Phillips Carbon Black Limited We Touch Lives Every Moment Investor Presentation 1 February- 2018 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Part of a Dynamic Conglomerate….
Carbon Black Industry What is Carbon Black ? Global Overview • Global CB demand is approx. 13 mn tonnes • Largest 10 players held 63% of total global sales • 93% of CB demand linked with tyre and rubber industry Company Overview Largest in India and 7 th largest globally by volume • Pure elemental carbon in the form of black powder • • Well spread product mix: • Produced by thermal decomposition of gaseous or liquid - Rubber Carbon Black hydrocarbons under controlled conditions - Non Rubber incl Specialty Carbon Black • Largest application - reinforcing agent in tyres • Co-generation power plants at each locations • Its unique properties make it useful for pigmentation, UV • Over 58 years of rich experience in the industry stabilization and also as a conductive agent • Comprehensive global reach to customers in more than 30 countries • Performance is related to properties of specific surface area, particle size and structure, conductivity and colour • Seamless capability to switch over various feedstocks 3 3 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Carbon Black Business Segmentation Rubber Carbon Black Non Rubber Carbon Black Pure Specialty Tyre Carcass Tyre Tread • • End market demand remains strong Advanced technology driven specialty carbon • Large volumes, sold directly to global tyre producers black manufacturing • • High margins relative to Rubber In rubber applications, CB provides reinforcement and • Non rubber CB functions as a pigment improves resilience • • Non Rubber constitutes 7% of global CB demand Non tyre rubber constitutes 20% of global CB demand Enhancing focus on High Performance Rubber black and Specialty Carbon Black 4 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Manufacturing Current Capacity Capacity (KTPY) 600 515 500 Location CB (MT) CPP (MW) 400 Durgapur, W.Bengal 1,57,000 30 315 300 Mundra, Gujarat 1,53,000 24 Palej, Gujarat 1,05,000 12 200 Kochi, Kerala 1,00,000 10 120 85 100 Total 5,15,000 76 0 PCBL SKI India Himadri CCIL Capacity Utilisation Market Share of PCBL: 120% 94% 100% 82% 77% • Over one-third of domestic consumption 80% 60% • Largest exporter of Carbon Black from India 40% 20% • 10% of Asian market excl China 0% FY15 FY16 FY17 5 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Global Reach with Regional Expertise…. • Four manufacturing facilities located near port Middle East • Presence in 30+ countries SAUDI ARABIA • Warehouse/Decanting Stations near customers UAE TURKEY • Recipient of “Top Exports” award from AIRIA for IRAN last 5 consecutive years Europe Americas Africa Asia NIGERIA BRAZIL CHINA PHILLIPINES ETHOPIA PERU HONG KONG SINGAPORE KENYA NEPAL KOREA SOUTH AFRICA ISRAEL TAIWAN JAPAN THAILAND MALAYSIA VIETNAM INDONESIA BANGLADESH SRI LANKA 6 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
….With Strong Brand Recall • Over 50 grades across rubber and non rubber black • Driving application innovation with customers PCBL R&D Customers Brand • Focus on high performance rubber and specialty carbon black • Seamless capability for multiple feedstock • Diversified sourcing of feedstock 7 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Tyre Demand in India Growing Rapidly Tyre Industry - key growth driver for Carbon Black Automobile Production Vs Tyre Production (Mn Units) 250 210 192 180 200 165 157 152 146 129 123 150 100 35 30 25 26 27 23 24 22 50 20 0 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E Automobile Production Tyre Production Source: SIAM and ATMA Source: Edelweiss Research • • Tyre Industry in the last 5 years has outperformed India and Thailand witnessing highest investments in the tyre segment within the Asia-Pacific region excl. the growth of automobile production on back of China higher demand from replacement market • • Utilisation levels will go up as demand outstrips supply In FY16 registered vehicle stood at 200 mn against 24 mn annual vehicle sales addition 8 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Competitive Raw Material Prices Widening spread between CBO and CBFS $/MT 800 700 600 500 400 300 200 100 0 CBFS CBO • Chinese carbon black manufacturers predominantly use CBO as a raw material which is a by product of steel manufacturing process • CBO prices rallied in 2017, almost tripling since the levels in November 2016 • Electric arc furnace technology steel production to increase while blast furnace technology production to decrease • Supply of Coal tar is likely to go further down 9 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Volume Growth.. Capacity Expansion Plans PCBL’s CB Production Trend (KTPA) (KT) 900 715 383 120 400 800 332 312 700 80 289 300 600 43 500 472 200 400 300 100 200 100 0 0 FY14 FY15 FY16 FY17 Cuurent Debottlenecking Brownfield Greenfield Total • Additional capacity 30,000 tonnes through debottlenecking in FY18 • Brownfield expansion of 80,000 tonnes with an investment of Rs 300 crs by FY19 • Greenfield expansion of regular carbon black in South India 10 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Increasing focus on Non Rubber application Sales Volume • Non Rubber carbon Blacks are higher margin products Non Rubber, • PCBL is India’s leading manufacturer of Specialty blacks 9% • Focus on increasing penetration in Non rubber segment Rubber, • Ramping up specialty portfolio to reduce India’s 91% dependence on imports Revenue Non • Moving up value chain to cover more than 90 % of Rubber , 12% product basket in plastic application ( largest market segment ) • Inhouse R&D to develop new grades for ink and paint applications Rubber , 88% 11 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Accelerating Contribution by Power Segment Power Capacity Across Plants (MW) 10 76 80 12 FY15 FY16 FY17 70 24 60 CB Production (MT Lakhs) 3.12 3.32 3.83 50 40 30 Power Generation (MU) 342 372 484 30 20 Power Export (MU) 199 225 304 10 0 Durgapur Mundra Palej Kochi Total Power Segment Performance (Rs Crs) Approximately 35% of power generated is used to 90 81 77 69 meet captive requirement, balance 65% is 60 51 exported to grid 49 45 30 Increasing efficiency and CB production volume 0 has been driving growth of power revenue FY15 FY16 FY17 Power Sale Power EBITDA 12 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Growth Driven by Sustained Performance…. As per FY17 15% 242% 40% Rs 20 CB Sales EBITDA PBT Volume EPS Growth Growth Growth 13 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
… Resulting from Strong Business Metrics EBITDA and EBITDA margins PBT 200 166 400 20% 305 150 300 15% 16% 215 210 100 200 10% 46 11% 50 105 14 9% 100 5% 0 5% 0 0% FY14 FY15 FY16 FY17 -50 FY14 FY15 FY16 FY17 -100 -88 EBITDA (Rs Crs) EBITDA Margin (%) Net Debt /Equity Return on Capital Employed 2.5 20% 2.4 2 2.1 1.7 15% 15% 1.5 9% 10% 8% 1 0.7 5% 0.5 0 0% -1% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 14 -5% A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Growth is a Process…. 16.4 57 108 4.3 616 15 74 487 Q3FY17 Q3FY18 …. We Reinforce it with Endeavour 15 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Borrowing Position 1400 1219 155 160 1200 1023 1000 64 120 107 777 759 800 707 79 600 35 80 549 400 28 443 200 92 317 40 211 72 0 51 FY15 FY16 FY17 0 FY15 FY16 FY17 Long Term Debt Working Capital Debt Interest Cost Hedging Cost • Reduced leverage with increase in cash flow and improved working capital management 16 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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