Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Q4 2011-12 Earnings Presentation
52 slides from Grasim Industries's earnings presentation, June 2012
Slide 1: Grasim Industries Limited
Grasim Industries Limited A VSF and Cement Major June 2012
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 Business Review Capex Highlights – Quarter 4: 2011-12 Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group Amongst the top business houses in India Operations spread over 33 countries Revenue at $35 Bn.(60% from overseas operations) Goal is to become a US$65 Bn. Group by 2015 133,000 employees, belonging to 42 nationalities Grasim - Viscose Staple Fibre & - Cement : Ultra
Slide 5: Group Driving Principles for Shareholder Value Creation
Group Driving Principles for Shareholder Value Creation ● Emphasis on cost leadership and efficiency Create world class assets, achieve global scale and cost leadership Competitiveness through innovation, continuous improvements and value added products Focus on key value drivers and ensure lo
Slide 6: The Aditya Birla Group: Leadership Across Businesses
The Aditya Birla Group : Leadership Across Businesses Leading Global Player – Hindalco – Novellis is largest aluminum rolling company – Largest producer of carbon black – One of two largest producer of VSF – Fourth-largest producer of insulators – Fifth-largest producer of acrylic fibre Leadership p
Slide 7: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading Global Player – Capacity : 334K TPA (9% Global share) Viscose Staple – 164K TPA expansion under implementation Fibre – 21% global share at Group level Revenue ` 50 Bn. (US$ 1 Bn.) – Integrated model with experience of more than five decades – Ch
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
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 „000 Chemical TPA 176 258 258 258 441 441 Mn. 62.0 Cement TPA 8.20 31.1 48.8 51.8 52.8 (Early FY14) No
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 turnover crossed ` 25,000 Cr. for the first time (approximately US$5 billion) in FY 2011-12 10
Slide 11: Grasim Business Mix – FY 2011-12
Grasim Business Mix – FY 2011-12 Net Revenues - ` 252 Bn. PBIDT - ` 63 Bn. (22%) (19%) (76%) (72%) Cement VSF Pulp and Fibre JVs Chemical Others (Net of elimination) 11
Slide 12: Strong Financials
Strong Financials Standalone Consolidated Full Year Full Year Full Year Full Year (` Bn.) 2010-11 2011-12 2010-11 2011-12 Net Worth 81.3 90.9 145.7 170.7 Debt 8.1 7.2 67.8 70.4 Net debt / (Net liquid investments) (24.3) (20.9) 0.2 6.7 Capital Employed 91.8 100.6 276.7 313.2 Debt:Equity (x) 0.10 0.08
Slide 13: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 4: 2011-12 Summary 13
Slide 14: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Leading global player – Capacity : 334K TPA (10% global share) – Group is world’s largest with 20% global share Revenue ` 50 Bn. – Fibre JV in China (70K TPA) (US$ 1 Bn.) – High level of backward integeration – 258K TPA caustic capacity, largely for captive use – Captive P
Slide 15: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (80 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 2010) Le
Slide 16: VSF: Global Presence
VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada • Fibre plant (70 K TPA) • 2 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
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 : 3 (Canada : 2, Sweden : 1) Captive power and steam Self
Slide 18: VSF: FY11-12 Performance
VSF: FY11-12 Performance Q4 Global Industry Scenario (` Bn.) 2010-11 2011-12 2011-12 ● Globally textile industry continued to be affected by slowdown in Eurozone and Capacity („000 TPA) * 334 334 334 China Sales Volume („000 MT) * 305 307 95 ● VSF prices remained suppressed in global Net Revenue 48.
Slide 19: VSF: Outlook
VSF: Outlook ● In medium to long term, rising consumption in emerging markets to drive demand ● In the short run, environment will be challenging `/ Kg. Stability in Euro zone and Macro economic policies to Peak Prices influence demand New capacities in China may create pressure on markets Pro
Slide 20: VSF: Strategy for Growth
VSF: Strategy for Growth Expansion plan under implementation progressing well Present capacity Expanded Commissioning (KTPA) capacity (KTPA) Target Vilayat, Gujarat - 120 Q4 FY12-13 Harihar, Karnataka 51 87 In phases : Q2 & Q4 FY12-13 Domsjo, Sweden 210 255 Q1 FY12-13 182,500 TPA caustic capacit
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
Slide 22: Indian Cement Industry: Overview
Indian Cement Industry : Overview Second largest cement market in world Cement Capacity ~ 319 Mn. TPA (March 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 Mar
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 ____
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
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 Projected (2012-2017) 240 (2002-2007) (2007-2012) 230 220 Power, Oil & Telecom 120 285 375 202 200 Irrig
Slide 26: Cement Sector Outlook
Cement Sector Outlook 14 % Growth Industry likely to grow at 8% + per annum 12.1 12 - Infrastructure, housing development and rural 10 9.8 9.3 8.8 development to be major growth drivers 8 6.9 - Demand growth should lead to higher volumes 6 5.3 and better utilisation of capacity for us 4 Surplus
Slide 27: Cement Business: Key Strengths
Cement Business : Key Strengths Operations spread across India (17% market share) in line with Industry 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
Slide 28: Cement Business: FY 2011-12 Performance
Cement Business : FY 2011-12 Performance Industry Scenario Q4 (` Bn.) 2010-11 2011-12 Oversupply continues to haunt the sector 2011-12 Cement capacity at ~ 319 Mn. Ton Capacity (Mn. TPA) 51.8 51.8 51.8 FY 2011-12 capacity utilisation at 73% Sales Volume Cement and Clinker Recovery in cement
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 market (Capacity) To maintain the market share, 25 Mn. TPA capacity required in next five years CNBM- China 260 As a first step, expansions of 9
Slide 30: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 4: 2011-12 Summary 30
Slide 31: Capex Plan
Capex Plan ` Bn. Capex under Opening Cash Outflow Spent Implemen- Work in FY13 FY14 during tation Progress FY12 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 for chemica
Slide 32: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 4: 2011-12 Summary 32
Slide 33: Highlights – Quarter 4: 2011-12
Highlights – Quarter 4: 2011-12 Q4 records improved performance sequentially In Q4, Cement business reported improved performance Recovery in Cement demand since Nov‟ 2011 UltraTech Capacity utilisation increased from 88% to 94% in Q4FY12 (Preceding quarter 83% ) In VSF business Volumes
Slide 34: Financial Performance – Consolidated
Financial Performance – Consolidated ` Bn. PAT for the year up by 16% 34
Slide 35: Financial Performance – Standalone
Financial Performance – Standalone ` Bn. 35
Slide 36: Revenue Chart
Revenue Chart ` Bn. Full Year Quarter -4 Net Revenue 2011-12 2010-11 2011-12 2010-11 42.9 41.6 Viscose Staple Fibre 12.3 13.3 43% 7.8 5.4 Chemical 2.2 1.6 41% 1.1 0.8 Others 0.2 0.2 (2.0) (1.4) Inter Segment Eliminations (Intra Company) (0.6) (0.5) 7% 49.7 46.4 Standalone Net Revenue 14.1 14.6 Subsi
Slide 37: PBIDT Chart
PBIDT Chart ` Bn. Full Year PBIDT Quarter -4 2011-12 2010-11 2011-12 2010-11 11.7 14.8 Viscose Staple Fibre 2.3 5.1 29% 1.6 1.2 Chemical 0.3 0.3 10% 3.9 2.1 Others 1.0 0.4 17.2 18.2 Standalone PBIDT 3.7 5.8 Subsidiaries 31% 45.6 34.8 UltraTech Cement Ltd. 14.9 11.4 31% 0.3 0.2 Grasim Bhiwani Textile
Slide 38: Net Profit Chart
Net Profit Chart ` Bn. Full Year Quarter -4 2011-12 2010-11 2011-12 2010-11 Total Total Total Total Grasim's Grasim's Grasim's Grasim's Net Net Net Net share share share share Profit Profit Profit Profit 11.8 11.8 Standalone PAT 2.4 4.0 43% 24.0 14.5 16.8 10.2 UltraTech Cement (60.34%) 8.7 5.3 7.2 4
Slide 39: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 4: 2011-12 Business Review Capex Summary 39
Slide 40: Summary
Summary Cement business performed well helped by improved demand VSF business, however, was impacted due to difficult global conditions Leadership position and cost competitiveness in both the businesses will be further strengthened on ongoing basis Capacity expansions under implementation i
Slide 41: 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 [email protected]
Slide 42: Grasim Industries Limited (Supplement)
Grasim Industries Limited - A VSF and Cement Major (Supplement) June 2012
Slide 43: Supplement
Supplement • Consolidated Financial Performance : Pg. 44 • Standalone Financial Performance : Pg. 45 • Balance Sheet - Grasim : Pg. 46 • Balance Sheet – UltraTech (Consolidated) : Pg. 47 • Consolidated Businesswise Performance : Pg. 48- 49 • Business Data : Pg. 50- 51 • Cement Plant Location : Pg. 5
Slide 44: Consolidated Financial Performance
Consolidated Financial Performance ` Bn. Quarter - 4 % Full Year % 2011-12 2010-11 Change 2011-12 2010-11 Change Net Turnover & Op. Income 72.9 64.8 12 252.4 215.5 17 Other Income 2.7 1.2 121 7.5 4.0 87 PBIDT 18.8 17.8 6 63.2 53.9 17 Interest 0.8 1.1 (27) 3.1 4.1 (23) Gross Profit 18.0 16.7 8 60.1 4
Slide 45: Standalone Financial Performance
Standalone Financial Performance ` Bn. Quarter - 4 % Full Year % 2011-12 2010-11 Change 2011-12 2010-11 Change Net Turnover & Op. Income 14.1 14.6 (3) 49.7 46.4 7 Other Income 1.3 0.9 49 4.6 3.0 56 PBIDT 3.7 5.8 (37) 17.2 18.2 (5) Interest 0.07 0.1 (45) 0.4 0.5 (22) Gross Profit 3.6 5.7 (37) 16.9 17
Slide 46: Balance Sheet - Grasim
Balance Sheet - Grasim Standalone Consolidated ` Bn. As on As on * As on As on EQUITY & LIABILITIES 31.03.12 31.03.11 31.03.12 31.03.11 Net Worth 91.0 81.3 170.7 145.7 Minority Interest - - 52.3 43.5 Non-Current Liabilities Long Term Borrowings 5.7 4.9 57.0 41.1 Deferred Tax Liability (Net) 2.4 2.3
Slide 47: Balance Sheet – UltraTech (Consolidated)
Balance Sheet – UltraTech (Consolidated) ` Bn. As on As on EQUITY & LIABILITIES * 31.03.12 31.03.11 Net Worth 128.2 106.5 Minority Interest 0.6 0.7 Non-Current Liabilities Long Term Borrowings 48.4 33.0 Deferred Tax Liability (Net) 17.4 17.3 Long Term Liabilities & Provisions 1.2 1.1 Current Liabili
Slide 48: Consolidated Businesswise Performance - Quarter 4
Consolidated Businesswise Performance- Quarter 4 ` 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 * 56.6 47.5 14.9 11.4 25.7 23.8 12.4 8.9 226.4 200.6 23.
Slide 49: 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
Slide 50: Viscose Staple Fibre (consolidated): Summary
Viscose Staple Fibre (consolidated): Summary Quarter 4 % Full Year % 2011-12 2010-11 Change 2011-12 2010-11 Change Capacity TPA 3,33,975 3,33,975 - 3,33,975 3,33,975 - Production MT 83,439 82,932 1 3,21,085 3,05,087 5 Sales Volumes MT 94,904 85,650 11 3,06,917 3,05,072 1 Net Revenue ` Bn. 13.7 15.3
Slide 51: Cement: Summary
Cement : Summary Quarter - 4 % Full Year % 2011-12 2010-11 Change 2011-12 2010-11 Change Grey Cement Capacity Mn. TPA 51.75 51.75 - 51.75 51.75 - Production Mn. MT 11.84 11.07 7 42.11 39.67 6 Sales Volumes $ Mn. MT 12.06 11.09 9 42.60 39.96 7 Clinker Sales Volumes Mn. MT 0.32 0.43 (25) 1.36 1.60 (15
Slide 52: 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