Packaging Films

Report
SRF Limited
Investor Presentation
September 2014
Diversity. Innovation. Performance
Disclaimer
Certain statements in this document may be forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties like
regulatory changes, local political or economic developments, and many other
factors that could cause our actual results to differ materially from those
contemplated by the relevant forward-looking statements. SRF Limited will not
be in any way responsible for any action taken based on such statements and
undertakes no obligation to publicly update these forward looking statements
to reflect subsequent events or circumstances.
2
Contents
Overview
Business Segments
Consolidated Snapshots
Outlook
Other Milestones
3
Overview
Overview
History & Heritage
Our legacy since 1889
Known as one of India’s respected
business houses
Winner of Deming Prize
Group known for
philanthropic work
2004: Tyre Cord Business
Run and manage some of the premiere
2012: Chemicals Business
academic institutions of India
5
Overview
Operations
SRF is
• A multi-business manufacturing entity
• An Indian multinational
• Engaged in the manufacture of chemical based
industrial intermediates
9 plants in India
4 plants abroad
6
Overview
Business Leadership
SRF has been one of the early players in India to enter:
Nylon tyre
Belting
Coated
cord fabrics
fabrics
fabrics
Specialty chemicals
Refrigerants
•
Engineering
plastics
First and the only company in India so far to have developed
technology to manufacture R-134a, an ozone friendly refrigerant
•
The only manufacturer of polyester tyre cord fabrics in India
7
Overview
Global No. 2
Domestic Market
Leader
Market Rankings
Belting fabrics
Tyre cord
Refrigerants
Domestic No. 2
Nylon 6 tyre cord fabrics
Belting
fabrics
Engineering
plastics
Fishnet
twine
Specialty
chemicals
Packaging films
8
Overview
Revenues
Global Workforce
Consolidated, FY14 figures in $ million rounded off
At a Glance
EBIT
No of Countries with
Manufacturing Plants
as on 31st March 2014
No of Business Segments
No of Countries Exporting
to
9
Overview
Technical Textiles
•
Chemicals & Polymers
Packaging Films
Fluorochemicals
Tyre cord fabrics
•
•
(nylon & polyester)
•
Business Profile
Films for Flexible Packaging
Refrigerants
•
Chlorinated solvents
Polyethylene
Belting fabrics
•
Coated fabrics
•
Laminated fabrics
•
Industrial yarns
Revenue
Operating Profit
Number of Plant Locations
Consolidated, FY14 figures in $ mn
Terephthalate (BOPET)
Specialty Chemicals
•
Bi-axially Oriented
•
Organic intermediates
Bi-axially Oriented
Polypropylene (BOPP)
Engineering Plastics
•
363.3
27.2
7
Polymer compounds
Revenue
Operating Profit
Number of Plant Locations
159.3
31.8
4
Revenue
147
Operating Profit
-0.8
Number of Plant Locations
4
10
Overview
Shareholding Pattern
Shareholding Pattern (05th Sep’14)
DII
13.6%
FIIs 10.7%
Promoters
52.4%
Public 17.7%
Prominent Shareholders
% of total
capital
DSP Mutual Fund
4.21
Sundaram Mutual Fund
3.98
UTI Mutual Fund
3.39
Government Pension Fund Global
2.26
Amansa Capital
1.53
LSV Emerging Equity Fund
1.15
Corporate
Bodies 5.5%
11
Overview
Commences production of
nylon engineering plastics
1970
Incorporated as
Shri Ram Fibres
Commenced
operations of
nylon tyre cord
at Manali
Shri Ram Fibres
renamed as SRF Ltd
Commenced production
of coated fabrics
1979
1974
Path of Progress
1990
1986
1983
1989
Commissioning of Belting
Fabrics facilities
Entered Chemicals Business
with production of refrigerants
New Chemical
Complex
partly
commissioned
at Dahej,
Gujarat in
India
Ventured into
Packaging Films
Business
2012
1995
Set up
facilities in
Thailand and
South Africa in
the Packaging
Films Business
2013
2008
Made 2 overseas acquisitions,
one for tyre cord plant in
Thailand, the other one for
belting fabrics in South Africa
12
Overview
Business Evolution
Relative Composition (in %) of Businesses
FY11 Revenue*
$579 mn
FY14 Revenue
$670 mn
Successful
Transformation:
Multiple business
Technical Textiles
53.5%
309.3mn
54.2%
363.3mn
entity with focus
on knowledge
based industries
Chemicals & Polymers
21.4%
124.5mn
23.7%
159.3mn
Packaging Films
25.0%
145.2mn
21.9%
147mn
*FY11 : Chemicals & Polymers revenues include $22.8 mn from CER’s
13
Overview
Growth Levers
Nurture innovation
through R&D
Focus on building
leadership businesses
Build and
Reposition
maintain market
portfolio towards
leadership in
business
segments
Build a Company
knowledge based
products
known and
respected for its R&D
Continue to build
new competencies in
the chemical
technology space
Focus on building knowledge
based value-added products
capabilities
De-risk from
Technical Textiles
Business
Drive growth in
new businesses
14
Overview
Leadership Team
Mr. Arun Bharat Ram
Chairman
Mr. Ashish Bharat Ram
Managing Director
Mr. Kartik Bharat Ram
Dy Managing Director
Mr. Rajdeep Anand
President (CTG)
Mr. Sushil Kapoor
President & CEO (TTB)
Mr. Rajendra Prasad
President & CFO
Mr. Prashant Mehra
President & CEO (PFB)
Mr. Anurag Jain
President & CEO (SCB)
Mr. Suresh Kannan
President & CEO (BF, CF & LF)
Mr. Ajay Chowdhury
President & CHRO
Mr. Prashant Yadav
President & CEO (FCB & EP)
Mr. Sanjay Chatrath
President & CEO (TCF)
15
Technical Textiles
Chemicals & Polymers
Business Segments
Packaging Films
Technical Textiles
Chemicals & Polymers
Packaging Films
Nylon Tyre Cord
Fabrics
Despite increase in radialisation of bus & truck tyre segment, the demand for
NTCF is expected to remain stable on account of growth in Tractor, 2 wheeler
and OTR tyre segments
Continues to be the domestic market leader and ranked world Number 2
in Nylon 6
Free cash flow generating business, no major investments anticipated
Four facilities located in India and one in Thailand with a total capacity of
nearly 50 KTPA Nylon 6 yarn and around 60 KTPA conversion
17
Technical Textiles
Chemicals & Polymers
Packaging Films
Polyester Tyre
Cord Fabrics
Global surplus in PTCF leading to lower realisations; yarn developed
for alternate applications
The only manufacturer of polyester tyre cord fabrics in India
18
Technical Textiles
Chemicals & Polymers
Packaging Films
Belting Fabrics
Largest manufacturer of belting fabrics in India and second
largest in the world; domestic market share ~60%
Segment reporting healthy performance; anticipated
improvement in infrastructure sector to provide further boost
Facilities located in India and South Africa
19
Technical Textiles
Chemicals & Polymers
Packaging Films
Coated Fabrics
State-of-the-art coating line offers PVC coated fabric with
Acrylic / PVDF finishes and polyurethane coated fabrics
Integrated manufacturing facility from polyester yarn to
fabricated articles
Economic slowdown has impacted performance – operating
at low utilisation levels
20
Technical Textiles
Chemicals & Polymers
Packaging Films
Laminated
Fabrics
Laminated fabric is a combination of a polyester fabric with a film
(PVC or another) on either or both sides
Lower advertising spends on account of slowdown has led to
subdued demand
New modern facility in Uttarakhand, India
21
Technical Textiles
Chemicals & Polymers
Packaging Films
Key Highlights
Revenues
356.5
354.7
Operating Profits
363.3
30
309.3
FY11
FY12
FY13
FY14
$ million
FY11
27.2
19.2
20.5
FY12
FY13
FY14
$ million
Tyre Cord Sales Trend
(in MTs)
61,170
•
with stable contribution to overall
59,403
55,219
revenues and profitability
51,668
•
FY11
FY12
Free cash flow generating business
FY13
No further investments anticipated
FY14
22
Technical Textiles
Chemicals & Polymers
Business Segments
Packaging Films
Technical Textiles
Chemicals & Polymers
Packaging Films
Fluorochemicals
Business
Refrigerant portfolio consists of R-22, R-134a and
HFC blends: R-410A, R-404A and R-407C
Over 40% share of the
Indian market besides being
well accepted worldwide
Only manufacturer
of R-134a in India
Global distribution
network, well positioned to
service the international
Global size capacity for
market, witnessing
R-134a with two
favorable industry
manufacturing facilities in
dynamics
India
24
Technical Textiles
Strong knowledge of Fluorination
and other halogen chemistry along
with concerted focus on R&D led
to development of complex Organofluorine compounds
Packaging Films
Specialty Chemicals
Business
More than 25 years of
experience handling fluorine
molecules; one of the most
hazardous chemicals
Team of over 200 employees
covering R&D, pilot projects and
engineering design
Aimed at meeting
demands of Pharma and
Agrochemical industry
Success in commercialisation of over 20
molecules; over 50 molecules at various
stages of development
IPR and knowledge oriented
business; unmatched in India and
unique advantage over low cost
manufacturers in China
Multi product
Chemicals & Polymers
Customer requirements drive process
development through in-house R&D and
engineering design; IPR of the process with
SRF for in-house developed processes
:
Multi customer
:
Multi application
Cross selling amongst existing and new customers
25
Driving Innovation through R&D
•
Developing
since 2003
internal
competencies
and
capabilities to create breakthrough process
innovations
•
Equipped
facilities
with
and
state-of-the-art
an
ingenious
R&D
team
of
scientists and technologists
•
2 R&D centres in India
•
Focus on developing new processes and
technologies
•
39 patents filed till date
26
Technical Textiles
Chemicals & Polymers
Packaging Films
Chemical Complex
at Dahej
•
Presently developing 126 acres out of
293 acres in Phase I
Operational
Units
•
Facilities to produce multiple products
with focus on fluorochemicals and
specialty chemicals
o
Five Specialty
Chemicals plants
o
New Global Scale
HFC 134a plant
Announced investments aggregating
more than $ 275 mn till date
o
One Chlorinated
Solvent Plant
o
Total capitalisation in excess of $ 212 mn
o
o
Announced capex includes investments in 2
plants for Specialty Chemicals approved in
the current FY
15 MW Captive
Power plant
•
•
•
 $ 23 mn
 $ 19 mn
Major investments in
infrastructure committed
supporting
Most future investments in this site
expected to lead to better
site
profitability
27
Technical Textiles
Chemicals & Polymers
Packaging Films
Key Highlights
Revenues
Operating Profit
200.8
99
172.5
73.3
124.5
159.3
43.8
CER
22.8
101.7
FY11
127.5
FY12
128.7
FY13
159.3
Ex CER
FY14
49
70.2
22.2
57.8
42.3
26.8
28.8
FY11
FY12
15.6
FY13
31.8
31.8
FY14
$ million
$ million
•
Outlook for Specialty Chemicals Business remains robust
•
Enhanced R-134a capacities should improve volumes
•
Investments in Dahej to aid improvement in revenues and profitability in FY15
•
Currently, 100% capacity utilisation of Engineering Plastic Plants
28
Technical Textiles
Chemicals & Polymers
Business Segments
Packaging Films
Technical Textiles
Chemicals & Polymers
Packaging Films
Key Highlights
Global demand-supply
Industry estimated to grow at
apprx 5% p.a. globally and apprx
12% p.a. domestically
mismatch; product is a pure
commodity and goes
through industry cycles;
No new capacity
addition announced
Second-largest
manufacturer of thin
BOPET films in India
Strong focus on value-added
products
Expanded globally with
facilities in Thailand and
South Africa at a total
investment of US $ 125
million
30
Technical Textiles
Chemicals & Polymers
Packaging Films
Overseas
Operations
BOPP Plant at South Africa
•
BOPET Plant at Thailand
Set up a greenfield BOPP film plant and a
vacuum metallisation plant in KwaZulu Natal,
•
Set up a greenfield BOPET film plant and a
vacuum
South Africa in 2013
metallisation
plant
in
Rayong,
Thailand in 2013
•
World class facility with 25,500 TPA capacity
•
•
World class facility with 28,500 TPA capacity
Demand-supply gap in South Africa with local
•
Products
demand exceeding the supply
•
Operations
stable
and
performance
in
quality
conscious
markets like Japan and South Korea, with
is
expected to improve as local consumers shift
from imports to buying film from SRF
accepted
consistent demand from these regions
•
Unit is reporting steady performance
31
Technical Textiles
Chemicals & Polymers
Packaging Films
Key Highlights
Revenues
Operating Profits
147
145.2
110
FY11
58
103.3
FY12
FY13
FY11
FY14
$ million
1
-0.8
FY12
FY13
FY14
$ million
•
Packaging Films Capacity and Utilisation
Trend
120,000
100,000
80,000
60,000
40,000
20,000
0
4.2
98%
100%
72%
91%
97,000
59,500
59,500
59,500
FY11
FY12
FY13
Capacity - MTs
BOPP and BOPET films being
commodities, go through the
120%
100%
80%
60%
40%
20%
0%
industry cycles
•
Global facilities in Thailand
and South Africa to contribute
positively in FY2015
FY14
Utilisation Rate
32
Consolidated Snapshots
Consolidated
Snapshots
Financial Performance
Trends
Consolidated Revenue
667.3
579
669.7
630.5
73.3
43.8
22.8
CER
556.2
594
586.7
FY11
FY12
FY13
669.7
Ex CER
FY14
Business Segments
CPB
Technical Textiles
Packaging Films
200.8
356.5
354.7
363.3
172.5
124.5
22.8
309.3
101.7
FY11
FY12
Figures in $ million
FY13
FY14
FY11
73.3
159.3
43.8
127.5
128.7
FY12
FY13
147
145.2
110
103.3
FY12
FY13
159.3
FY14
FY11
FY14
34
Consolidated
Snapshots
Consolidated EBIT
130.5
22.2
Financial Performance
Trends
113.2
74.7
70.2
108.3
50.7
42.3
43
FY11
CER
50.7
32.4
FY12
Ex CER
FY13
FY14
Business Segments
Technical Textiles
30
27.2
19.2
CPB
49
99
57.9
58
22.2
70.2
20.5
Packaging Films
31.8
42.3
31.8
26.8
FY11
FY12
Figures in $ million
FY13
FY14
FY11
28.8
15.6
FY12
FY13
FY14
FY11
4.2
1
-0.8
FY12
FY13
FY14
35
Consolidated
Snapshots
Financial Performance
Trends
Consolidated PBIDT
159
Consolidated PAT
81
144
22.2
CER
110
70.2
PBIDT Margin%
(Ex CER)
136.8
27
73.8 22
24
11
FY11
FY12
67.7
PBIDT Margin%
88
Ex CER
42
FY13
47
66.2
13
FY14
$ million
11
FY11
$ million
EPS ($)
•
1.3
9
16
FY12
13.6
2
PAT Margin%
(Ex CER)
27
28.4
14
17
11
CER
63
Ex CER
88
42.3
14.8
PAT Margin%
7
27
4
2
FY13
FY14
Expect to see improved performance
going ahead on account of
1.1
0.7
•
Successful business transformation
•
Enhanced volumes/ productivity
0.5
across key segments
FY11
FY12
FY13
FY14
36
Consolidated
Snapshots
Financial Performance
Trends
Net Worth
257
FY11
292
FY12
323
FY13
Gross Block
340
1,019
FY14
$ million
632
691
FY11
FY12
793
FY13
FY14
$ million
•
Dahej facility to produce multiple products with focus on specialty
chemicals and fluorochemicals
•
Return ratios are anticipated to improve as capex incurred leads to
growth and profitability
37
Consolidated
Snapshots
Financial Performance
Trends
Dividend Payout* (%)
Net Debt: Equity (x)
41.2
20.4
FY11
25.0
26.4
FY12
FY13
1.02
0.8
FY14
0.58
0.59
FY11
FY12
FY13
FY14
* Including Corporate Dividend Tax
RONW (%)
ROCE
94.2
32
CWIP in $ Mn
ROCE (%)
69.6
22
13
8
FY11
FY12
FY13
FY14
29.4
18.8
FY11
24.2
FY12
13.9
FY13
18.7
7.9
FY14
38
Outlook
Outlook
•
Technical Textiles
Business
NTCF is expected to remain a key business in the segment and a generator of
steady cash flow
•
Demand for NTCF to mirror Indian GDP growth as it is closely linked to the
transportation sector
•
Improving macroeconomic environment to have a positive impact on
laminated, coated and belting fabric segments going forward
40
Outlook
•
Chemicals & Polymers
Business
Expanded R-134a capacities should assist significant sales improvement in the
domestic and export markets
•
Loss of R-22 markets due to phase down for emissive use will be compensated
by increasing feedstock use by the Specialty Chemicals segment
•
Future potential and prospects of the Specialty Chemicals Business remain
robust
•
Focus on expanding range of specialty products and moving towards higher
value-added products in the agrochemical and pharmaceutical sectors
•
Ongoing investments in R&D leading to a healthy pipeline of new products:
two new dedicated plants commissioned at Dahej to drive revenues and
profitability in FY15
41
Outlook
•
Packaging Films
Business
Robust domestic FMCG demand and fast urbanisation leading to healthy growth in
demand: industry being cyclical, the situation is expected to turnaround in the near
future
•
Focus on full utilisation of assets and incorporating more value-added products in the
portfolio
•
First full year contribution from international operations in FY 2015; expected to
positively impact overall performance
42
Other Milestones
Other
Milestones
Awards & Recognitions
Winner of Deming Prizes for 2 businesses
Chemicals
Business
2012
Tyre Cord
Business
2004
SRF in
CII-ITC
Sustainability
Awards
Forbes’
‘Best
Under a
Billion
List’
2011
2008 Strong
Commitment
2009, 2010 & 2011
Significant
Achievement
2013
Sustainability
Prize
44
Other
Milestones
Awards & Recognitions
CSR Awards
2012 Businessworld FICCI
CSR Award
Best CFO Award
2013 Aaj Tak Care Awards
2013 Greentech CSR Award
2012: ‘Best CFO’ presented by a leading
Indian business magazine BusinessWorld
45
Other
Milestones
Concern for Community
Education
Vocational Skills
Undertakes up-gradation of
government schools under ‘Quality
Education for All’ programme,
covering 90 primary and middle
schools across 60 villages;
impacting more than 25,000
children spread across 6 states in
India
Undertakes several initiatives to
improve the employability of people
especially the younger generation
from the disadvantaged
communities by way of providing
vocational skills
Natural Resource
Management
Continues to reach out to poor
families in Alwar district in India to
improve their livelihood; impacting
6,500 families spread over 38
villages
Health
Continues to organise various
health camps ranging from
medical awareness, diabetes, eye
check-ups, blood donation, etc,
besides ongoing HIV/ AIDS
Awareness events and HIV
Testing programmes in all plant
locations
46
Thank you

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