Pennar Engineered Building Systems Limited Investor Presentation Q2FY16
Disclaimer This presentation contains forward looking statements including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Pennar Engineered Building Systems Limited s future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Pennar Engineered Building Systems Limited undertakes no obligation to periodically revise any forward looking statements to reflect future / likely events or circumstances. 2
Q2FY16 Results Ultratech Cements Ltd. 99 meter clear span building 3
Financial Performance Q2FY16 4
Highlights of Q2FY16 performance Order book at Rs. 410 crores New Orders - Siemens, International Cargo terminal, Namasthe Telangana, KEC International, UK Textiles Repeat Orders - Biological E. Limited, Reliance, L&T, Mylan Laboratories, Frontier Sales Corporation, P L Raju Constructions, Decathlon, Top View Infratech Expansion To start Engineering services operations in Visakhapatnam, Andhra Pradesh from December 2015 Opened new sales office at Coimbatore, Tami Nadu and Vijayawada, Andhra Pradesh To enter into new segment of Bridge girders 5
Company Overview IOT Infra Dahej, Gujarat 6
Pennar Group Overview Pennar Group of Companies Pennar Industries Ltd. Steel Products & Profiles Precision Tubes Industrial Components Systems & projects Pennar Engineered Building Systems Ltd. Pre-Engineered Buildings Custom Designed Steel Structures Engineering Services Pennar Enviro Ltd. Water Treatment Solutions Water Treatment Chemicals Fuel Additives 7
Pennar Engineered Building Systems Limited (PENPEBS) - Overview One of the leading custom designed building systems solutions provider in India Industry size of the Indian PEB was ~INR 55,000 million with a 13% CAGR over 3 years Pennar s market share was ~8% (1) in a fragmented industry in FY14 Manufacturing facility equipped with high-precision machines to fabricate and supply quality-replete steel buildings Production capacity of 90,000 MT p.a. One of the few companies that offers leak-proof roofing systems in India Technical know-how licensing agreement with NCI Group Inc. USA 156 ongoing projects across 20 states, aggregating to order book of INR 3.6 Bn (2) Key customers include Ultratech Cement, Volvo India and Larsen & Toubro with repeat orders from 17 customers as on June 30, 2015 Indian PEB market was at INR 55,000 million in FY14 and is expected to be at INR 91,680 million by FY17 (1) 8 (1) Source: CARE Research, Report mandated by the company (2) As on June 30, 2015
Key Events and Milestones 2015 2014 Crossed Rs. 4,500 million from Gross Revenue from Operations Commissioning of 0.5 MW solar power generation facility 2013 Investment by Zephyr Peacock India Fund Manufacturing capacity expanded to 90,000MT Entered into an agreement for commencement of engineering services 2011 Manufacturing capacity expanded to 60,000 MT Achieved Rs 1,000 million from Gross Revenue from Operations 2010 Commenced commercial production with a capacity of 30,000 MT Received Gold Rating from the Indian Green Building Council for achieving the green building standards as per IGBC Green Factory Building Rating Technology 2009 2008 Entered into Double Lok technical know-how agreement with NCI Group, Inc. Incorporation and commencement of business of the Company 9
PENPEBS - One of the Leading PEBS provider in India Diversified Products and Solutions Strong Engineering Design Capabilities and Technological Tie-Ups Experienced Management & Strong Parentage Established Track Record for Timely Execution Robust Financial Performance 10
Diversified Products and Solutions Pre-Engineered Buildings Structural & High Rise Steel Buildings Solar Module Mounting Structures Design & Engineering Services Custom designed and fabricated, available in large multi-dimensional spans Offer enhanced speed, flexibility and capable of withstanding weather changes Top PEBs built: Coal Storage Shed at Visakhapatnam; Factory Building at Khopoli, Odisha Comprising of steel and cement plants, multi-level carparks, towers and high rise buildings Existing in-house capabilities for design and manufacture Installed two buildings: G+7 Multi Storied Building G+10 Multi Storied Building at Hyderabad Design, supply and erect structures used for mounting solar modules Application in solar photovoltaic plants, solar canal tops, solar roof tops, solar thermal plants and solar car parks Developing integrated and comprehensive engineering design solutions In-house engineering and design team comprising of 147 technical personnel (1) Design services out-sourcing agreement with a US based entity Warehouse Buildings at Dahej, Bangalore Ability to offer diversified products and solutions makes Pennar a preferred partner by key customers 11 (1) As on June 30, 2015
PENPEBS Components PEBS Components & Solutions Primaries (Main Frame) Secondaries Claddings Accessories Niche Solutions H sections I beams Purlins Fascia channels Eave Struts Side runners Double-Lok roofing Roof sheeting Wall systems Fasteners Walk doors Louvers Windows Sky lights Ridge ventilators Roof & jack curbs Green Buildings Low Cost Housing Building Systems Double-Lok Standing Seam Roofing with 10 years leak proof warranty by PEBS Pennar Purlins/Girts/Eave struts are pre-galvanized with 275 gsm. Primary structures shot-blasted to Swedish standard SA 2.5 with epoxy primer Continuous supervision at site during installation Standard Trapezoidal Roof Sheeting Purlins/Girts/Eave struts are Pre-galvanized with 120 gsm. Primary structures with manual cleaning with alkyd primer Periodic supervision at site during installation 12
Strong Engineering & Design Capabilities and Technological Tie-Ups Award winning and experienced in-house design and engineering team of 147 technical personnel (1) Technical arrangement with NCI Group Inc, USA for Double Lok Standing Seam Roofing System One of the few companies to offer leak-proof roofing systems in India Out-sourcing agreement with USA based company which ensures: Exposure to the latest know-how, design and computer aided technologies Licensed some of the latest and advanced software in CAD technology and manufacturing Equipped to handle complex software to design complex custom designed structures Provides design and engineering services for projects executed by others as well Best pre-engineered building for Ultratech Cement Factory, Kotputli, Rajasthan CIDC Vishwakarma Award, 2015 Certificate of commendation for a cold storage shed at Kotputli, Rajasthan- INSDAG National Award, 2014 Infrastructure company of the year - Construction Week India Awards, 2013 (Runner up) 13 (1) As of June 30, 2015
Established Track Record for Timely Execution Timely execution of more than 400 projects in 5 years across various sectors Strong supply chain relationships, network of sales offices and building contracts and integrated operations allows to consistently deliver projects in an efficient and timely manner Consolidation of order and project management departments into one ensures operational efficiencies Established relationships with materials suppliers like JSW Steel Ltd., Tata Steel Ltd., Asian Paints and various vendors further strengthens the business operations Network of approved building contractors across India allows the Company to provide end-to-end solutions Repeat orders from 17 customers, including Ultratech Cements Ltd., Volvo India Private Ltd., Larson & Toubro Ltd. 99 meter clear span building Largest building executed by a PEBS player in India Solar Mounting Structures Multi-storied Building Processing Unit 14
Robust Financial Performance Revenues & PAT EBITDA & Margin 15
Strong Board to drive Corporate Governance Board of Directors JV Nrupender Rao, Chairman and non-executive Director IIT (Kharagpur), Masters (Op Research & Ind Eng) from Purdue University, USA and has 40 years of experience in various disciplines in multiple organizations P Venkateswara Rao, Managing Director B.E(Civil) from JNTU Kakinada with more than thirty four years of experience in the construction industry and last twenty two years in pre-engineered buildings sector Aditya Narsing Rao, Non-executive Director B.E(Geophysics), Masters (Engineering Management) from from Cornell University, New York, USA and has an experience of 10 years in corporate strategy and corporate planning Mukul Gulati, Non- executive nominee Director Cum laude graduate of the University of Maryland, MBA from Columbia University and has over 18 years of experience in the field of investment management Manish M Sabharwal, Non- executive independent Director Alumillioni from SRCC, MBA from Wharton, University of Pennsylvania and has an experience of 20 years in the field of finance, education, labour laws and skill development KR Bandari, Non- executive independent Director B.E. from IIT Delhi, MBA from FMS, Delhi, and has an experience of 45 years in management consultancy, management and financial services Varun Chawla, Non-executive independent Director B.Sc from Cornell University, more than five years of investment banking experience with Goldman Sachs in the U.S. and India and over four years of experience in advising start-ups for fund raising Sita Vanka, Non-executive independent Director M.A from Osmania University, M.Phil from University of Hyderabad and holds a doctorate from Osmania University and has over three decades of teaching experience in the various discliplines Received the Scroll of Honor for overall business excellence and industry practices IEI Industry Excellence Awards, 2013 16
Shareholding Pattern 17
PEBS Industry Volvo India 18
Typical PEB system The pre-engineered steel building system offers advantages to the customer as a more feasible, practical and efficient alternative to conventional buildings. The system has earned acceptance across the world and is gaining rapid ground in India as well. Some of the distinct advantages include: Durable - Weather resistant, earthquake resistant Faster - Reduced construction time thus ensuring enhanced speed in delivery and erection Flexible - Easy to expand Value - Low project cost, maintenance costs Aesthetics - Gives the engineer enough flexibility to create unique structures Lower Costs Lower maintenance costs and faster construction time has direct impact on revenue 19
PEB offers many advantages over conventional construction Industry Growth PEB industry growth expected to be substantial driven by construction growth and higher PEBS penetration. Industrial (manufacturing, warehouses) segment to remain domination while infrastructure and retail segments to grow rapidly Market Segments/ Application Design Fabrication Project Execution Timeline PEB preferred for light weight structures mostly in industrial segments and low-rise commercial and infrastructure. Rising demand for complex warehouses ((with specific requirements around height, span, positioning of columns, insulation, ventilation, etc) Fast design turnaround. Modular designs basic designs are re-used as far as possible Fabrication is off-site in a plant parts are assembled (bolted) on-site Typically turnkey projects design, fabrication and execution is handled by PEBS players PEBS has advantage of 40-50% shorter timelines compared to RCC Cost 5-20% lower upfront cost than structural steel. For complex warehouses PEB becomes more cost competitive 20
PEBS Sector Potential Opportunities Industrial Expected Investment of INR 2.5 trillion to create a potential market of INR 2,50,000 million* Cement - 479 million tonnes Automotive Industry INR 50,000 million Engineering and Capital Goods - Significant demand for manufacturing plants and sheds for PEB Commercial Application across warehousing & FMCG retail shops Agri-warehousing 10% of total warehousing in India - Strong potential demand for PEB Expected demand of ~INR 20,000 million of silos every year Warehousing Large clear-span storage sheds can be catered by PEB construction effectively Requirement in FY14 is 919 million sq.ft., expected to grow at 9%* Real Estate Government s scheme of affordable housing is expected to create potential demand of INR 180,000 million Commercial /High Rises Buildings Availability of commercial space is expected to grow from 650 million sq.mt. in 2012 to 1,900 million sq.mt. in 2030 Creates a market potential of INR 55,000 million* Infrastructure Investments expected to the tune of INR 65 trillion in FY 2012-17 Civil Aviation Investment of INR 72,000 million Metro Rail Investment of INR 13,00,000 million Power Plants Investment of USD 250 Bn Ports Investment of USD 49.75 Bn PEB penetration stands low at ~20% presenting a Strong Opportunity 21 * In the next 5 years. Source: CARE Research
Investor Contacts Investor Relations - cs@pebspennar.com Contact Details: Pennar Engineered Building Systems Ltd. Floor: 9, DHFLVC Silicon Towers Kondapur, Hyderabad - 500 084, Telangana CIN : U45400AP2008PLC057182 22