JAI BALAJI INDUSTRIES LTD. Corporate Presentation Disclaimer
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JAI BALAJI INDUSTRIES LTD. Corporate Presentation Disclaimer No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. Certain statements made in this presentation may not be based on historical information or facts and may be "forward looking statements" based on the currently held beliefs and assumptions of the management of Jai Balaji Industries Limited (“Company” or “Jai Balaji”), which are expressed in good faith and in their opinion reasonable, including those relating to the Company’s general business plans and strategy, its future financial condition and growth prospects and future developments in its industry and its competitive and regulatory environment. 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, including future changes or developments in the Company’s business, its competitive environment and political, economic, legal and social conditions. Further, past performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this presentation 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 is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any jurisdiction, including the United States. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. 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. This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner. 2 Background Jai Balaji Industries Ltd. (“JBIL” or “Company”) was incorporated in 1999 by the current promoters, Mr. Aditya Jajodia, Mr. Sanjiv Jajodia and Mr. Rajeev Jajodia Integrated steel manufacturing company ― Established its 1st Sponge Iron Plant in 2000 with an initial capacity of 50 tons per day ― Currently amongst the largest integrated steel producers in West Bengal* ― Metallics’ capacity of c. 1 million tons per annum (“MnTPA”) ― Products range from metallics (Sponge Iron and Pig Iron) to steel products (TMT bars and Alloy Steels). ― Also currently developing Ductile Iron Pipes and expanding rolling mill facilities to manufacture alloy steel bars Listed on the National Stock Exchange and Calcutta Stock Exchange in 2003 and on the Bombay Stock Exchange in 2008 with market capitalization of c. Rs. 12,250 million as at 26 August 2009 High growth in last 5 years ― Gross block (as at 31 March 2009) of Rs. 14,119 million, grown at a CAGR of 99% y-o-y** ― Annual revenue of Rs. 17,495 million for FY09 , grown at a CAGR growth of 70%** Strategic institutional investors – Citigroup Venture Capital invested Rs. 2,000 million in February 2008 and currently has a c. 11% stake including Board representation – India Equity Partners invested Rs. 733 million in February 2008 for a c. 4% stake including Board representation * Source: West Bengal Sponge Iron Manufacturers Association (Aug 2009) ** Annual reports of Jai Balaji Industries Limited (formerly known as Jai Balaji Sponge Limited (JBSL)): Growth with respect to JBSL. JBSL and another Jai Balaji Group Company, Shri Ramrupai Balaji Steels Ltd. 3 (“SRBSL”) merged in FY07 Jai Balaji Strengths Cost efficiency Strong business operations Integrated operations Demonstrated project execution skills Single location integrated operations (at Durgapur) with Company expanded metallics’ capacity from 105,000 Blast Furnace/Kiln for metallics and Induction/Electric TPA in 2005 to c. 1 MnTPA in 4 years (CAGR of 74%) Arc Furnace for steel making Proven track record in implementing expansion plans Forward integration into thermo mechanically treated on a timely basis and without incurring significant cost bars (“TMT”) Rods, Billets as well as Ductile Iron Pipes overruns and Alloy Steel Bars (in process) All capacity expansions except for acquisition of Backward integration infrastructure including Sinter Nilachal Iron and Power Limited (“NIPL”) and steel Plant, Coal Washery, Captive Power Plants, Coke Oven division of HEG Limited (“HEG”) have been organic (in process) and raw material sources of mines which are expected to be operational in the next couple years Logistics infrastructure Experienced management team and skilled employee base Company has built 3 private sidings and procured 4 The Promoters have been in the steel and ferro alloy rakes of 61 wagons each under the Wagon Investment industry since 1991 Scheme (“WIS”) of Ministry of Railways, GoI Senior project and technical team members have Assured supply of 32 rakes per month from the Indian extensive industry experience Railways and 10% discount on freight for the first 24 rakes (75% of rake availability) Total employee strength of 7,101 employees (4,500 contract employees and 2,601 direct employees) as on Majority of raw materials and finished products are 30 June 2009 transferred via rail network thereby reducing freight costs Geographic proximity to raw material sources Subsidies under the West Bengal Investment Scheme, 2000 and West Bengal Power and Intensive Industries Scheme, All manufacturing facilities are located in the middle of 2004 for the Durgapur Plant India’s mineral belt in the eastern region Industrial promotion assistance including the state Proximity to iron-ore and coal mines capital investment subsidy Well connected by ports and other logistics network Power subsidy Capital investment subsidy Interest subsidy 4 On Its Way to Become Fully Integrated… Non-coking Coal (Dumri)* Coking Coal (Rohne) ** 38.14 Million Tons (“MnT”) Iron Ore Lumps Iron Ore Fines 17.23 MnT expected in FY10 Raw Materials Coal Washery Sinter Plant Coke Oven 216,000 TPA 608,256 TPA 300,000 TPA 800,000 TPA (in process) DRI Kiln (Sponge iron) Captive Power Plant Metallics Blast Furnace (Pig Iron Plant) SpongeSponge IronIron 445,000 TPA 71.1 MW 954,250 TPA 509,250 TPA PigPig IronIron 60,000 TPA (in process) 40 MW (in process) Ferro Alloy 106,618 TPA Ferro Alloy Billets and finished Induction Furnace Billets Electric Arc Furnace Ductile Iron Pipe MSMS BilletsBillets products 473,230 TPA 433,000 TPA 240,000 TPA AlloyAlloy BilletsBillets Ductile Iron Pipes TMT Rolling Mill Alloy Bars Rolling Mill AlloyAlloy SteelSteel TMTTMT RodsRods 260,000 TPA 300,000 TPA (in process) BarsBars Backward and forward integration in process ExternalExternal SalesSales * Estimated proven/indicated reserves of 55.99 MnT Non-coking coal block, obtained through acquisition of Nilachal Iron and Power Limited of which the Company has a 68.12% share and rest with Bajrang Ispat Pvt ltd ** Allocated coking coal block in consortium with JSW Steel and Bhushan Steel with tentative extractable reserve of 250.00 MnT of which Company’s share is c.17.23 MnT 5 Established Project Execution Skills Sales mix over last 5 year (Rs million) in e value cha oving up th M Ferro Alloy Ferro 290 Pig Iron, Alloy, Pig Iron Silico 61 689 Sponge Manganese 30 Pig Iron Sponge 3,664 Iron,1,859 1,943 Iron Ferro Alloy TMT SpongeSponge 1,027 1,597 Bars, Iron, Sponge 2,255 1,080 Billets / MS Iron 1,080 Billets Billets / MS Ingot 380 TMT TMT Bars Billets Sponge 1,656 2,374 Ingots Bars 5,416 4,502 832 Iron Billets, 4,901 514 Billets 2,588 2,588m Capacity Expansions Jai Balaji Sponge Ltd. Merger with SRBSL* Acquisition of HEG & NIPL* BY FY 2005 FY 2006 FY 2007 FY 2008 FY2009** Finishing Lines TPA 30,118 (Ferro Alloy) 80,000 (Re-rolling) 51,000 (Ferro Alloy) 25,500 (Ferro Alloy)*** 180,000 (Re-rolling) Metal Capacity TPA 79,200 (MS Billets) 235,224 (MS Billets) 158,806 (MS Billets) 433,000 (Alloy Billets) Metallic’s TPA 105,000 (Sponge Iron) 120,000 (Sponge Iron) 220,000 (Sponge Iron) 509,250 (Pig Iron) Backward Integration 216,000 TPA Coal Washery 608,256 TPA Sinter Plant 12 MW Power Plant 40 MW Power Plant 12.8 MW Power Plant 6.3 MW Power Plant Logistics 2 Rakes under WIS 2 Railway Sidings 1 Railway Siding 1 Rake under WIS 1 Rake under WIS Established in FY06 * Source: Annual reports of Jai Balaji Industries Limited (formerly Jai Balaji Sponge Ltd.) ** Ferro Alloy of 25,500 TPA came up in Q1FY10 ***June 2009 6 Cost Effective Logistics Infrastructure Company estimates rail transport to be over 50% cheaper than road transport; however transport is limited by siding congestion and non-availability of rakes and locomotives Approximately 3 tons of raw material required for every 1 ton of steel Company has already invested in 3 railway sidings at the plant facility and at raw material sourcing locations in Orissa and