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11/25/2009

Energizing Earth NOVEMBER 2009


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Background

 Aries Agro Ltd was founded by Dr. T. B. Mirchandani and Mrs. Bala Mirchandani in 1969

 The Company started by manufacturing a small range of mineral feed additives for animals & birds

 Through in-house R&D efforts, the company branched out into Agrochemicals in 1975 with the introduction of
Chelated Micronutrients.
Micronutrients

 Aries Agro Ltd is a pioneer of Agricultural Chelates in India, using indigenously developed technology for
Chelation and Complexing of Multi Micro Nutrients.

 In 2001, Aries expanded its product line to include secondary nutrients – sulphur, magnesium and calcium.
2004 saw the further addition of water soluble NPK fertilizers.
fertilizers

 The company manufactures a wide range of products under 65 Brands.


Brands Products include Plant nutrients, crop
protection chemicals and Veterinary products.

 Six manufacturing plants with capacity of 84,600 tpa.

 Wide network of 25 branches, 4900 distributors and 70000 retailers across 22 states of India

 Investment in Golden Harvest, Sharjah - to set up unit to manufacture 10,800 tpa of Chelated Micronutrients.
Micronutrients

 Through Golden Harvest, Aries has invested in Amarak Chamicals FZC for manufacture of 60,000 tpa of
Sulphur Bentonite

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Industry: Specialty Plant Nutrition Solutions

H C O Provided
Hydrogen Carbon Oxygen by Air

The Aries Primary


N P K
Range Nitrogen Phosphorous Potassium Nutrients
addresses (water solubles)
these crop
nutrient needs
Secondary
Mg S Ca Nutrients
Magnesium Sulphur Calcium

Micro
Si Zn Fe Cu Mn Bo Mo Nutrients
Silicon Zinc Iron Copper Manganese Boron Molybdenum

Source: Development of Education in India – 1990-93

Crops require above nutrients for balanced and healthy growth


All nutrients are important for the growth of crops in varying quantities

Industry : Aries’ Unique Niche

Commodity Water Soluble NPK Secondary Value added Inorganic


NPK Fertilizers Fertilizers nutrients Micronutrients Micronutrients
Aries Presence X √ √ √ √

Typical products Urea, DAP, 20-20-20, 13-0-45, Ca, Mg, S Chelates Sulphates
SOP 0-52-34, 0-0-50
Price Control √ X X X X

Subsidies √ X X X X

Volumes High Low Medium Low Medium

Profitability Very Low Medium Medium High Low

Aries Revenue share % -- 12% 10% 58% 9%

Gross Margins % -- 12% 30% 55% 15%

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Key Demand Drivers

Contract Growing Govt focus on


Farming Population enhancing
Agri productivity

Change in Hybrid/genetically
Cropping Pattern modified seeds

Change in Demand - Shrinking


Eating Habits Specialty Nutrients Agri Land Area

Growing Micro Irrigation


Awareness Systems

Increasing Increase in
Growing
Deficiencies Exports
Affluence

Strong Marketing network

 Aries has 309 trained marketing personnel


 25 branches spread across 22 states AAL
 First link of distribution channel has more than
309 Marketing personnel
providing technical support

4900 distributors

 Direct access to 70000+ retail dealers 4900+ distributors


 Database of purchase records of 8mn+ farmer
population across 1,60,000 villages - one in six
villages of India 70000+ retailers
 Present in 375 fertilizer consuming districts – two
out of three fertilizer consuming districts of India

 Trained staff directly visit villages to educate the 8mn + Farmers


farmer about the concept of Chelation and
benefits of micronutrients and balanced crop
nutrition

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Product Portfolio

 Product line includes 9 main categories namely,


 Multi-micro nutrient complexes
 Chelated micro nutrients
 Secondary nutrients
 Specialty water soluble NPK fertilizers
 Antibiotics and hormones for agricultural use
 Seeds
 Insecticides
 Agricultural Sprayers
 Animal Nutrition products

 Flagship Brands
 Agromin (Chelated multi micro nutrients) –
produced in 107 different crop, soil and geography
specific variants
 Chelamin (Chelated zinc)

2009-10 : New Product launches

 Bio Degradable Chelates (First time in India)


ECO-Zinc, ECO-Cop, ECO-Mn, ECO-Fer

 Natural Amino Acid Chelates


PRO-Zinc, PRO-Cop, PRO-Mn, PRO-Fer, Agri-PRO

 Sea Weed Extract


MARINO

 Water Treatment Formulation


AQUARITE

 Calcium Nitrate Derivatives


AQUACAL, COMBICAL

 Aries Agricultural Sprayers – Knapsack & Battery powered

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Product Portfolio : India’s Plant Nutrients Super Bazaar

Nutrient Premium Range Mid Range Economy Range


Multi micronutrients Agromin Max, Agromin Gold Agromin Liquid, Agri Pro Agromin Soil Application
Zinc Eco Zinc, Chelamin Gold Chelamin, Aquazin, Pro Zinc Zincomix, Zn Sulf
Iron Eco Fer Chelafer, Pro Fer Ferromix
Copper Eco Cop Chelacop, Pro Cop
Manganese Eco – Mn Mn – Chel, Pro – Mn
Boron Boron 20 Borosoil, Calbor Tetrabor
Sulphur Primasulf, Nitrosulf Sulfonite
Magnesium Chelamag Magmix
Calcium Chelacal, Combical, Aquacal Calcium Nitrate
Nitrogen Macrofert Fertimax – NP
Phosphorus Macrofert Fertimax – PK
Potassium Macrofert Fertimax - K
All Nutrients Aries Total

Product Portfolio : Increasing Network Throughput

Objective : Maximize Share of Wallet from Aries’ wide distribution network

Seed Treatment Plantomycin Provides protection at germination


stages
Antibiotics for Plants Plantomycin Broad spectrum Bactericide

Plant Hormones Agronaa Induces flowering and fruiting

Bio Fertilizers Aquaphos Phosphorus Solubilizing bacteria

Nitrofix Nitrogen fixing bacteria


Hybrid Seeds Ansh Seeds Sunflower (1 varieties), Paddy (3
varieties), Maize (3 varieties)
Farm & Farmer Equipment Sprayers Battery operated Sprayers

Knapsack Sprayers

Plant Protection Chemicals Haasil, Nirbhay Plus, Jahaan, Fungicides, Miticides, Insecticides
Avashya, Anokhi, Ashray, Mohar

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Typical Seasonality of Indian Operations

Q1 (Apr - Jun) Q2 (Jul – Sep) Q3 (Oct – Dec) Q4 (Jan – Mar) Annual

Revenues – Nutrients 10% 30% 35% 25% 100%

Revenues - Seeds 55% -- 45% -- 100%

Revenues - Insecticides -- 35% 50% 15% 100%

Revenues - Sprayers 35% 35% 30% -- 100%

Inventory (across all High – to build Highest High Reduces by Ideal would be 90
locations) up for Kharif year end days of sales

Receivables (from Low High High Reduces by Ideal would be 150


registered distributors) year end days of sales

Expenses High as % to Stable Stable Highest,


Q1 sales includes year
end discounts
Working Capital needs High Highest High Reduces by Ideal would be 25%
year end of sales

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Challenges of Dealing with the Changing Seasons


 Deliberate focus on developing cash crop
markets Quantitative Quantitative Volume
Sales (MT) Sales (MT) Growth %
 Reduced focus on cereals grown in Kharif 2008-
2008-09 2009-
2009-10
season
First Half First Half
 Campaigns during Rabi season for
horticultural crops 11,778 MT 13,918 MT + 18.2 %
 Water availability in reservoirs is known
before commencement of the Rabi season,
Revenue Share Revenue Share
enabling strategy shifts into areas with
First Half % Second Half %
adequate water (Kharif season) (Rabi season)
 Focus on crops where farm gate prices have 2006-07 38% 62%
increased farmer’s investment capacity
2007-08 44% 56%
 Widen geographic spread into new markets
 Develop penetration in existing markets by 2008-09 47% 53%
entering unserviced areas using Rural Retail 2009-
2009-10 E 40% 60%
vehicles (KVVs)

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Wide Distribution of Revenues

Statewise Share of Revenues

NE
WB 2% AP
15% 23%
KER
KAR 0.1%
2%
TN
3%

PJB
6%

JHK
0.1%
BIH
4% HP MAH
17%
1% UK
1% UP
8% GUJ MP
HAR RAJ OR CG
3% 3%
3% 5% 2% 3%

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Nationwide Manufacturing Units

Lucknow
10,800 MT

Ahmedabad Kolkata
19,800 MT 1,650 MT

Mumbai
10,800 MT
Hyderabad
37,800 MT

Bangalore

Current Manufacturing Units 3,750 MT

* Disclaimer: This map is for broad representational purposes only &


may not have accurate or exact national and international boundaries.

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Golden Harvest Middle East FZC, Sharjah


• First of Aries’ Chelates Manufacturing Unit overseas

• Rationale :
• Duty saving on imports of Micronutrient fertilizer end product, instead of raw materials which are
organic chemicals or minerals
• Capturing overseas markets in the Middle East and in the SAARC Region as a cost effective source
of Chelated Micronutrients
• Serve as a supplier of ‘Technicals’ for flagship brands to Aries’ Indian manufacturing units

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Amarak Chemicals FZC, Fujairah

• Largest overseas investment of Aries


• Expected Commercial Production : Q4 of 2009-
2009-10

Rationale :
• Proximity to UAE’s oil refineries for Sulphur by
products which are the main raw materials
• Proximity to Asian markets, especially India and
China, which currently have the largest deficit of
Sulphur based secondary crop nutrients
• Captive market within Aries Agro’s wide distribution
network

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Amarak Chemicals FZC, Fujairah

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Growing Demand for Sulphur in Agriculture

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Markets for Amarak : Sulphur Deficit Regions of the World

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Amarak Chemicals : Competition

Assuming an average of 2 belts per production unit, 14 manufacturers globally would be producing
8,40,000 MT per year

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Aries Group : Our Growth Story

2005--06 2006-
2005 2006-07 2007-
2007-08 2008-
2008-09 2009--10
2009 2010-
2010-11 2011--12
2011
E E E

Sales 59.3 74.1 103.3 113.1 155 235 280

PBT 10.2 14.0 18.1 8.3 22.1 40.1 51.6

PAT 6.7 8.7 14.2 6.4 14.9 30.5 39.6

Rupees in Crores

Aries Group – Consolidated Global Operations

2009--10 E
2009 2010--11 E
2010 2011--12 E
2011
Sales EBIDTA Sales EBIDTA Sales EBIDTA
Aries Agro 135 28 165 32 185 37
Indian 4 0.8 10 2 20 4
Subsidiaries
Golden Harvest 11 2.2 20 4 30 6
Amarak Chemicals 5 -1 40 9 60 12
TOTAL : 155 30 235 47 280 70
Aries Group
PBT PAT PBT PAT PBT PAT
Aries Agro 20.3 13.4 26.4 17.4 31.5 20.8
Indian 0.8 0.5 1.8 1.2 3.8 2.5
Subsidiaries
Golden Harvest 2 2 3.7 3.7 5.5 5.5
Amarak -1 -1 8.2 8.2 10.8 10.8
Chemicals
TOTAL : 22.1 14.9 40.1 30.5 51.6 Rupees in Crores
39.6
Aries Group
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Competitive Strengths

 Widest range of specialty plant nutrition solutions available to the Indian farmer
 Customized variants based on ongoing research of soil, crop and geography specific nutrient
needs
 Highly skilled sales team geared up to promote concepts and branded agricultural inputs
 Unmatched distribution reach, with a proven capability to place a new product on 69000 retail
shelves within 1 day of launch
 Specialized, cost effective, environmentally sensitive Chelation technology
 World class manufacturing systems for multi micronutrient complexes
 India’s only customer loyalty programme in agribusiness – market intelligence, data mining
capability, interest free working capital
 Strong relationships with research institutions and Agricultural universities, along with systematic
lab to land knowledge dissemination programmes
 Unique industry-government-private partnership : CII-Aries Agro Young Indian Farmers Network
 Nationwide network of manufacturing facilities, with ISO certified Quality Management system

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Brand Strength

 Aries Corporate Brand :


 Symbol of trust and quality

 Consistent delivery of quality products

 Premium pricing accepted by farmers due to high standards and credibility

 Product Branding :
 Synonymous with product category in agriculturally progressive states

 Brands built without high decibel advertising campaigns, using extension services and field
demonstrations

 Knowledge, consistency and simplicity

 Nil sales of unbranded products since inception

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Consumer Connect

 Increasing awareness is key to increasing mindshare and market share


 Unique Young Farmers Network engaging 6100 farmers, all 25 to 40 years of age
 Partnership with the Confederation of Indian Industry’s Young Indians
 Uniconnect - Lab to land awareness programmes with 100+ Agricultural Universities and
Research Stations
 Bal Krishak Sambodhan - Exposure to young students in rural schools on best practices in crop
management
 Suryodaya - Continuous schedule of farmer study tours, farmer meetings, demos and field trials
 Train the trainers sessions with Government extension officers
 Regular Rural Immersion programmes
 Mobile Soil Testing and issue of Soil health cards
 SMS based weather advisories, commodity prices, farmer query resolution
 MCX-Aries Agro Gramin Suvidha Kendra – Pilot with India Post offices in 768 villages across 5
states as booking agents and information channels; scale up opportunity immense

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A Fleet of 100 Krishi Vigyan Vahans

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Aries KVV Objectives

 Build awareness in remote, unserviced markets


 Conduct farmer meetings and audio visual shows on product applications
 Visit six villages every day on a pre determined route
 Book orders from farmers and collect token advances to confirm order bookings
 Work with local distributor to liquidate stocks based on orders booked
 Provide door step farmer advisory services, soil testing and query resolution
 Incentivize farmers by providing special schemes on booking through the KVVs
 Tracking of impact of extension work – farmers contacted v/s booked orders v/s actual sales
 Advances will ensure dealers cannot push other competing brands at point of sale
 Advances collected accrue to the company with credit given to respective distributors after the
sale is completed

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KVV Operations – Progress so far

State # of KVVs Launch No of kms No of Avg Bookings


date covered villages in distance generated
routes per day (Rs. lakhs)
AP 17 13 July 1,61,007 700 77 km 124
TN 11 13 July 1,13,346 450 73 km 91
Rajasthan 10 1 Sept 73,200 300 100 km 13
Punjab & 15 31 July 78,200 610 74 km 40
Haryana
West UP 5 27 July 44,480 280 71 km 15
Bihar 10 30 July 75,230 340 77 km 29
Gujarat 3 30 Oct 7,455 54 70 km NA
Nipani 4 16 July 36,972 280 63 km 11
W.Bengal 12 13 Nov NA NA NA NA
TOTAL 87 5,89,890 3,014 323
As on 20 Nov 2009

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Environment Sensitivity

 All Aries products are based on the philosophy of “Use less chemicals and use safe chemicals” –
low doses of chemically inert and cost effective nutrient complexes

 The entire range of Aries Chelates are environmentally safe


 Starting April 2008, Aries has launched water soluble sachets for its flagship brands, reducing
the use of plastics and aluminum foil in packaging

 The company promotes “Balanced Nutrition as a National Imperative”, building resistance of


crops to pests and diseases and hence lowering the usage of harmful and expensive pesticides

 All Aries factories have zero effluents and produce no harmful emissions

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Global Reach

 Investment in Golden Harvest Middle East FZC, Sharjah – now an Aries subsidiary – first
International Chelated micronutrients manufacturing base for Aries in the Middle East

 Chelates manufacturing in Golden Harvest, UAE provides input cost savings for Aries’ Indian
operations due to concessional duties on imports of finished products versus raw materials

 Investments in manufacturing facilities of Amarak Chemicals FZC for Sulphur Bentonite


 Current international customers are global arms of Indian customers (tea, coffee plantations)
 Distributors appointed in the UAE, EU, Nepal & Bangladesh for accessing new markets
 Manufacture world class nutrition solutions in the Middle East with indigenous, cost effective
technologies to tap into the highly specialized farming requirements in water scarcity and
technology intensive areas

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Main Achievements - 1

 First company to market Agricultural Chelates in India


 First company to receive license to manufacture broad spectrum Antibiotics for crops
 Recipient of the Trans World Gold Medal by the International Labor Organization for
model labour relations in India

 Not a single man hour lost since 1969 due to labour disputes
 Responsible for the establishment of Indian Micro-Fertilizer Manufacturers Association
 Recipient of the National Unity Award by the Government of India
 Recipient of the Distinguished Leadership Award by American Biographical Institute
 Listed amongst the Top 100 Best Employers of India
 ISO 9000 Quality Management system
 Launched a new product across 22 Indian states on a single day - 15 August 2006

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Main Achievements - 2

 Setup of completely automated manufacturing facilities at Bangalore & Hyderabad,


using 100% Indigenous technology and components

 Successfully launching and running India’s only customer loyalty programme in


Agribusiness

 Establishing a unique National Young Indian Farmer Network, along with the
Confederation of Indian Industry

 First Plant Nutrition company in India to successfully go public and list on the premier
stock exchanges of India, the BSE & NSE

 Strong global partnerships with companies in South America, China, the Middle East
and Europe

 First Indian specialty plant nutrient manufacturer to set up an International


manufacturing base in the UAE

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Global Recognition

 Winner : CNBC Emerging India Award 2008


– FMCG, Food & Agribusiness sector

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Stakeholder Value Creation

 Value for Customers


 Proven benefit : cost ratio

 Cost effective, environmentally safe technologies

 Branded, high quality agricultural inputs

 Value for Employees


 Performance based variable pay across all levels and in all departments

 Informal, disciplined, open work environment

 Focussed and structured training and development initiatives

 Cordial employee relations, with not a single man hour lost since 1969 due to labour unrests

 Highly experienced mentors, with more than 120 staff having been with Aries for more than
20 years each

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Stakeholder Value Creation

 Value for Society


 Research and continuous knowledge creation in over 100 Agricultural Universities and
Research institutions across India

 Lab to land programmes across 97000 villages in 22 states, including ‘train the trainers’
programmes

 Sessions in Rural Schools to expose students to the ‘balanced crop nutrition’ concept during
science classes

 Advocating the use of environmentally safe technologies for crop nutrition, reducing the use
of harmful chemical fertilizers

 Focussed extension efforts to increase awareness levels in farming communities, using


knowledge as a catalyst to raise agricultural productivity and consequently improve the
economics of farming

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Competition | Challenges for new entrants

 Brand portfolio of 65 products, with 107 customized formulations


 Need to understand farmers at root levels, which requires not only capital investment but also lot
of time and effort

 Business requires selling concepts and not just pushing products


 Not a commoditised price-point selling product
 Knowledge based service industry, which requires understanding problems of farmers and
providing them with solutions

 Huge crop diversity, which requires large variety of product range


 Given the size of our country, huge amount of time and effort is required to establish the required
sales and support infrastructure

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Board of Directors

Name of the Director Designation

Dr. Jimmy Mirchandani Chairman and Managing Director

Dr. Rahul Mirchandani Executive Director

Mr Akshay Mirchandani Non-Executive Director

Dr. D.S. Jadhav Independent Director

Prof. R.S.S. Mani Independent Director

Mr Chakradhar Chhaya Independent Director

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Key Takeaways

 Vast experience of the Promoter Group


 Highly qualified and experienced management team
 Locational advantage of manufacturing units, branches and distribution network
 Unmatched distribution reach, including a fleet of 100 Rural Retail Vehicles
 International manufacturing base and global marketing partnerships
 In house research and development
 ISO certified Quality Management System
 Widest range of specialty plant nutrition solutions
 High brand recognition and brand strength in rural communities
 Capability to handle multiple customized formulations and varied SKUs to serve varied needs of
large as well as small and marginal farmers

 Leadership position within a high growth, profitable, niche sector of agribusiness in India

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Energizing Earth

Aries House, Plot No.24, Deonar, Govandi (East), Mumbai 400 043, India.
www.ariesagro.com

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Industry | The Wonder of Chelation Technology

 Nutrients can be applied to crops in inorganic form or Chelate form


 60% of inorganic compounds are wasted by leaching, fixation and due to its property of reacting
easily with air, water & soil

 Aries products, which are Chelated, are able to deliver the nutrient more effectively to the crops,
ensuring 100% availability.

 Nutrients ion is held in a claw-like structure which makes it chemically inert


 Soluble in water and easily absorbed by plants

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