1 Slide No. 1 JBF Industries Limited July 2007 JBF Industries Limited JBF Industries Limited July 2007 Slide No. 2 JBF Industries Limited July 2007 Disclaimer Except for the historical information and discussions contained herein, statements included in this presentation may constitute "forward-looking statements." These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward looking statements. JBF Industries Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. JBF Industries Limited JBF Industries Limited
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Slide No. 1JBF Industries Limited
July 2007
JBF Industries Limited JBF Industries Limited
July 2007
Slide No. 2JBF Industries Limited
July 2007
DisclaimerExcept for the historical information and discussions contained herein, statements included in this presentation may constitute "forward-looking statements." These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward looking statements. JBF Industries Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
Key Financial IndicatorsKey Financial IndicatorsParticular Unit Year 2004-05 Year 2005-06 Year 2006-07
(Audited) (Audited) (Audited)
Net Sales Rs. Cr 740 722 1480
EBIDTA % 12.57 12.97 12.44
PBT % 6.81 8.30 8.15
Net Profit % 3.95 5.94 5.45
EPS Rs. 9.43 9.84 15.61
CEPS Rs. 22.87 18.71 27.96
RONW % 15.74 17.34 23.43
ROCE % 18.13 17.15 20.65
Secured Term Loan Rs. Cr 95 219 288
Net Worth Rs. Cr 195 300 388
11
Slide No. 21JBF Industries Limited
July 2007
StrengthsStrengths
• Amongst the top 5 players in POY Industry with a market share of nearly 7%
• Largest supplier of Chips with 55% market share
• Amongst the top 5 players in POY Industry with a market share of nearly 7%
• Largest supplier of Chips with 55% market share
Advantage of Location :
– All key customers around Plant
– Key suppliers near plant
Advantage of Location :
– All key customers around Plant
– Key suppliers near plant
Customer Centric Manufacturer
– Extending technical support to customers
– Ability to provide Special Denier
Customer Centric Manufacturer
– Extending technical support to customers
– Ability to provide Special Denier
Slide No. 22JBF Industries Limited
July 2007
StrengthsStrengths
Both Batch and Continuous Process : Flexibility to manufacture specialty chips and Cost effective manufacturing of commodity chips
Both Batch and Continuous Process : Flexibility to manufacture specialty chips and Cost effective manufacturing of commodity chips
Process R&D - In-house innovations have increased productionProcess R&D - In-house innovations have increased production
Large capacities enable better negotiating power for raw materialsLarge capacities enable better negotiating power for raw materials
Low cost Producer, effective working capital management—leading to impressive ROCELow cost Producer, effective working capital management—leading to impressive ROCE
12
Slide No. 23JBF Industries Limited
July 2007
SYNTHETICS SYNTHETICS
IN THE IN THE
INDIAN TEXTILE INDUSTRYINDIAN TEXTILE INDUSTRY
Slide No. 24JBF Industries Limited
July 2007
The Indian Textile Industry.. A synopsisThe Indian Textile Industry.. A synopsis
2nd largest textile producer after China2nd largest textile producer after China
3rd largest producer of cotton in the world
– annual production over 3 Mn Tonnes
3rd largest producer of cotton in the world
– annual production over 3 Mn Tonnes
In the Man Made Fiber sector, World’s 5th
largest producer of Polyester, and 3rd largest for Viscose
In the Man Made Fiber sector, World’s 5th
largest producer of Polyester, and 3rd largest for Viscose
13
Slide No. 25JBF Industries Limited
July 2007
Fabric ProductionFabric Production
Non Cotton Production Growing Fastest Source: ASFI
0
5000
10000
15000
20000
25000
1997-
1998
1999-
2000
2001-
2002
2003-
2004
2005-
2006
Year
Other
Blended
Non Cotton
Cotton
2006-
2007
Mn. Sq. Mtrs
Slide No. 26JBF Industries Limited
July 2007
Yarn ProductionYarn Production
Cotton Dominates But Growth Slowing Down Source: ASFI
Per capita availability of all fibersPer capita availability of all fibers
INDIA, 4.5
CHINA, 12.5
USA, 24
WORLD, 9
0 10 20 30
Source: ASFI
KGSKGS
15
Slide No. 29JBF Industries Limited
July 2007
2004-05 2010-11
Textile TargetTextile Target
26
13
45
40$39bn
$85bn
Exports
Domestic
Exports to grow faster than domestic consumptionSource: ASFI
Slide No. 30JBF Industries Limited
July 2007
Fibre ShareFibre Share
3.1
2.5
4.0
Mn Tonnes
Cotton
Non Cotton
Non cotton to lead future growthSource: ASFI
0
2.5
5
7.5
10
12.5
2004-05 2010-11
2.5
3.1Cotton
Non Cotton8.2
4.0
16
Slide No. 31JBF Industries Limited
July 2007
Advantage IndiaAdvantage India
Excellent Raw Material baseExcellent Raw Material base
Low Labour costsLow Labour costs
Can undertake any stage of textile production process with quality
Can undertake any stage of textile production process with quality
India to be a hub for Textile productionIndia to be a hub for Textile production
Synthetics – Finished goods and Raw Materials given tax concession in the latest Government Budget
Synthetics – Finished goods and Raw Materials given tax concession in the latest Government Budget
Increased Capital allocation for development of Integrated Textile parks
Increased Capital allocation for development of Integrated Textile parks
Higher allocation of funds for upgradation of Machinery for the Textile sector
Higher allocation of funds for upgradation of Machinery for the Textile sector
Slide No. 32JBF Industries Limited
July 2007
Overview
Of
Polyester
Filament Yarn industry
17
Slide No. 33JBF Industries Limited
July 2007
KGS
WORLD, 3.1
USA, 8
INDONESIA,
5.1
CHINA, 6.1
PAKISTAN,
3.1
INDIA, 1.6
0 2 4 6 8 10Source: ASFI
Per capita availability of polyesterPer capita availability of polyester
Slide No. 34JBF Industries Limited
July 2007
Growth of Cotton and Chemical Fibres Growth of Cotton and Chemical Fibres
in Indiain India
2584
29423402
243 308
353 487
691
1049
745
964
1334
105 108113
292522
1725 38
0
500
1000
1500
2000
2500
3000
3500
Cotton VSF+VFY PSF PFY Acrylics Nylon Other Man
Made
1997 - 1998
2002 - 2003
2006 - 2007
18
Slide No. 35JBF Industries Limited
July 2007
Indian Synthetic Fibre IndustryIndian Synthetic Fibre Industry
Source: ASFI
Cotton, 2584, 61%
VSF+VFY, 243, 6%
PSF, 487, 12%
PFY, 745, 18%Nylon, 29, 1%
Other Man Made,
17, 0%
Acrylics, 105, 2%
Slide No. 36JBF Industries Limited
July 2007
The Major Players : POYThe Major Players : POY-- IndiaIndia
Others
27%
Indorama
11%JBF Ind
7%
Garden Silk Mills
7%
Century Enka
4%
NovaPetrochem
2%
Reliance Ind.
36%
Sanghi Poly
3%
Modern Syntex
3%
Source: JBF Internal Research
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Slide No. 37JBF Industries Limited
July 2007
Polyester Filament YarnPolyester Filament Yarn
The PFY industry has shown a growth of 9.81% The PFY industry has shown a growth of 9.81%
The industry has nearly 40 active players with a built in production capacity of nearly 2.0 Mn Tonnes per annum
The industry has nearly 40 active players with a built in production capacity of nearly 2.0 Mn Tonnes per annum
Cotton alone cannot fulfill the demand obligations of the country due to restrictions on the arable land and compulsion of usage of land for other agricultural products
Cotton alone cannot fulfill the demand obligations of the country due to restrictions on the arable land and compulsion of usage of land for other agricultural products
Polyester becoming increasingly uncompetitive in Taiwan and Korea and major capacities shifting to China and India in the quota free regime
Polyester becoming increasingly uncompetitive in Taiwan and Korea and major capacities shifting to China and India in the quota free regime
Slide No. 38JBF Industries Limited
July 2007
Why Polyester industry should grow in IndiaWhy Polyester industry should grow in India
Polyester competitively produced in India because
• Adequate availability of raw materials—PX,PTA,MEG
• World scale and world class production facilities
• Competitive conversion costs
Polyester competitively produced in India because
• Adequate availability of raw materials—PX,PTA,MEG
• World scale and world class production facilities
• Competitive conversion costs
Favorable Demand drivers:
• Consistent GDP growth
• Value added and new product developments
• Technological developments
Favorable Demand drivers:
• Consistent GDP growth
• Value added and new product developments
• Technological developments
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Slide No. 39JBF Industries Limited
July 2007
Why Polyester industry should grow in IndiaWhy Polyester industry should grow in India
Cotton alone cannot fulfill the demand obligations of the country due to restrictions on the arable land and compulsion of usage of land for other agricultural products
Cotton alone cannot fulfill the demand obligations of the country due to restrictions on the arable land and compulsion of usage of land for other agricultural products
Polyester becoming increasingly uncompetitive in Taiwan and Korea and major capacities shifting to China and India in the quota free regime
Polyester becoming increasingly uncompetitive in Taiwan and Korea and major capacities shifting to China and India in the quota free regime
MEG Supply – demand seem to balance, imports may upset this equation
Source: JBF Internal
Research
MEG Capacity supply scenarioMEG Capacity supply scenario
884831
883
1039
883
1237
883
1235
1369
1235
1411
1235
0
200
400
600
800
1000
1200
1400
1600
2005 2006 2007 2008 2009 2010
Production
Demand
UNIT: 000’ Tonnes
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Slide No. 55JBF Industries Limited
July 2007
ExpansionsExpansions
Slide No. 56JBF Industries Limited
July 2007
Update Update –– July 2007 July 2007
• The" JBF RAK FZ LLC " at Emirates of Ras al Khaimah, A Subsidairy of our Company, has successfully started production of PET Grade Chips under 1st Phase. The Company has polymerisation capacity of 900 TPD. In the 2nd Phase " JBF RAK FZ LLC, expect to start production of Polyester Film (BOPET) by quarter ending 31st December 2007.
• The Company has entered into MOU with CVCIGP II Client RosehillLimited,Mauritius and their afflitiates ( which are within the structure of Citigroup Venture Capital International Growth Funds, managedby Citigroup) whereby they would invest a sum of USD 118 million into JBF Global Pte Ltd., Singapore, subsidiary of our Company by way of fully convertible securities. These funds are meant to be used
for international operations of the Company.
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Slide No. 57JBF Industries Limited
July 2007
Expansion in 2007Expansion in 20071. POLYESTER CHIPS PROJECT
216,000 MT PER ANNUM
EXPECTED TO BE COMPLETED BYSeptember 2008
Slide No. 58JBF Industries Limited
July 2007
Expansion in 2006Expansion in 20061. POLYESTER CHIPS PROJECT
216,000 MT PER ANNUM
COMPLETED MARCH 2006
2. POY EXPANSION
90,000 MT PER ANNUM
Commissioned in September 2006
3. POLYMERIZATION PROJECT---RAK
324,000 MT PER ANNUM
First Phase Started in July 07Second Phase expected by last quarter FY 2007
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Slide No. 59JBF Industries Limited
July 2007
Polyester Chips projectPolyester Chips project
600 Tonnes per day ---216,000 TPA continuous polymerization plant600 Tonnes per day ---216,000 TPA continuous polymerization plant
Set up at Sarigam in Gujarat, closer to the source of its raw materialsSet up at Sarigam in Gujarat, closer to the source of its raw materials
Suppliers have committed to supply additional requirements of raw materialsSuppliers have committed to supply additional requirements of raw materials
POLYESTER FILM 108,000 TPAPOLYESTER FILM 108,000 TPA
PLANT SIZE 324,000 TPAPLANT SIZE 324,000 TPA
Status :
Production started July 2007. Customer Tied up for long term supplyProduction started July 2007. Customer Tied up for long term supply
Second phase expected by Oct- Dec 2007Second phase expected by Oct- Dec 2007
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Slide No. 65JBF Industries Limited
July 2007
Process ChartProcess Chart
PTA MEG
PET Chip PET Film
PREFORES
Packaging
BOTTLING
14m TonnsWorldwide
3m TonnsWorldwide
Slide No. 66JBF Industries Limited
July 2007
Global PET Resin Demand By Global PET Resin Demand By RegionRegion
1997
46%
22%32%64
2002
34% 24%
42%
2007
39%
36%25%
America
Asia
Europe, MDE & Africa
Tot Dem: 4.6Mil tons Tot Dem: 8.6Mil tons Tot Dem: 13.6Mil tons
Average Annual Growth
1997 – 2002 13.2%
2002 – 2007 9.7%
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Slide No. 67JBF Industries Limited
July 2007
LocationLocation
Slide No. 68JBF Industries Limited
July 2007
Location AdvantagesLocation Advantages
RAK is a tax friendly country and Prince of RAK is a equity partnerRAK is a tax friendly country and Prince of RAK is a equity partner
Abundant gas availability at very attractive rates --- confirmed at US $ 2.5 /mbtuAbundant gas availability at very attractive rates --- confirmed at US $ 2.5 /mbtu
Abundance of Raw material – PTA and MEG and SABIC Saudi Arabia and MEGlobal Kuwait are other optionsAbundance of Raw material – PTA and MEG and SABIC Saudi Arabia and MEGlobal Kuwait are other options
35
Slide No. 69JBF Industries Limited
July 2007
Other Benefits for JBFOther Benefits for JBF
JBF would benefit from economies of scale for Raw Material purchasesJBF would benefit from economies of scale for Raw Material purchases
JBF in India can show improved financial performanceJBF in India can show improved financial performance
JBF will have substantial benefits in terms of perception in terms of “GOING GLOBAL”JBF will have substantial benefits in terms of perception in terms of “GOING GLOBAL”
Turnover estimated at US $ 350 Mn. in first full year of operation
36
Slide No. 71JBF Industries Limited
July 2007
RecapitulateRecapitulate……
Textile Sector poised for growthTextile Sector poised for growth
Growth in Polyester inevitableGrowth in Polyester inevitable
Consumption set to grow in double digitsConsumption set to grow in double digits
Availability of Raw Material to increase and trend indicates softening of prices of intermediaries Availability of Raw Material to increase and trend indicates softening of prices of intermediaries
JBF poised to capture global growth opportunities. Foundations for growth in placeJBF poised to capture global growth opportunities. Foundations for growth in place
New plant can potentially double the turnover on stable operating matrix New plant can potentially double the turnover on stable operating matrix