Everest Kanto Cylinder Ltd
Disclaimer
The information contained in this presentation is only current as of its date and consists
of information that is already in the public domain or that is not price sensitive. All actions
and statements made herein or otherwise shall be subject to the applicable laws and
regulations as amended from time to time. We will accept no liability whatsoever for any
loss arising directly or indirectly from the use of, reliance of any information contained in
this presentation or for any omission of the information. It is advised that prior to acting
upon this presentation, independent investigation including seeking advice of your
financial, legal, tax and professional advisors as to the risks involved may be obtained
and necessary due diligence,
etc may be done at your end.
This presentation may contain certain statements of future expectations and other
forward-looking statements, including those relating to our general business plans and
strategy, our future financial condition and growth prospects, and future developments in
our industry and our competitive and regulatory environment. Actual results,
performances or events may differ materially from these forward-looking statements
including the plans, objectives, expectations, estimates and intentions expressed in
forward looking statements due to a number of factors, including without limitation future
changes or developments in our business, our competitive environment, and political,
economic, legal and social conditions in the countries we operate in. This presentation is
not being used in connection with any invitation of an offer or an offer of securities and
should
not
be
used
as
a
basis
for
any
investment
decision.
EKC – An Introduction
•
Established in June, 1978
•
Began with a Joint venture with Kanto Koatsu Yoki
Manufacturing Company of Japan
•
Pioneer in production and development of Industrial
and CNG cylinders with dominant market share in
South Asia and Middle East
•
Largest global player in the Large Pressure Vessel
space
•
Three manufacturing plants in India and one each in
Dubai, China and U.S.A.
•
Existing capacity of 1 Million cylinders of all sizes
mainly by way of organic and acquisition growth
•
Ambitious organic growth plans in India and China
•
Almost
1000
employees
on
rolls
worldwide
experienced in R&D, production and management
•
Quality control processes approved in more than 20
countries
EKC – Key Milestones
1978
Incorporation of Everest Kanto Cylinder (P) Limited
1981
First commercial production at Aurangabad Plant
1986
Commencement of exports to Gulf countries
1988
Commissioning of Tarapur Plant
1998
Development of CNG cylinder for the markets
1998
Supply of CNG Cascades
1998
Export to European countries
2001
More than 150,000 cylinders produced and dispatched
2004
Commencement of production at Dubai Plant
2005
Listing of Equity Shares and Gandhidham unit goes onstream
2007
Doubling of Capacity in Dubai and initiation of China Project
2008
Acquisition of CPI, U.S.A. and commencement of production in China
EKC – Product Applications
Area/Industry of
Application
Auto
Industrial
Healthcare
Applications
Public and Private Transport
Inert Gas, Steel, Metal Industry, Divers,
Mountainers, Power Applications
Resipratory Aid in Hospitals, MRI's, Bath
Therapy, Cryosurgery
Food and Beverage
Food freezing, Beverage Industry, Bottling
Process
Fire Fighting
Fire Fighting Equipments in
ships,thermal power stations, hospitals,
malls, offices, cinema halls
Welding
Cutting and Welding Operations
EKC – Key Customer profile
•
•
Industrial Cylinders
•
OEMs for CNG Cylinders
– Praxair
– Hyundai
– BOC India Ltd
– Toyota
– Inox Air Products Ltd
– Suzuki
– Advanced Silicon
– Tata Motors Ltd
– Air Products
– Eicher Motors Ltd
– Air Liquide
– Ashok Leyland & Co Ltd
– Swaraj Mazda
CNG Cascades
– Mahanagar Gas Ltd
•
Special Cylinders
– Indraprashtha Gas Ltd
– Defence Department in India
– Bhagyanagar Gas Ltd
– US Navy
– Gujarat Adani
Automobile CNG Cylinder
Jumbo Trailer Project
India & China
EKC’s Competitive Edge
• First mover advantage in CNG space in Asia
• Existing Production Capabilities & Capacities
and expansion plans leading to economies of
scale which gives edge over competition
• New manufacturing facilities to adopt cost
effective technologies and processes
• Supply Chain Advantage – Relationship with
Tenaris going back to 15 years
• Strong Customer relationship especially with
OEMs and after market players
• Regulatory approvals in over 20 Countries
EKC – Manufacturing Facilities
Capacity (In Nos.)
Established /
Acquired
Product Range
(In Lts.)
Aurangabad
1978
1-21
110,000
Tarapur
1985
21-280
80,000
Dubai
2003
21-280
Gandhidham
2005
1-280
140,000
200,000
China
2008
1-280 and
Jumbo
80,000
120,000
USA
2008
Jumbo
Location
GRAND TOTAL
Industrial
-
410,000
CNG
Jumbo
-
Total
-
110,000
80,000
-
160,000
196,000
-
196,000
596,000
340,000
10,000
210,000
4,000
4,000
14,000
1,020,000
EKC – Historical Key Financial Highlights
TURNOVER (Rs. Million)
EBIDTA (Rs. Million)
CAGR - 64%
2000
1500
6000
1000
4000
500
2000
0
TURNOVER (Rs. Million)
0
2003-04
2004-05
2005-06
2006-07
2007-08
738
1324
2355
4251
5287
2003-04
2004-05
2005-06
2006-07
2007-08
89
288
589
1142
1527
EBIDTA (Rs. Million)
PAT (Rs. Million)
EBIDTA Margin (%)
CAGR - 165%
40%
30%
1500
20%
1000
10%
0%
EBIDTA Margin (%)
500
2003-04
2004-05
2005-06
2006-07
2007-08
12%
22%
25%
27%
29%
0
PAT (Rs. Million)
2003-04
2004-05
2005-06
2006-07
2007-08
21
143
324
718
1043
H1 2008-09 Results Highlights
• High Growth in Turnover driven by organic
expansion in China and inorganic acquisition of
CPI, USA
• Growth in CNG business continues to be robust
with increased penetration of Indian, Middle East
and CIS markets
• Significant increase in output from Dubai unit and
optimum utilisation of Indian facilities
• EBITDA margins increase substantially aided by
increased selling prices and better product mix and
despite steep devaluation of INR vis a vis US$
• Higher interest, Depreciation and amortisation
mainly due to acquisition of CPI and
commencement of China operations
H1 2008-09 Results Highlights
H1 2008
Turnover (Rs. Million)
H1 2007
Change
4,101
2,391
84
49
EBIDTA (Rs. Million)
1,312
706
EBIDTA (as % of
Turnover)
32.0%
29.5%
PAT (Rs. Million)
782
506
16
10
7.73
5.19
Turnover (US$ Million) *
PAT (US$ Million) *
EPS (Rs. Per Share)
+71.6%
+85.9%
+54.4%
+48.9%
* 1 US$ = Rs. 49.00
H1 2008-09 Results
TURNOVER (Rs. Million)
4,101
4,500
4,000
3,500
2,391
3,000
2,500
2,000
EBIDTA (Rs. Million)
1,500
1,000
1,312
500
1,400
H1 2007-08
H1 2008-09
1,200
1,000
706
800
600
PAT (Rs. Million)
400
782
200
H12007-08
H12008-09
800
506
600
400
200
H1 2007-08
H1 2008-09
H1 2008-09 Results Highlights
Turnover by Markets
H1 2007-08
H1 2008-09
USA
12%
India
46%
Rest of Asia and
CIS
54%
Rest of Asia
and CIS
52%
India
36%
H1 2008-09 Results Highlights
Turnover by Products
H1 2007-08
H1 2008-09
Industrial
15%
Jumbo
15%
Industrial
9%
CNG
CNG
Industrial
Industrial
CNG
85%
Jumbo
CNG
76%
Global NGV growth outlook
• Benefits of Natural Gas Vehicles include
 Reduced Particulate and greenhouse gas emissions and safer than most liquid
fuels
 Widespread availability of NG which can also be derived from renewable
sources like biogas
 Technically proven and available at lower cost
 Can be used in all types of vehicles
 Minimal processing or refining requirements
• NGV growth has more than doubled during last five years
• As per Gas Vehicles Report dated June 2008, there are 8.5 Million
vehicles worldwide and IANGV projects that this would increase to a
level of 50 Million vehicles by 2020
Global NGV growth outlook
• Among top 10 countries, the number of NGVs
has increased from a level of 1.7 Million in
2001 to a level of 7.6 Million in March 2008
• EKC has a significant presence in six of these
countries which still have a low penetration
rate of NGVs in the overall vehicle population
• International Gas Union has projected that the
total global NGV population shall increase to a
level of 100 -200 Million by the year 2030 and
the final target shall be announced in 2009
Global NGV statistics – Top Ten countries
No. of NGVs (In ‘000)
Country
March-01
March-08
Argentina
735
1699
Pakistan
200
1650
Brazil
272
1533
India
25
822
Iran
1
730
Italy
370
433
9
252
China
36
201
Bangladesh
22
160
Ukraine
35
120
1705
7600
Colombia
Total
• Top ten countries represent
89% of global NGV population
• Compound Annual Growth rate
(CAGR) over last 7 years
- 24% globally
- 42% for Asia and CIS
NGV Population (in Nos.)
4000
3000
2000
1000
0
Rest of World
Asia and CIS
March-01
March-08
Asia and CIS
319
3683
Rest of World
1386
3917
• Very low penetration rate of
NGV vehicles
- 6.1 % globally
- 5.9 % for Asia and CIS
- 2.0% for high growth markets
like India and China
Natural Gas Scenario to positively impact
CNG business in India
•
•
Natural Gas infrastructure spans 8000 Kms with product
pipeline of 10000 Kms
Compressed Gas Distribution (CGD) networks in 19 cities
- More than 0.8 M vehicles on CNG
- More than 0.8 M households connected
•
Expression of interest for CGD in 68 cities to be implemented
over 2-5 years with investment ranging from US$ 50 – 200
Million in each city
•
Projected Gas Supply expected to increase from 80.5
MMSCMD to a level of about 200 MMSCMD in 2010-11
EKC’s Global Business Outlook
•
China plant commenced production in May 2008 and large line expected to go
into production very shortly
•
Integration activities with CPI progressing well resulting in improved production
levels
•
Billet Piercing Plant to be operational in this fiscal year and this is expected to
lower cost of production thereby making the products more cost competitive
•
Jumbo Cylinder Plant in India is scheduled to go into production in Q4 2008-09
and EKC expects to penetrate the untapped Indian market for such products by
leveraging CPI’s capability in this line of business
•
EKC is venturing into the market for light weight CNG cylinders mainly required
by OEMs in Europe and Asia and this project is expected to go into production
in Q2 2009-10. This would result in much higher value addition besides
providing value to customer
•
INR expected to continue to be under pressure but overall impact not significant
on the bottomline
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