Vardhman Special Steels Limited Investor Presentation May 2018 - PowerPoint PPT Presentation

Vardhman Special Steels Limited Investor Presentation May 2018

Disclaimer This presentation has been prepared by Vardhman Special Steels Limited (the “Company”) solely for information purposes and does 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

Table of Contents Company Overview Industry Overview Business Overview Quarterly Financial Highlights Annual Financial Highlights Way Ahead 3

Company Overview

Company Overview Amongst India’s Leading Steel Bar Reputed and long term customers Producer for Automotive Application  Toyota, Hero Moto Corp, Caterpillar, Hino Motors, Maruti,  Incorporated in May 2010 Bajaj and Hyundai, among others  Headquartered in Ludhiana,  More than 200+ Clients as on Punjab March 2018  Caters to sectors such as Engineering, Automotive, Tractor, Bearing and Allied Industries Strong International Customer Base for forging applications Product offerings  Thailand, Taiwan, Turkey, Russia,  Steel Bars and Rods and Bright Germany and Spain Bars of various categories of Special & Alloy Steels Certifications  ISO 14001:2004; OHSAS State-of-the-art manufacturing facilities 18001:2007; ISO 9001:2008; ISO/TS  Cutting-edge manufacturing technology 16949:2009  Manufacturing Capacity as on March 2018  Continuous Focus on improving Capital Structure Billets - 2,00,000 MTPA   Rolled Bars – 1,80,000 MTPA Debt reduced from Rs. 350 Crs in FY15 to Rs. 228 Crs. in FY18  Raised Rs. 118 cr through Rights Issue and QIP to repay 5 debt and fund ongoing capex

Journey So Far   July 2015 – Installed Fume 1973 - Commissioning of Oswal Steels at Faridabad, with initial Extraction system for pollution &  2010 - Incorporated as capacity to produce 50,000 dust control worth Rs. 12 Crore independent identity  Aug 2015 – Increased expansion metric tonnes of special & alloy under Vardhman Group - for Bright bars to 36,000 TPA & steels earlier unit of Vardhman  1,80,000 mt./pa for Hot Rolled 1986 - Acquired another plan, Textiles Limited  Dec 2016 - Installed transformers Mohta Alloys in Ludhiana, with installed capacity of 1,00,000 & allied equipment of Rs. 35 Cr to reduce melting time & increased metric tonnes per annum SMS capacity to 2,00,000 tonnes 1973-86 1995-01 2010-12 2013-14 2015-16 2017-18  1995 – Installed ultra-modern Steel   2013 – Installed fully Oct. 2017 – Purchased Melting Shop and 9/6 meter Bloom automatic rolling mill with ~8 acres of land at Caster with Electromagnetic Stirrer capacity of 1,50,000 metric Ludhiana for Rs. 36 Cr  2000 – Commissioned Vacuum tonnes & Magnaflux plus government duties Degassing (V.D) System leakage testing system (Dr.  2001 - Strengthened product Foerster Germany), and portfolio with addition of Bright Bar Ultrasonic Testing from Facility (Olympus, Canada)  Closed Faridabad operations & shifted to Ludhiana 6

Strong & Experienced Board of Directors Mr. Sachit Jain – Vice Chairman & MD Mr. Rajeev Gupta – Chairman & Independent Director  B. Tech (Electrical) from IIT, New Delhi, MBA (Gold medallist) from IIM, Ahmedabad and Owner/President Management  B. Tech from BHU/IIT, Varanasi and MBA from IIM, Ahmedabad Program from Harvard, USA  Rich experience of more than 34 years in manufacturing,  Experience of over 29 years in Textile and Steel Industry – Jt. MD investment banking and private equity Vardhman Textiles Ltd.  One of Country’s topmost Investment Banker  Chairman of CII, Northern Region Mr. Rajinder Kumar Jain – Director Ms. Suchita Jain – Director  Master’s degree in Commerce from Punjab University,  Chartered Mechanical Engineer from Institute of Mechanical Chandigarh Engineers London  Over 25 years of rich experience in textile industry  Retired as General Manager from Indian Railways after 35years  Key role in starting fabric manufacturing in Vardhman Textiles of service Ltd.  Representative of Promoter Group Mr. B.K. Choudhary – Director Mr. Jayant Davar – Director  Qualified as Mechanical Engineer  Degree in B.Sc., M.Com & MBA  Rich experience of more than 29 years in auto Industry  Rich experience of more than 43 years in Steel & Textile  Chairman-cum-MD of Sandhar Technologies Ltd. – Tier I supplier industry to Auto Industry  Managing Director of Vardhman Acrylics Limited 7

Strong & Experienced Board of Directors cont … Mr. Sanjeev Pahwa – Director Mr. Sanjoy Bhattacharyya – Director  B. Tech from IIT, Delhi  Bachelor of Science (Statistics Honours) and M.B.A. from IIM,  Renowned Industrialist Ahmedabad  Rich Experience of more than 25 years in bicycle/automobile  More than 20 years of experience in equities & investment tyres and tubes industry management  Chairman-cum-MD of Ralson (India) Ltd. – Largest tyre  One of leading stock market Gurus manufacturer in World Mr. Rakesh Jain – Director  Ph.d in Polymers from University of Akron  Worked in Advanced Technology Group at GE Electro-materials Division (EMD) in Coshocton, OH,USA  Worked with Aditya Birla Group (ABG) as MD of Indo Gulf Fertilizers Ltd, - Appointed at Jt. MD of Aditya Birla Nuvo  Presently, he is MD of Arjuna Advisory Services, LLP Note - Company is in process of finalising a Candidate for Woman Independent Director 8

Industry Overview

Indian Automobiles Industry India expected to become 4th largest automobile producer globally by 2020 after China, US & Japan. Auto components industry also expected to become 3rd largest in world by 2025 7th largest manufacturer of commercial vehicles Initiatives like ‘Make in India’, ‘Automotive Mission Plan 2026’, and NEMMP 2020 to give a huge boost to sector Presence of established domestic and international original equipment manufacturers (OEMs) Passenger vehicle market -expected to touch 10 million units by 2020 . Sales crossed three million milestone in FY17 Only country among top seven car markets globally to achieve double digit growth rate of 11 per cent during Jan- May 2017 10 Source: Society of Indian Automobile Manufacturers (SIAM)

Indian Automobiles Industry – Market Overview  Number of automobiles produced in India (in Two-wheelers and passenger vehicles dominate Indian auto market - millions) Sales of two-wheelers are expected to grow 8-10% in FY18  Sales of top five passenger vehicle manufacturers in India increased 25 24 23 22 21 20 3.7% year-on-year in October 2017 to 238,838 units  Two-wheelers and passenger cars accounted for 79% and 15% of 9 production volume in FY17 respectively  Over 67% of export volumes comprised of two-wheelers, followed by FY12 FY13 FY14 FY15 FY16 FY17 Q1 FY18 22% for passenger cars % Share of each segment in total production Number of automobiles exported (in millions) volume in FY17 3.6 3.6 3.5 3.1 2.9 2.9 Passenger Vehicle 15 Commercial Vehicle 3 Three Wheeler 3 Two Wheeler 79 FY12 FY13 FY14 FY15 FY16 FY17 0 20 40 60 80 100 11 Source: Society of Indian Automobile Manufacturers (SIAM)