Non Deal Roadshow presentation - Tata Chemicals
“On the growth path” March 2006 1
Table of contents < India - Economic overview < The Tata Group - overview < Tata Chemicals - Business overview
¡ Segment overview Chemicals Fertilisers < Financial overview
2
1
India - Economic overview
3
India–poised for strong economic growth... Supported by a government committed to economic reforms Real GDP growth
§
World’s third largest economy in purchasing power parity (PPP) terms, second fastest growing after China
§ § §
9%
8.5% 7.9%
8%
Nominal GDP estimated at US$625 billion in FY06E
7%
§
FY03
FY04
5% 4%
Per capita GDP only US$660, however, PPP adjusted per capita
3% FY04 Source:
FY05
UBS Research
Foreign exchange reserves over US$141 billion FDI in India
Net FII investment in 2005 crossed US$10 billion (an increase of 25% over 2004)
6,000
Mature capital market: National Stock Exchange (NSE) & Stock
5,000
Exchange, Mumbai (BSE) 3rd & 5th largest respectively in number of trades in the world
6,130 5,535 5,035 (US$ million)
§
6.9%
6%
PPP adjusted nominal GDP estimated at US$3,652 billion in FY06E
GDP higher at US$3,320
§
6.9%
4,673
4,000 3,000 2,000 FY02
Source:
FY03
FY04
FY05
UBS Research
4
2
..underpinned by strong consumption & infrastructure growth Consumption accounts for 64% of GDP
§
Government emphasising infrastructure growth
Strong GDP growth and growing proportion of higher
Roadways
§
‘North East South West Corridor ’ underway
income groups is driving domestic consumption growth
§
Pipelines
§
18,671 km of oil & gas pipelines planned in next 4 years
Power
§
Govt. plans to add 100,000 MW capacity by 2012
Ports
§
New ports & upgradation of existing ports planned
India has a rapidly growing middle class of about 200mn people with significant spending power
Infrastructure investments to grow at 15% CAGR
Favourable demographics 100% 80%
10%
10%
11%
12%
12%
34%
36%
38%
39%
41%
FY03 FY04
60% 40%
Large scale projects like ‘The Golden Quadrilateral ’ &
FY05 FY06E
19%
20%
21%
21%
19%
38%
34%
31%
29%
28%
1996
2001
2006
2010
2013
FY07E FY08E
20%
Age groups Source:
FY09E FY10E
0% 0–14
15–24
25–54
0
55 & above
10th 5-year plan
Source:
500
1,000
1,500
2,000
2,500
Cris Infac, Broker reports
5
The “India” Advantage India is emerging as a global manufacturing hub
Growing Proportion of high income group
• India leads the market in off-shore back-office but as a manufacturing centre, it lags behind China and T hailand • But now India is beginning to be recognized in skill-intensive manufacturing industries requiring technical expertise
Human Resources
R&D capabilities
Low cost manufacturing
§ §
§ § § §
Abundant qualified engineering and technical workforce – India produces 400,000 graduate engineers every year Large pool of unskilled labour
Global majors such as Motorola, HP, Cisco Systems and others are increasingly relying on their Indian operations
Skills in process, product and capital engineering Well-established raw material supply base India has already demonstrated an advantage in auto-components, engineering and pharmaceuticals businesses
The next wave of global outsourcing expected in specialty chemicals & electronics amongst others…
6
3
The Tata group - overview
7
Tata Group – India’s largest and the most respected business group § § §
Software Telecom Services Automation & Control Systems
IT and Communications Sales:19% PAT: 13% Assets: 26%
§ § §
Engineering
Automobiles Auto Components Air Conditioning
Sales:31% PAT: 20% Assets: 15%
§ §
Materials
§
Steel
Sales:21% PAT:46% Assets: 19%
Services Market cap1: US$32bn Revenues 2: US$18bn PAT2: US$2 billion
Sales:10% PAT: 4% Assets: 14%
§
Hotels Insurance, Asset Management International Trade
Consumer Products Chemicals and Fertilisers
Sales:6%
§ § §
Beverages Watches Retailing
Notes 1 Market cap (approx.) as on February 25, 2006 2 F.Y. 2005 data
PAT: 4% Assets: 7%
Energy Sales:8% PAT: 8% Assets: 13%
§
Sales:5% PAT: 5% Assets: 6%
§ § §
Basic Chemicals Fertilisers Pesticides
Power
8
4
The Tata group –portfolio restructuring unlocking significant value The Group’s aim is to double revenues every 4 years and profits every 3 years
§ Under the leadership of Ratan Tata, the
The changing face of the Tata group over the last decade
Tata Group has undergone a transformation
§ Restructuring business portfolio to exit noncore businesses and focus on building fewer ‘world-class’ companies
§ Growth through acquisitions § Tata Steel acquired NatSteel, Singapore
Entries Automobiles: Passenger Cars Auto Components (JV) Retailing
(approx. US$487m)
§ Tata Chemicals acquired the Brunner Mond group (approx. US$174m)
§ Tata Motors acquired Daewoo Motors (approx. US$102m)
Retailing Telecommunications CDMA & Fixed Line GSM
Exits
§ § § § § § § § § § §
Soaps & Toiletries Cosmetics Paints Branded White goods Consumer Electronics Oil Exploration Services Pharmaceuticals Computer Hardware Telecom Hardware Cement Textiles
Infrastructure Insurance (JV)
9
Tata Chemicals Business overview
10
5
Tata Chemicals at a glance §
Listing: and
Sales break-up – FY2005
Stock Exchange, Mumbai (BSE) National Stock Exchange (NSE)
Cement 3.7%
§
Ticker:
TTCH IN
§
Founded:
1939
§
Market Capitalization US$1,149mm
§
Revenue3 (US$mm): 664
§
EBITDA3 (US$mm):
115
§
EBITDA Margin3:
17%
§
Employees:
3,500
§
Ownership:
Sponsor Group Institutional Investors Indian Public
STPP Others 2.7% 4.2%
Salt 9.0%
Phosphatics Fertilisers 33.9%
Urea 26.9% Soda Ash 19.6%
27.5 % 31.3 % 30.1 %
Note: 1: Market data per Bloomberg as on Feb 28, 2006 2: INR/USD Conversion rate of 45.59 3: F.Y 2005 data
11
Investment highlights
3 rd largest soda ash player globally
Financial Strength to support growth initiatives
Experienced and committed management team
One of the most efficient fertiliser players in the domestic market
Leveraging strong 'Tata' brand name
Broad distribution platform
12
6
Strategic roadmap 2006–present
Table of contents < India - Economic overview < The Tata Group - overview < Tata Chemicals - Business overview
¡ Segment overview Chemicals Fertilisers < Financial overview
2
1
India - Economic overview
3
India–poised for strong economic growth... Supported by a government committed to economic reforms Real GDP growth
§
World’s third largest economy in purchasing power parity (PPP) terms, second fastest growing after China
§ § §
9%
8.5% 7.9%
8%
Nominal GDP estimated at US$625 billion in FY06E
7%
§
FY03
FY04
5% 4%
Per capita GDP only US$660, however, PPP adjusted per capita
3% FY04 Source:
FY05
UBS Research
Foreign exchange reserves over US$141 billion FDI in India
Net FII investment in 2005 crossed US$10 billion (an increase of 25% over 2004)
6,000
Mature capital market: National Stock Exchange (NSE) & Stock
5,000
Exchange, Mumbai (BSE) 3rd & 5th largest respectively in number of trades in the world
6,130 5,535 5,035 (US$ million)
§
6.9%
6%
PPP adjusted nominal GDP estimated at US$3,652 billion in FY06E
GDP higher at US$3,320
§
6.9%
4,673
4,000 3,000 2,000 FY02
Source:
FY03
FY04
FY05
UBS Research
4
2
..underpinned by strong consumption & infrastructure growth Consumption accounts for 64% of GDP
§
Government emphasising infrastructure growth
Strong GDP growth and growing proportion of higher
Roadways
§
‘North East South West Corridor ’ underway
income groups is driving domestic consumption growth
§
Pipelines
§
18,671 km of oil & gas pipelines planned in next 4 years
Power
§
Govt. plans to add 100,000 MW capacity by 2012
Ports
§
New ports & upgradation of existing ports planned
India has a rapidly growing middle class of about 200mn people with significant spending power
Infrastructure investments to grow at 15% CAGR
Favourable demographics 100% 80%
10%
10%
11%
12%
12%
34%
36%
38%
39%
41%
FY03 FY04
60% 40%
Large scale projects like ‘The Golden Quadrilateral ’ &
FY05 FY06E
19%
20%
21%
21%
19%
38%
34%
31%
29%
28%
1996
2001
2006
2010
2013
FY07E FY08E
20%
Age groups Source:
FY09E FY10E
0% 0–14
15–24
25–54
0
55 & above
10th 5-year plan
Source:
500
1,000
1,500
2,000
2,500
Cris Infac, Broker reports
5
The “India” Advantage India is emerging as a global manufacturing hub
Growing Proportion of high income group
• India leads the market in off-shore back-office but as a manufacturing centre, it lags behind China and T hailand • But now India is beginning to be recognized in skill-intensive manufacturing industries requiring technical expertise
Human Resources
R&D capabilities
Low cost manufacturing
§ §
§ § § §
Abundant qualified engineering and technical workforce – India produces 400,000 graduate engineers every year Large pool of unskilled labour
Global majors such as Motorola, HP, Cisco Systems and others are increasingly relying on their Indian operations
Skills in process, product and capital engineering Well-established raw material supply base India has already demonstrated an advantage in auto-components, engineering and pharmaceuticals businesses
The next wave of global outsourcing expected in specialty chemicals & electronics amongst others…
6
3
The Tata group - overview
7
Tata Group – India’s largest and the most respected business group § § §
Software Telecom Services Automation & Control Systems
IT and Communications Sales:19% PAT: 13% Assets: 26%
§ § §
Engineering
Automobiles Auto Components Air Conditioning
Sales:31% PAT: 20% Assets: 15%
§ §
Materials
§
Steel
Sales:21% PAT:46% Assets: 19%
Services Market cap1: US$32bn Revenues 2: US$18bn PAT2: US$2 billion
Sales:10% PAT: 4% Assets: 14%
§
Hotels Insurance, Asset Management International Trade
Consumer Products Chemicals and Fertilisers
Sales:6%
§ § §
Beverages Watches Retailing
Notes 1 Market cap (approx.) as on February 25, 2006 2 F.Y. 2005 data
PAT: 4% Assets: 7%
Energy Sales:8% PAT: 8% Assets: 13%
§
Sales:5% PAT: 5% Assets: 6%
§ § §
Basic Chemicals Fertilisers Pesticides
Power
8
4
The Tata group –portfolio restructuring unlocking significant value The Group’s aim is to double revenues every 4 years and profits every 3 years
§ Under the leadership of Ratan Tata, the
The changing face of the Tata group over the last decade
Tata Group has undergone a transformation
§ Restructuring business portfolio to exit noncore businesses and focus on building fewer ‘world-class’ companies
§ Growth through acquisitions § Tata Steel acquired NatSteel, Singapore
Entries Automobiles: Passenger Cars Auto Components (JV) Retailing
(approx. US$487m)
§ Tata Chemicals acquired the Brunner Mond group (approx. US$174m)
§ Tata Motors acquired Daewoo Motors (approx. US$102m)
Retailing Telecommunications CDMA & Fixed Line GSM
Exits
§ § § § § § § § § § §
Soaps & Toiletries Cosmetics Paints Branded White goods Consumer Electronics Oil Exploration Services Pharmaceuticals Computer Hardware Telecom Hardware Cement Textiles
Infrastructure Insurance (JV)
9
Tata Chemicals Business overview
10
5
Tata Chemicals at a glance §
Listing: and
Sales break-up – FY2005
Stock Exchange, Mumbai (BSE) National Stock Exchange (NSE)
Cement 3.7%
§
Ticker:
TTCH IN
§
Founded:
1939
§
Market Capitalization US$1,149mm
§
Revenue3 (US$mm): 664
§
EBITDA3 (US$mm):
115
§
EBITDA Margin3:
17%
§
Employees:
3,500
§
Ownership:
Sponsor Group Institutional Investors Indian Public
STPP Others 2.7% 4.2%
Salt 9.0%
Phosphatics Fertilisers 33.9%
Urea 26.9% Soda Ash 19.6%
27.5 % 31.3 % 30.1 %
Note: 1: Market data per Bloomberg as on Feb 28, 2006 2: INR/USD Conversion rate of 45.59 3: F.Y 2005 data
11
Investment highlights
3 rd largest soda ash player globally
Financial Strength to support growth initiatives
Experienced and committed management team
One of the most efficient fertiliser players in the domestic market
Leveraging strong 'Tata' brand name
Broad distribution platform
12
6
Strategic roadmap 2006–present
