Transcript Presentation By Ambuja Cement

Presentation By
Ambuja Cement
November 19, 2003
1
Ambuja
Cement
Indian Economy
GDP Growth - Estimates
(2003 - 2004)
1Q 2004 (A)
Estimated ’03-04
Service Sector
7.6 %
7.3 %
Industrial Sector
5.8 %
5.0 %
Construction Sector
5.7 %
6.7 %
Agriculture Sector
1.7 %
10.7 %
Economy expected to grow by about 7.4%
A- Actual
CMIE - Estimates
2
Ambuja
Cement
Cement in India
Why ?
 Indian economy will keep growing in band of - 5 - 7% annually
 To achieve larger GDP growth rate Country will need more
Roads, Ports, Irrigational facilities & other Infrastructure
 Housing will continue to be a major construction area
 Cement as a product or technology does not suffer from
obsolescence
 There is no “Substitute” for Cement
3
Ambuja
Cement
Roads - New Dimension
 Major Investments in Road Development
 Special Cess of Rs. 1.50 per liter on petrol and diesel
for Road Development
 Total outlay over next 2/3 years - Rs. 600 Billion
4
Ambuja
Cement
Road Development
Golden Quadrilateral- 5846 Sq.. Km
(Already Completed 1408 km)(Expected completion - June 2005)
North-South & East-West Corridors - 7300 Sq.. Km
( Already Completed 980 km) (Expected completion - 2007)
48 New Road project - 10000 Km.
(Expected completion - 2006)
Government commits to 25% Concrete Roads
Expected additional consumption -3/4 mn tonnes per annum
Source : NHAI
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Ambuja
Cement
Housing Construction
Huge potential:
Unfulfilled demand - 33 mn units
Increasing disposable income
Younger generation aspiring to have “Own House”
Low real estate prices
Easy availability of Housing Finance - Growing over 30%
Interest Rates have come down by 700 bps in last 3 years
Monthly instalment on mortgage is now equivalent to rentals
6
Ambuja
Cement
Cement Supply
Other side of the equation
7
Ambuja
Cement
Cement Supply - The Dynamics
Cement Production 2003
111 mn tonnes
Maximum Clinker Production Capability
(Including Sanghi)
103 mn tonnes
Current Clinker to Cement
Conversion Ratio (the best in
last 5 years)
1.21times
Maximum Cement Production Capability 127 mn tonnes
at Conversion Ratio - 1.23
8
Ambuja
Cement
Cement Supply - A Reality Check
 No new cement capacity under construction
 Lenders unwilling to fund new cement plants
 Maximum Cement production capability at a
conversion ratio of 1.23 - 127 mn tonnes
 Existing players going through Consolidation
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Ambuja
Cement
Indian Cement Industry
Next 3 Years
mn tonnes
Financial Clinker Cement
Cement
Demand
Year
Capacity Conversion Production
Ratio
at Peak
8%
( Maximum Level)
2003(A)
103
-
111
111
2004(E)
103
1.21
125
117
2005(E)* 105
1.22
128
126
2006(E)* 107
1.23
132
136
* On account of some debottlenecking
A- Actual
E- Estimated
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Ambuja
Cement
Cement Outlook
 Cement demand growth should exceed 8% if the GDP is
growing at over 6 %
 FY 2003-04 would be the First year in last decade to
not to have a single new plant commissioning
 Next 2 years also there is no new capacity expected
 Cement Demand to expected exceed Supply after a gap
of several years
All these point to good demand & better Cement Prices
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Ambuja
Cement
Ambuja Cement
Punjab
HP
Rajasthan
Gujarat
Chattisgarh
WB
Cement factories
Sea terminals
Maharashtra
mn tonnes
1986
2003
Capacity 0.7
14.0
Growth of 20 times in 15 years
12
Ambuja
Cement
Growth
With
A Sound Business Model
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Ambuja
Cement
Our Business Model

Own Infrastructure -Logistics Management

Strong brand & efficient distribution

Presence in prime markets

Lowest cost cement producer
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Ambuja
Cement
Own Infrastructure
 7 Owned Cement Ships for transporting Cement by Sea
 Large port in Gujarat to handle export of Cement
( 2 mn tonnes this year) & Import of Coal / Oil
 3 Cement receiving terminals
 190 MW of Captive Power Plants at various Cement
Plants to give reliable and cheap power
15
Ambuja
Cement
Strong 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
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Ambuja
Cement
Lowest Cost Producer
Rs./ tonne
FY 2003
FY 2002
Increase /
(Decrease) (%)
Power
187
179
4
Fuel
227
254
(11)
Raw material
136
133
2
Consumables
47
48
(2)
597
614
(3)
Direct cost
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Ambuja
Cement
Gujarat Ambuja Cement - Shareholding
GAC ( 12 mn )
40%
Pvt. Equity Investors
ACIL 60%
ACC
14.4%
( 17 mn )
ACEL
94%
( 2 mn )
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Ambuja
Cement
Convertible Bonds
Brief terms:
Date of Issuance
Coupon
Maturity
Conversion Price
Conversion
Amount
Conversion Option of the
Bondholder
Yield to maturity at
redemption
Call Option of company
January 2001
1%p.a.
January 2006
Rs. 222
Into GDRs/ Shares
US$ 100 million
Any time till maturity
4.6%
From January 2004 till Maturity
19
Ambuja
Cement
Gujarat Ambuja Cements Limited
(Effect of Conversion)
Before
Sources of Funds
Shareholders’ Funds
Deferred Tax
Convertible Bonds
Debt
Total
Application of Funds
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Investments in ACIL
Other Investments
Net Current Assets
Total
20
Rs. Million
After
16166
3053
4614
12436
36269
20680
3053
-12436
36269
30239
10120
20119
8572
2445
5133
36269
30239
10120
20119
8572
2445
5133
36269
Ambuja
Cement
Debt Profile
(As of 30.9.2003)
%
Tenor
Long Term
Short Term
Total
Mix
Rupee Debt
Foreign Currency Debt
Total
21
79
21
100
56
44
100
Ambuja
Cement
Gujarat Ambuja Cement Limited
Valuation
EV/Ton
US$ 90
EV/EBIDTA
9 times
Cash Earning per Shares (CEPS)
Rs. 27
Earning Per Shares (EPS)
Rs. 14
Price to Cash Earning
10 times
Debt/ Equity -( on Conversion)
0.60
Debt/ EBIDTA - (on Conversion)
2.4 times
22
Ambuja
Cement
THANK YOU
23
Ambuja
Cement