Discussion Material – Initial Public Offering May, 2012 pdf/Omkar-Corporate-Presentation.pdf · 6 Directors Prof. Dr. Suhas Rane Independent Director He is a BE Mechanical Engineer,

2

Disclaimer

This presentation is prepared by Omkar Speciality Chemicals Limited (OSCL or the “Company”) for general information purposes only, without regard to specific objectives, suitability, financial situations and needs of any particular person and does not constitute any recommendation or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment thereof. This presentation does not solicit any action based on the material contained herein. Nothing in this presentation is intended by the Company to be construed as legal, accounting or tax advice.

This presentation has been prepared by the Company based upon information available in the public domain and its internal estimates. This presentation has not been approved and will not or may not be reviewed or approved by any statutory or regulatory authority in India or by any Stock Exchange in India. This presentation may include statements which may constitute forward-looking statements. The actual results could differ materially from those projected in any such forward-looking statements because of various factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise.

The information contained in these materials has not been independently verified. None of the Company, its Directors or Promoter(s) or affiliates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this document or its contents or otherwise in connection with this document, and makes no representation or warranty, express or implied, for the contents of this document including its accuracy, fairness, completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, and nothing in this document or at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Past performance is not a guide for future performance. The information contained in this presentation are current, and if not stated otherwise, made as of the date of this presentation. The Company undertake no obligation to update or revise any information in this presentation as a result of new information, future events or otherwise. Any person / party intending to provide finance / invest in the shares / businesses of the Company shall do so after seeking their own professional advice and after carrying out their own due diligence procedure to ensure that they are making an informed decision. By attending/perusing this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future business of the Company.

This presentation is strictly confidential and may not be copied or disseminated, in whole or in part, and in any manner or for any purpose. No person is authorised to give any information or to make any representation not contained in or inconsistent with this presentation and if given or made, such information or representation must not be relied upon as having been authorized by any person. Failure to comply with this restriction may constitute a violation of the applicable securities laws. This presentation is not intended for distribution or publication in the United States. Neither this document nor any part or copy of it may be distributed, directly or indirectly, in the United States. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. By participating in this presentation or by reviewing this presentation, you agree to be bound by the foregoing limitations.

This document contains certain forward-looking statements relating to the business, financial performance, strategy and results of the Company and/or the industry in which it operates. Forward-looking statements are statements concerning future circumstances and results, and any other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements, including those cited from third party sources, contained in this presentation are based on numerous assumptions and are uncertain and subject to risks. A multitude of factors including, but not limited to, changes in demand, competition and technology, can cause actual events, performance or results to differ significantly from any anticipated development. Neither the Company nor its affiliates or advisors or representatives nor any of its or their parent or subsidiary undertakings or any such person's officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this presentation or the actual occurrence of the forecasted developments. Forward-looking statements speak only as of the date of this presentation. As a result, the Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this presentation as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward looking statements are based.

This presentation is not an offer to sell or a solicitation of any offer to buy the securities of the Company in the United States or in any other jurisdiction where such offer or sale would be unlawful. Securities may not be offered, sold, resold, pledged, delivered, distributed or transferred, directly or indirectly, into or within the United States absent registration under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Company’s securities have not been and will not be registered under the Securities Act.

The Company’s financial year ends on March 31.

3

Company Overview

• Omkar Speciality Chemicals Ltd (OSCL) is involved in the manufacturing of inorganic and organic intermediates and Active Pharmaceuticals Ingredients (APIs)

• OSCL has nine units in the state of Maharashtra, India (five units in Badlapur, District Thane, three units in Chiplun, District Ratnagiri and one unit in Mahad, District Raigad)

• The Company’s product segments include Iodine Compounds, Selenium Compounds, Intermediates, Resolving Agents and Others (Molybdenum, Cobalt, and Bismuth) and APIs which comprises of more than 200 products

• Exports to about 38 countries, including regulated markets such as Europe, North America, South America, China and other Asian countries

Financial Snapshot FY12 FY13 FY14 FY15

Revenue (Rs.Cr.) 166.9 211.7 240.3 265.13

EBITDA (Rs.Cr.) 33.2 40.2 42.9 52.17

Margin 19.9% 19.0% 17.9% 19.68%

PAT (Rs.Cr.) 16.0 20.6 13.6 24.28

Margin 9.4% 9.5% 5.6% 9.13%

Net worth (Rs.Cr.) 105.4 127.0 137.2 168.57

Note: EBITDA calculated as PBT + Depreciation + Finance Costs – Other Income

OSCL

Lasa Laboratory Pvt. Ltd.

Urdhwa Chemicals

Company Pvt. Ltd.

Rishichem Research Limited

Desh Chemicals Pvt. Ltd.

SITE LOCATIONS

Badlapur

Mahad

Chiplun

Mumbai

JNPT port

Badlapur

• Unit I

• Unit II

• Unit III

• Unit IV • Rishichem

Chiplun

• Unit V

• Unit VI

• Urdhwa

Mahad

• Lasa

5

Promoters & Directors

Mr. Pravin Herlekar

Chairman & Managing Director

He is a Bachelor of Technology in Chemical Engineering from Indian Institute of Technology, Bombay and is a post graduate in management studies from Mumbai University

He has an overall experience of 40 years in the field of Product Development, Marketing and Administration

He has been actively involved in the business of the Company and has played a key role in the growth of OSCL with his inputs in strategic planning and business development

Over the years he has been successful in expanding OSCL’s customer base, especially in Europe, North America, Asia, South America & Australia

Mr. Omkar Herlekar

Whole-time Director

He is a Bachelor of Science and Master of Science (By Research) in Chemistry from the University of Mumbai and has an overall experience of 8 years

He looks after the Research & Development activities of OSCL and supervises the entire factory operations

He is actively involved in the setting up and implementation of OSCL’s new manufacturing units

6

Directors

Prof. Dr. Suhas Rane Independent Director

He is a BE Mechanical Engineer, Diploma in Management Studies (DMS)and Master of Financial Management (MFM) from Mumbai University. He has a Ph.D. in supply Chain Management from University of Pune. He has an overall experience of 41 years. Currently he is a visiting faculty with NMIMS, S.P. Jain — Singapore & Dubai, Indo-German Chamber of Commerce and ICFAI

Mrs. Anjali Herlekar Non-executive, Promoter And Woman Director

Bachelor of Science (Physics) and Master of Education from University of Mumbai. She has an overall experience of about 20 years in the field of policy matters & HR administration in addition to her experience in Education.

Mr. Sitendu Shamra Independent Director

Dr. Vikas Telvekar Independent Director

He is an eminent Chartered Accountant. He has over 25 years of experience in the area of finance, tax planning, service tax etc. He has been practicing as a Chartered Accountant, in Mumbai, under the firm name Sitendu Sharma & Company.

He is a Master of Science (Technology) and Doctor of Philosophy (Technology) in Pharmaceutical and Fine Chemicals from UDCT, Mumbai. Since 2003, he is associated with The Institute of Chemical Technology, Department of Pharmaceutical Science and Technology as a permanent faculty. Recently Department of Science and Technology (DST), Government of India awarded him the BOYSCAST fellowship

Mr. Subhash Mali Independent Director

He is a Bachelor of Chemical Engineering from University of Bombay. He has an overall experience of about 36 years. During his tenure he has worked with Asian Paints Limited, Ranbaxy Laboratories Limited, Unichem Laboratories Limited and Kopran Limited. Since 2002, he is employed with Arch Pharmalabs Limited, Mumbai as Technical Director

Mr. Rishikesh Herlekar Executive Director

He is a B.E. (Chemical Engg.). and Pursuing M. Tech in Pharmaceutical Sciences. He has an overall experience of 2 years in the Business Development and also involved in Accounting, Audit & Finance area, Coordinating with Production, Quality Production, Quality Assurance and related Regulatory Matters.

7

Directors

Mr. Subhash Ghalke Independent Director

He is a B.Tech from IIT Bombay and M. Tech from IIT Kanpur. He has an overall experience of about 36 years. During his tenure he has worked with Aegis Chemical, Colgate Palmilive India, Lime Chemicals, UHDE India, Jayant Oils and Derivatives, Chemtrols Ltd. etc.

Mrs. Sanjivani Patare Independent and Woman Director

Mr. Prakash Rao Executive Director

She is a B.com graduate and Law Graduate from Pune University. She has over 20 years of experience in the area of Conveyance Matters, legal matters and procedural work.

He is a B.com. Graduate from Mumbai University. He has overall 30 years of experience in the field of HR, Admin and Public Relations.

Mr. Vikas Gadre Independent Director

He is a B.Tech. from IIT Bombay, MBA from IIM, Banglaore and Company Secretary from ICSI. He has an overall experience of about 40 years. Currently, he is heading Bombay Chamber of Commerce and Industry, a premier Chamber of commerce as Director General.

He is an eminent Chartered Accountant having more than 23 years of experience in the fields of Income Tax, Company Law, Banking, Finance, Statutory Audit, Internal Audit, Concurrent Audit, Special Task Audit, Tax Audit, Bank Audit, Financial Institutions Audit, Designing and developing Internal Control and Check Systems etc. He has been practicing as a Chartered Accountant, in Mumbai, under the firm name Laxmikant Kabra & Co.

Mr. Laxmikant Kabra Non-Executive and Non-Independent Director

8

Diagnostic Reagents

Cosmetics

Pharmaceuticals

Speciality Coatings

Veternairy API

Catalysis

Glass & Ceramics

Electronics

Synthetic Fibers

Electroplating

Resolving Agents

Feed Nutrients

Segments Served

9

Evolution Of Company

2015 • Commercialization of 300 MTPA capacity at Unit VI at Chiplun

FY

1983 • Incorporated as a proprietary firm at Badlapur; Develops import substitutes - molybdenum and selenium derivatives

1995 • Starts producing a slew of Iodine derivatives

2000 • Launch of new product - Selenium Organic Intermediates

2005 • Incorporation of Omkar Speciality Chemicals Pvt. Ltd.

2006 • Takeover of the business of the proprietary firm having manufacturing operations of molybdenum, cobalt, selenium &

iodine derivatives (installed capacity at the time of 318 MT)

2009 • Commences operations at Unit II, F-24 at Badlapur (East), Thane District

2010 • A public limited company now, receives ISO 9001:2008 Certification for Unit II, FDA approval to manufacture Selenium

Sulphide USP in Unit III, B-34 at Badlapur; Sets up R&D center at Unit III

2011 • Commences operations at Unit III • Lists on BSE and NSE through an Initial Public Offer • Acquires Rishichem Research

2012 • Acquisitions of Desh Chemicals Pvt. Ltd., Urdhwa Chemicals Company Pvt. Ltd., Plot No. D-27/5, at Chiplun and Plot

No. F-9 (adjacent to Unit IV at Badlapur) and receives DSIR recognition for R&D Center

2013 • Forays into API manufacturing through acquisition of Lasa Laboratory Pvt. Ltd. • Acquires plot No. W-94(A) & W-95(A) adjacent to Unit I at Badlapur • Successful commissioning of ERP and Urdhwa Chemicals Plant at Chiplun

2014 • Acquisition of Plot No. B-15 and B-16 at Chiplun, Plot No. D-27/4, adjacent to Unit V at Chiplun and Plot No. W-93(A)

adjacent to Unit I at Badlapur

10

Business Segments

Iodine Compounds

Anti-diabetic, anti-cancer, anti-cholesterol, etc. & as diagnostic reagents

Resolving Agents

Used in separation of optical isomers during synthesis of bulk drugs

Selenium Compounds

Ingredient for feed nutrient, pharma intermediates, manufacture of tinted glasses and ceramics

Intermediates

Used in pharmaceutical industry in synthesis of various APIs particularly as oxidizing or reducing agents

APIs

Veterinary APIs used mostly as Anthelmintic (de-worming)

129.39

51.13

16.28

10.53

56.83

Product usage FY15 Revenue

(Rs. Cr.)*

*Rest of the revenue amounting to ~Rs. 0.97 Cr is contributed by other products like derivatives of Molybdenum, Cobalt, Bismuth, etc.

11

Business Units

Badlapur Inorganic Intermediates

Badlapur Unit II Organic Intermediates

Badlapur Inorganic Intermediates

Badlapur Centralised warehouse

Unit I

Unit III

Unit IV

Chiplun Organic Intermediates

Chiplun Unit VI Organic Intermediates

Mahad APIs (Veterinary)

Chiplun Organic Intermediates

Unit V

Lasa

Urdhwa

Badlapur Pilot plant for product commercialization Rishi

chem

600

1,025

75

NA

NA

300

450

2,800

NA

Unit Location Activity undertaken Volumetric Capacities*

*Volumetric capacities in MTPA as of March 31, 2015

TOTAL 5250

12

Capacity Growth Over The Years

Volumetric Capacity (MTPA)

FY09 FY10 FY11 FY12 FY13 FY14 FY15

Unit I 375 375 375 600 600 600 600

Unit II 375 375 500 1,025 1,025 1,025 1,025

Unit III - - 75 75 75 75 75

Unit VI - - - - - - 300

Lasa - - - - 120 120 450

Urdhwa - - - - 2,800 2,800 2,800

Total Capacity

750 750 950 1,700 4,620 4,620 5,250

375 375 375 600 600 600 600 375 375 500

1,025 1,025 1,025 1,025 75

75 75 75 75

- - -

- - - 300 120 120 450

2,800 2,800

2,800

0

1000

2000

3000

4000

5000

6000

FY09 FY10 FY11 FY12 FY13 FY14 FY15

Unit I Unit II Unit III Unit VI Lasa Urdhwa

13

Strengths

Fungible Facilities leading to multi

product capability

Diversified customer base

• Manufacturing facilities with multiple product capability

• Products across segments comprise of more than 200 products

• OSCL can change its product mix with minimum lead time

Long standing existing client relationships

• Existing client relationships in domestic and international markets

• Of the top 30 customers over the past 2 fiscal years, more than 40% have been repeat customers

Cost advantage backed by a strong

focus on R&D

• Developed processes for manufacture of products in a cost effective manner

• DSIR recognized R&D unit

• Acquired Rishichem Research Limited – unit equipped with pilot plant facilities

Quality control

• OSCL has quality control departments at each of its units

• Activities comprise sampling, testing of raw materials and processes, quality certification, etc.

Experienced management

team and employees

• Managed by a team of qualified and experienced management and technical teams

• OSCL believes that the strength and quality of its management team has been instrumental in implementing its business and growth strategies successfully

• Diverse customer base from different industry segments

• In FY15, OSCL’s top 30 customers contributed less than 60% of the total sales, with the largest customer contributing 6.03% of the total sales

1 2 3 4 5 6

14

Top Products (1/2)

Segments

Iodine Compounds

Intermediates

Uses

• Reagent in pharma

industry

• Intermediate for API

• Screen printing

• Animal feed

formulations

• Digital applications

• Regent in pharma

industry

• Pigments

• Building block in

organic chemistry

Indicative Products per Segment and Segmental Sales (Rs.Cr.)

FY14 FY15

3,5-Di Iodo Salicylic Acid

5-Iodo-2-Methyl Benzoic Acid

Methyl Iodide

Potassium Iodate

Potassium Iodide

Sodium Iodide

Sodium Meta Periodate

Tri Methyl Sulfoxonium Iodide

Others

1,3-Acetone Di Carboxylic Acid

2,4 Di Chloro Benzoic Acid

4-Amino-2,4-Dichloro-5-Metildiphenil

4-Hydroxy-3 Iodo 5- Nitrobenonitile Crude

4-Iodoanisole

Bismuth Oxide

Phosphomolybdic Acid

Tellurium Dioxide

Vanadyl Sulphate

Others

139.51 129.39 The sale of Iodine

products in volume terms increased by

26.91%

41.26 51.13 Growth of 23.92%

APIs

• Deworming for

veterinary purposes

• Anti-fungal for

veterinary purposes

Albendazole

Closantel

Fenbendazole

Nitroxynil

Povidone Iodine

Toldimfos Sodium

Others

32.75 56.83 Growth of

73.53%

15

Top Products (2/2)

Segments

Resolving Agents

Others

Uses

• Separation of optical

isomers

• Catalyst across

industries

• Feed additive

Indicative Products per Segment and Segmental Sales (Rs.Cr.)

Di-Benzoyl L-Tartaric Acid (DBLTA)

Di-p-Toluoyl D-Tartaric Acid (Anhydrous)

Di-p-Toluoyl L-Tartaric Acid (Anhydrous)

Others

Ammonium Molybdate

Cobalt Carbonate

Sodium Molybdate

Others

5.33 0.97 De-growth of 81.80% due to reducing focus

on these highly competitive markets

9.75 10.53 Growth of 8%

Selenium Compounds

• Tinted glass manuf.

• Animal/Poultry feed

• Anti-Dandruff

Shampoo

• Reagent for API &

pharma industry

FY14 FY15

Benzene Seleninic Anhydride

Selenium Dioxide

Selenium Sulfide

Sodium Selenate

Sodium Selenite

Others

21.35 16.28 Decline of 23.75%

16

Markets Served

Currently OSCL has footprints across 38 countries round the globe

17

Strategy

• Increase in Gross margins • Diversified portfolio along with Mix and match of commodity and speciality niche

molecules

Augmenting manufacturing capacity to increase product range

• Exports have a shorter debtor cycle compared to domestic sales and will hence help in improvement in Net Working Capital days

• Logistic costs will come down due to setting up of Antwerp warehouse Increase in exports

• Receipt of process patents prohibits the use of the same process for manufacture of the said product by anyone else

• This will reduce competition for the products and increase margins as well as payment terms

Process patents for key products

18

Strategy (continued)

1. Enable the Company to become cost competitive 2. Imported Raw Material Dependency is reduced 3. Improvement in working capital with lower dependence on customers

Focus on backward and forward integration

1. Focus on R&D will enable Company to have a steady growth in product pipeline 2. Helps OSCL to stand different than it’s Competitors and Highlights it’s technical

Expertise Focus on innovation

1. Increase in margins 2. Further diversification of customer base 3. Such Diversified range of products helps OSCL to maintain its Top line and Bottom

Line

High margin niche products along with portfolio of high volume commoditized products

19

TECHNICAL EXPERTISE

Synthetic Lab:

High pressure reactions (Hydrogenations / Carboxylations).

-20°C to 200°C Reactions.

Polymorphism.

Handling Air and Moisture Sensitive Reactions / Reagents.

Reactions Handled –

• Grignard Reactions,

• Nitration, Halogenation,

• Oxidation,

• Reduction,

• Esterification,

• Ammonolysis,

• Oximation,

• Acetylation,

• Alkylation, etc.

Analytical Lab:

Analytical Method Development – In-process, Raw-Material, Intermediates &

Finished Products.

Method Validation.

Impurity Profiling.

Stability Studies.

21

Why Are We In The Iodine Compounds Business?

Iodine Production and Demand Scenario OSCL caters across all segments

Iodine

Commodity Derivatives

Niche Derivatives

Contrast Media (API)

Repellents & Other Uses

Recent Developments in Iodine Markets

Iodine is supplied predominantly from 2 countries i.e. Japan and Chile

The iodine market saw volatility in supply post 2010 due to the natural calamities in Japan, which pushed the prices up

As a result prices increased from US$30 per kg to US$90 per kg and was stable around US$75 per kg levels

In early FY 2014, Japanese supplies resumed and prices fell to US$30 per kg recently; with the market reaching normal

levels of operations

Salient Features and Benefits of Iodine

Used in production of many lifesaving drugs and is indispensible in most processes

A vital ingredient for monitoring operations of thyroid gland; leading to an increase in demand of iodine and its

derivatives

Iodine is used for the manufacture of diagnostic reagents, called contrast media in applications such as imaging,

scanning, etc., which has a vast potential to grow

22

Consolidated Financial Snapshot

Note: EBITDA calculated as PBT + Depreciation + Finance Costs – Other Income using the respective numbers for financial years 2012, 2013, 2014 and 2015 ended March 31

Revenue from Operations (Rs. Cr.) EBITDA (Rs. Cr.)

PAT (Rs. Cr.) Net Worth (Rs. Cr.)

166.95

211.69

240.27 265.13

90.48

0

50

100

150

200

250

300

FY12 FY13 FY14 FY15 Q1 2016

33.19

40.17 42.94

52.17

17.26

0

10

20

30

40

50

60

FY12 FY13 FY14 FY15 Q1 2016

16.00

20.56

13.56

24.28

8.17

0

5

10

15

20

25

30

FY12 FY13 FY14 FY15 Q1 2016

105.43

127.06 137.21

168.57 176.74

0

20

40

60

80

100

120

140

160

180

200

FY12 FY13 FY14 FY15 Q1 2016

23

Key Ratios

ROE (%)

ROCE (%)

15.18% 16.18%

9.88%

14.40%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

FY12 FY13 FY14 FY15

17.59% 17.24%

12.96% 13.82%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

FY12 FY13 FY14 FY15

24

Key Ratios

Note: Calculated on the basis of Closing Balance of Accounts Receivables, Inventory and Accounts Payable with respect to Net Revenue from Operations

Working Capital Cycle

145

177 203

143

111

-

50

100

150

200

250

FY12 FY13 FY14 FY15 Q1 2016

25

Snapshot 2015

FY15 Revenue: Rs. 265.13 crore

129.39

16.28

51.13

56.83

0.97

10.53 Iodine Compounds

Selenium Compounds

Intermediates

API

Others (Molybdenum, Cobalt, Bismuth)

Resolving Agents

26

Fast Growing Segments

Revenue – API Business (Lasa) (Rs. crore)

Revenue – Exports (Rs. crore)

10.81

32.76

71

0

20

40

60

80

FY13 FY14 FY15

26.08

59.76 62.12 67.17

0

10

20

30

40

50

60

70

80

FY12 FY13 FY14 FY15

27

Quarterly Trend – Consolidated nos.

Note: EBITDA calculated as PBT + Depreciation + Finance Costs – Other Income using the respective first quarterly numbers for years 2014, 2015 and 2016

57.51 53.51

90.48

18.59%

16.29%

19.08%

5.62%

9.28% 9.03%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Q1FY14 Q1FY15 Q1FY16

Rs. cro

re

Sales EBITDA Margin PAT Margin

BEST EMERGING SME AWARD, 2013 TO OSCL

Receipt of an Award by Mr. Pravin S. Herlekar,

Mr. Pravin S. Herlekar, Promoter and Chairman & Managing Director of OSCL has been honored for his dedicated services to the Chemical Industry and developing various molecules through research and development activity in this field, by Free Press Journal group, at the hands of Mr. Devendra Fadnavis, Chief Minister of State of Maharashtra, in the presence of Hon’ble Shri Ram Naik, Governor of State of Uttar Pradesh

THANK YOU

Visit us at

www.omkarchemicals.com