26
Jindal Poly Films Limited An Enterprise of the ‘B.C. Jindal Group’ Corporate Presentation November 2010 Private & Confidential 1
Jindal Poly Films LimitedAn Enterprise of the ‘B.C. Jindal Group’
Corporate Presentation
November 2010
Private & Confidential 1
Private & Confidential 2
Disclaimer
This presentation is strictly confidential and may not be copied, published, distributed or transmitted. The information in this presentation is being provided by Jindal Poly Films Limited (the “Company”).
This presentation has been prepared for information purposes only and is not an offer or invitation, directly or indirectly, to buy or sell any securities, nor shall part, or all, of this presentation form the basis at or be relied on in connection with, any contract or investment decision in relation to any securities. This presentation is not an offer document or a prospectus under the [Indian] Companies Act, 1956, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended and any other applicable law.
This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of the Company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company or industry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding expansion plans and the benefits there from, fluctuations in our earnings, our ability to manage growth and implement strategies, intense competition in our business including those factors which may affect our cost advantage, costs of raw materials, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns, changes in technology, availability of financing, our ability to successfully complete and integrate our expansion plans, liabilities, political instability and general economic conditions affecting our industries. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements to reflect future events or developments.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any jurisdiction, including the United States. None of our securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration therefrom. Securities offered or sold outside of the United States are being offered or sold in compliance with the applicable laws of the jurisdiction where those offers and sales occur. There will be no public offer of the securities in the United States or in any other jurisdiction.By viewing this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company.
Except as otherwise noted, all of the information contained herein is indicative and is based on management information, current plans and estimates in the form as it has been disclosed in this presentation. Industry and market-related information is obtained or derived from industry publications and has not been verified by us. The information contained in this presentation, except as otherwise noted, is only current as of the date of the presentation, and is subject to change without notice. The Company may alter, modify or otherwise change in any manner the content of this presentation, without any obligation to notify any person of such revision or changes. Persons relying on the information in this presentation should do so at their own risk and the Company shall not be responsible for any kind of consequences or liability to any person arising out of, relying and acting upon any such information.
THIS PRESENTATION DOES NOT CONSTITUTE OR FORM ANY PART OF ANY OFFER, INVITATION OR RECOMMENDATION TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN THE UNITED STATES OR ELSEWHERE.
Private & Confidential 3
Agenda
Company Overview11
Industry Overview22
Business Highlights33
Power Generation Foray44
Future Growth Strategy55
Private & Confidential 4
B.C. Jindal Group Overview
Established in 1952, the B.C. Jindal Group is one of India’s leading corporate houses, diversified into several business areas
The Group is engaged in the business of manufacturing BOPET films, BOPP films, metallised films, steel pipes, cold rolled steel strips, galvanized sheets and photographic products through various companies
The Group has ventured into power generation business recently
Jindal (India)Ltd.
B.C. JINDAL GROUP
Jindal PolyFilms Ltd.
RexorSA
Jindal PhotoLtd.
Largest flexible films (BOPET and BOPP) producer in India*
Distribution network across 40 countries
Listed on NSE and BSE with FY-10 Net Sales of Rs. 1,591 Cr. (USD 358 ml)1
Market Cap2: Rs. 3,097 Cr (USD 696 ml)1
Commenced operations in 1952Manufactures CR Strips, GP/ GC Sheet, ERW/ HIFW black and galvanized steel tubesNet Sales of Rs.1,066 Cr in FY-10 (USD 240 ml)1
Founded in 1954Major player in flexible and luxury packaging and a leader in tear tapes and film wrap in Europe based out of FranceAcquired by B C Jindal Group in 2003Revenues of Euro 17.6 ml (USD 24 ml)1 in FY10
Commenced operations in 1986 under an alliance with Fuji Photo Films, JapanProduces film roll, photo colour paper, x-ray films, etcListed on NSE and BSE.FY 10 Net Sales Rs. 379 Cr (USD 85 ml)1
Jindal India Thermal Power Ltd.
Currently developing 1,800 MW thermal power project in Odisha.Fuel from captive coal mine / linkage
(1) (Exchange Rate: 1 Euro = USD 1.39, 1 USD = Rs.44.50)(2) Market Cap as on [ ] Nov2010 (Source: BSE)
* Source: World BOPET film market trends 2010, PCI Films Consulting; World BOPP Film Market Trends 2008, PCI Films Consulting
Private & Confidential 5
Jindal Poly Films – An Integrated Packaging Films Company
India’s largest manufacturer of flexible packaging films*. Product range includes thin and thick BOPET films, BOPP films, metallised films and specialty films
Industry leader in its segments in India, with a total capacity of 307,000 TPA
BOPET Films – 35% market share#
BOPP Films – 50% market share#
Plant at Nasik, Maharashtra is the world’s largest single location plant for the manufacture of BOPET and BOPP films**
Advanced machinery imported from Dornier, Bruckner, Applied Materials and Kampf, Germany
Established distribution network - Export to more than 40 countries worldwide
Strategically located manufacturing facility - Close to source of raw material and seaport
Shareholding Pattern (As on 30th Sep, 2010)
Market Data & Stock Price Performance
BSE Code: 500227
NSE Symbol: JINDALPOLY
Bloomberg: JDPF IN
Reuters: JPLY.BOLast Price:(Ex-Bonus 1:1) Rs. 622.75
52-Wk High/Low: Rs. 700 / 146
Market Cap: Rs. 2,867 Cr (USD 644 ml)
Net Debt(1): Rs.421 Cr (USD 95 ml)
EV: Rs. 3,288 Cr (USD 739 ml)
P/E: 5.44x (Based on H1)
P/B(1): 2.15xSource: BSE (as on 04 Nov 2010) (1) As on 30th Sep 2010
Source: BSE
* Source: World BOPET film market trends 2010, PCI Films Consulting; **World BOPP Film Market Trends 2008, PCI Films Consulting# in Sep, 2010 - Source: Access Management Services (P) Ltd
Private & Confidential 6
Business Model
Follows a B2B model, supplies base film to converters/ processors who in turn sell the value added product to the end customers (FMCG Companies)
Jindal Poly Films is an integrated player of Poly Films; it manufactures poly chips after purchasing base raw material from outside. It also has metalizing and coating capabilities
The films are also consumed in-house by Rexor for manufacture of high end luxury packaging products
Backward integrated production facilities
Polyester Chips BOPET FILM
BOPP FILM
PTA SupplierPTA Supplier
MEG MEG SupplierSupplier
Metallizing &
Coating
IndustrialBuyers
Converters FMCGCompanies
Presence of Jindal Poly Films
PPHP SupplierPPHP Supplier
PPCP PPCP SupplierSupplier
Private & Confidential 7
Evolution into A Integrated Player
1985
1993
1996
2003
2004
2005
2006
2009
2010
Commenced manufacturing of Polyester Yarns
Backward Integration into
manufacturing of polyester chips for captive use
Manufacturing of BoPET films
started
Diversified into BoPP films, Acquisition of
Rexor, France. Entered the
metalised films segment
Expansion of BoPET capacity by
25,000 TPA
Expansion of BoPP capacity by
32,000 TPA, second thin pet
film line and second BOPP
line commissioned
We believe, we became largest producer of BOPP in India by
commissioning third BOPP line of 45,000
TPA, one of the largest in the world. Yarn
production stopped
Two BOPP film lines with a capacity of 90,000 TPA
commissioned
Another 8.7 meter thin PET
film line was installed taking total capacity to 1,27,000 TPA
Emerged as a leading player in plastic films in a relatively short period
Private & Confidential 8
Flexible Packaging - Dominated by BOPET & BOPP
Comparison of BOPET/ BOPP with other form of packaging material
MachinableMachinable BarrierBarrier DurableDurable ClarityClarity
BOPET
BOPP
TQPP
PVC
Polyethylene
Aluminum foil
Paper
Dominant share of BOPET, BOPP films led by superior properties
Flexible Plastic
Applications*
Source: Company Strong Medium Weak
* Graphics above are representation of examples of end uses of flexible packaging films. These do not represent our direct or indirect customers
Flexible packaging involves the use of light weight, durable and flexible materials, such as plastic films, paper and aluminum foil to package and label products
Applications include labels, wrappings for food, tobacco, fast moving consumer products and textiles
The key reasons for the shift towards flexible packaging are:
Improves shelf life of the productsHelps differentiate productsEnhances customer convenienceProvides cost benefits
Private & Confidential 9
BOPET Film: Global Scenario
1,714 1,8411,998
2,1662,320 2,393
0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009
The secular growth in BOPET demand driven by newer applications
Luxury Packaging
Solar Photo Voltaic Cells
LCD Television Screens
Touch Screen Mobile Screens
Increasing Contribution from Packaging, Electrical Applications*
CAGR: 6.9%
Stable growth in BOPET demand* Demand drivers*
Emerging Application Areas
Substitution of rigid packaging formats (e.g. bottles by stand-up and retort pouches)
Additional packaging to preserve food products
New thick film applications
Imaging &Graphics
Other Industrial
Packaging &Metallising
Electrical & Electronics
-5%
0%
5%
10%
15%
-5% 0% 5% 10% 15%
Avg Growth 2004-2009
Avg
Gro
wth
200
9-20
14
(KTPA)
* Source: World BOPET film market trends 2010, PCI Films Consulting
Private & Confidential 10
5,117
3,550 3,8534,188 4,532
4,906
0
1,000
2,000
3,000
4,000
5,000
6,000
2003 2004 2005 2006 2007 2008
(KTPA)
BOPP Film: Global Scenario
Growth of branded food retailing to sustain growth in demand for BOPP
Food packaging to witness highest growth*
Faster growth in BOPP demand* Demand Drivers*
Growth in the sales of packaged & convenience food
Substitution of other forms of packaging films and materials
Investment in new converting and packaging equipment by purchasers of BOPP film
Environmental friendliness
Cost effectiveness
Non-Food Packing
Food PackagingIndustrial
0%
2%
4%
6%
8%
10%
12%
14%
4% 5% 5% 6% 6% 7%
Avg Growth 2008-2013
Avg
Gro
wth
200
3-20
08
CAGR: 7.6%
Transparent75%
White/Opaque/Matt
13%Metalised
12%
Market by Type*
* Source: World BOPP Film Market Trends 2008, PCI Films Consulting
Private & Confidential 11
BOPET & BOPP Pricing Trends
50
70
90
110
130
150
170
190
210
230
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
BOPET BOPP
BOPET (Thin) and BOPP Price Trends
Thin BOPET prices have more than doubled since Apr 2010
Source: Company
Prices per KGPrices per KG AprApr--09 to 09 to MarMar--1010 AprApr--1010 OctOct--1010 % change % change
(Apr(Apr--Oct 2010)Oct 2010)
BOPET (Thin) 86 94 210 + 123%
BOPP 91 89 87 - 2%
Private & Confidential 12
Key Investment Highlights
Largest Manufacturer in Largest Manufacturer in India for BOPET & BOPP India for BOPET & BOPP
films*films*
Strong Financial Strong Financial Performance with Performance with
Robust Balance SheetRobust Balance Sheet
Global PresenceGlobal Presence
Low Cost ProducerLow Cost Producer
Large Capacities Large Capacities Providing Providing ““One StopOne Stop””
Solution and Economies Solution and Economies of Scaleof Scale
Strong Industry Growth Strong Industry Growth OutlookOutlook
Advanced Advanced Manufacturing FacilityManufacturing Facility
* Source: World BOPET film market trends 2010, PCI Films Consulting; World BOPP Film Market Trends 2008, PCI Films Consulting
Private & Confidential 13
Market Leader in Flexible Packaging Films
127,000
180,000
45,000
4,500
BOPET BOPP Metallised films Coating Plant
World’s Largest Single Location Facility*
Jindal Poly to be among top five largest BOPET film manufacturers in the world by 20141
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Largest capacity in India
Plant Capacity (TPA)#
127,00060,000 51,000 55,000 41,000 27,000
180,000
116,20040,000 35,000
Jindal Poly* Cosmo Uflex Polyplex SRF Garw are Ester
BOPET (TPA) BOPP (TPA)
To be one of the largest BOPET companies globally
262
222240268
330355
Toray Plastics Zheijang EuroAsia
Jindal Poly* DuPont Teijin JisngsuSuqian
Mitsubishi
Capacity in 2014 (‘000 TPA)
Source: Company
Source: FY10 Company Annual Reports
Source: World BOPET film market trends 2010, PCI Films Consulting* As per Company’s board sanction capacity to increase to 217 KTPA by 2013
# as on 30th Sep 2010, above capacity has been worked on 12 Mic packaging grade production* Source: World BOPET film market trends 2010, PCI Films Consulting; World BOPP Film Market Trends 2008, PCI Films Consulting
Private & Confidential 14
Wide Product Portfolio Catering to Diverse Application Markets
“One-Stop-Shop”
One of the few players globally to be able to offer a range of thin and thick BOPET film and BOPP film products
22
Consumer Products
Food packaging
Adhesivetapes
Magnetic media, imaging
Luxury Packaging
Solar Photo Voltaic Cells
Security Threads in Currency Notes
Tear Tapes
Emerging Applications
Specialty Products
Private & Confidential 15
Advanced manufacturing Facilities33
Implementing Advanced Technology
Advanced technology from global suppliers
8.7 metre width BOPET lines
Over 8 metre width BOPP lines
Flame treated 5 layer films
Wider high speed lines reduce energy
costs
Lower wastage due to wider lines
Backward integration into poly chips
reduces dependence on third parties
as well as provides cost advantage
Focus on technology and cost control
Private & Confidential 16
Global Presence
Well established relationship with distributors in over 40 countries
About 20% export revenues. Registered an export of Rs 319 Cr (USD 72 ml) in FY10
Presence across multiple markets helps increase volumes as well profitability by taking advantage of the low cost manufacturing base
No anti-dumping and one of the lowest anti-subsidy duties among all other Indian exporters for export to USA and European Union
Marketing Network Around the Globe
Access to high-end portfolio of products
Captive consumer of JPFL’s base films
R&D support
Market intelligence
Pan European distribution
Global presence and low duty structure provides competitive advantage
Rexor SA
44
Private & Confidential 17
Doubling Capacity over Next Two Years 55
Capacity expansion and focus on value added specialty films to be the future growth drivers
With expansion in thick BOPET films capacities, entering into high end thick films used in solar photovoltaic cells
Expansion into high value added products such as metallized & coated films
We believe BOPP expansion to cater to rapidly growing domestic and export demand, speciality films and capacitor grade film
180
66
66
312
217
30
60
127
Existing FY12 FY13 At the end of FY13
BOPET BOPP
Proposed Capacity Expansion (‘000 TPA)
Source: Company
Private & Confidential 18
Strong Financial Performance
Sales (Rs. Crores)
8311,020
1,2591,421
1,591
267 364 364 353 319
2006 2007 2008 2009 2010
Net Sales Export Sales
Profitability (Rs. Crores)
18%18%
128168
271
339 364
46 65
133 126
208
2006 2007 2008 2009 2010
EBITDA PAT
CAGR
30%30%
46%
Balance Sheet (Rs. Crores)
729 787973 1,069
913
275 237 171479 476
0.45
0.19
0.3
0.38
0.49
2006 2007 2008 2009 2010
Net Worth Total Debt Debt / Equity Ratio
66
% of sales1
20%
CAGR
(1) Export sales as % of total sales for FY2010 18
Private & Confidential
Financial Performance – Quarterly P&L (Trailing 4 Quarters)
Amount in Rs. Cr
PARTICULARSPARTICULARS Sep 10Sep 10 June 10June 10 March 10March 10 Dec 09Dec 09
Net Sales 687 556 436 387
Other Operating Income - - - -
Other Income 17 11 12 9
TOTAL INCOME 704 567 448 396
TOTAL EXPENDITURE
(Increase) / Decrease in stock in trade - 6 -6 3
Consumption of Raw Materials 332 333 278 248
Employee Cost 4 4 5 5
Power & Fuel 50 48 45 40
Other expenditure 33 30 30 20
EBITDA 285 146 97 81
Depreciation 22 22 22 20
Interest 8 7 7 7
Exceptional Items -14 11 -12 -11
PROFIT BEFORE TAX 269 106 79 65
Provision for Tax 89 23 30 30
NET PROFIT 180 84 50 35
CASH PROFIT 206 107 82 62
19
Private & Confidential
Financial Performance – P&L (Annual)
Amount in Rs. Cr
PROFIT & LOSS STATEMENTPROFIT & LOSS STATEMENT 20092009--1010 20082008--0909 20072007--0808 20062006--0707 20052005--0606
Net Sales 1,591 1,421 1,259 1,020 831
Other Income 46 22 20 12 17
Increase / (Decrease) in stock in trade 19 4 (3) (9) 10
TOTAL INCOME 1,656 1,446 1,276 1,023 859 Out of above export sales 319 353 364 364 267
EXPENDITURE
Consumption of Raw Materials 1,030 860 803 671 554
Manufacturing Expenses 209 163 148 125 116
Excise duty on Increase/(Decrease) in stock 1 (1) (1) (1) 1
Employee Cost 17 16 14 12 11
Selling & Distribution Expenses 15 25 32 36 38
Other Expenses 19 44 10 11 9
EBITDA 364 339 271 168 128 Depreciation 80 69 63 61 59
Interest 28 20 14 18 16
Exceptional Items (46) 62 - - -
PROFIT BEFORE TAX 302 188 194 90 53 Provision for Tax 93 62 61 26 7
NET PROFIT 208 126 133 65 46 CASH PROFIT 318 203 202 138 108
20
Private & Confidential
Financial Performance – B/S (Annual)
Amount in Rs. Cr
BALANCE SHEET 31-Mar-10 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06
SOURCES OF FUNDS:Shareholders Funds 1,069 973 913 787 729Equity Share Capital 23 26 28 28 28Reserves & Surplus 1,046 947 885 759 701
Deferred Tax Liability 167 138 130 123 111
Loans Funds 476 479 171 237 275Secured Loans 425 441 171 237 274Unsecured Loans 50 37 0 0 1TOTAL 1,712 1,589 1,214 1,148 1,114
APPLICATION OF FUNDS:Net Fixed Assets 1,282 1,154 928 901 852Gross Block (Incl. CWIP) 1,870 1,664 1,369 1,285 1,177Accumulated Depreciation 588 510 441 384 324
Investments 176 189 101 93 166
Net Current Assets 254 246 185 153 96
TOTAL 1,712 1,589 1,214 1,148 1,114
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Private & Confidential
Foray Into Power Generation
Jindal India Powertech Ltd.
(JIPL)
Jindal India Thermal Power
Ltd. (JITPL)
81.55%
Jindal Poly Films Ltd.Jindal Poly Films Ltd.
46.20%
OthersJindal Photo Ltd.
8.77%45.03%
Current Structure Proposed Structure
Others18.45%
Jindal India Powertech Ltd.
(JIPL)
Jindal India Thermal Power
Ltd. (JITPL)
86.46%
Jindal Poly Films Ltd.Jindal Poly Films Ltd.
73.73%
Others13.54%
Jindal Poly has plans to make further investment of approximately Rs. 456 Cr (USD 102 ml) in JIPL at par. Consequently Jindal Poly Films Ltd. will have 63.75% effective control of JITPL.
Mandakini Coal Co.Ltd (290.52 Mn MT)
(Our share of 96.84 MT)
33%
Coal Off-take Agreement
Jindal Photo Ltd.
26.27%
Mandakini Coal Co.Ltd (290.52 Mn MT)
33%
Coal Off-take Agreement
(Our share of 96.84 MT)
22
Source: Company
Private & Confidential 23
Angul – 1,800 MW Pit-head Coal Based Thermal Power Project
Secure and low cost fuel to provide competitive advantage; Significant progress on ground
Fuel security The project would run partly on captive coal mine and partly on linkage coalCaptive mine allotted with reserves of 96.84 MTLinkage in place for 2.66 MTPA from Mahanadi Coalfields Ltd.
Superior economics of captive coal mine
Fully explored mine with 56 boreholes over 6.5 sq kmEstimated calorific value of coal: 4,278 kCal/ kgStripping Ratio: 1:2.01(certified by CMPDI)Located 4 kms from the project site to result in huge savings in transportation cost
Pre development activities completed
Financial closure achieved for all the 3 UnitsLand, water, environment, fuel, off-take, BTG & other equipment and evacuation facilities in place
Construction in full swing
Access road and boundary wall completed; site leveling & grading of WTP area, water pond, internal roads and drainage system under constructionAwarded the contract for BTG package in June 2009
BTG foundation work in progressBTG drum already dispatched
Packages awarded for Coal Handling system, Ash Handling System, Chimney, Electrical, Civil Works, Cooling Tower, Transmission Line
Control over fuel transportation
5 km long overhead conveyor to be used for captive coal35 kms down railway siding to be used for linkage coal
Project Highlights
Private & Confidential 24
Angul – Snapshot of Implementation Status
ParametersParameters Unit IUnit I Unit IIUnit II Unit IIIUnit III RemarksRemarks
LandLand acquisition for ash dyke, overhead conveyor, merry-go-round and green belt pending
Fuel*Mining plan approved for captive mine
Linkage received
Environmental Clearance TOR received, EIA studies completed for Unit III
Water Allocation Received water allocation for 48 cusecs and permission for drawl
Financial Closure Debt tied up for all three units
BTG Package Unit I & II - NTP issued in Jun 2009
Power Off-takeUnit I - PPA with TPTCL for 500 MW
Unit II & III - LOI from TPTCL for 400 MW each
Expected COD for Unit I, II and III are Mar 2012, Sep 2012 and Sep 2013 respectively
*Mining plan approval for captive mine is in place for 7.5 MTPA (Company share of 2.5 MTPA). Accelerated mining plan for 15 MTPA (Company share of 5 MTPA) may be submitted to the Ministry of Coal, GoI in due course. Subject to the accelerated mining plan being approved, the captive coal mine is expected to meet the annual coal requirements for 1,200MW generation for a period of approximately 19 years. Linkage coal is expected to meet the requirement for 600 MW.
Completed Partially Completed Yet to begin Significantly Completed Work Started
Private & Confidential
Expansion into value added
products
Maintaincost
competitiveness
Investment in power generation
opportunity
Diversify into high end BOPET thick films
used in solar photovoltaic cells
Emphasis on efficient working capital cycle
through sales on cash payment basis and low
inventory levels
25
Growth Strategy
Thank You
