Balkrishna Industries Limited has informed the Exchange about Investor Presentation
BALKRISHNA INDUSTRIES LTD
Investor Presentation
February‘2023
Safe Harbor
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This presentation and the accompanying slides (the “Presentation”), which have been prepared by Balkrishna Industries Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.
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 tire industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, 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 and projections 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.
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Performance Snapshot – Q3FY23
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Sales Volumes
66,480 MT
Revenue
Rs. 2,215 Crs
EBITDA
EBITDA margin
PAT
Rs. 423 Crs
Rs. 19.1%
Rs. 100 Crs
Declared 3rd interim Dividend of Rs. 4/- per equity share
PAT
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Management Commentary
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channel
experiencing
inventory Currently, clearance in end markets. The distribution channel global markets had excess inventory not only in OHT segment but other tire segments as well.
across
Along with this, the slow lowering of raw material prices and improvement in delivery timelines owing to better availability of containers has led to slower ordering cycle by the channel.
The end demand is still holding up, but the channel issues of ordering continue to impact the volumes.
As expected Q3 volumes were 66,480 MT.
The Company continues to face challenges of de-stocking in Q4 however the intensity of the situation is receding on month-on-month basis.
The situation has been relatively better in North America however recession fears continue to impact demand.
India continues to be stable supported by better economic environment.
The freight cost correction witnessed in the last few months has led to improvement in margins which is reflected in freight costs which now stand at ~9% of sales in Q3.
Expect further benefits on account of freight to reflect in Q4 and fully in Q1FY24.
The Company has lowered the surcharge to end customers on account of freight and the same is reflected in our ASP which has moved down ~6% on QoQ basis.
The aspect which impacted margins negatively and almost negated the impact of freight costs were raw material costs. While raw material prices have corrected, the Company not fully enjoy the benefits due to high-cost raw material inventory in the system.
Further, lower volumes clocked in Q3 led to lower absorption of fixed costs as against the expectation of higher volumes built in at the start of the financial year.
Lower Raw material and freight costs, better hedge rate, better end market situation gives hope for a margin recovery in FY24.
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Capex Status
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Carbon Black and Captive Power Plant
▪ Commissioned 55,000 MTPA Carbon Black capacity along with Power Plant ▪ The Project of advanced carbon material for 30,000 MTPA is proceeding as per schedule ▪ Project Capex cost - Rs. 650cr
Waluj Brownfield Capex
▪ The Board had earlier intended to replace the OLD Waluj plant by the newly commissioned Greenfield Plant, but given the subsequent business outlook, it was decided to continue operations at both the plants along with modernization of the Old Plant
▪ In November 2022, the Board of Directors decided to revert to its earlier decision of ceasing operations at the old plant. The earlier approved capex of Rs. 350 crores for modernization of the old plant will now be utillised at the new plant site to bring in economies of scale
▪ Execution of this brownfield project has commenced and is expected to be completed as per schedule. The Waluj
location will accordingly have an overall capacity of 55,000 MTPA at a single site
The current achievable capacity is 335,000 MTPA and will increase back to 360,000 MTPA by H1FY24 post commissioning of the Waluj brownfield project
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Sales Volume Profile – 9MFY23
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In MT
1,99,213
2,11,261
+10%
2,01,760
2,88,795
2,27,131
2,28,505
FY18
FY19
FY20
FY21
FY22
9MFY23
All Figures on Standalone basis
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Volume Profile
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Segmental Sales
Channel Sales
Geographical Sales
3.1%
2.5%
33.7%
27.7%
10.5%
21.1%
9MFY23
9MFY23
9MFY23
49.4%
63.2%
69.8%
19.0%
Agriculture
OTR
Others
Replacement
OEM
Others
Europe
Americas
India
RoW
All Figures on Standalone basis
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Profit & Loss
Particulars (Rs in Cr)
Q3FY23
Q3FY22
Sales (MT)
66,480
70,320
YoY
-5%
9MFY23
9MFY22
228,505
211,676
YoY
8%
FY22
288,795
Standalone
Revenue from Operations
2,142
2,030
7,493
5,893
Realized Gain on Foreign Exchange
73
49
255
94
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• Average Hedge
rate
for
Q3FY23 was Rs. 85 versus
average custom rate (used
for invoicing) of
Rs. 81
leading to Realized gain on
foreign exchange of Rs. 73
crores
• Euro
rate
as
on
31st
December 2022 was ~Rs. 88
versus ~Rs. 80 as on 30th
September 2022,
leading to
M2M
loss
on
Foreign
currency borrowings during
29%
-4%
7,748
3,743
33
309
2,128
1,534
19.8%
86
-91
21
405
5,987
2,890
-214
291
1,415
1,606
26.8%
133
60
6
327
8,267
152
8,419
4,034
-255
380
2,078
2,182
25.9%
185
39
8
444
-68%
1,103
1,466
-25%
1,954
Q3FY23
to
the
tune
of
-70%
280
823
10.6%
429
1,037
17.3%
-21%
544
1,411
16.8%
Rs. 166cr
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Total Income
2,215
Raw Material
(Increase) / Decrease in Stock
Employee Expenses
Other Expenses
EBITDA
1,109
28
100
554
423
2,079
1,015
-49
97
510
507
7%
-17%
EBITDA Margin
Other Income
Unrealized Gain / (Loss)
Interest & Finance Charges
Depreciation
Tax
Profit Before Tax
Profit After Tax
19.1%
24.4%
43
-166
14
145
142
42
100
31
17
2
115
439
110
329
PAT Margin
4.5%
15.8%
Net Forex Gain/(Loss)
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Particulars (Rs in Cr)
Q3FY23
Q3FY22
9MFY23
9MFY22
Foreign Exchange Fluctuation on Sales
Foreign Exchange Fluctuation on Others
Total Realised Gain/(Loss) – A
Total Unrealized Gain/(Loss) - B
Net Forex Gain/(Loss) = A + B
73
6
78
-166
-88
49
14
64
17
80
255
35
289
-91
198
94
36
130
60
190
All Figures on Standalone basis
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Balance Sheet
Particulars (Rs. Cr.)
ASSETS
Non-current assets
Property, Plant and Equipment
Capital work-in-progress
Investment Property
Other Tangible Assets
Financial Assets
(i) Investments
(ii) Other Financial Assets
Income Tax Assets (Net)
Other non-current assets
Current assets
Inventories
Financial Assets
(i)Investments
(ii) Trade Receivables
(iii) Cash and cash equivalents
(iv) Bank Balances other than (iii) above
(v) Loans
(vi) Others
Other Current Assets
TOTAL
All Figures on Standalone basis
Sep’22
Mar’22
Particulars (Rs. Cr.)
Sep’22
Mar’22
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7,839
4,644
1,281
71
0
7,054
3,906
1,258
79
0
EQUITY AND LIABILITIES
EQUITY
Equity Share Capital
Other Equity
Non-Current Liabilities
Financial Liabilities
1,214
1,213
(i)Borrowings
215
-
414
4,471
1,676
651
1,395
206
7
4
192
340
83
8
506
3,803
1,639
685
1,098
29
6
3
65
277
12,310
10,857
(i)Other Financial Liabilities
Provisions
Deferred Tax Liabilities (Net)
Other Non-Current Liabilities
Current liabilities
Financial Liabilities
(i) Borrowings
(ii) Trade Payables
(iii) Other Financial Liabilities
Other Current Liabilities
Provisions
Tax Liabilities
TOTAL
7,630
39
7,591
6,925
39
6,886
1,258
807
837
0
59
297
66
501
0
24
251
31
3,423
3,126
2,253
1,942
707
150
256
4
53
808
120
251
4
-
12,310
10,857
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Cash Flow
Particulars (Rs. Cr.)
Operating profit before working capital changes
Changes in working capital
Cash generated from operations
Direct taxes paid (net of refund) and others
Net Cash from Operating Activities
Net Cash from Investing Activities
Net Cash from Financing Activities
Net Change in cash and cash equivalents
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H1FY23
1,114
-483
631
-177
454
-826
548
177
FY22
2,163
-825
1,339
-457
881
-1,889
1,003
-5
All Figures on Standalone basis
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Resilient Business Model
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Gross Cash and Cash equivalents of Rs. 2,082 Cr as on 31st December, 2022
Diversified Product Portfolio, spread across Agriculture, Industrial, Construction, Earthmoving, Mining, Port, Lawn and Garden and ATV tires
Self Reliant in Carbon Black along with Multiple sourcing arrangements for other Raw Materials
Ongoing Capex
BKT has built a resilient business model and is confident to withstand the near-term challenges to emerge stronger with a higher global market share
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Strategy at BKT
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Our Focus Area
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Expand reach within existing Sales
Channels as well increase footprint
within replacement segment and OEMs
Expand the product portfolio by adding
Reach 100% utilization levels at Bhuj
large sized tires and strengthen
relationship with Customer base
Plant in the next few years
Market Reach
+
Penetrate Americas
+
Product portfolio expansion
+
Indian Markets
+
Utilization
Increase share of business in USA
markets by increasing supplies from
India
Strengthen our distribution channels
within Indian Markets
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To Serve Global OEMs…
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The Brand Names and logos mentioned are the property of their respective owners and are used here for identification purposes only
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With India Production and Global Sales
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Waluj, Maharashtra
Bhiwadi, Rajasthan
Chopanki, Rajasthan
Bhuj, Gujarat
Mould plant, Dombivali
India Our Manufacturing base
Note – Maps not to scale. All data, information, and maps are provided “as is” without warranty or any representation of accuracy, timeliness or completeness
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Balkrishna Industries – A Snapshot
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01
02
03
04
05
06
Leading ‘Off-Highway Tire” Exporter BKT is India’s Leading player in the Global ‘Off Highway Tire (OHT)’ Market
Wide and comprehensive product portfolio Deep understanding of OHT market has led to capabilities to manufacture over 3,200 SKUs
Capacities The current achievable capacity is 335,000 MTPA and will increase back to 360,000MTPA by H1FY24 post commissioning of the waluj brownfield project
Global reach Sales to over 160 countries through Distribution network in Americas, Europe, India and Rest of the World
Strong OEM Presence Strong Partnerships with Global OEM’s a testimony of our Brand Acceptance & Performance
Experienced Management Team Experienced Management Teams across business divisions and verticals
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Our Strong Evolution
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1987
1995
2002
2003
1st Plant in Aurangabad inaugurated by our Founder Chairman, Late Mr. M P Poddar
Started Production of Off-Highway Tires
Plant in Bhiwadi, Rajasthan
Production of ATV, Gardening and earthmoving Tires
2011
2009
2008
2006
2004
Rebranding of BKT
Crosses Rs. 1,000 cr Turnover
Launch of Earthmax Tires
Plant in Chopanki, Rajasthan
Launch of Radial Agrimax Tires
2015
2018
2020
2021
2022
Started Greenfield Plant in Bhuj, Gujarat
Announced Capex at Waluj and Bhuj
Self Reliant on Carbon Black with the completion of Phase 2 at Bhuj in Gujarat
Commercialized new replacement plant at Waluj (Waluj 2) with capacity of 30,000 MTPA
Commercialized brownfield tire plant at Bhuj with capacity of 50,000 MTPA
India’s Largest Off-Highway Tire Manufacturer
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Business Practices Driving our Long-Term Sustainability
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Energy Efficiency
Environment
Waste Management
•
To ensure energy efficiency Initiated use of ‘Green Energy’ – installing 5MW windmills and 2 MW solar power plants for our greenfield projects
•
•
•
Controlled emissions through electrostatic precipitators in boilers and discharge through appropriate effluent treatment plants Replacing existing coal fired boilers with ‘gas fired boilers Planted approximately 1,00,000 trees in and around Bhuj plant
•
•
Implemented disciplined waste management system for systematic collection of scrap and safe storage/disposal and re-use of wastes Promoted industrial recycling of waste like reclaim rubber, crumb powder and rubberised friction compound
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Outcomes of our Sustainability Process
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Key Performance
High-yield ratio between material input & output with 99% efficiency leading to minimal process
1:1
Proportion of recyclable raw materials wrt the total raw materials used
2.5%
Waste reduction over the past three years
14.9%
Reduction in consumption of natural resources like water and coal over the last four years
12-18%
Future Targets
•
Zero Liquid Discharge (ZLD)
• Green House Gas (GHG) emissions
• Waste reduction
•
Consumptions reduction
• Green energy
Recognitions
•
•
BKT plants have been achieving ‘Energy Conservation Award’
by both the State & Central Government every year
BKT-Bhuj has been awarded ‘National Water Excellence
Management Award’ by CII
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Promoting Education, Health & Rural Development
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Our Endeavour is to improve the lives of children and adults, and our mission is to ensure health with dignity to every underprivileged children and adult
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BKT – A Strong Global Brand from INDIA
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Strengthening BKT Brand : Americas
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BKT is the Official and Exclusive Tire manufacturer of MONSTER JAM and its fleet of Monster Trucks – Monster Jam is a top sporting event in America
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Strengthening BKT Brand : Canada
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BKT Continental Cup – Curling: BKT is the Title Sponsor of Continental Cup
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Strengthening BKT Brand: Spain, Europe
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BKT is the Official Global Partner for the Spanish Football League “La Liga”
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Strengthening BKT Brand: Italy, Europe
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BKT is the Title Sponsor for the ITALIAN SERIE ‘B’ FOOTBALL CHAMPIONSHIP – THE NEWBORN - “SERIE BKT”
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Strengthening BKT Brand: France, Europe
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BKT is the Sponsor for the “LIGUE de Football Professionel (LFP)” in France
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Strengthening BKT Brand: France, Europe
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BKT Is Official Tire Supplier for Rugby World Cup France 2023
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RUGBY CHAMPIONSHIP
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BKT is associated with United Rugby Championship
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Strengthening BKT Brand : EUROPE
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Premium Partner of EUROLEAGUE BASKETBALL
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Strengthening BKT Brand : Tractor of the year (TotY) - EUROPE
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Team of expert journalists in agricultural mechanization, assign the Tractor of the Year (TotY) award to the ‘Best European Tractor’
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Strengthening BKT Brand : Australia
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BKT is the Official “OFF-HIGHWAY TIRE PARTNER” for KFC BIG BASH LEAGUE (THE AUSTRALIAN CRICKET LEAGUE)
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Strengthening BKT Brand : India
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The Brand Names and logos mentioned are the property of their respective owners and are used here for identification purposes only
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Official Partner of Teams in the Cricket T20 League for Season 14
Strengthening BKT Brand : India
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Click here for the BKT Video
Ranveer Singh is the Brand Ambassador of BKT
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Thank You
Company
Investor Relations Advisor
Balkrishna Industries Ltd. CIN - L99999MH1961PLC012185 Mr. M S. Bajaj Senior President (Commercial) & CFO msbajaj@bkt-tires.com www.bkt-tires.com
Strategic Growth Advisors Pvt. Ltd. CIN - U74140MH2010PTC204285 Mr. Shogun Jain shogun.jain@sgapl.net +91 77383 77756 www.sgapl.net
All images, texts and graphics contained in this document are the copyright of BKT. Permission to print hard copies of this material and to share it with interested people is granted unless otherwise provided by the Author of the document. It is forbidden to extract parts of the presentation without the express consent of the author. Balkrishna Industries Limited (BKT) cannot be held responsible for any incorrect data contained in this document. Any other form of reproduction, electronic or otherwise, as well as the application of any changes, partially or entirely, to images, texts, graphs and data is strictly prohibited without prior written permission from BKT. Balkrishna Industries Limited (BKT) reserves itself the right to alter any details contained in the document without prior notice.