2. Introduction
• E.I.D-Parry India Ltd
– Part of US $3 Billion Murugappa Group
– Sugar accounts for approx. 90% of total revenue
• 1167 crores
– Strong presence in other sectors:
• Bio Pesticides
• Nutraceuticals
• 9 sugar plants across South India
– 32000 TCD Sugarcane, 146 MW Power, 230 KLPD
Distillation
05:14:38 2
9. Qualitative Analysis
A. Vellayan Anand Bhatia
Director
Chairman
Economics, Cambridge
MBA Warwick
Ex-Unilever South America
VP, SICC
Ex-Lipton MD, India
38 years Industrial Experience
Investors Greivance Commitee
V Ravichandran
Vice Chairman R A Savoor
PGDM, IIM-A Director
Cost accountant B.Sc. Technology
Company Secretary Ex-MD Castrol
Acquisition Expert 40 years experience
Chairman, Audit Committee
R S Singhvi M V N Rao
Managing Director Director
CA, LLB Agriculture Expert
Ex-CEO Associate, Chartered Inst. Of
29 years experience Bankers
Fellow, IIBF
05:14:38 Ex MD, Chairman Canara Bank9
10. • ISO 14001:1996
– Audited by British Standards Institute, UK
• ISO 9001:2000
– Bereau Veritas (BVQI), France
• Strong ERP Implementation
– SAP
– Computerized Procurement
• Web based cane management system
• GPS, GIS, Nutrient Analysis services for farmers
– Decision Engine
• HACCP Certification
– Food Safety
• GMP “Buy EID Parry as it is well managed”
• Kosher & Halal -G Chokkalingam
ED, CIO, Centrum
• Strong internal R&D
Nov 15, 2011
05:14:38 10
11. Quantitative Analysis
P/E Ratio & EPS Trend
90
80 77.8
75.0
70
60
50 46.8
40 P/E
EPS
30 23.8
22.0
20 14.3 14.3
13.0
9.0
10 4.6 3.6
0.0 1.9 20%
0
-1.9
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12
-10
(Projected) Source:
Quantum
05:14:37 11
12. Quantitative Analysis
Other Ratios
Liquidity & Management
Profitability
Solvency Efficiency
80%
70%
ROCE
60%
RONW
50%
40%
30%
20%
10%
0%
-10% Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
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13. Liquidity & Management
Profitability
Solvency Efficiency
2.5
Current Ratio
2
Quick Ratio
1.5 Debt-Equity Ratio
1
0.5
0
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
05:14:38 13
14. Liquidity & Management
Profitability
Solvency Efficiency
12 Debtors Turnover Ratio
10 Inventory Turnover Ratio
Asset Turnover Ratio
8
6
4
2 0.94 0.99
0.75 0.78 0.69
0
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
05:14:38 14
19. Quantitative Analysis
DCF Analysis cont’d
Parameter Value
Primary Value, PV 18.84
Terminal Value 160.91
Adjusted Terminal Value, TV 81.52
Total Intrinsic Value, IV = PV + TV 100.36
Paid up Equity, N 17.27
Total IV based Market Cap (IV x N) 1733.23
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25. Quantitative Analysis
DCF Analysis – cont’d
298.4 Yesterday’s
Parameter
close
Value
DCF Intrinsic Value (IV) of Coromandel* 259.20
Paid Up Equity of Coromandel 28.24
Market Cap of Coromandel as per IV 7319.89 Crores
Liquidation Discount
Discount for lack of
EID Parry Stake in Coromandel Market Cap, %
control 62.86%
Discount for lack of
marketability
EID Parry Stake in Coromandel40%
Range: 15 –
Market Cap 4601.3 Crores
EID Parry Holding Discount* 50%
EID Parry Adjusted Stake in Coromandel 2300.64 Crores
Market Cap
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26. Quantitative Analysis
DCF Analysis – cont’d
Parameter Value
EID Parry net value of Market Cap 1733.23 + 2300.64 =
(IV based Market Cap of EID Parry + IV based 4033.97
Market Cap of Coromandel)
197 Yeste
Paid up Equity, EID Parry 17.27 clos
(Underp
EID Parry DCF Price, 232.95
(including 62.7 % Coromandel’s stake value)
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27. Industry Analysis
• Sugar Industry
– 2nd largest agro industry after textiles
• India: 2nd largest sugar producer
– 24.6 mt
• Sugarcane: 70% of total cost of production
• Regulation
– Supply price
• Statutory Minimum Price (SMP)
• Fair and Remunerative Price (FRP) @ 145/- per quintal
• States set State advised price (SAP)
– Most political commodity
• Used for vote bank
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31. Investor Consideration:
S
SWOT Analysis
200 year old brand/legacy/assets Farmer’s side supply price control
Recently consolidated capacities Labour unavailability
Govt Friendly policies for SAP Selling price cap and regulations
Strengths
Longer Crushing Season vs North
Internal R&D, Strong management
Weakness
Wheat/Paddy crop competition
Land availability, permissions
Beta = 0.96
Acres of land, book value = 38 Cr
Coromandel adds high value
SWOT
Burgening Middle Class – lifestyle
Monsoons
India is largest consumer for Sugar
Government Policy changes
Alcohol expansion, New 5% mixing law
International Supply/Demand issues
Opportunities
Bio-Pesticide & Nutraceuticals expansion Threats
Hostile Takeover
Valenza acquisition to help
Sugar surplus, prices 12% down in 2012
Exports
05:14:38 31
32. Recommendation
& Conclusion
EID Parry
• Poised for medium term bull run
• Short term fall of stock price
• due to sugar oversupply
• may hit sugar producers stock
prices in 2012
• Coromandel financial performance
• Driver for upside
• Positive outlook - fertilizer industry
• Demand – supply gap
• Candidate for a hostile takeover
Overall opinion – BUY
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