Fairchem Organics Ltd · NSE:FAIRCHEMOR
Fairchem Organics — Fairchem Speciality — Merger or Acquisition (July 2016)
28 slides from Fairchem Organics's merger presentation, Jul 25, 2016
Slide 1: Fairchem Speciality Limited Investor Presentation
Fairchem Speciality Limited¹ The creation of a Renewable Speciality Chemicals Company from the merger of the businesses of Adi Finechem Ltd And Privi Organics Ltd INVESTOR PRESENTATION 25 JULY 2016 ¹ Formerly known as “Adi Finechem Limited”. The name ‘Fairchem Speciality Limited’ has been reserved w
Slide 2: Agenda
AGENDA Sr. Particulars Page Number I About Adi Finechem Limited (“Adi”) 3 II About Privi Organics Limited (“Privi”) 8 III About Fairchem Speciality Limited (“Fairchem”) 14 IV Transaction Highlights 22 V Fairfax Guiding Principles 26 25 JULY 2016 | Page 2 of 28
Slide 3: About Adi Finechem Limited
ABOUT ADI FINECHEM LIMITED (“Adi”) 25 JULY 2016 | Page 3 of 28
Slide 4: About Adi
ABOUT ADI Incorporated in 1985 and publicly listed on Bombay Stock Exchange since 1995 and National Stock Exchange since 2015 — Management change in 2010; capacity expansion from 8,000 MTPA¹ in 2010 COMPANY to 45,000 MTPA in 2016 BACKGROUND — Fairfax India Holdings Corporation (“Fairfax”) acquired
Slide 5: Adi's Manufacturing Process
ADI’S MANUFACTURING PROCESS Raw Materials Process Product Acid Oil Pretreatment Soya, Sunflower, Corn, Cotton Glycerine (SSCC) Refining Splitting SSCC* seeds Oleo Chemicals Linoleic/Palmitic Amines, Amides, Soap Decanter Fractionation Separator Crude Dimer Inks Dimerising Deodorization Dimer/Monomer
Slide 6: Adi's Competitive Advantage
ADI’S COMPETITIVE ADVANTAGE One of the Leading Players in the Oleo Chemicals Market Using Renewable Resources Processes waste products of edible oil refining Enjoys leadership position in the Focuses on natural and value added products giving it price advantage industry due to barriers to entry whic
Slide 7: Adi's Historical Financial Summary
ADI’S HISTORICAL FINANCIAL SUMMARY Income Statement Rs In Mm Mar12 Mar13 Mar14 Mar15 Mar16 Revenue 974 1,235 1,524 1,513 1,525 CAGR: FY12-FY16 Growth (%) 68.1% 26.8% 23.4% -0.7% 0.8% Revenue = 11.9% EBITDA = 11.8% EBITDA 149 176 336 255 233 Margin (%) 15.3% 14.3% 22.0% 16.9% 15.3% Net Income 74 84 1
Slide 8: About Privi Organics Limited
ABOUT PRIVI ORGANICS LIMITED (“Privi”) 25 JULY 2016 | Page 8 of 28
Slide 9: About Privi
ABOUT PRIVI One of the leading manufacturers of aroma chemicals such as Amber Fleur, dihydromyrcenol (citrus character), Citral derivatives etc. COMPANY Expanded product range from two products in 1992 to 50+ high performance BACKGROUND chemicals in 2016 based on in-house Research & Development
Slide 10: Aroma Chemicals Value Chain
AROMA CHEMICALS VALUE CHAIN Petrochem & Pine based Aroma Chemicals Constitute ~70% Of Global Aroma Chemicals Market Raw Material Source Building Blocks Aroma Chemicals Market Segmentation Formulators FMCG Naphthalene Value % Volume % Floral Cresol Perfume Soft Floral Catechol Floral orient
Slide 11: Privi's Customer Relationships
PRIVI’S CUSTOMER RELATIONSHIPS Privi Is A One Stop Shop For All Its Customers Latest Reported # Molecules Key Customers Global Ranking Revenue* ($ Mm) Supplied Till Date #1 in F&F (Flavours and 4,576 15 Fragrances) #1 in FMCG 76,279 (Fast Moving Consumer 7 Goods) 3,023 # 2 in F&F 2 3,143 # 3 in F&F
Slide 12: Growth Strategy
GROWTH STRATEGY R&D team developing process to convert by-products from CST and other manufacturing processes – Terpenes , Delta Carene and other by-product PROJECTS R&D team developing processes to add new products IN – Privimoss – Privi to be only the second company to make this product PIPELI
Slide 13: Privi's Historical Financial Summary
PRIVI’S HISTORICAL FINANCIAL SUMMARY Income Statement Rs in Mm Mar12 Mar13 Mar14 Mar15 Mar16 Revenue 3,837 4,295 5,142 5,493 6,276 CAGR: FY12-FY16 Growth (%) Revenue = 13.1% 5.7% 11.9% 19.7% 6.8% 14.6% EBITDA = 16.3% EBITDA 468 553 714 771 855 Margin (%) 12.2% 12.9% 13.9% 14.0% 13.2% Net Income 136
Slide 14: About Fairchem Speciality Limited
ABOUT FAIRCHEM SPECIALITY LIMITED (“Fairchem”) 25 JULY 2016 | Page 14 of 28
Slide 15: To Be The Leading Renewable Speciality Chemicals Company
VISION Adi Privi processes waste processes waste products from the products from pulp edible oil refining and paper mills process To Be The Leading Renewable Speciality Chemicals Company Adi Privi manufactures oleo manufactures aroma chemicals with end use in chemicals with end use in adhesives, pai
Slide 16: Inspiration and Design Philosophy
INSPIRATION AND DESIGN PHILOSOPHY The two drops and a leaf symbol is an artistic representation of a merger of two companies forming a new beautiful green leaf. Which is a main source of agricultural waste products into value added speciality chemicals. Yellow colour is for the sun, blue colour is f
Slide 17: Leadership in Renewable Speciality Chemicals Driven By
LEADERSHIP IN RENEWABLE SPECIALITY CHEMICALS DRIVEN BY: R&D focus to backward integrate and develop green chemistry Develop processes to add value to various by-products formed in FOCUS ON RESEARCH manufacturing process leading to further expansion in operating margin AND DEVELOPMENT Develop a
Slide 18: Management Structure
MANAGEMENT STRUCTURE Supervisory Management Committee Fairchem Management Team Harsha Raghavan, Utkarsh Shah, Nahoosh Jt. Managing Directors: Nahoosh Jariwala and Jariwala, Mahesh Babani, DB Rao, Sanjeev Patil FAIRCHEM SPECIALITY LIMITED Mahesh Babani Group CFO: Sanjeev Patil Key functions of The Su
Slide 19: Financial Governance Standards
FINANCIAL GOVERNANCE STANDARDS Invest for long term growth / value creation at the cost of short term gains Always be adequately capitalized Not overleverage the balance sheet Not bet the entire company on any one project or acquisition Secure sources of sustainable raw material supply I
Slide 20: Research & Development Initiatives
RESEARCH & DEVELOPMENT INITIATIVES Strong 60 member R&D team comprising PhD, M.Sc. in Chemistry, Post Graduates in Chemical Engineering, well supported by Civil, Mechanical, Instrumentation engineers Facilities to develop alternate and more competitive manufacturing routes and then IN-HOUSE CHEM
Slide 21: Fairchem's Proforma Financial Summary
FAIRCHEM’S PROFORMA FINANCIAL SUMMARY Proforma¹ Revenue Growth Proforma¹ EBITDA Growth 18,000 3,000 16,000 Margin > 15% 2,500 14,000 12,000 2,000 Rs in Mm Rs in Mm 10,000 1,500 8,000 Margin 14% 6,000 > 16,000 1,000 > 2,400 4,000 Margin 13% 7,801 500 1,088 2,000 4,802 609 - - FY12 FY16 FY21 FY12 FY16
Slide 22: Transaction Highlights
TRANSACTION HIGHLIGHTS 25 JULY 2016 | Page 22 of 28
Slide 23: Transaction Highlights
TRANSACTION HIGHLIGHTS The board of directors of Adi and Privi unanimously approved a scheme of arrangement to demerge the aroma chemicals business of Privi into a wholly owned subsidiary of Adi. The Appointed Date for the said merger is fixed to be 1 August 2016. In consideration of the merger,
Slide 24: Shareholding Information
SHAREHOLDING INFORMATION Adi’s Current Shareholding Post Merger Equity Shareholding Public, 37.2% Fairfax, 44.9% Public, 26.1% Adi Promoters, 17.8% Fairfax, 47.8% Privi’s Shareholding (pre merger) Privi Promoters, Other 16.8% Shareholders, 14.1% Adi Promoters, Fairfax, 9.3% 50.8% Privi Promoters, 35
Slide 25: Indicative Timetable
INDICATIVE TIMETABLE Events Expected Completion Date¹ Stock exchange approval September 2016 Shift of registered office of Adi to Mumbai October 2016 Shareholder and creditor approval December 2016 Admission of petition to the High Court to approve the scheme December 2016 Approval from regulatory a
Slide 26: Fairfax Guiding Principles
FAIRFAX GUIDING PRINCIPLES We expect to compound our mark-to-market book value per share over the long term by 15% annually by running Fairfax and its subsidiaries for the long term benefit of customers, employees and shareholders - at the expense of short term profits if necessary OBJECTIVE Our
Slide 27: Disclaimer
DISCLAIMER This presentation does not constitute a prospectus, offering memorandum or an offer, or a solicitation of any offer, to purchase or sell any securities. This presentation should not be considered as a recommendation that any investor should subscribe for or purchase any securities of Adi
Slide 28: Fairchem Speciality Limited
FAIRCHEM SPECIALITY LIMITED (formerly known as Adi Finechem Limited) 1st Floor, 2, Sigma Corporates, Behind HOF Living, Sindhu Bhavan Road, Off S.G. Road, Ahmedabad - 380059 www.adifinechem.com / www.privi.com 25 JULY 2016 | Page 28 of 28
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