Group3- Agriulture.pptx

Agriculture Sector

Presented By: Nirmit Patel Tanisha Sharma Hinal Shah Sayli Joshi Dhruvi Shah Divya Poojary

07 46 55 65 92 117

Introduction Agriculture is the primary source of livelihood for about 58% of India’s population

Indian agriculture sector accounts for 18% of India’s GDP

Inflow of FDI of about $8.57 billion (April 2000- June 2018)

Production trends & key Investments

United Phosphorus Ltd. (UPL)

BUSINESS MARKET ANALYSIS

• Incorporated in 1985 • It has a market capital of Rs.39066.58 crore • Pesticides and agro chemicals

PRODUCT SEGEMENT •

•

•

They operate in three segments: agro chemical, industrial chemicals & traded products Herbicide, Fungicide, Plant Growth Regulator, Soil Conditioner Pesticides Intermediates is the highest raw material cost and Agro chemicals generates the highest revenue

GEOGRAPHIC SEGEMNT

• They have 23 manufacturing sites and have presence in 123 countries

ECOLOGICAL ANALYSIS Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

SWOT - UPL

Strength Strong product portfolio

Weakness

Deep marketing reach

Competitive Market

Better quality control

Higher working capital

Global manufacturing facilities

UPL

Threats

Opportunity Expansion into the countries like brazil & Africa

Unfavorable change in government policies Climate change & draught Lower commodity prices

Future Prospects of UPL • UPL’s buyout of Arysta LifeSciences will potentially throw up $5 billion in combined revenues and $1.2-billion annual EBIDTA • Combined entity will become the fifth largest generic agrochemicals company in the world • Arysta possesses expertise in speciality molecules where UPL is relatively weaker • Integration may help as UPL is strong in manufacturing and Arysta on the marketing side

Future Prospects of UPL • Arysta has reach over Brazil, Africa, the U.S. and Asia, complementing UPL’s businesses • Offers cost synergies using UPL’s strong manufacturing base in India and outsourcing by Arysta • Greater exposure to Africa, China and a few other countries which UPL lacks • Greater economies of scale in marketing and distribution as a merged entity

Financials of UPL Y/E March EPS Current Ratio

2014 9.70 1.73

2015 10.81 1.48

2016 16.47 1.48

2017 4.83 1.88

2018 10.76 1.59

Dividend per share

4

5

5

7

8

Book Value 77.17 per share

82.22

93.69

151.24

156.46

ROCE

18.21

12.96

19.26

7.17

8

0.35

0.35

0.34

0.11

0.1

Debt equity ratio

Recommendations of UPL • Sustained revenue growth – set to Continue • UPL has been expanding its footprint into multiple geographies and enhances its reach through acquiring brands that are reasonably valued and having a payback period of 3-4 years • The management has set an estimated revenue target of $ 4bn in the next 4 years, which if achieved, will set UPL apart from the competition in terms of ROE and ROI • International penetration de – risks UPL’s business model

Recommendations of UPL • Increased focus on per hectare productivity will increase demand for Agrochemicals • The world’s population is estimated to reach 11bn in 2100, posing grave challenges for food supplies. Hence, it is crucial to increase per hectare, productivity to meet food supply that can segment, is expected to benefit proportionately from strong demand for agrochemical. • Buy : At Rs.782.68

Balrampur Chini Mills Ltd. (BCML)

Business

• Incorporated in the year 1975 • It has a Market CAP of Rs.2532.24 Crore

Product segment

• Sugar, molasses, alcohol, Ethanol, bagasse & power • Sugarcane has the highest raw material cost & Sugar generates the highest revenue

Geographic segment

• It has 10 manufacturing units in UP

SWOT- BCML STRENGTH •

Second largest sugar manufacturing company in India huge range of interrelated products Largest capacity in India with 10 sugar factories located in U.P Access to power during off‐season through dual‐fuel power generation facility

• • •

WEAKNESS • • • •

OPPORTUNITY • • •

Increase in Sugar consumption around the world Economic security to the farmer due to more choices of selling his stock High value of by products for down stream industries

Price fluctuation in the Sugar industry Presence only in Uttar Pradesh Sensitive to draught Based on old technology

THREAT • • •

Sugar industry is very volatile Cheap sugar imports are harming the existing sugar mills in India Insecure political framework

Major Highlights BCML Global sugar demand is expected to increase to 192 mn tones by 2021 & 235 mn tones by 2030 compared to 183 mn tons in 2017

Healthy balance sheet-Long term Debt-equity ratio stood at 0.05 as on September 2018

Asia will remain the biggest consumer of sugar, increasing its share of total consumption from around 40% to 45% by 2021

By 2030, India & China will still remain the biggest consumers accounting for nearly 25% of global consumption

Future Prospects of BCML

• By early 2019, India will start exporting sugar to China • Management believes in improvement of sugar recovery • Revision of ethanol prices by the government • The New distillery at Gularia will have a capacity of 160klpd and should commence operations by end of 2019 • Increase in production of power • Investing in the entire ecosystem

13

Financials of BCML Y/E March EPS Current Ratio

Dividend per share Book Value share

ROCE

Debt equity ratio

per

2014 0.15 1.63

2015 -2.36 2.14

2016 4.09 2.28

2017 25.20 3.37

2018 9.68 1.77

0.00

0.00

0.00

2.5

3.5

49.76

46.12

50.28

65.58

69.48

5.27

0.93

12.73

24.18

15.51

1.11

1.43

1.22

1.09

0.54