2Contents About PCCPL Industry structure Business model Agro Chemicals DivisionsTwo key acquisitions & benefitsBusiness structure post acquisitionOther division highlightsCompetitive landscapeFuture strategyFinancial highlightsShareholding pattern
3About pccplFrom manufacturing basic chemicals such as oxalic acid, PCCPL is a fast-growing agrochemicals & formulations company with synergistic pharma, industrial chemicals & international trading divisions.PCCPL has a comprehensive product portfolio, strong brand presence & a wide distribution network.PCCPL’s products are well accepted in the domestic retail market & are also exported to large MNCs & brands across 60 countries covering 5 continents.Acquired two companies in the last two years : Sintesis Quimica SAIC based in Argentina and Agrichem based in Netherland.The company’s shares are listed in BSE, Ludhiana and Delhi Stock exchanges.
43 decades of moving up the value chain 2007: Stake in SourceDynamic PLC, US3 decades of moving up the value chain2007: Acq. Of AgrichemNetherlands (SD Agchem)2006: SDAG Chem. 85% stake in SQArgentina2006: Formation of SDAG Chem. Belgium2006: Amalgamation of all group companiesADIL / IA & IC / STS / PAURAJ2003: Separate manufacturing facility for pharma sector Alpha Drug India taken over from DSM: Focus on agrochemicals & spl chemicals.1983 : Diversified into diethyl oxalate & specialty products19th November, 1975 in joint collaboration with Excel Industries Ltd, Mumbai and PSIDC under the name of Punjab United Pesticides & Chemicals Ltd
5Our presencePCCPL has 7 state-of-the-art manufacturing plants at strategic multi-locations. All plants are ISO and ISO 9001 certified.
6About pccplAll products are manufactured in compliance with current Good Manufacturing Practices (cGMP's) for both domestic and international markets.The plants are situated at different locations which ensures that the production process is never hindered due to vagaries of climate, supplies, markets or labour problems.Strategic location: Formulation plant at Chiplun which is in close proximity to major horticulture farms in Maharashtra & also cater to the southern tea gardens.
8Agro chemical industry Industry structureInsecticidesHerbicidesFungicidesAgro chemical industryIn terms of vertical levels of business, the market can be segmented into three types:PCCPL is present in all three segments across all vertical levels of businessIntermediates for technicalTechnical & their bulk formulationsSmall pack branded formulations
975% of Revenue 10% of Revenue 5 % of Revenue PCCPLAgro chemicalsDivision75% of RevenueTechnical Bulks Mainly exportsFormulationsRetail marketInsecticidesPesticidesFungicidesHerbicidesBiological agro productsIntermediates for technical oxalic acid derivativesIndustrial Chemical10% of RevenuePharma DivisionInternational Trading5 % of Revenue
10InsecticidesHerbicideFungicidesPlant Growth RegulatorsBio ProductsSulphur Range
11World’s largest producer of oxalic derivatives KEYSTRNGHWorld’s largest producer of oxalic derivativesForward Integration – niche herbicides & biogradableWide product basket & in house R&D for new moleculesRobust local distribution networkExport to 60 countriesAll seasons revenue2 key acquisitionsImmense growth potential in the industry
12All Season business, De-risked, Diversified First 6 months of fiscal excellent domestic market sales (formulations)Next 6 months is an excellent season for agro technical business abroad.Exports tonations where agriculture is importantIsrael & Europe Netherlands, Belgium, Holland).Key acquisitions will enable the foray into the international formulation segments.Strengthen product pipeline & biological agro product range.
13Fully integrated Oxalic acid & derivatives Agro chemical bulks World’s largest producer.40% for in house i.e. raw material for agro bulks.Will also be used as raw material by the 2 newly acquired companies.Agro chemical bulksIn house raw material for formulationExport: Europe, Israel, South East Asia, Latin America, USA.Clients: Syngenta, Agan, Dow Chemicals, etc.Will also supply to Agrichem & Sintesis.FormulationsSulphur & Phosphorous based.Did not focus on competitive area of pesticides & insecticides .Developed environmentally friendly & niche segments.Biological crop.Future: Regulated markets.Agrichem has a good portfolio of registered crop protection products in Europe.Sintesis Quimica has a comprehensive biological products & formulations range.
14Main Division I. Agro Chemical Division (ACD). Manufactures a variety of basic chemicals, chemical intermediates, Agro chemicals and specialty chemicals. Agro Division – Derabassi is DNV ISO & ISO 9001 Certified
15I. Oxalic acid & derivatives Sales of oxalic acid & derivatives accounts for nearly 25% of the Agro Chemicals Division Revenue.PCCPL has an installed capacity of MT per year of oxalic acid & 3850 MT per annum of oxalic acid derivatives.PCCPL is the world largest producer of oxalic acid.Moved up the value chain to produce derivatives.Oxalic acid is used in the production of various agro chemical bulks, textile processing, leather finishing , metal treatment & in the manufacture of various chemical derivatives.
16II. Formulations Product RAnge InsecticidesPesticidesFungicidesHerbicidesBiological agro productsBasic useKills insectsKills pestsPrevents / treats growth of fungusSoil nutrients.Prevents growth of weedsNutrients for the soil. Non-chemical basedMain CropsSeeds - Wheat, Paddy, Cereals, etc.Seeds – Wheat, Paddy, Cereals, etc.Fruits (grapes, mango, banana, oranges, citrus, apples),Tea, Vegetables (peas, beans, chilli, onion, groundnut),Paddy, wheat.All crops, sugar & beet productsWheat & Paddy40+ Branded products13874Key Regions & seasonsAll India, all seasons (Kharif & Rabi)All India, all seasons (Kharif & Rabi crops)Western (horticulture belt), South (tea), north (apples).Western & all-IndiaEnvironment – friendly. GrowingCAPACITY IN FUNGICIDES INCREASED FROM 800 TONS to 2000 TONs P.A. to cater to the increasing domestic demand.
17Opportunity matrix: Strong demand on the horizon IndiaAgrochemical industry in India is the fourth largest in the world (after US, China and Japan) estimated to be Rs 6,000-crore.In last 5 years, demand has picked up (11% CAGR) due to better monsoons.Exports account for nearly half of the revenue has been growing at about 25%.India has one of the lowest use of chemical fertiliser per acre of arable land estimated at 75 kg as against 470 kg in Egypt, 430 kg in Netherlands, 270 kg in China, 180 kg in Bangladesh.Prices of agrochemicals in India are one of the lowest in the world.Strong agro boom has lead to the entry of large Indian corporate houses like ITC, Reliance Retail, Godrej, Cadbury India, Himalaya Drugs, etc. which has lead to large corporate & contract farming projects.Several agricultural sectors like horticulture, floriculture, development of seeds, cultivation of vegetables, mushroom under cultivated conditions have been thrown open to 100 % FDI.
18Opportunity matrixAgrochemicals has an enviously strong industry outlook.Indian food grain production (rice, wheat, coarse cereals and pulses) has grown at a CAGR of 1.3% while population growth is estimated at 1.6%. The per capita consumption is also fast increasing.Hence to be self-sufficient production needs to grow at 3.3% p.a.It is estimated that India will face a food grain deficit of 56 mn tons by by (&140 mn tons by 2030)* if growth stagnation is not reversed.For this crop yield has to improve dramatically. Use of the agrochemicals in India needs to increase.(*Source Economic Survey, Kotak Securities)
19World wide Opportunity matrix Estimated global agrichemical market size is USD 40 billionEstimated Global Agrochemical sales (2006)By Region By Category* Rest of the worldStrong agro commodity prices underlines the need for higher crop yields. Immense potential for the branded formulation business.
20Opportunity matrix Export: Agro technical/Intermediates Indian exports of agrochemicals have shown an impressive growth over the last five years.The key export destination markets are USA, UK, France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore.The size of the global market is estimated to appx. USD 30 billion & even 0.5% share of the global market fetches a turnover of USD 150 million range.The competition in the global market is mainly restricted to MNC’s (which are the originators & creators of various agro chemical molecules), Indian & Chinese players.Not many other countries have necessary technology & processing capabilities, infrastructure, ability to adhere to stringent quality & environmental policies required for the exporting agro technical / intermediates, hence provides an opportunity.PCCPL supplies to several large global originators & creators across 60 countries with large quantities exported to Israel & Europe.
21Two key AcquisitionsIn Netherlands and Argentina21
22PUNJAB CHEMICALS acquisition in Latin America SINTESIS QUIMICA S.A.I.C. is an Argentine company devoted to manufacturing special chemicals & biological products for industry and agriculture. It was founded in 1951 by a group of Chemical Sciences graduates.
23Acquisition 1: Sintesis Quimica SAIC In FY06, PCCPL acquired Sintesis Quimica SAIC, a leading Argentine agrochemical & formulation company for USD 10 million.Comprehensive product range.Two state-of-the-art manufacturing facilities in Argentina.Strong distribution network in South America.Services global agro formulation companies like Nufarm, Syngenta, etc.Domestic sales account for 70% of the total revenue; balance is exports.Export to: Latin America, Bolivia, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, Venezuela, China, Thailand, Singapore, Taiwan, Turkey, USA & Canada, etc.Company’s revenues appx.: USD 20 million with EBITDA margin of 12-13%.Revenue target is USD 35 million in next 3 years.
24Comprehensive Product Range Acquisition 1BiologicalInoculants for soya, wheat and corn.Agro based products & formulationsSoil disinfectantsSprout suppressants in potatoes, onions, garlicFungicidesInsecticidesHerbicides.Industrial and formulation based productsLeather industryWood preservation
25Key benefits to PCCPL Acquisition 1 Entry into regulated market of Latin America – BRAZIL (BRIC nation) & ArgentinaProvide a thrust to the development of biological productsCross sell products.Service reputed brands.Widen product basket
26PUNJAB CHEMICALS acquisition in Netherlands Founded in 1934, Agrichem is mainly focused on formulating generic crop protection products & is one of the leading companies with regulation data (EU basis)26
27Acquisition 2 Own brand sale & distribution Obtaining & defending Acquired Netherlands-based, agrochemical company Pegevo Beheer BV (AgriChem) for Euro 39.5 million.Euro 25 million has been paid for acquiring portfolio of registered products.Core activities include:Products are registered in the Netherlands, Belgium, the UK, France, Germany, Ireland, Denmark, Italy, Slovakia, Czech Republic, Belarus and Switzerland.R&DObtaining & defendingProduct registrationsFormulationsOwn brand sale & distribution3rd parties generics
28Acquisition 2Undertakes substance formulation for crop protection with a product range of herbicides, insecticides and fungicides.Main crops: Beets, Cereals, Potatoes, Flower bulbs, Fruit dipping & Rapeseed.Key export markets: Belgium, Denmark, Ireland, Netherlands, Switzerland, Germany, England, France,Greece, Austria, Poland, Slovakia, Czech Republic, etc.AgriChem has a crop protection registration department, in-house R&D and quality control facilities & its own formulation facilities.Revenue: Apprx Euro 26 million. EBITDA margin appx. 13 %.Target: Euro million in next 3 years.
29Acquisition 2 Agrichem’s GLP Laboratory Advantages: Analysis of all incoming & outgoing productsR&D (for product registration purposes)Quality asuranceResultsContinous quality assuranceDecreased timelines with regards to products development
31Key benefits to pccpl Entry into regulated market; access to data Save on registration cost.Immediate and direct access to the market instead of waiting period of 3-5 years.
32Advantages of two Acquisitions Entry into regulated formulation markets of Europe + South AmericaAccess to technical data of registered products which also helps enter into the US marketCross selling of productsProvide thrust to biological product rangeOverall margin improvement of PCCPL due to forward integration
33FLOWCHART OF SUBSIDIARY COMPANIES OF PCCPL STS UK LTD100%PCCPLSD AGCHEM EUROPE N.V.100 %SINTESISQUIMICA85 %(Argentina)SD AgrichemNetherland B.V.100 %PSDLLC40 %(USA)SOURCEDYNAMIC20 %(USA)AGRICHEMB.V.100 %PG CROPPROTECTIONLTD100 %(England)N.V.AGRICULTURALCHEMICALS100 %(Belgium)AGRICHEMHELVETIAGMBH100 %(Switzerland)NEDABAPS50 %(Denmark)KAPCHEMLTD50 %(Ireland)33
34Competitive positioning PCCPL’s Indian infrastructure is more inclined towards fungicides & herbicides which supports the company’s long-term retail forward integration strategy & growth plan.Since insecticides is the largest segment in India, it is more competitive while herbicides & fungicides is less competitive being a new (niche product).Overseas also the growth potential is immense. Example in developed countries: environmentally friendly herbicides are preferred (account for nearly 65% of the market share) while use of insecticides is declining (barely 20%). Share of fungicides is fast growing and is estimated to be about 15% of the market.
36Other BusinessesPharma Chemicals Division (PCD) (10% of total revenue)Manufactures anti-bacterial bulk drugs & intermediates of penicillin based antibiotics, Trimethoprim (TMP), Gallic Acid & its derivative products.Trimethoprim, the premium flagship product of the company is a bacteriostatic antibiotic manly used in the prophylaxis and treatment of urinary tract infections (Cystitis).Key clients include: GSK, Ranbaxy.Also undertake contract manufacturing for MNCs like GSK & Ranbaxy.This division comprises of the business of erstwhile Alpha Drugs Ltd. which has merged with PCCPL under a scheme of merger.The manufacturing facilities are located on the Chandigarh – Ambala highway.
37The Pharma Division -Alpha Drugs – Lalru (near Chandigarh) is ISO 9001 certified.
38Other BusinessesIndustrial Chemicals Division (ICD) (10% of total revenue)Manufactures Phosphorous based chemicals like Phosphorus Trichloride, Phosphorous acid, Phosphorous Oxychloride, Phosphorus Pentoxide, Phosphoric Acid etc.This division comprises of the business of erstwhile STS Chemicals Ltd. which has merged with PCCPL under a scheme of merger.The manufacturing plants are located at Pimpri (near Pune) and Tarapur (Thane District, Maharashtra)Key Clients: Dr Reddy, GSK, Ranbaxy, Pepsi, Coke, IPCAIndustrial Chemical Division - Pune & Tarapur are DNV ISO 9001 certified.International Trading Division (5 % of the total revenue)Explores opportunities in local trading i.e. importing products for local sales. Using inherent market understanding and market trend to identify product in high demand and importing to different domestic players.
39Future strategyValue addition by forward integration for various agro chemical and industrial chemicals.Unlike other agro pharma companies, PCCPL is not foraying into seeds rather it is adopting the branded retail formulations route & is focusing on next-generation environmental friendly biological agro products.Through Sintesis develop biological agro product range. Tie-up also in place with a local company in Hyderabad. Tremendous potential – environment friendly. Product has great potential in US & Canada.Through acquisition consolidate presence in formulation market of Europe, South America, North America and foray into Africa & South East Asia.Major thrust is value-added agro chemical products in the international market particularly in Europe, US & Canada.
40Future strategyContinuous R&D to introduce latest herbicides and bio products in domestic and international markets (after obtaining registrations).Explore contract manufacturing opportunities.For USA market, PCCPL has formed a JV with local partner & is planning to spend USD 10 million over a period of next 3 years to get its products registered in USA.Exploring opportunities to acquire product portfolio in USA.Evaluating opportunities to backward integrate into phosphorus space.
41Shareholding patternBSE Code: ; NSE Code: Punjabchem; Share outstanding: 6.6 million.Free Float: 3.5 million shares. Face Value: Rs 10.(As on March 31, 2008)
42Thank youRegistered office: SCO 417 – 418, Sector 35-C, Chandigarh –Group Corporate office: Plot No. 645 – 646, 4th/5th Floor, OberoiChambers II, New Link Road, Andheri (West), Mumbai –DisclaimerThe information contained in this document is intended only for private use during the presentation and should not be distributed to parties outside the presentation. Punjab Chemicals and Crop Protection Limited accepts no liability whatsoever with respect to the use of this document or its content. Statements in this “Presentation” describing the company’s objectives, estimates, expectations or predictions may be “forward looking Statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the company’s operations including demand supply conditions, cyclical nature of the company’s principal markets, changes in government regulations, tax regimes, economic developments within India and factors such as litigationnegotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent developments, information or events, or otherwise.