UPL CAPITAL MARKETS DAY...• Excellent performance of UPL herbicides on Wheat –including new...
Transcript of UPL CAPITAL MARKETS DAY...• Excellent performance of UPL herbicides on Wheat –including new...
Doing Things Better
UPL CAPITAL MARKETS DAY
April 29, 2016
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This document contains certain forward-looking statements with respect to the financialcondition, results of operations and business of UPL Limited (UPL) and certain of theplans and objectives of UPL with respect to these items. Examples of forward-lookingstatements include statements made about our strategy, estimates of sales growth,future EBITDA and future developments in our organic business. Forward-lookingstatements can be identified generally as those containing words such as “anticipates”,“assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”,“forecast”, “outlook”, “projects”, “may” or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events andcircumstances and there are many factors that could cause actual results anddevelopments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, domestic and globaleconomic and business conditions, the successful implementation of our strategy and ourability to realize the benefits of this strategy, our ability to develop and market newproducts, changes in legislation, legal claims, changes in exchange and interest rates,changes in tax rates, raw materials and employee costs, our ability to identify andcomplete successful acquisitions and to integrate those acquisitions into our business,our ability to successfully exit certain businesses or restructure our operations, the rateof technological changes, political, economic and other developments in countries whereUPL operates, industry consolidation and competition. As a result, UPL’s actual futureresults may differ materially from the plans, goals and expectations set forth in suchforward-looking statements. For a discussion of factors that could cause future results todiffer from such forward-looking statements, see also Risk management, of our AnnualReport.
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• Welcome and Introduction– Anand Vora
• Global Performance– Sagar Kaushik & Anand Vora
• UPL Value Proposition– Jai Shroff
• Supply Chain – Key to Success- K R Srivastava
• UPL Strategic Direction– Sagar Kaushik
• Seeds Business– Bhupen Dubey
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Q IV 2016 and FY 2016 Global Performance
ANAND VORA SAGAR KAUSHIKCFO – Global COO – Global Business
2015 - 16
Turbulent Year
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In CY 2015 the Crop Protection Industry de-grew 9.6%
Key players de-grew in the range of 5% to 23%
10%
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Rupees in Crores
Growth
Crores Crores % Crores Crores % %
Gross Revenues 4,340 100% 3,624 100% 20%
Domestic Revenues 417 10% 401 11% 4%
International Revenues 3,923 90% 3,223 89% 22%
Cost of Goods Sold 2,600 60% 2,233 62% 16%
Gross Margin 1,740 40.1% 1,391 38.4% 25%
Overheads 759 17% 606 17% 25%
EBIDTA 981 22.6% 785 21.7% 25%
Other Income / (Loss) 73 2% (49) -1% -247%
Depreciation & Amortisation 159 4% 104 3% 53%
Interest & Finance Charges 203 5% 122 3% 66%
Profit Before Tax 692 16.0% 510 14.1% 36%
Tax provision 65 1% 50 1% 30%
Profit After Tax 627 14.4% 460 12.7% 36%
Income from Associates (35) -1% (8) 0% 334%
Minority Interest 8 0% 3 0% 178%
Profit before Excp & prior period 584 13% 449 12% 30%
Exceptional items & Prior Period 32 1% 9 0% 275%
Net Profit for the period 552 12.7% 440 12.2% 25%
Qtr Ending
March 15Particulars
Qtr Ending
March 16
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Q IV 2015
Volume
Price
Exchange
Q IV 2016
4,292
3,563
INR in crore
25%
1%
-6%
Overall Growth
20%
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Rupees in Crores
Crores % Crores % Crores %
1 India 417 10% 401 11% 16 4%
2 Latin America 1,428 33% 909 25% 519 57%
3 Europe 872 20% 804 22% 68 8%
4 Rest of World 652 15% 648 18% 3 0%
5 North America 971 22% 862 24% 110 13%
Total 4,340 100% 3,624 100% 716 20%
Sr.
NoRegion
4th Qtr of FY 2015-16 4th Qtr of FY 2014-15 Growth
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Rupees in Crores
Growth
Crores Crores % Crores Crores % %
Gross Revenues 13,302 100.0% 12,091 100.0% 10%
Domestic Revenues 2,713 20.4% 2,622 21.7% 3%
International Revenues 10,589 79.6% 9,469 78.3% 12%
Cost of Goods Sold 7,988 60.1% 7,483 61.9% 7%
Gross Margin 5,313 39.9% 4,608 38.1% 15%
Overheads 2,597 19.5% 2,245 18.6% 16%
EBIDTA 2,716 20.4% 2,363 19.5% 15%
Other Income / (Loss) 112 0.8% (3) 0.0% -3825%
Depreciation & Amortisation 502 3.8% 425 3.5% 18%
Interest & Finance Charges 622 4.7% 517 4.3% 20%
Profit Before Tax 1,704 12.8% 1,418 11.7% 20%
Tax provision 283 2.1% 233 1.9% 21%
Profit After Tax 1,421 10.7% 1,185 9.8% 20%
Income from Associates (31) -0.2% 21 0.2% -249%
Minority Interest 13 0.1% 43 0.4% -70%
Profit before Excp & prior period 1,377 10.3% 1,163 9.6% 18%
Exceptional items & Prior Period 78 0.6% 19 0.2% 311%
Net Profit for the period 1,299 9.8% 1,144 9.5% 14%
ParticularsYear Ending March 16
*Previous year Exceptional item includes Rs. 49 crores ( net off taxes of Rs. 11 crores) on
Profit on sale of Sipcam UPL Brazil SA.
Year Ending March 15
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FY 2015
Volume
Price
Exchange
FY 2016
13,083
11,911
INR in crore
17%
1%
-8%
Overall Growth
10%
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Rupees in Crores
Crores % Crores % Crores %
1 India 2,713 20% 2,622 22% 91 3%
2 Latin America 4,252 32% 3,406 28% 846 25%
3 Europe 2,035 15% 2,033 17% 2 0%
4 Rest of World 1,810 14% 1,770 15% 40 2%
5 North America 2,492 19% 2,260 19% 232 10%
Total 13,302 100% 12,091 100% 1,211 10%
Sr.
NoRegion
Year Ended for FY 2015-16 Year Ended for FY 2014-15 Growth
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Rs. in Crore FY 2016 FY 2015
Turnover 13,083 11,911
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Particulars
PAT + Depreciation 1,923
Utilized for:
Working Capital 455
Capex 965
Dividend 215
Others 204 1,839
Balance from Operations 84
INR in crore
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Rupees in Crores
Crores % Crores % Crores %
1 India 2,713 20% 2,622 22% 91 3%
2 Latin America 4,252 32% 3,406 28% 846 25%
3 Europe 2,035 15% 2,033 17% 2 0%
4 Rest of World 1,810 14% 1,770 15% 40 2%
5 North America 2,492 19% 2,260 19% 232 10%
Total 13,302 100% 12,091 100% 1,211 10%
Sr.
NoRegion
Year Ended for FY 2015-16 Year Ended for FY 2014-15 Growth
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Rupees in Crores
Q4 FY 2015-16 Q4 FY 2014-15 GrowthYear Ended
for FY 16
Year Ended
for FY 2015Growth
417 401 4% 2,713 2,622 3%
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• Good acceptance of UPL insecticides against serious infestation ofsucking insects (White Fly) in North
• Excellent performance of UPL herbicides on Wheat – including newproduct Shagun®
• Serious drought conditions continued in Kharif and Rabi, affectingagrochemical usage
• High channel inventory continued - resulting in tight liquidity in themarket
• Large number of farmers registered for UPL Digital Advisory Centre toget timely advice to the growers on good crop management practices
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Rupees in Crores
Q4 FY 2015-16 Q4 FY 2014-15 GrowthYear Ended
for FY 16
Year Ended
for FY 2015Growth
1,428 909 57% 4,252 3,406 25%
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• UPL portfolio performed well in Rice, Fruits and Vegetables in Mexico and Columbia
• UPL fungicides showed excellent performance as resistance management tools againstrust disease on Soya
• Despite weak commodities, increase in Soya area in Brazil and Argentina
• Farmers of Brazil and Argentina benefitting from currency devaluation for export ofcommodities
• In Argentina, export taxes abolished on all commodities except Soya. Further need forimport license for Agrochemicals removed
• Demand of Fruits, Vegetables and Flowers remained strong for domestic and exportmarkets
• Reduction in insecticide segment in Brazil due to BT technology on Soya
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Rupees in Crores
Q4 FY 2015-16 Q4 FY 2014-15 GrowthYear Ended
for FY 16
Year Ended
for FY 2015Growth
872 804 8% 2,035 2,033 0%
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• UPL Organic portfolio performed well for growing demand in organicfarming
• Growth in UPL’s fungicide business in Potato and Vine crops
• Europe benefitted from a mild winter and early spring – however,North suffered from dry summer affecting Cereal fungicides usage
• Reduction in Sugarbeet area affecting herbicides market
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• Improved market access through increased registrations in Africancountries
• Excellent acceptance of UPL cotton portfolio in Pakistan, thoughconsumption got affected due to floods
• North Africa and Iran expected to grow with US lifting economic embargo
• Significant citrus / berries crop damage in Turkey due to frost / hailstorm affected fungicides consumption
• New season (Rice) did not meet expectation due to prolonged drycondition in SE Asia
Rupees in Crores
Q4 FY 2015-16 Q4 FY 2014-15 GrowthYear Ended
for FY 16
Year Ended
for FY 2015Growth
652 648 0% 1,810 1,770 2%
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• Sale of our new herbicides (Lifeline & Satellite) increasing as per expectation.“Over the top” segment opened with Interline brand
• Resistant weeds infestation continues to increase in Soya, Cotton and Corn
• Non-selective herbicides faced significant price competition
• Fungicide consumption reduced due to continued dry conditions in WesternUSA
• Insect pressure remained low in field crops affecting use of insecticides
• Reduction in Rice and Cotton area affected our Rice herbicides and Cottoninsecticides
Rupees in Crores
Q4 FY 2015-16 Q4 FY 2014-15 GrowthYear Ended
for FY 16
Year Ended
for FY 2015Growth
971 862 13% 2,492 2,260 10%
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JAI SHROFF
CEO
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Sustainable
Profitable
Growth
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UPL’s focus on manufacturing has
helped it emerge as a reliable supplier of
quality products at the right time and
right place
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Keep on launching 1 – 2 innovative and differentiated products in key global markets
Adjacent technologies to be one of the critical growth drivers in the future
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Adapt technology to enhance farmer engagement and deliver value• Adarsh Kisan Center• Adarsh Farm Service• CRM
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Bespoke marketing strategy honed to service respective regional markets
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K. R. SRIVASTAVA
COO – Global Supply Chain
Investing in manufacturing
Continuous cost improvement
Sustainability and Reliability
Awards and recognition
SupplyChain
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Investing in manufacturing
Set up new plants for Technical and
Formulation manufacturing globally
• Fungicide capacity New Plants
• Insecticide capacity enhancement
• Herbicide capacity enhancement
• Formulation capacity
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FUNGICIDES
Fungicide products capacity went
up by 60% in 2015-16 and plans to
enhance in 2016-17
Set up new plants for Technical and Formulation manufacturing globally
Mourenx
Barranquilla
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INSECTICIDES
Insecticide products capacity went
up by 10% in 2015-16 and plans to
enhance in 2016-17
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HERBICIDES
Implemented expansion which
increased capacity in 2015-16 by
40% and plans to enhance in 2016-
17
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• Increase formulation capacity
• Herbicide encapsulation
increased by 200%
• Granulation capacity for
insecticides and herbicides
increased by 300%
AIM IS TO BE CLOSER TOCUSTOMER
• New formulation plant being set up
in Jammu, Rotterdam, Brazil and US
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Continuous cost improvement
• Improving technologies
• Yield improvement
• Energy saving initiatives
• Procurement strategic tie-ups
• Inventory improvement -
changes in manufacturing plan
due to demand
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Sustainability and Reliability
• Continue to invest in safety
• Environment improvement
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• Focused on training of
contractors
• Implemented inviolable
standards in all plants
• Total Recordable Frequency
Rating (TRFR) an international
benchmark improved in UPL
from 0.47 to 0.39, whereas
international standard is 0.4
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Phase II safety capex of PHA have been implemented
This will increase our PHA safety rating from 93% to 98%, which is very close to industry benchmark
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Reduced Chemical Oxygen Demand(COD) of Vapi plant to 200 ppmagainst norm of 1,000 ppm
Water conservation - 60% of waterrecycled
Halol site to be zero discharge
We have also set up facilities toconvert our earlier waste to valueadded product
We are going beyond statutory normsin implementation at each of our sites
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Help us care for environment
Reliability of supply to market
Facilitates obtaining statutory approvals for
expansion
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Awards &Recognitions
• Barranquilla
• Rotterdam
• Vietnam
• Jammu
• Ankleshwar, Unit 1
• Ankleshwar, Unit 3
• Vapi
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Awarded Emerald Cross Category Excellence
BEST COMPANY IN COUNTRYAPRIL 2015
Barranquilla Rotterdam
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Awarded National Award for EHS and declared as a Model Factory
Vietnam
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Safety Award – Golden Peacock
Jammu
Safety Award from National Safety Council of India
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IMEA Gold Award for Manufacturing Excellence
Ankleshwar, Unit 1 Ankleshwar, Unit 3
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SAGAR KAUSHIK
COO – Global Business
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• Crop Protection market in 2015 de-grew by 9.6%* over 2014, to reach USD 51.2
bn
• Poor monsoon and El Nino pattern seriously impacted crops in India, Asia and
Latin American countries
• Volume growth was limited by harsh weather conditions and poor farm economics
• Weak crop prices and volatile currencies in several countries affected prices in US
Dollar terms
• Depreciating currencies benefitted growers in Latin America, making their
commodity exports competitive
• Price improvements were limited due to high channel inventories and glyphosate
over capacities
• Elevated stock levels of all major crops, except rice
Industry de-grew by 9.6% due to headwinds from weak commodity
prices, dry weather and volatile currencies
* Source: Philip McDougall
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• UPL’s constant currency revenue growth +18%
• UPL, young growing player in emerging markets,including Brazil
• Growth through New Product Development andinnovative mixtures
• Resistance management portfolio in key targetmarkets like US, Argentina and Brazil
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• Recovery in cotton and rice areas globally; though weaker marketenvironment with lower commodity prices
• Fruits and vegetable segment remains buoyant backed by demand inemerging markets and processing industry
• Currency devaluation makes growers in Brazil and Argentina morecompetitive
• Business recovery from drought in India and other emergingmarkets
Soil SeedsSeed
Treatment
Herbicides Fungicides
Insecticides
Organic Portfolio
Adjacent Technologies
Grains
Storage
Solutions
Post Harvest
Seeds Crop Protection Decco
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Seed & Seedlings treatment
Nursery Stage Transplanting, Vegetative growth & Reproductive stage
Maturity & Post harvest
• Seed treatment products
(Reno, Imigo, Saaf, Pratham, Floreo, Zander)
• Seed Nutrients (Wuxal , Zeba)
• Resistance Inducers (SMN03, Bronya,, Floreo )
• Seedling Treatment (Pratham, Floreo, Zander)
• Resistance Inducers (Bronya)
• Insecticides/Fungicides (Reno, Imigo, Fludi, Glory)
• Pre Emergence Herbicides(Saathi, Audi, Swachh)
• Early Post EmergenceHerbicides (Eros Gold , Eros)
• Granular Insecticides (Umet)• Sheath Blight (SAAF)• Sheath Blight and Blast (SAAF)• Leaf Folders and BPH (Imida
Gold)• Dirty panicle for grain quality
(Glory)
• Fumigation products and services (ALP)
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Seed Treatment Vegetative Growth Reproductive Stage Maturity Stage
S.T & Sowing Crop protection{Plant Health}
Crop protection{Curative}
• Burn down Herbicides (Lifeline, Tarang, Fascinate, Fanate)
• Post emergent Herbicides (Patela, Irish, Blazer, Tricor)
• Fungicides for Rust (Glory)
• Resistance Management solutions (Bronya)
• Fungicides for Rust (Unizeb Gold, Unizeb Glory, Unizeb, Tridium)
• Insecticides for bugs (Lancer Gold)
• Seed treatment products (Reno, Imigo, Saaf)
• Seed Nutrients (Wuxal, SMN03)
• Resistance Inducers (Bronya)
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Herbicide Resistant Weeds UPL Weed Control Program
UPL weed control programs to mitigate spread of weeds resistant to various herbicides in multiple cropping systems
Tricor, Lifeline, Interline, Ultra Blazer, Iris
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Aquatic weeds and algae before application of UPI products
After application of UPI aquatic herbicides
UPL Portfolio: Aquathol
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Reports of resistance in the world
• Benzimidazoles -66 Fungus Species
• Triazoles- 36 Fungus Species
• Strobilurins -25 Fungus Species
• Carboxamides -11 Fungus Species
Unizeb, Penncozeb, Mnazate, Uthane, Saaf ............GLORY
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Soil SeedsSeed
Treatment
Herbicides Fungicides
Insecticides
Organic Portfolio
Adjacent Technologies
Grains
Storage
Solutions
Post Harvest
Seeds Crop Protection Decco
Creating new segments within the value chain
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UPL is the biggest player to service organic farming in Europe
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Control Zeba
• ZEBA absorbs and releases water as neededby plants
– Reduces plant stress caused by heat and limitedwater availability
– Maximizes crop input investments by absorbingand releasing soil nutrients, water-solublefertilizer and chemicals
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ENVIRONMENTIncome Environment
YieldCost
reductionWater
conservation
Reduced number of applications
Reduced losses due to leaching and evaporation
Constant moisture
Improved germination
Availability of nutrients
Less fertilizers
Less nutrients
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FY 20142.5%
FY 20155%
FY 201614%
• Ulala• Atabron• Acephate 97
DF
• Iris• Eros
• Unizeb Gold• Glory• Lifeline• Satellite• Interline
Continue to launch differentiated
combinations / mixtures / label
extensions
Maintain at 15%
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• Farmers need timely adviceto support their crops
• Farmers need farm servicesto enhance cropproductivity
Adarsh Kisan Centre
Adarsh Farm Services
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Digital Farm Advisory Platform
1 mn+ farmers registered in India
• Increased level of interaction with
farmers:
• Adarsh Kisan Centre (AKC)
• Helpline to resolve farmers crop-
related queries / concerns / issues
• Unimart
• Retail stores to provide right agri-
inputs along with right advice
• Adarsh Farm Services (AFS)
• Mechanized Spraying Services on the
field
• Trust +
• Integrated solutions platform for
banana growers in Latam
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UPL, India
Agro Formulations
5,000+
Distributors
Retailers
Farmers
SWAL
3,000+
Distributors
Retailers
Farmers
Agro Technical
50+
National Formulators
Retailers
Farmers
Fumigants
- FCI
- CWC
- SWC’s
- Food Processors
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Product Portfolio
Crop Expertise
Aerial Spray
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Fresh Potato requirement year round
• Harvesting Period – Feb to Mar, -
stored in cold stores.
• Traditional Storage @ 2oC
– Stored for 9 months in cold store.
– Conversion of starch to sugar during storage.
• After removal from storage:
– Increase in sugar content.
– Immediate Sprouting.
– Shrinkage.
– Poor Shelf Life.
Impact of OORJA
• Storage @ 10oC – Energy Savings.
• No conversion of starch to sugar.
• Longer Shelf life
OORJA is applied as a “ Hot Fog” with the
help of recommended fogging machines
Before After
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Cone & Plate viscometer
Free thaw chamber
Innovation center in Ituverave Field Trial stations in India
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BHUPEN DUBEY
Head – Seeds Business
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A global agriculture seeds and technology company.
Committed to:
• Promoting sustainable agriculture through innovative research and technology
• Providing farmers with quality seedsand technology to enhance crops’ valueand bring prosperity to their families
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FORAGES
India, North and South America, Australia
Europe, Africa
RICE
India, Asia
SUNFLOWER
Europe, South America, Asia
CORN
Asia, Africa, South and
North America,
Australia, Europe
VEGETABLES
(Cauliflower, Hot Pepper, Okra, Tomato, Sweet Corn)
India, Asia
GRAIN SORGHUM
North and South AmericaAustralia, Europe, Asia,
Africa
CANOLA
Australia, Africa, South America, Asia, Europe
WHEAT
South and North Australia
SOYBEAN
Brazil
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Increasing global demand for crop production and food shortage
Long – term growth opportunities +
Drought / water and disease constraints
Opportunity for drought tolerant hybrids +
Digital capabilities and technology development
Opportunity to reach out to farmers and adapt new technologies in business
+
Government and regulatory changes
Can have negative or positive impact =
Volatility in commodity prices, currency movements and weather patterns
Diversified geographical mix, impact on seed price and traits value
=
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Customer Centricity
Collaboration &Partnership
Focused Product Portfolio
Differentiation through Innovation
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Dairy industry
need for high crude protein
and high digestibility
forages
Drought recurrences
need genetics which can withstand long dry spells
Short duration
vegetable crops
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• Barenburg, NetherlandsHigh Omega / Protein Grass
Seeds
• BASF, GermanyIMI Sorghum Technology
• Monsanto, USARR Canola
• Don Mario, BrazilSoybean Genetics
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• Market share growth in Mexico, USA and Brazil• Market entry in Russia
Grain Sorghum
• Market development in forages India & SE Asia• Value creation through IMI technology in USA, Argentina and
Australia
Forages
Corn
Canola
Sunflower
Soybean
Vegetables
• Aggressive market entry and growth in Brazil• Portfolio additions with White Corn in Mexico and Africa as well as
temperate corn in USA to generate increased sorghum sales
• Value creation through herbicide tolerant traits and stacks in Australia• Canola market development in India
• Value creation and share growth through Ultra High Oleic hybrids in Ukraine
• Portfolio addition in Brazil to generate increased corn sales
• Geographical expansion of sweet corn, okra, tomatoes and hot peppers
Growth opportunities in crops and regions
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R&D capabilities:
• 16 research stations and 2 biotech centres
• Over 300 environments with testing areas worldwide
• Over 60 years of research in plants genetics
• Germplasm bank consists of:
proprietary developed germplasm
public accessions and wild species
different sources of traits for biotic and abiotic
stresses
• Advanta Seeds hybrids are a suitable carrier of
added value technologies like GMs, chemical seeds
treatments, microbial seeds treatments and many
other potential novel technologies
• Advanta hybrids performance will be one of the
drivers of the successful merger of Advanta and UPL
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Field Crop Diversification and Growth
SORGHUM• Resistance to Sulphonilurias• IMI proprietary technology
CORN• Ear Rot tolerance (Thailand)• Global leverage of Thai program
CANOLA• Novel proprietary herbicide tolerant stacks (TT& RR) leadership• Expansion towards the Canadian market
SUNFLOWER
• UHO proprietary technology for high quality oil• Highstearic high oleic sunflower oil & Advanta proprietary technology• Orobanche and herbicide tolerant stacks
WHEAT• wide range of products in E. Australia• competitive products in W. Australia
RICE• New product launch with biotic stress tolerance (BLB, blast and BPH) • Enhanced quality parameters – Amylose, chalkiness and head rice
VEGETABLES• OKRA – dual virus tolerance - Super okra type • HOT PEPPERS - Value added traits in Red Dry & Asian short dual
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VA
LU
E
TIME
• Strategic acquisitions tobuild global portfolio
• Establish global headquarter and leadership team
• Fully leverage R&Dinnovation pipelinethrough impactful newproduct launches
• New geographies andmarkets expandingglobally like Brazil
• Low cost entry strategy
• Exponential growth byfully leveraged globalplatform
Building the base
2006 – 2015
Fully leverage globalcrop platforms
2016 – 2020
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Merger
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VA
LU
E
TIME
EXPONENTIAL GROWTH
• in line with global
trend
• newer geographies +
cross selling
opportunities
• proprietary access to
distributors and early
engagement with
farmers
• competitive cost
structure
Proprietary product access• Germplasm• Molecular marker and
Disease resistance technology
Strong R&D
Higher customer intimacy
Greater financial bandwidth
Talent and international experience
Low-cost entry to markets
Wider geographical presence
Seeds - future of agriculture value
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Event Timeline
Approval by Boards of both companies and announcement
BSE and NSE approval sought
BSE and NSE approval
Competition Commission approval sought
Application to Jurisdictional High Court
Competition Commission approval
Scheme documents posted to shareholders of both companies
UPL – Shareholders and Creditors Meetings
Advanta – Shareholders and Creditors Meetings
High Court approval
Other required approvals
Transaction completion
90
2 to 3 months
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