Supreme Engineering Limited has informed the Exchange regarding Investor Presentation
SUPREME ENGINEERING LIMITED
H1 FY2019-20 RESULT UPDATE & PRESENTATION
Disclaimer
This Investor Presentation has been prepared by ValueWise IR LLP in consultation with Supreme Engineering Limited and does not constitute a prospectus or placement memorandum or an offer to acquire any securities. This presentation or any other documentation or information (or any part thereof) delivered or supplied should not be deemed to constitute an offer. 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 such information or opinions contained herein. The information contained in this presentation is only current as of its date. Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking statements”, including those relating to the general business plans and strategy of Supreme Engineering Limited its future financial condition and growth prospects, future developments in its industry and its competitive and regulatory environment, and statements which contain words or phrases such as ‘will’, ‘expected to’, ‘horizons of growth’, ‘strong growth prospects’, etc., or similar expressions or variations of such expressions. These forward- looking statements involve a number of risks, uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. Further, no representation or warranty expressed or implied is made nor is any responsibility of any kind accepted with respect to the completeness or accuracy of any information. Also, no representation or warranty, express or implied, is made that such information remains unchanged in any respect as of any date or dates after those stated herein with respect to matters concerning any statement made in this Investor Presentation. Supreme may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. This presentation cannot be copied and disseminated in any manner. No person is authorized to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of Supreme . This presentation is strictly confidential. The earlier versions of this presentation, were in draft form, and should not be circulated or referred to by any person.
H1 FY2019-20 Result Highlights
14th November, 2019
EBIDTA Margins Improving : H1 FY20 (Rs.crores)
Particulars
1HFY20
1HFY19
YoY % Gr
2HFY19 Q0Q % Gr
FY19
FY18
Revenue from Operations
84.31
82.44
2.3%
Cost of Materials Consumed Purchase of Stock in trade Changes in inventory of FG Employee Expenses Other Expenses EBIDTA Ebidta Margin % Depreciation EBIT Other Income Finance Costs PBT Prior Period items Tax Expense Current Tax Differed Tax PAT PAT Margin % No of Shares (In.Crs) EPS Rs.
45.74 0.00 25.98 1.25 2.13 9.21 10.9% 0.901 8.31 0.27 4.80 3.78 0.00 1.01 0.78 0.23 2.75 3.6% 2.50 1.10
76.37 0.00 -5.29 1.32 1.73 8.31 10.1% 0.92 7.39 0.54 4.07 3.86 -0.42 0.82 0.73 0.09 2.63 3.8% 2.50 1.05
10.8%
12.5%
-2.1%
4.6%
91.13
78.51 0.00 0.84 1.69 1.14 8.95 9.8% 0.96 7.99 0.61 3.46 5.14 0.42 1.43 1.12 0.31 4.12 5.2% 2.50 1.65
-7.5%
173.57
2.9%
4.0%
-26.4%
154.87 0.00 -4.46 3.01 2.88 17.27 9.9% 1.88 15.39 1.16 7.53 9.02 0.00 2.26 1.85 0.40 6.77 4.6% 2.50 2.71
151.74
123.94
5.05 -4.17 1.76 7.88 17.27 11.4% 1.51 15.76 0.55 9.10 7.21 0.00 2.20 1.50 0.70 5.01 3.7% 1.80 2.79
YoY % Gr
14.4%
0.0%
-2.4%
25.0%
34.9%
Critical Products Drive H1 FY20 Sales & Margins
Result Highlights:
Revenues at Rs.84.31 crores were up 2.3% YoY higher. As per the management strategy of improving the product mix, the high margin Critical products revenues at Rs.18.54 crores vs Rs.13.2 crores the corresponding H1FY19. The Critical product division now contributes 22% of Revenues vs 16% in the previous corresponding period.
EBIDTA at Rs.9.21 crores was up 10.8% with margins improving by 80bsp. This is mainly due to the increased contribution of Critical products which enjoy higher EBIDTA margins of 30%+
Order Book on Hand continues to grow and is Rs.35.23 crores as on 30th Sept.2019
New Clients added in H1 FY20 – Bharat Dynamics Ltd, Sundaram Fasteners Ltd, ISRO
Tirunevilli, Armament Research Defence Establishment.
Segmental Performance
SPECIAL STEELS
CRITICAL STEELS
WIRES
Special Steels (excluding Critical steels products)are Nickel-Based Super Alloys having advantages temperature high for applications. import substitutes, these products are replacing stainless steels.
Mainly
currently
application products Critical contributed which 22% of H1FY20 revenues, is estimated to contribute aprox. Rs.50 crores ie. 25% for the full year FY20. The segment is growing exponentially starting with Rs.5 crs in FY17.
these
H1FY20
products In contributed Rs.50 crores, 7% YoY lower. Currently they contribute 60% of Revenues vs 67% in H1FY19.
the contribution is In FY20 estimated to be around 55%, products with Critical increasing in contribution.
Steel
Products negligible have competition and enjoy high margins ~ 30%+. This segment is the profit driver and remains as the focus area for exponential growth. Only two Special Alloy are preferred manufacturers for suppliers GOI.
segment
in its
18%
Wires contributed to Rs.15.16 crores, FY20 segment revenues. steady continues growth segment .
of The be
to
HI
a
go
into
textile Products machinery, hand tools, oil & gas, fastener and automotive application
Future Outlook
Indigenization of Special Steel Alloys & Import substitute
Approved for strategic missile programs such as LRSAM, Pinnaka,
AGNI, HSDTV etc.
The commitment towards ‘Make in India’ programme initiated by the
Government of India
Tenders for Indian manufacturers & Price-benefit clause Off-set policies Higher thrust for local production
Approvals received from these Public sector undertakings takes 5-6
years but provides sufficient moat and higher margins
Strong internal R&D team and versatility in supply
Competitive pricing due to private setup and low manufacturing costs
Critical Product Orders In Hand : Rs.35.23 crores
Four New Marque Customers Added in H1FY20
Emerging Opportunity
Supreme has received AS
9100 D certification for the plant
This certifies Supreme to start supplying material for civil aviation and aero-engines
Currently under discussion
with various OEM manufacturers for approvals
Received pilot and prototype orders from some of the major OEMs
This opportunity creates a further barrier to entry
Industry Highlights
• Space: From 4 launches in 2017, 7 in 2018 and target for 12 per
year by 2020.
• Aerospace: Indian Aerospace business (Civil and Military) is
growing at a rate of 20-25% YOY
• Defense: India is the 2nd largest importer of arms and has the 4th largest defence spend. Currently 60% of this is imported.
• Nuclear Power: 7 new reactors in production and fleet plan of
17 underway
Strong Demand For Alloy And Special Steels
Under Union Budget 2018-19, allocation to the defence sector was raised to US$ 45.57 billion. In addition,
Make in India policy is being pursued to achieve greater self-sufficiency in defence equipment
India’s nuclear power installed capacity was 6.78 GW in January 2019. Nearly 3,300 MW of nuclear capacity is
expected to be commissioned during 2017-2022, representing a business opportunity of US$312 million
India set to surpass UK and become the third largest aviation market around 2024 as per IATA forecasts. The Indian government is planning to invest US$1.83 billion for development of airport infrastructure along with aviation navigation services by 2026.
The Centre has allocated around Rs 107.83 billion to the Department of Space in the Union Budget for 2018- 19 against 2017-18's Rs.91.55 billion, as per the revised estimates. Recently, 30 Satellites plan is also sanctioned.
As per Automotive Mission Plan 2016-2026, Indian auto component industries could attain an impressive USD
200 billion in revenue by 2026, with exports of USD 80 billion.
Oil & gas contributes over 6% of the overall demand for specialty steel and super alloy products. As per 12th
Five Year Plan, oil production would increase investment of approx. USD 43.69 billion
Growth Across All Parameters (Rs.crores)
Total Revenue
EBITDA
PAT
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
174.53
152.30
120.87
113.65
79.60
18.43
17.83
12.21
10.22
8.55
20.00
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
6.76
5.01
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2.42
1.12
FY15 FY16 FY17 FY18 FY19
FY15
FY16
FY17
FY18
FY19
FY16
FY17
FY18
FY19
Company Profile & Business
Company Overview
Promoted by Mr.Sanjay Chawdhri
Major Revenue Segments
Listed in Sept.2018 on NSE Exchange with 65 lakh shares at Rs.27@,raising Rs.17.5 crs
Major capex already been done, infrastructure can support doubling of revenues.
with Equipped Strong Advanced R&D Capabilities, manufacturing high critical tech including products substitutes import for PSUs.
SPECIAL STEELS Accounts for 55% of Revenue Flat Growth
CRITICAL STEEL PRODUCTS Accounts for 25% of Revenue High Growth Segment
WIRES Accounts for 20% of Revenues Steady growth
Engineer
A Qualified University, Chawdhri instrumental been developing the overall business strategy.
from Karnataka Mr.Sanjay in
inception
since
has
three decades back,
Starting from a small factory in Rabale - New Mumbai, the product line has been expanded with in- house R&D. The Special Steels unit was set up at Khopoli in 2007 and Critical Steel products launched in 2017.
Board Of Directors
Mr. Sanjay Chowdhri •Promoter & MD,
Aged 53, Qualified Engineer in the field of Electronics & Communication from Karnataka University
•Over 3 decades of
experience, associated with the Company since inception, been instrumental in overall business strategy and development of business
Mr. Abhinav Chowdhri • Executive
Director, Aged 29, Major in Industrial Engineering with University of Pennsylvania
• Involved in Technical Development, Business Development & Production Activity. The company received various Govt owned customer approvals under his guidance
Mr. Pranav Chowdhri •CEO, aged 22 years Bach. Technology (Mechanical Engineering) from SVKM’s NMIMS
•Actively involved
in ensuring efficiency in marketing, sales, business development, and day to day operations at Unit II
Mrs. Lalita Chowdhri •Non-Executive
Director & Chairperson, aged 50 Years, bachelor of Arts in Economics
•Ensuring efficient administration of the Company
Dr. Jayaraman Kanan •Independent
Director, aged 61, Aeronautical Engineering from IIT, Doctor of Philosophy, Retired distinguished Scientist & Director of DRDL (Defence Research and Development Laboratory
•Over 3 decades of experience as a scientist in various Organization in the field of Defence
Dr. Prakash Deshmukh •Independent
Director, Aged 65, Bachelor in Technology (Hons.) in Metallurgic Engineering from IIT. Doctor of Philosophy. Ex Managing Director of Hindustan Aeronautics Ltd •Over 3 decades of
experience in various Organization in the field of Aerospace Metallurgy & Aviation
Milestones
1987
Set-up of Wire division at Rabale, Navi Mumbai
1994
2008
Received approvals from reputed bearing manufacturers for OEMs
Set-up of Special Steel division at Khopoli, Maharashtra
2010
Launched Superalloys and other exotic steels as the first manufacturer in the private sector
2012
2016
2017
2019
Received approval from Nuclear Power and Department of Atomic Energy
Received approvals from various PSUs in Defence, Space and Aerospace
Signed MOU with HAL to indigenize 25 Russian alloys for SUKOI 30 under “Make in India” and MIDHANI for R&D and outsourcing
Revenue growth in critical alloys jumps by 40%
Products
1. ESR Alloy Steel
EN24 / 4340, 4140, L43, 15CDV6
2. Special Stainless Steels
17-4PH, 15-5PH, 17-7PH, 13-8PH, SS304L, SS316L, SS321, SS410, SS420, SS431
3. Nickel-based Superalloys
Inconel 600, 625, 718, 800, 825, 925, Hastelloy C276, Nimonic 80A, Monel 400, K500, Invar 36 etc
4. Russian Grades
36XHT, 12X18H10T, 10X11H23, 30X13
5. Super-duplex Stainless Steels
F51, F60, F53, F55
6. Tool Steels
M2, M35, D2, D3, H11, H12, H13, O1
Special Steel Manufacturing Process
Special Steels Capacity Sufficient to Double Revenues
Capacity Utilisation (MT pa)
Special Steel Revenues (Rs Crores)
Process Stage
FY18
FY19
Installed
Actual
Installed
Actual
Primary Melting Secondary Melting
Radial Forging
Heat Treatment
3,600
1,875
3,600
1,875
1,200
1,000
1,200
1,000
3,000
2,250
3,000
2,250
4,000
3,000
4,000
3,000
Product
Nickel Alloy
Special Steels
Miscellaneous
FY18
21.0
109.0
1.9
FY19
87.8
60.1
7.1
Total Revenues
131.9
154.1
Special Steels - Revenue (Crores)
Capacity Unit I- Special Steel Division- 11800 mtpa
Located at Khapoli & Spread across an area of 24,341 Sq. Mts.
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Nickel Alloy
Special Stainless Steel
Misc
FY18
FY19E
Wire Division – Small & Steady Segment
Capacity Utilization (MT pa)
Process Stage
FY18
FY19
Annealing
Drawing
Peeling
Bars-De-coiling, Cutting, Grinding
Installed Actual
Installed Actual
4,800
4,500
4,800
4,725
5,000
4,688
5,000
4,922
3,000
2,813
3,000
2,292
3,000
2,813
3,000
2,292
Cold Rolling
1,000
938
1,000
984
Wire Revenues (Rs Crores)
Product
FY18
FY19
Oil & Gas Sector
Textile Sector
Bearing Components
Alloy Products
5.2
3.9
7.4
2.1
8.3
1.4
3.7
5.5
Wire Segments - Revenue (Rs.Crores)
Capacity Unit 2- Wire Division- 16,800 MT pa
Located at Rabale & Spread across an area of 2,363 Sq. Mts.
9 8 7 6 5 4 3 2 1 0
Bearing Components
Oil & Gas Sector
Textile Sector Hand Tools
Alloy Products
FY18
FY19E
Wire Segment & Testing Facility
Manufacturing Process
Spheroidized annealing
• Wire Drawing • • Coil to coil peeling • Pickling • De-coiling and cutting • Bar straightening/polishing • Centerless grinding and profile manufacturing
Geometric and non-geometric profiles as per customer’s specification.
Features
•
Spectrometer- Accurately shows chemical composition. Uses optical emission technique
• Ultrasonic Testing (UT)-100% bars are UT Tested. Back-wall echo, DGS, FBH methods available. AMS, ASTM, JIS standards followed
• Ultimate Tensile Testing
• Hardness Tester
• Microscope- Micro, Grain size, Inclusion testing conducted
• Dye-Penetrant testing (DP)
• Magnetic Particle Inspection (MPI)
• Radioactivity Testing • PMI
Financial Statements
Profit & Loss Statement (Rs.crores)
Particulars
Revenue from Operations
EXPENSES Cost of materials consumed Purchase of stock in trade Change in inventory of Finished Goods Employee benefit expenses Other expenses Total Expenses EBITDA Depreciation and amortization expenses EBIT Other income Interest EBT Tax expense: (i) Current tax (ii) Deferred tax PAT
FY17
FY18
FY19
120.40
151.74
173.57
116.99 6.85 -18.63 1.52 1.94 108.66 11.73 1.96 9.77 0.48 7.68 2.57
0.36 -0.21 2.43
123.94 5.05 -4.17 1.76 7.88 134.47 17.28 1.51 15.77 0.55 9.11 7.21
2.16 0.05 5.01
154.86 0.00 -4.46 3.01 2.88 156.29 17.28 1.89 15.39 1.15 7.52 9.02
2.20 0.05 6.77
Balance Sheet Statement (Rs.crores)
Particulars a. Share capital b. Reserves & surplus Total Shareholders fund Non-current liabilities a. Long-term borrowings b. Deferred tax liabilities (net) c. Other Long Term Liabilities d. Long-term provisions Total Non-Current Liabilities Current liabilities a. Short-term borrowings b. Trade payables c. Other current liabilities d. Short term provisions Total Current Liabilities T O T A L LIABILITIES
Gross Block Depreciation Capital Work in Progress Net Block Other Non-Current Assets Inventories Trade receivables Cash and cash equivalents Others Short term loans & advances T O T A L ASSETS
FY19 24.99 25.96 50.95
16.17 1.27 0.91 0.43 18.78
72.16 41.43 6.24 2.02 121.85 191.58
34.63 13.39 7.67 28.91 1.56 91.56 62.09 5.45 2.01 191.58
FY18 18.42 10.06 28.48
24.85 1.27 0.76 0.00 26.88
55.18 53.62 8.50 1.49 118.79 174.14
33.06 11.82 6.45 27.69 4.02 81.70 52.65 4.98 3.10 174.14
FY17 3.00 11.71 14.71
42.71 1.22 0.00 0.00 43.93
42.05 31.61 6.28 0.78 80.72 139.36
30.11 10.89 6.45 25.67 7.96 58.78 40.30 3.24 3.40 139.36
Cash Flow Rs.crores)
Particulars A)Cash Flow from Operating Activities : Operating profit before working capital changes Adjusted for (Increase)/ Decrease in: Inventories Trade receivables Short term loans and advances Other current & Non current assets Trade payables Other current Liabilities Short term provisions Working Capital (Increase)/ Decrease Cash generated from operations Less: Income Tax (paid)/ refunded Net Cash flow from operating activities (A)
Proceeds from Issue of Equity capital Change in Reserves & Surplus Long term Debt Short Term Debt Interest Paid Other Income / Profit / Loss from sale of assets Addition to Fixed Assets Net cash flow from financing activities
Net Increase/(Decrease) In Cash & Cash Equivalents (A+B+C) Cash equivalents at the beginning of the year Cash equivalents at the end of the year
FY19
FY18
17.27
17.35
-9.86 -9.44 0.46 1.01 -12.19 -2.26 0.53 -31.74 -14.47 -2.25 -16.72
6.57 11.49 -8.68 16.98 -7.52 1.15 -2.79 17.20
0.47 4.98 5.45
-22.92 -12.35 1.25 -1.02 22.01 2.22 0.71 -10.09 7.25 -2.20 5.05
6.75 6.17 -17.86 13.13 -9.11 0.55 -2.95 -3.31
1.74 3.24 4.98
FY17
11.73
-12.72 -13.01 -0.86 -0.34 30.03 -8.57 0.20 -5.27 6.46 -0.14 6.32
0.00 1.83 3.61 -0.07 -7.68 0.48 -3.93 -5.76
0.56 2.67 3.22
Thank you
Supreme Engineering Limited Plot No. R-223, Thane - Belapur Rd, MIDC Industrial Area, Rabale, Navi Mumbai, Maharashtra 400701 India.
Website: www.supremesteels.com
Contact Us
Investor Relations abhinavchowdhri@supremesteels.com Tel no : +91 9820454865 Shahina@valuewiseir.com Tel no: +91 9769726689