Srikalahasthi Pipes Ltd (Formerly: Lanco Industries Ltd) Earnings - PowerPoint PPT Presentation

Srikalahasthi Pipes Ltd (Formerly: Lanco Industries Ltd) Earnings Presentation Q2/H1-FY17

Overview • Srikalahasthi Pipes Ltd. (SPL) (formerly: Lanco Industries Ltd) was incorporated in 1991, the company entered into a strategic alliance with Electrosteel Group in 2002, India’s leading DI Pipe manufacturer. • The company has adopted its name from the area of its manufacturing facility, which is located in Rachagunneri, Srikalahasti Mandal, Tirupati • The company got Listed on BSE in 1994 and in NSE in 2007 and has a current market capitalization of approximately INR 11.3 Bn Business Mix • DI Pipes : Capacity – 225,000 TPA Pig Iron : Capacity - 275,000 TPA Coke : Capacity - 225,000 TPA • Cement : 90,000 TPA Power : 2 Captive Power Plants with a total capacity of 14.5 MW (2.5MW+ 12MW) Clients • SPL supplies DI pipes to various Water Boards, Municipal Corporations and Turnkey Contractors across the country for their Water Infrastructure Projects which is the thrust area of the Govt. of India. • Some of the Marquee clients include: Larsen & Toubro, Nagarjuna Construction Corporation, Indian Hume Pipes Ltd, VA Tech Wabag Ltd, Sriram EPC Ltd etc. FY16 Financials Highlights • Total Income at INR 11,629 mn* • EBITDA at INR 2,838 mn ; EBITDA Margin of 24.4 % • Net Profit at INR 1,588 mn 2 * Including Other Income

 Srikalahasthi Pipes Limited “SPL” (Formerly known as Lanco Industries Ltd.) was Revenue Distribution FY16 established in 1991 by Lanco Group of Companies to manufacture Pig Iron. Others Pig Iron 10%  SPL’s plant is located at Rachagunneri, Srikalahasthi, Chittoor District, Andhra Pradesh 3% near Tirupati and its key products include DI Pipes, Pig Iron, Cement. Cement 2%  SPL is categorized as Public Utility Services Company by Govt. of Andhra Pradesh  The company has a fully backward integrated manufacturing facility which includes a sinter plant, coke oven plant, power plant and a Sewage Treatment facilities in the DI Pipes 85% same complex spread over 300 acres, giving them a significant competitive advantage. Electrosteel Group Structure  In March 2002, India’s leading DI Pipes manufacturer, Electrosteel Castings Ltd (ECL), entered into a strategic alliance with SPL. Electrosteel Castings Ltd.  ECL is India’s largest and one of the few manufacturers in the world to make Ductile Iron (DI) Pipes, DI Fittings and CI Pipes, having its facilities in Khardah & Haldia in West Bengal and Elavur in Tamil Nadu. Srikalahasthi  SPL is one of the top players in the DI pipe industry in India, and commands around 15% market share across India and around 75% in South and Western Zone which it Pipes Ltd.(49%) primarily caters to.  Together the Electrosteel group commands around 40% market share of the Indian DI Pipes Market. 3

 Q2-FY17 Financial Performance: • Total Income (including other income): INR 1,913 mn • EBITDA: INR 518 mn • EBITDA Margin: 27.10 %, an increase of 339 bps Y-o-Y • PAT: INR 260 mn, a growth of 24.35 % Y-o-Y • PAT Margin: 13.58 %, an increase of 210 bps Y-o-Y • EPS: INR 6.53/ equity share  H1-FY17 Financial Performance: • Total Income (including other income): INR 4,760 mn • EBITDA: INR 1,327 mn • EBITDA Margin: 27.87 %, an increase of 347 bps Y-o-Y • PAT: INR 689 mn, a growth of 0.1 % Y-o-Y • PAT Margin: 14.49 %, an increase of 213 bps Y-o-Y • EPS: INR 17.34/ equity share 4

Q2/H1-FY17 Highlights : The on-going expansion programme of Rs 100 crores comprising up-gradation and modification of Blast Furnace and  augmentation of Ductile Iron Pipes capacity has been completed and will be stabilised in Q3-FY17 The Company also has taken a shut down of the Mini Blast Furnace (MBF) from 4 th August, 2016 for a period of about 30  days for the entire relining of the furnace along with the modernization to reduce the cost of production of the liquid metal. The sales for the quarter is lower due to reduced production of Ductile Iron Pipes, consequent to the planned shut down of  Mini Blast Furnace. Company is working to mitigate increase in coking coal price by using the existing coal stock and hedging coking coal price  risk. 5

Q2-FY17 wQ1-FY17 QoQ % Q2-FY16 Particulars(INR. mn) YoY % Total Income 1,913 2,847 (32.8)% 2,986 (35.9)% Expenditure 1,394 2,039 (31.6)% 2,278 (38.8)% EBITDA 519 808 (35.8)% 708 (26.7)% EBITDA margin 27.13% 28.39% (126)bps 23.71% 342 bps Depreciation 91 100 (9.5)% 86 5.3% Finance Cost 75 120 (37.5)% 133 (43.5)% PBT 353 588 (40.0)% 489 (27.9)% Tax 93 158 (41.4)% 146 (36.5)% PAT 260 430 (39.5)% 343 (24.3)% PAT margin 13.58% 15.09% (151) bps 11.48% 210 bps Other Comprehensive Income (net of Tax) (1) (1) 0.0% 0 1048.0% Total Comprehensive income 259 429 (39.6)% 343 (24.4)% EPS 6.53 10.81 (39.6)% 8.63 (24.3)% *Total Income includes other Income 6

H1-FY17 H1-FY16 Particulars(INR. mn) YoY % Total Income 4,760 5,571 (14.6)% Expenditure 3,433 4,212 (18.5)% EBITDA 1,327 1,359 (2.4)% EBITDA margin 27.87% 24.40% 347 bps Depreciation 191 173 10.5% Finance Cost 195 229 (15.0)% PBT 941 957 (1.7)% Tax 252 269 (6.4)% PAT 689 689 0.1% PAT margin 14.49% 12.36% 213 bps Other Comprehensive Income (net of Tax) (1) (0.11) 943.6% Total Comprehensive income 688 688 0.0% EPS 17.34 17.32 0.1% *Total Income includes other Income 7

Particulars(INR. mn) FY11 FY12 FY13 FY14 FY15 FY16 H1-FY17 Total Income 7,361 7,954 8,739 9,966 10,922 11,629 4,760 Expenditure 6,389 7,217 8,126 8,724 8,979 8,791 3,433 EBITDA 972 737 613 1,243 1,943 2,838 1,327 EBITDA margin 13.2% 9.3% 7.0% 12.5% 17.8% 24.4% 27.87% Depreciation 187 200 222 279 312 271 191 Finance Cost 227 579 604 549 437 420 195 PBT 558 (42) (213) 414 1,194 2,147 941 Tax 138 (2) (82) 27 372 559 252 PAT 420 (40) (131) 387 822 1,588 689 PAT margin 5.7% (0.5)% (1.5)% 3.9% 7.5% 13.7% 14.49% EPS 10.57 (0.99) (3.29) 9.73 20.66 39.94 17.34 *Total Income includes other Income 8

Assets (INR Mn.) FY13 FY14 FY15 FY16 H1FY17 Equity and Liabilities (INR. mn) FY13 FY14 FY15 FY16 H1FY17 Non Current Fixed Shareholders Fund Assets Share Capital 398 398 398 398 398 Fixed Assets 4,414 4,355 4,873 4,888 4,935 Reserves and Surplus 1,540 1,857 2,535 3,884 4,497 Capital work in progress 170 200 89 194 992 Net worth 1,938 2,255 2,933 4,282 4,895 Total Fixed Assets 4,584 4,555 4,962 5,082 5,927 Non Current Liabilities Non Current Investments Long Term borrowings 1,507 1,746 1,799 1,090 779 Long Term Loan and Advances 652 559 56 91 - Deferred tax liabilities 277 304 655 691 449 Other Non Current Long Term provisions 15 29 39 51 62 Investments - - - - Other non-current liabilities 740 495 125 125 50 Current Assets Current Investments - - - 1,460 971 Total non current liabilities 2,539 2,574 2,618 1,957 1,340 Inventories 2,083 2,368 1,346 1,189 1,792 Current Liabilities Trade Receivables 1,194 1,480 1,860 2,076 1,551 Short Term Borrowings 2,767 2,355 1,987 2,925 3,233 Cash and cash equivalents 102 574 593 215 103 Trades payables 1,048 1,957 1,024 515 521 Short Term loan and Other Current Liabilities 737 945 963 933 783 advances 139 265 392 296 350 Short Term Provisions 27 95 187 301 81 Other current Assets 303 382 503 504 159 Total current liabilities 4,579 5,352 4,161 4,674 4,618 Total 3,820 5,068 4,694 5,740 4,926 Grand Total 9,056 10,181 9,712 10,913 10,853 Grand Total 9,056 10,181 9,712 10,913 10,853 9

250 Working Capital Days Total Revenue 15,000 EBIDTA & EBIDTA Margins 2,838 201 30.00% 3,000 197 11,629 200 10,922 12,000 9,966 25.00% 2,500 7,361 7,954 8,739 1,943 135 130 150 9,000 20.00% 24.40% 2,000 117 105 972 1,243 15.00% 1,500 6,000 100 17.80% 737 613 13.20% 10.00% 1,000 12.50% 9.30% 3,000 50 5.00% 500 7.00% - - 0.00% - FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 Net D/E (x) Efficiency Ratios Net Profits 2.5 2.2 2.1 2,000 RoE (%) RoCE (%) 2.0 1,588 1.6 40.0% 37.40% 1,500 1.4 1.5 28.3% 30.0% 1.1 822 0.9 1,000 29.00% 1.0 20.0% 17.2% 19.9% 23.0% 420 387 500 0.5 10.0% 14.0% 13.0% 6.9% 4.7% - 0.0% - FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 FY11 FY12 FY13 FY14 FY15 FY16 (40) (131) -500 -10.0% -1.9% -6.8% 10

20% Srikalahasthi Sensex 10% 0% -10% -20% -30% -40% Shareholding Pattern Price Data (As of 30 th September, 2016) INR Face Value 10 Market Price 285 Others 45% 52 Week H/L 356/184 promoters 51% Market Cap (INR Mn) 11,331.6 Equity Shares Outstanding (Mn) 39.76 DII FII 1 Year Avg. Trading Volume ('000) 213.2 11 1% 3%