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Oct 25, 2023 141 likes •316 views

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

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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.

Disclaimer

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Business performance

 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 -649 -598 -1,247 PVC Pipes & Fittings 3,480 38,856 89,561 3,819 42,974 88,868 -366 27 -339 Power (Mwh) 175 11,418 346 40,884

171 - -171

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Result update – Profit & Loss

Particulars (INR mn) Q3FY15 Q3FY14 Q2FY15 Net Sales 6,429 6,599 3,859 EBIDTA before exceptional items (110) 1,180 445 EBIDTA margins (%)

1.71%

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 (%)

3.98%

15.20% 7.70% Other Income 14 9 86 Interest 119 188 108 PBT (639) 920 215 PBT margins (%)

9.94%

13.90% 5.60% Tax (201) 281 77 PAT (438) 639 137 PAT margins (%)

6.81%

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 fittings. This also impacted the PVC resin volumes. Crude prices dropped from $92/bbl in 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.

Business performance (contd.)

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Source: IHF and ICIS chemical weekly reports

Business scenario in charts

 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

Business scenario in charts

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 – Profit & Loss

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 (%)

1.71% 17.90% 11.50% 20.90% 18.80%

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 (%)

3.98% 15.20%

7.70% 17.10% 16.60% 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 (%)

9.94% 13.90%

5.60% 10.00% 10.80% 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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Quarterly segmental – Profit & Loss

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

711 124 379 597 424 494 605 % of Revenues

12.45%

14.50% 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

31 9 103 62 97 113 166 % of Revenues

23.43%

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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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%

Profit & Loss – Key indicators

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Balance sheet – Key indicators

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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PVC pipes and fittings volume

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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Branding and Advertisements

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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Disclaimer: All product names, logos, and brands are property of their respective owners

Accolades and awards

 ‘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

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8.4% 24.2% 4.7% 21.1%

10.0%

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)

 Plans to reduce debt to minimal levels by FY17E, with debt repayment in the range of INR 1.25bn to INR1.5bn per annum till FY17E

Strong balance sheet

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Key focus areas

 Increase the captive consumption of PVC resin. No capacity addition for PVC resin  Pipes capacity to increase by 30,000 MT each year for the next two years  Improve overall return ratios via low capital outlay for the brownfield capex for PVC pipes & fittings  Continue to run PVC pipes operations with the cash-n-carry model  Increase company’s distribution reach by having more warehousing facilities across India  Healthy cash generation to aid in debt reduction over the next few years  Develop solutions in the water management business  Maintain leadership position in the industry

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For further queries:

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 1001/2