Apl Apollo Tubes Limited · NSE:APLAPOLLO
Apl Apollo Tubes — Investor Presentation (June 2021)
64 slides from Apl Apollo Tubes's investor presentation, June 2021
Slide 1: APL Apollo
APL APOLLO June 2021 1
Slide 2: Contents
Contents APL Apollo Overview FY21 Transformation Porter's Five Forces Core Competence Structural Steel Applications Exciting Future Financial Priorities & Performance Merger Update ESG Initiatives Key Takeaways 2
Slide 3: Safe Harbour
Safe Harbour Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "
Slide 4: APL Apollo Overview
APL APOLLO OVERVIEW Givwrous
Slide 5: APL Apollo at a Glance
APL Apollo at a Glance 1 Leading structural steel tube brand Core Business 14 Five Product Categories Brands 50% Market Share* 2.6 Million Ton Structural Steel Capacity 8 Patents 10 Plants 2,124 Employees 800+ Distributors 1,500+ Products 5 *Market share is for FY21
Slide 6: Product Category
Our Brands Apollo Structural Product Category* Structural steel construction material: Residential, Commercial, Infrastructure Fabritech, Build, DFT, Column, FireReady, Agri Apollo Z Galvanized structural steel construction material: CoastGuard Residential, Commercial, Infrastructure Apollo Galv Gal
Slide 7: Product Category – Application & Sales Mix
Product Category – Application & Sales Mix* Product Category Sales Volume Mix (%) Applications Apollo Structural 63% Residential Buildings & Independent Homes 25% Structural, Piling, Sheds, Handrails, Gates, Fencing, Commercial Buildings, Warehouses & Factories 14% Balcony Grills, Staircase, Light S
Slide 8: Brand Equity
Brand Equity 6) SHEDP Ez SAD =m | @ “int KERAL m , > VS cum ide “HYDE! , ‘ THE INNER STRENGTH OF INDIA
Slide 9: Brand Equity
Brand Equity ( APL BADHTI HAL HIMMAT ANDAR Ki TAGAT SE STEELERS}
Slide 10: B2C Channel
B2C Channel Distributors 800+ Distributors – Solid Relationships, Incentive plans Retailers 50,000+ Retailers – Retailer bonding program Fabricators, Architects & Structural Engineers 200,000+ Fabricators, Architects, Structural Engineers & Developers – Apollo Connect Programs, Fabricator/Architect
Slide 11: Transformational FY21
Transformational FY21 G@urous
Slide 12: FY21 – Converted crisis into opportunity
FY21 – Converted crisis into opportunity Market Share Gains Solid cash flow generation Gained market share to 50% from 40% in structural Op cash flow of Rs9.9Bn and Free cash flow of tubes in India Rs6.1bn Cash and Carry model Market Expansion Net Working capital decreased to 8 days from 25 Started
Slide 13: Porter's Five Forces
PORTER'S FIVE FORCES Givrous
Slide 14: Porter's Five Forces
Porter’s Threat of Entry - Scale of 2.6m ton capacity; wide gap between No. 2 Player Five Forces Bargaining power of distributors - Vast distribution network (access to 800+ distributors, 50,000 retailers, 200k fabricators) - 50% market share in structural steel - Technology advantage (DFT, ILG) tub
Slide 15: Core Competence
CORE COMPETENCE Givrous
Slide 16: Our Business Moat
Our Business Moat... Highest no. of Lowest cost producer products with (largest buyer of HR coil) 1,500 SKUs Highest scale with 10 plants Highest Premium pricing to peers Profitability (2.6Mn ton capacity) (brand strength) Largest sales network Technology edge & (800 distributors) Innovation Lowest
Slide 17: Dominant Leadership
Dominant Leadership APL's Market Share (%) Peer Market Share FY21 50 37 40 31 APL Apollo 27 27 18% Player 1 7% Player 2 50% 7% Player 3 Player 4 FY16 FY17 FY18 FY19 FY20 FY21 9% 9% Others Capacity (Mn Tons) Number of Plants 2.5 2.6 11 10 10 2.1 1.8 7 7 1.3 1.3 6 FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY
Slide 18: Unique Capabilities
Unique Capabilities Developed structural Distribution Innovative steel Technology products network market in India First Mover advantage Direct Forming Technology Ground breaking for big structural products solutions No.1 Leader; Focused on B2C channel for last Roofing solutions, steel strength and
Slide 19: Structural Steel Tubes Applications
STRUCTURAL STEEL TUBES APPLICATIONS 19
Slide 20: Structural Steel Tubes Applications
Structural Structural Steel Steel Tubes Applications Applications 20
Slide 21: Structural Steel Tubes Applications
Structural Steel Structural Steel Tubes Applications Applications 21
Slide 22: Market Creation
Market Creation 22
Slide 23: Growing Strength to Strength
Growing Strength to Strength Volume (k tons) 1,633 1,640 1,339 1,130 50% Market Share 932 in Structural Steel 894 Tubes 657 530 426 300 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 • Developed Structural steel tube market in India • Focused on steel strength and building material application •
Slide 24: How have we created market..
How have we created market.. Conventional Why Structural Steel Tube How to replace Applications the conventional Construction Products replaces these products? products ?? Structural support, Uniform Strength, Steel Angle/Channels Towers Lower steel consumption infrastructure Low Diameter Furniture,
Slide 25: New Opportunities to revolutionise construction industry
New Opportunities to revolutionise construction industry Warehousing Affordable Housing Urban Infrastructure Urban Real Estate 25
Slide 26: Revolutionise the Construction Industry: Warehousing
Structure Steel Tube: Revolutionise the Construction Industry • JLL projects that there will be 344 mn sq. ft of warehousing space in India by 2022 Warehousing • Logistics, engineering, auto and ancillaries, e-commerce, FMCG, retail and telecom, and white goods have remained the biggest demand drive
Slide 27: Revolutionise the Construction Industry: Affordable Housing
Structure Steel Tube: Revolutionise the Construction Industry • Trends for affordable housing with low cost & faster completion is picking in India Affordable • Modular Building will be the future construction methodology Housing • Modular steel structures are constructed in-house with final assembl
Slide 28: Revolutionise the Construction Industry: Urban Infrastructure
Structure Steel Tube: Revolutionise the Construction Industry Urban • Govt plans to start 100 additional airports by 2024 • To invest Rs19,000 crore in upgrading airport infrastructure in the country, Infrastructure especially in smaller cities over next three years 28
Slide 29: Revolutionise the Construction Industry: Urban Real Estate
Structure Steel Tube: Revolutionise the Construction Industry • India’s vertical growth pushed high-rises buildings with G+20 floors or more to record highs in 2019 Urban Real Estate • Government has formed a panel to look into the upward revision of FSI norms in all major cities 29
Slide 30: India at the start of Structural Steel Usage
India at the start of Structural Steel Usage Structural Steel Tubes Market as % of Steel Potential Structural Steel Tubes Market in India Market (2020) (Mn Tons) 11 227 9 9 8 8 7 140 5X 4 90 3X 22 13 4 Global Europe LATAM Japan Middle North India 2019 2023E 2030E East America Steel Market Structural
Slide 31: Structural Steel Tubes essential for new age construction
Structural Steel Tubes essential for new age construction Growth Drivers Benefits - Growing vertical model of development - Environmental friendly - Increased Spending on Skyscrapers - Recyclable & lower greenhouse gas emission - Higher expenditure on infrastructure - No underwater usage unlike conv
Slide 32: Structural Steel Tubes Market expansion linked to construction activity
Structural Steel Tubes Market expansion linked to construction activity Global Structural Steel Tubes Market Indian Structural Steel Tubes Market expansion expansion 16,000 54 900 5.0 14,000 52 800 4.5 12,000 700 50 10,000 600 4.0 48 500 8,000 3.5 46 400 6,000 44 300 3.0 4,000 200 2,000 42 2.5 100 -
Slide 33: Structural Steel Tubes Uses
Structural Steel Tubes Uses Global Structural Steel Tubes Uses - Segment wise Indian market taking off in all segments (Mn ton) breakup(%) 1.8 1.6 1.4 19 17 16 1.2 23 22 22 1.0 0.8 21 22 22 0.6 0.4 37 39 40 0.2 0.0 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2013 2018 2021E Residential Infrastruct
Slide 34: Structural Steel Market Expansion
Structural Steel Market Expansion Global Structural Steel Market growth forecasts (Mn Ton) Growth Drivers for India 167 160 168 Rising population accompanied with 159 153 142 improvement in living standards 138 124 127 Requirement for strong, durable quality of construction for private residences In
Slide 35: Future of Construction
Future of Construction APL, } c L SEELPPES 95
Slide 36: We are ready..
We are ready.. Opportunity Size.. Where we are.. Our strengths.. FY21 sales volume New innovative Potential structural was 1.6Mn ton products steel market size of: Current capacity is Branding 13Mn ton by 2023 2.6Mn ton Fixed costs of 22Mn by 2030 Future capacity unutilized capacity addition
Slide 37: Financial Priorities & Performance
FINANCIAL PRIORITIES & PERFORMANCE 37
Slide 38: Financial Priorities under Strong Governance
Financial Priorities under Strong Governance Growth Earnings • Profitable Organic Growth • Drive sustainable EPS growth • Commitment to R&D and Talent • Attain earnings objectives across • Innovate products to replace economic cycles conventional construction methods • Achieve ROCE ≥ 30% Capital All
Slide 39: On path of Premiumization..
On path of Premiumization.. 1 2 4 Focusing on products which Moving towards Leveraging APL Apollo are aesthetically appealing solution driven brand equity and command premium offerings and heavy weight structural steel tubing products for 3 5 large real estate and Consumer centric Innovative sizes/n
Slide 40: Growing Strength to Strength
Growing Strength to Strength Volume (k tons) Net Profit (Rsm) 1,633 1,640 3,602 1,339 1,130 2,380 894 932 657 1,521 1,581 1,482 530 426 1,006 300 687 590 608 491 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 EBITDA (Rsm) Interest Coverage Ratio (
Slide 41: Growing Strength to Strength
Growing Strength to Strength ROCE (%) ROE (%) 26.5 23.9 24.8 22.8 21.4 21.4 20.8 21.0 21.2 20.3 20.5 18.4 18.4 18.9 19.3 17.5 17.4 16.5 15.0 13.5 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Net Debt/EBITDA (x) Net Debt/ Equity (x) 3.0 1.2 2.8 1
Slide 42: Growing Strength to Strength
Growing Strength to Strength Operating Cash Flow (Rs Bn) Net Debt (Rs Bn) 8.1 7.9 7.7 6.5 9.8 5.9 5.1 3.2 3.6 1.6 0.9 0.1 FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21 Net Working Capital (Days) EBITDA/Ton (Rs) 46 43 4,138 40 3,574 3,152 3,283 29 2,933 2,923 25 8 FY16 FY17 FY18 FY19 FY
Slide 43: Growing Strength to Strength
Growing Strength to Strength Capex to operating cash flow (%) Operating cash flow to EBITDA(%) 144 107 184 95 91 54 63 59 25 29 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 6.1 Free cash flow (Rs Bn) 5 Dupont ROE (%) 25 4 20 3 2 15 0.6 0.7 1 -0.1 -0.4 -1.5 -1.5 0 10 FY15 FY16 FY17 FY18 FY19 FY2
Slide 44: De-commoditizing Product Portfolio
De-commoditizing Product Portfolio Gradually improved our value added product contribution FY18 FY19 FY20 FY21 Annual Product Category Application Sales Mix Volume EBITDA/Ton Sales Mix Volume EBITDA/Ton Sales Mix Volume EBITDA/Ton Sales Mix Volume EBITDA/Ton Capacity (%) (KTon) (Rs) (%) (KTon) (Rs)
Slide 45: Balance Sheet & Cash Flow Statement (Consolidated)
Balance Sheet & Cash Flow Statement(Consolidated) P&L Statement (Rsm) FY21 FY20 Balance Sheet - Assets (Rsm) FY21 FY20 Cash Flow Statement (Rsm) FY21 FY20 Sales Volume (k Ton) 1,640 1,633 Cash & Bank Balance 3,579 456 EBITDA 6,787 4,774 Receivables 1,306 4,764 Accounts receivables 3,470 846 Net Reve
Slide 46: Annual EBITDA Bridge (Rs/ton)
Annual EBITDA Bridge (Rs/ton) 1. Value Addition 2. Pull Demand/No Sales Discounts 3. Cost Control 4. Brand Premium 326 250 500 164 105 80 4,138 6,820 2,923 6,763 EBITDA 31- Employee Selling & Freight & Value Brand No EBITDA 31- Mar-20 Cost Admin Others Addition Premium Discounting Mar-21 Benefit 46
Slide 47: Consolidated Cash Flow Bridge (Rsm)
Consolidated Cash Flow Bridge (Rsm) 7,881 9,771 154 17 623 1,624 2,797 Net Debt 31- Op. cash flow Investment Capex Interest Capital Other Net Debt 31- Mar-20 Increase Mar-21 265 Business continues to Capex being funded from Net debt declined 79% on solid generate strong internal cash flows free cash
Slide 48: Key Takeaways
KEY TAKEAWAYS Givrous
Slide 49: Solid Future Outlook
Solid Future Outlook Sufficient capacity for double digit annual sales volume growth in long term Three focus areas: Cash flows and Growth in High Diameter and High profitability Thickness Tubes led by DFT • Improving EBITDA/ton technology based products • Improving free cash flows • ROCE enhancemen
Slide 50: Enhancing Presence and Unlocking Opportunities
Enhancing Presence and Unlocking Opportunities Local Market Presence aided by 3-tier Distribution and Solid Supply Chain Mechanism 800+ Distributors 50,000+ Retailers and Fabricators 300 Towns and Cities 50
Slide 51: APL Apollo & Apollo Tricoat Merger
APL APOLLO & APOLLO TRICOAT Merger
Slide 52: Transaction Highlights
Transaction Highlights • The Board approved the merger of Shri Lakshmi Metal Udyog Limited and Apollo Tricoat Tubes Limited (Apollo Tricoat)with APL Apollo Tubes Limited (APL Apollo) on 27 February 2021 • Apollo Tricoat’s minority shareholders will receive for each equity share held: One equity sh
Slide 53: Transaction Highlights
Transaction Highlights • Effected by way of a Scheme of Amalgamation • Conditional on shareholder approval at each of APL Apollo and Apollo Tricoat, as well as regulatory approvals • Transaction governance in line with Indian regulations and best practices Big Four Accounting firm KPMG Assurance a
Slide 54: Strategic Rationale
Strategic Rationale Creation of stronger platform for Simplification of group structure growth Ability to offer innovative Potential re-rating to benefit all products resulting in higher shareholders margins Strategic Rationale APL Apollo Cost efficiencies to boost overall Greater financial flexibil
Slide 55: Merger Arrangements
Merger Arrangements Existing group structure Key Mechanics Promoter and Promoter Group1 Public APL Apollo 2B APL Infrastructure Pvt. Limited – 32.46% Tubes Ltd Issue of Amalgamation Sanjay Gupta – 0.14% 2A shares Cancellation Veera Gupta*2 – 2.33% 100% 1 of Amalgamation Rahul and Rohan Gupta – 2.1%
Slide 56: Benefit for APL Apollo Share holders
Benefit for APL Apollo Share holders • EPS Accretive: Net profit increase by 13.5%, Dilution of 9.7% • ROE Accretive: 100% of Apollo’s Tricoat profit to boost return profile • Margin Accretive: Apollo Tricoat’s high margin products to lift APL Apollo’s profitability • Addition of innovative value ad
Slide 57: ESG Engagement
APL APOLLO ESG Engagement
Slide 58: Why focus on ESG?
ESG is something that Investors are demanding, Customers are expecting, Shareholders are relying, and Employees are valuing. Why focus on ESG? Sudden shift in stakeholder focus areas.
Slide 59: Understanding ESG Drivers
Understanding ESG Drivers ESG considerations of major stakeholders 1 Investors 2 Govt./ Regulators 3 Sector Leaders Good financial returns, doing Complying with rules and Working with transparency business efficiently regulations, work and co- and integrity, making and according to the market best o
Slide 60: APL Apollo's approach towards ESG
APL Apollo’s approach towards ESG Project overview APL Apollo has engaged Big4 Consulting Group to develop ESG Strategy and Roadmap for risk mitigation Scope of work of the engagement Capacity- Materiality Goal/target Response to building, assessment, setting and sustainability As-is analysis ESG Re
Slide 61: Current State: APL's Integrated Annual Report
Current State: APL’s Integrated Annual Report APL Apollo’s IAR FY 2019-20 Page 61 Management approach for ESG has been defined
Slide 62: ESG Framework
ESG ESG Framework Framework : Material aspects are grouped into ESG pillars Vision: To be high performing organisation, valuing social and environmental wellbeing, nurturing relationships and promoting innovation Mission: To supply high-quality building materials to a worldwide client base while uti
Slide 63: Strong Management
Strong Management Directors (Non Executive) Executive Team Neeru Abrol Sanjay Gupta Arun Agrawal Director at TCNS Clothing Co Limited & others|Awarded Chairman & Managing Director Chief Operating Officer best achiever by ICAI | 26 Yr experience in SAIL Abhilash Lal Vinay Gupta Deepak Goyal 3 decades
Slide 64: Thank You
Thank You For further information, please contact: Deepak Goyal Anubhav Gupta APL Apollo Tubes Ltd APL Apollo Tubes Ltd Tel: +91 120 404 1400 Tel: +91 120 404 1452 Email: deepakgoyal@aplapollo.com Email: anubhav@aplapollo.com 64