Slide 1: Cover letter to stock exchanges
VEL/IP/14/08/2018 14th August, 2018 The General Manager-Listing The General Manager-Listing National Stock Exchange Limited Bombay Stock Exchange Limited Exchange Plaza, Bandra-Kurla Complex Phiroze JeejeeBhoy Towers Bandra(E) Mumbai-400051 Dalal Street Fort, Fax:- 022-26598235/36 Mumbai-400001 NSE
Slide 2: Innovative Technology for a Safer World - Investor Presentation
Inspire Growth Innovative Technology for a Safer World Investor Presentation 530961 | VIKASECO | ISIN: INE806A01020 July 2018 1
Slide 3: Disclaimer
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 information a prospective or exi
Slide 4: India's Only Producer of Organotin PVC Stabilizer
Vikas EcoTech – India’s Only Producer of Organotin PVC Stabilizer 20% 50% 15%+ 15+ years 20+ specialty chemicals & Export Destinations 3-year revenue CAGR 3-year EBITDA CAGR EBITDA MARGIN compounds experience Speciality Additives Speciality Compounds Recycled Materials Organotins Thermoplastic Rubbe
Slide 5: Key Supplier to Varied Industries & Customers
Vikas EcoTech – Key Supplier to Varied Industries & Customers Industries Infrastructure & Agriculture Packaging Customers FMCG, Footwear & Other Prince Pipes, Supreme Consumer Goods Industries, Apar Industries Organic & Inorganic Liberty Shoes, Relaxo Chemicals Footwear, Action Footwear Key Certific
Slide 6: Vikas EcoTech – Overview
Vikas EcoTech – Overview Employees – 125+ Exports to over 20 countries B2B Sales Growing by 20% CAGR Headquarters – New Delhi, India R&D based Selection & Manufacturing of Products High-end Specialty Chemicals & Polymers Inception – 1984 From Trading & Distribution Petroleum & Petrochemical Products
Slide 7: Game-changing growth drivers in the Chemical Industry
Game-changing growth drivers in the Chemical Industry • India – emerging as a global hub for chemical manufacturing • Presently, India is a net importer of chemicals • With the GST roll out, the organized chemicals industry is gaining immensely Growth will Innovation gaining Competitive Landscape ac
Slide 8: Investment Thesis
Investment Thesis Fast-growing company with niche chemical products R&D driven, environmentally safe products Strong balance sheet Well-stocked manufacturing facilities Backward integration to improve margins 7
Slide 9: Vikas EcoTech's Growth Trajectory
Vikas EcoTech’s Growth Trajectory All figures in INR Mn. except as stated Revenue EBITDA PAT 3,714 3,673 3,072 286 676 255 232 2,110 569 490 1,697 102 166 33 38 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 2014 2015 2016 2017 2018 Revenue Growth EBITDA margin PAT margin 18.2% 8.3% 46% 7.8% 16.0
Slide 10: Successful Business Transformation
Successful Business Transformation Trading Dominance Manufacturing Dominance • Plastics, Polymers & Allied Products • Specialty Compounds & Additives • EBITDA margins of ~4% in FY13 • EBITDA margins of 15%+ in FY18 REVENUE MIX - FY13 REVENUE MIX - FY18 Specialty [CATEGORY compound NAME] s 25% [VALUE
Slide 11: Demerger – High Value and High Volume Business
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 – 24.83% Individual Public Promoters 1. Offering eco-friendly and technologically 100 % superior products to the world 2. Research and Production
Slide 12: Demerging Low-Value Trading Segment
Demerging Low-Value Trading Segment Shareholders of Vikas EcoTech to receive shares of Vikas Multicorp in ratio 1:1 NCLT’s final hearing for scheme of arrangement is scheduled for September 6th, 2018. Demerger expected to be completed in FY19 Consolidated Vikas To be demerged into 2 Separate lis
Slide 13: The Vikas EcoTech Strategic Advantage
The Vikas EcoTech Strategic Advantage 4: One-stop solutions • Savings in input for clients 2: R&D costs from usage Advantage of recycled PVC • Consolidated • B2B customers get • Increased • In-house MTM technology manufacturing stabilizers, plasticizers, c profitability • Only company in India to ar
Slide 14: R&D driven product composition
R&D driven product composition R&D - Our Backbone Customer Centric Environmental Stewardship Innovative Products o Multi-dimensional R&D approach: o Science for Better Sustainability o Our R&D team is constantly provide solutions to the most Our engineers and scientists have working to create innova
Slide 15: Strong balance sheet support
Strong balance sheet support Balance Sheet EQUITY & LIABILITIES FY17 FY18 ASSETS FY17 FY18 Share Capital 280 280 Tangible assets 275 283 Reserves and Surplus 1,050 1,318 Non Current Investments 0 48 Long term Borrowings 80 54 Long Term Loans and Advances 4 3 Long Term Provisions 2 4 Other Non‐Curren
Slide 16: Balance Sheet Support
Balance Sheet Support All figures in INR Mn except as stated Net Worth Net Debt/Equity (x) RoE 46% 1,598 1.5 1,330 1.3 1.0 23% 0.8 20% 678 0.7 409 433 9% 8% FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 2014 2015 2016 2017 2018 Asset turnover Net debt to EBITDA RoCE 13.3 11.1 4.0 29% 3.9 25% 8.0
Slide 17: Working Capital Cycle
Working Capital Cycle 200 179 180 160 151 144 147 137 132 128 140 111 120 102 99 95 100 75 71 80 69 65 60 56 60 49 49 43 40 20 - 2014 2015 2016 2017 2018 Receivable days Inventory Days Payable Days Cash Conversion days *FY18 disruption of production for 45 days led to WC increase, to reverse in FY19
Slide 18: Well-stocked manufacturing facilities - Capacity Expansion
Well-stocked manufacturing facilities - Capacity Expansion Figs. in Metric Tonnes p.a. OrganoTin Stabilizers Polymer Rubber Compounds 36,000 3,000 26,000 1,800 1,800 17,500 1,200 10,800 2015 2016 2017 2018 2015 2016 2017 2018 Flame Retardants Recycled Compounds 1,800 1,800 1,800 10,000 10,000 1,200
Slide 19: Manufacturing Edge
Manufacturing Edge Key Facilities at Shahjahanpur (Rajasthan) and Noida SEZ (U.P.) Purchased of new factory adjacent to present Shahjahanpur (Rajasthan) factory New facility in immediate vicinity of Rajasthan‟s existing factory to further strengthen and increase operational & economical efficiencies
Slide 20: Backward Integration
Backward Integration o Company is setting up a 2-Ethylhexyl Thioglycolate (2-EHTG) manufacturing plant at Dahej, Gujarat Opportunity o 2-EHTG is key raw material for Organotin; Vikas Ecotech is India’s sole Organotin producer o Closure of manufacturing units in China due to non-compliance to new Rea
Slide 21: FY19: Strategic Priorities & Guidance
FY19: Strategic Priorities & Guidance FY19 GROWTH FORECAST FY19 STRATEGIC FOCUS • Production levels normalized in Q1 FY19, post temporary o Detailed marketing strategy to capture disruption in Q4 FY18 meaningful market share in US market • Company to continue to grow in tandem with earlier o Ramp up
Slide 22: Promoter-Directors
Promoter-Directors Vikas Garg | Promoter & Managing Director Promoters More than 18 years of experience in the line of polymer compounds and chemicals Jayant Chedda* FPIs Spearheaded the group’s diversification into polymer compounds and chemicals Others Instrumental in company’s strategic shift fro
Slide 23: Key Management Team
Key Management Team Mr. Ashutosh Verma – Director, CEO & Head R&D Mr. Amit Dhuria – Chief Financial Officer Mr. Sunil Dhameja – Sr. VP - Business Development Mr. Satish Kumar Gupta - VP - Plant Operations & Admin Mr. Rakesh Trikha - Head Impex Department Mr. Rajiv Malhotra - GM - Procure
Slide 24: Corporate Governance
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 of SKA Advisors. business, was the Chairman of the Securities and Exchange Board
Slide 25: Organotin - Huge Upcoming Opportunity
Speciality Products: Organotin - Huge Upcoming Opportunity o Organotins are a US FDA approved Advantages of Organotin stabilizers eco- friendly heat stabilizer for PVC; a o Strongest available heat stabilizer for PVC substitute for health hazardous lead- o Non-toxic, safe and eco-friendly based and
Slide 26: Organotin - Well Positioned to Capitalise the Opportunity
Organotin - Well Positioned to Capitalise the Opportunity Only manufacturer of Organotins in India with in-house Market Size R&D Only 7 other producers globally India Global 7 MT p.a. 140 MT p.a. Significant Regulatory Approvals in place Industries Manufacturing process: begins with Tin meta
Slide 27: Push to Global Exports – USA market
Push to Global Exports – USA market USA is the Methyl Tin Vikas EcoTech is Entry into USA largest Mercaptide in the process of market for Vikas consumer of (Organotin) is a ramping up EcoTech’s range Organotin FDA Compliant Organotin of Organotins stabilizers product capacity stabilisers Increased a
Slide 28: Q1FY19 Update
Q1FY19 Update 4 27
Slide 29: Q1FY19 Highlights
Q1FY19 Highlights Revenue (INR Mn) 1,151 869 Operational & Financial Highlights 319 o Revenues increased by over 160% on a sequential basis Q1FY18 Q4FY18 Q1FY19 o EBITDA improved by over 440% QoQ with strong margins of 15%+ EBITDA (INR Mn) o Company posted bottomline profits as compared to a loss
Slide 30: Q1FY19 – Key Performance Indicators
Q1FY19 – Key performance Indicators REVENUE (INR MN) EBITDA (INR MN) EBITDA Margin 18.7% 1,151 206 17.6% 1,102 1,101 194 15.0% 166 14.4% 800 120 319 3 1.1% Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 After major production disruptions in Q
Slide 31: Q1FY19 Financials At a Glance
Q1FY19 Financials At a Glance Income Statement Jun-18 Mar-18 Jun-17 YoY(%) QoQ(%) Revenue 869 319 1,151 -24% 172% COGS 699 271 953 -27% 158% Gross Profit 170 48 198 Gross Margin 19.6% 15.1% 17.2% Employee Benefits Expense 13 10 11 18% 33% Other Expenses 34 35 21 64% -1% EBITDA 123 3 166 EBITDA Margi
Slide 32: Appendix
Appendix 4 31
Slide 33: Global phase out of Lead-based Stabilizers
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 stabiliser Permission to use
Slide 34: Lead in Drinking Water due to PVC Pipes
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 content of lead. Mumbai M
Slide 35: Contamination due to PVC Pipes
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 50% (bore well / well w
Slide 36: Toxic PVC Pipe vs. Safe PVC Pipe
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 & Chemicals Misc. Additives &
Slide 37: India – Awareness & Regulations
India – Awareness & Regulations Impact of the Nestle Controversy 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 Ministry of Environment
Slide 38: Supplying to a Diverse Range of Industries & Customers
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 (PVC) 27 37
Slide 39: Supplying to a Diverse Range of Industries & Customers
Supplying to a Diverse Range of Industries & Customers HYGIENE & HEALTHCARE CHEMICAL COMPANIES STATIONERY TEXTILES SBM YARN DYEING 28 38
Slide 40: End Users – Premium Footwear brands
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 39
Slide 41: Ratings & Certifications
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 with stable outlook Indus
Slide 42: For further information, please contact
For further information, please contact - Ms. Sheetal Khanduja Go India Advisors +91 9769364166 sheetal@goindiaadvisors.com Ms. Tanya Khosla Go India Advisors +91 9769387813 tanya@goindiaadvisors.com 60 41