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Disclaimer No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from Finolex Industries Limited, Chinchwad, Pune-411 019, India. Certain part of this presentation describing
No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from Finolex Industries Limited, Chinchwad, Pune-411 019, India. Certain part of this presentation describing estimates, objectives and projections may be a “forward looking statement” within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.
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Company at a glance 4 Business model 8 Investment proposition 9 Strategies & targets 10 Financial overview 12 Q3FY15 performance 16 Appendix 25
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India’s largest backward integrated PVC pipe manufacturer with a PVC pipe & fittings production capacity of 2.5 Lakh MT p.a. Backward integration –
Pan India distribution network through wide network of dealers, sub-dealers and retail outlets – 15,000+ touch points Superior brand recall due to high quality product offerings for Agriculture, housing, building & construction.
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Storage tanks for raw material PVC resin plant at Ratnagiri Extruder lines PVC resin storage section
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PVC pipe plant, Masar, Gujarat Extruders at the plant Storage area for PVC fittings
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Corporate office at Pune Branch Offices Works Dealers
Corporate Office: Finolex Industries Limited, D/10, M.I.D.C. Chinchwad, Pune Maharashtra PVC Pipe Manufacturing Unit Masar, Gujarat PVC Pipe Manufacturing Unit Urse, Pune, Maharashtra PVC Resin, PVC Pipe Manufacturing Unit & Captive Power plant at Ratnagiri, Maharashtra 1,30,000 sq.ft. warehouse facility exclusively for PVC Fittings at Chinchwad, Pune, Maharashtra. Warehouse facility exclusively for PVC Pipes & Fittings at Bhubaneshwar
Widespread network - No single dealer contributes more than 1% of the PVC pipe and fittings revenues.
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Key revenue driver – mainly PVC pipes and fittings segment, with steadily increasing in- house consumption of the PVC resin Market wise sales are distributed between Agriculture (70%) and Non-agri (30%). Non- agri is mainly construction Key cost components - EDC, Ethylene and VCM are key raw materials for PVC production – mainly imported from middle east Margins improvement initiatives are underway, however, raw material prices movement (on back of crude oil) does impact operating margins in PVC resin segment Operating under cash-n-carry model 0.9:1 debt equity ratio, with strong debt reduction plans over next few years
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Only 44% of agricultural land in India is under irrigation. Pipes industry is growing at about 10% CAGR. FIL’s PVC pipes & fittings volumes grew by 16% CAGR over last ten years Government’s focus on increasing irrigation and housing will help to keep the industry growth strong over the next 3-5 years Growing brand and quality consciousness – share of organized players to rise further Margins improvement initiatives – focus on increasing sales of higher margins products viz. fittings, column pipes, CPVC pipes Brown-field capex of FIL in pipes & fittings division only – to generate superior RoCE Plans to reduce debt to minimum levels over next three years
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Production capacity – Capex only to increase PVC pipes and fittings capacity with average 30,000 MT p.a. over FY15-FY17. Investment in brownfield capex at INR 300mn p.a. Building hub-n-spoke model – concentrated manufacturing facilities and plans to have multiple warehouses across India Initiatives on track to scale up share of fittings in sales mix to over 10% from 6-7% currently Reduce debts to minimum level by internal cash accrual – over next three years Leverage existing distribution network to launch various products in water management business
1. Advertisements on-the-move 2. Print Advertisements and TV commercials targeting Rural and Urban markets 3. Pipes display at an exhibition
1. 2. 3.
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Profit & loss account (INR mn) FY11 FY12 FY13 FY14 9MFY15 Net Income 19,777 20,998 21,448 24,530 16,915 Growth in sales (%) 35.9% 6.2% 2.1% 14.4% 4.8% EBIDTA before exceptional items 2,655 2,618 3,921 4,403 1,734 EBIDTA margins before exceptional items (%) 13.4% 12.5% 18.3% 17.9% 10.2% EBIDTA after forex gain/(loss) 2,490 2,472 2,960 3,705 1,229 PBT 1,150 967 1,902 2,419 290 PBT (%) 5.8% 4.6% 8.9% 9.9% 1.7% PAT 762 752 1,361 1,701 201 PAT (%) 3.9% 3.6% 6.3% 6.9% 1.2%
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Balance Sheet (INR mn) FY11 FY12 FY13 FY14 1HFY15 Equity and liabilities Share capital 1,240 1,241 1,241 1,241 1,241 Reserves and surplus 4,963 5,381 5,971 6,656 7,092 Long term borrowings 1,954 1,896 1,397 2,322 2,239 Short term borrowings (incl. loans repayable in one year) 5,512 8,528 6,997 4,812 5,293 Total borrrowings 7,466 10,424 8,394 7,134 7,531 Assets Fixed assets (Net block) 7,924 7,840 8,795 9,052 8,630 Capital WIP 722 854 506 325 269 Non current investments 1,221 1,221 1,274 1,274 1,274 Current investments 859 3,711 2,322 941 351
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8.4% 24.2% 4.7% 21.1%
0.0% 10.0% 20.0% 30.0%
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
RoE (%) RoCE (%)
1.0 1.5 0.9
0.4 0.6 0.8 1.0 1.2 1.4 1.6
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Net Debt:Equity (x)
1.2 2.8
0.5 1.0 1.5 2.0 2.5 3.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Fixed Asset Turnover (x)
1.8 5.3
1.0 2.0 3.0 4.0 5.0 6.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Working Capital Turnover (x)
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The sales volumes for PVC declined 13% YoY to 61,826 MT and pipes and fittings declined by 10% YoY to 38,856 MT in Q3FY15.
Particulars Q3FY15 Q3FY14 Variance breakup (INR Mn.) INR Mn. MT Rs./Unit INR Mn. MT Rs./Unit Volume Price Total PVC 3,664 61,826 59,263 4,911 71,238 68,938
PVC Pipes & Fittings 3,480 38,856 89,561 3,819 42,974 88,868
Power (Mwh) 175 11,418 346 40,884
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Particulars (INR mn) Q3FY15 Q3FY14 Q2FY15 Net Sales 6,429 6,599 3,859 EBIDTA before exceptional items (110) 1,180 445 EBIDTA margins (%)
17.90% 11.50% EBIDTA after exceptional items (388) 1,276 385 Depreciation 146 177 149 EBIT before exceptional items (256) 1,002 296 EBIT margins (%)
15.20% 7.70% Other Income 14 9 86 Interest 119 188 108 PBT (639) 920 215 PBT margins (%)
13.90% 5.60% Tax (201) 281 77 PAT (438) 639 137 PAT margins (%)
9.70% 3.60%
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The business performance in Q3FY15 was impacted due to multiple factors: Sharp drop in PVC prices from USD 1,000 i.e. Rs. 70,500 per MT in September 2014 to USD 780 i.e. Rs. 56,300 per MT in December 2014, resulted in inventory losses of around Rs. 100 crores. Comparatively, PVC prices were USD 1,050 i.e. Rs. 70,700 per MT in September 2013 and USD 1010 i.e. Rs. 68,100 per MT in December 2013. PVC/EDC spread further reduced to USD 455 per MT during Q3FY15 as against USD 662 per MT during Q3FY14. PVC prices (on back of crude oil prices) continuously drifted downward during Q3FY15, which put the dealers in wait-n-watch mode and to certain extent postponing purchase of pipes and
September 2014 to $54/bbl by end of December 2014. Captive power plant took longer than expected to resume operations. The company had to purchase power from grid, leading to higher cost of power by approx. Rs. 8 crores. The CPP has resumed operations from December 2015. Increase in other expenses by Rs. 9 crores, mainly due to current branding initiatives, plant maintenance, etc. Rupee depreciation during the quarter from Rs. 61.75 to Rs. 63.04 per dollar, the impact of which is approx. Rs. 14 crores.
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Source: IHF and ICIS chemical weekly reports
Lower spreads resulted in fall in margins
300 350 400 450 500 550 600 650 700 750 800 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15
PVC - EDC Delta $/MT
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Source: IHF and ICIS chemical weekly reports
103 97 93 97 97 102 100 103 105 100 93 92 81 67 54 46
25 50 75 100 125 150 Sep 29,2013 Oct 27,2013 Nov 24,2013 Dec 29,2013 Jan 26, 2014 Feb 23, 2014 Mar 30, 2014 Apr 27, 2014 May 25, 2014 Jun 29, 2014 Jul 27, 2014 Aug 31, 2014 Sep 28, 2014 Oct 26, 2014 Nov 30, 2014 Dec 28, 2014 Jan 25, 2015
Crude ($/bbl)
1035 1000 1010 1035 1055 1025 1055 1065 1050 995 975 900 780 810
700 750 800 850 900 950 1000 1050 1100 Sep 29,2013 Oct 27,2013 Nov 24,2013 Dec 29,2013 Jan 26, 2014 Feb 23, 2014 Mar 30, 2014 Apr 27, 2014 May 25, 2014 Jun 29, 2014 Jul 27, 2014 Aug 31, 2014 Sep 28, 2014 Oct 26, 2014 Nov 30, 2014 Dec 28, 2014 Jan 25, 2015
PVC ($/MT)
41% drop 22% drop
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Quarterly PL (INR mn) Q3 Q2 Q1 Q4 FY15 FY14 FY15 FY14 FY15 FY14 FY14 FY13 Net Sales 6,429 6,599 3,859 3,899 6,627 5,635 8,397 6,296 EBIDTA before exceptional items (110) 1,180 445 815 1,246 946 1,025 1,099 EBIDTA margins (%)
16.80% 12.20% 17.50% EBIDTA after exceptional items (388) 1,276 385 490 1,079 407 1,096 1,277 Depreciation 146 177 149 148 149 146 151 132 EBIT before exceptional items (256) 1,002 296 667 1,097 799 875 968 EBIT margins (%)
14.20% 10.40% 15.40% Other Income 14 9 86 172 52 194 62 43 Interest 119 188 108 122 268 137 217 82 PBT (639) 920 215 391 715 318 790 1,106 PBT margins (%)
5.60% 9.40% 17.60% Tax (201) 281 77 117 213 91 228 313 PAT (438) 639 137 274 502 226 562 793 EPS
5.1 1.1 2.2 4 1.8 4.5 6.4
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Segment wise – Quarterly Q3 Q2 Q1 Q4 Profit & Loss (INR mn) FY15 FY14 FY15 FY14 FY14 FY13 FY14 FY13 Segmental revenues PVC 3,664 4,911 2,076 3,245 4,139 3,627 5,347 4,555 PVC pipes & fittings 3,480 3,819 3,158 2,779 5,438 4,349 4,686 4,142 Power 175 346 293 406 353 450 443 546 Segmental profits PVC 456 711 124 379 597 424 494 605 % of Revenues
6.00% 11.70% 14.40% 11.70% 9.20% 13.30% PVC pipes & fittings 254 340 242 236 520 355 389 315 % of Revenues 7.30% 8.90% 7.70% 8.50% 9.60% 8.20% 8.30% 7.60% Power 41 31 9 103 62 97 113 166 % of Revenues
9.10% 2.90% 25.40% 17.60% 21.60% 25.50% 30.40% Capital employed PVC 7,221 7,806 7,277 7,400 8,480 8,203 7,775 7,462 PVC pipes & fittings 4,789 4,583 3,899 3,839 3,063 3,429 3,393 3,191 Power 2,650 2,696 2,512 2,743 3,098 3,464 3,131 3,151 Other segments 3,413 3,723 3,051 2,734 1,381 3,824 1,715 3,479
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46,399 51,506 53,840 29,489 42,974 50,596 58,239 31,644 38,856 10000 20000 30000 40000 50000 60000 70000 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15
Pipes & Fittings (MT)
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Emphasis on increasing irrigated area will boost pipe demand A roof for each family and call given for ‘Housing for all‘ by 2022 to provide 2 crore houses in urban areas and 4 crore houses in rural areas Measures like unified agricultural market, INR 8.5 lakh crore target for farm loans and investment in rural infrastructure to further benefit the company Basic custom duty on EDC and VCM reduced to 2% from 2.5% Cess on coal imports increased from INR 100 per MT to INR 200 per MT Corporate tax to be gradually reduced from 30% to 25% over four years.
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Domestic PVC pipe demand = ~17,00,000 MT Organized Market = 60% ~10,20,000 MT Un-organised market = 40% ~6,80,000 MT Finolex Industries Limited = 2,50,000 MT Others
~ 25% of the
Internationally acclaimed Environment management system under ISO 14001, in place at the Ratnagiri plant. Achieved the goal of Zero effluent discharge at the Ratnagiri plant Planted and nurturing 49,000 trees within the Ratnagiri premises Awarded with “Certificate of Merit – believers Category” by “Frost and Sullivan's Green Manufacturing Excellence Award 2014” for Golap, Ratnagiri plant Won Bronze trophy in the National Safety Council Awards Competition 2013 for the PVC manufacturing plant at Ratnagiri
Plantation at the Ratnagiri plant premises 28
Providing English education at nominal cost to over 480 children at Mukul Madhav Vidyalaya, Ratnagiri Started extending financial assistance and support to Prathamik School and Girdhar Vidhyalaya at Masar, Gujarat ’The Finolex Women’s Well Being Clinic’ at Ratnagiri, provides quality health care services to underprivileged women. Under Rashtriya Gramin Peyajal Yojana’ helped the Gram Panchayats of various villages in Maharashtra to make potable drinking water available to villagers from a well by providing pumps, pipeline and water tanks to villagers and also extended financial help for repair charges, electricity bills etc. Many more initiatives are regularly undertaken by the company as a responsible corporate citizen
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Disclaimer: All product names, logos, and brands are property of their respective owners
‘Excellence in CSR’ award by Amity Global School Honoured by World Economic Forum (WEF) as amongst the ‘Global Growth Companies – 2014’ (in South Asia) Chosen as one of Asia’s 100 Best Marketing Brands by the WCRC Leaders Asia magazine Listed by The Economic Times as one of 10 mid sized Companies (out of ET500) with high growth potential Entered BSE ‘A’ group
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Finolex Industries Limited D-1/10, M.I.D.C. Chinchwad, Pune 411 019 Contact No.: 020 2740 8200 S-Ancial Advisors Pvt. Ltd. 503, Gundecha Chambers, Nagindas Master Road, Fort, Mumbai 400 001 Email: fil@s-ancial.com Contact No.: 022 6635 1004/5
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