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Indo Rama Synthetics (India) Ltd. Quarter 2 Results : 2007-08 Analyst Meet MUMBAI 01 NOV., 2007 Slide 2 2 2 The Meet Highlights Indo Rama Synthetics - Financial Performance Q2 2007 - 08 Emerging Polyester Scenario Crude & Raw Material Outlook Indian Polyester Industry Dynamics Summary Slide 3 3 3 Indo Rama Synthetics Financial Performance Q2 2007 - 08 Slide 4 4 4 Financial Highlights IRSL Particulars Q2 2007-08 Q2 2006-07 Gross Turnover 715.92 421.38 Less : Excise Duty on Sales 46.56 28.35 Net Turnover 669.36 393.03 Other Income 4.88 6.28 Total Income674.24399.31 (Increase) / Decrease in Stock- in-Trade (126.28) (95.05) Movement in Excise Duty on Stocks 12.04 7.70 Raw materials 602.25 367.58 Purchase of traded goods - 0.25 Staff Cost 12.52 9.08 Other Expenditure 111.47 65.95 Total Expenditure 612.00 355.51 In Rs. Crores Slide 5 5 5 Financial Highlights IRSL In Rs. Crores Particulars Q2 2007-08 Q2 2006-07 EBDITA62.2443.80 Interest9.395.47 EBDT 52.85 38.33 Depreciation 34.68 24.93 Profit Before Tax (PBT) 18.1713.40 Provision for Taxation -MAT - - -FBT0.210.20 -Deferred Tax6.164.47 Profit after Tax (PAT) 11.80 8.73 Slide 6 6 6 Analysis of Q2 Results Significant achievement of placing the enhanced capacity by penetrating new markets 70% increase in net turnover 97% increase in sales volume 58% increase in domestic sales volume 79% increase in production volume Comparison on Y-O-Y basis Slide 7 7 7 Analysis of Q2 Results EBIDTA went up by 42% Cash Profit increased by 38% PBT went up by 36 % despite : Increase in Interest cost by 72% due to Increase in the Rate of Interest Debt taken for funding the new polyester plant Increase in depreciation by 39% because of commencement of new polyester plant Aggressive marketing policy to capture market share Comparison on Y-O-Y basis Slide 8 8 8 Financial Highlights IRSL In Rs. Crores Particulars H1 2007-08 H1 2006-07 Gross Turnover 1,445.52 927.10 Less : Excise Duty on Sales 96.48 65.69 Net Turnover 1,349.04 861.41 Other Income 44.55 8.38 Total Income1393.59869.79 (Increase) / Decrease in Stock- in-Trade (90.09) (99.50) Purchase of traded goods - 26.35 Movement in Excise Duty on Stocks 9.43 8.26 Raw - materials 1,126.33 699.46 Staff Cost 25.03 19.04 Other Expenditure 203.41 137.84 Total Expenditure 1,274.11 791.45 Slide 9 9 9 Financial Highlights IRSL In Rs. Crores H1 2007-08 H1 2006-07 EBDITA 119.4878.34 Interest 28.0712.48 EBDT 91.4165.86 Depreciation 69.0949.72 Profit Before Tax (PBT) 22.3216.14 Provision for Taxation -MAT 0.00(0.52) -FBT 0.700.40 -Deferred Tax 7.555.35 Profit after Tax (PAT)14.0710.91 Slide 10 10 Analysis of H1 Results Significant achievement of placing the enhanced capacity by penetrating new markets 57% increase in net turnover 75% increase in sales volume 46% increase in domestic sales volume 63% increase in production volume Comparison on Y-O-Y basis Slide 11 11 Analysis of H1 Results EBIDTA went up by 53% Cash Profit increased by 38% PBT went up by 38% despite : Increase in Interest cost by 125% due to Increase in the Rate of Interest Debt taken for funding the new polyester plant Increase in depreciation by 39% because of commencement of new polyester plant Aggressive marketing policy to capture market share Comparison on Y-O-Y basis Slide 12 12 In MT Sales Volume Has Shown Consistent Growth Slide 13 13 Operating Performance Has Shown Consistent Growth In Rs. Cr. Slide 14 14 Emerging Polyester Scenario Slide 15 15 Declining world Cotton Availability Millions of 480-lb bales US Cotton acreage has fallen by 20-25% this year & is expected to fall further 20-25% next year because of substitution of land by other Crops Source : USDA (P) Cotton Year is from Oct to Sept Slide 16 16 Hardening Of Cotton Prices Internationally Price (Cents/Kg.) Cotton Prices Internationally are showing upward bias improving the competitiveness of Polyester Slide 17 17 Robust World PFY Outlook With Increasing Demand Operating Rates are projected to move up Source: PCI In MMT Operating Rate (P) Slide 18 18 Robust World PSF Outlook With Increasing Demand Operating Rates are projected to move up Source: PCI In MMT Operating Rate (P) Slide 19 19 Emerging Industry Outlook Cotton : Prices are expected to remain firm leading to higher demand of Polyester as alternative fibre POY : Operating Rates are projected to move up, improving the future outlook of POY PSF : Operating Rates are projected to move up, improving the future outlook of PSF Slide 20 20 Crude & Raw Material Outlook Slide 21 21 Behaviour of PTA & Crude Oil Prices PTA prices have not kept pace with the increase in the Crude Oil prices * Prices Shown in the chart are average price for the month $ / Tonne $ / Barrel Slide 22 22 MMT Operating Rate% Improved PTA Availability Source: PCI Supply Surging ahead of demand likely softening of prices (P) Slide 23 23 Global Paraxylene Outlook MMT Supply of PX surging ahead of demand leading to Softening of Prices In India Reliance, IOC and MRPL have already announced plans for putting up new Paraxylene plant leading to better domestic availability Source: PCI Slide 24 24 MEG Global Outlook Rising Surplus Capacity of MEG is likely to Soften MEG prices MMT Operating Rate Source: PCI (P) Slide 25 25 Summary of Raw Material Outlook Crude Oil : Crude Oil prices have moved up to new highs. PTA : PTA prices are showing downward bias with increasing availability prices are expected to remain benign PX : From next year PX Supply should outpace demand leading to benign price environment MEG : MEG prices are expected to decline from the third quarter with capacities coming up on later half of the year Slide 26 26 Indian Polyester Industry Dynamics Slide 27 27 Break-up of PSF Capacity in India Source: PCI Total Indian PSF Capacity : 1.2 MMT Slide 28 28 Break-up of POY Capacity in India Out of total 32 players the biggest 2 dominate the market with capacity share of 49.2% Source: PCI Total Indian POY Capacity : 1.9 MMT Slide 29 29 Market Share Of IRSL Steadily Increasing IRSL has increased its market share in all the value added products. Growing Polyester demand & no increase in capacities in the near future augurs well with our growth strategies. Slide 30 30 Melt Chips POY Fine POY Coarse PSF 125% 117% 110% 114.5% Polyester Industry Value Chain JBF, Garden IRSL, RIL, Bombay Dyeing IRSL, RIL IRSL & RIL are the only 2 players present across the total value chain 100% FDY 149% RIL, IRSL, JBF, Nova Slide 31 31 Summary Having successfully placed the entire production in the market we shall be concentrating in improving the bottom-line Raw material scenario is expected to remain benign Cotton Prices are showing a firm trend globally Being present across the entire Polyester value chain IRSL is expected to greatly benefit from the improvement in the industry scenario Slide 32 32 House Open for Questions