Atul Limited · NSE:ATUL
Atul — Investor Day (May 2018)
109 slides from Atul's investor day presentation, May 4, 2018
Slide 1: Analyst Meet 2018
Analyst Meet 2018 Main slides: 74 May 04, 2018 Total time: 60 minutes | 74
Slide 2: Welcome: Miles to go
Welcome Miles to go … Parnera hillock, Atul village | 74
Slide 3: Disclaimer
Disclaimer We have shared information and made forward looking statements to enable investors to know our product portfolio, business logic and direction and thereby comprehend our prospects. We cannot guarantee that these forward looking statements will realise although we believe we have been prud
Slide 4: Agenda
Agenda Future in perspective 01 - 21 Financials 2017-18 22 - 29 Sub-segment overview 30 - 74 | 74
Slide 5: Legacy
Legacy | 74
Slide 6: Kasturbhai Lalbhai
Founder Kasturbhai Lalbhai Ethics Perseverance Envisioning Attention to detail Larger purpose (1894 –1980) 1 | 74
Slide 7: Atul stands for …
Atul stands for … Integrity Understanding Unity Responsibility Excellence Decisions and External Though we Delivering Excelling in actions remain manifestation may be many, values and everything consistent with of we share a taking we do thoughts internal common ownership of and and words realisatio
Slide 8: Atul today
Atul today Atul Bioscience Atul Brazil Quimicas Atul China Atul Rajasthan Date Palms Atul Europe Atul Foundation Atul Club Amal Atul Institute of Atul Middle-East Vocational Excellence Rudolf Atul Chemicals Atul USA 3 | 74
Slide 9: Footsteps
Footsteps 1st 1st private sector company company to produce several speciality 3,000+ inaugurated by the first employees chemicals first time in Prime Minister of India India 65 70 900+ manufacturing plants years of incorporation products 400+ 85+ 6,000+ formulations countries customers 4 | 74
Slide 10: Footprint
Footprint Endeavouring to make ‘Made in India’ label proud 5 | 74
Slide 11: Serving diverse customers
Serving diverse customers | 74
Slide 12: Serving diverse customers
Serving diverse customers | 74
Slide 13: Performance
Performance | 74
Slide 14: Sales trend
Sales trend ` cr 3,050 14 years CAGR: 13% 2,639 2,510 2,403 2,307 1,964 1,746 1,508 1,159 1,168 998 895 817 682 568 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 6 | 74
Slide 15: Sales growth
Sales growth 500 400 1,000 1,000 1,000 ` cr 4,000 3,050 1,964 998 578 0.2 1952 FY 03 FY 08 FY 13 FY 18 - 50 years 5 years 5 years 5 years _ years 7 | 74
Slide 16: Profit and RoCE trends
Profit and RoCE trends ` cr 35% 397 400 397 14 years PBT CAGR: 33% 400 31% PBT 30% 27% 26% 26% 312 25% 300 277 22% 21% % RoCE 18% 20% 17% 187 200 15% 13% 11% 129 9% 9% 9% 116 10% 100 7% 80 5% 51 5% 26 35 19 20 7 0 0% FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Slide 17: Key highlights 2017-18
Key highlights 2017-18 Achieved volume growth Enhanced market share of key products Repaid all debt Implemented softwares to improve efficiency of sales team Enhanced capacity by debottlenecking plants of key products Developed 34 new products | formulations and scaled up 28 thereof Im
Slide 18: Industry and Atul
Industry and Atul | 74
Slide 19: Chemical industry
Chemical industry Chemical industry holds a significant position in the Indian economy. Indian chemical industry today Serving industries Global size Growth USD 120 bn US$ bn % Projected size Additives 3 2% (growth 7%) of industry by Fragrance 12 4% 2025 2.1 % of Personal care 20 4% USD 400 bn natio
Slide 20: Atul strengths
Atul strengths People Zero debt Processes and systems Versatile and integrated Regulatory compliant manufacturing Excellent infrastructure Diversified product portfolio (large land bank ready for development) and customer base 11 | 74
Slide 21: Way forward
Way for ward | 74
Slide 22: Ability to compete – specific to products
Ability to compete – specific to products Product | Backward Forward Existing Economy Market Product Existing Purchase Product group integration integration infra of scale reach synergy customer economy F&F–1 + + + + + + + = F&F–2 = + + + + + + = F&F–3 + = + + + + + = Pharma intermediate + = = + + +
Slide 23: Market attractiveness
Market attractiveness Market size Product CAGR Volume (MT) Value (` cr) F&F–1 2,500 163 4% Pharma intermediate 22,600 608 21% Performance chemical -1 4,000 250 26% 13 | 74
Slide 24: Growth plan
Growth plan New products `640 cr `640 cr Existing `2140 cr `740* cr `1,400 cr products Brownfield | green field Incremental sales Debottlenecking | projects potential** higher capacity utilisation * Projects with potential of `150 cr will be commissioned in Q2 FY19. ** growth plan for subsidiary|
Slide 25: Strategy, Progress, Plans
Strategy Progress Plans Processes Principles Perseverance 15 | 74
Slide 26: People
People Appraisal Dialogues Budgets | Norms T&D Targets Milestones Reviews Business plan Product plan Purpose Sales plan Values Vision 16 | 74
Slide 27: Alignment
Alignment Perspectives KRAs Sub-KRAs Budgets | Norms | Targets 4 7 100 + 1000 + __________________ __________________ __________________ ___________________ Business plan Financial Profitability Across 22 functions Detail action plan Product plan ………………………………… Working capital Customer ……………………………… S
Slide 28: Responsibility towards society
Responsibility towards society | 74
Slide 29: Atul Foundation
Atul Foundation Kalyani Shala, Ashramshalas Prevention of exploitation of women Books on Indian culture | ecology | philosophy Blood units to thalassemia patients Conservation of manuscripts Protection and prevention from sex research at Institute of Chemical Technology trafficking A
Slide 30: Education
Education Over 7,200 young minds, nurtured through education | 74
Slide 31: Empowerment
Empowerment Empowered 11,000+ students through vocational training courses | 74
Slide 32: Health
Health Over 1,30,000 beneficiaries | 74
Slide 33: Infrastructure
Infrastructure 3,500 toilets built and 1,500 underway | 74
Slide 34: Shareholders
Shareholders | 74
Slide 35: Return on share
Return on share ` cr 120% EPS Dividend 100% 100% 96 93 91 85% 75% 73 72 60% 45% 45% 46 40% 30 30 19 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 19 | 74
Slide 36: Capital expenditure
Capital expenditure ` cr Cash flow from operations Capital expenditure 375 358 370 Cash flow 317 325 Dividend paid 193 176 168 141 121 104 114 106 94 97 61 47 26 30 30 36 33 14 16 16 21 21 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 20 | 74
Slide 37: Shareholder value
Shareholder value 14 year share price CAGR: 38% 3,500 Value of `10,000 invested in October 2000 become `32 lakhs in April 2018. 400 397 397 400 3,0903,000 312 2,500 300 PBT in ` cr 277 2,000 187 200 1,500 Share price 129 116 1,000 100 80 51 500 26 35 19 20 7 0 34 0 FY 04 FY 05 FY 06 FY 07 FY 08 FY 0
Slide 38: Financials 2017-18
Financials 2017 -18 | 74
Slide 39: Profit and loss
Profit and loss Particular FY 18 FY 17 %D Net sales 3,050 2,639 16% Expenditure 2,559 2,141 Other income 20 14 EBIDTA 511 512 0% EBIDTA % 16% 19% Interest 9 21 Depreciation 105 91 PBT 397 400 -1% Tax 127 115 PAT 270 285 -5% RoCE % 22% 26% Average capital employed 1,814 1,638 22 | 74
Slide 40: Sales analysis
Sales analysis ` cr Inc | (dec) Sales FY 18 FY 17 ` cr % National 1,536 1,239 297 24 International 1,514 1,400 114 8 Sales (net) 3,050 2,639 411 16 12% 3,050 318 4% 2,639 93 16-17 Price variance Volume variance 17-18 23 | 74
Slide 41: Segment results
Segment results ` cr Life Science Performance and Total Particulars Chemicals Other Chemicals FY 18 FY 17 FY 18 FY 17 FY 18 FY 17 Net revenues from operations 1,061 865 2,087 1,983 3,148 2,848 Profit before interest and tax 120 130 281 290 401 420 Segment assets 696 603 1,523 1,393 2,219 1,996 Total
Slide 42: Working capital
Working capital ` cr Inc | dec over Particulars Mar 18 Mar 17 Mar 17 Inventories 379 368 11 Debtors 718 507 211 Other current assets 184 159 25 Gross working capital 1,281 1,034 247 Current liabilities 556 403 153 Net working capital 725 631 94 25 | 74
Slide 43: Break up of working capital
Break up of working of capital Mar 18 Mar 17 Inc | dec over Particulars A A Mar 17 NWC 725 631 94 Less: Non-operational items Tax related assets 51 38 13 Cash and bank balances 22 7 15 Operating working capital 652 586 66 25a | 74
Slide 44: Fund flow
Fund flow ` cr Particulars 2017-18 2016-17 Sources EBIDTA 511 512 Changes in non-current assets (net) 21 44 Total 532 556 Applications Interest and finance charges 9 21 Purchase of fixed assets and capital advances 114 176 Working capital increase 94 61 Loans repaid 155 147 Dividend paid 33 36 Direc
Slide 45: Subsidiary and associate companies
Subsidiary and associate companies 80 76 20 25 10 ` cr 21 57 20 19 8 60 55 15 15 14 15 6 40 12 10 6 10 5 4 20 8 5 5 3 2 0 0 0 0 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 Atul Bioscience DPD Sales PBT 40 15 80 73 20 32 65 59 30 26 60 15 23 10 15 10 14 14 20 9 40 10 5 10 20 5 2 0 0 0 0 FY 16 FY 17 FY 18 FY
Slide 46: Key ratios
Key ratios FY 18 FY 17 Particulars Earning per share 91.2 96.2 Price | Equity ratio (times) 28.9 24.9 Book value per share 740.8 647.5 Price | Book value (times) 3.5 3.7 Enterprise value | EBIDTA (times) 15.1 14.1 Debt | Equity - 0.1 Fixed assets turnover* 2.6 2.4 Turnover to average capital employe
Slide 47: Industry overview
Industry over view | 74
Slide 48: Sub segment: Aromatics
Pe r fo r m a n c e a n d O t h e r C h e m i c a l s L i fe S c i e n c e C h e m i c a l s Sub segment: Aromatics Product groups: Intermediates and API intermediates Serving: Chemical additives, Fragrance, Personal care and Pharmaceutical industries Product Market share Competition (2017-18) p-Cre
Slide 49: Sales ₹842 cr
Sales `842 cr 2% 1% 1% Value Volume Price 30 | 74
Slide 50: Opportunity landscape
Opportunity landscape Additives Fragrance Personal care World, $ bn 3.1 11 20 CAGR 2% 4% 4% India, $ mn 25 460 540 CAGR 3% 5% 5% Source: Customer interactions | market reports 31 | 74
Slide 51: Unrealised capex
U n re a l i s e d c a p ex Unrealised sales potential: `140 cr 32 | 74
Slide 52: Projects under implementation
P ro j e c t s u n d e r i m p l e m e ntat i o n Debottlenecking (`44 cr)* * sales 33 | 74
Slide 53: Forward path
Fo r wa rd p at h Implement project to manufacture a fragrance intermediate (1) Develop and establish capacity for Cosmetic ingredient (1) Commercialise new products developed in Kilo lab (8) 34 | 74
Slide 54: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Competition from China Significant efficiency improvements (product yield | throughput) Volatility in input prices Secure rates through short | medium term contracts Fluctuations in Forex Hedge receivables 35 | 74
Slide 55: Sub segment: Bulk Chemicals and Intermediates
Pe r fo r m a n c e a n d O t h e r C h e m i c a l s Sub segment: Bulk Chemicals and Intermediates Product groups: Bulk chemicals, Adhesion promoters, Intermediates Industries served: Cosmetics, Chemical, Dyestuff and Tyre Product Market share Competition (2017-18) Resorcinol Significant (India) As
Slide 56: Sales ₹293 cr
Sales `293 cr* 38% 23% 15% Value Volume Price *Includes internal sales 37 | 74
Slide 57: Opportunity landscape
Opportunity landscape Automobile industry: Global Light vehicle assembly 61 64 66 67 69 50 53 57 42 41 42 42 43 43 43 43 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F Mature Emerging CAGR (mature): 0.4% CAGR (emerging): 4.5% Emerging market share (2017): 57% Emerging market share (2023): 62% Source
Slide 58: Unrealised capex
U n re a l i s e d c a p ex Unrealised sales potential: `8 cr Unrealised sales potential: `31 cr 39 | 74
Slide 59: Projects under implementation
P ro j e c t s u n d e r i m p l e m e ntat i o n Bulk chemicals (`24 cr)* Intermediate (`30 cr)* * sales 40 | 74
Slide 60: Forward path
Fo r wa rd p at h Enhance market share of Resins (3) Expand capacity of bulk chemicals (1) and intermediate (1) Explore Chlorine downstream products (4) Explore introduction of new products (3) 41 | 74
Slide 61: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Price and margin sensitive commodity products Improve operational efficiencies Long gestation period for qualification of Improve qualification period through data performance chemicals generation with in-house facilities 42 | 74
Slide 62: Sub segment: Colors
Pe r fo r m a n c e a n d O t h e r C h e m i c a l s Sub segment: Colors Product groups: Textile dyes, Pigments Industries served: Textile, Paint and Coatings and Paper Product group Market share Competition (2017-18) Textile dyes Significant (India) India (>100), Asia, Europe Insignificant (World)
Slide 63: Sales ₹456 cr
Sales `456 cr 13% 12% -1% Value Volume Price 44 | 74
Slide 64: Opportunity landscape
Opportunity landscape Speciality Textile dyes | chemicals HP pigments Food colors Solvent colors intermediates World, $ bn 6|7 5 1 1 0.5 CAGR 3% | 4% 4% 3% 6% 5% India, $ mn 450 | 320 150 100 100 30 CAGR 4% | 6% 5% 3% 10% 6% Source: Technopak, WTO, DMAI, Markets and market reports, Persistence marke
Slide 65: Unutilised capacity
Unutilised capacity Unrealised sales potential: `110 cr 46 | 74
Slide 66: Projects under implementation
P ro j e c t s u n d e r i m p l e m e ntat i o n Sulphur black (`10 cr)* Vat dyes and its intermediates (`25 cr)* * sales 47 | 74
Slide 67: Forward path
Fo r wa rd p at h Increase market share in Vat, Sulphur and High Performance Pigments Expand Vat dyes (3) and their intermediates (2) and Sulphur black capacities Strengthen Reactive range in warm dyeing and printing (11) Commercialise new High Performance Pigments (5) Enhance product port
Slide 68: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Fluctuations in demand of Vat dyes in work-wear Focus on yarn and woven segments segment (fabric construction change) Dependence on China for key dye intermediates Start in-house manufacture Limited product portfolio in High Performance I
Slide 69: Sub segment: Crop Protection
L i fe S c i e n c e C h e m i c a l s Sub segment: Crop Protection Product groups: Fungicides, Herbicides and Insecticides Industries served: Crop Protection Chemicals and Agriculture Product Market share Competition (2017-18) 2,4-D and downstream products 16% (World) India (5), Asia (7), Australia
Slide 70: Sales ₹651 cr
Sales `651 cr 43% 33% 10% Value Volume Price 51 | 74
Slide 71: Opportunity landscape
Opportunity landscape Population growth and rising incomes drive To feed the growing population in 2050, demand for growth in consumption of major food grains. agrochemicals, fertilisers, nutrients, etc will continue to grow. Population growth 2007-2050 US$9 bn growth % +80% Production Mn Tons Popul
Slide 72: Unrealised capex
U n re a l i s e d c a p ex Unrealised sales potential: `72 cr 53 | 74
Slide 73: Projects under implementation
P ro j e c t s u n d e r i m p l e m e ntat i o n Herbicide (`30 cr)* * sales 54 | 74
Slide 74: Forward path
Fo r wa rd p at h Bulk actives: o Expand capacities for existing products (2) o Expand geographical reach through new registrations (25) o Develop new products (2) with backward integration Retail: o Expand retail business across India o Develop new formulation mixtures (11) 55 | 74
Slide 75: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Business dependent on weather and pest attack Increase geographical presence High dependence on Herbicides product group Develop other product groups Dependence on China for key intermediates Start in-house manufacture of key intermediate
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Slide 77: Sub segment: Pharmaceuticals
L i fe S c i e n c e C h e m i c a l s Sub segment: Pharmaceuticals Product groups: APIs and API intermediates Industries served: Pharmaceutical Product group Market share Competition (2017-18) APIs and API intermediates Insignificant (World) India, Asia, Europe, North America Dapsone 50% India (1),
Slide 78: Sales PH ₹68 cr
Sales PH `68 cr 21% 16% 5% Value Volume Price 58 | 74
Slide 79: Sales (PH+ABL) ₹127 cr
Sales (PH+ABL) `127 cr 20% 18% 2% Value Volume Price 59 | 74
Slide 80: Opportunity landscape
Opportunity landscape Global pharma market expanding to US$1.5 tn by 2021, led by Pharmerging markets EU5 14% Size: US$152 bn CAGR 17–21: 1 – 4% US 41% Size: US$462 bn CAGR 17–21: 6 – 9% Japan 10% Size: US$90 bn Pharmerging 21% CAGR 17–21:(1) – 2% Size: US$243 bn CAGR 17–21: 6 – 9% ROW 14% Size: US$
Slide 81: Opportunity landscape: generics
Opportunity landscape Generics are taking an increased market share globally Europe: 47% 62% Japan: 31% 40% North America: 52% 70% Europe: 26% 29% Japan: 16% 18% North America: 16% 23% Africa | Middle East: 52% 70% Asia | Australia: 74% 71% Africa | Middle East: 52% 70% Asia | Aust
Slide 82: Unrealised capex
U n re a l i s e d c a p ex Unrealised sales potential: `84 cr 62 | 74
Slide 83: Forward path
Fo r wa rd p at h Debottleneck product capacities (2) Grow sales in the USA, Japan and EU5 Increase CRAMS business with strategic customers Refurbish and debottleneck pilot plant to scale up new products Qualify new products (7) 63 | 74
Slide 84: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Fluctuations in Forex Hedge receivables Changes in regulatory requirements Track the changes and train people Long qualification process Initiate qualification process early 64 | 74
Slide 85: Sub segment: Polymers
Pe r fo r m a n c e a n d O t h e r C h e m i c a l s Sub segment: Polymers Product groups: Curing agents, Epoxy Resins, Reactive diluents, Rubber and Polyurethane based adhesives, Sulfones Industries served: Aerospace, Adhesives, Automobile, Composites, Construction, Electrical and Electronics, Foo
Slide 86: Sales ₹870 cr
Sales `870 cr 15% 13% 2% Value Volume Price 66 | 74
Slide 87: Opportunity landscape
Opportunity landscape Paint and Coatings Construction Adhesives 6% 10% 15% ` ‘000 cr 78 7 59 14 6 9 2017-18 2020-21 2017-18 2020-21 2017-18 2020-21 Applications Applications Applications Protective coatings Admixtures Tile joints Can and coil coatings Flooring chemicals Foundry Powder coatings Water
Slide 88: Unrealised capex
U n re a l i s e d c a p ex Unrealised sales potential: `26 cr Unrealised sales potential: `32 cr 68 | 74
Slide 89: Forward path
Fo r wa rd p at h Expand resins and formulations (3) and specialty intermediates (3) 69 | 74
Slide 90: Risks and mitigation
R i s ks a n d m i t i gat i o n Risks Mitigation Price and margin sensitive business Optimise product and customer portfolio Fluctuations in Forex Increase exports Lengthy product approval process Improve coordination with customers 70 | 74
Slide 91: Brands
Brands = LAPOX oWERGRIP WERGI POWERGRI| ‘ULTRA
Slide 92: Brands
B ra n d s | 74
Slide 93: Brands
Brands LACARE’ VEHICOOL Ghl "I Ultracool radiator coolant = Lacare i —— LACARE atl — LACARE’ AM 7 a CHAIN LUBE a Lie
Slide 94: Sub segment: Floras
L i fe S c i e n c e C h e m i c a l s Sub segment: Floras Industries served: Food and Nutrition 71 | 74
Slide 95: Sales ₹30 cr
Sales `30 cr 8% 7% 1% Value Volume Price 72 | 74
Slide 96: Agriculture scenario
A g r i c u l t u re s c e n a r i o Global food and agribusiness industry: US$5 tn, India: US$160 bn Global food production growth rate: 2% CAGR, India: 3.5% CAGR By 2050, planet Earth will need to double the food supply, caloric demand will increase by 70% but 40 % of water requirements unli
Slide 97: Global date palm plantation
G l o b a l D ate Pa l m p l a ntat i o n (‘000 hectares) Increase % increase Country 2014 2015 2016 2015 vs 2016 2015 vs 2016 Iraq 235 254 310 56 22.2 Iran 183 183 193 10 5.7 Algeria 165 167 167 0.5 0.2 Saudi Arabia 107 135 146 10 7.7 Pakistan 91 97 96 -1 -1.3 UAE 46 85 94 8 10.0 Morocco 58 58 58 0
Slide 98: Greening the deserts, a journey…
G re e n i n g t h e d e s e r t s , a j o u r n ey … A journey that began in 2008 endeavours to improve the economy and ecology of the arid regions of the world which started with India | 74
Slide 99: Technology transfer agreement (with the UAE University)
Te c h n o l o g y t ra n sfe r a g re e m e nt (with the UAE University) | 74
Slide 100: Growth stages
G ro w t h sta ge s In lab Hardening in greenhouses and shade nets In field In-vitro Acclimatization Primary Secondary Field plantation Fruiting hardening hardening Initiation Multiplication Elongation Rooting Stages 1-4 Stage 5 Stage 6 Stage 7 Stage 8 Stage 9 | 74
Slide 101: Demonstration farms (Jaisalmer and Bikaner)
D e m o n st rat i o n fa r m s ( J a i s a l m e r a n d B i k a n e r ) Plantation 5 years old Flowering Fruiting | 74
Slide 102: Atul Rajasthan Date Palms Ltd
At u l R a j a st h a n D ate Pa l m s Ltd Jodhpur | 74
Slide 103: Production
P ro d u c t i o n | 74
Slide 104: In-vitro
I n - v i t ro Bud proliferation Multi-cultures in growth room Shooting Rooting | 74
Slide 105: DPD Ltd, UK
D P D Ltd , U K | 74
Slide 106: Reach
Re a c h Global India Particulars Numbers Particulars Numbers Countries 35 States 16 Acres > 40,000 Acres 5,560 Plants > 2 million Plants 3,21,696 Beneficiaries >200 Beneficiaries 1551 Gujarat Rajasthan Particulars Numbers Particulars Numbers Districts 24 Districts 21 Acres 2,577 Acres 2,937 Plants
Slide 107: Date Delights
Date Delights —_— Medpont tates Date Delights & Date Delights
Slide 108: Expansion
Expansion Purchase of land at DPD, UK for capacity expansion | 74
Slide 109: Thank you
Thank you | 74