Transcript Nepal - NRNA

Dangote Cement Plc
Proposed Investment in Nepal
27 February 2014
Dangote Group
The Dangote Group is a diversified conglomerate,
headquartered in Lagos, Nigeria, with interests across a
range of sectors in Africa. Current interests include
cement, sugar, flour, salt, pasta, beverages and real
estate, with new projects in development in the oil and
Natural gas, telecommunications, fertilizer and steel.
The Group focuses on provision of local, value-added
products and services that meet the needs of the
African population. Dangote Cement, the largest
cement production company in Africa, with a market
capitalization of almost US$14 billion on the Nigeria
Stock Exchange, has subsidiaries in Benin, Cameroon,
Congo, Ethiopia, Ghana, Nigeria, Serra Leone, South
Africa, Tanzania and Zambia.
Nigeria is a growing economy and with its low cement
consumption per capita base, it has significant growth
opportunities.
Cement consumption and GDP
History shows that demand for
cement rises rapidly when GDP
takes off from a low base
China
1,000
Egypt
Algeria
Morocco
India
2020
Senegal
Brazil
Gabon
Serbia
South Africa
Benin
Per capita
cement
consumption
Ghana
100
Liberia
(kg, log scale)
Colombia
Nigeria
Cameroon
Cote d'Ivoire
Zambia
Indonesia
Rep. Congo
Nepal
Ethiopia
2020
Malawi
Assumptions:
10% growth in cement  ca. 250kg
6% GDP growth
Dangote Cement
target markets
Per-capita GDP and
cement consumption for
a basket of emergingmarket countries.
10
0
2,000
4,000
6,000
8,000
10,000
12,000
GDP per capita (current US$)
2
Dangote has grown from a trading company into an
international cement company in a short period of time
“Institutional Expansion”
2011 and beyond…
Dangote Group – major business “eras”
 Emphasis on institutionalization
“Accelerated Growth”
1998-2010
“Early Years”
1977-1997
 Emphasis on trading
“ In 1977… began trading in rice,
sugar and cement, reinvesting the
profits until he was able to venture
into full-scale manufacturing”
 Emphasis on manufacturing
“ … we are still expanding. We are
not slowing down at all. There is
no economic meltdown.””
- Al. Aliko Dangote (Wall St.
Journal, 2009)
- The Guardian Newspaper, UK
and international expansion
“From an original small trading firm in
1977, the Dangote Group has grown
to become a multi-trillion –naira
conglomerate, controlling 28% of the
entire equities listed on the Nigerian
Stock Exchange”
- Tell Magazine, Nigeria Aug 2011
“ we are going into something
big…need to spend $7.5billion in the
next 4 years, so definitely we need a lot
of concentration.”
- Al. Aliko Dangote (Reuters, 2012)
1977
Key Skills
Required
1998
• Entrepreneurship
• “Deal-making”
• Distribution network and
logistics
• Raising financing
• Capital project execution
• Operations and Sales
Distribution
2011
• Corporate Centre capabilities
(Strategy; portfolio management
• Performance management
• Talent management
3
A niche producer of cement with proven competence
• Largest producer in Nigeria and Sub-Saharan Africa
– Clear leader in Nigeria, Sub-Saharan Africa’s largest cement market
– 19mt capacity, delivering ca. 60% market share
– Three plants in excellent locations, supported by strong distribution
• Delivering superior financial performance
–
–
–
–
–
FY 2011 sales: ₦235.9bn ($1.5bn); 56% EBITDA margin
8.6mt cement sold
Strong operating cash flow - ₦164bn from operations (FY 2011)
Modest Net Debt/EBITDA (1x) positions company for strong growth
Strong ROE of 41%
• Highly efficient operations
– Largest plant, Obajana, achieving 100% utilisation (FY 2011)
– 12mt new, higher-margin capacity replaces imports to meet demand
• Largest company on Nigerian Stock Exchange
– Market capitalisation $13bn; ca. 28% of NSE
– LSE listing planned to comply with NSE rules; extra 20% stock  25% free float
– A bellwether on the African growth story
4
From 8mta production capacity in 2011, it has grown to 20.75
mta in 2012 and more than 50mta by 2015
FY 2011
FY 2012
FY 2015
8mt capacity
20.75mt capacity
51.0mt capacity
• Two plants in Nigeria, 8mt capacity
• Obajana 5mt
• Gboko
3mt
• Clear market leader, 50% share
• 50 depots, most extensive distribution
• Leading importer (from Far East)
•
•
•
•
•
$1.5bn revenue
$0.82bn EBITDA, 56% margin
Ca.22% sales imported (lower margin)
Modest net debt vs peers: $0.8bn
High ROE – 41%
• Capacity expansion underway
• Obajana: 5mt brownfield
• Ibese:
6mt new plant
• Gboko: 1mt process upgrades
• Senegal: 1.5mt new plant
• $3.9bn of additional capacity planned
• Fund with Nigerian cash flow
• Raise debt in local markets
$1.5bn revenue
$0.82bn EBITDA
• Nigerian capacity increased to 20.25mt
• Obajana 10.25mt
• Ibese
6mt
• Gboko
3mt
•
•
•
•
•
•
Market share extended, ca. 70%
Expanding depot network
Margin gains from new capacity
Margin gains as imports end
Ibese serving high-growth South West
Obajana opening new regional markets
• 1mt Gboko expansion due Q1 2013
• 1.5mt Senegal plant commissioned
• Convert Nigerian terminals for export
• Work begins on new Nigerian capacity
• Obajana +3mt by 2015
• Ibese
+6mt by 2015
• Calabar +3mt by 2015 (TBC)
• Nigerian capacity 32mt
• Obajana 13mt
• Ibese
12mt
• Gboko
4mt
• Calabar 3mt (TBC)
• Fully operational in 15 countries
• 47.0mt production capacity (TBC)
• 4.0mt import on ECOWAS coast
• ECOWAS strategy fully operational
• Exporting across other African borders
•
•
•
•
•
•
Operating in robust, growth markets
Demand, deficits sustain pricing
Well-diversified regional exposure
Largest/major player in all markets
Strong profitability, cash generation
High barriers to entry
• Delivering high returns for shareholders
• Work underway on African capacity
• 15.0mt production, 8 countries
• 4.0mt import on ECOWAS coast
• Africa’s leading cement company
• An emerging global cement giant
5
Besides Nigeria, growth strategies and clear entrepreneur
vision of the management have moved investments to other
African countries with US$2.5bn committed
Tunisia
Morocco
Algeria
Libya
Current/planned
Significant influence
Integrated cement plant
Grinding plant
No/low influence
Import facility
Egypt
Western Sahara
Location
Plant Type
Nigeria
Cameroon
Ethiopia
Gabon
Rep Congo
Senegal
South Africa
Tanzania
Zambia
Integrated
GP
Integrated
GP
Integrated
Integrated
Integrated
Integrated
Integrated
Ghana
Sierra Leone
Cote d'Ivoire
Guinea
Liberia
Terminal
Terminal
Terminal
Terminal
Terminal
Capacity
Mta
35.3
1.0
3.0
1.5
1.5
1.5
3.3
3.0
1.5
51.6
3.0
0.5
1.0
1.0
0.5
6.0
Cape Verde
Senegal
The Gambia
Guinea-Bissau
Mauritania
Noukchott
Mali
Niger
Bamako
Guinea
Burkina
Faso
Niamey
Abidjan
Togo
Sudan
Chad
Eritrea
Djibouti
Somalia
Nigeria
Ivory
Coast Ghana
Sierra Leone
Freetown
Liberia
Kano
South
Sudan
Central African
Cameroon Republic
Benin Douala
Port Harcourt
Yaounda
Librevile
Gabon
Equatorial Guinea
Congo
Burundi
Democratic
Republic
of the Congo
Ethiopia
Kampala
Uganda Kenya
Nairobi
Seychelles
Rwanda
Tanzania
Dar Es Salam
Luanda
Angola
Zambia
Lusaka
Malawi
Harare
Zimbabwe
Namibia
Mauritius
Mozambique
Reunion
Botswana
Madagascar
Pretona
Swaziland
Lesotho
South Africa
Cape Town
To take Dangote Group to its next level, the Group has targeted to grow our
cement production capacities to 100Mta by 2017
Nepal
DANGOTE CEMENT TEAM AND H.E ANIL JHA; HONOURABLE
MINISTER OF INDUSTRY, GOVERNMENT OF NEPAL
DIRECTOR – STARTEGY AND BUSINESS DEVELOPMENT; DR.
STANLEY KO AND CHIEF SECRETARY OF NEPAL GOVERNMENT;
LEELA MANI POUDYAL, GOVERNMENT OF NEPAL
Key observations
1. Nepal’s economy has been growing at an average of 4.12%. The rate eased to 3.9% in 2011
and analysts have predicted further easing to 3.9% in 2013.
2. Easing of economy has not reduced cement consumption because of ongoing construction
projects
3. The consumption of cement has historically outpaced production
4. Capacity utilization is low in the country
5. New plant capacities are expected to be added Nepal
6. Present (2013) cement demand is 4,000,000 MT estimated 7,000,000 MT by 2017
7. Estimated 2013 Clinker home production is 1,000,000 MT only. 3,000,000 MT deficit in 2013
Nepal’s economic growth of 3.9% (WB,2011) is below the
Developing Asia’s average, while inflation has been high
Nigeria (2011)
Nepal(2011)
924,768
147,181
Abuja
Kathmandu
152.6
30.4
Geography
Area (km2)
Capital
Demography
Population (million)
Denisty (Inhab/km2)
Urbanisation (%)
165
47
17
1,940
540
Naira
Nepalese Rupee
0.0063
0.0114
97
75
Economy
GNI per capita (US$)
Currency
US$ Exchange (2012)
Per capita cement
consumption (kg)
4/13/2015
11
Consumption has been outpacing consumption
Nepal Cement Market (2000-2010)
Consumption has been driven by:
•Public investments
•Private investment
3.50
3.00
2.50
Consumption expected to be driven by
investments in
•High rise buildings
•Roads and bridges expansion
•Hydro power projects
Production
M 2.00
t
a 1.50
Consumption
1.00
0.50
0.00
1995
4/13/2015
2000
2005
2010
2015
12
Nepal – Foreign Investment Policy
• Foreign Investment is welcome in Nepal
• 100 % foreign owned enterprises permitted
• Permitted to repatriate the equity investment, benefits,
dividends, principal and interest of foreign loans
• Government- assured security of investment
• Number of tax benefits are entitled including income tax
and others
Process for Investment in a New Industry
• Documents required:
 Project Report – Three copies
 Certificate of Incorporation including Memorandum
of Association and Article of Association
 Company Profile
 Financial Credibility Certificate (FCC)provided by a
home country bank
 Authority Letter from the company to carry out
necessary work on its behalf
Limestone Mines in Nepal
• A score of limestone deposits of various grades were
discovered across the country
• Most limestone lie along the southern margin of midland
zone which has good cement grade limestone
• Only few deposits are being explored at the moment
• There are over 1,000,000,000 MT limestone identified
across the country
DANGOTE PLAN IN NEPAL
• Invest to establish two Cement Production Plant; East and
West Nepal
• Each has the capacity to produce 6,000 MT/Day and
acquire 200,000,000 MT limestone Mine
• First Phase – Investment and erection of One Plant (2.1
Million MT/Annum
DANGOTE JOURNEY SO FAR…
• Visit high level missions three times in 2013 and two times in
2014
• Applied for FDI in February 2013
• Submitted Feasibility Study report in April 2013
• Check out the Mines and did detailed technical studies in
Dang, Dhading and Makwanpur districts.
• Received Approval from FDI in Cement Industry for investment
of $550,000,000 (Five Hundred and Fifty U.S. Dollars only) in
November 2013 from The Investment Board of Nepal
• Now in the process of registering at the Company Registrar’s
Office and other departments in Nepal
ISSUES/CHALLENGES
• Delay in Approval process (8 months instead of the
committed 2-3 months
• Delay in process at the Investment Board and relevant
Government Authority
• Assurance from high level authority but no real support
from the officials at execution level
• No one –door system/policy as assured
DANGOTE CEMENT NEPAL LIMITED
•
•
•
•
Project completion by 2017
6,000 MT per day production (120,000 of 50kg Cement)
1000 direct employment and 5000 indirect employment
Towards self sufficient cement production in the country