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  1. 1. Coromandel Fertilisers Limited STRATEGY MEETING FEBRUARY 22, 2008DUNIA MERI MUTTHI MEIN………………..
  2. 2. GOA MEET - RECAP
  3. 3. What we said “The Future” would be The Future – Bread, Butter, JamDiversifying away from a Government Controlled,Monsoon Dependent Business into Exciting Fields ……Bread: Fertiliser BusinessButter: Rural retailing, WSF, Compost Fertilizer, Micronutrients,Management Consultancy, Backward integration, Value added complexes.Jam: Building industry, Uranium , much more…..
  4. 4. What we Promised ……. 5600 386000 40 350 3505000 3887 35 26 300 221 30 2504000 25 2003000 20 150 152000 100 101000 5 50 0 0 0 2006 2010 2006 2010 2006 2010 Turnover Volume Profit
  5. 5. After the last meet
  6. 6. GLOBAL SCENARIO Fertilisers - Raw materials , Intermediates and Finished products prices sky rocketing. Fertilisers demand spike – Bio fuels draw away large volumes. Brazil , China , Malaysia and US draw large volume of Fertilisers. Tight availability of all key raw materials – Sulphur, Rock Phosphate, Phos Acid and Potash.
  7. 7. FERTILISER – RAW MATERIALS SCENARIO UNPRECEDENTED Sulphur –supply constraints 700 Sulphur from Canada & Russia - China 600 500 Sulphur procures from Saudi and UAE – 400 300 Price up from $100/MT to > 200 100 $600/MT. 0 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Latest 250 Rock Phosphate Rock Phosphate- Short supply 200 Togo Rock from Traditional sources, Good 150 Grade Rock availability scarce- 100 Price up from $80 pmt to $225 50 pmt 0 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Latest
  8. 8. FERTILISER – RAW MATERIALS SCENARIO UNPRECEDENTED Phos acid availability very Phos Acid tight – price up form 1700 $560/MT to > $1500/MT(?) 1500 1300 1100 900 700 Potash – Demand 500 300 outstripping supply – Price June-06 September- December- March-07 06 06 June-07 September- 07 Latest up from $226/MT to 900 800 DAP 700 $500/MT. 600 500 400 300 200 100 DAP price up from $250/MT 0 June-06 September- December- March-07 June-07 September- Latest 06 06 07 to over $800/MT.
  9. 9. IMPACT  Food shortage - Price soaring Galloping Subsidy bill from Rs. 35000 Cr to Rs.75000 Cr. Govt issuing Subsidy Bonds – Liquidity vs. Yield Risk
  10. 10. GOVT POLICIESNew Fertilizer subsidy policy from April 2008 awaited.  Subsidy for DAP to be normated based on Imported DAP – IMG recommendation.  Subsidy for Complex likely to be based on New Tariff Commission study.  Sulphur compensation - from April 2008 for Sulphur based complexes.  SSP subsidy likely linkage with DAP subsidy
  11. 11. INDUSTRY DEVELOPMENTS SPIC, MFL, FACT –weaken further . IFFCO suffers – production loss. Importers of Urea incur severe losses. Sulphur based complexes – suffer. IPL emerges as largest importer. Fertilizer industry turnover to cross 1 lac crore. SSP Industry in coma state.
  12. 12. HIGHLIGHTS & INITIATIVESMerger of GFCL with CFL completedRecord production and sales from Kakinada unit.Long term settlements completed at Vizag, Kakinada, ThaneRecord Production & Sales of G- SulphurIncreased focus on Speciality nutrients – launch of Sulpho Zinc, Water-soluble fertilizer and Boron.Launch of Municipal compost- Godavari Gold
  13. 13. HIGHLIGHTS & INITIATIVESGranulation Pilot plant commissionedPesticides formulation - 30% growth - Accelerated growth plan in AP & Maharashtra. ;Jammu plant operations stabilized; Turn Over 3190 Cr.Pesticides Technicals :Streamlined Ankaleshwar operations. PBT 320 Cr. Thane unit achieved higher Turnover and profits.April – Dec 2007 CFL achieves record profits –
  14. 14. Projects update
  15. 15. Kakinada plant expansion Kakinada geared to produce1.4 mn mt - Rs 2.6 Crore expansion- completed C –train to produce 4.25 lac mt on hold till Phos acid tie –up Addl. Raw Material storage facilities under construction 6000mt water solubles plant commissioned 300 tpd sulphuric acid plant under review Rapid wall project- applied for pollution clearance Gas allocation –efforts initiated
  16. 16. FOSKOR BAA Record Phos. Acid production at Foskor, Richards bay Plant Phos Acid Production Estimate (2007-08) – 6.5 L Tonnes Record DAP production- Highest realization CFL requirement of Acid largely met -signs 10 yr agreement for supply of Phos Acid Foskor Turnaround (Rand Mill) 1750 1500 1250 Before After BAA 1000 BAA 750 500 250 0 -250 2005 2006 2007 2008 (E) 2009 (P) -500 -750
  17. 17. TIFERT, TUNISIA Technical negotiation withsuppliers completed - Technicalclosure by end Feb Financial Closure by end April. Long Term debt being tied upwith European Investment bank andIslamic Development Bank Project commissioning by Mid2010
  18. 18. AMMONIA JV Pre-feasibility study by FMB done – detailed report received. Request of feed stock allocation made to Saudi Govt. - Response awaited Estimated project cost US$1.6 Billion. JV in other gas rich countries like Qatar and West Africa being explored.
  19. 19. RAPIDWALL PROJECT Market study done by AC Nielsen – report received. Model house at Vizag completed in Nov 2007. Talks with reputed builders in progress for marketing tie up. Project attractive with usage of natural gas – negotiations with GAIL in progress for additional gas allocation at Kakinada.
  20. 20. J.V. for Mining & Phos. Acid  JV proposed in Singapore for exploration of rock mining opportunities  One more JV for Phos Acid in Africa
  21. 21. URANIUM PROJECT Testing of Phos Acid expected to commence in April 2008. Vizag Port Trust allots 25 acres of land for the project.
  22. 22. Pesticides
  23. 23. PesticidesVision : Be among top 10 in India and make a beginning in global arena• Promise • Performance• Formulation business : – Currently growing at 30% ; To achieve Turnover of Expect to reach Rs.225 cr by 09-10 Rs.225 cr – Accelerated Growth Plan in AP/Maharashtra/North – Strengthening R&D to introduce new products – Co marketing to bring new products – Leveraging on Retail initiative in AP
  24. 24. Pesticides• Promise • Performance Technical & Exports : Rs.175 Cr • JV in China for BY 09-10. Need to Grow at 30% manufacturing & Current growth 15% Chemical Trading • Consolidation of Technical business in Ankleshwar • Trading offices in South America/North America • Exploring acquisition opportunities in South America
  25. 25. Human Resources
  26. 26. Training- EXSELL – selling skills program for field staff- PACE - to train marketing staff in Dealer/Channel Managemen- Building Leadership Skills (BLS)- STEPUP – program on Skills to enhance performance
  27. 27. Excellence in Retail Management (ERM) - Grassroots - On boarding - Over 9,000 training mandays achieved (till Jan’08) Talent Retention Mentoring – for MT’s/ET’s & HIPO’s Career Planning & Individual Development Plan Integration of policies and processes between CFL , GFCL & Ficom
  28. 28. Awards and Accolades
  29. 29. AWARDS AND ACCOLADES May Day Award -2007-for Best Management and for outstanding contribution in maintenanceof industrial relations, Labor Welfare and productivity by Govt of AP. CNBC TV18 Employer of Choice Award- Most Engaged Workforce Award
  30. 30. Vizag-FAI’s Award for consistent excellentproduction of Phos Acid Plant.Kakinada-FAI’s Best production performance Award for2006-07 under Complex fertilizer (P2O5category)Vizag and Kakinada-Bureau of Energy Efficiency (BEE) certificate ofMerit for Energy Efficient practices in FertilizerIndustry (4th Consecutive Time)
  31. 31. BLUE OCEAN INITIATIVES
  32. 32. BLUE OCEAN INITIATIVESAlternatives to Chemical Fertilizers – Municipal Compost.Non Subsidy income initiatives – Water soluble Fertilizers.Total Farmer Solutions – Out put business.Rural Retail Foray
  33. 33. BLUE OCEAN INITIATIVESAlternatives to Chemical Fertilizers – Municipal Compost.Non Subsidy income initiativesTotal Farmer SolutionsRural Retail Foray
  34. 34. Alternatives to chemical Fertilisers – Municipal Compost National potential -200 mn mt. Contains N, P & K in microquantities. Builds up moisture holding capacity. Improves Quality & yield. Release costly space in cities. Can qualify for carbon credit. Product - at infant stage. Complements our chemicalfertilizers.
  35. 35. Launch and progress Launched in October. Sale crossed 1500 mt. Municipal Compost Sales Turnover Product priced @ Rs.4000 pmt. 120 150 30% contribution 72 100Projected sale in 3 years – 3 Lac mt. 24 Key limitations – material tie up. 50 12Business Model JV/ Outsourcing 0 2008-09 2009-10 2010-11 2011-12
  36. 36. BLUE OCEAN INITIATIVESAlternatives to Chemical Fertilizers – Municipal Compost.Non Subsidy income initiatives - Water Soluble FertilisersTotal Farmer SolutionsRural Retail Foray
  37. 37. WSF – enhancing productivity National market – 60000 MTs. 90% of material imported. High value product – non subsidised. Product – used in high value crops. Fertigation , Foliar spray. Involves aggressive marketing. Product include potassium nitrate, SOP, etc.`
  38. 38. Progress and plans Established manufacturing facilities at Vizag and Kakinada. Combined production gives 7000mt pa. Water Solubles Sales Turnover Planning SOP facility at Kakinada. 180 200 108 Supply tie up with SQM/YARA. 36 72 100 Crossed sale of 2500 mt this year. 0 2008-09 2009-10 2010-11 2011-12 Launching product – pan India.
  39. 39. BLUE OCEAN INITIATIVESAlternatives to Chemical Fertilizers – Municipal Compost.Non Subsidy income initiatives - Water Soluble FertilisersTotal Farmer Solutions - Agri Output BusinessRural Retail Foray
  40. 40. Agri Output Business
  41. 41. Agri output business Procure pulses, maize and turmeric from farmers directly. Area of operation confined to AP and Karnataka. Establish a dall mill and turmeric polishing unit. Investment Rs.15 Crores. Process, grade, pack to supply retail business houses like MORE, BIG BAZAR, etc.
  42. 42. Volumes and ContributionValues 2008-09 2009-10 2010-11(Crores) Turnover Contribution Turnover Contribution Turnover ContributionTurmeric 20 1.6 25 2.0 30 2.5Pulses 40 3.2 80 6.4 100 8.0Maize 5 0.4 7 0.5Chillies 20 1.5Total 60 4.8 110 8.8 157 12.5
  43. 43. BLUE OCEAN INITIATIVESAlternatives to Chemical Fertilizers – Municipal Compost.Non Subsidy income initiatives - Water Soluble FertilisersTotal Farmer SolutionsRural Retail Foray
  44. 44. Rural Of Andhra PradeshCFL’s RURAL RETAIL FORAY
  45. 45. ORGANISED RETAILING IN DIFFERENT COUNTRIES90% 80%80% 70%70%60%50% 40%40%30% 20%20%10% 4%0% US Dlpd Eu Brazil China India Countries Organised Retail as % of Total Retail in Important countries
  46. 46. TOTAL RURAL RETAIL BUSINESS IN INDIA 250000 230000 200000 180000 140000 150000Rs. crore 110000 100000 50000 0 Year 2000 2005 2010 E 2015 E
  47. 47. OPPORTUNITY MATRIX FOR RURAL RETAIL IN INDIA High Rajasthan, Gujarat, Maharastra, Andhra Punjab, UP, Haryana Pradesh, Tamil Nadu, Kerala, West Bengal Potential Bihar, Orissa, Madhya Pradesh, Chhattisgarh, Not Economically Viable Jharkhand Low Penetration High Based on monthly per capita consumption expenditure Source: CII-YES BANK Report
  48. 48. PROMINENT ORGANISED RURAL RETAILERS Hariyali Kisan Bazaar (DSCL) Tata Kisan Sansar (TCL) Choupal Sagar (ITC)
  49. 49. PROMINENT ORGANISED RURAL RETAILERS Godrej Aadhaar Kisan Seva Kendra (Godrej Agrovet) (IOCL) Triveni Khushali Bazaar (Triveni Engineering and Industries Limited)
  50. 50. STRATEGY BEHIND THE MANA GROMOR RETAIL CENTERS Leveraging Strategy Leverage on the relationship and goodwill created with the farmersBlocking Strategy Building StrategyCreate entry barriers. Create a strong base for other businesses. Base Strategy “To make the farmer family earn more with our inputs and services and spend the additional income to lead a better life.”
  51. 51. Mana Gromor Center (MGC) Visual Merchandising
  52. 52. What MGC Offers?....... Soil Testing Facility
  53. 53. What MGC Offers?....... TECHNICAL ADVICE TO FARMERS
  54. 54. What MGC Offers?....... Farmers Training Programmes
  55. 55. What MGC Offers?....... Field Visit
  56. 56. SUCCESSFUL ROLL OUTS IN 20 LOCATIONS Suryapet Kodada Miryalguda Khammam TiruvuruNalgonda PithapuramSattenapalli Mandapeta Gadwal TadepalligudemNandyal Bhimavaram GudivadaAdoni TenaliAnantapur Parachuru Proddatur Narasaraopet
  57. 57. Response from farming communityHigh Footfall for FertilizerAchieved Turnover of Rs.50 Cr. so far… Challenge is to get a higher share of their wallet.
  58. 58. MGC FormatsItem Format I Format IINo. 50 450Area (Sq.ft) 5000 2500Land/Building Own/Rented Rented District HQ &Location Revenue Major Mandal HQ division HQ Large Soil Testing Lab & Meeting/Discussion Training room CentreActivities/ Farm inputs &Facilities All implements, Vet. businesses Feed & medicine Selected other All Services categoriesOwnership Owned FranchiseeManpower/ 12 7-9Center
  59. 59. Energy Health Pumpset •Tele Medicine FMCG Invertors •Apollo/ Care •Pharmacy- Fortis (HLL) •Lab Test Luxury Beauty Clinic- KAYA Protection •Diagnosis and Solution You name it •SprayingNutrition We have it •Entire Range of Pesticides•Soil Testing •Spray Equipments•Recommendation•Monitor•Products-SSP/DAP/NPKs/Urea•Micronutrients/Municipal Compost Credit•Water Soluble/MOP SBI, Kisan Card Mana Gromor Income •Chola DBS •Out Put Procurement Textiles Transport Indian Oil/Lubes Education Communication Cycles Time Mobiles/Cards- Airtel Carrier Launcher
  60. 60. Our Partners- Possible Tie-ups Need Advise ?
  61. 61. FUTURE ROLL OUT PLANS March, 2009 500 MGC 350 MGC 350 MGC July to December, 08 April to June, 08 200 MGC 200 MGC Jan to Mar, 08 150 MGC June to Dec, 0720 MGC
  62. 62. CFL’s Retail initiative … There are several business opportunities in the fast growing Rural Markets CFL has good advantage due to the existing market share and brand equity The Retail model aims at de-risking the existing business as well as opening doors for several new businesses This is a low investment and high turnover model compared to the other retail ventures. Innovation and system efficiencies will add substantial scope for increasing the profits.
  63. 63. Our Target is to reach Rs.5000 Cr in 5 Yrs
  64. 64. …… We Deliver During 2008-09 CFL Turnover will cross $2 Billion CFL will be a $ 3 Billion Company and Market Cap of $2.5 Billion By 2010-11
  65. 65. We promise what we deliver andWe deliver what we promise

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