UPLL’s FY15 annual report analysis highlights sale of receivables of
INR8.3b (FY14: INR6.2b) to UPL Finance BV—an unrelated party,
adjusted for which the cash conversion cycle increased to 120 days
(v/s the reported 95). Despite the sale of receivables, operating cash
flow post interest declined from INR10.2b in FY14 to INR6.7b in FY15
due to increase in (a) loans and advances to INR5.7b (FY14: INR4.0b)
and (b) finance cost to INR7.4b (FY14: INR4.3b). Revenue grew a mere
12% YoY to INR121b, while EBITDA margin increased 80bp to 19.5%.
Forex fluctuations had an INR2.1b (15% of PBT) adverse impact on
earnings. UPLL has a natural hedge of forex borrowings against
exports income; however, it continues to have exposure to derivative
instruments—which leads to an increase in net unhedged forex
position on a consolidated basis. UPLL had cash and investments of
INR13b (FY14: INR16b), generating a 4.4% yield; UPLL also has debt of
INR32.8b having a borrowing cost of 10.2%—the low yield and high
borrowing cost may partially be due to seasonality of the business
.
UPL LIMITED
The
ART
of annual report analysis
A
NNUAL
R
EPORT
T
HREADBARE
13 January 2016
UPL sold receivables of
INR8.3b (FY14: INR6.2b) to
UPL
finance
BV,
an
unrelated party.
Operating
cash flow post
interest declined to INR6.7b
(FY14:INR10.2b).
Cash
and investments generated average
yield of 4.4% while debt had an average
borrowing cost of 10.2%.
Sale of receivables to UPL Finance BV, an unrelated party,
increases:
United Phosphorus, Inc. (a subsidiary) sold receivables
of INR8.3b (FY14: INR6.2b) to UPL Finance BV—an unrelated
party. Consequently, the receivables are derecognized and do
not form part of receivable/contingent liabilities; adjusted for
which the receivable days for FY15 will be higher by 25 days at
136 days.
Earnings-to-cash flow conversion declines from 80% in FY14 to
71% in FY15:
The decline was primarily on account of an increase
in advance extended to INR5.7b (FY14: INR4.0b). Higher finance
cost at INR7.4b (FY14: INR4.3b) further led to a decline in
operating cash flow post interest to INR6.7b (FY14: INR10.2b).
Forex fluctuations continue to impact earnings:
UPLL recognized
a forex loss of INR3.2b (FY14: Gain of INR0.6b), partially offset by
derivative gains of INR1.1b (FY14: Loss of INR1.4b). Some of the
derivatives taken by the company increase unhedged positions
on consolidated basis; this may be due to a combination of (a)
net unhedged forex position on subsidiaries and (b) elimination
of inter-company transactions on consolidation of subsidiaries
(having a reporting currency other than INR)
Effective tax rates low at 17.3%:
This was primarily on account
of routing of exports (~32% of export revenue) through
subsidiaries domiciled in countries having low tax rates.
Rising payable days drive improvement in cash conversion
cycle:
Over the last four years, reported cash conversion cycle
improved to 95 days (FY12: 139 days), primarily on account of
increase in payable days to 141 (FY11: 100 days)—led by
standalone operations.
Bloomberg
CMP (INR)
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b) / (USD b)
Stock Info
UPLL IN
425
428.6
576/329
9/-7/39
182.2/2.7
2016E
133.6
26.4
12.8
29.9
11.2
162.6
20.0
22.1
13.8
14.2
2.6
7.9
2017E
150.5
30.7
16.5
38.5
28.7
197.0
21.4
24.0
10.8
11.0
2.2
6.6
0.8
Financial summary (INR b)
Y/E March
Sales
EBITDA
NP
Adj EPS (INR)
EPS Growth (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
2015A
120.9
23.6
11.5
26.9
11.2
136.7
20.8
21.7
15.1
15.8
3.1
8.7
Div. Yield (%)
0.8
0.8
E: MOSL Estimates (Analyst estimates)
Shareholding pattern (%)
As on
Promoter
DII
FII
Others
Sep-15
29.8
9.9
47.9
12.4
Note: FII Includes depository receipts
Jun-15
29.8
9.1
48.9
12.2
Sep-14
29.8
8.5
46.6
15.1
ART will present a threadbare portrait of annual reports - statistical, strategic and structured.
We believe ART's wide canvas - from accounting and auditing issues to operating
performance to management insights to governance matters - will help readers paint a
clearer picture of the stock's investment worthiness.
Auditor’s name
S R B C & Co LLP
Sandeep Gupta
(S.Gupta@MotilalOswal.com); +91 22 3982 5544
Somil Shah
(Somil.Shah@MotilalOswal.com); +9122 3312 4975/
Mehul Parikh
(Mehul.Parikh@MotilalOswal.com); +9122 3010 2492
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

ART
|
UPLL
ART #1
ACCOUNTING & KEY FINANCIAL INSIGHTS
Operating cash flow declines despite increase in sale of receivables
Earnings-to-cash flow
conversion deteriorates
despite increase in sale of
receivables of INR8.3b
(FY14: INR6.2b) to UPL
Finance BV—an
unrelated party.
Operating cash flow before extraordinary items declined from INR15.3b in FY14
to INR14.6b in FY14, led by increase in working capital requirements.
Cash conversion cycle remained flat at 95 days (FY14: 96 days).However,
advances recoverable in cash or kind increased from INR4.0b in FY14 to INR5.7b
in FY15. Further details on advances extended are not available.
UPLL’s receivables discounted on recourse basis stood at INR0.9b
(FY14:INR2.12b) and are shown as a part of contingent liabilities.
Further, United Phosphorus Inc, (a subsidiary) sold receivables of INR8.3b (FY14
INR6.2b) to UPL Finance BV—an unrelated party. Consequently, the receivables
have been derecognized and also do not form part of contingent liabilities.
Adjusted for sale of receivables cash conversion cycle stood at 120 days (v/s
reported of 95 days)
Free cash flow post interest declined from INR4.5b in FY14 to negative INR1.1b
in FY15. The decline was led by (a) steep increase in finance cost paid from
INR4.3b in FY14 to INR7.4b in FY15 and (b) increase in capex from INR5.7b in
FY14 to INR7.8b in FY15
Exhibit 1:
Earnings-to-cash conversion deteriorates
Pre Tax CFO / EBITDA
111%
84%
80%
71%
21%
FY11
FY12
FY13
FY14
FY15
Source: Company Annual Report, MOSL
13 January 2016
2

ART
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UPLL
Exhibit 2:
FCF turns negative on rising capex and finance cost (INR b)
Particulars
Net profit before taxation, and
extraordinary items
Add/(Less): Non-cash
adjustments
Add/(Less): Non-Operating
adjustments
Less: Direct taxes paid
Oper. profit bef. w/cap changes
Inventories
Trade receivables
Other current assets
Loans and advances
Trade payables
Long term & Short term
provisions
Current liabilities and provisions
Cash generated from
operations before exceptional
Items
Exceptional Items
Prior Period Adjustments
Net Cash from Operating
Activities
Less: Financial cost
Cash generated from
operations post interest
Less: Capital expenditure
Free cash flows post interest
Standalone
FY14
FY15
5.5
1.5
0.5
(1.1)
6.4
(2.5)
3.9
(0.2)
(0.9)
4.5
0.1
0.1
11.4
-
-
11.4
(1.9)
9.5
(3.2)
6.3
5.8
1.6
(2.1)
(1.2)
4.1
(3.0)
(0.1)
(0.0)
(0.4)
3.8
0.1
0.4
5.0
-
-
5.0
(2.4)
2.5
(3.9)
(1.3)
Subsidiary (derived)
FY14
FY15
7.0
3.1
3.4
(0.6)
12.9
(1.6)
(10.3)
0.0
0.4
1.6
0.1
0.8
3.9
(0.8)
(0.2)
3.0
(2.4)
0.7
(2.5)
(1.8)
8.4
2.7
6.6
(1.6)
16.0
(1.7)
(4.9)
(0.4)
(1.7)
1.8
(0.4)
0.9
9.7
(0.5)
(0.0)
9.1
(4.9)
4.2
(3.9)
0.3
Consolidated
FY14
12.6
4.6
3.9
(1.8)
19.3
(4.1)
(6.4)
(0.2)
(0.5)
6.2
0.1
0.9
15.3
(0.8)
(0.2)
14.4
(4.3)
10.2
FY15
14.2
4.3
4.4
(2.8)
20.2
(4.7)
(5.0)
(0.4)
(2.1)
5.6
(0.3)
1.3
14.6
(0.5)
(0.0)
14.1
(7.4)
6.7
(5.7)
(7.8)
4.5
(1.1)
Source: Company Annual Report, MOSL
Rising payable days on
standalone levels improve
reported cash conversion
cycle over FY12-FY15.
Rising payable days lead to improvement in cash conversion cycle
Over the last four years, the improvement in cash conversion cycle from 139
days in FY12 to 95 days in FY15 is primarily on account of (a) increase in the
payable days from 100 days in FY12 to 141 days in FY15, and (b) Sale of
receivables by United Phosphorus Inc.
The increase in the payable days is primarily on account of the standalone
operations, wherein the payable days have jumped steeply from 115 days in
FY12 to 200 days in FY15.
Exhibit 3:
Cash conversion cycle improves primarily on increase in payable days at the standalone entity
Particulars
Inventory Days
Receivable Days
Advances from customers
Payable Days
Cash conversion cycle (Days)
FY12
102
153
5
115
135
Standalone
FY13
FY14
95
109
167
104
5
4
147
171
110
38
Consolidated
FY15
FY12
FY13
FY14
FY15
136
125
117
120
129
97
119
107
109
111
3
5
4
2
4
200
100
119
131
141
30
139
101
96
95
Note: On closing basis; Source: Company Annual Report, MOSL
13 January 2016
3

ART
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UPLL
Exhibit 4:
Receivable days continue to remain elevated in LATAM and USA (INR b)
Subsidiary Name
FY14
Sales
FY15
Sales excluding
Related Party
FY14
FY15
Receivable Days (Ex
Receivable Days
Related Party)
FY14
FY15
FY14
FY15
UPL do Brasil Indústria e Comércio de
Insumos Agropecuários S.A.
14.3
14.7
14.2
14.7
262
298
264
298
UPL Agro S.A. de C.V.
3.0
3.2
3.0
3.2
62
91
62
91
Icona S A
1.7
2.5
1.5
2.3
233
188
264
145
UPL Costa Rica S.A
1.3
1.6
1.0
1.4
94
78
56
64
UPL Europe Limited
9.2
8.9
NA
NA
80
59
NA
NA
UPL France
0
3.4
0
3.3
0
87
0
85
UPL (Cerexagri)
6.6
4.2
6.6
0.0
117
173
117
NM
Cerexagri (B.V.)
2.3
2.5
0.9
0.7
344
309
89
201
UPL (Benelux)B.V.
3.2
1.9
2.0
1.7
60
240
27
6
UPL Deutschland GmbH
2.9
2.2
2.9
2.1
195
127
7
18
Decco US Post - Harvest Inc.
1.9
2.4
1.8
2.3
59
69
41
36
United Phosphorus Inc.*
19.2
21.1
19.0
20.8
42
48
41*
47*
Bio win Corporation
5.1
6.3
0.5
0.3
1,965
1,610
181
829
United Phosphorus Limited, Gibraltar
0
0.8
0
0
2,159
UPL LIMITED,Gibraltor
17.2
18.5
3.1
2.3
356
416
1,615
1,225
UPL Limited,Hong Kong
2.5
3.4
1.2
1.2
273
229
322
305
UPL Italia S.R.L.
2.3
2.3
2.3
2.2
370
402
245
215
SWAL Corporation Limited
4.1
4.9
4.1
4.9
55
73
53
66
Standalone
49.7
53.3
25.7
29.6
104
97
72
91
UPL Limited, Mauritius
0
5.3
0
0.3
NA
451
NA
579
United Phosphorus Cayman Limited
2.2
2.6
1.8
2.2
65
100
12
12
Riceco International, Inc.
2.6
2.5
0.9
0.8
156
175
184
257
UPL Australia Limited
1.1
1.3
NA
NA
41
36
NA
NA
*including sale of receivables of INR8.3b (FY14: INR6.2b) receivable days stood at 192 days (FY14: 160 days)
Note: days calculated on closing basis; Source: Company Annual Report, MOSL
Revenue growth and margin expansion led by subsidiaries
On consolidated basis, UPLL’s revenue grew 12% YoY to 121b in FY15. The
revenue growth was led by subsidiaries wherein the revenue contribution
increased 17.2% YoY to INR68b. On a standalone basis, revenue increased
7%YoY to INR53b.
EBITDA margin increased to 19.5% in FY15 from 18.7% in FY14, primarily on
gross margin expansion. However, for the standalone entity, EBITDA margin
declined to 10.5% in FY15 from 13.4% in FY14 on higher operating cost.
13 January 2016
4

ART
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UPLL
Exhibit 5:
Subsidiaries’ performance leads to growth in operating earnings
Standalone
Particulars
Net Revenue (Operations)
Raw Materials Consumed
Gross Margin
Operating and Administrative Expenses
Personnel Cost
EBITDA
FY14
(INR b)
%
FY15
(INR b)
%
Subsidiary (Derived)
FY14
(INR b)
FY15
% (INR b)
%
Consolidated
FY14
(INR b)
FY15
% (INR b)
%
49.7
26.6
23.1
13.8
2.6
6.7
100.0
53.6
46.4
27.8
5.2
13.4
53.3
28.2
25.1
16.3
3.2
5.6
100.0
52.9
47.1
30.6
6.0
10.5
58.0
27.8
30.2
9.8
6.9
13.5
100.0
47.9
52.1
16.9
11.9
23.3
67.6 100.0 107.7 100.0 120.9 100.0
31.9 47.2 54.4 50.5
60.2 49.8
35.6 52.8 53.3 49.5
60.7 50.2
10.4 15.4 23.6 21.9
26.7 22.1
7.3 10.7
9.5
8.8
10.4
8.6
18.0 26.6 20.2 18.7
23.6 19.5
Source: Company Annual Report, MOSL
Forex fluctuation impacts earnings adversely….
Forex fluctuations had an
INR2.1b (15% of PBT)
adverse impact on earnings.
During FY15, INR appreciated against most currencies (~26.4% against BRL; by
~18.2% against Euro); however, it declined 4.3% versus the USD.
UPLL had significant unhedged forex payables as at the end of FY15. Refer to
Exhibit 9
for details.
UPLL recognised foreign exchange loss of INR3.2b (v/s gain of INR0.6b in FY14)
mainly comprising of:
(a) Forex loss of INR0.9b in FY15 (v/s gain of 0.1b in FY14) on operations as part
of other income, and
(b) Forex losses of INR2.3b (v/s gain of INR0.5b in FY14) on loans as part of
finance cost.
UPLL has forex debt, which acts as a natural hedge for foreign exchange
earnings.
Further, UPLL had derivative contracts outstanding as of FY15. Refer to
Exhibit
11
for details. Some of the contracts lead to an increase in net unhedged
position.
The net unhedged position on the consolidated basis can be on account of
combination of (a) net unhedged foreign position at the subsidiary level and (b)
elimination of inter-company transactions on consolidation of subsidiaries
(having a reporting currency other than INR).
UPLL recognized a gain of INR1.1b on derivatives in FY15 (v/s a loss of INR1.4b in
FY14)—as part of net finance cost.
The gains and losses on derivatives were primarily on account of standalone
operations, wherein the company recognized a gain of INR1.2b in FY15 (v/s a
loss of INR1.4b in FY14)
Exhibit 7:
.. and consolidated entity adverse (INR b)
FY15
-0.2
-0.1
-0.3
-1.2
-1.5
Particulars
Other income
Finance cost - Gain/ (loss)
Gross Foreign Exchange Gain/ (Loss)
Derivatives Instruments- Gain/(loss)
Net Foreign Exchange Gain/ (Loss)
FY14
0.1
0.5
0.6
-1.4
-0.8
FY15
-0.9
-2.3
-3.2
1.1
-2.1
… However, partially cushioned by gains on derivatives
Exhibit 6:
Forex impact on standalone (INR b)
Particulars
Other income
Finance Cost - Gain/ (loss)
Gross Foreign Exchange Gain/ (Loss)
Derivatives Instruments- Gain/(loss)
Net Foreign Exchange Gain/ (Loss)
FY14
1.2
-0.7
0.5
1.4
1.9
Source: Company Annual Report, MOSL
Source: Company Annual Report, MOSL
13 January 2016
5

ART
|
UPLL
Exhibit 8:
Low net unhedged exposure on standalone (‘000)
Nature of Instrument
1. Payable
Currency
USD
EUR
GBP
JPY
USD
EUR
AUD
GBP
AED
CHF
FY14
383,467
28,827
202
128
394,150
34,591
1,815
10
18
-
FY15
327,478
26,903
176
27,572
305,279
17,782
1,588
10
-
19
Exhibit 9:
High net unhedged exposure on consolidated (‘000)
Nature of Instrument
1 Payable
Currency
USD
EUR
GBP
CHF
DKK
PLN
MUR
USD
EUR
GBP
DKK
JPY
AUD
MUR
PLN
AED
NZD
CHF
FY14
743,479
33,395
260
4
1,118
-
20
224,833
15,893
124
3,879
145,291
5,113
4,506
55
18
-
-
FY15
708,647
57,057
2,310
38
1,099
7
43
143,503
23,351
2,109
51
176,303
10,795
180
116
-
75
19
2. Receivable
2 Receivable
Source: Company Annual Report, MOSL
*(including Foreign Currency payable in respect of derivative
contracts as mentioned in Exhibit-10 below)
Source: Company Annual Report, MOSL
*(including Foreign Currency payable in respect of derivative
contracts as mentioned in Exhibit-11 below)
Exhibit 10:
Standalone derivative exposure outstanding (‘000)
Nature of Instrument
(a) Forward contracts - Sell
Forward contracts - Sell
Forward contracts - Buy
(b) Derivative contracts
(i) Full Currency Interest
Rate Swap contracts –
payable*
Full Currency Interest Rate
Swap contracts – payable*
Currency
USD
EUR
USD
FY14
4,000
4,119
-
FY15
-
24,843
64,577
Exhibit 11:
Consol. derivative exposure outstanding (‘000)
Nature of Instrument
(a) Forward contracts - Sell
Forward contracts - Sell
Forward contracts - Buy
(b) Derivative contracts
(i) Full Currency Int.Rate
Swap contracts – payable*
Full Currency Interest Rate
Swap contracts – payable*
(ii) Interest Rate Swaps on
Loans Payable
Currency
USD
EUR
USD
USD
EUR
USD
FY14
4,307
4,119
7,141
233,853
25,667
243,275
FY15
2,127
24,843
157,057
177,584
25,667
202,948
USD
EUR
233,853
25,667
177,585
25,667
Source: Company Annual Report, MOSL
*Note:- a) Company will receive principal in INR and pay in foreign
currency, b) Company will receive fixed interest in INR and pay fixed /
floating interest in foreign currency.
Source: Company Annual Report, MOSL
*Note:- a) Company will receive principal in INR and pay in foreign
currency, b) Company will receive fixed interest in INR and pay fixed
/ floating interest in foreign currency.
Exhibit 12:
Translation losses dampen net worth accretion (INR b)
Particulars
Opening net worth
Add: Profit for the year
Less: Dividend (including tax)
Issue of shares
Buyback of Shares
Capital Reserve
Securities Premium Account
Capital Redemption Reserve
Foreign Currency Translation
Reserve
General Reserve
Surplus in the Consolidated
Statement of Profit and Loss
Closing net worth
FY14
46.5
9.5
(2.0)
-
(0.0)
0.0
(2.8)
0.0
1.2
-
FY15
52.5
11.4
(2.6)
-
-
0.3
0.0
-
(3.1)
-
INR3.1b of adverse impact
on translation of foreign
subsidiaries.
0.2
0.1
52.5
58.6
Source: Company Annual Report, MOSL
6
13 January 2016

ART
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UPLL
Gains on sale of associate contain exceptional losses
Exceptional/prior period losses declined to INR0.1b in FY15 v/s INR1.0b in FY14,
primarily on account of gain of INR0.6b on sale of stake in Sipcam UPL Brazil—an
associate.
Restructuring and reorganization cost of Latam and European businesses stood
at INR0.4b (v/s INR0.5b in FY14).
FY14
554.4
198.6
100.0
-
-
853.0
FY15
427.1
-
100.0
70.9
(568.1)
29.9
Exhibit 13:
Exceptional and prior period losses decline on sale of associate (INR m)
Particulars
Exceptional Items
Restructuring/reorganization Cost
Compounding fees
Provision for diminution in value of Investment
Fraudulent withdrawal
Profit on sale of Associates
Total
Prior Period Items
Material cost pertaining to earlier years
Others (net)
Total
Restructuring/
reorganization cost of
Latam and European
operations continued
126.0
43.3
29.5
5.5
155.5
48.8
Source: Company Annual Report, MOSL
Effective tax rate remains low on routing exports through low tax countries
UPLL’s consolidated tax rate remained low at 17.3% (FY14: 19.2%) due to (a)
investment based tax incentives and dividend income from subsidiaries available
at the standalone level leading to an effective tax rate of 20.7%, and (b) routing
of exports sales through subsidiaries domiciled in countries with low tax rates.
Exhibit 14:
Effective tax rate remains low
21.5%
17.6%
19.2%
Exports through countries
having low tax rates keep
effective tax rate low.
17.3%
11.0%
FY11
FY12
FY13
FY14
FY15
Source: Company Annual Report, MOSL
UPLL routes its exports sales primarily through three subsidiaries (a) UPL
Limited, Gibraltar, (b) Bio-win Corp, Mauritius and (c) UPL, Mauritius; the sales
from these is primarily to fellow subsidiaries at a significant margin and have
low tax rates.
UPL, Gibraltar FY15 revenue stood at INR18.5b—of which ~INR15b was to
related parties. PAT margin for FY15 stood at 18%—2x consolidated PAT
margin.
Bio-win Corp. FY15 revenue stood at INR6.5b—of which 95% is to related
parties. PAT margin for FY15 was 56%—6x consolidated PAT margin.
UPL, Mauritius FY15 revenue stood at INR5.3b—of which INR5b pertains to
related parties. PAT margins stood at 41%— ~4.6x consolidated PAT margin.
7
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Exhibit 15:
Low tax rates in subsidiaries having high margins (INR b)
FY14
Subsidiary
United Phosphorus Inc.
UPL LIMITED,Gibraltor (Formerly Known as
Uniphos Limited,Gibraltor)
Bio-win Corporation Limited
UPL Limited, (formerly known as Uniphos
Limited )
Upl do Brasil Industria e Comércio de
Insumos Agropecuários S.A.
UPL Europe Limited (formerly known as
United Phosphorus Limited)
SWAL Corporation Limited
Cerexagri S.A.S.
UPL Limited,Hong Kong( Formerly Known as
United Phosphorus Limited, Hongkong)
UPL France (formerly known as Aspen SAS)
UPL Agro S.A. de C.V.(formerly known as
United Phosphorus de Mexico, S.A. de C.V.)
Icona S A
Decco US Post-Harvest Inc
UPL Italia S.R.L. (formerly known as
Cerexagri Italia S.R.L.)
Net Worth
4.2
8.3
8.8
3.4
5.5
5.1
0.5
2.1
0.4
0.0
0.2
0.1
0.4
0.2
Revenue
19.1
17.2
5.1
-
14.3
9.2
4.1
6.6
2.5
-
3.0
1.7
1.9
2.3
1%
32%
6%
0%
53%
36%
33%
85%
PAT
Margin
3%
20%
47%
0%
1%
3%
2%
3%
6%
ETR
27%
0%
-1%
0%
23%
21%
32%
13%
0%
Net Worth
5.1
11.9
6.8
4.2
4.8
4.9
0.6
2.0
0.8
0.3
0.0
0.0
0.7
0.2
FY15
Revenue
21.1
18.5
6.3
5.3
14.7
8.9
4.9
4.2
3.4
3.4
3.2
2.5
2.4
PAT
Margin
3%
18%
56%
41%
6%
1%
3%
6%
10%
1%
0%
5%
9%
ETR
35%
0%
0%
0%
41%
22%
34%
-11%
0%
-19%
69%
16%
38%
2.3
0%
75%
Source: Company Annual Report, MOSL
Exhibit 16:
Routing exports through counties with low tax regime
UPL
Limited
Bio -Win
Corporation,
Mauritius
Upl do Brasil
Industria e Comércio
de Insumos
Agropecuários S.A.
United Phosphorus
Limited, Gibraltar
UPL Limited ,
Mauritius
Swal
Corporation
UPL Inc
UPL
Limited,Hon
g Kong
UPL
France
UPL Agro S.A. de
C.V.(formerly known as
United Phosphorus de
Mexico)
ICONA S.A
UPL Italia S.R.L.
(formerly
known as
Cerexagri Italia
S.R.L.)
Decco US Post-
Harvest Inc
Source: Company Annual Report, MOSL
Debt declines marginally while borrowing cost rises
Debt declined marginally from INR33.5b in FY14 to INR32.8b in FY15.
Long-term debt (including current maturities) declined from INR27.4b in FY14 to
INR22.0b in FY15. However, short-term loans increased from INR6.1b in FY14 to
INR10.9b in FY15.
A significant proportion of the external debt availed by the standalone entity
and Bio-win Corporation (which is guaranteed by the standalone entity).
Borrowing cost (excluding forex) charged to P&L increased to 10.2% in FY15
from 8.9% in FY14, while borrowing cost including forex increased to 13.6% in
FY15 (FY14:11.3%).Part of the high borrowing cost may be on account of
seasonality of business & the reported debt position being as of a certain date.
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Finance cost charged to income statement stood at INR5.2b (FY14:INR4.9b);
however, interest and finance charges paid stood at INR7.4b (FY14: INR4.3b).
Exhibit 17:
Debt declines marginally, shifts from long term to short term (INR b)
Long Term Borrowings
33.9b
9.7%
7.7
26.2
Short Term Borrowings
42.0b
11.1
8.1%
30.9
33.5b
6.1
8.9%
27.4
32.8b
10.2%
10.9
22.0
FY15
Borrowing Cost excluding forex
FY12
FY13
FY14
Source: Company Annual Report, MOSL
Exhibit 18:
Significant external debt availed by standalone entity and Bio-win (INR b)
Particulars
UPL do Brasil
Icona S A
Bio-Win Corporation
Standalone
Others
Total
FY14
1.7
0.6
12.9
14.2
4.1
33.5
FY15
2.6
0.6
11.4
13.8
4.5
32.8
Source: Company Annual Report, MOSL
Cash and investment at 22% of net worth; yields 4.4% returns
Cash and investment stood at INR13b, 22% of net worth (FY14: INR 16b, 30% of
net worth). Yield on investment remained low at 4.4% (FY14: 2.8%).
Low yield on cash and investments are primarily on account of (a) high current
account balance of INR4.3b (FY14: INR6.9b) which may be on account of
seasonality in business & the reported cash position being as of a certain date,
and (b) INR4.7b (FY14: INR2.8b) of fixed deposits made outside India.
Exhibit 19:
Significant gap between borrowing cost and investment yields
Borrowing Cost
12.3%
9.9%
9.7%
2.9%
Borrowing cost excluding forex
11.3%
10.2%
4.4%
Yield
13.6%
8.1%
1.9%
8.9%
2.8%
FY12
FY13
FY14
FY15
Source: Company Annual Report, MOSL
13 January 2016
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Intangible asset at 43% of net worth
Intangible assets increased to INR25.1b in FY15 (FY14: INR22.8b). The increase is
primarily on account of increase in goodwill on consolidation to INR14.5b in
FY15 (FY14: INR12.1b) due to increase in holding of subsidiary UPL DO BRASIL
S.A. from 73% to 100%
Exhibit 20:
Significant proportion of net worth invested in intangibles
Particulars
Intangible Assets-Acquired
ITUD
Goodwill on Consolidation
Total
Intangibles % of net worth
FY14
9.6
1.0
12.1
22.8
FY15
8.2
2.4
14.5
25.1
Goodwill on consolidation
rises on account of
increasing stake in UPL
Do Brasil.
43.4%
42.8%
Source: Company Annual Report, MOSL
13 January 2016
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ART #2
MANAGEMENT SPEAK/KEY PLANS
Global agrochemical industry
An emerging trend in the global agrochemicals market was the increasing
research & development in bio-pesticides to compete with organic farming and
integrated pest management.
Between 2009 and 2014, several molecules went off patent while some are on
the verge of patent expiry—opening opportunities for other generic
agrochemical players. According to FICCI, the total feasible opportunity is
estimated at over USD3b.
The global crop protection chemicals market is projected to reach USD69.6b by
2019, with an estimated CAGR of 5.5% from 2014 to 2019.
Achievements in FY15
Used in-house technologies to introduce Glufosinate in India.
Adopted an asset-sweating model:
UPL generated higher revenue through a
progressively higher asset utilization coupled with value addition (make-or-buy
approach).
Commissioned two plants within best-in-class timelines:
UPL commissioned
two herbicide manufacturing plants at Jhagadia within nine months. The
company also established a coal-fired boiler at Jhagadia within 15 months, an
industry benchmark.
Outlook
Under current agricultural policies in India, consumption growth between 2009
and 2050 is likely to be strongest for fruits (246%), vegetables (183%) and dairy
products (137%)—which together account for 77% of the total projected rise in
food consumption by 2050. While the demand for food has largely been met by
domestic products, food imports have also risen.
UPLL aims to focus on superior supply chain management, smarter procurement
as well as comprehensive administration and control at its facilities.
Capacity expansion in Colombia and Rotterdam is expected to transpire in FY16.
UPLL is setting up active ingredient manufacturing plants in India, Europe and
America to enhance market proximity at a time when China is emerging as a
higher cost global player.
Brazil—a key UPL target market
Brazil is an agricultural powerhouse— total volume of agricultural production in
2014 accounted for 5.8% of GDP. The country is the world’s biggest producer
and exporter of coffee, sugar and orange juice, the biggest meat exporter, the
second-biggest producer and exporter of soy products as well as a major grower
of corn. In 2014, Brazil’s agricultural exports to China represented 22% of the
former’s total agricultural exports.
The national consumption of agrochemicals is equivalent to 5.2 liters of
agrochemicals per year per inhabitant. Importantly, the release of transgenic
seeds in Brazil was one of the factors responsible for making the it the top
11
13 January 2016

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consumer of agrochemicals since the cultivation of these modified seeds
requires the use of large quantities of these products.
Brazil corn production for FY15 was pegged at 75 million tonnes, down 5 million
tonnes from last year. The area is estimated at 15 million hectares, down 0.8
million hectares from the previous year. Yield is forecast at 5 tonnes per
hectare, down 1.2% from the previous year. A decline in the first season crop
estimate was offset by an increase in the second season forecast.
13 January 2016
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ART #3
GOVERNANCE MATTERS
Directors regular in attending board meetings
UPLL is regular in calling board meetings as per the prescribed laws. Four board
meetings were held in FY15.
The board comprises 12 directors, out of which 4 are promoter directors, 2 are
non-promoter executive directors and 6 are independent directors (out of which
4 have been on the board for more than 10 years).
All directors attendend more than 50% of the meetings in FY15.
Exhibit 21:
Directors regular in attending board meetings
Attendance
Particulars
Category
Promoter and Executive Chairman and
Mr. R. D. Shroff
4
Yes
Managing Director
Mrs. S. R. Shroff
Promoter and Non-Executive Vice Chairman
4
No
Mr. J. R. Shroff
Promoter and Non-Executive Director
4
Yes
Mr. V. R. Shroff
Promoter and Non-Executive Director
4
No
Mr. A. C. Ashar
Non-Promoter and Executive Director
4
Yes
Dr. P. V. Krishna
Independent and Non-Executive Director
3
Yes
Mr. Pradeep Goyal
Independent and Non-Executive Director
3
Yes
Mr. K. Banerjee
Non Promoter and Executive Director
3
Yes
Dr. Reena Ramachandran Independent and Non-Executive Director
4
Yes
Mr. Pradip Madhavji
Independent and Non-Executive Director
4
Yes
Mr. Vinod Sethi
Independent and Non-Executive Director
4
Yes
@
Mr. Suresh P. Prabhu
Independent and Non-Executive Director
2/3
No
Mr. Hardeep Singh*
Independent and Non-Executive Director
1/1
N.A.
@
th
Resigned with effect from 7 November, 2014; *Appointed as an additional Director with effect
nd
from 2 February, 2015;
Source: Capital line, Company Annual Report, MOSL
Name of Director
Board
Meeting
Last
AGM
Auditor rotation likely as per the Companies Act 2013
Statutory auditors to be
mandatorily changed post
FY17, in accordance with
the new Companies Act.
Member firms of Ernst and Young have been the auditors of UPLL since FY04.
The Companies Act (2013) requires mandatory rotation of auditors for listed
entities after serving for 10 consecutive years. The Act further provides a three-
year period (from April 1, 2014) to comply with the requirement.
13 January 2016
13

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NOTES
13 January 2016
14

ART GALLERY
ART COMPANIES

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ART
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UPLL
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