SOMANY CERAMICS LTD Investor & Analyst Meet Presentation 9 th August, 2016
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Somany Ceramics Ltd (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
Agenda 01 Industry Dynamics & Growth Drivers 02 Our Story 03 Financials 04 Branding & Marketing 3
Industry Dynamics & Growth Drivers 4
Indian Tiles Industry is Rising… % Global Size Value Share Indian Indian Tiles Per Capita Volume Industry Production Consumption Share Global Tiles Industry Indian Tiles Market Production India per capital Volume Share Value Share of is estimated at $ is estimated at ~$ increased to 825 consumption very low between Organized Organized 3.6bn; is 3 rd largest 48bn with China MSM in 2014 at 0.5 Sqm versus 4.1 and Unorganized players is ~50% having ~50% market globally Sqm in Brazil and 3.4 Players is 40:60 share Sqm in China 5
… coupled with Growth Drivers Real Estate Smart Housing For Swachh Bharat Bill Cities All Abhiyan 7 th CPC, Monsoons & Gas Prices ADD on China GST …will achieve significant size and scale in India & Globally 6
Growth Drivers 7
Real Estate Bill… 01 01 04 04 Mandatory to register all • Bill provides for • projects with State RERA with insurance of land title extensive information which will ensure that • All Projects with plot area of claims made on land more than 500 sq. mts or 8 can be satisfied by the apartments inclusive of all insurance companies phases will get registered 02 02 03 03 Developers will now have to • deposit 70% of collections • Liability of the developers for from homebuyers in structural defects will now dedicated account to be be five years from date of used only for that particular handing over possession project …shall instill Confidence & Transparency thus encouraging Buyers & Large scale Institutional Investments 8
Housing for All by 2022… Units Shortage Annual Investment ~110mn units including current Entails an investment of USD shortage of ~60mn units 250bn-260bn each year till 2022 to achieve the objective Distribution Investment Growth ~70% of Housing needs would Investments will need CAGR be concentrated in 9 states viz growth of 12-13% (unadjusted UP, Bihar, West Bengal, MP, for inflation) in 2022 AP, Rajasthan, TN & Karnataka …envisages every family to have a pucca house with water connection, toilet facilities, 24x7 electricity supply and access by the time Nation completes 75 years of Independence in 2022 9
Smart Cities Smart Living Smart Governance Sewerage & Sanitation Revenue Management Water Supply Administration Electricity Grievance Management Storm Water Drainage Housing & Security Smart People Smart Economy 1 4 Education Income Levels Public Participation in Policy Labor Market Inclusive Development Poverty Level 2 5 Smart Mobility Smart Environment 3 6 Transport & Allied networks Pollution Controls Communication Resource Management … focuses on upgradation of facilities for sustainable, better and inclusive living benefitting Tiles Industry 10
Swachh Bharat Abhiyan Swachh Bharat Abhiyan is an initiative taken by the Government to make India open- defecation free by 2019 by providing access to toilet facilities to all Target Targets the construction of 60 mn household toilets by 2019 Cost The total cost of the Swachh Bharat Abhiyan is estimated at USD9.6 billion Funding Contribution to funding done by Government, Corporates and International Development Agencies Impact Impact will be seen on Construction and Buildings Material Industry. Will generate Manpower & Job opportunities Social Transformation To raise the bar on quality of Living across the strata of population 11
7 th CPC, Monsoon & GST Higher Disposable Income $$ Urbanisation Better job GST opportunities, Increasing Nuclear increasing GDP, 7 th CPC families, kuccha to GST Implementation contained inflation pucca homes, will help bridge gap leading to higher Monsoon improving between Organized The pay, allowance disposable income infrastructure & Unorganized and pensions of facilities (Schools, Players. It will Above Normal ~4.7m Central Govt Banks, Hospitals) in improve efficiency monsoons as Employees and towns & villages in logistics indicated by Pensioners could go Skymet & IMD shall up by ~25% boost consumption 12
Gas Prices & ADD on China $ Gas is ADD on Boost Production Gas Pricing significant Cost China Tiles Revision to benefit Government imposed ADD on China would help Gas Pricing Contract Players on Long Term $1.37 per sq mtre Anti Industry increase between RasGas and India Gas Contracts. Dumping Duty on China production levels and has been renegotiated towards Vitirified Tiles improve competitive edge such that it is now closer in Coastal regions to the current market price …to increase the competitive edge of Indian Tiles Industry Globally 13
Evolved from 12k crs to 24k crs in 5 years… Ceramic Tiles 43% 53% CY2009 CY2014 334 MSM 440 MSM Rs 6,400 Crs Rs 10,500 Crs GVT PVT 44% 39% 13% 8% CY2009 CY2014 CY2009 CY2014 145 MSM 266 MSM 15 MSM 50 MSM Rs 4,700 Crs Rs 10,500 Crs Rs 900 Crs Rs 3,000 Crs … Higher Premiumisation and Value Add Across Segments 14
Tiles Hub - Morbi Proximity to Raw Materials Mecca of the Indian Tile Industry Proximity to key raw materials in Gujarat and Rajasthan Home to >600 manufacturers out of 700 in India Raw materials abundantly available locally or from Almost 100% of the Unorganized Tile market in India neighboring region of Rajasthan Manufactures ~60% of India’s Total Tile production Dedicated Gas lines available Competitively placed Capability to manufacture vitrified tiles, Financially beneficial floor tiles, quartz stone, sanitary ware, roofing tiles and mosaic tiles Branded players tie up with manufacturers in Exports to markets such as ME, Africa, parts Morbi and underwrite a large part of their of Asia along with supply to Indian branded production players Allows all partners to focus on their core Proximity to ports make it a low cost strengths transport hub Highly capital efficient model 15
Sanitary Ceramic Ware Tiles Polished Glazed Bath Vitrified Vitrified Fittings Tiles Tiles 16
Somany Wall of Fame – Pioneering Brand 1 st to receive ISO 1 st Tile Company 1 st Ceramics Tile 1 st Brand to 14001 to receive the Company in launch the Certification largest size in prestigious India to get a Indian Power & 1 st GVT: patent for glaze IGBC Brand Award for 600x1200MM – and VC Shield Certification 2 consecutive the King of Slabs technology in years 2009 1 st to be 1 st Indian Tile 1 st to be 1 st Indian Tile felicitated with Company to Recognized & Company to get the BIS Mark participate in Government presented with licence for its ACerS 2014 CERSAI, Italy Recognition in and products Corporate 1996 for its R&D Mosbuild, Russia manufactured in Technical Centre Kassar, Haryana Achievement Award for VC Shield 17
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