Announcement under Regulation 30 (LODR)-Investor Presentation

Investor Presentation

about 1 month ago



Sentiments detected

Positive 45
  • Polyplex at a Glance ◼ Integrated and diversified manufacturer of plastic film substrates including BOPET (thin & thick), BOPP, CPP and Blown PP / PE ◼ Wide offering of specialty, innovative and differentiated products across a variety of packaging, electrical & electronic and other industrial applications ◼ Unique value proposition of on-shoring, off-shoring and near-shoring for a global customer base, while maintaining cost leadership ◼ Superior sales & distribution network and strong technical support in key demand centers driving deep customer relationships Unique Global Business Model… …With a Diverse Product Profile… Product Breakdown (Q1FY23 Revenues)

  • Pioneer in Sustainable Products and Processes in the Industry Strong Commitment Towards Sustainability Focused Innovative Solutions ◼

  • Financial Performance – Snapshot India Rating & Research IND AA- (Positive Outlook) Superior Value Creation

  • Margin …Driven by Strong, Sustainable Profitability

  • Increasing Share of D- Market Positioning PAC Sales 8 * Normalized EBITDA: EBITDA excluding impact of unrealized FX gains/(losses) on long term loans; # Reported sales excluding other operating revenues; 1 ROCE =

  • Factors impacting YoY: - Higher Revenue due to: ▪ Higher volumes on account of startup of BOPP line in Indonesia -

  • Increased volumes ▪ Higher Revenue due to rise in sales price of BOPET film on account of - Higher sales prices of BOPET film on account of higher RM cost higher RM cost partially offset by fall in BOPP film prices partially offset by fall in BOPP film prices ▪ Higher VA resulting in better per unit EBITDA margin ▪ Unfavorable impact of FX fluctuation on change in stock on account of -

  • In Q1 22-23, there is an unrealized FX gain of INR 30.20 crores ($ 3.91 million) as against unrealized FX loss of INR 46.58 crores ($ 6.32 consolidation.

  • FY19 FY20 FY21 FY22 Q1FY23 Reported EBITDA Normalized EBITDA

  • Continued Focus on Operational Efficiencies and Costs …

  • Resulting in Stable and Superior Margins 5 Track Record of Profitable Growth and Cash Flow Generation 6

  • 1 Integrated Manufacturing Has Broadened Product Portfolio Base Film Lines with Upstream PET Resin Plants and Downstream Capabilities - The only global player with resin plants at all manufacturing locations ◼

  • production at all film manufacturing locations is results in superior market positioning and higher unique to Polyplex in this industry returns Assured and consistent availability of quality raw material Wider product and application range

  • Reduced costs with adequate and secured return on Diversified customer base incremental investment Protects proprietary composition and helps in film product Increase customer and market penetration development, especially for D-PAC portfolio

  • Significant premium saved in buy v/s make for specialty Increased ability to provide customized and more technical resin products

  • Direct Melt Casting (DMC) ensures better quality and energy

  • Increasing proportion of value-added films with management, while being cost competitive corresponding reduction in standard film sales Substantial savings including freight, packing costs,

  • Chemical recycling of post consumer & post-industrial waste wastage, fixed costs and technical development Opens merchandizing opportunities Provides platform for future growth 17

  • Unique value proposition of differentiated products, applications and customers has led to a healthy growth in specialty portfolio ✓ - Products where the competition is limited Sustained higher - Special features for the customer, contribution over the relevant Differentiated delivering higher value standard product

  • 2 Increasing Contribution of D-PAC Sales Continued Increase in D-PAC Volumes… …

  • Resulting in Growth of Incremental 1 D-PAC EBITDA KMT (films) Incremental EBITDA for D-PAC ($ / kg) EBITDA ($ million) 0.72 0.70 0.75 0.81 0.98 323 306 274 253 $186 $171 229 $133 207 233 $115 $110 $116 $86 $72 $76 $28 60 $43 $47 $55 $24

  • Constant addition of new products to the differentiated portfolio, effectively “replacing” older and standard products Sustained investments in projects in Turkey, US, India and Thailand expected to drive growth in D-PAC sales Strong relationships and continued engagement with anchor customers for an iterative product development process 1

  • The contribution from D-PAC sales to the overall EBITDA represents “incremental” margin over and above standard products net of additional costs (raw materials, differential productivity, wastages and conversion costs).

  • 2 Constantly Innovating to Ensure Sustained Differentiation Dedicated R&D Ecosystem in India

  • Demonstrated ability to partner with customers for joint product development and co-innovation due to strong technical capabilities, thereby deepening customer relationships

  • Strong manufacturing and distribution capabilities helps capitalize on the increasing preference of customers to source locally

  • ~2,650 customers in ~75 countries across Europe, Asia (ex-India), India, the Americas and RoW 20% 19% 27% 4% Digitalized Packaging and Industrial Processe applications (70% and 30% of s FY22 turnover respectively) 30% Americas Other Asia Europe India RoW …Given Capability of Catering to Customers’

  • 4 Continued Focus on Operational Efficiencies and Costs - Business process continuous improvement and excellence programs — Undertaking several initiatives to improve business processes and optimize costs through continuous improvement in the areas of productivity, wastage, freight, packing, energy conservation, inventory management and other processes — Benefits from these programs have been accruing over the last several years and incremental benefits are expected in the future as well ◼ Structure new investments to build on leadership in delivered cost — Near-shore and on-shore manufacturing strategy — Benefit from logistics and trade duty differentials ◼ Capacity utilization — Ensuring ~100% CUF across all manufacturing plants even in the context of global over-capacity (if any): – Swift ramp up in capacity utilization of new BOPET, BOPP and other downstream assets — Debottlenecking existing assets ◼ Asset configuration — Cost efficiency through large contemporary assets being used for standard products — Continue to repurpose older lines for producing specialty films efficiently — Economies of scale through minimum asset base of two base film lines, resin plant and downstream capabilities at each manufacturing location 29

  • 4 Superior Utilization Relative to Industry Polyplex utilization through debottlenecking and outperformed the industry (Thin BOPET Film 250 99% 99% 101% 200 100% 150 80% 100 80% 60% 50 184 59 - 40%

  • Improving Steady Robust Strong

  • Net Debt ($mm) 31 Note: 1 Cash flow from operations have been adjusted for tax on dividend; Significant increase in Net Working Capital (NWC) in FY22 is due to spike in RM cost, increase in volume and selling prices Sales Volume Across All8% 12% 323 306

  • Improving Steady Robust Strong

  • Improving Steady Robust Strong

  • Commitment Towards Sustainable Environment A - Strive to work on sustainable products and processes - Continue to make multiple and substantial investments in recycling operations to provide solutions for post industrial as well as post-consumer plastic waste

  • 6 Meaningful Social Impact Conscientious Approach to Contribute to the Community - Ensured safety and security of staff members during COVID-19 — A robust health monitoring mechanism has been put in place including handling of emergency situations — Proactive communication and prevention has been the hallmark of these initiatives Fight ◼ Sustained employment for all employees during COVID-19 pandemic, including payout of additional bonus to recognize the efforts Against and boost the morale of the employees COVID-19 ◼ Monetary contributions to NGOs, hospitals and Government relief funds across all its locations — Donated medical equipment, supplies and protective gear for healthcare workers — Supported various NGOs by providing necessary food supplies to the communities around Polyplex’s locations — Provided infrastructure facilities to Government hospitals at the plant locations in India

  • We leverage synergies across hierarchies, functions and locations Professional, highly Stable management qualified and team with almost - We value our people and are committed to their experienced zero attrition over development leadership team the last several Care years -

  • Polyplex has been a recipient of some of the most prestigious awards in the industry, demonstrating its commitment towards becoming a global leader in the industry

  • Key Attributes of the Business Model Creates a Natural Hedge Against Industry Volatility Global S&D Network => diversified and fragmented customer base; optimized market mix to improve margins Diversified portfolio

  • Preferred supplier & cost reduction improved pricing power Flexible packaging and industrial end-use => resilient and growing demand $ 0.61 $ 0.56 $ 0.57 $ 0.49 $ 0.45 Normalized EBITDA ($ / kg)

  • Polyplex Has Consistently Generated Superior and Stable Gross Margins Relative to the Industry VA Stability

  • Thin BOPET Film Demand Expected to Stay Resilient and Accounts for 80% of Global BOPET Film Demand

  • Key Trends - Demand Ageing population, evolving retail formats and penetration of e-commerce, together with focus on safety and hygiene has led Global thin film growth expected at 5-6% in the to rise in per capita packaging material consumption.

  • Technological increasing urbanization, changing developments are leading to accelerated demand in electrical, demographics, trend towards nuclear families electronics and other industrial applications, along with new and increase in purchasing power in applications like LiB for EVs, which is expected to further developing countries increase demand 47

  • Investment Under Implementation Key Investment Rationale - New investment rationale: — High level of confidence owing to established sales and distribution network Base Film Capacity Expansion (i.e., Second BOPET Film and Debottlenecking Resin — Market growth of 10-12 KT p.a. plant) in USA — Availability of captive resin Investment in Offline Coater in USA — Successful strategy deployed at all locations – 2 film lines and a resin plant Total Capex: $122 mm - Expected Start-up - H2 2023 ◼ Post this investment, Polyplex will be the most cost competitive producer of Thin BOPET films in the US 50

  • The forward-looking statements reflect Polyplex’s expectations of its next quarter earnings.

Negative 5
  • In Q1 22-23, there is a loss of INR 12.44 crores ($1.61 million) in Q1 21-22 on account of restatement of foreign currency long million) as against a gain of INR 13.68 crores ($1.82 million) in Q4 21-22 term loans 9

  • (Thin PET & OPP) Operation Q1 22-23 ▪ Increase in Fixed cost mainly due to higher energy costs in Turkey post the Ukraine - Russia conflict leading to steep increase in Natural Gas tariff ▪ The above numbers have been translated using simple average of monthly exchange rates for Q1 FY 22-23 - Bracket shows negative numbers Reported EBITDA %

  • Long term weighted average EBITDA % ▪ Reported EBITDA is impacted due to impact of FX movement on restatement of long term FX loans ▪ Long term average (almost same for both Reported & Normalized EBITDA) shows that the differences are evened out as exchange rates move up and down ▪ EBITDA margin in FY22 has fallen due to higher sales price resulting from higher RM cost - % margin shows reduction although per unit margin has improved 10

  • Polyplex CUF is calculated based on the extant capacity; 30 Industry CUF as per CY, Polyplex CUF as per FY; Industry CUF is based on internal estimates; Expected Global CUF of the Industry will decline in CY22 as per demand supply estimates

  • The gap between Polyplex and Chinese players’ gross margin ◼ Raw material movements tend to be ‘pass through’ in increases significantly during the trough of industry cycle film prices ◼ Chinese players achieved a higher margin for a short period in - Value Addition (VA/material margin) is dependent on second half of 2021 owing to supply constraints resulting from industry CUF logistic disruption / energy crisis 45

Mentioned Phrases & Organizations

Important keywords detected (20+)

film (52)
bopet (32)
capacity (25)
ebitda (25)
films (24)
resin (23)
polyplex (22)
pet (22)
cash (22)
products (21)
manufacturing (21)
thailand (20)
thin (20)
line (20)
cost (19)
industry (19)
india (18)
post (17)
global (16)
product (16)

Organizations identified (10+)

Polyplex (9)
Thin BOPET (6)
Polyplex Corporation Limited (4)
PCL (4)
rPP (3)
Plastic Bank (3)
BOPET Film (2)
Success Enablers (2)
PTA (2)

Tables extracted (5)

Shareholders’ Return (CAGR)Last 1 yearLast 3 yearsLast 5 yearsSince IPO (1988)
(A) Total Returns*
➢ Polyplex61%90%51%26%
➢ Nifty 500-TRI9%20%13%13%
➢ BSE Small Cap-TRI4%31%13%14%
(B) Stock Price Movement
➢ Polyplex52%70%38%17%
➢ Nifty 5007%19%11%11%
➢ BSE Small Cap3%30%12%13%
has consistently improved capacity utilization) 99% 100%82% 229
82% 203
80% 232
Sales Volume Across All 8% 12%323

Features are experimental.