focus on contract
product
manufacturing
diversification
Leading agrochemical Increase in R&D Demand for
companies in India are expenditure to
now focusing more on strengthen product
the contract portfolio
manufacturing to Global companies have
enhance scale and expressed their interest
strengthen business in sponsoring R&D
synergies activities in India due to
The opportunity for the availability of
contract manufacturing scientific skill and
in India is large, given managerial talent
that global players are Certain domestic as well
targeting high-margin as MNC manufacturers
products and are aim to develop
outsourcing the innovative Formulations
manufacturing of low- that are environment
margin products friendly and involve easy
application
Expanding
Strategic alliances Patent expiry
distribution network
Increasing strategic In 2014, many
agrochemicals is. alliances among major molecules are likely to
dependent on the players for greater go off patent, throwing
monsoon in India hence, market reach the market open for
presence in broader Global agrochemicals generic players
geographies diversifies majors including FMC, The lot of new
the risk due to these DuPont, Syngenta, manufacturers in the
uncertainties Bayer and Nihon Indian pesticides
Therefore, companies Nohayaku have industry can exploit this
are focusing on technical as well as opportunity
increasing their marketing tie ups with
distribution network leading Indian
manufacturers for the
manufacturing / sale of
their products
 India is increasing the share in the global agro
chemical business
USD 55 bn

USD 50 bn
5% FY 15P

USD 50 bn USD 5.0 bn

Global Market
13 % 12-14 %
FY 13E
USD 40 bn
USD 3.9 bn

13 %
FY 08 Indian share in Global
USD 2.4 bn market to increase to
about 9% in FY15 from
Indian Market 6% in FY 8
Agro Chem Industry India Vs. Global

Main Differentiators

Indian Agro Chem Industry Global Agro Chem Industry

More Fragmented with 60 % Less Fragmented with 70-80 %

of market catered by 15-20 of the market catered by 6-7
Players Players

Higher consumption of Higher consumption of

Insecticides, though change Herbicides
In consumption is changing
due to high cost of labor

Low R&D Spend 1-2 % Higher R& D Spend 10-12%

Indian farmers are changing so is the Indian Industry

Indian Farmer is a loyal customer, so India did not get

the new molecules at the speed which it deserved.

Market is about 70% of the generic products.

Acceptance to new technology products is good,

about 200 old products have been replaced by each
other.

India is a large manufacturing base of agro chemicals.

Technology as well as the man power is available here,
and the quality is also well accepted in the world.

India has got all the 5 big crops, and season is round
the year, different climate and soil zones are
conducive for the research activities as well.
 Critical success factors in the Industry
The Indian agrochemicals market is complex and presents certain challenges for a new
entrant to establish a meaningful foothold in a short span of time. Some of the critical
success factors in the Indian agrochemicals industry include:
Strong distribution network
Dispersed and fragmented farmer base across the country necessitates having a
wide distribution network to reach out to end customers and establish deep
customer relationships
Enables on-time feedback mechanism, a key to continued success
Pan India presence mitigates volume and revenue volatility risks
Comprehensive product portfolio
One stop solution for farmers
Superior bargaining power over channel partners and distributors
Mitigate cyclicality concern through a diverse product portfolio catering to the need
of major crop growing areas and across seasons
Integrated operations with backward integration into technicals
Several large domestic formulators have backward integrated into technicals
This enables control over supply chain Strong Comprehensive
Distribution product
Integrated operations also lead to lower margin volatility and higher operating Network portfolio
margins
Experienced management team familiar with the local business environment
Management having localized experience enables the Company to have a clear
Integrated Experienced
and better understanding of the local market which in turn helps the Company to operations Management
have a fast and stable growth
 Key Trends in the Crop protection Industry

1. Healthy Demand Prospects for Agro Chemicals

2. Industry Witnessed Steady Performance over the past

5 years

3. Extent of geographic diversity and product mix has

the key bearing

4. Integration of activities is the vital key

5. Exports has the large potential

 Key Trends in the Crop protection Industry

Agro chemical Industry has come a lone way in the past

four decades
India took almost 40 yrs to reach 4000 Cr. In 2004, but
last 10 years have multiplied the market four folds.
India is expected to touch 5 billions in the next 2 years
almost 8 % of the world market where it was only 6% in
2008.
We are privileged to be part of the industry which is
showing a double digit growth (CAGR) in next decade.

Per Capita usage is still very low, less than 500 gms per
hactare against the world average of 1.5 kg.
 The market size of agrochemicals is
expected to touch Rs 25,000crores
by 2015
Current levels are around of
Rs 17000 crores domestic market and
Rs 6,000 crores exports market
India is on its way to become the next
major manufacturing hub after China
 Agrochemicals are like Medicines For Plants

Increased awareness will lead Crop Avoidable Losses Cost :

(%) Benefit*
to advance in agricultural
Cotton 40-90 1:7
practices
Paddy 21-51 1:7
Mustard 35-75 1:12
Use of better inputs shall result Sunflower 36-51 1:8
in increase in yield Groundnut 29.42 1:26
Maize 20.25 1:3
Use of pesticide shall be Pulses 40-88 1:4
viewed as cost effective as Sugarcane 8-23 1:13
every Rs 1 spent on pesticides Vegetable 30-60 1:7
shall give a benefit of Rs 8 to Fruits 20-35 1:4
the farmers source :
IARI
(as per IARI)
 Indian Agrochemicals Industry
Overview
India is the 4th largest producer of agrochemicals (by volume), after USA, Japan
& China, and 12th largest by value globally Indian Pesticide industry
Indian pesticide sector is estimated to have grown by ~8.1% per annum during
FY 2008-12 to reach ~USD 4.1 Bn USD Bn

Growth in the sector is driven by exports which accounts for more than 30%
of the total market
It is a highly fragmented industry having
~125 technical grade manufacturers, both large and medium sized players
(including 10 MNCs) operating in the country
~500+ formulators, predominantly in the small scale sector
Pesticide production and use in India shows a different pattern from global Market Segmentation - Product split (FY10 Value)
trends
Insecticide use is around 68% domestically, compared to ~27% in the world
Herbicide use is ~ 15% in the country while worldwide, herbicide
consumption stands at 42%
Top 10-12 players comprise of global companies like Syngenta, Bayer and BASF
and leading Indian companies like UPL, Rallis, PI Industries and IIL which
dominate the market with ~60-70% share
India currently has a net surplus pesticide production capacity and the capacity
utilization stood at 56% during FY 10
Market Segmentation - Crop-wise share (FY10 Value)
Indian pesticide sector is expected to grow by a CAGR of ~12.9% during the
period FY 2012-15 to reach ~USD 5.9 Bn
Growth in the sector is expected to be driven by exports
16% Cotton
During this period, the domestic market is expected to grow by 8 9% per
annum while export market is expected to grow by 15 16% per annum 37% Paddy
10%
Pulses
17%
Cereals
20%
Others
Source: EY research. Industry analysis, Crop Life, Crisil Research
Indian Agrochemicals Industry
Export Import Scenario
USD Bn
Import-Overview
Imports consists of pesticides which are generally not manufactured in
India
Majority of imports come from China, USA, Japan, Switzerland and
Germany
Multinational corporations active in India generally resort to importing
Formulations and not the active ingredient of pesticides to restrain the
domestic industry from launching new products
The cost of first registration is very high compared to me-too
registration. Therefore Indian companies usually do not take the
initiative for first registration

Export-Overview
Exports form a huge market for domestic pesticide producers in India
Most big players are engaged in exports of pesticide products to various
parts of the world
Advantages of low manufacturing cost and low cost of qualified
manpower boosts production in India
India is a net exporter of pesticides to countries such as US, Brazil, France,
China and some other European & African countries

India is a net exporter of pesticide - During the period FY 2008-12, value of pesticide exports increased by a CAGR of ~22% while imports during the
same period increased by a CAGR of ~39%
Global Agrochemicals Industry
USD 9.3 bn off-patent opportunity coming up for generics players
Overview Increase in Generics penetration
The agro chemical market globally is dominated by generic products
which account for ~ 50% of the market
The generics segment has been the fastest growing segment with a CAGR
of 7.2% between 1993 and 2009
The growth in generics segment is expected to continue with ~USD 9.3
bn worth of patented products expected to lose patented status
between 2010 and 2020
Several products which have been off patent for over 10 years still have
the original patent holder being its largest manufacturer, as the
originator molecule does not face steep sales decline
The proprietary off-patent segment can provide a significant growth
opportunity to Generic Companies, Increased focus on R&D needed to
tap into this segment

Market Opportunity - Products going off patent (2010-

Market segmentation in Pesticides Market
2020E)

Source: Phillips McDougall, MAI Analysis, Industry reports

USD Bn
 Insecticides (India) today has evolved itself to
a Brand leader, research based, technical synthesis
and premier formulation company
About Insecticides (India) Ltd.

Insecticides (India) was established in 2001

Insecticides (India) is a Public limited Company, got listed at NSE and BSE in 2007

Insecticides (India) is today 864 Cr. (net turnover of FY14) Enterprise with 6 manufacturing
units and 25 depots spread in the length and breath of the country.

Insecticides (India) is into manufacturing of Formulation as well as technical grade

products.

Insecticides (India) has more than 110 formulation and more than 10 technical products in
its Kitty.

Insecticides (India) has state of the art Research and Development Centre, which is
approved by DSIR, and is NABL accredited
 Insecticides (India) Limited At a Glance
Research and Development
In House R&D Centre approved by DSIR
NABL Accredited
More than 12 new process developed so Far
Signed a JV for setting up a new R&D facility with
OAT Agrio, Japan

Technical Synthesis Facilities

Two State of the Art Technical Synthesis Plants
Manufactures more than 10 technical
Facilities of CRAMS
Strategic Advantage of Plant at PCPIR Zone in Dahej
(Gurarat)

Formulation Facilities
120 formulations with more than 600 SKUs
Fully automated 4 state of the art plants
Pan India presence with 3200 Distributors and 50000
Dealers
Milestones

Launched Nuvan, Hakama and Pulsor in

collaboration with AMVAC and Nissan
Entered in to JV with Otsuka, Japan research
Acquired Monocil brand from and invention of new agricultural chemicals
Nocil Ltd
Two new formulation plants -
Dahej and Udhampur -
commence operations 2012 2013
Acquired the exclusive
rights to sell the Thimet 2011
brand in India from
American Vanguard Technical plant in Dahej
Corporation, USA commences operations
2006 IPO & listing at NSE/BSE
2007
Commissioned second Technical plant commenced
formulation plant in operations in Chopanki
Samba (Jammu)
2004 Set up R&D Expansion of Formulations
Started operations by 2005 Laboratory in completed in Samba
commissioning formulation Chopanki
plant in Chopanki Granted ISO 9001-
(Rajasthan) 2000 certification
2002
2003 Acquired leading brands
of Montari Industries Ltd
(Ranbaxy Group company)
1996
Converted
2001 into a public
limited
Incorporated
company
as a private
limited
company
Manufacturing Capabilities

Insecticides (India) has state of the art fully automatic formulation plants with strict quality
control checks.

Insecticides (India) has two multi purpose technical plants with 6 different Streams.

Strong manufacturing infrastructure, In house manufactured products account for 90%+

revenue

One of the best asset turnover amongst Indian peers

Significant opportunity for CRAMS arising out of new facilities

Significant area available for expansion of facilities in Government approved industrial belt for
agrochemical production

Overall Installed Capacity of the Technical Plants is 21800 Mts.

Overall Installed Capacity of the Formulation is 89950 Mts.

Manufacturing Plants and their Locations
Technical Range of Products

Insecticides (India) Limited started the manufacturing of

technical in 2007, Today more than 10 Technical are
manufactured.

Insecticides Weedicides Fungicides

Lambdacyhalothrin Glyphosate Thiophanate Methyl
Fipronil Sulfosulfuron
Imidacloprid Methsulfuron Methyl
Thiamethoxam
Dichlorvos
Chlorpyriphos
Bifenthrin
Share of Technical Production
Share of In house consumption to the Technical Sales (In Crores for FY14)

92

121

In house
consumption

Technical Sales
Research & Development

Insecticides (India) Limited has state of the Art In Hose R&D Centre

R&D Centre is approved by DSIR, Ministry of Science and Technology

R&D Centre is NABL Accredited

R&D Centre has recently signed a agreement with DSIR for

commercialization of MNIO, which is a export substitute

One process patent Granted and over 8 process Patents have been filed

More than 10 process have been successfully identified.

JV with OAT, Japan for R&D

The company has recently entered into a Joint venture with a Japanese company OAT Agrico
(Formarly Otsuka AgriTechno Co. Ltd) to set up a new R&D company and centre at Chopanki
in Rajasthan.

OAT would provide the technology and know-how of the research and invention methods.

The JV would mainly focus on research and invention of new agricultural chemicals besides
managing intellectual property for the products invented in the Research Centre

The JV is expected to be operational by FY14

CRAMS - Advantage
Research facility at IIL can handle all type of reactions at lab and plant
scale

Capacity of reactions from milligram to tons scale

Well qualified, specialist and experienced team of Scientist

In House analytical instruments for testing of CRAMS projects

R&D centre is NABL accredited and Approved by DSIR

One of the largest formulation facilities, and state of the art technical
synthesis plants to process as per the requirement
Large Product Portfolio

Exceptional track record of new product launches and Large portfolio across multiple
portfolio augmentation aided by
segments
PGRs 1 18 19

In-house product development through

Backward integration
Fungicides 8 20 28

Herbicides 11 25 36

Enhanced focus on R&D

Insecticides 23 65 88

Acquisitions of high recall, but off-shelf brands and

their successful re-launch into leading brands
0 20

Institutional
40 60

Branded formulations
80 100

Lethal and Monocil are recent success stories

Track record of launch of new
branded
9
formulations 8
Technical collaborations with leading global 8 7
7
agrochemical players 6 5 5
Plan to repeat success of Thimet with Nuvan 5
4 3 3
3

Marketing arrangements with principal partners 2

1
0
FY08 FY09 FY10 FY11 FY12 FY13

IILs product portfolio comprising of over 110 branded products, over 10 technical
and over 750 SKUs
Bringing the International Technology to Indian Farmers

Insecticides (India) Limited has brought the international

Technology to Indian Farmers by various Tie ups and Agreements
IIL Collaborations and Tie Ups and Tie-ups
IIL collaborations

Technical Collaboration for manufacturing and

marketing of Thimet (Since 2006) & Nuvan
(Since 2012)

Exclusive Marketing Tie up for two

specialty products Patented Fungicide
Pulsor and Selective Herbicide Hakama

JV to set up a dedicated R&D

Centre in India to invent new
agrochemical molecules
Brand Wagon

Today Insecticides (India) Limited has more than 110 products in its kitty, with 5
leading brands in the basket namely Lethal, Victor, Thimet, Monocil and Nuvan
Aggressive & Intense
Brand Building Exercise
Direct Advertising
The Company works aggressively
toward making its brands
household names among its
customer segments
IIL uses all modes of media to
reach out to its customers
including print media, electronic
media, in-store advertisements,
distribution of pamphlets etc.
It has been a pioneer in using
Electronic media for
advertisement in agrochemical
industry in India
Has roped in many famous faces
including movie and TV stars as
its brand ambassadors over the
years
Print campaigns are run not only
in national/regional newspapers
but also in agriculture focused
newspapers/magazines
Engaging with customers
Bundles its products with services
such as awareness campaigns
regarding periodicity and quantity
of usage, product demonstrations,
counselling and after-sales
support
Employs techno commercial
people with relevant background
(such as agriculture graduates) in
sales team, to explain the
technical aspects of the products
to distributers, dealers and
farmers
Provides educational literature in
regional languages for the control
of weeds, insects and diseases
Conducts Customer Satisfaction
Surveys to gauge customers
feedback
Umbrella brand strategy
IIL has successfully adopted an
umbrella strategy, wherein it
relies on product extensions of
its established brands to
introduce products for new
applications and crops
This enables the Company to
leverage on the high brand
recall that its products enjoy in
the marketplace. IIL has
extended some of its major
brands like Lethal and Victor in
this manner
Lethal: Lethal Super, Lethal
Super 550, Lethal TC, Lethal 50
TC, Lethal RTU and Lethal DP
Victor: Victor Super, Victor Plus
Indirect branding exercises
Educate farmers on the benefits
and need for safe and judicious
use of agrochemicals
Conducts annual exercise and
hires upto 100 such additional
techno commercial members on
a temporary basis
Dr. Dada: Novel concept
introducing techno-commercial
members as expert for all
queries in the field and to help
train farmers in new
technologies
Participation in conferences,
exhibitions and all major
agriculture university fairs
Participation in international
exhibitions in China, Turkey,
Malaysia, Thailand
Few Examples of Branding Exercises
IIL in News Electronic Media
National Channels

Regional Channels

Product Literature and Demos

Marketing Techniques
Jeep Campaigns & Bobblers

Demo films are shown to

farmers across the nation to
instruct and guide them

Last year, over 5,000 Farmer

PVC Sheet Ads
Composite literature is meetings were conducted for
for Pulser,
published in numerous demonstrating the use of the
Hakama & Nuvan
regional languages products
Network

Distribution Network of over 50,000 dealers, 3200 Distributors and 25 Depot

all across India.

200 Techno-Commercial members in Sales & Product Development team.

Company owned warehouses and offices located in 20 of the most important

agricultural regions of India

Successful history of product acquisition and launch in India

Presently sells about 110 products in different pack sizes

Successful track record of growth in the last decade

Financial Snapshots

Turnover (In Cr.)

1200
1200

1000
864

800

617

600 522
Turnover (In Cr.)
450
379
400

200

0
FY10 FY11 FY12 FY13 FY14 FY15 (P)
Financial Snapshots

EBDITA Margins

11.50% 11.27%

11.00% 10.82%

10.50%

10.04% 10.00%

10.00% EBDITA Margins

9.68%

9.46%
9.50%

9.00%

8.50%
FY10 FY11 FY12 FY13 FY14 FY15(P)
Financial Snapshots

PAT (In Cr. )

60
60

50

40
40
35
33
32

28 PAT (In Cr.)

30

20

10

0
FY10 FY11 FY12 FY13 FY14 FY15 (P)
Financial Snapshots

Financial Ratios
Particulars FY14 FY13 FY12 FY11 FY10

EBIDTA Margin (%) 9.46 10.6 9.6 10.1 9.4

PAT Margin (%) 4.62 5.73 6.3 7.2 7.8

Sales Growth(%) 40.12 13.9 15.9 19.3 43.3

Debt: Equity 2.72 0.99 0.8 0.3 0.2

Dividend(%) 30 NA 25 25 20

EPS (Rs.) 31.49 27.85 26 28.1 27.9

Financial Snapshots

Balance Sheet Details

Particulars (In Crores) FY14 FY13 FY12 FY11 FY10

Net Worth 246.72 212.22 182.16 154.74 126.21

Debt 242.64 158.55 38.05 21.90 21.90

Other Liabilities 4.62 5.40 2.91 2.31 0.00

Total Liabilities 493.98 428.94 343.62 195.10 148.11

Net Fixed Assets (Including CWIP) 224.27 185.22 143.22 90.63 32.59

Net Current Assets 260.70 217.57 174.74 86.88 108.58

Other Assets 22.10 10.34 28.56 19.64 3.62

Total Assets 507.07 439.13 346.52 197.15 144.79

* Figures have been regrouped wherever necessary
Share Holding Pattern
(As on March 31st, 2014)

1.20% 5.33%
8.00%

10.78%

74.69%

Promoter Public FIIs Corporate Bodies Financial Instititions/ Banks

Growth Strategy
Growth Strategy
Ready to capitalize on the growth opportunities
Expansion in domestic market IIL has set platform and a well laid down strategy in place for future growth
Branded Formulations
Leverage its extensive distribution network and brand equity to induct new products
Expand current brands through brand extensions
Introduce patented new products through tie-ups & new discoveries through newly formed JV
Introduce off patented products through registration
Technicals
Introduce new products as per the market demand on back of flexible manufacturing
More than 20 Technicals registration in process which will further improve capacity utilization of Technicals plants
CRAMS
Leverage R&D capabilities for CRAMS opportunity to exploit Indias low cost advantage
Entry in exports markets
Plans to focus on select high growth emerging markets for Branded Formulations/ Technicals
The latest manufacturing facility i.e. Dahej is close to port. Therefore, it is best suited to cater to the exports market
demand
Manufacturing infrastructure already in place with significant expansion possibility
Surplus capacity is available to cater to the increasing domestic demand and increase focus on the exports market
Sufficient land for future expansion with all approvals will facilitate faster capacity expansion in coming years
Margins expansion strategy
Focus on high margin brands
New product development through JV with OAT
Enhanced margins in products that would be transferred in-house (from earlier outsourcing model)
Focus on the institutional segment, which is a large volume segment
Growth Strategy

Continued focus on
R&D to reduce costs
and manufacturing time
Capitalize on prior
Continued focus on experience to achieve
establishing strong maximum number of
brands technicals registration
Employ IILs well-tested Leverage R&D
Umbrella strategy to capabilities for CRAMS
introduce product
extensions
Enhanced backward
integration with increase
in technicals
manufacturing capacity
Enhance margins
Enable targeting
institutional segment
Leverage on location
advantage of
manufacturing facilities
Exploit gains from
upgraded and newly
commissioned
manufacturing facilities

IIL intends to leverage its expertise in successful brand launches, enhanced R&D focus and
recently expanded manufacturing capacity to fuel its future growth

18
Insecticides (India) - Take Away
Business Model Successful / Adaptable
Diversified End-Use Market Niches
Strategic, Efficient, Compliant Manufacturing
Growing opportunities in backward integration
Equal potential in Crop & Non-Crop Growth Potential
Organization Committed to Customer / Stewardship
This is a beginning of a new era for us as it is the first step
towards relation building with the Japanese Major.
Rice is a major crop in India it is a staple food crop. Double rice
crop in the east & south, and 1 crop in north
Entrepreneurial / Financially Prudent Culture
THANKS