IFGL Refractories Limited
An Indian Multi-national
Page 2
Disclaimer
Certain statements in this presentation concerning our future growth prospects, are forward looking statements, which involves a number of risks and uncertainties that may cause actual results to differ materially from those in such forward looking statements. Risk and uncertainties relating to these statements include and are not limited to risk and uncertainties relating to fluctuations in sales, earnings, our ability to manage growth, intense competition, our ability to manage operations, fluctuations in demand, our ability to successfully complete and integrate potential acquisitions, performance of our subsidiaries, political instability and changes in legal restrictions and general economic conditions affecting our industry. The Company may from time to time make additional written and or oral forward looking statements. The Company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the Company.
Page 3
IFGL Refractories Highlights
• One of the best known Special Refractory Manufacturer of India
• Largest exporter of Refractories from India
• Crossed Rs 1000 Million Export in 2007-08
• Recipient of CAPEXIL Special Export Award for Refractories for five successive years
• Star Export House –recognised by Ministry of Commerce
• Quality System certified- BS EN ISO 9001: 2000
• Reputed for introducing new technology products in India
• Uninterrupted Dividend paying (since 2002-03)
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Industry Scenario & Opportunities
Page 5
Refractory Industry Overview
74%
12%
4%3%
7%
SteelCement GlassNon ferrousOthers
End use- segments
5%
37%
12%
26%
16%
4%
Rest of World
China
RestOfAsia
Europe
US
I ndia
Global Refractory Production World Steel
Crude Steel Production
2007 – 1,343 million tonnes growth of 7.5%
2006 – 1,244 million tonnes growth of 8.9%
2005 – 1,142 million tonnes
Page 6
World Steel – on growth path after consolidation
World Crude Steel Production
755 799 777 789 848 850 904 9701069 1142
12441344
0
200
400
600
800
1000
1200
1400
1600
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Million MT
World Steel Production growth %
0.2%
6.4%7.3%
10.2%
6.8%
8.9%8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2001 2002 2003 2004 2005 2006 2007
growth %
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Global Market Opportunities for Refractories
• BRIC led growth has revitalised Steel Industry-BRIC’s share in world production grown from 31% in 2001 to 48.2% in 2007
• Strong growth expected to continue as Steel consumption still very low in Developing regions
• Increased demand for Special Refractories, being consumable to Steel Industry
• Limited competition for Special Refractories
• Buoyant outlook for Steel Industry, both in Indian and Overseas markets
Steel Scenario
Page 8
•Resources
•Abundant Iron Ore reserves•Strong Managerial skills in Iron and Steel making•Large pool of skilled Man-power•Established steel players with strong skills in steel making
•Pro-active stance of Govt.•Encouragement for overseas investments
•High economic growth driven by industry•Faster Urbanisation•Increased Infrastructure Asset Building•Automobiles and component industry growth
•Opportunities
•Policy
Indian Steel Industry – a bright future
•DevelopmentsSAIL,TISCO, ESSAR,JSW have announced ambitious Capacity expansion plansArcelor Mittal and POSCO major International players coming to India
YearSteel
production % Growth
Mln tons
2002-03 34.7
2003-04 38.7 11.53%
2004-05 43.4 12.14%
2005-06 46.5 7.14%
2006-07 50.7 9.03%
Page 9
Steel production- Current production & Planned capacity
Current (2005-
06)Planned
Current (2005-
06)Planned
SAIL 13.5 26.0 POSCO (Orissa) 12.0RINL (Vizag) 3.5 10.0 Arcelor Mittal (Orissa) 12.0Tata Steel (Jamshedpur) 4.7 10.0 Arcelor Mittal (Jharkhand) 12.0Tata Steel (Orissa) 6.0 Mukund 0.8 2.8Tata Steel (Jharkhand) 12.0 Jindal Stainless ,JSL 0.6 1.2Tata Steel (Chattisgarh) 5.0 Jindal Stainless ,JSL, Dubri 1.6Essar (Hazira) 2.5 7.5 Bhusan (Orissa) 2.8Essar (Orissa) 4.0 Bhusan (Jharkhand) 3.0Essar (Jharkhand) 6.0 JSPL (Chattisgarh) 1.2 2.4Essar (Chattisgarh) 3.2 JSPL (Orissa) 6.0JSW (Vijaynagar) 3.5 10.0 JSPL (Jharkhand) 5.0JSW (West Bengal) 10.0 Jayaswal NECO 0.6 2.0JSW(Salem) 0.3 2.0 EAF/IF/Others 13.0 20.5Ispat 2.2 5.0
Total Crude Steel 46.4 200.0
3943 46
5156
62
70
200
0
20
40
60
80
100
120
140
160
180
200
FY 04 FY 05 FY 06 FY 07E FY 08E FY 09E FY 10E FY 20E
Steel Production (Mn Tons)
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SAIL
Tata SteelRINL
MittalPOSCO
JSPL
EssarBhushan
JSWIspat
Proposed state-wise New Capacity
J’khand: 38 mtpa
W Bengal: 14 mtpa
Ch’garh: 9 mtpa
Orissa :50 mtpa
AP: 3.3 mtpa
Karnataka: 9.7 mtpa
IFGL Plant
Page 11
IFGL - Introduction
Page 12
Brief history of IFGL Refractories
2006Acquired Goricon Group
1970s
1979Indo Flogates founded
1990s 2000s
1993IFGL
Refractories Founded
Collaboration with Harima Corp., Japan
1999Purchase of stake from Vesuvius
Indo Flogates merger with IFGL Refractories
2005Acquired Monocon Group
1980s
•Manufacture of Flocon Slide Gate Mechanism & refractories
•Manufacture of Slide Gates for Furnace and convertors
•Manufacture of Continuous Casting Refractories started
•Manufacturing IPV Porous Plug started
•Export Thrust
•Lances
•Darts
•Monolithics
•Castables
2000Awarded ISO 9001
1983
Collaboration with Flogates UK
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Highly efficient international manufacturing operations . . .
Monocon International RefractoriesDenaby, UK
Mono Ceramics Inc Michigan, US
Monotec Refratarios Fortaleza, Brazil
Tianjin Monocon Tianjin, China
IFGL Refractories India
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Products:•Continuous Casting refractories
•Slide Gate system & refractories
•Ladle bottom Porous Plugs
•Tap Hole Sleeves
•Furnace Gate & refractories
•Cast Products
•Monolithics/Castables
•ZIRCON & Zirconia Nozzles
Works:
Sector ‘B’
Kalunga Industrial Estate
P.O. Kalunga – 770 031
District – Sundargarh
Orissa - India
IFGL Refractories
Corporate Office:
Mcleod House
3, N S Road
Kolkata-700001
India
Technical Collaborator:
Krosaki Harima Corporation, Japan
(A Subsidiary of Nippon steel)
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Production Facilities- UK & America
Office & Works:Davy Road, Old Denaby, South Yorkshire, UK
• ISO 9001 accreditation
• Products– Lances– Tundish spray
products– Slag control darts– Other Monolithics
• Engineering Products– Slag control Dart
machines– Ladle & EF Monocators– Tundish spray
machines– SPV
• Office and works:Pipestone RoadBenton HarborMichigan 49022USA
• ISO 9001 accreditation
• Products– Lances – Precast &
Castables– Purge Plugs
• Office in Sao Paulo
• Works: Av. Jandira, 316-Conj.4 Cep 04080-001 Sao Paolo Brazil
• Products – Tundish spray– Precast– Castables
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Production Facilities- China
•
•Office & Works:Tianjin Economic Development AreaTianjin 300457 P R China
• Products - Slag Control Darts - Cast Products - Purge Plugs
• Office & Works:Tianjin Economic Development AreaTianjin 300457 P R China
• Products - Monolithics
New plant
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Italy SwedenRomania & Slovakia
GermanyFrance
UK Poland
S.Africa
USA, Canada, Mexico
Turkey
Iran
Egypt
Aus, NZ
Malayasia
Worldwide Marketing Network
Marketing offices/ Works Agents
Russia
Chile
Ukraine
Page 18
• Current
KROSAKI HARIMA CORP.,JAPAN
New Generation Slide Gate Systems
Continuous Casting Refractories
ALCAR INTERNATIONAL, U.K
Tube Changer device for Slab Caster
Technical Know How
Page 20
IFGL - Performance
Page 21
Consolidated OperationsRs Million
Financial Results for Year ended 31/3/08
Particulars 31-Mar-07 31-Mar-08 Change-%
Net Sales 3226.95 3780.07 17.14%
EBITDA 499.44 553.67 10.86%
Profit ( + ) / Loss ( - ) before Tax 372.05 408.88 9.90%
Net Profit ( + ) / Loss ( - ) after tax 262.37 284.88 8.58%
EBITDA Margin 15.48% 14.65%PBT Margin 11.53% 10.82%PAT Margin 8.13% 7.54%
EPS 7.58 8.23
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Standalone Operations
Rs Million
Financial Results for Year ended 31/3/08
Particulars 31-Mar-07 31-Mar-08 Change-%
Net Sales 1508.19 1713.42 13.61%
EBITDA 332.32 356.88 7.39%
Profit ( + ) / Loss ( - ) before Tax 252.61 261.69 3.60%
Net Profit ( + ) / Loss ( - ) after tax 163.91 168.51 2.81%
EBITDA Margin 22.03% 20.83%PBT Margin 16.75% 15.27%PAT Margin 10.87% 9.83%
EPS 4.74 4.87
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Overseas Operations
Rs Million
Financial Results for Year ended 31/3/08
Particulars 31-Mar-07 31-Mar-08 Change-%
Net Sales 1718.76 2066.65 20.24%EBITDA 167.12 196.79 17.75%Profit ( + ) / Loss ( - ) before Tax 119.44 147.19 23.23%Net Profit ( + ) / Loss ( - ) after tax 98.46 116.36 18.18%
EBITDA Margin 9.72% 9.52%PBT Margin 6.95% 7.12%PAT Margin 5.73% 5.63%
EPS 2.84 3.36
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IFGL Group - Strong financial performance
• Strong growth in Sales • Highly cash generative – EBITDA Rs 55 crores yearly and growing
Financial performance (year ended 31 March)
0
Rs M
illi
on
0
Rs M
illi
on
Turnover 741.4 930.3 1129.2 2307.2 3226.9 3780
EBITDA 121.6 178.9 225.5 363.1 499.4 553.6
EPS (Rs) 0.86 2.49 3.45 5.37 7.58 8.23
2003 2004 2005 2006 2007 2008
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IFGL Refractories, India
YEAR 01-02 02-03 03-04 04-05 05-06 06-07 07-08 EXPORT 112 339 497 688 752 870 1011
TURNOVER 454 741 930 1129 1303 1508 1713
0
200
400
600
800
1000
1200
1400
1600
1800
VA
LU
E(R
s M
illio
n)
01-02 02-03 03-04 04-05 05-06 06-07 07-08
FINANCIAL YEAR
EXPORTS & TOTAL TURNOVER
EXPORT
TURNOVER
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Global Market Opportunities for Refractories Geographical distribution - Steel Production & IFGL Group sales
Steel ProductionMillion MT
India 53Europe 365Asia (excl India) 701Americas 180Others 44
1343
Steel production
4%
19%
50%
14%
13% India
Europe
Asia (excl India)
Americas
Others
SalesRs million
India 708Europe 1363Asia (excl India) 422Americas 761Others 525
3780
Sales- Geographical
20%
32%
12%
23%
13%India
Europe
Asia (excl India)
Americas
Others
Page 27
Achievements 2007-08
• New Dart Plant started operating in China
• New Product introductions:– Full range of Castables– Zirconia nozzles
• Integration of Goricon Production facilities into Monocon to achieve Cost efficiencies
• All overseas subsidiaries generating profits
• Continued enhancement of Kalunga Plant capacity
• Expansion of Marketing network
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CAPEX
Capital Expenditure
51.3
106.4
45.9
106.4
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2004-05 2005-06 2006-07 2007-08
Rs M
illio
n
Capital Expenditure
Page 29
Capacity- India
Capacity Shaped (Pcs)
384900
756000
564900
624900
720900 720900
300000
400000
500000
600000
700000
800000
02-03 03-04 04-05 05-06 06-07 07-08
Capacity Unshaped (MT)
24000
10001000700300300
0
5000
10000
15000
20000
25000
30000
02-03 03-04 04-05 05-06 06-07 07-08
Page 30
Capacity- Global
Location Company Product UnitsCapacity per annum
India IFGL Refractories Ltd.
Carbon Bonded Refractories for Continuous Casting pcs 360000Slide Gate Refractories pcs 300000Purge Plugs pcs 24000Cast Products pcs 72000Unshaped/ Castables etc. MT 24000
UK Monocon International Refractories LimitedLances pcs 10800Darts pcs 240000Unshaped MT 30000
USA Mono Ceramics IncLance pcs 12000
Brazil Monotec Refratarios LtdaUnshaped MT 6000
China Tianjin Monocon Refractories Co LimitedUnshaped MT 24000
China Tianjin Monocon Aluminous Refractories Co LimitedDarts pcs 180000
Page 31
Future Outlook
Page 32
IFGL Refractories Shareholding Pattern & Dividend History
Public14.94%
Promoters56.83%
Sojitz Corp.9.90%
Krosaki Harima4.57%
Mutual Funds / institutions
13.76%
Listed on:
•Bombay Stock exchange
•National Stock Exchange
Dividend
10.0%12.5%
15.0%17.5% 17.5%
20.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Page 33
Action Plan 2008-09
LIKELY SCENE
• Likely scarcity of Refractories due to:– Pressure on supply of Raw Materials– New Capacity / increase in Steel
Production
• Achieving full capacity utilisation in Kalunga(Rourkela) Plant
ACTION PLAN
•Full Utilisation of the new Dart Plant in China
•2nd shift operation of the Monolithic Plant in China
•Develop market of Zirconia nozzles and Castables
•Debottlenecking to take care of next 1/2 years
•New Plant for CC Refractories Planned in Kandla SEZ
Page 34
New Project CC Refractories at Kandla SEZ
• Existing plant running very close to full capacity
• Huge increase in demand expected due to high growth in Steel Industry
• Overseas Sales growing fast, driven by
– Group’s acquisitions of refractory companies in UK, USA, Brazil and China
– Resulting in logistical support and increased acceptance of IFGL products by overseas customers
• Port based plant in Western India will reduce transit time and reduce delivery cost to customers in Middle East and Europe
• Project to be implemented by IFGL Exports Ltd., a subsidiary of IFGL Refractories Ltd.
• Capacity planned 300000 pcs per annum (existing 360000 pcs) of CC products
• Project Cost Rs 500 Million
Kandla Existing plant at Rourkela
Page 35
SEZ Benefits
•Duty Benefits: SEZ units may import or procure from the domestic sources all their requirements of capital goods, raw materials, consumables, spares, packing materials, office equipment, DG sets etc. duty free.
•100% IT exemption (10A) for first 5 years and 50% for 5 years thereafter. Reinvestment allowance to the extend of 50% of ploughed back profits for further 5 years
•External commercial borrowings by units up to $ 500 million a year allowed without any maturity restrictions.
•Flexibility to keep 100% of export proceeds in EEFC account. .
•Exemption from interest rate surcharge on import finance.
•Exemption to sales made from Domestic Tariff Area to SEZ units from Central Sales Tax.
•Exemption from Service Tax to SEZ units
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Progress- Kandla CC Project
• Land already acquired
• Key Personnel appointed
• Orders for Long delivery equipment placed
• Contractors / equipment suppliers being identified
Bhoomi puja being perfomed by company
senior executives
Page 37
Outlook for 2008-09
20%
25%
Sales Profit
Page 38
Thank You