DCW Ltd. — Earnings Release 2023

May 12, 2023

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Digitally signed by DILIP DILIP VISHNUBHAI VISHNUBHAI DARJI DARJI Date: 2023.05.12 13:50:22 +05'30'

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Earning Presentation

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Snapshot

8+ 2 Decades of State-of-the-Art Experience Integrated Manufacturing Units

12+ 2,000+ Chemicals with Employees 3 Specialty Chemicals 27% 43% 3 year Revenue 3 year EBITDA CAGR CAGR

BUSINESS

Pioneer

In India Soda Ash, C-PVC, Synthetic Rutile & SIOP

OPERATIONS

Zero Effluent and waste Process

FINANCIALS

14% Specialty Chemicals Revenue contribution from 0.5% in FY16

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Leading Largest and Unique Manufacturer of Commercial scale C-PVC and SIOP manufacturer of SIOP in in India Asia 58 MW ~2,500 Captive Acres of land available

58 MW Captive Power Capacity

0.33x 21.6% Net Debt to Equity Ratio FY23 ROCE 0.79x Net Debt to EBITDA Ratio

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Business Overview Financial Highlights Historical Financial Overview

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Company Overview

• Incorporated in 1939, DCW Ltd. was established as Dhrangadhra Chemical Works at Dhrangadhra, Gujarat as India’s first Soda Ash plant.

• Since then DCW has pioneered and created a strong presence in the Chlor-Alkali, Synthetic Rutile and PVC business segments, with a successful record of innovation in new products and processes.

• Over the years the company has expanded, diversified and modernized its operations with a diversified range of products for supply to customers in both, domestic and international markets with a conscious strategic shift towards specialty chemicals.

• DCW has an extensive distribution network spanning over 12 countries across USA, Europe, Japan, Malaysia and Netherlands catering to over 100+ customers.

• Today it has two state of the art manufacturing facilities located in Dhrangadhra, Gujarat and Sahupuram, Tamil Nadu.

Product Basket

• Specialty Chemicals: Synthetic Rutile (SR), Synthetic Iron Oxide Pigments (SIOP) and Chlorinated Poly Vinyl Chloride (C-PVC)

• Commodity Chemicals: Soda Ash, Caustic Soda, Poly Vinyl Chloride (PVC)

• Intermediate Chemicals: Liquid Chlorine, Hydrochloric Acid, Trichloroethylene, Utox, Ferric Chloride, and Sodium Hypochlorite, Sodium Bicarbonate and Ammonium Bicarbonate.

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Operating Revenue (INR Mn) and EBITDA Margins (%)
26,338
24,547
14,643
13,528 12,773
16.27%
14.30%
13.23%
11.97% 11.47%
FY19 FY20 FY21 FY22 FY23
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Geographical Revenue Break-up (As on FY23)

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28%
72%
DOMESTIC EXPORTS
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FY23 Segmental Revenue FY23 Segmental EBITDA
Soda Ash,
16%
PVC,
35%
SIOP, C-PVC,
6% Caustic 15%
Division,
C-PVC, Caustic SIOP,
60%
Soda Ash, 8% Division, 12%
14% 37% PVC, 4
-2%
Specialty
Specialty
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Key Milestones
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Growth in Commodity Chemicals Expansion towards Specialty Chemicals
Setup one of the Entered into a Technical Commenced
Commissioning of the first integrated License and Support production of 1st
Chlor-alkali Plant at plants in India to Agreement with Rockwood and only
Sahupuram in Tamil manufacture PVC Italia (Italy), and Arkema, C-PVC plant in
Nadu and Synthetic Rutile France, Europe India
1925 1968 1986 2016 2022
1959 1970 2010 2017
Incorporated Founded India’s 1st Changed Company’s Commissioned one of Capital Expenditure
India’s 1st Soda Trichloroethylene name to DCW Limited Asia’s largest scale of to increase capacity
Ash factory at plant Synthetic Iron Oxide and optimum
Dhrangadhra, Pigment plant utilisation of C-PVC &
Gujarat SIOP plants
Moving up the value chain by pioneering various chemical products and processes in India
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Marquee Customers
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~~Commodity Chemicals~~

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~~Specialty ChemicalsSpecialty Chemicals~~

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Value Proposition
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Significant Scale-up Opportunities Technology Tie-ups Diversified Application Base Niche & Diversified Product Mix
Over 2,500- acre land bank available at Licensed technology from Arkema Catering to over 15 industries with Diversified product mix of
Sahupuram facility provides easy scale- & technical assistance from high end-user growing markets Commodity, Intermediate
up opportunity without incurring Rockwood Pigments for SIOP and Specialty Chemicals
additional capex for land.
1 3 5 7 9
2 4 6 8
Strategic Location Moving up the Value Chain Self Sufficiency Well Established Relationships Planned Capital Expenditure
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Sahupuram Facility situated in the vicinity of the port providing logistical advantage for the export markets and tactical raw material procurement

Increasing the contribution from high value, high margin Specialty Chemicals Segments.

58 MW Co-Generation power plant ensures cost-effective, uninterrupted power supply. And major raw materials like Salt, Liquid Chlorine, Hydrogen, Hydrochloric Acid, etc. are captively produced to make value added products.

With over 8 decades of existence DCW has built strong client and supplier relationships across domestic and international markets

Next growth phase led by Specialty Chemicals to boost revenue & margins with planned Capex to double C- PVC capacity and increase SIOP throughput

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Capital Expenditure
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To further strengthen its position, DCW has planned a capital expenditure of INR 125 Crs to make further inroads into Specialty Chemicals and expand its CPVC capacity and with line-balancing capex to increase the utilization of SIOP capacity to near 100% from current levels	To further strengthen its position, DCW has planned a capital expenditure of INR 125 Crs to make further inroads into Specialty Chemicals and expand its CPVC capacity and with line-balancing capex to increase the utilization of SIOP capacity to near 100% from current levels	To further strengthen its position, DCW has planned a capital expenditure of INR 125 Crs to make further inroads into Specialty Chemicals and expand its CPVC capacity and with line-balancing capex to increase the utilization of SIOP capacity to near 100% from current levels
Upcoming CAPEX at Sahapuram Facility
Product	Expected Year of Commissioning	Total Capacity after Capex
C-PVC	H2-FY24	20,000 MTPA
SIOP	H2-FY24	30,000 MTPA

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Business Overview Financial Highlights Historical Financial Overview

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Key Financial and Operational Highlights
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Q4-FY23 Financial Performance

Q4/FY23 Operational Highlights:

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Revenue from
EBITDA EBITDA Margins
Operations
INR 995 Mn 16.92%
INR 5,881 Mn
0.7% Y-o-Y
(16.8)%Y-o-Y 295 Bps Y-o-Y
PAT PAT Margins Diluted EPS
INR 353 Mn 6.0% INR 1.20
(26.2)% Y-o-Y (76) Bps Y-o-Y (26.4)% Y-o-Y
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FY23 Financial Performance

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Revenue from
EBITDA EBITDA Margins
Operations
16.27%
INR 26,338 Mn INR 4,285 Mn
7.3% Y-o-Y 31.9% Y-o-Y 304 Bps Y-o-Y
PAT PAT Margins Diluted EPS
INR 1,920 Mn 7.29% INR 6.50
78.6% Y-o-Y 291 Bps Y-o-Y 72.0% Y-o-Y
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Q4-FY23:

• Flat growth in operational income on a QoQ basis due to fall in Caustic & SR prices by 37% & 31% QoQ respectively, which was countered by volume increase across all product segments.

• Operational income declined on a YoY basis on account of sharp drop in net realisations for PVC, CPVC & Caustic by 34%, 19% and 14% respectively.

• EBITDA margins improved on a YoY basis due to improved performance of Soda Ash business.

FY23:

• Highest ever turnover and absolute EBITDA achieved in FY23 with EBITDA margins expanding to 16.27%.

• Capacity utilsations across all business segments reached optimum levels with SIOP volumes consistently increasing over the quarters

• There has been a structural shift in interest costs reducing to under 10% from 17% levels in the year earlier, through refinancing of borrowings.

• The company was able to strengthen the Balance Sheet significantly by de-leveraging and improving current ratio to 1.38 from 1.02 in FY22.

• ROCEs have significantly improved to 21.63%.

• The company’s credit rating was upgraded to “A”, with a consistent track record of 3 rating upgrades in the last 18 months.

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Quarterly Key Segmental Performance

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Revenue (INR Mn) & EBITDA Margin (%)

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C-PVC SIOP Caustic Division PVC Soda Ash
626 2,275 3,465
545 408 989
473 898
379 2,053 671
1,699
1,932
39.7% 358 1,907
39.0%
31.2%
20.0% 24.3% 28.3% 13.9% 30.8% 10.9% 12.5% 11.4% 0.5% 19.7% 23.0%
-1.4%
Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23
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Production (in MT) & Capacity Utilisation (%)

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C-PVC SIOP Caustic Soda PVC Soda Ash
25,409 25,103 27,570
2,959 2,988 5,767 21,250 21,080 26,349 26,660
2,826
4,987 113% 112%
110% 111% 105% 4,519 89% 18,845 19,945 98% 102% 99%
85% 88%
79%
67% 74% 89%
Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23 Q4-FY22 Q3-FY23 Q4-FY23
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Yearly Key Segmental Performance

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Revenue (INR Mn) & EBITDA Margin (%)

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C-PVC SIOP Caustic Division PVC Soda Ash
2,190 1,539 9,561 12,434 3,621
2,153
6,702 9,279
2,024
1,075
34.5%
32.4%
28.4% 13.1%
17.1% 27.1% 18.7%
10.1%
-0.8% -0.7%
FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23
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Production (in MT) & Capacity Utilisation (%)

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C-PVC SIOP Caustic Soda PVC Soda Ash
1,04,959
11,472 20,809 80,010 96,348
11,263
72,035 107% 90,697
106% 14,678 94,706 97%
104% 83% 105%
75%
84%
77%
54%
FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23
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Quarterly Consolidated Financial Performance

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Particulars (INR Mn)	Q4-FY23	Q4-FY22	Y-o-Y	Q3-FY23	Q-o-Q
Operational Income	5,881	7,072	(16.8)%	5,792	1.5%
Total Expenses	4,886	6084	(19.7)%	4,777	2.3%
EBITDA	995	988	0.7%	1,015	(2.0)%
EBITDA Margins (%)	16.92%	13.97%	295 Bps	17.52%	(60) Bps
Other Income	44	13	NA	38	15.8%
Depreciation	228	221	3.2%	227	0.4%
Interest	191	258	(26.0)%	195	(2.1)%
Profit before Exceptional Items	620	522	18.8%	631	(1.7)%
Exceptional Items	-	-	-	27	NA
PBT	620	522	18.8%	658	(5.8)%
Tax	267	44	NA	176	51.7%
Profit After tax	353	478	(26.2)%	482	(26.8)%
PAT Margins (%)	6.00%	6.76%	(76) Bps	8.32%	(232) Bps
Other Comprehensive Income	(38)	(6)	NA	(1)	NA
Total Comprehensive Income	315	472	(33.3)%	481	(34.5)%
Diluted EPS (INR)	1.20	1.63	(26.4)%	1.63	(26.4)%

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Annual Consolidated Financial Performance

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Particulars (INR Mn)	FY23	FY22	Y-o-Y
Operational Income	26,338	24,547	7.3%
Total Expenses	22,053	21,299	3.5%
EBITDA	4,285	3,248	31.9%
EBITDA Margins (%)	16.27%	13.23%	304 Bps
Other Income	153	61	NA
Depreciation	902	885	1.9%
Interest	1,261	1,131	11.5%
Profit before Exceptional Items	2,275	1,293	75.9%
Exceptional Items	469	139	NA
PBT	2,744	1,432	91.6%
Tax	824	357	NA
Profit After tax	1,920	1,075	78.6%
PAT Margins (%)	7.29%	4.38%	291 Bps
Other Comprehensive Income	(41)	(4)	NA
Total Comprehensive Income	1,879	1,071	75.4%
Diluted EPS (INR)	6.50	3.78	72.0%

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Business Overview Financial Highlights Historical Financial Overview

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Historical Income Statement

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Particulars (INR Mn)	FY19	FY20	FY21	FY22	FY23
Operational Income	13,528	12,773	14,643	24,547	26,338
Total Expenses	11,909	11,308	12,549	21,299	22,053
EBITDA	1,619	1,465	2,094	3,248	4,285
EBITDA Margins (%)	11.97%	11.47%	14.30%	13.23%	16.27%
Other Income	36	85	113	61	153
Depreciation	834	872	874	885	902
Interest	1,040	1,075	1,197	1,131	1,261
Profit before exceptional items	(219)	(397)	137	1,293	2,275
Exceptional Item	-	-	-	139	469
PBT	(219)	(397)	137	1,432	2,744
Tax	(176)	(129)	99	357	824
Profit After tax	(43)	(268)	38	1,075	1,920
PAT Margins (%)	NA	NA	0.26%	4.38%	7.29%
Other Comprehensive Income	7	10	3	(4)	(41)
Total Comprehensive Income	(36)	(258)	41	1,071	1,879
Diluted EPS (INR)	(0.19)	(1.12)	0.15	3.78	6.50

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Historical Balance Sheet

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Particulars (INR Mn)	FY21	FY22	FY23	Particulars (INR Mn)	FY21	FY22	FY23
ASSETS				EQUITY AND LIABILITIES
Non-Current Assets				Equity
Property, Plant & Equipment	13,962	13,386	12,839	Share Capital	522	522	590
Capital Work in progress Right – of – use Assets Financial Assets (i)Investments	38 107 0	81 134 0	597 121 0	Other Equity Total Equity Non-Current Liabilities (i)Borrowings (ii)Lease Liability	6,350 6,872 5,227 10	7,496 8,018 4,409 29	9,661 10,251 3,807 17
(ii)Other Financial assets	479	96	112	(iii)Other Financial Liabilities	364	408	200
Income tax assets (net)	14	-	10	Provisions	153	184	235
Other Non- Current Assets	40	58	78	Deferred Tax Liabilities (Net)	616	727	1,044
Total Non- Current Assets	14,640	13,755	13,757	Other Non-Current Liabilities	98	91	84
Current Assets				Total Non-Current Liabilities	6,468	5,848	5,387
Inventories	1,691	2,471	3,446	Current Liabilities
Financial Assets				(i)Borrowings	1,003	1,106	1,242
(i)Investments	-	-	-	(i)Trade Payables	2,980	2,958	2,750
(ii)Trade Receivables (iii)Cash and Cash Equivalents (iv)Other Bank Balances (v) Loans Other Current Assets	952 500 725 12 232	1,165 877 248 11 506	1,329 99 1,585 12 405	(ii)Other Financial Liabilities (iii)Lease Liabilities Other current Liabilities Provisions Income Tax Liabilities (Net) Total Current Liabilities	536 1 836 56 - 5,412	458 14 560 68 2 5,166	749 17 166 71 - 4,995
Total Current Assets	4,112	5,278	6,876	Total Liabilities	11,880	11,015	10,382
TOTAL ASSETS	18,752	19,033	20,633	TOTAL EQUITY AND LIABILITIES	18,752	19,033	20,633

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Financial Performance

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PAT (INR Mn)
Revenue From Operations (INR Mn) EBITDA (INR Mn) & EBITDA Margins %
26,338
24,547 4,285
1,920
3,248
13,528 12,773 14,643 1,075
2,094
1,619
1,465
16.27%
14.30%
11.97% 11.47% 13.23% 38
FY19 FY20 FY21 FY22 FY23
-43 -268
FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23
ROE & ROCE (%) Net Debt to EBITDA & Net Debt to Equity Working Capital Days
21.63% 3.22 3.25 26
17.04% 2
2.39
21.02%
9.15%
7.02% FY19 FY20 FY21 FY22 FY23
4.81% 14.44% 1.30
0.82 0.7 0.73 0.79 -32
0.55
0.33
-0.68% 0.56% -74
-4.09%
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
-121
ROE ROCE Net Debt/EBITDA Net Debt/Equity
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Capital Market Data

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				Stock	Performance Data (As on 31st March, 2023)	Performance Data (As on 31st March, 2023)	Performance Data (As on 31st March, 2023)	Performance Data (As on 31st March, 2023)
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
-30.00%
Apr-22	May-22	Jun-22	Jul-22	Aug-22	Sep-22	Oct-22	Nov-22	Dec-22	Jan-23	Feb-23	Mar-23
					DCW	Sensex
Price Data (As on 31st March,		2023)				INR		Shareholding Pattern (As on 31st		March, 2023)
Face Value						2.00		DII, 0.02%
CMP					43.49
52 Week H/L					62.55 / 33.55			FPI, 8.30%	Promoters,
Market Cap. (Mn)					12,836.29				45.10%
No. of Share outstanding (Mn)					295.16
Avg. Trading Volume ('000)					2,191.73				Public, 46.58%
Avg. Net Turnover (Mn)					99.16

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Disclaimer
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DCW Ltd.

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 ʼ looking statements" based on the currently held beliefs and assumptions of the management of DCW 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 ʼ 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.

Valorem Advisors Disclaimer:

Valorem Advisors is an Independent Investor Relations Management Service company. This Presentation has been prepared by Valorem Advisors based on information and data which the Company considers reliable, but Valorem Advisors and the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.

Valorem Advisors also hereby certifies that the directors or employees of Valorem Advisors do not own any stock in personal or company capacity of the Company under review.

For further details, please feel free to contact our Investor Relations Representatives:

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Mr. Anuj Sonpal Valorem Advisors Tel: +91-22-4903 9500 Email: dcw@valoremadvisors.com

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Mr. Dilip Darji Sr. General Manager (Legal) & Company Secretary Email: dilip.darji@dcwltd.com

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THANK YOU

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