Heg Limited · NSE:HEG
Heg — Q1 FY2019 Earnings Presentation
30 slides from Heg's earnings presentation, Aug 6, 2018
Slide 1: Investors presentation cover letter to BSE and NSE
PROUD TO BE INDIAN PRIVILEGED TO BE GLOBAL HEG/SECTT12018 6th August, 2018 1 BSE Limited 2 National Stock Exchange of India Limited 25 th Floor, P J Towers Exchange Plaza, 5th Floor Dalal Street Plot No.C/l, G Block, Bandra - Kurla Complex MUMBAI - 400 001. Bandra (E), Scrip Code: 509631 MUMBAI - 40
Slide 2: Q1 of FY19 Investor Update Presentation
Q1 of FY19 Investor Update Presentation April 2018 HEG Ltd © LNJ Bhilwara Group 1
Slide 3: HEG is part of LNJ Bhilwara group
HEG is part of LNJ Bhilwara group a diversified, reputed and large Indian business house having more than five decades of industrial experience and presence in Power Generation & Textiles Graphite Electrodes Power Consultancy IT Enabled Services HEG Ltd © LNJ Bhilwara Group 2
Slide 4: Nationwide Presence
Nationwide Presence • Group has 5 of its companies listed on Indian Stock Plants & Office Locations Exchanges, with over one million stakeholders. • Corporate office & Production units at 37 locations with over 25,000 workforce. LNJ Group ‐ Key Financials 2017‐18 Turnover USD 1242 mn Net Fixed Asset
Slide 5: HEG Limited – Profile
HEG Limited – Profile HEG Limited is a leading graphite electrode manufacturer & exporter Globally The company produces two grades of graphite electrodes ‐ Ultra High Power (UHP) & High Power (HP) ‐ used in producing steel through the Electric Arc Furnace (EAF) route. Exports approximately 70%
Slide 6: World's Largest Single Site Graphite Electrode Plant
World’s Largest Single Site Graphite Electrode Plant HEG Ltd © LNJ Bhilwara Group 5
Slide 7: Highlights
1977 ‐ Established in Financial (appx 25% equity) / Technical participation of Pechiney, France 1992 ‐ Pechiney sold their Graphite business to SGL, Germany & Indian Promoters bought these shares in HEG 1995 / 2011 – Kept expanding from 10,000 mt in small tranches & in 2011 took a quantum leap
Slide 8: Graphite Electrode (GE) Industry – Our Unique Strengths
Graphite Electrode (GE) Industry – Our Unique Strengths GE‐ An indispensable material for Electric Arc Furnaces (EAF) for Steel production EAF accounts for appx 45% of total World Steel Production (Without China) High Entry Barrier – HEG the last new entrant in the world ‐1977 Uses 100 % Cap
Slide 9: Capacity Build Up
Capacity Build Up Graphite Electrode Captive Power (MW) (In '000 tonne) (In '000 tonne) 120 120 100 100 100 80 77 77 77 80 80 66 60 52 60 44 40 30 40 20 14 20 14 0 0 1990 2002 2006 2009 2011 2020 2002 2006 2009 2011 2020 Probable HEG Ltd © LNJ Bhilwara Group 8
Slide 10: R&D Center
R&D Center • R&D set up to corroborate the Quality & Improvement Drives with small scale production facilities • The focus is also on development of new product lines • Development is focused towards Carbon 9
Slide 11: Financial Snapshot
Financial Snapshot in Rs. Crore (except EPS) Q1 FY19 Q4 FY18 Q1 FY18 FY18 REVENUE 1595 1296 214 2771 EBITDA* 1196 955 24 1734 EBITDA Margin 75% 74% 11% 63% EBIT 1178 937 6 1661 EBIT Margin 74% 72% 3% 60% PAT 770 634 (8.43) 1081 PAT Margin 48% 49% (4)% 39% EPS 192.77 158.66 (2.11) 270.61 * EBITDA inc
Slide 12: Segmental Performance – Graphite Electrodes
Segmental Performance – Graphite Electrodes in Rs. Crore Q1 FY19 Q4 FY18 Q1 FY18 FY18 Net Sales 1587 1288 212 2739 Export (% of sales) 69% 79% 62% 71% EBITDA Margin 75% 74% 1.5% 61% EBIT Margin 74% 73% (5.4)% 59% Capacity utilisation at around 82% during the Qtr. Increase in the operational effi
Slide 13: Segmental Performance – Power
Segmental Performance – Power in Rs. Crore Q1 FY19 Q4 FY18 Q1 FY18 FY18 Net Sales 26.51 40.66 54.24 213.80 EBITDA Margin (6)% 11% 38% 28% EBIT Margin (18)% 4% 33% 23% HEG Ltd © LNJ Bhilwara Group 12
Slide 14: Blue Sky Policy
Chinese Government is taking air pollution control measures seriously. New action plan released on the country’s official government website, will expand the fight to 82 cities across China Blue Sky Policy Eight inspection teams were sent to 21 regions to ensure the enforcement of new promulgati
Slide 15: Chinese Steel Scenario
Chinese Steel Scenario BHP, one of three large iron ore producers of the world, projects drop in Iron ore prices by 20% over the next two years due to drop in demand. Steel scrap supply in china will grow exponentially from current level of 80 mmt in 2018 to about 350 mmt by 2035 facilitating in
Slide 16: China Pollution Crack Down
China is in the fifth year of a “war on pollution” . It is becoming increasingly difficult for small BOF to meet environment standards. China Pollution There are “Special Emission Levels” during winter and some special standards Crack Down around major cities which are more strict. Ultra low s
Slide 17: China's Steel Capacity outlook 2018
China’s Steel Capacity outlook 2018 Capacity reduction ahead of expectations: net capacity reduction achieved 115 mmt vs. 150 mmt target. The balance is expected to close down in this year. IF's capacity closure in Major Regions Additional ~155 mmt illegal induction furnace capacity closed Man
Slide 18: China Steel Exports
China Steel Exports Figures in mmt HEG Ltd © LNJ Bhilwara Group 17
Slide 19: EAF Steel Scenario
EAF Steel Scenario HEG Ltd © LNJ Bhilwara Group 18
Slide 20: EAF World Production – With & Without China
EAF World Production –With & Without China Figures in mmt 720 EAF World EAF World w/o China 660 592 600 540 515 473 480 454 448 431 429 422 429 434 407 418 420 357 397 432 415 360 398 373 383 383 372 380 353 366 360 366 356 300 301 240 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 21: China's EAF Growth
China's EAF Growth ( as per Chinese sources) 180 160 160 Year % of EAF 2015 6% 140 2016 6% 130 2017 9% 120 2018 12% Figs in mmt 2019 15% 100 100 2020 20% 75 80 60 52 47 Source: Platts / HEG est. 40 2015 2016 2017 2018 2019 2020 Additional EAF capacity of 110 mmt between 2016 and 2020, would mean a
Slide 22: Crude Steel Production
Crude Steel Production HEG Ltd © LNJ Bhilwara Group 21
Slide 23: World Steel Capacity Utilization
World Steel Capacity Utilization HEG Ltd © LNJ Bhilwara Group 22
Slide 24: World Steel Scenario (Jan-Jun) 2018, MMT
WORLD STEEL SCENARIO (JAN‐JUN) 2018, MMT Change Change Crude Steel Production 2015 2016 2017 (Jan‐Jun) 2018 (Jan‐Jun ) 2018 vs. 2017 vs.2016 2017 World 1620 1606 1691 5.3% 881 4.6% China 803 787 832 5.7% 451 6.0% World without China 817 819 859 4.9% 430 3.2% Growth Areas %↑ % of world pdn Middle Eas
Slide 25: GE Industry
GE Industry HEG Ltd © LNJ Bhilwara Group 24
Slide 26: Industry Overview – India's Rising Share
Industry Overview – India’s Rising Share (w/o China & Russia) 55 54 50 45 40 35 33 32 32 32 30 30 26 25 23 23 20 15 14 10 5 3 0 0 Graftech SGL Japan India 1990 2010 2017 HEG Ltd © LNJ Bhilwara Group 25
Slide 27: GE Capacity Evolution
GE Capacity Evolution (w/o China & Russia) S. No. Company Name 2010 2014 2017 No. of plants 1 SDK 105 105 225 5 2 Tokai 100 100 95 4 3 NCK / SEC 60 60 60 2 Sub‐Total Japan 265 265 380 11 4 Graftech 245 185 167 3 5 SGL 230 180 0 0 Sub‐Total 740 630 547 14 6 HEG 60 80 80 1 7 GIL 60 98 98 4 Sub‐Total I
Slide 28: GE Industry Development
GE Industry Development 8 GE plants got closed between Currently 19 plants in 15 countries Almost 300,000 tons of 2010 and 2016 , 20% of world comprising 725,000 tons capacity inefficient/polluting GE capacity in capacity due to demand supply are working at 85‐90% capacity China has been shut down t
Slide 29: Needle Coke Scenario
• Needle coke is the main raw material for GE production & is very critical for the growth of GE industry. • Due to excess capacity of needle coke in the recent past, some of the needle coke producers have been trying to find a new application for coke in the Lithium Ion batteries. • In the last cou
Slide 30: Thank You
Thank You Ms Dimple Momaya heg@adfactorspr.com +91 98207 62036 HEG Ltd © LNJ Bhilwara Group 29