Man Industries (India) Limited · NSE:MANINDS
Man Industries (India) — Investor Presentation (June 2004)
41 slides from Man Industries (India)'s investor presentation, June 2004
Slide 1: Supporting infrastructure creation …
Supporting infrastructure creation …
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements which may be identified by their use of words like “plans, “expects,“ “will,” ”anticipates,” “believes,” “ intends,” “project,” “estimates” or other words of similar meaning. All statement that address expectations or projections about
Slide 3: Contents
Contents 1 Industry and Opportunity 2 Overview of Man Industries 3 Current Business Scenario 4 Plans and prospects
Slide 4: Industry and Opportunity
1 Industry and Opportunity 2 Overview of Man Industries 3 Current Business Scenario 4 Plans and prospects
Slide 5: The Pipe Industry
The Pipe Industry • Pipelines are the preferred mode of transportation for liquids and gases globally • Different types of pipes used for different applications – Trunk lines and branch lines – Distribution lines • Pipe types also differ on product being transported – Water, sewerage, petroleum prod
Slide 6: Pipes used for Trunk and Branch Lines
Pipes used for Trunk and Branch Lines • Longitudinally Submerged Arc Welded (LSAW) Pipes – Made by longitudinally submerged arc welding of Steel Plates – Can withstand high pressure application given their thickness as well as minimal welding seam – Used for high pressure trunk lines (typically for
Slide 7: Pipes used for Trunk and Branch Lines
Pipes used for Trunk and Branch Lines • Electric Resistance Welded (ERW) Pipes – Made by welding without use of weld metal – Limits sheet thickness, weld seam is also not as strong as SAW – Hence suitable for small diameter sub-trunk lines and branch lines • Ductile Iron Pipes – Made by centrifugal
Slide 8: Comparison of Types of Pipes
Comparison of Types of Pipes Particulars LSAW HSAW ERW DI Diameter 16”-60” 14”-104” 2.5”-24” 12”-32” Thickness 4.8-38mm 5-20mm 1.6-12.7mm * Pressure H L/M L/M L Fatigue H L L L Source: Company * Not a criteria • LSAW pipes are thus best suited for high pressure trunk applications
Slide 9: LSAW Pipes Best Suited for High Pressure Trunk Line Applications
LSAW Pipes Best Suited for High Pressure Trunk Line Applications • LSAW offers highest range of diameters and sizes for high pressure applications – with strong welding and high thickness plates – HSAW is unsuitable for high pressure applications due to thickness limitation and long weld length – ER
Slide 10: LSAW Pipes – Alternative Technologies
LSAW Pipes – Alternative Technologies Characteristics 3RBE U-O-E J-C-O Productivity High Moderate Low Shape - Roundness Good Moderate Moderate Local Roundness Good Moderate Moderate Residual Stresses Minimal Very High High Dia. Vs.Thk Range Moderate Restricted Maximum Source: Company 3RBE is well su
Slide 11: Demand for Pipelines Increasing
Demand for Pipelines Increasing • Latent gas demand, accompanied by recent gas finds and thrust on LNG imports will lead to growing demand for Gas transportation 3,000 (km) 2,000 Current gas scenario 1,000 0 2004 2005 2006 2007 Source: GAIL • GAIL itself is planning 7,900 km of new trunk lines over
Slide 12: Total Domestic Demand is Even Higher
Total Domestic Demand is Even Higher Domestic demand over next five years Company Pipe kms Pipe size ONGC 1,000 28" - 30" GAIL 7,900 Various sizes 26" to 42" GSPL 1,200 24"to 36" Reliance 2,250 24" to 48" Unocal 1,740 36" to 48" Others* 7,000 various sizes Total over next five years 21,090 Annual av
Slide 13: Will Benefit Domestic Capacities
Will Benefit Domestic Capacities • Current domestic capacities at 2,000 km p.a. would just be able to meet the domestic demand Domestic LSAW Pipe Capacity Rated Practical Company wise rated capacity (kms) Capacity Man Industries (3RBE) 580 Current 2,370 1,850 SAW Pipes (UOE, Benchpress) 990 -Post-ex
Slide 14: Supply Side Dynamics
Supply Side Dynamics n Long gestation period – 12-18 months for plant set up, 6- 36 months to get major approvals New players n Pre-qualification criteria includes performance track record n Have gone through the gestation period, and are now Existing expanding in line with demand expectations playe
Slide 15: Approvals – A Major Entry Barrier
Approvals – A Major Entry Barrier • Since oil & gas transportation, under high pressure, is hazardous, oil companies approve vendors only after stringent quality assessment and audit procedures – Can take 2-3 years – Most approvals are plant specific, existing players have to go through the audit an
Slide 16: Plant Set Up & Approvals – Indicative Time Line
Plant Set Up & Approvals – Indicative Time Line Activity Estimated Time Set up Project commissioning 12-18 Months and API Approval after audit. 3 Months approval Domestic Project Approvals (EIL, GAIL, IOCL, BPCL, HPCL, Reliance) 3-18 Months Global Project Approvals (Halliburtan, Bechtel, BP, Shell,
Slide 17: India’s Competitive Advantage
India’s Competitive Advantage Advantage over imports even at 10% • Indian manufacturers are globally import duty cost competitive with conversion US$/tonne Indian Mfr. Foreign Mfr. costs of ~ US$ 50/MT as against US$ 80-100/MT for overseas players Plate 400 400 – Lower labour costs, and costs of Fre
Slide 18: Competitive Also for Exports to Middle East
Competitive Also for Exports to Middle East Export competitiveness US$/tonne Indian Mfr. Foreign Mfr. • Middle East is a high demand area, with no significant local Plate 400 400 manufacturing Freight on plate 30-50 10-15 Import Duty 0 0 • Local demand traditionally met by Conversion cost 50 80-100
Slide 19: India – Benefiting from Proximity to the Demand Zone
India – Benefiting from Proximity to the Demand Zone Indian proximity to Demand Zone Source: Company Major pipe manufacturers are located in Europe and Japan whilst the Middle East, Russia and India are major demand centres
Slide 20: Global Major LSAW Pipe Manufacturers
Global Major LSAW Pipe Manufacturers Plant Capacity Plant Capacity Europe India Europipe 1200-1500kms SAW 990kms Ilva 1200-1500kms Welspun 800kms Corus 700-1100kms MAN 580kms Japan Sumitomo 1000-1200kms Americas Kawasaki 1000-1200kms NAPA (USA) 800-1000kms Nippon 800-1000kms Berg Steel Inc. (USA) 40
Slide 21: Domestic Players Have Gone Through Difficult Times
Domestic Players Have Gone Through Difficult Times • Domestic capacities set up in late 1990s (WGSL-1997, MAN-1996*) had difficult initial years – Gestation period as they sought accreditation and approvals from domestic and global agencies and oil companies – Domestic demand was also lack luster, m
Slide 22: Now, Fortunes Are Looking Up
Now, Fortunes Are Looking Up Sales PBDIT 10,000 1,800 (Rs.m) 8,000 (Rs.m) 1,500 1,200 6,000 900 4,000 600 2,000 300 0 0 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 SAW Pipes MAN Ind Welspun SAW Pipes MAN Ind Welspun PAT Production (LSAW Pipes) 800 300 (Rs.m) ('000 MT) 600 250 200 400
Slide 23: Overview of Man Industries
1 Industry and Opportunity 2 Overview of Man Industries 3 Current Business Scenario 4 Plans and prospects
Slide 24: Overview
Overview Incorporated Incorporated in in 1988, 1988, Man Man Industries Industries Limited Limited is is one one of of India’s India’s LSAW LSAW pipe pipe manufacturers manufacturers with with an an in-house in-house coating coating plant plant Revenues of Rs Operates a 3.4 bn and 580km per PBIDT of
Slide 25: Background
Background • Promoted by Mr. Rameshchandra Mansukhani in 1988 – Extrusion plant in Pithampur, MP to manufacture sections and profiles for buildings, railways, irrigation • Diversified into Longitudinal SAW Pipe manufacturing in 1996 – Collaboration agreement with Chr. Haeusler, Switzerland for API-g
Slide 26: Shareholding Pattern
Shareholding Pattern 42% 50% 2% 6% Promoters Institutions NRI/OCB Others Source : Company
Slide 27: Management Team
Management Team LIST OF KEY PERSONS: NAME OF PERSON Designation Qualification EXPERIENCE Mr. R.C. Mansukhani Chairman LLB, M.A. in Eco. 33 years experience in metals business, steel trading and Distinction in construction. International Banking, Monetary fund Mr. J.C. Mansukhani Managing B.Sc. Tech.
Slide 28: Management Team
Management Team LIST OF KEY PERSONS: PERSONS: NAME OF PERSON Designation Qualification EXPERIENCE Mr. R.K.Jain G.M.- Com. B.Com., FCA Is a Chartered Accountant having experience of about 15 years in Finance, accounts, taxation. Mr. Manish Pathak G.M.-Marketing B.E. –Mech. About 12 years of experienc
Slide 29: Manpower
Manpower • Company employs about 937 people including 92 engineers 145 125 667 Technical Admin & Marketing Workers
Slide 30: Business Overview
Business Overview Aluminium LSAW Pipe Mill HSAW Pipe Mill Coating Plant Extrusions Production 1988 1996 1999 2001 commenced Profiles and PE and Coal tar Products LSAW Pipes HSAW Pipes Panels Enamel Coating Capacity 5000 MTPA 580 km pa 270km pa 3.6 mn sqm pa Plant location Pithampur, MP Pithampur, MP
Slide 31: LSAW Pipes Manufacturing Capabilities
LSAW Pipes Manufacturing Capabilities Key Approvals • Plant set up using the latest 3-roll bending International Domestic technology, permits manufacturing a wide range of LSAW pipes SAUDI ARAMCO QATAR PETROLEUM GAIL INDIA ENGINEERS INDIA – 18”-56”, 6-29mm J. RAY MCDERMOTT IOCL SAIPEM BPCL • Capabil
Slide 32: Coating – the Icing on the Cake
Coating – the Icing on the Cake • Coating Plant – Provides competitive edge in supply of LSAW pipes, as most European and Japanese manufacturers rely on 3rd party coating plants. – Lower conversion costs compared to International manufacturers – Increasing demand for coated pipes in India – Provides
Slide 33: Low Capital Cost
Low Capital Cost • LSAW Pipe Mill with Coating plant set up in US$ 30 mn – Use of 3-roll bending technology, which provides versatility and flexibility in operations with lower investments in tools and jigs – In house development of non critical equipment including Parabolic and Diabolic Conveyors,
Slide 34: Current Business Scenario
1 Industry and Opportunity 2 Overview of Man Industries 3 Current Business Scenario 4 Plans and prospects
Slide 35: Historical Perspective
Historical Perspective • LSAW Pipe was set up in 1996-97, but capacity utilisation levels remained low leading to low profitability till 2002 – The company set up an expander and coating plant in 1999-2001 to enhance its quality and value addition – With approvals and revival of domestic projects, b
Slide 36: Uptrend Continues in FY2004
Uptrend Continues in FY2004 • Sizeable domestic orders have ensured a higher capacity utilisation in the recent year – LSAW pipe output likely to be above 80,000 MT in FY2004 – Growth in revenues and margins have led to significant increase in profits 2,000 300 (Rs mn) 1,500 225 1,000 150 500 75 0 0
Slide 37: Near Term Outlook
Near Term Outlook • Large domestic orders likely to keep domestic demand high – Includes ONGC Mumbai-Uran Trunk line of 408 km, GAIL Dahej-Uran Pipeline of 550 km, Haldia-Paradip Crude pipeline of 330 km • Export opportunities also picking up – NPCC, Abu Dhabi 202 km, Qatar Petroleum 138 km, Rasiisa
Slide 38: Plans and prospects
1 Industry and Opportunity 2 Overview of Man Industries 3 Current Business Scenario 4 Plans and prospects
Slide 39: LSAW Pipes - Expansion Plans
LSAW Pipes - Expansion Plans • New LSAW pipe mill under implementation at Anjar, Kutch (Guj) – 35 km from Mundra / Kandla port – Commissioning by end of current calendar year – Capex – Rs1.4bn; Capacity – 550km/200,000 MT per annum • Will facilitate focus on exports – Port location will reduce inlan
Slide 40: Other Businesses
Other Businesses • HSAW (Spiral) pipes – Continue to focus current capacity of 270 kmpa on domestic demand for water supply, sewerage and oil applications • Aluminum extrusions – Focus on both domestic and export markets, in-house anodising and electro- colouring give export competitiveness – Curren
Slide 41: Managing Business Risks
Managing Business Risks Project based orders – any delay • Second plant with focus on exports will help service or bunching of projects can lead expanded client base and reduce volatility to volatility quarterly performance • Port based location will offer faster turnaround time and enhance competit
Man Industries (India) — Investor Presentation (June 2004) on 6ix