KESAR PETROPRODUCTS LIMITED Investor Presentation – February 2018
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Kesar Petroproducts 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 what so ever. 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 Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. 2
Business Overview 3
Strong Performance in 9M FY18* In Rs. Crs Revenue EBITDA +3.4% +58.4% 130.4 31.4 126.1 19.8 9MFY17 9MFY18 9MFY17 9MFY18 EBIT PAT +60.3% +71.7% 31.1 24.9 19.4 14.5 9MFY17 9MFY18 9MFY17 9MFY18 4 * As per IND-AS
Improved Performance % of Total Volume EBITDA Per MT (In Rs.) Alpha+Beta CPC Crude Blue +79.4% Dye Inetrmeidiates 62,529 15% 19% 34,857 69% 74% 17% 7% 9MFY17 9MFY18 9MFY17 9MFY18 5
Increased Revenue from High Value Product In Rs. Crs CPC CRUDE BLUE BETA BLUE ALPHA BLUE +10.50% +41.34% -4.25% 87.9 10.9 22.6 21.6 79.5 7.7 9MFY17 9MFY18 9MFY17 9MFY18 9MFY17 9MFY18 +12.33% +23.93% -19.09% 30.7 4.0 7.4 27.3 6.0 3.3 Q3FY17 Q3FY18 Q3FY17 Q3FY18 Q3FY17 Q3FY18 6
Strong Performance in Q3 FY18* In Rs. Crs Revenue EBITDA +3.2% +83.9% 45.2 11.1 43.8 6.0 Q3FY17 Q3FY18 Q3FY17 Q3FY18 EBIT PAT +82.9% +122.9% 10.8 8.6 5.9 3.8 Q3FY17 Q3FY18 Q3FY17 Q3FY18 7 * As per IND-AS
Kesar at Glance One of the Leading manufacturers of CPC Blue 01 Crude and its downstream products in India. 15% market share of the Indian CPC market 02 Vertically Integrated : CPC Blue is the primary raw material for Pigment Blue Moving up the Value chain with Alpha Blue, Beta 03 Blue and Dye-intermediates Environmentally friendly and sustainable 04 processes and technologies 8
Product Portfolio Kesar integrates services in a manner that aims to provide timely deliveries along with high quality product output Dye Intermediates Pigments Product Capacity (MTA) Product Capacity (MTA) Dye Intermediates 1,200 CPC Blue Crude 18,000 (Includes K-acid, Gamma Alpha Blue 2,400 acid and Others) Beta Blue 3,600 9
Pigment Value Chain FY17 Sales Value Addition Alpha Blue 19% Rs. 200/ kg Raw Material : CPC Crude Blue & Sulphuric Acid CPC Crude Blue Beta Blue 7% Rs. 140/ kg Raw Material : CPC Crude Blue & Salt Rs. 80/ kg 67% CPC Crude Blue Raw Material Phthalic Anhydride & Cuprous Chloride 10
Long Term Client Relationships 15 Years+ 15 Years+ 8 Years+ 8 Years+ 17 Years+ 8 Years+ 8 Years+ 2 Years+ 11
Manufacturing Facilities Operational Efficiencies through Vertical Integration Focus on Process Innovation Located at Lote Parshuram, the Chemical Belt of Maharashtra 12
Facilities at a glance Activated CPC Aminated Beta-Blue-15-3 Beta-CPC-15 CPC-Crude2 CPC-Blue-15-0 CPC-Blue-15-1- CPC-Crude CPC-Crude4 Nitrated-N RM Sulphonated-N 13
End Users Application Rubber Inks 5% 35% Plastic 30% Paints Textiles 15% 15% % of FY 17 Revenues 14
We are Future Ready 15
Global Trend in Dyes & Pigment Global Demand for Dyes & Outlook : Global Dyes & Pigments Organic Pigment • Growth in Dyes segment will be driven by textiles, leather +17% and food 3.7 • Pigments market is expected to be propelled by printing ink, 3.1 paints and coatings • China and India account for over 50% of total production MMT and are expected to increase their market share in the global markets • Key Expected Trends 2016E 2021F ▪ Strict environmental norms to limit growth of China’s +39% market, Reduced capital inflows and Increased cost of production 27.5 ▪ Chinas slowdown to benefit India and increase the 19.8 latter’s market share in global dyes and pigments $bn ▪ India’s share in total global production to reach ~20% by 2021 from ~15-16% in 2016 2016E 2021F 16
Domestic Dyes & Pigment Industry Domestic Demand for Pigment Outlook : Global Dyes & Pigments Industry • The Organic Dye and Pigments Industry is estimated at ~$3- +30% 3.2bn as of 2015-16 57.0 • Dyes : The demand has grown at a healthy pace of 6-7% 44.0 over the last 5 years driven by textile industry KTPA • Pigment : The domestic organic pigments industry, driven largely by paints and inks, has grown by 4-5% in the last 5 years 2016E 2021F ▪ Blue, Green and White Colors together account for 65% of domestic production of organic pigments Blue ▪ The key movers in the pigment markets are inks (42-44%), 23% Green plastics (12-13%), paints and coatings (27-28%), textiles (7-8%) 35% and others (7-8%) White 5% Red ▪ 5% Demand from Paints and Plastic segment is healthy at 6-7% led Yellow by improved demand from Housing Industry and Irrigation 10% 21% Others Classification - Types of Pigment 17
Huge Headroom for Growth Percentage Utilization 32% 37% 10% 39% 20000 18,000 18000 16000 No Major Capex in Near 14000 Future 12000 10000 8000 5,805 6000 Increase in volumes will 3,600 4000 lead to Operating Leverage 2,400 and Better Profitability 1,200 2000 890 473 365 0 CPC Crude Blue Alpha Blue Beta Blue Dye Intermediates Installed Capacity Utilized Capacity As of FY17 18
Moving up the Value Chain with… REVENUE FY17 : Rs. 171 Crs REVENUE FY15 : Rs. 112 Crs 3% 8% CPC Crude Blue CPC Crude Blue 20% 25% Alpha Blue + Beta Alpha Blue Blue Dye Dye 67% 77% Intermediates Intermediates Increasing contribution from High Value High Margin Products like Alpha Blue and Beta Blue has resulted in an improvement in our Overall Margins 19
…significant growth in High Value Product In Rs. Crs CPC CRUDE BLUE ALPHA BLUE 15.2% 19.4% 114.6 31.9 99.3 86.4 87.9 23.2 22.4 21.6 FY15 FY16 FY17 9MFY18 FY15 FY16 FY17 9MFY18 BETA BLUE DYE INTERMEDIATES 11.4 12.7 10.9 +103.30% 694.8% 9.9 5.0 3.1 2.4 0.2 FY15 FY16 FY17 9MFY18 FY15 FY16 FY17 9MFY18 20
Future Ready 01 02 03 Economies of Scale High Margin Products Product Innovation Geared to improve utilization Focus on increasing the mix Continuous Product levels resulting in better of high value products like Innovation through use of operating leverage Alpha Blue & Beta Blue Technology and by way of Pigments Backward / Forward Integration 04 05 High Entry Barrier Business Growing Export Opportunities Intensive Environmental Growth in the Pigment Regulations, High Water Industry and the continued Requirements, difficulty in dominance of Indian Players Obtaining New Licenses and in Pigments such as Blue and Client Stickiness Green 21
Financial Performance Financial Performance 22
Historical Financial Highlights In Rs. Crs Volume (MT) Revenue +23.4% 7,502 171 +39.2% 130 130 5,017 112 4,851 3,870 FY15 FY16 FY17 9MFY18 FY15 FY16 FY17 9MFY18* EBITDA EBITDA (per MT) 31 62,529 26 +36.6% +90.2% 35,014 31,929 15 18,762 7 FY15 FY16 FY17 9MFY18* FY15 FY16 FY17 9MFY18 23 * As per IND-AS
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