Company Overview

Coromandel International Limited (NSE: COROMANDEL), India’s second largest Phosphatic fertilizer player, is in the business segments of Fertilizers, Specialty Nutrients, Crop Protection and Retail. The Company manufactures a wide range of fertilizers and markets around 4.5 million tons making it a leader in its addressable markets. 1

In its endeavor to be a complete plant nutrition solutions Company, Coromandel has also introduced a range of Specialty Nutrient products including Organic Fertilizers. The Crop Protection business produces insecticides, fungicides and herbicides and markets these products in India and across the globe. Coromandel is the second largest manufacturer of Malathion and only the second manufacturer of Phenthoate. Coromandel has also ventured into the retail business setting up around 800 rural retail centers in the States of Andhra Pradesh, Telangana, Karnataka and Maharashtra.

The Company clocked a turnover of Rs. 13,155 Crores during FY 2019-20. lt was ranked among the top 20 best companies to work for by Business Today and was also voted as one of the ten greenest companies in India by TERI, reflecting its commitment to the environment and society. Coromandel is a part of the INR 381 Billion (38,105 Crores) Murugappa Group.

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Products & Services

Coromandel has multi-locational production facilities and manufactures & markets a wide range of Phosphatic Fertilisers, Crop Protection Products, Speciality Nutrients like Sulphur Pastelles, Water Soluble Fertilisers, Micro Nutrients and Organic Fertilisers. The Company exports its Crop Protection products to countries across the globe. Coromandel also provides agri input solutions to the farmers through its rural retail centers. The Company is managed by competent and committed professionals and is known for fostering a climate of high performance and continuous improvement. 2

Fertilisers

Coromandel manufactures and markets a wide range of fertilisers making it a leader in its addressable markets & the second largest phosphatic fertiliser player in India.

Crop Protection

The Crop Protection business produces insecticides, fungicides, herbicides and markets these products in India and abroad. Coromandel is the second largest manufacturer of Malathion and is the major manufacturer of Phenthoate in Asia. By taking over M/s Sabero Organics in 2011, Coromandel has added many technicals to its range of products and has climbed to a coveted position among top 5 Indian companies in Indian Pesticide Industry. The Company has global registrations in 62 countries and has strong presence in export markets of Latin America, SE Asia & Africa.

Speciality Nutrients

To give a focused thrust to marketing of speciality nutrients, Coromandel has a Speciality Nutrients division (SND). This business compliments the Company's efforts in improving the Indian farm productivity by supplementing / correcting secondary and micro nutrient deficiency prevailing in Indian soils and focuses on the marketing of concept products for Indian agriculture.

Retail

The retail arm of Coromandel was started in the year 2007 with 2 outlets in Andhra Pradesh and by 2013-14 the business expanded to over 665 retail centers in rural Andhra Pradesh and Karnataka. Coromandel's retail centers are located at Mandal headquarters (Mandal is a revenue unit in Andhra Pradesh, which is 1/50th of a district.) Each retail center has an average area of 1750 square feet with a catchment area of 30-40 villages and about 5,000 farmer families.

Subsidiaries and Joint Ventures

List of subsidiaries and joint ventures

Name of the CompanyRelationshipCountry of incorporationPercentage
Coromandel International LimitedParentIndia-
Liberty Pesticides and Fertilisers Limited (LPFL)SubsidiaryIndia100
Sabero Organics America  S.A. (SOAL)SubsidiaryBrazil99.98
Sabero Australia Pty Ltd, Australia (Sabero Australia)SubsidiaryAustralia100
Sabero Europe B.V. (Sabero Europe)SubsidiaryNetherlands100
Sabero Argentina  S.A. (Sabero Argentina)SubsidiaryArgentina95

Coromandel Agronegocios de Mexico, S.A de C.V (Coromandel Mexico)

SubsidiaryMexico100
Coromandel International (Nigeria) Limited (CNL)SubsidiaryNigeria99.99
Parry America, Inc (PAI)SubsidiaryUSA100
Parry Chemicals Limited (PCL)SubsidiaryIndia100
Dare Investments  Limited (DIL)SubsidiaryIndia100
CFL Mauritius  Limited (CML)SubsidiaryMauritius100
Coromandel Brasil Limitada (CBL), Limited  Liability  PartnershipSubsidiaryBrazil100
Coromandel  Mali SASU (CMS)SubsidiaryMali100
Coromandel SQM (India) Private Limited (CSQM)Joint ventureIndia50
Yanmar Coromandel Agrisolutions Private Limited (YCAS)Joint ventureIndia40
Sabero Organics Philippines Asia Inc (SOPA)AssociatePhilippines40

Industry Overview

Global Agriculture

The global agricultural production is expected to grow by 15% over the next decade while the area under cultivation is projected to be largely flat, as per the OECD-FAO Agricultural Outlook 2019-28. The projected growth is singly attributable to yield improvement. Integrated crop management at the farm level and related infrastructure expansion through strategic investments in the enabling environment remain a must for raising productivity in a sustained manner. Smart agriculture driven by technological innovations, crop diversification, adoption of best in class agronomic practices and integration of livestock are likely to be the driving themes. 3

Indian Agriculture

With a cultivated land area of around 150 million hectares, India ranks 2nd in global agricultural output in value terms. It is also the 2nd largest producer of food grains and the 8th largest exporter of agricultural produce.

Thanks to the continued focus on the rural economy and a spate of agricultural reforms, agricultural output has continued to rise in the recent years. The country is estimated to return another year of record food grain production at 296 million tons in crop season 2019-20.

Reforms and technological advancement

The Union budget 2020-21 gave additional thrust on the agriculture sector. The budget allocated Rs 2.83 lakh crore for agriculture and allied sectors including irrigation and rural development.

Enhancing farmers’ access to the market in a holistic way is another important priority. From the seamless physical movement of the produce through ‘Kisan Rail’ and ‘Krishi Udan’ to financing of NWRs (negotiable warehouse receipts) with e-NAM (electronic national agricultural market) and viability gap funding for additional storage capacity to geo-tagging of the warehousing and cold storage facilities, a slew of initiatives have been rolled out towards transformation of the agriculture sector. The involvement of SHGs for seed banks and One Product-One District campaigns would lead to district level cluster formation. e-NAM will enable Farmer Producer Organisations (FPO) to trade their produce from their collection center without bringing the produce to APMC and facilitate trade from warehouses-based e-NWR. Supplementing these is a host of web and mobile-based applications for the dissemination of information, available in Hindi and other regional languages. These include Kisan Suvidha, Pusha Krishi, mKisan Portal and Participatory Guarantee System of India (PGS) Portal.

Global Fertilisers

The global fertiliser demand is expected to increase by 2.6% to 195 million ton (MT) in 2019-20, according to International Fertilizer Association. The demand growth is expected to be backed by strong growth in Africa, Eastern Europe & Central Asia (EECA), South Asia and West Asia region and a rebound in the North American market that was hit in 2018-19 due to unfavourable weather. By 2023-24, the global demand is expected to reach 204 MT led by K, followed by P and N. Steady improvement in nutrient management practices, stringent policies and regulations around the usage of fertilisers and widespread adoption of balanced use of fertilisers would propel this growth.

Indian Fertilisers Industry

India is 2nd-largest consumer of fertilisers and the 3rd-largest producer of fertilisers in the world. The Indian fertiliser ecosystem comprises of the private, government and cooperative sectors. Urea accounts for about 60-65% of the overall fertiliser consumption and enjoys a dominant share in the country’s fertiliser production. The government plans to achieve self-sufficiency in Urea production by 2022.

During 2019-20, India produced 419 lakh tons of fertilisers (Urea, DAP/NPK and SSP) as against 409 lakh tons in 2018-19. The phosphatic segment sales grew by 8% to reach 200 Lakh MT

The fertiliser industry remains highly regulated and subsidy dependent. The government has lowered its budgetary estimate for fertiliser subsidy to `71,309 crores for 2020- 21. The nutrient rates under Nutrient-Based Subsidy (NBS) for FY2021 have been reduced due to the softening of raw material prices over the year. The fertiliser industry continues to be impacted by a high subsidy backlog of ~` 36,000 crore.

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Business Overview

Fertiliser Business

With close to 3.5 million-ton capacity of fertilisers, Coromandel accounts for ~22% of the domestic production capacity in India. Manufacturing units are located at Vizag, Kakinada and Ennore. The plants have the flexibility to produce 13 products from multiple rock and acid combinations. The Company enjoys a considerable market presence in Southern, Eastern and Western regions in the country.

The Company successfully commissioned its second Phosphoric Acid plant, making the Vizag unit self-sufficient for its phosphoric acid requirement. Other notable initiatives of the fertiliser segment were spread across improving capacity, storage and efficiencies.

During FY2019-20, the plants operated at their highest ever capacity, producing 29.8 lakh tons of phosphatic fertilisers. The primary sales volumes increased to 31.4 lakh tons, higher by 4% over the last year, the market share moderated marginally to 15.7% from 16.3% in 2018-19. The Point of Sales (PoS) which is the measure for actual consumption recorded a growth of 12%. The Company re-launched grade 24-24-0-8 under the brand name ‘GroSmart’ which has been well received by the farmers.

Single Super Phosphate (SSP) business maintained its leading position in the market with market share at 14%. The production for the year stood at 6.0 lakh tons, which is 7% higher than the previous year. The brand ‘GroPlus’ has created a niche for itself in the market.

Crop Protection Chemicals (CPC) Business

Global CPC market is growing at a CAGR of 5.% between 2016 and 2021. India is 4th largest producer and the 13th largest exporter of agrochemicals.

With around 15-25% crop loss due to pests, diseases and inadequate CPC usage, India offers a strong growth prospect to the CPC industry. India is losing agricultural production worth ` 1.48 lakh crore annually due to damage from pests, weeds and plant diseases, according to the Ministry of Agriculture.

The per hectare consumption of agrochemicals in India is just 0.6 kgs as compared to 5-7 kgs in US and 11-12 kgs in Japan. The low CPC penetration, increasing labour cost and climate change are likely to act as the main growth drivers for CPC in India.

Maharashtra, Andhra Pradesh and Telangana are leading consumer of crop protection chemicals in the country. Paddy accounts for the maximum share of agrochemicals consumption around (26%-28%) followed by cotton (18% -20%).

Retail Business

Besides making contribution to the Company’s growth and profitability, the Retail business division goes a long way in strengthening the Company’s connect and engagement with the farmers. The business operates ~750 retail stores which are supported by ~2,000 member strong team. Over the years, Coromandel Retail Centres have evolved as a ‘Complete Farming Solution Multi-Brand Platform’ offering a range of agri-input products and services to around 3 million farmers.

Financial Highlights

The company’s Revenue from Operations for the year was Rs 13,117 crores as against Rs 13,204 crores last year. The Profit before Interest, Depreciation, and Taxation grew to Rs 1,763 crores from Rs 1,450 crores in the previous year registering a growth of 22%. The Net Profit for the year grew to Rs 1,059 crores from Rs 714 crores in the previous year i.e. an increase of 48% YoY

EBITDA margin increased 240 basis points to 13.4% in 2019-20 over 2018-19 and PAT margin increased 270 basis points to 8.0% in 2019-20 over 2018-19. The Earnings Per Share (EPS) for the year stood at Rs 36.20 per share, an increase of 48% compared to Rs 24.41 per share for the previous year.

The company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back up lines of credit. Net Cash from operations for the year stood at Rs 1,867 crores. It follows a prudent financial policy and aims at maintaining an optimum financial gearing.

The company continues to be a long-term debt free Company. Debt to Equity Ratio was 0.37 as of March 31, 2020.

Coromandel International posts Q3 results

1st February 2021; Coromandel International Limited, India's leading Agri solutions provider is in the business of Fertilisers, Crop Protection, Bio Pesticides, Specialty Nutrients, Organic fertilizer and Retail. The Company has reported the financial results for the quarter ended Dec 2020. 4

Consolidated performance for the quarter ended Dec 2020

During the quarter ended Dec 2020, the Company's consolidated total income stood at Rs. 3,542 crores in comparison to the corresponding quarter last year of Rs. 3,288 crores. Profit before depreciation, interest, taxes and exceptional item (EBITDA) for the quarter ended Dec 2020 has grown by 16% to Rs. 501 crores vs. Rs. 432 crores during corresponding quarter of last year. Consolidated net profit after tax for the quarter is Rs. 334 crores in comparison to Rs. 265 crores for the corresponding quarter last year registering a growth of 26%.

For the nine months ended Dec 2020, the Company's consolidated total income is Rs. 11,385 crores (corresponding period last year Rs. 10,296 crores), EBITDA has grown by 31% to Rs. 1,760 crores vs Rs. 1,341 Crs. Corresponding period last year and Profit after tax is Rs. 1,173 crores registering a growth of 41% year on year.

Standalone performance for the quarter ended Dec 2020

During the quarter ended Dec 2020, the Company's standalone total income stood at Rs. 3,521 crores in comparison to the corresponding period last year of Rs. 3,285 crores. Profit before depreciation, interest, taxes and exceptional item (EBITDA) for the quarter ended Dec 2020 has grown by 14% to Rs. 493 crores vs. Rs. 430 crores during corresponding quarter of last year. Standalone net profit after tax for the quarter is Rs. 326 crores in comparison to Rs. 263 crores for the corresponding quarter last year registering a growth of 24%.

For the nine months ended Dec 2020, the Company's standalone total income is Rs. 11,349 crores (Corresponding period last year Rs. 10,291 crores), EBITDA has grown by 30% to Rs. 1,743 crores vs Rs. 1,338 Crs. corresponding period last year and Profit after tax is Rs. 1,156 crores registering a growth of 39% year on year.

Commenting on the financial results, Mr. Sameer Goel – Managing Director, Coromandel International Ltd. said:

"Coromandel registered a strong performance in Quarter 3 with its continuous emphasis on superior products, farm connect initiatives, increased operational efficiencies, smart sourcing and better working capital management. Excessive rainfall in some of its operating geographies led to the postponement of Rabi sowing and skipping of few applications.

Fertilizer business registered a volume growth of 8% during the quarter. Business has been strengthening its branding, leveraging digital technology and set up Nutri clinics. It is collaborating with leading institutions for providing new crop solutions to the farmers.

As part of Atmanirbhar Bharat, the Company has been focussing on accelerating its capital projects. A large evaporator plant is coming up at Vizag to improve the availability of concentrated Phosphoric Acid. The Sulphuric Acid plant has been successfully recommissioned at Ranipet and a pilot Liquid Fertilizer Plant is being set up at Vizag. Organic fertilizer and Speciality Nutrient businesses have performed well with a focused product and specific crop-based solution. Partnership with Seeds, Microirrigation and Farmer Produce Organisations (FPO) has further strengthened its connect with the farmers.

Crop Protection business witnessed a strong turnaround this year, growing by 26% on YTD basis. The domestic formulation and domestic B2B business have seen a robust growth during the period. New Products continue to do well and have contributed to 25% of the domestic formulation business. The company continue to strengthen its position in certain international geographies.

The business continues to focus on enriching the product portfolio and is working on a rich pipeline of new and combination molecules. Coromandel International has received registration for Quizalofop Ethyl, a selective systemic herbicide for soyabean and other vegetative crops. Infrastructure strengthening and capacity expansion projects are on track. Overall, the profitability of the business has improved due to better product mix coupled with efficiencies in sourcing and manufacturing.

The Bio pesticides business registered an impressive growth in the matured European and US markets. The company plan to expand capacity at its Thyagavalli plant to cater to the increased demand for Bio products. The R&D team is working on several new products and applications to expand its product offerings in collaboration with leading agriculture universities.

The Retail stores have been fully functional during the year despite the COVID situation by having strict safety protocols and continue to support the farming community by offering agri solutions including products, farm advisory and mechanization services. Business has improved its operational efficiencies and has leveraged technology to reach out to farmer community.

The Company has been at the forefront of spreading awareness on the COVID pandemic in the communities around its plants and reaching out to the large farming communities. Coromandel International has worked closely with the Government and the local administration including setting up a special COVID ward at Kakinada General Hospital.

The company plan to take annual turnaround of its major plants during the upcoming quarter and fast track the capital projects. With the forecast of a normal monsoon and the roll out of COVID vaccination program in the coming months, the company expect the economic activities to normalize in FY2022. The Company will continue to serve the farming community and will focus on improving its crop solutions and technology offerings to drive the farm productivity."

References

  1. ^ https://coromandel.biz/aboutus.html
  2. ^ https://coromandel.biz/products.html
  3. ^ https://coromandel.biz/pdf/2020-2021/AnnualReports/AnnualReport2019-2020.pdf
  4. ^ https://www.voltas.com/assets/financial_pdf/annoucements/67413.pdf
Created by Asif Farooqui on 2021/04/26 19:46
     

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