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Corporate Presentation
November2011
Executive Summary
Overview Products & Business Mix JBF Industries is a global company engaged in the production of the polyester value chain Current polymerisation capacity of 1.04 MMT p.a. and downstream capacity of 325 KT p.a. Operates out of 3 domestic facilities, 1 in Gujarat and 2 in Silvassa, and 1 overseas facility in Ras AlKhaimah, UAE Promoted by Mr. Bhagirath C. Arya, a technocrat entrepreneur Listed on the BSE and NSE with a market cap of INR 8,940 mn (as on Sep 30, 2011) Product Mix can be divided into three broad categories:I. Polyethylene Terephthalate (PET) Chips: Textile Grade and Bottle Grade II. Polyester Yarn: Partially Oriented Yarn, Full Drawn Yarn etc. III. Biaxially-Oriented Polyethylene Terephthalate (BOPET) Films: Thin film, Thick film, Metallised film FY 11 Sales Mix (By Value) :- PET Chips 56%, Polyester Yarn 26%, BOPET Films 18% Indian facilities (Textile grade chips, bottle grade chips, and polyester yarn) caters to the Indian market 2nd largest domestic supplier of textile grade chips with a capacity share of ~26% 3rd largest domestic supplier of bottle grade chips with a capacity share of ~20% 3rd largest domestic supplier of Polyester Yarn with a capacity share of ~11% RAK facility (Bottle grade chips and Films) caters to European, MEAF and North American markets Market share of 66 % in the UAE and 50% in GCC region in the Bottle grade chips segment Income has multiplied ~9 times from INR 7,219 mn in FY 06 to INR 64,870 mn in FY 11 - CAGR of 55% EPS has multiplied ~ 9 times from INR 8.5 in FY 06 to INR 76.2 in FY 11 CAGR of 55% FY 11 Performance :- Income INR 64870 mn (up 31% YoY), EBITDA INR 9,743 mn (up 98% YoY), Net Profit INR 5,461 mn (up 157% YoY) Efficiency Ratios (FY 11) :- ROE 47%, ROCE 26% JBF is amongst the Top 10 producers of PET chips globally and will become amongst the Top 5 BOPET Film producers globally by December 2011. Company plans to be an integrated petrochemical player by setting up 1.12 MMT Purified Terephthalic Acid (PTA) plant at Mangalore SEZ thereby enhancing cost efficiencies and reduced logistics cost Company plans to set up a 390 KT p.a. PET plant in Belgium adjacent to British Petroleums PTA facility, that will ensure continuous supply of PTA
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Markets
Integrated Polyester Player of a Global scale
Company Overview
Industry Overview
Financial Performance
Company Background
Company Overview
Established in 1982, JBF Industries was founded by Mr. Bhagirath Arya as a Yarn Texturising company, the company has since
backward integrated into the polyester value chain
Company is currently engaged in the production of products in the Polyester value chain such as: Polyethylene Terephthalate
(PET) chips which are of Bottle grade, Textile grade and Film grade; Polyester Yarn, such as Partially Oriented Yarn (POY), Polyester Filament Yarn (PFY), Full Drawn Yarn (FDY) and Other Specialized Yarn; and BOPET Films, which are of Thin grade, Thick grade and Metallised grade
It commenced its international operations in 2006 by foraying into the PET chips and BOPET Film business by setting up plant
at Ras-Al-Khaimah (RAK) UAE
Global petro-chemicals company achieving ~USD 1.4 bn revenues (> 45% overseas) in FY11. FY11 Dividend of INR 8/share. Backed by marquee investors like LIC, HDFC MF, ICICI Prudential, Sundaram, Jupiter India Fund, Reliance Capital (Sep 30, 2011)
Financial Highlights
Figures in INR Mn
FY 09 Total Income EBIDTA EBIDTA Margin Net Profit Net Profit Margin EPS (INR) 43,376 5,377 12.4% 2,442 5.6% 38.4
300
157 156
219 15 54 75
Films
FY 09
FY 10
FY 11
Management Profile
BC Arya Chairman
Qualified with a Bachelors Degree in Electrical Engineering Equipped with over 30 years experience in the Polyester industry particularly in the field of synthetic yarn Presently acting as Executive Chairman and handles all management and operating affairs of the Company
B. Tech, MS & MBA degree holder; associated with the Company since January 1997 Equipped with over 30 years of experience; worked as Vice President (Marketing) at J.K. Synthetics Ltd and Nirlon Ltd Presently acting as Managing Director with a particular focus on production and marketing functions
Qualified Chartered Accountant and Cost Accountant ; associated with the Company since August 1990 25 years of experience, previous positions include Deputy General Manager (Finance) at Armour Chemicals Ltd., Manager (Finance) at Wockhardt Ltd Presently acting as Director (Finance) and responsible for managing Finance, Treasury and Banking functions
Qualified science graduate; associated with the Company since 1992 Over 22 years of experience; previously Manager in the Production Department of Armour Chemicals Presently acting as Commercial Director and responsible for managing material procurement, inventories management, excise and other commercial tax related matters etc.
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Promoters
41.2%
Institutions
28.4%
SILVASSA Plants
`
100%^^
SARIGAM Plant
Institutions 27%
Corporates includes all domestic and foreign Corporate Bodies
100%
3
4 5 6 7 8 9
2.8 %
2.8 % 2.6 % 2.1 % 1.9 % 1.2 % 0.9 %
Indian Operations
UAE Operations
^^ JBF bought back 33% stake held by CVCI between MayDecember 2010 * As on 30th September, 2011 Source BSE India
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10
UTI AMC
T OTAL
0.6 %
22.5 %
125
224/119 8,940 71.7 41.7 15.3 6.4%
250 200 JBF Ind 150 100 50 0 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 JBF Ind
7
Jun-11
Jul-11
Aug-11
Sep-11
Key Milestones
Ability to grow continuously through integration and scale..
Incorporated in 1982 / established itself as one of Indias Leading Polyester Texturisers Backward integration into chips production with 36,000 MT in Mar 01/ Expanded to 72,000 in Nov. 01 Commissioned Ras Al Khaima UAE plant; Capacity: 216 KTA grade chips and BOPET Film capacity of 48 KTA Backward integration by setting up a 1.12 MMT p.a . PTA plant in Mangalore.
Entered yarn manufacturing in 1996, capacity 18,000 MT/ Expanded to 36,000 in 1999
Expansion: Chips 108 KTA Yarns 144 KTA Setup Sarigam facility; 216 KTA textile grade chips
Acquired Microsynth Fabrics, Saily; Increased India Textile chips capacity to 460 KTA, RAK Bottle grade chips capacity to 390 KTA and BOPET Film capacity of 66 KTA at RAK
Texturising 1982 94
Scale up 2003 - 05
Expansion 2008 - 11
April - 2006
April 2007
August 2007
History of starting and scaling up through backward/forward integration successfully Track record of successfully executing complex and large scale projects
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Applications
0.34 MT
MEG Film Grade chips Application/s in FMCG industry
PET Films
Value addition across the Polyester chain Value Chain segments covered by JBF Integrating backward by setting up a PTA plant by 2014/15
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Industry application
JBF RAK
JBF India
Weaving-Fabric, Garment
JBF has witnessed significant capacity growth over FY 05-11 through a series of brown-field as well green-filed expansion
programmes
Commenced commercial operations at the RAK facility in FY 08 thereby diversifying its product portfolio JBF is currently undergoing de-bottle necking exercises in its domestic textile grade chips facility which would take the existing
total chips capacity from 608 KT p.a to 626 KT p.a., and is also in the process of adding another thick grade film line in RAK,
which would take the total films capacity from 66 KT p.a to 102 KT p.a.
Based on capacity expansion programme currently underway, it is expected to have a polymerisation (chips production)
capacity of 1,058 KT p.a. along with downstream capacity of 360 KT p.a. by end of FY12.
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Sarigam, Gujarat
Textile Grade Chips 260,000 MT p.a. Specialty Grade Chips 200,000 MT p.a. Bottle Grade Chips 155,000 MT p.a. Total 608,000 MT
POY /Specialty Yarn/FDY: 108,000 MT p.a.
Saily, Silvassa
Athola, Silvassa
Facilities are located in close proximity to each other, the raw material suppliers and also to the major textile hub of Surat Facility locations ensure flexibility in operations, working capital requirement optimization and low logistical costs JBF is amongst the largest domestic manufacturers of Textile & Bottle grade chips as well as Polyester Yarn
Performance Highlights FY 10 FY 11 484,389 219,136 276,376 207,069 35,579 H1FY12
INR/Kg
110
Production (MTPA)
Chips POY & Specialty Yarn Sales (MTPA) Chips POY Sales (INR Mn) 276,411 150,132 26,913 128,065 113,142 20,988
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431,342 159,283
236,036 113,303
80 60 40 20 0
Chips
FY 10
FY 11
H1FY12
Strategic Advantage of production facility in RAK, UAE: Tax free and no export duty zone Easy availability of raw material Major Port, giving easy access for exporting to USA and Europe Tap growth potential of the MEAF and GCC markets, which are the fastest growing PET markets in the world with more than 10% growth YoY First mover advantage in the Middle East region has helped secure preferred supplier contracts for bottle grade chips Expansion into higher value added products like Thick films and Metallised films
Performance Highlights Average Product Realization*
FY 10
Production (MTPA) Bottle Grade Chips Films Sales (MTPA) Bottle Grade Chips Films 331,014 53,940 360,283 54,638
FY 11
339,010 75,462
H1FY12
144,779
Rs/Kg
129
66
33,550
77
90
54
50
278,356 76,374
124,812 32,051
0 Bottle Grade Chips Films
22,496
29,076
13,551
12
FY 10
FY 11
H1FY12
Revenue Mix
Well Diversified Business Model. Product Mix (By Sales)
POY 34%
POY (INR/Kg)
Chips RAK (USD/MT)
14-25
133-300 556-2,223
POY^ 26%
FY 11 Key Customers
CIS 2%
India 100%
USA 3%
EU 17%
India 54%
Domestic Textile grade chips: Welspun India, Jiwarajka Industries Bottle grade chips: Coca-Cola Co. Global Bottle grade chips: Coca-Cola Co, Nestle Waters,
Danone, Schweppes, Al Ain, Masafi, AFIA
FY 06-07
^ Includes Speciality Yarn
FY 11
13
Logistics Savings
Working Capital Advantage JBF expects to save ~ $40-$50 per ton in freight for its RAK facility, due to reduction in logistical costs that it incurs currently by procuring Px in UAE and sending it to South East Asia to convert it into PTA JBF Indias operation is expected to save ~ $15-$20 per ton on logistical costs of PTA imports
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JBF Group currently consumes around 800-900 KT p.a of PTA PTA is a scarce commodity in India, due to which JBF imports around 20-30% of PTA p.a Stability and sustainability of margins only possible in an integrated setup
JBF RAK has a 3-4 week PTA delivery time which would reduce to 3-5 days Imports to JBF India take 3-4 weeks currently, which would reduce to 1-2 days
JBF will develop a 390 KT p.a. capacity PET plant to manufacture bottle grade chips The plant will be located in the Geel province of Belgium, and will be a co-location plant next to British Petroleums (BP) PTA facility Company currently undergoing stringent environmental clearance activities The plant is expected to be commissioned by end of 2014 Expected Project Cost - ~$200mn Expected Debt:Equity - 70:30
New Market Penetration JBF Currently does not supply any bottle grade chips to the European Union market Demand strong for bottle grade chips in EU and it is still a net importer of bottle grade chips
Logistic Advantage Being a co-location plant with BPs PTA facility will ensure continuous supply of PTA with logistcal cost savings being passed to JBF Industries
Prestigious Tie Up British Petroleum had short listed JBF after reviewing other global PET manufacturers to setup this plant
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Company Overview
Industry Overview
Financial Performance
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Global Demand AAGR** Polyester Film Polyester Filament Yarn (PFY) Polyester Staple Fiber (PSF) PET Resin (For Bottles)
**AAGR Average Annual Growth Rate Source CMAI Global
Cotton, 25
PSF, 14 PET, 15
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India Demand AAGR** Polyester Film Polyester Filament Yarn (PFY) Polyester Staple Fiber (PSF) PET Resin (For Bottles)
**AAGR Average Annual Growth Rate Source CMAI Global
4000 3000 2000 1000 0 2005 2006 2007 2008 PSF 2009 2010 FILM 2011 POY/PFY PET Resin2
30
20 10 0
Operating Rate 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Capacity World PTA Demand World Oper. Rate
MMT at the end of 2010; whereas the global demand is estimated at ~40.7 MMT. Domestic Capacity of PTA is at ~3.5 MMT, while demand is at ~4 MMT and operating rates are at Major Suppliers Global - Samsung Petrochemicals, Total Petrochemicals, BP Aromatics, Acetyls Domestic Reliance Industries, Mitsubishi Chemical, Indian Oil Corporation Operating rates expected to moderate due to relatively higher growth in capacity additions Demand to remain firm and is expected to grow at a CAGR of 6.4% from 2010-14
Million Tons 30 25 20 15 10 5 0
Operating Rate 95 90 85 80 75 70 65
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Capacity MEG Demand Operating Rate
rd
nd
JBF Industries
ME
66*
2%
Company Overview
Industry Overview
Financial Performance
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Financial Summary
Total Income
70,000 60,000 50,000
49,965 43,376 28,790 15,148
EBITDA
65,461
PAT
9,584
5,461
40,000
30,000 20,000 10,000 0
2,442
2,748
2,128
FY 07
FY 08
FY 09
FY 10
FY 11
FY 07
FY 08
FY 09
FY 10
FY 11
FY 07
FY 08
FY 09
FY 10
FY 11
FY 07
FY 08 ROE
FY 09
FY 10 ROCE
FY 11
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Income Statement Income Total Expenses EBITDA EBITDA Margin Exchange Difference & Derivative Loss Depreciation
Interest *
PBT Tax Profit After Tax PAT Margin Minority Interest Profit After Minority Interest
633
1,597 295 1,302 4.50% (35.3) 1,337
975
2,901 459 2,442 5.61% 553 1,889
1,258
2,668 540 2,128 4.3% 224 1,904
1,421
6,063 602 5,461 8.4% 5,461
594
1,366 83 1,283 3.7% 1,283
EPS
21.49
30.36
30.61
76.21
17.84
*Interest amount for FY08 and FY09 includes amount by way of Forex (Gain)/Loss
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Balance Sheet - Consolidated (INR Mn) Share Capital Cumulative Redeemable Preference Shares (CRPS)
FY 08 622 -
FY 09 622 -
FY 10 622 -
FY 11 717 266
Reserves
Net worth Minority Interest Loan Funds TOTAL LIABITILITES Net Fixed Assets (Incl Capital WIP) Investments Net Current Assets (Excluding Cash) Cash & Bank Deferred Tax Liability (Net) TOTAL ASSETS Cash Flow- Consolidated (INR Mn) Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year
5,211
5,933 3,161 8,366 17,459 13,361 594 1,133 3,353 -982 17,459 FY 08 171 2,942 -4,125 4,365 3,182 3,353
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6,709
7,331 3,997 12,414 23,743 20,837 361 2,873 899 -1,226 23,743 FY 09 3,353 2,988 -7,435 2,325 -2,122 899
8,117
8,740 3,633 13,644 26,016 21,165 1,310 3,880 999 -1,337 26,016 FY 10 899 1,951 -2,199 352 103 999
13,555
14,538 17,836 32,374 24,705 1,280 5,469 2,350 -1,430 32,374
Figures in INR Mn
Peer Comparison
EBITDA Margins (%) FY11 ROE (%) FY11
IVL (TB), 11.0% Century Enka, 12.2% Garden Silk, 8.1% Indorama Syn., 14.3% JBF Ind., 15.0% Century Enka, 13.2% Garden Silk, 16.6% Indorama Syn., 28.2%
JBF recorded the highest EBITDA Margins amongst peers in 2011 Dividend Yield (%) As on Sep 30, 2011
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
JBF maintains the highest ROE levels amongst peers Asset Turnover (x) FY11
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
25
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Thank You
JBF Industries Ltd. Express Towers, 8th Floor, Nariman Point, Mumbai 400 021.
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