Investor Presentation

May 2016

India’s

largest

manufacturers of

Industrial

Explosives and

Initiating Systems

World’s Largest

Cartridge

manufacturing

facility at a single

location.

One of the largest

Manufacturing

Facilities of

Detonating Cord

and Cast Boosters

in India

Who we are…A Snapshot !

India’s 1st Private

Player to

manufacture

HMX & HMX

Compounds

India’s 1st Private

Player to

commence

commercial supply

to Defence for

HMX

Largest exporter of

industrial explosive

from India

1983Commenced

business as a Trader

in Explosives

1996Started

production of Cartridge explosives

1998Commencedproduction ofDetonators

2000Started

production of Bulkexplosives

200120052006Initial Public Offer

(IPO)Got listed

Milestones

Included Cast

Booster and PETN

in Product Protfolio

Started Exports.

2007Extended presence

in India by setting New

Bulk Plants

2008-16

Manufacturingunits in Zambia,Nigeria & Turkey

Bulk Plants

Started commercial

supply of HMX &

Propellant for

Defence

Emerged as India’sLargest Explosives

Manufacturer

Exporting to 20 Countries with product used in

40 countries

Bulk explosives

Cartridge Detonators Detonating Cord Cast Boosters

3,01,323 MTPA

Licensed capacity

1,25,000 MTPA

Largest

Licensed capacity

190 Mn. Units 75 Mn. Metres

Licensed capacity

1650 MTPA

Largest

Product Range & Licensed Capacities

Licensed capacityLicensed capacity

Locationalproximity to the

mines

All units located at 50-60 kms

radius from the major mining

regions

Largestcapacity in

India

Largest

cartridge

manufacturing

Facility

at a single

location in the

world

Well poised to

cater to rising

demand from

Indian and

overseas mining

&

Infrastructure

Industries

Largest

Manufacturing

Facility

in India

LargestManufacturing

Facilityin India

Plants State Clients served

4 Maharashtra 1. Western Coalfield Ltd.

2 MP

1. Northern Coalfield Ltd

2. Reliance power (sasan)

3. Jai Prakash Coal

2 Chattisgarh

1. South Eastern Coalfield Ltd.

2. Lafarge, Parsak (Adani

group)

3. Mahanadi Coalfields Ltd

Presence in India

2 Jharkhand

1. Tisco

2. Central Coalfield Ltd,

3. Bharat Coking Coalfield Ltd .

3 Odhisha

1. Mahanadi Coalfield Ltd.

2. Tisco

3. Iron Ore Mines

2 TeleanganaSCCL

1 Rajasthan Hindustan Zinc, Jindal Saw

1 West Bengal Eastern Coalfield Ltd

Raw Material Management

• 70% of the total raw material consumed

• Domestically sourced from Deepak Fertilizers, GNFC, RCF

• Price volatility - rise/fall clause included in rate contract with

customers to a large extent

Key Raw Material – Ammonium Nitrate

• The domestic price is ` 25000/MT

• Total AN demand in India, for explosives, is ` 7 Lakhs MT

against a domestic production of ` 6 Lakhs MT

Key Strengths

Marquee Clientele

5/26/2016

Customer Bifurcation (FY16)

Coal India

26.11%

Non CIL & Inst

19.73%Trade & Others

25.02%

Defence

0.46%

Export &

Overseas

28.68%

Coal India

30.05%

Non CIL & Inst

15.99%

Trade & Others

26.15%

Defence

0.00%

Export &

Overseas

27.80%

FY16 FY15

Particulars FY16 FY15

Coal India 432.91 437.71

Non CIL & Inst 327.19 233.01

Trade & Others 414.84 380.86

Defence 7.70 0.00

Export & Overseas 475.59 404.89

Total 1658.23 1456.47

Rs in Crs

Regulatory Environment

One of the very few

sectors needing

Industrial License &

Clearance from Home

Ministry

License also required

Clearance required

from IB-regarding

safety of location &

antecedents of

Directors

NoC required from

District Magistrate

NoC by District

Magistrate after For underground

(Gasy mines) use License also required

from Chief Controller

of Explosives, GoI

Magistrate after

clearance by Police,

PWD,

Grampanchayat

(Gasy mines) use

permission required

from DGMS

Daily Reporting to

PESO & Local Police

on Production and

Sales

Market Dynamics

• Size of the market ~ Rs 6500 Cr.

• Historical growth 7-8% p.a. (last 10 years)

• Future growth expected 12% p.a.

• Annual Explosive consumption of ` 9 Lakh MT in FY15

• Highly concentrated market with about

GLOBAL OVERVIEW DOMESTIC OVERVIEW

Major players

India is 8th largest & fastest growing market globally

• Highly concentrated market with about 30 manufacturers in the industry

Major players

Solar Industries India Limited is the market leader in the country

Our Growth will come from…

Defence Sector

4.

2. 1.

Overseas

Market

3.

Renewed

demand from

Housing and

Infrastructure

revival

2.

Enhanced

demand from

coal mining

1. Market

Domestic Dynamics

• Main drivers for explosives demand

1) Mining 2) Infrastructure development

• Mining Industry is the major consumer of explosives. It accounts of 90% of total explosives

• Coal Industry consumes 70% of total demand

• CIL have planned to increase production from present 537 Mill. Tons in FY16 to 924 Mill. Tons by 2020.

• SCCL have planned to raise production from 60 Mill. Tons in FY16 to 74 Mill. Tons by 2020.

• Iron Ore and Limestone expected to increase at 8 – 10% p.a. in same period.

• CIL issues tender with reverse Auction with price escalation clause quarterly basis based on movement in prices of AN, Diesel and Labor index.

• MMDR Amendments bill and Coal Mines (Special provision) bill are likely to open up mining sector in a big way.

Global Reach & Presence

Facility :

Capacity of 5000 MT

of Cartridge & 10000

Mt of Bulk & Nonel

Zambia

Facility :

Capacity of 10000

MT of Cartridge &

5000 MT of Bulk.

Nigeria

Facility :

Capacity of 40000 MT of

ANFO, 5000 MT of

Cartridge & Nonel

Turkey

Facility :

Planning for

Capacity of 25000

MT Bulk Explosive

South Africa

Mt of Bulk & Nonel

Assembly.

• Our Holding - 65%

5000 MT of Bulk.

• Our Holding - 55%

Cartridge & Nonel

Assembly Plant

• Our Holding - 74.50%

MT Bulk Explosive

• Our Holding-74%

Defence- Indeed a large opportunity

• The industry is poised for exponential growth

over the next decade driven by substantial

growth such as need for an overhaul of

defence equipment, inadequate defence

equipment inventories in key areas, a

sustainable GDP growth rate and a largely

hostile geo-political environment

• The sector has also witnessed a significant

governmental policy shift which eventually led

to increased participation of private sector

players in this sector- DPP, FDI policy, the tax

framework, the industrial licensing policy andframework, the industrial licensing policy and

the foreign trade policy

• India is the largest defence equipment

importer in the world- The private sector is

expected to capitalize on the R&D and

technical capabilities of the DPSUs and

global OEMs to meet demand

• It is estimated that Indian Government’s

annual capex on defence is expected to grow

to USD 36Bn by 2024, growing at a CAGR of

9.4%, clearly envisaging the immense

opportunity in the sector

Specialty Chemicals for Defence Sector

Following orders have been received :

Product Customer

Value (Rs

Crs)

HMX & HMX Compound OFK-Jabalpur/DRDL-Hyd/TBRL 14.62

Propellant for Akash, Pyro

Technique, Igniters/

Warheads Filling etc

BDL – Hyd, DGOS - New Delhi, OFK,

DRDL, ARDE, HEMRL, TBRL

58.19

Warheads Filling etc

Total 72.81

Our Journey in Numbers

+23.06%

CAGR723 cr

1031 cr1213 cr 1216 cr

1456 cr

1658 cr

0

200

400

600

800

1000

1200

1400

1600

1800Revenue

169 cr

+20.16%

CA9R

0

FY06 FY11 FY12 FY13 FY14 FY15 FY16

130086161033

190091175764

221638

271171

0

50000

100000

150000

200000

250000

300000

FY06 FY11 FY12 FY13 FY14 FY15 FY16

Volume

44652

+20.3%

CAGR

Our Journey in Numbers

148 cr

195 cr 210 cr232 cr

262 cr

310 cr

0

50

100

150

200

250

300

350

FY06 FY11 FY12 FY13 FY14 FY15 FY16

EBITDA

40 cr

147 cr166 cr

150

200 PAT

+21.57%

CAGR

+20.25%

CAGR

76 cr

101 cr116 cr 118 cr

147 cr

0

50

100

150

FY06 FY11 FY12 FY13 FY14 FY15 FY16

22 cr

4458

65 6681

92

0

20

40

60

80

100

FY06 FY11 FY12 FY13 FY14 FY15 FY16

EPS

13

Details of Borrowings

Rs. In Crs.

Particulars FY16 FY15 FY14

Short Term Borrowing (A) 190.96 165.00 272.21

Long Term Borrowing (B) 134.03 155.30 151.72

Total debt (A+B) 324.99 320.30 423.93

Share Capital 18.10 18.10 18.10Share Capital 18.10 18.10 18.10

Reserves & Surplus 849.47 757.78 643.48

Total Equity 867.57 775.88 661.58

Cash Balance & FD & Short

Term Investment 67.38 66.90 147.77

Net Debt 257.61 253.40 276.16

Net Debt Equity Ratio 0.30 0.33 0.42

Capex Done 135.51 119.47 160.22

Financials – P&L 5 years

(Rs in crs) FY11 FY12 FY13 FY14 FY15 FY16

Gross

Income 723.83 1030.68 1213.32 1216.5 1456.47 1658.23

Excise Duty 43.41 64.12 93.39 90.82 110.96 125.39

Net Income 680.42 966.56 1119.93 1125.68 1345.51 1532.84

Material

Consumed 372.43 560.78 650.07 590.81 768.71 874.08

Other Costs 185.62 235.75 281.75 339.16 329.16 366.55Other Costs 185.62 235.75 281.75 339.16 329.16 366.55

Other

Income 25.59 24.65 16 18.43 14.29 17.67

EBIDTA 147.96 194.68 197 214.14 261.92 309.88

PAT 75.59 101.2 116 118.44 147.41 166.14

Material

Consumed

% 54.74% 58.02% 58.05% 52.48% 57.13% 57.02%

EBIDTA % 21.75% 20.14% 17.64% 19.02% 19.47% 20.22%

PAT % 11.11% 10.47% 11.29% 11.50% 10.96% 10.84%

EPS

(Annualised

in Rs) 43.64 58.42 65.47 65.44 81.45 91.80

Financials – B/S

Rs in Crs FY11 FY12 FY13 FY14 FY15 FY16

Gross Block 270.29 386.35 436.77 575.40 667.36 880.98

Cash & Bank Balance 59.63 63.01 92.19 133.01 37.20 37.04

Net Worth 316.04 404.6 572.70 661.57 775.88 867.57

Loan Funds 138.67 283.26 344.52 442.75 328.48 346.47

Capital Employed 397.27 621.67 868.29 1048.63 1063.86 1170Capital Employed 397.27 621.67 868.29 1048.63 1063.86 1170

Gross Debt Equity Ratio 0.44 0.70 0.60 0.67 0.41 0.40

Inventory Days 58 84 76 94 78 68

Debtors Days 48 49 47 55 48 58

ROCE 35.44 29.26 22.23 18.34 21.66 23.68

RONW 24.35 25.01 20.31 17.9 19.00 19.15

Working Capital Days 87 102 132 144 105 93

Book Value 172 224 316 366 431 479

FY16 Financials

Consolidated YOY Comparison Margins

Rs in Crs. FY16 FY15 Change FY16 FY15 % Change

Gross Sales 1658.23 1456.47 13.85

Net Sales 1532.84 1345.51 13.92

EBIDTA 309.89 261.92 18.31 20.22 19.47 0.75

Interest/ Fin 20.70 17.85 15.97 1.35 1.33 0.02Interest/ Fin 20.70 17.85 15.97 1.35 1.33 0.02

Depreciation 32.82 31.45 4.36 2.14 2.34 -0.20

Exceptional 0.00 10.00 -100.00 0.00 0.74 -0.74

PBT 256.37 202.62 26.53 16.73 15.06 1.67

Tax 76.39 46.28 65.06 29.80 22.84 6.96

MI 13.84 8.93 54.98 0.90 0.66 0.24

PAT after MI 166.14 147.41 12.71 10.84 10.96 -0.12

Shareholding (as on March 31, 2016)

72.98%

18.23%

3.14%

1.05% 0.42% 4.18%

Promoters

Mutual

Funds

Public

FII

Corporate

Others

Mutual Fund HDFC Fund (6.0648), SBI (5.9848), Kotak Fund (1.4976),DSP Rock (1.4273), Tata

Fund (1.0778), Birla Sun life (0.8527), Kotak Fund ( 0.6169)

FII Kotak Global Funds (0.8824), Nomura Singapore Ltd ( 0.1106), Fidility Investment

Trust & Emerging Market Fund (0.0304), Aperios Emerging Connectivity Master

Fund Limited (0.6266)

Other Bodies Corporate Edelweiss Securities Limited (0.0565), Shah Investors Home Ltd ( 0.0304), IDBI

Federal Life Insurance Co. Ltd ( 0.0293), Bharti AXA Life Insurance Company Ltd (

0.0196) , ), Unilazer Venture Pvt Ltd (0.0101)

Others ICICI Prudential Life Insurance (2.6650),

Thank YouThank You

Nilesh Panpaliya

CFO

nilesh@solargroup.com

www.solargroup.com