#1SUDARSHAN Investor Presentation Q4 FY21#2SAFE HARBOR STATEMENT This presentation may contain statements which reflect Management's current views and estimates and could be construed as forward-looking statements These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements These risks and uncertainties include, but are not limited to our exposure to changes in general economic conditions, market, Foreign currency and other risks, changes in government policies/regulations, tax regimes as also technological changes The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of subsequent development, information or events or otherwise 2 SUDARSHAN#3COMPANY OVERVIEW SUDARSHAN#4Our Company at Glance We are a leading world-class color solutions provider with a focus on exceptional and sustainable results SUDARSHAN 16 SUD-15- CONSOLIDATED REVENUES $250 Mn (FY21) INFRASTRUCTURE 2 Manufacturing plants in Mahad & Roha and a dedicated R&D center in the outskirts of Pune PEOPLE 50+ sales team 60+ channel partners 2,000+ global workforce BUSINESS FOCUS Pigment Focus. Don't compete with customers GEOGRAPHIC REACH Largest pigment producer in India. Exports to 85+ countries SUDARSHAN#5Our Global Presence We Export to 85+ countries with 50+ sales members GLOBAL HEAD OFFICE NORTH AMERICA Sudarshan Chemical Industries Limited Sudarshan North Americas Inc. CHINA EUROPE Sudarshan (Shanghai) Trading Co Ltd. MEXICO Sudarshan Europe B.V. JAPAN Sudarshan Mexico S. de R.L de CV. Sudarshan Japan K.K 5 SUDARSHAN#6A journey towards a leading world class color solutions provider Domestic Revenue Cr Exports Revenue Cr 157% EBITDA Cr 236% EBITDA % 1,864 288 1,438 953 781 724 192 A Consistent performance with Sales growing at a CAGR of 10% and Operating profit by 13% despite exiting some of the businesses 481 657 911 (49%) 86 11.8% 15.4% 13.3% 243 (46%) (34%). FY11 FY18 FY21 FY11 FY18 FY21 player Earnings per Share 234% 20.2 Gross Block Cr 6.1 11.1 348 599 168% 932 FY11 FY21 Pigment, Agro Chemical, A pure play Pigment Masterbatch businesses focus Amongst top 20 pigment 3rd largest pigment Domestic market share estimate @ 30% ~ R&D lab: India Organic and Inorganic pigments with revenues largely from Azo and Phthalo pigments Renewable energy: 0% producer globally Domestic market share ~ estimate @ 35% R&D labs: India & Germany Development & strong growth of High Performance and Cosmetics product range Renewable energy: 20% FY11 FY18 FY21 FY11 FY18 FY21 Revenue includes Revenue from Operations and Other operating income | EBITDA as percent to Total Income from operations (excluding other income) | EPS is calculated excluding profit/loss from exceptional and extraordinary items | Gross block excluding CWIP at end of period SUDARSHAN#7Pigments Application - a global $8.6bn market opportunity We are uniquely placed to offer a comprehensive range high performance and speciality pigments COATINGS PLASTICS INKS COSMETICS High performance and special effect for the coating industry Our key focus area with targeted significant growth in the automotive and decorative segments A pallete with a wide spectrum of colors and performance for plastic applications Leadership position in plastics segment in multiple geographies; attributed to our detailed know-how of the industry General purpose and high performance pigments for inks Focus on niche applications in the ink industry with necessary expertise in offset and liquid ink segments Effect pigments for cosmetics & personal care applications An important growth area for Sudarshan; we continue building capabilities in end application 7 SUDARSHAN#8Pigment Industry View • COVID-19 had varied impact across application industries different end Plastics: Moderate to low impact; use in essential goods like packaging, hygienic products helped limit COVID impact Packaging Inks: Low impact and rapid recovery; use in essential goods like food packaging helped limit COVID impact Coatings: Demand was impacted during the phase of first and second wave of Covid Paints Significant industry structure changes; top players in the process of divesting their pigment business Potentially long-term changes in Supply chains due to a combination of trade related factors and COVID (including disruption in RM prices) 8 SUDARSHAN#9. Investing for growth of our Pigment business Expected to complete capex projects during FY22 • There were continued restriction on movement of technical personnel to complete capex projects, however no cancellation of planned capex despite covid driven uncertainties Current Capex plan 600 Cr Capex incurred Capex to be incurred FY20 222 Cr Put to use: 293 Cr Sales from these FY2171 Cr Mar-21: CWIP at 269 Cr FY22: To invest 38 Cr Capex put to use during FY22 at ~ 307 Cr capex will ramp up gradually over three to four years Capex has revenue potential 1,000 to 1,200 Cr at full capacity SUDARSHAN#10Annual Performance#11Annual Performance Highlights - Consolidated Financials Income from Operations (In Cr) EBITDA* (In Cr & Margin %) +9% +9% 1,864 1,708 1,593 1,438 FY18 FY19 FY20 FY21 204 192 +14% +17% 246 288 PAT (In Cr & Margin%) 81 77 15.4% 14.4% 13.3% 12.8% FY18 FY19 FY20 FY21 +22% +29% 140 109 7.5% 6.4% 5.4% 5.1% FY18 FY19 FY20 FY21 Financial results include results of the wholly owned subsidiary RIECO Industries Limited which was earlier classified under 'discontinued operations'. | Previous quarter / year figures have been regrouped wherever necessary to meet current period's classification. | * EBITDA as percent to Total Income from operations (excluding other income) | PAT is excluding profit/loss from exceptional and extraordinary items 11 SUDARSHAN#12Financial Highlights Earnings per Share Return on Capital Employed Gross Block Cr 81% 15.4% 15.7% 14.8% 14.8% 641 20.2 599 15.7 11.1 11.7 932 863 Cash conversion cycle Working capital % to Income from Operations 113 93 88 86 24% 28% 24% 25% FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 Debt to Equity Ratio Net debt Cr Net Debt to EBITDA Current Ratio 2.2 1.3 2.1 1.0 2.0 1.2 1.2 1.2 1.8 0.8 0.8 0.6 431 367 499 614 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 EPS is calculated excluding profit/loss from exceptional and extraordinary items 12 ➤ Sudarshan has invested for growth in last three years ➤ ROCE has been steady while Earnings per Share has increased by 81% ➤ Other key ratios remain healthy SUDARSHAN#13Annual Performance Highlights - Pigment Business Income from Operations (In Cr) Gross margin % +10% +10% 1,753 43.4% 42.6% 42.8% 41.8% 1,590 1,477 1,329 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 EBITDA* (In Cr & Margin %) +15% +20% 234 211 187 281 16.0% 14.7% 14.1% 14.3% FY18 FY19 FY20 FY21 A steady growth in Pigment revenues with stable gross margins while Operating margins continue to improve 13 SUDARSHAN#14Pigment Business: Overseas geographies continue to have higher growth Domestic Revenue Cr +8% 806 756 677 +6% 856 Export Revenue Cr +11% +14% 783 721 653 897 Mix % 51% 51% 51% 49% 49% 49% 49% 51% FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 With the investment in infrastructure and sales force in the international geographies, share of exports will continue to grow ➤ Domestic business would continue to grow at stable rate ➤ A strong focus on product quality and supply chain management practices continues to serve demand opportunities in both the markets Revenue includes Revenue from Operations and Other operating income of Pigment business 14 SUDARSHAN#15Pigment Business: Shift towards Specialty to continue Specialty Revenue Cr +12% 1,109 1,005 856 +8% 1,203 Non-Specialty Revenue Cr +5% +14% 481 473 471 550 Mix % 64% 68% 70% 69% 36% 32% 30% 31% FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 ► Focus on growing our Specialty pigments portfolio is shifting revenue mix favourably Share of Specialty pigments increased from 64% in FY18 to 69% in FY21 ➤ Optimum utilisation of capacities and cost competitiveness will help in keeping steady growth in Non-Specialty portfolio Revenue includes Revenue from Operations and Other operating income of Pigment business 15 SUDARSHAN#16Quarterly Financials#17Quarterly Performance Highlights - Consolidated Financials Income from Operations (In Cr) EBITDA* (In Cr & Margin%) 449 506 +14% 577 Q4FY20 Q3FY21 Q4FY21 +28% 54 12.0% 80 +10% 87 +62% PAT (In Cr & Margin%) 17 15.7% 15.2% Q4FY20 Q3FY21 Q4FY21 3.9% 43 +11% 48 8.6% 8.3% Q4FY20 Q3FY21 Q4FY21 +176% Financial results include results of the wholly owned subsidiary RIECO Industries Limited which was earlier classified under 'discontinued operations'. | Previous quarter / year figures have been regrouped wherever necessary to meet current period's classification. | * EBITDA as percent to Total Income from operations (excluding other income) | PAT is excluding profit/loss from exceptional and extraordinary items 17 SUDARSHAN#18Quarterly Performance Highlights - Pigment Business Income from Operations (In Cr) Gross margin % EBITDA* (In Cr & Margin %) 402 477 +12% 533 Q4FY20 Q3FY21 Q4FY21 +33% FY20 42.8% FY21 43.4% FY20 14.7% 43.9% 43.2% 42.9% 48 12.0% 78 FY21 16.0% +8% 84 16.3% 15.8% Q4FY20 Q3FY21 Q4FY21 Q4FY20 Q3FY21 Q4FY21 Capacity utilisation during Q4FY21 was at ~ 86% of operating capacity ➤Impact from withdrawal of export incentive scheme (MEIS) on margins at ~ 1% YoY. Details of new scheme RODTEP yet to be released Sharp price increases midway through the quarter in several intermediate products; normally pass through in selling prices takes with up to a quarter lag * EBITDA as percent to Total Income from operations (excluding other income) 18 +73% SUDARSHAN#19Pigment Business - A robust YoY performance Domestic Revenue Cr 206 261 +5% Export Revenue Cr 273 +33% 196 Mix % 51% 55% 51% Q4FY20 Specialty Revenue Cr 284 Q3FY21 329 +10% Q4FY21 216 +20% 260 +32% 49% 45% 49% Q4FY20 Q3FY21 Non-Specialty Revenue Cr +15% 363 +28% 148 118 Mix % 71% 69% 68% Q4FY20 Q3FY21 Q4FY21 Q4FY21 170 +43% 29% 31% 32% Q4FY20 Company continues to see good traction on domestic & exports markets as also in all categories of product lines Revenue includes Revenue from Operations and Other operating income of Pigment business 19 Q3FY21 Q4FY21 SUDARSHAN#20Business Outlook#21Business Outlook - FY22 and beyond Capex program to drive future growth and bring in EBITDA improvement Capex projects under commissioning in the areas of existing and new products; Gradual sales ramp-up of new Capex's expected to drive growth • New businesses to move into plant commissioning and sales ramp up phase Commencing execution of cost improvement and value chain integration projects . Business mix change to continue Expanding product portfolio to build globally competitive and comprehensive range Deeper penetration in select International geographies Efficiency and continuous improvement focus • Building one of the most efficient chemical complexes in India and globally, with strong focus on EHS and sustainability Focus on controlling net working capital and inventories to optimize cash conversion cycle Focus to improve Return on Capital Employed will continue as a key initiative 21 SUDARSHAN#22ABOUT SUDARSHAN#23Our Vision, Mission & Values Our growth is fueled by an immense drive to be a leading player in our field MISSION World class Global Color Solution provider with an innovative and vibrant culture VISION VALUES To be amongst the top three pigment players in the world Seva (Service), Courage, Commitment and Passion, Respect, Trust 23 SUDARSHAN#24Our Journey Evolution of Sudarshan from a local player to a global player is result of a well crafted strategy Establishing the Business 1952 - 1989 Efforts largely domestic with limited portfolio range Next leap in Technology 1989 - 2006 Building technical capabilities & infrastructure Going Global 2006 - 2018 Scaled up infrastructure to world class standards Net revenue at INR 1,000 Cr FY14 State of art technology centre at Sutarwadi Listed on NSE Manufacturing plant in Mahad for Pthalos & Effect Manufacturing plant in Pune Inception of Sudarshan Pigments Footprints in Europe & USA Listed on BSE Net revenue at INR 400 Cr FY06 Manufacturing plant in Roha 24 Improved portfolio with HPPS and Effects for Cosmetics SUDARSHAN#25Our Governance Structure - Board Of Directors Mr. Pradeep Rathi (Chairman) Mr. Rajesh Rathi (Managing Director) Mr. Ashish Vij (Whole Time Director) Mr. D. N. Damania (Non-Executive, Independent Director) Mr. S. Padmanabhan (Non-Executive, Independent Director) Mrs. Shubhalakshmi A. Panse (Non-Executive, Independent Director) Mr. Naresh T. Raisinghani (Non-Executive, Independent Director) Mr. Sanjay K. Asher (Non-Executive, Independent Director) Mr. Anuj N. Rathi (Non-Executive, Non-Independent Director) Mrs. Rati F. Forbes (Non-Executive, Independent Director) Dr. Deepak Parikh (Non-Executive, Independent Director) 25 SUDARSHAN#26Our Products Portfolio Organic Pigments Azo Phthalos HPPS Dispersions Coloured material made of organic compound with pigment properties. Commonly used for Coatings, plastics, Inks & Textile applications Inorganic Pigments Chromes Cadmiums Iron Oxides Made up of mineral compounds. Are mainly oxides, sulphides of one or more than one metals. Used for plastics and industrial coatings I Effect Pigments Mica base for industrial and cosmetics Pigments with mica base and coated with oxides to give shimmer and glow. Mainly used in plastics, automotive coatings, cosmetics applications 26 SUDARSHAN#27The Pigment Approval Cycle Approval cycle for pigment sales varies across products and Sudarshan Chemicals is well placed in this regard COATINGS w PLASTICS INKS 10 COSMETICS Coatings remains a prominent focus area with Automotive and Decorative being the key segments Automotive: 1 to 5 years Decorative: 6 months to 1 Market leaders in multiple geographies offering wider spectrum of colours and pigment grades. Plastics: 3 to 6 months Focus on niche applications like liquid inks to build competency and strong market share Inks: ~1 month Proven track record with significant growth for Sudarshan's progress Cosmetics: 1 to 2 years year 27 22 SUDARSHAN#28Our Technical Capability PEOPLE • • • 100+ Scientists & Technical resources Global experts' panel for competency enhancement Analytical & Application Lab experts INFRASTRUCTURE • • • • Dedicated site for R&D with investments > USD 10Mn State of art equipment for characterization and composition analysis Ability to handle crystal modification & surface treatments Ability to ensure reproducibility in end application PROCESS • Stage Gate Process • DOE approach to solutions SUDARSHAN 28#29Our Infrastructure SCIL is focused on building capabilities across research, development & technical service. Manufacturing Site: Roha Built in 1973; 1100+ trained team members. Products Manufactured: AZO, HPP, Effect Pigments, Dispersions Manufacturing Site: Mahad Built in 1993; 500+ trained team members. Products Manufactured: B&G, HPP, Effect Pigments SUDARSHAN 甜 Our Manufacturing Plants with Modern Water Treatment Facility and Certified by BSC and having won Sword of Honour for Safety 29 SUDARSHAN#30Global Pigments Market Overview Global Colour Pigment Market* - Relevant to Sudarshan Inorganic 3.0 Effect 0.6 ($bn) Organic 5.0 * Excludes Black, White and Metallic Pigments. Based on internal Pigment industry study and various market research reports 30 30 О Our estimate of the Global Colour Pigments Market is ~$ 10B, market opportunities open to Sudarshan are ~$ 8.6B. • Global Organic Pigment market is expected to grow at ~3% CAGR over the next 5 years. o India is set for strong, sustainable growth in pigment manufacturing with substantial export opportunities. • Sudarshan is well placed to expand market share for all its applications. • We expect this strong growth to come from our coatings, inks, plastics and cosmetics segments. SUDARSHAN#31Our Pillars Of Growth We believe Growth will come from a focused approach to broaden product portfolio and renewed application focus • Product Portfolio Enhance Product Portfolio across Organic (especially HPPs and Inks) 01 02 03 . Inorganic HPPS • Effect Pigments • Solvent Dyes Application Focus . Continued focus on decorative coatings and plastics • Additional focus on automotive coatings, industrial effects & cosmetics Geographic Presence • Expand global footprint to newer geographies, and gain market shares in US, EU and China 31 SUDARSHAN#32Building Capabilities We focus on building capabilities across functions to achieve our vision $ SUDARSHAN STRENGTHEN R&D Faster launch of new and innovative products, faster turnaround time on technical issues. MANUFACTURING & OPERATIONS EXCELLENCE Lean & Six Sigma, Capex expansion, strengthening supply chain COMMERICAL EXCELLENCE Improving reach, channel management and customer experience ENVIORNMEMNT SUSTAINABILITY Best in class safety practices, continued efforts towards sustainable energy sources such as solar, windmill etc. 32 32#33Our Competitive Advantage We achieve excellent product and process reliability Product Consistency & Process Control 800+ tests 4000+ specifications ISO 9001 Six Sigma Reliable technical information Reliable Service Laboratories certified by the National Accreditation Board for Testing & Calibration Laboratories Recognized for operational excellence in Supply Chain Management Our Certifications Oliver Wight Class ISO 17025:2001 A Certificate 33 Environment & Occupational Health Ensure safety of our plant operatives ISO 14001 OHSAS 18001 British Safety Council 5 Star Rating Sword of Honour SUDARSHAN#34Empowering our society and safeguarding our environment "SUDHA" (Sudarshan's Holistic Aspiration) Women Empowerment Our EHS initiatives 1,000+ women 8+ villages Livelihood initiatives through Paper Bags making projects, Stitching Projects Health and Community Development 20 Asha Workers (Health Workers) working in 22 villages Distribution of water purifiers to 38+ rural schools Clean and safe drinking water facilities to 38+ rural schools Sanitary Napkins Vending machines in 4 Girls schools Education The J. M. Rathi High School provides education to over 2,000 students Providing education to 376 children in Pune Slum area Digitalization of 28 rural schools Environment Waste Management - Working with 4,000+ families and 9 villages Effluent Treatment Our state of the art effluent treatment facilities and the standards of operation are recognized throughout the region as most stringent Co-Gen Facility (Steam & power co-generation plant) Estimated CO2 emission reduction approx. 480,000 Kg/Day Suspended Particulate matter less than 50mg/Nm3 Uninterrupted power supply to process consistent quality of product High efficiency will result in less fuel consumption Wealth Out of Waste Reduction in green house gases due to installation of Anaerobic Hybrid Reactor Installed both primary and secondary sludge where secondary sludge is used in cogen plant as a fuel Sudarshan Received Global CSR Award 2020 in Platinum Category for an outstanding achievement in implementing CSR Programme for strengthening core business with Social Commitment 34 SUDARSHAN#35Shareholder Information Share Information (as at 31st March 2021) NSE Ticker SUDARSCHEM Promoters Flls and FPIs BSE Ticker 506655 Mutual Funds Others Market Cap (INR mn) 35,992 % free-float 59.97% Free-float market cap 21,542 Shares Outstanding 6,92,27,250 3M ADTV (Shares) 2,12,911 3M ADTV (INR mn) Industry 1153.2 Shareholding Pattern (as at 31st March 2021) 40.03% 9.36% 7.31% 43.30% Sudarshan has performed in line with broader indices over the last 12 months ⚫Sudarshan MSCI India Small Cap Index ⚫ NIFTY 500 Specialty Chemicals 31-Mar-201 30-Apr-20 31-May-20 30-Jun-201 31-Jul-20 31-Aug-20 30-Sep-20 31-Oct-20 30-Nov-20 31-Dec-201 31-Jan-21 28-Feb-21 31-Mar-21 35 2020 117% 76% 39% SUDARSHAN#36Awards And Accolades MAHT MAHAIMA SUDARSHAN 30/1/2021 Sudarshan Chemical Industries Ltd WINS "Mahatma Awards 2020" in CSR Excellence RI Mahatma Awards 2020 in CSR Excellence Global CSR Award 2020 Platinum Category Global Clean Village Award - Energy & Environment foundation Global WasteMet Award 2018 - Gold Category 36 Golden Peacock HR Excellence Award 2018 GOLDEN PEACOCK A W A R D Winner HR Excellence 2018 S Global HR Excellence HR Excellence Award 2018 1st in Chemicals & Fertilizer Sector 'Dream Company to Work For' in Chemical Sector World HRD Congress 2017 ANNUAL GENERAL M C AWARDS PRESENTATION CSR CSR CSR DMAI Award for Energy Conservation Initiative 2017-18 India CSR Award for CSR Community Initiative 2017-18 SUDARSHAN#37THANK YOU Investor Relations at Sudarshan: Mr. Mandar M. Velankar +91 20 6828 1200 [email protected] CIN: L24119PN1951PLC008409 www.sudarshan.com Sudarshan Chemical Industries Limited 162 Wellesley Road, Pune, Maharashtra - 411001 Spiritually fulfilling 37 growing together... · Socially just • Environmentally sustainable SUDARSHAN