Eid parry

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• Introduction• Qualitative Analysis• Quantitative Analysis• Industry Analysis• Investor Considerations: SWOT Analysis• Recommendations & Conclusion

Contents

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• 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

Introduction

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Others – 2.3 %Neutraceuticals – 3.4 %

Bio Pesticides – 4.5 %

Power – 10.2 %

Alcohol – 6.7 %

Sugar – 72.9 %

Turnover Contribution (Total = 1291 Crores)

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1906, fertilizer manufacturing

Incorporated, 1975

1981, Murugappa Group

1788, Thomas Parry

Amongst Top 5 Sugar Producers of India

Introduction – Cont’d

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2004 – launched branded sugar – positive response across thousands of retail outlets

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`Introduction – Cont’d

M&A’s & HoldingsAcquisition Year

Coromandel 1995 & 2004

Godavari Fertilizers & Chem 2000

East India Sugars Pvt. Ltd. 2004

Santhanalakshmi Investments Pvt Ltd 2005

JV with Cargill – new plant 2006

New Horizons Sugar Mills Assets 2006

Valensa International Ltd (48%) 2008

Sadashiva Sugars (76%) 2009

Parrys Sugar Industries (65%) 2010

Valensa International Ltd (100%) 2011

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45.80%

22.70%

6.60%

24.90%

PromotersMFs, FI & BanksFIIOthers

Individual Owners: 4.22%

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Qualitative Analysis

A. Vellayan ChairmanMBA WarwickVP, SICC

V RavichandranVice ChairmanPGDM, IIM-ACost accountantCompany SecretaryAcquisition Expert

R S SinghviManaging DirectorCA, LLBEx-CEO29 years experience

Anand BhatiaDirectorEconomics, CambridgeEx-Unilever South AmericaEx-Lipton MD, India38 years Industrial ExperienceInvestors Greivance Commitee

R A SavoorDirectorB.Sc. TechnologyEx-MD Castrol40 years experienceChairman, Audit Committee

M V N RaoDirectorAgriculture ExpertAssociate, Chartered Inst. Of BankersFellow, IIBFEx MD, Chairman Canara Bank

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• 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• Kosher & Halal• Strong internal R&D

“Buy EID Parry as it is well managed”-G ChokkalingamED, CIO, Centrum Nov 15, 2011

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Quantitative Analysis

P/E Ratio & EPS Trend

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 (Projected)-10

0

10

20

30

40

50

60

70

80

90

22.0

9.0

0.0 1.9

14.3

46.8

75.0

13.0 14.3

-1.9

77.8

23.8

4.6 3.6

P/EEPS

Source: Quantum

20%

60%

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Quantitative AnalysisOther Ratios

Profitability Liquidity & Solvency

Management Efficiency

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

ROCERONW

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Mar '07 Mar '08 Mar '09 Mar '10 Mar '110

0.5

1

1.5

2

2.5

Current RatioQuick RatioDebt-Equity Ratio



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Mar '07 Mar '08 Mar '09 Mar '10 Mar '110

2

4

6

8

10

12

0.750000000000001 0.78

0.690000000000001

0.940000000000001 0.99

Debtors Turnover RatioInventory Turnover RatioAsset Turnover Ratio



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Peers Avg ROE

Avg ROCE

Sales CAGR

Avg WC / Sales

PAT Margin

Debt / Equity

TTM P/E

2007-2011 % % % %

EID Parry 23.4 19.1 27.5 41.3 28.2 0.6 34.3

Bannari Amman 14.7 12.1 7.0 52.4 11.4 0.7 11.9

Bajaj Hind 2.0 3.6 20.7 89.3 2.6 1.8 20.6

Shri Renuka 16.5 12.4 96.0 30.8 6.6 1.0 54.0

Triveni Ind. 13.2 12.1 5.9 31.8 6.0 0.9 17.6

Quantitative AnalysisPeer Comparison

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Quantitative AnalysisEV/EBITDA

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1996 1998 2000 2002 2004 2006 2008 2010 20120

100

200

300

400

500

600

700

800

900

Dividend %

Quantitative AnalysisDCF Analysis

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• Discounted cash flow analysis of EID Parry• Approach Style: Extremely conservative• Assumptions

Quantitative AnalysisDCF Analysis

Assumptions

Initial Dividend 400%

FV 1

Dividend Value 4

Dividend growth Rate, Primary 15%

Dividend growth Rate, Tertiary 7%

Returns Expected 14%

Primary Period 5 Years

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Quantitative AnalysisDCF 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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Quantitative AnalysisDCF Analysis – cont’d

62.7%

EID Parry Ltd

Coromandel International Ltd (CIL)

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Inflection point

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2007 2008 2009 2010 20110

100

200

300

400

500

600

700

800

62% growth YoY!

PAT Growth – Coromandel

INR,

Cro

res

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110%

100%

200%

300%

400%

500%

600%

700%

800%

25% 30%50% 55% 65% 70% 60% 65% 75% 85% 100%

175%

500% 500%

700%

FV = 1

Dividend Payouts of Coromandel

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Parameter - Coromandel Value

Dividend % 450%

Dividend Value, FV=1 4.5

Dividend growth Rate, Primary 50%

Dividend growth Rate, Tertiary 7%

Returns Expected 14%

Primary Period 5 years


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Parameter 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

EID Parry Stake in Coromandel Market Cap, % 62.86%

EID Parry Stake in Coromandel Market Cap 4601.3 Crores

EID Parry Holding Discount* 50%

EID Parry Adjusted Stake in Coromandel Market Cap

2300.64 Crores


Liquidation DiscountDiscount for lack of

controlDiscount for lack of

marketabilityRange: 15 – 40%

298.4 Yesterday’s close

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Parameter Value

EID Parry net value of Market Cap (IV based Market Cap of EID Parry + IV based

Market Cap of Coromandel)

1733.23 + 2300.64 = 4033.97

Paid up Equity, EID Parry 17.27

EID Parry DCF Price, (including 62.7 % Coromandel’s stake value)

232.95


197 Yesterday’s close

(Underpriced)

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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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S

Strengths

Weakness

Opportunities

Threats

S W O T

Investor Consideration:SWOT Analysis

200 year old brand/legacy/assetsRecently consolidated capacitiesGovt Friendly policies for SAPLonger Crushing Season vs NorthInternal R&D, Strong managementBeta = 0.96Acres of land, book value = 38 CrCoromandel adds high value

Farmer’s side supply price controlLabour unavailability Selling price cap and regulationsWheat/Paddy crop competitionLand availability, permissions

Burgening Middle Class – lifestyleIndia is largest consumer for Sugar Alcohol expansion, New 5% mixing law Bio-Pesticide & Nutraceuticals expansionValenza acquisition to helpExports

MonsoonsGovernment Policy changesInternational Supply/Demand issuesHostile TakeoverSugar surplus, prices 12% down in 2012

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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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Thank You

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07:56:33 AM 35

Eid parry

Education

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