Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (March 2006)
50 slides from Grasim Industries's investor presentation, March 2006
Slide 1: Grasim Industries Limited - A VSF and Cement Major
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation March 2006
Slide 2: Cautionary Statement
Cautionary Statement Statements in this “Presentation” describing the Company’s objectives, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or impl
Slide 3: Presentation Structure
Presentation Structure Introduction Introduction Businessreview Business review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group h Amongst the largest business houses in India h Leadership position across businesses h Pioneers of globalisation in India, with manufacturing operations in 9 countries h Revenues of $7.9 bn; Net earnings of $820 mn h Delivered TSR in excess of 25% per annum over the last 5 y
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Largest in India; 9th largest in the World Cement – 31 Mn TPA capacity, including 17 Mn TPA in UltraTech Revenue Rs.57 Bn. – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals (US$ 1,290 Mn.) – Captive power plants across all location
Slide 6: Transformed significantly in recent years
Transformed significantly in recent years… h Integrated Plantation cum Pulp Project at Laos h Acquisition of St Anne Nackawic Pulp Mill - Canada h Major capex Plans for Capacity Expansion, CPP & Up-gradation Invest h UltraTech Cement Acquisition for growth h Cement restructuring h Cement brownfield
Slide 7: Grasim Consolidated Business Mix – FY05
Grasim Consolidated Business Mix – FY05 Net Revenues PBIDT Mix Capital Employed * Rs.9,317 Crores (US$ 2,105 Mn) Rs.2,272 Crores (US$ 513 Mn) Rs.9,701 Crores (US$ 2,192 Mn) 1% 2% 3% 4% 1% 2% 7% 5% 10% 10% VSF 5% 17% 11% VSF VSF 21% Cement Cement 27% Grasim Cement Subsidiaries Cement Subsidiaries 23%
Slide 8: Grasim Consolidated Business Mix – 9MFY06
Grasim Consolidated Business Mix – 9MFY06 Net Revenues PBIDT Mix Capital Employed Rs.7,299 Crores (US$ 1,649 Mn) Rs.1,606 Crores (US$ 363 Mn) Rs.10,227 Crores (US$2,311 Mn) 2% 1% 2% 3% 4% 8% 6% VSF 7% 16% 5% VSF 9% VSF 21% 5% 20% Grasim Cement Cement Cement 20% Subsidiaries Subsidiaries 27% Grasim C
Slide 9: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 9
Slide 10: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Amongst world’s top two producers with 12% global share – 3 Fibre plants (257,325 TPA) & 1 pulp plant (70,000 TPA) Revenue Rs.20 Bn. – JV for Pulp with Tembec Inc., Canada (125,000 TPA) (US$ 450 Mn.) – Acquired another large pulp mill in Canada, JV with Tembec Inc. (145,00
Slide 11: VSF Global Scenario
VSF Global Scenario h VSF: A cellulosic fibre Global Market Share - VSF − 4% of global fibre market − 7% of global man-made fibre market Equifibers h Global Capacity – 2.1 Mn. TPA 3% Chinese Producers (several) ‘000 TPA 38% − AVB group − Grasim (India) 257 − Indo Bharat Rayon (Indonesia) 110 Lenzing
Slide 12: Sustainable Competitive Strengths
Sustainable Competitive Strengths h Amongst the lowest cost producers globally h Fully integrated operations − Captive Pulp (45%) & Caustic Soda (100%) − Captive power and steam − Two JVs for pulp manufacturing in Canada − Self managed water supply sources h Strong R&D capabilities − Several new pro
Slide 13: VSF: Current Performance
VSF: Current Performance h Satisfactory performance in a challenging environment h Impressive recovery in volumes in the 2nd and (Figures in Rs. Crores) FY04 FY05 9MFY06 3rd quarter − Strong domestic demand Capacity (mtpa) 251,850 253,675 257,325 − Increased exports of commodity VSF to South Asian c
Slide 14: VSF: Outlook
VSF: Outlook h Volumes prospects remain positive − Strong demand from South Asian countries viz. Pakistan & Bangladesh − Domestic demand remains firm h Price outlook stable − Selling prices raised by Re.1/Kg. consecutively for second quarter − Cotton prices showing sign of recovery h Long term outlo
Slide 15: VSF: Strategy for Growth
VSF: Strategy for Growth h Enhancement of capacity thru brownfield and de-bottlenecking (49,625 MTPA) h Grasim focusing on value added products and market enlargement − Positioning VSF at the high end of the market − New genre cellulose fibres “Modal”, “Viscose +” commercialised h Concentrated effor
Slide 16: Chemicals: A backward integration for VSF
Chemicals: A backward integration for VSF h 2nd largest producer in India (Rs. Crores) FY04 FY05 9MFY06 h Nearly 80% of caustic soda used captively h Strong performance during the year Capacity (MTPA) 190,800 190,800 190,800 − Higher international prices, backed by robust Net Turnover 295 351 296 de
Slide 17: Cement
Cement Largest in India; 9th largest in the World Revenue - Rs. 57 Bn – 31 mn TPA capacity, including 17 mn TPA in UltraTech (US$ 1,290 Mn.) – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals – Market leader in White Cement (0.5 Mn MT)
Slide 18: Cement: Sector outlook promising
Cement: Sector outlook promising h India is second largest market in the world h A growth business in India with significant long term potential h Demand outlook positive ; Expected to grow by 8-9% in the long term − Buoyant housing demand − Growing thrust on infrastructure − Capex spending by indus
Slide 19: Grasim well positioned to reap benefits
Grasim well positioned to reap benefits … • Leadership in key consuming markets hNo 1 in 9 states with 42% of demand hNo 2 in 4 states with 20% of demand hNo 3 in 4 states with 15% of demand Grasim Zonal Combine Distribution (%) Zone Mkt. Rank Grasim Industry Combine Share % 15 2nd North 33 24 20 1s
Slide 20: Grasim well positioned to reap benefits
Grasim well positioned to reap benefits … • Complimentary asset profile offering synergies Bhatinda(G) Capacity (Mn TPA) Noida Grasim Consolidated 31.2 Jodhpur Gurgaon - Grasim 13.1 Shambhupura - UltraTech & NCCL 17.0 Sikka Jawad Durgapur(G) Jafrabad - SDCCL 1.1 Magdalla (G) Pipavav Hirmi Raipur Gre
Slide 21: Grasim: Strong current performance
Grasim: Strong current performance (Figures in Rs. Crores) FY04 FY05 9MFY06 h Capacity utilisation impressive at 102% Capacity h Robust growth in sales volumes Grey Cement (Mn.TPA) 13.12 13.12 13.12 − Outperformed the Industry in North & East White Cement (Mn.TPA) 0.4 0.5 0.5 − Strong growth of 7% i
Slide 22: UltraTech (consolidated): Current performance
UltraTech (consolidated): Current performance h Improved product mix (Figures in Rs. Crs) FY04 FY05 9MFY06 Capacity (Mn TPA) 17.0 17.0 17.0 − Moving from clinker export to cement export Net Turnover & 2,700 @2,090 h Increase in cement and clinker realisations 2,336 Other Income h Higher operating pr
Slide 23: Consolidated Performance Highlights
Consolidated Performance Highlights Grasim SDCC FY04 FY05 9MFY06 42% 3% Grey Cement UltraTech 55% Capacity (Mn. TPA) 31.2 31.2 31.2 Sales Volumes (Mn. MT) 28.1 29.4 21.6 Cement Capacity - 31.2 Mn. Ton Net Turnover (Rs. Crs.) 4,844 5,654 # 4,590 *PBIDT (Rs. Crs.) 818 974 960 Grasim 51% SDCC *Capital
Slide 24: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth h Cost control − Lowering energy costs Setting up Captive Power Plant with combined capacity of 169 MW at 4 locations Bidding for captive coal & lignite mines Use of alternate fuel - Petcoke − Reducing distribution costs h Improve realization by
Slide 25: Sponge Iron
Sponge Iron Revenue - Rs.7 Bn. Largest merchant producer in India (US$ 160 Mn.) – Gas based coastal plant with 900,000 MT capacity
Slide 26: Sponge Iron
Sponge Iron h Flexibility to produce both HBI & DRI from the same reactor h Flexibility to use multiple feedstocks h Captive port for raw material imports h Sponge Iron business performance impacted since 2nd quarter − Poor availability of Natural Gas supplies − Steep rise in cost of all inputs and
Slide 27: Sponge Iron: Current performance / Outlook
Sponge Iron : Current performance / Outlook h Operations impacted due to poor availability of (Figures in Rs. Crores) FY04 FY05 9MFY06 Natural Gas Capacity (TPA) 900,000 900,000 900,000 h Operating margins impacted due to steep rise in cost of all inputs and lower volumes Net Turnover 639 1021 524 h
Slide 28: Capital Expenditure Plan
Capital Expenditure Plan h Grasim -Plans to spend Rs.1,700 Crs. in next two years Cement : capacity expansions (1.5 Mn.TPA) and CPP (77 MW) – Rs.589 Crs., modernisation – Rs.362 Crs. VSF : capacity expansion (49,625 TPA) –Rs.374 Crs. and modernisation – Rs.159 Crs. Chemical : conversion to mem
Slide 29: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 29
Slide 30: Standalone Financials
Standalone Financials (Figures in Rs. Crores) FY99 FY04 FY05 9MFY06 h Over 10 times growth in market cap. to Net Turnover 3,757 5,213 6,229 4,812 Rs.155 Bn. (US$3.5 Bn.) PBIDT 674 1,504 1,785 1,127 h Low gearing PAT *105 779 886 600 h Excellent returns on Equity EPS (Rs.) *12.5 85.0 96.6 65.5 h Comf
Slide 31: Consolidated Financials
Consolidated Financials (Figures in Rs. Crores) FY04 FY05 9MFY06 h Strong Consolidated Balance sheet as well Net Turnover 7,782 9,292 7,271 h Leveraging in real term even lower, to be PBIDT 1,909 2,272 1,606 viewed in the context of PAT (After Minority share) 759 880 692 − Cash surplus EPS (Rs.) 82.
Slide 32: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 32
Slide 33: Investment Summary
Investment Summary h A Cement and VSF major with significant competitive strengths h Domestic leadership in cement − Well timed acquisitions, ahead of improvement in sector profitability − Improving performance of cement subsidiaries h VSF – well planned strategy for growth of pulp and fibre capacit
Slide 34: Vision and Strategy
Vision and Strategy To be a premium VSF and Cement Company delivering Vision superior value to stakeholders on a sustained basis z Grow and strengthen main businesses: VSF and Cement z Sweat other assets optimally Strategy z Improve margins through stringent cost control and greater efficiency 34
Slide 35: Thank You
IGRASTM ADITYA BIRLA GROUP Thank You
Slide 36: Grasim Industries Limited - Supplement
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation (Supplement) March 2006
Slide 37: Presentation Structure
Presentation Structure Introduction Introduction FinancialHighlights Financial Highlights BusinessReview Business Review& &Outlook Outlook Summary Summary Supplements Supplements • Consolidated Financial Performance (Pg. 38) • Standalone Financial Performance (Pg. 39) • Balance Sheet (Pg. 40) • Segm
Slide 38: Consolidated Financial Performance
Consolidated Financial Performance (Rs. Crores) Q3FY06 Q3FY05 % Chg. 9MFY06 9MFY05 % Chg. FY05 (Audited) Net Turnover & Op. Income 2,503.2 2,338.6 7 7,298.9 6,840.1 7 9,317.3 Other Income 29.6 43.8 (32) 149.8 133.3 12 217.6 PBIDT 504.6 512.7 (2) 1,606.0 1,635.2 (2) 2,272.3 Interest 53.1 72.9 (27) 16
Slide 39: Standalone Financial Performance
Standalone Financial Performance (Rs. Crores) Q3FY06 Q3FY05 % Chg. 9MFY06 9MFY05 % Chg. FY05 Net Turnover & Op. Income 1,648.2 1,559.7 6 4,840.6 4,610.3 5 6,252.4 Other Income 15.3 37.9 (60) 111.6 84.6 32 167.0 PBIDT 334.3 430.5 (22) 1,126.8 1,306.6 (14) 1,784.7 Interest 23.5 35.2 (33) 73.7 104.8 (3
Slide 40: Balance Sheet
Balance Sheet Consolidated Standalone (Figures in Rs. Crores) FY04 FY05 FY04 FY05 Gross Block 10,702 11,317 5,802 6,052 Net Block 6,394 6,300 3,213 3,204 Goodwill 2,037 1,958 -- -- Cement Subs. Investments -- -- 2,333 2,362 Investments 270 769 409 939 Net Current Assets 475 674 349 426 Capital Emplo
Slide 41: Segmental Performance-Q3FY06
Segmental Performance-Q3FY06 Standalone (Rs. Crores) PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) Q3FY06 Q3FY05 Q3FY06 Q3FY05 Q3FY06 Q3FY05 Q3FY06 Q3FY05 Q3FY06 Q3FY05 Q3FY06 Q3FY05 VSF 515.8 489.6 124.2 160.7 24.1 32.8 107.6 146.0 903 963 47.9 67.9 Chemical
Slide 42: Segmental Performance-9MFY06
Segmental Performance-9MFY06 Standalone (Rs. Crores) PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) 9MFY06 9MFY05 9MFY06 9MFY05 9MFY06 9MFY05 9MFY06 9MFY05 9MFY06 9MFY05 9MFY06 9MFY05 VSF 1,433.9 1,500.8 339.3 486.8 23.9 32.6 291.6 444.5 903 963 43.3 68.9 Chemi
Slide 43: Viscose Staple Fibre: Summary
Viscose Staple Fibre : Summary % 9M 9M % Q3 FY06 Q3 FY05 FY05 Chg. FY06 FY05 Chg. Capacity TPA # 257,325 251,850 2 257,325 251,850 2 @ 253,675 Production MT 61,862 63,558 (3) 164,376 184,648 (11) 247,952 Sales Volumes MT 66,025 55,957 18 181,757 177,350 2 231,533 Net Turnover Rs. Crs. 515.2 489.7 5
Slide 44: Chemical: Summary
Chemical : Summary Q3 Q3 % 9M 9M % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Capacity (Caustic) MT 190,800 190,800 -- 190,800 190,800 -- 190,800 Production (Caustic) MT 44,039 42,719 3 122,822 119,802 3 161,966 Sales Volume(Caustic) MT 44,283 43,170 3 121,717 120,318 1 163,111 Net Turnover Rs. Crs. 93.0 94
Slide 45: Cement: Summary
Cement : Summary Q3 Q3 % 9M 9M % FY05 FY05 FY05 FY06 Chg. FY06 Chg. Grey Cement Capacity Mn. MT 13.12 13.12 -- 13.12 13.12 -- 13.12 Production Mn. MT 3.49 3.11 12 10.05 9.14 10 12.44 Sales Volumes Mn. MT * 3.53 3.19 11 * 10.12 9.27 9 12.63 Net Turnover Rs. Crs. * @730.6 623.8 17 * @2,111.1 1,878.4 1
Slide 46: Sponge Iron: Summary
Sponge Iron : Summary Q3 Q3 % 9M 9M % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Capacity TPA 900,000 900,000 -- 900,000 900,000 -- 900,000 Production MT 90,972 180,687 (50) 396,732 560,595 (29) 780,341 Sales Volumes MT 98,440 196,735 (50) 382,342 570,154 (33) 772,799 Net Turnover Rs. Crs. 132.9 262.7 (49)
Slide 47: Textiles: Summary
Textiles : Summary Q3 Q3 % 9M 9M % FY05 FY05 FY05 FY06 Chg. FY06 Chg. Net Turnover Rs. Crs. 50.9 59.3 (14) 172.1 184.0 (6) 249.9 PBIDT Rs. Crs. 0.2 1.6 (87) 4.5 8.8 (49) 11.9 PBIDT Margin % 0.4% 2.7% -- 2.6% 4.8% -- 4.8% PBIT Rs. Crs. (1.3) (1.6) -- 0.1 (0.9) -- (0.5) Capital Employed Rs. Crs. 100 1
Slide 48: Capex under implementation
Capex under implementation Rs. Crores Capex Cash Outflow plan FY06 FY07 Cement 951 322 570 - Power plants (3 Nos, 77MW) 330 74 200 - Grinding unit in North (1.3 Mn. MT) 115 20 95 - De-bottlenecking/Blending 144 30 114 - Modernization 362 198 161 VSF 533 147 320 - Capacity expansion (49,625 Tons) 374
Slide 49: UltraTech (Consolidated): Financial Performance
UltraTech (Consolidated): Financial Performance (Rs. Crores) Q3 Q3 % Inc. 9M 9M % Inc. FY05 FY06 FY05 FY06 FY05 Net Turnover & Other Income * 734.8 680.3 8 * 2,090.3 1,959.3 7 2,700.3 PBIDT 133.3 65.9 102 380.8 246.6 54 378.9 PBIDT Margin (%) 18.3% 9.8% -- 18.4% 12.7% -- 14.1% Interest 23.0 26.9 (14
Slide 50: SDCC: Financial Performance
SDCC : Financial Performance (Rs. Crores) % 9M 9M % Q3 FY06 Q3 FY05 FY05 Chg. FY06 FY05 Chg. Net Turnover & Op. Income 51.6 41.2 25 149.6 121.5 23 168.9 Other Income 0.5 0.6 (5) 3.3 4.1 (20) 5.5 PBIDT 8.3 (3.0) -- 30.1 8.2 266 18.1 PBIDT Margin 16.2% -- -- 20.1% 6.8% -- 10.7% Interest * 0.4 4.6 -- *
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