INVESTOR PRESENTATION

Transcription

1 INVESTOR PRESENTATION

2 DISCLAIMER The communication may contain statements relating to future business developments, company s performance and economic performance that may constitute forward looking statements. While these forward looking statements represent the company s judgments and future expectations, a number of factors could cause actual developments and results to differ materially from expectations. The company undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances

3 Murugappa Group An Overview

4 MURUGAPPA GROUP INR 225 Billion Conglomerate One of the largest tfamily promoted, td professionally managed, diversified business groups

5 The Philosophy h we cherish h The fundamental principle of economic activity is that No man you transact with will lose; then you shall not

6 Murugappa Group Today ~ INR 225 Billion Conglomerate One of the largest family promoted, professionally managed, diversified business Groups

7 The Spirit of the Murugappa Group

8 Corporate Social Responsibility AMM Foundation 1% of PAT from Group companies to AMM Foundation 4 Schools, a polytechnic; approximately 11,000 students 4 Hospitals - over 8,00,000 patients treated last year Scholarships for needy meritorious Students Research centre for technology for the rural & urban poor

9 Carborundum Universal

10 Birth Of CUMI Incorporated as a joint venture between Carborundum Company USA, Universal Grinding Wheel Company, UK and the Murugappa, 1954 CARBORUNDUM UNIVERSAL India USA UK Acquired a coated abrasives facility from Ajax products Pvt Ltd Bonded d abrasives facility set up in Chennai India

11 Sales Share Business Portfolio CUMI FY 13 PBIT Share Revenue EBIT Capital Employed :Rs bn :Rs. 1.8 bn :Rs bn Abrasives Revenue : Rs 8.1 bn EBIT : Rs 0.8 bn Capital Employed : Rs 5.4 bn Ceramics Revenue : Rs 5.0 bn EBIT : Rs 0.8 bn Capital Employed : Rs 3.7 bn Electro-minerals Revenue : Rs 6.7 bn EBIT : Rs 0.2 bn Capital Employed : Rs 5.3 bn Industrial Ceramics Super Refractories Abrasion Wear Resistance Electro Resistivity Heat Resistance Electro Minerals

12 CUMI Consolidated 25 Factories 7C Countries ti Over 4750 plus Employees plus employees outside India Consolidated Gross Sales Rs 2042 cr (FY ) Market Cap ~ Rs 2250 cr. Products being sold in 43 countries

13 CUMI World Wide- By Business Verticals CANADA RUSSIA Abrasives Ceramics Abrasives Electro minerals Ceramics CHINA Abrasives USA Abrasives THAILAND Ceramics Abrasives TRI S. AFRICA Foskor Zirconia EUROPE UAE INDIA AUSTRALIA Electro Minerals Ceramics Electro Minerals Abrasives Electro minerals Abrasives Abrasives Ceramics Ceramics Electro minerals Abrasives l Ceramics l Electro Minerals 2013 Manufacturing Base Marketing & Distribution Base 13

14 OUR VISION/MISSION VI ISION MIS SSION We will be an Admired Company in Abrasives & Technical Ceramics, driven by Innovation, to create Stakeholder Wealth. Become one of the largest Abrasives (including Super Abrasives) / Technical Ceramics in the Company in the World by

15 ABRASIVES

16 ABRASIVES Product Range Thin wheels A Strong Regional Player with the complete Range of products. Coated Abrasives Bonded Super Abrasives Construction Products Metal Working Fluids Power tools

17 ABRASIVES Abrasives are made of hard, tough and wear resistant materials used to shape or finish a work-piece. Abrasives are used for diverse applications ranging from material removal, polishing and finishing in multiple industries like automobile, auto-ancillaries, fabrication, construction and wood-working. There are 3 types of Abrasives Bonded: Bonded abrasives are mostly in the form of grinding wheels and used in diverse applications like fabrication & grinding Coated: A coated abrasive comprises an abrasive fixed to a backing material such as paper, cloth and fibre. Sandpaper is a very common coated abrasive. They are used in polishing. Super Abrasives: Involve high quality grains such as diamond or cubic boron nitride. CUMI manufactures all the 3 types of Abrasives (Super Abrasives through the JV Wendt India)

18 ABRASIVES - Application Bonded Products and other applications. Thin Wheels For Rough Grinding and Cutting applications:- General Engineering Fabrication Foundry Rolling Mills Projects and other applications. and other applications. Coated Products

19 ABRASIVES - Application and other applications. Power Tools Wood working Metal working Construction Super Abrasives Products Rotary Tools Cutting Tool industries Printing and Paper Roll grinding Ceramic and Tile grinding Wood Working Tools Creep Feed grinding Notch and Slot grinding Tungsten Carbide Roll grinding Ceramic and Refractory grinding Glass Industry and other applications

20 ABRASIVES - Market & Strategy GLOBAL Market 12.7 Billion $ Product wise India $ 0.5 billion Region wise Our Sales in FY 12 is $ 166 million ; Market Share ~ 1-2% globally In India, our share stands at 23-25%, highest being in 38-40% Current Standing Point Metal working Fluid CIMCOOL, CUMILube Leadership in Indian market, at aconsolidated d basis. Abrasive being a LOCAL business. We are currently INDIA centric and our market share will go up only through setting up production facilities in the target regions through organic/ inorganic route. Future Strategy Acquire niche technologies ~ 50, tones bonded abrasives capacity A i i h t h l i Coated abrasives capacity at 19.6 mil square meter. Customer facing organization Super abrasives through Wendt India. North America Power Tools CUMI Metabo tie up Europe Leaders in Russian market in the Vitrified Leadership through Application Engineering Strong R&D team for new product development Comprehensive systems solution provider Strengthen Power tools business - $ 15 bill globally Inked an Agreement with METABO, a reputed global player Strengthen Super Abrasives Inorganic opportunity / Technology Acquisition

21 Abrasives Marketing Network Plants Plants Warehouses Institutions Dealers Sub Dealer We have ~ 500 dealers We have ~ 1000 sub dealers Sales Mix is 40% institutions, 60% through channels to retail customers Retail Customer Small Institutions

22 ABRASIVES Facilities Manufacturing Thiruvottriyur, Chennai Hosur, Tamil Nadu Sriperumbudur, Chennai Uttarkhand Marketing & Distribution CUMI Middle East Ind dia CUMI Canada VAW, Russia CACCL, China Overseas Venlo Netherlands Wendt, India Wendt, Thailand/CME Sterling Abrasives, Gujarat Subs / JV s CUMI USA

23 ABRASIVES INDUSTRY VALUE CHAIN Input Materials Manufacturing Marketing Salesand and Service Internal access to key inputs. Process Capability Application Engineering Brand and Distribution New input material development Low cost locations New Product Development Customer facing Organization Scale Range

24 ABRASIVES Performance Rs. Mil Net Sales - Annual -2.5% +18.7% + 6.4% +3.6% +26.7% + 29% % % sales in India 92% 89% 80% 74% 83% 80% 79% 80%

25 INDUSTRIAL CERAMICS

26 INDUSTRIAL CERAMICS Product Range Wear Protection IC Engineered Ceramics Metallized Ceramics

27 INDUSTRIAL CERAMICS A ceramic is an inorganic, non metallic solid prepared by the action of heat and subsequent cooling. CUMI is into Alumina based Industrial ceramics. There are broadly three product categories, which CUMI is into Wear Resistant products (Tiles): These are weldable and pastable alumina ceramic tiles that can be bonded onto the surface to be protected from wear. They are used in industries where bulk material movement causes heavy wear of the equipment and thus these products are used to protect equipment from heavy abrasion and wear. Lined Equipments - these are fabricated steel lined with ceramics as per customers' requirement. They are also used in industries for Wear and corrosion resistance application Engineered Ceramics: These come in different types: - Ceramic Seals, Customized Ceramics, Insulators & Ignitors, Textile components and Zirconia components. Metz Cylinders and Devices: They are used in industries for Electrical resistivity application. The products come in three different types:- Metallized Ceramics for vacuum interrupters Metallized Ceramics for electrical l and electronic devices Metallized ceramic brazed components

28 INDUSTRIAL CERAMICS Applications Wear Resistant Products Power Generation Coal Mill (Inner Cone, Multiport Outlet Valve, Mill Discharge Valve, Mill Inner Dia Lining, Orifices, Ventury Vanes) Bends (Tranisitions & Y- Pieces) Ash Handling g( (Bends & Slurry Pipes) Cement Industry Coal and Raw Mill Lined Equipment Coal washeries and Material Handling Pulverized Fuel Bends Cement Industry Engineering Ceramics Boiler industry Pump Shaft Sleeves Pump plungers Pump Cylinder Liners Textile industry Electronics Metalized Products Electrical transmission and distribution Electronics industry Textile machinery Defense Medical Electronics Solid Oxide Fuel Cells

29 INDUSTRIAL CERAMICS Market & Our Standing GLOBAL Market for Advanced CERAMICS Out of the total $ 13 billion market, Alumina based Ceramics material is around ~ 5 billion. Alumina based Our Market Million $ Ceramics Market Share Energy and Aerospace 250 6% Wear Resistant % Bio Ceramics 3500 Defense 75 Cutting Tools 175 Total 5000 In Energy and Aerospace category, market for Metallized products would be around 80 million $. Our Share in the Metallized Ceramics market is around 18% and in the overall Energy and Aerospace is 6% In Wear Resistant application, global market for our range of Wear resistant products would be around 200 million $. Our Share in the market would be 14% and in the overall Wear Resistance is 3% Our strategic intent is to (a) increase market share by addressing newer geographies (b) introduce new product offerings to increase our addressable market size which is currently limited to 280 million $ Current Standing Point Over 6800 tons tiles and 0.8 million cylinders capacity in India Leadership in Indian and Australian market. Active player in North American and South African market This being a GLOBAL business, 65% of the produce is exported. Leadership established, through Developing manufacturing technology and achieving process efficiency and scale Designing and providing end to end solution in India and Installation/ Servicing in customer country The division uses Lean and Six Sigma to drive efficiency

30 INDUSTRIAL CERAMICS Future Strategy Currently we are in the business of Alumina based Ceramics. We constantly look at extending offerings in that range and target newer industries. Products Metz Cylinders Competing Criteria Technology, Process Capability Move up the Value Chain constantly by offering high value products. We have been actively pursuing the same as depicted in the picture alongside. Build customer facing entities as we have in Australia to provide end to end solutions in other geographies South Africa / North America. Grow in Ceramic medical business Armored & Engineered ceramics Wear & Corrosion resistant product Grinding Media Moving up the value chain Technology, Process Capability Cost, Installation Service Capability Cost

31 INDUSTRIAL CERAMICS Facility We have World Class facility based out of HOSUR, Tamil Nadu We have one of the few six sigma ceramic operations in the World

32 INDUSTRIAL CERAMICS INDUSTRY VALUE CHAIN Input Materials Design and Engineering Manufacturing Sales and Installation Internal access to key inputs. Application Knowledge Process Capability Customer facing Organization New input material development EPC Contractors / Consultant Approvals Scale Installation / Service capability Scale Plant Engineering

33 SUPER REFRACTORIES

34 SUPER REFRACTORIES Product Range CUMI Refractory Products Fired products Monolithics Precast Shapes Silicon Carbide (CUMIFRAC) Conventional Dense Castables (CUMICRETE) Nitride bonded Silicon Carbide Insulation Castables (CUMICRETE Light Weight) Mulite (CUMILITE) High Alumina (CUMILOX) Zirconia Mullite and Zircon (CUMIZITE & CUMIZON) Low cement castables (CUMIHICAST & CUMIPLASCAST) Self Flow Castables (CUMIFLOW &CUMICAST EF) Ramming Mass (CUMIRAM) Insulation Firebricks (CUMILAG) Laying Mortars (CUMI Bond)

35 SUPER REFRACTORIES Refractory is any material that t can withstand t high h temperature. t CUMI is into High Alumina, Silicon Carbide, Zirconia based refractories which are capable to withstand very high temperature:- Fired Refractories: Is a block of refractory ceramic material used in lining furnaces, kilns & fireplaces. A refractory brick is built primarily to withstand high temperature. Monolithics: These are refractory material in powder form. These are materials which are installed as some form of suspension that ultimately harden to form a solid mass. The division also manufactures and sells Anti-corrosive products: Corrosion is a degradation of materials properties caused by chemical reaction with their environments. Anti-corrosive products are used in plants/ products which undergo such corrosion

36 SUPER REFRACTORIES - Application Ceramic Industries Chemical Process Industries Non Ferrous Insulators Sanitaryware & Tableware Abrasives Carbon Black Fertilizer Petro-Chem. / Refinery Aluminum Copper Zinc Wall Tiles Refractories Electro Ceramics Cement Iron & Steel Glass Container Soda-lime Boro-silicate Decorative Fibreglass Power Generation Boiler Sponge Iron (DRI) Gas-Based Coal - Based Foundries

37 REFRACTORY MARKET World Refractory Demand ($30 billion) by Regions World Refractory Demand ($30 billion) by Industry Global Refractory market - $30 Billion Global demand for refractories is projected to rise 4-5 percent per year

38 SUPER REFRACTORIES Market & Strategy Current Standing Point The Global size of Refractory business could be estimated to the extent t of ~ $ 30 billion Over 9,500 tons Fired capacity in India and Refractory is a LOCAL business. 90% of our sales are in Russia. Around 32,000 tons monolithic domestic market. capacity in India; NbSiC capacity in Russia India Market Rs. Cr Leadership in Indian market in select products Industry CUMI s Addressable CUMI s Product wise Active player in the Russian market. Market Size Market Size Market Share Basic Leadership in Fiber Refractories in Indian 1200 market through MMTCL JV Dolomite 400 High Alumina % Silica 200 Flow Control 500 Monolithics % TOTAL 4500 We operate only in Fired High Alumina and Monolithics business, that too for not entire temperature range, but only for specific high end range. Hence our addressable market size is ~ Rs. 600 cr We have entered with Technology agreement with Sheffield Refractories, UK and AndermanCeramics,UK.Wehavealso acquired 100% stake in TRI, South Africa. With these we would be entering Flow Control market and also increasing our addressable market size in High Alumina and Monolithics. Niche product offerings in Glass and Carbon Black industry in India and Aluminium industry in Russia. Ability to manufacture complex shapes Future Strategy Green field project for capacity expansion Inorganic opportunity with success 100% stake in RHI Isithebe, South Africa giving us 1500 tons Fired capacity and 6000 tons Mono Techno-commercial agreement with Sheffield Refractories, UK and with Anderman Ceramics, UK to manufacture, supply and install a range of high end refractory solutions for the Steel industry, Glass industry In 2011, we had formed JV with Israel based company, for a new Refractory material

39 SUPER REFRACTORIES Ability to manufacture complex shapes and meet all surge requirements

40 REFRACTORY INDUSTRY VALUE CHAIN Input Materials Design and Engineering Manufacturing Sales and Installation Low cost input / access Application Knowledge Process Capability Customer facing Organization Energy / Power OE Approvals Scale Installation / Service capability Plant Engineering Low cost

41 CERAMICS (Industrial Ceramics and Refractories)- Performance Net Sales - Annual Rs. Mil +9.3% + 31% +20.4% % % % + 21% % sales in India 54% 54% 64% 64% 62% 67% 60% 53%

42 ELECTRO MINERALS

43 ELECTROMINERALS Product Range Brown Fused Alumina White Fused Alumina Silicon carbide Zirconia Specialty minerals Bonded Abrasives Refractory Silicon wafer slicing Diesel Particulate Filter Coated Abrasives Metallurgical Investment casting Floor Laminates SurfaceEngineering Refractories Energy & Environment

44 ELECTROMINERALS - Application Refractory Bonded Abrasives Coated Abrasives Dermabrasion Semi Conductor Lapping Laminates Pressure Blasting Photovoltaic Plasma Spray Particulate Filters Metalurgical

45 ELECTROMINERALS Facility Bauxite mines & calcination Silicon carbide, 5400 tpa 3 Fine powders, 11,400 tpa 4 Fused alumina ~22000 tpa MW Hydel power, Maniyar

46 ELECTROMINERALS Overseas Facility VAW - Russia VAW Russia Silicon Carbide, tpa Foskor Zirconia Fused Zirconia, tpa TRI 22k tpa fusion facility Thukela Refractory Foskor Zirconia

47 ELECTRO MINERALS Global Capacity & Our Standing Global Capacity and Our Share Fused Zirconia Global capacity of Fused Zirconia ~ 75k tons per annum. With 10k tons per annum, we are the third largest in the world after Saint Gobain and Imerys. Around 40% capacity is in China Silicon Carbide Global capacity is ~ 2 million tonnes. Price and Cost movements, macro factors, keeps these facilities either running or closed. With 70k tons per annum in VAW we are the second largest after Saint Gobain Around 50% of the capacity is in China, with no single identifiable big player Current Standing Point Established leadership in Russian and Indian market Locational advantage in Russia by way of low power and pet coke cost providing significant cost competitiveness in SiC business In Speciality products, CUMI has achieved leadership in this business by way of improving process capability and Micronisation Fused Aluminas Global capacity is ~ 1.7 million tonnes CUMI share is 1% Around 50% of the capacity is in China

48 ELECTRO MINERALS Future Strategy Innovation Value Pyramid

49 ELECTRO MINERALS Future Strategy Innovation Value Pyramid C11 Nano synthesis Level 4 Nano Powders Alternative application in SiC apart from Photovoltaic C1 Mining C6 Powder processing C9 Chemical processing C7 Sintering C10 Ultrafine powder processing C8 Heat treatment Level 3 Sol gel Ceramics Sub micron powder Level 2 Controlled Crystallization and Micronization C4 C5 C2 C3 Grain Surface Calcination Fusion Level 1 processing coating Fusion Synthetic Brown Alumina in the market Build scale and size at lowest cost location Moving to Big Furnace FZL doubling of capacity by Sep 2012 Acquisition of RHI giving 30k tonnes of fused capacity Organic expansion of Sintered Alumina Continued focus on establishing technology base/ process capability through internal development produce specialty version of Zirconia Gradually increase share of level 3 in the EMD consolidated basket (refer Fig alongside)

50 ELECTRO MINERALS INDUSTRY VALUE CHAIN Input Materials Technology Manufacturing Product Development Access to minerals,,pet coke, cell grade Alumina Process Capability Capacity / Scale Customer Partnership Low cost Power Development to use Alternate t Inputs Low cost Location R&D Location

51 ELECTRO MINERALS - Performance Net Sales - Annual Rs. Mil +25% +22% -8% +13% +97% +21.7% +15.9%

52 CUMI Growth Paradigm New Materials Internally driven -Externally networked

53 Competency based on having a very wide Technology canvas Products and Technologies Products Grinding Wheels Coated Products Fused Grains High purity Ceramics Refractories Processes Fusion Compaction Sintering Finishing Surface Coating Electro Plating Powder preparation Size reduction Key Properties Hardness Material removal Thermal resistance Wear resistance High density and purity Corrosion resistance Dimensional stability Electrical resistivity Applications Abrasives/Grains Material cutting and removal Refractories Insulators Engineered Ceramic components (Seals) Nuclear imaging Wear resistance equipments

54 Technology Platforms 40 Technology Platforms

55 FINANCIALS

56 Revenue Growth. In Million % % % % % -1.3% Rs

57 International Revenue share (%) Percentag ge

58 Income Statement Income Statement Rs. Million Net Sales Growth % 46% 32% 7.5% 25% 33% -1% EBITDA EBITDA % 22.4% 17.1% 16.7% 19.0% 19.6% 20.4% 12.9% Depreciation PBIT PBIT % 19.2% 13.8% 13.7% 15.8% 16.4% 17.5% 9.2% Excep. Items PBT PBT % 18.0% 19.1% 13.4% 13.4% 16.1% 16.4% 7.8% PAT PAT % 12.1% 13.1% 8.7% 7.9% 10.7% 11.1% 4.6% Net Sales Rs. Million

59 Segmental Performance Net Sales (Rs. Mil) Abrasives Ceramics Electro minerals Inter segment Others Net sales PBIT Margin (%) Abrasives Ceramics Electro minerals Total

60 Consolidated Segment Trend

61 Sales- Rs. Mil Abrasives Segmental Performance -2.5% +18.7% PBIT Margin Abrasives +3.6% +26.7% % + 29% + 6.4% Ceramics + 9.3% Ceramics +20.4% % % % + 21% + 31% Electro minerals Electo Minerals +25% +22% -8% +97% +13% +21.7% +15.9%

62 Performance Ratios EBITDA % PBIT %

63 Performance Ratios Debt Equity Ratio Asset Turns ROCE

64 Capex for Key Investments Abrasives Ultra Thin Wheels Plant in UTK VAW Debottlenecking in Abrasives ~Rs.40 Crs. Electro-minerals CUMI blue capacity expansion FZL capacity increase VAW Maintenance and Debottlenecking ~Rs.110 Crs. Ceramics & Refractory Expansion of NbSiC capacity Technology Acquisition in refractory ~Rs.45 Crs. Power SEDCO ~Rs. 25 Crs. Capex executed in ~ Rs. 220 cr Capex planned in ~ Rs. 100 cr

65 New Projects Foskor Tilt Project Bubble Zirconia

66 Production Process

67 Applications & Markets Refractory (80%) Specialty chemicals (5%) Fused Cast material for Glass Industry (10%) Titanium Investment Casting (5%) Applications addressed with existing product range Magnesia & Calcia Double Fused products for Refractories Friction Brake Linings Pigments Technical Ceramics Calcia Stabilised, Yttria Stabilised, New applications require high purity Magnesia Stabilised, Ceria Stabilised and fine powders Thermal Spray Powders Addressed with Alumina Zirconia Abrasive Grains Bubbles Nuclear Power Generation

68 Applications & Markets- Bubble Zr Pigments Glass and Ceramics Abrasives

69 New Projects Alumina Zirconia Project Only Alumina Zirconia plant in India First pour of Alumina Zirconiai

70 New Projects Lite ceramics Bubble C R I L bubble project : Only bubble refractory plant in the world

71 Barmag commissioned to address the Refractory Market

72 Thukhela Refractories Working on life beyond RHI New range of BFA, WFA at Thukhela (TRI )

73 Volzhsky Abrasives Then.. Now.. Cleaner, Greener Volzhsky Abrasives

74 Technology Transfer Signing Agreement Technology Transfer Agreement Signing with Sheffield's

75 Investor Friendly Company 42.2% held by the Murugappa Group. 33% held by FII s, MF, PE, Insurance Cos 59 years of unbroken track record of Profit and Dividend Six Bonus Issues since inception 89% of the current Equity is by way of capitalization of Reserves Growth in the last 5 years entirely funded by Debt, Internal accruals and by unlocking value Investor / Analyst Interaction Quarterly Earnings Call and Transcripts upload Minimum 2 investors Presentation in Mumbai and Abroad Bi Annual Communication on company performance sent to all investors 100 plus investor visits / tele conference in a year

76 Dividend id d Payout Ratios Market Performance Ratios

77 Exhibition / Conference Refractory Exhibition in Russia - Mirstekla Glasstech Asia Bangkok

78 Exhibition / Conference NMD Conference, Jamshedpur, November

79 CUMI Skill Development Center In order to develop alternative to contract /flexi system and ensure ready availability of Skilled Workmen, CUMI launched Skill development Center in Hosur

80 Accolades CUMI team winning i the Southern CUMI team winning i the International Region Kaizen Competitions by CII. Competitions of Quality Circle Forum. CUMI has won the Safety Award of Department of Factories, Government of Kerala for the year CUMI team winning the M.K.K. Nair Memorial Productivity Awards from Kerala State Productivity Council

81 Corporate Social Responsibility Tie up with ANBALAYA SCHOOL (A school for physically challenged children located at Thiruvottiyur) - Conducting Free Medical Camp and Participation in World Disabled Day

82 Sustainability Index Threshold of Vulnerability We are significantly above the threshold of vulnerability on all. High level of sustainability

83