Heg Limited · NSE:HEG
Heg — Non-Deal Roadshow (September 2019)
26 slides from Heg's roadshow presentation, September 2019
Slide 1: Intimation of Analyst/Institutional Investor Meeting and Presentation
PROUD TO BE INDIAN PRIVILEGED TO BE GLOBAL BEG/ SE CIT/ 2019 23 1d September, 2019 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/1, G Block, Bandra - Kurla Complex MUMBAI -400 001. Bandra (E), Scrip Code : 509631 MUM
Slide 2: Investors Presentation September 2019
Investors Presentation September 2019 0
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 1 HEG Ltd © LNJ Bhilwara Group
Slide 4: LNJ Group nationwide presence and key financials 2018-19
Nationwide Presence • Group has 5 of its companies listed on Indian Stock Exchanges, with over one million Plants & Office stakeholders. Locations • Corporate office & Production units at 37 locations with over 25,000 workforce. LNJ Group - Key Financials 2018-19 Listed Companies Turnover USD 1750 m
Slide 5: World's Largest Single Site Graphite Electrode Plant
World’s Largest Single Site Graphite Electrode Plant 3 HEG Ltd © LNJ Bhilwara Group
Slide 6: 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 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 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 approx 45% of total World Steel Production (Without China) High Entry Barrier – HEG the last new entrant in the world -1977 State of the
Slide 9: 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 7
Slide 10: Graphite Electrode (GE) Industry
Graphite Electrode (GE) Industry 8
Slide 11: Industry Overview – India's Rising Share
Industry Overview – India’s Rising Share (w/o China & Russia) 60 54 40 33 32 32 32 30 26 23 23 20 14 3 0 0 Graftech SGL Japan India 1990 2010 2017 HEG Ltd © LNJ Bhilwara Group 9
Slide 12: 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 2021-22 2002 2006 2009 2011 2020 10 HEG Ltd © LNJ Bhilwara Group
Slide 13: GE Capacity Evolution (w/o China & Russia)
GE Capacity Evolution (w/o China & Russia) S. No. Company Name 2010 2014 2017 No. of plants 1 SDK 105 105 225 (incl. SGL) 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 (sold to SDK) 0 Sub-Total USA/Europe 475 365 167 3 6 HEG 60
Slide 14: GE Industry Development
GE Industry Development 8 GE plants got closed Currently 19 plants in 15 Almost 300,000 tons of between 2010 and 2016 , countries comprising 725,000 inefficient/polluting GE 20% of world capacity due to tons capacity are working at capacity in China has been demand supply imbalance. 85-90% capacity
Slide 15: EAF Steel
EAF Steel 13
Slide 16: EAF World Production – Without China & China
EAF World Production –Without China & China China EAF EAF World w/o China % of EAF China 13.4% 449 +1.1% 432 415 398 373 383 383 372 380 366 301 360 366 353 356 175 160 100 66 71 65 75 Figures in mmt 57 54 52 47 20% 21% Source: WSA 9% 12% 6% 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 17: Global EAF steel production
Global EAF steel production 8-10% 500 -2% 400 3.5% 300 200 100 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • EAF steel production grew at the CAGR of 3.5% from 1984-20
Slide 18: Global Shift to EAF Steel Production
Global Shift to EAF Steel Production 2017 EAF as a % of Total Steel Production 68% The Chinese government targets 20% EAF market share by 2020 46% 41% 39% 11% 2018 6% 2016 North America European Union Asia (ex-china) world excluding China 2017 % of World Steel Production china More than 3 times grow
Slide 19: Continuous Decline of Chinese Steel Exports
Continuous Decline of Chinese Steel Exports 112 108 93 al 75 Annualized based on 4 months actuals 69 70 CY‐14 CY‐15 CY‐16 CY‐17 CY‐18 CY‐19 HEG Ltd © LNJ Bhilwara Group 17
Slide 20: Blue Sky Policy
Chinese Government is taking air pollution control measures seriously This year the application of the restriction will be more rigid & strict. & have been Blue Sky Policy advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year Export of Steel is likely to keep falling in near futur
Slide 21: China Pollution Crack Down
China is in the fifth year of a “war on pollution” 2017 environment control was not very serious – being first year , allowed 60-65% capacity utilization against 50% orders but this year it will be much more stringent & China Pollution Crack Down the impact may be higher. Last year Environmental
Slide 22: China's Steel Capacity outlook 2018
China’s Steel Capacity outlook 2018 IF's capacity closure in Major Regions • 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. • Additional ~155 mmt illegal induction furnace capacity closed • Man
Slide 23: Conclusion on EAF Steel
EAF Steel production is expected to grow at a faster pace compared to BOF because of following reasons: Replacement of Induction furnaces & polluting blast furnaces in China by EAFs EAF Share in China to grow from 6% in 2016 to 20% in 2020 Conclusion Chinese scrap availability to increase at the CAG
Slide 24: 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 couple of
Slide 25: Financial Snapshot
Financial Snapshot in Rs. Crore (except EPS) FY19 FY18 FY17 REVENUE FROM OPERATIONS 6593 2758 896 EBITDA* 4767 1734 88 EBIT 4695 1661 14 PAT 3050 1081 -50 EPS 763.60 270.61 (12.52) EBITDA Margin (%) 72% 63% 10% EBIT Margin (%) 71% 60% 2% PAT Margin (%) 46% 39% -6% * EBITDA includes Other Income HEG
Slide 26: Thank You
Thank You HEG Ltd © LNJ Bhilwara Group