irsl analyst meet presentation oct
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8/3/2019 IRSL Analyst Meet Presentation Oct
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Indo Rama Synthetics (I) Ltd.
Analyst Meet
Mumbai21 Oct., 2004
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The Meet Highlights
1. Polyester Growth Potential Opportunities for Polyester in India
Demand drivers
Edge over other Fibres
Conclusion & outlook
2. Plan to Capitalize on the Opportunity Expansion project
Participation in Global PET business
3. Indo Rama Performance Financial Performance
Operating performance
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Polyester
GrowthPotential
Polyester
Competitively
Produced
Versatile
Product
Characteristics
Edge over
CompetingFibres
Favourable
DemandDrivers
Factors to Stimulate Polyester Growth
in India
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Polyester Industry Growth in India
The Enablers
Adequate availability
of Raw Materials (i.e.PTA & MEG)
Existence of world
scale & world-class
production facilities
Long Term View Polyester Industry*
* Including PET chipsSource: PCI
Polyester Polymer Operating Rates
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Polyester Capacities Shifting from
Taiwan / Korea
Source : PCI
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6Source : PCI
Polyester Capacities Shifting to
China / India
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Demand Drivers for Polyester
Increase in per capita
consumption due GDP
growth & urbanisation
Value added & innovative
new product development Home textiles
Geo textiles
Auto textiles, etc.
41%
16%
43%
93%
4%3%
0%
20%
40%
60%
80%
100%
World India
Industrial Applications
Home Textiles
AppraelSource : Tecoya
Untapped non-apparel sector offering great potential
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Edge Over Competing Fibres
Cotton &
polyester
constitute
more than
90% of total
fibre
consumption
in thecountry
Cotton &
polyester
constitute
more than90% of total
fibre
consumption
in thecountry
2,703
1,087
1,220
1,343 1,3521,433
1,6141,511
2,811
2,8882,9022,947 2,942 2,926
-
500
1,000
1,500
2,000
2,500
3,000
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Polyester
Cotton
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
% share of Polyester 29 30 31 31 33 34 36
% share of Cotton 71 70 69 69 67 66 64
% share of polyester consumption continue to increase -
expected to reach 50% by 2010
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Polyester growth to escalate & remain high
Best in Class Indian polyester players will prosperpost Jan, 2005
Operating rates in polyester industry in healthy shape
Non-apparel use - Major market to exploit
Summing up on Triggers from Growth
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Factors Limiting the Growth
Unfavorable duty structure for polyester compared tocompetitive fibres
Escalating crude prices leading to sharp increase inPTA / MEG costs Current Margin under pressure
Impacting demand growth in the short term
Earlier Current
Duty
ReductionYarn & Fibre
- Cotton Yarn 9.20% 4.08% 5.12%
- Blended Yarn 13.80% 8.16% 5.64%
- PSF 18.40% 16.32% 2.08%
- POY/PFY/FDY 28.60% 25.50% 3.10%
Fabric
- 100% Cotton 10.00% 4.08% 5.92%
- Blended 10.00% 8.16% 1.84%
- 100% Polyester 10.00% 8.16% 1.84%
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Globally PTA & MEG is in short supply
Will result in reduced production of polyesterOpportunity for margin improvement in future
Expansion plan on target to meet the demandopportunities post Jan, 2005
Enablers of Growth for IRSL
RM supplies
to IRSL well
covered
IRSL continues to be bullish on growth outlook ofPolyester industry
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Indo Ramas Plans toCapitalize on the Textile
Opportunity
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Polyester Capacity Expansion
Existing V/s Planned
150
120
1515
140
140
020
290
260
15
35
0
100
200
300
400
500
600
(in
'000
tpd)
Existing Cap. Expansion Cap. Total Cap.
PSF POY FDY CHIPS
300 300
600
Total capacity after expansion will be 600,000 tpa
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Moving with Time on Technology
ZimmerDupont
/Chemtex
Technology - CP
2 lines175200 tpd line
5 lines70 90 tpd line
PSF plantLine capacity
2 nos
(400 tpd)
3 nos
(180 240 tpd)
Polymer plant
Individual plant cap.
BarmagBarmagTechnology POY
ZimmerToyoboTechnology - PSF
New ProjectPresent PlantParameter
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Strengthening the Backbone.
Cogeneration
with steamturbine
DG plantType of Plant
Rs. 1.70 / KwhRs. 2.75 / KwhCost of Power
Generation
2 x 15 MW51 MWCapacity
ProjectedPresentParameter
Operating cost to come down on energy
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1246
1685
240
355
0
200
400
600
800
1000
1200
1400
1600
1800
Existing Total (After expansion)
200
220
240
260
280
300
320
340
360
380
400
Number MT/Head
Manpower Productivity to Frog leap.
No. ofHeads
MT /Head
. Improvement of >50% post expansion
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Time Schedule for Project Start-up
Product Time Line
PSF Dec05 / Jan06
POY Feb06 / Mar06
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Project Funding
8600Total Polyester
Project
2960
1110
4530
Amount(Mn. Rs.)
Internal Accruals
IKB & DEG
Indian Banks
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Benefits from Expansion..
Operating cost of the new plant lower compared to existing plant Operatingcost of existing plant will also come down
Commercial Production by early 2006 synchronized with the completion of
IOCs PTA plant at Panipat of 530,000 MTs. Annual Sales from the new project Rs. 2000 cr. (approx.) [Asset Turnover
Ratio more than 2 in a capital intensive project]
New Plant has the following additional advantages:
Lower Capital Cost of ~ 30% Lower Funding Cost of ~16%
Lower Operating Cost
Increased productivity
EPS to enhance since equity base remainsconstant
DE Ratio continues to be favorable
1.51
0.9
1.18
0.61
0.35
0.25
0.45
0.65
0.85
1.05
1.25
1.45
1.65
2003-04 2004-05 2005-06 2006-07 2007-08
Debt Equity Ratio
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IRSL Goes Global in PET Business
IRSL invested to Starpet (USA) 24% stake
Indopet (Thailand) acquires Starpet
Indopet also setting-up new project in Lithuania (EU state) withcapacity of 210,000 tpa to manufacture bottle grade PET resin
Indopet to emerge as one of the largest global PET
producers
IRSL holding of Starpet swapped with ordinary shares of
Indopet
IRSL holding in Indopet - 8.46%
This offers IRSL an opportunity to participate in PETbusiness on a global scale
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Indo Rama Synthetics (I) Ltd
Performance Update
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Financial Highlights1 H FY05
Note : ( ) = unfavourable
(38%)(3.72)9.926.20Other Income
2%19.061148.301167.36Gross Sales
5%0.8017.1416.34Staff Cost
20.11
29.32
(13.89)
42.41
(5.49)
Variance
7%642.03599.62Consumption of RM,
etc.
15%17%Operating EBDITA %
15%133.81153.92Operating EBDITA
4%761.26731.94Total Expenditure
(14%)102.09115.98Other Expenditure
(1%)885.15879.66Sales (Net of Excise & inter-divisional sales)
% Change1H2003-04
1H2004-05
Rs. Crore
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Financial Highlights1 H FY05
Note : ( ) = unfavourable
(201%)(45.66)22.71(22.95)Non-operating Inc/ (Exp)
(14.51)
3.25
1.14
(18.90)(0.36)
(18.54)
7.01(25.55)
Variance
54%
4%
5.99
25.36
2.74
24.22
Provision for Taxation
- MAT
- Deferred Tax
(15%)127.69109.15EBDT
5.33%3.71%PAT Percentage
24%28.8321.82Interest Cost
(31%)47.1832.67Profit After Tax
(24%)78.5359.63Profit Before Tax(1%)49.1649.52Depreciation
(16%)156.52130.97EBDITA
% Change1H2003-04
1H2004-05
Rs. Crore
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Financial HighlightsQtr 2
Note : ( ) = unfavourable
19%
77.76
342.25
56.06
7.65
278.54
3.37
416.64
558.20
Q12004-05
(30%)(1.22)4.052.83Other Income
(9%)(63.83)672.99609.16Gross Sales
5%0.509.198.69Staff Cost
(26.31)
28.66
(2.53)
30.69
(53.75)
VarianceQ2 vs Q2
9%351.77321.08Consumption of RM,
etc.
20%16%Operating EBDITA %
(26%)102.4776.16Operating EBDITA
7%418.35389.69Total Expenditure
(4%)57.3959.92Other Expenditure
(10%)516.77463.02Sales (Net of Excise &inter-divisional sales)
%ChangeQ22003-04
Q22004-05
Rs. Crore
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Financial HighlightsQtr 2
1.61%
6.71
0.564.07
11.34
24.49
35.83
11.98
47.81
(29.95)
Q12004-05
(13%)(1.07)8.077.00Non-operating Inc/
(Exp)
(17.63)
3.50
5.09
(26.22)
(0.43)
(25.79)
1.59
(27.38)
VarianceQ2 vs Q2
62%
20%
5.68
25.24
2.18
20.15
Provision for Taxation
- MAT
- Deferred Tax
(26%)99.1173.32EBDT
8.44%5.61%PAT Percentage
14%11.439.84Interest Cost
(40%)43.5925.96Profit After Tax
(35%)74.5148.29Profit Before Tax
(2%)24.6025.03Depreciation
(25%)110.5483.16EBDITA
%ChangeQ22003-04
Q22004-05
Rs. Crore
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47%
29%
4%
7%
13%
PSF
POY
Chips
FDY
DTY
44%4%
6%
14%
32%
Rs. 1167.36 Cr. Rs. 11,48.30 Cr.
Analysis of Sales Mix
H1 : 2004-05 H1 : 2003-04
PSF & POY constitute >75% of total sales
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Growth in Operating EBIDTA
17%
15%
14%
16%
18%
1H FY04 1H FY05
Procurement & Operating efficiencies resulting in
improvement of margins
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Prudent Financial Management
188.0
114.4
28.83
21.8250
75
100
125
150175
200
1H FY 04 1H FY 05
RsCr.
20
22
24
26
28
30
Rs.
Cr.
Loan Repayment Interest Cost
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Rewarding the Shareholders
Interim Dividend
10%
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House Open for Questions
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