R&D Infrastructure and Team – Chopanki R&D Equivalent to International Standards ▪ Well-designed instrument and process lab Team ▪ International exposure to R&D scientists • Experienced and dedicated scientist in R&D ▪ Participation in National and International • Team of 12 employees at Chopanki R&D centre conference • Doctorate – 2 ▪ Patent granted for import substitute products like • Post Graduate – 6 Imidacloprid and Acetamiprid, MNIO and PMIDA • Graduates - 4 ▪ All lab procedures are carried out as per GLP guidelines ▪ Pre-inspection audit for GLP recognition done R&D Equipment • Well furnished and best- equipped R&D laboratory with all safety measures • LC-MS: 1, HPLC: 3, GC – MS : 1, GLC :3 , Prep-HPLC : 1, FTIR: 1, UV-visible spectrophotometer: 1 • R&D is well equipped with all utilities. We have 6 fumehoods where 12 reactions can be carried out simultaneously 16 Capital Market Presentation 2019
Certifications and Recognitions – Chopanki Recognitions Certification Framework • Recognized by DSIR: Since2005 Quality Management ISO 9001:2015 • IIL In-House R&D Centre System recognized by DSIR, Ministry of Science and Technology, New Delhi • Environment NABL Accreditation of QC Labs at ISO 14001:2015 Management System Chopanki Occupational Health & ISO 45001: 2018 Safety Management System 17 Capital Market Presentation 2019
Process of Scaling Up from Lab to Commercial In House R&D Labs for Testing and Commercializing Potential Products at a Low Cost and Shorter Turnaround Time Lab Scale Pilot Plant Commercial Kilo Lab Scale Scale • Gram level 18 Capital Market Presentation 2019
Achievements – Chopanki Achievements Strategy for Process Improvement Products Developed Commercialized Insecticides 26 17 1. Quality Improvement Herbicides 16 11 2. Remove Cumbersome Process Fungicides 9 3 3. Removal of Multiple Solvents Total 51 31 4. Make Processes - Simple, Shorter and Cost- Effective Key Technical Products Developed Contributing to Maharatna Technicals Chlorpyrifos Thiamethoxam Diafenthiuron Acetamiprid Way Forward Lethal Identified new products to meet farmer Range of Bheema Hercules Hercules requirements and 15 products are under Products development Brands Bheema Super Logo/ Gama Sharp Arrow 19 Capital Market Presentation 2019
2.2 R&D - Dahej Mr. Shailesh Patel DGM – R&D
R&D Objectives and Capabilities – Dahej Key Objectives Capabilities ▪ ▪ Process improvement of existing products with Design and Development respect to cost ▪ Project approval to commercialization ▪ To develop the process for new products ▪ Product registration (CIB/Export) /intermediates in terms of competitive cost, energy efficient and environmental friendly to stay ahead of farmer’s requirement and market competition ▪ Formulation development ▪ Backward integration ▪ Contribute for safe and eco friendly practices in agriculture ▪ Adopt and implement new research technology Unit Process Reduction Pressure (Using Pd/C, reaction Phosgenation Phosphorus / Friedel-Craft Telomerizatio Halogenation Rany Ni, (Hydrolysis, (Using Diazotization Sulfur Grignard akn/acn n / Cyclization (Cl2n, Br2n, Fn) Sodium Hydrogenatio Triphosgene) chemistry borohydride) n) 21 Capital Market Presentation 2019
R&D Infrastructure and Team – Dahej Dahej R&D Overview ▪ Established in 2014 ▪ Well equipped with latest technology and facility R&D Equipment ▪ New molecules development, process scale up and • 2 Labs with fume hoods and all required facilities. technology transfer to plant ▪ Impurities synthesis and characterization • Separate dedicated ADL facility with GC, HPLC etc. ▪ Plant trouble shooting/support ▪ Five batch analysis as per GLP guidelines Team • Team of 10 employees at Dahej R&D centre • Doctorate – 1 • Post Graduate – 7 • Others - 2 Capital Market Presentation 2019
Backward Integration – Dahej Objectives: 1. Independency of the key raw materials procurement 2. Cost benefits: Reduce the cost of purchasing the raw materials. Will also result in reduction of wastages, transport costs and other costs 3. Increased control: Control the supply chain process in a more efficient manner Six intermediaries developed to get independency of the key raw materials and realize cost benefits 23 Capital Market Presentation 2019
Achievements – Dahej Technicals Formulations for Exports Products Developed Commercialized Products Developed Commercialized Insecticides 11 8 Insecticides 4 2 Herbicides 5 4 Herbicides 7 4 Total 16 12 Fungicides 2 2 Total 13 8 Key Products Developed Contributing to Maharatna Key Products Developed Contributing to Maharatna Technicals Imazethapyr Bispyribac Sodium Glyphosate Pretilachlor Selector Green Label Hijack Racer Brands Hijack Super Super Racer Flight 71 24 Capital Market Presentation 2019
2.3 R&D - Biological and Patents Dr. LC Rohela Sr. GM - QA
Why Biologicals? ▪ Modern science is 200 years old while nature science is 3 billion years old ▪ Nature science wonders- Sequoia tree 100ft wide, 100ft tall withstand 100 tons of load in structure made of cellulose - strength is more than steel ▪ Integrated Crop Management (ICM) and Soil health - Low toxicity to humans and nontarget insects Modern science following nature science path: • Biopolymers Material science • Penicillin to cefixime etc., Taxol to Docetaxil, Medicine Neutraceuticals- Plant Derived • Herbal blends Cosmetics • Pyrethin to synthetic pyrethroids Agriculture • Nerotoxins to insecticides Recent trends – Biosimilar molecules in medicines, biosimilar peptides derived from spider venom as effective as agrochemicals with zero harvest waiting period Is On A Rising Trend 26 Capital Market Presentation 2019
Global Bio-Control Market Global Market Potential – USD millions 1,500 500 3,000 100 1993 1999 2009 2012 2014 2015 2020 2005 2,000 4,000 250 1,000 Future Market Drivers • Fewer new synthetic crop protection active ingredients will emerge - too expensive • Improved market access for bio pesticides and bio stimulants • Federal registration guideline for bio stimulants in EU & USA will make market more attractive • ICM + Soil health • MNC’s in last 4 years have acquired Agri biological products manufacturing companies 27 Capital Market Presentation 2019
Biological Facility Overview Lab Facility: Aseptic lab, autoclaves , microscopes, laminar air flow, incubator, cryo centrifuge Location: Shamli, Uttar Pradesh 33 Cr Biological Team: Doctorate – 4 , Post Graduate - 1 , Graduate - 3 Biological Revenue FY2019 Total Product range • Biofertilizer, Organic Manure, Soil Enrichment and Biostimulants • Projected reduction in chemical fertilizers by 25% Business Potential • Current CAGR 10-15% in global Agri bio business 28 Capital Market Presentation 2019
IIL Biological Journey… Long Way to Go… Products Commercialized Products in Pipeline MYCORAJA 1. Kayakalp PRO : Kayakalp application was on farm • Vascular Arbuscular Mycorrhizae based fungal formulation fermentation for 6 days. Kayakalp Pro designed to 12 hrs on farm fermentation. Capacity for soil rejuvenation and controlling soil borne PRIME GOLD pathogens • A biologically fortified PGR 2. Zinc Solubilising Bacteria : Under launching, MILSTIM capable of fortifying produce with Zinc and will • A liquid organic manure support combating diabetes ROOT BEAD 3. Glomus Arbuscular Mycorrhizae : Production by • For increasing root nodule formulation in pulses root organ culture technique. Developing roots in jars in aspetic conditions with mycorrhizae. Very good activity for transfer of nutrients to KAYAKALP roots. Good export potential to USA, EU, • A consortia of micro organisms for soil enrichment . It has potential Australia for rejuvenating soil and has the capacity to protect plants from soil borne pathogens 29 Capital Market Presentation 2019
IIL Formulation Products- Agrochemicals • Design Of Formulation No. Of Formulations • Activity by contact, systemic or stomach • Single or multiple activities • Threats Under Commercialized • Hydrophobic agrochemical, 50-250g to spread over 1 acre in Development terms of land and 20-30 acres when calculated on leaf area in 1 Single AI 11 1 acre • Uniform distribution up to target Combinations 4 19 • Synergism establishment in case of combinations • Solutions – Micronization, surface chemistry aided by suitably Tank Mix 3 2 designed surfactants. Tank mix adjuvants Adjuvants • Types Of Formulations- EC/SC/WP/WG/CGR/SC/CS/EW/SE/ ME Development Support • Developing synergistic combination formulations performing multiple actions through different modes of action with increased bio efficacy duly supported by bio- efficacy team • New generation formulation in SC/SE/CS/SG/ME form which are farmer friendly 30 Capital Market Presentation 2019
Patents Intellectual property of developed innovative products / process preserved through patents Patentability Search : Freedom to Operate (FTO) Patent Validity Search : Patent (Infringement search) : • Novelty, inventive • To gauge the validity Application step • To assess any possible of the claims in a Process modification to avoid granted patent infringement 7 Biotech Formulation Synthesis New A.I. Patents Granted Patents Granted - 3 4 - 22 Patents due for Grant 1 12 1 8 Patents Pending In-house: Researchers + Patent Attorney Team External Support: IPR Law firms 31 Capital Market Presentation 2019
Quality Assurance Evaluation Criteria Aim – ✓ Standard operating procedure ✓ QC-RM/PM/FG Target – Adherence to quality policy ✓ Market complaints ✓ Corrective Action Preventive Action (CAPA) Advantage – Farmer’s satisfaction and brand development Well Defined Process Specs of inputs - Plant Commercial & Machinery, Product Product Lab Scale Bio Efficacy Quality Production Packing Activity Design Preparation Evaluation Manual Methodology material Finished goods 32 Capital Market Presentation 2019
2.4 R&D - OAT & IIL India Mr. Kazuya Kishimoto MD & CEO OAT & IIL India Laboratories
Indian Experience Indian Experience on R&D Relationship with IIL and Experience ❖ IIL’s long term vision for Research is a major ❖ India is suitable for R&D with nearly all crops and seasons reason for association ❖ Man-power is good and available reasonably ❖ OAT and IIL will bring the new chemistry with least ❖ Efficacy testing is possible round the year possible cost ❖ Easy to do field trails due to IIL’s pan -India presence ❖ Relationship with IIL has been great in these years and look forward to work on many more ventures ❖ Management is aggressive and fast decision is one of core strength’s 34 Capital Market Presentation 2019
OAT & IIL India Vision ❖ Becoming a first-class research & development centre, which continuously invent/develop new molecules to contribute to the world crop protection markets (including India & Japan) ❖ Will target to be a first company to invent an "Invent in India“ first pesticide History ❖ Established on 6th March, 2013 with approximately 50 employees, consisting of chemists/biologists and supporting staffs. ❖ 4 chemistry laboratories ❖ Total number is increased to 60 as on Nov, 2019 35 Capital Market Presentation 2019
2.5 R&D - OAT & IIL India Dr. Kallolmay Biswas GM – R&D OAT & IIL India Laboratories
OAT & IIL Journey Japan India Joint Venture Company 2013 2014 2016 2018 2019 • Establishment • Inauguration • Start-up CRO • Expansion of • Opening of a of OIL (OAT& of R&D centre Business existing green new synthesis IIL Joint house laboratory Venture) facilities • Start-up of a new formulation plant 37 Capital Market Presentation 2019
Mission Mission Invention at R&D Centre ❖ First time, a Japanese company established such ❖ Contribute to sound crop production through novel facility in the field of agro-chemicals in India sophisticated crop protection agents and support the rich diet and health of people ❖ Approved by DSIR, Ministry of Science and ❖ Technology Creation of new agrochemicals with high safety to mammals, animals and non-target organisms and no ❖ 45+ scientists are conducting research impact to environment ❖ Lead by renowned scientist with more than 20 ❖ The residue of this product will be insignificant so that the year of experiences in the field of agrochemicals crop can be used for consumption even after one day of ❖ We have 5 Japanese leading the R&D centre spray 38 Capital Market Presentation 2019
Synthesis and Biology Lab West Building - Synthesis Lab East Building - Biology Lab 39 Capital Market Presentation 2019
Invention at R&D Centre Laboratories Synthesis Analytical Biological Equipped with latest machines and Ultra modern green houses to conduct equipment like NMR and UPLC-MS to effective in-house testing 4 synthesis laboratories analyze and characterize new Breeding rooms, bio-assay rooms and molecules spray cabinets 40 Capital Market Presentation 2019
New Formulation Facility - Chopanki, Rajasthan Formulation Plant Chaperone Sodium Para - Nitrophenolate 0.3% SL • Plant Growth Regulator (PGR) which effects various stages of development of plants • Stimulation of activity of enzymes resulting in faster cytoplasmic streaming, more efficient photosynthesis and mineral uptake Advantages: • Enhances germination and rooting Way Forward • Stimulates Vegetative growth and Flower bud development ▪ Develop new generation products and new • Accelerates Pollen germination generation formulations • Improves health as well as quality of crops ▪ The flexible business model has enabled us to deliver • Resulting in higher yield which gives more profit to farmers good outcomes in a relatively short period of time ▪ The team is now concentrating on cost reduction, customer friendly and environment safe products 41 Capital Market Presentation 2019
3. Regulatory, Market Development and Manufacturing Mr. Bhupendra Tiwari Mr. Sanjay Vats Mr. Sanjay Singh Head Manufacturing Vice President GM – Market Development
3.1 Regulatory Mr. Sanjay Vats Vice President
Regulatory Environment in India Regulatory Environment in India Registration Process 1 ❖ India is one of the most dynamic generic pesticide Registration is done under various sections of manufacturers in world and is fourth largest pesticide Insecticides Act, 1968 manufacturer after China, USA and Japan Application for the registration is prepared in ❖ Use of pesticides in India is regulated by the 2 Form-I and submitted online Insecticides Act, 1968 and Rules, 1971 • All requisite data (Chemistry, Toxicology, Bio-efficacy and Packaging) as per approved latest guidelines of CIB & RC is submitted ❖ All pesticides (Insecticides, Fungicides, Herbicides, Public Health insecticides) must be registered with Insecticides Board & Registration Committee (CIB & 3 Scrutiny of submitted data by concerned RC) scientists/technical officers to check data conformity 4 Registration approval by the Registration Committee 44 Capital Market Presentation 2019
Registration Categories and Challenges Registration Categories and Timeframe Data generation: 2.5 - 3 Years 5-6 Original First-time 9 (3) CIB & RC: 2-3 Years Years Registration manufactured/imported in India Me-too Technical: 2.5 – 3 Years 2.5-3 9 (4) Already registered pesticides Registration Formulations: 1-1.5 Years Years Registration Process Challenges Dedicated Team to Speed Up the Process Team ❖ Immense data requirement for registering new product in India • 6 experienced members specialized in different streams ❖ Slow process to scrutinise the application resulting and following up with regulatory departments: delay in registration approval • Toxicology • Chemistry • Bio Efficacy • Packaging 45 Capital Market Presentation 2019
IIL 9(3) Registrations IIL 9(3) Registrations Technicals Formulations 2 10 Name of the Product Product Category Brand Name Bispyribac Sodium Technical 95% Min. Technical - Bispyribac Sodium 10% SC Formulation Green Label Imazethapyr Technical 93% Min Technical - Bifenthrin 8%SC Formulation To be launched Metsulfuron Methyl 20%WG Formulation To be launched Diafenthiuron 40.1% + Acetamiprid 3.9%WP Formulation Hercules Emamectin Benzoate 3% + Thiamethoxam 12%WG Formulation Encounter Hexaconazole 4% + Carbandazim 16%SC Formulation Sofia Buprofezin 22% + Fipronil 3%SC Formulation Aikido Bifenthrin 3% + Chlorpyriphos 30%EC Formulation Lethal Gold Bifenthrin 8.8%CS Formulation Rockstar Cyenopyrafen 30%SC Formulation Kunoichi 46 Capital Market Presentation 2019
IIL Number of Registrations ❖ Category 9(3) : 12 registration certificates approved by CIB & RC ❖ Category 9(4) : 47 technical and 225 of formulation registration certificates approved by CIB & RC Year-wise Registration Registration Pipeline Year 9(3) Registrations 9(4) Registrations 9(3) Registrations 9(4) Registrations 2019-20 02 12 22 06 2018-19 05 29 2017-18 02 30 IIL strategic focus on developing newer 2016-17 02 26 technicals and products which can be registered 2015-16 - 35 under 9 (3) category and can contribute towards growth of Maharatna Products Upto 2014 01 140 47 Capital Market Presentation 2019
3.2 Market Development Mr. Sanjay Singh GM – Market Development
Tractor Brand – Farmer’s Choice A trust of decades Umbrella Brand for end to end solutions Farmers’ first choice pan India Symbol of Confidence 49 Capital Market Presentation 2019
Product Selection & Offering Continuous process from product identification to commercialization and offer complete solution to farmers Market Registration • Launch product • Identification of • Look forward to Research in the Market crop specific International • Educate farmers • Official data farmers tie-up • Market research about its problems generation to on current • In-house R & D- application and register the solutions • Weed, Insect, product benefits products by available Pest & Diseases selection Registration team • Market size of Problem Find Solution opportunities Commercialization Identification • In-house R & D- product selection • Data generation in different agro- climatic zone vis a vis with current solution to identify the bio-efficacy superiority- Involvement of national and state level team • Replications from trials plot to pilot plot to reconfirm the findings 50 Capital Market Presentation 2019
Global Partners and Achievements Nissan, Japan Marketing Tie up for specialty products Fungicide PULSOR (2012), Selective Herbicide HAKAMA (2012) and Miticide KUNOICHI (Oct 2019) (All figures in Rs. Crore) Pulsor Hakama Kunoichi 100.0 100.0 60.0 44.4 26.0 14.0 7.8 5.0 FY13 H1FY20 FY23E FY20E FY23E FY13 H1FY20 FY23E 1 New combination to be launched 1 New variant and 3 New combinations to be launched * Projections are based on company internal estimates 51 51 Capital Market Presentation 2019
Global Partners and Achievements OAT Agrio, Japan Nihon, Japan JV to set up a dedicated R&D Tie up for SUZUKA Centre in India to invent new (Flubendiamide) (2016) AIKIDO agrochemical molecules. (2018) & HAKKO (Buprofezin) PGR ROOT BEAD (2017) (2016) PGR CHAPERONE (Dec 2019) Momentive, USA AMVAC, USA Tie up with MOMENTIVE Technical Collaboration for Performance Material INC, USA for manufacturing and marketing AGRO SPRED MAX (2016) for of THIMET (2006) silicone based super spreader & NUVAN (2012) 52 52 Capital Market Presentation 2019
International Tie-ups and Timeline 2006 2012 2012 2012 2016 • AGRO SPRED MAX • THIMET • NUVAN • HAKAMA • PULSOR (Super Spreader) (Insecticide) (Insecticide) (Herbicide) (Fungicide) Momentive, AMVAC, AMVAC, Nissan, Nissan, USA USA USA Japan Japan 2018 2016 2016 2017 2019 2019 • AIKIDO • SUZUKA • HAKKO • ROOT • KUNOICHI • CHAPERONE (Insecticide) (Insecticide) (Insecticide) BEAD (Miticide) (PGR) Nihon, Nihon, Nihon, (PGR) Nissan, OAT Agrio, Japan Japan Japan OAT Agrio, Japan Japan JAPAN (Oct. 2019) (Dec. 2019) 53 Capital Market Presentation 2019
Innovative Technology – Select Success Stories Root bead : Nodule enhancer in pulse crops A unique product for rice sheath blight-Best solution Pulsor : available in India Hakama : Strong graminicide Agrospred Max : A silicon based spreading agent- need for the farmers A strongest miticide from Nissan kills all the stages of Kunoichi : mites including eggs. A promising product for cotton to control white fly- Hercules : most damaging pest A perfect product for simultaneous solution of Encounter : Loopers and Tea Mosqito bug in tea Established as the first spray of crop protection Sofia : against various diseases Many more examples are the success stories of IIL and the journey continues… 54 Capital Market Presentation 2019
Key Products – Sales and Forecasts (All figures in Rs. Crore) Sofia Hercules 100.0 50.0 32.2 14.7 13.8 11.3 FY19 H1FY20 FY23E FY19 H1FY20 FY23E Encounter Lethal Gold 50.0 50.0 15.6 6.2 6.0 FY19 H1FY20 FY23E FY20E FY23E * Projections are based on company internal estimates 55 Capital Market Presentation 2019
Market Development – Structure and Manpower North Zone Pay Roll : 18 TPR : 100-150 Team • Head Office - Delhi • H.O. Market Development Team - 5 • Network Distributed in Zones: West Zone • North, East, South, West Pay Roll : 21 • Market Development Team: TPR : 150-200 • Pay Roll: 72 East Zone • Third Party Roll: 600-850 Pay Roll : 10 TPR : 150-200 South Zone Pay Roll : 23 TPR : 200-300 56 Capital Market Presentation 2019
Market Development Activities Demonstrations: Crops vs Pest Specific Field Days : Seeing & Believing Farmer Meetings: Solution for specific problems Mega Farmer Meetings: Crop solution 57 Capital Market Presentation 2019
Market Development Activities Intensive Consumer Awareness Program Dealers Training Program Market Development Activities & Large Farmer Contact Mega Farmer Group A V Van Balloon Total Farmers Demo Field Days Meeting Meetings Meetings Campaign Show contact Total 750+ 1,000+ 20,000+ 6,500+ 5,000+ 2,500+ 250+ 20+ Lakhs Engaged with 20+ lakh farmers through Market Development Activities & Farmer Contact Initiative 58 Capital Market Presentation 2019
Market Development Activities Mass Media Campaign: News Paper, Radio and TV campaign Social Media: WhatsApp groups of Farmers across country Android App and WhatsApp Group for Farmers and Dealers for product information 59 Capital Market Presentation 2019
3.3 Manufacturing Mr. Bhupendra Tiwari Head Manufacturing
Manufacturing Sites – Formulations Unit 4: Samba, J&K Unit 1: Chopanki, Rajasthan Unit 5: Udhampur, J&K Unit 2: Chopanki, Rajasthan Unit 3: Dahej, Gujarat 61 Capital Market Presentation 2019
Manufacturing Capacity and Formulations Aggregate Installed Capacity New Generation Formulations ❖ New generation formulations are effective, safer, 19,400 KLPA easier to handle and environment friendly Liquid Formulation Water Dispersible Granules Suspension Concentrate 75,750 MTPA (WG) (SC) Granules Formulation 18,770 MTPA Microemulsion Concentrated Emulsion (CE) Powder Formulation (ME) 13,800 MTPA Controlled Release Suspo-emulsion Formulation Technical Garde Formulation (SE) (CR) 62 Capital Market Presentation 2019
Manufacturing Capabilities – Formulations Automation Quality Check Laboratory ❖ All factory sites are having well established test lab ❖ Most of the plants are having automation in with ultra modern facilities and experienced chemists formulation and packaging to check ❖ Raw materials Automatic formulation and packing lines for powder, ❖ Intermediates granules and liquid products ❖ Finish goods Aim ❖ Packing materials ❖ Environmental samples ❖ NABL Accreditation at Chopanki 63 Capital Market Presentation 2019
Manufacturing Sites – Technicals Unit 1: Unit 2: Chopanki, Rajasthan Dahej, Gujarat (Technical Production started in 2007) (Technical Production started in 2011) Aggregate Installed Capacity 13,800 MTPA Technical Garde 64 Capital Market Presentation 2019
Manufacturing Capabilities – Technicals Characteristics ▪ Multi-products plant and multipurpose lines ▪ State of art Effluent Treatment facility ▪ Self dependent in utilities ▪ Trained safety team with training facility ▪ Backward integration for products ▪ Higher capacity utilization ▪ Independent quality control ▪ Efficient regulatory and technical team ▪ Remarkable R&D support for process improvement, ▪ Due to backward integration less dependency on validation of new products & innovative ideas suppliers ▪ Adaptability of latest technology in term of cost & ▪ Low site operating cost due to expansion on environment friendliness same site Team and Infrastructure Chopanki Dahej • Regular Employee : 100 • Regular Employee : 300 • Contractual : 150 • Contractual : 300 • Total area : 50 Acre 65 Capital Market Presentation 2019
Products Manufactured Insecticide & Fungicide Plant - Dahej Herbicide Plant - Dahej Product Brand Product Brand Atrazine Strike Chlorpyrifos Lethal Range of Products Pretilachlor Super Racer, Racer Cartap hydrochloride Indan Metribuzin Anchor Thiophanate Methyl Prism Sulfosulfuron Kaiser Diafenthiuron Hercules, Logo/ Gama Force 11 Tricyclazole Imazethapyr Selector Acetamiprid Hercules, Sharp Bispyribac sodium Green Label Diuron Duron Insecticide & Fungicide Plant - Chopanki Clodinafop propargyl Omega Cloquintocet-mexyl - Product Brand Lambda Cyhalothrin Bravo, Metacil Capacity Expansion Plans To Manufacture Technicals Bifenthrin Super Star, Lethal Gold ❖ Target to add 5 new technical in 2020 Arrow, Bheema, Bheema Thiamethoxam Super, Encounter ❖ Target to backward integrate intermediates for Coded Fungicide Fungicide for CRAMs three technicals 66 Capital Market Presentation 2019
Expansion and Growth Plans Backward Integration Plan at Dahej and Chopanki Setting up “SEZ” unit at Dahej ▪ Developed land is readily available for expansion ▪ We are coming with export oriented unit at SEZ Dahej for formulation of Insecticides & herbicides ▪ Due to geographical location of Dahej, logistics & easy ▪ Production is expected to commence in February 2020 availability of raw material will help in cost reduction as compared to other part of India ▪ This will enable us to multiplying our exports and meet ▪ Gearing of ourselves to meet future demands of new our FY2023 targets customers and enhance overall profitability Advantages Advantages ▪ Lower dependency on supplier ▪ 10-year tax holiday in a block of the first 20 years ▪ Low manufacturing cost of finished products ▪ Exemption from duties on all imports for project development ▪ Reduction in overhead cost per tonne ▪ Exemption from GST on domestic sourcing of capital ▪ Optimum utilisation of existing utilities goods for project ▪ Better control on process ▪ Exemption from import duty, GST and other taxes ▪ Lower inventory build-up and shorter working capital cycle 67 Capital Market Presentation 2019
4. Sales & Marketing Mr. Shrikant Satwe Dr. Arun Kohli Mr. VK Garg Head - International Vice President – Vice President Business Institutional Sales
4.1 Sales & Marketing – Domestic Sales Mr. VK Garg Vice President
Agricultural Production vs Pesticides Consumption “ FARMERS WAS THE FIRST SOCIAL PERSON ON EARTH” World rank in Agriculture Pesticide Use Number of Pesticide Country Agriculture Production ($ bn) (tons, 2017) molecules registered Production 1 978 1,763,000 681 China 2 394 52,750 282 India 3 269 362,421 467 EU 4 164 407,779 481 USA 7 81 377,176 477 Brazil 9 58 52,248 583 Japan 13 41 35,287 364 Thailand 17 37 63,416 561 Australia 21 32 196,009 414 Argentina Important Observations: • India, the second largest agricultural producer, uses much less pesticides both in volume and in variety • “Indian farmers use excessive pesticides” is a mischievous propaganda by foreign funded environmental activists to malign Indian agriculture in the international trade Source: Crop Care Federation of India 70 Capital Market Presentation 2019
Region-wise Pesticides Ratio REGION 2002 2018 REMARKS IIL Share in B2c Market Share REGION Sales 2018-19 Generic dominant and 2018-19 East Zone 13% 20% fast-growing market East Zone 27% 6% Combination of Generic & West Zone 20% 25 % Research and fast- growing Market West Zone 22% 5% North Research dominant and 30 % 25% Zone growing in Value North Zone 23% 6% Combination of Generic & South 37 % 30% Research And growing in South Zone 28% 5% Zone value IIL presence is well diversified across states and zones 71 Capital Market Presentation 2019
Sales Team & Strategy Strategy to move to Blue Ocean Team Farmer Engagement for the Product Launch Designation Strength Engaging farmers and Vice President 4 channel partners from the initial trials Marketing Manager 2 Zonal manager 7 Regional Manager 38 Collecting the feedbacks Working with the farmers and maintaining the data at every stage of product Area Manager 54 for next season application Sales Executive 43 Sales Officer 115 Sales Representative 193 Development team 72 Continuous recall by PoPs, Showing results AV vans, Electronic media practically to farmers by and digital campaigns demos 500 + Team with 600-850 TPR 72 Capital Market Presentation 2019
IIL Brand Business Strength ❖ Farmer centric approach ❖ Strong Brand Image and Recall o Old brands: Lethal, Lethal Super, Thimet, Monocil, Victor, Sharp, Hijack And Racer o New brands: Pulsor, Xplode, Nuvan, Mycoraja, Green Label, Hijack Super, Hakama, Super Racer, Lethal Gold, Hercules, Sofia, And Kunoichi ❖ PAN India Quality & Stable network o Depots : 28 o Distributors: 5,000 o Dealers: 60,000 ❖ Strong market development team and robust product identification to commercialization process 73 Capital Market Presentation 2019
5- Way Test Strengthen the team Strengthen the market Strengthen the field Strengthen the product portfolio Strengthen the system and policy 74 Capital Market Presentation 2019
4.2 Sales & Marketing – Institutional Sales Dr. Arun Kohli Vice President – Institutional Sales
B2B Institutional Sales Institutional Sales Contribution Institutional Sales Trend FY2019 Revenue B2B, 31% Others, 69% 2016-17 2017-18 2018-19 Constant growth in sales over the years 76 Capital Market Presentation 2019
B2B Capabilities and Key Products IIL Capabilities Diversified Range of Products ▪ Two synthesis plants Household Insecticides Fungicides Herbicides Insecticides ▪ Five formulation plants D-TRANS ▪ Capability to produce complex ACETAMIPRID TRICYCLAZOLE GLYPHOSATE ALLETHRIN molecules LAMBDA CYHALOTHRIN THIOPHANATE ATRAZINE ▪ R&D support ▪ Good brand perception with IMIDACLOPRID METALAXYL IMAZETHAPYR large customers BIFENTHRIN MYCLOBUTANIL PRETILACHLOR ▪ Good quality product BISPYRIBAC ▪ Timely execution capabilities DIAFENTHIURON SODIUM CHLORPYRIFOS SULFOSULFURON CARTAP CLADINOFOP QUIZALOFOP Bulk 77 Capital Market Presentation 2019
Capital Market Presentation 2019 Top Products & Customers Glyphosate Pretilachlor Lambda Top 10 Products – FY2019 Bifenthrin Thiamethoxam Artrazine Thiophanate Methyl Quizalofop Cartap Tricyclazole UPL Willwood Chemicals Parijat Industries Top Customers – FY2019 Crystal Crop Protection Dhanuka Agritech IFFCO Indofil Industries Bharat Group Sumitomo Chemicals Adama Zuari Agro 78
B2B Strategy and Outlook Strategy Future Scope ▪ Adding new chemistries and molecules ▪ Agriculture markets to grow by double digit ▪ Focus on complex molecules with low ▪ Commodity prices are high competition ▪ Farmers are prepared to invest in Agri Input/agro ▪ Identifying the products getting off patented chemicals and focus on reverse engineering ▪ The changed product portfolio caters to all ▪ Have large scope for sales to new and existing segment customers ▪ We are future ready to cater to customers ▪ Pan India presence already and plan is to go ▪ Our Business relations with our customers deeper in the market through strong sales and distribution network ▪ Dual working on buying and selling ▪ Technology transfers and sharing 79 Capital Market Presentation 2019
4.3 Sales & Marketing – International Sales Mr. Shrikant Satwe Head - International Business
B2B International Sales Highlights International Sales Trend (Rs. Cr.) • IBD grown at 82% CAGR between FY16-19 • IBD contribute 4 % of total IIL Sales 60 • Presence in 18 countries with 42 customers • APAC contributed maximum ( 40%) followed by Africa & ME 34 • Herbicides Contributed maximum followed by Insecticides & Fungicides • Formulation contribute > 90% of the business • WDG ; EC formulations maximum contributed 12 12 • 80% business from IIL core products • “Trading House Status” confirmed in FY18 FY16 FY17 FY18 FY19 81 Capital Market Presentation 2019
Market Expansion Strategy Differentiated Product Mix to Existing & New Customers Geographical Presence Volume & through Regulatory Margin compliance Cost Efficient Expansion Generic through Leveraging R & D Supplier having Capability to Develop Long Term Off patent Competency in Supply Product/Chemistries adding Value Contracts & Chain Growing Outsourcing Sustainable market Opportunities Relationship Through CSM business Value added Product Portfolio like Biocides; Intermediates & Public health Products 82 Capital Market Presentation 2019
Key Products : Data in Progress Insecticides Herbicides Fungicides ❖ Bispyribac sodium ❖ Thiophanate Methyl ❖ Acetamiprid ❖ Diuron ❖ Tricyclazole ❖ Thiamethoxam ❖ Myclobutanil ❖ Dinotefuran ❖ Diafenthiuron ❖ Lambda Cyhalothrin ❖ Bifenthrin 83 Capital Market Presentation 2019
Regional Alliance Status Regional Alliances Highlights 227 • Presence in 30 countries & > 100 customers through registrations • Total 227 Dossiers submitted till Nov 2019 105 • Total 74 Registrations received till Nov 2019 74 15 12 5 FY16 FY20 No. of Customers Dossier Registrations Capital Market Presentation 2019
Focus Markets (in USD BN) Registration Activities 2013 : $ 30.00 USB 12.3 2018 : $ 31.35 USB 10.1 10.0 2023 : $ 36.80 USB 7.5 6.5 3.6 2.9 2.4 2.3 2.3 2.1 2.1 2.0 2.0 1.7 1.8 1.8 1.7 1.2 1.1 1.0 1.0 1.0 1.0 1.0 0.9 0.9 0.9 0.8 0.7 0.7 0.7 0.6 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 Brazil Argentina Mexico Ukraine Russia Australia China South Vietnam Thailand Germany Spain Poland France UK Canada Korea 2013 2018 2023 85 Capital Market Presentation 2019
Market Challenges Regulatory Government Supply Chain ❖ Slow Economy ❖ Stringent Data Compliance & ❖ Major Uncertainties in Raw Material availability & Pricing regulatory guidelines ❖ Distressed Farm Commodity ❖ Lead time to register alternative ❖ Lead time for Registration prices source for major Intermediates ❖ Stringent ESH norms ❖ Restricted product usage due to resistance issue ❖ Trade Sanctions ❖ GM area Expansion ❖ Credit Risk ❖ OECD registration must for ❖ Currency Volatility MEENA markets ❖ Trade Blocks & Trade agreements ❖ “REACH” & Quality Compliance like US-China Trade Agreements; BREXIT 86 Capital Market Presentation 2019
Exports : A Credible Large Opportunity Exports from India (USD Bn) Highlights • Exports from India to grow up to 4.10 USD Bn by 2023 4.1 • Global players incrementally looking to diversify their sourcing base to India • Strong Ethanol demand 15% as bio diesel • Proportion of High Generic molecules in rise leading to 2.5 lower IP protection concerns 2.0 • Demand for Ecofriendly / Innovative product 1.7 • Consolidation within industry 1.4 1.2 1.1 • Higher Prices of the Agriculture commodities • Demand for high Value & Industrial Crops • Rising Per Capita Income & demand from emergent economies in both Crop & Non crop 2010 2011 2012 2013 2014 2017 2023E 87 Capital Market Presentation 2019
IIL Exports Projections International Sales Trend (Rs. Cr.) Growth Outlook • In FY23 revenue to grow up to Rs 300 crs which is 300 16.2 % of Total Sales • Formulation to Tech Sales Ratio 65 to 35 • APAC will contribute (33%) followed by Africa(28%) ; Middle East (15%) ; LA (15%) & Europe ( 8%) each & NAFTA( 1.6%) • Expecting some contribution from CRAM & Biopesticides business 100 • Insecticides will contribute maximum followed by Herbicides & Fungicides 60 34 • Demand for eco-friendly formulation 12 12 • Focus on cost effective “ SEZ” based supply • “2 STAR Trading House” status in FY20 FY16 FY17 FY18 FY19 FY20E FY23E 88 Capital Market Presentation 2019
5. Procurement Mr. Sunil Wason Vice President Procurement
Centralized Procurement Chopanki Plant - 1 Dahej Plant - 5 Chopanki Plant -2 Samba Plant - 6 Dahej SEZ Plant - 3 Shamli Plant - 7 Centralized Chopanki Technical - 4 Udhampur Plant - 8 Procurement Business Divisions Machine Production Warehouse Maintenance Utilities Assets R&D ETP Lab Safety/Security 90 Capital Market Presentation 2019
Procurement Spend Analysis – FY2019 Procurement Expenses – Category Wise 1% 2% 7% Raw Material Packing Material Consumable Assets 90% Raw Material Domestic vs Import Geography 6% 4% China 35% Domestic Japan Import Taiwan 65% 90% 91 Capital Market Presentation 2019
Procurement Mix PM Procurement Bifurcation FY 2019 Top 10 spends CHINA FY 2019 M/Caps 1.12% Misc. 2.1% Bags 0.95% Cyanuric chloride Bifenthrin Cartons 3.47% 5% Alcohol 4 Phenoxy -2 . 6 – 5% Dhsopropylniline Lambda thiour Labels etc 5.96% Cyhalothric Acid 6% 27% 4-Phenoxy-2,6- disopropy Phenyl Isothiocy 8% Laminates 11.07% Containers Trimethyl (Bottles/Drums) Phosphite (TMP) 60.06% 9% 2-chloro-5-chloro C-Box 15.27% Methyl Thiazole 11% 3-methyl-4- nitroimino Perhydro-1,3,5- N-Propoxyethyl- oxa 2- N-2-6 Diethyl 9% ethylsulfonylimid Aniline (PE azo-1,2a Pyridin 10% Sulf 10% 92 Capital Market Presentation 2019
Procurement Source Moving from Traders to Manufacturers in China Manufacturer vs Trader (%) FY19 41% 59% FY18 37% 63% FY17 30% 70% Manufacturer Trader 93 Capital Market Presentation 2019
Strengths and Challenges Challenges Strengths ❖ In-house ❖ High dependency on China R & D to support process improvement issue / new technology ❖ Supply commitment from China adoption ❖ Price volatility ❖ IIL is one of the top repute company – Gets ❖ Consistent quality priority supplies and pricing ❖ Clear vision helps in long term planning ❖ Strong influence of mediators/Traders ❖ Clear-cut strategy to shift from Traders to ❖ Disruptive new process/Technology Manufactures ❖ Compete and maintain China bench marking ❖ Multiple sources for each items ensuring risk prices minimization ❖ Stringent In-house quality assurance system for vendor selection ❖ Setting up backward integration plant at Dahej 94 Capital Market Presentation 2019
6. Financial Performance Mr. Sandeep Aggarwal Chief Financial Officer
Financial Performance – Last 5 years Strong EBITDA and PAT growth with margin improvements every successive years Revenue from Operations (Rs. Mn) 5.4% 11,919 CAGR 10,733 9,942 9,882 9,652 FY15 FY16 FY17 FY18 FY19 PAT (Rs. Mn) EBITDA (Rs. Mn) 13.7% 22.3% CAGR 1,856 CAGR 1,228 1,478 843 1,110 1,114 15.6% 920 3 13.8% 597 10.3% 548 7.8% 11.5% 396 11.2% 6.0% 5.7% 9.3% 4.0% FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 EBITDA Margin (%) PAT Margin (%) 96 Capital Market Presentation 2019
Products Freshness Index Proven track record of successful new product launches exhibits IIL’s strong R&D capabilities and continues to provide competitive edge 535 478 70 420 407 Revenue from new product launches (Rs. Cr.) 66 89 15 71 131 299 148 90 40 11 13 9 33 221 10 38 45 84 34 172 41 89 30 66 6 65 30 60 36 69 192 44 172 166 155 131 125 103 44 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 H1 FY20 New Products launched 5 5 3 2 5 5 8 5 during the year % of Revenue 7.1% 19.9% 22.9% 30.3% 37.9% 43.1% 44.9% 47.3% from Operations 97 Capital Market Presentation 2019
Realization Trend Increasing Sales Rate Per KG Trend Sales Rate per KG/LTR 353 274 260 256 234 FY16 FY17 FY18 FY19 H1FY20 98 98 Capital Market Presentation 2019
Key Return Ratios Consistently improving return ratios and generating wealth for shareholders Return on Equity Return on Capital Employed Return on Asset 18.9% 18.6% 9.1% 8.4% 20.2% 15.4% 17.4% 12.9% 15.8% 6.1% 6.0% 14.6% 12.5% 9.8% 4.4% FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 99 Capital Market Presentation 2019
Capital Structure H1 Key Highlights (Rs. Million) FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Long Term Debt 775 519 283 145 68 34 ▪ Higher debt in FY2019 was represents amount invested in Short Term Debt 2,409 1,514 2,060 968 2,952 2,972 building up higher inventory of Thimet and Nuvan Total Debt 3,184 2,033 2,342 1,112 3,020 3,006 ▪ Debt is expected to normalize to the range of ~150 Cr by the end of Cash & Cash Equivalents 86 71 68 196 89 91 the current fiscal year with zero long term debt Net Debt 3,098 1,962 2,274 917 2,931 2,915 Total Equity 2,908 4,049 4,645 5,476 6,613 7,407 Net Debt/Equity 1.07x 0.48x 0.49x 0.17x 0.44x 0.39x Note: Capital Employed = Total Debt + Total Equity 100 Capital Market Presentation 2019
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