COTRIL ALIMENTOS S.A.
OCTOBER 2008
Beef Industry in Brazil - Overview
Overview
Heads of Cattle Slaughtered in Brazil (millions)
 With 169 million heads, Brazil has the largest commercial
cattle inventory in the world, considering that India does not
commercialize cattle due to its religious beliefs
30.4 30.7
 Brazil is currently the largest beef and veal exporter in the
world, with exports totaling 2.19 million tons (28.8% of
worldwide exports) in 2007, according to the USDA
CAGR =
7.5%
 Cattle prices in Brazil have increased from lower growth
rates of inventory and as a result of higher than average
cow slaughtering between 2003 and 2006, as well as from
higher costs in 2008
19.9
– Average cattle prices in the state of São Paulo increased
from R$53 per live arroba weight in Dec 2006 to R$90
per live arroba weight in Aug 2007
Source: IBGE, USDA, CEPEA
Note: 1 live arroba = 30 kilograms and 1 dead arroba = 15 kilograms
21.6
16.8 17.1
18.4
14.9 14.9
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Heads of Cattle in the 50 Largest Feedlots of Brazil (‘000)
153.1
169.9
According to Assocon estimates, a total of 3 million
heads of cattle were fattened in feedlots in 2007
128.0
1,705.6
1,257.1
101.7
934.0
801.6
78.6
666.1
438.0
1970
25.9
Source: IBGE as of September 12, 2008
Heads of Cattle in Brazil (millions)
118.1
28.0
1975
Source: IBGE as of September 12, 2008
1980
1985
1995
2006
2002
524.7
2003
2004
2005
2006
2007
2008E
Source: Top Beefpoint research of feedlots
2
Beef Industry in Brazil - Location and Density
Cattle Herd Density
 The Southern region has seen land value increases because of
agricultural activities
 Cattle herds are migrating from the Southern to the Northern parts of
the country
– Increased importance of plant location due to high logistic costs
1995
Cattle herd breakdown by region (2006) – Total: 169 mm heads
North
Northeast
Southeast
South
Middle-West
18.4%
15.3%
20.6%
14.1%
31.6%
2006
3
Beef Industry in Brazil - Volumes and Revenues
Gross Value of Brazilian Beef Production (R$ billion)
Brazilian Beef Exports (US$ mm)
47.4
4,425
32.8
32.4
3,923
CAGR =
27.1%
3,060
2,526
1,590
2006
2007
2008E
Source: CNA
1,049
1,144
2001
2002
2003
2004
2005
2006
2007
Source: ABIEC
Top 4 Beef Companies in Brazil (numbers in R$mm, unless otherwise indicated)
Market share in the Brazilian beef market
Beef capacity
(heads/day)
51,400¹
12,650
21,100
5,500
Net Revenues 07
14,142
6,400
3,340
1,463
EBITDA 07
591
864
380
121
% Margin 07
4.2%
13.5%
11.4%
8.2%
% Exports 07
39.1%
47.0%
49.8%
76.6%
Location of
plants
AC, GO, MT, MS, MG,
RO, SP, PR / USA /
Argentina / Australia
GO, MT, MS, MG,
BA, PR, SP /
Uruguay
RO, MT, MS, GO,
SP, RJ, RS / Chile /
Argentina / Uruguay
SP, GO, MS, TO
Paraguay
Top-4 beef
companies
20%
Others
80%
Source: Companies’ filings, USDA, SECEX, news run
¹ Does not consider National Beef, Smithfield Beef and Grupo Tasman
4
Beef Chain Overview
Early
Breeding
Pasture
Growing
Feedlot
1 year
1 year
75 days
1 day
 When cattle arrive at a
feedlot, they typically are
separated into herds and
live in pens that allow about
7 to 8 square meters of
room per animal. Cattle
usually spend 75 days in a
feedlot, during which they
are fed a scientifically
formulated ration and have
constant access to water
 Once cattle have reached
17 live arrobas weight, they
are typically considered
“finished” and are
transported to packing
plants for slaughter
 When cattle arrive at
packing plants, the
animals are
slaughtered and
processed within the
most exigent
standards of sanitary
control
 The process is
oriented for quality
excellence in food
production for
consumption
 As calves reach 6 to 10
months of age, they are
weaned from their
mothers. Weaned male
calves (steers) often
graze until about one
year old (yearlings) and
then are sold to a cattle
feeder who will prepare
the animal for the feedlot
 Calves reach
approximately 6 live
arrobas weight
 These are mostly
ranches and farms where
cattle graze on pasture or
start receiving grain to
supplement their diets.
Once most cattle reach
approximately 12 live
arrobas weight, they are
taken to a feedlot
Note: 1 live arroba weight equals approximately 30 kilograms and
1 dead arroba weight equals approximately 15 kilograms
Slaughterhouses
Meat Packing
Sales
Domestic & Export
Markets
 Final products are
sold in domestic and
export markets, where
retailers and
foodservice operators
sell beef products in
supermarkets and
restaurants
5
Cotril Alimentos
Overview
“Integrate the beef chain, attending the most required quality standards with social
and environmental responsability”
Highlights
Shareholders Structure
 Cotril Alimentos is made up of the following operations:
feedlots, slaughterhouse/meat packing and sales/distribution
 Cotril Alimentos is the largest Brazilian feedlot operator and
has approximately 650,000¹ heads of cattle distributed
throughout more than 560 farms
Cotril Group
64%
– Partnership with Schering-Plough (Intervet) for sanitary
control of its cattle inventory
– Largest single supplier of cattle to beef companies in the
state of Goiás
Operational
assets
Capital
 Feedlot fixed capacity is expected to reach 210,000 heads of
cattle in 2008, consolidating Cotril´s #1 position in Brazil
– Considering an estimated 3x turnover, Cotril Alimentos will
be able to fatten approximately 600,000 heads of cattle on
its feedlots
Integrated beef chain
Cattle Feed
Early
Breeding
Pasture
Growing
Feedlot
Slaughterhouses
Meat Packing
Sales
Domestic & Export
Markets
 In December 2007, Cotril’s slaughterhouse in the city of
Inhumas (close to Goiânia) started its operations;
– Currently has a total capacity of 1.200 animals/day
– International standard of quality: This allows them to export
to “General List” countries, including the European Union;
also licensed to export to Middle East countries
36%
To be incorporated in Cotril Alimentos by the end of 2008
Note: ¹ As of July 2008. It includes animals in pasture and feedlots
6
Cotril’s Cattle Herd
Tocantins
Mato Grosso
► Heads of cattle: 168,514
► Heads of cattle: 39,050
–
Pasture Growing: 28,058
–
Pasture Growing: 147,095
–
Feedlots: 10,992
–
Feedlots: 21,419
► # of farms: 124
► # of farms: 21
Goiás
RO
Rondônia
► Heads of cattle: 420,771
TO
MT
► Heads of cattle: 19,064
–
Pasture Growing: 15,427
–
Feedlots: 3,637
GO
MG
–
Pasture Growing: 293,149
–
Feedlots: 127,622
► # of farms: 367
Minas Gerais
► # of farms: 13
► Heads of cattle: 3,838
Total Heads of Cattle (thousand)
–
Pasture Growing: 3,838
–
Feedlots: 0
► # of farms: 43
552
484
594
616 602
630 628 664 661 656 656 668 671 656 651
507
391
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
340
Heads of cattle: 651,237
 Male: 570,755
 Female: 80,482 (approximately 15,000 heads
of cattle on early breeding operations)
Number of farms: 568
 Leased: 535
 Owned: 33
7
Largest Feedlot Operator in Latin America
5
Capacity
Unit Name
2007
2008E
1
Mara Rosa
50,000
50,000
2
Nerópolis
25,000
15,000
3
Jussara
15,000
45,000
4
Cariri
15,000
25,000
5
Campinaçú
10,000
15,000
6
Mineiros
0
15,000
7
Água Boa
0
30,000
8
Comodoro
Total
0
15,000
115,000
210,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
MT
GO
Jul-07
Aug-07
Sep-07
3
TO
4
8
MT
7
6
Animal Production for Slaughtering
Jun-07
TO
Oct-07
Nov-07
Dec-07
2
1 5
3
2
GO
Average Number of Animals in the Feedlots
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
8
Slaughterhouse Operation
Overview
 Strategically located in the city of Inhumas (GO), close to the main cattle suppliers and 60 Km from Goiânia
 Total capacity of 1.200 animals/day
– Under the company’s business plan total meat production derived from the meat packing plants will reach full capacity by 2011
 Due to Cotril’s integrated operations, slaughterhouses are expected to work at full capacity
– From 2009 the feedlot operation will be responsible for providing almost 100% of the meat packing plant needs minimizing supply risk
between the harvest (December through May) and in between harvest (June through November) periods of the year
 International standard of quality: allows for export to “General List” countries, including the European Union; also licensed to export to
Middle East countries
 The products and carcass are cut and classified according to the client’s specific demands
 Innovative traceability system
9
Agricultural Production
 Cotril’s own agricultural production (harvest 2007/2008) was able to produce approximately 30% of its total feedlot consumption
Unit
Farm
State
Company
Product
Area (ha)
Tons
Market Value (R$)
Nerópolis
Cambará
GO
Alimentos
Grass (Silage)
500
30,000
1,200,000
Jussara
Canadá
GO
Alimentos
Corn (Silage) – 1st Crop
3,000
180,000
14,400,000
Jussara
Canadá
GO
Alimentos
Corn (Grains) – 2nd Crop
3,000
21,600
8,640,000
Mara Rosa
Sta. Luzia
GO
Alimentos
Corn (Silage)
560
33,600
2,688,000
Mara Rosa
Sta. Luzia
GO
Alimentos
Corn (Grains)
300
2,160
864,000
Mara Rosa
Sta. Luzia
GO
Alimentos
Sorghum (Grains)
700
5,040
1,596,000
Mara Rosa
Jatobá
GO
Alimentos
Grass (Silage)
750
45,000
1,800,000
Cariri
São Vicente
TO
Alimentos
Corn (Silage)
1,200
72,000
5,760,000
Cariri
Itália
TO
Alimentos
Corn (Grains)
1,200
8,640
3,456,000
Campinaçú
São José
GO
Alimentos
Corn (Silage)
600
36,000
2,880,000
Campinaçú
Bom Jesus
GO
HPA²
Corn (Grains)
2,000
14,400
5,760,000
Campinaçú
Bom Jesus
GO
HPA²
Sorghum (Silage)
500
30,000
1,500,000
Água Boa
Água Ba
MT
HPA²
Corn (Silage)
720
43,200
3,456,000
Comodoro
Comodoro
MT
HPA²
Corn (Silage) – 1st Crop
460
27,600
2,208,000
Comodoro
Comodoro
MT
HPA²
Corn (Silage) – 2nd Crop
460
27,600
2,208,000
Barreiras
NA
BA
HPA²
Corn (Grains)
1,900
13,680
5,472,000
17,850
590,520
63,888,000
Cotril Total Production
Cotril total production
Total food consumption by feedlot operation in 2008¹
R$64mm
R$198mm
Cotril produces approximately 30% of its own food input
needs, which provides an important competitive advantage
¹ Estimated food for fattening 560 thousand animals
² HPA: Henrique Pereira Ávila, who is one of Cotril Alimentos’s shareholders
10
PE Investment Impact on the Cotril Group
 Vision has been actively involved in providing finance and asset backed loans since 2006 to
the Cotril Group, and in 2007 obtained a 36% equity stake in Cotril Alimentos S.A.
 As a long term equity investor with aligned interests, Vision has worked closely with the Avila
family and the Cotril Group to provide financial, strategic and governance input for its
operations. This has included:
– Allocating a new CFO to the company and restructuring the financial business model and
originating more efficient lines of financing for working capital
– Developing alternative fiscal structures to reflect the importance of evolving from a more
family oriented personal tax planning overlay into more robust corporate tax and
company structures
– Providing input at the strategic planning level through the installation of a Board of
Directors
– Introducing Strategic Partners to the Group to position the company for further growth
– Preparing Cotril Alimentos for alternative capital raising events such as an IPO or listing
through the implementation of new corporate governance and management controls,
efforts to increase transparency, and inputting environmental and labor risk awareness
and strategy
11
Ongoing Strategic Highlights
Beef Chain Integration
Strategic Location and Logistics
 Cotril Alimentos’s main strategic goal is to incorporate early
breeding and pasture growing activities by the end of 2008.
This objective is to integrate the complete beef chain of
production, thus achieving an innovative vertical integration
model for the beef chain in Brazil. Cotril will thus combine its
cattle supply capacity from the feedlot operation with the
slaughterhouses/meat packing units and sales activities. This
will provide competitive edge through a differentiated logistic
and large scale driven operation, unique among the major
Brazilians meat packers
 Cotril´s business units are located close to the Norte-Sul
railroad (today up to Barrôlandia city in the state of Tocantins)
playing an important role in future logistics efficiency. Once
this railway is finalized, their products for export can then flow
through the large northern ports (Belém, Itaqui) saving almost
3,700KM when considering the alternative of the Santos port
in the State of São Paulo
 The company will be developing in essence a new business
model for the beef sector (only achieved so far in Brazil by the
major pork and poultry integrated producers, i.e. Sadia and
Perdigão) that would minimize supply and quality risks
throughout the chain
 Feedlot operations and meat packing plants are being
concentrated in a logistic efficient distribution in order to
minimize transportation costs. In the first year of slaughtering
operation (beginning 2008) the average distance per animal
between feedlots and meat packing plants will be
approximately 88Km and, for the second year 94Km. This
compares favorably to the distance of up to 350Km that
competitors need to transport cattle
Capital Raising
Implementation of Management Controls
 A potential equity injection of US$ 100 million would help to
accelerate the company’s growth in the following way
 Going forward Vision is helping Cotril Alimentos in its
installation of management and financial controls systems,
including SAP
– US$ 60 million would be routed to the acquisition of calves.
The remaining would be allocated as working capital in
building up feed stocks in the confinements, allowing higher
bargaining power in the acquisition of feed stocks during
harvest season
 Terco Grant Thornton was recently hired to perform the first
auditing of Cotril Alimentos as a stand alone company
12
Appendix
13
Cotril Group
The group is formed by the following companies:
Cotril Máquinas e Implementos
 Exclusive dealer for New Holland heavy duty
construction equipment
 Ranked number 1 dealer, responsible for 30% of New
Holland heavy equipment total sales
Cotril Motors
 Exclusive dealer of Mitsubishi cars, pick-ups and
SUVs in Goiâna
 Ranked 3rd largest Brazilian dealer
Cotril was founded in 1965
and has become a diverse
group of companies with
strong performance in the
mid-west region of Brazil.
The Cotril Group has more
than 800 employees across
its five principal companies
Cotril Rental
 Rent of heavy duty construction equipment
 Manufacturer’s integral support: New Holland,
Randon, Terex, Roadbuilding and Proton Muller
Cotril Agropecuária
 Concentrates the early breeding and pasture growing
operations for cattle
 Founded back in March 1982, it is expected to
produce approximately 560,000 heads of cattle for
slaughtering in 2008
Cotril Alimentos
 Feedlot and slaughterhouse operations
 Expected to reach 200,000 heads of cattle capacity in
2008
14
Vision Brazil Investments
Vision Brazil
Investments
 Alternative Asset Management Company based in Brazil
Assets Under
Management
 Approximately USD 2.0 billion in assets under management in funds and USD 1.4 billion in equity value for its
Private Equity investments
Investor Base
 Purely institutional: pension funds, private equity and other long term focused investors
Agribusiness
Investments
 Currently holds in excess of USD 900 million of agricultural financing and equity in the following segments:
Cattle / Beef, Sugar / Ethanol, Soy / Corn / Cotton and Timber
 Top private originator in Brazil of exchange tradable agricultural securities
Agribusiness
Investment
Highlights
 Has developed outstanding relationships over the past years with the top agricultural producers in Brazil
 Partnership owned with a staff of 75 people and a network of more than 30 service providers in the agricultural
sector (collateral control / monitoring, advisory), involving more than 1,000 people controlling / monitoring its
investments
15