Analyst Meet Nov 2010 Contents BOPET Film Industry Polyplex group - - PowerPoint PPT Presentation

Analyst Meet Nov’2010

Polyplex (Thailand) Public Limited Company

• BOPET Film Industry
• Polyplex group
• Polyplex Competitive Strength
• PTL : Financial Performance
• Current Industry Scenario & Outlook

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Contents

Film business - Value Chain

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PTA Supplier

P E T R E S I N

MEG Supplier

B A S E F I L M S

Industrial Buyers Converters FMCG Companies

Polyplex’s area of operation

BOPET Thin Film Application

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BOPET Thick Film Application

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BOPET Film

• BOPET is mainly segmented into Thin & Thick Films

– Thin Film : 50 Micron & Under (75% of total BOPET) – Thick Film : Over 50 Micron (25% of total BOPET)

• The industry capacity is mainly divided based on above Thickness segments.
• Some lines are designed to produce intermediate range of Films from 12µ to

100µ

• Major End use of BOPET Film are

– Imaging & Graphics – Magnetic Tape – Packaging & Metalizing : Main Segment for POLYPLEX – Electronics / Electricals – Other Industrial

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BOPET Film – Influencers on Price

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COST DRIVEN FACTORS

CRUDE OIL PRICE IMPACT ON POLYESTER FILM (60%)

PTA MEG ENERGY COST (FUEL / POWER) LOGISTICS COST

CURRENCY VOLATILITY

COUNTRY EXPORT COMPETITIVENESS IMPORT INTENSITY CURRENCY WAR

TRADE AGREEMENTS AND BARRIERS

PROTECTIONISM, ANTI-DUMPING BILATERALISM & REGIONAL TRADE

MARKET DRIVEN FACTORS

DEMAND – SUPPLY BALANCE

BOPET Global Demand Supply

• Largest End use :Flexible Packaging - which accounts for more than two-third of

total Thin Film used.

• Thin Film demand has witnessed a CAGR of about 8% Per Annum (2004-09) and

expected to grow at CAGR of 9.5% (2010-2014).

• Thick Film market has grown at a CAGR of about 4% per annum (2004-09) and is

expected to grow at CAGR of 7.2% (2010-2014).

• The above CUF is based on “Name Plate” Capacity. Achievable peak CUF is 85%-

90% for Thin Film and 70% - 75% for Thick Film against Name Plate Capacity.

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BOPET Thin Film "KMT" 2004 2009 2014 E BOPET Thick Film "KMT" 2004 2009 2014 E Capacity 1,388 2,171 3,166 Capacity 626 847 1,137 Production 1,235 1,806 2,781 Production 479 587 829 Capacity Utilisation % 89% 83% 88% Capacity Utilisation % 77% 69% 73% Demand 1,235 1,806 2,843 Demand 479 587 829 Imaging & Graphics 8 6 4 Imaging & Graphics 203 161 133 Magnetic Tape 94 22 7 Magnetic Tape

• Packaging & Metallising

730 1,232 1,998 Packaging & Metallising 4 17 32 Electrical / Electronics 59 90 187 Electrical / Electronics 142 248 443 Other Industrial 344 456 647 Other Industrial 131 161 221 *Source: Industry Sources

Packaging :Sustainable Growth

• Diversified application of BOPET has resulted in Sustainable Growth at better than

World GDP Growth rates.

• The growth in packaging segment proves it resilience to recessionary factors.

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BOPET (Thin + Thick)

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World PET Film Market estimated at USD 9.5 billion in 2010

Segment wise Demand of BOPET Film

• BOPET (Thin + Thick) Film demand expected to grow @ CAGR of 9%
• Packaging is expected to grow @ CAGR of 10%

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734 842 951 1046 1149 1249 1392 1545 1698 1863 2030 474 524 568 616 638 617 659 710 766 820 868 201 222 255 293 333 338 389 444 508 575 630 211 198 181 178 172 167 160 154 147 140 137 94 55 42 32 28 22 17 15 11 9 7 500 1000 1500 2000 2500 3000 3500 4000 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E

Packaging Other Industrial Electrical Imaging Magnetic Tape

Structural Shift in Application of BOPET

12 500 1000 1500 2000 2500 3000 3500 4000 2004 2009 2014 E Packaging Other Industrial Electrical Imaging Magnetic Tape

43% 28% 12% 12% 5% 52% 26% 14% 7% 1% 55% 24% 17% 4%

K MT

• P-I-E

segment to continue to grow at robust rate

• Electrical

segment to witness highest growth rate of 13%.

• Growth in Electrical

due to new applications.

• Packaging to follow

closely at 10%

• Imaging and Tapes

to experience “Negative” growth

Changing Consumer Habits, convenience is the key Consumer demand for fresh and healthy food, beverages driving need for intelligent as well as high barrier packing Emergence of strong Retail sector Securing product from counterfeiting Sustainability - Growing concern on carbon footprint, promotion of Green Technology

Packaging: Growth Drivers

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Sustainable Packaging: Key Drivers

• Emphasis on sustainable packaging due to growing

world wide concern on carbon foot print and promotion of green technology

• Recyclability, bio-degradability, bio-materials
• Customer’s requirements are the most influential

factor for driving the manufacturers towards sustainability

• Driven by Global Majors like Wal-Mart, TESCO, P &

G, Unilever, Nestle, Pepsi, Coca-Cola, etc.

The Industry Structure :Evolution

Early 80s

Dominance by few large players

Mid 80s

Emergence of Japanese Players

Early 90s

Emergence of Korean Players

Mid 90s

Fragmented Capacity Add. in Europe/ SE Asia/ India

Late 90s

Consolidation, Acquisitions and Closures

Early 2000

Consolidation Point of Inflection Structural Shift

Mid 2000

Near shoring Regionalization

Early 2010

Point of Inflection Specialization

• BOPET Film Industry
• Polyplex group
• Polyplex Competitive Strength
• PTL : Financial Performance
• Current Industry Scenario & Outlook

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Contents

Polyplex Group – Global Presence

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Manufacturing Locations – India (PCL), Thailand (PTL) & Turkey (PE) Distribution Companies – USA (PA) & China (PTSL). Warehouses – 12 in USA, 3 in Mexico, 1 in Poland & 1 in Guangzhou, China

Factories Warehouses

Turkey: Plant 3

India : Plant 1 & Plant 4

Thailand: Plant 2

Polyplex Group Structure

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Polyplex (Asia) Pte. Ltd. (PAPL) SINGAPORE Polyplex Corproation Limited (PCL/Polyplex India) INDIA Private Investor Polyplex (America)

• Inc. (PA) USA

Polyplex (Thailand) Plc.. (PTL/Polyplex Thailand) THAILAND Public/ Institutional Shareholdrers Polyplex (Singapore) Pte. Ltd. (PSPL) SINGAPORE Polyplex Trading (Shenzhen)

• Co. Ltd. (PTSL)

CHINA Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE/ Polyplex Turkey) TURKEY Outside Interest Investment Company Manufacturing Company Distribution Company

9.88% 9.88% 16.5%% 43.5% 100% 100% 100% 100% 40% 80.24%

Polyplex Group: Serving Customers Worldwide

• Customer solution oriented sales and technical

services teams (region specific ) & Global Innovation Centre PCL- SAARC, GCC and Africa PTL- SEA, Far East & Oceania PE - Europe & CIS countries

• Distribution subsidiaries in

PA - North and South America, Canada & Mexico PTSL-China

More than 1,200 Customers in 80 countries

• Distributors & agents increase reach and service

small customers

• Customer centric customized delivery model:

– Container loads drop-shipped for cost- effectiveness – Local warehousing support for higher flexibility & security

Polyplex : Business Strategy

• We’re a fully integrated, global manufacturer of plastic films with Concentric

Diversification into BOPP & CPP

• Our vision is to continuously grow, create value and establish global leadership in

the plastic film business

• We’re expanding to meet demand in new geographies and for new applications

like Extrusion lamination, Silicone Coated release films etc.

• Continually balance our Product & Market Portfolio to increase stability of our

Earnings.

• Judicious mix of On-shore, Off-shore and Near-shore strategy.

20 Turkey India Thailand

Higher cost & Higher Price

Customer

Near-shore PET Producer

• Service/Warehouse
• Small Quantity
• Quick Delivery
• Local Presence
• Technical Services

Off-shore PET producer On-shore PET Producer Medium cost & Low delivered Price Low cost & Low delivered Price

• No Service
• Container load
• Lead time
• Far away
• Service
• Small Quantity
• Quick Delivery
• Local Presence
• Technical Services

Onshore/Offshore Vs Near shore: Strategy

Polyplex Group: Existing Capacities

51000 42000 58000

PET FILM (151,000 TPA)

INDIA THAILAND TURKEY

151000 35000 10000

PET FILM (TPA) BOPP (TPA) CPP (TPA)

77600 57000 57600

PET RESIN 192,200 TPA

INDIA THAILAND TURKEY 160 150

SILICONE COATING (Mn Sqm)-India EXTRUSION COATING (Mn Sqm)-Thailand

16300 15200 11000

MET FILM (42,500 TPA)

INDIA THAILAND TURKEY

Polyplex :Product Portfolio

Offline Coater 310 Mn SQM

PET Film 151 KTPA,CPP 10KTPA, BOPP 35 KTPA

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Polyplex Group capacities: 2012

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• The above capacities include Silicone Coated Film under implementation in Thailand &

Thin PET film line expansion ( Including Resin + metallized film line) under implementation in Turkey.

• Off- line coater represents Silicone Coating line in India and Extrusion Coating line in

Thailand

54,600 42,000 89,000 35,000

• 10,000

77,600 57,000 85,600 20,400 15,200 19,600 160

• 650

200 400 600 800 1000 1200 1400

• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

Base Film Raw Material Metallized Film Coated Film Base Film Raw Material Metallized Film Coated Film Base Film Raw Material Metallized Film

Coating Capacity (in Million Sqm) Base Film, Raw Material and Metallizer (in tons)

Polyplex Group Capacity

PET BOPP CPP PET Chips Metallizer Silicon Coating Extrusion Coating

Mio Sqm

India Thailand Turkey

Polyplex: Continuous Growth…

From 20 KMT capacity in 2002, we have become a TOP 5 Manufacturer of Thin BOPET Film with capacity of 151 KMT and adding further 31KMT by 2012. In addition existing BOPP capacity of 35 KMT and CPP Capacity of 10 KMT

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20,000 62,000 91,000 120,000 151,000 185,600 35,000 35,000 10,000 10,000 50,000 100,000 150,000 200,000 250,000 2002 2003 2005 2007 2010 2012 C A P A C I T Y I N M T BOPET BOPP CPP

20K MT 62K MT 91K MT 120K MT 196K MT 231K MT

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Thailand

Apr/ Nov 2003 Sep 2004 Feb 2005 July 2005 April 2008 May 2008 PET Film – Line 1 & 2 Chip Plant –Batch /Continuous Metallizer -2 Metallizer-1 Extrusion Coated Film

Turkey

PET Film – Line 1 Metallizer - 1 Metallizer -2 Chip Plant PET Film - Line 2 December 2005 March 2006 December 2006 May 2008 May 2008 March 2010 Cast Polypropylene Film Expected H1 FY 2011-12 Silicone Coating line PET Film Line-3, Metalliser + Chips line Expected Q4 FY 2011-12

Polyplex Thailand : Journey So Far

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SILCONE COATING LINE – THAILAND

• Investment size – USD 19.44 million, including working capital.
• Target markets – Europe, US and Asia
• Applications – Used as a release liner for Label liners, graphic

arts, medical liners and Shingle Tapes

• Capacity – Dependant on the product mix being run on the line

and can vary significantly across different product types – 200 million sq.mts to 600 million sq.mts

• Financial closure achieved.
• Expected to be operational in H1 of FY 2011-12.

Projects Under Implementation

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THIN PET FILM LINE – TURKEY

• Investment size – USD 79 million, including working capital.
• Capacity – Fully integrated line – Backward integration into resin and forward

integration into metalized film

• Thin PET film line – 31,000 MT pa
• High speed Metallized Film line – 8,600 MT pa
• Polyester Resin plant – 28,000 MT pa
• Financing Pattern:
• Debt Borrowing – Approx. 50 Million USD - Financial closure expected to be done

within Q4 of FY 2010-11

• Balance to be funded out of internal accruals
• Main machinery ordered and down payment made.
• Expected to be commercially operational in Q4 of FY 2011-12.

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Projects Under Implementation

• BOPET Film Industry
• Polyplex group
• Polyplex Competitive Strength
• PTL : Financial Performance
• Current Industry Scenario & Outlook

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Contents

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• State-of-the-art machineries at all locations
• Backward Integration enables:

– Consistent quality – Development of new and specialty application products – Assured supplies

• Forward integration and Concentric diversification enables us to
• ffer more value to customers.
• Customer engagement initiatives
• Benefits of Global presence
• Focus on Operational Excellence – Better efficiencies, lower
• perating costs etc.

Polyplex : Competitive Strengths

Polyplex Group: Changing Paradigm

Year Capacity (MT) Product Market Space/Focus Source of Competitive Advantage Pre-2002 20,000

• Domestic & Export focus.
• Operational Excellence
• Low cost

2003-07 90,000

• Global manufacturing and

customer base

• Operational, Intellectual &

Emotional Integration

• Near Shoring
• Customer Service
• Customer Intimacy

2009 + 200,000

• Leveraging Economies of

Scale

• Delivering Profitable Value
• Concentric diversification
• Innovation

Innovation Network: Sources of Innovation

Resin Supplier Brand Owner Film Producer Converter Packer

Machine Supplier Machine Supplier Machine Supplier

Retailer Consumer

Value and Innovation Chain

Polyplex: Formalized Innovation Execution Model

• Value Plus.
• First level of customer engagement
• Flexible Packaging Market trends, developments, innovations.
• Technical Seminars & one to one interaction.

V+

• Win – Win.
• Second level of customer engagement
• Cost – Out and efficiency/ effectiveness initiatives.
• Specific project / programmed based.

W2

• Power of One.
• Highest level of customer engagement
• Long term project based engagement.
• Joint product/ technology development.

P1

Confidential 32

• BOPET Film Industry
• Polyplex group
• Polyplex Competitive Strength
• PTL : Financial Performance
• Current Industry Scenario & Outlook

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Contents

Financial performance :H1 “2010-11”

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H1 2009-10 H1 2010-11 YoY % Production (PF+MF)-MT 53,705 55,886 4% Total Revenues 3,558 4,670 31% EBITDA 687 1,445 110% Profit before Tax 445 1,223 175% Profit after Tax (excl.minority int) 431 1,175 172%

Financial Figs in Mn THB Production Qty includes only BOPET Film.

Financial performance:Q2 “2010-11”

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Q2 2009-10 Q1 2010-11 Q2 2010-11 QoQ% YoY% Production (PF+MF)-MT 26,917 28,267 27,619

• 2%

3% Total Revenues 1,747 2,133 2,561 20% 47% EBITDA 327 543 902 66% 176% Profit before Tax 211 431 792 84% 275% Profit after Tax (excl.minority int) 200 412 762 85% 280%

Financial Figs in Mn THB Production Qty includes only BOPET Film.

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Financial Performance – Historical Data

Financial Performance : Key Indicators

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• 0.10

0.20 0.30 0.40 0.50 0.60 0.70 0.80

• 1.00

2.00 3.00 4.00 5.00 6.00 7.00 2005-06 2006-07 2007-08 2008-09 2009-10 H1 2010- 11 DSCR Current Ratio D/E

D/E DSCR &

• C. Ratio

INDICATOR 2005-06 2006-07 2007-08 2008-09 2009-10 H1 2010-11 DSCR 2.46 2.76 3.35 3.14 2.69 5.73 D/E 0.44 0.46 0.69 0.72 0.57 0.42 Current Ratio 2.03 1.55 1.81 4.11 2.11 2.60

Financial Performance : Key Indicators

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• 1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 2005-06 2006-07 2007-08 2008-09 2009-10 H1 2010-11 T H B / S h a r e Book Value EPS (Annualised)

INDICATOR 2005-06 2006-07 2007-08 2008-09 2009-10 H1 2010-11 Book Value 4.34 4.39 5.39 5.72 6.24 7.41 EPS (Annualised) 0.70 0.43 1.02 1.30 1.30 2.94

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Capacity Utilization BOPET – Thailand

42,000 42,000 42,000 42,000 42,000 5,000 5,000 10,250 11,000 11,000 88% 95% 90% 97% 99% 71% 91% 67% 74% 81% 0% 20% 40% 60% 80% 100% 120%

• 6,000

12,000 18,000 24,000 30,000 36,000 42,000 48,000

Financial Year

Plain Film Metallized Film Plain Film Metallized Film

Capacity Utilization - Turkey

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29,000 29,000 54,375 58,000 58,000 5,000 5,000 10,250 11,000 11,000 81% 92% 74% 89% 91% 50% 83% 57% 72% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

• 6,000

12,000 18,000 24,000 30,000 36,000 42,000 48,000 54,000 60,000

Financial Year

Plain Film Metallized Film Plain Film Metallized Film

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Note: Above region wise break up is based on Sales Value for H1 2010 - 11 at Polyplex (Thailand) Consolidated level

• Significant presence in all leading markets
• The company’s sales reach in premium markets of Europe & North America validate company’s

strategy to set up manufacturing facility in Turkey and acquire the distribution company in the US - Judicious mix of On-shore, Off-shore and Near-shore strategy

• Well balanced region wise mix – no dependency on any single region

Sales Mix – Region Wise

EUROPE 39% North America 26% ASIA 24% THAILAND 9% ROW 2%

PTL Consolidated Sales - THB 4.54 Bn

EUROPE North America ASIA THAILAND ROW

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* Value added films include Chemically Coated films, Metallized Film (PET + CPP) and Thermal Laminated film which have higher value addition as compared with normal plain film.

Note: Above data is for PTL (standalone) based on Sales quantity

Sales Mix – Increasing Value Added Products

• BOPET Film Industry
• Polyplex group
• Polyplex Competitive Strength
• PTL : Financial Performance
• Current Industry Scenario & Outlook

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Contents

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Global BOPET – Disruption “Factors”

Market Developments

• Over the past few years demand has continued to grow despite the Economic

Crisis in 2008-09.

• There has been inadequate matching capacity addition (excluding China).
• Revival of demand post the economic crisis.

Structural changes :

• Closure of some old uneconomic lines
• Diversion of capacity from packaging to industrial segment as well as conversion
• f thin film lines into intermediate and thick films for new applications.
• Heightened anxiety with the convertors to develop alternative supply options

with a clear preference for onshore/ near shore suppliers. New applications

• Optical industry /Photovoltaic (PV) industry in Advanced World.

The above Factors have resulted in a tight supply situation of BOPET Films in 2010.

Demand 2010: Key Drivers

Consumer Staples

Packaging of food & personal products 2008 Q4 -- -- 2009 + 2010 ++

Consumer Discretionary

Automotive Electronics & Consumer durables 2008 Q4 -- -- 2009 -- 2010 ++

Industrial Segments

Existing 2008 Q4 -- -- 2009 -- 2010 + + New 2008 Q4 -- -- 2009 + 2010 + + +

Consumer staples: Less susceptible to economic cycles. Cash crunch during 2008 crisis & destocking in supply chain led to exaggerated “apparent” reduction in demand. Consumer discretionary: Demand dependant on consumer confidence. Grew steadily in pre recession period, slowed down in 2008-09, revived rapidly in 2010 with revival of consumer confidence especially in the emerging economies. Further aided by pent up demand Industrial Segments: Economic recovery & increased business confidence led to robust demand in 2010 . Boosted by new applications especially PV with 30% + growth

Supply 2010: Key Drivers

• Drastic reduction in “apparent” demand in Q4 2008 & Q1 2009.
• Due to fragmented nature of converting industry & diverse applications, poor

visibility of polyester film demand.

• Postponement of capacity additions due to perceived uncertainty of demand,

cash crunch, risk aversion & low business confidence

• Closure of old uneconomic capacities in Europe & USA
• Increased specialization leading to rationalization of product mix by some of

the industry leaders away from packaging film to other emerging application

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Industry Outlook

• The demand of BOPET in flexible packaging segment is

expected to grow at more than 10% CAGR .

• Polyplex's estimate of Global Demand supply situation of Thin

Film Segment till 2013 is as follows.

Particulars / Year 2010 2011 2012 2013 Demand 1,810 1,975 2,155 2,350 Capacity 1,810 1,890 2,100 2,390 Growth in Demand 165 180 195 210 Net Capacity Addition 80 210 290 180 Supply - Demand Situation (85) (55) 40 10 Shortage Shortage Excess Balanced

Calendar Year

Conclusion

• Industry Structure Shifts in Polyester film business.
• Our competitive position – Edge over competitors
• Industry attractiveness
• The uniqueness of polyester film business :

– Packaging – Green energy (PV), – High growth electronics (LCD/LED).

• Diversified application giving sustained growth with multiple of GDP.
• New high growth segments
• Minimal threat of substitution
• Concentrated Industry and Fragmented customer base.
• Centre of gravity of polyester film industry shifting to Asia
• Regional specialization of manufacturers to serve focused end use market

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Analyst Meet Nov’2010

Questions & Answers

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Analyst Meet Nov’2010

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Disclaimer

The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Polyplex (Thailand) Public Co., Ltd. Nothing in this release should be construed as either an offer to sell or a solicitation to buy or sell shares in any jurisdiction.

Analyst Meet Nov’2010

Thank you

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