IG Petrochemicals Ltd Investor Presentation - FY16 1
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by I G Petrochemicals Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. This presentation contains certain forward looking statements concerning the Company’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company. 2
Improved Performance – Quarterly basis Gross Profit (%) EBITDA (%) EBIT (%) PAT (%) +219bps +272bps 22.4% 10.9% +99% 20.2% 8.1% PAT Q3FY16 Q4FY16 Q3FY16 Q4FY16 +39% EBITDA +326bps +267bps 9.5% 5.6% 6.2% 2.9% +15% Gross Profit Q3FY16 Q4FY16 Q3FY16 Q4FY16 3 Growth On Q-o-Q basis
Improved Performance – Yearly basis Gross Profit (%) EBITDA (%) EBIT (%) PAT* (%) +733bps +513bps 23.0% 11.9% +101% 15.6% 6.8% PAT * FY15 FY16 FY15 FY16 +41% EBITDA +449bps +380bps 10.4% 6.3% 5.9% 2.5% +18% Gross Profit FY15 FY16 FY15 FY16 4 Growth On Y-o-Y basis * PAT excl. Extra-ordinary item
Improved Performance – Ratios ROCE (%) ROE (%) Total Debt/Equity 25.8% 20.7% 0.8 0.7 0.6 20.2% 12.6% 0.3 8.6% 4.8% 1.2% 0.3% FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Recommended Dividend of Rs. 2 per Equity share (i.e.20% of Face Value) during FY15 - 16 5
Company Overview Numero Uno Indian manufacturer of Phthalic Anhydride (PA) Flagship company of Dhanuka Group One of the largest PA manufacturer in the world Lowest Cost producer of Phthalic Anhydride (PA) globally Higher capacity utilization with continued Consumption Pull for Phthalic Anhydride Self sufficiency achieved in Power/Steam generated by plant 6
Focused Management Mr. M M Dhanuka: Chairman Mr. Nikunj Dhanuka: Managing Director & CEO Chemical Engineer from BITS, Pilani with 35 years of Commerce Graduate with Management course from experience in the industry UK True Entrepreneur with responsibility for day to day Two decades of experience in the industry, affairs and made a turnaround in business through instrumental in restructuring the business activities his far sightedness and effective decision making and in charge of the overall affairs of the company Mr. R Chandrasekaran: CFO Mr. J K Saboo: Executive Director B.Com., LL.B with over 30 years of experience C.A. and CS with over 27 years of experience Currently in charge of the all activities at Taloja and is Responsible for all the financial related activities and associated with the Company since 1992 is associated with the company since 1999 Mr. S N Maheshwari: President (Fin. & A/c) Mr. G V R Reddy: President (Technical) C.A with over 30 years of experience M.Sc. Engg (Electrical & Instrumentation) and has around 30 years experience Currently is responsible for financial, accounts and Currently he is in-charge of the Plant at Taloja taxation matters 7
Phthalic Anhydride Phthalic Anhydride (PA) Applications for PA is a downstream PA is used as an PA is used in a PA are product of Orthoxylene intermediate for the variety of increasing (OX) a basic Petrochemical production of application in rapidly, driven Plasticizers, both consumer by new PA is a versatile Unsaturated Polyster durables to non Research & intermediate in organic Resins, Alkyd Resins consumer Innovation chemistry & Polyols durables 8
End User Industries 19% Plasticizers Paints 14% 41% CPC (Color Pigments) 10% Unsaturated 16% Polyester Resin (UPR) Others 9
Phthalic Anhydride (PA) : Varied Applications Phthalic Anhydride Textile Dyes Packaging Materials Paints Printing Inks Plastic Pipes &Products 10
Manufacturing Capacity Total Capacity 1,69,250 MTA 53,000 MTPA (PA 3) Brownfield expansion 50,000 MTPA (PA2) Brownfield expansion 21,250 MTPA De-bottlenecking 45,000 MTPA (PA1) Initial Production Capacity 11
Manufacturing Facilities 3 units at Single Location Proximity to India’s Chemical Hub 50 Km away from Jawaharlal Located at MIDC, Taloja in Raigad Nehru Port Trust (JNPT), District, Maharashtra Nhavasheva, Mumbai, Maharashtra 12
Key Customers 13
Consumption Pull for Phthalic Anhydride Stabilize Crude Prices - 01 Better Realizations Global Market Improvements - 02 Well positioned to grab the opportunities Better Economic Scenario - 03 Influence demand for the product in downstream markets Infrastructure Thrust - 04 Strong & Constant domestic demand for the Product Increase in Consumption - 05 Increase fuelled by rising demand for plasticizers, paints etc Indian Government Initiatives - 06 Focus on Rural Water Management – Demand for PVC Pipes 14
Consumption Pull for Phthalic Anhydride Global PA Consumption - ~5.5mn tones India’s GDP Growth Rate (%) +4% UPR Others 8.0% 7.9% 7.5% 25% 7.3% 20% 6.9% Plasticizer 55% 2013 2014 2015 2016E 2017E Source: World Bank Resurging of Indian Asia-Pacific consumption is economy – Pick up of ~ + 50% demand across sectors & Demand in this region is Indian PA industry is expected to grow industries expected to grow at 6.41% at ~7% - ~8% annually PA has wide application CAGR till 2019 from paints to pipes - India is 3 rd Largest Higher demand from the consumer of Plasticizer entire spectrum of end expected to be fastest users of PA growing market 15
Key Competitive Advantages Consistent Strong Better Lowest Strategic high Clientele Recovery Plant Cost capacity across Processes Location Producer utilization industries • In-house • Near to Port – • Diversified • Annual contract for • Steam generated from generation of Huge Saving in Product Use in its sales to Indian Process utilised power Freight Cost Multiple Customers efficiently- reduces Oil • Higher • Proximity to the • ~30% - 40% of Industries consumption • Low Customer efficiency and Chemical Belt of Sales is contracted significantly • Developing value reengineering India Concentration annually for fixed process reduces margin added products cost per unit through waste stream Enhancing Sales & Leading to a Better Margin Profile 16
Positives in FY16 The Company through its wholly 01 own Subsidiary IGPL (FZE) has entered into JV with M/s. Dubai 03 Upgrade in the Credit Rating for Long Term & Natural Gas Co. Ltd UAE for the Short Term Borrowings by India Ratings & manufacturing of Maleic Research Anhydride with a capacity of 45,000 MTPA Particulars Old Ratings New Ratings 02 Long Term Borrowings "IND BBB+" "IND A-" DTA Sales and Catalyst cases Short Term Borrowings "IND A2+" "IND A1" decided in Company’s favour – “Absolving the contingent liabilities related to Excise and Customs duties to the extent of Rs. 204.05 crs .” 17
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