CARE Ratings Ltd · NSE:CARERATING
CARE Ratings — Webinar on Indian Cement Industry (January 2013)
33 slides from CARE Ratings's conference presentation, Jan 8, 2013
Slide 1: Celebrating Two Decades of Analytical Excellence
Celebrating Two Decades of Analytical Excellence
Slide 2: CARE Research Presentation
CARE Research Presentation 2
Slide 3: About CARE Research
ABOUT CARE RESEARCH Industry Research: CARE Research offers value research in the form of industry research reports which are subscribed to by investors, bankers, analysts, corporates etc. The industry research has been in existence since inception of CARE as its integral part to provide support to
Slide 4: List of Research Reports
LIST OF RESEARCH REPORTS LIST OF INDUSTRIES Sector Updates Sector Updates 1 Aluminium Monthly 24 Passenger Vehicle Monthly 2 Apparel Industry Quarterly 25 Pesticides Quarterly 3 Auto Component Annual 26 Pharmaceutical Monthly 4 Banking Monthly 27 Pipe Quarterly 5 Cement Monthly 28 Power Generation Q
Slide 5: About CARE Research
ABOUT CARE RESEARCH Industry Research: CARE Research offers value research in the form of industry research reports which are subscribed to by investors, bankers, analysts, corporates etc. The industry research has been in existence since inception of CARE as its integral part to provide support to
Slide 6: List of CIRM Reports
LIST OF CIRM REPORTS LIST OF INDUSTRIES No Sectors No Sectors 1 Agri - Edible Oil 29 NBFC Housing Finance 2 Agri - Food Processing 30 NBFC Micro - Finance 3 Air Conditioners 31 NFM -Aluminium 4 Airlines/Civil Aviation 32 NFM-Other Metals excl Al & Zn 5 Airports 33 NFM-Zinc 6 Auto Tractors 34 Organiz
Slide 7: List of CIRM Reports contd
LIST OF CIRM REPORTS ….contd LIST OF INDUSTRIES No Sectors No Sectors 57 Diesel Engines 87 Services - Brokers 58 Domestic Freight RFTI 88 Services - Educational Institutions 59 Electrical Goods/Components/Appliances 89 Services - Hospitals 60 Engineering/Manufacturing - General 90 Services - Hotels
Slide 8: About CARE Research
ABOUT CARE RESEARCH Industry Research: CARE Research offers value research in the form of industry research reports which are subscribed to by investors, bankers, analysts, corporates etc. The industry research has been in existence since inception of CARE as its integral part to provide support to
Slide 9: Customised Research
CUSTOMISED RESEARCH • Market entry • Analysis competitive strategy landscape • Expansion of • Assessing size of business operations organized and unorganized players • New product launch • Assessing operational Tool for business • Demand sizing parameters like planning • Demand supply gap manufactur
Slide 10: CARE Research – Key Clients
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Slide 11: CARE Research – Key Clients
CARE Research - Key Clients _ ewe &VARUN INDUSTRIES LIMITED 7a GUJARAT NRE MLR Motors Pvt. Ltd. ®D IDBI BANK @ Pr [J Ecucome SHINHAN INDUSTRIES LTO. Q ASM ZRII PROTECT TO PROSPER NA , ESTD. 1906 VENTURE Y—— TOPWORTH
Slide 12: CARE Research – Knowledge Partners
CARE Research – Knowledge Partners
Slide 13: Is cement sector on a recovery path
“ls cement sector on a recovery path”
Slide 14: Flow of Presentation
Flow of Presentation • Current Scenario Overview Regional Scenario Competitive landscape Industry Aggregates - Costs, Margins & Prices • Outlook Overall Demand & Supply Price & Margins Break even Analysis Consolidation- an open opportunity…
Slide 15: Overview
Overview GDP growth vs. Cement consumption growth During FY06-10, cement consumption grew at a 12 CAGR 9.9% 11 During FY11-13, cement 10 consumption grew at a 9 CAGR 5.6% % 8 7 6 5 4 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 GDP Cement Consumption
Slide 16: Regional Scenario
Regional Scenario North Central 74.8 mn tonnes 41.1 mn tonnes (23% ) (13% ) East 43.8 mn tonnes (13% ) West 46.3 mn tonnes (14% ) South 118.7 mn tonnes (37% )
Slide 17: Regional Scenario
Regional Scenario Dem. – 7.8% Dem.– 11.4% North Cap. – 9.5% East Cap. – 8.6% 80 50 60 40 mn tonnes mn tonnes 30 40 20 20 10 0 0 FY08 FY 09 FY 10 FY11 FY12 FY13 FY08 FY 09 FY 10 FY11 FY12 FY13 Demand Capacity Demand Capacity Dem.– 4.3% Dem.– 7.5% South Cap. – 13.9% West Cap. – 7.8% 140 50 120 40 mn t
Slide 18: Regional Scenario
Regional Scenario Central Dem.– 7.7% 50 Cap. – 7.8% 40 mn tonnes 30 20 10 0 FY08 FY 09 FY 10 FY11 FY12 FY13 Demand Capacity During the period FY08-13, All India • Demand has grown at CAGR of 400 7.3%. 300 mn tonnes 200 • Capacity has grown at CAGR of 100 10.4%. 0 •Industry witnessed a capacity FY08
Slide 19: Inter-Regional cement movement
Inter-Regional cement movement Inter-Regional movement (mn tonnes) Inbound Outbound Net North 4.2 14.1 9.9 East 8.2 0.7 (7.5) South 1.8 12.0 10.2 West 13.8 2.4 (11.4) Centre 9.7 8.5 (1.2)
Slide 20: Competitive Landscape
Competitive Landscape Player wise share of capacity at the end of FY13 Holcim (ACC+Ambuja) 18% Others 31% Lafarge India A V Birla Group 3% (UltraTech) Birla Corp. 15% 3% Century Textiles 3% Jai Prakash Associates Chettinad Cement 11% 3% Shree Cement India Cements Madras Cement 4% 5% 4%
Slide 21: Industry Average- Cost & Margins
Industry Average- Cost & Margins Trends in Industry averages PAT Margin PBDIT Margin Freight cost Power & fuel cost Net Realisation (%) (%) (Rs. per tonne) (Rs. per tonne) (Rs. per tonne) FY13 11.1 22.5 950 1,039 4,695 FY12 10.2 21.0 721 991 4,083 FY 11 8.8 20.0 700 908 3,611 FY10 15.1 29.4 622 801
Slide 22: Average cement prices
Average cement prices City wise Retail price 370 350 330 Rs. per bag 310 290 270 250 230 210 190 170 FY10 FY11 FY12 FY13 Ahmedabad Mumbai Delhi Kolkata Chennai Hyderabad All India
Slide 23: Outlook
Outlook Ase Research
Slide 24: Projected overall demand supply scenario
Projected overall demand supply scenario 400 390.4 102 368.2 348.1 99.9 100 350 99.1 324.7 98 293.6 mn tonnes 300 mn tonnes 96.7 268.3 96 249.0 250 233.8 94 200 92 150 90.8 90 FY 13 FY 14 (P) FY 15 (P) FY 16 (P) Total Capacity Total Demand Surplus capacity
Slide 25: Demand from infrastructure sector
Demand from infrastructure sector Expected cement demand Figure in oval represents expected cement demand in mn tonnes Port 6 Airport 12 Irrigation 14 Railway 22 Road 25 65 Power 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 Expected investment (Rs. bn)
Slide 26: Cement consumption to revive going ahead
Cement consumption to revive going ahead GDP growth vs. Cement consumption growth During FY11-13, cement consumption grew at a During FY113-16, 12 CAGR 5.6% cement consumption to 11 grow at a CAGR 7.9% 10 9 % 8 7 6 5 4 FY10 FY11 FY12 FY13 FY14(P) FY15(P) FY16(P) GDP Cement Consumption
Slide 27: Region wise capacity additions
Region wise capacity additions Capacity additions Central West East South North 0 5 10 15 20 25 mn tonnes FY14 FY15 FY16
Slide 28: Trends in utilization rate
Trends in utilization rate 80 Capacity utilization 79 78 76 76 74 73 % 72 74 73 72 72 70 68 FY10 FY11 FY12 FY13 FY14 (P) FY15 (P) FY16 (P)
Slide 29: Cement prices to remain elevated in FY14
Cement prices to remain elevated in FY14… Cement price projection 370 350 330 Rs. per bag 310 290 270 250 230 210 190 170 FY12 FY13 FY14 (P) Ahmedabad Mumbai Delhi Kolkata Chennai Hyderabad All India
Slide 30: Break even cushion
Break even cushion 1,400 3.5 3.1 1,200 3.0 1,000 2.5 2.3 800 2 2.0 Rs. per tonne times 600 1.6 1.5 1.2 400 1.0 200 0.5 0 0.0 FY 08 FY 09 FY 10 FY11 FY12 Fixed cost per tonne Contribution per tonne Break-even Cushion
Slide 31: Inorganic opportunity, is this the right time?
Inorganic opportunity, is this the right time? 300 31st March 2012 10th July 2013 250 227 217 US $ per tonne 180 186 200 140 Replacement 150 185 184 185 cost 93 81 77 100 137 46 84 36 96 50 66 86 52 58 46 30 0 OCL India Commodities Prism Cement UltraTech Cem. ACC India Cements Heidelberg Saurashtra
Slide 32: In a nut shell
In a nut shell • Domestic cement demand is estimated to grow at a CAGR of 7.9 % in the period FY 13-16. • Focus on infrastructure development and low cost housing to keep the long term demand for cement intact. • Industry’s operating rate is expected to increase to a level of 76% by the end of FY16.
Slide 33: Thank you
Thank you Ase Research
CARE Ratings — Webinar on Indian Cement Industry (January 2013) on 6ix