INVESTOR PRESENTATION Q4 and FY18

Transcription

1 INVESTOR PRESENTATION Q4 and FY18 COAL DREDGING SHIPPING OIL & GAS

2 Cautionary Statement and Disclaimer The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forward looking information in this presentation including, without limitation, any tables, charts and/or graphs, has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Mercator Limited and any of their subsidiaries cannot be relied upon as a guide to future performance. This presentation contains 'forward-looking statements' that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward looking statements by their nature address matters that are, to different degrees, uncertain. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. We caution you that reliance on any forward-looking statement involves risk and uncertainties, and that, although we believe that the assumption on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statement based on those assumptions could be materially incorrect. This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Mercator Limited or any other invitation or inducement to engage in investment activities, nor shall this presentation (or any part of it) nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. 2

3 Delivering on Our Stated Strategy Oil and Gas Business Strengthening Core Business De-leveraging DOC & FDP received well in time; trial production achieved in March 2018 Onsite developments progressing well Awaiting mining lease to commence production in Q2FY19 FY19 production rate of c.5500 barrels per day(bpd) Dredging o Moving to high margin contracts o Exploring value unlocking through de-merger of the dredging business Coal o Quick resolution to disruption: currently achieving an all time high production Tankers o Monetised Aged Fleet Debt reduced by 6% to INR 1,761 Crore Debt reduction hampered during the year due to disruptions in Coal business and delays in Sagar Samrat Sail Away Significant debt reduction expected in FY20 & FY21 as Oil and Gas ramps up FY18: Creating opportunities amidst challenges 3

4 FY19: Moving to a High Growth Trajectory Our Positioning FY19 Priority Our Positioning FY19 Priority Oil and Gas 26 million barrel of proved high quality reserves from 1 st two wells; Close proximity to refinery Commence Production by Q2FY19 FY19 production rate of c.5500 bpd Coal One of the few successful coal miners in Indonesia High quality reserves of 3,700/3,800 and 4,200kcal Higher production of c.2mn tonne High grade coal of 4,200 kcal to contribute around 40% of production Our Positioning FY19 Priority Our Positioning FY19 Priority Dredging Largest private company with technical qualifications Focus on Inland Water way Focus on maintaining bid success rate of 50%+ Build a strong order book Shipping One of the few well placed shipping companies in India Younger, sustainable and more efficient fleet; All the vessels 100% operational Maintain high EBITDA margin of over 40% No scheduled Dry-Docking except VLCC 4

5 FY18: Key Highlights Coal Full year operations impacted due to temporary disruptions Operations resumed in a short span of 3-4 months; currently achieving all time high production Dredging Revenues adversely impacted due to completion and non renewal of Kandla and dry-docking of a large dredger Demerger process on-going FY19 Order book of INR 156 crores Oil and Gas Significant progress made in FY18 FDP approval received for Jyoti 1ⅈ Trial production achieved Awaiting mining lease to commence production in Q2FY19 Shipping Revenue impacted due to low charter rates Profitability impacted due to loss on sale of assets 5

6 Creating Superior Shareholder Value FY Revenue Share FY Revenue Share Shipping Dredging Coal Oil 42% 12% 18% 28% Shipping Dredging Coal Oil 25% 14% 23% 38% FY 2019 EBIDTA Share FY 2020 EBIDTA Share Shipping Dredging Coal Oil 35% 17% 23% 25% Shipping Dredging Coal Oil 34% 15% 18% 33% 6

7 Guidance: FY19 & FY20 Revenue FY19 Guidance INR 1,200-1,300 crore FY20 Guidance INR 1,450-1,550 crore EBITDA INR crore INR crore EBITDA Margin 30%-35% 35%-40% Significant Attributable PAT Debt Reduction by 10%-15% Improving Free Cash Flows Growth from H2FY19; Oil and Gas ramp up and seasonal improvement in Dredging 7

8 FY19: Low Incremental Capex Requirement o Oil: Draw down of existing debt limits and new debt for ramp-up o Capex recovery from government to start immediately with commencement of commercial production FY19 Projected Capex: INR 164 Crore o Coal: to be secured by way of offtake financing arrangement o Shipping: VLCC dry docking expenditure to be met out of internal accruals 7 27 Shipping Dredging Coal Oil o Dredging: Purchase of new dredgers linked to winning new contracts; to be funded through internal accruals 8

9 FY19 Segmental Outlook

10 Oil and Gas Large Upcoming Value Jyoti 1 & 2 Timeline to Commercial Production o o o o High resource potential Third Party resource certification of 26.2 million barrel Field development Plan for 23.8 million barrels of oil approved: holds premium over BRENT MOU with Indian Oil Corporation (IOC) for Crude Oil Sales Agreement in place; evacuation infrastructure in place EBITDA positive immediately from commencement of production in Q2FY19 Aug 17: Declaration of Commerciality Feb 18: Approval of FDP Mar/Apr 18 Production Trial Run o Initial production: c.700 barrels/day o FY19 exit production rate: c.5500 barrels/day o Projected production: o FY19 - c.500,000 barrels o FY20 c.2 mn barrels 500, , ,000 40,000 Q2FY Q3 Q4 FY19 June 18: Mining Lease Approval Q2FY19: Commencement of Production 10

11 Coal Significant Upside from FY20 Higher Production with a Larger Proportion of High Quality Coal o c.26.3 MMT of present reserves with 3,700/3,800/4,200 Kcal thermal coal Thailand Laos Cambodia o Expected Annual production o FY19 c.2 million tonnes with a 60:40 split between 3,700/3,800 Kcal and 4,200 Kcal coal; Average Realization c.$32/tonne Malaysia Brunei Philippines o FY20 c.2.4 million tonnes with a 50:50 split between 3,700/3,800 Kcal and 4,200 Kcal coal; Average Realization c.$34/tonne Project Location Republic of Indonesia Samarinda Balikpapan o Third party Infra volume o FY19 and FY20 - c.2.9 mn tonne - c.$4 to $5/tonne Australia 11

12 Dredging Strong Govt Focus Key Opportunities being Explored o o o Marine Civil Works: river bank protection, coastal defense, coastal protection works National Waterways: de-silting of dams, reservoirs, lakes Trenching Activities: Diversify into oil and gas trenching works for laying submersible pipeline Explore JV Options o o o Projected capacity utilization at optimal levels Maintaining bid success rate at 50%+ Demerger of the Dredging segment to be completed by end FY19 o o Govt s Sagarmala Plan INR 50,000 million allocated towards Dredging of Indian Waterways INR 50,000 million allotted towards Marine Civil Works under the Coastal defense & Coastal protection plan Exploring Geographical Diversification FY19 Order Book INR 156 crore FY19 Expected Order Inflow INR crore 12

13 Shipping FY19 to be a Tough Year o All vessels, will be 100% operational Planned Dry-Docking for VLCC o Pressure on VLCC rates; Average rate of US$ 13,000/day expected in FY19 VESSEL NAME DEPLOYED WITH AVG. CHARTER RATES ($/DAY) TIMELINE Prem Pride British Gas 26,000 Dec 2020 Prem Mala HPCL 12,383 Mar 2019 Vedika Prem HPCL 12,402 Jan 2021 Hansa Prem BPCL 11,602 Mar 2019 Sisouli Prem Spot 9,450 Voyage VLCC Spot 13,000 Voyage Repetition of 5 year average ordering patterns Max fresh ordering to avoid lower utilisation Market-based removal scenario no fresh orders Regulation-based removal scenario no fresh orders Outlook FY19 As the demand-supply gap within the Tanker industry narrows down from FY18 onwards, VLCC Charter rates are expected to rebound and then gradually appreciate 13

14 Q4 & FY18 Performance

15 FY18 Update Business Performance Dredging: Strong rebound after a challenging Q1 Oil and Gas: Trial production commenced Segmental Break-Up FY18 Total Income: INR 1,010 Crore Oil & Gas 3% Others -3% Shipping 29% Shipping: Assets monetised; younger fleet Coal: Management revamped; ramp up complete Financial Performance Revenues adversely impacted due to fall in charter rates and disruption in coal business Coal 48% Dredging 17% FY18 Adjusted EBITDA: INR Rs. 271 Crore Shipping 43% Maintained strong Adj. EBITDA margins of 27% Debt reduced by 6% to INR 1,761 Crore despite increase in debt in Oil & Gas division by INR 66 Crore Coal 42% Dredging 15% 15

16 Segment Wise Business Performance - Dredging Operational Highlights o Tendering business with seasonal fluctuations o Operational rebound in H2FY18 o All dredgers gainfully employed though at low capacity utilisation Financial Highlights o FY18 revenue adversely impacted due to o Completion and subsequent non renewal of Kandla dredging project o Unplanned maintenance off-hire of a large dredger o Q4 Adj. EBITDA margin higher at 37% INR Crore Q4'18 Q4'17 Y-O-Y % FY18 FY17 Y-O-Y % Revenues % % Expenses % % EBIDTA % % Adjusted EBIDTA % % Interest % % Depreciation (3.2) % % PBT 11.9 (8.2) 245% (28.4) (4.5) -530% Tax % % Net Profit (8.8) (8.2) -8% (49.4) (4.6) -974% Adjustments INR Crore Q4'18 Q4'17 FY18 FY17 EBITDA Add: Provision for Doubtful Debts Adjusted EBITDA

17 Segment Wise Business Performance - Shipping Operational Highlights o Charter rates under significant pressure from Q2 onwards o Successfully monetised aged fleet o All vessels gainfully employed under time charter o VLCC running under a commercial pool managed by a leading tanker operator Financial Highlights o FY18 Profitability adversely impacted due to: Loss on sales of assets (included under expenses) of Rs. 65 crores VLGC now running on spot voyage charter where expenses includes fuel cost and port expenses INR Crore Q4'18 Q4'17 Y-O-Y % FY18 FY17 Y-O-Y % Revenues % % Expenses % % EBIDTA (1.0) % % Adjusted EBIDTA % % Interest % % Depreciation % % PBT (47.7) (32.4) 47% (160.2) (58.9) -172% Tax % % Net Profit (69.7) (32.4) -115% (182.6) (59.8) -205% Adjustments INR Crore Q4'18 Q4'17 FY18 FY17 EBITDA (1.0) Add: Provision for Doubtful Debts Loss on Sale of assets (net) Adjusted EBITDA

18 Segment Wise Business Performance - Shipping FY18 Average Rates Average (TCY $ per day) FY 2018 Product Tankers $ 12, FSO $ 26, VLCC $ 17, VLGC $ 18, Dry bulk carrier $ 3, Revenue Coverage Vessel Name Client Charter Rates $/Day Contracted Till Prem Pride Shell 26,000 Dec-20 Prem Mala HPCL 12,383 Mar-19 Vedika Prem HPCL 12,402 Jan-21 Hansa Prem BPCL 11,602 Mar-19 Sisouli Prem Spot Market Spot Rates Spot Market VLCC Spot Market Spot Rates Spot Market 18

19 Segment Wise Business Performance - Coal Operational Highlights o Operations disrupted during Q3/Q4 o On-ground management team completely replaced o Significant strengthening of internal controls and processes o Production re-started in Q4FY18; operating near full capacity INR Crore Q4'18 Q4'17 Y-O-Y % FY18 FY17 Y-O-Y % Revenues % , % Expenses % , % EBIDTA % % Adjusted EBIDTA % % Interest 6.6 (131.1) 105% 26.4 (105.5) 125% Depreciation % % PBT % % Tax (1.4) - 0% % Net Profit % % Financial Highlights o Company sold 1.02 MMT of coal in FY 2018 o Production impacted in Q3 and partly in Q4 o Handled 1.50 MMT of coal for third parties o Disruption expenses fully provided for in FY18 o The operations are in full swing Achieved sales of ~150,000 MT in the month of April 2018 Adjustments INR Crore Q4'18 Q4'17 FY18 FY17 EBITDA Add: Provision towards disruption in business Provision for Doubtful Debts Provision towards slow moving coal trading debtors Impairment of Investment Adjusted EBITDA

20 De-Leveraging Status and Debt Maturity Profile De-Leveraging Status Debt Maturity Term Debt Working Capital 390 1, , ,489 1, FY 2017 FY 2018 FY19 FY20 FY21 FY22 FY23 FY24 FY25 20

21 Consolidated Adjusted EBIDTA Adjusted EBIDTA 9M FY18 Q4 FY18 FY18 EBIDTA Add: Adjustments Provision for Doubtful Debts Loss on sale of dry bulk carrier Profit on sale of MR tanker (1.63) - (1.63) Provision towards disruption in coal business Provision towards slow moving old trading debtors Impairment of Investment Expenditure in respect of change orders in EPC project without corresponding increase in revenue Adjusted EBIDTA

22 Consolidated Adjusted EBIDTA bridge Rs. In Crore Q3 FY 18 Shipping Dredging Coal Oil & Gas Others FY

23 Consolidated Financial Performance Mercator Limited CIN NO : L63090MH1983PLCO31418 Regd. Office: 3rd Floor, Mittal Tower, B-wing, Nariman Point, Mumbai Tel: Statement of Audited Standalone and Consolidated Financial Results For Quarter and Year Ended March 31, 2018 Particulars Consolidated Standalone (Rs. in Crore) Quarter ended Year ended Quarter ended Year ended 31-Mar Dec Mar Mar Mar Mar Dec Mar Mar Mar-17 Audited Unaudited Audited Audited Audited Audited Unaudited Audited Audited Audited 1 Income (a) Revenue from operations , (b) Other income ( net) Total Income , , Expenses (a) Cost of service rendered , (b) Employee benefits expense (c) Finance costs (d) Depreciation and amortisation (e) Other expenses Total expenses , , Profit /(loss) from operations before exceptional items and tax (43.26) (104.28) (32.18) (217.31) (21.04) (53.63) (9.48) (142.82) (20.39) 4 (3-4) Exceptional items (9.16) Profit/(loss) before tax (3-4) (43.26) (104.28) (32.18) (217.31) (21.04) (53.63) (9.48) (142.82) (29.55) 6 Tax expense Current tax (39.77) (1.01) (17.45) (58.12) (20.03) (41.47) (0.20) (0.20) (42.17) (1.00) Deferred tax (net) (2.12) - - (2.12) (1.18) Net profit /(loss) after tax (5-6) (85.15) (105.29) (49.63) (277.55) (62.51) (53.83) (9.68) (184.99) (30.55) Other comprehensive income/(expenses) net of tax Items that will not be reclasified to statement of profit and loss Remeasurement gains /(loss) of defined benefit plans (0.43) 1.49 (0.43) (0.61) 0.92 (0.61) 23

24 Consolidated Financial Performance Mercator Limited CIN NO : L63090MH1983PLCO31418 Regd. Office: 3rd Floor, Mittal Tower, B-wing, Nariman Point, Mumbai Tel: Statement of Audited Standalone and Consolidated Financial Results For Quarter and Year Ended March 31, 2018 Particulars Consolidated Standalone (Rs. in Crore) Quarter ended Year ended Quarter ended Year ended 31-Mar Dec Mar Mar Mar Mar Dec Mar Mar Mar-17 Audited Unaudited Audited Audited Audited Audited Unaudited Audited Audited Audited 8 Other comprehensive income (0.43) 1.49 (0.43) (0.61) 0.92 (0.61) 9 Total comprehensive income for the period (83.82) (104.83) (50.06) (276.06) (61.80) (53.48) (10.29) (184.07) (31.16) 10 Total comprehensive income for the period attributable to Owners of the company (91.03) (105.30) (41.19) (294.03) (61.80) (53.48) (10.29) (184.07) (31.16) Non controlling interest (8.87) Paid up equity share capital (FV of Re.1 per share) Paid up debt capital Other equity Basic and diluted earnings per share (3.22) (3.67) 0.93 (10.42) 0.97 (2.19) (1.86) (0.38) (6.52) (1.25) 14 Debeture redemption reserve Capital redemption reserve Net worth Debt equity ratio Debt service coverage ratio (DSCR) Interest service coverage ratio (ISCR) ISCR = Cash Profit Before Finance Cost/ Finance cost; Debt Equity Ratio = Total Borrowings/ Total Equity; DSCR = Cash Profit before finance cost/(finance Cost + Principal Repayments (excluding prepayments) during the year) 24

25 Corporate Overview

26 Mercator: An Energy Conglomerate Company Profile Key Lines of Business Mercator India is a leading business group with interests in Dredging, Oil and Gas, Coal and Shipping Energy focused conglomerate with strong earnings outlook Strategic portfolio changes in FY16; exited loss making businesses Significant reduction in debt; further deleveraging underway a Dredging Sunshine sector; amongst largest private sector dredger with a fleet of 9 dredgers Shipping (Oil Tankers) Stable source of earnings; all tankers having time charter contracts Oil and Gas Substantial discoveries of high quality crude made; more wells being drilled Coal mining + trading business: High quality reserves; low operating cost 5 Well positioned to benefit from GOI s focus on port development 26

27 Our Strong Asset Base Shipping Dredging Oil and Gas Coal Fleet DWT No. Avg Age Product Tanker Floating Storage Offloading 125, , Type of Dredger Hopper Capacity TSHD TSHD 7450 TSHD 7598 ~24 mn barrels of proven & recoverable light crude oil Open cast mine in Indonesia with over 26 MMT reserves Mining license in Mozambique 20+ km of All-weather haul road Stockpile with stacker & re-claimer VLCC 299, Total Wet Bulk 533, VLGC 50, Total Gas Segment 50, Grand Total 584, TSHD 5433 TSHD 4568 TSHD 2600 GD Hopper 870 Bucker Ladder CSD NA NA Total 39,819 Fixed & mobile crushing units Conveyor belt loading facility directly onto barges 160 m of dedicated waterfront for barge loading Own Jetty with ample spare capacity 27

28 Global Presence Abu Dhabi EPC India Mercator Headquarters Oil & Gas Blocks Dredging Projects Tanker Operations Singapore VLCC Singapore Mozambique Coal Mining Licence Indonesia Coal Mines and Logistics Infrastructure 28

29 Asset Profile SHIPPING DREDGING COAL OIL & GAS Prem Pride (FSO) Hansa Prem (Product Tanker) Bhagvati Prem (TSHD) Open cast mine Jyoti 1 Discovery Conveyer belt loading Prem Mala (Product Tanker) Vedika Prem (Product Tanker) Jyoti 2 Discovery All weather haul road 29

30 Current Leadership Team Mr. HK Mittal Executive Chairman Mr. H.K. Mittal, Executive Chairman, is an alumnus of IIT- Roorkee. He acquired Mercator Ltd. in 1988 and with his vision has brought the company where it is today. His passion drove the business both vertically & horizontally. Mr. Shalabh Mittal Chief Executive Officer Mr. Shalabh Mittal is the Chief Executive Officer of the Company. He holds a Master s Degree in S. P. Jain Inst. of Mgmt. and Research. He is also alumnus of Harvard Business School, USA. His primary role is to manage and supervise business operations of the Company effectively in accordance with the overall strategies and policies of the Company. Mr. Adip Mittal Head Oil & Gas Business division Mr. Adip Mittal is the Head Oil & Gas Business division of the Company since March 30, He holds a degree of Bachelors of Arts from the Ohio State University and majored in Economics with a minor in Business Administration. He also holds Masters in Shipping, Trade & Finance from Cass Business School, City University, London, UK. When he joined our Company, he was actively involved with dredging and tanker divisions and new projects of our Company. Mr. Rajendra Kothari Chief Financial Officer Mr. Rajendra Kothari is a fellow member of Institute of Chartered Accountants of India and an associate member of the Institute of Company Secretaries of India. He has over three decades of experience in various industries in the fields of Finance, Treasury, Accounting, Direct and Indirect Taxation, Legal, Company Secretarial and Risk Management functions; besides he also has indepth business experience in handling the functions of Procurement, Supply Chain Management, Human Resources and Information Technology. 30