Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (June 2005)
47 slides from Grasim Industries's investor presentation, June 2005
Slide 1: Grasim Industries Limited - A VSF and Cement Major
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation June 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 Supplements Supplements 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group h Amongst three large business houses in India h Leadership across businesses h Pioneers of globalisation in India, with operations across 18 countries h Revenues in excess of $6.5 bn; Net earnings of $730 mn h Delivered TSR in excess of 25% per annum over the last 5 years h G
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Largest in India; 9th largest in the World Cement – 31 mn TPA capacity, including 17 mn TPA in UltraTech Revenue Rs.57 Bn. – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals (US$ 1,310 Mn.) – Captive power plants across all location
Slide 6: Transformed significantly in recent years
Transformed significantly in recent years… h UltraTech Cement acquisition h Cement restructuring Invest h Cement brownfield expansions for growth h Captive thermal power augmentation Build h VSF capacity at Kharach Size & Scale h Manpower rationalisation by almost 33% Enhance Competitiveness h Closu
Slide 7: Towards superior shareholder value
… Towards superior shareholder value (Rs. Crores) (%) 7500 1.25 7000 23.7 25 1.13 6931 23.1 23 6500 6000 1.00 6304 21 5000 19 5500 5673 0.75 5412 17 5037 4000 4500 15 4324 3000 0.50 13 0.46 3606 3500 10.1 11 2000 2971 0.25 9 2706 2500 1000 7 2142 5.3 0 5 1500 0.00 FY99 FY02 FY03 FY04 FY05 FY99 FY02
Slide 8: Grasim: Business Mix – FY05
Grasim: Business Mix – FY05 Net Revenues PBIDT Capital Employed Rs.6,247 Crores (US$ 1,436 Mn) Rs.1,785 Crores (US$ 410 Mn) Rs.6,931 Crores (US$ 1,593 Mn) 1% 1% 4% 6% 6% 16% 5% 11% 3% 15% 22% 7% 31% 34% 32% 31% 44% 31% Cement Cement Subsidiaries VSF Chemicals Textiles Sponge Iron Others Essentiallya
Slide 9: Grasim Consolidated Business Mix – FY05
Grasim Consolidated Business Mix – FY05 Net Revenues PBIDT Mix Capital Employed* Rs.9,410 Crores (US$ 2,163 Mn) Rs.2,272 Crores (US$ 522 Mn) Rs.8,164 Crores (US$ 1,877 Mn) 1% 3% 3% 3% 1% 2% 8% 4% 11% 11% VSF 6% 13% VSF 17% 21% VSF Cement Cement 27% Grasim Cement Subsidiaries Cement Subsidiaries 26%
Slide 10: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary Supplements Supplements 10
Slide 11: 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 MT) Revenue Rs.20 Bn. – JV for Pulp with Tembec Inc., Canada (110,000 MT) (US$ 460 Mn.) – Acquiring another large pulp mill in Canada with Tembec Inc. – Group world
Slide 12: A key global player
A key global player h VSF: A cellulosic fibre Sustainable Competitive Advantages − 7% of global man-made fibre market − 4% of global fibre market hAmongst lowest cost producers globally h Global Capacity – 2.1 Mn TPA approx. hFully integrated operations − Captive Pulp (45%) & Caustic Soda (100%) Glo
Slide 13: Strong Current operations
Strong Current operations (Rs. Crs.) (%) 700 PBDIT ROCE 80 64.5 64.3 600 63.3 (Figures in Rs. Crores) FY03 FY04 FY05 500 60 400 Capacity (mtpa) 220,775 251,850 253,675 33.4 40 611 300 588 573 Net Turnover 1,640 1,765 1,956 200 20 345 PBIDT 588 573 611 100 0 0 PBIDT Margin 36% 33% 31% FY02 FY03 FY04
Slide 14: Outlook
Outlook h Enhancement of capacity thru brown field and de-bottlenecking (58,755 MT PA) to sustain growth momentum − 18000 TPA to be operational by September 05 − Balance to come onstream, in phases, by March 07 h Grasim focusing on value added products and market enlargement − Positioning VSF at the
Slide 15: Chemicals: A backward integration for VSF
Chemicals: A backward integration for VSF h 2nd largest producer in India h Nearly 80% for captive requirements h Strong current performance (Rs. Crores) FY03 FY04 FY05 − Improved demand from VSF and other end Capacity (MTPA) 190,800 190,800 190,800 use segments − Up trend in realisation, both domes
Slide 16: 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$ 1,310 Mn.) – 11 composite plants, 7 grinding units, 7 RMC units & 4 bulk terminals – Market leader in White Cement (0.5 Mn MT)
Slide 17: 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 Positive demand outlook ; Growth to average 7-8 % − Housing outlook buoyant − Government thrust on infrastructure − Rapid industrial growth to add further impet
Slide 18: Grasim well positioned to reap benefits
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 36 26 22 1st Ea
Slide 19: Complementary asset profile offering synergies
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 20: Cement Consolidated: Highlights
Cement Consolidated : Highlights Q4FY05 FY05 FY04 Grasim SDCC Capacity (Mn TPA) 31.2 31.2 31.2 42% 3% Sales Volumes (Mn MT) UltraTech Clinker 0.5 3.1 3.2 55% Cement 7.3 26.3 24.9 Cement Capacity - 31.2 Mn. Ton 7.8 29.4 28.1 Net Turnover (Rs. Crs.) Grasim Clinker 66 410 335 49% SDCC 3% Cement 1,390 4
Slide 21: Grasim: Strong current performance
Grasim: Strong current performance h Sales volume up 6% (Figures in Rs. Crores) FY03 FY04 FY05 h Strong revenue growth backed by Capacity Grey Cement(Mn.TPA) 12.92 13.12 13.12 realisation and higher volumes White Cement (Mn. TPA) 0.4 0.4 0.5 h Margins improved on better prices − Despite substantial
Slide 22: UltraTech (consolidated): Current performance
UltraTech (consolidated): Current performance… h Capacity utilisation of 91% (Figures in Rs. Crs) FY04 FY05 − 12.9 Mn. Ton of Cement and 2.7 Mn. Ton of Capacity (Mn TPA) 17.0 17.0 Clinker Net Turnover & Other 2,336 2,797 Income − Cement sales volume up 6% PBIDT 367 379 h Revenues up by 20% on higher
Slide 23: UltraTech Outlook
UltraTech Outlook h Capex plan of Rs. 966 Crs. including Rs.540 Crs. for 92 MW thermal power plant at Gujarat Cement Plant h Cost and efficiency improvement − Power cost reduction − Fuel cost reduction Use of alternate fuels towards reducing fuel costs − Logistics Cost reduction h Reduce leveragin
Slide 24: Grasim Cement: Business Strategy for profitable growth
Grasim 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
Slide 25: Sponge Iron
Sponge Iron Revenue - Rs.10 Bn. Largest merchant producer in India (US$ 230 Mn.) – Gas based coastal plant with 900,000 MT capacity
Slide 26: Sponge Iron: Strategic efforts paying off
Sponge Iron: Strategic efforts paying off h Significant competitive advantages Strong Cash Flow Generation − Flexibility to produce both HBI & DRI 450 Rs. Crores from the same reactor 400 − Flexibility to use multiple feedstocks 390 350 − Captive port for raw material imports 300 h Focus on asset sw
Slide 27: Sponge Iron: Outlook remains positive
Sponge Iron: Outlook remains positive h Excellent current performance − Enhanced volumes and strong prices (Rs. Crores) FY03 FY04 FY05 − Increased plant utilisation Capacity (MT PA) 900,000 900,000 900,000 − Higher margins and returns despite Rising Pellet and Iron Ore costs Net Turnover 406 639 1
Slide 28: Grasim: Capex
Grasim: Capex Rs. Crores Capex Cash Outflow plan FY06 FY07 Cement (Grasim) 920 504 384 - Power plants ( 3 nos, 77 MW ) 332 166 134 - Grinding Unit in North (1 .3 Mn. MTPA ) 112 65 47 - De-bottlenecking & Blending 151 51 100 - Others 325 222 103 VSF 602 290 305 - Capacity expansion ( 58,775 MTPA ) 37
Slide 29: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary Supplements Supplements 29
Slide 30: Grasim - Impressive earnings growth
Grasim - Impressive earnings growth h Robust growth in last 6 years (Figures in Rs. Crores) FY99 FY03 FY04 FY05 h Compared to FY99 Gross Turnover 4,325 5,412 6,130 7,201 − PBIDT has gone up by 2.6 times − PAT has multiplied by 9.0 times Net Turnover 3,757 4,606 5,213 6,229 − Interest Cover improved
Slide 31: Grasim - Segmental Performance – FY05
Grasim - Segmental Performance – FY05 Rs. Crores PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed# (PBIT basis) FY05 FY04 FY05 FY04 FY05 FY04 FY05 FY04 FY05 FY04 FY05 FY04 VSF 1,957.4 1,765.5 610.8 572.7 31.2 32.5 553.6 520.4 1,027 825 63.3 64.3 Chemical 351.8 295.4 104.0 74.
Slide 32: Consolidated Segmental Performance – FY05
Consolidated Segmental Performance – FY05 Rs. Crores PBIDT Capital ROAvCE (%) Business Revenue PBIDT Margin PBIT (%) Employed# (PBIT basis) VSF 2,006.3 612.9 30.5 554.6 1,054.6 61.7 Chemical 351.8 104.0 29.6 87.0 212.7 42.5 Cement 5,749.8 973.6 16.9 578.7 6,887.9 8.4 Sponge Iron 1,021.5 389.7 38.2 3
Slide 33: Strong Balance Sheet - Grasim
Strong Balance Sheet - Grasim (Figures in Rs. Crores) FY99 FY03 FY04 FY05 h Strong Balance Sheet – Substantial Gross Block 4,937 5,594 5,802 6,052 liquidity build up post full funding of Net Block 3,354 3,264 3,213 3,204 UltraTech acquisition Cement Subs. Investments 56 1,134 2,260 2,215 h Book Valu
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet (Figures in Rs. Crores) FY04 FY05 h Strong consolidated Balance Sheet as well Gross Block 10,702 11,317 h Gearing to be viewed in the context of Net Block 6,394 6,300 − Large cash surplus Goodwill 2,037 1,958 − Debts include long term interest free State Investments 270 76
Slide 35: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary Supplements Supplements 35
Slide 36: Investment Summary
Investment Summary h A cement and VSF major with added advantage of strong cash flows from Sponge Iron h Achieved domestic leadership in cement − Well timed, ahead of likely improvement in sector profitability − Significant value unlocking opportunities in UltraTech − Synergy realisation and perform
Slide 37: 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: Sponge Iron z Improve capital productivity Strategy z Market expansion through greate
Slide 38: Thank You
IGRASTM| ADITYA BIRLA GROUP Thank You
Slide 39: Presentation Structure
Presentation Structure Introduction Introduction FinancialHighlights Financial Highlights BusinessReview Business Review& &Outlook Outlook Summary Summary Supplements Supplements • Financial summary and Business Data - Q4FY05 & FY05 (Pg. 40-47) 39
Slide 40: Grasim - Financial Performance Summary
Grasim - Financial Performance Summary (Rs. Crores) Q4FY05 Q4FY04 % Chg. FY05 FY04 % Chg. Net Turnover & Op. Income 1,642.2 1,553.2 6 6,247.1 5,233.3 19 Other Income 82.5 72.1 14 169.4 209.2 (19) PBIDT 478.1 513.3 (7) 1,784.7 1,504.2 19 Interest 33.9 35.1 (3) 138.8 153.9 (10) Gross Profit 444.2 478.
Slide 41: Viscose Staple Fibre: Summary
Viscose Staple Fibre : Summary % % Q4 FY05 Q4 FY04 FY05 FY04 Chg. Chg. Capacity TPA @ 253,675 251,850 1 @ 253,675 251,850 1 Production MT 63,304 61,164 3 247,952 221,005 12 Sales Volumes MT 54,182 62,597 (13) 231,533 229,110 1 Net Turnover Rs. Crs. 461.7 497.8 (7) 1,956.4 1,764.8 11 Avg. Realisation
Slide 42: Chemical: Summary
Chemical : Summary Q4FY05 Q4FY04 % FY05 FY04 Chg. Capacity (Caustic) MT 190,800 190,800 -- 190,800 190,800 -- Production (Caustic) MT 42,165 43,135 (2) 161,966 157,541 3 Sales Volume(Caustic) MT 42,793 42,625 -- 163,111 156,967 4 Net Turnover Rs. Crs. 102.6 80.1 28 350.9 294.6 19 Avg. ECU Realisatio
Slide 43: Cement: Summary
Cement : Summary Q4FY05 Q4FY04 % FY05 FY04 % Chg. Chg. Grey Cement Capacity Mn. MT 13.12 13.12 -- 13.12 13.12 -- Production Mn. MT 3.30 3.20 3 12.44 11.85 5 Sales Volumes Mn. MT 3.36 3.24 4 12.63 11.96 6 Net Turnover Rs. Crs. 699.4 660.5 6 2,577.8 2,226.0 16 Avg. Realisation Rs./MT 1,923 1,873 3 1,8
Slide 44: Sponge Iron: Summary
Sponge Iron : Summary Q4FY05 Q4FY04 % FY05 FY04 % Chg. Chg. Capacity TPA 900,000 900,000 -- 900,000 900,000 -- Production MT 219,746 219,685 -- 780,341 687,272 14 Sales Volumes MT 202,646 205,891 (2) 772,799 676,921 14 Net Turnover Rs. Crs. 281.3 232.8 21 1,021.4 638.9 60 Avg. Realisation Rs./MT 13,
Slide 45: Textiles: Summary
Textiles : Summary Q4FY05 Q4FY04 % FY05 FY04 % Chg. Chg. Net Turnover Rs. Crs. 65.9 60.7 9 249.9 228.0 10 PBIDT Rs. Crs. 3.1 5.2 (40) 11.9 13.4 (12) PBIDT Margin % 4.7% 8.5% -- 4.8% 5.9% -- PBIT Rs. Crs. 0.5 2.3 -- (0.5) (0.2) -- Capital Employed Rs. Crs. 101 109 (7) 101 109 (7) ROAvCE (PBIT basis)
Slide 46: Production Data (MT)
Production Data (MT) Q4FY05 Q4FY04 FY05 FY04 Capacity Capacity Capacity Capacity Production % Production % Production % Production % TPA TPA TPA TPA VSF @ 253,675 63,304 100 # 251,850 61,164 111 @ 253,675 247,952 98 # 251,850 221,005 100 Caustic Soda 190,800 42,165 88 190,800 43,135 83 190,800 161,9
Slide 47: Divisional Turnover (Qty) & Realisation
Divisional Turnover (Qty) & Realisation Quantity (MT) Realisation (Rs. /MT) Product Q4 Q4 Q4 Q4 FY05 FY04 FY05 FY04 FY05 FY04 FY05 FY04 VSF 54,182 62,597 231,533 229,110 78,178 74,491 79,008 72,269 Caustic Soda * 42,793 42,625 163,111 156,967 21,364 16,571 18,836 16,338 Grey Cement * * 3.36 3.24 12.
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