GMM Pfaudler Ltd. — Earnings Release 2021

Oct 28, 2021

Earnings Presentation - Q2 FY22

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Agenda

$\mathcal{S}$

Executive Summary

Other updates

Management Team	Aseem Joshi appointed as CEO, India business • Previously worked at Honeywell, Eaton Corporation, McKinsey & Company, IBM Corporation • MBA (INSEAD, France), MS – Industrial and Systems Engineering (Virginia Tech, USA), BE – Mechanical Engineering (Pune, India)
Employee Stock Options*	Talent retention and performance incentive • Dilution of 0.35% ■ Exercise price @90% of last 6 months' average price • Vesting period (Year 1: NIL, Year 2: 33.3%, Year 3: 66.7%)
Raw material and Energy	. Input costs have increased across geographies and have been priced in or passed on • Rising energy costs in Europe; Americas and India unaffected • China power supply restrictions to impact capacity in the short term • Mitigation plan in place; forecasts remain unchanged
*Subject to shareholders' approval	GMM Pfaudler

E

Defining the standard

$5^{\circ}$

Consolidated

Consolidated Results - Q2 FY22

^*Excluding PPA adjustments related to PFI acquisition. Backlog is net of POC.

Pf

Figures in INR Mn

Particulars	30.09.21	31.03.21
Shareholder's equity	4,502	4,071
Non-controlling interests	1,127	1,233
Debt	5,287	4,917
Pension liabilities	4,474	4,535
Trade payables	2,899	2,959
Other liabilities (current & non-current)	7,036	6,459
Total liabilities and equity	25,325	24,175

Particulars	30.09.21 31.03.21
Fixed Assets	5,740	5,240
Goodwill & Intangibles	4,841	5,166
Receivables	2,931	3,096
Inventory	6,103	5,849
Cash and equivalents	2,504	2,435
Other assets (current & non-current)	3,206	2,389
Total Assets	25,325	24,175

Strong cash generation during H1 FY22, well re-invested in business
□ Existing debt levels reduced. Additional debt taken for partial funding on Vatva
Working capital in control with healthy collections and funding by customer advances	D
■ Balanced capital allocation with net gearing of 0.5 times as on September 30, 2021

Stronger Balance Sheet with ROCE of 26% and ROE of 32%

$\triangleright$

Standalone

Standalone Results - Q2 FY22

Backlog is net of POC

Figures in INR Mn

Pf

Defining the standard

Performance Analysis

BUSINESS PERFORMANCE IMPROVED - BOTTOM-LINE CONTAINS NON-CASH PPA ADJUSTMENTS

					_ _ _ _ _ _ _ _
(in Rs Million)		Standalone Results	International Results Q2 FY22		Inter-Co		Consolidated Reported Results	Change
Particulars	Q1 FY22	Q2 FY22	Business (Note i)	PPA (Note ii)	Elimination S	Q2 FY22	Q1 FY22	$\%$
		A	$\mathsf{B}$	$\overline{C}$	D	$A+B+C+D$
Revenue from Operations	1,714	2,059	4,702		(289)	6,472	5,517	17%
Cost of materials consumed	695	896	1,737		(271)	2,362	2,161
Changes in inventory (WIP & FG)	(19)	(25)	143		67	185	8
Employee benefits expense	199	208	1,525		$\bigcirc$	1,733	1,746
Labour Charges	107	137	35		$\bigcirc$	172	139
Other expenses	295	333	759		(10)	1,082	1,104
$E$ BITDA	437	510	504	$\overline{O}$	(76)	938	359	161%
- margin %	26%	25%	11%			14%	7%
Other Income	8	12	17		$\bigcirc$	29	12
Finance cost	32	47	(28)		$\bigcirc$	19	141
Depreciation and amortisation expense	78	85	119	188	$\bigcirc$	392	386
Profit/(loss) before tax	335	390	430	(188)	(76)	556	(156)	NM
Taxes	77	98	143	(49)	(24)	168	28
Profit/(loss) after tax	258	$\sqrt{292}$	287	(139)	(52)	388	(184)	NM

(i) International business includes the standalone performance of Mavag and Pfaudler International (PFI) on operational basis (ii) PPA stands for Purchase Price Allocation

AUDITED

Segmental Overview - Q2 FY22

Integration Update

Project Apollo

Operational Excellence

Implement GMM's lean-production model across manufacturing sites to increase throughput

• Operational excellence program in $\mathcal{L}_{\mathcal{A}}$ Germany and China yielding results
• Vatva ramp-up ongoing, will be at full $\mathcal{H}^{\mathcal{A}}$ capacity in Q4 FY22
• New furnaces in India and Brazil will be operational in December 2021
• Global EU concept finalized and will launched in Q3 FY22

Value Sourcing

Leverage GMM's low-cost capabilities to increase market share and margins across the group

• Phase 1 components, made in India, sent $\blacksquare$ to Europe, feedback is positive
• Phase 2 components under development $\blacksquare$
• European grade raw materials $\blacksquare$ developed in India
• Market share improvement seen in $\blacksquare$ developed markets by leveraging cost and capacity advantage

Cross-Selling

Capture customer wallet share through cross selling and product portfolio enhancement

• Interseal customer trials begun, orders received and India launch on-track
• Large order from Americas (GLE, HE, and Mixing Systems)
• Centralized global opportunity management for improved B2B relationships

-15

Appendix

Consolidated

Consolidated Results - H1 FY22

^*Excluding PPA adjustments related to PFI acquisition. Backlog is net of POC.

Pf

Consolidated Cash Flow Statement - H1 FY22

GM

Defining the standard

Standalone

Standalone Results - H1 FY22

Pf

Particulars	30.09.21	31.03.21
Shareholder's equity	4,070	3,574
Non-controlling interests	⊖
Debt	1,447	1,054
Pension liabilities	∩	∩
Trade payables	952	931
Other liabilities (current & non-current)	1,380	1,118
Total liabilities and equity	7.849	6.677

Particulars	30.09.21 31.03.21
Fixed Assets	2,070	1,474
Goodwill & Intangibles	284	320
Receivables	946	1,130
Inventory	1,554	1,127
Cash and equivalents	341	287
Other assets (current & non-current)	2,654	2,339
Total Assets	7.849	6,677

	H1 FY22	H1 FY21	FY21	FY20
Glass lined Equipment	2,496	1,708	4,013	3,547
Heavy Engineering	594	568	959	502
Proprietary Products	683	574	1,436	1,114
Total	3,773	2,850	6,408	5,163

Legacy segments are being disclosed this year additionally for reference/comparison purposes only $\mathcal{L}_{\mathcal{A}}$

Profitability in each segment is in line with previous quarters trends $\sim$

Figures in INR Mn

International

International* Results - Q2 FY22

GM

$Pf$

Defining the standard

* Includes Mavag & PFI, Excluding inter-company eliminations. ** Q2FY21 includes PFI (management reporting converted to IFRS and unaudited) for a like-to-like comparison. Forex rates (USDINR) assumed constant for Q2FY21 & Q2FY22 to eliminate forex impact. Backlog is net of POC.

25

International* Results - H1 FY22

GM

$Pf$

Defining the standard

* Includes Mavag & PFI, Excluding inter-company eliminations. ** H1FY21 includes PFI (management reporting converted to IFRS and unaudited) for a like-to-like comparison. Forex rates (USDINR) assumed constant for H1FY21 & H1FY22 to eliminate forex impact. Backlog is net of POC.

26

Other Updates

CONSOLIDATED
Inventory Summary	30.09.21	31.03.21
Inventory	6,103	5,384*
Customer advances	3,709	2,879
Net funding required for inventory	2,394	2,505
Backlog	18,135	14,833
Inventory days (net of advances)	37	40
Receivables Summary	30.09.21	31.03.21
Trade Receivables	2,931	3,096
Receivable days	45	50
Payables Summary	30.09.21	31.03.21
Trade Payables	2,899	2,959
Payable days	44	47

STANDALONE

Figures in INR Mn

Inventory Summary	30.09.21	31.03.21
Inventory	1,554	1,127
Customer advances	957	564
Net funding required for inventory	597	563
Backlog	5,488	4,158
Inventory days (net of advances)	30	32
Receivables Summary	30.09.21	31.03.21
Trade Receivables	946	1,130
Receivable days	47	64
Payables Summary	30.09.21	31.03.21
Trade Payables	952	931
Payable days	47	53

RECEIVABLES AND INVENTORY (NET OF ADVANCES) IMPROVED DESPITE INCREASING BACKLOG

*Adjusted for step-up inventory (PPA- related) of Rs 465 million. Reported inventory is Rs 5,849 as on March 31, 2021. Inventory days (net of advances) is net funding required for inventory divided by LTM Sales (including proforma revenue for PFI) multiplied by 365 Receivable days is trade receivables divided by LTM Sales (including proforma revenue for PFI) multiplied by 365 Payable days is trade payables divided by divided by LTM Sales (including proforma revenue for PFI) multiplied by 365

Consolidated Profitability Metrices

*Consolidated figures exclude acquisition costs and PPA adjustments related to PFI acquisition in FY21 and H1 FY22.

Returns in H1 FY22 are multiplied by 2 for like-to-like comparison. This is meant for representation purposes only and not intended to be forward looking guidance.

FY19 and FY20 Restated includes GMM India and Mavag. FY20 Shareholder's equity (consolidated) was restated in FY21, RoE and RoCE are restated to account those changes. EPS is calculated using net profit attributable to equity holders (excludes non-controlling interests).

RoE is calculated as net profit attributable to equity holders divided by total equity (excludes non-controlling interest).

RoCE is calculated as EBIT divided by total equity + non-controlling interest + total debt

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