Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (January 2013)
40 slides from Grasim Industries's investor presentation, January 2013
Slide 1: Grasim Industries Limited: A VSF and Cement Major
Grasim Industries Limited A VSF and Cement Major January 2013
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 3: 2012-13 Summary 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 $40 Bn.(60% from overseas operations) Goal is to become a US$65 Bn. Group by 2015 133,000 employees, belonging to 42 nationalities Grasim - Viscose Staple Fibre & - Cement : Ultra
Slide 5: Group Driving Principles for Shareholder Value Creation
Group Driving Principles for Shareholder Value Creation Emphasis on cost leadership and efficiency Create world class assets, achieve global scale and cost leadership Competitiveness through innovation, continuous improvements and value added products Focus on key value drivers and ensure lo
Slide 6: The Aditya Birla Group: Leadership Across Businesses
The Aditya Birla Group : Leadership Across Businesses Leading Global Player – Hindalco – Novellis is largest aluminum rolling company – Largest producer of carbon black – One of two largest producer of VSF – Fourth-largest producer of insulators – Fifth-largest producer of acrylic fibre Leadership p
Slide 7: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading Global Player – Capacity : 352K TPA (9% Global share) Viscose Staple – 146K TPA expansion under implementation Fibre – 21% global share at Group level Revenue ` 50 Bn. (US$ 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 FY12 14.4 Moderate capex need for VSF leading to substantial free FY11 17.5 All-round spike in all cash flow FY10 14.6 fibre prices Cement Business – high growth business with large capex Global Mel
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 „000 498 Viscose Staple Fibre TPA 221 270 334 334 378 (Q1 FY14) Chemical (Caustic Soda) „000 TPA 176 258 258 258 441 441 Mn. 62.0 Cement TPA 8.20 31.1 48.8
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.) 250 30.0 209.2 26.5 200 300 252.4 250 25.0 150 200 19.7 94.5 141.4 20.0 100 150 100 15.0 50 50 0 0 10.0 FY07 FY08 FY09 FY10 FY11 FY1
Slide 11: Grasim Business Mix – 9M 2012-13
Grasim Business Mix – 9M 2012-13 Net Revenues - ` 202 Bn. PBIDT - ` 48 Bn. 1.6 7.0 1.9 7.9 7.2 32.6 (15%) (16%) 36.9 155.0 (78%) (77%) Cement VSF Pulp and Fibre JVs Chemical Others (Net of elimination) Cement VSF Pulp and Fibre JVs Chemical Others (Net of elimination) 11
Slide 12: Strong Financials
Strong Financials Standalone Consolidated Full Year 9M Full Year 9M (` Bn.) 2011-12 2012-13 2011-12 2012-13 Net Worth 91.0 99.6 170.7 191.4 Debt 7.2 11.6 70.4 89.8 Net debt / (Net liquid investments) (20.9) (10.1) 6.7 27.6 Capital Employed 100.6 114.7 313.2 362.4 Debt:Equity (x) 0.08 0.12 0.32 0.36
Slide 13: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 3: 2012-13 Summary 13
Slide 14: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Leading global player – Capacity : 352K TPA (9% global share) Revenue ` 50 Bn. – Group is world’s largest with 21% global share (US$ 1 Bn.) – Fibre JV in China (72K TPA) – High level of backward integration
Slide 15: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (84 Mn. MT) VSF: A cellulosic fibre Others 4% of global fibre market 2% VSF Cotton 4% 6% of global man-made fibre market Raw Wool 32% 1% Major Global Players‟ Capacity „000 TPA Synthetic 61% AVB group (incl. Grasim) : 762 ____________________ Of which
Slide 16: VSF: Global Presence
VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada • Fibre plant (72 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
Slide 17: VSF: Sustainable Competitive Strengths
VSF : Sustainable Competitive Strengths Amongst the low cost producers globally Highly integrated operations Captive raw materials - Pulp & Caustic Soda Four pulp manufacturing plants – Grasim, India : 1, Overseas JVs : 4 (Canada : 3, Sweden : 1) Captive power and steam Self managed wate
Slide 18: VSF: 9M 2012-13 Performance
VSF: 9M 2012 -13 Performance 9M Global Industry Scenario (` Bn.) 2010-11 2011-12 2012-13 Market conditions for the textile industry Capacity („000 TPA) * 334 334 352 continue to be challenging, compounded by Surplus VSF capacity in China Sales Volume („000 MT) * 305 307 241 Depressed cotton pr
Slide 19: VSF: Outlook
VSF: Outlook Industry to remain under pressure in the near term `/ Kg. given the prevailing slowdown in global economy including textiles Surplus capacity in China to exert pressure on 115 99 volumes and prices 91 Profitability will also be influenced by competing fibre dynamics However, in
Slide 20: VSF Strategy for Growth
VSF Strategy for Growth Ongoing Capacity Expansions at Harihar and Vilayat progressing well Additional capacity (including specialty fibre from Vilayat) will lead to increased volume from FY 2013-14 Major revamp of Nagda plant being planned over next 3 years for technological upgradation Wat
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 ~ 340 Mn. TPA (December 2012), (Against 2,380 Mn. TPA in China1) Long term average growth has been 1.2 x of GDP Industry capacity doubled in last decade – in line with rising demand East West Large Dome
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 Projections (2012-2017) 240 (2002-2007) (2007-2012) 230 220 Power, Oil & Telecom 120 285 375 202 200 Irr
Slide 26: Cement Sector Outlook
Cement Sector Outlook 14 % Growth Demand growth linked to GDP growth; 12.1 12 implementation of reforms 9.8 10 9.3 Likely growth of > 8% in the long term 8 Surplus supply scenario likely to continue for next 3 6.9 5.3 years 6 - Capacity addition pace to slowdown (Likely 4 addition of 49 Mn. To
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
Slide 28: Cement Business: 9M 2012-13 Performance
Cement Business : 9M 2012-13 Performance Industry Scenario 9M (` Bn.) 2010-11 2011-12 Sector Capacity at 340 Mn. TPA 2012-13 21 Mn. TPA capacity commissioned in nine Capacity (Mn. TPA) 51.8 51.8 51.8 months Sales Volume Prices declined during the quarter on low Cement and Clinker 41.6 44.0 31.
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 CNBM- China 260 required in next five years Lafarge- France 225 As a first
Slide 30: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 3: 2012-13 Summary 30
Slide 31: Capex plan
Capex plan ` Bn. Work in Cash Outflow Capex spent Capex under Progress during Implemen- FY13 FY14 as on tation onwards 9M 2012-13 01-04-12 Standalone VSF Expansion : Vilayat (120K TPA), Harihar (36K TPA) 22.6 Chemical Expansion : Vilayat (182K TPA) 8.1 Epoxy Project : Vilayat (51,500 TPA) 2.2 Normal
Slide 32: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 3: 2012-13 Summary 32
Slide 33: Highlights – Quarter 3: 2012-13
Highlights – Quarter 3 : 2012-13 Operational The businesses remained affected by present global and domestic market condition In VSF: Global textile trends affected VSF business PBIDT declined due to lower realisation in line with global trends JVs performance impacted due to substantial f
Slide 34: Financial Performance – Consolidated
Financial Performance – Consolidated ` Bn. Nine Months % Change Quarter 3 % Change Quarter 2 2012-13 2011-12 YoY 2012-13 2011-12 YoY 2012-13 Reported Recasted (on recasted) Reported Recasted (on recasted) 202.0 179.6 179.6 12 Revenue 67.7 63.0 63.0 7 66.0 158.6 139.7 139.7 14 Operating Costs 54.6 49
Slide 35: Net Profit Chart
Net Profit Chart ` Bn. Nine Months Quarter 3 2012-13 2011-12 % 2012-13 2011-12 % Change Change Total Grasim's Total Grasim's Total Grasim's Total Grasim's Co. share Co. share Co. share Co. share 8.5 9.3 Standalone PAT 2.0 2.7 19.2 11.6 15.3 9.2 26 UltraTech Cement 6.1 3.7 6.0 3.6 2 (1.2) (0.5) 0.7 0
Slide 36: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 3: 2012-13 Business Review Capex Summary 36
Slide 37: Summary
Summary Cement business reported satisfactory performance VSF business records satisfactory performance, given textile value chain under pressure Leadership position and cost competitiveness in both the businesses will be further strengthened on ongoing basis Both businesses to consolidate l
Slide 38: Organizational Structure
Organizational Structure UltraTech Cement * Others Pulp, Fibre & Allied Chemical (60.32%) VSF Overseas Pulp Overseas Chemicals Domestic Overseas VSF Units 70 K TPA Pulp Units 3 Mn. TPA, (UAE, 352K TPA 258K TPA 49 Mn. TPA Bangladesh, Sri Lanka) Nagda Birla Jingwei $ AV Cell $ Nagda 11 Composite Grasi
Slide 39: 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
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 [email protected]
Grasim Industries — Investor Presentation (January 2013) on 6ix