Phillips Carbon Black Limited We Touch Lives Every Moment Investor - - PowerPoint PPT Presentation

1

Phillips Carbon Black Limited

Investor Presentation February- 2018 We Touch Lives Every Moment

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

Part of a Dynamic Conglomerate….

• Global CB demand is approx. 13 mn tonnes
• Largest 10 players held 63% of total global sales
• 93% of CB demand linked with tyre and rubber industry

3

Carbon Black Industry

What is Carbon Black ?

• Pure elemental carbon in the form of black powder
• Produced by thermal decomposition of gaseous or liquid

hydrocarbons under controlled conditions

• Largest application - reinforcing agent in tyres
• Its unique properties make it useful for pigmentation, UV

stabilization and also as a conductive agent

• Performance is related to properties of specific surface

area, particle size and structure, conductivity and colour

Global Overview

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People 3

Company Overview

• Largest in India and 7th largest globally by volume
• Well spread product mix:
• Rubber Carbon Black
• Non Rubber incl Specialty Carbon Black
• Co-generation power plants at each locations
• Over 58 years of rich experience in the industry
• Comprehensive global reach to customers in more

than 30 countries

• Seamless capability to switch over various feedstocks

4

Carbon Black Business Segmentation

Enhancing focus on High Performance Rubber black and Specialty Carbon Black

• End market demand remains strong
• Large volumes, sold directly to global tyre producers
• In rubber applications, CB provides reinforcement and

improves resilience

• Non tyre rubber constitutes 20% of global CB demand

Rubber Carbon Black Tyre Carcass Tyre Tread Non Rubber Carbon Black Pure Specialty

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

• Advanced technology driven specialty carbon

black manufacturing

• High margins relative to Rubber
• Non rubber CB functions as a pigment
• Non Rubber constitutes 7% of global CB demand

5

Manufacturing

Market Share of PCBL:

• Over one-third of domestic consumption
• Largest exporter of Carbon Black from India
• 10% of Asian market excl China

Capacity (KTPY)

Capacity Utilisation

77% 82% 94% 0% 20% 40% 60% 80% 100% 120% FY15 FY16 FY17

Location CB (MT) CPP (MW) Durgapur, W.Bengal 1,57,000 30 Mundra, Gujarat 1,53,000 24 Palej, Gujarat 1,05,000 12 Kochi, Kerala 1,00,000 10 Total 5,15,000 76

Current Capacity

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People 515 315 120 85 100 200 300 400 500 600 PCBL SKI India Himadri CCIL

Global Reach with Regional Expertise….

6

• Four manufacturing facilities located near port
• Presence in 30+ countries
• Warehouse/Decanting Stations near customers
• Recipient of “Top Exports” award from AIRIA for

last 5 consecutive years SAUDI ARABIA UAE TURKEY IRAN

Middle East Europe Asia Americas Africa

NIGERIA ETHOPIA KENYA SOUTH AFRICA BRAZIL PERU CHINA PHILLIPINES HONG KONG SINGAPORE NEPAL KOREA ISRAEL TAIWAN JAPAN THAILAND MALAYSIA VIETNAM INDONESIA BANGLADESH SRI LANKA A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

….With Strong Brand Recall

7

R&D

Customers

PCBL Brand

• Over 50 grades across

rubber and non rubber black

• Driving

application innovation with customers

• Focus
• n

high performance rubber and specialty carbon black

• Seamless

capability for multiple feedstock

• Diversified

sourcing

• f

feedstock

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

Tyre Demand in India Growing Rapidly

8

• Tyre Industry in the last 5 years has outperformed

the growth of automobile production on back of higher demand from replacement market

• In FY16 registered vehicle stood at 200 mn against

24 mn annual vehicle sales Automobile Production Vs Tyre Production (Mn Units) Tyre Industry - key growth driver for Carbon Black

Source: SIAM and ATMA Source: Edelweiss Research

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

• India and Thailand witnessing highest investments in

the tyre segment within the Asia-Pacific region excl. China

• Utilisation levels will go up as demand outstrips supply

addition

20 22 23 24 25 26 27 30 35 123 129 146 152 157 165 180 192 210 50 100 150 200 250 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E Automobile Production Tyre Production

Competitive Raw Material Prices

9 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

• Chinese carbon black manufacturers predominantly use CBO as a raw material which is a by product of steel

manufacturing process

• CBO prices rallied in 2017, almost tripling since the levels in November 2016
• Electric arc furnace technology steel production to increase while blast furnace technology production to

decrease

• Supply of Coal tar is likely to go further down

Widening spread between CBO and CBFS

100 200 300 400 500 600 700 800 CBFS CBO

$/MT

10

Volume Growth..

Capacity Expansion Plans

• Additional capacity 30,000 tonnes through debottlenecking in FY18
• Brownfield expansion of 80,000 tonnes with an investment of Rs 300 crs by FY19
• Greenfield expansion of regular carbon black in South India

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

(KT)

472 43 80 120 715 100 200 300 400 500 600 700 800 900

Cuurent Debottlenecking Brownfield Greenfield Total

PCBL’s CB Production Trend

(KTPA)

289 312 332 383 100 200 300 400 FY14 FY15 FY16 FY17

11

Increasing focus on Non Rubber application

• Non Rubber carbon Blacks are higher margin products
• PCBL is India’s leading manufacturer of Specialty blacks
• Focus
• n

increasing penetration in Non rubber segment

• Ramping up specialty portfolio to reduce India’s

dependence on imports

• Moving up value chain to cover more than 90 % of

product basket in plastic application ( largest market segment )

• Inhouse R&D to develop new grades for ink and paint

applications

Rubber, 91% Non Rubber, 9%

Sales Volume Revenue

Rubber , 88% Non Rubber , 12% A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

Accelerating Contribution by Power Segment

FY15 FY16 FY17 CB Production (MT Lakhs) 3.12 3.32 3.83 Power Generation (MU) 342 372 484 Power Export (MU) 199 225 304

Approximately 35% of power generated is used to meet captive requirement, balance 65% is exported to grid Increasing efficiency and CB production volume has been driving growth of power revenue

12

10 20 30 40 50 60 70 80

Durgapur Mundra Palej Kochi Total

30 24 12 10 76

Power Capacity Across Plants (MW) Power Segment Performance (Rs Crs)

69 77 81 49 45 51 30 60 90 FY15 FY16 FY17 Power Sale Power EBITDA A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

13

15% CB Sales Volume Growth 40% EBITDA Growth 242% PBT Growth Rs 20 EPS

As per FY17

Growth Driven by Sustained Performance….

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

14

… Resulting from Strong Business Metrics

2.1 2.4 1.7 0.7 0.5 1 1.5 2 2.5 FY14 FY15 FY16 FY17

Net Debt /Equity

105 210 215 305 5% 9% 11% 16% 0% 5% 10% 15% 20% 100 200 300 400 FY14 FY15 FY16 FY17 EBITDA (Rs Crs) EBITDA Margin (%)

EBITDA and EBITDA margins

• 88

14 46 166

• 100
• 50

50 100 150 200 FY14 FY15 FY16 FY17

PBT

• 1%

8% 9% 15%

• 5%

0% 5% 10% 15% 20% FY14 FY15 FY16 FY17

Return on Capital Employed

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

15

Q3FY17 Q3FY18

487 74 15 4.3 16.4 616 108 57

Growth is a Process…. …. We Reinforce it with Endeavour

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

443 317 211 777 707 549 200 400 600 800 1000 1200 1400 FY15 FY16 FY17 Long Term Debt Working Capital Debt 1219 1023 759

Borrowing Position

16

• Reduced leverage with increase in cash flow and improved working capital management

92 72 51 64 35 28 40 80 120 160 FY15 FY16 FY17 Interest Cost Hedging Cost 79 155 107 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

Strong Financial Performance

17

FY16 FY17 9MFY18 9MFY17 Total Income 2,132 2,150 1803 1383 Raw material cost 1,291 1,221 1159 886 Other Expenses 624 624 333 287 EBITDA 217 305 311 210 Finance Cost (incl hedging cost) 107 79 50 67 Depreciation 62 60 45 45 PBT 48 166 216 98 Tax Expenses 31 96 61 61 PAT 17 70 155 37

Rs Crs

48% EBITDA Growth 319% PAT Growth

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

YTD YoY Change

18

To Summarise: Factors Building Our Future

Specialty and High Performance Product Mix Manufacturing Efficiency & Optimization Long Lasting Relationship with Major Tyre Customers Strong Customer Reach: Warehouse/Decanting Stations near Customers Robust Financial: Low Borrowings Maximizing Benefit from Industry Growth

A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People

Thank You

19 A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People