Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Q2 FY2010-11 Earnings Presentation
50 slides from Grasim Industries's earnings presentation, November 2010
Slide 1: Grasim Industries Limited: A Cement and VSF Major
Grasim Industries Limited A Cement and VSF Major November 2010
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 Highlights – Quarter 2: 2010-11 Business Review Capex Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group h Amongst the top business houses in India h Operations spread over 25 countries h Revenue at $30 bn. (60% from overseas operations), in the league of Fortune 500 h 130,000 employees, belonging to 30 nationalities h Leadership position across businesses Grasim - Cement & Visco
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading player in India with 18% market share, 8th Cement largest in the world Revenue Rs.155 Bn.* (US$ 3,478 Mn.) – Capacity at 52 Mn. TPA – Market leader in White Cement (0.5 Mn. TPA) – Leading RMC player in India World’s top producer Viscose Staple –
Slide 6: Restructuring Completed
Restructuring Completed Platform for accelerated future growth created thru’ business restructuring 6
Slide 7: Restructuring Objectives
Restructuring Objectives Continue Strong Parentage & Grasim Sponsorship Of The Cement Business Create Platform That Enhances Financial Flexibility To Pursue Next Stage Of Growth Provide Shareholders With Direct Exposure To Pure-play Cement Business Lay The Foundation For Cement Consolidation To Alig
Slide 8: Grasim's Two Business strategy has paid off
Grasim’s “Two Business” strategy has paid off Cement (Standalone) VSF EBITDA (-) Capex(1) (Rs. Cr.) EBITDA (Rs. cr.) EBITDA (-) Capex(2) (Rs. Cr.) EBITDA (Rs. cr.) FY02 (518) 469 317 361 FY03 (79) 359 568 632 FY04 310 447 571 661 FY05 (761) 551 589 727 539 800 408 623 FY06 FY07 255 1,623 378 797 FY0
Slide 9: Large investment to outpace Industry Growth
Large investment to outpace Industry Growth Product / Facility Unit FY07 FY08 FY09 FY10 FY13 E Mn. Cement Tons 31.1 35.0 41.6 48.8 61.0 Ready Mix Concrete Mn. Cu. Mtrs. 3.4 9.5 11.4 11.8 11.8 Captive Power Plant MW 144 167 480 504 624 - Cement Business ‘000 Viscose Staple Fibre TPA 270 334 334 334 4
Slide 10: Grasim Financials
Grasim Financials Standalone Consolidated Full Year First Half Full Year First Half (Rs. Bn.) 2009-10 2010-11 2009-10 2010-11 Net Worth 71.5 76.5 125.2 133.8 Debt 10.4 8.4 56.0 65.7 Capital Employed 84.4 87.4 238.8 259.4 Debt:Equity (x) 0.15 0.11 0.34 0.38 Interest Cover 15.5 30.0 13.9 10.0 Book Val
Slide 11: Strong growth in Revenue and Profits
Strong growth in Revenue and Profits Capital Employed : CAGR 19% Revenue : CAGR 17% Profit after Tax : CAGR 26% (Rs. Bn.) (Rs. Bn.) (Rs. Bn.) 250.0 238.8 202.0 30 200.0 27.6 200.0 25 150.0 20 150.0 100.0 93.1 15 97.0 100.0 10 8.8 50.0 50.0 5 0.0 0.0 0 FY05 FY06 FY07 FY08 FY09 FY10 FY05 FY06 FY07 FY0
Slide 12: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 2: 2010-11 Business Review Capex Summary 12
Slide 13: Highlights - Quarter 2 (Strategic)
Highlights - Quarter 2 Strategic: z Cement restructuring fully over, all cement capacities are now consolidated under UltraTech z Acquisition of ETA Star Cement, UAE completed z Work on brownfield expansion at Malkhed and Raipur with aggregate capacity of 9.2 Mn. TPA (Including 95 MW TPP and 5 split
Slide 14: Highlights - Quarter 2 (Operational)
Highlights - Quarter 2 Operational: z Delayed onset of monsoon prolonged water shortage at Nagda − Reducing production of VSF by 9% and Caustic by 5% z Higher pulp prices eroded profitability at standalone level; However benefitted Pulp JVs z Pulp JVs also show better operating efficiency z VSF pric
Slide 15: Financial Snapshot – Quarter 2
Financial Snapshot – Quarter 2 Quarter - 2 : Standalone Quarter - 2 : Consolidated (Rs. Bn) 2010-11 2009-10 2009-10 % Change 2010-11 2009-10 % Change Restated* Reported On Restated Revenue 9.6 9.6 30.2 - 45.0 47.4 (5) Operating Costs 6.7 5.8 19.6 15 37.2 31.9 16 PBIDT 4.3 4.8 11.6 (11) 8.8 16.3 (46)
Slide 16: Financial Snapshot – First Half
Financial Snapshot – First Half Half Year : Standalone Half Year : Consolidated (Rs. Bn.) 2010-11 2009-10 2009-10 % Change 2010-11 2009-10 % Change Restated* Reported On Restated Revenue 19.3 17.8 61.1 8 96.2 98.8 (3) Operating Costs 13.1 11.8 41.4 11 74.7 67.0 11 PBIDT 7.9 7.2 21.1 9 23.5 33.1 (29)
Slide 17: Revenue Chart
Revenue Chart Rs. Bn. Half Year Quarter - 2 % Chg. % Chg. 2010-11 2009-10 Net Revenue 2010-11 2009-10 - 42.2 Cement $ - 20.6 9 17.1 15.7 Viscose Staple Fibre 8.6 8.5 1 (5) 2.4 2.5 Chemical 1.2 1.3 (9) - 1.1 Sponge Iron (Sold on 22nd May 2009) - - 0.4 0.3 Others 0.2 0.2 (0.6) (0.7) Inter Segment Elim
Slide 18: PBIDT – Chart
PBIDT – Chart Rs. Bn. Half Year Quarter 2 % Chg. PBIDT % Chg. 2010-11 2009-10 2010-11 2009-10 - 14.2 Cement $ - 6.8 5 5.8 5.5 Viscose Staple Fibre 2.7 3.5 (23) (12) 0.6 0.7 Chemical 0.3 0.4 (11) - (0.4) Sponge Iron (Sold on 22nd May 2009) - - 1.5 1.0 Others 1.2 0.9 7.9 21.1 Standalone PBIDT 4.3 11.6
Slide 19: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 2: 2010-11 Business Review Capex Summary 19
Slide 20: Cement
Cement Leading player in India – 51.8 Mn. TPA capacity, Eighth largest in the world Revenue Rs.155 Bn. – Currently 11 composite plant, 11 grinding unit, 68 RMC unit & 5 bulk terminal (US$ 3,478 Mn.) – Captive power plants across all major locations – Market leader in White Cement (0.5 Mn. TPA) – Lea
Slide 21: Indian Cement Industry
Indian Cement Industry Top Cement Consuming Countries Per Capita Consumption Mn. Tons 1500 1440 Kgs./Person 1200 1087 1048 1200 1050 900 900 750 600 600 470 450 415 277 300 237 300 203 * 173 88 63 150 54 54 52 0 0 China India USA Japan Russia Korea Brazil Korea China Japan World Brazil US India ____
Slide 22: Cement – Major Growth Drivers
Cement – Major Growth Drivers h Rising affordability - Increasing income level h Rapid Urbanisation (28.7% in 2005 to 37.2% in 2025) 1 Housing h No. of Cities with population of 1Mn.+ to grow from 33 in 2005 to 56 in 2025 1 h As per 11th Five year plan (2008-12), housing requirement of 74 Million un
Slide 23: Cement Sector Outlook
Cement Sector Outlook h Cement demand expected to grow at 10% + for the next five years − Indian economy to continue on strong growth trajectory − Increase in consumption, both in Government as well as private sector − Revival in corporate capex cycle h Margins to return gradually back to normalcy s
Slide 24: Grasim Cement Business: Key Strengths
Grasim Cement Business : Key Strengths h Operations spread across India (18% market share) h Excellent growth record − From 5 Mn. TPA in FY98 to 49 Mn. TPA in FY10 h Leadership in key consuming markets − Among the top three in 18 states with 72% of country’s demand h Strong nationwide distribution n
Slide 25: Operations spread across India
Operations spread across India Bhatinda(G) Panipat Dadri Kotputli Aligarh Jodhpur Shambhupura Jawad Durgapur(G) Pipavav Hirmi Jafrabad Jharsuguda(G) Magdalla (G) Awarpur Raipur Navi Mumbai B Hotgi(G) Malkhed Ratnagiri(G) B Hyderabad Tadpatri Ginigera Bangalore Mangalore B B Arakonam(G) UltraTech Cem
Slide 26: Cement Business: Current Performance
Cement Business : Current Performance Half Industry Scenario (Rs. Billion) 2008-09 2009-10 Year h Subdued demand growth of 6% in first half 2010-11 − Seasonal impact of better monsoons Capacity (Mn. TPA) 41.6 48.8 51.8 h Substantial fall in cement prices to Sales Volume Grey Cement (Mn. Tons) 35.0 3
Slide 27: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth h Focus on achieving accelerated profitable growth & Cement Global Ranking* (Capacity) improve market share − ~25 Mn. TPA capacity required in next 5 years to Holcim - Switzerland maintain market share Lafarge - France h As a first step, Brownfield exp
Slide 28: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) World’s top producer – Capacity at 334K TPA (10% global share) – Group is world’s largest with 21% global share Revenue Rs.39 Bn. – 1 pulp plant in India (70K TPA) (US$ 885 Mn.) – 2 JVs for Pulp in Canada (315K TPA) – Fibre plant (70K TPA) in China in JV – 258K TPA caustic
Slide 29: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (70 Mn MT) Others 1% VSF hVSF: A cellulosic fibre Cotton 4% Raw Wool 32% − 4% of global fibre market 2% − 6% of global man-made fibre market Synthetic 61% ____________________ Source: Fibre Organon (for CY 2009) Global Market Share – VSF (2.7 Mn MT) hMajor Global
Slide 30: VSF: Global Presence
VSF: Global Presence China,Hubei Canada • 2 Pulp plants in Joint India • Fibre plant (70 K TPA) Venture • 3 fibre plants in Joint Venture • Pulp plant • Caustic soda plant P South East Asia • 2 fibre plants of Group Co. of 334K TPA Fibre Plant - Own • Wood plantation at Laos Fibre Plant - JV (under
Slide 31: VSF: Sustainable Competitive Strengths
VSF : Sustainable Competitive Strengths h Amongst the lowest cost producers globally h Highly integrated operations − Captive raw materials - Pulp (75%) & Caustic Soda (100%) − Captive power and steam − Two JVs in Canada for pulp manufacturing − Self managed water supply resources h Strong in-house
Slide 32: VSF: Current Performance
VSF: Current Performance Industry Scenario Half Year (Rs. Billion) 2008-09 2009-10 2010-11 h Cotton shortage globally has further deteriorated by damage of crops in Pakistan Capacity (‘000 tpa) 334 334 334 by floods Sales Volume − Resulting in improved sentiments for VSF 238 308 135 (‘000 MT) leadin
Slide 33: VSF: Outlook
VSF: Outlook • VSF demand will continue to grow in long 125000 11% Rs. Ton term 100000 • Textile consumption in India is increasing with growth in population and prosperity 75000 • Usage of VSF in various allied applications 50000 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 like Non Woven etc. globally Stea
Slide 34: VSF: Strategy for Growth
VSF: Strategy for Growth z VSF revised expansion plan − Greenfield project of 120,000 tons at Vilayat, Gujarat at a cost of Rs.16.9 billion, with product mix in line with anticipated market needs − Brownfield expansion at Harihar with a capacity of 36,500 tons and plant upgradation at a cost of Rs.4
Slide 35: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 2: 2010-11 Business Review Capex Summary 35
Slide 36: Capital Expenditure Plan
Capital Expenditure Plan h Focused capital allocation strategy – investments in Cement & Fibre h Total outlay of Rs.135 Bn. in Grasim and Cement subsidiaries − Brownfield capacity expansion at Chhattisgarh and Karnataka – 56 Bn. − Greenfield project in Fibre business at Vilayat, Gujarat and Brownfie
Slide 37: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 2: 2010-11 Business Review Capex Summary 37
Slide 38: Summary
Summary h Grasim - Leadership position in in both the flagship businesses − Strong competitive edge − Global size operations h Leading global player in VSF − Integrated business model from plantation to fibre − Continued focus on increasing capacities and creating differentiation h Domestic leadersh
Slide 39: 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 sharad.agarwal@adityabirla.com
Slide 40: Grasim Industries Limited: A VSF and Cement Major (Supplement)
Grasim Industries Limited - A VSF and Cement Major (Supplement) November 2010
Slide 41: Supplement
Supplement • Consolidated Financial Performance : Pg. 42 • Standalone Financial Performance : Pg. 43 • Balance Sheet : Pg. 44 • Consolidated Businesswise Performance : Pg. 45-46 • Business Data : Pg. 47 - 49 • Capex Plan : Pg. 50 41
Slide 42: Consolidated Financial Performance
Consolidated Financial Performance Rs. Bn. Quarter 2 Half Year Full Year % Chg. % Chg. 2010-11 2009-10 2010-11 2009-10 2009-10 Net Turnover & Op. Income 45.0 47.4 (5) 96.2 98.8 (3) 201.9 Other Income 1.0 0.8 19 1.9 1.4 44 2.7 PBIDT 8.8 16.3 (46) 23.5 33.1 (29) 63.2 Interest 1.0 0.8 17 1.9 1.6 14 3.4
Slide 43: Standalone Financial Performance
Standalone Financial Performance Rs. Bn. Quarter 2 Half Year Full Year % Chg. % Chg. 2010-11 2009-10 2010-11 2009-10 2009-10 Net Turnover & Op. Income 9.6 30.2 (68) 19.3 61.1 (68) 83.1 Other Income 1.3 1.0 32 1.7 1.3 34 2.4 PBIDT 4.3 11.6 (63) 7.9 21.1 (63) 29.7 Interest 0.1 0.5 (80) 0.2 1.0 (79) 1.
Slide 44: Balance Sheet
Balance Sheet Consolidated Standalone As on As on As on As on As on As on (Rs. Bn.) 31.03.09 31.03.10 30.09.10 31.03.09 31.03.10 * 30.09.10 * Gross Block # 210.4 217.2 233.2 122.8 31.4 31.9 Net Block # 142.2 145.5 154.6 83.1 18.3 18.0 Goodwill 20.0 20.1 23.9 -- -- -- Cement Subs. Investments -- -- -
Slide 45: Consolidated Businesswise Performance - Quarter 2
Consolidated Businesswise Performance- Quarter 2 (Rs. Bn.) ROAvCE (%) Revenue PBIDT PBIDT Margin (%) PBIT Capital Employed Business (PBIT basis) 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 Cement * 32.8 36.1 4.8 11.8 14.4 32.5 2.6 9.8 189.0 157.6 5
Slide 46: Consolidated Businesswise Performance - First Half
Consolidated Businesswise Performance- First Half (Rs. Bn.) ROAvCE (%) Revenue PBIDT PBIDT Margin (%) PBIT Capital Employed Business (PBIT basis) 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 Cement * 72.6 76.8 15.7 26.7 21.3 34.7 11.3 22.9 189.0 157
Slide 47: Cement: Summary
Cement : Summary Quarter -2 Half Year Full Year % Chg. % Chg. 2010-11 2009-10 2010-11 2009-10 2009-10 Grey Cement Capacity Mn. TPA 51.75 45.65 13 51.75 45.65 13 48.75 - Domestic 48.75 45.65 7 48.75 45.65 7 48.75 - Star Cement 3.00 - - 3.00 - - - Production Mn. MT 8.61 8.36 3 18.53 17.79 4 37.02 $ Sa
Slide 48: Cement: Summary Contd
Cement : Summary Contd….. Quarter -2 Half Year Full Year % Chg. % Chg. 2010-11 2009-10 2010-11 2009-10 2009-10 Net Revenue Rs. Bn. - Cement 30.6 34.1 (10) 68.2 73.0 (7) 151.0 - White Cement 2.3 2.0 12 4.4 3.7 18 3.7 PBIDT Rs. Bn. 4.8 11.8 (59) 15.7 26.7 (41) 47.7 PBIDT Margin % 14.4% 32.5% - 21.3% 3
Slide 49: Viscose Staple Fibre: Summary
Viscose Staple Fibre : Summary Rs.Bn. Quarter 2 Half Year Full Year % Chg. % Chg. 2010-11 2009-10 2010-11 2009-10 2009-10 Capacity TPA 333,975 333,975 - 333,975 333,975 - 333,975 Production MT 69,802 76,669 (9) 139,130 139,021 - 302,092 Sales Volumes MT 67,488 73,993 (9) 134,790 141,411 (5) 308,431
Slide 50: Capex plan
Capex plan Rs. Bn. Net Capex Cash Outflow to be spent FY11 FY12 & as on 01.04.10 Onward VSF Business - Vilayat (120,000 TPA) and Harihar Project 21.4 (36,500 TPA) - Other Capex 3.4 Chemical Plant – Vilayat (182,500 TPA) 7.7 Chemical Business and Other Capex 1.3 Standalone Capex (A) 33.8 5.9 27.9 Cem
Grasim Industries — Q2 FY2010-11 Earnings Presentation on 6ix