Download Ambuja Cement A Growth Story

Ambuja Cement
August 2005
1
Ambuja
Cement
Indian Economy
 In a Sustainable high growth mode
 Impetus on Service Sector
 Changing Demography - A Growth Driver

Economy getting delinked from Agriculture
& unpredictable monsoons
2
Ambuja
Cement
Agrarian to a Service Economy
(%)
GDP Constituent
1997 - 98 2004 - 05
Agriculture
40
23
Industry
35
25
Services
25
52
3
Ambuja
Cement
Cement Growth
A Proxy to GDP Growth
4
Ambuja
Cement
Other Asian countries experience has been that
whenever Per Capita GDP crosses USD $ 500
there is a substantial rise in the cement
consumption
India set to witness this growth in Cement
Consumption
5
Ambuja
Cement
Cement Growth in India
Not a Challenge
As
Demand has been growing at a
CAGR of 7% over last Decade
6
Ambuja
Cement
Cement Demand
(Apr - June)
Mn. Tonnes Growth (%)
2005 - 06
34.3
12
2004 - 05
30.7
3
7
Ambuja
Cement
Momentum of Growth to continue
due to Initiatives in Housing & Infrastructure
Development
8
Ambuja
Cement
Enabled by :
 Large forex reserves
 Abundant liquidity
 Consumer Driven
 Low interest rates
Infrastructure Development now
Not only Viable but Profitable
9
Ambuja
Cement
Expected Cement Demand
mn tonnes
2005-06 2006-07
Base Domestic Demand
121
131
Growth - 8%
10
10
Expected Domestic Demand
131
141
4
4
135
145
Exports (Potential to be even higher)
Expected Cement Demand
10
Ambuja
Cement
Cement Production Capability
mn tonnes
2005-06 2006-07
108
111
Base Clinker Production
Increased Production due
to improvements
Clinker Export
Clinker for Cement Grinding
3
111
6
105
4
115
6
109
Blending Ratio
1.27
1.29
Cement Production
133
141
11
Ambuja
Cement
Demand set to outstrip Supply
12
Ambuja
Cement
As
Last Plant was set up in March ’03
No new supply expected till March ‘06
It Never happened in past
13
Ambuja
Cement
Result
Structural change in Pricing Scenario
14
Ambuja
Cement
Cement Prices
- Domestic Rs. / per Bag
Aug 2005
Aug 2004
Dec 2004
Bombay
172
163
158
Delhi
158
131
135
Kolkatta
174
175
173
Ahmedabad
151
149
110
Jaipur
143
139
135
Hyderabad
118
121
117
Chennai
145
155
160
15
Ambuja
Cement
- International -
US$ (FOB)
Cement
Clinker
2004 - 05
37
28
2005 - 06 (E)
42
32
(E) - Expected
16
Ambuja
Cement
Ambuja Cement
Punjab
1986 - 0.7 Mn. Tonnes
Today - 14 Mn. Tonnes
HP
A growth of 18 times since
inception
Rajasthan
Gujarat
Cement factories
Sea terminals
Maharashtra
Mn. tonnes
17
Gujarat
5.0
North India
6.0
Maharashtra
3.0
Total Capacity
14.0
Ambuja
Cement
Growth
With
A Sound Business Model
18
Ambuja
Cement
Our Business Model
 Huge owned Infrastructure
 Presence in the growing markets of North & West
 Premium Brand - only selling in Retail Markets.
 Largest Exporter of cement – 15% of Production
 35% Cement transport by sea - Cheapest Mode
 Low Cost Cement Producer
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Ambuja
Cement
Own Infrastructure
 7 Owned Ships for transporting Cement by Sea
 Large port in Gujarat to handle export of Cement
 3 Cement receiving terminals
 200 MW of Captive Power Plants at various
Cement Plants to give reliable and cheap power
20
Ambuja
Cement
Premium Brand
India - A bagged market
Individual home builder - key driver of demand
Our focus :
 Best quality cement
 Good packaging
 Logistic management - strong distribution network
 Customer service
Ambuja Cement - Most preferred brand
- Fetching higher realisation
21
Ambuja
Cement
Direct Cost
Rs./ tonne
FY 2005
Power
202
Fuel
298
Raw material
172
Consumables
49
Direct cost
721
US $
16.4
USD/INR = Rs. 44
22
Ambuja
Cement
A Comparison
(April - June 2005)
Rs. Mn.
Ultratech
Grasim
ACC
GAC
- Volume (mn tonnes)
4.00*
3.34
4.44
3.28
- Net Sales
8471
7381
9848
7205
Operating Profit
1691
1726
2335
2350
20
23
24
33
O/P Per tonne (Rs.)
423
516
525
716
(US$)
9.6
11.8
12.2
16.3
Sales
Operating Margin (%)
* Including Export & Sale of clinker - 0.40 mn. tonnes
USD/INR = Rs. 44
Source : Stock Exchange Filing
23
Ambuja
Cement
Gujarat Ambuja Cements Limited
(Consolidated Income Statement)
Rs. Mn.
Sales
Operating Profit
Interest
Depreciation
Profit Before Tax
Prior Period Adjs (credit)
Tax
Profit After Tax
Minority Interest
Net Profit
Operating Margin
FY2005
30855
9278
902
2195
6181
831
5350
169
5181
30 %
24
FY 2004 Growth (%)
24150
28
7098
31
900
2082
6
4116
50
425
688
20
3853
39
229
(26)
3624
43
29 %
-Ambuja
Cement
Gujarat Ambuja Cements Limited
(Consolidated Balance Sheet)
Rs. Mn.
Sources of Funds
Shareholders’ Funds
Minority Interest
Deferred Tax
Net Debt
Total
Application of Funds
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Investments
Net Current Assets
Total
25
FY2005
FY2004
24873
79
3811
8447
37210
17314
6375
3209
11845
38743
39210
14792
24418
10835
1957
37210
44434
16005
28429
9637
677
38743
Ambuja
Cement
Ratios
FY 2005
FY 2004
Interest Cover
9.4
7.5
Operating Margin
31 %
30 %
Net Debt / EBIDTA
1.1
2.2
Net Debt / Networth
0.37
0.61
ROCE
17 %
12 %
RONW
21 %
18 %
26
Ambuja
Cement
Our Score Card
(1987 - 2005)
Parameters
CAGR (%)
Capacity
18
Sales
29
Net Profit
36
Networth
30
Return to Shareholders
29
Wtd. Avg. EBIDTA Margin
33
27
Ambuja
Cement
Our Shareholders
Others
17%
Management
24%
Domestic Pension &
Mutual Funds
18%
FII's (Incl. GDR)
41%
28
Ambuja
Cement
Strategic Alliance with Holcim
29
Ambuja
Cement
Structure
Before
Current
GACL
AIG/GIC
GACL
HOLCIM
60%
40%
33%
67%
ACIL
ACIL
ACC
ACEL
ACC
ACEL
13.8%
94.6%
34.70%
97%
Due to this Structure GACL’s effective shareholding in ACC goes
up to 11.5% from 8.3 % without any fresh investments by GACL.
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Ambuja
Cement
Salient Features of the Partnership
 Holcim Investments in India through ACIL only
 Access to Holcim’s best practices in areas such
as waste heat recovery, use of alternative fuels,
human resources and Information technology
 Opening of new cement trading opportunities in
Middle East and Indian Ocean
31
Ambuja
Cement
Ambuja Growth Plans
 Plan to increase capacity by 3 to 4 mn. tonnes
in immediate future
 Growth to be funded from free cash flows
32
Ambuja
Cement
Thank You
33
Ambuja
Cement