#1maithan alloys ltd Investor Presentation August 2020#2Safe Harbor maithan alloys ltd This presentation and the accompanying slides (the "Presentation"), which have been prepared by Maithan Alloys 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.#3maithan alloys ltd VISION To be India's premiere Alloy Company that is built on the solid foundation of shareholder trust, customer commitment, employee satisfaction and sustainable communities Consistently delivering on our promises backed by meticulous hard work is our motto for ensuring success always! MISSION To be India's premiere Alloy Company ☐ Promising Excellent Shareholder Value Nurturing our Employees ☐ Utmost Commitment to our Customers ☐ Care for our Communities VALUES ☐ Commitment Loyalty Integrity ☐ Rigour ☐ Teamwork 3#4Maintaining the Maithan Edge maithan alloys ltd 3939#5Key Differentiators maithan alloys ltd Efficiency Lowest in the Cost Curve Optimum Capacity Utilization Higher Tonnage product Strong Credibility Strong credibility in the market right from suppliers to end customers Optimising Facilities for Maximising Returns Source raw materials based on our product mix which largely remains stable PPAs with efficient power supplying utilities Stable Asset turnover ratios with zero debt Diversified Customer Base International clients across 35 countries Low Concentration Risk as exposure to no client is more than 10% of its exports Expanding into emerging Asian economies Expansion Plans Organic & Inorganic Growth Opportunities 5#6Maithan Edge Largest Manufacturer 20 Years Rich Experience Niche Products India's largest Manganese Alloy Producer and Exporter maithan alloys ltd Robust Balance Sheet 20 years. Two decades of experience and continuous growth Basket of the most valuable Techno- Commercial Products = Net Cash Company Credit Rating: CARE AA CRISIL AA CARE/CRISIL A1+ Increased Stockholder's Return Revenue Growth ROCE Increased by + 3,100 bps ROE Increased by + 1,300 bps Increased by +11% CAGR EBITDA Increased by +29% CAGR CAGR calculated from FY2014 to FY2020 Profit After Tax Increased by +64% CAGR Net Cash Position of Rs. 634 Crores as on March 2020 6#7Product Offerings maithan alloys ltd Ferro alloys enhance steel strength, durability, anti-corrosion and anti-stain properties and acts as de-oxidant for Steel Manufacturing Ferro Manganese • An alloy of iron and manganese • Used in steel products wherein silicon • content needs to be controlled at low levels Used in flat steel, manganese-rich steel and stainless-steel manufacturing • • Ferro Silicon An alloy of iron and silicon Silicon acts as a steel oxidant Used primarily in special steels and in small quantities in mild steel • Silicon Manganese An alloy of silicon and manganese . Cost-effective blend of silicon and manganese • Consumed in all steel products. Used in higher quantities in 200 series stainless steel, alloy steel and manganese steel 7#8State of the Art Manufacturing Facilities Visakhapatnam (SEZ) 72.0 MVA • Smelters: 4 x MVA 18.0 MVA Kalyaneshwari 48.75 MVA • Smelters: 2 x 5.0 MVA ; 1 x 6.5 MVA; 1 x 8.25 MVA ; 2 x 12.0 MVA . Products: Ferro Manganese/ Silicon Manganese • Raw Material: Maganese Ore, Coke, Coal • Sourcing: Imports 90%; Domestic 10% • User Industry: Steel • Products: Ferro Manganese/Silicon Manganese • Raw Material: Maganese Ore, Coke, Coal • Sourcing: Imports 65%, Domestic 35% • User Industry: Steel Organization for Standard ISO PATIONAL HEALTH OHSAS 18001 maithan alloys ltd Byrnihat 16.5 MVA • Smelters: 2 x 8.2 MVA • Products: Ferro Silicon • Raw Material: Quartz, Coke, Coal ● Sourcing: Domestic 100% • User Industry: Steel ONMENTAL MANAGE 9001 Quality remains the core to everything that we do. We achieved the ISO 9001 certification in 2003. This achievement makes a part of a world- recognized Quality Management System that helps us meet the expectations and needs of our customers every time. cococo International standard for Health & Safety was achieved by Maithan in 2016. The addition of this certification has been a new feather in our cap-making us stronger and taking our successes a step forward to include the health and safety not only of our processes but also our people. ISO 14001 We have already started the processes to be ISO14001 compliant. It's a standard that sets out criteria for an environmental management system. With this certification, we aim to map out a framework that we will follow to set-up an effective environmental management system. Quality Product Variety of Grades Leading to better Product Mix WHY IMPORT ORE? • • Logistic Advantage 8#9Self Sustaining Business Model Input of sized and graded Raw Material Feed in day bins through conveyors Automated Batch preparation and Charge into Furnace Reaction in furnace and discharge of molten metal Pouring in cast iron and cooling of ingots maithan alloys ltd We have an ability to generate a Larger Throughput from our manufacturing facilities Used as Raw Material for Silico Manganese Ferro Manganese Slag Sizing, Grading and Packing Lumpy Discharge of Slag Silico Manganese Slag Granulated Inspection and Dispatch Land Filling Fly Ash Brick making (Crushed) 6#10Strong Client Relationships Association with SAIL and JSL being more than a decade JINDAL STAINLES JSW maithan alloys ltd Shift of focus from 'Stable' Europe to 'Growing' Asia helping in better realizations सेल SAIL JINDAL STEEL & POWER NIPPON STEEL & SUMITOMO METAL [] CHINASTEEL outokumpu Posco JFE حديد الإمارات emirates steel احدى شرفات سنابات A SENAAT company JFE Steel Corporation ArcelorMittal TATA STEEL GO GERDAU NUCOR TECHINT H QU HYUNDAI STEEL قطر ستيل QATAR STEEL "We are pleased to have formed a partnership with Maithan Alloys and we truly appreciate their commitment to quality and customer service. They have put forth all efforts to accomplish our needs amid out dynamic priorities and have always delivered to the deadlines set by us." JSL PT. JINDAL STAINLESS "From the beginning of our association with Maithan Alloy, we found the team to 100% committed to achieving customer service at any cost. M/s. Maithan Alloys are extremely professional and competent. We are very impressed with their ability to include continuous improvement in work processes." un usha martin ~100% of Domestic clients are associated with the Company for over 7 years 75% Repeat Clients Long term relationships with clients offers Competitive Advantage Low Concentration Risk in export markets with presence in over 35 countries 10#11Asian Economies to drive the Global Steel Demand maithan alloys ltd Global Steel Demand 2018: 1,548.5 Mn T NAFTA 9% Avg. rate of growth is expected to be in the range ~1%-~2% EU 13% CIS 3% AFRICA 3% Asia, Oceania & Middle East 70% Central & South America 3% Source: www.worldsteel.org Note: Data for Global Finished Steel Demand Note: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness It caters 70% of Global Steel demand Asia Ex-China Growth is expected to be ~5% Maithan already has a strong foothold in the growing Asian economies with no exposure to China 11#12Advantage India TAX maithan alloys ltd 100% FDI allowed in the mining sector & exploration of metal & non-metal ores under the Automatic Route 2017 Budget outlay of ~ Rs. 4 tn in infrastructure to drive domestic steel consumption 'Housing For All' to drive housing demand thereby benefitting steel industry Anti-dumping Duty on Steel Products India has become the 2nd AA largest steel producer in FY19 MADE IN INDIA India ranks 4th globally in terms of iron ore production Steel Industry's Outlook to increase capacity to 300 Mn T by 2030 to drive demand for ferro alloys India's GDP to grow by +7% (IMF) over the next two years 12#13Advantage Maithan Alloy Producers to benefit from NSP 2017 Capacity (Mn MT) Production (Mn MT) 122 CAGR +6% 300 92 CAGR +7% 255 maithan alloys ltd Why Advantage Maithan... Per Capita Consumption (kg) Operating Efficiency Better Product + Mix + Strong Customer Relationships 61 CAGR +7% 158 FY 2016 FY 2030 FY 2016 FY 2030 FY 2016 FY 2030 Gaining Market Share Globally and Domestically Reduce dependence on Steel imports and become self sufficient in Steel production Increase domestic availability of washed coking coal so as to reduce import dependence on coking coal to 50% Policy to increase consumption of Steel in Infrastructure, Automobiles & Housing sector World Crude Steel Demand 3% CAGR since 2017 India Crude Steel Demand 7% CAGR since 2017 Whereas... Provide policy support & guidance to private manufacturers, MSME Steel producers, CPSES Steel Ministry will facilitate R&D through the establishment of Steel Research & Technology Mission of India (SRTMI) ~1.5% of Manganese Alloy is required to produce each tonne of Steel Maithan Alloys Production has grown CAGR of 16% since 2007 13#14Strong Leadership Team... . • Mr. S. C. Agarwalla Chairman and Managing Director 30 years of rich experience in Ferro Alloys industry Has a strong understanding of business processes and excellent communication and human management skills • Mr. Subodh Agarwalla Whole Time Director and CEO • B.Tech from IIT BHU and M.B.A. from IIM Bangalore • At age of 41 years is the Whole Time Director and CEO • and strengthens the operational activities of the Company Focuses on project setup, corporate planning and business development, planning & budgeting maithan alloys ltd Mr. Sudhanshu Agarwalla President and CFO • M.B.A. from XLRI Jamshedpur 15 Years of experience in Finance, Marketing and Procurement in the Ferro Alloys Industry 14#15with an Experienced Board . . Mr. S. C. Agarwalla (Chairman and Managing Director) 30 years of rich experience in Ferro Alloys industry Has a strong understanding of business processes and excellent communication and human management skills • maithan alloys ltd Mr. Subodh Agarwalla (Whole Time Director and CEO) B.Tech from IIT BHU and M.B.A. from IIM Bangalore Strengthens the operational activities of the Company Mr. Nand Kishore Agarwal (Independent Director) Accounts, Finance and Tax Laws Mr. Ashok Bhandari (Independent Director) Finance and negotiation with banks, governments and technology & equipment suppliers Mr. Vivek Kaul (Independent Director) Entrepreneurship and Entrepreneurship Ecosystem Development, industrial knowhow, application development. Mr. Palghat K Venkatramani (Independent Director) Banking with specialty in Industrial Finance and staff training Foreign Exchange and Management Accountancy Mrs. Kalpana Biswas Kundu (Independent Director) Banking Sector, Accounts and Finance Mr. Parasanta Chattopadyay (Non Executive Director) Iron and steel industry, General Management, and Government liasoning 15#16Financials maithan alloys ltd 3939#17Maintaining Sustainable Margins 12.4% 9.8% 9.0% 8.6% FY16 22.2% 20.3% 19.1% 18.4% 19.2% 18.3% 22.5% 20.5% Long-term sustainable Manufacturing EBIT margin FY17^ range is ~14% FY18 Manufacturing EBITDA Manufacturing PBT maithan alloys ltd Operating EBIT Manufacturing EBIT 18.6% 16.0% 16.4% 13.1% 15.4% FY19 12.0% 12.2% 11.8% FY20 Performance improved on the back of efficient cost measures and better processes Demand overpassed supply leading to above normal industry growth Supply catching up with demand leading to Stable business scenario Downward cycle characterised by start of shutting down of capacities 17#18Doing Profitable Business is the key... Debt & Current Investments maithan alloys ltd Operating ROCE (%) The Company proposes to incorporate a wholly owned subsidiary to take up the announced expansion project, primarily for manganese based ferro alloys, mainly through the internal accruals and reserves of the Company Higher Return Ratio is because of prudent capital allocation and superlative operating efficiency 139 150 88 81 Mar-16 Mar-17 Rs. Crs 45 384 22.6% 48.2% 65.4% 66.9% 35.7% 667 640 552 607 469 460 458 104 226 361 217 307 7 7 Mar-18 Mar-19* Mar-20* FY16 FY17 FY18 FY19 FY20 EBIT Average Capital Employed Total Debt Current Investments FY15 & FY16 numbers are as per IGAAP * On consolidated basis Operating ROCE = EBIT/Average Capital Employed EBIT (EBIT-Other Income) Capital Employed = (Equity + Debt - Current Investments) 18#19Consolidated Financials - Q1 FY21* maithan alloys ltd Particulars (Rs. Crs.) Q1 FY21 Q1 FY20 Q4 FY20 Revenue 266 486 406 Raw Material 129 285 219 Employee Expenses 9 10 11 Power 68 94 80 Other Expenses 19 28 42 Operating EBITDA 41 69 54 Depreciation 4 4 4 Operating EBIT 37 65 50 Other Income 8 6 30 Finance costs 0 1 1 PBT 45 70 79 0 Tax 10 18 21 15 PAT 35 52 64 *As per IND-AS 19#20Consolidated Profit & Loss Statement maithan alloys ltd Particulars (Rs. Crs.) FY20* FY19* FY18* FY17* FY16 Revenue (Net of Excise Duty/ GST) 1,831 1,988 1,879 1,342 1,151 Raw Material 1,067 1,126 970 628 597 Employee Expenses 42 44 45 33 23 Power 361 373 367 280 315 Other Expenses 128 122 121 130 89 Operating EBITDA 233 323 376 271 127 Depreciation 16 16 15 25 23 Operating EBIT 217 307 361 246 104 Other Income 66 26 19 8 4 Finance costs 4 6 4 10 12 PBT 279 327 376 244 96 Tax 57 72 84 64 17 PAT 222 255 292 180 79 *As per IND-AS 20 20#21Consolidated Balance Sheet as at 31st March, 2020 maithan alloys ltd Particulars (Rs. Crs.) Mar-20 Equity 1,293 Mar-19 1,113 Particulars (Rs. Crs.) Non-Current Assets Mar-20 265 Mar-19 279 Equity share capital 29 29 Property, plant and equipment 195 229 Other Equity 1,263 1,083 Capital Work-in-Progress 1 0 Non-Controlling Interest 1 1 Intangible Assets 1 0 Right of Use Assets 21 21 0 Non-current Liabilities 37 35 Financial Assets Financial liabilities i. Investments 4 6 i. Lease Liabilities 4 4 ii. Other Financial Assets 33 ii. Borrowings 0 0 Non-Current Tax Assets (net) 6 36 33 Provisions 3 2 Other Non-Current Assets 4 4 Deferred tax liabilities (net) 30 28 Current Assets 1,251 1,240 Other non-current liabilities 1 1 Inventories 277 261 Current Liabilities 186 371 Financial assets Financial liabilities i. Investments 2 622 i. Borrowings 7 3 ii. Trade receivables 281 257 ii. Trade payables 75 246 iii. Cash and cash equivalents 625 17 iii. Other financial liabilities 24 27 iv. Bank balances 13 29 Provisions 2 1 v. Loans 1 0 Current tax liabilities (net) 5 0 vi. Other financial assets 2 4 Other current liabilities 73 93 Other current assets 50 51 Total Equity and Liabilities 1,516 1,519 Total Assets 1,516 1,519 As per IND-AS 21#22Consolidated Cashflow Statement maithan alloys ltd Particulars (Rs. Crs.) Mar-20 Mar-19 Net Profit Before Tax 279.3 326.9 Adjustments for: Non Cash Items / Other Investment or Financial Items -36.7 -4.1 Operating profit before working capital changes 242.6 322.7 Changes in working capital -236.9 69.2 Cash generated from Operations Direct taxes paid Net Cash from Operating Activities 5.7 391.9 50.6 77.2 -44.95 314.73 Net Cash from Investing Activities 696.2 -275.6 Net Cash from Financing Activities -42.5 -54.1 Net Decrease in Cash and Cash equivalents 608.7 -15.0 Add: Cash & Cash equivalents at the beginning of the period 16.6 31.6 Cash & Cash equivalents at the end of the period 625.3 16.6 222 22#23Performance Snapshot Operating Income (Rs. Crs.) 604 547 549 988 1,026 962 956 903 875 793 64 63 50 EBITDA (Rs. Crs.) 208 201 169 166 156 125 108 H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H2FY18 H1FY19 H2FY19 H1 FY20 H2 FY20 H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H2FY18 H1FY19 H2FY19 H1 FY20 H2 FY20 52 52 38 maithan alloys ltd EBIT (Rs. Crs.) 201 188 161 159 148 117 100 H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H2FY18 H1FY19 H2FY19 H1 FY20 H1 FY20 ROCE on Semi-Annual basis Particulars (Rs. In Crs) H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H2FY18 Equity 355.6 394.7 421.8 592.4 711.4 875.1 H1FY19 995.9 H2FY19 1,120.0 H1 FY20 1,185.7 H2 FY20 1,292.8 Long Term Debt 140.7 122.1 79.6 60.0 40.7 19.7 7.8 3.7 3.5 0.0 Short Term Debt 36.7 17.3 8.2 17.1 7.0 25.0 0.0 3.4 0.2 6.8 Cash & Cash 59.7 87.7 85.4 156.0 190.4 383.6 550.7 663.7 633.8 640.5 Equivalents Capital Employed 498.9 500.0 469.6 603.6 622.8 586.9 500.8 506.3 597.5 700.3 ROCE Half Year (%) 10.6% 11.3% 8.7% 40.1% 29.7% 36.3% 32.1% 32.3% 22.9% 16.5% ROCE for Full year (%) 22.6% 48.2% 65.4% 66.9% 35.7% Every dollar is conservatively spent to generate higher ROCE 23#24Contact Details: THANK YOU Company Maithan Alloys Ltd. CIN: L27101WB1985 PLC039503 Mr. Rajesh K. Shah [email protected] www.maithanalloys.com Investor Relations Advisors Strategic Growth Advisors Pvt. Ltd. CIN: U74140MH2010PTC204285 Ms. Neha Shroff/ Mr. Deven Dhruva [email protected]/ [email protected] +91-7738073466 / +91-9833373300 www.sgapl.net