Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (February 2017)
42 slides from Grasim Industries's investor presentation, February 2017
Slide 1: Grasim Industries Limited: Building, Consolidating, Growing
Grasim Industries Limited Building, Consolidating, Growing February 2017
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 Merger of Grasim with ABNL – Creating a Premier Play on India’s Growth Grasim Businesses 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 $ 41 Bn., over 50% from overseas operations Anchored by 120,000 employees, belonging to 42 nationalities Trusted by 1.2 Mn. shareholders & 180 Mn.+ customers Ranked 1st in India
Slide 5: The Aditya Birla Group: Leadership Across Businesses
The Aditya Birla Group : Leadership Across Businesses Leading Global Player – Hindalco – Novelis is the largest aluminum rolling company – Largest player in carbon black – Second largest producers of Viscose Staple Fiber (VSF) – Among the top global players in Cement – Fourth largest producer of ins
Slide 6: Grasim: Market leader across Business Segments
Grasim: Market leader across Business Segments Leading Global Player Viscose Staple Fibre – Capacity : 498K TPA Revenue ` 60 Bn. – Grasim commands 9% global share; ABG share 17% (US$ 0.9 Bn.) – Integrated model with experience of more than six decades Largest Chlor-Alkali Manufacturer in India – Cap
Slide 7: Investment in Growth
Investment in Growth…… Substantial Investment made across Businesses – US$ 4 Bn. over last five years..... VSF KTPA* Caustic KTPA* Cement Mn. TPA* Gross Fixed Asset 300% 50% Rs. Bn. 85% 113% 1048 498 95 # 486 840 334 69.3 51.8 228 258 FY 11 FY 16 FY 11 FY16 Post FY 11 FY16 Post JPA Mar' 11 Mar' 16 E
Slide 8: Yielding Results
…..Yielding Results Standalone Performance ` Bn. Revenue EBITDA Net Profit 16% 47% 58% 74.7 20.7 64.3 14.1 12.5 7.9 9MFY16 9MFY17 9MFY16 9MFY17 9MFY16 9M1FY17 Consolidated Performance Revenue EBITDA Net Profit 4% 23% 41% 250.3 260.7 61.9 24.0 50.2 17.1 9MFY16 9MFY17 9MFY16 9MFY17 9MFY16 9MFY17 8
Slide 9: Yielding Results: Standalone EBITDA
…..Yielding Results 2,500 Standalone EBITDA (` Bn.) 20.7 2,000 1,500 14.1 1,000 8.3 500 - 9M FY15 9M FY16 9M FY17 VSF Chemical Treasury / Dividend Income etc. Standalone EBITDA have shown robust growth Speedy rampup of new capacities in both VSF and Chemical businesses Merger of ABCIL with Gra
Slide 10: Robust Financial Ratios
Robust Financial Ratios ` Bn. Consolidated Financial Ratios Consolidated Debt / Surplus 125.0 100.0 3/31/2016 12/31/2016 102.6 87.1 Debt:Equity (x) 0.35 0.25 37.9 2.6 Net Debt: Equity (x) 0.10 - Mar-16 Dec-16 Standalone Debt / Surplus Net Debt / EBITDA 0.54 - 18.4 21.2 16.0 ROAvCE (%) 13.2 11.3 12.9
Slide 11: Growth Plans under Implementation
Growth Plans under Implementation Debottlenecking opportunities identified to meet growing demand Actively engaged in R & D for 3rd generation VSF fibre Continued focus on increasing share of specialty fibre For 9MFY17, proportion already increased from 32% to 36% with higher share of Modal
Slide 12: Recent Corporate Actions
Recent Corporate Actions Investment limit for Registered Foreign Portfolio Investors / Foreign Institutional Investors being increased from 30% to 49% Measures to Improve Sub-divided equity shares from one (1) equity share of face value of Rs.10 each fully paid up Liquidity to five (5) equity sh
Slide 13: Presentation Structure
Presentation Structure Introduction Merger of Grasim with ABNL – Creating a Premier Play on India’s Growth Grasim Businesses 13
Slide 14: Current Holding Structure
Current Holding Structure Grasim Aditya Birla Nuvo Promoters Public Promoters Public 31.3%(1) 68.7%(1) 62.8% 37.2% Grasim Aditya Birla Nuvo 60.2% 100.0% 51.0% 23.3% Aditya Birla Birla Sun UltraTech Idea Divisions Divisions(4) Others Financial Life (4) Others Cement Cellular Services (2) Insurance(3)
Slide 15: Resultant Holding Structure
Resultant Holding Structure 25.7% Promoter Public 40.1% 59.9% 1 Grasim + Aditya Birla Nuvo 17.1% 57.2% 60.2% 28.0% 51.0% 2 Aditya Birla UltraTech Financial Idea Cellular Solar Divisions Others Cement Services All of financial Textiles 11.4% Aditya Birla services Chemicals Fashion & Retail includ
Slide 16: Transaction Rationale
Transaction Rationale 1 • Financial Services Business is likely to benefit from lower cost of funds, given stronger credit rating of Grasim (CRISIL – AAA): AAA parent may potentially lead to reduction in cost of borrowing Will provide access to larger pool of funds through capital markets in the
Slide 17: Transaction Rationale (cont'd)
Transaction Rationale (cont’d) 2 • Cash flow of the merged entity from various operating businesses can be meaningfully leveraged towards nurturing companies with future growth opportunities Access to high • Businesses with significant growth potential and leadership positions growth Among the top
Slide 18: Shareholders Benefits
Shareholders Benefits Comments Grasim ABNL ABFS growth (FY 11-16) Idea Cellular growth (FY 12-16) Exposure to fast growing Lending book: 15x Revenue Market Share: 14.3% to 18.9% sectors (Financial Services Total AUM: 2.1x Subscriber Market Share: 15.4% to 19.6% & Telecom) Mix of businesses with •
Slide 19: Shareholders Benefits (Cont'd)
Shareholders Benefits (Cont’d) Comments Grasim ABNL • Strong credit rating & reduction in cost of borrowing for Financial Services Business Stronger parentage with robust balance sheet • Access to larger pool of funds through capital markets for both equity and debt • Cash surplus in Grasim: Rs. 1
Slide 20: Presentation Structure
Presentation Structure Introduction Merger of Grasim with ABNL – Creating a Premier Play on India’s Growth Grasim Businesses 20
Slide 21: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Birla Viscose Birla Modal Birla Excel
Slide 22: VSF: Cellulosic Fibre With Many Unique Attributes
VSF: Cellulosic Fibre With Many Unique Attributes Natural fibres Man made fibres From From From Natural Natural fibres Synthetic inorganic Sources Polymers substances Protein- Cellulose Cellulose based based based Polyester Carbon Nylon Ceramics Wool Viscose Polypropylene Cotton Glass Silk Modal Pol
Slide 23: VSF: Global Industry Scenario
VSF: Global Industry Scenario Global Fibre Pie (95 Mn. MT) VSF: A cellulosic fibre Others 5% of global fibre market VSF 1% 5% Cotton 7% of global man-made fibre market 26% Wool 1% ‘000 TPA Major Global Players’ Capacity Synthetic 67% ABG group (incl. Grasim) : 922 of which Grasim : 498
Slide 24: Grasim: Rightly Placed
Grasim : Rightly Placed Presence in Right Market …...and Right Product Apparel Growth 2010 – 2015 (%) Fibre Growth 2010 – 2015 (%) 11 9 6 7 4 3 3 1 VSF PFY PSF Cotton India China RoW World Advanced -1 Economies Market size Market size (2015 ) (2015) 7.2 38.6 25.4 102.8 31.6 5.1 32.2 15.9 23.6 (Bn. U
Slide 25: VSF: Global Presence
VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada JV • VSF JV • 3 Pulp plants JVs India • 4 VSF plants South East Asia • 1 Pulp plant • 2 VSF plants of AVB • 6 Caustic soda Group Cos. plants VSF Plant - Own VSF Plant - JV VSF Plant - Group Cos. Pulp Plant - Own Pulp Plant - JV 25
Slide 26: VSF: High Backward Integration
VSF: High Backward Integration Input % of Cost Capacity Requirement Met • Dissolving Grade • 50% - 55% • 4 Manufacturing plants • 55% - 60% Pulp (India : 1 & Overseas : 3) • Caustic Soda • 10% - 15% • 840K TPA • Fully captive • Power & Steam • 10% • 290 MW • Fully captive Sustainable competitive adv
Slide 27: LIVA: Greater Connect with Consumers
LIVA : Greater Connect with Consumers A Co-branded partner uses a “liva tag” on each garment 27
Slide 28: VSF: 9M FY17 Performance
VSF: 9M FY17 Performance Sales volume up by 9% YoY (` Bn.) 2014-15 2015-16 9M FY17 Intensive business development activities leading to Capacity (‘000 Ton)* 434 498 375 increase VSF usage in domestic market Higher sales of specialty fiber Sales Volume (‘000 MT) 403 467 367 Revenue grew by 20
Slide 29: VSF: Outlook
VSF: Outlook Textile consumption in India expected to grow at higher International Fibre Prices ($/Kg.) rates, vis-à-vis global consumption $/ Kg 2.3 Augur well for VSF demand 2.1 2.10 1.9 Limited capacity addition leading to higher operating rates 1.85 1.7 Short term variations likely in ut
Slide 30: Chemical
Chemical Largest Chlor - Alkali manufacturer in India Largest producer of Epoxy Resins in India Largest value-added product portfolio with total capacity of 410K TPA including water treatment chemicals 30
Slide 31: Chlor Alkali Industry
Chlor Alkali Industry Caustic Soda demand currently at ~3.4 Mn. TPA Caustic Soda Usage in India Caustic Soda has developed end-user market in India Others Textiles Top 5 players account for 60% of market share 24% 20% Manufacturing capacities concentrated in Western and Pesticides 4% Alumina
Slide 32: Chemical Business: 9M FY17 Performance
Chemical Business : 9M FY17 Performance Volume up by 5% (` Bn.) 2014-15 2015-16# 9MFY17 Additional volume from Ganjam plant which was Caustic Soda acquired in September last year Capacity (000’ Ton) 452 804 630 Ramp up of Karwar plant Sales Volume (‘000 Ton) * 409 763 590 EBITDA up by 22% at
Slide 33: Cement
Cement ``q India’s Largest Selling Cement Brand Different Products to provide No. 1 RMC player in India complete Building Solutions No.1 Player of White Cement With > 100 plants > 1100 stores & Cement based Putty
Slide 34: Indian Cement Industry: Overview
Indian Cement Industry : Overview Second largest cement market in world Cement Capacity ~ 411 Mn. TPA Sustained cement consumption growth of around 7.5% in last 15 years Though demand has been weak in last 3-4 years Industry capacity doubled in last decade Around 50 million tons capacity
Slide 35: Global Cement Capacity and Per Capita Consumption
Global Cement Capacity and Per Capita Consumption Top Cement Producing Countries - 2014 Per Capita Consumption - 2014 Kgs/person Mn. Tons 2,438 1,780 830 660 580 470 355 280 200 255 81 71 72 68 China Turkey Vietnam World Russia Brazil USA India China India USA Turkey Brazil Russia __________________
Slide 36: Cement – Major Growth Drivers in India
Cement – Major Growth Drivers in India Favorable demographics with growing young population Rising affordability - Increasing income level Housing Government vision of house for every family by 2022 (~60% - 65%) Rapid Urbanisation (33% in 2011, likely to be 40% by 2030) No. of Cities with
Slide 37: Cement Sector Outlook
Cement Sector Outlook % Growth Expected Cement demand growth drivers : 14 12.1 Increase in Government spending on Infrastructure and 12 low cost housing 10 8 7.1 AP and Telangana development 5.7 6 5.2 4.7 Reduction in interest rates and subsidies for housing 3.5 4 2.6 Demand Supply Balance
Slide 38: Cement Business: Key Strengths
Cement Business : Key Strengths Excellent growth record Domestic capacity increased > 10 fold since FY98 Proven capabilties to grow organically (44 Mn. TPA) and inorganically (25 Mn. TPA) Market Leadership “UltraTech” – Premium national brand Leadership in key consuming markets Strong
Slide 39: Cement Business Footprint – A Pan India Player
Cement Business Footprint – A Pan India Player Current Post Mix Acquisition North 12.8 17.6 20% Bhatinda Central 6.2 17.6 20% Panipat Jhajjar Dadri East 11.4 11.4 13% Kotputli Aligarh West 20.5 20.5 23% Jodhpur P Shambhupura Sewagram Jawad Patliputra South 15.5 20.5 23% Wanakbori Katni P Durgapur Pi
Slide 40: Cement Business: 9M FY17 Performance
Cement Business : 9M FY17 Performance Improved operating margins from 20% to 23% with (` Bn.) 2014-15 2015-16 9MFY17 decline in operational cost - Higher usage of petcoke Capacity (Mn. Ton) 63.2 67.7 51.9 - Improved energy consumption Sales Volume - Increase in WHRS power share Cement and Clinker
Slide 41: Grasim Group Structure
Grasim Group Structure Pulp & Fibre Chemical UltraTech Cement (60.24%) Others VSF VSF JV Pulp Overseas Caustic Epoxy Domestic Overseas 498K TPA China 70K TPA Pulp JVs 840K TPA 51K TPA 3 Mn. TPA, (UAE, Bangladesh, Sri Lanka) AV Group NB Nagda Grey Cement Grasim Nagda Birla Jingwei Harihar 270K TPA Bh
Slide 42: Thank You
Thank You Contacts: Grasim Industries Limited (Corporate Finance Division) Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400 030 CIN: L17124MP1947PLC000410 Sharad Agarwal +91-22-66525062 grasim.ir@adityabirla.com Shirin Sancheti +91-22-66525097 grasim.ir@adityabirla.com
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