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RALLIS ACQUIRES SEEDS ENTITY

V Shankar December 2010

9th

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The Strategic Context

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Rallis Poised : The Path to Grow

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Why Seeds? : The Strategic Fit

Seeds: a key agri input need of farmers: drives productivity

improvement
A high growth opportunity; value creating - closest to adjacent

business connect.
Strengthens our RKK farmer bonding programme Meets composite portfolio needs
Globally more technology focus on seeds towards sustainable

agriculture
Increasing spend of farmers towards traits & seeds

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Why Inorganic?
Rallis needs a combination of good pipeline of hybrids, biotechnology and seeds infrastructure to grow its Seeds Business

Technology

Exclusive & Pipeline of Hybrids

Seeds Infrastructure

Inorganic route is effective and expeditious

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The Seed Industry

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The Seeds Industry : Connect to Agriculture

Large opportunity

Indian seed market is > 6th largest in the world

6500 Cr

A high growth opportunity: Value creating

Indian Seed Industry growing @ 12-13% pa

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Source: International Seed Federation; Aug,2010 Industry Sources & Rallis Analysis, Nov, 2010

Seeds A Growing Industry

Seed industry > 6500 Cr* (CAGR 12%)

1200, 18% 1000, 15% 850, 12%

Commercial Seeds Value in Cr, %

900, 13% 2300, 34%

* Commercial Seeds - Accounts for 25% of total potential. Rest 75% - own seeds
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Changes in Indian Seed Industry

Private sector contributing significantly in field crops too

Moving from unorganised to organized

Consolidation is taking place

Focus on Research & Product Development

Market growth led by Research based Companies

Agri-innovations have been successful in India

High adoption rate for new technologies: hybrids More than 90% area under Bt cotton

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The Acquisition

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Metahelix

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Business Background
q Metahelix an R&D led organization
Ag-biotech Company headquartered in Bangalore, India Distinctive ability to develop proprietary Biotech products

Dhaanya Seeds - Hybrid Seed Business

Commercializes the hybrid seed and trait products developed by Metahelix.

International Presence
Expanding into South & East Asia

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Competent Team
o Gautham Nadig, Ph.D.
Executive Director

K.K.Narayanan, Ph.D.
Managing Director

S. Ravi Krishna, M.Sc., PGDM

Chief Executive Officer, Dhaanya Seeds & Director

Ganesh Kishore, Ph.D.

Have Considerable Experience and Expertise in Seed business

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about Metahelix
q Strong Research & Development Program q Crop genetics, molecular markers and biotech trait development q First Indian Company to have proprietary Bt trait; Cry1C in Bt Cotton. q Portfolio of important crops, such as Rice, Maize, Cotton, Millet, Tomato, Okra, Hot Pepper q Biotech Traits:
Insect & Weed Protection technology in Cotton, Rice and Maize Viral and Fungal disease protection in rice, cotton and vegetables

q Developed and introduced many high performance hybrids in key crops in India q Obtained approvals for rice and corn hybrids in Indonesia, Thailand; approvals in Vietnam and Philippines in pipeline
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about Metahelix
o People (Research oriented Manpower)
Promoted by 5 scientists Team of 50 scientists (20 PhDs) in plant biotechnology (genomics and informatics) and crop genetics Trained Team for Scientific Product Testing across the country

o Research Facilities:
Research farms at Bangalore, Hyderabad & Aurangabad Biotech Lab & Green houses at Bangalore Country wise product testing locations Research Software

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about Metahelix
o Seed Production Facilities
About 3000 contract growers Seed processing plant and ware house at Hyderabad Bio-mass based cob-drying facility of 1800 MT/year capacity

o Dhaanya Seeds
120 people in Sales, Market development ,Product development ~1000 distributors ( Mainly in Paddy, Maize & Pearl millet belts)

o Has taken rice & maize products Internationally with registrations

Entering Vietnam, Thailand, Indonesia, Philippines

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The Business Fit

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Metahelix - A good strategic fit for Rallis Growth in Seeds

Rallis strength is customer intimacy Rallis owns farmer relationship. Rallis has wide and deep market penetration Rallis does not have its own seed products. Globally technology focus on seeds

Seeds business in India is a high growth and value creating opportunity Important segment in driving RKK farmer bonding programs

Metahelix has good technology base Dhaanya has competitive products

Opportunity for Significant Growth

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Rallis + Metahelix will bring in significant capabilities in Seeds Play

Licenses Future Traits Regulatory Resources / Experience

Biotech Product Development Breeding Production Sales and Distribution

Good quality and proprietary germplasm

Good Production Programs

Rallis Leverage of existing systems

Good People, Systems and Processes

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The Rallis synergy

1. Leveraging the Tata-Rallis brand name, distribution strength and marketing ability

2.

Using the Rallis Kisan Kutumba customer base for enhancing sales for hybrid rice, maize, millet and vegetables. Tata Kisan Sansar network access the Northern region of UP and Punjab for hybrid rice and maize

3.

4.

Bring in new business through seed protection (seed treatment) and participate in government programs jointly.

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Strategic Alignment with Rallis

Cultural Fit with Rallis Management Leadership Team and Competence Market Presence and Strength of Hybrids Strength of Hybrid Pipeline Strength of Germplasm Biotech Program
Metahelix Strong in Research, Technical Knowledge (Backend Operations)
Copyright Rallis India Limited. All rights reserved A strong and motivated research team and breeders with good systemic approach

Hybrid Products in Rice, Maize, Millet and select vegetables Covering most of the segments

Good number of hybrids in pipeline

Sufficiently good pipeline products and Germplasm Biotech Research Infrastructure Cry1C approved for Cotton Working on Biotech traits in Maize, Paddy, Tomato, Cotton

Rallis strong in Network , Marketing & Branding Skills (Frontend)

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Acquisition details
o Acquisition of 53.5 % stake from existing investors for To go upto 100% in five years time 99.5 crores

Promoters and key employees will continue Acquisition financed mainly through internal accruals

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Acquisition Value Creation

o o o o o o Rallis brand prowess and Metahelix promising products will create unique differentiation Metahelix has own technology/IP, good production capabilities and successful product commercialization Potential to generate cumulative revenues of 1000 crores by 2015

Valuation of seed business is linked to R&D, Strategic & Cultural fit and control Valuation at 2x next year revenues Will be EPS accretive

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Looking Ahead

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Trends in Indian Seeds Business

o Increasing demand for Branded / Quality Seeds

Biotech Traits:
Bt Cotton (Approved) New Traits in pipeline

High adoption rate for new technologies

~ 90% area under Bt cotton

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The Indian Opportunity

o Opportunity in Quality Seeds
Maize: Ranked 5th in production (2MT/Ha in India vs 5 MT/Ha World Av) Rice: Area under hybrid Rice (<3% in India vs > 50% in China), Vegetable seeds: Varieties to Hybrids Bt Cotton: single gene to stacked gene

Seed replacement Rate:

Wheat, Paddy, Oilseed, Pulses, etc

Export Opportunities:
Hybrid Maize, Paddy, Bt Cotton, Vegetables, etc
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The Indian Opportunity

o Population
INDIA: 2 nd largest population in the world

Increasing crop productivity: Huge Opportunities

India has 12% of global arable land Average productivity below world average for key crops

Value of Seed Industry will increase: driven by

Increase in area under hybrids New Technologies

Global Seeds & Trait Industry: US$ 42 billion

India : US$ 1.5 billion Seeds: an important contributor to the targeted 4% growth in Agriculture

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Sources: International Seed Federation; FAO data & Rallis analysis

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