Vikas Ecotech Limited · NSE:VIKASECO
Vikas Ecotech — Investor Presentation (November 2017)
60 slides from Vikas Ecotech's investor presentation, November 2017
Slide 1: Inspire Growth: Innovative Technology for a Safer World
Inspire Growth Vikas Ecotech Limited Innovative Technology for a Safer World Investor Presentation 530961 | VIKASECO | ISIN: INE806A01020
Slide 2: Disclaimer
Vikas Ecotech Limited Vikas Ecotech Limited Disclaimer • The information contained herein has been prepared to assist prospective investors in making their own evaluation of Vikas Ecotech Limited (hereinafter ‘the company’) and does not purport to be all-inclusive or to contain all of the informatio
Slide 3: In this Presentation
Vikas Ecotech Limited In this Presentation Lead – A Global Poison The Toxic-free Opportunity About Vikas Ecotech The Global & Indian Scenario The Vikas Ecotech Strategic Advantage Financials 3
Slide 4: Lead – A Global Poison
Vikas Ecotech Limited Lead – A Global Poison 4
Slide 5: Lead, Barium, Cadmium are toxic metals
Vikas Ecotech Limited Lead, Barium, Cadmium are toxic metals WIDESPREAD USE >>> EXTENSIVE ENVIRONMENTAL CONTAMINATION + Lead exposure causes HEALTH PROBLEMS ACROSS THE WORLD 600,000 new cases of intellectual Lead Poisoning – serious and sometime fatal disabilities in children every year. 70+ severe
Slide 6: Lead in Drinking Water due to PVC Pipes
Vikas Ecotech Limited Lead in Drinking Water due to PVC Pipes Investigations by the ‘Quality Council of India’ ALARMING HIGH MEDIUM LOW Kolkata Delhi Chennai Bangalore 33% of over 370 samples of water from the top 26 Kochi Coimbatore Ludhiana Ahmedabad cities of India tested positive for harmful con
Slide 7: Contamination due to PVC Pipes
Vikas Ecotech Limited Contamination due to PVC Pipes Lead Contamination due to PVC pipes is one of Municipal Water With High the major contributing factors of groundwater Levels of Lead pollution in India. ALARMING ALARMING Kolkata 100% Kochi 60% High content of lead found in ground water Ludhiana 5
Slide 8: Toxic PVC Pipe vs. Safe PVC Pipe
Vikas Ecotech Limited Toxic PVC Pipe vs. Safe PVC Pipe Standard formulation of a PVC pipe Toxic & Poor Quality PVC Pipe Non-Toxic & Good Quality PVC Pipe Composition Composition PVC Resin 100 Phr. PVC Resin 100 Phr. Calcium Carbonate 5 ~ 45 Phr. Calcium Carbonate 5 ~ 45 Phr. Misc. Additives & Chemic
Slide 9: The Toxic-free Opportunity
Vikas Ecotech Limited The Toxic-free Opportunity 9
Slide 10: The Lead-free Opportunity - Global
Vikas Ecotech Limited The Lead-free Opportunity - Global Growing health concerns Growing awareness Government Regulations The Result Ban on the use of toxic metals like lead, barium and cadmium-based heat stabilizers in PVC processing ORGANOTIN STABILIZERS PROVIDE THE ANSWER 10
Slide 11: The Push for Toxic-free Stabilizers
Vikas Ecotech Limited The Push for Toxic-free Stabilizers Ten-year Voluntary Commitment of the European PVC industry Cleaner and safer water, protection from toxic pollution in our homes, neighborhoods and workplaces ORGANOTIN STABILIZERS PROVIDE THE ANSWER 11
Slide 12: Organotin / MTM Stabilizers Advantages
Vikas Ecotech Limited ORGANOTIN / MTM (Methyl Tin Mercaptide) STABILIZERS Lead-free, non-toxic, safe and eco-friendly Advantages Sanctioned by most international legislations for potable water pipes and fittings Extensive global approvals for food contact applications with equal or improved strength
Slide 13: Global phase out of Lead-based Stabilizers
Vikas Ecotech Limited Global phase out of Lead-based Stabilizers A huge opportunity - PVC Stabilizer Market: 3.8 billion USD by 2020 Asia-Pacific: Largest market registering 57.1% share in 2014 Phase out driven by the Northern Europe - 2000-2011 - lead United Kingdom - Comprehensive switched stabili
Slide 14: India – Awareness & Regulations
Vikas Ecotech Limited India – Awareness & Regulations Impact of the Nestle Controversy à Increased Awareness about Lead Poisoning India ? Currently no legislative mandate to phase-out Lead-based heat stabilizers (~80% market share) in India NGT wide an order passed on 25th May, 2017 has directed the
Slide 15: About Vikas Ecotech
Vikas Ecotech Limited About Vikas Ecotech 15
Slide 16: Vikas Ecotech – Overview
Vikas Ecotech Limited Vikas Ecotech – Overview Inception – 1984 Headquarters – Employees – 125+ New Delhi, India Exports to over 25 countries and B2B Sales Growing by 25% CAGR R&D based Selection & Manufacturing of Products High-end Specialty Chemicals & Polymers <- Backward Integration From Trading
Slide 17: Promoter-Directors
Vikas Ecotech Limited Promoter-Directors Vikas Garg | Promoter & Managing Director Promoters More than 18 years of experience in the line of polymer compounds and chemicals Jayant Chedda* Others Spearheaded the group’s diversification into polymer compounds and chemicals Instrumental in company’s st
Slide 18: Management Team
Vikas Ecotech Limited Management Team Ashutosh Verma | CEO & Whole-time Director Vast experience spanning over 34 years in field of Plastics Raw Material and Polymer Compounds Responsible for Business Development and Technical support to the customers of VGL Experience and expertise in the field of
Slide 19: Corporate Governance
Vikas Ecotech Limited Corporate Governance Mr. Ghyanendra Nath Bajpai Mr. Sunil Alagh Chairman - Advisory Board Vice Chairman - Advisory Board Mr. Ghyanendra Nath Bajpai, a Mr. Sunil Alagh, Founder and Chairman distinguished leader in Indian business, of SKA Advisors. was the Chairman of the Securit
Slide 20: Product Lines
Vikas Ecotech Limited Product Lines Rubber- Rubber-Plastic Plastic Compounds Additives Plastic - Rubber Compounds Thermoplastic Rubber (TPR) Compounds Thermoplastic Elastomer (TPE) Compounds Ethylene Vinyl Acetate (EVA) Compounds Flame Poly Vinyl Chloride (PVC) Compounds Organotin Plasticizers Retar
Slide 21: Product Lines – The Recycling Advantage
Vikas Ecotech Limited Product Lines – The Recycling Advantage Matching Using recycled quality with raw materials compounds produced with virgin grade Rubber- Plastic Based on Experience Compounds with additives & modifiers, Plastic - Rubber Compounds Thermoplastic Rubber (TPR) Compounds Thermoplasti
Slide 22: Organotin Stabilizers
Vikas Ecotech Limited Organotin Stabilizers Capacity Advantages Industries • Existing – 3.0 KT Agriculture & Planned – 9.0 KT Only heat stabilizer for transparent Infrastructure Pipes Per year and food-grade PVC applications Medical Devices Strongest stabilizer for PVC Market Size suitable for criti
Slide 23: Polymer Compounds
Vikas Ecotech Limited Polymer Compounds Capacity Products Customers • Existing – 36 KTPA, Planned – 50 KTPA Broad range of differentiated Supreme Industries Ltd., Apar Industries Ltd. Per year compounds Liberty Shoes, Relaxo Market Size Thermoplastic Rubber (TPR) Footwear, Action Footwear •PVC GLOBA
Slide 24: Polymer Additives
Vikas Ecotech Limited Polymer Additives Customers Products Capacity Leading wire and cable Additives - Epoxidised Soyabean Oil manufacturers - 3 KTPA Ploycab Cable Company, RR Kable Ltd., Havells India Ltd. Market Size Engineering companies - GLOBAL • 24 KTPA Escorts Ltd. • 210 Product Benefits KTPA
Slide 25: Flame Retardants (ATH)
Vikas Ecotech Limited Flame Retardants (ATH) Products Huge Market Capacity In developed countries it is • Existing – 1.8 KTPA, Flame Retardant Additive (ATH) an essential ingredient in Planned – 3.6 KTPA all plastic and rubber Per year applications. PVC insulated cable industry has largest Product B
Slide 26: Supplying to a Diverse Range of Industries
Vikas Ecotech Limited Supplying to a Diverse Range of Industries Agriculture Automobile Wires & Cables Organic & Inorganic Chemicals Polymers Food Packaging Pharma FMCG Packaging Footwear 26
Slide 27: Supplying to a Diverse Range of Industries & Customers
Vikas Ecotech Limited Supplying to a Diverse Range of Industries & Customers FOOTWEAR AUTOMOTIVE COMPONENTS ELECTRICALS OEM supplier of Maruti Suzuki Ltd. Avlight Automotive Ltd. OEM supplier of Yamaha Motors Pioneer Tooling Services Pvt Ltd OEM supplier of Maruti and Ford India Ltd. PLASTIC POLYMER
Slide 28: Supplying to a Diverse Range of Industries & Customers
Vikas Ecotech Limited Supplying to a Diverse Range of Industries & Customers HYGIENE & HEALTHCARE CHEMICAL COMPANIES STATIONERY TEXTILES SBM YARN DYEING 28
Slide 29: End Users – Premium Footwear brands
Vikas Ecotech Limited End Users – Premium Footwear brands Omega Polymicrons Euro Shoes Capstan Rubber Indcoat Footwear Royal Polymers DSM Soles Alvin Leather Craft Apex Footwear Limited Colorado Multiple European Brands Suolificio Linea Italia Unisal India F.B. Footwear 29
Slide 30: Global Exports
Vikas Ecotech Limited Global Exports Knowledge Advantage 'Two Star from Exports – Export House' Global R&D understanding Currently exporting to : USA Germany China Spain Turkey Sri Lanka UAE Singapore Colombia Vietnam Turkmenistan Egypt Tunisia Ukraine Congo Argentina Iran Bangladesh 30
Slide 31: Push to Global Exports - FDA Compliance
Vikas Ecotech Limited Push to Global Exports - FDA Compliance Vikas Ecotech is in On the receipt of USA is the largest the process of the certification, Exports to the US consumer of receiving FDA Tinmate shall calls for FDA Organotin Compliance become a certified Compliance stabilizers. Certificate
Slide 32: Global & Indian Scenario
Vikas Ecotech Limited Global & Indian Scenario 32
Slide 33: Global Players & Competition
Vikas Ecotech Limited Global Players & Competition Global specialty chemicals is a matured market. Key Players: India – Market Opportunity, Moving towards maturity MNC ARMS UNORGANIZED ORGANIZED Specialized Small, local players Aditya Birla players Group Vikas Ecotech Market will expand both ways 33
Slide 34: Game-changing growth drivers in the Chemical Industry
Vikas Ecotech Limited Game-changing growth drivers in the Chemical Industry • India – emerging global hub for chemical manufacturing • Presently, India is a net importer of chemicals • With the GST roll out in July 2017, the chemical industry will gain immensely Growth will Innovation gaining Compet
Slide 35: Government Push
Vikas Ecotech Limited Government Push “The government is committed to its ‘Make in India’ initiative and chemical industry can play a major role in this campaign by making India a manufacturing hub for chemicals, especially knowledge and specialty chemicals.” A J V Prasad, Joint Secretary, Governmen
Slide 36: The Vikas Ecotech Strategic Advantage
Vikas Ecotech Limited The Vikas Ecotech Strategic Advantage 36
Slide 37: The Vikas Ecotech Strategic Advantage
Vikas Ecotech Limited The Vikas Ecotech Strategic Advantage 4: One-stop solutions • Savings in input for clients 2: R&D costs from Advantage usage of • B2B customers get recycled PVC • Consolidated stabilizers, plasticizers, manufacturing compounds and • Increased • In-house MTM around a single prof
Slide 38: Organotin Stabilizers: Growth Drivers
Vikas Ecotech Limited Organotin Stabilizers: Growth Drivers PVC Consumption growing globally Average PVC consumption • 2.9 million GLOBAL tonnes/annum • 50 million Riding on the potential in PVC consumption, tonnes/annum demand for stabilizers is bound to grow India Anti-Dumping Duty plea with Minis
Slide 39: Manufacturing Edge
Vikas Ecotech Limited Manufacturing Edge Key Facilities at Shahjahanpur (Rajasthan) and Noida (U.P.) Purchased of new factory adjacent to present Shahjahanpur (Rajasthan) factory. New facility in immediate vicinity of our Rajasthan existing factory to further strengthen and increase operational & ec
Slide 40: Key Priorities
Vikas Ecotech Limited Key Priorities Scientific Research & Development Technology Leadership Manufacturing Excellence Thrust on Exports Accelerating expansion in production capacity • Exports of Rs. 194 Crs. in FY17 as against Rs. 151 Cr. for FY16 • Robust increase in exports of the company and the
Slide 41: Ratings & Certifications
Vikas Ecotech Limited Ratings & Certifications Export House Certificate Crisil Rating TWO STAR EXPORT HOUSE status holder Crisil Ratings, India assigned CRISIL BBB for from Directorate General of Foreign Long Term Borrowings and CRISIL A3+ for Trade , Ministry of Commerce & Short Term Borrowings wit
Slide 42: Demerger – High Value and High Volume Business
Vikas Ecotech Limited Demerger – High Value and High Volume Business Current Structure In line with strategic vision and mission, VEL focus over the last two years has been on – Public Individual 1. Offering eco-friendly and technologically Promoters 24.83% 100% superior products to the world 2. Res
Slide 43: Demerger – Segregation of business to focus on growth
Vikas Ecotech Limited Demerger – Segregation of business to focus on growth Specific Focus Required for Growth • To unlock the true value of the business and to achieve prosperity in each segment of the business, the management believes in segregating its high potential product groups, so as to prop
Slide 44: Financials
Vikas Ecotech Limited Financials 44
Slide 45: Profitability Highlights
Vikas Ecotech Limited Profitability Highlights Rs. in Crore Q2 FY18 Q2 FY17 YoY Q1 FY18 Q4 FY17 Q3 FY17 Q1 FY17 # Revenue from Operations 110.2 86.5 109.0 103.4 84.1 100.7 Other Income 1.8 0.4 0.4 -0.2 0.8 0.3 Total Income 112.0 86.9 28.9% 109.5 103.5 84.8 101.0 Raw Material & Fuel costs 84.5 69.0 8
Slide 46: Financial Snapshot (graphical presentation)
Vikas Ecotech Limited Financial Snapshot (graphical presentation) 25% Q2 FY18 112 20.2% 18.9% 20% Q1 FY18 109 17.6% 17.9% 17.9% 15.6% Q4 FY17 15.0% 103 15% Net Revenues EBITDA Margin Q3 FY17 85 10.0% 10% 9.0% 8.9% 8.8% 7.9% PAT Margin Q2 FY17 84 5% Q1 FY17 101 0% 0 20 40 60 80 100 120 *Q4 FY17 PAT m
Slide 47: Annual Profitability Highlights
Vikas Ecotech Limited Annual Profitability Highlights Rs. in Crore FY17 FY16 YoY Revenue from Operations 371.4 307.2 Other Income 1.7 4.8 Total Income 373.0 312.0 19.6% Raw Material & Fuel Costs 288.9 237.2 Employee Cost 5.3 3.3 Other Cost 9.7 17.7 Total Expenditure 303.8 258.2 EBITDA 69.3 53.8 28.7
Slide 48: Financial Snapshot (graphical presentation)
Vikas Ecotech Limited Financial Snapshot (graphical presentation) H1 FY18 219 18.6% 17.2% 17.5% FY17 373 Net Revenues EBITDA Margin FY16 312 9.5% 9.0% PAT Margin 8.2% 7.0% FY15 215 6.2% FY14 172 1.9% 1.8% 0 50 100 150 200 250 300 350 400 INR Crore *Q4 FY17 PAT margin is after Extra-Ordinary Items 48
Slide 49: Balance Sheet Highlights
Vikas Ecotech Limited Balance Sheet Highlights Rs. in Crore Mar-17 Mar-16 Rs. in Crore Mar-17 Mar-16 Shareholder’s Funds 131.3 66.2 Non-Current Assets 30.0 28.3 Share Capital 28.0 25.4 Fixed Assets 27.5 27.9 Reserves & Surplus 103.4 40.8 Deffered Tax Assets (net) 2.2 0.2 Non-Current Liabilities 8.3
Slide 50: Balance Sheet Highlights
Vikas Ecotech Limited Vikas Ecotech Limited Balance Sheet Highlights Rs. in Crore Sept - 17 Mar - 17 Rs. in Crore Sept - 17 Mar - 17 Shareholder’s Funds 167.4 131.3 Non-Current Assets 31.1 30.0 Share Capital 28.0 28.0 Fixed Assets 28.5 27.5 Reserves & Surplus 139.4 103.4 Non-Current Investments 0.0
Slide 51: Robust Exports
Vikas Ecotech Limited Income from operations Income from Exports % of Exports Robust Exports 400 60% 372 350 312 52.0% 50% 300 48.3% 47.9% 40% 250 225 213 35.7% 194 200 30% 172 151 150 108 20% 100 16.9% 76 10% 50 29 0 0% 2014 2015 2016 2017 H1 2018 Export Turnover of Rs. 194 cr. in FY17. Robust incr
Slide 52: Key Highlights – FY17 v/s FY16
Vikas Ecotech Limited Vikas Ecotech Limited Key Highlights – FY17 v/s FY16 20% 29% 132 bps Revenue EBITDA EBITDA Margin Rs 372.5 crore Rs 68.7 crore 18.6% 32% (9) % (195)bps # # Profit Before Tax* Profit After Tax# PAT Margin# Rs 52.0 crore* Rs 23.2 crore # 6.2%# *Before Extra-Ordinary Items # After
Slide 53: Key Developments during the Financial year 2016-17
Vikas Ecotech Limited Key Developments during the Financial year 2016-17 § Credit Ratings ü Crisil - assigned BBB rating to VEL’s Long Term debt ü Crisil - Assigned A3+ rating to Short Term loans ü Brickworks - Upgraded Company’s rating to BBB+ from BBB- ü Dun & Bradstreet - Upgraded the Company’s r
Slide 54: Key Developments during the Financial year 2016-17
Vikas Ecotech Limited Key Developments during the Financial year 2016-17 § Manufacturing facility commissioned at Noida SEZ ü New facility to manufacture Organotin heat stabilizers & PVC compounds only for Export markets commissioned in Noida in March, 2017 § New Client wins – Mexichem, Baerlocher,
Slide 55: Key Developments during the Financial year 2016-17
Vikas Ecotech Limited Key Developments during the Financial year 2016-17 § New product launch ü Entry into Polypropylene (PP) compounds for White Goods sector ü PP compounds are widely used in water coolers, washing machines, A.Cs, electric irons, etc. ü Received quality approvals from leading Brand
Slide 56: Key Developments during the Financial year 2016-17
Vikas Ecotech Limited Key Developments during the Financial year 2016-17 § Increasing Customer Base both in India and Globally ü VEL participated in both local as well as International fairs to explore avenues for tie-ups and appointment of channel partners for distribution of products in Europe and
Slide 57: Key Macro Development
Vikas Ecotech Limited Key Macro Development § National Green Tribunal (NGT) order on use of Lead in PVC pipes – ü NGT wide order passed on 25th May, 2017 has directed Ministry of Environment and Forests (MoEF) to lay down standards within 4 (four) months for use of Lead in PVC pipes, in consultation
Slide 58: Fund Raising during the Financial year 2016-17
Vikas Ecotech Limited Fund Raising during the Financial year 2016-17 § Preferential Issue – ü VEL raised growth capital of Rs. 43 crs for CAPEX and general purpose requirements ü Mr. Jayant Chheda, Chairman of Prince Pipes and Fittings, India’s 3rd largest pipe manufacturer subscribed to the prefere
Slide 59: Drivers for Improved Performance and Profits
Vikas Ecotech Limited Drivers for Improved Performance and Profits 1. Benefitting from increased manufacturing capacity 2. Brand recognition & premium 3. Robust exports and Decreased cost of production domestic demand from stabilised R&D, capacity ramp-up and macro factors MTM/ Organotin Stabilizers
Slide 60: Contact
Vikas Ecotech Limited “We endeavour to become an eco-friendly company, selecting and producing food-grade products for our end-customers. We want to be a meaningful replacement to harmful lead based stabilizers in India.” Vikas Garg For further information, please contact - Vikas Ecotech Ltd. Mr. Vi
Vikas Ecotech — Investor Presentation (November 2017) on 6ix