NOCIL Ltd — Investor Presentation 2020

Jan 30, 2020

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30[th] January 2020

SEC/122B

The Secretary The National Stock Exchange of India Ltd. The Bombay Stock Exchange Limited Exchange Plaza “P.J. Towers” Bandra Kurla Complex, Dalal Street Bandra (East) Mumbai-400 001 Mumbai-400 051 Scrip Code: 500730 Symbol: NOCIL

Dear Sir,

Sub: Investor Presentation

Pursuant to Regulation 30(6) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015, we enclose herewith Investors Presentation on the Financial Highlights for the quarter and nine months ended 31[st] December 2019.

The aforementioned Presentation has been uploaded on the Company’s website viz., www.nocil.com.

We request you to take the above on your records and acknowledge receipt.

Thanking you,

Yours faithfully, For NOCIL Limited Digitally signed by AMIT KUNDAN VYAS AMIT DN: c=IN, o=Personal, 2.5.4.20=83ce41194720ac59c832db4f4 c5bad300e6c12dee1d20c8a74e0e0fd4 bae8051, postalCode=400011, KUNDAN st=MAHARASHTRA, serialNumber=ce9572346503ab01604b dbd2fe672a29f88580111781df58beb97 VYAS 779860e8331, cn=AMIT KUNDAN VYAS Date: 2020.01.30 18:08:58 +05'30' Amit K. Vyas Assistant Vice President (Legal) & Company Secretary

Encl.: as above

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Investor Presentation – January 2020

NOCIL LIMITED

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Safe Harbour

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This presentation and the accompanying slides (the “Presentation”), which have been prepared by NOCIL 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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2

Quarterly Performance

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Revenue from Operation Total Conversion cost
Volumes (MT) Operating EBITDA (%)
(Rs. In crores) (% to Revenue)
0% -2% 230 35% 34% 24.5% 23.1%
210 32%
194
18.4%
Q1FY20 Q2FY20 Q3FY20 Q1FY20 Q2FY20 Q3FY20 Q1FY20 Q2FY20 Q3FY20 Q1FY20 Q2FY20 Q3FY20
• • •
Impacted due to slowdown Prolonged slowdown Lower capacity utilisation •
Depressed market leading
in Auto Industry resulted into temporary resulted into operating
to Price Suppression
• oversupply scenario leading deleverage
In Q3 - Aggressively •
Full ADD impact
participated in the volume to price suppression • Price suppression to some
•
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• In Q3 - Aggressively participated in the volume off-take in order to maintain wallet share

• Price suppression to some extent was net off through internal efficiency

• Operating leverage did not play out

• Full impact of ADD in this quarter

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*(Employee Expense + Other Expenditure)/(Revenue from Operations)

3

Key Highlights

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Industry Scenario:

• Volume de-growth seems to have bottomed out. Pick in sales volume up

• expected

• Price depression seems to be more of temporary nature, in the worst case for few months

Our Strategy:

• Focus on gaining Market share

• Focus on optimisation of resources

• Q4FY20 volumes expected to be highest in FY20

• Depending on the relationship coupled with higher volume off-take price aggression strategy will be selectively rolled out

Maintain Guidance of Marginal de-growth in volume for FY20 in the range of 0% to 5%

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4

Standalone Profit & Loss Statement

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Rs. In Crores	Q3 FY20	Q2 FY20	Q1 FY20	Q-o-Q	9M FY20	9M FY19	Y-o-Y
Net Revenue from Operations	194	210	230	-7.4%	634	801	-20.9%
Raw Material	93	89	100		282	356
Value Addition *	102	121	129		352	445
Value Addition %	52.3%	57.7%	56.4%		55.6%	55.6%
Employee Expenses	19	19	20		57	50
Other Operating Expenses	47	54	54		155	164
Operating EBITDA	36	48	56	-25.5%	140	231	-39.6%
Operating EBITDA Margin	18.4%	22.8%	24.5%		22.1%	28.9%
Depreciation	8	8	7		23	17
Interest	0^	0^	0^		1	0
Other Income	1	2	2		6	8
Profit Before Tax	29	42	51		122	222
Tax	8	-13**	18		13	74
Net Profit	21	55	33		109	148
Net Profit Margin	10.6%	26.3%	14.2%		17.1%	18.5%

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*Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories

** includes deferred tax credit of Rs. 24 crores on account of reduction in tax rate ^ less than 1 crore

5

Consolidated Profit & Loss Statement

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Rs. In Crores	Q3 FY20	Q2 FY20	Q1 FY20	Q-o-Q	9M FY20	9M FY19	Y-o-Y
Net Revenue from Operations	194	210	230	-7.4%	634	801	-20.9%
Raw Material	93	89	100		282	356
Value Addition *	102	121	129		352	445
Value Addition %	52.3%	57.7%	56.4%		55.6%	55.6%
Employee Expenses	19	19	20		59	52
Other Operating Expenses	46	54	53		151	161
Operating EBITDA	37	48	57	-24.5%	142	233	-39.2%
Operating EBITDA Margin	18.8%	23.1%	24.6%		22.4%	29.1%
Depreciation	8	8	8		24	18
Interest	0^	0^	0^		1	0
Other Income	1	2	3		6	8
Profit Before Tax	29	42	51		122	222
Tax	8	-13**	18		14	74
Net Profit	21	55	33		109	149
Net Profit Margin	10.8%	26.2%	14.3%		17.2%	18.6%

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*Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories

** includes deferred tax credit of Rs. 24 crores on account of reduction in tax rate ^ less than 1 crore

6

Business Overview

Company Overview

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• Part of Arvind Mafatlal Group

• Expertise in Rubber Chemical Business over 4 decades

• Largest Rubber Chemicals Manufacturer in India

• Long Term Business Relationships with Tyre Majors (Both Domestic & International)

• Awarded Responsible Care Logo by Indian Chemical Council

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Revenue [] EBITDA []
+13 [%] +55 [%]
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• CAGR growth from (FY13-FY19)

Operating PBT[*]

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+44 [%]
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Dividend Payout more than 5 years

~30[%]

8

Management Team

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• Mr. Hrishikesh . A. Mafatlal – Promoter & Chairman

Mr. S. R. Deo – Managing Director

• Executive Chairman and Promoter Director of NOCIL Ltd

• M. Tech. in Chemical Engineering from IIT Kanpur

• B.Com. (Hons.) & has attended the Advanced Management Programme at the Harvard Business School, USA

• Associated with the company for nearly 40 years in various technical capacities

Mr. R. M. Gadgil - President - Marketing

Mr. P. Srinivasan – Chief Financial Officer

• B Tech in Chemical Engineering from IIT Mumbai

• Chartered Accountant with over 31 years of experience

• Associated with the Company in various marketing capacities for nearly 38 years

• Associated with the Company since 2005

• Dr. Chinmoy Nandi - Vice President (Research & Development)

• Post Graduate & Ph.D. in Science

Dr. Narendra Gangal – Vice President (QA, Analytical & Outsourced Research)

• Ph.D. in Analytical Chemistry with 27 years of experience

• Associated with the company for nearly 35 years in various

• Associated with the company since 2007

• R&D capacities

Mr. Rajendra Desai – Vice President (Operations, Corporate HR & Personnel)

• Chemical Engineer with Diploma in Management Studies

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• Associated with the company for nearly 34 years

9

Glimpse of our Plants

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Navi Mumbai Plant

• Set up in 1976

• Located in Trans-Thane Creek industrial area at Navi Mumbai, Thane - Belapur’s industrial zone designated for the chemical Industry, about 40 kms away from Mumbai

• State-of-the-art technology for the manufacture of the entire range of Rubber Chemicals for Tyre & other Rubber Products

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Dahej Plant

• Commenced operations in March 2013

• Located about 45 kms from Bharuch, Gujarat

• Location has synergistic Chemicals & Petrochemicals industry and excellent connectivity with Dahej & Hazira Port

• Fully automated continuous process plant developed completely with in-house technology

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10

Our Value Proposition

01

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Long Term Relationships with Customers over 40 Countries

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03

02

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01 Products & Product Forms

• Wide Range of Rubber Chemical Products

• Varied Product Forms

02 Sales, Marketing & Technical Service

• Market Responsive Approach

• Strong MTS Team to offer Technical Services

03 R & D and Quality Assurance

• Experienced, capable & innovative team of R & D scientists.

• Ultra Modern Laboratories & Pilot Plant Facilities

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• Latest Analytical Instruments

11

Products & their Usage

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ANTI-DEGRADANTS/ ANTI-OXIDANTS

1

2

▪ These are ingredients in rubber compounds which deter the ageing and inhibit degradation due to oxygen attack of rubber products, thereby enhancing service life

ACCELERATORS

▪ Increase the speed of vulcanization

▪ Permit vulcanization to proceed at lower temperature & with greater efficiency

ONE STOP SHOP With WIDE RANGE to suit

MARKET REQUIREMENTS

OTHER APPLICATIONS

3

▪ Pre vulcanization inhibition, Post vulcanization stabilization, Latex based applications etc.

▪ Improving Thermal Stability of cross links in rubber products

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12

R&D and Total Quality Management

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Research & Technology Development Quality Assurance Certifications ▪ NOCIL’s Research Centre at ▪ Quality Management System ▪ ISO 9001:2008 Navi Mumbai recognized by Ministry of Science and with a focus on Quality of ▪ ISO 14001:2004 Raw materials, Finished Technology, Govt. of India ▪ BS OHSAS 18001:2007 Products as well as in Process ▪ Key Areas Focussed upon Sample Analysis ▪ ISO/IEC 17025:2005 • Process Development, scale ▪ ▪ The Quality Control ISO/TS16949:2009 up, commercial implementation Laboratory operates round ▪ IATF • the clock and is equipped Environmental strategies for ▪ NABL sustainable growth with the latest Analytical ▪ • Research initiatives as per Instruments & Equipment's Responsible Care by Indian customers’ perceived needs Chemical Council

13

Technology & Speciality Chemicals – Moving up the curve

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55%
Key Factors
+20% 35%
Value Addition
Continual Technological
Strong position in High-
Improvement in Product value added products FY13 FY19
& Processes
28%
+24%
R&D Capabilities leading Operating
Operating leverage due
to significant reduction in EBITDA
to scaling-up of business 4%
cost of production
FY13 FY19
18%
Favourable Positioning +14%
PAT
4%
FY13 FY19
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14

Rubber Chemicals – Industry Trends

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High Performance Tyres

Stringent Environmental compliance

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Extended life, Automotive & Industrial products will increase rubber processing chemical loadings

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Cost increase in China leading to Better level playing field

NOCIL has been awarded by ICC for “Excellence in Management of Environment” under the large chemical industry

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Rising Income Levels

Global Demand[*]

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Increase in Motor vehicle ownership rates, especially in developing nations would need additional consumption of rubber processing chemicals

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For Rubber processing chemicals continue to forecasted to grow around 4% - 5% for next 10 years

*Source : Freedonia Report

15

Positive Demand Forecast

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Global Rubber Consumption (Natural + Synthetic)
In Lakh tonnes
291.8
0.0
8.0
9.3
8.6
4.5
6.1
255.4
2013 2014 2015 2016 2017 2018 2019 Total
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• Rubber Chemicals constitute ~4% of the Rubber Consumption

• • Normally every year ~35k additional demand for Rubber chemicals is created

• • Major markets have shown a de-growth in 2019 after 6 years

Latest IRSG forecast speaks of 2.5% - 2.8% growth over the next 2 years

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Source : Rubber Statistical Bulletin, Jul - September 2019 edition

16

*Annualised based on H1CY19 data

CAPEX Update

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• Phase I – Rs. 170 crores ^ Phase II – Total Capex of Rs. 255 crores[^] • For expansion of its production

• • Phase I (a) - Expansion at Navi facilities for Rubber Chemicals Expansion is expected to give an Asset

• Mumbai has been commissioned (including intermediates captively Turnover of ~2X at FY18 prices

• and the commercial production have consumed towards manufacture of

• started from Jun’18 rubber chemicals) at Dahej/Navi Mumbai – (Announced in Dec’17)

• • Phase I (b) – Expansion at Dahej is has been commissioned in Jan’19 • For expansion of its production facilities for Rubber Chemicals at Dahej/Navi Mumbai - (Announced

• ▪ Mechanical Completion ✓ in Jan’18) ▪ Trial Production ✓ ▪ Mechanical Completion ✓ -

• Total Capex of Rs. 425 crores Entire

• ▪ Commercial Production ✓ ▪ Trial Production ✓ project will be funded through Internal Accruals

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100% Implementation by in-house team without any technical collaborations

^ as per FY18 prices

17

Why NOCIL is a “Supplier of Choice”

Environment Friendly Processes

Non-Chinese Dependable Player

Continuous investments done to adopt various innovative environmental technologies for long-term sustainability

Non-Chinese Dependable & Quality Player with Committed Plans for future growth

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00
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Product Testing & Validation

Wide Range of Product

Approved & registered vendor with the Major Domestic & International Tyre Players offering Technical Support to customers for Rubber Products / Process Development

Presence across the entire range of Rubber chemicals i.e. 22 product basket

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Pipeline of New Generation of Rubber Chemicals

Development of Niche products using innovative technologies & Green chemistry concepts and new generation environmentally sustainable processes for growth

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Entry Barrier

Customers take from 6-18 months to give approval on plant specific basis & same is carried out for various locations globally

18

Annual Performance Trend

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Revenue from Operations*

Operating EBITDA

Operating PBT**

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Rs. In Crores
+13.4%
1,043 +27.9% 290 +30.1% 267
968
263 239
742
716
159
137
139
121
FY16^ FY17 FY18 FY19 FY16^ FY17 FY18 FY19 FY16^ FY17 FY18 FY19
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• Revenue from operations is net of GST/Excise duty

• ** Operating PBT (PBT - Other Income)

^ IGAAP

19

Annual Operating Performance

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Value Additions*

Operating EBITDA Margins

Operating PBT Margins

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55% 28% 26%
54% 27% 25%
52%
50%
21%
19%
19%
17%
FY16^ FY17 FY18 FY19 FY16^ FY17 FY18 FY19 FY16^ FY17 FY18 FY19
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*(Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories)/Revenue

20

Margin built-up over the years

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Overall Improvement in Margin Profile of the Company

Sustainable Initiatives taken over 5 years

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55%
55%
52%
50%
46% •
Change in Product mix
42%
o Share of specialised applications
35%
o Increased share of export business
27% 28% •
Technological Improvements
21%
19% o Continual improvement in yield performance
16%
o Introduction of contemporary technologies
10% 18%
17%
•
14% Operating leverage
4%
8% 11%
4% 4% o Volume maximisation
FY13 FY14 FY15 FY16 FY17 FY18 FY19 o In-house generation of power at Dahej site
EBITDA (%) Value Addition(%) PAT (%)
(Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories)/Revenue
21
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For further information, please contact: Company : Investor Relations Advisors : NOCIL Ltd. Strategic Growth Advisors Pvt. Ltd. CIN: L99999MH1961PLC012003 CIN: U74140MH2010PTC204285 Mr. P. Srinivasan - CFO Ms. Payal Dave / Ms. Neha Shroff finance@nocil.com payal.dave@sgapl.net / neha.shroff@sgapl.net +91 9819916314 / +91 7738073466 www.nocil.com www.sgapl.net