Professional Documents
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Safe Harbor
The views expressed here may contain information derived from publicly available sources that have not been independently verified.
No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forward looking
information in this presentation including, without limitation, any tables, charts and/or graphs, has been prepared on the basis of a number of
assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Aries Agro
Limited (”Aries") and its subsidiaries. Past performance of Aries and its subsidiaries cannot be relied upon as a guide to future performance.
This presentation contains 'forward-looking statements' – that is, statements related to future, not past, events. In this context, forward-looking
statements often address our expected future business and financial performance, and often contain words such as 'expects,' 'anticipates,'
'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward–looking statements by their nature address matters that are, to different degrees,
uncertain. For us, uncertainties arise from the behaviour of meteorological conditions, fluctuations in interest and or exchange rates and input
prices; and from numerous other matters of national, regional and global nature, including those of a environmental, climatic, natural, political,
economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that
those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase,
otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Aries or any of its subsidiary undertakings or any other
invitation or inducement to engage in investment activities, nor shall this presentation (or any part of it) nor the fact of its distribution form the
basis of, or be relied on in connection with, any contract or investment decision.
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ARIES AGRO- KEY FACTS
Promoted by Dr. T.B. Mirchandani and Mrs. Bala Mirchandani in 1969, Aries is India’s
KEY DATA
leading micro-nutrient player with sales of INR 2.9bn (FY14) and Exports to around
BLOOMBERG TICKER ARIE:IN
12 countries
FACE VALUE (RS) 10
Started with manufacturing of mineral feed additives for animals, diversified after NO. OF SHARES (MN) 13
1975 into micro-nutrients, secondary nutrients and water-soluble NPK fertilisers for PRICE* (RS)
plants. Introduced the concept of “chelates” in India (Agromin, Chelamin, etc.)
MCAP* (RS MN)
Winner of the 2011, 2012 & 2013 Inc India Awards for the 500 fastest growing mid-
size companies in India. 2013 Inc India Innovative 100 Award for the 100 most
innovative Indian companies under the categories of product design and responsible
business. India 500 is an offshoot of the annual Inc. 500 Award.
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SUMMARY CONSOLIDATED FINANCIALS
INR Cr.
INR Cr.
150.90 20.00
150.00 18.27 30.00 10.00
15.00
17.83 20.00
100.00
10.00
5.00
50.00 5.00 10.00
6.56
- - - -
FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14
. .
Net Sales Chng (%) PBDIT OPM (RHS%)
5.00 0.40
0.20
- -
FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14
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INDIA NEEDS MORE FOOD WITH LESS LAND
Higher food inflation, through constrained monetary policy and decreased savings, impacts economic growth
Food inflation at 6.7% CAGR despite food production rising from 169.9 mn te (FY89) to 234.5 mn te (FY09)
Rising food prices due to growing global and domestic food demand, decreasing arable land
Declining per capita arable land- Population rising at 1.4% p.a.; arable land declining due to non-agricultural usage,
deteriorating soil quality and dipping water tables
Total agricultural land in India declined from 185.142 mn ha to 182.385 mn ha in the last two decades.
Raising crop yield critical for food security. Current Indian yields woefully lower than potential yields
In India, 50% of PFCE is on food, implying higher vulnerability to food shortages and inflation.
India- Declining Arable land (ha) per capita India- Food Articles WPI (CAGR- 6.7%) India- Below global yields
0.4
400
0.35
350 2010 Cereal Yield (kg/ha)
0.3
hectares per person
300
0.25
250
0.2
200
0.15
150
0.1
100
0.05
50
0
0
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
FY95
FY97
FY99
FY01
FY03
FY05
FY07
FY09
FY11
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MICRO-NUTRIENTS- PLAYING A CRITICAL ROLE IN RAISING YIELD
Crop nutrition and protection critical to improving yields and thus total food production
India’s fertiliser consumption has grown at 4.8% p.a. over the last decade, however, this has been unbalanced due to subsidies. Total
fertiliser subsidy for FY14 revised estimated at INR. 680bn.
Balanced mix of nutrients needed to improve crop yield based on the specific needs of the crop and the soil quality
Relatively higher major (NPK fertilisers) and secondary fertilisers (Mg, S, Ca) are being used.
Micro-nutrients (Bo, Zn, Si, Mn, Fe, Cu, Mo based) have been ignored due to lower awareness
Micro-nutrients are metal-based nutrients complementary to major fertilisers and called so because of the relatively low volume
required in the overall balanced nutrition needs of a plant.
Micro-nutrient deficiencies are quite common. An estimated 50% of the world cereal soils are deficient in Zinc and 30% of cultivated
soils globally are deficient in Iron.
More than half the global population suffers from Fe and Zn deficiencies. Approximately 30% of children have stunted growth primarily
due to micronutrient (Fe, Zn) deficiency.
Dietary Zn deficiency is a major nutritional disorder of the poor households of countries like India which depend heavily on rice.
Micronutrient enrichment of crops can be an effective strategy to address dietary Zn deficiencies in human.
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MICRO-NUTRIENTS- GROWTH DRIVERS AND INDUSTRY DYNAMICS
Industry estimates the micro-nutrient market at INR 12bn or 0.4 mn tonnes p.a.
Chelated micronutrients a profitable, but smaller market than major and hence less presence of larger players.
Changing Government Policies- Moving away from subsidies would impact primary fertiliser consumption.
Nutrient-Based Subsidy (NBS)- Subsidized fertilisers leading to underproductive fertility practices and longer-term issues of
soil quality, hence move to NBS a good move. With fixed subsidy, consumption of potash and phosphate has decreased.
Increasing awareness- Efforts by industry players and government on providing soil-testing facilities, knowledge on soil quality and
crop care will have long-term bearing on growth of micro-nutrients fertilisers
However, there are local players and imports which compete largely on pricing.
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INDUSTRY: SPECIALTY PLANT NUTRITION SOLUTIONS
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THE WONDER OF CHELATION TECHNOLOGY
60% of inorganic compounds are wasted by leaching, fixation and due to its property of reacting easily with air, water & soil
Key advantages of chelated (derived from Greek word “chel” meaning a crab’s claw) micro-nutrients
Chemically inert and soluble in water and easily absorbed by plants
Increase the availability of nutrients by binding relatively insoluble iron, ensuring 100% availability
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ARIES-DIVERSIFIED PORTFOLIO, PAN-INDIA PRESENCE
Leading chelated micro-nutrients player and exposure to secondary nutrients and Soluble NPK
Product-wise Manufactured Sales break-up
150.00 Manufactured Sales as % of Total Sales
100.00
Animal Feed 72.32
(in Rs. Cr.)
73.00
Insecticides
Micronutrients
50.00
68.00 65.46
62.99
-
63.00
FY11 FY12 FY13 FY14 59.44
Balanced revenue from Kharif and Rabi crops
120% 58.00
FY11 FY12 FY13 FY14
100%
80%
60% Rabi
Kharif
40%
20%
0%
FY11 FY12 FY13 FY14
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PAN INDIA SALES – STATEWISE SALES BREAKUP FOR THE YEAR 2013 - 14
MUMBAI, 6
MADHYAPRADESH, 5
WEST BENGAL, 11
KARNATAKA, 5
JHARKHAND, 1
HARYANA, 3
UTTARANCHAL, 2
MAHARASHTRA, 15
GUJARAT, 4
ORISSA, 2
BIHAR, 4
ASSAM, 2
TAMIL NADU, 3
ANDHRA PRADESH, 18
UTTRAPRADESH, 5
PUNJAB, 11
RAJASTHAN, 4
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STRONG PRODUCT PORTFOLIO, CONTINUOUS INNOVATION
Aries caters to a wide variety of agri-produce including Rice, Wheat, Pulses, etc.
Strong R&D focus led by 70-member team and trials conducted over 100 Universities and Institutions
Products are priced at a premium to the rest of the market owing to their higher brand awareness
Significant efforts go into educating the farmers and the distributor channels about Aries products.
Aries has entered into a Purchase and Sale Agreement for purchase of “Biodegradable Spray Oils” for sale and marketing
of the same under Aries’ brand name.
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SOME PICTURES OF MANUFACTURED AND TRADED PRODUCT PACKS
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OPERATIONAL CAPABILITIES- STRONG MANUFACTURING AND DISTRIBUTION
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INTERNATIONAL BUSINESSES- SOURCING STRENGTH, NEW EXPORT MARKETS
• Aries’ International Business increased by 2% as compared to 17% in FY2012-13 and now constitutes to 27% of the total
revenue of the Aries Group.
• Golden Harvest Middle East FZC (Sharjah) and Amarak Chemicals FZC (Fujairah) (75% step-down of Golden Harvest) are the two
international subsidiaries with production capacities of 10,800mtpa and 60,000mtpa respectively
• Aries has deployed INR 600 Mn in Golden Harvest Middle East FZC and Amarak Chemicals FZC.
• Marketing strategy for International Business:
• Distributors have been appointed and Sales have commenced in more than 12 countries including Brazil, New Zealand, Taiwan, Australia,
Pakistan, Viet Nam and United Kingdom.
• Global business team based out of Mumbai, India and UAE.
GOLDEN HARVEST MIDDLE EAST FZC (SHARJAH, UAE) AMARAK CHEMICALS FZC (FUJAIRAH, UAE)
Supplies chelates to Aries as well as external customers. Supplies Sulphur Bentonite, a key secondary nutrient, to
In FY14, 34% of its sales was to Aries and rest to Aries and external customers. In FY14, 0.76% was supplied
customers located in Asia, M.E., Africa and Latin America. to Aries.
Sales down by 12.44% in FY14, while capacity utilization in Sales in FY14 was AED 31mn. FY14 capacity utilization has
FY14 was almost at the same level as that of FY13. been 32%.
• Rationale:
• In-house cheaper source of EDTA critical for Aries as
chelated products from more than 2/3rd of Aries
Sales.
• Potential to serve new markets.
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ARIES- UNIQUELY POSITIONED
Price Control ✔ ✗ ✗ ✗ ✗
Subsidies ✔ ✗ ✗ ✗ ✗
• While Aries does not get subsidy benefits, it faces no price control and uncertainty over pricing and working capital due to subsidy.
• Aries enjoys much higher profit margins than commodity fertilisers and inorganic micronutrients.
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RISKS AND CHALLENGES
Poor monsoon
Company’s past performance demonstrates that only less than half of Aries’ performance can be explained by rainfall.
Stronger focus on developing cash crop markets and horticulture crops during Rabi, since water availability is known before Rabi season.
Re-orienting our product and market-mix towards states with surplus power
Awareness- Price of Aries products are 4-6x Urea prices, and hence “assumed substitutability” leads to farmers using more
Urea. However, the quantity of Chelated micronutrients needed is much lower than that of major fertilisers. Besides,
micronutrients improve the performance of major fertilisers. Aries makes sustained efforts to improve the awareness about
Chelated micronutrients.
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KEY TAKEAWAYS
Favorable Industry dynamics for the medium to long-term given the food security issues, rising population and changing
government policies.
Pan-India presence with a strong product portfolio catering to both Kharif and Rabi crops.
Continued new product launches driving growth
Strong manufacturing capabilities to cater to growth until FY15 without any significant capex.
6 plants spread across India with a total capacity of 84,600 MTPA. Current capacity utilization 45%
Well-entrenched distribution network, reaching almost a sixth of India’s villages and farmers.
Key concerns would be power shortage, besides dependence of Indian agriculture on monsoon.
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FOR QUERIES AND FURTHER INFORMATION
Energizing Earth
Aries House, Plot No.24, Deonar, Govandi (East), Mumbai 400 043, India.
www.ariesagro.com
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ANNEXURE I: KEY MICRO-NUTRIENTS AND THEIR ROLE
• Used by plants to reduce nitrates into usable forms and nitrate fixation by
Molybdenum (Mo) some plants
Zinc (Zn) • Participates in chlorophyll formation, and also activates many enzymes
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ANNEXURE II: TYPICAL SEASONALITY OF INDIAN OPERATIONS
Inventory (across all locations) High – to build up Highest High Reduces by year end
for Kharif
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