APL APOLLO INVESTOR PRESENTATION November 2019 1
Contents Topics APL Apollo Overview Structural Steel Applications Core Competence Exciting Future Financial Priorities & Performance Key Takeaways 2
Safe Harbour Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", seek to", "future", "objective", "goal", "likely", "project", "should", "potential", "will pursue", and similar expressions of such expressions may constitute "forward-looking statements“ . These forward looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investment and business income, cash flow projections, our exposure to market risks as well as other risks. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date thereof. 3
APL APOLLO OVERVIEW 4
APL Apollo at a Glance 1 Leading building material structural steel brand Core Business 14 Five Product Categories Brands 40 % Market Share 2.5 Structural Steel Capacity Million Ton 8 Patents 11 Plants 2,079 Employees 790 Distributors 1,100+ Products 5
Our Brands Apollo Structural Fabritech, Build, DFT Structural steel construction material: Residential, Commercial, Infrastructure Product Category* Apollo Z CostGuard Galvanized structural steel construction material: Residential, Commercial, Infrastructure Apollo Build Green, Bheem, StrenX Galvanized structural steel construction material: Residential, Commercial, Infrastructure Apollo Standard FireReady, Agri Construction material, Industrial Apollo Tricoat Tricoat, Plank, Signature, Elegant, Chaukhat Home improvement applications 68% Building Material 32% Infrastructure & Others 6 *Apollo Structural -Hollow Section, Apollo Z- Pre Galvanized (GP), Apollo Build – Galvanized (GI), Apollo Standard – Black Pipes
Brand Equity 7 7
Brand Equity 8 8
B2C Channel Distributors 790 Distributors – Solid Relationships, Incentive plans Retailers 50,000 Retailers – Retailer bonding program Fabricators 100,000 Fabricators – Apollo Connect Bonding Programs, Fabricator meets to promote APL Apollo Brand End Consumer End Customer Connect – Indian Premier League, Football, Kabaddi League. Amitabh Bachchan Campaign, 9 TV Commercials, Radio, Social Media
STRUCTURAL STEEL APPLICATIONS 10
Structural Steel Structural Steel Applications Applications 11 11
Structural Steel Structural Steel Applications Applications 12 12
CORE COMPETENCE 13
Our Business Moat... Most products Lowest cost producer with 1,100 SKUs (largest buyer of HR coil) Premium pricing to peers Highest Highest scale with 11 plants Profitability (brand strength) (2.5Mn ton capacity) Largest sales network Technology edge & (790 distributors) Innovation 14
Dominant Leadership Peer Market Share FY19 APL’s Market Share (%) 40 36 32 29 28 APL Apollo 32% Player 2 40% Player 3 Player 4 7% Others 9% 12% FY 16 FY 17 FY 18 FY 19 1HFY20 Number of Plants 11 11 Capacity (Mn Tons) 2.5 7 7 2.1 6 1.8 1.3 1.3 15 FY 16 FY 17 FY 18 FY 19 1H FY20 FY 16 FY 17 FY 18 FY 19 1H FY20 Source: Company data and Industry research
Unique Capabilities Developed structural Innovative Distribution Technology steel products network market in India Ground breaking First Mover advantage Direct Forming Technology solutions for big structural products Roofing solutions, No.1 Leader; Focused on B2C channel for last Door & window frame steel strength and In-line Galvanizing to mile penetration Roofing solutions for replace traditional coastal market, door building material frame applications products 16
EXCITING FUTURE 17
India at the start of Structural Steel Usage Structural Steel Market as % of Steel Market (2018) Potential Structural Steel Market in India (Mn Tons) 11 227 9 9 8 8 7 140 5X 90 3X 4 22 13 4 2018 2023E 2030E Global Europe LATAM Japan Middle North India East America Steel Market Structural Steel Market India has huge structural steel based construction potential 18 Note: Structural Steel is 4Mn ton market size, out of total ERW market size of 6Mn ton (balance is water transportation) Source: Company data and Industry research
Structural Steel essential for new age construction Benefits Growth Drivers Environmental friendly Growing vertical model of development - - Increased Spending on Skyscrapers Recyclable & lower greenhouse gas emission - - No underwater usage unlike conventional method Higher expenditure on infrastructure - - Highways, bridges, flyovers & public utilities Highly durable, sustainable, fire resistant & easy to repair - - Growth in E-commerce/Warehouse construction demand Swift erection speed helping in lower overhead costs - - Elevated stress bearing capacity Consumer preference for better quality residential construction - - Rising need for housing due to population explosion Excellent Strength to Weight Ratio - - Light weight Ability to replace wood gives it an edge - - 19
Structural Steel Market expansion linked to construction activity Indian Structural Steel Market expansion Global Structural Steel Market expansion 14,500 800 5 51 14,000 700 49 4 13,500 600 47 13,000 3 500 45 12,500 400 2 12,000 43 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Gross Fixed Capital Formation (USD Bn) Gross Fixed Capital Formation (USD Bn) Structural Steel Volume (Mn Ton) Structural Steel Volume (Mn Ton) 20 Countries included: USA, Europe, Japan, China Source: Company data and Industry research
Structural Steel Uses Global Structural Steel Uses - Segment wise breakup(%) Indian market taking off in all segments (Mn ton) 16 17 19 3 22 22 23 2 22 22 21 1 40 39 37 0 2013 2018 2021E 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E Residential Commercial Infrastructure Others Residential Infrastructure Commercial Others 21 Countries included: USA, Europe, Japan, China Source: Company data and Industry research
Structural Steel Market Expansion Global Structural Steel Market growth forecasts (Mn Ton) Growth Drivers for India Rising population accompanied with 182 174 167 improvement in living standards 159 153 142 138 127 124 Requirement for strong, durable quality of construction for private residences Increased spending on construction of infrastructure 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 22 Source: Company data and Industry research
Future of Construction 23 23
We are ready .. Opportunity Size.. Where we are.. Our strengths.. 1HFY20 sales volume New innovative Potential structural was 0.8Mn ton products steel market size of: Current capacity is Branding 13Mn ton by 2023 2.5Mn ton Fixed costs of 22Mn by 2030 Future capacity unutilized capacity addition linked to factoring in market potential Low gearing Solid FCF generation 24
On path of Premiumization.. 2 4 1 Focusing on products which Moving towards Leveraging APL Apollo are aesthetically appealing solution driven brand equity and command premium offerings and heavy weight structural steel 3 5 tubing products for large real estate and Innovative sizes/new Consumer centric infra projects applications where approach competition is behind curve 25
FINANCIAL PRIORITIES & PERFORMANCE 26
Financial Priorities under Strong Governance Growth Earnings •Profitable Organic Growth •Drive sustainable EPS growth •EPS accretive strategic acquisitions •Attain earnings objectives across •Commitment to R&D and Talent economic cycles •ROCE ≥ 25% Capital Allocation •Focus on Free Cash Flow Generation •Sound Leverage and Working Capital Ratio 27 •Consistent dividend payouts to shareholders
Growing Strength to Strength Volume (000’s Ton) PAT (Rsm) 1,581 1,339 1,483 1,461 1,130 932 1,069 894 1,006 753 657 638 FY15 FY16 FY17 FY18 FY19 1HFY20 FY15 FY16 FY17 FY18 FY19 1HFY20 EBITDA/Ton (Rs) EBITDA (Rsm) 3,375 4,045 3,355 3,790 3,020 3,018 3,328 2,761 2,722 2,919 2,061 1,862 28 FY 15 FY 16 FY 17 FY 18 FY 19 1HFY20 FY15 FY16 FY17 FY18 FY19 1HFY20 Note: This data is based on the Consolidated Financial data of the Company
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