adhunik metaliks limited - alpha ideas

Adhunik Metaliks Limited Results Presentation for the

quarter ended March 31, 2013

May 30, 2013

Steel Mining Power

2

Disclaimer

Certain matters discussed in this presentation may contain statements regarding the Company’s market opportunity

and business prospects that are individually and collectively forward-looking statements. Such forward-looking

statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and

assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to: the performance

of the Indian economy and of the economies of various international markets, the performance of the steel, mining

and power industry, competition, the Company’s ability to successfully implement its strategy, risks associated with

acquisitions of, and investments in, other entities, the Company’s future levels of growth and expansion, the

Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results,

levels of activity, performance or achievements could differ materially and adversely from results expressed in or

implied by this presentation. The Company assumes no obligation to update any forward-looking information

contained in this presentation. Any forward-looking statements, projections and industry data made by third parties

included in this presentation are not adopted by the Company and the Company is not responsible for such third party

statements and projections

All financial data for quarter & period ended March 31, 2013 are unaudited

3

Table of Contents

Financial Snapshot

Message from Management

Segmental Overview

Steel

Consolidated Financial Performance

4-6

7

9-11

18-20

Strategic Plan 25-26

Mining 12-14

Power 15-17

About Us & Investor Contacts 27

Company Overview 21-24

FINANCIAL SNAPSHOT

Mining

5

Financial Snapshot - Consolidated

569 613

1,027

0

200

400

600

800

1,000

1,200

Mar'12 Dec'12 Mar'13

Net Operating Income*

90

153

178

-20

20

60

100

140

180


EBITDA*

Business Overview

Financial Snapshot

Steel Mining Power Financial Highlights

Consolidated Strategic Plan

(42)

40

21

-60

-40

-20

0

20

40

60


PAT*

(3.4)

3.2

1.7

-4

-2

0

2

4


EPS (non-annualized) (`)

* ` crore

6

Financial Snapshot

AML*, 74%

OMM*, 26%

Mar’12

AML*, 51%

OMM*, 49%

Mar’12

AML*, 45%

OMM*, 55%

Dec’12

Net Operating Income Breakup

EBITDA Breakup



Business Overview

Financial Snapshot

AML*, 72%

OMM*, 28%

Mar’13

AML*, 56%

OMM*, 44%

Dec’12

AML*, 36% OMM*,

64%

Mar’12

* AML – Standalone Steel business; OMM – Standalone Mining business

7

Message from the Management

Commenting on the Company’s performance for the quarter ended March 31, 2013, Mr. Manoj Kumar Agarwal, Managing Director at Adhunik Metaliks said:

“We are pleased to announce the COD of the second unit of 270 x 2 MW (540 MW) of our merchant power plant in Jharkhand. Both units have now stabilized and are operating at high load. With coal linkages and PPAs in place, we believe we are well positioned to improve financial results whilst paring debt which in turn will improve return ratios. Commencement of our captive coal block in Ganeshpur by Q1 FY15 will further augment performance.

Our mining operations continue to be strong. We expect this to be further improved with the ramp up of our pellet capacities. The performance of our steel business has been modest given the challenges in the steel sector. While our focus on backward integration partially mitigated these impact, we continue to focus on bringing in efficiencies to improve overall corporate performance.

While the challenges in the macro-environment persist, we are pleased with our operational performance and are confident of leveraging our strong and integrated business model to drive synergies and deliver sustained growth as the environment improves.”

Business Overview

Financial Snapshot



SEGMENTAL OVERVIEW

Mining

10

Differentiated and Integrated Business Model P

rod

uct

D

iffe

ren

tiat

ors

V

alu

e

Dri

vers

● Single location 0.45 MTPA capacity alloy steel plant catering to auto, power, engineering, oil & gas sectors

● Product mix shifting to higher value added items

● Higher Realizations

● Approvals from leading OEMs

● Captive natural resources (iron ore, Kulum)

● Captive power plant

● Captive railway slidings and rakes

● Cost efficient integreted model

Financial Snapshot



Sele

cted

P

rod

uct

s

Business Overview

Coal Mine

Iron Ore

11

Operational Overview – Quarter ended Mar’13

74.5 83.9

100.4

40.9

74.0

59.6

35.6

26.4 26.1

0

10

20

30

40

50

0

20

40

60

80

100

120


` ‘

00

0/t

on

ne

‘00

0 t

on

ne

Billets

Production Sales Realizations

30.5

20.6 20.4

28.9

21.7 21.3

47.4 52.8 49.4

0

10

20

30

40

50

60

0

10

20

30

40


` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Rolled Steel


1.5

3.8

4.8

0.3

2.1

3.3

43.2 39.5

45.9

0

10

20

30

40

50

0

1

2

3

4

5

6


` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Ferro Alloy


58.1

45.2 45.5

14.1 5.2 4.1

28.9

23.9 23.6

0

10

20

30

0

20

40

60

80


` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Pig / Hot Metal


Financial Snapshot



Business Overview

MINING

13

Our Resources

Particulars Ghatkuri Iron Ore

Mines Suleipat Iron Ore Mines (50:50 JV)

Patmunda Manganese Ore Mine

Other Manganese Ore Mines

Location West Singhbhum,

Jharkhand Mayurbhanj, Orissa Sundergarh, Orissa Koira, Orissa (5 mines)

Estimated Mineable Resources (MMT)

40-45 40 15 5

Mine Type Open Cast Open Cast Open Cast Open Cast

Grade Fe: 58-62% Fe: 62-64% Mn: 28-38%+ Mn: 28-38%+

Area Under Mining Lease

276.0 Ha 618.0 Ha 807.3 Ha 150.0 Ha

Area Under Operation 141.0 Ha 364.0 Ha 91.0 Ha 100.0 Ha

Approved Mining Plan 2.0 MTPA 0.6 MTPA

(Applied for 3.0 MTPA) 0.36 MTPA 0.18 MTPA

Current Status Operational Operational Operational 2 operational

2 under development

Business Overview

Financial Snapshot



Jhar

khan

d

Orissa

Manganese Ore Mines

Suleipat Iron Ore

Ghatkuri Iron Ore mines

14

Operational Overview – Quarter ended Mar’13

70.8

264.8

108.9

3.3

3.3 3.0

0

1

2

3

4

0

75

150

225

300


` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Iron Ore

Sales Realizations

7.1

10.8

4.7

6.8

-

2

4

6

8

-

2

4

6

8

10

12

Dec'12 Mar'13

` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Manganese Ore

Sales Realizations

133.5

228.2 236.0 9.6

9.1

7.4

0.0

3.0

6.0

9.0

12.0

0

50

100

150

200

250


` ‘0

00

/to

nn

e

‘00

0 t

on

ne

Pellet*

Sales Realizations

Business Overview

Financial Snapshot



* Operations of 1.2 mn tonne Pellet plant commenced in Dec’ 11 Realizations –Ex-mine / Ex-plant

16

Phase I: Jharkhand Project (2x270MW) Overview

• 515 acres (97% of total land) acquired and acquisition of balance 18 acres under progress • Entire land at a distance of 1 km from the 400 KVA sub-station of PGCIL

• Fuel: Captive coal mines. 138 MT coal block at Ganeshpur, Jharkhand (50:50 JV with Tata Steel) o Land Acquired o Mining Plan approved o Public Hearing Completed o MOEF approval progress satisfactory

• Option – 2: Mining arrangement with Tata Steel as lead • Tapering linkage received for entire 540 MW • BTG ordered from BHEL for 540 MW • COD for first phase of 540 MW (2x270 MW) declared

• Total cost: ` 3,151 crore. Equity: ` 813 crore and Debt: ` 2,338 crore [Debt/Equity: 3:1] • Equity Tie-ups: IDFC - (` 290 crore) and SBI Macquarie: (` 145 crore) • ` 787 crore of equity already infused and ` 2,320 crore of debt already drawn down till March

31, 2013 (APNRL)

Land

Fuel and BTG

Financial Closure

Approvals & PPA

• MoEF clearance and NOC from Pollution Control Board have been received for Phase I & II (2x270 MW)

• Received chimney height clearance • Water for 1,000 MW (35.6 mcm) approved from a perennial river at a distance of 10 kms • Permission for railway siding received • Bulk Power Transmission Agreement (BTPA) signed • PPA for ~423 MW executed

Financial Snapshot

Steel Mining Financial Highlights


Business Overview

Power

17

Power Project Updates

• The first phase unit of 270 x 2 MW (540 MW) coal fired thermal power plant has now stabilized

– Secured tapering coal linkages and executed Fuel Supply Agreement from Coal India Limited (CIL)

– Unit I of power plant operating at 70-85% load

– Recently declared COD of Unit II of power plant

– The Company has started delivering power as per the PPA arrangement

• Approvals and clearance for Captive coal mines at Ganeshpur, Jharkhand expected by Q1 FY15

FINANCIAL OVERVIEW - CONSOLIDATED

Mining

19

Financial Highlights - Consolidated

Particulars (` crore) Quarter ended Mar 31, 2013

Quarter ended Dec 31, 2012

Shift (%) Quarter ended Mar 31, 2012

Shift (%) Period ended

March 31, 2013

Net Operating Income 1,027.1 612.6 67.7 568.6 80.6 2,255.3

EBIDTA 177.6 152.7 16.3 90.2 96.9 484.4

EBIDTA Margin (%) 31.3 24.9 640 bps 15.9 1,540 bps 21.5

Depreciation 53.3 33.2 60.5 36.5 46.0 121.5

Interest 122.8 92.6 32.6 93.9 30.8 305.7

PBT 26.7 46.2 (42.2) (25.8) NA 117.4

PAT 21.2 39.7 (46.6) (42.1) NA 97.1

PAT Margin (%) 2.0 6.5 (450 bps) (7.4) NA 4.3

Non-annualised EPS (`) 1.72 3.22 (46.6) (3.41) NA 7.86

Financial Snapshot



Business Overview

20

Balance Sheet - Consolidated

Particulars (` crore) As on Mar 31, 2013 As on Mar 31, 2012

Net Fixed Assets 4,477.7 4,682.7

CWIP 837.4 2575.0

Networth 1,569.4 908.2

Total Debt 4,772.9 4,100.2

- AML 1,229.7 1,509.6

- OMM 1,023.1 772.2

- APTL* - -

- Neepaz V – Forge* - 149.2

- APNRL 2,520.1 1,669.2

Cash & Cash equivalent 54.1 115.6

Financial Snapshot

Steel Mining Power Strategic Plan Financial Highlights

Consolidated Business Overview

* The Company’s investment in APTL & Neepaz V-Forge were sold in December 2011 and April 2012 respectively

21

COMPANY OVERVIEW

Mining

22

Group Business Structure

Business Overview

Financial Snapshot



# Our Share 49%

Note: We have sold our investments in Neepaz V Forge & Adhunik Power Transmission Limited

*Net Operating Income and EBITDA Margins for 9M ended March 31, 2013 (audited)

**Shareholding as on 31st March 2013

Vertically Integrated Business Segments

Adhunik Metaliks Limited - Flagship/Holding Company

o Alloy and Special Steels: Adhunik Metaliks Limited (AML) – 0.45MTPA

Captive Mines

o Iron Ore: 18 MMT (Operational)

Adhunik Power and Natural Resources Ltd. (APNRL): 81.74% subsidiary** o IPP: 540 MW o First unit of 270 MW COD declared on

21 Jan 2013 o Second unit of 270 MW COD declared

on 19 May 2013

Captive Mines

o Coal: 69 MMT

Orissa Manganese & Mining Ltd (OMML): 100% Subsidiary** o Iron Ore: 40- 45 MMT (Operational) o Manganese Ore: 15 MMT

(Operational)

Suleipat Mines (50:50 JV)

o Iron Ore: 40 MMT (Operational)

1.2 mn tons per annum Integrated Iron Ore Beneficiation & Pellet Plant

(Operational)

Patratu Mines (49:51 JV)#

Coal: 450 MMT (recently allocated)

Mining Revenues*: ` 221.7 crore

EBITDA Margins* (%): 27.0 %

Power Steel

Revenues*: ` 567.3 crore EBITDA Margins* (%): 10.9 %

23

The Natural Resources Advantage

Business Segment` Mineral Resources Location Status

Steel (Captive) Iron Ore 18 MMT Keonjhar, Orissa Operational

Merchant Mining

Iron Ore 40-45 MMT Ghatkuri, Jharkhand Operational

Manganese Ore

15 MMT Patmunda, Orissa Operational

5 MMT Koira, Orissa Operational

Merchant Mining (Joint Venture Company)

Iron Ore 40 MMT Mayubhanj, Orissa Operational

Coal 450 MMT Patratu, Jharkhand Recently Allocated

Power (Captive) Coal 69 MMT Ganeshpur, Jharkhand Expected COD by Q1 FY15

Business Overview

Financial Snapshot



24

Our Strengths

• Established presence in Iron ore mining and manganese mining • Commenced 1.2 mn tons per annum Integrated Iron Ore Beneficiation & Pellet Plant

• Setting up a 540 MW (2x270 MW) coal based power plant in Jharkhand

COD for first unit of 270 MW declared on 21st Jan 2013

COD for second unit of 270 MW declared on 19th May 2013

Diversified Minerals and Energy Player

• Minerals: from mining to manufacturing of special steel for automobile and engineering sectors

• Energy: From mining to power generation

Vertically Integrated Operations

• Access to high grade iron ore and manganese reserves • Sizeable resources of iron ore & manganese ore

• Coal linkages for power plant in place pending commencement of Ganeshpur coal block

Raw Material Access

• Proven execution capabilities, having set up projects in steel and allied industries • Experienced management team in operations, mining and project management

Operational Track Record

• Revenue CAGR of 22.6% from FY08 to FY13* (annualized) • EBITDA CAGR of 20.3% from FY08 to FY13* (annualized)

* FY13 results annualized (April 1, 2013 – March 31, 2013)

Strong Financial Performance

Business Overview

Financial Snapshot



STRATEGIC PLAN

Mining

26

Way Forward

Business Overview

Financial Snapshot



Em

erg

e a

s a

div

ers

ifie

d m

eta

l, m

inin

g a

nd

en

erg

y p

rod

uc

er

- Move up the value chain of steel manufacturing to produce high value added steel like auto steel and structural steel

- Emerge as a preferred vendor to the leading domestic as well as global OEMs

- Ramp up of production from captive iron ore

- Focus on volume increase in iron ore and manganese ore

- Convert inexpensive low-grade iron ore fines to high value pellet for merchant sales

- Ramp up production levels of the recently commissioned 1.2 MTPA iron ore beneficiation & pellet project

- Successful commissioning of Patratu Coal mine

- Assured linkages with CIL to ensure optimum operations

- COD of captive coal block at Ganeshpur by Q1 FY15 expected to reduce power cost by over 50%

- Optimum mix of long term Power purchase agreement and spot market sales

- Further expansion plan to be backed by fuel security

STEEL

MINING

POWER

27

Sachin Bhansali / Ankur Modi Gavin Desa / Ishan Selarka / Ashwin Chhugani

Adhunik Metaliks Limited CDR India

D: +91 33 3051 7100 D: +91 22 6645 1237 / 1232 / 1250

Fax: +91 33 2289 0285 Fax: +91 22 6645 1213

Email: [email protected] Email: [email protected]

[email protected] [email protected]

[email protected]

About Us & Investor Contacts

For further information please log on to www.adhunikgroup.com or contact:

Adhunik Metaliks Limited (AML) is a diversified metal and mineral producer, having

presence in steel manufacturing of 0.45 million ton per annum (mtpa), merchant mining

(operates the mining business through wholly owned subsidiary Orissa Manganese and

Minerals Limited (OMML). It has also forayed into merchant power business through its

subsidiary Adhunik Power and Natural Resources Limited (APNRL – 81.74% stake as on

March 31, 2013), which has setup 540 MW (2 X 270 MW) coal based power plant in

Jharkhand.

http://www.adhunikgroup.com/

adhunik metaliks limited - alpha ideas

Documents