Time Technoplast Ltd
Enhancing investment decisions
Initiating coverage
Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process –
Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental
grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The
valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to
grade 1 (strong downside from the CMP).
CRISIL Fundamental Grade
Assessment CRISIL Valuation Grade
Assessment
5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)
4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)
3/5 Good fundamentals 3/5 Align (+-10% from CMP)
2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)
1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)
Analyst Disclosure Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest
that can bias the grading recommendation of the company. Disclaimer: This Company-commissioned Report (Report) is based on data publicly available or from sources considered reliable. CRISIL Ltd.
(CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / Report are
subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this Report. Nothing
in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assumes
the entire risk of any use made of this data / Report. CRISIL especially states that it has no financial liability, whatsoever, to the
subscribers / users of this Report. This Report is for the personal information only of the authorized recipient in India only. This
Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person – especially
outside India or published or copied in whole or in part, for any purpose.
CRISIL EQUITIES | 1
January 04, 2011 Fair Value Rs 71 CMP Rs 58
Fundamental Grade 4/5 (Strong fundamentals)
Valuation Grade 5/5 (CMP has strong upside)
Industry Information technology
Polaris Software Limited
Business momentum remains intact
Fundamental Grade 4/5 (Superior fundamentals)
Valuation Grade 4/5 (CMP has upside)
Industry Containers & Packaging
Time Technoplast Ltd Focussed value add to business
Time Technoplast (Time) is a leading manufacturer of polymer-based products with varied applications. Beginning with industrial packaging products such as drums and containers, it has subsequently moved into other polymer-based applications and also grown through acquisitions and joint ventures in India, Europe, UAE and Thailand. We expect Time to grow significantly based on healthy growth in the industrial packaging business, expansion into new Asian markets, and the launch of new products. We assign Time a fundamental grade of ‘4/5’, indicating that its fundamentals are ‘superior’ relative to other listed securities in India.
Growth in user industries to drive demand for industrial packaging Being a market leader with a 75% share in industrial packaging, Time is set to benefit from ~15-17% growth in the end-user industries, especially with consumption likely to improve with the trend to replace metals with plastics. We expect the domestic industrial packaging revenues to grow at a three year CAGR of 19% from FY10-13.
Asian expansion accelerates growth, to compete with global players After achieving market leadership in India, Time is expanding into other Asian countries with (a) an acquisition in Taiwan, (b) the acquisition of YPA, the second largest player in Thailand and (c) two Greenfield projects in Tianjin and Guangzhou in China. Although its foray into the Asian markets will provide opportunities for growth given low penetration of polymers, there will be challenges too. Time’s ability to replicate its historical success in these new markets will be a key monitorable.
New products in the offing; market acceptance a key monitorable Time has acquired technologies to develop two new products, composite cylinder and material handling products, which should accelerate growth. It acquired Komposite Praha (based in the Czech Republic), which is one of the two global companies manufacturing composite gas cylinders. Time also entered into a joint venture with Schoeller Arca, the global leader in material handling products. However, the market acceptance of the products remains a key monitorable.
Expect three-year revenue CAGR of 25%; EPS to almost double We expect consolidated revenues to register a three-year CAGR of 25% to Rs
19.5 bn in FY13 largely driven by growth in the industrial packaging segment and its foray into new markets. PAT is expected to grow from Rs 909 mn in FY10
to Rs 1,751 mn in FY13, driven by healthy revenue growth and stable margins. EPS is expected to almost double from Rs 4.3 in FY10 to Rs 8.4 in FY13.
Valuations – current market price has ‘upside’ We have used the discounted cash flow method to value Time and arrived at a fair value of Rs 71 per share. This fair value implies multiples of 10.0x FY12E and 8.4x FY13E earnings. We initiate coverage on Time with a valuation grade of ‘4/5’.
KEY FORECAST
(Rs mn) FY09 FY10 FY11E FY12E FY13E Operating income 7,834 10,003 12,124 16,542 19,525 EBITDA 1,559 1,952 2,360 3,186 3,761 Adj PAT 690 909 1,026 1,478 1,751 Adj EPS-Rs 3.3 4.3 4.9 7.1 8.4 EPS growth (%) (9.6) 30.1 13.7 44.1 18.4 Dividend yield 1.6 1.0 0.8 1.2 1.4 RoCE (%) 18.2 17.5 16.5 18.4 17.9 RoE (%) 15.3 17.1 16.4 20.0 19.8 PE (x) 9.9 13.3 11.8 8.2 6.9 P/BV (x) 1.4 2.1 1.8 1.5 1.3 EV/EBITDA (x) 6.2 8.4 7.7 6.4 5.7
Source: Company, CRISIL Equities estimate NM: Not meaningful; CMP: Current Market Price
CFV MATRIX
KEY STOCK STATISTICS NIFTY / SENSEX 6158 /20561
NSE / BSE ticker TIMETECHNO
/TIMETECNO
Face value (Re per share) 1
Shares outstanding (mn) 209
Market cap (Rs mn)/(US$ mn) 12,127 / 271
Enterprise value (Rs mn)/(US$ mn) 16,093/360
52-week range (Rs) (H/L) 65/ 43
Beta 1.07
Free float (%) 37.9%
Avg daily volumes (30-days) at NSE 229,448
Avg daily value (30-days) (Rs mn) 13.3
SHAREHOLDING PATTERN
PERFORMANCE VIS-À-VIS MARKET
Returns
1-m 3-m 6-m 12-m
TIME -7% 9% 14% 14%
NIFTY 3% 0% 18% 18%
ANALYTICAL CONTACT Sudhir Nair (Head) [email protected]
Charulata Gaidhani [email protected]
Bhaskar Bukrediwala [email protected]
Client servicing desk
+91 22 3342 3561 [email protected]
1 2 3 4 5
1
2
3
4
5
Valuation Grade
Fu
nd
am
en
tal G
rad
e
Poor Fundamentals
ExcellentFundamentals
Str
on
gD
ow
nsi
de
Str
on
gU
psi
de
62% 62% 62% 62%
12% 12% 12% 11%
4% 4% 4% 5%
21% 22% 22% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-09 Mar-10 Jun-10 Sep-10
Promoter FII DII Others
CRISIL EQUITIES | 2
Time Technoplast Ltd
Table: 1 Time: Business environment
Product /
Segment Industrial packaging
Infrastructure
products
Lifestyle products
Automotive
components and
others
New products
(composite
cylinders and
material handling
products)
Revenue
contribution
(FY10)
61% 20% 9% 10% 0%
Revenue
contribution
(FY13)
59% 18% 11% 6% 6%
Product /
service
offering
Manufacturing of
polymer drums, barrels
and containers,
Intermediate bulk
containers (IBCs). These
are used in the
chemicals, specialty
chemicals, paints and
FMCG industries
Manufacturing of pipes
used for water
treatment and sewage
projects, telecom, UPS
and other industrial
batteries, prefabs &
shelters
Turfs and mattings Anti spray rain
flaps made of
polymers, fuel
tanks, de-aeration
tanks.
Composite Cylinders
made of polymers,
material handling
products like crates,
pallets, bins
Geographic
presence
India, UAE, Thailand,
Taiwan. Moving to China,
Indonesia and South
Korea. India contributes
~89% of total revenues
of this segment
India, Bahrain India, Europe,
Thailand
India, Europe India, Middle East,
Europe
Market
position
Market leader with
~75% market share
Few players in the
batteries business.
Highly fragmented
industry with large
number of
unorganised players.
The company
works directly
with the
automobile
manufacturers
These products,
mainly the composite
cylinders, are new
and will take time to
gain acceptance.
Currently composite
cylinders made of
polymers is used to
some extent in
Europe and the
Middle East
Industry
growth
expectations
End-user industry to
grow at 15%-17%
Flattish growth in
telecom batteries.
Pipes business to show
robust growth driven
by spending in water
infrastructure
~10-12% Drive by demand
in auto industry
which is expected
to grow at 12-
13% over the
next –four-five
years
Sales growth
(FY08-FY10
– 2-yr CAGR)
18% 27% 17% 1% n.m.
Sales
forecast
(FY10-FY13
– 3-yr CAGR)
25% 16% 36%
(driven by organic
and inorganic growth)
8% n.m.
Demand
drivers
• Packaging for end-user
industry
• Replacement demand
from metal to plastics
• Infrastructure spend
on water treatment
projects
• Replacement of
ductile iron pipes
with polymers
• Rising income levels
• Increase in
construction activity
for housing and
commercial
properties leads to
more spends on
interiors.
• Acceptance of
innovative
polymer
products in the
automotive
sector in India
and Europe
• Government thrust
towards use of
composite cylinders
• Retail penetration
will drive demand
for material
handling
CRISIL EQUITIES | 3
Time Technoplast Ltd
Key
competitors
Balmer Lawrie Van Leer,
Balmer Lawrie, Sintex
Industries
Jain Irrigation
Supreme Industries
Highly fragmented
industry with large
number of
unorganised players.
Innovative hence
no competitor
There are currently
only two players
including Time, who
have the technology
to manufacture
composite cylinders
from polymers;
Schoeler is the
largest player in
material handling.
Time has entered into
a JV with them in
India
Key risks • Slowdown in end-user
industries
• Lack of higher
penetration in
international markets
of China, Taiwan,
Indonesia and South
Korea
• Competition • Competition from
the unorganised
segment
• Slowdown in
automotive
sector in India
and Europe
• Lack of government
push
Source: Company, CRISIL Equities
CRISIL EQUITIES | 4
Time Technoplast Ltd
Grading Rationale
A technology-based polymer product player
Time is a leading manufacturer of a range of polymer-based products. Over a
period of time, it has acquired and developed technologies to make polymer-
based value-added products and has successfully substituted metals with
polymers.
The company started with manufacturing industrial packaging products such as
drums, barrels, containers and subsequently moved to other products.
Currently, its portfolio consists of products catering to industry segments like
industrial packaging, lifestyle products, infrastructure products, automotive
components and healthcare products. Of these, industrial packaging is the
largest contributor to revenues - 61% - followed by infrastructure (20%) and
lifestyle products (9%).Time conducts its business under two segments namely
polymer products and composite products. Although a majority of the business
comes from India, Time has crossed the borders into other parts of Asia and
Europe.
Figure 1: Segment-wise revenue break-up (FY10) Figure 2: Segment-wise profitability break-up (FY10)
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Continuously adding and innovating new products
Time has consistently been adding and innovating products. From initially
manufacturing industrial packaging products, it has expanded its basket to
include batteries, pipes, lifestyle and automotive products, and very recently –
composite cylinders and material handling products. To expand the portfolio,
Time either took the acquisition route or acquired the necessary technology
through a tie-up or joint venture to manufacture the products. A strong R&D
team is at the helm of all efforts to innovate products and identify opportunities
to replace metals with polymers, especially in high performance areas.
Composite products,
22%
Polymer products,
78%
Composite products,
23%
Polymer products,
77%
Industrial packaging is
the largest contributor to
revenues - 61%
CRISIL EQUITIES | 5
Time Technoplast Ltd
Table 2: Time has continuously added new products to portfolio
Year Products Self development/acquisition
1992 Drums & containers Self developed
1993 Large drums and barrels Through technology tie-up with Mauser, Germany
1998 Lifestyle products (entrance mattings) Self developed
2000 Consumer packaging- PET sheet & conical pails Self developed
2004 Intermediate bulk containers (IBCs) JV with Mauser
2005 Anti-spray rain flaps Self developed
2006 Healthcare products Self developed
2007 Telecom batteries Through acquisition of Ned Energy
2008 Industrial batteries Through acquisition of Gulf Powerbeat, Bahrain
2009 Pipes Self developed
2009 Composite cylinders Through acquisition of Komposite Praha, Czech Republic
2010 Returnable material handling JV with Schoeller Arca, the Netherlands
Source: Company, CRISIL Equities
Market leader in industrial packaging
Time is the largest player in polymer-based industrial packaging with a market
share of 75%. The company manufactures a range of polymer drums, barrels
and IBCs used in the packaging of products in end-user industries such as
chemicals, specialty chemicals, FMCG, construction chemicals, paints,
pharmaceuticals and others. Although the company primarily grew organically, it
acquired the second best player, TPL Plastech, from the Tainwalla Group in
2006, which further strengthened its market position.
A pioneer in polymer-based packaging
Initially, packaging products (barrels, drums and containers) for liquids, used by
the chemical, specialty chemicals, pharmaceuticals and other industries, were
mainly made of metals. Time was the first in the market to introduce polymer-
based industrial packaging for liquids and gradually over the years it has been
successful in replacing metal-based packaging with polymers.
Polymer-based packaging scores over metals
Currently, 50% of industrial packaging products are polymer-based while the
rest are still metallic. Polymer offers various benefits: a) lower weight; b) higher
resale value of polymer containers; and c) higher quality since the
containers/barrels produced are seamless and, hence, better equipped for
transportation and difficult material handling conditions; many products are
sensitive or hazardous in nature and, hence, safety of the materials in transit is
of prime importance to end-users.
Table 3: Polymer packaging score over metals- Drums (200 litre)
Parameters Plastic (PE) Metal
Weight 8.5 kg 20 kg
Raw material Polyethylene (PE) Steel
Material cost/ kg Rs 75 Rs 35
Yield/mt 117 drums 51 drums
Raw material cost Rs 640 per drum Rs 700 per drum
Re- sale value Rs 550-600 Rs 250-300
Source: Company, CRISIL Equities
CRISIL EQUITIES | 6
Time Technoplast Ltd
Technology tie-up with Mauser provides the edge
Time tied up with Germany’s Mauser, a leading industrial packaging player, in
1993 to get the technology for making large barrels and containers in return for
fixed royalty. In the packaging business for more than a century, Mauser has
been innovating packaging solutions designed for the safety of hazardous
chemicals to suit industry requirements.
Time has also entered into a 49-51 JV with Mauser – Time Mauser Industries
Pvt. Ltd. - for manufacturing and marketing IBCs in India. IBCs are large
containers of ~1,000 litres used for packaging chemicals and specialty
chemicals, and are used for long-distance transportation of hazardous
chemicals.
Strong and diversified clientele
Time has close to 500 clients in the industrial packaging space and is not
dependent on any one client (the top 10 customers constitute ~25% of its
industrial packaging revenues). A strong relationship with clients ensures repeat
business; 90% is repeat business. The company has set up manufacturing
facilities across India (24 units in 13 locations) in proximity to its end-users in
order to lower the lead time. Also, since there is a high amount of freight
component involved in transporting these packaging products, it is cost
advantageous.
Figure 3: Time’s manufacturing units across India
Source: Company, CRISIL Equities
Plant location: Kolkata, West Bengal
Plant location: Panthnagar, Uttarakhand
Plant location: Baddi, Himachal Pradesh
Proposed Plant Location:Bhuj, Gujarat
Plant Location: Ahmedabad,Gujarat
Plant location: GummdiPoondi, Tamil Nadu
Plant location: Hyderabad, Andhra Pradesh
Plant location: Jammu, Jammu & Kashmir
Plant Location:Panoli, Gujarat
Plant Location: Daman and Silvassa,Gujarat
Plant Location: Mahad,Maharashtra
Plant location: Pen, Maharashtra
Plant location: Hosur, Tamil Nadu
Clients: India Glycols Ltd,
Galaxy Surfactants Ltd,
Jubilant Organosys Ltd,
BASF India Ltd, Clariant
Chemicals (I) Ltd
CRISIL EQUITIES | 7
Time Technoplast Ltd
Built up relationships with plants close to end users
Given Time’s leadership position, pan-India manufacturing facilities and superior
quality of products, it has built up strong relationships with clients. Even though
the company is vulnerable to raw material price fluctuation because its raw
materials (polyethylene and polypropylene) are crude oil-based, Time has been
able to pass on raw material hikes to its clients. With plants close to the end
users, Time has developed a win-win strategy with its clientele. Over the past
five years, it has maintained its EBITDA margin in the range of 20% despite
fluctuation in raw material prices. Figure 4: EBITDA margins have been fairly stable Figure 5: ...despite fluctuation in raw material prices
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
End-users to drive demand for industrial packaging
Demand for industrial packaging is driven by growth in end-user segments such
as chemicals, specialty and construction chemicals, FMCG, paints,
pharmaceuticals and lube oils.
Figure 6: End-user industries for industrial packaging
Source: CRISIL Equities
The end-user industries have grown at a healthy rate in the past few years
driven by increased consumer spending. After a slowdown in 2009, growth has
picked up with improvement in the Indian economy. While the chemicals
industry grew at ~15%, the specialty segment grew faster at ~20% in FY10.
19.8%
19.3%
21.5%
19.9%
19.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
FY06 FY07 FY08 FY09 FY10
EBITDA Margins
40000
50000
60000
70000
80000
90000
100000
110000
Apr-
05
Jul-
05
Oct
-05
Jan-0
6
Apr-
06
Jul-
06
Oct
-06
Jan-0
7
A pr-
07
Jul-
07
Oct
-07
Jan-0
8
A pr-
08
Jul-
08
Oct
-08
Jan-0
9
A pr-
09
Jul-
09
Oct
-09
Jan-1
0
Apr-
10
Jul-
10
Oct
-10
(Rs/Tonne)
HDPE Landed Cost (Rs/tonne)
Specialty Chemicals, 31%
FMCG, 29%
Paints & Inks, 12%
Pharmaceuticals and Interm, 5%
Construction Chemicals &
Adhesive, 13%
Lube Oils & Additives, 5%
Food, 3%
Others, 2%
Speciality chemicals,
construction chemicals and
FMCG constitute ~75% of the
end user demand for industrial
packaging
CRISIL EQUITIES | 8
Time Technoplast Ltd
According to industry sources, specialty and construction chemicals segments
are poised for an annual growth of ~15% each while FMCG is expected to grow
at ~13-14% per annum over the next three years. The paints segment is also
expected to grow at a healthy rate of 15% driven by increased housing and
infrastructure spending.
Figure 7: Speciality chemicals growth Figure 8: Growth in personal care industry
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Growth to follow the substitution effect
There has been an increasing usage of polymers in the industrial packaging
segment, with plastic drums and barrels fast replacing the age-old metal drums.
Although there was hardly any usage of polymer drums in industrial packaging,
its penetration has increased over the years to 50% currently. The penetration
is expected to increase further given the various benefits of polymer-based
packaging as discussed earlier. Also, even though polymer packaging was
slightly costlier than metal packaging, the gap has narrowed. The situation is
expected to reverse with lower cost of polyethylene due to new gas-based
capacities coming up in China and the Middle East, thus reducing the cost of
polyethylene, which is the main raw material (constituting ~65% of total cost)
for making polymer packaging. This will enable an increased penetration of
plastic drums in the industrial packaging segment.
Time to strengthen operations in Asia
After capturing the Indian industrial packaging market, Time is now expanding
its footprints in other Asian markets, which currently have low penetration of
polymer packaging (~20%) but are at the cusp of shift towards polymer
packaging given the declining price differential between polymer and metal
packaging. Also, these markets are growing at a healthy rate thereby providing
immense potential and opportunities for growth. The company has already
entered Thailand and Taiwan and is now looking at China, South Korea and
Indonesia by putting up greenfield projects there.
1218
40
0
5
10
15
20
25
30
35
40
45
2002 2006 2012(E)
Market Size
200
300
525
0
100
200
300
400
500
600
2004 2008 2012(E)
(US$ mn)
Market Size
Polymer packaging is no
longer going to be
costlier than metal-based
packaging
CRISIL EQUITIES | 9
Time Technoplast Ltd
Table 4: Time’s projects in Asia
Location Capacity Mode of entry Status
Thailand 6,600 MT Inorganic Operational
Taiwan 10,000 MT Inorganic March 2011
China 13,200 MT Greenfield March 2011
Indonesia 6,600 MT Greenfield June 2011
South Korea 6,600 MT Greenfield September 20'11
Source: Company, CRISIL Equities
International chemicals manufacturing moving towards Asia
Over the past decade, the global chemical industry has witnessed a geographic
shift in manufacturing from NAFTA countries (US, Mexico, Canada) and Europe
to the emerging economies of China, India and other parts of Asia excluding
Japan. This has triggered growth in international trade of chemicals between
Asia and the developed economies, thereby driving the demand for industrial
packaging.
Figure 9: Global chemical sales move towards China and Asia
* excl China and Japan
Source: Cefic
Entered Thailand and Taiwan through acquisitions
To foray into the fast growing Asia-Pacific market, in 2007, Time acquired Pack
Delta, the erstwhile JV with Mauser in Thailand. It acquired YPA Thailand in
November 2009, thus strengthening its market position in Thailand. Both Pack
Delta and YPA are operational with a combined capacity of 14,340 tonnes.
In October 2010, Time acquired Taiwan’s Yung Hsin, a market leader in plastic
drums. Yung Hsin has revenues of ~Rs 750 mn and a manufacturing capacity of
10,000 MT of plastic drums and containers with an IBC line that is currently idle.
With a capex of ~Rs 158 mn, Time plans to start operations on the IBC line by
March 2011 and fully commercialise the unit by FY12. Taiwan also has a low
penetration of ~8% for plastics in industrial packaging. We expect a growth of
~15% in Taiwan.
32.1%
28.0%
13.1% 11.7%
5.8%4.4%
2.5%2.4%
24.0%
21.2%
15.9%
6.4%
22.2%
5.2%
3.1%
2.0%
0%
5%
10%
15%
20%
25%
30%
35%
EU27 NAFTA Asia* Japan China Latin America
Rest of Europe
Other
1999 2009
Time’s plants in China
will be operational by
end FY11.
CRISIL EQUITIES | 10
Time Technoplast Ltd
Foray into China, Indonesia and South Korea; challenges lie
The company is looking to expand to China, Indonesia and South Korea. It is
currently planning to set up two greenfield projects (at Tianjin and Guangzhou)
and has plans for manufacturing IBCs in China since it is the hub of international
trade between Europe and Asia for chemicals, specialty and construction
chemicals, and pharmaceuticals. Although the potential for IBCs is very high in
the region, Time will be competing with the global players like Schutz and
Mauser. In China, IBCs are only manufactured in Shanghai, where both Schutz
and Mauser have a presence.
Time is setting up a facility in Tianjin, which is in close proximity to the chemical
industry park in the free trade zone in Tianjin. Tianjin is the gateway of exports
to South Korea. Time is also setting up a facility in Guangzhou, which is the third
largest city in China and a trading port. Guangzhou also has an export
processing zone, with a presence of major chemical companies. Time is also
working on setting up manufacturing facilities in Indonesia and South Korea.
Time’s progress in terms of the timely commissioning of its plants and the
business in China, Indonesia and Korea remain a key monitorable.
Infrastructure and lifestyle products segments – expanding its product portfolio
The infrastructure and lifestyle products segments contribute close to 30% of
Time’s total revenues, with infrastructure having the larger share at 20%. Under
the infrastructure business, the company manufactures batteries used by
telecom companies for their towers while under the lifestyle segment it
manufactures and distributes products such as entrance mattings, turfs and
products like chairs.
Moving into new products such as pipes as the battery business is slowing down
Time started its infrastructure products division with the acquisition of NED
Energy in 2007 which manufactures batteries required to support the telecom
towers. The company competes with Amara Raja Batteries, Exide Industries and
HCL. Although the business recorded strong growth in the past few years given
the boom in telecom (the number of telecom towers were on the rise till FY10),
the business has started to now slow down given the slowdown in growth in
telecom sector. The company has, hence, expanded its product portfolio to
polyethylene (PE) pipes which are used in desalination plants and water supply
and sewerage infrastructure. The company also supplies the pipes to major EPC
players like Larsen & Toubro, Nagarjuna Construction, IVRCL and others.
The company is eyeing high growth in this business given the government
spending on water infrastructure projects. The pipes business has been picking
up with an increase in number of water and sewerage treatment projects in
India. Water supply and sanitation (WSS) has been allotted a huge investment
outlay of Rs 1.4 tn in the 11th Five-Year Plan compared to the investment outlay
of Rs 648.1 bn in the 10th Five-Year Plan. Major thrust in the WSS segment is
WSS has been allotted a
huge investment outlay of
Rs 1.4 tn in the 11th Plan
CRISIL EQUITIES | 11
Time Technoplast Ltd
on improving rural infrastructure, an area expects investments of Rs 907 bn in
the 11th Five-Year Plan. Also, the traditional ductile iron pipes are being
replaced with PE pipes, improving the performance in terms of corrosion,
leakage and handling pressure. We expect the pipes business to grow at ~20%
per annum over the next three years.
Figure 10: Spending on water projects to drive demand for
pipes
Source:
Time also supplies UPS and solar batteries. In October 2010, Time acquired
Powerbuild, a solar battery manufacturer in Bengaluru to cater to the demand
for solar batteries.
Domestic lifestyle business growing at a healthy rate
Time forayed into the consumer and lifestyle products business with the launch
of mattings and turfs in 2006. The company has subsequently launched other
products like moulded furniture. These products have been well received in the
market, with the lifestyle business registering a strong growth of 38% (since its
start) driven by increased spending and demand for such products. The
company has a pan-India distribution network of 9,000 dealers across 350 cities.
Solutia acquisition opens doors to international markets
Time has extended its presence to Europe with the acquisition of US-based
Solutia’s plastic products division. Solutia manufactures specialty chemicals,
performance films and glass. The plastic products division manufactures
mattings and turfs under the renowned brand ‘Astroturf’, nestpads used in
poultry farms and rain flaps under the brand ‘ClearPass’ in Romania and supplies
to the European market. With the acquisition of the plastic products division of
Solutia, Time not only gets access to ‘Astroturf’, which is a well-known brand in
lifestyle products, but it will also be able to sell the brands internationally to
various markets including Middle East and Europe.
2910
4595
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2002-07 2007-12
(Rs bn)
Govt. spending on Water Industry
The acquisition will enable
Time to market both ‘Astroturf’
and ‘ClearPass’ in the
international markets except
the USA
CRISIL EQUITIES | 12
Time Technoplast Ltd
Automotive products segment – new products in offing, but acceptance will take time
Automotive products contribute close to 10% of Time’s total revenues. Under
this business, the company primarily manufactures and markets rain flaps and
fuel tanks to domestic as well as European markets. The company has recently
developed some new innovative products like de-aeration tanks which it supplies
to Tata Motors, Ashok Leyland and Eicher Motors for their commercial vehicles.
It is currently in talks with these companies to supply these products for
passenger vehicles. Although internationally these polymer-based products are
used in passenger cars, in India it is currently not so. We believe such products
will take some time to take off as they have to go through various rounds of
testing before they can be sold to automobile players.
Inorganic route to growth has proven successful
Time has walked both paths - organic and inorganic. Of the 38% CAGR growth
registered so far during the period FY07-10, 23% has come from the organic
path and the remaining through inorganic means. These acquisitions have been
smaller in size; the idea was not to get the capacity but to either get access to
technology or to enter new markets. The company has been successful in
running and integrating these companies with its operations. Most of these
companies have demonstrated improvement in performance after Time acquired
them, which is a testimony of Time’s strong and able management.
Table 5: Acquisitions and growth path
Year Company acquired Cost of acquisition
(Rs mn)
TTL % of
Share
Reason for acquisition
Jul-06 TPL Plastech 322.58 75% Increase dominance in industrial packaging by acquiring
the second largest player
Nov-06 Pack Delta 159.73 49% Expanding presence in industrial packaging in Thailand
Nov-07 Ned Energy 482.89 71% Application of polymers in the manufacture of telecom
batteries
Apr-08 Gulf Power 225.00 100% Expanding the product portfolio to auto batteries
Nov-09 Komposite Praha 161.04 99% Technology for composite cylinders
Nov-09 YPA Thailand 70.80 100% Entering the European markets in lifestyle products
Oct-10 Power Build 51.60 60% Increasing presence and market share in Thailand
Oct-10 Plastic product division
of Solutia Europe
160.65 100% Technology for manufacturing solar batteries
Dec-10 Yung Hsin Taiwan 225.00 90% Entering Taiwan in industrial packaging
Source: Company, CRISIL Equities
The company has been successful in integrating and improving the performance
- utilisation and efficiencies - of acquired companies, resulting in increased
profitability.
CRISIL EQUITIES | 13
Time Technoplast Ltd
Table 6: Financials of acquisitions
Acquisition Year of
acquisition
Financials at the time of
acquisition
Financials
(FY10)
Revenues
(Rs mn)
EBITDA
(%)
Revenues
(Rs mn)
EBITDA
(%)
TPL Plastech July 2006 372.02 10.06% 733.88 14.45%
Pack Delta Nov 2006 281.15 18.25% 663.32 17.41%
NED Energy Nov 2007 391.85 15.21% 1953.42 20.52%
Source: Company, CRISIL Equities
Composite cylinders – new product, new challenge
Composite cylinders are cylinders made of polymers and glass reinforcement
fibre and are used for packaging gas. They have many advantages compared to
metal cylinders, both in terms of safety and weight. They not only weigh less
than half of metal cylinders, the safety levels are high as they can withstand
close to six times the pressure of a metal cylinder and are also not prone to
explosions.
The LPG cylinder market in India is huge with 180 mn cylinders currently in
circulation, while globally it is 600 mn units. These cylinders are mainly used for
cooking purposes. LPG penetration is likely to increase from an estimated 48.4%
of total households in FY10 to around 56.2% in FY15 following an increase in
rural customer base and the continued shift in demand from SKO (Standard
Kerosene Oil) to LPG. In order to encourage the use of LPG over other fuels, the
government has introduced the Rajiv Gandhi Grameen LPG Vitrak Yojana which
seeks to increase the domestic cooking gas penetration in India from 48% to
around 75% of the population by 2015. Apart from this, ~10% of the total
cylinders in circulation are replaced with new ones as typically the life of a metal
cylinder is close to 10 years.
Figure 11: Increasing number of LPG connections in India
Source: CRISIL Equities
89 95 102 106115
0
20
40
60
80
100
120
140
FY06 FY07 FY08 FY09 FY10
(mn)
LPG Connections
LPG cylinders: 180 mn
units in India, 600 mn
units globally
CRISIL EQUITIES | 14
Time Technoplast Ltd
Time has necessary technology and first-mover advantage
In November 2009, Time acquired Komposite Praha, a manufacturer of
composite gas cylinders in the Czech Republic, when it ran into trouble during
the recession. The company was formed by four scientists who developed the
technology for such cylinders, but could not run it profitably. The acquisition has
not only given access to technical know-how but also a capacity of 0.5 mn units.
The company has already started supplying to the European markets from its
Czech Republic unit.
Also, with access to this technology, Time has already developed a prototype to
market composite cylinders in India. Although there are other cylinder
manufacturers in India, who have also shown interest to enter the composite
cylinders, currently no one has the desired technology. We believe with
technology in place, Time will reap the benefits as the market for composite
cylinder opens up in India.
Indian market will take some time to open up, but opportunities in other markets are immense
Although the Government of India is keen to push composite cylinders in the
Indian market and has invited expression of interest from various players to set
up facility in India, we believe this may take some time because of necessary
approvals, clearances and other formalities. However, Time is planning to export
these composite cylinders to countries like Middle East, Sri Lanka and Indonesia
till opportunities in India open up. The company is in the process of setting up a
unit for manufacturing 1 mn composite cylinders at Talasari in Maharashtra,
which has received certification from TUV during the month. The TUV certification
will enable it to market the composite cylinders internationally. The company is
also in talks with various oil marketing companies (OMCs) in these markets who
have expressed their willingness to source these cylinders from Time.
Material handling, another new product; technology tie-up with Schoeller Arca
In 2009, Time entered a joint venture with Schoeller Arca Systems, the
Netherlands, for the launch of material handling products (MHP) in India. The
product is unique as against typical MHP, this new innovation is sturdier and can
be folded after its emptied, thereby reducing return freight costs. As per the JV
agreement, Schoeller Arca will provide the necessary technical knowhow while
Time will manufacture and market the same in India.
MHP products are used in the retail, agriculture, fisheries, automotive and postal
sectors. The company has set up facilities to manufacture 3,000 MT of MHP
products, which is expected to increase to 6,000 MT by FY13. While the plant
has been commissioned, we expect revenues to accrue from FY12.
We believe that both these products have tremendous potential but will take
time before they are accepted completely in India; their success remains a key
monitorable. We have been conservative in our estimates for these products and
have assumed a share of just 6% to total revenues in FY13.
Market acceptance of
innovative products is
likely to further
accelerate growth and
remains a key
monitorable
CRISIL EQUITIES | 15
Time Technoplast Ltd
Key risks
Dependence on growth of end-user industries
Time’s industrial packaging business is dependent on the growth of its end-user
industries such as chemicals, specialty chemicals, FMCG and others. In FY09,
during the economic slowdown, the chemicals and specialty chemical industry
slowed down significantly due to a slowdown in end-user industries, namely
infrastructure, construction, textiles, automobiles and personal care. Given that
industrial packaging is Time’s largest business segment, any such slowdown in
the future may have an impact on the company’s performance.
Relationship with Mauser, Germany
Time currently has a technology tie-up with Mauser, Germany for some of its
industrial packaging products for which it pays royalty to Mauser. The company
also has a JV with Mauser for the IBC products. Although the Time and Mauser
share a long relationship, any sort of disruption may have an adverse impact.
Successful integration of new acquisition is a key monitorable
Time has recently made a few global acquisitions - an industrial packaging
company in Taiwan and several acquisitions in Europe. Historically, the
management has been fairly successful in integrating the acquisitions. Going
forward, management’s ability to integrate the newer acquisitions and
successfully run these companies will be a key monitorable.
Success of new products
Time has recently developed two new products – composite cylinders and
returnable material handling. Both the products have good potential but may
take some time before they are accepted in the market. Although we have been
conservative in our revenue estimates from these new products, any further
delay in getting the desired success and acceptance from the market may have
an adverse impact on our estimates.
Delays in commissioning of new capacities
The company is currently in the process of setting up new Greenfield plants in
some international locations such as China and Indonesia. It is also in the
process of setting up facilities for its new products. Any delay in commissioning
of these capacities may have an impact on the financial performance of the
company.
Competition from international players in Asia
Although there are few players in the industrial packaging segment and with the
low penetration by plastics reduce the risks, Time faces competitive risks from
international players in industrial packaging in Asia.
In FY09, volumes and
margins were marginally
impacted due to
recession in end user
industries
CRISIL EQUITIES | 16
Time Technoplast Ltd
Financial Outlook
Revenues to grow at three-year CAGR of 25%
We expect Time’s revenues to grow at a three-year CAGR of 25% to Rs 19.5 bn
in FY13 driven by both organic and inorganic growth. Organic growth is expected
to be 21%, primarily driven by growth in industrial packaging (expected to grow
at a CAGR of 25%) as well as new products. By FY13, new products will
contribute ~6% to total revenues. Inorganic growth is expected to come from
the acquisition of an industrial packaging unit in Taiwan and a lifestyle product
division of Solutia.
Figure 12: Revenue and revenue growth Figure 13: Growth in industrial packaging
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Figure 14: Segment-wise revenue break up (FY10) Figure 15: Segment-wise revenue break up (FY13)
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
EBITDA margin have been fairly stable in the past; expect it to be in the range of ~19%
Time’s EBITDA margins in the past have been fairly stable and have been in the
range of 19-20%. Although the company uses polymers as its main raw
material, the prices of which have been volatile in the past, it has been able to
pass on the hike in prices given its high bargaining power with customers.
However, margins have dipped from 21.5% in FY08 to 19.9% in FY09 and
19.5% in FY10 on the back of an increase in overheads due to the various
acquisitions and lower utilisation of these capacities. We expect the company’s
7.8 10.0 12.1 16.5 19.5
16.6%
27.7%
21.2%
36.4%
18.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
5
10
15
20
25
FY09 FY10 FY11E FY12E FY13E
(%)(Rs bn)
Revenues Growth (RHS)
5.36.3
7.6
9.911.6
0
2
4
6
8
10
12
14
FY09 FY10 FY11E FY12E FY13E
Industrial Packaging (Rs bn)
Industrial Packaging,
61%
Infrastructure, 20%
Lifestyle Products, 9%
Automotive Products, 8%
Healthcare Products, 2%
New Products, 0%
Industrial Packaging,
58%
Infrastructure, 18%
Lifestyle Products,
12%
Automotive Products, 5%
Healthcare Products, 1%
New Products, 6%
CRISIL EQUITIES | 17
Time Technoplast Ltd
margins to remain at similar levels, 19.5% in FY11 and 19.3% in FY12 and
FY13. The company reported an EBITDA margin of 20% in the first six months of
FY11.
Figure 16: EBITDA margins to remain fairly stable
Source: Company, CRISIL Equities
PAT to grow at a three-year CAGR of 24%; EPS to almost double in three years
Consolidated PAT is expected to grow from Rs 909 mn in FY10 to Rs 1,751 mn in
FY13, driven by healthy revenue growth and stable margins. Net margins are
expected to decline from 9.1% in FY10 to 8.5% in FY11 and then improve to
8.9% in FY12 and 9% in FY13. EPS is expected to increase from Rs 4.3 in FY10
to Rs 8.4 in FY13.
Figure 17: PAT and PAT margin Figure 18: EPS to double in three years
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
1,559 1,952 2,360 3,186 3,761
19.9%19.5% 19.5% 19.3%
19.3%
15%
16%
17%
18%
19%
20%
21%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY09 FY10 FY11E FY12E FY13E
(%)(Rs mn)
EBITDA EBITDA margin (RHS)
690 909 1,026 1,478 1,751
8.8%
9.1%
8.5%
8.9%9.0%
8.1%
8.2%
8.3%
8.4%
8.5%
8.6%
8.7%
8.8%
8.9%
9.0%
9.1%
9.2%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY09 FY10 FY11E FY12E FY13E
(%)(Rs mn)
PAT PAT margin (RHS)
3.3 4.3 4.9 7.1 8.4
-21%
32%
13%
44%
18%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
0
1
2
3
4
5
6
7
8
9
FY09 FY10 FY11E FY12E FY13E
EPS EPS Growth
Continued capex on
expansions and
acquisitions have put a
pressure on ROE and
ROCE, which are set to
improve from FY12
CRISIL EQUITIES | 18
Time Technoplast Ltd
Management Overview
CRISIL's fundamental grading methodology includes a broad assessment of
management quality, apart from other key factors such as industry and business
prospects, and financial performance.
An experienced management led by professionals
Time has an experienced management led a by four professionals with over two
decades of experience in the polymer industry. The company is headed by Mr.
Anil Jain, managing director, with more than three decades of experience in the
industry. Mr Jain is supported by three promoter directors - Mr. Bharat Vageria
(Director Finance), Mr. Raghupathy Thyagarajan (Director Marketing) and Mr
Naveen Jain (Director Technical).
Successful in achieving market leadership
Time has been successful in establishing a leadership position in industrial
packaging in India through both organic and inorganic growth, under the able
guidance of Mr Anil Jain. Management has not only been able to handle organic
growth but also identified right opportunities, acquired them as well as
integrated them well with the current operations.
Proactive in innovating new products
Time’s management has an eye for innovative technologies. The company has
successfully innovated and developed new products in the past. It started with
industrial packaging and then continuously added new products such as
batteries, pipes, lifestyle products, automotive products, etc. It recently
acquired a technology to make two new products – composite cylinders and
material handling. Management’s ability to continuously innovate and implement
new technologies and products has enabled Time to scale up in a short span of
time.
A strong and experienced second line; management board in place
Based on our interactions and assesment, we believe the company has a strong
second-line of management. The senior management team has varied work
experiences in their respective fields and have been with the company for a
reasonable period of time. The company also has a Management Board
consisting of twelve members who are a part of the second-line of management
along with three permanent but external invitees.
Time’s management is
well focussed on
business with due
attention to innovative
application of polymers
CRISIL EQUITIES | 19
Time Technoplast Ltd
Corporate Governance
CRISIL’s fundamental grading methodology includes a broad assessment of
corporate governance and management quality, apart from other key factors
such as industry and business prospects, and financial performance. In this
context, CRISIL Equities analyses the shareholding structure, board composition,
typical board processes, disclosure standards and related-party transactions.
Any qualifications by regulators or auditors also serve as useful inputs while
assessing a company’s corporate governance.
Overall, Time’s corporate governance is good supported by an independent
board and good board practices.
Board composition
Time board consists of 10 members, of whom four are independent directors,
which meets the requirement under Clause 49 of SEBI’s listing guidelines.
Chairman of the board, Mr K. N. Venkatasubramanian, is a non-executive
member. He is the ex-chairman of Indian Oil and the chairman of a number of
oil companies namely IPCL, Gulf Oil. The other directors are highly qualified and
well experienced too. Most of the board members have been associated with the
company for more than 15 years and their suggestions and feedback are well-
received by the promoters. Given the background of directors, we believe the
board is well experienced. Based on our interaction with independent directors,
we believe they have a good understanding of the company’s business and its
processes.
Board’s processes
The company’s quality of disclosure can be considered good judged by the level
of information and details furnished in the annual report, websites and other
publicly available data. The company has all the necessary committees – audit,
remuneration and investor grievance - in place to support corporate governance
practices. The audit committee is chaired by an independent director, Mr M K
Wadhwa, a chartered accountant. The board meetings are conducted
professionally with the detailed agenda reaching the board of directors on time.
Corporate governance
practices are good
CRISIL EQUITIES | 20
Time Technoplast Ltd
Valuation Grade: 4/5
We have used the discounted cash flow (DCF) method to value Time and arrived
at a fair value of Rs 71 per share. The stock is currently trading at Rs 58 per
share. We initiate coverage on Time with a valuation grade of ‘4/5’, indicating
that the market price has upside from the current levels.
Key DCF assumptions
• We have forecasted the free cash flow from FY12 to FY17
• We have assumed cost of equity of 15.3%, factoring in risk premium for low
liquidity of the stock
• We have assumed a terminal growth rate of 3% beyond the explicit forecast
period until FY17
WACC computation
FY12-17 Terminal value
Cost of equity 15.3% 15.3%
Cost of debt (post tax) 6.3% 6.3%
WACC 11.3% 12.1%
Terminal growth rate 3.0%
Sensitivity analysis to terminal WACC and terminal growth rate
Terminal growth rate
Term
inal
WA
CC
1.0% 2.0% 3.0% 4.0% 5.0%
10.1% 76 87 101 119 145
11.1% 65 73 84 97 115
12.1% 56 62 71 81 94
13.1% 48 54 60 68 78
14.1% 42 47 52 58 65
Source: CRISIL Equities estimates
One-year forward P/E band One-year forward EV/EBITDA band
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
0
20
40
60
80
100
120
140
Jun-0
7
Aug
-07
Oct
-07
Dec-
07
Jan-0
8
Mar
-08
May
-08
Jul-
08
Sep-
08
Nov
-08
Jan-0
9
Mar
-09
May
-09
Jul-
09
Sep-
09
Oct
-09
Dec-
09
Feb
-10
Apr-
10
Jun-1
0
Aug
-10
Oct
-10
Dec-
10
(Rs)
Time Technoplast 5x 8x 11x 16x 23x
0
5000
10000
15000
20000
25000
Jun-0
7
Aug-
07
Oct
-07
Dec
-07
Jan-
08
Mar-
08
May-
08
Jul-
08
Sep
-08
Nov-
08
Jan-
09
Mar-
09
May-
09
Jul-
09
Sep
-09
Oct
-09
Dec
-09
Feb-
10
Apr
-10
Jun-1
0
Aug-
10
Oct
-10
Dec
-10
(Rs mn)
EV 3x 4x 5x 6x
We assign a fair value of
Rs 71 per share to Time
and initiate coverage with
a valuation grade of ‘4/5’
The fair value implies P/E
multiple 10x FY12 EPS
and 8.4x FY13 earnings
CRISIL EQUITIES | 21
Time Technoplast Ltd
P/E – premium / discount to NIFTY P/E movement
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Peer comparison
Companies CMP M.cap Price/Earnings (x) Price/Book (x) EV/EBITDA RoE (%)
(Rs mn) FY10 FY11E FY12E FY10 FY11E FY12E FY10 FY11E FY12E FY10 FY11E FY12E
Time Technoplast Ltd 58 12,127 13.3 11.8 8.2 2.1 1.8 1.5 8.4 7.7 6.4 17.1 16.4 20.0
Balmer Lawrie & Co Ltd 587 9,560 8.2 7.0 5.3 1.7 1.5 1.3 5.9 3.1 2.4 22.5 20.9 23.4
Sintex Industries Ltd 190 51,868 12.2 13.0 10.5 2.1 2.2 1.7 11.2 10.1 8.3 18.0 18.9 19.5
Supreme Industries Ltd* 151 19,118 9.2 9.1 7.3 3.5 3.0 2.3 6.2 5.5 4.5 43.4 40.2 35.8
*Year ended June
Source: CRISIL Equities
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Jun-
07
Aug
-07
Oct
-07
Dec-
07
Jan-0
8
Mar
-08
May-0
8
Jul-
08
Sep-
08
Nov
-08
Jan-0
9
Mar
-09
May-0
9
Jul-
09
Sep-
09
Oct
-09
Dec-
09
Feb-1
0
Apr-
10
Jun-
10
Aug
-10
Oct
-10
Dec-
10
Premium/Discount to NIFTY Median
0
5
10
15
20
25
30
35
Jun-
07
Aug-0
7
Oct
-07
Dec-
07
Jan-0
8
Mar
-08
May-0
8
Jul-
08
Sep
-08
Nov-0
8
Jan-0
9
Mar
-09
May-0
9
Jul-
09
Sep
-09
Oct
-09
Dec-
09
Feb-
10
Apr-
10
Jun-
10
Aug-1
0
Oct
-10
Dec-
10
1yr Fwd PE (x) Median PE
+1 std dev
-1 std dev
CRISIL EQUITIES | 22
Time Technoplast Ltd
Company Overview
Time was promoted by a group of professionals, experienced in the polymers
business. Incorporated in 1989, Time commenced operations in 1991 as a small-
scale unit with its plant in Daman. In 1993, the company entered into a
collaboration with Mauser, Germany, the world leader in industrial packaging.
The company gradually expanded its operations to 24 manufacturing units with
13 locations in India and the rest abroad - in Sharjah, Poland, Romania and
Thailand.
The company has five business segments based on the industries to which it
supplies the products - industrial packaging, infrastructure products, automotive
products, lifestyle products and healthcare products. Of these, industrial
packaging is the largest, contributing to 61% of revenues followed by
infrastructure with 20% contribution to revenues and lifestyle products with 9%
contribution to revenues. Although the majority of its current business comes
from India, it has also spread its reach to Europe and other Asian countries.
Figure 19: Corporate Structure
Source: Company, CRISIL Equities
Time Technoplast Limited India
Overseas SubsidiariesVentures Indian Subsidiaries
1.Time Mauser Industries Pvt Ltd India(TTL -49% ,Mauser -51%)
2.Mauser Holding Asia Pte Ltd, Singapore(TTL -49%, Mauser -51%)
2a.Pack Delta Public Co Ltd,Thailand(Mauser Holding Asia-99.65%)
3.Schoeller Acra Time, Singapore (TTL-50.10%, Schoeller Acra Netherland-49.90%)
3.Schoeller Acra Time Materials Handling Solutions Ltd., India (Schoeller Acra Time-1005)
1.Elan Incorporated FZE,Sharjah (100%)
1a.TianjingElan,China(Elan-100%)
1b.YPA,Thailand(Elan-100%)
2.NovoTechSp.z.o.o.,Poland(100%)
3.Kampozit-Praha S.R.O.,Czech Republic (TTl-99%)
1.TPL Plastech Ltd (TTL-75%)
2.Ned Energy Limited (TTL-71%)
2a.TechnikaCorp. FZE, Sharjah (Ned Energy Ltd-100%)
2a.i.GulfPowerbeat
WLL,Bahrain(Technika Corp.-100%)
4.Yung Hsin, Taiwan (90%)
CRISIL EQUITIES | 23
Time Technoplast Ltd
Milestones
1992 Production facility commenced at Daman, launched internationally acclaimed XL-ring drums
1993 Collaboration with Mauser, Germany
1998 Lifestyle products launched-entrance mattings (DuroTurf & Meadowz) based on special product technology
2000 Consumer packaging- commenced manufacturing PET sheet and conical pails
2004 Joint venture with Mauser; commenced production of IBC
2005 Development and launch of anti-spray rainflaps
2006 Launch of DuroSoft mattings
Started overseas operations, Sharjah,UAE Acquired TPL Plastech Ltd (Tainwala poly containers)
2007 Public issue in June 2007 of Rs 10 each at a premium of Rs 315 per share
Entered into battery business -acquired NED Energy, Hyderabad Acquired Pack Delta, Thailand under JV with Mauser
2008 Commenced production at Poland for automotive components Expanded battery capacity - acquired Gulf Powerbeat, WLL, Bahrain
2009 Expanded battery operations in India, new facility at Panoli (Gujarat) through NED
Energy Ltd
Acquired composite gas cylinder business in Czech Republic
Acquired competing business in Thailand, YPA (Thailand) Ltd - industrial packaging Signed JV with Schoeller Arca Systems, Netherland for launch of material handling
products (MHP) and material handling solutions in India
2010 Setting up Greenfield packaging project in Tianjin (North China)
Acquired plastics products division of Solutia, Europe
Acquired solar batteries manufacturer Powerbuild, Bangalore Acquired Yung Hsin, Taiwan
CRISIL EQUITIES | 24
Time Technoplast Ltd
Annexure: Financials
Source: CRISIL Equities
Income statement Balance Sheet(Rs mn) FY09 FY10 FY11E FY12E FY13E (Rs mn) FY09 FY10 FY11E FY12E FY13E
Operating income 7,834 10,003 12,124 16,542 19,525 LiabilitiesEBITDA 1,559 1,952 2,360 3,186 3,761 Equity share capital 209 209 209 209 209 EBITDA margin 19.9% 19.5% 19.5% 19.3% 19.3% Reserves 4,434 5,252 6,165 7,481 9,039 Depreciation 259 355 477 537 633 Minorities 223 312 343 377 415 EBIT 1,300 1,597 1,883 2,649 3,128 Net worth 4,867 5,773 6,717 8,067 9,663 Interest 271 333 473 646 763 Convertible debt - - - - - Operating PBT 1,029 1,264 1,410 2,003 2,365 Other debt 3,197 4,398 5,905 8,074 9,117 Other income 3 14 28 20 22 Total debt 3,197 4,398 5,905 8,074 9,117 Exceptional inc/(exp) 4 (6) - - - Deferred tax liability (net) 173 211 211 211 211 PBT 1,035 1,272 1,438 2,023 2,386 Total liabilities 8,237 10,382 12,833 16,352 18,992 Tax provision 269 296 331 455 537 AssetsMinority interest 72 74 81 89 98 Net fixed assets 3,961 4,776 6,299 7,262 8,966 PAT (Reported) 694 903 1,026 1,478 1,751 Capital WIP 284 609 989 2,053 2,053 Less: Exceptionals 4 (6) - - - Total fixed assets 4,246 5,385 7,288 9,316 11,020 Adjusted PAT 690 909 1,026 1,478 1,751 Investments 3 - - - -
Current assets
Ratios 25% Inventory 1,493 2,045 2,425 3,308 3,905
FY09 FY10 FY11E FY12E FY13E Sundry debtors 1,791 2,075 2,491 3,399 4,012 Growth Loans and advances 455 728 882 1,204 1,421
Operating income (%) 16.6 27.7 21.2 36.4 18.0 Cash & bank balance 497 432 301 334 282
EBITDA (%) 7.9 25.2 20.9 35.0 18.0 Marketable securities - - - - - Adj PAT (%) (20.7) 31.7 12.9 44.1 18.4 Total current assets 4,235 5,280 6,099 8,245 9,620 Adj EPS (%) (20.7) 31.7 12.9 44.1 18.4 Total current liabilities 1,028 1,511 1,782 2,437 2,877
Net current assets 3,207 3,769 4,317 5,808 6,743 Profitability Intangibles/Misc. expenditure 781 1,228 1,228 1,228 1,228 EBITDA margin (%) 19.9 19.5 19.5 19.3 19.3 Total assets 8,237 10,382 12,833 16,352 18,992 Adj PAT Margin (%) 8.8 9.1 8.5 8.9 9.0 RoE (%) 15.3 17.1 16.4 20.0 19.8 Cash flow
RoCE (%) 18.2 17.5 16.5 18.4 17.9 (Rs mn) FY09 FY10 FY11E FY12E FY13E
RoIC (%) 15.3 15.4 14.6 15.9 15.4 Pre-tax profit 1,031 1,279 1,438 2,023 2,386 Total tax paid (245) (258) (331) (455) (537)
Valuations Depreciation 259 355 477 537 633 Price-earnings (x) 9.9 13.3 11.8 8.2 6.9 Working capital changes (264) (626) (679) (1,458) (987) Price-book (x) 1.4 2.1 1.8 1.5 1.3 Net cash from operations 782 750 905 647 1,496 EV/EBITDA (x) 6.2 8.4 7.7 6.4 5.7 Cash from investments
EV/Sales (x) 1.2 1.6 1.5 1.2 1.1 Capital expenditure (1,608) (1,942) (2,380) (2,565) (2,337) Dividend payout ratio (%) 15.9 13.8 9.5 9.5 9.5 Investments and others - 3 - - - Dividend yield (%) 1.6 1.0 0.8 1.2 1.4 Net cash from investments (1,608) (1,939) (2,380) (2,565) (2,337)
Cash from financing
B/S ratios Equity raised/(repaid) - - - - - Inventory days 91 97 95 95 95 Debt raised/(repaid) 1,101 1,202 1,507 2,169 1,043 Creditors days 54 62 60 60 60 Dividend (incl. tax) (110) (124) (113) (163) (193) Debtor days 74 70 70 70 70 Others (incl extraordinaries) 63 47 (50) (55) (61) Working capital days 120 110 111 105 112 Net cash from financing 1,054 1,125 1,344 1,951 790 Gross asset turnover (x) 1.8 1.6 1.5 1.7 1.7 Change in cash position 228 (65) (131) 34 (52) Net asset turnover (x) 2.7 2.3 2.2 2.4 2.4 C losing cash 497 432 301 334 282
Sales/operating assets (x) 2.2 2.1 1.9 2.0 1.9 Current ratio (x) 4.1 3.5 3.4 3.4 3.3 Quarterly financials
Debt-equity (x) 0.7 0.8 0.9 1.0 0.9 (Rs mn) Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11
Net debt/equity (x) 0.6 0.7 0.8 1.0 0.9 Net Sales 2,504 2,469 3,059 2,481 3,249 Interest coverage 5.8 5.9 5.0 4.9 4.9 Change (q-o-q) 20.3% -1% 24% -19% 31%
EBITDA 533 480 479 521 624 Per share Change (q-o-q) 16% -10% 0% 9% 20%
FY09 FY10 FY11E FY12E FY13E EBITDA margin 21.3% 19.4% 15.7% 21.0% 19.2%Adj EPS (Rs) 3.3 4.3 4.9 7.1 8.4 PAT 246 219 239 269 301 CEPS 4.5 6.0 7.2 9.6 11.4 Adj PAT 246 219 239 236 301 Book value 23.3 27.6 32.1 38.5 46.2 Change (q-o-q) 21% -11% 9% -1% 28%Dividend (Rs) 0.5 0.6 0.5 0.7 0.8 Adj PAT margin 9.8% 8.9% 7.8% 9.5% 9.3%Actual o/s shares (mn) 209.3 209.3 209.3 209.3 209.3 Adj EPS 1.2 1.0 1.1 1.1 1.4
CRISIL EQUITIES | 25
Time Technoplast Ltd
Focus Charts
Segment-wise revenue break up Stable EBITDA margins over the years
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Revenue and revenue growth PAT and PAT margin
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
RoE and RoCE to improve from current levels Shareholding pattern over the quarters
Source: Company, CRISIL Equities Source: Company, CRISIL Equities
Composite products,
22%
Polymer products,
78%
19.8%
19.3%
21.5%
19.9%
19.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
FY06 FY07 FY08 FY09 FY10
EBITDA Margins
7.8 10.0 12.1 16.5 19.5
16.6%
27.7%
21.2%
36.4%
18.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
5
10
15
20
25
FY09 FY10 FY11E FY12E FY13E
(%)(Rs bn)
Revenues Growth (RHS)
690 909 1,026 1,478 1,751
8.8%
9.1%
8.5%
8.9%9.0%
8.1%
8.2%
8.3%
8.4%
8.5%
8.6%
8.7%
8.8%
8.9%
9.0%
9.1%
9.2%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY09 FY10 FY11E FY12E FY13E
(%)(Rs mn)
PAT PAT margin (RHS)
24.7%
18.2%17.5%
16.5%18.4% 17.9%
27.8%
15.3% 17.1% 16.4%
20.0% 19.8%
0%
5%
10%
15%
20%
25%
30%
FY08 FY09 FY10E FY11E FY12E FY13E
ROCE ROE
62% 62% 62% 62%
12% 12% 12% 11%
4% 4% 4% 5%
21% 22% 22% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-09 Mar-10 Jun-10 Sep-10
Promoter FII DII Others
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