Q1 FY17 RESULTS UPDATE AUGUST 2016

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Presentation transcript:

Q1 FY17 RESULTS UPDATE AUGUST 2016

DISCLAIMER This presentation and the following discussion may contain “forward looking statements” by Sharda Cropchem Limited (“Sharda” or “the Company”) that are not historical in nature. These forward looking statements, which may include statements relating to future results of operations, financial condition, business prospects, plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and projections of the management of Sharda about the business, industry and markets in which Sharda operates. These statements are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond Sharda’s control and difficult to predict, that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of Sharda. In particular, such statements should not be regarded as a projection of future performance of Sharda. It should be noted that the actual performance or achievements of Sharda may vary significantly from such statements.

DISCUSSION SUMMARY Q1 FY17 Results Highlights Q1 FY17 Consolidated Financials About Us Business Model Business Strategy & Outlook

Q1 FY17 RESULTS: KEY HIGHLIGHTS In Rs Mn REVENUES & GROSS MARGIN EBITDA & EBITDA MARGIN * PAT & PAT MARGIN 22.7% 35.8% 32.1% 18.3% 13.1% 13.0% 3,140.5 2,774.8 714.0 408.9 363.6 506.4 13.2% 41.0% 12.5% Q1 FY16 Q1 FY17 Q1 FY16 Q1 FY17 Q1 FY16 Q1 FY17 Revenues Gross Margin % EBITDA EBITDA Margin % PAT PAT Margin % * Excluding Foreign Exchange Impacts

Q1 FY17 RESULTS: KEY HIGHLIGHTS FINANCIAL UPDATE - Q1 FY17 total revenues grew by 13.2% YoY - Region-wise Growth – Europe (22.9%), NAFTA (0.2%), LATAM (24.6%), ROW (-1.5%) Q1 FY17 gross profit grew by 26.3% YoY in line with revenues. Q1 FY17 gross margin increased by 373 bps from 32.1% to 35.8%. Q1 FY17 EBIDTA excluding foreign exchange impact increased by 41.0%. Q1 FY17 EBITDA margin increased by 448 bps from 18.3% to 22.7%. Q1 FY17 EBIDTA including foreign exchange impact increased by 30.2%. Q1 FY17 EBITDA margin increased by 274 bps from 18.3% to 21.0%. Q1 FY17 PAT grew by 12.5% YoY. Q1 FY17 PAT margin was stable at 13.1%. OPERATIONAL UPDATE - Total number of registrations increased to 1,830 as on 30th June 2016, compared to 1,765 as on 31st March 2016. The company has another 831 registrations in the pipeline across geographies. Total revenue contribution from the Top 10 molecules has been 61.6% in Q1 FY17 as compared to 66.9% in Q1 FY16.

Q1 FY17 RESULTS: REVENUE ANALYSIS In Rs Mn AGROCHEMICALS VS. NON-AGROCHEMICALS GEOGRAPHICAL PRESENCE – AGROCHEMICAL SALES Revenues From Operations Agrochemical Revenues 2,769.2 3,139.2 2,327.4 2,573.1 9.4% 7.3% 16.0% 18.0% 13.3% 30.4% 14.2% 26.2% 84.0% Q1 FY16 Agrochemicals 82.0% 47.0% 52.3% Q1 FY17 Non-Agrochemicals Q1 FY16 Q1 FY17 Europe NAFTA LATAM RoW FORMULATIONS VS. ACTIVE INGREDIENTS GEOGRAPHICAL PRESENCE – NON-AGROCHEMICAL SALES Agrochemical Revenues Non-Agrochemical Revenues 441.8 566.1 2,327.4 2,573.1 19.5% 6.8% 17.5% 15.1% 18.1% 18.0% 35.5% 93.2% 37.4% 80.5% 30.0% 28.4% Q1 FY16 Formulations Q1 FY17 Q1 FY16 Q1 FY17 AIs Europe NAFTA LATAM RoW

Q1 FY17 WORKING CAPITAL ANALYSIS 142 145 141 111 52 42 Q1 FY16 Q1 FY17 Inventory Days Receivables Days Creditors Days NET WORKING CAPITAL DAYS DECREASED FROM 73 DAYS IN Q1 FY16 TO 56 DAYS IN Q1 FY17 * Calculated on closing inventory, receivables, creditors In Rs Mn

CONSOLIDATED PROFIT & LOSS STATEMENT Particulars (In Rs Mn) Q1 FY16 IGAAP Difference Q1 FY16 (IND AS Vs IGAAP) Q1 FY16 IND AS Q1 FY17 IND AS YoY % Remarks Revenue from Operations 2,790.4 -21.2 2,769.2 3,139.2 13.4% Provision for expected redemption of sales incentive vouchers, selling & distribution expenses and discounts Other Operating Income 3.6 2.0 5.6 1.4 -75.9% Total Revenues 2,794.0 -19.2 2,774.8 3,140.5 13.2% COGS 1,886.4 -1.1 1,885.3 2,016.7 7.0% Gross Profit 907.6 -18.1 889.5 1,123.8 26.3% Gross Margin 32.5% 32.1% 35.8% 373 bps Employee Expenses 66.9 -0.5 66.4 67.5 1.7% Professional Charges 115.9 -0.0 140.5 21.2% Other Expenses 214.2 -13.4 200.8 256.6 27.8% Regrouping of selling & distribution expenses and provision for MTM on outstanding derivative contracts EBITDA 510.6 -4.2 506.4 659.2 30.2% EBITDA Margin % 18.3% 21.0% 274 bps EBITDA Excl. Forex Impacts 714.0 41.0% EBITDA Margin % excl. Forex Impacts 22.7% 448 bps Depreciation 91.6 127.1 38.7% Finance Cost 0.1 - Other Income 109.4 0.0 45.9 -58.1% Other Comprehensive Income (Net of tax) -0.3 PBT 528.3 -4.4 523.9 577.6 10.3% Tax Expense 168.2 -7.8 160.4 169.2 5.5% Impact on account of Deferred Tax Minority Interest 0.5 339.6% PAT after minority interest 360.3 3.3 363.6 408.9 12.5% PAT Margin % 12.9% 13.1% 13.0% Earnings Per Share (EPS) In Rs. 3.99 0.04 4.03 4.54 12.7%

ABOUT US: COMPANY OVERVIEW BUSINESS OVERVIEW Sharda Cropchem Limited is a global crop protection chemical company largely operating across Europe, NAFTA and Latin America across fungicides, herbicides and insecticides. Sharda operates with an asset light business model focused on identification and registration of potential molecules with a strong demand. As of 30TH June 2016, Sharda owned 1,605 registrations for formulations and 225 registrations for active ingredients (AIs) and filed 831 applications for registrations globally pending at different stages. Sharda also runs a non-agrochemical business comprising of order-based procurement and supply of non-agrochemical products including conveyor belts and general chemicals, dyes and dyes intermediates. KEY STRENGTHS Asset light business model with core competency of registrations and an extensive library of dossiers and registrations. Strong geographical presence in more than 78 countries with an established global marketing & distribution network (more than 634 third-party distributors and over 120 direct sales force). Superior sourcing capabilities with an established access to cost competitive manufacturers in China and India. Significant promoter experience and experienced management team. STRONG FINANCIALS Consolidated Revenues, EBITDA and PAT were Rs 12,206.1 mn, Rs 2,669.1 mn and Rs 1,749.7 mn in FY16 having grown at CAGR of 19%, 22% and 26% over FY12 to FY16. Strong balance sheet and asset light model resulting into a strong cash position of Rs 1,448.5 mn (net of gross debt of Rs 20.0 mn) and equity of Rs 8,108.1 mn in FY15. Healthy Return Ratios in FY16 :  ROCE – 30.8% Cash Adj. ROCE – 38.6%  ROE – 23.9%

ABOUT US: FINANCIAL SUMMARY In Rs Mn REVENUE FROM OPERATIONS EBITDA & EBITDA Margin PAT & PAT Margin CAGR: 19 % CAGR: 22 % CAGR: 26 % 11.2% 10.8% 12,186 10,611 20.0% 18.0% 19.5% 16.3% 21.9% 14.1% 11.6% 14.4% 7,777 7,904 6,135 2,669.1 1,750 1,225.0 1,399.8 1,542.6 1,726.5 1,111 1,230 687 844 FY13 EBITDA FY13 FY14 PAT FY12 FY13 FY14 FY15 FY16 FY12 FY14 FY15 FY16 EBITDA Margin % FY12 FY15 FY16 PAT Margin % LEVERAGE ANALYSIS RETURN METRICS 8,108 6,545 5,557 19.3% 21.7% 23.9% 4,668 19.6% 20.3% 3,929 38.6% 1,909 31.7% 31.7% 1,279 1,561 1,469 26.3% 28.7% 621 34 459 399 381 20 22.2% 22.7% 22.6% 23.2% 30.8% FY12 FY13 FY14 FY15 FY16 Equity Debt C&CE ROCE % Cash Adj. ROCE % ROE % Source: Figures for FY12 and FY13 are sourced from Red Herring Prospectus of the company. PAT Margin = PAT / Revenue from Operations, EBITDA Margin = EBITDA (excl. Other Income) / Revenue from Operations, ROE: PAT/Avg. Equity, ROCE: EBIT/Avg. Capital Employed [(Capital Employed = Equity + Total Debt), (Cash Adj. Capital Employed = Equity + Total Debt – C&CE)] 10

ABOUT US: SHAREHOLDING STRUCTURE Share Price Performance Market Data As on 4h August 2016 (BSE) Market capitalization (Rs Mn) 34,026.7 Price (Rs.) 377.15 No. of shares outstanding (Mn) 90.2 Face Value (Rs.) 10.0 52 week High-Low (Rs.) 409.0– 203.3 CMP Rs 377.15 500.0 400.0 300.0 200.0 100.0 0.0 30000.0 20000.0 10000.0 0.0 Sharda Cropchem Sensex Source: BSE Shareholding – 30th June2016 Key Institutional Investors – 30th June2016 % Holding DSP Blackrock Investment Manager 7.04% HDFC Asset Management 3.79% Pinebridge 2.56% Goldman Sachs 2.02% SBI Funds Management 1.82% UTI MF 0.82% Reliance Capital 0.64% Public 4.81% DII 14.18% Promoter 75.00% FII 6.01% Source: Company Source: Company

DIFFERENTIATED BUSINESS MODEL: ASSET LIGHT MODEL Agrochemical Value Chain Basic & Sharda’s Operating Area Active Ingredient Manufacturing Applied Research Identification Registration Formulation & Packaging Marketing & Distribution ASSET LIGHT BUSINESS MODEL Sharda’s Model: Demand Pulled / Customer Driven Traditional Model: Supply Pushed / Product Driven Focus on identification of generic molecules, preparing dossiers, seeking registrations, marketing & distributing formulations through third party distributors and/or own sales. Manufacturing of AIs and formulations is outsourced. Highly flexible operating model resulting in – Markets Markets Registration Identification & Registration Overall cost competitiveness Efficient management of fluctuating market demand across various geographies. Offering wide range of formulations and AIs. AI Manufacturing Customer & Products Basic & Applied Research SHARDA IS A FOCUSSED GLOBAL AGROCHEMICAL MARKETING & DISTRIBUTION COMPANY

BUSINESS STRATEGY & OUTLOOK Forward Integration - Build own Sales Force Leverage market presence and execution capabilities. Adopt the factory-to-farmer approach and be a one-stop solution provider. Strategy on-ground in Mexico, Colombia, Hungary, Spain, Poland, Italy, Portugal, USA & India. Expand & Strengthen Distribution Presence Expand geographical reach using existing library of dossiers. Two-fold strategy of further penetrating existing markets and entering new markets. Continual Investment in Obtaining Registrations Continue to identify generic molecules going off- patent. Investing in preparing dossiers and seeking registrations in own name. Focus on Biocide Registrations Scale up marketing and distribution of biocides with a focus on Europe. Increase biocide registrations. Focus on Inorganic Growth Continue to explore possibilities of partnerships with other companies across jurisdictions.

ABOUT US: OUR PRESENCE Agrochemical Operations Diversified business operations across the globe leading to reduced risk of adverse market and seasonal conditions

THANK YOU FOR FURTHER QUERIES: Mr. Conrad Fernandes Chief Financial Officer Email: cfernandes@shardaintl.com Contact No: +91 22 6678 2800 Mr. Nilesh Dalvi / Mr. Yashesh Parekh IR Consultant Email: nilesh.dalvi@dickensonir.com yashesh.parekh@dickensonir.com Contact No: +91 9819289131 / 8108321555