Fairchem Organics Ltd · NSE:FAIRCHEMOR
Fairchem Organics — Investor Presentation (August 2022)
41 slides from Fairchem Organics's investor presentation, Aug 22, 2022
Slide 1: Investor Presentation
Investor Presentation August 2022
Slide 2: Company at a Glance
Company at a Glance Well entrenched Customer Relationships in Promoted by Fairfax Company plans to Long lasting Pan India increase its top line by high growth India Holdings and Raw Material sourcing 2.5 times of FY21 in 3 industries like backed by experienced capabilities with years and intends to
Slide 3: Company Overview
% FAIRCHEM. Company Overview
Slide 4: Company Overview
Company Overview • Fairchem Organics Ltd. (Fairchem) is engaged in the business of manufacturing of Oleo Revenue & EBITDA Margin (In Mn) Chemicals and Nutraceuticals, since the last 25 years. • It has a state -of-the-art Manufacturing unit which was set up in 1995 and has over the 6,432 years gone t
Slide 5: Key Milestones
Key Milestones Main focus on reduction of manufacturing cost per ton. De-Merged from The original project was Fairchem Speciality to process by-product Complete Re- Engineering of its and now operating as stream of Rice Bran Oil. Energy Consumption System. Fairchem Organics Commenced project in Inst
Slide 6: Sequence of Key Events and Growth Trajectory
Sequence of Key Events and Growth Trajectory Annual Revenue (INR Mn) Forward integration to 2010-22: Focus on increasing yield, quality of by-products, reaction time (de-bottlenecking) and reducing catalyst cost value added products 2016-22: Doubled the capacity to 90,000 TPA from 45,000 TPA such as
Slide 7: Exceptional Track Record of Growth & Profitability
Exceptional Track Record of Growth & Profitability Raw Material Processing Capacity (in TPA) Capacity expansion to 120,000 45,000 60,000 72,000 90,000 TPA as on Q1 FY23 Processed Volume (in kt) 31 39 41 48 52 59 Operating leverage driving margin EBITDA (%) 14.8% 12.8% 14.3% 14.4% 15.8% 17.3% 16.3% e
Slide 8: Manufacturing Process Overview
Manufacturing Process Overview Basic Raw Material Process Product Industry Acid Oil Pre-treatment Glycerine (1.25% by-product) Soft Oil (Soya / Sun Splitting / Cotton / Paints & Inks, Canola / Crude Linoleic Soaps and Rice/ Fatty Acid Groundnut) Acid/Palmitic Acid Animal Feed Fractionation Vegetable
Slide 9: Product Overview – Existing Portfolio
Product Overview – Existing Portfolio Raw Materials Output Products End Market Use-cases Linoleic /Soya Paints & inks Specially designed to produce fast drying protective coating with a lighter color fatty acid Palmitic acid Soaps, animal feed Animal feed for lactating animals Acid Oil Offers
Slide 10: Multiple Adjacencies for Future Growth
Multiple Adjacencies for Future Growth Further processes “key products” into “value added products” / “high yielding products” Current Products New Derivatives End Market Industry Cosmetic, aviation fuel, Iso Stearic Acid lubricant Fairchem Organics is also entering new global markets Monomer Steari
Slide 11: Fairchem’s Competitive Advantage
Fairchem’s Competitive Advantage Major Player in the Indian Oleo Chemical Market Using Renewable Resources • Processing waste from edible oil refining process to produce high value oleo chemicals giving it price advantage • Enjoy Leadership Position in the industry due to barriers to entry • Focus o
Slide 12: Highly Differentiated “Waste-to-Wealth” Manufacturing Capabilities
Highly Differentiated “Waste-to-Wealth” Manufacturing Capabilities 1 Unique Manufacturing Capabilities Green chemicals are Vast majority of Fairchem’ s raw Processing waste from edible oil refining process the ingredients of material and finished products are to produce high value oleochemical
Slide 13: Well Entrenched Long Term Customer Relationships
Well Entrenched Long Term Customer Relationships Customer network - a competitive advantage Long History of Deep Engagement with Customers Key Customers Displaying High Levels of Stickiness Bulk of the top 15 customers have growing, long-term relationships with Fairchem Organics 7% Ensure quality an
Slide 14: Strong R&D Focus with an Experienced Team
Strong R&D Focus with an Experienced Team Resulting in a Long History of Innovation Continued Investment in Fairchem’s state-of-the-art R&D Lab R&D and Innovation Highly skilled employee base with strong engineering focus and deep experience (average experience of 10 years in the firm) Building
Slide 15: Experienced and Professional Management with Strong Governance Framework
Experienced and Professional Management with Strong Governance Framework High profile Board put in place by Parent which has taken several initiatives to improve the corporate governance framework Executive / Non-executive directors Rigorous adoption of risk framework by audit Served as MD of Fa
Slide 16: Manufacturing Facility
Manufacturing Facility • The company’s State -of-the-Art Manufacturing unit is located in Sanand, Ahmedabad and is one of the largest processing capacities for Natural Soft Oil based Fatty acids in India. • In 2018, the Company set up state of the art R&D laboratory with ~ 400 Sq. Meters area and cu
Slide 17: Capacity Expansion
Capacity Expansion • Over the years Fairchem has gone through various stages of expansion, debottlenecking and technological advancements to create a one of its kind world class facility. Plant Capacity (Metric Tons) • Majority of the capacity expansion has been undertaken primarily through internal
Slide 18: Manufacturing Facility – Aerial Site Overview
Manufacturing Facility – Aerial Site Overview Investor Presentation | 24 www.fairchem.in 18
Slide 19: ESG Initiatives
ESG Initiatives ENVIRONMENT SOCIAL GOVERNANCE CSR Activites Effluent Method of Disposal • Always be adequately capitalized • Dr. Jivraj Mehta Smarak Health Foundation • Not overleverage the balance sheet - Purchase of Ventilator Machine Zero Liquid Discharge by Multi • Secure sources of sustainable
Slide 20: Business Overview
C FAIRCHEM. Business Overview
Slide 21: Business Segments
Business Segments FAIRCHEM ORGANICS OLEO CHEMICALS NUTRACEUTICAL Investor Presentation | www.fairchem.in 21
Slide 22: Oleo Chemicals
Oleo Chemicals Oleo Chemicals are chemicals derived from Plant and Animal Fats. They are analogous to petrochemicals derived from petroleum. The formation Main Product Application of basic oleochemical substances like Fatty Acids, Fatty Acid Methyl Esters Linoleic Acid / Soya Fatty (FAME), Fatty Alc
Slide 23: Linoleic Acid
Linoleic Acid Applications Linoleic Acid is designed especially to produce fast drying protective coating having lighter color. It is Paints Inks an unsaturated fatty acid and is a liquid at room temperature. Purpose of Use: • Linoleic Acid is designed especially to produce fast drying protective co
Slide 24: Dimer Acid
Dimer Acid Dimer Acid also known as dimerized fatty acids are prepared from unsaturated fatty acids obtained Applications from vegetable oil. It is a light yellow or yellow viscous transparent liquid. It is non-toxic. Paints Inks Purpose of Use: • Offers improved bonding. • Used as curing agents for
Slide 25: Monomer Acid & Distilled fatty acids
Monomer Acid & Distilled fatty acids Applications Fairchem is one of the leading producers of Monomer and Other distilled fatty acids with significantly Paints Lubricants lower raw material costs Monomer Acid: • Monomer Acids are non-petroleum, non-animal based products that can be used as substitut
Slide 26: Nutraceuticals
Nutraceuticals • Nutraceutical, a portmanteau of the words “nutrition” and “pharmaceutical” Revenue Contribution (INR Mn) applied to products that range from isolated nutrients, dietary supplements and herbal products, specific diets, genetically modified food, and processed foods 258 such as cereal
Slide 27: Mixed Tocopherol Concentrate
Mixed Tocopherol Concentrate • Tocopherol is used as raw material to manufacture natural Vitamin E. Natural Vitamin E is almost Applications 3-4 times more expensive than synthetic Vitamin E. Developed markets like US and Europe are the key consumers due to the high value of the product. Vitamin E F
Slide 28: Strategic Overview
% FAIRCHEM. Strategic Overview
Slide 29: Future Growth Strategies
Future Growth Strategies Forward integration of to develop Methyl Ester (Biofuel) and upgrading of a Forward Enhancing customer base Increasing co-product – Monomer Integration of Oleo to serve new industries customer base (Monobasic) of fatty acid Chemicals like specialty inks for stream to make St
Slide 30: Industry Overview
C FAIRCHEM. Industry Overview
Slide 31: Oleo Chemicals Industry
Oleo Chemicals Industry • The oleo chemicals market is broadly segmented into four key applications markets: • Pharmaceutical & personal care, • Food & beverages, • Soaps & detergents, • Polymers • Pharmaceutical & personal care is the largest application market for oleo chemicals accounting for maj
Slide 32: Oleo Chemicals Industry in India
Oleo Chemicals Industry in India • India oleochemicals market is projected to cross USD 2.6 Bn by 2025. • India oleochemicals market has been segmented into five categories namely - fatty acids, fatty alcohols, glycerin, fatty acid methyl esters and fatty amines. Robust growth in India oleochemicals
Slide 33: Financial Overview
C FAIRCHEM. Financial Overview
Slide 34: Historical Income Statement
Historical Income Statement PARTICULARS (INR Mn) FY18 FY19 FY20 FY21 FY22 Q1-FY23 Revenue from Operations 2,428 2,499 3,065 3,966 6,432 2,251 Total Expenses 2,090 2,139 2,581 3,279 5,383 1,851 EBITDA 338 360 484 687 1,049 400 EBITDA Margins (%) 13.92% 14.41% 15.79% 17.32% 16.31% 17.77% Other Income
Slide 35: Balance Sheet
Balance Sheet ASSETS FY18 FY19 FY20 FY21 FY22 EQUITY AND LIABILITIES FY18 FY19 FY20 FY21 FY22 Non-Current Assets EQUITY Property, Plant and Equipment 1,015 1,152 1,219 1,220 1,363 Equity Share Capital 376 391 130 130 130 Capital work-in-progress 34 9 94 295 420 Instruments entirely equity in nature
Slide 36: Cash Flow Statement
Cash Flow Statement PARTICULARS (INR Mn) FY18 FY19 FY20 FY21 FY22 Cash and Cash Equivalents at Beginning of the year 3 0.2 0.2 0.3 0.3 Cash Flow From Operating Activities 155 342 312 394 405 Cash Flow from Investing Activities (126) (137) (239) (228) (342) Cash Flow From Financing Activities (32) (2
Slide 37: Key Financial Highlights
Key Financial Highlights Revenue (In Mn) EBITDA (In Mn) & EBITDA Margin (%) PAT (In Mn) & PAT Margin (%) 5 Year CAGR - 26% 5 Year CAGR - 35% 5 Year CAGR - 49% 6,432 1,049 679 3,966 687 425 3,065 484 347 2,499 400 270 2,428 2,251 338 360 194 215 17.32% 16.31% 17.77% 11.32% 10.72% 10.56% 12.00% 13.92%
Slide 38: Track Record of Strongest Operational Efficiency, Growth and Asset Turns
Track Record of Strongest Operational Efficiency, Growth and Asset Turns Driving Profitability Revenue Growth while Building on the Strong Margin Characteristics of Niche Specialty Chemicals Businesses 5-Year Revenue CAGR (FY17-22) FATO(2) 1.1 4.0 5.1 3.5 4.2 3.6 1.7 2.4 8.8 2.0 1.5 2.7 2.8 4.8 3.8
Slide 39: Capital Market Data
Capital Market Data Stock Market Performance (as on 30th June, 2022) Dividend Percentage 60% 130.00% 50% 40% 30% 20% 10% 0% -10% 35.00% 25.00% -20% 15.00% 15.00% -30% Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Fairchem Sensex FY18 FY19 FY20 FY21 FY22 Price Da
Slide 40: Disclaimer
Disclaimer Fairchem Organics Limited Disclaimer: The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that al
Slide 41: Thank you
Thank you 41
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