Satia Industries Limited has informed the Exchange regarding Investor Presentation FEB, 2020
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The Manager, Listing Department, BSE Limited, Phiroze Jeejeebhoy Towers Dalal Street Mumbai-400001 Scrip Code: 539201
Dear Sir/Madam,
Date: 15.02.2020
The Manager Listing Department National Stock Exchange of India Ltd Exchange Plaza, Plot no. en, G Block, Bandra-Kurla Complex, Bandra (E) Mumbai Symbol: SATIA
- 400 051.
Sub: Submission
of Analyst;
Investor Presentation
the Pursuant Requirements) Regulations, 2015.Please find enclosed Investor Presentation.
to Regulation
Obligations
(Listing
SEBI
300f
and Disclosure
Thanking you,
Yours sincerely, For Satia Industries Ltd
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(Rakesh Kumar Dhuria) Company Secretary
Registered Office & Mill 'VillageR
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Branch: 613-615 Naurang House 21 KG M Br Br:~
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uktsar Sahlb-152 032, Punjab, India, Ph.: 262001,262215,263585 Fax: 01633·263499 email: satiapaper@gmall.com
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92, Sector 8· C, Madhya Marg, C~andigarh -160018 Ph.: 0172·2780022f23,46183n
. arg, Connaught Place, New Delhl·110001 Ph.: 23710351/52153 Fax: 23718191 e-mall : satlapaper@redlHmall.com Fax: 0172-4648600, satiaindustrlesltd@gmail,com van Complex, 29, Station Road, Jalpur-302006, Rajasthan Ph. : 2371055, 2379554 Fax: 0141·2374433 e-mail: satlapaper.jpr@gmail,com ell _nnE.tl1'\
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SATIA INDUSTRIES LIMITED
INVESTOR PRESENTATION February 2020
1
Executive Summary
Company Overview
Key Clientele
• Incorporated in 1980, Satia Industries Limited (SIL), is one of the biggest and completely integrated Wood and Agro based paper manufacturers. • SIL’s products are extensively used in the printing of books, directories, envelopes, diaries, calendars, computer stationery, annual manufacture copy reports, etc.
around
• SIL has long standing relationship with State Text book Corporations 40% of and revenue from these organisations. • The remaining revenue attributes to the Public and Sector Companies.
Private
comes
Manufacturing and Distribution Network:
FY19 Financial Snapshot
• Manufacturing plant based out of Muktsar with capacity to manufacture 1,05,000 MT per annum. • Completely integrated manufacturing operations with 3 paper machines, 100% in- house power generation and effluent treatment. • Strong Distribution Network: 70 dealers and 3 branch offices.
Operational Revenue INR 7,384 Mn
EBITDA INR 1,641 Mn
EBITDA Margin 22.22%
PAT INR 878 Mn
PAT Margin 11.89%
ROE 29%
ROCE 26%
2
Company Overview
3
About The Company
• Incorporated in 1980 by Dr. Ajay Satia, Satia Industries Limited (SIL) started its commercial
production of printing and writing paper at Muktsar, Punjab in 1984.
• SIL is one of the biggest Wood and Agro based paper plants in India manufacturing paper
using wood chips, veneer waste, wheat straw, sarkanda, etc.
• The Company has a fully integrated manufacturing facility, which includes paper machines,
pulping machinery, chemical recovery plant and power generation plant.
• Fully integrated production facility gives superior advantage in terms of cost efficiency and environmental compliance, ultimately leading to superior margin profile compared to peers.
• With a view to improve the quality of pulp and also to save on cooking chemicals, a
Continuous Digester has been installed by the Company.
• The product profile includes Super Snow White, Snow White, Photocopier paper, Map litho, Colored paper, Ledger paper, Cartridge paper, Duplicating, bond paper - with and without watermarks and Chromo (Art) paper from GSM range 42 to 200 GSM.
• Satia Industries Limited market its product through dealer network located all over India
and through Branches at Jaipur, Delhi & Chandigarh.
Operational Revenue (INR Mn) & EBITDA Margin (%)
7,384
6,421
5,708
16%
19%
22%
22% 6,296
4,336
12%
FY16
FY17
FY18
FY19
9M-FY20
Revenue (INR Mn)
EBITDA Margins %
Raw Materials Used of Total Volumes
Waste Paper Based 5%
Wood Based 30%
Agro Based 65%
4
Key Management Personnel
R.K. Bhandari (MBA) - Joint Managing Director
Looks after marketing and other administrative responsibilities since the last 32 years Chirag Satia - Executive Director
Dr. Ajay Satia Chairman & M.D
Chirag has been driving force behind new inititatives since he joined in 2015 and looks after Finance, Accounts and Commercial Operations. His enterprising spirit and forward looking vision has added new energy to the workforce. A.C. Ahuja – Director
• Dr. Satia set up the integrated paper
mill in 1984.
• His
vision to adopt
technological changes and economies of scale along with timely capital infusion has brought the unit among the best in the industry in terms of pulping strength, power self-sufficiency, effluent treatment and meeting the environmental norms.
• Dr. Satia has a passion for work and enterprising unparalleled possesses spirit for expansion and modernisation.
• His greatest strength lies in building and retaining a strong and trusted team which has turned his dreams into reality.
Ex. Executive Director IFCI, Delhi Hardev Singh - Director (Technical)
Has a wide experience in installation of projects Arun Kumar Gupta - Director (Independent)
Senior Chartered Accountant Ashok Kumar Gupta - Director (Independent)
A CAIIB and has 35 years of experience in Banking Dr. Priti Lal Shivhare (MSC, Ph.D. Chemistry) - Director (Independent)
A scientist in Central Pulp and Paper Research Institute, Saharanpur, (U.P)
Inder Dev Singh – Director (Independent)
A retired personnel of PNB and has studied B.Com. and LLB and is a CAIIB
Dinesh Sharma – Director (Independent) Masters in Chemical Engineering
S. K. Arora – Director (Independent) Senior Chartered Accountant
Ashok Khurana (C.A.) - VP-Finance
R. K. Dhuria – Company Secretary
L.L.B.
5
Key Milestones
Started production using a single paper machine with the capacity of 4,950 MTPA
Production
crossed
10,000 MTPA
Power cogeneration plant (5MW) was installed
Increased capacity of the power plant to 23.30 MW
Additional Power generation capacity of 10.45 MW and New Solar plant with capacity 2.29 MW were installed
1984
1993
2003
2011-12
2016-17
Achieved a significant production
2018-19
1980 Incorporation of the Company
1989 Second paper machine was installed
1998 Third paper machine and 200 MTD pulp mill were installed.
2006 A Chemical Recovery Plant and power plant (5MW) were installed
2014-15 The Capacity of Chemical Recovery Plant was enhanced and also installed a Pulp Bleaching Plant
2017-18 Added Solar Capacity of 3.25 MW
6
Geographical Presence
Region-wise sales for FY19
Jammu & Kashmir 1.3%
Punjab 8.4%
Haryana 3.7%
Rajasthan 9.1%
Gujarat 1.4%
Maharashtra 13.7%
Telangana 0.9%
Export and Others 10.4%
Region-wise sales for FY19
Delhi 12.8%
Uttar Pradesh 18.1%
Assam 5.8%
West Bengal 2.3%
Bihar 0.8%
Madhya Pradesh 2.1%
Chhattisgarh 5.4%
Odisha 3.8%
7
Distributors (70)
Branch Offices (3)
Manufacturing Plant (Muktsar)
Manufacturing Facilities
Pulping Facilities
Paper Machines
Chemical Recovery Plant
Power Generation
Segment
Description
Digester
• Continuous for oxygen pulp, cooking delignification and chlorine dioxide bleaching has been installed.
• Capacity of paper machines varies with operating speed and GSM of paper.
• Proposed: 300 TPD, already Environment
for
applied Clearances
• Installed
Chemical two Recovery boilers with a capex of INR 850 Mn to process black liquor reconversion into caustic soda.
for
• Project
target
for commissioning is two and a half years subject to all Govt. permissions.
• It also helps in environment
compliance.
• Installed
turbine three generating sets at a total capex of INR 871.6 Mn and a solar power plant at capex of INR 224.2 Mn.
8
Capex Plan
Agro – Residue
Wood chips
Waste Paper
CRP
In-house power generation
Current Capacity 1,05,000 MT of Paper
Capex of INR 500 Cr
Capacity Expansion of 1,00,000 MT of Paper
Funding
Internal Accrual 35%
Debt 65%
Updates: • Additional purchased.
land
has
been
• New
Paper European Manufacturing Machine has been ordered.
• Foundation work going on in full swing for the new Block. • Final Environmental Clearance already received from the Ministry of Environment & Forests, Delhi.
• Financial closure has already the first
being achieved for phase.
Plant to be commissioned by the end of Q4-FY21
A similar greenfield capacity expansion of 300 TPD would cost around INR 1,000 Cr and would take a timeline of around 40 months to be operational.
9
Paper Cutlery Segment
• Prime Minister Sh. Narendra Modi gave an ambitious call to eliminate all single-use plastic products in the country by 2022 and SIL plans to make most of this opportunity in the national movement to replace plastic and styro foam from food delivery packaging with sustainable packaged products
• The company has already entered into Virgin fibre based Cup stock segment and plans to venture into the paper cutlery segment with an initial capital outlay of INR 15-18 Cr
• Target for commencement of production is in FY 21
Initial Production Capacity of 8 TPD
To be enhanced to 32 TPD
Online food delivery is fuelling substantial acceleration in food packaging demand. We expect this segment to gain traction by FY21.
10
Paper Making Process
Stage 1
Agro Residue
Wet Washing
Cleaned Raw Material
65%
Wastewater
Clarifier & Biogas Plant
Continuous Cooking with caustic soda which passes through steam at 165 Degree Celsius
Cooked Pulp & Black Liquor
(Sodium Lignate)
Unbleached Pulp Washing, Refining, Screening & Cleaning
Brown Pulp
Elemental Chlorine Free Bleaching (Environ- ment Friendly)
Black Liquor
Caustic Soda Recovery Section
W h i t e P u p
l
Wood Chips
30%
Requires higher amount of Caustic Soda (Sodium Hydroxide)
Imported Wood Pulp
5%
Hydra pulper (disintegrat ion)
Stage 2 Stock Preparation
Different types of Pulp (Agro, wood, imported wood) is mixed in different proportions as per the required quality additives like AKD, PAC, whitening Agent, Wet End Additives and Fillers
Stage 3 Paper Making
Sheet Forming-> Wet Sheet
De-watering through 3 stages: Vacuum Suction, Pressing, Evaporation (Drying)
Calendaring for smoothness and evenness
Roll Forming
Stage 4 Converting and Finishing
Sheeting
Rewinding
Cutting
Refined & stored in a chest
11
Effluent Treatment
Recovery Boiler Organic matter burns and acts as fuel
Black Liquor
(Sodium Lignate)
Inorganic matter becomes Sodium Carbonate
Treated with Calcium Hydroxide
Calcium Carbonate (Limestone) Sold in markets
Sodium Hydroxide (Caustic Soda) Reused after 90 -95% recovery rate
Wheat straw wet washing waste water is used to produce Biogas
Waste water from paper machine is clarified and reused in washing of pulp in bleaching stages
Maximum circulation of bleaching plant filtrate
Final effluents are first treated at the Effluent Treatment Plant & then passed to the Eucalyptus Plantations
12
Top Clients
Bal Bharti
Assam State Text Book Production & Publication Corporation Ltd.
Odisha State Bureau of Textbook
Chhattisgarh Pathya Pustak Nigam
Rajasthan Rajya Pathyapustak Mandal
Burda Druck India Private Limited
West Bengal Text Book Corporation Ltd
Himachal Pradesh Board of School Education
Indian Railways
13
Myths Vs Realities of the Paper Industry
Myth
Reality
Denuding forests
Paper industry in India is also agro and rural based. Industry led agro/farm forestry in collaboration with farmers have brought over 125,000 hectares under pulp wood plantations.
Disturbs ecological balance
It is wood positive. The industry grows more trees through its agro-forestry initiative than it harvests. Moreover, pulp and paper industry consumes only 3% of the national requirement of wood while major consumption is as fuel wood (89.5%) and timber (7.5%).
The sun has set on India’s paper industry
Overall paper consumption is projected to increase to 24 million ton in 2024-25 from 15 million ton currently. Every one kg increment per capita consumption results in additional demand of more than 1 MTPA.
Technologically outdated
An investment of more than USD 5 Bn. has been made by the industry during the last five years in capacity enhancement, technology upgradation and various acquisitions.
Unsustainable industry
Paper is biodegradable, recyclable and sustainable.
Puts undue strain on water and energy resources
Lobbies for access to forests repeatedly
Earlier, paper mills used to consume 200 cubic meters of water to produce a ton of paper. Now, the integrated mills have reduced the usage to 50 cubic meters with efforts on for 40 cubic meters.
Out of the total degraded forest land of 29 Mn hectares, the paper industry is asking for only 10%. Growing pulpwood trees on degraded land will lead to a fillip in rural employment and add to the green cover of India.
14
Certifications
15
Key Strengths
Wheat Straw is cheap and easily available locally
Low cost raw materials
$
No other paper mill in a 100 Km radius
Secure access to raw materials
Chemical Recovery Plant to treat Black Liquor, oxygen plant for Delignification, production of Chlorine Dioxide for Bleaching & Pulping
Tremendous cost savings through in-house effluent treatments/intermediates
27.95 MW capacity run on Biomass and process intermediate- Black Liquor
Co-power generation
to reduce cost
Pan India distribution network
3 Branch Offices and 70 Distributors
Long standing relationships with State Text Book Boards
Environment compliant manufacturing facilities
In-house treatment of pollutants and 540 Acres of Eucalyptus Plantations and Carbon Credit Surplus
16
Business Overview
17
Writing and Printing paper : Products
Snow White
Features: Brightness: 85% Whiteness: 133% Opacity: 85-96%
Super Snow White
Ultra White
Ultra Shine
Ultra Print
Features: Brightness: 89% Whiteness: 142% Opacity: 85-96%
Features: Brightness: 85% Whiteness:133 % Opacity: 85-96%
Features: Brightness: 88% Whiteness: 142 % Opacity: 85-96%
Variants: Copy Segment:52-64 GSM Printing Segment: 52-90 GSM
Variants: Copy Segment: 52-64 GSM Printing Segment: 52-90 GSM
Variants: Copy Segment: 52-64 GSM Printing Segment: 52-90 GSM
Variants: Copy Segment: 52-64 GSM Printing Segment: 52-90 GSM
Pricing: INR 60,500 to 64,000 PMT
Pricing: INR 61,500 to 65,000 PMT
Pricing: INR 62,500-65,800 PMT
Pricing: INR 62,000 to 65,500 PMT
RM Composition: Agro Pulp: 75% Hard Wood Pulp: 25%
RM Composition: Agro Pulp: 70% Hard Wood Pulp: 30%
RM Composition: Agro Pulp: 75% Hard Wood Pulp: 25%
RM Composition: Agro Pulp: 70% Hard Wood Pulp: 30%
Features: Brightness: 90% Whiteness: 145 % Opacity: 78-96%
Variants : 58-100 GSM
Pricing: INR 63,000 to 66,500 PMT RM Composition: Agro Pulp: 65% Hard Wood Pulp: 25% Imported Hard/Soft Wood Pulp: 10%
18
Writing and Printing paper : Products
Coloured Paper
Cover Paper
Natural Shade
Photo Copier
Ledger
Features: Brightness- NA Whiteness- NA Opacity – 78-96%
Variants: 48-180 GSM
Features: Brightness- 85% Whiteness- 133% Opacity – 94-96%
Variants: 100-170 GSM
Pricing: INR 67,000 to 71,000 PMT
Pricing: INR 62,000 PMT
Features: Brightness- 82% Whiteness- 70% Opacity – 92-95%
Variants: 80-120 GSM
Pricing: INR 62,000 PMT
RM Composition: Agro Pulp- 70% Hard Wood Pulp -30%
RM Composition: Agro Pulp- 75% Hard Wood Pulp -25%
RM Composition: Agro Pulp- 70% Hard Wood Pulp -30%
Features: Brightness- 90% Whiteness- 142% Opacity – 92%
Variants: 70-80 GSM
Pricing: INR 69,500-70,000
RM Composition: Agro Pulp- 65% Hard Wood Pulp -20% Imported Hard/Soft Wood Pulp- 15%
Features: Brightness- 58% Whiteness- 11% Opacity – 88-90%
Variants : 58-90 GSM
Pricing: INR 65,000 to 66,000 PMT
RM Composition: Agro Pulp- 75% Hard Wood Pulp- 25%
19
Operating Efficiency
Production, Revenue and Profit Trend
1,43,440
1,44,429
3,978
3,931
1,60,631
4,336
372
FY14
531
FY15
Raw Material Consumed (MT)
449
FY16 Column1
1,94,204
2,06,400
6,421
2,12,858
7,384
5,708
875
1,284
1,578
FY17
FY18
FY19
Total Revenue (INR Mn.)
Cash Profit (PBDT) (INR Mn.)
76.01%
1.35%
Operating Cost Bridge
0.76%
0.05%
65.26%
-0.37%
-4.59%
-7.95%
FY16-Operating costs as % of revenue
Raw Materials
Chemicals
Power & Fuel
Store & Spare
Packing Material
Salary & Wages
FY19-Operating costs as % of revenue
2,50,000
2,00,000
1,50,000
1,00,000
50,000
-
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
20
Strategic Advantage
Raw Material Security
Water Security
Captive Power Generation
• SIL has the capability and flexibility to use all three kinds of pulp made from agro residue, wood
•
and waste paper. It procures raw materials like wheat straw, sarkanda and wood chips from the area adjacent to the manufacturing plant in Punjab.
• No other paper mill, in a 100 km, radius ensures easy and cheap availability.
• Water is imperative at each stage of production and can lead to loss of machine days in case of
shortage.
• The fresh water requirement is 18,500 m3 /day for Agro & Wood-Based Pulp to produce writing
& printing paper 390 TPD.
• The Company has an approval from the state irrigation department for fresh water withdrawal
of 7.5 cusec from Arniwala Canal, which is at a distance of 1.8 km.
• With the high cost of power directly affecting profits of paper industries, the best option is to
install own captive power plants to manage production schedules without unplanned downtime and lower costs.
• Against the huge requirement of steam at 10Kg/cm2 pressure for pulp making and steam at 4Kg/cm2 pressure for drying paper; SIL has installed 62Kg/cm2 steam pressure boilers and 27.95 MW power is co-generated from energy produced in pressure reduction which helps in huge cost savings.
21
Future Growth Strategy
03
With a strong raw material base, doubled production capacity to over 2.0 lac tons paper every year and with a flexibility to make high grade surface sized maplitho and copier paper along with our traditional stronghold in Government textbook paper market; we plan to expand our customer base and further strengthen our existing network by meeting varied needs of the customers in the face of stiff competition in the market.
02
SIL proposes to simultaneously enhance its agro, wood and recycling pulp making facilities to meet increased level of paper machines capacity along with flexibility in raw material usage. We plan to upgrade our Chemical recovery plant and cogeneration division to meet environmental challenges and also maintain our to maintain cost competitiveness.
independence in low cost power
01
SIL plans to make best of the scenario by focusing on modernization of its existing plant and machinery; quality up gradation by increasing wood pulp in its raw material mix and making surface sized paper for high speed multi colour printing and plans to double its production capacity by setting up a new paper machine in its existing premises by the end of the year 2020. The plant will be operational by 2021/2022.
22
Environmental Compliance
Environment Compliance though a legal necessity; SIL considers this as its moral responsibility and has undertaken many steps to ensure that no harm is done to the environment:
• Eucalyptus Plantation : SIL uses the natural quality of Eucalyptus Plant for natural pumping and evaporation of ground water through its leaves into the atmosphere and has developed 540 acres of Eucalyptus Plantation for waste water handling. No water is discharged into any water body.
• SIL has adequate water and air pollution control devices to meet the prescribed norms of Water and Air pollution and has got the necessary Consent to operate from the PPCB, Punjab under different Acts.
• SIL has a fish tank with the treated waste water to check fish survival in the treated
effluent and establishes that it is not harmful for aquatic life.
• Solid waste is used by card board manufacturers and boiler ash goes into land filling.
• SIL is planning to tie up with cement companies to dispose lime sludge.
• Methane is used for power generation or as fuel in the boiler.
23
Karnal Technology
Process
•
•
The Karnal Technology involves growing trees on ridges 1m wide and 50cm high wand disposing of the untreated sewage in furrows. The effluent is consumed within 12-18 hours and it is possible to dispose off 0.3 to 1.0 ML of effluent per day per hectare through this technique.
Plantation Eucalyptus plant is widely used for Karnal Technology due to the capacity to transpire large amounts of water and ability to remain active through out the year.
•
•
•
•
Low Cost The expenditure of adopting this technology involves cost of making ridges, plantation and their care. The implementation does not involve skilled labour and relatively unfertile wastelands can be used for this purpose.
Zero Effective Discharge This technique utilizes the entire biomass as living filter for supplying nutrients to soil and plant. Further, as forest plants are to be used for fuel wood, there is no chance of pathogens, heavy metals and organic compounds to enter into the human food chain system.
timber or pulp,
Revenue Generation This system generates gross returns from the sale of fuel wood and the sludge accumulating in the furrows along with the decaying forest litter.
24
Corporate Social Responsibility
SIL believes that the corporate sector are economic organs of the society and therefore endeavors to make a positive difference to the society by trying to build a better tomorrow. • • •
Total amount spent in FY19: INR 11.2 Mn Total amount spent during FY18: INR 4.9 Mn The management has approved INR 25 Mn for CSR program in surrounding villages. The activities mentioned therein shall be carried out within a time frame of 5 years (2017-18 to 2021-22) The sectors identified under the scope of CSR activities are as follows:
Community Health Improvement: Periodical medical checkups, blood donation camps to be organized near the project site, eye check-up camps, health awareness camps for mother and child and health and hygiene practices
Community Education Facilities: Augmentation of furniture, blackboard, etc. in village schools, award scholarships to meritorious students, distribution of educational books, stationary, uniforms, aids, etc.
Community Welfare activities: Development of worship places as well as beautification, distribution of seeds & saplings, promotion & support to various Govt. schemes
Community Water Conservation: Rain water harvesting, ground water recharge pits and water conservation awareness programs
Community Capacity Building: Development of vocational training for technical skills, self employment trainings for women, such as, stitching, embroidery, tailoring, and handicrafts, etc.
Infrastructural Development: Village pond retrieval and R.O installation
A forestation Programs: Plantation of trees in village road sides
25
Industry Overview
26
Paper Industry Overview
• Globally, India is the fastest growing paper market – 5-year (FY11 - FY16) with a CAGR of
consumption is 8% in comparison to 1% globally.
• Paper demands grow in tandem (gain momentum) with the GDP growth rate in a country. Over the last 10-yr period (2006-2016), India’s paper demand grew 8.1%, whereas GDP CAGR was 7.3%. Thus, the Company believes that India’s high GDP growth rate ensures that base demand growth for paper is high.
• Moreover, paper usage per capita in India lags in comparison to most other major
economies - 13 kg p.a. vs 150-250 kg p.a. for more developed countries.
• Combined with rapidly improving literacy rates and increasing office documentation needs, we expect demand growth in writing and printing paper in India to continue [Literacy rate improved to 75% in 2016 from 63% in 2001].
• The Indian paper industry is highly fragmented with more than 1000 mills, of which about
750 mills are operational and top 3 players account for only 9% of the market.
10%
8%
6%
4%
2%
0%
-2%
-4%
5 Year CAGR % FY11 to FY16
8%
1%
1%
0%
India
China
Indonesia
USA -1%
UK
Germany
-3%
India (total 17m tons)
China (total 109m tons)
USA (total 70m tons)
Indonesia (total 7m tons)
9%
21%
32%
28%
91%
79%
68%
72%
Share of Top 3
Others
27
Paper Industry Overview
•
India is the fastest growing major paper market in the world.
• An appreciating rupee made imports attractive in FY17.
• Anti-dumping duties were imposed by the US in 2016 and 2017, which
led to diversion of supply from US to Indian markets.
• Free Trade Agreements with ASEAN and South Korea led to an increase
in exports at 10Yr CAGR of 15% and 8%, respectively.
• Even though this dynamic may change as the rupee depreciates\anti- dumping duty is effected, open imports have already forced companies to increase cost efficiency\consolidate.
28
Challenges of Environmental Compliance
• The pulp and paper industry is among the world’s largest generators of air and water pollutants, waste products and gases that cause climate change. Thus, heavy investment is required by companies to be environmentally compliant. Multiple norms have been introduced over the years, which have covered paper manufacturing companies.
CREP, 2003
CWRPP, 2012
CWRPP, 2015 (Ganga Basin States)
National Charter (In the pipeline)
• Corporate Responsibility for Environment Protection (CREP) had some key action points - utilization of treated effluent wherever
possible, reduce wastewater discharge to less than 140 m3/tonne of paper by 2005, etc.
• Charter for Water Recycling & Pollution Prevention in Pulp & Paper Industries (CWRPP), not only highlighted the Best Available Techniques (BAT) based on European Union’s BREF document, but also laid down stringent water consumption, effluent generation and effluent characteristics norms for the industry to be achieved in two phases, i.e., short-term goals (by March 2016) and long-term goals (by March 2017). Water consumption norm of 50 m3/tonne of paper produced has already been achieved by the Industry.
• National Charter is in the pipeline. Large mills have already incurred capex to adopt environmental friendly technologies and thus,
would not have a huge impact.
• Central Pollution Control Board (CPCB) advises the Central government on matters concerning air and water pollution. It has classified
pulp and paper in the Red category, which means environmental clearance for new factories would be strict.
• Recently, 12 environmentally non-compliant paper mills were issued closure notices by CPCB.
29
Indian Paper Industry is Ripe for Consolidation
High Capital Intensity - Investment in land and machinery, repairs and maintenance of mills, technology, cost of environmental compliance, growing wood plantations and establishing a distribution network all make manufacturing paper a capital intensive task.
Economies of scale - The average capacity of an Indian Paper Mill is about 21,373 TPA, which is less than 1/5th of the average capacity of European mills, and about 1/9th the size of the average US mill.
Imports will pressure inefficient players further.
It is expensive to be environmentally compliant - The pulp and paper industry is among the world’s largest producers of water pollutants and waste products. CPCB has classified Pulp and Paper industry into the Red category, which means environmental clearance for new factories would be strict.
Advent of GST - GST has been introduced at 12-18% for most paper categories which implies that the margin cushion available to small companies (likely tax avoiding) may be pressured.
Industry Stress - Multiple inorganic opportunities are available in India, which can help large players with strong balance sheets consolidate.
30
Financial Overview
31
Income Statement
PARTICULARS (INR Mn)
Operational Revenue
Total Expenses
EBITDA
EBITDA Margin
Other Income
Depreciation
Finance Cost
Extraordinary Items
PBT
Tax
Profit After Tax
PAT Margin
Other Comprehensive Income
Total Comprehensive Income
EPS (INR per share)
*As per IND-AS
FY16
4,336
3,801
535
FY17*
5,708
4,799
909
FY18*
6,421
5,203
1,218
FY19*
7,384
5,743
1,641
9M-FY20*
6,296
4,919
1,377
12.34%
15.93%
18.97%
22.22%
21.87%
165
332
251
(16)
101
(30)
131
211
400
245
-
475
20
455
303
451
237
-
833
146
687
145
477
208
-
1,101
223
878
140
394
158
-
965
207
758
3.02%
7.98%
10.70%
11.89%
12.04%
-
131
1.31
(2)
453
4.55
(8)
679
6.86
2
880
8.77
2
760
7.58
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Balance Sheet (IND-AS)
H1-FY20 PARTICULARS (INR Mn)
PARTICULARS (INR Mn) Equity Equity Share Capital Other Equity
Non-Current Liabilities a) Financial Liabilities
(i) Borrowings (ii) Other Financial liabilities b) Other Non-Current Liabilities c) Provisions
Current Liabilities
a) Financial Liabilities
(i) Borrowings (ii) Trade Payables
(iii) Other Financial Liabilities
b) Current tax liabilities (net) c) Other Current Liabilities d) Provisions GRAND TOTAL - EQUITIES & LIABILITES
FY18 2,226 100 2,126
FY19 3,076 100 2,976
3574 100 3474
1,819
1,957
2072
910 837 3 69
1,054 823 3 77
1109 876 3 84
1,773
1,571
2256
676 447
468
- 164 18 5,818
537 454
516
13 44 7 6,604
783 630
662
58 116 7 7902
Non-Current Assets a) Property, Plant and Equipment b) Capital Work In Progress c) Financial Assets (i) Investments (ii) Loans (iii) Other financial assets d) Deferred Tax Asset (Net) e) Other Non-Current Assets
Current Assets a) Inventories b) Biological Assets other than bearer plants c) Financial Assets
(i) Trade Receivables (ii) Cash and Cash Equivalents (iii) Bank balances other than
above
(iv) Other financial assets d) Current Tax Assets (Net) e) Other Current Assets GRAND TOTAL – ASSETS
FY18 3,540 3,119 295
29 35 10 48 4
2,278 526
295
1,179 13
64
23 21 157 5,818
FY19 4,505 3,827 561
H1-FY20 5012 3624 1301
31 17 10 59 -
2,099 599
303
1,057 5
35
26 - 74 6,604
31 18 10 29 -
2890 586
329
1762 10
35
52 - 115 7902
33
Financial Highlights
Operational Revenue (INR Mn)
5,708
6,421
7,384
4,336
EBITDA (INR Mn) & EBITDA Margin (%)
PAT (INR Mn) & PAT Margin (%)
18.97%
15.93%
12.34%
22.22%
7.98%
10.70%
11.89%
3.02%
535
909
1,218
1,641
131
455
687
878
FY16
FY17
FY18
FY19
FY16
FY17
FY18
FY19
FY16
FY17
FY18
FY19
ROE (%) and ROCE (%)
Debt to Equity
Net Worth (INR Mn)
29%
21%
31%
29%
26%
26%
12%
12%
1.67
1.00
0.68
0.50
1,583
1,130
3,076
2,226
FY16
FY17
FY18
FY19
FY16
FY17
FY18
FY19
FY16
FY17
FY18
FY19
ROE (%)
ROCE (%)
34
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 Satia Industries Limited (“Company” or “SIL” or “Satia Industries Ltd.”), 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 there from. This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.
For further information please contact our Investor Relations Representatives: Mr. Inderjeet Monga AGM – Accounts and Finance Tel: +91 9855716521 Email: agm.finance@satiagroup.com
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Thank You
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