Indag Rubber Ltd. — Investor Presentation 2021

Dec 2, 2021

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December 02, 2021

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001

(Company code-1321) (Scrip code-509162)

Sub: Investor Presentation – Q2 & H1’ FY 22

Dear Sir,

Enclosed please find the Investor Presentation of Q2 & H1’ FY 22, for the information of the investors and public at large.

Thanking you.

Yours faithfully,

For Indag Rubber Limited

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Company Secretary

INDAG RUBBER LIMITED

The only alternative to new tyres….since 1978

Investor Presentation – Q2 & H1 FY22 December 2021

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Safe Harbor
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This presentation and the accompanying slides (the “Presentation”), which have been prepared by Indag Rubber Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but 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

Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.

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Q2 & H1 FY22 FINANCIAL HIGHLIGHTS

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CEO’s Message
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Commenting on the Result, Mr. Vijay Shrinivas CEO, Indag Rubber Limited said,

“Post subdued Q1 FY22, we have witnessed gradual recovery in demand from Q2 FY22 onwards. With large scale vaccination drives across the country there has been significant drop in covid cases and recovery in economic and business activities. With 1 billion vaccination mark for the country, we have so far kept the third wave at bay and a lot of confidence is coming back post the 2nd wave of Covid-19 which will enable more stable and conducive operational environment for tyre industry.

Our manufacturing facilities are running smoothly and most of our employees are double vaccinated. Our company has clocked total income of Rs.46.2 crores for Q2 FY22. The company has faced sharp increase in prices of raw materials which was not fully passed on as the markets are recovering from 2nd wave of Covid-19. This has affected the margins and profitability. We expect to pass on the prices in the coming quarter looking at the business environment.

Automobile industry has been grappling with issue of semi conductor shortages and steep hike in raw material costs impacting the production of vehicles. However, there has been improvement in supplies over last few weeks and the trend is expected to continue in months to come.

At Indag, we are continuously striving to improve the efficiency of our operations and focused on cost saving measures. Being pioneer of the cold retreading, a huge product portfolio with different tread design patterns, we are well placed to provide fleet owners with world class retreading solutions .“

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Consolidated Financials – Q2 & H1 FY22
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Particulars (Rs. In Crs.)	Q2 FY22	Q2 FY21	Q1 FY22	H1 FY22	H1 FY21
Revenue from Operations Other Income	45.5 0.8	45.9 2.2	31.3 0.4	76.8 1.2	71.5 2.9
Total Revenue(incl Other Income)	46.2	48.1	31.7	77.9	74.4
Total Raw Material	32.5	28.5	21.4	54.0	46.9
Gross Profit	13.7	19.6	10.2	23.9	27.5
Gross Profit %	29.7%	40.8%	32.3%	30.7%	36.9%
Employee Expenses Other Expenses	5.0 6.8	5.6 6.8	5.3 5.3	10.3 12.1	10.0 10.1
EBITDA	1.9	7.3	-0.3	1.5	7.4
EBITDA %	4.1%	15.1%	-1.1%	2.0%	9.9%
Depreciation	0.8	0.8	0.8	1.6	1.6
EBIT	1.1	6.4	-1.1	0.0	5.8
EBIT(%)	2.3%	13.3%	-3.5%	0.0%	7.8%
Finance Cost Share of loss of joint venture Profit before Tax Tax	0.0 0.3 0.8 0.5	0.1 0.1 6.3 1.6	0.0 0.2 -1.4 -0.4	0.1 0.5 -0.6 0.1	0.1 0.2 5.5 1.4
Profit/loss after tax from continuing operations	0.3	4.7	-1.0	-0.7	4.2
Discontinued operations Profit before tax Current tax expense	0.0 0.0	0.0 0.0	0.3 0.0	0.3 0.0	0.2 0.0
Profit after Tax	0.3	4.7	-0.8	-0.4	4.4
PAT %	0.7%	9.8%	-2.5%	-0.6%	5.9%
EPS	0.19	1.79	-0.34	-0.15	1.63

Margins & Profitability were impacted due to sharp increase in raw material prices which was not fully passed on as the markets are recovering from 2[nd] wave of Covid-19

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Note: Q1FY21 performance was impacted by lockdowns induced due to 1[st] wave of Covid-19, however, Q1 FY22 Revenues were impacted on account of restrictions imposed due to 2[nd] wave of Covid

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Consolidated Balance Sheet
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Liabilities (Rs. In Crs.)	Sep-21	Mar-21
Equity Share Capital Other Equity Equity attributable to the shareholders of the Company Non-ControllingInterest	5.3 192.2 197.5 3.6	5.3 192.5 197.7 3.7
Total Equity	201.1	201.4
Non Current Liabilities Financial Liabilities Borrowings Provisions Deferred Tax Liabilities(Net)	- 1.0 3.3	- 0.9 2.8
Total Non Current Liabilities	4.3	3.7
Current Liabilities Financial Liabilities Borrowings Trade Payables Other Financial Liabilities Provisions Current Income Tax Liabilities(Net) Other Current Liabilities	- 13.2 7.3 0.1 0.2 2.3	- 15.2 3.3 0.5 0.0 2.3
Total Current Liabilities	23.1	21.3
Liabilities directly associated with asset/disposal group held for sale	-	10.2
Total Equity and Liabilities	228.5	236.6

Assets (Rs. In Crs.)	Sep-21	Mar-21
Non Current assets Property, Plant and Equipments Capital Work-In-Progress Goodwill Other Intangible Assets Financial Assets Investments Loans Other Financial Assets Income Tax Assets (net) Other Non-Current Assets	24.6 22.1 0.4 0.2 78.3 0.0 0.9 3.6 0.2	25.0 19.3 0.4 0.1 83.6 0.0 1.0 2.8 2.3
Total Non Current Assets	130.2	134.6
Current Assets Inventories Financial Assets Investments Trade Receivables Cash and Cash Equivalents Other Bank Balances Loans Other Financial Assets Income Tax Assets (net) Other Current Assets	38.0 25.1 22.1 1.5 1.5 2.7 1.6 0.0 5.7	36.0 7.3 29.5 1.8 1.9 0.2 1.5 0.0 6.2
Total Current Assets	98.3	84.3
Asset/Disposalgroup held for sale	-	17.6
Total Assets	228.5	236.6

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Consolidated Cashflow Statement
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Particulars (Rs. In Crs.)	Sep-21	Sep-20
Net Profit Before Tax	-0.6	5.8
Adjustments for: Non Cash / Other Items	1.0	0.3
Operating profit before working capital changes	0.5	6.0
Changes in working capital	1.0	15.8
Cash generated from operations	1.5	21.8
Direct taxes paid	-0.9	-1.2
Net Cash from Operating Activities	0.6	20.7
Net Cash from Investing Activities	-0.7	-17.8
Net Cash from Financing Activities	-0.2	-1.2
Net Decrease in cash and cash equivalents	-0.3	1.7
Add: Cash & Cash equivalents at the beginning of the period	1.8	1.3
Cash & Cash equivalents at the end of the period	1.5	3.0

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Consistent Dividend Pay-out
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Dividend
Pay-Out 15% 17% 19% 19% 20% 29% 40% 59% 47% 247%
12.6
12.2
10.7
9.5
8.4
8.0
6.0
5.1
4.1
2.4 2.4 2.4 2.4 2.4 2.4 2.4
2.0
1.6
1.2
1.0
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
EPS DPS
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The Board has declared Interim Dividend for the Financial Year 2021-2022 of Rs. 0.90/- per equity share of Rs. 2/- each (45 % of FV)

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Adjusted EPS & DPS for the split

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Key Updates (1/2)
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Disinvestment in Solar Business

• Indag Rubber Limited on 27[th] October, 2020 had announced the disinvestment/sale of 100% shareholding in its step-down subsidiary, Samyama Jyothi Solar Energy Private Limited by SUN-AMP Solar India Private Limited (subsidiary) to NextPower III Singapore Holdco. Pte. Ltd

• The transaction relating to sale of Samyama Jyothi Energy Pvt. Ltd. has been completed during quarter ended

• 30[th] September 2021 and gain of Rs. 5.96 lakhs has been recognized as income for the quarter and half year ended 30[th] September 2021

• SUN‐AMP Solar India Private Limited will continue to remain a non-material subsidiary of INDAG

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Key Updates (2/2)
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Exit from Joint Venture Company – Sun Mobility EV Infra Private Limited

• The Board of Directors in their meeting held on 28[th] September 2021 had considered and approved sale / transfer of 15,00,000 equity shares of Rs.10 each of SUN Mobility EV Infra (P) Limited (Joint Venture company(JVCO)) to EPIC Mobility Technologies Pte Ltd. (Joint Venture Partner) at IRR of 15% pre-tax or Fair Market Value (whichever is higher)

• The Company had subscribed 15 lakhs of fully paid equity shares of the face value Rs 10/ - amounting to Rs 150 lakhs and 120 lakhs of fully paid preference shares of Rs 10 each amounting to Rs 1200 lakhs

• The Company has transferred all the equity shares to the Joint Venture partner at an agreed price of Rs 14.642 per share

• The Joint Venture Company has redeemed the preference shares at the same price that is 14.642, which has resulted in a total gain of Rs 626.67 lakhs. Since the transaction has been completed in October 2021 it will be reflected in the next quarter results

• Mr. Vijay Shrinivas, who was a representative Director of the Company on the Board of Joint Venture Company, has resigned from the Board of Joint Venture Company w.e.f. 18 October 2021, as the Company is not holding any share capital of the JVCO w.e.f. 18 October 2021

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Who we are…
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India’s Most Trusted Tread Manufacturing Company

Pioneered Cold Retreading Technology in India

Best Quality with Reasonable Pricing

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1,500+ Retreaders

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40+

Presence in All types of Commercial Vehicle Tyre Segments

“Lowest Cost Per Kilometre”

VISION & MISSION

VALUES

To be No.1 company in every market served, by offering best- in- class tyre Retreading products and services through largest network of trained Channel partners committed to offer most reliable, economical and sustainable tyre solutions for commercial transport industry.

Excellence Customer Satisfaction Commitment Social Responsiveness Creativity Openness and Diversity

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Years in Business

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18+ Depots across India

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1,00,000+ Satisfied Customers

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ABOUT RETREADING

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What is Retreading
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HOT PROCESS
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COLD PROCESS

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• Uncured rubber is added to a
• Precured rubber of high density &
available in various tread designs Retreading is a technology buffed casing & cured in the
is lined with cushion gum before where the old tyres are made serviceable by removing mouldapproximatelyat 150temperatures ° C-160 ° C of
applying to a buffed casing
worn out and damaged • This temperature allows uncured
• Curing is done in a pressure treads and replacing it with
rubber to flow in the matrix
chamber at low temperature new treads
100 ° C & pressure forming the tread design during
vulcanization
COLD Retreading
Industry – 67% 20% - 25%
Orgainsed, share
50%
HOT Retreading
Industry – 33%
Un-organised,
50%
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Retreading Process
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Final Enveloping & Rim Mounting Inspection & Building Painting Curing by Tread Buffing Chamber Rubber Initial Inspection Cementing and Filling Repairs & Skiving Collection of Casings

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Benefits of Retreading
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Saves Money

30%-50% of the price of New tyre with life nearly the same as New tyre

Durable

Appropriate tread can last nearly the same as new tyre

01 02

Safety

06 Benefits of Retreading 05 04

Environment Friendly

Requires ~7 gallons of crude oil to produce a retread as opposed to 22 gallons of oil to manufacture a new tyre

Recycle

Extends the life of used tyres thus saving even more energy, CO2 and raw materials with each

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product cycle

03

Tested to same stringent performance criteria as new tyre

Low Cost Production

In retread tyre only 25% Natural rubber is used whereas; in new tyre around 80% of Natural rubber is required

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Flow of Business
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Treads wear out
Fleet Owners
after certain
Run the Vehicles
usage
Retread the same
Buy new Tire
Old Tire
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If Cost of
New Tyre
is Savings Cost of
Rs. 100 50-70% Retreaded Tyre
Rs. 30-50
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Indag manufactures and supplies Best Quality retreading products to the retreaders at a Reasonable Price

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BUSINESS OVERVIEW

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Our Journey
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Disinvestment in Step down subsidiary Samyama Jyothi Energy Private Ltd.

Exit from JVCO – Sun Mobility EV Infra Private Limited

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2021
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Included as one of the best “Under 1Bn” company by Forbes Asia

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2016
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JV was terminated with Bandag

Certificate of Excellence from Inc 500 in 2012 & 2013

1978 - Incorporated as JV between Khemka Group & M/s Bandag Inc, (USA)

Khemka Group took over 38.3% share

Expanded Capacity from 13,800 MT to 20,000 MT

2015 2012 Increased capacity at Nalagarh plant from 6,000 MT to 13,800 MT

Set up plant at Nalagarh (Himachal Pradesh)

1979 - Set up plant at Bhiwadi (Rajasthan)

1984 - Listed on BSE

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2006
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1978
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Foray into Foreign market with launch of “Zoma” Brand

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Our Products
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• PRECURED TREAD UN – VUNCUNIZED UNIVERSAL SPRAY TYRE ENVELOPES RUBBER RUBBER CEMENT STRIP GUM

• • • • Capacity of 20,000 MT Capacity of 1,800MT Capacity of 1,800 KL Various allied products and p.a. p.a. p.a. spare tools used in

• • Radial and Bias Range • Bonding gum for • Solution available in retreading units/shops • Range from Passenger curing process Ready to use and Thick to Truck/Bus Tyre • Specifically forms

• • OTR & Tractor manufactured to provide longer shelf life

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Superior Technology
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Indag uses advanced technology in terms of machinery, equipment and raw materials

Our products give mileage that result in LOWEST COST PER KILOMETER

Our processes have been certified as ISO 9001:2015 and ISO 14001:2015 compliant

Continuously engaged in R&D to develop and deliver superior compounds that give higher mileage to our customers Constant engaging in testing of compounds in the field, to ensure that our customers get a product that gives superior performance

In order to produce tread rubber, Indag blends the ingredients, and then extrude the mixture long slabs. The rubber slabs are placed in to mould that apply heat at very high pressure on rubber slab in mould. This will result in to extremely dense, pre-cured tread rubber, specially different to other tread manufacturer

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State of Art Manufacturing Facilities
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State of the art manufacturing unit Located at Nalagarh Industrial Estate in Himachal Pradesh

Advanced Technology in terms of machinery and equipment

Modern Retreading Cum-Training centre to impart high quality of training

Only company who uses curing temperature of 99°C than others who cure at higher temperature of 125 - 150°C

Brand – Indag & Zoma use superior raw material and pressed at a high pressure that gives high performance product both in term of mileage and tread life

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Focused Management
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Mr. Nand Khemka

Mr. Vijay Shrinivas

Mr. Uday Khemka

Chairman & Managing Director

CEO & Whole Time Director

Director

• Son of Mr. Nand Khemka having more than 24 years of Investment Banking & Entrepreneurial experience in Emerging markets

• M.S. in Foreign Trade & MBA in Production Management from the Columbia University, New York, U.S.A.

• With the company since 2018. He was last working with Arvind Ltd. as Chief Sales & Marketing Officer. Prior to that, he was with E I DuPont India Pvt Ltd, Bharat Shell Ltd and Larsen & Toubro Ltd in various operating and leadership roles

• Over 40 years of experience in

• promoting and running successfully various organizations

• Vice-Chairman of the SUN Group of companies

• MBA in International Business from Indian Institute of Foreign Trade, New Delhi with 21 years of experience

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Mr. Shiv Khemka

Director

• Vice Chairman of SUN Group, founded in the early 90’s

• Educated at Eton College, Brown University, and the Lauder program at The Wharton School, University of Pennsylvania

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Focused Management
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Ms. Bindu Saxena Non-Executive Director (Independent)

Mr. P R Khanna

Non-Executive Director (Independent)

Mr. Harjiv Singh Non-Executive Director (Independent)

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Mr. Raj Kumar Agrawal Non-Executive Director (Independent)

Mr. Anil Bhardwaj G.M.(Accounts) & CFO

Mrs. Manali D Bijlani Company Secretary

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KEY STRENGTHS

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Our Key Strengths
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STRONG DISTRIBUTION

TRAINING IMPARTED

INNOVATION

NETWORK

We have a PAN India Presence with over 18 depots

Training imparted by Engineers who has unique qualifications of Retreading to achieve Highest standards of Quality while re-treading

Innovations & Invention of Different Recipes & Patterns

STRONG FINANCIALS

We have a Strong Balance Sheet with zero Debt

COST EFFICIENCIES

Cost Efficiencies have been maintained throughout thereby improving our Margins

AFTER SALES SERVICES

Retreaders get after-sales and support services with regards to retreading process and machinery issues. We also provide Logistic & warehouse support

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Strong Distribution Network
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PAN India Presence

1,500+ Retreaders

200+ Dealers

18+ Depots across India

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50+ Sales Team

Map not to scale. All data, information and maps are provided “as is” without warranty or any representation of accuracy, timeliness or completeness.

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Training Retreaders
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Training imparted by Engineers who have long experience of retreading under experts

Safety in all areas & High Standard Products & Service Delivery

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To achieve Highest standards
of Quality while re-treading
Marketing the Product &
Differentiating from
Others
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Training Centre
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Consultancy Services to our Retreaders:

• Retreading process consultancy

• Retreading machinery consultancy

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What our Clients say
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“Strongly recommend Indag's retreads as they perform exceptionally well, upto 85% of new tyre mileage. Extremely satisfied with Indag's ZZYL 240 RRR tread for tubeless Radial tyres.”

Bhagwati Air Express Pvt. Ltd., Delhi ( Fleet Owner )

“Upon using 80+ tyres of Indag ZZYL and ZZE2 Treads, we found that the Average wear rate to be 9000 km/mm; providing a 32% additional mileage perfomance compared to competitor. Thus, we are grateful to the Indag team for their recommendations and support; and are very much satisfied with Indag's offerings.”

R R Logistics, Rajasthan ( Fleet Owner )

“Indag Rubber is made of passionate and hardworking people who provide excellent Sales and Technical Support along wIth Marketing collaterals. This has resulted in superior quality of the product which is at par with any brand of new tyres in terms of Road Handling, Cornering Stability. Mileage Perfomance and High Cut-Chip Resistance; all leading to the successful fulfillment of Indag's promise of Lowest Cost/KM.”

Sanjay Tyres , Madhya Pradesh ( Retreader )

“Indag's premium quality and best-in-class retreading process has fulfilled our expectations. ZZE2 (ICON) offering is specially designed for good traction and lower resistance enabling me to achieve an extremely high mileage of 1.25 lac KM, providing the lowest cost/km in the industry.”

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Chartered Speed Ltd. , Madhya Pradesh ( Fleet Owner )

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Opportunities
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Increase in Commercial Vehicle Sales especially the MHCV segment Improving roads and support infrastructure

Implementation of GST has narrowed the pricing difference between the organised and the un-organised

01 03 02 04 Reduction in influx/dumping of tyres in Increase in Radialisation in India after demonetization and imposition CV segment of Anti-Dumping Duty

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Currently, all types of tyres are banned for imports to boost local industry

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CV Sale Trends
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CV Production Trends

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11,12,405
8,95,448
7,86,692 [8,10,253]
7,56,725
6,99,035 6,98,298
6,24,939
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
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As Industrial Activity Picks up – More Demand for Commercial Vehicles for Movement of Goods – More Tires worn out – Retreading done on Tires

IIP Growth Rate

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15.9%
-0.1% 2.8% 3.3% 4.6% [4.3%]
4.0%
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
-22.8%
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CV Domestic Sales Trends

*FY21– From April 2020 – Feb 2021

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10,07,311
8,56,916
[7,14,082] 7,17,593
6,32,851 6,14,948 [6,85,704]
5,68,559
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
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Retreading Industry Picks up with Lag effect

Large Opportunities for Retreading Business in coming years

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Source: SIAM

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Increase in Radialisation
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Radialisation in Truck & Bus
55 51% 51%
48%
50
44%
45
38%
40 36%
33%
35
30 26%
25 21%
18%
20
15
10
5
0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Source: ATMA
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Better Road Conditions

Radialisation Requires

Better Road conditions, No overloading & Proper Maintenance of Vehicles

Faster vehicles, running on radials will consume tyres more frequently, narrowing the gap in retreading time by covering larger distances in shorter durations

No Overloading & Proper Maintenance of Vehicles Will help to reduce Casing Failure , which is precondition for Tire Retreading

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GST - A Game Changer
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Retreading was dominated by Unorganised Players There has been a Slow Shift towards Organised Players

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• Difference in Pricing between Organised and • Quality Precured Tread

• Unorganised is mainly due – Longer Life of Tire

• to taxes • As Radial Tires are

• •

• Pricing GST implementation has Expensive – Demand for led to removal of different Quality Product is on taxes and resulted into level rise

• playing field for both the players

Quality

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Company Offers - Best Quality with Reasonable Pricing

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For further information, please contact

Company : Investor Relations Advisors : Indag Rubber Ltd Strategic Growth Advisors Pvt. Ltd. CIN: L74899DL1978PLC009038 CIN: U74140MH2010PTC204285 Mr. Anil Bhardwaj, G.M.(Accounts) & CFO Mr. Rahul Agarwal / Ms. Khushbu Shah anil@indagrubber.com rahul.agarwal@sgapl.net / khushbu.shah@sgapl.net +91 9821438864/ +91 9820601181 www.indagrubber.com www.sgapl.net