IDirect RallisIndia IC

Initiating Coverage
October 1, 2014
Rating Matrix
Rating : Buy
Rallis India (RALIND)
Target : 278
Target Period : 18-24 months | 226
Potential Upside : 23% Good play on Agri theme....
Rallis India Ltd (Rallis), a Tata enterprise, is a major crop protection (agro
YoY growth (%) chemicals) player domestically with presence in the hybrid seed segment
(YoY Growth) FY14 FY15E FY16E FY17E through its subsidiary Metahelix. The company has transformed itself
Net Sales 19.9 17.3 16.5 16.7 from being an insecticide player in the past decade to a total agriculture
EBITDA 24.1 21.3 22.6 22.7
services solution provider. Rallis presence across the value chain along
Net Profit 27.6 20.9 18.4 25.7
with good brand recall bodes well for the company. In FY10-14, Rallis
EPS (Rs) 27.6 20.9 18.4 25.7
Sales and PAT have grown at a CAGR of 18.4% and 10.6%, to | 1727
crore and | 152 crore respectively. Going forward, on the back of robust
Valuation summary (Consolidated)
FY14 FY15E FY16E FY17E
outlook in contract manufacturing business, strong retail presence
P/E 28.9 23.3 19.7 15.7 through 2000 dealers & 30000 retailers & increasing share of Non
Target P/E 35.5 29.4 24.8 19.8 pesticide portfolio (NPP share to rise from 33.9% of net sales in FY14 to
EV / EBITDA 17.0 13.6 10.9 8.7 34.6% of net sales in FY17E) we expect the companys Sales and PAT to
P/BV 6.1 5.1 4.4 3.7 grow at a CAGR of 16.8% & 21.6% respectively in FY14-17E. We initiate
RoNW 21.2 22.0 22.2 23.7 coverage on Rallis valuing it at 22x P/E on an average FY16E & FY17E EPS
RoCE 27.5 29.9 33.9 35.4 of | 12.6 with a corresponding target price of | 278 & assign a BUY rating.
Presence across the value chain!!
Stock Data Rallis is present across the agricultural value chain ranging from hybrid
Stock Data seeds (through its subsidiary Metahelix) to plant growth nutrients to
Market Capitalization | 4395.7 Crore
organic manure & soil conditioners (through its subsidiary Zero Waste
Total Debt (FY14) | 74.5 Crore
Agro Organics) to crop protection (agro chemicals). Metahelix
Cash and Investments (FY14) | 15.5 Crore
manufactures and markets hybrid seeds with ~60-65% exposure to the
EV | 4454.7 Crore
52 week H/L 251 / 145
Kharif season. Metahelixs revenue has grown at a CAGR of 59 % in FY12-
Equity capital | 19.5 Crore 14. With good product profile coupled with strong R&D set up, we expect
Face value |1 the Metahelixs revenue to grow at a CAGR of 25% in FY14-17E to | 439
MF Holding (%) 6.7 crore in FY17E (| 225 crore in FY14). Hence with Metahelix traction and
FII Holding (%) 15.0 strong base business we expect consolidated revenues to grow at a
CAGR of 16.8% over FY14-17E to | 2755.3 crore in FY17E.
Comparative return matrix (%) Contract manufacturing; new area of thrust; robust growth outlook
Return % 1M 3M 6M 12M Rallis also has a notable presence in the contract manufacturing segment
Rallis India -5.0 -2.0 37.0 46.0 wherein it manufactures chemicals and formulations for other reputed
PI Industries -5.0 36.0 75.0 210.0 industry players. It is developing its new Dahej SEZ unit for the purpose of
Dhanuka Agritech 11.0 26.0 90.0 260.0
contract manufacturing. In FY14, Rallis clocked a top line of ~| 250 crore
UPL Ltd 3.0 6.0 85.0 138.0
from this segment. With the commissioning of Dahej facility (partially) we
expect this segment to grow at a CAGR of 20% in FY14-17E.
Price movement
Sound financials, lean balance sheet; well poised for growth
9,000 300 Rallis has a lean balance sheet with minimal leverage and strong return
8,000 250 ratios with FY14 ROCE & ROE at 21% & 28% respectively. The company
7,000 also possesses relatively better working capital cycle with Net working
200
6,000 capital days at 23 days in FY14 vis--vis industry average of ~ 44 days.
150 We initiative coverage on Rallis India with a target price of | 278, valuing
5,000
4,000
100 the company at 22x P/E (implying PEG of 1x over FY14-17E period) on an
50 average FY16E & FY17E EPS of |12.6. We assign a BUY rating on the stock
3,000
Exhibit 1: Financial Performance (Consolidated)
2,000 0
(Year-end March) FY13 FY14 FY15E FY16E FY17E
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Net Sales (| crore) 1,440.9 1,727.2 2,026.6 2,360.8 2,755.3
Price (R.H.S) Nifty (L.H.S) EBITDA (| crore) 210.6 261.3 316.9 388.7 476.9
Net Profit (| crore) 119.0 151.9 183.7 217.4 273.2
EPS (|) 6.1 7.8 9.4 11.2 14.0
Analysts name P/E (x) 36.9 28.9 23.3 19.7 15.7
Chirag J Shah Price / Book (x) 7.1 6.1 5.1 4.4 3.7
shah.chirag@icicisecurities.com EV/EBITDA (x) 21.0 17.0 13.6 10.9 8.7
Shashank Kanodia RoCE (%) 26.4 27.5 29.9 33.9 35.4
shashank.kanodia@icicisecurities.com RoE (%) 19.2 21.2 22.0 22.2 23.7
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research

Shareholding pattern (%) Q1FY15 Company background
Shareholder's Category Holding (%)
Promoters 50.1
Rallis India, promoted by Tata Chemicals (US$ 1.5 billion market cap
Institutional Investors 21.6 company), is a market leader in the crop protection (agro-chemical i.e.
General Public 28.3 pesticides) segment domestically with a rich historical background. Under
crop protection segment it manufactures and markets insecticides,
FII & DII holding trend (%) herbicides and fungicides. With manufacturing facilities spread across 4
geographic locations domestically, the company has a capacity of 10,000
tonne of technical grade pesticides and ~30,000 tonne/litres of
16.0 15.0
13.8 formulations per annum. The company has a strong distribution network
11.9
14.0 12.5 with ~2000 dealers & 30,000 retailers thereby covering ~80% of the
11.5 11.3
12.0 10.8 10.6
10.2 Indian districts. The company has over 25 depots with ~200 plus field
10.0 8.9 staff and more than 1200-1300 crop advisers. Rallis has presence in
8.0 7.1 7.2 6.8 6.7 almost all key Agri states including Andhra Pradesh, Gujarat, Maharashtra,
6.1 6.3
%
6.0 Punjab and Haryana among others.

4.0 The company has transformed itself from being only an insecticide player
2.0 to a total agro service solution provider. The transformation began in
0.0 FY11 when it acquired a majority stake in a seed manufacturing company
i.e. Metahelix Life Sciences Pvt. Ltd. at an enterprise value of ~| 186
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
crore. Rallis present stake in Metahelix stands at ~80% with a total equity
FII DII investment of | 171 crore. In FY13 it had also acquired a majority stake in
organic manure and soil conditioners manufacturing company based in
Maharashtra i.e. Zero Waste Agro Organics Pvt. Ltd. As of FY14, Rallis
holds 51% in this company with a total equity investment of | 29 crore.
Rallis also has an institutional and contract manufacturing arm that
manufacturers chemicals for its institutional clients namely Bayer
Corpscience, PI Industries among others. The company is a registered
source of supplier in international markets and has no plans to enter into
the subsidy driven fertilizer segment domestically.
Exhibit 2: Rallis India Ltd. Overview
Rallis India
Consolidated revenue of ~
|1750 crore in FY14
Domestic Agro-chemicals Seeds Business Contract Manufacturing Institutional Business Plant Growth Nutrients,
(crop protection) Metahelix Household Chemicals
Revenues of ~|900 crore Revenues of ~| 225 crore Revenues of ~| 250 crore Revenues of ~ | 250 crore Revenues of ~| 125 crore
(51%) (13%) (14%) (14%) (8%)
Source: Company, ICICIdirect.com Research,

Page 2
Brief Overview of Indian Agriculture Industry/Sector
The Indian economy has transformed itself from being an agrarian
economy way back in 1950s to being a services driven economy in
recent times. The share of agriculture in our total GDP has reduced from
51.9% in 1950-51 to 13.9% in FY14. Though the share of agriculture in the
total GDP has decreased over a period of time, a majority ~60-65% of our
population is still directly or indirectly dependent on it for livelihood.
India Topological Data (2011)
Domestically our agriculture season is bifurcated into Kharif and Rabi
Particulars Units Amount
Total Geographical Area million hectare 329
season. Kharif (June-October) being the season wherein the crops are
Gross Cropped Area (GCA) million hectare 199 mainly rain-fed (South-West monsoons) with major crops sown during
Net Sown Area (NSA) million hectare 142 the season include rice, cotton, soyabean etc. The Rabi (November-April)
Cropping Intensity GCA/NSA 141% season is mostly governed by irrigation wherein main crops sown during
Net Irrigated Area million hectare 64 this season include wheat, barley, mustard etc. India on an average
Irrigation % % 45 receives ~1186 mm of rainfall annually with ~887 mm (~75%) distributed
Source: Ministry of Agriculture, ICICIdirect.com Research during the Kharif season. The total land under cultivation as of FY11 stood
at 141.6 million hectare while the total food grain production in FY14
stood at 264.4 million tonne (estimated by the ministry of agriculture)
Exhibit 3: Domestic Food grain production (% Share, Kharif vs. Rabi) Exhibit 4: Indian GDP Contribution (Agri, Industry, Services)
100
100
36.4 80
80 40.0 43.7 48.1 50.6 51.1 57.1 57.5 57.4 58.8 60.0
60
60
% share
40 40
63.6 60.0 28.3 27.9 28.2 27.3 26.1
56.3 51.9 49.4 48.9 20
20
14.6 14.6 14.4 14.0 13.9
0 0
1970-71 1980-81 1990-91 2000-01 2010-11 2013-14 2009-10 2010-11 2011-12 2012-13 2013-14
Kharif Rabi Agriculture & Allied Sectors Industry Services
Source: Ministry of Agriculture, ICICIdirect.com Research Source: Government of India, ICICIdirect.com Research
The proportion of food grain production between Kharif and Rabi in the
past has been skewed towards the Kharif season (In 1970s & 80s the
share of Kharif stood at ~60%). With increasing thrust on irrigation &
farmer awareness, the scenario is now balanced with current proportion
of food grain production being equally distributed among Kharif & Rabi
season. As of FY14, the share of Kharif & Rabi in total food grain
production stood at 49% & 51% respectively.
Exhibit 5: India Domestic GDP vs. India Domestic Agriculture GDP
Agricultural GDP at Agricultural GDP at
Domestic GDP at Constant YoY Growth Domestic GDP at Current YoY Growth Constant Prices (2004-05) YoY Growth Current Prices YoY Growth
Fiscal Year Prices (2004-05) (| crore) (%) Prices (| crore) (%) (| crore) (%) (| crore) (%)
FY06 3253073 9.5 3390503 14.1 502996 5.5 536822 12.6
FY07 3564364 9.6 3953276 16.6 523745 4.1 604672 12.6
FY08 3896636 9.3 4582086 15.9 556956 6.3 716276 18.5
FY09 4158676 6.7 5303567 15.7 555442 -0.3 806646 12.6
FY10 4516071 8.6 6108903 15.2 557715 0.4 928586 15.1
FY11 4918533 8.9 7248860 18.7 610905 9.5 1143517 23.1
FY12 5247530 6.7 8391691 15.8 643543 5.3 1300569 13.7
FY13 5482111 4.5 9388876 11.9 649424 0.9 1417468 9.0
FY14 5741791 4.7 10472807 11.5 681412 4.7 1653802 16.7
Source: Ministry of Agriculture, ICICIdirect.com Research ,
The pure play agricultural share in the total GDP at constant prices stood
at ~12% in FY14 while its share at the current prices was at ~16% in
FY14. In FY14, the real agricultural GDP growth rate stood at 4.7%.

Page 3
Global Agro chemical Industry
India Vs Global Crop Protection Industry
According to the industry estimates, the global agro chemical (crop
80 71 protection) industry is pegged at ~US$ 48 billion as of CY12. It has grown
CAGR 6.8%
at a CAGR of 10.9% in CY06-12 and is expected to grow at a CAGR of
60 CAGR 10.9% 48 6.8% in CY12-18E to US$ 71 billion by CY18E. The Indian agro chemical
US$ billion
40 26 industry size is pegged at ~US$ 3.8 billion (~| 20,000 crore) as of FY12,
which is equally divided between the domestic consumption & exports;
20
each at US$ 1.9 billion (~| 10,000 crore). The domestic industry is
0 expected to grow at a CAGR of ~12% to US$ 6.8 billion by FY17E with
CY06 CY12 CY18E domestic consumption witnessing a growth of ~8% CAGR & exports
expected to grow at a CAGR of ~15% in the aforesaid period.
Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Exhibit 6: Global Agro chemical geographic distribution (CY12)
Research
ROW
4%
Latin America Europe
19% 29%
Globally, Europe constitutes the highest ~29% of the total
agro chemical consumption while Asia ranks 2nd with
~25% share of the total pie as of CY12.
North America
23%
Asia
25%
Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research
In Europe the consumption is highest on account of high commodity

prices, need for better quality, higher yield & limited land. In Asia
however, the consumption is higher on account of increasing demand for
palm oil in Japan, Malaysia & Indonesia.
There is a key difference observed in terms of application of agro

chemicals. Globally, fruits & vegetables and cereals form majority (44%)
of the agro chemical consumption while in India it is mainly skewed
towards the Kharif crops i.e. Cotton (50%) & Rice/Paddy (18%), which
forms the major portion of the agro chemical consumption.
Exhibit 7: Global consumption bifurcation Crop Wise (CY12) Exhibit 8: Domestic consumption bifurcation- Crop Wise (CY12)
Sugarcane Cereals, Millets,
others Fruits &
2% Oil Seeds others
18% Vegetables
7% 1%
26%
Rice Plantation Crops

9% 8%
Cotton
Cotton Fruits & 50%
6% Vegetables
Cereals
14%
Soyabean 18%
10% Maize Paddy
13% 18%
Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research
A stark difference is also observed in the agro chemical usage bifurcation

globally vis--vis India wherein globally herbicide forms major portion of
pesticide consumption (44% share) while in India, insecticides forms the
major share (65%).

Page 4
Investment Rationale
Indian Vs. Global (2011)
Challenges faced by Indian Agri industry: An opportunity for agro-chemicals
Particulars Units India World % Share India commands ~ 2.4% of the global geographic area & has access to
million ~4% of the total water reserves for supporting a mammoth ~18% of the
Total Area hectare 329 13442 2.4 total global population & ~15% of the total global livestock. Given the size
million
of population and geographical limitations there exists a strong case for
Land Area hectare 297 13009 2.3 augmenting the productivity of sowable land.
million 1) Constant Arable Land: Growing Population
Arable land hectare 159 1411 11.3
In India, the land under cultivation or the net sown area has increased
Total Population million no 1241 6909 18.0
marginally in the last several decades. In 1950-51, the net sown area
Source: Agriculture Statistics 2013, ICICIdirect.com Research
stood at 118.8 million hectare while in 2010-11 it stood at 141.6 million
hectare. However the same is not the case in the last decade specifically,
wherein the net sown area has remained almost constant (net sown area
in 2000-01 stood at 141.3 million hectare while the same in 2010-11 stood
at 141.6 million hectare).
Exhibit 9: India Net Sown Area & Gross Sown Area (1950-2011) Exhibit 10: India Net Sown Area & Gross Sown Area (2000-2011)
250 141 160 250 141 142
130 131 138 140
123 140 138 138
115 118 200 137
200 111 136 136 138
120 135
million hectare 136
150 134
million hectare
150 100
132 134
%
131
80 100 132
%
199.0
100
185.7
185.3
60 130
172.6
165.8
50
152.8
143.0
141.3
141.6
140.9
140.3
133.2
131.9
128
118.8
40
50 0 126
20
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
0 0
1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11 Net Area Sown Total Cropped Area Cropping Intensity
Net Area Sown Total Cropped Area Cropping Intensity
Source: Agriculture Statistics 2013, Ministry of Agriculture, ICICIdirect.com Research Source: Agriculture Statistics 2013, Ministry of Agriculture, ICICIdirect.com
Research
Cropping Intensity i.e. the no of times the same land can used for
cropping (calculated as gross sown area to net sown area) however in the
aforesaid period has increased from 111% in 1950-51 to 141% in 2010-11,
thereby implying efficiencies over the period of time.
As per the Vision 2030 document released by the Indian council of
Indias domestic population has grown from 361 million in
1950-51 to 1210 million in 2010-11 (at a CAGR of 2%).
agricultural research, the domestic demand for food grains is expected to
Going forward, as per the estimates of United Nations (UN) increase at a CAGR of ~2% in CY2000-30. The food grains demand is
Indias population is expected to grow at a CAGR of 1% to expected to reach 355 million tonne in CY 2030 vis--vis 192 million tonne
1450 million by 2028, putting forth a tremendous demand in CY2010. Fruits & vegetables demand is expected to reach 290 million
for food grains.
tonne in CY2030 vis--vis 136 million tonne in CY2010.
Exhibit 11: Food grains demand expected to increase at a CAGR of ~2% in CY2000-30
400 355
350
300
million tonne
250 192 180 182

200 156
150 102 95 110 93
64 81 76
100 33 43
50 14 30
However, given the limitation of land use and increasing the 0
cropping intensity over a certain limit there exists an
Rice
Wheat
Pulses
Grains
Cereals
Fruits
Milk
Vegetables
Food
urgency to increase the yield out of the same land for

meeting the needs of growing domestic population. This in
turn will be a key growth driver for the growth of agro CY2000 CY2030
chemical industry going forward.
Source: Indian Council of Agricultural Research Vision 2030, ICICIdirect.com Research

Page 5
2) Fragmented Land Holdings: Reducing the economies of scale
The acreage of land holdings per Indian farmers have reduced over a
period of time thereby leading to challenges over economics of scale and
Average size of operational holding in 1960-61 stood at 2.63 greater farm mechanization. As per the agriculture census released by the
hectare/holding government of India, average size of operational holding has reduced
from 1.33 hectare per holding in FY01 to 1.23 hectare per holding in FY06
and further to 1.15 hectare per holding in FY11. The proportion of
marginal & small holding as a % of total holdings is also on the rise in
India. It has increased from 81.8% in 2000-01 to 85% in 2010-11.
Exhibit 12: India Farm Holdings Bifurcation
No of Holding (million number) Area (million hectare)
Category of Holdings 2000-01 2005-06 2010-11 2000-01 2005-06 2010-11
Marginal (<1 hectare) 75.4 83.7 92.4 29.8 32 35.4
As of 2010-11, the total number of marginal holding (<1 Small (1-2 hectare) 22.7 23.9 24.7 32.1 33.1 35.1
hectare) stood at 92.4 million while small holding (1-2 Semi-Medium (2-4 hectare) 14 14.1 13.8 38.2 37.9 37.5
hectare) stood at 24.7 million out of the total holdings Medium (4-10 hectare) 6.6 6.4 5.9 38.2 36.6 33.7
which stood at 137.8 million Large (>10 hectare) 1.2 1.1 1 21.1 18.7 17.4
All Holdings 119.9 129.2 137.8 159.4 158.3 159.1
Average Size of Holding
(hectare/holding) 1.33 1.23 1.15
Proportion of Marginal & Small
holdings (%) 81.8 83.3 85.0
Source: Ministry of Agriculture, ICICIdirect.com Research
Thus, with increasing fragmented land holdings and limitations over

mechanization of the same, there exits an impelling case for increase the
yields per holding. One of the ways through which it can be achieved is
the optimum use of agro chemicals in farm lands.
3) Domestic Pesticide Industry, under penetrated market; nascent stage
According to the industry estimates, the domestic agrochemical (crop
protection) industry size is pegged at ~US$ 3.8 billion (FY12) with US$ 1.9
billion of sales domestically (~| 10,000 crore) & ~US$ 1.9 billion worth of
exports. Indias per capita pesticide consumption however is one of the
lowest in the world with 0.6 kg/hectare of pesticides used vis--vis its
global peers like China & Japan, which use 13 kg/hectare & 12 kg/hectare
respectively.
Exhibit 13: Per Capita Consumption of pesticides (FY12)
18 17
16
14 13
12
12
Kg/hectare
10
8 7 7
Pesticide usage in developed countries like USA & UK in FY12
stood at 7 Kg/hectare and 5 Kg/hectare respectively. 6 5 5
4
2 0.6
0
USA Korea France UK India Taiwan China Japan
The per capita consumption of pesticides is low in India on account of low

farmer awareness, limited reach and relatively limited purchasing power
of Indian farmer vis--vis their global counterparts.

Page 6
As of FY12, Insecticides form the largest share (65%) of pesticides
consumed in India, followed by Herbicides (16%), Fungicides (15%) and
others (4%). Among the crops, the major crops for which pesticides are
used are mainly Kharif crops namely Cotton (50%) & Rice/Paddy (18%).
Exhibit 14: Domestic consumption bifurcation Pesticide type (FY12) Exhibit 15: Domestic consumption bifurcation- Crop Wise (FY12)
Sugarcane Cereals, Millets,
Others Oil Seeds others
2%
Herbicides 4% 7% 1%
16%
Plantation Crops
8%
Cotton
Fungicides Fruits & 50%
15% Vegetables
Insecticides 14%
65%
Paddy
18%
Among the states, Andhra Pradesh commands the highest share of 24%
in terms of pesticides usage, followed by Maharashtra which accounts for
13% and Punjab at 11%.
Exhibit 16: State Wise Domestic pesticide consumption (FY12)
Others
15% Andhra Pradesh
24%
West Bengal
5%
Haryana
5%
Tamil Nadu
Maharashtra
5%
13%
MP & Chhattisgarh
8%
Punjab
Gujarat Karnataka 11%
7% 7%
Going ahead, the Indian agrochemcial industry is expected to grow at a

Agro-chemical value chain
CAGR of ~12% to US$ 6.8 billion by FY17E with domestic industry
witnessing a growth of ~8% CAGR over FY12-17E while exports are
Technical Grade End expected to grow at a CAGR of ~15% in the aforesaid period.
Manufacturers Formulator Distributor User Rallis, with its presence across the agro-chemical value chain i.e.
In-licensing technical grade manufacturer, formulator and distributor is well poised for
exciting growth period ahead. Rallis is also adequately present across the
Source: FICCI, Tata Strategic Group Study, ICICIdirect.com insecticides, herbicides & fungicides segment and commands ~8%
Research domestic market share. It generates ~ | 900 crore of top line from this
segment out of the total market size of ~ | 12,000 crore. Going forward
we expect the companys sales in this segment to grow at a CAGR of 15%
to | 1362 crore in FY17E.
Under penetration of pesticides segment domestically and governments
thrust to augment the crop yields, reiterate our positive stance on the
agro-chemicals industry. Rallis with its strong presence amongst the Agri
community is well poised for the robust growth journey ahead.

Page 7
4) Huge losses on account of non usage of pesticides
As per industry estimates, crop losses on account of non usage of
pesticides is pegged at | 90,000 crore annually. Majority of the losses can
be attributed to weeds (accounting for ~33%), insects (accounting for
~26%) & diseases (accounting for ~26%). Hence in order to avoid crop
losses, application of agro chemicals becomes essential.
Exhibit 17: Crop losses due to different pests (FY12)
Rodents & others

15%
Weeds
33%
Diseases
26%
Insects
26%
5) Shortage of farm labour, impelling case of herbicide growth

Globally, herbicides (used for removing unwanted plants that grow
alongside the main plant) form the major portion of agro chemical
consumption with a share of 44%. In India, however due to abundance of
man power herbicides portion is subdued at only 16% of the total agro-
chemical consumption pie.
Exhibit 18: Global consumption bifurcation Pesticide type (FY12) Exhibit 19: Domestic consumption bifurcation Pesticide type (FY12)
others
7% Others
Herbicides 4%
16%
Fungicides
Herbicides
27%
44%
Fungicides
15%
Insecticides
65%
Insecticides
22%
MG NREGA Statistics
FY14 (till However, going forward with increasing urbanization and enrolment
Particulars Units FY11 FY12 FY13 Dec'13) under MGNREGA scheme, there is an existing trend of shortage of farm
Total Job Card labour which is driving the growth of herbicides domestically. As the
Issued crore 12.0 12.5 12.8 12.7
Manual labour is waning away, thereby making economics favourable
Employment
provided,
towards increased use of herbicides going ahead. To reiterate our point,
Households crore 5.5 5.1 5.0 3.8
50% of the new products launched by Rallis in the period FY11-14 were in
Person days crore 257.2 218.8 229.9 134.8 the herbicides segment, thereby showing strong inclination to penetrate
Budget Outlay | crore 40100 40000 33000 33000 the most promising agro chemical segment.
Central Release | crore 35769 29190 30010 29886
Source: NREGA.nic.in, ICICIdirect.com Research

Page 8
Increase in MSPs, rise in purchasing power of farmers to further increase
agro-chemical penetration domestically
The government with the view of protecting the farmers interest has
been declaring the minimum support price (MSP) for various agricultural
produce. MSP is the minimum price that the farmer will realize while
selling its produce either to the government agencies for public
distribution system or to the aanaj mandis at various locations across
the country. In case the market price falls below this MSP then it is the
onus of the government to procure the farm produce from the farmers at
its declared MSP price. Over the 5 year period i.e. FY11-15 the MSP of key
crops like rice (common), maize & cotton (medium staple) have increased
at a CAGR of 8%, 10% & 11% respectively.
Exhibit 20: Minimum Support Price (MSP) Trend
(|/kg) FY09 FY10 FY11 FY12 FY13 FY14 FY15
Kharif Crops
Common 9.0 10.0 10.0 10.8 12.5 13.1 13.6
Time and again the government has been increasing the MSP Paddy Grade A 9.3 10.3 10.3 11.1 12.8 13.5 14.0
and generally its been ~| 50/qunital or | 0.5/kg annually. Maize 8.4 8.4 8.8 9.8 11.8 13.1 13.1
Arhar 20 23 30 32 38.5 43.0 43.5
Government has already declared the MSPs for the current Moong 25.2 27.6 31.7 35 44 45.0 46.0
Kharif season with Paddys (Rice) MSP being fixed as | Urad 25.2 25.2 29 33 43 43.0 43.5
13.6/kg for common variety & | 14.0/kg for Grade A variety Medium Staple 25 25 25 28 36 37.0 37.5
Cotton Long Staple 30 30 30 33 39 40.0 40.5
Rabi Crops
Wheat 10.8 11 11.7 12.85 13.5 14 NA
Increase in MSPs bodes well for the farmers as it makes them financially
empowered thereby increasing their purchasing power for procuring
optimum raw materials for their farm lands. Increase in MSPs will also aid
in increasing the use of agro-chemicals going forward thereby helping the
agro-chemical industry for a robust growth period ahead.

Page 9
Domestic Yields off from their lows; albeit laggard vis--vis its global peers
In India, the yield of crops has improved over a period of time. The yield
of farmland producing food grains has improved from 522 kg/hectare in
1950-51 to 1930 kg/hectare in 2010-11, representing a CAGR of ~2.2% in
the aforesaid period. However the progress of the same has been rather
slow in the last decade wherein the yield of food grains has increased
from 1626 kg/hectare in 2000-01 to 2095 kg/hectare in 2013-14,
representing a CAGR of ~2% in the aforesaid period.
Exhibit 21: Food grains: Yield per hectare (1950-2011) Exhibit 22: Food grains: Yield per hectare (2000-2014)
2500 2500
2071 2095
1930 1909 1930
2000 2000 1757
1626 1626 1652
1535
1380
1500 1500
kg/hectare
kg/hectare
1023
872
1000 710 1000
522
500 500
0 0
1950-51
1960-61
1970-71
1980-81
1990-91
2000-01
2010-11
2000-01
2002-03
2004-05
2006-07
2008-09
2010-11
2012-13
Source: Ministry of Agriculture, ICICIdirect.com Research Source: Ministry of Agriculture, ICICIdirect.com Research
Indias yield of food grains lags considerably vis--vis that of global peers.
Exhibit 23: Paddy/Rice, Yield per hectare (2012) Exhibit 24: Maize, Yield per hectare (2012)
800 718 8000 1000 875 9000

700 7000 7734 8000
6735 800
600 5639 6000 7000
500 5153 5000 5949 6000
kg/hectare
kg/hectare
600 5021
4944 5000
million
4394
million
400 4000
3591 4000
300 3000 400 274
206 2512 3000
164 153 177 208
200 2000 2000
69 200 71
100 31 43 44 1000 35 35
13 8 14 8 21 1000
0 0 0 0
World China India Indonesia Vietnam World USA China Brazil India
Area (million hectare) Production (million tonne) Area (million hectare) Production (million tonne)
Yield (kg/hectare) Yield (kg/hectare)
Source: Ministry of Agriculture, ICICIdirect.com Research Source: Ministry of Agriculture, ICICIdirect.com Research
As evident from the above charts, in the case of rice, domestic yield as of
2012 stood at 3591kg/hectare vs. the global average of 4394 kg/hectare
and significantly lagging behind Chinas yield of 6735 kg/hectare.
Similarly, in case of maize, which is the crop most widely produced
across the world, Indias yield stands at 2512 kg/hectare vs. global
average of 4944 kg/hectare. However in case of Wheat & Sugarcane India
is at par with the global average. In case of wheat, as of 2012 this stands
at 3174 kg/hectare while the global average is 3116 kg/hectare. Similarly,
in case of sugarcane, as of 2012 domestic yield is 68216 kg/hectare vs.
global average of 68752 kg/hectare

Page 10
Rallis India: Presence across the value chain; Meta-helix
feather in cap
Rallis is present across the agricultural value chain ranging from hybrid
seeds (through its subsidiary Metahelix) to plant growth nutrients to
organic manure & soil conditioners (through its subsidiary Zero Waste
Agro Organics) to crop protection (agro chemicals). The company has on
a consolidated basis clocked revenues of | 1747 crore in FY14, exhibiting
a CAGR of 18.4% in FY10-14. The core business of Rallis constitutes the
crop protection (agro chemical; pesticides) business. Its non pesticide
portfolio (NPP) consists of plant growth nutrients, hybrid seeds, organic
manure & specialty chemicals which constituted ~31% (~| 570 crore) of
its gross turnover in FY14.
Exhibit 25: Agriculture Value Chain & Rallis presence
Agriculture Value Chain Seeds Plant Growth Nutrients Organic Manure Crop Protection
Rallis Presence Metahelix Standalone Entity Zero Waste Agro Core Business
Source: ICICIdirect.com Research
Domestic Crop Protection Business to dominate (CY17 share at 49.4%)

The company has a strong uphold in the domestic crop protection
industry and clocked revenues of ~| 900 crore from this segment in
FY14. It corresponds to a domestic market share of close to ~8% as of
FY14. Indian agro chemical industry is expected to grow at a CAGR of 11-
12% going forward whereas the company is expected to outperform the
industry growth and is expected to grow at a CAGR of 15% on the back of
prominent presence across the farmer community (through various
farmer benefiting programme), strong brand recall and successful
penetration of products launched over FY12-14. We expect the
companys revenues to grow at a CAGR of 14.8% to | 1362 crore in
FY17E and estimate the average share in revenues of this segment to
range between 49-51% over the aforesaid period
Exhibit 26: Domestic Crop Protection business to at CAGR @ 14.8% Exhibit 27: Rallis Domestic Crop Protection Bifurcation (FY14)
2000
Fungicides
1500 1362 30%
1186
1033 Insecticides
| crore
1000 900 45%
500
Herbicides
0
25%
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Page 11
Within the domestic crop protection segment, insecticides constitute 45%
share (~| 400 crore) while fungicides constitute 30% (~| 270 crore) &
herbicides constitute 25% (~| 225 crore) of the segment sales.
In the pesticides segment, apart from manufacturing its own products, the
company also acts like an associate thereby marketing & distributing
various world class products of other companies. The trading activity
accounted for 15%(| 240 crore in FY14) of the standalone topline in FY14.
Some of the renowned names & products for which it acts as associate
are as follows:
Nihon Nohyaku Co. Ltd., Japan
Rallis is in long term collaboration with M/s. Nihon Nohyaku for marketing
their product under the brand name of FUJIONE which is an insecticide
for the control of blast in rice.
Syngenta
Rallis is in agreement with Syngenta for co-marketing some of their
products with exposure to crops like rice, cotton & wheat. These products
are sold under the Rallis brand name. The brands include Preet, Paralac &
Sartaj
Bayer
Rallis has sourced the popular brand Tata Mida from Bayer and is also
co-marketing Spiro brand
Gharda Chemicals Ltd

Rallis has sourced some products from Gharda Chemicals Ltd and
markets them under his own brand name. One of the popular products is
Fateh, which is a leading herbicide in the wheat segment.
Makhteshim Chemical Works

Rallis has a long term association with Makhteshim Chemical works and
has imported the popular brands Captan and Atrazine from them.
Rallis will also be launching the product Nova this fiscal year for its
target crop- Cotton

Page 12
Focus on R &D and product launches to drive growth
R&D Expenditure: Best in the agro-chemical space
Rallis has its own captive research team and its annual expenditure on
R&D on consolidated basis is ~2% of its net sales with FY13 & FY14
expenditure at 1.8% & 1.7% of its consolidated net sales.
Exhibit 28: R & D expenditure as a % of sales
30 1.8 2.0
R & D expenditure (Industry Players) 1.7
1.8
FY14 25 1.6
Company R&D Exp Net Sales R&D -% of Sales
20 1.2 1.4
PI Industries 8.1 1761 0.4
1.2
0.9
| crore
UPL Ltd 71.8 10771 0.7 0.8
15 0.8 1.0
%
Dhanuka Agritech 1.6 738.4 0.2 0.7
25.5
23.6
0.8
Rallis India 25.5 1747 1.7 10
0.3 0.6
Bayer Corpscience 20.2 3245 0.6
5 0.4
9.2
9.0
Monsanto India 28.8 582 4.9
7.2
0.2
6.0
5.3
2.5
Source: Company, ICICIdirect.com Research 0 0.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
R&D Expenditure % of Net Sales
Product Launches: Key growth driver

The company has been quiet responsive to market conditions and has in
the past introduced new products at regular intervals. The company on an
average introduces ~3 products each year.
Exhibit 29: Product Launches by Rallis India
Total No of No of Products
Year Registrations Commercialized Product Name Product Type
Nova, Applaud Insecticide
FY07 6 3 Taqat Fungicide
Takumi, Sedna, Royal Insecticide
FY08 5 5 Ishaan, Tebuconazole Fungicide
Mantis Blasticide
In the context of crop protection chemicals, a registration FY09 7 3 Cartox G, Cartox SP Insecticide
essentially means the license issued by the competent Ergon Fungicide
authority for selling that particular molecule/formulation in Balwan Insecticide
that very country. All agro chemical manufacturers have to FY10 2 3 Rallizyme Plant Growth Nutrient
obtain these registrations before being able to sell their Ralligold Plant Growth Nutrient
products in international markets.
Taarak Herbicide
Post FY10, Rallis has been quiet active in its overseas FY11 12 3 Toran Insecticide
business with registrations (both international & domestic Neon, Sonic, Taffin Insecticide
for exports) increasing at a steady pace. In the past three Vaar, Honcho, Cylo, Fycol Herbicide
years the company has made around 50 registrations which Saras, Ditaf Fungicide
should provide fillip to its international business going FY12 16 10 Bahar Plant Growth Nutrient
forward FY13 16 2 Upahar, Gluco Beta Plant Growth Nutrient
FY14 17 1 Plato Herbicide
In the current financial year (YTD FY15) the company has launched 2
major products namely Origin (Insecticide + Fungicide) & Duton
(Herbicide). The company expects to break even in 2-3 years from these
new products.
Origin: It is a combination of insecticide & fungicide and is meant for
paddy/rice. Its a first of its kind in India and has been developed in house
by the company.
Duton: It is an herbicide which is meant for paddy. It is in-licensed from
Dow Chemicals.

Page 13
Innovation Turnover Index
Rallis benchmarks its internal performance through an internally defined
parameter called Innovation Turnover Index. The parameter basically
measures the contribution of new products to the total product mix. It is
calculated as the ratio of revenues from products introduced in the last
four years to total revenue in the present year.
Exhibit 30: Innovation turnover index
35 31
30 30
30
25
20
20
15 15
As of FY14, Rallis innovation index stood at 15%, flat YoY
%
15 11
10
5
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14
It is a strong measure depicting R&D focus of the company. Greater the

product launches in any particular year & their consequent better
acceptances in market, greater the innovation index.
Pesticide Toxicity: Strong focus on Green Label Products
The toxicity of the pesticides is determined by the quantum of dosage in
milligram (mg) per kilo gram (kg) of animal weight that is lethal in nature.
Accordingly, as per the Insecticides Act of 1968 and the Insecticides Rules
of 1971, in the Indian context there are 4 labels of toxicity i.e. Red, Yellow,
Blue & Green with Red being the most toxic and green being the least.
Currently, it is mandatory for the companies to disclose their toxicity label
onto their product.
Exhibit 31: Pesticide Toxicity Labels
Oral Lethal dose (mg per Dermal Lethal dose (mg
kg body weight of test per kg body weight of
Label Name Level of toxicity animals) test animals)
Red Label Extremely toxic 1--50 1--200

Rallis India on its conscious effort and strong ethical
parentage has stopped manufacturing & marketing Red
label products (since 2011) and is currently manufacturing
& marketing only green label pesticides. It resulted in the
marginal decline in sales amounting to ~| 100 crore in
FY11-12 Yellow Label Highly Toxic 51--500 201--2000
Blue Label Moderately Toxic 501--5000 2001-20000
Green Label Slightly Toxic >5000 >20000

Source: Insecticides Rules 1971, Government of India, ICICIdirect.com Research

Page 14
Rallis focus on inorganic growth: moving in right direction
Metahelix: Hybrid Seed Researcher & Manufacturer
In FY11, Rallis acquired 60.2% stake in Metahelix Life Sciences Pvt. Ltd.
for ~| 126.3 crore with an option of increasing its stake in future.
Metahelix Acquisition Details Thereafter, the company has been increasing its stake in Metahelix at
Particular Units FY11 FY12 FY13 FY14 regular intervals with current (as of FY14) stake at 80% with a total equity
Stake % 60.21 75.64 77.02 80.5 investment of ~| 171 crore. Metahelix manufactures hybrid seeds for
Incremental paddy, bajra and maize among others with main exposure (~60-65%) to
Stake % 15.43 1.38 3.48
the Kharif season. According to industry estimates, the domestic seed
Investment
Amount | crore 126.3 158.2 163.7 171
industry size is pegged at ~| 10000-12000 crore, of which Metahelix
Incremental commands market share of ~2%. Rallis had set a revenue guidance of
Investment | crore 31.9 5.5 7.3 cumulative sales amounting to ~| 1000 crore over FY12-16 and has
Metahelix achieved a sales of | 441 crore till FY14 and is well placed to achieve the
Valuation | crore 209.8 209.1 212.5 212.4 balance | 560 crore during FY15E-16E. Going forward we expect the sales
Source: Company, ICICIdirect.com Research in this segment to grow at a CAGR of 25% to | 439 crore in FY17E.
Exhibit 32: Metahelix Financials
500 12.3 14
10.1 12
400
7.8 10
7.4
In FY14, Metahelix clocked sales of | 225 crore with 300 8
| crore
%
EBITDA of | 16.7 crore & corresponding EBITDA margins of
439
200 6
7.4%.
351
2.4
281
4
225
100 35.6 54.1

21.8 2
125
3 16.7
0 0
FY13 FY14 FY15E FY16E FY17E
Net Sales EBITDA EBITDA Margins (RHS)
Metahelix is currently going through a gestation period wherein it is

invested heavily into business promotion activities to establish itself in the
domestic markets. This is reiterated from the fact that 12% of its net sales
(~| 26 crore) is spent on business promotion activities while another 18%
of its net sales (~| 41 crore) is expensed in form of cash discounts in
FY14. Going forward, with increasing market share & higher traction in
revenues we expect operating leverage benefits to kick in, which would
improve EBITDA margins from 7.4% in FY14 to 12.3% in FY17E.
With robust growth in revenues, we expect metahelix share in total
revenue mix to increase from 12.9% in FY14 to 15.9% in FY17E
Exhibit 33: Rallis consolidated revenue mix

100 0.5 0.6 0.8 1.0
12.9 13.9 14.9 15.9
80 14.3 13.5 12.8 12.0
14.3 14.8 15.2 15.6
60
%
40
51.6 51.0 50.2 49.4
20
2.0
4.3 2.0
4.2 2.0
4.2 1.9
4.1
0
Plant Growth Nutirents Household Chemicals Domestic Pesticide Contract Manufacturing
Speciality Chemicals Metahelix Zero Waste Agro

Page 15
Zero Waste Agro Organics: Organic manure & soil conditioners
Rallis owns 51% in Zero Waste Agro Organics with an investment of | 29
crore as of FY14. The company manufactures organic manure which
enriches soil and improves yield by at least 25-30% thereby helping the
farmer realize more produce from its field. Rallis had set a revenue
guidance of cumulative sales amounting to ~| 100 crore over FY14-18E
and has achieved a sales of | 8 crore till FY14 and is well placed to
achieve the balance | 92 crore during FY15E-18E. Going forward we
expect the sales in this segment to grow at a CAGR of 50% to | 27 crore
in FY17E, albeit on a low base. On the margins front the company
reported negative EBITDA amounting | 2.8 crore in FY14 & we expect this
division to just breakeven at the EBITDA level going forward in FY14-17E.
Exhibit 34: Zero waste agro organics revenue trend
50
40
Zero waste agro sales are expected to grow at a CAGR 30 27

| crore
of 50% to | 27 crore in FY17E (| 14 crore in FY14)

18
20
12
8
10
0
Non-Pesticide Portfolio (NPP): Share on rise; will further de-risk Rallis

NPP as a % of Net Sales (Consolidated)
The company is making a constant effort to de-risk its business model
wherein it is working towards increasing the share of non-pesticide
35
portfolio in its overall sales mix. NPP includes business of plant growth
35 34.6 nutrients (top line of ~| 75 crore as of FY14), household chemicals (top
line of ~| 35 crore as of FY14), specialty chemicals (top line of ~ | 250
34
crore as of FY14) and its subsidiaries i.e. metahelix (top line of ~| 225
34 34.2 crore as of FY14) and Zero Waste Agro (top line of | ~8 crore as of FY14).
Cumulatively revenues generated by the NPP portfolio was ~| 590 crore
%
34
33.9 in FY14 and its share of the consolidated revenues in FY14 stood at 31%.
34 33.8
34
Going forward, we expect the share of NPP portfolio to increase from
31% of gross turnover/33.9% of net sales in FY14 to 34.6% of net sales in
33 FY17 primarily on the back of growth in the seeds (Metahelix) & organic
FY14 FY15E FY16E FY17E compounds (Zero Waste Agro) business. The company has an internal
target of increasing the NPP share to 40% of the total sales going forward.
With increasing share of NPP portfolio (led by increase share of Metahelix
in the total revenue mix; share increasing from 13% in FY14 to 16% in
FY17E) and improvement in margin profile at Metahelix, the consolidated
margins of Rallis is expected to improve from 15.1% in FY14 to 17.3% in
FY17E.

Page 16
Rallis increasing thrust on contract manufacturing; margins accretive
Currently exports account for ~50% of total crop protection industry
domestically (Domestic industry size ~US$ 3.8 billion; Exports ~US$ 1.9
Contract manufacturing is nothing but manufacturing billion). A major chunk of it is attributed by contract manufacturing.
chemicals and formulations for other reputed industry Currently both Rallis India & PI Industries are major players in this
players segment and realize healthy revenues out of it. As per industry estimates
the total contract manufacturing opportunity is estimated at ~US$ 25
billion. The foreign players prefer India as an outsourcing partner on
account of de-risking of their manufacturing base from China, strong
domestic technical know-how and employee cost arbitrage.
The company, in FY14, clocked export turnover of ~| 500 crore, 50% of

which or ~| 250 crore was from contract manufacturing segment. The
company exports to Europe, Asia, Middle East, Americas, Africa &
Oceania. It is developing its facility at Dahej SEZ dedicated for this
purpose wherein in the initial phase, the company plans to develop four
lines at its Dahej unit with the first two lines already operating on a pilot
basis. The company has targeted cumulative revenues of | 500 crore in 5
years from this facility (period FY13-17E). Going forward we expect the
sales in this segment to grow at a CAGR of 20% and built in revenue to
reach | 430 crore by FY17E.
Exhibit 35: Contract Manufacturing Business to grow at a CAGR of 20% in FY14-17E
500
430
400
359
| crore
300
300
250
200
Product Profile-Across Segments

The company defines its Mega brands as the brand which has the
potential to reach | 100 crore of top line. Some of its mega brands include
Tata Uphaar, Tata bahaar & Ralligold among others.
Exhibit 36: Rallis product profile
Particular Type/Specific Brands/Crops
Insecticides Tata Mida, Reeva, Asataf, Manik
Herbicides Fateh, Tata Metri, Tata Panida
Pesticides Fungicides Contaf, Contaf Plus, Master and Fujione
In the case of plant growth nutrients, foliar grade essentially Hybrid Maize, Hybrid Paddy, Bt Cotton, Bajra, Black Gram, Green
means the nutrients which are applied on the plant leaves Seeds Crops Covered Gram, Red Gram, Bengal Gram, Soybean, Wheat, Mustard
or sprayed in the air and are to be absorbed by the plant Foliar Grades
leaves. Fertigation grade on the other hand means the
Plant Growth Nutrients Fertigation Grades Gluco Beta, Ralligold, Solubar, Tata Bahaar, Tracel, Tata Uphaar
nutrients which are released along the irrigation channel
which are normally applied to the roots directly Household products Insecticides Termex, Sentry
Seed Treatment Tata Mida 70 WS, Glazer 35 WS, Tata Mida 600 FS, Captaf 50
Chemicals WP
Source: Company, ICICIdirect.com, Research

Page 17
Working Capital Discipline: A strong positive
The working capital management of Rallis is one of the best in Industry
wherein its net working capital days are well below 30 days. In FY13 &
FY14, Rallis net working capital days stood at 6 days & 23 days
respectively
Exhibit 37: Net Working Capital Days FY13 (Industry Players) Exhibit 38: Net Working Capital Days FY14 (Industry Players)
160 200
134 173
140 180
160
120
140
100 88
120
days
days
80 100 83
58 59
60 80
33 60 47
40 34
40 23
20 6 13
20
0 0
UPL Ltd
Corpscience
Monsanto
Dhanuka
Rallis India
PI Industries
Agritech
UPL Ltd
Corpscience
Monsanto
Dhanuka
Rallis India
PI Industries
Agritech
India
India
Bayer
Bayer
Going forward, on the back of increase share of working capital intensive

seed business i.e. Metahelix (share in consolidated revenues expected to
increase from 13% in FY14 to 16% in FY17E), we expect the net working
capital days to increase from 23 days in FY14 to 30 days in FY15E and
further to 40 days by FY17E, which will still be better than the Industry
standards.
Exhibit 39: Net working capital days (Rallis India)
70
58
60
50
40
40 35
30 30
30 23
days
20
10
10 6
1
0
-10 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
-20 -15

Page 18
Seasonal Business: First half overpowers the 2nd half
Rallis business depicts high degree of seasonality as company has
significant exposure (~60%-65%) to the Kharif season. The first quarter
results are usually dominated by the performance of the seed business
(Metahelix) wherein the seed placement for the Kharif season takes place
i.e. April to June. The second quarter is dominated by performance of
agro-chemical business wherein the major sprays post crop germination
takes place. The third & forth quarter are usually lean. However, the
companys contract manufacturing business as well as exports are not
seasonal in nature and are equally spread across the fiscal year.
Standalone: Q2 the strongest
In the standalone entity, Q2 is the strongest quarter on account of agro-
chemical business. Over FY11-14, Q2s average full year contribution to
top line stands at 36.1%, EBITDA at 48.8% & PAT at 54.4%
Exhibit 40: Standalone Quarterly Share of Revenues (FY11-FY14)
70
61
60 54 55 55
48 48
50 4447
37 35 37
40 35
%
30 262627 26 25 26 252524
21 20 20 2221 20 2019
19 1815 1716 1715 18 17
20 14 1513 15
1212 11 12 11
10 4
0
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14
Quarterly sales as a % of annual sales Quarterly EBITDA as a % of annual EBITDA Quarterly PAT as a % of annual PAT
Source: Capitaline Database, ICICIdirect.com Research
Consolidated: Q1 catches up (Metahelix helps); but Q2 still rules

In the consolidated entity, Q1 captures the result of Metahelix and has a
greater proportion to total top line as against the standalone entity. For
the seed business remaining 3 quarters are lacklustre in nature. Rallis,
being a crop protection company, still derives maximum revenue in the
second quarter of the fiscal year
Exhibit 41: Consolidated Quarterly Share of Revenues (FY11-FY14)
70
59
60
52 52
49
50 47 44
44 44
40 34 35 33 35
30 252627 232323 25 2422 24 24 2322

22 20
18 18 2018 19 1818 20 19
20 15 17 16
1212 13 1210 13 13
8 9
10
0
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14
Quarterly sales as a % of annual sales Quarterly EBITDA as a % of annual EBITDA Quarterly PAT as a % of annual PAT
Source: Capitaline Database, ICICIdirect.com Research

Page 19
Good connect with the farmers, strong brand royalty
Exhibit 42: Rallis farmer oriented initiatives
Rallis Kisan Kutumb Description Benefits Accrued
The company has obtained a very strong
Rallis Kisan Kutumb is Rallis' initiative for delivering up-to-date
response against this initiative and
information to farmers in the form of improved agronomic
currently has over 1.5 million farmer
practices coupled with efficient use of agro-chemicals to improve
base. It helps in wider reach for the
productivity and lower costs. It uses various communication
company's product
means such as regular contacts throughout the crop cycle,
organizing crop seminars, product demonstrations through
carefully designed Package of Practices (PoP), Farmer exchange
programmes (Prerna), Focused Group Discussions (FGDs) and
Advisory Services. It acts like a very effective extension system
thereby helping the company increase the farmer reach
Samrudh Krishi Description Benefits Accrued

Samrudh Krishi is a holistic agro-advisory program wherein Enhanced farm productivity through
customized recommendations are provided by crop-advisors of advanced agricultural practices. Helps
the company who visit each farmers plot. The company has also company in developing the strong
strengthen farmer helpline call centre's which have now become connect with farmers
an important tool in servicing the farmers. Rallis currently offers
help lines in fifteen vernacular languages. Rallis has added a
number of value added services such as SMS alerts on crop
prices, weather and possible disease outbreak
Grow More Pulses (MoPu) Description Benefits Accrued

MoPu's objective is to enhance the cultivation of pulses by It has been a great success with over 3.5
providing farmers quality seeds, critical technology interventions lakh farmers covered and around 15,000
to increase yield and creating a mechanism for buyback of their MT of pulses procured from farmers till
produce at fair prices which is then sold under the brand name i- date. Company is aiming for a cumulative
Shakti Dals by Tata Chemicals Ltd 1 million farmers to be its beneficiary
going forward
System of Rice Intensification (SRI) Description Benefits Accrued

SRI is a method of transplanting seeds in paddy fields using Usage of SRI technique has resulted in
transplanters and automatic seeding machine. Rallis has initiated up to 15% higher paddy yields and
the SRI project on paddy in Bargarh District, Odisha savings of irrigation water. The monetary
benefits out of this activity are yet to
accrue to the company
Brand Recall 2009, Customer Survey by Gallup
60 54 As a result of all these initiatives, the company has created a strong

50 presence among the farmer community and consequently, realizes a
40 healthy brand recall. According to the survey done by an independent
30 29 28
30 24
agency i.e. Gallup in 2009, the survey concludes that Rallis has 7 of its
%
19 17
15 13 13 13
products in the top 12 products by customer unaided recall. Rallis brands
20 12 that featured in the survey are Contaf, Rogor, Asataf, Tatamida, Contaf
10
Plus, Applaud & Tatamono.
0
Confidor
(Rallis)
(Syngenta)
Tatamida
(Bayer)
Tatamono
Rogor
(Bayer)
Fame
Proclaim
(Rallis)
(Rallis)

Page 20
Industry Scan: Rallis vis--vis other Industry players
Exhibit 43: Major Players Profile

Rallis India PI Industries Dhanuka Agritech UPL Ltd
Rallis India, a Tata Enterprise, is a market Domestic Agri-inputs business Dhanuka Agritech Limited manufactures Manufacturing presence across 28
leader in the crop protection (agro- comprises of plant protection products a wide range of agro-chemicals like international locations (nine in India).
chemical i.e. pesticides) segment (herbicides, insecticides, fungicides) as herbicides, insecticides, fungicides, Global marketing presence via more than
domestically. The company under the well as specialty plant nutrient products miticides, plant growth regulators in 50 subsidiaries in 124 countries. The
segment of crop protection manufactures and solutions. Custom synthesis exports various forms liquid, dust, powder and Companys products comprise
and markets insecticides, herbicides and comprises of custom synthesis and granules. The Company has high number fungicides, insecticides, herbicides,
fungicides. With manufacturing facilities contract manufacturing of agro- of international technical tie-ups. It aims rodenticides, fumigants, postharvest
spread across 4 geographic locations chemicals, pharma intermediates and to be a marketing (more than a chemicals, fertilizers and seeds, plant
Product Profile domestically, the company has a other niche fine chemicals that address manufacturing) company. The core growth regulators and industrial and
capacity to produce in excess of 10,000 the growing needs of global innovators. It manufacturing activity that it undertakes specialty chemicals. The Company has
tonne of technical grade pesticides and is market leader and the largest producer is formulations more than 3,500 product registrations.
~30,000 tonne/liters of formulations per of molecules like Profenofos, Ethion and The company generates 21% of its
annum. Phorate. revenues in India & 65% of the
Companys production was sourced from
within India
Tata Mida, Reeva, Asataf, Manik, Fateh, Nominee Gold, Osheen, Foratox, Fosmite, Fluid, Onestar, Lustre, Dhanzyme Gold Gr, Manzate Prostick, Super Wham,
Tata Metri, Tata Panida, Contaf, Contaf Biovita and Roket. Fuzi super, maxxlyd Starthene,Vandozeb, Tricor, Lancer Gold,
Key Brands Plus, Master and Fujione, Gluco Beta, Saaf, Devrinol, Phoskill
Ralligold, Solubar, Tata Bahaar, Tracel,
Tata Uphaar
In FY15, the company has launched 2 The Company introduced two new Introduced five new products Danfuron, Company expects to develop at least five
major products namely Origin & Duton. products during FY14 MELSA, a wheat Defend, Maxyld, Media Super and mega brands in the near future. It has
Newly launched Origin is a combination of insecticide & herbicide and PIMIX, a rice herbicide. Protocol during FY 2013-14. The launched 6 new products in India in FY14
products fungicide and is meant for paddy/rice. Going ahead, the company plans to company intends to launch two novel
Duton is an herbicide which is meant for introduce 7-8 new products over the next molecules in each of the next three years
paddy. 3-4 years
2000 dealers & 30,000 retailers 40,000 retail points & 9000 8,000 distributors/ dealers selling to over NA
Network
distributors/dealers 75,000 retailers
14% of revenues 52% of revenues Nil NA
Share of contract
manufacturing
Exports 29% of revenues 52% of revenues 0.3% of revenues NA

Composition
Brand promotion Various farmer initiatives like Rallis Kisan NA Farmer initiatives like Dhanuka- kheti ki NA
initiatives Kutumb, Samrudh Krishi nayi takneek; Signed Amitabh Bachchan
as brand ambassador
18% of net sales in metahelix with 12% 9.5% of net sales spent as discounts (| Advertisement & publicity (| 13 crore in Advertising & sales promotion (| 112
Cash discount/ additional of net sales of metahelix spent 166 crore in FY14), advertisement & FY14) crore in FY14)
brand promotion on cash discounts & business promotion sales promotion expense of | 22 crore in
expenses respectively (| 67 core in FY14) FY14
Employees 881 in FY14 1432 in FY14 >1100 employees in FY14 3595 in FY14
FY14 Numbers
R&D as a % of 1.7 0.40 0.20 0.7
Sales
Net WC days 23 34.0 173.0 83.0
Gross Block 651 676 99 3588
Asset Turnover 2.7 2.6 7.5 3.0
Sales (| cr) 1747 1761 738 10771

EBITDA (| cr) 261.3 306.8 125 2050.1
Margins (%) 15.0% 17.4% 17.0% 19.0%
PAT(| cr) 152 188 93 935
M Cap (| cr) 4650 6139 2187 16216
Debt: Equity (x) 0.1x 0.2x 0.1x 0.6x
Source: Company, ICICIdirect.com Research,

Page 21
Financials
Consolidated Revenues to grow 16.8% CAGR in FY14-17E
We expect Rallis to clock a modest revenue growth of 16.8% CAGR in
FY14-17E primarily on the back of better sales on account of enhanced
registrations both domestically as well as in international markets. We
expect the company to clock consolidated revenues of | 2755 crore in
FY17E vis--vis | 1727 crore in FY14. The companys share of exports is
expected to remain constant at ~28% going forward.
Exhibit 44: Consolidated Revenue trend Exhibit 45: Revenue bifurcation (Domestic sales vs. exports)
3,000 FY14-17E CAGR: 16.8% 2,755 2,500 30

28.9
2,500 2,361
2,000 28.3 28.3 29
2,027 28.0
27.6
2,000 1,727 1,500 28
| crore
1,441
%
| crore
1,994
1,500 1,000 27
1,701
1,453
1,238
1,024
1,000 500 26
761
660
574
417
489
500 - 25
-
FY13 FY14 FY15E FY16E FY17E Domestic Sales Exports Exports as a % of Total Sales
We expect the companys standalone revenues to grow at a CAGR of

14.9% in FY14-17E. The standalone operations are expected to clock
revenues of | 2289 crore in FY17E vis--vis | 1510 crore in FY14. Within
the standalone business the contract manufacturing business is expected
to grow at a CAGR of 19.8% in FY14-17E to | 430 crore in FY17E (~| 250
crore in FY14). The specialty chemicals business however is expected to
be a laggard and is expected to grow at a CAGR of 9.8% in FY14-17E to |
331 crore in FY17E. On the subsidiaries front, we expect Rallis both
subsidiaries to report robust performance going forward. Revenues of the
seed business i.e. Metahelix is expected to grow at a CAGR of 25% in
FY14-17E to | 439 crore in FY17E (| 225 crore in FY14). While soil
conditioner business i.e. Zero waste agro is expected to grow at a CAGR
Revenue share mix (%) of 50% in FY14-17E, albeit on a smaller base.
Exhibit 46: Rallis segmental revenue break up
100 0.5 0.6 0.8 1.0
12.9 FY14-17E CAGR
90 13.9 14.9 15.9
Business Segment Units FY14 FY15E FY16E FY17E (%)
80 14.3 13.5 12.8 12.0 Plant Growth Nutrients | crore 75.0 86.1 98.8 113.5 14.8
70 Household Chemicals | crore 35.0 40.2 46.1 53.0 14.8
14.3 14.8 15.2 15.6
60 Domestic Pesticide | crore 900.0 1033.2 1186.1 1361.7 14.8
50
%
Contract Manufacturing | crore 250.0 299.5 358.8 429.8 19.8

40
Specialty Chemicals | crore 250.0 274.5 301.4 330.9 9.8
30 51.6 51.0 50.2 49.4
Total Standalone business | crore 1510.0 1733.5 1991.3 2288.9 14.9
20
10 Metahelix | crore 224.8 281.0 351.3 439.1 25.0
2.0
4.3 2.0
4.2 2.0
4.2 1.9
4.1 Zero Waste Agro | crore 8.1 12.2 18.2 27.3 50.0
0
FY14 FY15E FY16E FY17E Total Consolidated business | crore 1742.9 2026.6 2360.8 2755.3 16.5
Plant Growth Nutrients Household Chemicals Source: Company, ICICIdirect.com Research
Contract Manufacturing Specialty Chemicals
Zero Waste Agro

Page 22
Arriving at Revenue estimates
For the estimation of companys revenue going forward, we have
bifurcated the companys business segments into two i.e. the established
business & the nascent business. The established business would consist
of the segments in which the company has a strong presence and
commands a decent market share. This essentially consists of its entire
standalone operations which include the domestic crop protection
business, plant growth nutrients and export segment i.e. contract
manufacturing & specialty chemicals. The nascent business would
essentially include the seed & the organic composite business i.e.
Metahelix and zero waste agro wherein the company is still in the process
of establishing its presence & has a negligible market share.
It has been observed that the companys standalone operations have
mirrored the growth of nominal agriculture GDP in the last 7 years (FY08-
14) with average revenue multiplier being 0.92x in the aforesaid period.
Exhibit 47: Rallis Standalone Revenue growth & nominal Agri GDP growth Exhibit 48: Standalone Revenue multiplier
25 2.0
23.1 23.1 1.83
20 19.8 1.5
18.5 1.34
16.7
15 15.1 15.7
13.7 1.0 0.94
x
12.6 12.1 0.85

%
0.72 0.92
10 9.9
9.0 0.5
7.6 0.41 0.35
5 5.2
0.0
0 FY08 FY09 FY10 FY11 FY12 FY13 FY14
FY08 FY09 FY10 FY11 FY12 FY13 FY14
Standalone revenue multiplier (x)
Nominal Agri GDP growth (%) Standalone Revenue growth (%) Average multiplier (x) FY07-FY14
Source: Ministry of Agriculture, ICICIdirect.com Research Source: ICICIdirect.com Research
Exhibit 49: Justification for top line growth

Particulars Units FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Standalone Revenues | crore 643 692 852 897 1074 1181 1324 1531
% growth % 8 23 5 20 10 12 16
Nominal Agri GDP | crore 604672 716276 806646 928586 1143517 1300569 1417468 1653802
% growth % 18 13 15 23 14 9 17
Standalone Revenues/Agri GDP x 0.41 1.83 0.35 0.85 0.72 1.34 0.94
Average multiplier x 0.92 0.92 0.92 0.92 0.92 0.92 0.92
Rallis Standalone Operations Revenue growth justification FY15E FY16E FY17E

Real Agri GDP growth rate (assumption), A 4 4 4
Average Agri GDP Inflation Rate (Studying past 7 year data), B 10.8 10.8 10.8
Nominal Agri GDP growth rate, C = A+B 14.8 14.8 14.8
Revenue Multiplier, D 1 1 1
Standalone Revenues implied growth, C x D 14.8 14.8 14.8
Going forward, we have assumed the real Agri GDP growth rate of 4%
and added to it the average Agri inflation rate (10.8%) over the last 7
years to derive the nominal Agri growth rate of 14.8%. Applying a
revenue multiplier of 1x, we have obtained the revenue growth for
companys standalone operations (14.8% in FY14-17E).
For the companys seed & organic composite business, given their low
base, we have built in revenue CAGR of 25% & 50% respectively over
FY14-17E.

Page 23
Consolidated EBITDA to grow 22.2% CAGR in FY14-17E
We expect Rallis consolidated EBITDA to grow at a CAGR of 22.2% in
FY14-17E primarily on the back of improved margins on account of higher
sales on the standalone basis and traction at Metahelix. We expect the
company to record a margin improvement of 220 bps over next three
years and expect Rallis to clock an EBITDA margin of 17.3% on the
consolidated basis in FY17E vs. consolidated EBITDA margins of 15.1% in
FY14. This is in line with companys long term strategy to attain EBITDA
margins of 20%.
Exhibit 50: Rallis Consolidated EBITDA & EBITDA Margins Exhibit 51: Rallis Standalone EBITDA & EBITDA Margins
18.3
600 17.3 18 500 19
18 17.5 18
500 16.5 17 400 18
16.8
17 17
400 15.6 16.2
16 300 17
| crore
| crore
15.1 16
300 16 15.4
%
14.6 % 200 423 16
477 15
200 389 353
15 295 15
317 247
261 14 100 203 15
100 211
14 14
- 13 - 14
FY13 FY14 FY15E FY16E FY17E FY13 FY14 FY15E FY16E FY17E
EBITDA EBITDA Margins Standalone EBITDA Standalone Margins
The companys standalone EBITDA margins are expected to improve

from 16.2% in FY14 to 18.3% in FY17E. Its subsidiaries EBIDTA margins
are expected to improve from 6.4% in FY14 to 11.6% in FY17E
Consolidated PAT to grow 21.6% CAGR in FY14-17E

We expect Rallis consolidated PAT to grow at a CAGR of 21.6% in FY14-
17E on the back of improved EBITDA margins. The PAT margins are also
expected to improve form 8.8% in FY14 to 9.9% in FY17E.
Exhibit 52: Consolidated PAT trend
300 12
9.9
8.8 9.1 9.2
250 8.3 10
200 8
| crore
150 6
%
273
100 217 4
184
152
50 119 2
- -
PAT PAT Margins

Page 24
ROCE & ROE set to improve, payout expected to be maintained at 30%
With increasing profitability we expect the companys return ratios to
improve going forward. We expect Rallis ROCE to improve from 27.5% in
FY14 to 35.4% in FY17E. The ROE too is expected to improve from 21.2%
in FY14 to 23.7% in FY17E.
Exhibit 53: RoCE & RoE Trend Exhibit 54: EPS, DPS & Dividend payout
38
40 35.4 16 40
33.9
35 29.9 14 31 30 30 30 35
26.4 27.5
30 12 30
25 10 25
|/share
20 23.7
%
22.2 8 20
%
21.2 22.0 14.0
15 19.2 6 11.2 15
10 9.4
4 7.8 10
5 6.1
2 3.4 4.2 5
- 2.3 2.4 2.8
- -
RoE RoCE EPS DPS Payout Ratio
The company has maintained a healthy dividend payout at 38% in FY13 &
31% in FY14. We expect the company to maintain this healthy payout at
~30% going forward. We expect the company to record an EPS of | 9.4
in FY15E, | 11.2 in FY16E & | 14.0 in FY17E. The corresponding dividend
is expected at | 2.8/share in FY15E, | 3.4/share in FY16E & | 4.2/share in
FY17E.
Cash Flows set to improve; CFO/EBITDA at 0.5x,FCF yield inching to 4.7%

The cash flows of Rallis are expected to improve with cash flow from
operations (CFO) increasing from | 104 crore in FY14 to | 255 crore in
FY17E. The CFO/EBITDA, a measure of quality of earnings, is also
expected to stabilize at ~0.5x by FY17E. On the free cash flow (FCF) front,
the FCF is expected to improve from | 47 crore to | 200 crore in FY17E
with corresponding FCF yield at 4.7%.
Exhibit 55: CFO, EBITDA, CFO:EBITDA Exhibit 56: Free cash flow, free cash flow yield
600 1.0 250 5

0.9 4.7
0.9
500 0.8 200 4
3.8 3.7
400 0.7
0.6 0.6 150 3
| crore
| crore
0.5 0.5
%
300 0.5
x
2.1
200
100 2
477
0.4 0.4
168
156
200
389
0.3
317
50 1.1 1
261
90
255
0.2
211
211
200
198
100
47
104
0.1 - -
- -
CFO EBITDA CFO/EBITDA Free Cash Flow Free Cash Flow Yield

Page 25
Valuation
Rallis India has always traded at a premium in relation to its peers like PI
Industries, United Phosphorus and Dhanuka Agritech given the consistent
product launches (average launch of 2-3 products each year in FY07-14
period), high diversification across the agricultural value chain, stringent
working capital cycle and lean balance sheet with strong cash flow profile.
We believe this premium is set to continue going forward. We expect
Rallss revenues, EBITDA & PAT to grow at a CAGR of 16.8%, 22.2% &
21.6% respectively in FY14-17E. The company currently trades at a P/E of
19.7x FY16E EPS & 15.7x FY17E EPS.
The company has got re-rated multiple times in the last decade and with
the current governments thrust on increasing the farm productivity, we
expect the robust outlook for Rallis to continue going forward with the
company enjoying premium valuations. We have valued Rallis on the
average FY16E (| 11.2/share) & FY17E (| 14.0/share) EPS of | 12.6 and
assigned a P/E multiple of 22x (implying a PEG of 1x over FY14-17E;
bottom line growth of 21.6% in FY14-17E) to arrive at a target price of |
278. We assign a BUY rating on the stock. With pick up in the monsoon
activity towards the end of current season and progressive sowing
domestically the risks over subdued agricultural activity have also
relatively tapered down thereby rendering sentimental support to
premium valuations.
Exhibit 57: Peer Comparison (Financials)
Market Sales EBITDA EBITDA Margin PAT
Company Cap Debt FY12 FY13 FY14 FY12 FY13 FY14 FY12 FY13 FY14 FY12 FY13 FY14
PI Industries 6245 122 956.9 1246.3 1761.0 182.1 190.8 306.8 19.0 15.3 17.4 103.6 97.3 188.0
UPL Ltd 14564 3350 7671.3 9185.7 10771.0 1435.7 1726.6 2050.1 18.7 18.8 19.0 600.7 740.7 934.8
Dhanuka Agritech 2476 39 529.2 582.3 738.4 80.0 88.9 125.4 15.1 15.3 17.0 57.1 64.5 93.1
Insecticide Ind 914 258 521.8 616.7 864.1 56.4 69.5 82.2 10.8 11.3 9.5 33.0 35.3 39.9
Rallis India 4396 77 1274.8 1458.2 1746.6 202.9 210.6 261.3 15.9 14.4 15.0 99.1 119.0 151.9
Monsanto (I) 5308 0 373.8 442.4 581.8 70.4 86.6 151.1 18.8 19.6 26.0 50.2 67.3 122.9
Bayer Corp (I) 8561 0 2272.0 2725.0 3245.0 240.1 428.8 510.0 10.6 15.7 15.7 139.0 1162.0 289.5
Source: Bloomberg, ICICIdirect.com Research
Exhibit 58: Peer Comparison (Valuation)

Market P/E EV/EBITDA P/B ROA ROE
Company Cap FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E
PI Industries 6245 33.2 26.2 20.2 21.5 17.4 13.7 9.0 7.0 5.4 15.3 18.8 20.2 30.7 29.8 29.8
UPL Ltd 14564 15.8 12.2 10.5 8.4 7.5 6.7 2.8 2.3 2.0 7.5 9.2 9.6 19.2 20.4 20.0
Dhanuka Agritech 2476 26.6 22.3 18.7 20.8 17.1 13.6 7.5 6.0 4.8 19.9 23.8 25.1 31.3 28.7 28.0
Monsanto (I) 5308 43.1 32.1 25.6 34.2 28.0 22.5 15.4 11.0 8.0 20.5 NA NA 32.7 36.8 35.8
Bayer Corp (I) 8561 29.6 25.7 21.4 18.9 16.0 13.6 4.9 4.2 3.5 12.1 18.5 19.2 15.8 17.6 17.4
Industry Average 29.7 23.7 19.3 20.8 17.2 14.0 7.9 6.1 4.7 15.1 17.6 18.5 25.9 26.6 26.2
Rallis India 4396 28.9 23.3 19.7 17.0 13.6 10.9 6.1 5.1 4.4 18.1 19.3 21.0 21.2 22.0 22.2
Sensitivity Analysis
Exhibit 59: EPS & Target price sensitivity to revenue growth
FY16E EPS (|) FY17E EPS (|) Target Price (|)

For every 200 bps alternation in the revenue CAGR over
12 10 12 249
FY14-17E, the FY16E & FY17E EPS changes by ~4.5% &
Revenue CAGR over
6.4% respectively. 14 11 13 263
For every 200 bps alternation in the revenue CAGR over 16 11 14 278
FY14 - 17E
FY14-17E, the target price changes by ~5.6% (~| 18 12 15 293

14.5/share)
20 12 16 308

Page 26
Trading Multiples
Exhibit 60: 2 year forward P/E Graph (Rallis currently trading at 17.8x; Average at 15.9x)
350
300
250
200
(|)
150
100
50
0
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Price 28x 25x 22x 19x 16x 13x 10x
Source: Reuters, ICICIdirect.com Research
Exhibit 61: 1 year forward P/E Graph Exhibit 62: 2 year forward P/E Graph
Rallis 1 year forward P/E Rallis 2 year forward P/E

25 21.9 25
17.8
20 20
15 15
x
10 10
5 5
0 0
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Nov-10
Jan-10
Jun-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
Oct-13
Aug-14
May-13
Mar-14
Source: Bloomberg, ICICIdirect.com Research Source: Bloomberg, ICICIdirect.com Research
Exhibit 63: Rallis P/E multiple; premium over PI Industries & Dhanuka Agritech
250
200
150
Rallis has always traded at a premium over its domestic 100

competitors namely PI Industries & Dhanuka Agritech with
average P/E premiums being 43% (over PI Industries) & 95% 50
(over Dhanuka Agritech) in the last 2 years.
The premiums however have shrunk presently; with PI quoting 0

Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
at par with Rallis India while Dhanuka trading at a discount of

18.4% to Rallis India -50
Rallis premium over PI Industries Rallis premium over Dhanuka Agritech

Page 27
Risks & Concerns
Evolution of Genetically Modified crops (GM Crops)
The global agro chemical industry is susceptible to introduction of
genetically manufactured (GM) crops as they are highly pest resistant with
better yields (as compared to the normal variety), thereby limiting the
quantum of crop protection chemicals to be used for plants germinated
through GM seeds. Rallis agrochemical business is also exposed to this
risk factor and may adversely affect its profitability and financials on
account of increased usage of GM crops globally.
Exhibit 64: Sensitivity Analysis; Target price vs. revenue growth
Standalone Revenue CAGR over FY14 - 17E (%)
12 14 16 18 20
Metahelix Revenue 15 252 265 278 292 305
CAGR over FY14 - 20 256 269 282 295 309
17E (%) 25 260 272 285 299 313
30 264 276 289 303 317
35 268 281 294 307 321
We have assumed the standalone revenue to grow at a CAGR of 14.9% in

FY14-17E. However, for every 200 bps increase/decrease of the same
changes our target price by ~5% (~| 13.5/share) assuming the metahelix
revenue growth materializes as expected (We expect metahelixs
revenues to grow at a CAGR of 25% in FY14-17E).
Farm Loan Waiver: Upside risk to Industry & Rallis revenues
The central government in February 2008 had announced & executed a
farm loan waiver scheme wherein the farm loans amounting to ~| 70,000
crore were waived off thereby benefiting the small & the marginal
farmers. While, the benefits of the farm waiver & consequent benefits to
the agriculture sector did not accrue in FY09 on account of higher growth
base in FY08, the entire agro chemical industry however witnessed robust
growth wherein their industry revenues grew 26.1% YoY. Rallis India
followed the suit with its revenues growing by ~23% YoY in FY09
(highest pace in last 7 years).
Exhibit 65: Impact of Loan waiver on Industry revenues
Domestic Agro- Rallis India
Agri GDP (Constant YoY Growth Agri GDP (Current YoY Growth Chemical Industry YoY Growth Standalone Top line
Fiscal Year Prices) | crore (%) Prices) | crore (%) Revenue, | crore (%) Rainfall (mm) | crore YoY Growth (%)
FY06 502996 5.5 536822 12.6 5241 99
FY07 523745 4.1 604672 12.6 5973 14.0 100 643
FY08 556956 6.3 716276 18.5 7204 20.6 106 692 7.6
FY09 555442 -0.3 806646 12.6 9083 26.1 98 852 23.1
FY10 557715 0.4 928586 15.1 10084 11.0 78 897 5.2
FY11 610905 9.5 1143517 23.1 11923 18.2 102 1074 19.8
FY12 643543 5.3 1300569 13.7 13160 10.4 101 1181 9.9
FY13 649424 0.9 1417468 9.0 15901 20.8 92 1324 12.1
FY14 681412 4.7 1653802 16.7 18942 19.1 106 1531 15.7
Source: Government of India, ICICIdirect.com Research Farm Loan waiver scheme announced in Rallis followed the industry trend
Feb 2008; budget outlay | 60,000 crore. with its top line increasing by
Actual disbursements started in Dec08 ~23% YoY
with release of | 25000 crore & June09
with release of | 5000 crore
Going forward, with Telangana government declaring a farm loan waiver

amounting ~| 17000 crore and erstwhile Andhra Pradeshs state being
the largest crop protection consumer (24% share in FY12) there exits a
strong probability of Industry & Rallis revenue to increase in higher
double digit in FY15E/FY16E

Page 28
Failure to develop new products
Though Rallis enjoys a good brand recall but failure to develop any new
products according to the market needs can adversely affect the
companys financials. The companys internal benchmarks i.e. Innovation
Turnover Index has moved to a lower trajectory (Innovation index at 11,
15, and 15 in FY12-14 vis--vis 30, 30, 31 in FY08-10) depicting decreasing
share of revenues from new products. Though there might we some
blockbuster product by the company which had been launched more than
4 years ago and hence not accounted under this index, but still any
reduction in launches of new products can hamper the growth in
companys revenues going forward.
MSPs (global food prices seeing correction)
One of the reasons for rise in purchasing power of domestic farmers and
consequent buying of crop protection chemicals has been the increase in
minimum support prices (MSP) by the central government at regular
intervals for the farm produce. Currently, globally the food prices are
seeing some correction (due to increase in production) and hence any
reduction in MSPs by the central government may limit the purchasing
power of farmers thereby limiting the growth of agro chemicals industry
and Ralliss revenues going forward.
Competition
Though the Indian crop protection market is under penetrated but still
there exist a good number of efficient players in the organized segment
which act as competitors for the company. The company faces stiff
competition from both domestic as well as international players.
International competitors include BASF, Bayer Corpscience & Syngenta
among others while domestic competitors include United Phosphorus, PI
Industries & Dhanuka Agritech among others
Weather conditions/ Inadequate Monsoons
Rallis product profile is highly weather dependent, the control of which is
beyond the companys ambit. Any adverse weather conditions including
inadequate or excess rainfall can likely result in loss of revenues for the
company. The companys core business i.e. agro chemical (crop
protection) is also dependent on weather & soil conditions which result in
growth of pests & weeds. Any anomaly in the above might alter the
occurrence of pests & weeds which can result in loss of revenues for the
company.
Soil degradation
Excessive use of pesticides & fertilizers can cause degradation of the
quality of soil which can adversely affect the yield of crops planted by
farmers. And reduction in yields followed by reduction in purchasing
power of farmers can adversely affect the business of the company

Page 29
Financial Summary (Consolidated)
Exhibit 66: Profit and Loss (| crore)
Net Sales 1,440.9 1,727.2 2,026.6 2,360.8 2,755.3
Other Operating Income 17.3 19.4 24.3 25.9 27.5
Total Operating Income 1,458.2 1,746.6 2,051.0 2,386.6 2,782.7
Other Income 11.7 6.4 4.6 5.1 9.8
Total Revenue 1,469.9 1,753.0 2,055.5 2,391.7 2,792.5
Raw Material Expenses 877.9 1,008.4 1,163.7 1,359.7 1,576.2

Employee Expenses 94.4 110.5 126.6 143.4 163.2
other operating costs 275.3 366.3 443.7 494.9 566.4
Total Operating Expenditure 1,247.6 1,485.3 1,734.0 1,997.9 2,305.8
EBITDA 210.6 261.3 316.9 388.7 476.9

Interest 18.5 12.6 15.1 12.2 10.3
PBDT 203.8 255.1 306.4 381.5 476.4
Depreciation 31.5 40.7 44.0 50.4 57.5
PBT 172.3 214.4 262.4 331.2 418.9
Total Tax 53.5 61.7 76.6 109.3 138.2
PAT before MI 118.8 152.7 185.8 221.9 280.7
Minority Interest (0.2) 0.8 2.1 4.4 7.4
PAT 119.0 151.9 183.7 217.4 273.2
Exhibit 67: Balance Sheet (| crore)

Equity Capital 19.5 19.5 19.5 19.5 19.5
Reserve and Surplus 601.3 698.6 817.0 958.0 1,135.7
Total Shareholders funds 620.7 718.0 836.5 977.5 1,155.1
Total Debt 54.0 74.5 64.5 4.5 4.5
Deferred Tax Liability 28.6 33.0 33.0 33.0 33.0
Minority Interest 4.7 10.5 12.6 17.0 24.5
Other Non Current Liabilities 6.0 3.5 3.5 3.5 3.5
Liability side total 714.0 839.5 950.1 1,035.5 1,220.6
Total Gross Block 583.0 650.8 700.8 780.8 860.8

Less Total Accumulated Depreciation 195.3 232.7 276.7 327.1 384.6
Net Block 387.7 418.2 424.1 453.7 476.3
Total CWIP 34.5 21.1 81.1 56.1 31.1
Total Fixed Assets 422.2 439.3 505.2 509.8 507.4
Liquid Investments 1.0 6.4 6.4 16.4 116.4
Other Investments 18.7 18.7 18.7 18.7 18.7
Goodwill on Consolidation 167.6 185.9 185.9 185.9 185.9
Inventory 267.2 329.5 416.4 485.1 566.2
Debtors 164.8 167.9 194.3 258.7 339.7
Loans and Advances 119.5 138.0 141.9 165.3 192.9
Other Current Assets 2.7 2.6 2.0 2.4 2.8
Cash 26.0 9.1 10.8 12.7 14.0
Total Current Assets 580.2 647.0 765.5 924.2 1,115.5
Creditors 408.5 386.2 444.2 517.4 603.9
Provisions 67.7 73.0 88.8 103.5 120.8
Total Current Liabilities 476.2 459.2 533.0 620.9 724.7
Net Current Assets 104.0 187.8 232.4 303.2 390.8
Assets side total 714.0 839.6 950.1 1,035.6 1,220.7

Page 30
Exhibit 68: Cash flow statement (| crore)
Profit after Tax 119.0 151.9 183.7 217.4 273.2
Depreciation 31.5 40.7 44.0 50.4 57.5
Cash Flow before working capital changes 169.0 205.2 242.8 280.1 341.0
Net Increase in Current Assets (42.7) (83.7) (116.7) (156.8) (190.0)

Net Increase in Current Liabilities 71.8 (17.0) 73.8 87.9 103.8
Net cash flow from operating activities 198.1 104.5 199.9 211.2 254.7
(Purchase)/Sale of Fixed Assets (30.2) (57.7) (110.0) (55.0) (55.0)

Liquid Investments 1.9 (5.4) - (10.0) (100.0)
Net Cash flow from Investing Activities (17.2) (74.6) (107.9) (60.6) (147.6)
Inc / (Dec) in Equity Capital - - - - -

Inc / (Dec) in Loan Funds (74.9) 15.4 - (25.0) -
Inc / (Dec) in Loan Funds (21.7) 5.1 (10.0) (35.0) -
Total Outflow on account of dividend (52.2) (54.6) (64.2) (76.5) (95.6)
Net Cash flow from Financing Activities (164.6) (46.8) (90.2) (148.7) (105.9)
- - - - -
Net Cash flow 16.3 (16.9) 1.8 1.9 1.3
Cash and Cash Equivalent at the beginning 9.6 26.0 9.1 10.8 12.7
Closing Cash/ Cash Equivalent 26.0 9.1 10.8 12.7 14.0
Ratios
Exhibit 69: Ratio Analysis
Per Share Data
EPS 6.1 7.8 9.4 11.2 14.0
Cash EPS 7.7 9.9 11.7 13.8 17.0
BV 31.9 36.9 43.0 50.3 59.4
Operating profit per share 10.8 13.4 16.3 20.0 24.5
Operating Ratios
EBITDA / Total Operating Income 14.4 15.0 15.5 16.3 17.1
PAT / Total Operating Income 8.2 8.7 9.0 9.1 9.8
Return Ratios
RoE 19.2 21.2 22.0 22.2 23.7
RoCE 26.4 27.5 29.9 33.9 35.4
RoIC 27.4 27.5 32.0 35.6 39.6
Valuation Ratios
EV / EBITDA 20.4 16.6 13.6 10.9 8.7
P/E 35.9 28.2 23.3 19.7 15.7
EV / Net Sales 3.0 2.5 2.1 1.8 1.5
Sales / Equity 2.3 2.4 2.4 2.4 2.4
Market Cap / Sales 3.0 2.5 2.1 1.8 1.6
Price to Book Value 6.9 6.0 5.1 4.4 3.7
Turnover Ratios
Asset turnover 2.0 2.2 2.3 2.4 2.4
Inventory Days 67.7 69.6 75.0 75.0 75.0
Debtor Days 41.7 35.5 35.0 40.0 45.0
Creditor Days 103.5 81.6 80.0 80.0 80.0
Working Capital Days 6.0 23.5 30.0 35.0 40.0
Solvency Ratios
Debt / Equity 0.1 0.1 0.1 0.0 0.0
Current Ratio 1.2 1.4 1.4 1.5 1.5
Quick Ratio 0.7 0.7 0.7 0.7 0.8

Page 31
Appendix
Food grain production
In India, the area under cultivation for food grains has been steady at
~120-125 million hectares (out of the total area under cultivation of 171
million hectares) with total food grains production growing at CAGR of
4.9% in FY10-14 to 264 million tonne in FY14. Within the food grains
segment, rice constituted 106 million tonne while wheat constituted 96
million tonne in FY14.
Exhibit 70: Area Under Cultivation & Food Grain production
Area Under Cultivation (million hectares) Production (million tones) Yield (kg/hectare)
FY14 Adv FY14 Adv Long Tern FY14 Adv
S.NO Crops FY10 FY11 FY12 FY13P Est FY10 FY11 FY12 FY13P Est Avg FY10 FY11 FY12 FY13P Est
1 Rice 42 43 44 43 44 89 96 105 102 106 97 2126 2238 2393 2379 2421
2 Wheat 29 29 30 30 31 81 87 95 92 96 84 2835 2986 3174 3077 3061
3 Coarse Cereals 28 28 26 24 26 34 43 42 38 43 1211 1534 1592 1573 1675
4 Pulse 23 26 25 24 25 15 18 17 18 20 629 691 698 736 772
(1+2+3+4) Food grains 121 127 125 121 126 218 245 259 250 264 237 1797 1930 2078 2071 2095
5 Oilseeds 26 27 26 27 28 25 32 30 29 32 957 1194 1133 1112 1149
6 Sugarcane 4 5 5 5 5 292 342 361 335 348 326 69595 71333 72208 66908 69600
7 Cotton 10 11 12 12 12 24 33 35 34 37 404 501 490 495 530
Source: Ministry of Agriculture, ICICIdirect.com Research Cotton production recorded as million bales; 170 kg each
The marginal increase in the area of cultivation with modest

growth in food production implies that the crop yield has Agriculture Exports/Imports
improved over a period of time. The average yield of food Exhibit 71: India Agricultural Exports (top 10 items)
grain crops has increased from ~1800 kg/hectare in FY10
FY11 FY12 FY13
to ~ 2100 kg/hectare in FY14
Item Quantity Value Quantity Value Quantity Value
S.No (MT) (| crore) (MT) (| crore) (MT) (| crore)
1 Cotton Raw incl. waste 1.9 13160 2.0 21624 2.0 19812
2 Marine products 0.8 11917 1.0 16585 1.0 18833
3 Oil Meals 6.9 11070 7.4 11796 6.3 15822
4 Rice basmati 2.4 11355 3.1 15450 3.5 19391
India is a major exporter of raw cotton, marine products and 5 Meat & Prep 8960 14111 17902
basmati rice. In FY13, India exported 2 million tonne (MT) of 6 Tea & Coffee 0.5 6364 0.6 5600 0.5 9389
cotton amounting to | 19,812 crore while the same 7 Wheat 0.0 0 0.7 1023 6.5 10488
quantum for basmati rice stood at 3.5 MT and | 19,391 8 Sugar 1.7 5419 2.7 8767 2.8 8576
crore respectively. 9 Non-basmati Rice 0.1 231 4.0 8659 6.7 14417
10 Other Cereals 3.2 3649 4.1 5493 5.5 8217
Exhibit 72: India Agricultural Imports (top 10 items)

FY11 FY12 FY13
Quantity Value Quantity Value Quantity Value
S.No Item (MT) (| crore) (MT) (| crore) (MT) (| crore)
1 Vegetable Oils (fixed edible) 6.9 29860 8.4 46255 11.0 61106
2 Pulses 2.7 7150 3.4 8931 3.8 12738
3 Cashew Nuts 0.5 2650 0.8 5338 0.9 5331
4 Fruits & Nuts (excl cashew) 3637 4658 5972
India is a major importer of edible oils, pulses and cashew
nuts. In FY13, India imported 11.0 million tonne (MT) of 5 Sugar 1.2 2790 0.1 314 1.1 3072
edible oils amounting to | 61,106 crore while the same 6 Spices 0.1 1556 0.1 2190 0.2 2590
quantum for pulses stood at 3.8 MT and | 12,738 crore 7 Cotton raw & waste 0.1 624 0.1 1059 0.2 2465
respectively. 8 Milk & Cream 0.0 492 0.1 1038 0.0 107
9 Jute, raw 0.1 302 0.2 449 0.2 371
10 Cereal Preparations 0.0 229 0.0 317 0.1 332

Page 32
Irrigation
As of FY11, out of the total sown area of 142 million hectares around 45%
(65 million hectares) was the area under irrigation. Among the agrarian
states Punjab (98%) & Haryana (87%) are the most irrigated states while
Maharashtra (19%) is the least one. Among the crops Wheat (92%) & Rice
(59%) are the most irrigated crops domestically.
Source of Irrigation (million hectares, % share) 2011-12 Exhibit 73: Irrigated Area Trend Domestically
100 45 47 50
41
Other
Sources, 80 34 40
Canals, 29
million hectares
7.1, 11%
16.0, 25% 60 23 30
Other Wells, 18
%
17
92
89
10.8, 17% 40 20
76
65
64
63
Tanks, 1.9,
55
50
48
3% 20 10
39
38
31
28
25
23
21
0 0
Tube Wells, 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11 2011-12
29.4, 44% Gross Irrigated Area (million hectares)
Net Irrigated Area (million hectares)
% of Gross Irrigated Area over Gross Cropped Area

Rallis India
Micro-Irrigation: The new area of thrust

As against the traditional flood irrigation methodology used by Indian
The government also subsidies the farmer in the initial cost farmers for irrigating their fields, off late the government is promoting the
of the irrigation set up (~35% of cost) and has been usage of micro-irrigation (MIS) technique. MIS essentially means released
disbursing hefty sums for the same under various schemes
(disbursed ~| 1300 crore in FY14). In terms of state small quantum of water at necessary time periods to the most appropriate
exposure, Gujarat & Maharashtra have pioneered the use of part of the plant. It is implemented through drip & sprinkler irrigation
this technique for the benefit of their farmers. techniques. This regulated supply of water results increasing yield per
crop and at the same time save precious natural resource i.e. water.
Credit Flow to agriculture sector
The government through its various schemes supports the agriculture
sector with credit being the fore most. The government has classified
credit to agriculture as a priority sector lending wherein every bank has to
set aside or disburse a big chunk of its advances to agriculture and allied
services. The government at present is also running a credit subvention
scheme wherein loan to farmers is offered at a concessional rate of 7%
with 2% as subvention rate given by government directly to banks.
Furthermore if the farmer makes timely payment he/she gets further
subvention of 3% so that the effective rate of loan for judicious and
responsible farmers come to about 4% only.
Each year the government sets a target of agriculture credit which in
totality is being met by the various lending institutions as a whole (banks,
NBFCs, MFIs, financial institutions etc.). For FY15, the government has
set a target of | 8 lakh crore
Exhibit 74: Agriculture Credit flow
Agricultural Credit, Target Agricultural Credit,
Year (| cr) Achieved (| cr) % Achieved YoY Growth (%)
FY09 280000 287149 103
FY10 325000 384514 118 33.9%
FY11 375000 468291 125 21.8%
FY12 475000 511029 108 9.1%
FY13 575000 607375 106 18.9%
FY14 700000 730765 104 20.3%

Page 33
Monsoon Update
Exhibit 75: India Chart- South West Monsoon (1st June 2014- 24th September 2014)
In the chart on the right, the areas/states marked as green

received normal rainfall (+19% to -19%) while areas/states
marked as red received deficient rainfall (-20% to -59%).
Thus it can be observed that majority of the country

(~68%) received normal rainfall with few areas namely
Punjab, Haryana, West UP, East MP, HP, Delhi, East Up,
Bihar, Marathwada, Telangana receiving deficient rainfall.
It is also to be noted that, though the rainfall might be less

in the agrarian states of Haryana & Punjab but they are one
of the most irrigated states and hence the crop losses in
these states are expected to be minimal
Source: Indian metrological department (IMD), ICICIdirect.com Research,
On the cumulative basis (1st June14- 24th Sept14), the

total rainfall deficient in India stood at 11% with the rainfall Exhibit 76: Monsoon Summary
deficient in northwest India being 20%, central India being
Regions Actual Rainfall (mm) Normal Rainfall (mm) % Departure form LPA
8%, south peninsula being 6% and east & northeast India
being 11%. Country as a whole 763.2 858.8 -11
Northwest India 478.6 601.2 -20
Out of 36 meteorological subdivisions (defined by the Indian Central India 877.1 949.4 -8
Metrological department), the rainfall has been excess over
South Peninsula 637.4 679.8 -6
1, normal over 25, deficient over 10 sub-divisions and no
sub-division under scanty rainfall. In area-wise distribution, East & northeast India 1226.5 1385.1 -11
7% area of the country received excess rainfall, 68% area of Source: Indian metrological department (IMD), ICICIdirect.com Research
the country received normal rainfall and remaining 25% area
received deficient/scanty rainfall. The monsoon in the current season had a lacklustre start with low rainfall
As per latest release by the Ministry of agriculture, 96.3% of in the month of June 2014. However it picked up momentum thereafter
the normal area under Kharif crops has been sown up to with country receiving good amount of rainfall in the month of July14 &
19th Sept14. Area sown under all Kharif crops taken August14. As of 24th September the total cumulative rainfall (1st June14-
together has been reported to be 102 million hectares in
FY15 (at all India level) vs. 104 million hectares in FY14 24th Sept14) is only 11% short of its long term average (858.8 mm) and
hopes are intact for a healthy crop produce this season (FY14).

Page 34
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com
ANALYST CERTIFICATION
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report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the
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underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of
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The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and
meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without
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from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities
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Initiating Coverage

ICICIdirect.com | Equity Research

6.0 Punjab and Haryana among others.

Source: Company, ICICIdirect.com Research,

ICICIdirect.com | Equity Research

ICICIdirect.com | Equity Research

Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research

In Europe the consumption is highest on account of high commodity

There is a key difference observed in terms of application of agro

Rice Plantation Crops

A stark difference is also observed in the agro chemical usage bifurcation

ICICIdirect.com | Equity Research

250 192 180 182

urgency to increase the yield out of the same land for

ICICIdirect.com | Equity Research

Thus, with increasing fragmented land holdings and limitations over

Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research

The per capita consumption of pesticides is low in India on account of low

ICICIdirect.com | Equity Research

Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research

Going ahead, the Indian agrochemcial industry is expected to grow at a

ICICIdirect.com | Equity Research

Rodents & others

Source: FICCI, Tata Strategic Group Study, ICICIdirect.com Research

5) Shortage of farm labour, impelling case of herbicide growth

ICICIdirect.com | Equity Research

ICICIdirect.com | Equity Research

800 718 8000 1000 875 9000

ICICIdirect.com | Equity Research

Domestic Crop Protection Business to dominate (CY17 share at 49.4%)

1000 900 45%

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

Gharda Chemicals Ltd

Makhteshim Chemical Works

ICICIdirect.com | Equity Research

Source: Company, ICICIdirect.com Research

Product Launches: Key growth driver

ICICIdirect.com | Equity Research

Source: Company, ICICIdirect.com Research

It is a strong measure depicting R&D focus of the company. Greater the

Red Label Extremely toxic 1--50 1--200

Blue Label Moderately Toxic 501--5000 2001-20000

Green Label Slightly Toxic >5000 >20000

ICICIdirect.com | Equity Research

100 35.6 54.1

Source: Company, ICICIdirect.com Research

Metahelix is currently going through a gestation period wherein it is

Exhibit 33: Rallis consolidated revenue mix

Speciality Chemicals Metahelix Zero Waste Agro

Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

Zero waste agro sales are expected to grow at a CAGR 30 27

of 50% to | 27 crore in FY17E (| 14 crore in FY14)

Source: Company, ICICIdirect.com Research

Non-Pesticide Portfolio (NPP): Share on rise; will further de-risk Rallis

ICICIdirect.com | Equity Research

The company, in FY14, clocked export turnover of ~| 500 crore, 50% of

Source: Company, ICICIdirect.com Research

Product Profile-Across Segments

ICICIdirect.com | Equity Research

Going forward, on the back of increase share of working capital intensive

Source: Company, ICICIdirect.com Research

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