Grasim Industries Ltd. · NSE:GRASIM

Grasim Industries — Investor Presentation (September 2012)

51 slides from Grasim Industries's investor presentation, September 2012

  1. Slide 1: Grasim Industries Limited: A VSF and Cement Major

    Grasim Industries Limited A VSF and Cement Major September 2012

  2. 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

  3. Slide 3: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2012-13 Summary 3

  4. 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

  5. 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

  6. 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

  7. Slide 7: Grasim: Market leader across business segments

    Grasim: Market leader across business segments Leading Global Player – Capacity : 334K TPA (9% Global share) Viscose Staple – 164K 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

  8. 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 All-round  Moderate capex need for VSF leading to substantial free spike in all fibre prices cash flow  Cement Business – high growth business with large Global Melt down capex requirement  Cash surp

  9. 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 Viscose Staple Fibre TPA 221 270 334 334 498 498 Chemical (Caustic Soda) „000 TPA 176 258 258 258 441 441 Mn. 62.0 Cement TPA 8.20 31.1 48.8 51.8 52.8

  10. 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.) Consolidated Revenue crossed ` 25,000 Cr. for the first time (approximately US$5 billion) in FY 2011-12 10

  11. Slide 11: Grasim Business Mix – FY 2011-12

    Grasim Business Mix – FY 2011-12 Net Revenues - ` 252 Bn. PBIDT - ` 63 Bn. (22%) (19%) (76%) (72%) Cement VSF Pulp and Fibre JVs Chemical Others (Net of elimination) 11

  12. Slide 12: Strong Financials

    Strong Financials Standalone Consolidated Full Year Q1 Full Year Q1 (` Bn.) 2011-12 2012-12 2011-12 2012-12 Net Worth 91.0 93.8 170.7 178.5 Debt 7.2 8.8 70.4 74.6 Net debt / (Net liquid investments) (20.9) (18.3) 6.7 7.3 Capital Employed 100.6 105.5 313.2 329.3 Debt:Equity (x) 0.08 0.09 0.32 0.32 In

  13. Slide 13: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2012-13 Summary 13

  14. Slide 14: Viscose Staple Fibre (VSF)

    Viscose Staple Fibre (VSF) Leading global player – Capacity : 334K TPA (9% global share) – Group is world’s largest with 21% global share Revenue ` 50 Bn. – Fibre JV in China (70K TPA) (US$ 1 Bn.) – High level of backward integration – 258K TPA caustic capacity, largely for captive use – Captive Pul

  15. Slide 15: VSF Global Scenario

    VSF Global Scenario Global Fibre Pie (84 Mn. MT)  VSF: A cellulosic fibre  4% of global fibre market  6% of global man-made fibre market  Major Global Players‟ Capacity „000 TPA  AVB group (incl. Grasim) : 744  Of which Grasim : 334 ____________________ Source: Fibre Organon (for CY 2011)  Le

  16. Slide 16: VSF: Global Presence

    VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada • Fibre plant (70 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

  17. Slide 17: VSF: Sustainable Competitive Strengths

    VSF : Sustainable Competitive Strengths  Amongst the low cost producers globally  Highly integrated operations  Captive raw materials - Pulp (85%) & Caustic Soda (100%)  Four pulp manufacturing plants – Grasim, India : 1, Overseas JVs : 4 (Canada : 3, Sweden : 1)  Captive power and steam  Self

  18. Slide 18: VSF: Q1 2012-13 Performance

    VSF: Q1 2012 -13 Performance Q1 Global Industry Scenario (` Bn.) 2010-11 2011-12 2012-13  Difficult economic environment continues to impact textile industry Capacity („000 TPA) * 334 334 334  Further decline in global prices of VSF and other competing fibres globally Sales Volume („000 MT) * 305

  19. Slide 19: VSF: Outlook

    VSF: Outlook  Environment continues to be challenging and `/ Kg. Peak Prices volatile  Stability in Euro zone and Macro economic policies to influence demand  New capacities in China may create pressure on markets  Profitability will also be influenced by competing fiber dynamics as well as inpu

  20. 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 Q4 2012-13 Harihar, 51 87 In phases :Q2 & Q4 2012-13 Karnataka Domsjo, Sweden 210 255 Q2 2012-13  Additional capacity (including special

  21. 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

  22. 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  Large Domestic Mark

  23. 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 ____

  24. 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

  25. 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

  26. Slide 26: Cement Sector Outlook

    Cement Sector Outlook 14 % Growth  Industry likely to grow at 8% + per annum 12.1 12 linked to GDP growth 10 9.8 9.3  Infrastructure, housing and rural development to be 8 6.9 major growth drivers 6 5.3  Demand growth should lead to higher volumes and 4 better utilisation of capacity for us 2  S

  27. 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

  28. Slide 28: Cement Business: Q1 2012-13 Performance

    Cement Business : Q1 2012-13 Performance Q1 Industry Scenario (` Bn.) 2010-11 2011-12 2012-13  Demand continues to grow at healthy pace Capacity (Mn. TPA) 51.8 51.8 51.8  Sector capacity at 324 Mn. TPA  5 Mn. Ton capacity commissioned during the Sales Volume Cement and Clinker quarter 41.6 44.0 1

  29. 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 required in next five years CNBM- China 260  As a first step, expansions of

  30. Slide 30: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2012-13 Summary 30

  31. Slide 31: Capex Plan

    Capex Plan ` Bn. Capex Cash Outflow Capex spent Opening under during Work in FY13 FY14 Implemen- Progress Q1 2012-13 tation VSF Business - Expansion Projects: Vilayat (120K TPA), Harihar (36K TPA) 22.6 - Other Capex 4.9 Chemical Business – Vilayat (182K TPA) 8.1 Balance Capex (Including normal capex

  32. Slide 32: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2012-13 Summary 32

  33. Slide 33: Highlights – Quarter 1: 2012-13

    Highlights – Quarter 1: 2012-13 Operational  Consolidated Revenue improved 16% Y-o-Y despite present market condition  Revenue increased from ` 59 Bn. to ` 68 Bn. Cr supported by higher volumes in both businesses  PBIDT and PBT marginally up  5% increase in Cement volumes led to improved profita

  34. Slide 34: Financial Performance – Consolidated

    Financial Performance – Consolidated ` Bn. Quarter 1 % Change Quarter 4 2012-13 2011-12 YoY 2011-12 Revenue 68.3 59.1 16 72.9 Operating Costs 52.0 42.8 21 56.8 PBIDT 17.7 17.5 1 18.8 PBT 14.0 13.7 2 15.0 PAT 7.2 7.5 (4) 8.1 (after Minority Share) EPS (`) 78.2 81.9 (4) 88.1 34

  35. Slide 35: Revenue Chart

    Revenue Chart ` Bn. Quarter 1 % Change Quarter 4 Net Revenue 2012-13 2011-12 YoY 2011-12 Viscose Staple Fibre 10.6 9.0 18 12.3 Chemical 2.3 1.5 53 2.2 Others 0.2 0.3 - 0.2 Inter Segment Eliminations (Intra Company) (0.6) (0.4) - (0.6) Standalone Net Revenue 12.6 10.4 21 14.1 Subsidiaries UltraTech C

  36. Slide 36: PBIDT Chart

    PBIDT Chart ` Bn. PBIDT Quarter 1 % Change Quarter 4 2012-13 2011-12 YoY 2011-12 Viscose Staple Fibre 2.8 3.5 (21) 2.3 Chemical 0.7 0.3 92 0.3 Others 0.4 0.7 - 1.0 Standalone PBIDT 3.8 4.5 (16) 3.7 Subsidiaries UltraTech Cement Ltd. 13.9 12.6 10 14.9 Joint Ventures (Pro Rata) Pulp JVs (45%) and Fibr

  37. Slide 37: Net Profit Chart

    Net Profit Chart ` Bn. Quarter 1 2012-13 2011-12 % Total Total Grasim's Grasim's Change Net Net share share YoY Profit Profit Standalone PAT 2.7 3.1 (13) UltraTech Cement (60.34%) 7.6 4.6 6.7 4.0 14 Pulp (45%) and Fibre (31%) JVs / Associate (33%) (0.6) (0.3) 0.6 0.3 - Idea Cellular (5.18%) 2.3 0.1

  38. Slide 38: Presentation Structure

    Presentation Structure Introduction Highlights – Quarter 1: 2012-13 Business Review Capex Summary 38

  39. Slide 39: Summary

    Summary  Cement business performed well helped by improved demand  VSF business achieved satisfactory performance despite difficult global conditions  Leadership position and cost competitiveness in both the businesses will be further strengthened on ongoing basis  Capacity expansions under impl

  40. 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

  41. Slide 41: Grasim Industries Limited – Supplement

    Grasim Industries Limited - A VSF and Cement Major (Supplement) September 2012

  42. 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

  43. Slide 43: Consolidated Financial Performance

    Consolidated Financial Performance ` Bn. Quarter 1 % Full Year 2012-13 2011-12 Change 2011-12 Net Turnover & Op. Income 68.3 59.1 16 252.4 Other Income 1.4 1.3 8 7.5 PBIDT 17.7 17.5 1 63.2 Finance Cost 0.7 0.9 (21) 3.1 Gross Profit 16.9 16.5 2 60.1 Depreciation 2.9 2.8 6 11.5 PBT 14.0 13.7 2 48.5 To

  44. Slide 44: Standalone Financial Performance

    Standalone Financial Performance ` Bn. Quarter 1 % Full Year 2012-13 2011-12 Change 2011-12 Net Turnover & Op. Income 12.6 10.4 21 49.7 Other Income 0.7 0.8 (19) 4.6 PBIDT 3.8 4.5 (16) 17.2 Finance Cost 0.06 0.1 (42) 0.4 Gross Profit 3.7 4.4 (16) 16.9 Depreciation 0.4 0.4 3 1.4 PBT 3.4 4.1 (17) 15.4

  45. Slide 45: Balance Sheet - Grasim

    Balance Sheet - Grasim ` Bn. Standalone Consolidated As on As on * As on As on EQUITY & LIABILITIES 30.06.12 31.03.12 30.06.12 31.03.12 Net Worth 93.8 91.0 178.5 170.7 Minority Interest - - 55.5 52.3 Non-Current Liabilities Long Term Borrowings 6.2 5.7 57.9 57.0 Deferred Tax Liability (Net) 2.9 2.4

  46. Slide 46: Balance Sheet – UltraTech (Consolidated)

    Balance Sheet – UltraTech (Consolidated) ` Bn. As on As on EQUITY & LIABILITIES * 30.06.12 31.03.12 Net Worth 136.0 128.3 Minority Interest 0.7 0.6 Non-Current Liabilities Long Term Borrowings 49.1 48.4 Deferred Tax Liability (Net) 17.7 17.3 Long Term Liabilities & Provisions 1.3 1.2 Current Liabili

  47. Slide 47: Consolidated Businesswise Performance - Quarter 1

    Consolidated Businesswise Performance- Quarter 1 ` 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 * 53.6 45.9 13.9 12.6 25.6 27.2 11.4 10.2 237.0 207.7 19

  48. Slide 48: Consolidated Businesswise Performance - Full Year

    Consolidated Businesswise Performance- Full 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 * 192.4 159.4 45.7 34.8 23.3 21.6 36.0 25.6 226.4 200.6

  49. Slide 49: Viscose Staple Fibre (consolidated): Summary

    Viscose Staple Fibre (consolidated): Summary Quarter 1 % Full Year 2012-13 2011-12 Change 2011-12 Capacity TPA 3,33,975 3,33,975 - 3,33,975 Production MT 83,404 69,898 19 3,21,085 Sales Volumes MT 77,013 54,839 40 3,06,917 Net Revenue ` Bn. 12.0 11.0 18 50.1 PBIDT ` Bn. 2.7 3.8 (21) 12.8 PBIDT Margi

  50. Slide 50: Cement: Summary

    Cement : Summary Quarter 1 % Full Year 2012-13 2011-12 Change 2011-12 Grey Cement Capacity Mn. TPA 51.75 51.75 - 51.75 Production Mn. MT 10.76 10.31 4 42.11 Sales Volumes $ Mn. MT 10.83 10.34 5 42.60 Clinker Sales Volumes Mn. MT 0.19 0.38 (49) 1.36 White Cement Production '000 MT 133 119 12 553 Sale

  51. 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

Grasim Industries — Investor Presentation (September 2012) on 6ix