irsl analyst meet presentation oct

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


(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


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

irsl analyst meet presentation oct

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