Zuari Industries Ltd. (ZIL), formerly Zuari Agro Chemicals Ltd., was incorporated in 1967. Promoted by K K Birla and US Steel Corporation to manufacture urea. In the year

1987, the company promoted Chambal Fertilisers and Chemicals Ltd. In FY98, ZIL merged Indian Furniture Products Ltd., Tamil Nadu, and an EOU making ready-to-assemble furniture in collaboration with Seribo, France, with itself. In FY99, this division designed and introduced a range of computer related furniture in India. ZIL has promoted Gautier India Ltd. to market furniture products manufactured by the company and carry out trading.

The Zuari Seeds Ltd., an erstwhile 50:50 joint venture became a subsidiary during the FY2001-02, consequently to sale of equity stake by Institute of Field & Vegetable Crops & KOP Investments, Cyprus in favour of the company. Zuari Maroc Phosphates Pvt Ltd., a 51-49 Joint Venture of Zuari Industries Limited and Zuari Maroc Phosphore SA of Morocco acquired a majority (74%) stake in Paradeep Phosphates.

Products & Services:

The Fertiliser Division lies at the core of the company's operations and accounts for the major share of its business. ZIL's plants have an annual installed capacity of

413,000MT of Urea,

330,000MT of DAP (di-ammonium phosphate) and 240,000MT of complex fertilizers such as NP/NPK. ZIL also holds a significant stake in Paradeep Phosphates, which is Asia's second largest DAP manufacturer. ZIL manufactures nitrogenous and phophatic fertilizers and has also diversified into manufacture and sale of cement, furniture, seeds, biopesticides, and pesticides.

ZIL with an extensive marketing network and strong loyalty for its Jai Kisan brand of products is one of the low cost fertilizer producers in India. Government has projected the requirement of 28 mn tons of fertiliser nutrients (NPK) by the end of 11th five-year plan (2011-12). Total food grain production in 2011-12 is projected at 337 mn tons. As there is no scope for expansion of agricultural land, production has to be increased through higher yields per unit of land by increasing use of fertilisers and better seeds, which will be beneficial the company.

Recent development:

ICRA has assigned an LA+ rating, indicating adequate-credit-quality, to Rs 8,000 million long term fund based limits and A1 rating, indicating highest credit-quality in the short term, to Rs

18,000 million short term non- fund based limits and Rs 5000 million short term loan of Zuari Industries (ZIL).

Zuari Industries announced that it has entered into a gas transmission agreement with GAIL (India) on May 26, 2009 for transportation of gas to company's plant at Zuarinagar, Goa for use as fuel/feed stock. Zuari Industries is a joint venture between the K K Birla Group and the US Steel Corporation. The fertiliser division is the major revenue generator for the company contributing around 95% of the topline.

Valuation:

At current market price, stock is trading at very attractive valuation of 2.49 P/E multiple of its FY2010 estimated earnings. We recommend investors to srong buy on "Zuari Industries Limited" with medium to long term investment prospective.