IFGLREFRACTORIES LTD

ResultUpdatePresentation
August 2016
August2016

SafeHarbor

This presentation and the accompanying slides (the Presentation), has been prepared by IFGL Refractories Limited
(the Company), solely for information purposes and do not constitute any offer, recommendation or invitation to
purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract
or binding commitment whatsoever.
This Presentation has been prepared by the Company based on information and data which the Company considers
reliable,
li bl but
b t the
th Company
C
makes
k no representation
t ti or warranty,
t express or implied,
i li d whatsoever,
h t
and
d no reliance
li
shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this
Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may
consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly
excluded.
Certain matters discussed in this Presentation may contain statements regarding the Companys market opportunity
and business prospects that are individually and collectively forwardlooking statements. Such forwardlooking
statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties
and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the
performance of the Indian economy and of the economies of various international markets,
markets the performance of the
refractories industry in India and worldwide, competition, the companys ability to successfully implement its
strategy, the Companys future levels of growth and expansion, technological implementation, changes and
advancements, changes in revenue, income or cash flows, the Companys market preferences and its exposure to
market risks, as well as other risks. The Companys actual results, levels of activity, performance or achievements
could differ materially and adversely from results expressed in or implied by this Presentation.
Presentation The Company
assumes no obligation to update any forwardlooking information contained in this Presentation.
2

INDUSTRY OVERVIEW
INDUSTRYOVERVIEW

WorldSteelCapacityUtilization

onaTenMonthHigh
T M th Hi h
Source Worldsteel

IndianEconomysResilience
Governmentannouncedasignificantincrease
of Rs.70,000crore ininvestmentininfrastructure
in201516overthecurrentyear,withafocuson
railwaysandroads.
IndianmetallurgicalindustriesattractedFDItothe
g
tuneofUS$8.7billion,respectively,intheperiod
April2000September2015.

Railways201516investmentwouldbeclosetodoubleofthe
averageofprevious5years.201617CAPEXpeggedatRs.1.21
g
p
y
p gg
lakh crore

Driven by rising infrastructure development and growing

demand for automotives, steel consumption is expected
to reach 104 MT by 2017
GovernmentissettingupSteelResearchand
TechnologyMissionofIndia(SRTMI)forR&D
activitiesinsteelindustryataninitialcorpusofRs
200crore .
On the back of Reform momentum, Steel demand
in India is expected to grow by 5.4 per cent to 83.8
million MT in 2017 as per World Steel Association.

tobenefitSteelIndustry
t b
fit St l I d t
5

SafeguardMeasuresWorldover
USARaiseditstariffsonimportsof
ChineseSteelto522%from266%

EU-Imposed provisional tariffs on

Chinese Steel of 16%

INDIAGovernmentseta
minimumimportprice
(MIP)of$341to$752per
tonne for173steel
products

MEXICO35.6percentAntiDumpingduty
onimportsfromKorea

BRAZILAntiDumpingDutyonChineseSteelforaperiod
of5yearsrangingfrom$1009.29to1356.09perMT
f5
i f
$1009 29 t 1356 09
MT

VIETNAMTemporaryAntidumpingtariffs
f
from14%to23%onimportsofChinese
14% t 23%
i
t f Chi
Steel.AdditionalImportDutiesofupto
25%untilOctober2019

willbenefitDomesticSteelProduction
6

IFGL ReadytoCapitalize

StabilizingWorldEconomyto
leadtorecoveryofSteel
y
DemandinDeveloped
Economies
.

SteelDemandintheWorldex
Chinatoisexpectedtogrowin
2016WSA
IncreaseSteelProductionin
IndiaonbackofInfrastructure
growth&Safeguards.

IFGLispresentinmajorSteel
IFGL
is present in major Steel
Producingcountriesofthe
World;willbenefitfrom
EconomicRecovery

Merger

IFGLExports CorporateAnnouncement

IFGL Refractories Limited

IFGLRefractories

PromoterGroupofIFGL
Refractories Limited

Current Structure of
CurrentStructureof
IFGLExportsLtd.

51%

49%
IFGLExportsLtd

BoardofDirectorshaveapprovedmergerofIFGLRefractories Ltd.withIFGLExportsLtd.onand
from1st April,2016subjecttonecessaryapprovals/permissionsincludingsanctionofthe
SchemeofAmalgamationbytheJurisdictionalHighCourt(s)
ShareExchangeRatioapprovedis1:1i.e.,OneEquityShareofRs.10/ eachofthesubsidiary
CompanycreditedasfullypaidupforeveryoneEquityShareofRs.10/ eachfullypaidupheld
intheCompany
TheAdvisortothetransactionisKPMG,Valuer isWalkerChandiok &Co.LLPandFairness
OpinionAdvisorisSaffronCapitalAdvisorsPrivateLtd.
CombinedEntitywillhaveequitybaseof3,60,39,312equityshareshavingfacevalueofRs.10/
eachwithPromoterGroupholding72.43%andrestownedbyPublic
9

MergerRationale

Simplified
Corporate
Structure

GreaterFinancial
Strength&
Flexibility
l bl
improving
Economic&
Competitive
Positionof
ii
f
Combined
Entity

Betterfinancial,
business&
operational
prospectsincluding
t i l di
efficient
managementof
costs&
administrative
d i i t ti
control

Greaterefficiency
inCash
managementby
b
poolingofcash
flowgeneratedby
thecombined
b i
business

Taxefficient
structureleadingto
t t
l di t
potentialCash
Savings

Shareholder
Value Accretive
ValueAccretive
Transaction

10

OUR PERFORMANCE
OURPERFORMANCE

ConsolidatedProfit&Loss
Particulars [Rs.Crs]
T t lI
TotalIncome
RawMaterial

Q1FY17

Q1FY16

YoY Growth
%

Q4FY16

QoQ
Growth%

181 9
181.9

185 8
185.8

2.1%
2 1%

177 9
177.9

2 2%
2.2%

89.2

95.1

87.4

31.1

28.4

132.3

OtherExpenses

40.1

36.2

38.8

21.6

26.1

17.2%

19.4

11.3%

11.9%

14.0%

210bps

10.9%

100bps

EBITDA%
Depreciation

4.0

3.9

3.5

FinanceCost

1.1

1.2

1.1

5.0

5.0

3.2

11.5

16.0

Provisions
Tax
Profit afterTax

28.1%

11.6

Germany:
C i
Continuestoexhibitstable
hibi
bl
performancewithimproving
marginprofile
IFGLExports:
AchievedRecordQuarterly
revenues Phase 1 of Plant
revenues.Phase1ofPlant
operatingatfullutilization

Employee
Expenses

EBITDA

Commentary

Monocon Group:
Impactedbyslowcore
industrymovementinEurope
andUK.Workingonnew
productstoexpandportfolio
IndiaBusiness:
DomesticBusinessstablewith
a4.6%growth.Overall
growthmutedduetofallin
Exports

0.9%

USAPerformance:
AntiDumpingmeasureinUSA
haveresultedinincreased
productionandhigh
profitability.Utilizationlevels
p
y
haveimprovedleadingto
operatingleverage

12

StandaloneFinancialHighlights Q1FY17
StandaloneTurnover[Rs.Crs]

EBITDA[Rs.Crs]
11.9

80.7
73.7

9.3

Q1FY16

Q1FY17

Q1FY16

DomesticV/sExportSales[%]

Q1FY17

PAT[Rs.Crs]
6.4

4.5

43.0%

Exports

Domestic
57.0%

Q1FY16

Q1FY17

13

ConsolidatedFinancialHighlights Q1FY17
ConsolidatedTurnover[Rs.Crs]
185.8

181.9

EBITDA[Rs.Crs]
26.1
21.6

Q1FY16

Q1FY17

Q1FY16

EBITDAmargin[%]

Q1FY17

PAT[Rs.Crs]
16.0

14.0
11.9

11.5

Q1FY16

Q1FY17

Q1FY16

Q1FY17

14

SubsidiaryPerformance Q1FY17
EICeramics[$mn]

Monocon Group[GBPmn]
6.2

4.7

5.5
0.4

3.5
0.3

0.2

0.8
02
0.2

05
0.5

0.2

Q1FY16

Q1FY17

0.1

Q1FY16

Q1FY17

Revenue
EBITDA

HofmannCeramic[Euromn]
[
]

IFGL E
IFGLExports[Rs.Crs]
t [R C ]

PAT

2.9

16.0
2.6
11.3

0.4
0.2

Q1FY16

4.2

0.3
0.2

Q1FY17

3.1

2.9
1.6

Q1FY16

Q1FY17
15

REPUTEDGLOBALBRAND

StrongBrandinGlobalRefractories Market

ConsolidatedTurnover[Rs.Crs.]

FY16SalesbyRegion

+4.5%

781

793
722

676
606

Europe
[excUK]
33%

UK
9%

Americas
24%

India
22%

FY12

FY13

FY14

FY15

FY16

India
UK
Asia[excIndia]

Asia[exc
India]
12%
Europe[excUK]
Americas

17

Our Manufacturing Plants

MonoCeramicsInc
Michigan,US

Monocon ,UK

HofmannCeramic,
Germany
Tianjin Monocon
Tianjin, China

EI
Ceramics,Cincinnati,
US

IFGLExports,Kandla
p
,
SEZ,Gujarat,India

18

SpecializedRefractoryforSteelmakingwith
WideProductRange

Isostatic &Tube
Changer
Refractories&
System
y
SlideGate&
PurgingRefractories
&System

Cast
Products,Zirconia
Nozzles,Foundry
Ceramics

19

IFGL5YearPerformance
Particulars [Rs.Crs]

FY12

FY13

FY14

FY15

FY16

TotalIncome

607.1

676.8

781.0

793.5

722.1

RawMaterial

303.8

352.3

378.0

406.1

365.2

EmployeeExpenses

84.3

98.7

110.0

117.9

119.6

Oth E
OtherExpenses

141 8
141.8

163 2
163.2

181 0
181.0

170 6
170.6

149 9
149.9

77.2

62.7

113.0

98.9

87.4

12.7%

9.3%

14.5%

12.5%

12.2%

FinanceCost

6.75

8.0

7.0

5.9

4.8

Depreciation

12.91

13.4

15.0

14.3

15.5

6.3

ProfitBeforeTax

57.5

41.3

91.0

78.7

60.9

Tax

18.3

15.9

25.0

25.4

15.7

MinorityInterest(MI)

0.0

2.8

2.0

0.2

3.2

Profit afterTax&MI

39.2

28.2

64.0

53.1

42.0

PAT%

6.5%

4.2%

8.2%

6.7%

5.8%

EBITDA*
EBITDA%*

Provisions

*ForFY16EBITDAisbeforeProvisions(otherthanTax)whichispartofotherexpenses

20

buckingGlobalSteelTrendand
Revenue

Monocon Group[GBPmn]
Group [GBP mn]
27.6

EI Ceramics [$ mn]
EICeramics[$mn]
16.8

27.4

26.1

10.6

16.6
10.2
15.4

27
2.7
2.5
1.3

1.6

2.3
1.5

0.7

FY13

FY14

FY15

2.2
1.1

1.5

FY13

9.9

1.5

0.9
1.6
0.8

FY14

10.2

26
2.6

1.1 0.7
FY16

PAT

Hofmann Ceramic [Euro mn]

HofmannCeramic[Euromn]

15.9

22.8

EBITDA

FY15

FY16

0.5
0.3

FY13

0.5

11
1.1
0.7

0.6

0.2

FY14

FY15

FY16

9 Despite challenging growth environments in World economy, International Operations have continued to
grow and gain market share
9 Monocon Group&HofmannCeramichavegrownataRevenueCAGRof2%&4%respectivelysinceacquisition
whileEICeramicshasgrownat6%CAGRsinceacquisition
9 Monocon GroupRevenueandProfitabilitywasimpactedbyaclosureofSteelclientsmillinUKduringAugust
S t b 2015 i t b k
September2015owingtobankrupcty
t
9 AllInternationalAcquisitionsareprofitable&generatesufficientcashflowtomanageDebtservicingandfund
capacityexpansions

21

increasingfocusonReturnMatrix*
Monocon Group#

EICeramics

HofmannCeramic
+530Bps

5.1%

4.9%

10.4%

13.6%

EBITDA

10.5%
5.1%

FY13

FY16

FY13

FY16

FY13

FY16

+720Bps
5.4%

20.4%

16.4%
4.6%

ROCE

9.5%

FY13

FY16

FY13

FY16

13.2%

FY13

FY16

OnBasisofLocalcurrencyFinancialsinthecountryofreporting
#ForFY16performanceimpactedbyclosureofClientsSteelMillBusinessinUK

22

SustainableShareholderValueCreation
ReturnonCapitalEmployed

22%
18%

NetDebt:EquityRatio[x]

NetDebt:EBITDARatio[x]

0.7

1.9

18%

14
1.4

0.5
14%

13%

0.8

0.3

0.7

0.2
0.4
0.1

FY12

FY13

FY14

FY15

FY16

FY12

FY13

FY14

FY15

FY16

FY12

FY13

FY14

FY15

FY16

*Consolidated
ROCE=EBIT/(TotalDebt+Networth)
NetDebt:Equity Ratio=(TotalDebt Cash&bankbalance)/Networth

23

DividendRecord
20.0%

20.0%

FY15

FY16

17.5%
15.0%

15.0%

FY12

FY13

Particulars(Rs.)
l ( )

FY14
FY12

FY13

FY14

FY15

FY16

Consolidated BookValueperShare

64.1

70.9

95.1

99.6

111.7

ConsolidatedEarning PerShare

11.3

7.9

18.3

15.1

12.1

DividendPerShare

1.5

1.5

1.75

2.00

2.00

24

Contact

F f th i f
Forfurtherinformation,pleasecontact:
ti
l
t t

Company:

InvestorRelationsAdvisors :

IFGLRefractories Ltd.
CIN L27202OR1989PLC002971
Mr.RajeshAgrawal
j
g
rajesh.agrawal@ifgl.in

StrategicGrowthAdvisorsPvt.Ltd.
CIN U74140MH2010PTC204285
Mr.Shogun
g Jain/Ms.SanjitaGhosh
/
j
jshogun@sgapl.net /gsanjita@sgapl.net
+917738377756/+917738359389
www.sgapl.net

www.ifglref.com