Lucid Colloids Ltd Indian Guar Industry Post the

Lucid Colloids Ltd. Indian Guar Industry Post the Gloom, Boom & Bust. . . Can we reinvent ourselves? Uday Merchant, Lucid Colloids Ltd. , 11 October 2014 Guar International Conference, Jaipur Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Do we need to “Reinvent” ourselves? YES. Why? To make our industry and product Sustainable in the Long Term. How? By recognising our weaknesses, grabbing the opportunities and avoiding the threats. 1 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Strengths • India supplies 85% of the World’s Guar needs. • Guar Industry in India is 50 years old. • Significant Foreign Exchange earner. • Robust Guar commodity market and supply chain. • Mix of small, medium and large manufacturers. • Futures trading on electronic platform brings price transparency and liquidity. 1 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Weakness Over capacity in Industry. Estimated annual installed production capacity for finished products is > 1 million mts vs. estimated annual demand of 0. 6 million mts. Opportunity Capacity consolidation. Threat Industry continues to operate at very low or no margins due to internal industry competition. No surplus available for efficiency improvement, innovation and improving operating standards. 2 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Weakness Industry is back to operating at very low or no profit margins. Opportunity Price discipline. Maintain prices which are fair and acceptable across the spectrum – from farmers to end users. Guar Powder Industry must target 15% EBITDA and 10% NPBT margins. Maintain affordable prices for end-users. Find the pricing “sweet spot”. Threat Without sufficient margins for re-investment, Industry will starve itself of funds for efficiency improvement, innovation and improving operating standards. 3 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Weakness Very low levels of innovation in the industry. Most operate on a “me too” basis. Most value addition done overseas. Opportunity Generate sufficient margins to plough in to RND and new product development. Every product or process in which the “water phase” needs management is a potential application for Guar Gum. Threat Without RND and Innovation Indian Guar industry will continue to be a follower rather than a leader. 4 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Weakness Excessive price volatility and boom-bust cycles. Opportunity Stop price gouging and opportunistic pricing. Aim for steady prices and steady operating margins. Maintain price discipline. Threat As a commodity which is especially largely rain dependent, price volatility cannot be wished away. Also some amount of speculation is necessary to make markets liquid. But extreme price uncertainty and volatility carries the risk of irreversibly loosing Guar usage in several applications to substitutes. 5 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Weakness Industry operating to poor process efficiency, environmental, health, safety, hygiene and social standards. These standards are evolving and improving every day. The industry needs to improve and stay a step ahead on these standards. Opportunity Incorporate and implement acceptable standards. Plan for the next 5 years on higher standards that will evolve. Invest in improving operating standards. Threat Increasingly the customers in developed markets are moving and will continue to demand higher environmental, health, safety, hygiene and social standards. Just paper certificates will no longer be acceptable. If the industry is unable to voluntarily meet these challenges on an on-going basis, users may impose ultimatums on the industry. 6 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. So the final key to Reinventing ourselves is ……. 6 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Long Term Sustainability Profits Value Addition Profits RND Innovation Higher Operating Standards Process efficiency Global acceptability 7 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. And finally on a lighter note. . . This is “ GUAR”…. 7 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. And this is “ GAUR” 7 Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.

Lucid Colloids Ltd. Thank You. Confidential. Property of Lucid Colloids Ltd. , Mumbai, India. All rights reserved. Prepared October 2014. For Private circulation by permission only.