INDO RAMA SYNTHETICS (INDIA) LTD TWO DECADES OF POLYESTER - PowerPoint PPT Presentation

INDO RAMA SYNTHETICS (INDIA) LTD TWO DECADES OF POLYESTER MANUFACTURING EXCELLENCE Investor & Analyst Meet – May 4, 2011 1

Our Motto Our Motto An abiding faith in “Self” A dogged determination to “Excel” A resolve to hold one’s own against all odds A passion to seek greater and newer challenges, consistently A vision to be first and the “best among the best” We are 2

The Indian Textile Sector The Indian Textile Sector • The Indian textile industry is one of the leading textile industries in the world • Contributes about 14 per cent to industrial production, 4 per cent to the country’s GDP ; 17 per cent to the country’s export earnings.” (ref Min of Textiles Annual Report 2010) • Provides direct employment to over 35 million people - the second largest provider of employment after agriculture Source - http:/ / www.importerbase.com 3

Fiber Consumption overview Consumption overview Fiber World Natural Fiber = 26.3 MMT (37%) Manmade Fiber = 47.1 MMT (63%) India Natural Fiber = 4.7 MMT (61%) Manmade Fiber = 3.1 MMT (39%) Per capita consumption (Kgs) Region Cotton Polyester 2005 2010 % 2005 2010 % World 4.0 3.7 (7.5) 3.7 5.1 38 China 7.0 8 14 10.0 18 80 India 3.3 3.9 18 1.8 2.5 38 Globally, consumption is significantly tilted towards manmade fibers, whereas India will catch up the trend soon. 4 Source : Saurer Fiber Survey Report

The Indian Polyester Segment The Indian Polyester Segment • Growing at a CAGR of more than 10% for the past two years – capable of exceeding this growth going forward • Several drivers for this growth o Rising demand driven by higher GDP o Easily Available raw material o Spiraling cotton prices o Very high operating rates in the downstream industry o Progress in Non-woven & Technical Textile applications; opportunities non textile applications o More of Nuclear Families 5

Finished goods overview 6

Polyester Outlook (PFY + PSF ) Polyester Outlook (PFY + PSF ) Global Scenario Domestic Scenario 70 84% Capacity Production Operating rate 82% 60 80% 50 78% million tons million tons 40 76% 74% 30 72% 20 70% 10 68% 0 66% 2008 2009 2010 2011 2012 2013 2014 2015 2011-2015 Projected Figure 7 Source : PCI Demand Supply Report 2010/11 for Global and Indo Rama Internal Reports for domestic

Polyester Outlook (PSF) Polyester Outlook (PSF) Global Scenario Domestic Scenario 25 120% Capacity Production Operating rate 100% 20 80% 15 million tons million tons 60% 10 40% 5 20% 0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2 0 1 1- 2 0 1 5 Project ed Figure 8 Source : PCI Demand Supply Report 2010/11 for global and Indo Rama Internal reports for domestic

Polyester Outlook (PFY) Polyester Outlook (PFY) Global Scenario Domestic Scenario 45 Capacity Production 40 95% Operating rate 35 30 million tons million tons 85% 25 20 15 75% 10 5 0 65% 2008 2009 2010 2011 2012 2013 2014 2015 2 0 1 1- 2 0 1 5 Project ed Figure 9 Source : PCI Demand Supply Report 2010/11 for Global and Indo Rama Internal report for domestic.

Non Apparel Segment Numerous R&D initiatives have enabled innovation and identification of non apparel usages for polyester. These include: Expanding non apparel opportunities can only expand demand for polyester 10

Substitute Fiber 11

Cotton Scenario Cotton Scenario Domestic Global (Cotton Year Oct – Sep) (Cotton Year Aug – July) million tons million tons % age % age Cotton prices are very high due to stock to use percentage coming down. 12 Source : USDA

Cotlook A Index vs. World Stock / Use Ratio A Index vs. World Stock / Use Ratio Cotlook 13 Source : Cotton Prices from Cotlook Website

Historical International Prices - Cotton / PSF / POY Cents / Kgs Apr-10 July-10 Oct 10 Jan 11 Mar 11 Cotton 194.0 203.0 279.0 395.0 502.0 PSF 135.0 125.0 144.0 195.0 225.0 POY 141.0 131.0 148.0 177.0 206.0 Gap between Cotton Price and Polyester Widened 14 Source : Business Plan Reports for PSF and POY and Cotton Prices from Cotlook Website

Raw material overview 15

PTA Outlook PTA Outlook Global Scenario Domestic Scenario million tons million tons % age % age 2011-2015 Projected Figure 16 Source : PCI Demand Supply 2010/11

MEG Outlook MEG Outlook Global Scenario Domestic Scenario million tons % age million tons % age 2 0 1 2- 2 0 1 5 Project ed Figure 17 Source : PCI Demand Supply Report 2010/11

Crude vs. Raw Crude vs. Raw Material Material * Oil prices are in USD/Barrel. All other prices are in USD/MT CFR MEG 1640 130 PTA 120 1440 110 1240 100 1040 l T rre r M 90 a r B e p 840 e D p S 80 D U S U 640 70 440 60 Crude 240 50 40 40 6 7 8 0 5 5 5 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 b Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q n r e a a F M J ' ' ' Correlation between crude and PTA / MEG not significant 18 Source: IRSL Internal reports

Who We Are Who We Are 19

Financial Results Financial Results for the Quarter / Year ended M arch 31, 2011 for the Quarter / Year ended M arch 31, 2011 20

HIGHLIGHTS HIGHLIGHTS Financial Year 2010- -11 11 Financial Year 2010 (April, 2010 – – March, 2011) March, 2011) (April, 2010 Revenues ( ` 3,000.14 Cr) 3,100.00 3,000.14 3,000.00 2,900.00 2,800.00 2,659.41 EBIDTA ( ` 417.51 Cr) 2,700.00 Revenues ` . Cr. 2,600.00 13 % 13 % 500 417.51 2,500.00 400 2,400.00 FY10 FY11 300 223.54 EBIDTA 200 ` . Cr. 100 86.77 % 86.77 % 0 FY10 FY11 PAT ( ` 139.41 Cr) 139.41 150 100 PAT ` . Cr. 50 7.13 1855.26 % 1855.26 % 0 FY10 FY11 21

FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS FY 2011 FY 2011 ` . in crore PARTICULARS 2010-11 2009-10 % Change 12.81 Gross Turnover 3,000.14 2,659.41 Expenses: 11.69 Raw materials cost 2,154.87 1,929.35 12.11 Employees cost 63.58 56.71 3.99 Total Expenditure 2,581.16 2,482.18 PARTICULARS 2010-11 2009-10 % Change 86.77 EBIDTA 417.51 223.54 (11.23) Interest 59.27 66.77 0.50 Depreciation 149.90 149.15 Profit Before Tax 208.34 7.62 2634.12 Profit After Tax 139.41 7.13 1855.26 22

Annual Financial Ratios Annual Financial Ratios Particulars F.Y. F.Y. 2010-11 2009-2010 Debt/Equity Ratio 0.93 1.66 Interest Coverage Ratio 7.04 3.35 Debt Service Coverage Ratio 1.59 1.56 Current Ratio 1.00 0.84 Fixed Asset Coverage Ratio 2.47 1.94 Return on Capital Employed 29.48% 19.22% 23

Finance Cost Reduction Finance Cost Reduction Fig. in ` . Cr. ` . Cr (Including Working capital Interest & Term Loan) 24

Major Value Addition / Cost Cutting Measures 25

DTY Capacity Expansion DTY Capacity Expansion Expansion of value added product capacity by the addition of 22 new high capacity Draw Texturized Yarn (DTY) machines. o With 8 new high capacity DTY machines already commissioned, the capacity has increased to 64,800 TPA from 43,000 TPA in February, 2011 Further enhancement of plant capacity by adding 14 new DTY machines which will be commissioned from August, 2011 to January, 2012 o Post commissioning : Capacity: - 98,000 TPA o Total Cost of Project : ` 32 crore o Payback period for the project: 2 years 26

Operational enhancement Operational enhancement Existing dowtherm Heating System based on Furnace Oil (FO) to be replaced by a coal based plant which will be commissioned by July, 2011. Under this project four coal based heaters will be commissioned o Total Cost for this project would be ` 73 Crore o Expected payback period : 1.5 Years o To set up a Steam turbine generator with a capacity of 11 MW, utilizing the available Steam capacity for captive use, reducing dependency on Furnace Oil based DG set. Steam Turbine Generator to be commissioned by November 2011 o Total Cost for this project: ` 36 Crore o Expected payback period : 2 Years o 27

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