INVESTOR PRESENTATION HINDCON CHEMICALS LIMITED HEM SECURITIES LTD. - - PowerPoint PPT Presentation

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HEM SECURITIES LTD.

AWARD WINNING MERCHANT BANKER

INVESTOR PRESENTATION HINDCON CHEMICALS LIMITED

COMPANY OVERVIEW 2

Company Name Hindcon Chemicals Limited Registered Office Kolkata, West Bengal Factory Howrah, West Bengal Date of Incorporation August, 25 1998 Exchange NSE – EMERGE Industry Chemicals

• Incorporated on August 25, 1998 and since then company is engaged in manufacturing of chemicals

particularly for construction industry. They offer a wide range of chemical products which finds variety of applications in the construction sector.

• In F.Y. 2016-17, their net revenue of operations comprised of Rs. 33.94 Crore of which 32.14% comprises of

export sales to Nepal, Bhutan and Bangladesh.

• Company have developed a wide portfolio over 100 products which has made them one stop shop provider of

construction chemicals. Product portfolio includes Protective waterproofing coatings, Sodium Silicates, Concrete & mortar admixtures, Epoxy grouts & mortars, Waterproofing compounds, Shot crete aids, Remover cleaning compounds, Sealants, Tile adhesives etc.

• Company is also involved in a continuous process of modifying their products to eliminate any harmful

ingredient so as to serve the society with echo-friendly finished materials. As a result of these measures, Company will be able to increase its market share and profitability.

• Companies' manufacturing facility is located at Howrah, West Bengal which has an existing installed capacity
• f 30,000 MT per year.

PROCESS FLOWCHART 3

FURNACE SODIUM SILICATE GLASS LOADED IN DIGESTOR WITH WATER FILTER TANK PROCESSING TANK Mixing Of Raw Material QUALITY CHECK PACKING DISPATCH TO CUSTOMER

OBJECTIVES OF THE ISSUE 4

OBJECTS AMOUNT ALLOCATED IN RS. For Meeting Working Capital Requirements 5.38 Cr For Meeting General Corporate Expense 1.60 Cr For Meeting Public Issue Expense 0.74 Cr Issue Proceeds 7.73 Cr

ISSUE HIGHLIGHTS 5

IPO DETAILS Issue Size (No of Share) 27,60,000 Fresh Issue (No of Share) 27,60,000 Issue Size In Rs 7.73 Cr Face Value Rs.10 Issue Price

• Rs. 28

Post Issue No Of Share 1,02,38,125 Post Issue Paid Up Capital 10.24Cr Post Issue Implied Market Cap 28.67 Cr SHARE HOLDING PATTERN PRE IPO POST IPO Promoter Holding 85.13% 62.18% Public Holding 14.87% 37.82% BID LOT RII 4000 Other Then RII 8000 & in multiples of 4000 thereof ISSUE OPENS 26 February 2018 ISSUE CLOSES 28 February 2018 LISTING ON NSE Emerge LEAD MANAGER TO THE ISSUE Hem Securities Limited REGISTRAR TO THE ISSUE Link Intime India Private Limited RESERVATION FOR NO OF SHARE Market Maker 1,44,000 RII 13,08,000 Other Then RII 13,08,000 NO OF SHARES Pre Issue 74,78,125 Post Issue 1,02,38,125

PRODUCT PROFILE 6

Products Features Water Proofing Compounds They are used for plastering of walls, tanks, instant leak plugging, rapid hardening for basement and tunnels, stop running water from walls, dams etc. Concrete & Mortar Admixtures This is used for concrete floor slabs, foundation, columns, beams, ceilings, shotcreting etc. Concreting Aids This is used for shutter release agents for steel & wooden framework before concreting for high strength concreting, to prevent corrosion anodically as well as cathodically, for protection of reinforcement embedded in concrete. Sodium Silicate This is used as a binder in soap, as a paste in Card Board, as a quoting in electrodes have different uses in textile, Pharmaceuticals, Dams, Canals, Road, & Water Proofing.

PRODUCT PROFILE 7

Products Features Protective & Waterproofing Coating / Sheeting The uses include prevention of corrosion of all types, to arrest seepage and dampness, waterproofing for roofs, gardens, pool, to provide coating for insulating solar heat, used over concrete substrates as primer for waterproofing, long lasting protection of stone. Grouts & Repairing Mortars This is used for injection into cracks in concrete to stop flow

• f moving water and for filling up the wall and floor joints in

residential and building structures. Shot Crete Aids This products is used as accelerating admixture for dry shotcreting. Floor Toppings This is used for concreting floors, anti skid warehouse, runway, heavy traffic areas, for coating before applying high build epoxy coating on steel & concrete surfaces.

PRODUCT PROFILE 8

Products Features Sealants This is used as sealants for fine cracks in structural membranes, tile joints, metal joints, holes, for sealing of vertical & horizontal expansion joints, Tile Adhesives They are used for permanent fixing of ceramic tiles/marble, vitreous, semi-vitreous tile, porcelain, glass mosaic tiles, precast terrazzo, engineered stone and natural stones over concrete. Epoxy Grout & mortar They are used for pressure injections into concrete, as primer on cement, stone, concrete, fixing insert plates, foundation bolts, tie bars, food processing plants, interior verticals. Foundry Aid This product is used for concrete admixtures, pesticides, foundries, leather tanning, drilling fluid and mud and paper cutting chemicals.

PRODUCT PROFILE 9

Products Features Coating/ Impregnation This product is used to get exposed aggregate finish on concrete face. Remover / Cleaning Compounds This is used to remove rust from steel reinforcement, and

• ther steel section embedded in concrete.

Expansion & Contraction Joint System They are used in construction and cold joints, water retaining structures, water retaining structures, tunnel, sewage treatment plant.

CLIENTELE STRENGTH 10

STRONG MANAGEMENT TEAM 11

• Mrs. Nilima Goenka, Executive Director, Promoter
• She has over 20 years of experience in Administration and Human Resource

Management.

• She is entrusted with the responsibility to oversee administration and Human

Resource function in the Company.

• Mr. Sanjay Goenka, Managing Director, Promoter
• He has over 25 years of experience in the business of construction chemicals and

cement additives.

• He had been awarded with “National Award – 2010” in the year 2011 from

Ministry of Micro, Small & Medium Enterprises for Outstanding Entrepreneurship.

• He has played a pivotal role in setting up of business of Company and is responsible

for the overall management and expansion of Company.

INDUSTRY OUTLOOK 12

• Construction industry in India is growing in excess of 16% p.a. and is likely to reach $ 100 billion by the

end of the XIIth Five Year Plan period.

• The construction chemical industry in India accounts for only 0.4% of the total construction spend and

has a potential of reaching 1% which is the norm in developed economies.

• The key products for this sector would be in the areas of painting and coating materials, reinforcing

fibers, admixtures and other construction chemicals.

• The key success factor for construction chemical industry would be developing products and adopting

advanced coating, ceiling and reinforcing material like polyurethane base coating, silicone base and polymer base re-enforcing material.

• Compared to the developed world (The US, Europe) or China, the current penetration of specialty

chemicals within India’s end markets is low. With an increased focus on improving products, usage intensity of specialty chemicals within these end markets will rise in India over the next decade.

• Government target to increase the share of manufacturing in GDP to at least 25% by 2025 (from current

16%). Investments in manufacturing in the chemical sector are absolutely essential to ensure growth of the Indian chemical industry. Government's proposal to set up of a technology up-gradation fund of ~USD 80 Mn in the 12th plan for chemicals.

COMPETITORS ANALYSIS 13

Face Value EPS PE RONW (%) NAV Per Share Pidilite Industries Limited 1 17.07 51.85 24.80 75.95 BASF India Limited 10 51.53 41.11

• 1.11

294.48 Hindcon Chemicals Limited 10 5.46 6.55 13.76 176.63

• 10

20 50 80 110 140 170 200 230 260 290

REVENUE STATEMENT 14

Particulars Amount In (Rs. Cr) As At 30-09-2017 31-3-2017 31-3-2016 31-3-2015 31-3-2014 Revenue 17.27 33.94 33.36 34.91 30.89 Expenditure 14.76 30.38 31.25 33.44 29.67 Operating Profit 2.51 3.56 2.11 1.46 1.22 Operating Profit Margin % 14.53 10.50 6.32 4.19 3.95 Other Income 0.86 0.31 0.10 0.06 0.09 Depreciation 0.07 0.18 0.21 0.27 0.14 EBIT 3.30 3.69 1.99 1.26 1.17 Interest 0.35 0.61 0.68 0.75 0.65 PBT 2.94 3.07 1.31 0.51 0.52 Tax 0.75 1.02 0.44 0.16 0.16 PAT 2.19 2.06 0.86 0.34 0.36 NPM % 12.67 6.07 2.58 0.99 1.17

BALANCE SHEET 15

Particulars Amount In (Rs. Cr) As At 30-09-2017 31-3-2017 31-3-2016 31-3-2015 31-3-2014 31-3-2013 LIABILITIES Share Capital 7.48 1.50 1.50 1.50 1.50 1.50 Reserves & Surplus 9.56 13.36 11.30 10.44 10.10 9.75 Net worth 17.04 14.85 12.79 11.93 11.59 11.25 Non Current Liabilities

• Long Term Borrowings

0.005 0.02 0.05

• 0.006

0.10

• Deferred Tax Liabilities

0.003 0.001

• Long Term Provision

0.01

• 0.003

Current Liabilities 12.5 10.75 11.39 13.25 9.07 10.08 Total Liabilities 29.56 25.62 24.23 25.18 20.67 21.43 ASSETS Non Current Assets

• Fixed Assets

1.06 1.11 0.92 0.93 0.99 1.13

• Non Current Investments

2.99 1.2 1.05 0.67 0.54 0.5

• Long Term Loans and Advances

0.41 0.41 0.38 0.14 0.1 0.03

• Deferred tax assets (Net)

0.07 0.06 0.06 0.04

• Other Non Current Assets
• 0.07

0.03 Current Assets 25.03 22.84 21.82 23.4 18.97 19.74 Total Assets 29.56 25.62 24.23 25.18 20.67 21.43

FINANCIAL RATIOS 16

Particulars

For Year Ended 31st March 30-09-2017* 2017 2016 2015 2014 Return on Net worth (%) 12.84 13.86 6.74 2.89 2.98 EBITDA Margin (%)

14.53 10.50 6.32 4.19 3.95

Current Ratio 2.00 2.12 1.92 1.77 2.09 Restated Basic and Diluted EPS 2.93 2.75 1.15 0.46 0.46 Net Asset Value Per Share (in Rs.) 22.79 99.32 85.55 79.78 77.50

*Figures are not annualized.

STRONG GROWTH IN REVENUE 17

2014 2015 2016 2017 Revenue 30.89 34.91 33.36 33.94 28 29 30 31 32 33 34 35 36

Revenue Trend

In Rs Crore

STRONG GROWTH IN EBIDTA 18

2014 2015 2016 2017 EBIDTA 1.26 1.47 2.1 3.55 0.5 1 1.5 2 2.5 3 3.5 4

EBIDTA

In Rs Crore

STRONG GROWTH IN PAT 19

2014 2015 2016 2017 PAT 0.36 0.35 0.87 2.05

0.5 1 1.5 2 2.5

PAT

In Rs Crore

STRONG FINANCIAL PERFORMANCE 20

Revenue Profit After Tax

2.38% 54.48%

CAGR (4 Years FY 14 – FY 17)

EBITDA

29.56%

INVESTMENT RATIONALE 21

Valuation: Company is bringing the issue at a P/E multiple of 6.55 on post issue annualized H1FY18 EPS, at a price of Rs 28/- per Share while peers like Pidilite Industries, BASF, Gillanders Arbhuthnot & Co are trading at P/E multiple

• f more than 30.

Wide range of products: Co’s product portfolio includes Protective waterproofing coatings, Sodium Silicates, Concrete & mortar admixtures, Epoxy grouts & mortars , Waterproofing compounds ,shot crete aids ,remover cleaning compounds ,Sealants, tile adhesives etc. Strong Client Base: Company’s clientele include names like Larsen & Toubro Ltd, Gammon India Ltd, BGR Energy Systems Ltd, Hindustan Construction Company Ltd, Jaiprakash Associates Ltd, Patel Engineering Ltd, SEW Infrastructure Ltd. Awards & Recognitions: Company has received award for outstanding Export Performer at the 13th Federation of Small & Medium Industries(FOSMI) Award programme held in year 2015 and 1st prize in the category of “Outstanding Industrial Enterprise” at the 11th Federation of Small & Medium Industries (FOSMI) Award programme held in year 2012. Company has also received 3rd prize in the category of “Outstanding Industrial Enterprise” at the 10th Federation

• f Small & Medium Industries (FOSMI) Award programme held in year 2010.

Certifications: Company is ISO 9001: 2015 and ISO 22716 : 2007 accredited and has obtained licence from Bureau of Indian Standards to use the Standard Mark IS 9103 : 1999 for Concrete Admixture, Super Plasticiser Type –tiles etc.

REACH US 22

Disclaimer: * For additional information & risk factors please refer to Prospectus.

• This document is provided for assistance only and not intended to be taken alone for the basis for an investment decision.
• Our presentation/proposal may include predictions, estimates, management opinions or other information that might be considered

forward-looking. These forward-looking statements represent our current judgment on the future, they are subject to risks and uncertainties that could cause actual results to differ materially. Such forward-looking statements are subject to risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements.

• Hem Securities Limited will not be in any way responsible for any action taken based on such statements and undertakes no
• bligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

THANK YOU

A – 904, Naman Midtown, Senapati Bapat Marg, Elphinstone Rd, Lower Parel, Mumbai - 400013 Tel: +91 - 22 – 4906 0000 Email ID: ib@hemsecurities.com Website: www.hemsecurities.com HEM SECURITIES LTD.

AWARD WINNING MERCHANT BANKER

‘VASHUDHA’ 62 B, BRAUNFELD ROW, KOLKATA-700 027 Tel: 9133 24490835 / 39 Website: www. hindcon.com