Adhunik Metaliks Limited Results Presentation for the
quarter ended March 31, 2013
May 30, 2013
Steel Mining Power
2
Disclaimer
Certain matters discussed in this presentation may contain statements regarding the Company’s market opportunity
and business prospects that are individually and collectively forward-looking statements. Such forward-looking
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, the performance of the steel, mining
and power industry, competition, the Company’s ability to successfully implement its strategy, risks associated with
acquisitions of, and investments in, other entities, the Company’s future levels of growth and expansion, the
Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results,
levels of activity, performance or achievements could differ materially and adversely from results expressed in or
implied by this presentation. The Company assumes no obligation to update any forward-looking information
contained in this presentation. Any forward-looking statements, projections and industry data made by third parties
included in this presentation are not adopted by the Company and the Company is not responsible for such third party
statements and projections
All financial data for quarter & period ended March 31, 2013 are unaudited
3
Table of Contents
Financial Snapshot
Message from Management
Segmental Overview
Steel
Consolidated Financial Performance
4-6
7
9-11
18-20
Strategic Plan 25-26
Mining 12-14
Power 15-17
About Us & Investor Contacts 27
Company Overview 21-24
FINANCIAL SNAPSHOT
Mining
5
Financial Snapshot - Consolidated
569 613
1,027
0
200
400
600
800
1,000
1,200
Mar'12 Dec'12 Mar'13
Net Operating Income*
90
153
178
-20
20
60
100
140
180
Mar'12 Dec'12 Mar'13
EBITDA*
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
(42)
40
21
-60
-40
-20
0
20
40
60
Mar'12 Dec'12 Mar'13
PAT*
(3.4)
3.2
1.7
-4
-2
0
2
4
Mar'12 Dec'12 Mar'13
EPS (non-annualized) (`)
* ` crore
6
Financial Snapshot
AML*, 74%
OMM*, 26%
Mar’12
AML*, 51%
OMM*, 49%
Mar’12
AML*, 45%
OMM*, 55%
Dec’12
Net Operating Income Breakup
EBITDA Breakup
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Business Overview
Financial Snapshot
AML*, 72%
OMM*, 28%
Mar’13
AML*, 56%
OMM*, 44%
Dec’12
AML*, 36% OMM*,
64%
Mar’12
* AML – Standalone Steel business; OMM – Standalone Mining business
7
Message from the Management
Commenting on the Company’s performance for the quarter ended March 31, 2013, Mr. Manoj Kumar Agarwal, Managing Director at Adhunik Metaliks said:
“We are pleased to announce the COD of the second unit of 270 x 2 MW (540 MW) of our merchant power plant in Jharkhand. Both units have now stabilized and are operating at high load. With coal linkages and PPAs in place, we believe we are well positioned to improve financial results whilst paring debt which in turn will improve return ratios. Commencement of our captive coal block in Ganeshpur by Q1 FY15 will further augment performance.
Our mining operations continue to be strong. We expect this to be further improved with the ramp up of our pellet capacities. The performance of our steel business has been modest given the challenges in the steel sector. While our focus on backward integration partially mitigated these impact, we continue to focus on bringing in efficiencies to improve overall corporate performance.
While the challenges in the macro-environment persist, we are pleased with our operational performance and are confident of leveraging our strong and integrated business model to drive synergies and deliver sustained growth as the environment improves.”
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
SEGMENTAL OVERVIEW
Mining
STEEL
10
Differentiated and Integrated Business Model P
rod
uct
D
iffe
ren
tiat
ors
V
alu
e
Dri
vers
● Single location 0.45 MTPA capacity alloy steel plant catering to auto, power, engineering, oil & gas sectors
● Product mix shifting to higher value added items
● Higher Realizations
● Approvals from leading OEMs
● Captive natural resources (iron ore, Kulum)
● Captive power plant
● Captive railway slidings and rakes
● Cost efficient integreted model
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Sele
cted
P
rod
uct
s
Business Overview
Coal Mine
Iron Ore
11
Operational Overview – Quarter ended Mar’13
74.5 83.9
100.4
40.9
74.0
59.6
35.6
26.4 26.1
0
10
20
30
40
50
0
20
40
60
80
100
120
Mar'12 Dec'12 Mar'13
` ‘
00
0/t
on
ne
‘00
0 t
on
ne
Billets
Production Sales Realizations
30.5
20.6 20.4
28.9
21.7 21.3
47.4 52.8 49.4
0
10
20
30
40
50
60
0
10
20
30
40
Mar'12 Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Rolled Steel
Production Sales Realizations
1.5
3.8
4.8
0.3
2.1
3.3
43.2 39.5
45.9
0
10
20
30
40
50
0
1
2
3
4
5
6
Mar'12 Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Ferro Alloy
Production Sales Realizations
58.1
45.2 45.5
14.1 5.2 4.1
28.9
23.9 23.6
0
10
20
30
0
20
40
60
80
Mar'12 Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Pig / Hot Metal
Production Sales Realizations
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Business Overview
MINING
13
Our Resources
Particulars Ghatkuri Iron Ore
Mines Suleipat Iron Ore Mines (50:50 JV)
Patmunda Manganese Ore Mine
Other Manganese Ore Mines
Location West Singhbhum,
Jharkhand Mayurbhanj, Orissa Sundergarh, Orissa Koira, Orissa (5 mines)
Estimated Mineable Resources (MMT)
40-45 40 15 5
Mine Type Open Cast Open Cast Open Cast Open Cast
Grade Fe: 58-62% Fe: 62-64% Mn: 28-38%+ Mn: 28-38%+
Area Under Mining Lease
276.0 Ha 618.0 Ha 807.3 Ha 150.0 Ha
Area Under Operation 141.0 Ha 364.0 Ha 91.0 Ha 100.0 Ha
Approved Mining Plan 2.0 MTPA 0.6 MTPA
(Applied for 3.0 MTPA) 0.36 MTPA 0.18 MTPA
Current Status Operational Operational Operational 2 operational
2 under development
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Jhar
khan
d
Orissa
Manganese Ore Mines
Suleipat Iron Ore
Ghatkuri Iron Ore mines
14
Operational Overview – Quarter ended Mar’13
70.8
264.8
108.9
3.3
3.3 3.0
0
1
2
3
4
0
75
150
225
300
Mar'12 Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Iron Ore
Sales Realizations
7.1
10.8
4.7
6.8
-
2
4
6
8
-
2
4
6
8
10
12
Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Manganese Ore
Sales Realizations
133.5
228.2 236.0 9.6
9.1
7.4
0.0
3.0
6.0
9.0
12.0
0
50
100
150
200
250
Mar'12 Dec'12 Mar'13
` ‘0
00
/to
nn
e
‘00
0 t
on
ne
Pellet*
Sales Realizations
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
* Operations of 1.2 mn tonne Pellet plant commenced in Dec’ 11 Realizations –Ex-mine / Ex-plant
POWER
16
Phase I: Jharkhand Project (2x270MW) Overview
• 515 acres (97% of total land) acquired and acquisition of balance 18 acres under progress • Entire land at a distance of 1 km from the 400 KVA sub-station of PGCIL
• Fuel: Captive coal mines. 138 MT coal block at Ganeshpur, Jharkhand (50:50 JV with Tata Steel) o Land Acquired o Mining Plan approved o Public Hearing Completed o MOEF approval progress satisfactory
• Option – 2: Mining arrangement with Tata Steel as lead • Tapering linkage received for entire 540 MW • BTG ordered from BHEL for 540 MW • COD for first phase of 540 MW (2x270 MW) declared
• Total cost: ` 3,151 crore. Equity: ` 813 crore and Debt: ` 2,338 crore [Debt/Equity: 3:1] • Equity Tie-ups: IDFC - (` 290 crore) and SBI Macquarie: (` 145 crore) • ` 787 crore of equity already infused and ` 2,320 crore of debt already drawn down till March
31, 2013 (APNRL)
Land
Fuel and BTG
Financial Closure
Approvals & PPA
• MoEF clearance and NOC from Pollution Control Board have been received for Phase I & II (2x270 MW)
• Received chimney height clearance • Water for 1,000 MW (35.6 mcm) approved from a perennial river at a distance of 10 kms • Permission for railway siding received • Bulk Power Transmission Agreement (BTPA) signed • PPA for ~423 MW executed
Financial Snapshot
Steel Mining Financial Highlights
Consolidated Strategic Plan
Business Overview
Power
17
Power Project Updates
• The first phase unit of 270 x 2 MW (540 MW) coal fired thermal power plant has now stabilized
– Secured tapering coal linkages and executed Fuel Supply Agreement from Coal India Limited (CIL)
– Unit I of power plant operating at 70-85% load
– Recently declared COD of Unit II of power plant
– The Company has started delivering power as per the PPA arrangement
• Approvals and clearance for Captive coal mines at Ganeshpur, Jharkhand expected by Q1 FY15
FINANCIAL OVERVIEW - CONSOLIDATED
Mining
19
Financial Highlights - Consolidated
Particulars (` crore) Quarter ended Mar 31, 2013
Quarter ended Dec 31, 2012
Shift (%) Quarter ended Mar 31, 2012
Shift (%) Period ended
March 31, 2013
Net Operating Income 1,027.1 612.6 67.7 568.6 80.6 2,255.3
EBIDTA 177.6 152.7 16.3 90.2 96.9 484.4
EBIDTA Margin (%) 31.3 24.9 640 bps 15.9 1,540 bps 21.5
Depreciation 53.3 33.2 60.5 36.5 46.0 121.5
Interest 122.8 92.6 32.6 93.9 30.8 305.7
PBT 26.7 46.2 (42.2) (25.8) NA 117.4
PAT 21.2 39.7 (46.6) (42.1) NA 97.1
PAT Margin (%) 2.0 6.5 (450 bps) (7.4) NA 4.3
Non-annualised EPS (`) 1.72 3.22 (46.6) (3.41) NA 7.86
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Business Overview
20
Balance Sheet - Consolidated
Particulars (` crore) As on Mar 31, 2013 As on Mar 31, 2012
Net Fixed Assets 4,477.7 4,682.7
CWIP 837.4 2575.0
Networth 1,569.4 908.2
Total Debt 4,772.9 4,100.2
- AML 1,229.7 1,509.6
- OMM 1,023.1 772.2
- APTL* - -
- Neepaz V – Forge* - 149.2
- APNRL 2,520.1 1,669.2
Cash & Cash equivalent 54.1 115.6
Financial Snapshot
Steel Mining Power Strategic Plan Financial Highlights
Consolidated Business Overview
* The Company’s investment in APTL & Neepaz V-Forge were sold in December 2011 and April 2012 respectively
21
COMPANY OVERVIEW
Mining
22
Group Business Structure
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
# Our Share 49%
Note: We have sold our investments in Neepaz V Forge & Adhunik Power Transmission Limited
*Net Operating Income and EBITDA Margins for 9M ended March 31, 2013 (audited)
**Shareholding as on 31st March 2013
Vertically Integrated Business Segments
Adhunik Metaliks Limited - Flagship/Holding Company
o Alloy and Special Steels: Adhunik Metaliks Limited (AML) – 0.45MTPA
Captive Mines
o Iron Ore: 18 MMT (Operational)
Adhunik Power and Natural Resources Ltd. (APNRL): 81.74% subsidiary** o IPP: 540 MW o First unit of 270 MW COD declared on
21 Jan 2013 o Second unit of 270 MW COD declared
on 19 May 2013
Captive Mines
o Coal: 69 MMT
Orissa Manganese & Mining Ltd (OMML): 100% Subsidiary** o Iron Ore: 40- 45 MMT (Operational) o Manganese Ore: 15 MMT
(Operational)
Suleipat Mines (50:50 JV)
o Iron Ore: 40 MMT (Operational)
1.2 mn tons per annum Integrated Iron Ore Beneficiation & Pellet Plant
(Operational)
Patratu Mines (49:51 JV)#
Coal: 450 MMT (recently allocated)
Mining Revenues*: ` 221.7 crore
EBITDA Margins* (%): 27.0 %
Power Steel
Revenues*: ` 567.3 crore EBITDA Margins* (%): 10.9 %
23
The Natural Resources Advantage
Business Segment` Mineral Resources Location Status
Steel (Captive) Iron Ore 18 MMT Keonjhar, Orissa Operational
Merchant Mining
Iron Ore 40-45 MMT Ghatkuri, Jharkhand Operational
Manganese Ore
15 MMT Patmunda, Orissa Operational
5 MMT Koira, Orissa Operational
Merchant Mining (Joint Venture Company)
Iron Ore 40 MMT Mayubhanj, Orissa Operational
Coal 450 MMT Patratu, Jharkhand Recently Allocated
Power (Captive) Coal 69 MMT Ganeshpur, Jharkhand Expected COD by Q1 FY15
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
24
Our Strengths
• Established presence in Iron ore mining and manganese mining • Commenced 1.2 mn tons per annum Integrated Iron Ore Beneficiation & Pellet Plant
• Setting up a 540 MW (2x270 MW) coal based power plant in Jharkhand
COD for first unit of 270 MW declared on 21st Jan 2013
COD for second unit of 270 MW declared on 19th May 2013
Diversified Minerals and Energy Player
• Minerals: from mining to manufacturing of special steel for automobile and engineering sectors
• Energy: From mining to power generation
Vertically Integrated Operations
• Access to high grade iron ore and manganese reserves • Sizeable resources of iron ore & manganese ore
• Coal linkages for power plant in place pending commencement of Ganeshpur coal block
Raw Material Access
• Proven execution capabilities, having set up projects in steel and allied industries • Experienced management team in operations, mining and project management
Operational Track Record
• Revenue CAGR of 22.6% from FY08 to FY13* (annualized) • EBITDA CAGR of 20.3% from FY08 to FY13* (annualized)
* FY13 results annualized (April 1, 2013 – March 31, 2013)
Strong Financial Performance
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
STRATEGIC PLAN
Mining
26
Way Forward
Business Overview
Financial Snapshot
Steel Mining Power Financial Highlights
Consolidated Strategic Plan
Em
erg
e a
s a
div
ers
ifie
d m
eta
l, m
inin
g a
nd
en
erg
y p
rod
uc
er
- Move up the value chain of steel manufacturing to produce high value added steel like auto steel and structural steel
- Emerge as a preferred vendor to the leading domestic as well as global OEMs
- Ramp up of production from captive iron ore
- Focus on volume increase in iron ore and manganese ore
- Convert inexpensive low-grade iron ore fines to high value pellet for merchant sales
- Ramp up production levels of the recently commissioned 1.2 MTPA iron ore beneficiation & pellet project
- Successful commissioning of Patratu Coal mine
- Assured linkages with CIL to ensure optimum operations
- COD of captive coal block at Ganeshpur by Q1 FY15 expected to reduce power cost by over 50%
- Optimum mix of long term Power purchase agreement and spot market sales
- Further expansion plan to be backed by fuel security
STEEL
MINING
POWER
27
Sachin Bhansali / Ankur Modi Gavin Desa / Ishan Selarka / Ashwin Chhugani
Adhunik Metaliks Limited CDR India
D: +91 33 3051 7100 D: +91 22 6645 1237 / 1232 / 1250
Fax: +91 33 2289 0285 Fax: +91 22 6645 1213
Email: [email protected] Email: [email protected]
[email protected] [email protected]
About Us & Investor Contacts
For further information please log on to www.adhunikgroup.com or contact:
Adhunik Metaliks Limited (AML) is a diversified metal and mineral producer, having
presence in steel manufacturing of 0.45 million ton per annum (mtpa), merchant mining
(operates the mining business through wholly owned subsidiary Orissa Manganese and
Minerals Limited (OMML). It has also forayed into merchant power business through its
subsidiary Adhunik Power and Natural Resources Limited (APNRL – 81.74% stake as on
March 31, 2013), which has setup 540 MW (2 X 270 MW) coal based power plant in
Jharkhand.