Transcript Slide 1

PUNJAB CHEMICALS & CROP
PROTECTION LIMITED
CONTENTS

About PCCPL

Industry structure

Business model

Agro Chemicals Divisions

Two key acquisitions & benefits

Business structure post acquisition

Other division highlights

Competitive landscape

Future strategy

Financial highlights

Shareholding pattern
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ABOUT PCCPL



From 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.
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2007: Stake in Source
Dynamic PLC, US
3 decades of moving up the value
chain
2007: Acq. Of Agrichem
Netherlands (SD Agchem)
2006: SDAG Chem. 85% stake in SQ
Argentina
2006: Formation of SDAG Chem. Belgium
2006: Amalgamation of all group companies
ADIL / IA & IC / STS / PAURAJ
2003: Separate manufacturing facility for pharma sector Alpha Drug India taken
over from DSM
1993- 1994 : Focus on agrochemicals & spl chemicals.
1983 : Diversified into diethyl oxalate & specialty products
19th November, 1975 in joint collaboration with
Excel Industries Ltd, Mumbai and PSIDC under
the name of Punjab United Pesticides &
Chemicals Ltd
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Our presence
PCCPL has 7 state-of-the-art
manufacturing plants at strategic
multi-locations. All plants are ISO
14000 and ISO 9001 certified.
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ABOUT PCCPL

All 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.
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INDUSTRY STRUCTURE
Insecticides
Herbicides
Fungicides
Agro chemical
industry
In terms of vertical levels of business, the market can be segmented into three types:
Intermediates for technical
Technical & their bulk formulations
Small pack branded formulations
PCCPL is present in all three segments across all vertical levels of business
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PCCPL
Agro
chemicals
Division
75% of
Revenue
Technical Bulks Mainly
exports
Formulations
Retail market
Insecticides
Pesticides
Fungicides
Industrial
Chemical
Division
10% of
Revenue
Pharma
Division
10% of
Revenue
International
Trading
5 % of
Revenue
Intermediates for technical
oxalic acid derivatives
Herbicides
Biological
agro products
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o
Insecticides
o
Herbicide
o
Fungicides
o
Plant Growth
Regulators
o
Bio Products
o
Sulphur Range
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World’s largest producer of oxalic derivatives
Forward Integration – niche herbicides & biogradable
Wide product basket & in house R&D for new molecules
Robust local distribution network
Export to 60 countries
All seasons revenue
2 key acquisitions
Immense growth potential in the industry
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ALL 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 to
nations where agriculture is important
Israel & Europe Netherlands, Belgium,
Holland).
Key acquisitions will enable the foray
into the international formulation
segments.
Strengthen product pipeline & biological
agro product range.
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FULLY INTEGRATED
Oxalic acid & derivatives
Agro chemical bulks
Formulations
• World’s largest
producer.
• In house raw material for
formulation
• Sulphur & Phosphorous
based.
• 40% for in house i.e.
raw material for agro
bulks.
• Export: Europe, Israel,
South East Asia, Latin
America, USA.
• Did not focus on
competitive area of
pesticides & insecticides .
• Will also be used as raw
material by the 2 newly
acquired companies.
• Clients: Syngenta, Agan,
Dow Chemicals, etc.
• Developed environmentally
friendly & niche segments.
• Will also supply to
Agrichem & Sintesis.
• 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.
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MAIN 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 14001 & ISO 9001 Certified
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I. OXALIC ACID & DERIVATIVES

Sales of oxalic acid & derivatives accounts for nearly 25% of the Agro Chemicals Division
Revenue.

PCCPL has an installed capacity of 12000 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.
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II. FORMULATIONS PRODUCT RANGE
Insecticides
Pesticides
Fungicides
Herbicides
Biological agro
products
Basic use
Kills insects
Kills pests
Prevents / treats
growth of fungus
Soil nutrients.
Prevents growth
of weeds
Nutrients for the
soil. Nonchemical based
Main Crops
Seeds - 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 products
Wheat & Paddy
40+
Branded
products
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Key Regions
& seasons
All India, all
seasons (Kharif &
Rabi)
All India, all
seasons (Kharif
& Rabi crops)
Western (horticulture
belt), South (tea),
north (apples).
Western & allIndia
Environment –
friendly. Growing
CAPACITY IN FUNGICIDES INCREASED FROM 800 TONS to 2000 TONs P.A. to cater to the increasing
domestic demand.
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OPPORTUNITY MATRIX: STRONG DEMAND ON THE HORIZON
India

Agrochemical 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.
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OPPORTUNITY MATRIX

Agrochemicals 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 2018
(&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)
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OPPORTUNITY MATRIX
World wide

Estimated global agrichemical market size is USD 40 billion
Estimated Global Agrochemical sales (2006)
By Region
By Category
Others
ROW*
7%
Latin
America
17%
4.90%
Europe
26%
Fungicides
23%
Herbicides
45.80%
Asia
24%
North
America
26%
Insecticides
26.30%
* Rest of the world
Strong agro commodity prices underlines the need for higher crop yields. Immense potential for the branded
formulation business.
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OPPORTUNITY 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.
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TWO KEY ACQUISITIONS
In Netherlands and Argentina
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PUNJAB 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.
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ACQUISITION 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.
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ACQUISITION 1
COMPREHENSIVE PRODUCT RANGE
Biological
• Inoculants for soya, wheat and corn.
Agro based products & formulations
•
•
•
•
•
Soil disinfectants
Sprout suppressants in potatoes, onions, garlic
Fungicides
Insecticides
Herbicides.
Industrial and formulation based products
• Leather industry
• Wood preservation
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ACQUISITION 1
KEY BENEFITS TO PCCPL
Entry into
regulated market
of Latin America
– BRAZIL
(BRIC nation) &
Argentina
Cross sell
products.
Service reputed
brands.
Provide a thrust
to the
development of
biological
products
Widen product
basket
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PUNJAB 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)
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ACQUISITION 2

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:
R&D

Obtaining &
defending
Product
registrations
Formulations
Own brand sale
& distribution
3rd parties
generics
Products are registered in the Netherlands, Belgium, the UK, France, Germany,
Ireland, Denmark, Italy, Slovakia, Czech Republic, Belarus and Switzerland.
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ACQUISITION 2

Undertakes 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 36-40 million in next 3 years.
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ACQUISITION 2

Agrichem’s GLP Laboratory
Advantages:

Analysis of all incoming & outgoing products

R&D (for product registration purposes)

Quality asurance
Results

Continous quality assurance

Decreased timelines with regards to products
development
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ACQUISITION 2
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KEY BENEFITS TO PCCPL
Entry into
regulated
market;
access to data
Immediate and
direct access to
the market
instead of
waiting period
of 3-5 years.
Save on
registration
cost.
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ADVANTAGES OF TWO ACQUISITIONS
Entry into regulated formulation markets of Europe + South America
Access to technical data of registered products which also helps enter into the US
market
Cross selling of products
Provide thrust to biological product range
Overall margin improvement of PCCPL due to forward integration
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FLOWCHART OF
SUBSIDIARY COMPANIES
OF PCCPL
PCCPL
STS UK LTD
100%
SD AGCHEM EUROPE N.V.
100 %
SINTESIS
QUIMICA
85 %
(Argentina)
SD Agrichem
Netherland B.V.
100 %
PSD
LLC
40 %
(USA)
SOURCE
DYNAMIC
20 %
(USA)
AGRICHEM
B.V.
100 %
PG CROP
PROTECTION
LTD
100 %
(England)
N.V.
AGRICULTURAL
CHEMICALS
100 %
(Belgium)
AGRICHEM
HELVETIA
GMBH
100 %
(Switzerland)
NEDAB
APS
50 %
(Denmark)
KAPCHEM
LTD
50 %
(Ireland)
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COMPETITIVE 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.
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Higher
Excel
Crops
Ballarpur
Excel PCCPL
Inds. ,
Industries
GACL
PCCPL
Mid-level
PCCPL
Lower end
share
market
Relative
United
Rallis
India Phosphorous
Others
PCCPL
PCCPL
Insecticides
Unorganised
sector
Phosphorous
based chemicals
Agro chemicals
technical –
oxalic acid &
derivatives
NicheSulphur-based
formulations &
herbicides
Future –
Biological agro
products
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OTHER BUSINESSES
Pharma 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.
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The Pharma Division -Alpha Drugs – Lalru (near Chandigarh) is ISO 9001 certified.
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OTHER BUSINESSES
Industrial 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, IPCA
 Industrial 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.
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FUTURE STRATEGY

Value 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.
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FUTURE STRATEGY

Continuous 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.
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SHAREHOLDING PATTERN
Others, 0.36%
Individuals,
40.49%
Corporate
Bodies,
8.90%
Promoters,
47.36%

BSE Code: 506618; NSE Code:
Punjabchem; Share outstanding:
6.6 million.

Free Float: 3.5 million shares.
Face Value: Rs 10.
Institutions,
2.89%
(As on March 31, 2008)
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THANK YOU
Registered office: SCO 417 – 418, Sector 35-C, Chandigarh – 160 022.
Group Corporate office: Plot No. 645 – 646, 4th/5th Floor, Oberoi
Chambers II, New Link Road, Andheri (West), Mumbai – 400 053.
Disclaimer
The 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.
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