MACROECONOMIC ANALYSIS

GDP growth 7.4%

Agricultural GDP growth rate 0.3%

Per capita net National Income ₹88,538 (12.3% growth rate)

Average retail inflation 6.3% (declined from 8.9%)

Food inflation 4.8% (declined from 9.5%)

Manufacturing PMI (Sep 2015) 51.2 (decline from 52.3)

Unemployment rate 4.9%

INDIAN AGROCHEMICALS SCENARIO

TAIWAN

CHINA

JAPAN

USA

KOREA

FRANCE UKIN

DIA0

4

8

12

1617

13 12

7 75 5

0.6

PER CAPITA CONSUMPTION OF PESTICIDES (KG/HA)

Crop protection chemicals accounts for 2% of the total chemicals market in India

Industry size-21000 crores (50% exports)

India due to its inherent strength of low-cost manufacturing and qualified low-cost manpower is a net exporter of pesticides to countries such as USA and some European and African countries

Consumption of crop protection products in India is among the lowest in the world

low consumption in India are low purchasing power of farmers, lack of awareness among farmers, limited reach and lower accessibility of products provides immense opportunity for crop protection to grow in India *Data compiled from FICCI AGROCHEM REPORTS

MICROECONOMIC ANALYSIS

Agriculture Decrease in production due to erratic rains and market manipulation

Raw materials Increase in price of raw materials

Government Subsidy Government provides pesticides to farmers at subsidized rates

Commodity prices Highly volatile and declining

Substitutes Rising sale of spuriouspesticides and spiked bio-pesticides

Tax free import on R&D equipment

5% of export earnings

Custom duty on Import of raw materials

Reduced in 2015 budget

REVENUES BY GEOGRAPHY

21%

27%

14%

20%

INDIA LATIN AMERICAEUROPE REST OF THE WORLDNORTH AMERICA

Incorporated on January 2, 1985 with the

name Vishwanath Commercials Ltd.

In September 30, 2003, the name of the

company was changed to United Phosphorus

Ltd. UPL has 23 manufacturing sites, which

includes nine in India, four in France and two in Spain.

UPL operates in three segments :

1.Agrochemicals 2.Industrial Chemicals 3.Chemical Intermediates

COMPETITOR ANALYSIS

2014-15 2013-14 2012-130

1000

2000

3000

4000

5000

6000

Turnover in Cr

UPL Ltd PI Industries Rallis India

STRENGHTS  Operates through 23 manufacturing sites across the

world with world class technology and quality control facilities to aid in the production of red phosphorus.

Year-on-year growth of revenue 

Customer base in more than 123 countries and operations in every continent speak volumes of the company’s strong network and market reach. 

Strong applied R&D capabilities in every continent they operate in.

The Company offers a range of goods that includes insecticides, fungicides, fumigants, herbicides and rodenticides

WEAKNESS The company has been unable to pass on the benefits of

costs to the end-users due to fluctuations in the raw material prices

  Seasonal agricultural demand is affecting revenue growth and cash flows

OPPORTUNITIES  Innovative technologies in agricultural sector are

aiding the company’s R&D efforts as it brings out newer methods and scenarios of fertilizer products

Seed development has received a big boost due to WTO and UN approvals across the world.

THREATS Genetically Modified (GM) crops are a threat to the

fertilizer companies due to their adaptability and long shelf-life.

Environmental agencies keep scrutinizing the company’s manufacturing processes

CAPACITY UTILIZATION

UPL commissioned 50 MW equivalent coal-fired boiler in record time and cost (at Rs88 crore in 15 months) in jhagadia district of gujarat.

UPL also completed a new herbicide plant in a record 11 months (industry benchmark: nearly 36 months) to enhance capacity and raise the level of our customer service.

This will save nearly Rs75 crore in total annual energy bills

CASH FLOW ANALYSIS

Operating Activities Investing Activities Financing Activities

-600

-400

-200

0

200

400

600

Cash flow

UPL Ltd PI Industries Rallis India

R&D

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

0200

400600

8001000

12001400

1600

1344

1319

1241

1022

1072

1291

PRODUCT POTFOLIO

PRODUCT POT-FOLIO

ANALYSIS

Company spends 2% of turnover in R&D

The Company launched 55 products in the last two years, emphasizing strategic effectiveness

UPL has had 4965 registrations in 2014-15

Invested extensively in research to create a pipeline of globally patented products. The result: 388 Patents filed;124 Patents granted

The Company’s innovation index (measures the revenue contribution of products launched during the past four years) increased from 2.5% in 2013-14 to 5% in 2014-15

PROFITABILITY ANALYSIS

FY 11 FY 12 FY 13 FY 14 FY 150.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

COMMENTARY

During FY 15, all the operating subsidiaries have performed very well.

There has been rapid progress in the companies acquired in the recent past, such as Cerexagri, Agchem, Riceco, UPL do Brasil, Dva Agro etc.

UPL will focus more on organic growth which will help company to increase its topline and market share while keeping the capital

employed and debt under check

No major impact of seasonality on the UPL’s business performance due to better Geographical-mix

EARNINGS PER SHARE

EPS0

5

10

15

20

25

30

12.08 12.03

17.12

21.59

26.69

FY11FY12FY13FY14FY15

D/E Interest coverage0

0.5

1

1.5

2

2.5

3

3.5

4

FY11FY12FY13FY14FY15

COMMENTS

UPL has rupee & foreign currency loans

50% of its loans is in rupee terms and remaining 50% in Foreign currency

Interest rate cycle in India is in declining phase

The company paid finance cost of Rs.486 cr in FY14 as compared to Rs.429 cr in FY13

UPL will have to pay less interest cost which will improve its interest coverage ratio

Deleveraging its balance sheet which will result in improved bottom-line and EPS growth in the coming quarters

DIVERSIFICATION

Product diversification

Entered seeds market through its previous acquisition of Dutch company Advanta

Widened its formulations portfolio from 1,319 to 1,344 to cover all weather patterns

Company has extended beyond agrochemicals and diversified its seed treatment solutions and post-harvest solutions

Market diversification

UPL acquired 40% stake in Brazilian firm Sinagro group

Bought Cerexagri which has a presence in US and Europe

AGRICULTURE DEVELOPMENT Adoption of systemic rice intensification(SRI) 270 famers benefitted across five villages in dang

district UPL aims bring in 1,100 farmers under the ambit of

SRI over the next two years to enhance paddy productivity in the dang district

Farming is best learned handson and at UPL we do that at the Farmers’ Training School (FTS) at Vikram Farm, Naholi

HEALTH

UPL organised two general health camps covering areas like general health, eye and dental care were organised in association with the Haria L.G. Rotary Hospital, Vapi

Tricycles were provided to the differently-abled so that they could pursue active and independent lifestyles

EMPLOYMENT UPL has formed the self-help group (Jai Yogeshwar

Mahila Mandal) to build the capacity of tribal women via an entrepreneurial skill development programme on artificial jewelry making

Sewa Rural is a voluntary development organisation involved in health and development activities in rural

tribal areas of South Gujarat at Jhagadia since 1980.

EDUCATION

To encourage sports and recreation activities in the schools, the WAU volunteers participated with seven schools from six villages of Mandava cluster under Ankleshwar taluka

UPL provided need-based educational items like stationery kits, examination kits along with school bags and black boards benefitting around 40 children.

CSR

DIVIDENDS

Announcement Date Dividend (%) Remarks

27-04-15 250.00 Rs.5.00 per share

25-04-14 200.00 Rs.4.00 per share

25-04-13 125.00 Rs.2.50 per share

30-04-12 25.00 Rs.0.50 per share

52 WEEK HIGH/LOW

FUTURE OUTLOOK

2010 2015 2030 20500

0.050.1

0.150.2

0.250.3

0.350.4

0.450.5

DEVELOPED WORLD DEVELOPING

COMMENTS India has 190 Mn hectares of gross cultivated

area and the scope for bringing new areas under cultivation is severely limited. Available arable land per capita has been reducing globally and is expected to reduce further .

The pressure is therefore to increase yield per hectare which can be achieved through increased usage of agrochemicals.

Average productivity in India stands at 2MT/Ha as compared to 6 MT/Ha in USA and world average is 3MT/Ha

This provides an immense opportunity for UPL to deepen its access into markets in India and abroad and widen its portfolio by providing holistic services to farmers .

ARABLE LAND PER CAPITA (ha)

*Data taken from NABARD Data Bank,MOA, GOI

WHY YOU SHOULD INVEST?

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 USD 4 bn 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

Increased focus on per hectare productivity will increase demand for Agrochemicals:

The world’s population is estimated to reach 11 bn in 2100, posing grave challenges for food supplies. Hence, it is crucial to increase per hectare productivity to meet food supply that can be achieved through use of agrochemicals. UPL, being one of the largest players in the segment, is expected to benefit proportionately from strong demand for agrochemical