Triveni Engineering & Industries Ltd

Transcription

1 Triveni Engineering & Industries Ltd Corporate Presentation August

2 Overview TRIVENI ENGINEERING & INDUSTRIES LIMITED Diversified Business : One of the three largest sugar manufacturer in India with integrated operations of co-generation and distillery Leading manufacturer of engineered to order mechanical equipment Promoter driven, professionally managed Eminent and independent Board of Directors Pan-Indian presence 2

3 Revenue Composition FY07 (*) 40% FY06 27% Sales CAGR FY04 07 FY05 FY04 24% 20% Sugar including Co-generation Engineering % Engineering Sugar - 23% Engg - 57% Total - 33% 1,000 5,000 9,000 13,000 17,000 21,000 (*) FY 07 data for 18 months ending 30 st Sep Accounting year extended to 30 th Sep in line with sugar crushing season. 3

4 The Engineering Business 4

5 Engineering Business - Plant Locations Manufacturing Plants Turbine Business Bangalore Gears Business Mysore Water Business Noida Market leader in steam turbines upto 20 MW with current capacity upto 30 MW size Largest manufacturer of High speed Gears and Gear boxes in India A leading player in the high technology water & waste water business Mumbai Ahemdabad Kolhapur Pune Nagpur Latur Bangalore Mysore Noida Raipur Hyderabad Naini Vijaywada Corporate Office Kolkata Manufacturing Facilities Marketing and Service Centres 5

6 Engineering Business - Revenue Growth Rs. million 6,000 5,000 4,000 3,000 2,000 1, FY04 FY05 FY06 18M FY07 Water Gears Turbines CAGR FY04 FY07 PBIT 87% Sales - 57% 6

7 Engineering - Power Generation Market MARKET CHARACTERISTICS The market is price sensitive Market demands high levels of technology, efficiency & lower life cycle cost as major factors in purchase decision Market places a premium on shorter deliveries Robust designs, typically suited for the Indian market are in demand Requirement of strong servicing capabilities and lifetime relationship with the customer is expected. DRIVERS TO THE DEMAND Power Shortage Industrial growth Manufacturing growth Replacement market Power rates Kyoto protocol ANNUAL MARKET FOR TURBINES BELOW 30 MW IN YEAR ANNUAL MARKET FOR TURBINES BETWEEN 30 TO 45 MW IN YEAR Demand is estimated at approx MW Conservative domestic demand estimate of per annum including additions on account of about 750 MW per annum including additions growth, fulfilment of gap and replacement on account of growth, fulfilment of gap and replacement Sources: Ministry of Power, Powerline, MNES, The Energy Research Institute and Internal projections 7

8 Engineering - Power Generation Potential to Grow Additional power requirement in the country estimated at 76,500 MW in next five years Current industrial power consumption generation gap to be bridged on account of growth on account of cost of grid power & irregular supplies Costly fuel source to influence replacement of DG to TG sets Growing renewable energy market Estimated demand of 25,000 MW to come in from captive /industrial /co-generation segments in the next five years. The current gap in the Industrial Segment between consumption (26,800 MW) and generation (19,000 MW) is expected to be addressed in the next four to five years. Sectors such as metals (sponge iron & mini steel mills), textiles, sugar, cement, paper etc. will use more captive power as grid power is costlier besides the poor quality and irregular supplies from the grid. Given the rising oil prices, there is tremendous scope for substitution from diesel to steam which will accelerate the growth in demand for steam turbines. Renewable energy will play a major role in the development of a low carbon energy system Decentralised power generation and distribution using biomass based raw materials 8

9 Turbine Business Group BUSINESS PERSPECTIVES Wide range of customer industries like sugar, cogeneration, steel, paper, textiles, pharmaceuticals Manufacturing since 1968; over 2,000 turbines manufactured and sold since inception Turbine manufacturing capacity doubled in FY06 and further increased by 80% in FY07. The current range of products is up to 30MW Consistently maintained domestic market share of over 65% in the past three years. 18M FY07 market share at 78% for range up to 20 MW TECHNICAL PERSPECTIVES Highly efficient turbines with indigenously developed tapered twisted blades. Designed for peak performance under a broad spectrum of operating conditions Fully integrated operations with strong Engineering & Design team; Facility equipped with state of the art equipments and machine tools best in the industry SERVICING & REFURBISHING Service as a differentiator - An extensive network of Service centres spread across the country Approx. 30% of the business unit s personnel dedicated to after sales program Reaching the customer site within 24 hours of service call Currently over 700 turbines serviced annually Full Speed vacuum Balancing Tunnel for balancing turbines/ compressors/ alternators up to 150 MW commissioned in July 2007 Refurbishment of any make of Turbine upto 150 MW catering to Asia Pacific market Refurbishing solutions for Expander Turbines, Turbo Compressors, Blowers, Pumps & all Turbo machinery equipment 9

10 Turbine Business Group Significant improvement in PBIT margin by over 700 basis point in FY 07. PBIT margin continue to increase in the year also ~ 300 bps y-o-y Change in product mix, improved efficiencies, cost reduction etc., also enabled improving margins FINANCIAL PERSPECTIVES Outstanding order Book as at 30 th June 2008 Rs billion Increase in margins primarily due to : Particulars FY04 FY05 FY 06 FY 07 (*) 9M FY 08 9M FY 07 Turbines dispatched (MW) Net Sales (Rs. Million) 1,242 1,626 2,780 6, PBIT ( Rs. Million) , PBIT Margins (%) Improved share of servicing, spares & refurbishing Increased from 8.7% in 9M FY 07 to 11% in 9M FY 08; expected to grow upto 15% Increased share of exports (*) FY 07 is for 18 months ending 30th September 2007 ; other financial years are April- March Share of exports in total sales increased from 5% in 9M FY 07 to 13% in 9M FY 08 10

11 Turbine Business Group Strong Research & Development team supported by an eminent team of external advisors from IISc, IIT and other notable institutions Expanding the range of products higher MW, higher pressure turbines Spares & Services to form higher proportion of revenues in view of increased installed base achieved in the last several years; estimated to reach 15% of the revenue in FY 09 Refurbishment of all makes of turbines including overhauling and troubleshooting Tie-up with GE Oil & Gas for design, manufacture & assembling of High Speed Reciprocating Compressors FUTURE PERSPECTIVES Setting up of a dedicated Training School for in-house development of skilled design and servicing staff- an unique initiative in human development & technology upgradation Customised operation and maintenance contracts (O&M) to be a focus area and targeting to double the number of contracts Focus on Exports Targeting all high technology markets across the globe. Exports to form 20% of revenue by FY 09 Tie-up with Waukesha for packaging, assembling and distributing Waukesha Gas Engines Looking for appropriate tie-ups for going into higher ranges of turbines, marketing & servicing network etc. 11

12 Gears Business Group BUSINESS PERSPECTIVES Triveni is in the business of design, manufacture and marketing of gears and gearboxes with a capacity of up to 70.0 MW and speed up to 50,000 rpm Own developed technology for high speed gear boxes upto 7.5 MW including test rigs, hydel gear boxes across range, niche low speed and loose gears for multinationals The high speed gear range for steam, gas, pumps and compressor applications range above 7.5 MW is manufactured using technology licensed from Lufkin Above 25MW up to 70MW produced through a joint manufacturing programme with Lufkin Conforms to international standards such as DIN, API & AGMA Applications in power turbines, compressors, pumps etc. as a power transmission equipment State of the art design and manufacturing facility with sophisticated profile grinding and hobbing machines from Gleason Pfauter of Germany and latest softwares for design Supplied & Commissioned the highest power (54 MW) load gear box by Triveni for a GE frame-6 gas turbine Highest power (8 MW) indigenous gear box for high speed compressor manufactured and tested for API 613 Vth edition Highest quality - DIN 3 quality assured 12

13 Gears Business Group FINANCIAL PERSPECTIVES Over 75% market share in below 25 MW and supplier to all major turbine competitors such as BHEL, Siemens. Overall ~ 60% market share in high speed gears across the power range Improvement in margins on account of new products, higher share of servicing, spares & retrofitting share of servicing & retrofitting gone up from 26% in 9M FY 07 to 29% in 9M FY 08 Major retrofitting orders executed for cement industry, steel industry etc. Outstanding order Book as at 30 th June 2008 Rs. 489 million Increase in sales of over 20% and PBIT improvement of over 600 basis points year on year Particulars FY04 FY05 FY 06 FY 07 (*) 9M FY 08 9M FY 07 Net Sales (Rs. Million) PBIT (Rs. Million) PBIT Margins (%) (*) FY 07 is for 18 months ending 30th September 2007 ; other financial years are April- March 13

14 Gears Business Group FUTURE PERSPECTIVES Focus on product development in high value added low speed applications Installation of 2 meter CNC profile grinder and vertical turret lathe with grinding attachments, internal hobbing /milling attachment including assembly bay expansion Revenue growth through Product diversification into hydel gear boxes, marine gear boxes and niche low speed gear boxes Meeting the growing gear box demand in oil & gas segment & auxiliaries for power plants Focus on providing retro-fitting and replacement solutions for domestic and export market Consistently maintain overall gear box quality at world class standards Source for high precision loose gears for major MNC s. On the look out for expanding the products and services offered through technology tie-ups and strategic relationships with global players 14

15 Water Business Group BUSINESS PERSPECTIVES Annual estimated market for Water/Waste Treatment market is ~ Rs. 50 billion with an estimated growth of 20-25% Visible potential for water & waste water business in view of anticipated stringent environmental norms and scarcity of water Market is increasing substantially in all areas- desalination, water reuse and decentralised solutions Technology association with Siemens Water Technology Business for various products & solutions One of the widest ranges of products & technologies offered in the Indian Market Product lines include clarifiers, aerators, filters, membrane solutions, de-watering equipment and high purity water systems Over 2000 numbers of process equipments for water & waste water treatment applications, supplied and commissioned till date 15

16 Water Business Group The water business Group (WBG) delivered a 270% increase in turnover for FY 07 at Rs. 511 million (Rs. 138 million). PBIT increased 161% to Rs. 58 million (Rs. 22 million). Significant growth (CAGR of 80% in turnover and 93% in PBIT) achieved during the past four years Focus on high value jobs like major effluent recycling, installation of high purity water system etc. for major power plants Currently executing the largest industrial desalination plant, to date in India, for a power plant FINANCIAL PERSPECTIVES Outstanding order Book as at 30 th June 2008 Rs billion Continue to get larger orders and in the areas of high technology applications Started getting pre-qualified for high value jobs which will enable to grow faster During April- June 08, received a single order of Rs. 625 million more than past 18 month s turnover, for a municipal project Own manufacturing workshop cum office facility at NOIDA operational Particulars FY05 FY 06 FY 07 (*) 9M FY 08 9M FY 07 Net Sales (Rs. Million) PBIT (Rs. Million) PBIT Margins (%) (*) FY 07 is for 18 months ending 30th September 2007 ; other financial years are April- March 16

17 Water Business Group FUTURE PERSPECTIVES Visible growth potential in coming years in sectors such as Municipal, power, metals and mining apart from the overall industrial and municipal applications Jawaharlal Nehru National Urban Renewal Mission (JNNURM ) schemes to be taken up in all major Indian cities with an annual estimated market size for water related schemes of Rs billion Over MW new power generation capacities to be added in the next five years annual estimated market size of Rs billion for water business Major expansion and capacity additions envisaged in steel, coal etc. estimated annual market Rs billion With the execution of high value desalination, condensate polishing units and other industrial application orders, WBG will prequalify for taking up higher value orders. Key technology applications to be used in these sectors are desalination (power & municipal), high purity system, condensate polishing units (both for large sized power plants), biological treatment with nutrient removal (for municipal sector), Anaerobic Treatment (ethanol manufacturing) etc. Triveni is capable of providing solutions across the spectrum and is gearing up further by continually looking forward for wider product offerings in association with global technology leaders to strengthen the current technology range and also to add new products & solutions to address the expanding market With the visibility of a fast growing market, WBG is estimated to grow at a CAGR of 70-75% in the next five years. 17

18 The Sugar Business 18

19 Sugar Business GLOBAL SUGAR INDUSTRY Global production for estimated at 170 million, an increase of 1.8%. Brazil, the leading sugar producing nation, currently processing ~ 60% of the total cane crop for production of ethanol while this was only ~ 55% in the previous crop For the past few months, sugar prices globally has been volatile and the same is continuing. Sugar prices has been impacted by money inflows from commodity funds. White Sugar prices after rising to about $ 470 /tonne are currently at $388 (Oct 08 contract) while the raw sugar after touching 18 USc/lb, is currently at 13.6 USc/lb (Oct 08 contract) (Date : 12 th August 08) Introduction of mandatory blending by major countries of World - fuel ethanol consumption to go from billion litres currently to 79.4 billion litres by This would be further accentuated by the New Renewable Fuel Standards by USA INDIAN SUGAR INDUSTRY India is the largest consumer & second largest producer of sugar India s production of season estimated to be at 26.5 million (lower by 6%). On account of farmers switching to alternate crops because of lower cane prices and less than normal rainfall in major sugar cane growing areas of Maharashtra & Karnataka, the estimated sugar production for season would be million tonne, a drop of ~ 20%. This will have an impact during production as well On account of estimated lower production for and season, sugar, molasses and alcohol prices expected to rise significantly in the coming quarters and to remain high for the next 2-3 years Expectation of a decision from the Supreme Court to have a mechanism to fix cane pricing for UP on a rational basis taking into consideration cost of production, sugar prices etc. Also expected is the decision on the enhanced deduction of transportation charges on cane from Rs per qtl, to Rs per qtl. 19

20 Sugar Cycle Profitability Margins : Profitability Margins : Sugar Power / Ethanol 2 years Delayed payment to farmers, high sugarcane arrears Decline in sugar prices, lower profitability Downcycle Higher sugar production, higher availability of sugar Decline in area under sugarcane cultivation, lower production Time Higher sugarcane utilization for sugar production Decline in sugarcane utilization for sugar production Upcycle Sugar Power / Ethanol Lower sugar production, lower sugar availability Increase in sugar prices, improved profitability Higher and prompt payment from farmers, lower arrears Increase in area under sugarcane cultivation, higher production 3 years Profitability Margins : Sugar Power / Ethanol Profitability Margins : Sugar Power / Ethanol Source: Cris-Infac / Company 20

21 Sugar - Domestic Production & Consumption Sugar (P) ($) Opening Stock (*) Production Imports Total Available Consumption Exports Total Despatches Closing Stock Closing Stock / Consumption (%) 63% 49% 26% 20% 44% 41% 29% Note: Years mentioned are sugar years and not calendar years. The sugar year is from October to September. Source: ISMA for data upto ($) Company Estimates (*) Adjustment made as per Central Excise Certificate Closing stock taken as a percent of consumption is one of the indicators of sugar price movement. 21

22 Sugar Key Differentiators Major facilities located in cane rich areas of Western Uttar Pradesh - Western Uttar Pradesh with more than 80% cane intensity fertile and irrigated land SUGAR PLANT LOCATIONS Sugar cane catchment area for all sugar units under canal irrigation both in Western & Central Uttar Pradesh - Lower dependency on monsoon Deoband (14,000 TCD) Chandanpur (6,000 TCD) Raninagal (5,500 TCD) Closer to country s major sugar consuming markets - better realizations & lower transportation cost Long term relationship with farmers ~ 250,000 farmers Khatauli (16,000 TCD) Sabitgarh (7,000 TCD) Milak Narainpur (6,000 TCD) Ramkola (6,500 TCD) Extensive sugar cane development programme to develop new areas under cane cultivation in our new locations; improving yields of cane across the units 22

23 Sugar Business Sugar crushing season for is complete Crushing started late during this season ( ) and on account of lower yield due to climatic factors, the mills operated only for an average of 126 days during this season as against last season s average of UP mills of 158 days Triveni crushed 5.86 million tonne of cane producing 580,000 tonne of sugar a decline of 2% as against decline of ~ 14% in sugar production across the State of Uttar Pradesh Sugar recoveries for the Group higher at 9.90% as against 9.69% last season SUGAR MANUFACTURING For sugar season, Allahabad High Court gave judgment striking down the SAP announced by UP State while for , the Lucknow bench of Allahabad High Court upheld SAP. Final decision on the cane pricing for & before the Supreme Court Accounted and paid for cane in at Rs per tonne as per the Interim Order of Lucknow Bench while for , paid and accounted at Rs per tonne Particulars FY04 FY05 FY 06 FY 07 (*) 9M FY 08 9M FY 07 Net Sales (Rs. Million) PBIT (Rs. Million) (518) 105 (878) PBIT Margins (%) (4.7) 1.6 (14.5) (*) FY 07 is for 18 months ending 30 th September 2007 ; other financial years are April- March 23

24 Sugar Going Forward Integration of co-generation and distillation of alcohol - counter-cyclical to sugar cycle Geared up to take up the benefit of upturn in sugar cycle on account of higher volume Over 65% of current year s production in inventory as on 30 th June 2008 well positioned to take advantage of current rising prices With the capex incurred in FY 07, the full benefits of cane crush to accrue in the coming seasons onwards with consistent & full season capacity utilization New sugar units in relatively low cane intensive area and hence little competition Estimated sugar production for season to be more or less equal or marginally higher than season on account of: Start of the season days earlier than season thereby having a total crushing for ~170 days Better yields for ratoon crop on account of good monsoon to offset partially for the reduction in area under cane Extensive cane development programme with better varietal mix to improve yield, recovery etc. Major sugar production capacities in the core cane growing area of UP have less switching to alternate crop; preliminary planting data indicates lowest switch in planting area in West UP (where 3 major units are located) followed by in Central UP (3 new units are located) Good farmer relationship paid 100% of cane arrears for before the Court s intervention SY 05 SY 06 SY 07 SY 08 Crushing Capacity TCD 25,250 40,500 61,000 61,000 Sugar manufactured 000 tonnes

25 Sugar Co-Generation Business This business is counter cyclical to the sugar cycle as the input price of bagasse is counter cyclical to sugar MW of exportable power for on an average of 250 days from two sugar units; during on account of reduced crushing days, no. of days operations was ~ 215 days Continual improvements in operational efficiencies - reduced steam consumption resulting in higher bagasse savings, which in turn enables longer operations of the cogeneration facility during the off-season Facilities eligible for carbon credits under Clean Development Mechanism Accounted for the CERs of Deoband for April 07 March 08 during April- June 08 quarter while verification of Khatauli Phase 1 for the same period is underway and expected to be accounted in the last quarter of this financial year On an on-going basis, approx. 200,000 CERs per annum to be accrued Particulars FY 05 FY 06 FY07 (*) 9M FY 08 9M FY 07 Sales (Rs. Million) PBIT ( Rs. Million) PBIT Margins (%) (*) FY 07 is for 18 months ending 30 th September 2007 ; other financial years are April- March 25

26 Sugar - Distillery Business Integration of Sugar operation value addition of by-product - molasses 160 KLPD distillery, commissioned in April 2007, is one of the largest single stream molasses based distillery in the country and is located at Muzaffarnagar Ideally located to use the molasses from two of the major units viz., Khatauli & Deoband Have achieved full capacity utilisation and operating with good efficiencies In this short span of time, started producing one of the country s best quality ENA Government announcement of mandatory blending of 5% ethanol from October 2007 and 10% blending from October 2008 expected to result in fresh tenders for ethanol Achieved turnover of Rs. 467 million during the nine month ending June 2008 Alcohol prices went up by ~ 15% during the quarter ending June 2008 Current alcohol prices are on the rise and is approx. 25% higher than last quarter average prices Given the outlook of lower production of sugarcane in and , the alcohol prices are expected to rise significantly in the coming quarters. 26

27 Retail Business Triveni Khushali Bazaar Triveni has launched a chain of stores called Triveni Khushali Bazaar, for rural and semi urban customers currently 42 stores in operation Operates under three verticals Agri, Non-Agri and Finance/Service caters to the entire basket of goods & services required by the semi-urban and rural community including FMCG, groceries, life style products, agricultural inputs such as farm implements, diesel, fertiliser, and services such as facilitating institutional credit, insurance, mutual funds, farm advisory services etc Triveni s channel partners include HPCL, Apollo tyres, IFFCO, Chambal, Atlas, Godrej, HLL, etc The company has signed an MoU with SBI to provide unsecured financing to farmers The company has tie up with Max New York Life for insurance products Tie-up with Reliance Money for financial services products The business is carried out by a wholly owned subsidiary Triveni Retail Ventures Limited since October

28 Vision Statement Our long-term corporate vision is to: (a) Maintain a Top 3 position in each of our businesses within the applicable market segment The market segment for the Turbines business is the global market while for the sugar business it is India (b) Create value and delight for our customers and stakeholders (c) Incorporate technology as the key differentiator to deliver growth and to sustain leadership SUGAR Business SUGAR MANUFACTURING Stabilise the installed Capacity Achieve greater raw material security Strengthen farmer relationships Thrust on cane development and continuously improve technology in sugar manufacturing CO-GENERATION & DISTILLERY Value addition of by-products to be achieved by maximum integration of operations Explore organic and inorganic expansions, depending on opportunities and market ENGINEERING Business TURBINES BUSINESS Upgrade & maintain manufacturing excellence Constant technology & developmental improvement Using superior service as a differentiator Broaden the market for Steam Turbines GEARS BUSINESS Increase product range Diversify and broaden our customer base WATER BUSINESS Focus on Technology Focus on high margin equipment and solutions 28

29 For more details contact: CN Narayanan Triveni Engineering & Industries Ltd. Tel Fax : cnnarayanan@trivenigroup.com Gavin Desa/ Saurav Shah Citigate Dewe Rogerson Tel: Fax: gavin@cdr-india.com / saurav@cdr-india.com Disclaimer Some of the statements in this presentation that are not historical facts are forward looking statements. These forwardlooking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry. Further, this presentation may make references to reports and publications available in the public domain. Triveni Industries Ltd. makes no representation as to their accuracy or that the company subscribes to those views / findings. 29