Company analysis BUY/SELL/HOLD recommendation

1. 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%

2. INDIAN AGROCHEMICALS SCENARIO
17
13
12
7 7
5 5
0.6
0
2
4
6
8
10
12
14
16
18
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

3. 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 spurious
pesticides 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

4. REVENUES BY GEOGRAPHY
21%
27%
14%
20%
INDIA LATIN AMERICA
EUROPE REST OF THE WORLD
NORTH 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

5. COMPETITOR ANALYSIS
0
1000
2000
3000
4000
5000
6000
2014-15 2013-14 2012-13
Turnover in Cr
UPL Ltd PI Industries Rallis India

6. 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

7. 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

8. CASH FLOW ANALYSIS
Operating Activities Investing Activities Financing Activities
UPL Ltd 497.18 -130.62 -459.2
PI Industries 180.65 -146.32 -50.13
Rallis India 63.81 -41.99 -24.07
-600
-400
-200
0
200
400
600
Cash flow
UPL Ltd PI Industries Rallis India

9. R&D
1344
1319
1241
1022
1072
1291
0 500 1000 1500
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
PRODUCT POTFOLIO
PRODUCT
POTFOLIO
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

10. PROFITABILITY ANALYSIS
FY 11 FY 12 FY 13 FY 14 FY 15
Total Income from
Operations
5,804.51 7,654.72 9,194.52 10,770.88 12,090.52
PAT 557.64 555.55 774.6 949.79 1,144.03
0.00
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

11. EARNINGS PER SHARE
12.08 12.03
17.12
21.59
26.69
0
5
10
15
20
25
30
EPS
FY11
FY12
FY13
FY14
FY15

12. 0
0.5
1
1.5
2
2.5
3
3.5
4
D/E Interest coverage
FY11
FY12
FY13
FY14
FY15
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

13. 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

14. 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

15. 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

16. 52 WEEK HIGH/LOW

17. FUTURE OUTLOOK
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
2010 2015 2030 2050
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

18. 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