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Phillips Carbon Black Limited
Investor Presentation
October - 2017
We Touch Lives Every Moment
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Part of a Dynamic Conglomerate….
• Largest in India and 7th largest globally
• Well spread product mix:
- Rubber Carbon Black
- Non Rubber incl Specialty Carbon Black
• Co-generation power plants at each locations
• Over 55 years of rich experience in the industry
• Comprehensive global reach
- Customers in more than 30 countries
- Leadership in National market
- Strong distribution channels
• State of Art R&D setup
• Seamless capability to switch over various feedstocks
• Publicly listed on BSE (Code – 506590) and NSE (PHILIPCARB)
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A Leader in the IndustryWhat is Carbon Black ?
• Pure elemental carbon in the form of black powder
• Produced by thermal decomposition of gaseous or liquidhydrocarbons under controlled conditions
• Largest application - reinforcing agent in tyres
• Its unique properties make it useful for pigmentation, UVstabilization and also as a conductive agent
• Performance is related to properties of specific surfacearea, particle size and structure, conductivity and colour
Company Overview
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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Carbon Black Business Segmentation
Enhancing focus on High Performance Rubber blacks and Specialty Carbon Blacks
• Non Rubber constitutes 9% of total sales volume
• Advanced technology driven specialty blacks manufacturing
• End market demand remains strong
• Direct sales to global tyre customers
Rubber Carbon Black
Tyre Carcass Tyre Tread
Non Rubber Carbon Black
Pure Specialty
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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Manufacturing
472
315
12085
0
50
100
150
200
250
300
350
400
450
500
PCBL SKI India Himadri CCIL
Market Share of PCBL:
• Over one-third of domestic consumption
• Largest shipment of Carbon Black in Internationalmarket from India among competitors
Capacity (KTPY)
Capacity Utilisation
77% 82%94%
0%
20%
40%
60%
80%
100%
120%
FY15 FY16 FY17
Location CB (MT) CPP (MW)
Durgapur, W.Bengal 1,47,000 30
Mundra, Gujarat 140,000 24
Palej, Gujarat 95,000 12
Kochi, Kerala 90,000 10
Total 4,72,000 76
Current Capacity
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Global Reach with Regional Expertise….
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• Four manufacturing facilities located near port
• Presence in 30+ countries
• Warehouse/Decanting Stations near customers
• Recipient of “Top Exports” award from AIRIA for last 5 consecutive years
SAUDI ARABIAUAETURKEYIRAN
Middle East
Europe
AsiaAmericas Africa
NIGERIAETHOPIAKENYASOUTH AFRICA
BRAZILPERU
Australia & New Zealand
CHINA PHILLIPINESHONG KONG SINGAPORENEPAL KOREAISRAEL TAIWAN JAPAN THAILANDMALAYSIA VIETNAMINDONESIA BANGLADESH
SRI LANKA
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
….With Strong Brand Recall
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R&D CustomersPCBL Brand
• Over 50 grades acrossrubber and non rubberblack
• Driving applicationinnovation withcustomers
• Focus on highperformance rubber andspecialty carbon black
• Seamless capability formultiple feedstock
• Diversified sourcing offeedstocks
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Growing Tyre Industry
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• Tyre Industry in the last 5 years has outperformed the growth of automobile production on back of higher demand from replacement market
• In FY16 registered vehicle stood at 200Mn against 24Mn annual vehicle sales
Automobile Production Vs Tyre Production (Mn Units)Fastest Growing Auto Market
Domestic Sales Growth over last yr
Tata Motors 29%
Maruti Suzuki 17%
Honda 10%
Hyundai 6%
• French car maker, PSA, Peugeot Brand, is going to enter Indian market by joining hands with Hindustan Motors
• Korean car maker, Kia, will be setting up a greenfield project in AP with capacity of 3 lakhs cars p.a
• Chinese car maker, SAIC, will be using GM’s Halolplant to tap Indian market
20 22 23 24 25 26 27 30
123 129146 152 157 165
180 192
0
50
100
150
200
250
FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E
Automobile Production Tyre Production
Source: SIAM and ATMA
Source: Business Standard Research
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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Tyre Industry developments
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Truck Bias + Radial Capacity forecastsAll in Mn units
5.65.8
6.7
2.2 2.33.6
6 66
0.40.4
1.10.3
0.4
2
0
1
2
3
4
5
6
7
8
FY17 FY18E FY20/21E
Apollo Tyres CEAT JK Tyre Bridgestone Michelin
FY15 FY16 FY17 FY18E FY19E FY20E
Truck radial imports - units 784 1286 1402 1262 1388 1527
growth % 64% 9% -10% 10% 10%
Total local market demand for truck tyres (radial + bias) - units 15,859 16322 15935 17163 18861 20211
growth % 3% -2% 8% 10% 7%
Imposition of anti-dumping duty on Chinese tyres would support margins
• On Sept’17, government has imposed anti-dumping duty on truck radial tyres importedfrom China
• The duty is in the range of USD250-450/MT. Thistranslates into Rs1500-1600 per truck radial andwould result in a duty rate of 10-12%
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Volume Growth..
CB Production (Lakh MT)
• Additional capacity of around 5% through debottlenecking
• Brownfield expansion under implementation will increase capacity by around 15%
• Adequate headroom in terms of land and other resource availability for further brownfield andgreenfield expansion
2.89
3.12
3.32
3.83
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
FY14 FY15 FY16 FY17
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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Increasing focus on Non Rubber application
• Non Rubber carbon Blacks are higher margin products
• PCBL is India’s leading manufacturer of Specialty blacks
• Focus on increasing penetration in Non rubbersegment
• Ramping up specialty portfolio to reduce India’sdependence on imports
• Moving up value chain to cover more than 90 % ofproduct basket in plastic application ( largest marketsegment )
• Market development across geographies
Rubber, 91%
Non Rubber,
9%
Sales Volume
Revenue
Rubber, 88%
Non Rubber,
12%
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Accelerating Contribution by Power Segment
FY15 FY16 FY17
CB Production (MT Lakhs) 3.12 3.32 3.83
Power Generation (MU) 342 372 484
Power Export (MU) 199 225 304
Approximately 35% of power generated is used to meet captive requirement, balance 65% is exported to grid
Increasing efficiency and CB production volume has been driving growth of power revenue
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0
10
20
30
40
50
60
70
80
Durgapur Mundra Palej Kochi Total
30
24
12
10 76
Power Capacity Across Plants (MW)
Power Segment Performance (Rs Crs)
6977 81
49 4551
0
30
60
90
FY15 FY16 FY17
Power Sale Power EBITDA
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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15%
CB Sales Volume Growth
40% EBITDA Growth
242%
PBT Growth
Rs 20
EPS
As on FY17
Growth Driven by Sustained Performance….
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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… Resulting from Strong Business Metrics
2.12.4
1.7
0.8
0
0.5
1
1.5
2
2.5
FY14 FY15 FY16 FY17
Net Debt /Equity
105
210 215
305
5%
9%11%
16%
0%
5%
10%
15%
20%
0
100
200
300
400
FY14 FY15 FY16 FY17
EBITDA (Rs Crs) EBITDA Margin (%)
EBITDA and EBITDA margins
-88
1446
166
-100
-50
0
50
100
150
200
FY14 FY15 FY16 FY17
PBT
-1%
8%9%
15%
-5%
0%
5%
10%
15%
20%
FY14 FY15 FY16 FY17
Return on Capital Employed
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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Q2FY17 Q2FY18
465
71
13
3.6
14.7
601
104
51
Growth is a Process….
…. We Reinforce it with Endeavour
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
443 317 211
777
707
549
0
200
400
600
800
1000
1200
1400
FY15 FY16 FY17
Long Term Debt Working Capital Debt
12191023
759
Borrowing Position
16
• Fall in crude prices and working capital management reduced the debt requirement despite volume growth
• Reduced leverage with increase in Cash Flow and improved WC management
9272
51
64
35
28
0
40
80
120
160
FY15 FY16 FY17Interest Cost Hedging Cost
79
155
107
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Strong Financial Performance
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FY17 FY16
Total Income 2,150 2,132
Raw material cost 1,221 1,291
Other Expenses 624 624
EBITDA 305 217
Finance Cost (incl hedging cost) 79 107
Depreciation 60 62
PBT 166 48
Tax Expenses 96 31
PAT 70 17
Rs Crs
40% EBITDA Growth
312% PAT Growth
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
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To Summarise: Factors Building Our Future
Specialty and High Performance Product Mix
Manufacturing Efficiency & Optimization
Long lasting relationship with major tyre Customers
Strong Customer Reach: Warehouse/Decanting Stations near customers
Robust Financial: low borrowings
Benefits maximum from Industry Growth due to leadership position
A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
Thank You
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A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People
