Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (November 2012)
51 slides from Grasim Industries's investor presentation, November 2012
Slide 1: Grasim Industries Limited: A VSF and Cement Major
Grasim Industries Limited A VSF and Cement Major November 2012
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 Business Review Capex Highlights – Quarter 2: 2012-13 Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group Amongst the top business houses in India Operations spread over 36 countries Revenue at $40 Bn.(60% from overseas operations) Goal is to become a US$65 Bn. Group by 2015 133,000 employees, belonging to 42 nationalities Grasim - Viscose Staple Fibre & - Cement : Ultra
Slide 5: Group Driving Principles for Shareholder Value Creation
Group Driving Principles for Shareholder Value Creation Emphasis on cost leadership and efficiency Create world class assets, achieve global scale and cost leadership Competitiveness through innovation, continuous improvements and value added products Focus on key value drivers and ensure lo
Slide 6: The Aditya Birla Group: Leadership Across Businesses
The Aditya Birla Group : Leadership Across Businesses Leading Global Player – Hindalco – Novellis is largest aluminum rolling company – Largest producer of carbon black – One of two largest producer of VSF – Fourth-largest producer of insulators – Fifth-largest producer of acrylic fibre Leadership p
Slide 7: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading Global Player – Capacity : 352K TPA (9% Global share) Viscose Staple – 146K TPA expansion under implementation Fibre – 21% global share at Group level Revenue ` 50 Bn. (US$ 1 Bn.) – Integrated model with experience of more than five decades – Ch
Slide 8: Grasim's "Two Business" strategy has paid off
Grasim’s “Two Business” strategy has paid off Consistent cash flow generation from VSF business FY12 14.4 Moderate capex need for VSF leading to substantial free FY11 17.5 All-round spike in all cash flow FY10 14.6 fibre prices Cement Business – high growth business with large capex Global Mel
Slide 9: Substantial Capacity Buildup Outpacing Industry Growth
Substantial Capacity Buildup Outpacing Industry Growth FY FY FY FY FY FY Product / Facility Unit 2000 2007 2010 2012 2013 2014 Actual Projected „000 498 Viscose Staple Fibre TPA 221 270 334 334 454 (Q1 FY14) Chemical (Caustic Soda) „000 TPA 176 258 258 258 441 441 Mn. 62.0 Cement TPA 8.20 31.1 48.8
Slide 10: Strong growth in Revenue and Profits
Strong growth in Revenue and Profits Capital Employed Revenue Profit after Tax (Excluding CWIP & (Before Extraordinary Item) Liquid Investment) (` Bn.) (` Bn.) (` Bn.) 250 30.0 209.2 26.5 200 300 252.4 250 25.0 150 200 19.7 94.5 141.4 20.0 100 150 100 15.0 50 50 0 0 10.0 FY07 FY08 FY09 FY10 FY11 FY1
Slide 11: Grasim Business Mix – H1 2012-13
Grasim Business Mix – H1 2012-12 Net Revenues - ` 134 Bn. PBIDT - ` 33 Bn. 4.4 4.6 1.3 1.0 0.1 5.3 22.3 (17%) (16%) 103.3 (76%) 25.0 (76%) Cement VSF Pulp and Fibre JVs Chemical Others (Net of elimination) 11
Slide 12: Strong Financials
Strong Financials Standalone Consolidated Full Year H1 Full Year H1 (` Bn.) 2011-12 2012-13 2011-12 2012-13 Net Worth 91.0 97.6 170.7 184.5 Debt 7.2 10.5 70.4 80.1 Net debt / (Net liquid investments) (20.9) (13.7) 6.7 19.9 Capital Employed 100.6 102.8 313.2 343.1 Debt:Equity (x) 0.08 0.11 0.32 0.33
Slide 13: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2012-13 Summary 13
Slide 14: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Leading global player – Capacity : 352K TPA (9% global share) – Group is world’s largest with 21% global share Revenue ` 50 Bn. – Fibre JV in China (72K TPA) (US$ 1 Bn.) – High level of backward integration – 258K TPA caustic capacity, largely for captive use – Captive Pul
Slide 15: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (84 Mn. MT) VSF: A cellulosic fibre Others 4% of global fibre market 2% VSF Cotton 4% 6% of global man-made fibre market Raw Wool 32% 1% Major Global Players‟ Capacity „000 TPA Synthetic 61% AVB group (incl. Grasim) : 762 ____________________ Of which
Slide 16: VSF: Global Presence
VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada • Fibre plant (72 K TPA) • 3 Pulp plants in in Joint Venture Joint Venture Turkey • Fibre plant under planning P P India • 3 Fibre plants • Pulp plant South East Asia • Caustic soda plant • 2 Fibre plants of Group • 1 Fibre plant and
Slide 17: VSF: Sustainable Competitive Strengths
VSF : Sustainable Competitive Strengths Amongst the low cost producers globally Highly integrated operations Captive raw materials - Pulp & Caustic Soda Four pulp manufacturing plants – Grasim, India : 1, Overseas JVs : 4 (Canada : 3, Sweden : 1) Captive power and steam Self managed wate
Slide 18: VSF: H1 2012-13 Performance
VSF: H1 2012 -13 Performance H1 Global Industry Scenario (` Bn.) 2010-11 2011-12 2012-13 Textile industry remain affected by continued slowdown in Eurozone, nominal growth in US Capacity („000 TPA) * 334 334 352 and lower demand in China Sales Volume („000 MT) * 305 307 162 Fibre prices remain u
Slide 19: VSF: Outlook
VSF: Outlook In the short term, environment continues to be `/ Kg. challenging given the prevailing global slowdown Global slowdown and surplus capacities in China to impact market conditions and margins despite 128 softening in pulp prices 101 Profitability will also be influenced by competin
Slide 20: VSF Strategy for Growth
VSF Strategy for Growth Expansions are progressing as per schedule Present Expanded Commissioning capacity capacity Target (KTPA) (KTPA) Vilayat, Gujarat - 120 Line wise commissioning will start in Q4 2012-13 and will be over by middle of Q1 2013-14 Harihar, Karnataka 69 87 Phase I commissioned in
Slide 21: Cement
Cement Leading player in India Revenue ` 192 Bn. – 52 Mn. TPA capacity (US$ 4 Bn.) – 529 MW of captive power plants across all major locations – Market leader in White Cement (0.6 Mn. TPA) and Ready Mix Concrete
Slide 22: Indian Cement Industry: Overview
Indian Cement Industry : Overview Second largest cement market in world Cement Capacity ~ 324 Mn. TPA (June 2012), (Against 2,380 Mn. TPA in China1) Long term average growth has been 1.1 X of GDP Industry capacity doubled in last decade – in line with rising demand East West Large Domestic
Slide 23: Indian Cement Industry
Indian Cement Industry Top Cement Producing Countries - Per Capita Consumption - 2011 2011 Mn. Tons kgs/person 2000 2000 1600 1480 1400 1500 1200 1000 860 1000 800 680 600 490 320 500 400 220 227 190 200 68 64 63 52 0 0 China India USA Turkey Brazil Iran China Turkey Iran World Brazil USA India ____
Slide 24: Cement – Major Growth Drivers
Cement – Major Growth Drivers Favorable demographics with growing young population Rising affordability - Increasing income level Housing Rapid Urbanisation (27.8% in 2001 increased to 31.2% in 2011, likely to exceed 40% by 2030) 1 No. of Cities with population of 1Mn.+ to grow from 48 in 20
Slide 25: Infrastructure Spending: Xth, XIth & XIIth Plan
Infrastructure Spending: Xth, XIth & XIIth Plan Spending Overview $ Bln 280 Sectors X Plan XI Plan XII Plan Infrastructure Spending - XIIth Plan ($ Bln) 260 Actual Revised Estimate 260 Investment Projections (2012-2017) 240 (2002-2007) (2007-2012) 230 220 Power, Oil & Telecom 120 285 375 202 200 Irr
Slide 26: Cement Sector Outlook
Cement Sector Outlook 14 % Growth Demand growth linked to GDP growth; 12.1 12 implementation of reforms 10 9.8 9.3 At present with 6% - 6.5% GDP growth 8 6.9 5.3 rate, expected growth rate of ~ 8% 6 4 Surplus supply scenario likely to continue for next 3 2 years 0 - Likely addition of 66 Mn. T
Slide 27: Cement Business: Key Strengths
Cement Business : Key Strengths Operations spread across India (17% market share) Excellent growth record – 10 times in 14 years From 5 Mn. TPA in FY98 to 52 Mn. TPA in FY12 Market Leadership “UltraTech” - Premium national brand Leadership in key consuming markets Strong nationwide dis
Slide 28: Cement Business: H1 2012-13 Performance
Cement Business : H1 2012-13 Performance Industry Scenario H1 (` Bn.) 2010-11 2011-12 Subdued demand growth 2012-13 Sector Capacity at 338 Mn. TPA Capacity (Mn. TPA) 51.8 51.8 51.8 19 Mn. TPA capacity commissioned in first half Sales Volume Cement and Clinker Business Performance 41.6 44.0 21.
Slide 29: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth Focus on achieving accelerated profitable growth Cement Global Ranking* Aim to grow faster than the industry (Capacity) To maintain the market share, 25 Mn. TPA capacity CNBM- China 260 required in next five years Lafarge- France 225 As a first
Slide 30: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2012-13 Summary 30
Slide 31: Capex plan
Capex plan ` Bn. Capex Work in Cash Outflow Capex under Progress spent FY13 FY14 Implemen- as on during tation 01-04-12 H1 2012-13 Standalone VSF Expansion : Vilayat (120K TPA), Harihar (36K TPA) 22.6 Chemical Expansion : Vilayat (182K TPA) 8.1 Epoxy Project : Vilayat (51,500 TPA) 2.2 Normal Capex :
Slide 32: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2012-13 Summary 32
Slide 33: Highlights – Quarter 2: 2012-13
Highlights – Quarter 2 : 2012-13 Operational Q2 records improved performance at Consolidated as well as Standalone Level While Consolidated Revenue was up by 15%, Net Profit rose sharply by 48% on Y-o-Y basis In Cement: Domestic volumes grew by 1% Prices remained stable during monsoons I
Slide 34: Highlights – Quarter 2: Strategic
Highlights – Quarter 2 Strategic Brownfield expansions commissioned during the quarter VSF - Harihar, Karnataka : 18,250 TPA (Phase I) Pulp - Domsjo, Sweden : 45,000 TPA Expansion projects in Cement and VSF are generally on track Cement capacity to increase by 20% from 52 Mn. TPA to 62 Mn.
Slide 35: Financial Performance – Consolidated
Financial Performance – Consolidated ` Bn. Half Year % Change Quarter 2 % Change Quarter 1 2012-13 2011-12 YoY ( ` Crore) 2012-13 2011-12 YoY 2012-13 134.3 116.6 15 Revenue 66.0 57.6 15 68.3 103.9 90.2 15 Operating Costs 52.0 47.4 10 52.0 32.7 28.8 14 PBIDT 15.1 11.3 33 17.7 25.1 21.3 17 PBT 11.1 7.
Slide 36: Net Profit Chart
Net Profit Chart ` Bn. Half Year Quarter 2 2012-13 2011-12 % 2012-13 2011-12 % Change Change Total Grasim's Total Grasim's Total Grasim's Total Grasim's Co. share Co. share Co. share Co. share 6.6 6.6 - Standalone PAT 3.8 3.4 11 13.2 7.9 9.3 5.6 41 UltraTech Cement 5.5 3.3 2.6 1.6 109 0.05 - 0.3 0.3
Slide 37: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 2: 2012-13 Business Review Capex Summary 37
Slide 38: Summary
Summary Cement business reported improved performance VSF business records satisfactory performance, despite textile value chain under pressure Leadership position and cost competitiveness in both the businesses will be further strengthened on ongoing basis Both businesses to consolidate lea
Slide 39: Organizational Structure
Organizational Structure UltraTech Cement * Others Pulp, Fibre & Allied Chemical (60.32%) VSF Overseas Pulp Overseas Chemicals Domestic Overseas VSF Units 70 K TPA Pulp Units 3 Mn. TPA, (UAE, 352K TPA 258K TPA 49 Mn. TPA Bangladesh, Sri Lanka) Nagda Birla Jingwei $ AV Cell $ Nagda 11 Composite Grasi
Slide 40: Thank You
Thank You Contacts: Grasim Industries Limited (Corporate Finance Division) Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400 030 Sharad Agarwal +91-22-66525062 grasim.ir@adityabirla.com
Slide 41: Grasim Industries Limited: A VSF and Cement Major (Supplement)
Grasim Industries Limited - A VSF and Cement Major (Supplement) November 2012
Slide 42: Supplement
Supplement • Consolidated Financial Performance : Pg. 43 • Standalone Financial Performance : Pg. 44 • Balance Sheet - Grasim : Pg. 45 • Balance Sheet – UltraTech (Consolidated) : Pg. 46 • Consolidated Businesswise Performance : Pg. 47-48 • Business Data : Pg. 49-50 • Cement Plant Location : Pg. 51
Slide 43: Consolidated Financial Performance
Consolidated Financial Performance ` Bn. Quarter 2 % Half Year % Full Year 2012-13 2011-12 Change 2012-13 2011-12 Change 2011-12 Net Turnover & Op. Income 66.0 57.6 15 134.3 116.6 15 252.4 Other Income 1.0 1.2 (15) 2.4 2.4 (3) 7.5 PBIDT 15.1 11.3 33 32.7 28.8 14 63.2 Finance Cost 0.9 0.9 (3) 1.6 1.8
Slide 44: Standalone Financial Performance
Standalone Financial Performance ` Bn. Quarter 2 % Half Year % Full Year 2012-13 2011-12 Change 2012-13 2011-12 Change 2011-12 Net Turnover & Op. Income 13.5 12.5 9 26.1 22.9 14 49.7 Other Income 1.9 1.7 12 2.6 2.5 2 4.6 PBIDT 5.0 5.1 8.8 9.6 (8) 17.2 PBIDT Margin 32.4 35.7 30.7 37.8 31.7 Finance Co
Slide 45: Balance Sheet - Grasim
Balance Sheet - Grasim Standalone Consolidated ` Bn. As on As on * As on As on EQUITY & LIABILITIES 30.09.12 31.03.12 30.09.12 31.03.12 Shareholders' Funds 97.6 91.0 Net Worth 184.5 170.7 - - Minority Interest 56.8 52.3 Non-Current Liabilities 8.0 5.7 Long Term Borrowings 63.9 57.0 3.6 2.4 Deferred
Slide 46: Balance Sheet – UltraTech (Consolidated)
Balance Sheet – UltraTech (Consolidated) ` Bn. As on As on* EQUITY & LIABILITIES 30.09.12 31.03.12 Shareholders' Funds Net Worth 141.5 128.2 Minority Interest 0.6 0.6 Non-Current Liabilities Long Term Borrowings 53.3 48.4 Deferred Tax Liability (Net) 18.0 17.4 Long Term Liabilities & Provisions 1.3
Slide 47: Consolidated Businesswise Performance - Quarter 2
Consolidated Businesswise Performance- Quarter 2 ` Bn. PBIDT Margin ROAvCE (%) Business Revenue PBIDT PBIT Capital Employed (%) (PBIT basis) 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 Cement * 49.7 41.9 11.1 6.9 22.2 16.3 8.6 4.5 244.3 209.8 14.7
Slide 48: Consolidated Businesswise Performance - Half Year
Consolidated Businesswise Performance- Half Year ` Bn. PBIDT Margin ROAvCE (%) Business Revenue PBIDT PBIT Capital Employed (%) (PBIT basis) 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 Cement * 103.3 87.8 25.0 19.5 24.0 22.0 20.0 14.8 244.3 209.8 1
Slide 49: Viscose Staple Fibre (consolidated): Summary
Viscose Staple Fibre (consolidated): Summary Quarter 2 % Half Year % Full Year 2012-13 2011-12 Change 2012-13 2011-12 Change 2011-12 Capacity TPA 3,52,225 3,33,975 5 3,52,225 3,33,975 5 3,33,975 Production MT 79,798 83,516 (4) 1,63,202 1,53,414 6 3,21,085 Sales Volumes MT 85,312 78,959 8 1,62,324 1,
Slide 50: Cement: Summary
Cement : Summary Quarter 2 % Half Year % Full Year 2012-13 2011-12 Change 2012-13 2011-12 Change 2011-12 Grey Cement Capacity Mn. TPA 51.75 51.75 - 51.75 51.75 - 51.75 Production Mn. MT 9.65 9.51 1 20.41 19.83 3 42.11 Sales Volumes $ Mn. MT 9.74 9.76 (0) 20.57 20.10 2 42.60 Clinker Sales Volumes Mn.
Slide 51: Cement Plant Locations
Cement Plant Locations PLANT LOCATION CAPACITY (Mn. TPA) NORTH • Shambhupura, Rajasthan & 5.0 Jawad, M.P. 3.0 – Aligarh GU, U.P. 1.3 Bhatinda(G) Panipat – Bhatinda GU, Punjab 1.8 Dadri – Dadri GU, U.P. 1.3 Kotputli Aligarh • Kotputli, Rajasthan 3.1 Jodhpur – Panipat GU, Haryana 1.3 Shambhupura WEST
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