Sudarshan Chemical Industries Limited Investor Presentation March, 2019
Safe harbour statement This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our exposure to changes in general economic conditions, market, Foreign currency and other risks, changes in government policies/regulations, tax regimes as also technological changes. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of subsequent development, information or events or otherwise.
Financial Overview March, 2019
Financial Performance Standalone Income from Operations ( In ₹ Cr ) Standalone EBITDA* ( In ₹ Cr ) & Margin% ormance 60 60 389 389 56 56 377 377 53 53 364 364 52 52 340 340 340 340 erfor 35 35 16.4% 15.3% FY19 Per 14.3% 14.1% 10.3% Q4FY Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Consolidated EBITDA* ( In ₹ Cr ) & Margin% Consolidated Income from Operations ( In ₹ Cr ) erformance 1,477 211 211 11% 11% 13% 13% 1, 1,329 187 187 FY19 Per 14.3% 14.1% FY FY18 FY19 FY18 FY19 EBITDA * as percent to Total Income from operations (excluding other income and impact of excise duty) Previous quarter/ year figures have been restated to reflect the effect of transfer of Industrial Mixing Solutions Division
Gross Margin Performance FY1 Y18 @ @ 42 42% FY Y 19 19 @ @ 40 40% gins margi Standalone ma 43 43% 40 40% 40% 40 39% 39 37 37% St Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 ins margin • Consolidated FY19 gross margin at 42% idated ma • Margins impacted mainly on account of raw material price increases and lag effect of 43 43% 42 42% Consolid pass throughs. Consol FY18 FY19 Previous quarter/ year figures have been restated to reflect the effect of transfer of Industrial Mixing Solutions Division
Performance Highlights • Consolidated FY19 income from operations at ₹ 1,477 cr, a growth of 11% as compared to FY18. Specialty pigments portfolio grew by ~ 20%. • EBITDA Margins at 14.3% improved marginally despite pressure on gross margins. • Prudent cost management to drive EBITDA margin improvement in Q4FY19 across initiatives such as: o Optimisation of fixed costs o Savings in manufacturing overheads o Avoidance of discretionary costs • Completed INR 72 crores worth of capex in FY19. One strategic capex project has been put on hold due to change in market landscape. Projects worth INR 200 crores are under implementation and further projects worth INR 100 crores are under evaluation. • FY19 inventory built up was planned to de-risk supply chain given RM disruptions and to transition to a new planning process. • Launched ~25 new products during FY19. • The Company entered into a Business Transfer Agreement for transfer of its Industrial Mixing Solutions Division on a going concern basis. • Board has recommended final Dividend at ₹ 3.50/- per share (175%), Special Dividend at ₹ 2.50/- per share (125%) subject to the approval of the shareholders in the ensuing Annual General Meeting. Together, the Total Dividend for the Financial Year 2018-19 amounts to Rs. 6.00/- per share (300%) on the face value of Rs. 2.00/- per share.
Key Ratios - Consolidated Return on Capital Employed (annualized) Debt - Equity Ratio 15.6% 15 1.0 1.0 14.9% 14 0.6 0.6 FY18 FY19 FY18 FY19 Earnings per Share (annualized) * Current Ratio 12 12.8 1.4 1. 1.2 1. 11.1 11 FY18 FY19 FY18 FY19 Previous quarter/ year figures have been restated to reflect the effect of transfer of Industrial Mixing Solutions Division * Earnings per share calculated excluding exceptional items
About Sudarshan
Our Company at a glance… We are a leading world-class color solutions provider with a focus on exceptional and sustainable results. CONSOLIDATED MAR MARKET T GE GEOGRAPHIC PEOPLE BUSI BU SINESS SS REVENUES REV CAP CAPITALIZATION 50+ sales team. REACH RE FOC OCUS 60+ channel partners. FY19 turnover at INR ~2,000 cr+ Largest pigment Pigment 2,000+ global $210M Listed on BSE (1981) Focus. Don’t producer in India. workforce. & NSE (1995) compete with Exports to 85+ countries. customers.
Our Mission, Vision & Values Our growth is fueled by an immense drive to be a leading player in our field. MISS MISSION World class Global Color Solution provider with an innovative and vibrant culture VI VISI SION To be amongst the top three pigment players in the world VAL ALUES Seva (Service), Courage, Commitment and Passion, Respect, Trust
Our Journey Evolution of Sudarshan from a local player to a global player is result of a well crafted strategy. Es Establis lishin ing the he Bus usiness Goin oing Glob lobal Next leap Nex ap in n Technolo logy 19 1952 52 - 1989 1989 1989 19 89 - 2006 2006 20 2006 06 - 2018 2018 Scaled up infrastructure to world Efforts largely domestic with Building technical capabilities & class standards limited portfolio range infrastructure Footprints in Europe & USA Manufacturing plant in Mahad Net revenue at ₹ 400 Cr for Pthalos & Effect Pigments FY06 Manufacturing Improved plant in Roha portfolio with HPPs and Effects Listed on for Cosmetics NSE Manufacturing plant in Pune Net revenue Listed on at ₹ 1,000 Cr Inception of BSE FY14 Sudarshan State of art technology centre at Sutarwadi
Our Global Presence Exports to 85+ countries with 50+ sales members GLOBAL HEAD OFF FFICE Sudarshan Chemical Industries Limited NORTH AM AMERICA Sudarshan North Americas Inc. EU EUROPE Sudarshan Europe B.V. CHINA ME MEXI XICO Sudarshan (Shanghai) Trading Co Ltd. Sudarshan Mexico S. de R.L de CV.
Our Product Portfolio PIGM IGMENTS ORGANIC INO INORGANIC Azo EFFECT CT Chromes Phthalos Mica base for Cadmiums HPPs industrial and Iron Oxides Dispersions cosmetics Organic Pigm igments Colored material made of organic compound with pigment properties. Commonly used for Coatings, plastics, Inks & Textile applications. Ino norganic Pigm igments Made up of mineral compounds. Are mainly oxides, sulphides of one or more than one metals. Used for plastics and industrial coatings. Effect Pigm igments Pigments with mica base and coated with oxides to give shimmer and glow. Mainly used in plastics, automotive coatings, cosmetics applications
Pigments Application Sudarshan is uniquely placed to offer a comprehensive range - general purpose grades, high performance and effect pigments. COATI TINGS GS COS OSMETI TICS PLAS LASTICS INK NKS A pallete with a wide Effect pigments for High performance and General purpose and high spectrum of colors and cosmetics & personal care special effect for the performance pigments for performance for plastic applications. coating industry. inks. applications. Enjoy leadership position A strategically important Focus on niche in plastics segment in Our key focus area with growth area for applications in the ink multiple geographies; targeted significant Sudarshan; we continue industry with necessary attributed to our detailed growth in the automotive building capabilities in expertise in offset and know-how of the and decorative segments. end application. liquid ink segments. industry.
Our Technical Capability PEOPLE • 100+ Scientists & Technical resources • Global experts panel for competency enhancement • Analytical & Application Lab experts INFR FRASTRUCTURE RE • Dedicated site for R&D with investments > USD 10Mn • State of art equipment for characterization and composition analysis • Ability to handle crystal modification & surface treatments • Ability to ensure reproducibility in end application PROCESS • Stage Gate Process • DOE approach to solutions
Our Infrastructure We spend over $4M every year on research, development & technical service and over $2M on environmental compliance with a $3.4M effluent plant. Man anufacturin ing Site: Roh oha Man anufacturin ing Site: Mah ahad Built in 1973; 1100+ trained team members. Built in 1993; 500+ trained team members. Products Manufactured: AZO, HPP, Effect Pigments, Dispersions Products Manufactured: B&G, HPP, Effect Pigments Our Manufacturing Plants with Modern Water Treatment Facility and Certified by BSC and having won Sword of Honour for Safety.
Global Pigments Market Overview Global Colour Pigment Market* - Relevant to Sudarshan • Our estimate of the Global Colour Pigments Market is ~$ 10B, market opportunities open to Sudarshan are USD SD 0.6 ~$ 8.6B. Bi Billi lion on • Global Organic Pigment market is expected to grow at ~3% CAGR over the next 5 years. 3.0 • India is set for strong, sustainable growth in pigment manufacturing with substantial export opportunities. 5.0 • Sudarshan is well placed to expand market share for all its applications. • We expect this strong growth to come from our coatings, inks, plastics and cosmetics segments. Organic Inorganic Effect * Excludes Black, White and Metallic Pigments. Based on internal Pigment industry study and various market research reports
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