Sharda Cropchem Limited has informed the Exchange about Investor Presentation
Investor Presentation July 2022
Safe Harbor
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Sharda Cropchem Limited (the “Company”), have been prepared solely for
information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection
with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed
information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty,
express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This
Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this
Presentation is expressly excluded
Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively
forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions
that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets,
the performance of the industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion,
technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as
other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation.
The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties
included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.
2
About Sharda Cropchem Limited
“We are a fast-growing global agrochemicals company with a peer position in the generic crop protection chemicals industry. Our vast and growing library of dossiers and IPRs provide us solid foundations for growth in the global marketplace, especially in Advanced Markets such as Europe, North America and Latin America. It equips us with the ability to operate in a diversified range of formulations and generic active ingredients space globally”
Agrochemical Focused Company
Intellectual Property (IP) driven company engaged in marketing and distribution of wide range formulations and generic active ingredients
Asset Light Business Model
Efficiently channelizing time and resources for strengthening core competency of identifying generic molecules and registration opportunities which offer scalable growth with limited capital requirements
Large Pipeline of Registrations*
Procured 2,719 registrations. Additionally, it has filed 1,153 applications for registrations globally pending at different stages
Diversified Sourcing Arrangements
Enduring relationship with multiple manufacturers and formulators enables to source and supply formulations or generic active ingredients at competitive prices
Consistently Increasing Global Presence
With diversified range of product portfolio, Company has grown by expanding business operations in 80+ countries, across Europe, NAFTA, Latin America and ROW
Widespread Distribution Network
Presence in the entire agrochemical value chain with 500 third party distributors and 400+ sales force serving the Company’s esteemed clientele in 80+ countries
Company’s apt domain knowledge and experience gives substantial competitive advantage for expanding business in existing markets and new geographies
As on 30th June 2022
5
Asset Light Business Model
Overall Agrochemical Value Chain
Sharda’s Operating Area
√
√
√
√
Basic & Applied Research
Identification
Registration
Active Ingredient Manufacturing
Formulation & Packaging
Marketing & Distribution
SHARDA CROPCHEM’s ASSET LIGHT BUSINESS MODEL
Focus on identification of generic molecules, preparing dossiers, seeking registrations, marketing & distributing formulations through third party distributors and/or own sales force
Manufacturing of AIs and formulations is outsourced
Highly flexible operating model resulting in • Overall cost competitiveness • Efficient management of fluctuating market
demand across various geographies
• Offering wide range of formulations and AIs
Acts as a key differentiator from an innovator company, allowing the Company to save its capital, time and resources on R&D
6
Increasing Global Presence having a Widespread Distribution
Presence 80+ countries
across Europe, NAFTA, LATAM & RoW
Sales Force 400+
Distributors 500+
CAPEX incurred in Q1 FY23* Rs. 102 Cr.
Over the years, we’ve built a strong brand franchise within our global markets; we are benefiting through the economies of scale in our portfolio and leveraging value of our supply chain to deliver value to our customers across geographies
Company has gained a great deal from globalization, including new customers and diverse geocentric revenue streams. Over the years, we have mastered flexibility and adopted innovative ways to grow our business overseas
In addition to newer markets, the wide global presence has allowed us to find new, specialised sales and local marketing talent.
Successfully adopted a factory-to- farmer approach to become a one- stop solution provider to our global customers
Strengthening and widening the sales force in Europe, USA, Canada, Mexico, Colombia, South Africa, India, and rest of the world, in addition to third party distributors with a goal to enhance its presence in the agrochemical value chain
It enables the Company to penetrate its formulations and generic active ingredients in various countries backed by the third-party distributors and presence of its own sales force
* Plus related revenue expenditure on registrations
7
The Sharda Advantage
THE SHARDA ADVANTAGE
Global Reach
Wide Product Range
Healthy relationships with suppliers
Quality with Affordability
Faster Services to Customers
One Stop Solution Provider for Crop Care Products
8
Way Forward
Forward Integration - Build Sales Force
Expand & Strengthen Distribution Presence
➢ Leverage market presence and execution capabilities
➢ Expand geographical reach using existing library of
➢ Adopt the factory to farmer approach and be a one stop
solution provider
➢ Strategy on ground in different regions of NAFTA, Europe, LATAM and other key markets in ROW
dossiers
➢ Two-fold strategy of further penetrating existing markets
and entering new markets
Continual Investment in Product Registrations
Focus on Operational Efficiencies
➢ Continue to identify generic molecules going off patent
➢ Accelerated focus on revenue generating investments
➢ Investing in preparing dossiers and seeking registrations
➢ Margin improvements
in own name
➢ Better cost management and eliminate NVAs
9
Industry Outlook and Growth Drivers
Global crop protection chemicals market value (In Billion USD) – CAGR of 3.5%
59.7
8.1
42.0
62.8
77.0
43.7
53.0
5.3
2020
3.9
0.5
8.4
5.9
4.3
0.6
2025e
10.2
7.7
5.4
0.8
2030e
Herbicide
Fungicide
Insecticide
Nematicide
Molluscicide
INDUSTRY DRIVERS
1
2
3
A growing population: the global population is set to increase by 1.2 billion by 2030 and 2 billion by 2050, while the middle class will more than double to 4.9 billion by 2030
A growing middle class fuels demand for increased food and protein production, which in turn drives demand for grain to support growth
Fewer arable acres per capita means that products need to continue to maximise farmer yields; arable land is expected to decrease from half an acre per person today to less than one- third of an acre per person by 2050
Primary Research, Secondary Research, Magna Information Centre
10
Experienced Management
Mr. Ramprakash V. Bubna Chairman & Managing Director
Mr. Ashish Bubna Whole Time Director
Mr. Manish Bubna Whole Time Director
Mr. Ashok Vashisht Chief Financial Officer
•
•
•
Holds a Bachelor’s Degree of Technology in Chemical Engineering from IIT, Bombay
He has over 53 years of experience in chemicals, agrochemicals and related businesses
He is responsible for the Company’s overall business operations and strategy
•
•
•
•
Holds a Bachelor’s Degree in Commerce from the University of Mumbai
Over 30 years of experience in marketing of chemicals, agrochemicals and related businesses.
Instrumental in strategizing early investment in product registrations and building the library of product dossiers.
Responsible for marketing, procurement, registrations and logistics functions of the agrochemical business.
•
•
•
•
Holds a Bachelor’s Degree in Chemical Engineering from the Department of Chemical Technology, Bombay University.
Over 28 years of experience in chemicals, agrochemicals and related businesses
Spearheaded the Company’s foray into the conveyor belt and general chemicals business
Also oversees the information technology, logistics and documentation functions of the Company
•
•
He is Fellow member of Chartered Institute of Management Accountants UK & accredited CGMA, Fellow member of CPA Australia, Fellow member of The Institute of Cost Accountants of India and Associate member of The ICSI. He has also done DipIFR from ACCA UK and qualified Independent Director from IICA
25+ years of rich professional corporate experience in global and Indian MNCs in the field of Strategy, M&A, Financial Management, Direct & Indirect Taxation, Strategic Cost Management, Project Management, Statutory Audits & Internal Audits, Governance & Risk Management
11
Q1 FY23 Financial Highlights
Q1 FY23 Segment Wise Highlights
Cr.
Agrochemical Segment
Non Agrochemical Segment
TOTAL REVENUES
86%
534
75%
615
25%
210
14%
89
% of Revenue
100%
100%
825
623
Q1FY22
Q1FY23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
+15%
+137%
+32%
On Consolidated Basis
13
Q1 FY23: Product Wise Highlights (Agrochemical Segment)
Herbicides
Insecticides
Fungicides
Cr.
TOTAL REVENUES (Agrochemical Segment)
48%
58%
25%
17%
27%
25%
% of Revenue
100%
100%
354
136
144
156
615
534
254
105
Q1FY22
Q1FY23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
+39%
-23%
+8%
+15%
On Consolidated Basis
14
Q1 FY23: Region Wise Breakup (Agrochemical Segment)
Europe
NAFTA Region
47%
251
+24%
51%
312
33%
175
+10%
31%
192
Q1FY22
Q1FY23
Q1FY22
Q1FY23
LATAM Region
16%
85
-2%
13%
83
RoW
+18%
5%
28
4%
23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
% of Revenue
Cr.
TOTAL REVENUES (Agrochemical Segment)
615
534
Q1FY22
Q1FY23
+15%
On Consolidated Basis
15
Q1 FY23: Region Wise Breakup (Non Agrochemical Segment)
Europe
+143%
28%
59
27%
24
NAFTA Region
+196%
55%
114
44%
39
Q1FY22
Q1FY23
Q1FY22
Q1FY23
LATAM Region
+165%
6%
13
6%
5
RoW
+13%
11%
23
23%
21
Q1FY22
Q1FY23
Q1FY22
Q1FY23
% of Revenue
Cr.
TOTAL REVENUES (Non - Agrochemical Segment)
210
89
Q1FY22
Q1FY23
+137%
On Consolidated Basis
16
Q1 FY23 Financial Highlights
Revenues & GP Margin
EBITDA & EBITDA Margin*
Profit After Tax & PAT Margin
29.3%
623
25.4%
825
17.1%
107
13.5%
111
6.1%
38
2.7%
23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
Q1FY22
Q1FY23
+32%
+4%
- 41%
Revenue growth led by better price realization and product mix.
Gross Margins have been impacted by weakening of €/$ and increase in freight costs
EBITDA and Margin impacted due to lower GP Margins and increase in freight costs .
PAT was impacted by higher depreciation and forex losses of Rs. Rs. 43.2 cr. in Q1 FY23 vs. Gain of Rs. 11.5 cr. in Q1 FY22 impacting to the tune of Rs. 54.7 Crs.
* Excluding 1. Other expenses of Rs 12.15 Crs. towards loss on fair valuation of investments during quarter ended June 30, 2022 as against gain of Rs.1.27 Crs. for corresponding quarter ended June 30, 2021 which has been included under Other Income
2. EBITDA is excluding IA & IAUD write-off (Rs. 2.8 cr. in Q1 FY23; Rs. 3.5 cr. in Q1 FY22 ; (IA & IAUD – Intangible Assets & Intangible Assets Under Development)
17
Impact of weakened Euro to the Dollar in the last quarter
1.11
USD / Euro Price Chart
Unprecedented depreciation of Euro to the USD
- 7%
1.04
01-Apr-22
16-Apr-22
01-May-22
16-May-22
31-May-22
15-Jun-22
30-Jun-22
Major currencies have depreciated to the USD in the last quarter due to the ongoing war between Russia & Ukraine
Nearly 50% of Q1 FY23 Sales from Agrochemical business have been to the Europe whereas majority of the Company’s Raw Material is imported from China and payments are done in US Dollar
This has impacted the Company’s Gross Margin and overall profitability as the Euro had considerably depreciated against the dollar
EVALUATION OF VARIOS MEASURES BY THE COMPANY
• Sourcing in Euro currency
• Optimal Hedging of currencies
• Seeking Price increase to minimize this forex impact
18
Strong Balance Sheet
Working Capital (in Days)
88 days
91 days
121
102
109
86
69
68
RoCE
+550 bps
RoE
+470 bps
20.2%
25.7%
15.2%
19.8%
Mar-21
Mar-22
Mar-21
Mar-22
Total Equity
Total Debt
Cash & Cash Equivalents
Jun-21
Jun-22
Inventory Days
Recievable Days
Creditor Days
Rs. 1,942 crores
Rs. 61 crores
Rs. 254 crores
Rs. 1,912 crores as on Mar’22
Rs. 38 crores as on Mar’22
Rs. 300 crores as on Mar’22
ROE: PAT/Avg. Equity, ROCE: EBIT/Avg. Capital Employed [(Capital Employed = Equity + Total Debt)]
On Consolidated Basis
19
Annexure
Q1 FY23 Financial Highlights
Particulars
Revenue from Operations
COGS
Gross Profit
Gross Margin %
Employee Expenses
Other Expenses
EBITDA*
EBITDA Margin %
Forex (Gain)/Loss
Depreciation
Other Income
EBIT
EBIT Margin %
Finance Cost
PBT
Tax Expense
PAT
PAT Margin %
Earnings Per Share (EPS) In Rs.
Q1 FY23
Q1 FY22
824.5
615.1
209.4
25.4%
8.5
104.8
111.1
13.5%
43.2
54.7
20.3
18.4
2.2%
0.8
17.6
-5.0
22.6
2.7%
2.51
622.7
440.1
182.5
29.3%
10.1
69.4
106.6
17.1%
-11.5
53.9
6.5
67.1
10.8%
0.6
66.5
28.4
38.1
6.1%
4.22
Cr.
Y-o-Y
32%
15%
4%
(73%)
(73%)
(41%)
* Excluding 1. Other expenses of Rs 12.15 Crs. towards loss on fair valuation of investments during quarter ended June 30, 2022 as against gain of Rs.1.27 Crs. for corresponding quarter ended June 30, 2021 which has been included under Other Income
2. EBITDA is excluding IA & IAUD write-off (Rs. 2.8 cr. in Q1 FY23; Rs. 3.5 cr. in Q1 FY22 ; (IA & IAUD – Intangible Assets & Intangible Assets Under Development)
On Consolidated Basis
21
Historical Profit & Loss
Particulars
Revenue from Operations
COGS
Gross Profit
Gross Margin %
Employee Expenses
Other Expenses
EBITDA*
EBITDA Margin %
Forex (Gain)/Loss
Depreciation
Other Income
EBIT
EBIT Margin %
Finance Cost
PBT
Tax Expense
PAT
PAT Margin %
Earnings Per Share (EPS) In Rs.
* EBITDA is excluding IA & IAUD write-off
FY22
3,579.8
2,499.8
1,080.0
30.2%
44.2
336.4
728.6
20.4%
16.5
245.3
28.9
466.5
13.0%
2.2
464.2
115.0
349.3
9.8%
38.71
FY21
2,395.6
1,636.0
759.7
31.7%
37.3
305.5
455.2
19.0%
-19.9
170.4
45.9
312.2
13.0%
2.8
309.5
80.2
229.2
9.6%
25.40
FY20
2,003.0
1,388.8
614.3
30.7%
34.9
282.4
351.7
17.6%
15.1
137.1
42.1
186.8
9.3%
1.9
184.9
20.2
164.7
8.2%
18.25
FY19
1,997.6
1,387.3
610.2
30.5%
33.5
250.1
368.8
18.5%
4.5
99.4
20.6
243.4
12.2%
8.4
235.0
58.7
176.3
8.8%
19.55
Cr.
FY18
1,706.6
1,143.7
562.8
33.0%
33.5
183.9
353.3
20.7%
-8.5
69.9
8.1
292.1
17.1%
4.9
287.2
96.4
190.8
11.2%
21.15
On Consolidated Basis
22
Balance Sheet – Equity & Liabilities
Equities & Liabilities Shareholder's Funds Equity and Share Capital Other Equity Non-controlling Interest Total Equity
Non-Current Liabilities Borrowings Trade Payables Lease Liabilities Other Financial Liabilities Provisions Deferred Tax Liabilities (net) Total Non-Current Liabilities
Current Liabilities Borrowings Lease Liabilities Trade Payables Other Financial Liabilities Other Current Liabilities Current Tax Liabilities Provisions Total Current Liabilities Total Equity & Liabilities
FY22
90.2 1,822.2 0.3 1,912.8
- 2.4 3.5 1.6 2.3 128.9 138.6
38.0 5.1 1,177.6 324.8 55.4 4.2 86.7 1,691.8 3,743.1
FY21
90.2 1,524.1 0.3 1,614.6
- 2.4 8.4 3.2 3.0 92.9 109.9
67.8 4.5 806.8 149.1 58.0 3.2 50.0 1,139.4 2,863.9
FY20
90.2 1,312.6 0.3 1,403.1
0.1 2.4 - 13.1 2.7 69.3 87.5
0.0 - 686.7 89.7 54.4 1.5 24.4 856.7 2,347.2
FY19
90.2 1,193.7 0.2 1,284.1
0.1 2.9 - 1.4 2.2 91.0 97.6
0.0 - 636.2 104.0 60.7 0.6 20.1 821.7 2,203.3
Cr.
FY18
90.2 1,044.6 0.2 1,135.0
0.1 3.0 - 0.3 2.1 83.1 88.6
169.6 - 633.8 106.2 56.1 24.0 12.9 1,002.6 2,226.2
On Consolidated Basis
23
Balance Sheet - Assets
ASSETS
Assets
Non-Current Assets
Property, Plant and Equipment
Goodwill
Other Intangible assets
Intangible assets under development
Deferred Tax Assets (net)
Non-Current Tax Assets
Other financial assets
Total Non-Current Assets
Current Assets
Inventories
Investments
Trade Receivables
Cash & Cash equivalents
Other Bank balances
Loans
Other Financial Assets
Other Current Assets
Total Current Assets
Total Assets
FY22
FY21
FY20
FY19
FY18
Cr.
14.4
0.0
577.4
212.2
4.9
71.6
11.2
891.7
892.8
134.4
1,540.0
56.7
109.3
0.5
48.9
68.9
2,851.5
3,743.1
20.9
0.4
523.1
131.0
6.0
73.6
9.4
764.5
525.5
83.0
1,162.6
85.6
175.0
-
28.1
39.6
2,099.3
2,863.9
27.8
0.4
388.1
161.4
3.9
72.5
11.6
665.7
382.2
115.5
988.4
77.8
75.7
-
11.3
29.6
13.5
0.4
357.8
219.8
5.5
49.2
8.9
655.2
364.9
211.9
811.4
50.6
73.0
-
11.9
24.3
10.7
0.4
215.2
359.9
40.0
29.3
7.3
662.9
530.4
22.1
891.9
61.3
39.3
-
0.0
18.3
1,681.5
2,347.2
1,548.2
2,203.3
1,563.3
2,226.2
On Consolidated Basis
24
Key Financial Performance Indices
Revenue
EBITDA & EBITDA Margin*
Profit After Tax & PAT Margin
Cr.
1,707
1,998
2,003
2,396
3,580
20.7%
18.5%
17.6%
19.0%
20.4%
11.2%
8.8%
8.2%
9.6%
9.8%
353
369
352
455
191
176
165
229
729
349
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
RoCE
RoE
Net Cash & Cash Equivalents^
25.8%
25.7%
18.2%
19.8%
336
18.8%
20.2%
13.9%
14.6%
12.3%
15.2%
269
276
262
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
-47 FY18
FY19
FY20
FY21
FY22
* EBITDA is excluding IA & IAUD write-off
^ Total Cash & Cash Equivalents - Debt
On Consolidated Basis
25
CSR Activities
CSR initiatives taken up by the Company are in the areas of Promoting Education, Healthcare, Eradicating Hunger, Empowerment of Women, Animal Welfare, Promotion of Sports and Rural Development Projects
Promoting Education
Animal Welfare
Medical Aid & Relief
26
THANK YOU
Company: Sharda Cropchem Limited
Investor Relation Advisors: Strategic Growth Advisors Pvt. Ltd.
CIN: L51909MH2004PLC145007
CIN: U74140MH2010PTC204285
Mr. Ashok Vashisht - CFO cfo@shardaintl.com Tel: +91 22 6678 2800
Mr. Deven Dhruva / Mr. Jigar Kavaiya deven.dhruva@sgapl.net / jigar.kavaiya@sgapl.net Tel: +91 98333 73300 / +91 98206 02034