Indorama Polymers

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Indorama Polymers IRP2005 Analyst
Meeting1 March 2006The Stock Exchange of
Thailand
DISCLAIMER This presentation does not constitute
an invitation to underwrite, subscribe for, or
otherwise acquire or dispose of any Indorama
Shares. Past performance is no guide to future
performance and persons needing advice should
consult an independent financial adviser. For the
convenience of the interested investors the
management is presenting the financial data in US
Dollar also. However, the translation method does
not confirm with GAAP and is based on the method
developed by the management which will be
followed consistently in future.
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Agenda

• Fundamentals
• 2005 Financial Update
• Focus Thailand
• Global Outlook

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Guiding Philosophy
VISION To be one of the leading global producer
with key focus on people and processes thus
making INDORAMA one of the most admired companies
in the world
MISSION Continuously upgrade quality of products
and services through people involvement and world
class processes to attain customer delight thus
becoming a preferred supplier and
institutionalise people learning as a key factor
for business growth
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Group Structure
Post-IPO issued and paid-up capital Baht 1,382
million
APL Group
DEG
Indorama Holding Ltd.
Beacon Global (Thailand) Ltd.
Indorama Synthetics (India) Ltd.
Public
23.1
26.5
38.9
6.5
5.0
Indorama Polymers Public Co. Ltd (IRP) PET
Polymers 126,000 ton/yr
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99.9
100
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Petform (Thailand) Limited (PTF) Preforms and
Closures
Asia Pet (Thailand) Ltd. (APT) Amorphous PET
Polymers110,000 ton/yr
StarPet Inc. (SPT), USA PET Polymers200,000
tons/yr
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UAB Orion Global Pet (OPT) Lithuania,
Europe PET Polymers 198,000 ton/yr
Expanded capacity in December, 2006. Now 90,000
tpa Expanded capacity in December, 2006. Now
116,000 tpa Lithuania plant commissioning
expected in Mid-2006
Name change effective from August 25, 2005
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Production Process
Bottle blowing filling
0.84
PTA
0.35
CP Plant
SSP Plant
Preforms
MEG
PET Polymers
Amorphous PET
Closures
IPA
0.02
Asia Pet
Petform
IRP
Tons of Input for 1 ton of PET polymers
StarPet / Orion Global Pet
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Demand Growth New Applications
Carbonated Soft Drinks
Iced Tea
Energy Drinks
Juices
Water
BEER
Ketchup and Sauces
Liquor / Wine
Milk
Lubricating Oil
Paints
Food
Toiletries Cosmetics
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IRP Capacity 4 of Global Demand in 2007
524,000
206,000
170,000
154
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PET Demand Growth and Per Capita
Global demand of 12.5 million tons, growing at
8-10 p.a.
Global
Source Tecnon

• Demand growing by 1 million tons per annum
• World per capita consumption is 1.7 kilos per
  annum
• Higher per capita consumption in North America (8
  kilos) and West Europe (5 kilos), still growing
  at 7-8 per annum

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PET Polymers demand growth in all regions
14,208
13,281
12,331
11,416
Source Tecnon
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PET Demand distribution
Source PIRA International
Source Tecnon

• CSD demand growth of 6-7
• Water demand growth of 10-12
• Others include beverages and food
• Sheet include food and non-food
• Beer, developing stage, high growth
• potential

• Convenience is the key to growth of
• packaging materials
• Consumers prefer usability or
• occasion specific packaging
• Priority for product safety and
• functionality

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Plastics highest growth packaging material
Source PIRA International
Source Rexam Beverage

• Plastics highest growth segment
• Low prices of large family packs is
• driving strong growth of plastic bottles
• Preference to recyclable v/s refillable
• packaging material

• PET growth segment in beverage
• packaging
• Glass and can is stable
• USA a growth market where only 50
• of CSD in PET
• Emerging markets favor PET

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Shift from Aluminium Cans to PET Bottles ?
LME Aluminium Prices
PET Polymers Prices
1,150
2,400
US / Ton
39
830
75
1,370
Source LME
Source PCI

• Industry analysts predict branded beverages to
  increase use of PET Bottles over
• aluminium considering
• Cost effective, rising cost of aluminium
• Resealed and large packs, convenience of PET
• PET development in small packs to directly
  compete with Cans

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Industry Attractiveness

• Global demand 12.3 million tons projected for
  2006 and growth at 8-10 per annum
• New applications fuelling high growth rates, 2-3
  times global GDP growth, i.e. energy drinks,
  flavored water, iced tea and others
• Market movements in packaging reflect preferred
  packaging material
• PET preferred over glass, PVC and other polymers
• Better properties than other packaging materials
• Consumers prefer convenience of PET for purity,
  light weight and resealable
• Beverage producers prefer PET for being cost
  effective

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PET prices move in tandem with raw materials
Improving PET spreads on lowering RM costs
Narrow PET spreads on rising RM costs
Histrorical, Wide PET spreads on lower RM costs
Source Industry prices
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PET chain quarterly margin distribution
Source Industry
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Crude impact marginal on PET spreads

• Crude price increase absorbed in petrochemical
  chain
• Petrochemical prices increased
• Petrochemical spreads were higher on tight
  supply, low investments
• Post-SE Asian crisis in 1997-98
• Additional supply in year 2005-6 result in
  decline in spreads
• PET prices move in line with raw material prices
• Able to pass rising costs in past 2 years
• Historically, PET spreads widen on lower raw
  material costs
• Reversing petrochemical cycle will be beneficial
  (refer slide 12)

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Agenda

• Fundamentals
• 2005 Financial Update
• Focus Thailand
• Global Outlook

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Financial Performance Proforma
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Higher profits in 2H2005
Proforma Baht
Katrina impact in H205
Katrina impact in H205
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Higher sales in premium markets
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Gain from market mix
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Note Sales quantities are indicated by
Spread
Spread
Higher sales in premium markets Improved Spreads
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Surge Revenues 16 Profits 54 YoY
Proforma Baht
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Surge Revenues 13 Profits 77 YoY
Proforma US
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Post-IPO, Higher Returns to Shareholders
In UScents
In Baht
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2004 based on proforma financial statements for
the given period Issued and paid-up capital for
2005 Post-IPO of Baht 1,382,197,870 while for
2004 Baht 1,062,197,870
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Key ratios
In Baht terms
On Post-IPO share capital of Baht 1,382 m.
Liquidity Position
Leverage
Notes Based on proforma financial statements for
the given period Issued and paid-up capital for
2005 Post-IPO of Baht 1,382,197,870 while for
2004 Baht 1,062,197,870
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Financial Position
Includes Euro 32.3 million debt of Orion Global
Pet
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Key Ratios Comparison
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Agenda

• Fundamentals
• 2005 Financial Update
• Focus Thailand
• Global Outlook

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Integrated operations in Lopburi
PTA
MEG
IPA
Inputs
Inputs
Asia Pet (Thailand) Limited Output Amorphous PET
Polymers - 110,000 tons
Domestic
Exports
Captive
Indorama Polymers Pcl. Output PET Polymers -
126,000 tons
Exports
Domestic
Captive
Petform (Thailand) Limited Output Preforms and
Closures
Domestic
Exports
Captive
Serm Suk Pcl. Output Bottled Beverages
Bottled Beverages
End Users
JV with Serm Suk Pcl. Expanded capacity in
December, 2006. Now 90,000 tpa
IRP Group Cos.
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Competitive Edge IRP has low capex cost
Notes Producer represented here are (BPC
Thailand, Thai Pet Resin Thailand and Thai
Shinkong. The investment and capacity data has
been taken from various published reports.
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Surplus domestic feed stock availability Higher
Spreads

• Domestic availability of raw materials is key to
  higher spreads
• Countries with surplus domestic feedstock supply
  help polyester plants in achieving high capacity
  utilization because of competitive raw material
  costs hence higher spreads

eg. Thailand
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Thailand Surplus PTA
Industry Sources
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Expand PET Polymers capacity by 40

• IRP has announced expansion of PET polymers
  capacity by 36,000 tpa, current
• capacity 90,000 tpa and post-expansion 126,000
  tpa, at the same site
• New capacity expected to start commercial
  operations in January, 2007
• Proposed capital expenditure is US 5 million
  per ton
• Expansion to be financed by long term loans US
  4 million and balance from
• internal cash

• Rationale for expansion
• Rising demand from customers in domestic and
  export market
• No major capacity additions in Asia ex-China for
  next 2 years
• Current capacity operating at full for 2 years
• Utilize surplus Amorphous PET capacity 110,000
  tpa for better margins
• Expected pay back of 2 years, lower incremental
  cost

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Indorama Polymers

• First producer of PET Polymers in Thailand
• CAGR Revenue 34 (Year 1996 to 2005)
• Consistently profitable operations since
  inception
• Integrated operations at single location
• Low capex cost per ton
• Large customer base in domestic and export
  markets

• Market in Thailand
• Demand for PET polymers growing at 15 per annum
• Low per capita consumption of 1.1 kilos v/s
  global average of 1.7 kilos
• CSD packaging more in glass, projected to shift
  in PET in line with global
• market movement
• Surplus availability of PTA and MEG start-up,
  the main raw materials

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Agenda

• Fundamentals
• 2005 Financial Update
• Focus Thailand
• Global Outlook

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Year 2005 in Hindsight

• Year 2005 started with uncertainity on demand
  growth and its negative impact on spreads from
• Rising crude prices
• Over capacity in China
• Tight supply of raw materials, PTA and MEG
• August 2005, Hurricane Katrina and Rita adding
  to tight supply of raw materials

• IRP in year 2005,
• Strong operations, higher production on
  increased plant efficiency
• Able to pass rising costs and PET spreads
  improved on lowering of raw
• material spreads
• Relationship with suppliers enable to overcome
  unusual supply situation
• Responsive, ability to move products to premium
  markets

Result Normalized pre-tax net profit increase to
Baht 899 million, growth 172
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IRP has achieved 84 CAGR Sales
240,000

• Customer acceptance
• Global delivery capability

220,000
200,000
180,000
160,000
140,000
Tons
120,000
100,000
80,000
60,000
40,000
20,000
-
2002
2003
2004
2005
Expanding markets and customer base
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Spread Quantity Profits
Committed volume growth upto year 2007...
More than 1 Billion pieces
Growth 154

• Preforms Closures
• Forward integration into bottles for
• 150 m. pieces
• Capacity increase in preforms by
• 42 and closures 50
• Expansion in line with growth plans
• of customers

• PET Polymers
• 7th largest global producer
• Current PET capacity 206,000 tons
• 2007 PET capacity 524,000 tons

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Project Updates
NEW

• PET Polymers Indorama Polymers, Thailand
  Expansion Project
• Increase capacity of PET Polymers by 36,000 tpa
  at existing site
• Proposed capital expenditure of US 5 million
• Financing with US 4 million long term loans and
  balance from internal cash
• Interest during construction period to be
  capitalized and charged to PL from Q1, 2007
• Commissioning in December, 2006

• PET Polymers Orion Global Pet, Lithuania
  Greenfield Project
• Capital expenditure of Euro 60 m. upto end of
  2005
• Loan draw down of Euro 32.3 m. upto end of 2005
  (Sanctioned Euro 57.5 m.)
• Interest during construction period to be
  capitalized and charged to PL from Q3, 2006
• Commissioning in Mid-2006
• PET Polymers StarPet Inc., USA, Expansion
  Project
• Site work in progress and plant supply agreement
  signed
• Loan draw down US 1.2 m. upto end of 2005
  (Sanctioned US 31 million)
• Interest during construction period to be
  capitalized and charged to PL from Q1, 2007
• Commissioning in December, 2006
• Preforms Closures Petform, Thailand Expansion
  Project
• Capital expenditure of Baht 175.6 m. upto end of
  2005
• Loan draw down of Baht 83 m. upto end of
  2005(Sanctioned Baht 260 m.)
• Preforms and closures start operations in Feb.
  2006 and blowing plant to start inQ1,2006

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Looking ahead...

• Global packaging market of US 370 billion
  growing at 4.8, plastics
• (including PET) is the largest segment and with
  highest growth of 5.9
• PET Polymers demand growth at 8-10, replacing
  aluminium and
• glass as cost effective and convenience of use
• Asian operating rates to improve with limited
  new capacity additions
• Raw materials in a long market, increasing
  supply, and larger volume
• purchase to leverage favorable prices

• PET Polymers volume growth from 216,000 tpa to
  524,000 tpa by
• December, 2006 and year 2007 to be the full
  year of operations
• Added new capacity for preforms and closures and
  Blowing bottle, a
• new product line to be added in Q1, 2006

IRP, Prepared and Enthusiastic
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IRP Positioning

• 7th largest global PET producer with end-2006
  capacity at 524,000 tons
• Only PET producer with production facility in
  Asia, Europe and North America enabling to
  capture demand growth in all markets
• Regional presence provides ability to service
  large global customers at low logistics cost
• Large volume purchase of raw materials enable
  higher volume discounts thereby increasing spread
• High capacity utilization resulting in lower
  conversion costs
• New plants of economic size at lower capex

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Key Value drivers

• Low Operating Costs
• High capacity utilization
• Continuous volume growth
• Lower fixed overheads than comparable peers
• Enhancing Spreads
• Global delivery model - Domestic production base
  for regional reach
• Market mix - Focusing sales to premium markets
  translates into higher spreads
• Product mix - Multiple production base caters to
  regional speciality grade needs
• Sales Strategy - Balance between contracted and
  spot
• Competitive Raw Material Buying - Large volume
  purchases, Secured volume discounts

Better Spreads
Increasing Shareholders Returns

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THANK YOU