Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (November 2005)
51 slides from Grasim Industries's investor presentation, November 2005
Slide 1: Grasim Industries Limited - A VSF and Cement Major
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation November 2005
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 Introduction Businessreview Business review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group h Amongst largest business houses in India h Leadership position across businesses h Pioneers of globalisation in India, with manufacturing operations in 9 countries h Revenues of $7.6 bn; Net earnings of $790 mn h Delivered TSR in excess of 25% per annum over the last 5 years
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Largest in India; 9th largest in the World Cement – 31 Mn TPA capacity, including 17 mn TPA in UltraTech Revenue Rs.57 Bn. – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals (US$ 1,245 Mn.) – Captive power plants across all location
Slide 6: Transformed significantly in recent years
Transformed significantly in recent years… h Integrated Plantation cum Pulp Project at Laos h Acquisition of St Anne Nackawic Pulp Mill - Canada h Major capex Plans for Capacity Expansion, CPP & Up-gradation Invest h UltraTech Cement Acquisition for growth h Cement restructuring h Cement brownfield
Slide 7: Grasim Consolidated Business Mix – FY05
Grasim Consolidated Business Mix – FY05 Net Revenues PBIDT Mix Capital Employed * Rs.9,317 Crores (US$ 2,036 Mn) Rs.2,272 Crores (US$ 497 Mn) Rs.9,701 Crores (US$ 2,120 Mn) 1% 2% 3% 1% 2% 4% 5% 7% 10% 10% VSF 5% 17% 11% VSF VSF 21% Cement Cement 27% Grasim Cement Subsidiaries Cement Subsidiaries 23%
Slide 8: Grasim Consolidated Business Mix – H1FY06
Grasim Consolidated Business Mix – H1FY06 Net Revenues PBIDT Mix Capital Employed Rs.4,796 Crores (US$ 1,048 Mn) Rs.1,101 Crores (US$ 241 Mn) Rs. 9,938 Crores (US$2,172 Mn) 1% 2% 3% 4% 3% 10% 7% 8% 14% VSF VSF 6% 10% VSF 19% 5% 19% Cement Grasim Cement Cement Subsidiaries 21% Subsidiaries Grasim Cem
Slide 9: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 9
Slide 10: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Amongst world’s top two producers with 12% global share – 3 Fibre plants (253,675 MT) & 1 pulp plant (70,000 TPA) Revenue Rs.19 Bn. – JV for Pulp with Tembec Inc., Canada (110,000 TPA) (US$ 415 Mn.) – Acquired another large pulp mill in Canada in JV Tembec Inc. (145,000 TP
Slide 11: VSF Global Scenario
VSF Global Scenario h VSF: A cellulosic fibre Global Market Share − 4% of global fibre market − 7% of global man-made fibre market Equifibers h Global Capacity – 2.1 Mn TPA 3% Chinese Producers (several) − AVB group 38% − Grasim (India) 254 − Indo Bharat Rayon (Indonesia) 110 Lenzing − Thai Rayon (T
Slide 12: Sustainable Competitive Strengths
Sustainable Competitive Strengths h Amongst lowest cost producers globally h Fully integrated operations − Captive Pulp (45%) & Caustic Soda (100%) − Captive power and steam − Two JVs for pulp manufacturing in Canada − Self managed water supply sources h Strong R&D capabilities − Several new product
Slide 13: VSF: Current Performance
VSF: Current Performance h Satisfactory performance in a challenging environment h Impressive volume recovery in Q2FY06 (Figures in Rs. Crores) FY04 FY05 H1FY06 ¾ EU & US embargo on Chinese exports Capacity (mtpa) 251,850 253,675 253,675 ¾ Focus on export to growing textile hubs like Net Turnover 1,
Slide 14: VSF: Outlook
VSF: Outlook h Volumes prospects remain positive ¾ Embargo on Chinese textile exports to help ¾ Closure of Plants in US & Russia due to operations turning unviable h Margins expected to be stable ¾ Softening pulp prices ¾ Caustic prices softening globally h Long term outlook remains positive ¾ Impro
Slide 15: VSF: Strategy for Growth
VSF: Strategy for Growth h Enhancement of capacity thru brown field and de-bottlenecking (58,775 MT PA) h Grasim focusing on value added products and market enlargement ¾ Positioning VSF at the high end of the market ¾ New genre cellulose fibres “Modal”, “Viscose +” commercialised h Focus on increas
Slide 16: Chemicals: A backward integration for VSF
Chemicals: A backward integration for VSF h 2nd largest producer in India h Nearly 80% of caustic soda used captively (Rs. Crores) FY04 FY05 H1FY06 h Strong current performance Capacity (MTPA) 190,800 190,800 190,800 ¾ Higher international prices, backed by robust Net Turnover 295 351 203 demand fro
Slide 17: Cement
Cement Largest in India; 9th largest in the World Revenue - Rs. 57 Bn – 31 mn TPA capacity, including 17 mn TPA in UltraTech (US$ 1,245 Mn.) – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals – Market leader in White Cement (0.5 Mn MT)
Slide 18: Cement: Sector outlook promising
Cement: Sector outlook promising h Second largest market in the world h A growth business in India with significant long term potential h Demand outlook positive ; Expected to grow by 8 % ¾Buoyant housing demand ¾Growing thrust on infrastructure ¾Unfolding of capex cycle to provide further impetus h
Slide 19: Grasim well positioned to reap benefits - market leadership
Grasim well positioned to reap benefits … • Leadership in key consuming markets hNo 1 in 7 states with 39% of demand hNo 2 in 6 states with 21% of demand hNo 3 in 5 states with 19% of demand Grasim Zonal Combine Distribution Zone Mkt. Rank Grasim Industry Combine Share % 14 2nd North 34 24 22 1st Ea
Slide 20: Grasim well positioned to reap benefits - asset profile
Grasim well positioned to reap benefits … • Complimentary asset profile offering synergies $JCVKPFC ) Capacity (Mn TPA) 0QKFC Grasim Consolidated 31.2 ,QFJRWT )WTICQP 5JCODJWRWTC - Grasim 13.1 - UltraTech & NCCL 17.0 5KMMC ,CYCF &WTICRWT ) ,CHTCDCF - SDCCL 1.1 /CIFCNNC ) 2KRCXCX #YCTRWT *KTOK 4CKRWT
Slide 21: Grasim: Strong current performance
Grasim: Strong current performance (Figures in Rs. Crores) FY04 FY05 H1FY06 h Capacity utilisation impressive at 100% Capacity h Strong volume growth Grey Cement (Mn.TPA) 13.12 13.12 13.12 − Outperformed the Industry in North & East White Cement (Mn.TPA) 0.4 0.5 0.5 − Strong growth of 8% in south h
Slide 22: UltraTech (consolidated): Current performance
UltraTech (consolidated): Current performance h Improved product mix; focus on maximising (Figures in Rs. Crs) FY04 FY05 H1FY06 cement exports Capacity (Mn TPA) 17.0 17.0 17.0 Net Turnover & − Moving from clinker to cement export 2,700 @1,356 2,336 Other Income h Positive change in sales mix PBIDT 3
Slide 23: UltraTech Outlook
UltraTech Outlook h Capex plan of Rs.987 Crs. including setting up of captive power plants (Rs. 540 crs.) and debottlenecking h Cost and efficiency improvement − Power cost reduction Lignite based TPP at Gujarat plant, by July 2007 Co-Generation plant at Tadpatri (AP) Measures for interim redu
Slide 24: Consolidated Performance Highlights
Consolidated Performance Highlights FY04 FY05 H1FY06 Grey Cement Capacity (Mn. TPA) 31.2 31.2 31.2 Grasim SDCC Production (Mn. MT) 42% 3% Clinker 3.2 3.1 0.8 Cement 24.8 26.1 13.3 UltraTech Sales Volumes (Mn. MT) 55% Clinker 3.2 3.1 0.8 Cement 24.9 26.3 13.4 Cement Capacity - 31.2 Mn. Ton 28.1 29.4
Slide 25: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth h Cost control − Lowering energy costs - use of alternate fuel, higher share of TPP Captive Power Plant with combined capacity of 169 MW planned at 4 locations − Reducing distribution costs h Improve realization − Realign product / market mix − Focus
Slide 26: Sponge Iron
Sponge Iron Revenue - Rs.8 Bn. Largest merchant producer in India (US$ 175 Mn.) – Gas based coastal plant with 900,000 MT capacity
Slide 27: Sponge Iron
Sponge Iron h Competitive advantages − Flexibility to produce both HBI & DRI from the same reactor − Flexibility to use multiple feedstocks − Captive port for raw material imports h Focus on asset sweating in recent years − Generated Rs.748 crores in past 3 years despite poor gas availability 27
Slide 28: Sponge Iron: Current performance / Outlook
Sponge Iron : Current performance / Outlook h Operations impacted by disruptions in Natural (Figures in Rs. Crores) FY04 FY05 H1FY06 Gas supplies Capacity (TPA) 900,000 900,000 900,000 h Operating margins impacted due to steep rise in iron ore, pellet and natural gas prices Net Turnover 639 1021 391
Slide 29: Capital Expenditure Plan
Capital Expenditure Plan h Grasim -Plans to spend Rs.1,700 Crs. in next two years − Cement : capacity expansions and CPP – Rs.589 Crs., modernisation – Rs.362 Crs. − VSF : capacity expansion (58,775 TPA) –Rs.374 Crs. and modernisation – Rs.159 Crs. − Chemical : conversion to membrane cell – Rs.148 C
Slide 30: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 30
Slide 31: Standalone Financials
Standalone Financials (Figures in Rs. Crores) FY99 FY04 FY05 H1FY06 h In last completed FY05, compared to FY99 Net Turnover 3,757 5,213 6,229 3,169 − PBIDT up by 2.6 times PBIDT 674 1,504 1,785 793 − PAT has multiplied by 8.0 times – CAGR PAT *105 779 886 439 of 43% EPS (Rs.) *12.5 85.0 96.6 47.8 −
Slide 32: Consolidated Financials
Consolidated Financials (Figures in Rs. Crores) FY04 FY05 H1FY06 h Strong Consolidated Balance sheet as well Net Turnover 7,782 9,292 4,772 h Leveraging in real term even lower, to be PBIDT 1,909 2,272 1,101 viewed in the context of PAT (After Minority share) 759 880 497 − Large cash surplus EPS (Rs
Slide 33: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 33
Slide 34: Investment Summary
Investment Summary h A Cement and VSF major with significant competitive strengths h Domestic leadership in cement − Well timed acquisitions, ahead of likely improvement in sector profitability − Improving performance of cement subsidiaries is a key challenge h VSF to remain stable cash generator −
Slide 35: Vision and Strategy
Vision and Strategy To be a premium VSF and Cement Company delivering Vision superior value to stakeholders on a sustained basis z Grow and strengthen main businesses: VSF and Cement z Sweat other assets optimally Strategy z Market expansion through greater penetration z Improve margins through stri
Slide 36: Thank You
IGRASTM| ADITYA BIRLA GROUP Thank You
Slide 37: Grasim Industries Limited - A VSF and Cement Major (Supplement)
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation (Supplement) November 2005
Slide 38: Presentation Structure
Presentation Structure Introduction Introduction FinancialHighlights Financial Highlights BusinessReview Business Review& &Outlook Outlook Summary Summary Supplements Supplements • Consolidated Financial Performance – H1FY06 (Pg. 39 – 40) • Standalone Financial Performance - H1FY06 (Pg. 41 - 43) • B
Slide 39: Consolidated Financial Performance
Consolidated Financial Performance (Rs. Crores) Q2FY06 Q2FY05 % Chg. H1FY06 HIFY05 % Chg. FY05 (Audited) Net Turnover & Op. Income 2,327.7 2,221.7 5 4,795.8 4,501.5 7 9,317.3 Other Income 44.7 38.2 17 120.2 89.5 34 217.6 PBIDT 460.9 538.1 (14) 1,101.4 1,122.4 (2) 2,272.3 Interest 53.9 70.4 (23) 110.
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet (Figures in Rs. Crores) FY04 FY05 H1FY06 h Strong consolidated Balance Sheet as well Gross Block 10,702 11,317 11,570 h Leveraging in real term even lower, to be Net Block 6,394 6,300 6,316 viewed in the context of Goodwill 2,037 1,958 1,958 − Large cash surplus Investment
Slide 41: Standalone Financial Performance
Standalone Financial Performance (Rs. Crores) Q2FY06 Q2FY05 % Chg. H1FY06 H1FY05 % Chg. FY05 Net Turnover & Op. Income 1,639.1 1,533.5 7 3,192.4 3,050.6 5 6,252.4 Other Income 30.8 30.4 1 96.3 46.7 106 167.0 PBIDT 352.7 429.8 (18) 792.5 876.1 (10) 1,784.7 Interest 23.7 36.7 (35) 50.3 69.6 (28) 138.8
Slide 42: Financial Snapshot - Standalone
Financial Snapshot - Standalone H1 (Figures in Rs. Crores) FY99 FY04 FY05 FY06 h Book Value – from Rs.234 in FY99 to Gross Block 4,937 5,802 6,052 6,190 Rs.519 per share in H1FY06 Net Block 3,354 3,213 3,204 3,219 h Low gearing Cement Subs. Investments 56 2,333 2,362 2,357 h Excellent returns on equ
Slide 43: Segmental Performance-H1FY06
Segmental Performance-H1FY06 Standalone (Rs. Crores) PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) H1FY06 H1FY05 H1FY06 H1FY05 H1FY06 H1FY05 H1FY06 H1FY05 H1FY06 H1FY05 H1FY06 H1FY05 VSF 918.1 1,011.1 215.1 326.1 23.8 32.4 184.0 298.5 952 852 39.7 74.8 Chemica
Slide 44: Viscose Staple Fibre: Summary
Viscose Staple Fibre : Summary % H1 H1 % Q2 FY06 Q2 FY05 FY05 Chg. FY06 FY05 Chg. Capacity TPA 253,675 251,850 1 253,675 251,850 1 @ 253,675 Production MT 50,231 61,378 (18) 102,513 121,090 (15) 247,952 Sales Volumes MT 62,776 60,517 4 115,732 121,394 (5) 231,533 Net Turnover Rs. Crs. 485.1 510.0 (5
Slide 45: Chemical: Summary
Chemical : Summary Q2 Q2 % H1 H1 % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Capacity (Caustic) MT 190,800 190,800 -- 190,800 190,800 -- 190,800 Production (Caustic) MT 42,766 38,765 10 78,783 77,083 2 161,966 Sales Volume(Caustic) MT 41,585 38,651 8 77,434 77,148 -- 163,111 Net Turnover Rs. Crs. 103.9 81.
Slide 46: Cement: Summary
Cement : Summary Q2 Q2 % H1 H1 % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Grey Cement Capacity Mn. MT 13.12 13.12 -- 13.12 13.12 -- 13.12 Production Mn. MT 3.21 3.04 6 6.56 6.03 9 12.44 Sales Volumes Mn. MT * 3.25 3.04 7 * 6.59 6.08 8 12.63 Net Turnover Rs. Crs. * @ 681.6 616.0 11 * @ 1,380.1 1,254.5 10 2
Slide 47: Sponge Iron: Summary
Sponge Iron : Summary Q2 Q2 % H1 H1 % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Capacity TPA 900,000 900,000 -- 900,000 900,000 -- 900,000 Production MT 125,944 202,976 (38) 305,760 379,908 (20) 780,341 Sales Volumes MT 140,275 189,959 (26) 283,902 373,418 (24) 772,799 Net Turnover Rs. Crs. 170.4 227.5 (25
Slide 48: Textiles: Summary
Textiles : Summary Q2 Q2 % H1 H1 % FY05 FY06 FY05 Chg. FY06 FY05 Chg. Net Turnover Rs. Crs. 70.7 75.5 (6) 121.2 124.7 (3) 249.9 PBIDT Rs. Crs. 3.4 5.0 (32) 4.3 7.2 (40) 11.9 PBIDT Margin % 4.8% 6.6% -- 3.5% 5.8% -- 4.8% PBIT Rs. Crs. 1.9 1.8 -- 1.3 0.7 -- (0.5) Capital Employed Rs. Crs. 106 108 (2)
Slide 49: Production Data (MT)
Production Data (MT) H1FY06 H1FY05 FY05 Capacity Capacity Capacity Production % Production % Production % TPA TPA TPA VSF 253,675 102,513 81 251,850 121,090 96 @ 253,675 247,952 98 Caustic Soda 190,800 78,783 83 190,800 77,083 81 190,800 161,966 85 Grey Cement * 13.12 6.56 100 13.12 6.03 92 13.12 12
Slide 50: Divisional Turnover (Qty.) & Realisation
Divisional Turnover (Qty.) & Realisation Quantity (MT) Realisation (Rs. /MT) Product H1FY06 H1FY05 FY05 H1FY06 H1FY05 FY05 VSF 115,738 121,394 231,533 72,587 78,428 79,008 Caustic Soda * 77,434 77,148 163,111 23,178 17,078 18,836 Grey Cement * * 6.59 6.07 12.63 1,931 1,899 1,874 White Cement 161,428
Slide 51: Capex under implementation
Capex under implementation Rs. Crores Capex Cash Outflow plan FY06 FY07 Cement 951 457 437 - Power plants (3 Nos, 77MW) 330 114 160 - Grinding unit in North (1.3 Mn. MT) 115 50 65 - De-bottlenecking/Blending 144 49 94 - Modernization 362 244 118 VSF 533 214 319 - Capacity expansion (58,775 Tons) 374
Grasim Industries — Investor Presentation (November 2005) on 6ix