Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (September 2010)
51 slides from Grasim Industries's investor presentation, September 2010
Slide 1: Grasim Industries Limited: A Cement and VSF Major
Grasim Industries Limited A Cement and VSF Major September 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 1: 2010-11 Business Review Capex Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group Amongst the top business houses in India Operations spread over 25 countries Revenue at $30 bn. (60% from overseas operations), in the league of Fortune 500 130,000 employees, belonging to 30 nationalities Leadership position across businesses Grasim - Cement & Visco
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading player in India with 19% market share Cement – Capacity at 48.8 Mn. TPA Revenue Rs.155 Bn. (US$ 3,335 Mn.) – Market leader in White Cement (0.5 Mn. TPA) – Leading RMC player in India World’s top producer Viscose Staple – Capacity at 334K TPA (10
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 Cement Mn. Tons 31.1 35.0 41.6 48.8 Mn. Cu. Ready Mix Concrete Mtrs. 3.4 9.5 11.4 11.8 Captive Power Plant MW 144 167 480 504 - Cement Business Viscose Staple Fibre ‘000 TPA 270 334 334 334 9
Slide 10: Grasim Financials
Grasim Financials Standalone Consolidated Full Year Quarter 1 Full Year Quarter 1 (Rs. Bn.) 2009-10 2010-11 2009-10 2010-11 Net Worth 71.5 73.7 125.2 131.0 Debt 10.4 8.7 56.0 55.7 Capital Employed 84.4 84.9 238.8 246.7 Debt:Equity (x) 0.15 0.12 0.34 0.33 Interest Cover ^ 15.5 27.0 13.9 12.4 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.) 202.0 250.0 238.8 200.0 30 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 1: 2010-11 Business Review Capex Summary 12
Slide 13: Highlights - Quarter 1
Highlights - Quarter 1 Standalone businesses witnessed a revenue growth of 17%; profits up by 62% VSF business revenues up by 20%; Operating profits have increased by 54% led by higher realizations Chemical business performance improved sequentially with higher ECU realisations Cement busine
Slide 14: Financial Snapshot – Quarter 1
Financial Snapshot – Quarter 1 Quarter - 1 : Standalone Quarter - 1 : Consolidated (Rs. Bn.) 2010-11 2009-10 % Change 2010-11 2009-10 % Change Restated* Reported On Restated Revenue 9.6 8.2 30.9 17 51.2 51.3 - Operating Costs 6.4 6.0 21.7 7 37.5 35.1 7 PBIDT 3.6 2.5 9.5 46 14.6 16.8 (13) Interest 0.
Slide 15: Revenue Chart
Revenue Chart (Rs. Bn) Quarter - 1 % Chg. Net Revenue 2010-11 2009-10 Cement $ - 21.6 - Viscose Staple Fibre 8.6 7.2 20 Chemical 1.2 1.2 (1) Sponge Iron (Sold on 22nd May 2009) - 1.1 - Others 0.2 0.2 - Inter Segment Eliminations (Intra Company) (0.3) (0.3) - Standalone Net Revenue (As Reported) 9.6
Slide 16: PBIDT – Chart
PBIDT – Chart Rs. Bn. Quarter 1 PBIDT % Chg. 2010-11 2009-10 Cement $ - 7.4 - Viscose Staple Fibre 3.0 2.0 54 Chemical 0.3 0.4 (12) Sponge Iron (Sold on 22nd May 2009) - (0.4) - Others 0.3 0.1 - Standalone PBIDT 3.6 9.5 - Comparable Standalone PBIDT of the present Business # 3.6 2.5 46 Subsidiaries
Slide 17: Net Profit
Net Profit (Rs. Bn) Quarter -1 Grasim 2010-11 2009-10 Share % Total Net Grasim's Total Net Grasim's Profit share Profit share Grasim Standalone - Continued Businesses 2.2 1.4 - Discontinued Businesses $ - 3.9 Total 2.2 5.3 UltraTech Cement Ltd. 54.8% 2.4 1.3 4.2 2.3 42% Samruddhi Cement Ltd. 65% 3.2
Slide 18: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 1: 2010-11 Business Review Capex Summary 18
Slide 19: Cement
Cement Leading player in India – 48.8 Mn. TPA capacity Revenue Rs.155 Bn. – Currently 11 composite plant, 11 grinding unit, 68 RMC unit & 5 bulk terminal (US$ 3,335 Mn.) – Captive power plants across all major locations – Market leader in White Cement (0.5 Mn. TPA) – Leading RMC player in India
Slide 20: 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 21: Cement – Major Growth Drivers
Cement – Major Growth Drivers Rising affordability - Increasing income level Rapid Urbanisation (28.7% in 2005 to 37.2% in 2025) 1 Housing No. of Cities with population of 1Mn.+ to grow from 33 in 2005 to 56 in 2025 1 As per 11th Five year plan (2008-12), housing requirement of 74 Million un
Slide 22: Cement Sector Outlook
Cement Sector Outlook Cement Realisations Cement demand expected to grow at 10% + Rs. Ton 4000 3,683 3,675 for the next five years 3,356 3,432 3,330 Indian economy to continue on strong 3000 growth trajectory Increase in consumption, both in Government as well as private sector 2000 Q1/10 Q2/1
Slide 23: Grasim Cement Business: Key Strengths
Grasim Cement Business : Key Strengths Operations spread across India (19% market share) Excellent growth record From 5 Mn. TPA in FY98 to 49 Mn. TPA in FY10 Leadership in key consuming markets Among the top three in 18 states with 72% of country’s demand Strong nationwide distribution n
Slide 24: 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 Arakonam(G) UltraTech Cemen
Slide 25: Cement Business: Current Performance
Cement Business : Current Performance Industry Scenario – Quarter 1 Quarter 1 (Rs. Billion) 2008-09 2009-10 Strong demand growth 2010-11 11% during FY10; 8.4% in Q1FY11 Capacity (Mn. TPA) 41.6 48.8 48.8 Oversupply due to new capacity Sales Volume Grey Cement (Mn. Tons) 35.0 39.9 10.3 Prices
Slide 26: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth 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 As a first step, Brownfield exp
Slide 27: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth Investments in logistics infrastructure - bulk terminals, rakes and jetty expansion, to improve efficiency and strengthen cost competitiveness Putting up waste heat recovery system to reduce energy costs Expanding UltraTech Building Solutions net
Slide 28: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) World’s top producer – Capacity at 334K TPA (11% global share) – Group is world’s largest with 24% global share Revenue Rs.39 Bn. – 1 pulp plant in India (70K TPA) (US$ 850 Mn.) – 2 JVs for Pulp in Canada (315K TPA) – Fibre plant (35K TPA) in China in JV – 258K TPA caustic
Slide 29: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (70 Mn MT) VSF: A cellulosic fibre Others VSF 1% 4% Cotton 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) Major Global
Slide 30: VSF: Global Presence
VSF: Global Presence China,Hubei Canada • 2 Pulp plants in Joint India • Fibre plant (35 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 Amongst the lowest cost producers globally 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 Strong in-house
Slide 32: VSF: Current Performance
VSF: Current Performance Industry Scenario – Quarter 1 Quarter 1 2008-09 2009-10 2010-11 Demand showing signs of weakening (Rs. Billion) Inventory built up in the textile value chain Capacity (‘000 tpa) 334 334 334 Continued Euro zone uncertainty Sales Volume Cotton prices continue to rise 2
Slide 33: VSF: Outlook
VSF: Outlook • Textile sector recovery slowed down by Euro 125000 21% Rs. Ton Zone issue 100000 • Demand outlook cautious High inventory level in the value chain cause of 75000 concern, may create pricing pressure 50000 • Operating margins may come under pressure Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 with
Slide 34: VSF: Strategy for Growth
VSF: Strategy for Growth Greenfield VSF plant to be set up at Vilayat, Gujarat at an estimated investment of Rs.10 Bn. to meet expected growth in demand Commercial production expected to commence in FY13 Chinese JV capacity to double from 35,000 TPA to 70,000 TPA during the current quarter Cont
Slide 35: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 1: 2010-11 Business Review Capex Summary 35
Slide 36: Capital Expenditure Plan
Capital Expenditure Plan Focused capital allocation strategy – investments in Cement & Fibre Total outlay of Rs.115 Bn. in Grasim and Cement subsidiaries Brownfield capacity expansion at Chhattisgarh and Karnataka Completion of existing projects, building logistic infrastructure, modernisati
Slide 37: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 1: 2010-11 Business Review Capex Summary 37
Slide 38: Summary
Summary Grasim - Leadership position in in both the flagship businesses Strong competitive edge Global size operations Leading global player in VSF Integrated business model from plantation to fibre Continued focus on increasing capacities and creating differentiation 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) September 2010
Slide 41: Supplement
Supplement • Consolidated Financial Performance : Pg. 42 • Standalone Financial Performance : Pg. 43 • Balance Sheet : Pg. 44 • Consolidated Businesswise Performance : Pg. 45 • Business Data : Pg. 46 - 48 • Capex Plan : Pg. 49 • Combined Cement Assets : Pg. 50 • Combined Cement Financials : Pg. 51 4
Slide 42: Consolidated Financial Performance
Consolidated Financial Performance Rs. Bn. Quarter 1 Full Year % Chg. 2010-11 2009-10 2009-10 Net Turnover & Op. Income 51.2 51.3 - 202.0 Other Income 1.0 0.5 83 2.7 PBIDT 14.6 16.8 (13) 63.2 Interest 0.9 0.8 11 3.4 Gross Profit 13.7 16.0 (14) 59.8 Depreciation 2.6 2.4 11 9.9 PBT 11.1 13.6 (19) 49.9
Slide 43: Standalone Financial Performance
Standalone Financial Performance Rs. Bn. Quarter 1 Full Year 2010-11 2009-10 2009-10 Net Turnover & Op. Income 9.6 30.9 83.1 Other Income 0.4 0.3 2.4 PBIDT 3.6 9.5 29.7 Interest 0.1 0.5 1.2 Gross Profit 3.5 9.0 28.5 Depreciation 0.5 1.4 3.5 PBT (before EO gain) 3.0 7.6 25.0 Total Tax 0.8 2.3 7.4 PAT
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 30.06.10 31.03.09 31.03.10 * 30.06.10 * Gross Block # 210.4 217.2 220.1 122.8 31.4 31.7 Net Block # 142.2 145.5 145.8 83.1 18.3 18.1 Goodwill 20.0 20.1 20.1 -- -- -- Cement Subs. Investments -- -- -
Slide 45: Consolidated Businesswise Performance- Quarter 1
Consolidated Businesswise Performance- Quarter 1 (Rs. Bn.) PBIDT Margin ROAvCE (%) Revenue PBIDT 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 * 39.7 40.6 10.9 14.9 27.0 36.6 8.8 13.0 179.2 154.2
Slide 46: Cement : Summary
Cement : Summary Quarter 1 Full Year % Chg. 2010-11 2009-10 2009-10 Grey Cement Capacity Mn. TPA 48.8 45.7 7 48.8 - Samruddhi / Grasim 25.7 22.6 14 25.7 - UltraTech 23.1 23.1 - 23.1 Production Mn. MT 9.9 9.4 5 37.0 - Samruddhi / Grasim 5.3 4.9 8 19.4 - UltraTech 4.6 4.5 2 17.6 $ Sales Volumes Mn. MT
Slide 47: Cement : Summary Contd
Cement : Summary Contd….. Quarter 1 % Chg. Full Year 2010-11 2009-10 Net Revenue Rs. Bn. 39.7 40.6 (2) 154.8 - Samruddhi / Grasim : Cement 20.0 19.9 1 77.1 White Cement 2.1 1.7 27 8.4 - UltraTech - Cement 18.3 20.0 (8) 72.4 PBIDT * Rs. Bn. 10.9 14.9 (27) 47.7 - Samruddhi / Grasim 6.3 7.4 (15) 26.6 -
Slide 48: Viscose Staple Fibre : Summary
Viscose Staple Fibre : Summary Rs.Bn. Quarter 1 Full Year % Chg. 2010-11 2009-10 2009-10 Capacity TPA 333,975 333,975 - 333,975 Production MT 69,328 62,352 11 302,092 Sales Volumes MT 67,302 67,418 - 308,431 Net Revenue Rs. Bn 8.6 7.2 20 35.7 Avg. Realisation Rs./MT 117,910 97,543 21 106,481 PBIDT R
Slide 49: Capex plan
Capex plan Rs. Bn. Cash Outflow Net Capex to be spent FY11 FY12 & as on Onward 01.04.10 VSF Business - Vilayat Project 10.0 - Other Capex 3.2 Chemical Business and Misc. Capex 1.3 Standalone Capex (A) 14.5 5.5 9.1 Cement Subsidiaries - Projects’ residual capex 8.8 - Material Evacuation and Logistic
Slide 50: Combined Cement Assets
Combined Cement Assets Capacity UltraTech Samruddhi Combined Grey Cement Million TPA 23.1 25.7 48.8 Composite Plants No. 5 6 11 Grinding Units No. 6 5 11 White Cement Million TPA - 0.6 0.6 TPPs MW 236 268 504 RMC No. 33 plants 35 plants 68 plants Million Cu. Mtr 5.08 6.68 11.76 Key Investments - Sub
Slide 51: Combined Cement Financials
Combined Cement Financials As of 30/06/2010 * (In Rs. Bn.) UltraTech Samruddhi Combined Net Worth 48.6 49.0 97.6 Capital Employed 74.7 83.7 158.4 Debt (Net of surplus funds) (2.8) 10.2 7.4 Ratio: Interest Cover (PBIT/Interest) 12.8 10.2 11.1 Debt: Equity (Net) -- 0.21 0.08 ROCE (PBIT/CE) 19% 25% 22%
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