& Industries Ltd. Himadri Chemicals & Industries Limited Meet/100184_20140430.pdf2014/04/30 ·...
Transcript of & Industries Ltd. Himadri Chemicals & Industries Limited Meet/100184_20140430.pdf2014/04/30 ·...
Himadri Chemicals & Industries Limited
Investor Presentation
April 2014
Himadri Chemicals & Industries Ltd.
Himadri Chemicals & Industries Ltd.Important Notice
Forward Looking Statements
This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Himadri Chemicals & Industries Limited’s (Himadri Chemicals or the Company) future business developments and economic performance.
While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations.
These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance.
Himadri Chemicals undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances.
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Himadri Chemicals & Industries Ltd.
Table of Contents
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1. Investment Highlights 3
2. Business Overview 4
3. Industry Overview 12
4. Board of Directors 14
5. Ownership 15
6. Financial Performance 16
7. Strategic Outlook 19
8. Corporate Social Responsibility 21
Himadri Chemicals & Industries Ltd.
• Achieved a ~38% CAGR in Revenues over FY2009-13 period
• Long-term investors like Bain Capital and Citi Venture Capital
Premier Global Customer Base
• Serves aluminium and graphite, lithium-ion battery, tyre and rubber and infrastructure industries
• Strong clientele including BALCO, Hindalco, Nalco, PT Inalum, Vedanta, Graphite India, HEG and SGL Carbon SA and other aluminium and graphite players
• Has strong relationships and supply contracts with customers globally
• Long-term relationships with all major Indian raw material suppliers and is the largest purchaser of Coal Tar in India
• Strategically imports raw materials based on prevalent global, economical and demand-supply dynamics, thereby optimizing costs
Strategic Sourcing Advantages
3
Investment Highlights An Integrated Speciality Carbon Company with Global Leadership Position
• Engaged in producing a wide range of carbon products such as Coal Tar Pitch, chemical oils, Carbon Black, Naphthalene, Advanced Carbon Material, corrosion protection, Sulfonated Naphthalene Formaldehyde (SNF) and clean and green Power
• One of the few integrated specialty carbon companies of the world
• Largest producer of Coal Tar Pitch in India with ~63% market share, catering to around two-thirds requirements of the Indian Graphite and Aluminium industries; only Indian company using advanced technology for coal tar distillation
• One of the few global manufacturers to produce Zero Quinolene Insoluble (QI) impregnating Coal Tar Pitch and advanced carbon material
Compelling Competitive Position
Strategically-located Facilities with Significant
Capacities
Strong Financial Performance
• Seven manufacturing facilities spread across India in West Bengal, Gujarat, Andhra Pradesh and Chhatisgarh
• Coal Tar Distillation, Carbon Black and SNF capacities of 250,000, 120,000 and 68,000 TPA, respectively
• Expanding the Coal Tar Distillation capacity by 150,000 TPA
Himadri Chemicals & Industries Ltd.
Himadri Ispat Ltd. was merged in the
Company
Established as Himadri Casting Pvt.
Ltd.
First Coal Tar distillation plant in
Howrah
Himadri became a publicly listed
company
Establishment of new unit at
Vishakhapatnam
Expansion at Howrah Plant
Business Overview Track Record of Growth and Development
4
1987
1990
1991
1999
1999
2000
Established new Coal Tar distillation
plant at Hooghly
2004
Started double production capacity
in Hooghly
2005
Commercialised a by-product refining plant at Mahistikry
2006
Established new facility at Korba in
Chhattisgarh
2007
Commenced production at
Advanced Carbon plant
2008
Acquisition of a plant in Vapi for
commercial production
2009
Started production at Carbon Black plant and started
power plant at Mahistikry
2009
CTP plant expansion in Hoogly & SNF
capacity expansion in Vapi
2010
Recognised as a R&D centre by the
Government of India; Started a CTP
plant in China
2011
Started producing Advanced Carbon
Material in Falta and CTP in China
2012
1987-1991 1992-2000 2001- 2006 2007- 2009 2010- 2013
Expanded the Carbon Black
capacity & started producing SNF at
Hooghly
2012
Himadri Chemicals & Industries Ltd.
International
8.5%
Exports
91.5%
Business Overview Diversified Product Portfolio with Presence across the Carbon Value Chain
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Coal Tar Pitch
Carbon Black
Advanced Carbon
SNF
Power
• A complex chemical with 22 chemical and physical properties obtained through coal tar distillation
• One of the most important industrial chemicals in the world
• Applications include rubber, plastics, coating, inks and batteries
• Only company outside Japan to possess the technology to manufacture high quality advanced carbon material
• Used in the manufacture of lithium ion batteries
• Value-added product derived from Naphthalene • Used in ready mix concrete
• Commissioned its captive power plant running on carbon black off-gas and connected to the grid
YTD FY2014 Revenue Breakup Description Products
Increased Focus on Exports:
• Exports also act as a natural hedge against currency movements for raw material imports
• Revenue from Exports has increased by ~3% in 9M FY2014 as compared to H1 FY2014
Himadri Chemicals & Industries Ltd.
Category Products Applicability/developments
Coal Tar Distillation
Aluminium grade pitch Aluminium production
Graphite grade binder pitch
Graphite electrode manufacture
Graphite grade zero QI coal tar impregnating pitch
Graphite electrode, nipple impregnation and UHP grade electrode manufacture
Mesophase pitch Anode material for Li-ion batteries, carbon/carbon composites
Special pitches Refractories, carbon paste, paints/ultramarine blue and water proofing, among others
Naphthalene
Dyes and dyestuff intermediates, tanning agents, super plasticiser manufacture, pharmaceuticals, disinfectants
Light creosote oils Paints and asphalt liquefying, manufacture of phenolic disinfectants
Wood preservative oil Benzole extraction from the coke oven gas and as a wood preservative
Anthracene oil/Carbon black oil
Carbon black manufacture as a feedstock and in coal tar enamel manufacture
Business Overview A Wide Array of High-Demand Products
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Himadri Chemicals & Industries Ltd.
Category Products Applicability/developments
Carbon Black
Carbon black Reinforcing agent for rubber, abrasion-resistant, tear-resistant, improving fracture behavior with improved dynamic mechanical properties
Advanced carbon
material
SSG (Standard synthetic graphite)
Li-ion batteries for mobile devices, laptops and other electronic appliances
HPG (High power graphite)
Li-ion batteries for automobiles, power tools, EV and HEV
Carbonised pitch Intermediate product graphitised for final use as anode material
Corrosion protection
Himcoat enamel Anti-corrosion protection to underground and off-shore pipelines
Himcoat Primer-B Oil & gas, water and sewage pipelines, tanks, underground structures and fittings
Himtape Oil & gas, tanks, underground structures and fittings
Himwrap Protection to underground pipelines by protecting the enamel against soil stress, pipe shift, moisture, bacteria and root growth
SNF Beton SP-011–liquid and powder form
Used in Admixture, Dyes and Pigments, Agrochemicals, Leather and Rubber
Power Power Commissioned 12 MW and 8 MW power plants under IPP and CPP modes respectively
Business Overview A Wide Array of High-Demand Products
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Himadri Chemicals & Industries Ltd.
Synchronised and Forward-Integrated Process of Production
8
Business Overview
Advance Carbon Material
Coal Coke Ovens
Coal Tar
Chemical Oils/ Napthalene
Creosote Oil
Dedicated Logistical Support
Coke
Carbon Pitch
Distillation Tower
SNF, Corrosion protection
Products and Naphthalene
Aluminium Smelters
Graphite Electrode Mfgrs.
Pipe Mfgrs.& Dyes and Organic Compound Mfgrs.; Super Plasticizers, Construction
admxture and agro-chemicals
Carbon Black Mfgrs.(Feed stock for Tyre Industry)
Distillation Process
Feed stock for tyre, Rubber Hose, Conveyor Belt & Printing
Industry
User Industry Operations Feedstock Supply
• Coal Tar is a by-product generated through the processing of Coal into Coke in Steel manufacturing
• Coal Tar is then distilled to derive a variety of intermediate chemical products such as Coal Tar Pitch (~54%), Creosote Oils (~26%) and Chemical Oils (~12%)
• Forward integration by using byproducts to manufacture Carbon Black and SNF
Power Plant
Carbon Black
Lithium-Ion Batteries
Power
Himadri Chemicals & Industries Ltd.Business Overview
Strategically Located Manufacturing Locations – Seven in India
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Coal Tar Distillation (CTP) (2) Multiple Products (2)
Pitch Processing (1)
SNF (1)
Hooghly, West Bengal
Howrah, West Bengal (2)
Korba, Chattisgarh
Visakhapatnam, Andhra Pradesh
Vapi, Gujarat
Advanced Carbon Material (1)
Falta, West Bengal
Manufacturing Facility in India
Himadri Chemicals & Industries Ltd.
SNF
Business Overview Strong and Long-term Customer Relationships
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Carbon Black
Coal Tar Pitch
Normat India Pvt Ltd
Mahan Aluminium
Himadri Chemicals & Industries Ltd.Business Overview
Strategic and Technological Advantages in Several Areas
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Product • One of the few companies globally which manufacture Zero QI
Impregnating Coal Tar Pitch
Storage & Distribution
• Plants well-connected through various transportation modes (like railways and roads)
• Raw material storage capacity of around 70,000 MT (~3.5 months)
• Liquid Pitch Capability: • Largest dedicated fleet of specially-designed 114
tankers in India to transport liquid pitch • Only company in India to export Liquid Pitch and having
Liquid Pitch terminal for exports
Procurement
• One of the largest purchaser of Coal Tar in India • Highest share of Coal Tar from nearly all domestic steel plants • Capability to source Coal Tar globally to take advantage of
global price movements
• Experienced R&D team with international experts in the field
• Plants certified with ISO 9001:2008 and ISO 14001:2004 • Equipped with statistical process control equipment for
quality consistency • Flexible manufacturing plants capable of switching between
any type and quality of raw material
R&D
Facilities
Himadri Chemicals & Industries Ltd.
Industry Overview Favourable Long-term Industry Dynamics in India
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Co
al T
ar P
itch
Mar
ket
Source: Worldsteel and Management Estimates
• Due to its high binding quality, Coal Tar Pitch is used as a binder in anode manufacturing for Aluminium production. Coal Tar Pitch has a direct impact on the cost of Aluminium production
• Demand is derived by the Aluminium industry which is its largest end market, accounting for ~84% of demand globally by 2015
• Aluminium production in India is expected to grow at a CAGR of ~34% from 2012 to 2015. Global Aluminium production is expected to be driven by India, Middle East and China
• Demand for CTP in India is expected to be around 431 KTPA by the year 2015 • India has a current Coal Tar production of around 720 KTPA, out of which 52% is available for CTP production • CTP is also used as a major raw material in Graphite industry. Graphite electrodes are used in EAF method of
manufacturing steel. According to the World Steel Association (WSA), global crude steel production reached 1,607 million MT in 2013, up by 3.5% compared to the last year. Global steel demand continues to grow although at a slower pace.
• Indian steel producers are increasingly focused on cost competitiveness and operational efficiencies to maintain their margins. Although steel consuming sectors such as construction, auto and capital goods continue to underperform. Steel production increased to 81 mn MT in 2013, an increase of 5.1% on 2012
Aluminum84%
Graphite9%
Others7%
World Coal Tar Pitch Consumption 2015
Aluminum Pitch69%
Graphite Pitch17%
Carbon Black
9%
Others5%
Coal Tar Demand in India
Himadri Chemicals & Industries Ltd.Industry Overview
Favourable Long-term Industry Dynamics in India
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Car
bo
n B
lack
Source: Management Estimates and industry research
• Carbon Black demand is majorly derived from the Tyre industry, which accounts for ~58% of the demand
• During 2013-14, the OEM tyre demand (volumes) is expected to grow marginally by ~2%
• During FY2012-13 the demand for domestic tyres has increased on account of reduction in tyre imports from China and massive domestic investments
• Automotive industry in India is expected to grow by 6-8% during FY2014
• Carbon Black demand is expected to grow at a CAGR of 9% during 2011-2015 reaching to 965 KTPA by 2015
Tyre Industry
58%
Non-Tyre Industry
27%
Exports15%
Carbon Black Demand In India
SNF
• SNF is primarily used by construction sector to increase the strength and fluidity of cement
• India has a demand of approximately 17 KTPM
• Demand for SNF is driven by admixture manufacturers. Western India alone accounts for around 36% of the total demand of SNF in India
• SNF is currently growing at a rate of 10% - 15%
6,000
5500
35001,600 16,600
WesternIndia
NorthernIndia
SouthernIndia
EasternIndia
Total
Regionwise demand for SNF in India
Himadri Chemicals & Industries Ltd.Board of Directors
Strong Corporate Governance with Balanced Board Composition
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B. L. Choudhary
Managing Director
D. P. Choudhary
Emeritus Chairman
S. K. Banerjee
Former Chairman and
MD, NALCO
S. K. Saraf
Member, Audit
Committee
H. S. Mann
Former Chairman and
MD, MMTC
Krishnava Dutt
Managing Partner,
Udwadia, Udeshi &
Argus Partners
Pavninder Singh
Principal, Bain
Capital
Non-Executive Director
S. S. Choudhary
Executive Director
Rahul K. Yadav
Managing Director, CVCI,
Dubai
V. K. Choudhary
Executive Director
Non-Executive and Independent Director
Himadri Chemicals & Industries Ltd.Ownership
Trust and Confidence of Long-term Investors
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Shareholding Pattern Market Data
• Outstanding Shares (Mn) 386
• Book Value Per Share (Rs.) (31-12-13) 21.01
• Bloomberg Ticker HCI:IN
• Reuters Ticker HMCH.NS, HMCH.BO
• BSE Ticker 500184
• NSE Ticker HCIL
Source: BSE as of December 31, 2013
Key
Inve
sto
rs
Promoters44.6%
Bain Capital26.8%
Citi12.2%
Others16.4%
Himadri Chemicals & Industries Ltd.Financial Performance
Consolidated Financial Performance
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Revenue (Rs. mn) EBITDA (Rs. mn) and Margin (%)
Basic EPS (Rs.) Net Profit (Rs. mn) and Margin (%)
Note: Net Profit and EPS calculation includes foreign exchange fluctuations and other income
3,755 4,7147,001
11,44813,533
FY2009 FY2010 FY2011 FY2012 FY2013
CAGR: 38%
467
1,073 1,133
573
94
12.4%
22.8%
16.2%
5.0%0.7%
FY2009 FY2010 FY2011 FY2012 FY2013
1.47
3.232.94
1.49
0.24
FY2009 FY2010 FY2011 FY2012 FY2013
1,285
1,979 2,059 2,208
1,170
34.2%
42.0%
29.4%
19.3%
8.6%
FY2009 FY2010 FY2011 FY2012 FY2013
Himadri Chemicals & Industries Ltd.
Standalone Financial Performance
17
Revenue (Rs. mn)
EBITDA (Rs. mn) and Margin (%)
Gross Profit (Rs. mn) and Margin (%)
Net Profit (Rs. mn)
Financial Performance
3,371
3,0183,095
3,4663,347
Q3 FY2013 Q4 FY2013 Q1 FY2014 Q2 FY2014 Q3 FY2014
655 492
649 836 896
19.4%
16.3%
21.0%24.1%
26.8%
Q3 FY2013 Q4 FY2013 Q1 FY2014 Q2 FY2014 Q3 FY2014
281 241329
481537
8.3% 8.0%
10.6%
13.9%
16.0%
Q3 FY2013 Q4 FY2013 Q1 FY2014 Q2 FY2014 Q3 FY2014
(160)269
(519) (287) 218
Q3 FY2013 Q4 FY2013 Q1 FY2014 Q2 FY2014 Q3 FY2014
Himadri Chemicals & Industries Ltd.
Instrument Rating Comment
Short-term Debts
CARE A1+
Indicates very strong degree of safety regarding timely payment of financial obligations
Long-term Facilities
CARE AA- Indicates high degree of safety regarding timely servicing of financial obligations
Non-Convertible Debentures
CARE AA-
Controlled Leverage Profile with Investment-grade Ratings
18
Leverage Position Net Debt (Rs. Mn) and Net Debt / EBITDA (x)
Net Debt / Equity (x)
(Rs. Mn) Q3 FY2014 Q2 FY2014
Long Term Borrowings 5,605 5,291
Short Term Borrowings 7,859 8,903
Total Debt 13,464 14,194
Less: Cash & Cash Equivalents
2,353 2,418
Net Debt / (Net Cash) 11,111 11,776
Net Worth 8,104 7,828
Financial Performance
Credit Ratings (CARE)
3,351
1,822
4,844
7,987
10,241
2.7x
1.0x
2.5x
3.6x
8.8x
FY2009 FY2010 FY2011 FY2012 FY2013
1.03
0.27
0.57
0.89
1.16
FY2009 FY2010 FY2011 FY2012 FY2013Note: Data standalone for Leverage Position and consolidated for charts
Himadri Chemicals & Industries Ltd.Strategic Outlook
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Clearly-defined Group Strategy
Maintaining domestic leadership in Coal Tar Pitch
Key Growth Drivers
• Be among the top three producers of Coal Tar products globally
• Attain total capacity of 1 MTPA
• Set up world’s largest manufacturing base for Advanced Carbon Material
• Become the lowest cost producer of Coal Tar products in the world
• Become the preferred supplier of Coal Tar products globally
• Setting up of a specially-integrated carbon complex
Strategic Objectives
Entering into business of Carbon Black with Power
Focusing on marketing of SNF
Increasing portfolio of value-added products
Enhancing International sales
Developing new products and processes
Himadri Chemicals & Industries Ltd.Safety, Health and Environment (SHE)
High Sensitivity to SHE Aspects
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Safety Policy:
• To ensure a safe working environment for employees and act as a socially responsible citizen by adopting safe practices and providing engineering solutions to avoid hazard occurrences
• Accidents and risk to health are preventable through continual improvement in working environment and involvement of all employees creating thereby an accident-free work place
Health Policy:
• Treat health & safety of employees as of utmost importance
Environmental Policy:
• Conserve natural resources like water, fuel, energy and build environmental awareness among employees and other parties
• Maintain strict compliance with relevant environmental legislations and regulations
Himadri Chemicals & Industries Ltd.Corporate Social Responsibility
Strong Commitment to Corporate Social Responsibility
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Initiatives
• The Company runs a free dispensary for villagers and employees near its Mahistikry plant
• Organised health & eye camps along with blood donation drives and rescue and relief camps for flood affected villages.
• Cultural and sports programmes for economical, cultural and social betterment of the community
• Organized book and uniform distribution campaigns for students and the needy
• Commissioned tube wells to ensure hygienic water and has funded local schools in the various locations
• Initiatives in modernisation and expansion of schools (700-1,200 children) for economically weaker sections
• Food distribution camps are organised throughout the year
• Building pukka houses for BPL section of people
Himadri Chemicals & Industries Ltd.
Contact Details:
Himadri Chemicals & Industries Limited
Ruby House, 8, India Exchange Place
2nd Floor, Kolkata - 700 001, West Bengal
www.himadri.com
Anurag Choudhary
Himadri Chemicals & Industries Limited
+91 33 2230 4363
Shruti Jain
Churchgate Partners
+91 22 3953 7444
Deepak Balwani
Churchgate Partners
+91 22 3953 7444