Grasim Industries Ltd. · NSE:GRASIM

Grasim Industries — Merger or Acquisition (August 2016)

29 slides from Grasim Industries's merger presentation, August 2016

  1. Slide 1: Creating A Premier Play on India’s Growth

    Creating A Premier Play on India’s Growth August 2016 Investor Presentation

  2. Slide 2: Outline

    Outline 1. Current & Resulting Structure 2. Transaction Rationale 3. Benefit to the Shareholders 4. Capital Allocation Strategy 5. Value Creation for Shareholders 6. Growth Businesses – Financial Services & Telecom 7. Post Merger Capital Structure of Grasim and ABFSL 8. Annexures 2

  3. Slide 3: Current Holding Structure

    Current Holding Structure Grasim Aditya Birla Nuvo Promoters Public Promoters Public 31.3%(1) 68.7%(1) 58.4% 41.6% Grasim Aditya Birla Nuvo 60.2% 100.0% 51.0% 23.3% Aditya Birla Birla Sun UltraTech Idea Divisions(4) Others Financial Life Divisions (4) Others Cement Cellular Services (2) Insurance(3)

  4. Slide 4: Resultant Holding Structure

    Resultant Holding Structure 26.2% Promoter Public 38.8% 61.2% 1 Grasim + Aditya Birla Nuvo 16.6% 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

  5. Slide 5: 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

  6. Slide 6: 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 businesses • Am

  7. Slide 7: Shareholders Benefits

    Shareholders Benefits Comments Grasim ABNL ABFS growth (FY 11-16) Idea Cellular growth (FY 12-16) Exposure to fast Lending book: 15x Revenue Market Share: 14.3% to 18.9% growing sectors (Financial Services & Total AUM: 2.1x Subscriber Market Share: 15.4% to 19.6%  Telecom) Mix of businesses with •

  8. Slide 8: Shareholders Benefits (Cont’d)

    Shareholders Benefits (Cont’d) Comments Grasim ABNL • Strong credit rating & reduction in cost of borrowing for Stronger parentage Financial Services Business with robust balance • Access to larger pool of funds through capital markets for both  sheet equity and debt • Cash surplus in Grasim: Rs. 4

  9. Slide 9: Stronger Standalone Financials Post Merger

    Stronger Standalone Financials Post Merger Grasim Net Debt/ EBITDA: 0.2x Grasim (Post merger) Net Debt/ EBITDA: 0.9x Rs. 8,980 Cr Rs. 1,860 Cr 10% Net debt / annualized EBITDA (Q1 FY 17): 0.5x Chemicals 32% 40% Rs. 14,446 Cr Rs. 2,706 Cr Viscose Staple Fibre (67%) + 4% Vikram Woollen (1%) 68% 14% 50

  10. Slide 10: Capital Allocation Strategy

    Capital Allocation Strategy Market Cap Capital Employed Raised ~ Rs. 15,600 cr independently: Figures in Rs. cr FY07 FY16 FY07 FY16 • 2007 – IPO – Rs. 2,450 cr • 2008 – Providence1 - Rs. 2,100 cr 24,528 39,678 6,431 70,342 • 2008 – Axiata – Rs. 7,300 cr • 2014 – QIP/Pref – Rs. 3,750 cr FY07 FY16 FY0

  11. Slide 11: Value Creation for Shareholders

    Value Creation for Shareholders CAGR returns for various time periods vs. Sensex 49.8% 40.9% 30.2% 24.0% 23.5% 21.4% 16.7% 13.7% 12.6% 10.6% 9.2% 1.3% Last 1 Year Last 3 Years Last 5 Years Last 7 Years GRASIM ABNL SENSEX Aditya Birla Nuvo & Grasim have consistently outperformed the benchmark Notes:

  12. Slide 12: Growth Businesses

    Growth Businesses

  13. Slide 13: Aditya Birla Financial Services

    Aditya Birla Financial Services  Among the top 5 fund managers in India (excl. LIC) Promoters Grasim Public  Rs. 196,545 Cr Funds under management (As of Q1 FY17: Includes AUM of Life Insurance, Private Equity and quarterly average AUM of Asset Management business) 16.6% 57.2% 26.2%  Rs. 28,700 C

  14. Slide 14: Sound Growth in Key Metrics

    Sound Growth in Key Metrics AUM (Rs. Cr) Lending Book (Rs. Cr) 184,276 27,728 88,201 1,850 FY11 FY16 FY11 FY16 Revenues (Rs. Cr) Earnings Before Tax (Rs. Cr) 9,299 995 6,304 472 FY11 FY16 FY11 FY16 14

  15. Slide 15: Overview of Businesses

    Overview of Businesses NBFC – Robust Growth Profile With Quality Loan AMC – Gaining Market Share Consistently Book  Among the top 10 diversified private NBFCs in India  4th largest in India  Diversified portfolio with All-India presence  AAUM of Rs. 1,63,121 Cr (Q1 FY17)  One of the lowest NPAs

  16. Slide 16: Overview of Businesses (Cont’d)

    Overview of Businesses (Cont’d) Life Insurance – Top 4 Private Life Insurer Portfolio of Other Businesses  Among top 4 private insurers in India (by APE) with  Aditya Birla Housing Finance: Commenced operations in new business market share of 8.4% in Q1FY17 October 2014 and currently has a loan bo

  17. Slide 17: Idea Cellular

    Idea Cellular Fastest growing telecom operator in the world’s most attractive telecom market  #3 mobile operator with ~183 million (VLR) subscribers  16% shareholding in Indus One of the world’s largest tower companies  3G / 4G spectrum covering 87% of revenues  Entering digital content services

  18. Slide 18: Post merger capital structure of Grasim and ABFSL

    Post merger capital structure of Grasim and ABFSL

  19. Slide 19: Post Merger Capital Structure of Grasim and ABFSL

    Post Merger Capital Structure of Grasim and ABFSL Step 1: Merger of ABNL into Grasim As on 30 June, 2016 # Shares (Mn) Outstanding equity shares of Grasim of face value of Rs. 10 each (A) 93.35 Outstanding equity shares of ABNL of face value of Rs. 10 each (B) 130.22 Equity shares held by Grasim in

  20. Slide 20: Annexure 1 – Advisors & Key Activities

    Annexure 1 – Advisors & Key Activities

  21. Slide 21: Advisors

    Advisors Financial Advisor  DSP Merrill Lynch Limited(1) Independent Fairness  Grasim – JM Financial Institutional Securities Limited Opinion  Aditya Birla Nuvo – Kotak Mahindra Capital Company Limited  Khaitan & Co (for overall transaction) Legal Advisor  Cyril Amarchand Mangaldas (for Financi

  22. Slide 22: Key Activities

    Indicative Activities to Completion  Grasim and ABNL board approved the merger and swap ratio  Draft scheme filed with Stock Exchanges  File application with IRDA and CCI  IRDA approval for transfer of insurance business stake to ABFSL Key Activities  File the Scheme with High Courts after rece

  23. Slide 23: Annexure 2 – Grasim Businesses

    Annexure 2 – Grasim Businesses

  24. Slide 24: UltraTech Cement – India’s Largest Cement Company

    UltraTech Cement – India’s Largest Cement Company Business Highlights Key metrics Current: 69.3mtpa Post Ongoing Acquisition: 91.1mtpa  India’s largest cement company - Overseas Overseas North North ~17% of India’s total capacity 4% 27% 4% 26% South South 22% 22%  Best positioned to capture the up

  25. Slide 25: Viscose Staple Fibre – Leading Global Player

    Viscose Staple Fibre – Leading Global Player Leading Global Player 5 VSF Plants and 5 Pulp Plants Across 4 Countries  Integrated model with six VSF Business Global Market Share Canada Sweden China, Hubei decades of experience • 3 Pulp plants • Domsjo pulp plant • VSF JV Others JVs JV  VSF market p

  26. Slide 26: Chemicals - Largest Chlor-Alkali Manufacturer

    Chemicals - Largest Chlor-Alkali Manufacturer Business Highlights Market Share and Volume Doubled Since FY14  Largest Chlor-alkali manufacturer Market Share (1) in India 22%  Capacity: 840 ktpa  Capacity to increase by 25% 13% 11% on brownfield expansion and debottlenecking  Largest producer of

  27. Slide 27: Annexure 3 – Aditya Birla Nuvo – Other businesses

    Annexure 3 – Aditya Birla Nuvo – Other businesses

  28. Slide 28: Aditya Birla Nuvo – Other Businesses

    Aditya Birla Nuvo – Other Businesses Jaya Shree Indian Rayon1 Indo-Gulf Fertilisers Aditya Birla Insulators  India’s #1 Linen player  Largest manufacturer &  8th largest urea  India’s largest & world’s Market  Leading manufacturer of exporter of VFY in India manufacturer 4th largest manufacture

  29. Slide 29: Disclaimer

    Disclaimer This presentation has been prepared by Grasim Industries Limited ("Grasim"), Aditya Birla Nuvo Limited (“ABNL”) and Aditya Birla Financial Services Limited ("ABFSL") for information purposes only in relation to a potential arrangement between Grasim, ABNL and ABFSL pursuant to a scheme of

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