SRF Ltd. — Interim / Quarterly Report 2019

Feb 12, 2019

The Corporate Relationship Department, BSE Limited 1st Floor, New Trading Ring Rotunda Building, P.J. Towers Dalai Street, Mumbai 400 001

National Stock Exchange of India Limited "Exchange Plaza" Bandra-Kurla Complex Bandra (E) Mumbai 400 051

Scrip Code- 503806

Scrip Code-SRF

SRF/SEC/BSE/NSE

12.02.2019

Interaction with Institutional Investors/Analysts

Dear Sir,

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform that Mr. Anoop K Joshi, President, CFO & Company Secretary and Mr. Rahul Jain, Sr. Vice President (Corporate Controller & Treasurer) will be interacting with certain Institutional Investors/Analysts on 13th -14th February, 2019 in Mumbai.

Copy of the presentation is enclosed.

This is for your information and record, please.

Thanking you, Yours faithfully, for SRF LIMITED

ANOOP K OSHI (PRESIDE T, CFO & COMPANY SECRETARY)

SRF LIWIT'ED

Block-C Sec. • • Gurugran 003 Haryana India Tel: +91 .140( Fax: +91 :00 E-mail: ...• Website . • •.C.Cift

Regd. Office Unit No. 236 & i if, Lad floor DU' Galleria, Mayur Ple(i • Noida Link Road Mayur Vihar Phase 1 Extension Delhi 110091

SRF Limited

We always find a better way

February 13 & 14, 2019

Q3 & 9M FY19 Results Presentation

Certain statements in this document may be forward-looking statements. Such forwardlooking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. SRF Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances.

Contents

04

Q3 & 9M FY19 Segmental Performance 09

Q3 & 9M

Abridged Statement of Profit & Loss

(Rs. crore)	Q3 FY19	Q3 FY18	% Y-o-Y	9M FY19	9M FY18	% Y-o-Y
Gross Operating Revenue	1,964.0	1,397.1	40.6%	5,620.7	4,072.6	38.0%
EBIDTA	336.2	252.5	33.1%	1,013.8	689.4	47.1%
EBIDTA Margin (%)	17.1%	18.1%	(96 Bps)	18.0%	16.9%	111 Bps
Depreciation	93.2	77.0	21.0%	269.8	229.7	17.5%
Interest	54.4	23.9	128.0%	148.7	81.4	82.7%
ECF (Gain) / Loss	(10.2)	(21.1)	(51.5%)	22.9	(39.9)	(157.4%)
Profit Before Tax	198.8	172.7	15.1%	572.4	418.2	36.9%
Profit After Tax	165.7	131.2	26.3%	450.7	337.8	33.4%
Profit After Tax Margin (%)	8.4%	9.4%	(96 Bps)	8.02%	8.29%	(26 Bps)
figuresConsolidatedDiluted EPS (Rs.)	28.83	22.85		78.45	58.83

Key Financial Ratios

Particulars	FY13	FY14	FY15	FY16	FY17	FY18
EBITDA margin	17.59%	13.59%	20.43%	22.13%	21.42%	17.69%
PAT Margin	6.69%	4.04%	8.78%	9.51%	10.87%	8.38%
Net Debt to Equity	0.71	1.01	0.99	0.73	0.67	0.82
Net Debt to EBITDA	2.06	3.78	2.82	1.96	2.07	3.00
Asset Turnover	0.82	0.73	0.77	0.70	0.68	0.66
Debtors Turnover	0.13	0.17	0.13	0.11	0.14	0.12

Consolidated figures

NOTE – FY16, FY17 & FY18 ratios are as per IndAS

Results Overview - Revenue & EBIT

Revenues (Rs. crore)

EBIT (Rs. crore)

Consolidated figures

CB – Chemicals Business; PFB - Packaging Films Business; TTB – Technical Textiles Business; Others

Results Overview - Revenue Share

CB – Chemicals Business; PFB - Packaging Films Business; TTB – Technical Textiles Business; Others

(Rs. Crore)	Segment Revenues	% Contribution toRevenues	EBIT	% EBIT Margins	% Contribution toEBIT
Q3 FY19	586.0	29.8%	76.6	13.1%	29.6%
Q3FY18	401.8	28.7%	73.3	18.2%	32.6%
Shift%	45.8%		4.6%
9M FY19	1,605.4	28.5%	218.3	13.6%	27.2%
9M FY18	1,104.8	27.1%	177.0	16.0%	31.9%
Shift%	45.3%		23.3%

Consolidated figures

Chemicals Business - Key Highlights

Fluorochemicals Business

• The segment reported healthy performance during the quarter on account of steady volumes and realizations for refrigerants
  • SRF continues to be the largest manufacturer of refrigerants in the country
• Business continues to increase its market share of FLORON & industrial chemicals in the domestic market
• Chloromethanes plant commissioned in Dec'17 at Dahej running at optimal capacity, aiding Y-o-Y performance

Market Trends

• Passenger vehicles production witnessed a negative growth of (9%) in Q3FY19; domestic sales remained flat
• Domestic A/C market remained sluggish to negative

Chemicals Business - Key Highlights

Specialty Chemicals Business

• Segment delivered stable performance
  • Agro-Chemical segment on the path of showcasing healthy recovery;
  • Pharma segment continues to show positive traction;
• Successfully started commercial production at newly commissioned plants, initial dispatch commenced – to contribute to performance notably from Q4FY19 onwards
  • Higher depreciation and fixed costs on account of new facilities impacted EBIT margins as the facilities are in the process of ramping up
• Focus continues to be on expanding the client base and portfolio and launching pilot campaigns to keep the funnel optimally utilized
• The Board has approved a project to debottleneck certain Specialty Chemical plants to further increase the production capacity at Dahej at an estimated cost of ₹140 crore

Market Trends

• Pharma continues to grow, even though at a low CAGR
• Agro market witnessing green shoots

Chemicals Business - Key Highlights

Chemicals Technology Group

Chemicals Technology Group (CTG) is actively engaged in the development of new process technologies

– Key focus on the niche area of fluorinated molecules

Strong internal competencies and capabilities

– Equipped with state-of-the-art R&D facilities and an ingenious team of scientists and engineers

2 R&D centres in India

Filed 9 process patents in Q3FY19 taking the tally to 155 patents of which 23 have been granted till date

(Rs. Crore)	SegmentRevenues	% Contributionto Revenues	EBIT	% EBITMargins	% ContributiontoEBIT
Q3 FY19	702.6	35.7%	88.1	12.5%	34.1%
Q3FY18	430.2	30.8%	62.9	14.6%	28.0%
Shift%	63.3%		40.0%
9M FY19	2,030.3	36.1%	305.8	15.1%	38.1%
9M FY18	1,255.6	30.8%	157.5	12.5%	28.4%
Shift%	61.7%		94.2%

Consolidated figures

Packaging Films Business - Key Highlights

Packaging Films Business

• The Company reported strong performance in this segment driven by healthy contribution from new capacities
  • Margin performance was impacted owing to sharp fall in raw material prices which led to some inventory loss
• Growth witnessed from VAP sales
• Civil work for new projects progressing well at Hungary and Thailand sites

Market Trends

• BOPP market continues to be over supplied; creating pressure on margins
• BOPET raw material pricing stabilizing

(Rs. Crore)	SegmentRevenues	% Contributionto Revenues	EBIT	% EBITMargins	% ContributiontoEBIT
Q3 FY19	547.8	27.9%	81.7	14.9%	31.6%
Q3FY18	452.2	32.3%	76.3	16.9%	34.0%
Shift%	21.1%		7.2%
9M FY19	1,592.8	28.3%	241.9	15.2%	30.2%
9M FY18	1,376.6	33.8%	186.1	13.5%	33.6%
	15.7%		30.0%

Consolidated figures

Technical Textiles Business - Key Highlights

Tyre Cord Fabric (TCF)

• SRF continues to maintain its market leadership in NTCF with strong demand witnessed in Q3FY19
  • NTCF facility reached optimal production capacity
• The Board approved a proposal to install additional spinning and textile capacity at Manali and Gwalior at ~ ₹80 crore – to be incurred over the next three years

Belting Fabrics & Polyester Yarn

• Higher sales of value-added products contributed to healthy performance in both segments
• Reached full capacity utilization in Polyester Yarn
• Competition from Chinese imports adversely impacted performance in Belting Fabrics

Market Trends

• US-China trade war impacted the business negatively owing to Chinese dropping their prices
• Imports continue to shrink post imposition of Anti Dumping Duty on Polyester Industrial Yarn

(Rs. Crore)	SegmentRevenues	% Contributionto Revenues	EBIT	% EBITMargins	% ContributiontoEBIT
Q3 FY19	129.2	6.6%	12.05	9.3%	4.7%
Q3FY18	114.0	8.2%	12.06	10.6%	5.4%
Shift%	13.4%		-0.1%
9M FY19	396.7	7.1%	36.0	9.1%	4.5%
9M FY18	339.2	8.3%	33.9	10.0%	6.1%
Shift%	17.0%		6.4%

Consolidated figures

Others- Key Highlights

Coated Fabrics & Laminated Fabrics

• In Coated Fabrics, SRF continues to maintain its domestic market leadership
• In Laminated Fabrics, the Company reported consistent sales in hot laminations in Q3FY19
  • Successfully commercialized two new products

Engineering Plastics

• Segment reported healthy performance during the quarter

Market Trends

• Severe supply overhang scenario continues in Laminated Fabrics segment

Overview - Business Profile

			Revenue	EBIT	No.of Plants
salcmiehC	FluorochemicalsRefrigerants••Pharma propellants•Industrial chemicals	Specialty Chemicals•Organic intermediates for agro &pharma	1,611	269	5
gnsgimaFilkcaP	Films for Flexible Packaging•Bi-axially Oriented Polyethylene Terephthalate (BOPET)•Bi-axially Oriented Polypropylene (BOPP)		1,782	230	5
alscenitilhxceeTT	•Tyrecord fabrics (nylon & polyester)•Industrial yarnsBelting fabrics•		1,839	253	5
rehtO	Engineering Plastics••Polymer compounds•	Coated fabricsLaminated fabrics	457	44	4

Overview Growth Levers

Outlook - Chemicals Business

Focus on expanding to new markets / geographies for refrigerants and solvents

Integrated capacities to produce a range of current & future HFC's to cater to customer needs

Focus on moving up the value chain through accelerating qualifications for new molecules and active ingredients in both Agro and Pharmaceutical sectors

Increased capex is being undertaken to ensure we have capacities in place to meet the expected rebound

Outlook - Packaging Films Business

Overall the global packaging films industry is witnessing improvement in capacity utilization

Supply overhang likely to continue in the BOPP segment

Focus on increasing pace of R&D efforts, efficient cost structures, enhanced capabilities and value-added products in the portfolio

Outlook - Technical Textiles Business

NTCF is expected to remain a key business in the segment and a generator of steady cash flow

Other sub segments of Technical Textiles started to contribute to its performance

Improving macroeconomic environment to have a positive impact on belting fabric segment going forward

About Us

Established in 1970, SRF Limited with an annual turnover of ₹5,600 crore (US$ 860 million) is a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates. The company's diversified business portfolio covers Technical Textiles, Fluorochemicals, Specialty Chemicals, Packaging Films and Engineering Plastics. Anchored by a strong workforce of more than 6,300 employees from different nationalities working across twelve manufacturing plants in India, two in Thailand and one in South Africa, the company exports to more than 75 countries. Equipped with State-of-the-Art R&D facilities, SRF has filed 155 patents for R&D and technology so far, of which 23 have been granted. A winner of the prestigious Deming Prize for two of its businesses namely Tyre Cord and Chemicals, SRF continues to redefine its work and corporate culture with TQM as its management way.

For further information please contact

Anoop Poojari / Karl Kolah CDR India

Tel: +91 22 6645 1211 / 1220 Email: anoop@cdr-india.com / karl@cdr-india.com