Investor Presentation May 2016
Who we are…A Snapshot ! India’s One of the largest World’s Largest largest Manufacturing Cartridge Facilities of manufacturers of manufacturing Detonating Cord Industrial facility at a single and Cast Boosters Explosives and location. Initiating Systems in India India’s 1 st Private India’s 1 st Private Largest exporter of Player to Player to industrial explosive commence manufacture from India commercial supply HMX & HMX to Defence for Compounds HMX
Milestones 1996 1998 2000 1983 Started Commenced Started Commenced production of production of production of Bulk business as a Cartridge Detonators explosives Trader explosives in Explosives 2007 2006 2005 2001 Extended presence Initial Public Offer Started Exports. Included Cast in (IPO) Booster and PETN India by setting New Got listed in Product Protfolio Bulk Plants Bulk Plants 2008-16 Exporting to 20 Started commercial Emerged as India’s Manufacturing Countries with supply of HMX & Largest Explosives units in Zambia, product used in Propellant for Manufacturer Nigeria & Turkey 40 countries Defence
Product Range & Licensed Capacities Bulk Cartridge Detonators Detonating Cord Cast Boosters explosives 1650 MTPA 75 Mn. Metres 3,01,323 MTPA 190 Mn. Units 1,25,000 MTPA Licensed capacity Licensed capacity Licensed capacity Licensed capacity Licensed capacity Largest Largest Largest Largest Largest Well poised to cartridge capacity in Manufacturing Manufacturing cater to rising manufacturing India Facility Facility demand from Facility in India in India Indian and at a single overseas mining location in the Locational & world proximity to the Infrastructure mines Industries All units located at 50-60 kms radius from the major mining regions
Presence in India Plants State Clients served 4 Maharashtra 1. Western Coalfield Ltd. 1. Northern Coalfield Ltd 2 MP 2. Reliance power (sasan) 3. Jai Prakash Coal 1. South Eastern Coalfield Ltd. 2. Lafarge, Parsak (Adani 2 Chattisgarh group) 3. Mahanadi Coalfields Ltd 1. Tisco 2 Jharkhand 2. Central Coalfield Ltd, 3. Bharat Coking Coalfield Ltd . 1. Mahanadi Coalfield Ltd. 3 Odhisha 2. Tisco 3. Iron Ore Mines SCCL 2 Teleangana 1 Rajasthan Hindustan Zinc, Jindal Saw 1 West Bengal Eastern Coalfield Ltd
Raw Material Management Key Raw Material – Ammonium Nitrate • 70% of the total raw material consumed • Domestically sourced from Deepak Fertilizers, GNFC, RCF • Price volatility - rise/fall clause included in rate contract with customers to a large extent • The domestic price is ` 25000/MT • Total AN demand in India, for explosives, is ` 7 Lakhs MT against a domestic production of ` 6 Lakhs MT
Key Strengths
Marquee Clientele 5/26/2016
Customer Bifurcation (FY16) Export & Export & Coal India Overseas Coal India Overseas 26.11% 27.80% 30.05% 28.68% Defence Defence 0.00% Non CIL & Inst 0.46% 19.73% Trade & Others Non CIL & Inst Trade & Others 26.15% 15.99% 25.02% FY16 FY15 Rs in Crs Particulars FY16 FY15 Coal India 432.91 437.71 Non CIL & Inst 327.19 233.01 Trade & Others 414.84 380.86 Defence 7.70 0.00 Export & Overseas 475.59 404.89 Total 1658.23 1456.47
Regulatory Environment One of the very few Clearance required sectors needing from IB-regarding NoC required from Industrial License & safety of location & District Magistrate Clearance from Home antecedents of Ministry Directors NoC by District For underground Magistrate after Magistrate after License also required License also required (Gasy mines) use clearance by Police, from Chief Controller permission required PWD, of Explosives, GoI from DGMS Grampanchayat Daily Reporting to PESO & Local Police on Production and Sales
Market Dynamics GLOBAL OVERVIEW DOMESTIC OVERVIEW • Size of the market ~ Rs 6500 Cr . • Historical growth 7-8% p.a. (last 10 years) • Future growth expected 12% p.a. • Annual Explosive consumption of ` 9 Lakh MT in FY15 • • Highly concentrated market with about Highly concentrated market with about 30 manufacturers in the industry Major players Major players India is 8 th largest & fastest growing Solar Industries India Limited is the market market globally leader in the country
Our Growth will come from… 4. 3. 2. 2. Defence Sector Overseas Market Market 1. Renewed demand from Housing and Infrastructure Enhanced revival demand from coal mining
Domestic Dynamics • Main drivers for explosives demand 1) Mining 2) Infrastructure development • Mining Industry is the major consumer of explosives. It accounts of 90% of total explosives • Coal Industry consumes 70% of total demand • CIL have planned to increase production from present 537 Mill. Tons in FY16 to 924 Mill. Tons by 2020. • SCCL have planned to raise production from 60 Mill. Tons in FY16 to 74 Mill. Tons by 2020. • Iron Ore and Limestone expected to increase at 8 – 10% p.a. in same period. • CIL issues tender with reverse Auction with price escalation clause quarterly basis based on movement in prices of AN, Diesel and Labor index. • MMDR Amendments bill and Coal Mines (Special provision) bill are likely to open up mining sector in a big way.
Global Reach & Presence Nigeria Zambia Turkey South Africa Facility : Facility : Facility : Facility : Planning for Capacity of 10000 Capacity of 40000 MT of Capacity of 5000 MT Capacity of 25000 MT of Cartridge & ANFO, 5000 MT of of Cartridge & 10000 MT Bulk Explosive MT Bulk Explosive 5000 MT of Bulk. 5000 MT of Bulk. Cartridge & Nonel Cartridge & Nonel Mt of Bulk & Nonel Mt of Bulk & Nonel Assembly Plant Assembly. • Our Holding - 74.50% • Our Holding - 65% • Our Holding-74% • Our Holding - 55%
Defence- Indeed a large opportunity • The industry is poised for exponential growth over the next decade driven by substantial growth such as need for an overhaul of defence equipment, inadequate defence equipment inventories in key areas, a sustainable GDP growth rate and a largely hostile geo-political environment • The sector has also witnessed a significant governmental policy shift which eventually led to increased participation of private sector players in this sector- DPP, FDI policy, the tax framework, the industrial licensing policy and framework, the industrial licensing policy and the foreign trade policy • India is the largest defence equipment importer in the world- The private sector is expected to capitalize on the R&D and technical capabilities of the DPSUs and global OEMs to meet demand • It is estimated that Indian Government’s annual capex on defence is expected to grow to USD 36Bn by 2024, growing at a CAGR of 9.4%, clearly envisaging the immense opportunity in the sector
Specialty Chemicals for Defence Sector Following orders have been received : Value (Rs Product Customer Crs) HMX & HMX Compound OFK-Jabalpur/DRDL-Hyd/TBRL 14.62 Propellant for Akash, Pyro BDL – Hyd, DGOS - New Delhi, OFK, 58.19 Technique, Igniters/ DRDL, ARDE, HEMRL, TBRL Warheads Filling etc Warheads Filling etc Total 72.81
Our Journey in Numbers 1800 Revenue 1658 cr 1600 1456 cr 1400 1213 cr 1216 cr 1200 1031 cr +23.06% 1000 723 cr CAGR 800 600 169 cr 400 200 0 0 FY06 FY11 FY12 FY13 FY14 FY15 FY16 Volume 300000 271171 250000 221638 190091 200000 175764 +20.16% 161033 130086 150000 CA9R 100000 44652 50000 0 FY06 FY11 FY12 FY13 FY14 FY15 FY16
Our Journey in Numbers EBITDA 350 310 cr 300 262 cr 250 232 cr 210 cr +20.3% 195 cr 200 148 cr CAGR 150 40 cr 100 50 0 FY06 FY11 FY12 FY13 FY14 FY15 FY16 PAT 200 166 cr 147 cr 147 cr 150 150 118 cr 116 cr +21.57% 101 cr 100 76 cr CAGR 22 cr 50 0 FY06 FY11 FY12 FY13 FY14 FY15 FY16 EPS 100 92 81 80 66 65 58 60 +20.25% 44 40 13 CAGR 20 0 FY06 FY11 FY12 FY13 FY14 FY15 FY16
Details of Borrowings Rs. In Crs. Particulars FY16 FY15 FY14 Short Term Borrowing (A) 190.96 165.00 272.21 Long Term Borrowing (B) 134.03 155.30 151.72 Total debt (A+B) 324.99 320.30 423.93 Share Capital Share Capital 18.10 18.10 18.10 18.10 18.10 18.10 Reserves & Surplus 849.47 757.78 643.48 Total Equity 867.57 775.88 661.58 Cash Balance & FD & Short Term Investment 67.38 66.90 147.77 Net Debt 257.61 253.40 276.16 Net Debt Equity Ratio 0.30 0.33 0.42 Capex Done 135.51 119.47 160.22
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