Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (June 2006)
51 slides from Grasim Industries's investor presentation, June 2006
Slide 1: Grasim Industries Limited - A VSF and Cement Major
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation June 2006
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 the 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 $8.3 bn; Net earnings of $940 mn h Group market capitalisation of $10.1* Bn. h Group Flagship
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading player in India Cement – 31 Mn. TPA capacity, including 17 Mn. TPA in UltraTech Revenue Rs.69 Bn. – 11 composite plants, 7 grinding units, 11 RMC units & 4 bulk terminals (US$ 1,490 Mn.) – Captive power plants across all locations – 170 MW TPP,
Slide 6: Grasim Consolidated Business Mix – FY06
Grasim Consolidated Business Mix – FY06 Net Revenues PBIDT Mix Capital Employed * Rs.10,200 Crores (US$ 2,217 Mn) Rs.2,331 Crores (US$ 507 Mn Mn)) Rs.10,300 Crores (US$ 2,239 Mn) 2% 2% 1% 3% 4% 8% 5% 6% 15% 3% VSF 10% VSF VSF 5% Cement 19% 21% Grasim Cement Subsidiaries Cement 20% 33% Subsidiaries C
Slide 7: Transformed significantly in recent years…
Transformed significantly in recent years… h Capacity expansion plans in Cement & Fibre Businesses h Integrated Plantation cum Pulp Project at Laos h Major capex Plans for CPP, RMC’s & Up-gradation h Acquired St Anne Nackawic Pulp Mill - Canada Invest h UltraTech Cement Acquisition for growth h Ceme
Slide 8: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 8
Slide 9: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) Amongst world’s top two producers with 12% global share Revenue Rs.20 Bn. – 3 Fibre plants (257,325 TPA) & 1 pulp plant (70,000 TPA) – JV for Pulp with Tembec Inc., Canada (125,000 TPA) (US$ 435 Mn.) – Acquired another large pulp mill in Canada, JV with Tembec Inc. (145,00
Slide 10: VSF Global Scenario
VSF Global Scenario h VSF: A cellulosic fibre − 4% of global fibre market Global Market Share - VSF − 7% of global man-made fibre market h Global Capacity – 2.1 Mn. TPA Equifibers ‘000 TPA 3% Chinese Producers − AVB group (several) 38% − Grasim (India) 257 * − Indo Bharat Rayon (Indonesia) 110 Lenzi
Slide 11: Sustainable Competitive Strengths
Sustainable Competitive Strengths h Amongst the lowest cost producers globally h Highly integrated operations − Captive Raw materials - 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
Slide 12: VSF: Current Performance
VSF: Current Performance h Satisfactory performance amidst structural changes − Abolition of MFA impacted initially due to (Rs. Crores) FY05 FY06 uncertainty associated with its impact − Reduction in import duty and DEPB incentive Capacity (mtpa) 253,675 257,325 h Highest ever sales volumes Net Turn
Slide 13: VSF: Outlook
VSF: Outlook h Demand to sustain at present higher levels − Strong demand from India and South Asian Textile hubs − Reduction in excise duty on VSF to increase its competitiveness against natural fibres h Margins to sustain at current levels − Price outlook stable − Prices of pulp and coal on the ri
Slide 14: VSF: Strategy for Growth
VSF: Strategy for Growth h Enhancement of capacity thru brownfield and de-bottlenecking (49,625 MTPA) h Focusing on value added products and market enlargement − Positioning VSF at the high end of the market − New genre cellulose fibres “Modal”, “Viscose +” commercialised h Concentrated efforts to i
Slide 15: Chemicals: A backward integration for VSF
Chemicals: A backward integration for VSF h 2nd largest producer in India (Rs. Crores) FY05 FY06 h Nearly 80% of caustic soda used captively Capacity (MTPA ) 190,800 190,800 h Strong performance during FY06 − Higher international prices, backed by robust Net Turnover 351 385 demand from end use segm
Slide 16: Cement
Cement Leading player in India Revenue - Rs. 69 Bn. – 31 Mn. TPA capacity, including 17 Mn. TPA in UltraTech (US$ 1,490 Mn.) – 11 composite plants, 7 grinding units, 11 RMC units & 4 bulk terminals – Market leader in White Cement (0.5 Mn. TPA)
Slide 17: Cement: Sector outlook promising
Cement: Sector outlook promising h India is the 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 8-9% in the long term − Growing demand from housing and infrastructure − Industrial investment to provi
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 25% of demand hNo 2 in 7 states with 38% of demand hNo 3 in 3 states with 14% of demand Map not to scale (* Taking ACC/Ambuja as single combine) 18
Slide 19: Grasim well positioned to reap benefits …
Grasim well positioned to reap benefits … • Complimentary asset profile offering synergies Bhatinda(G) Capacity (Mn TPA) Panipat Grasim Consolidated 31.2 Dadri Kotputli - Grasim 13.1 Shambhupura Jodhpur - UltraTech & NCCL 17.0 Jawad Sikka Durgapur(G) - SDCCL 1.1 Jafrabad Magdalla (G) ACC 20.2 Pipava
Slide 20: Grasim Cement: Current performance
Grasim Cement : Current performance h Impressive Capacity utilisation at 105% (Rs. Crores) FY05 FY06 h Record sales volume fuelled by higher Capacity Grey Cement (Mn.TPA) 13.12 13.12 demand − Outperformed the Industry in North & East White Cement (Mn.TPA) 0.5 0.5 − Strong growth in South Net Turnove
Slide 21: UltraTech (consolidated): Current performance
UltraTech (consolidated) : Current performance h Improved product mix (Rs. Crs) FY05 FY06 Capacity (Mn. TPA) 17.0 17.0 − Moving from clinker export to cement export Net Turnover & Other h Increase in cement and clinker realisations @3,053 Income 2,703 h Higher operating profit and margins despite PB
Slide 22: UltraTech (consolidated): Current Performance
UltraTech (consolidated) : Current Performance h Capacity utilisation at 88% in FY06 as against FY06 FY05 92% in FY05 Production (Mn. MT) Clinker 1.33 2.67 − Shutdown at Gujarat Cement Works, Kovaya Cement 13.71 12.92 due to floods in Q2FY06 Sales volumes (Mn. MT) − Prolonged annual maintenance shut
Slide 23: Consolidated Performance Highlights
Consolidated Performance Highlights Grasim SDCC FY05 FY06 42% 3% Cement UltraTech 55% Capacity (Mn. TPA) 31.2 31.2 Sales Volumes (Mn. MT) 29.2 30.1 Cement Capacity - 31.2 Mn. Ton Revenue (Rs. Crs.) 5,652 # 6,609 *PBIDT (Rs. Crs.) 974 1,466 Grasim 51% SDCC *Capital Employed (Rs. Crs.) 6,886 6,911 3%
Slide 24: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth h Embark upon major capacity addition in Grasim through greenfield and brownfield − 1.5 Mn. TPA to be added thru Grinding unit at Dadri by June 07 and debottlenecking − 4 Mn. TPA greenfield project at Kotputli, Rajasthan with split grinding unit − 4 Mn
Slide 25: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth h Cost control − Lowering energy costs § Setting up Captive Power Plant at 4 locations in Grasim (102 MW) and 2 locations in UltraTech (142 MW) § Bidding for captive coal & lignite mines − Focus on optimising rail-road mix to minimise impact of road fr
Slide 26: Sponge Iron
Sponge Iron Largest merchant producer in India Revenue - Rs.6 Bn. – Gas based coastal plant with 900,000 MT capacity with captive port (US$ 140 Mn.) – Flexibility to use multiple feed stocks
Slide 27: Sponge Iron: Current performance / Outlook
Sponge Iron : Current performance / Outlook h Operations impacted due to poor availability of Natural Gas (Rs. Crores) FY05 FY06 h Operating margins impacted due to steep rise Capacity (TPA) 900,000 900,000 in cost of all inputs and lower volumes Net Turnover 1021 634 h Profitability to remain under
Slide 28: Capital Expenditure Plan
Capital Expenditure Plan h Cement expansion plans of 9.5 Mn. TPA at total investment of Rs.2,600 Crs. - 4 Mn. TPA Greenfield project at Kotputli, Rajasthan with split grinding unit, by early FY09, outlay Rs.1,275 Crs. - 4 Mn. TPA Brownfield project at Shambhupura, Rajasthan with split grinding unit,
Slide 29: Capital Expenditure Plan contd….
Capital Expenditure Plan contd…. - VSF : Modernisation – Rs.299 Crs. - Chemical : Conversion to membrane cell – Rs.148 Crs. Modernisation – Rs.33 Crs. - Textiles : CPP (8 MW) and modernisation – Rs. 79 Crs. h UltraTech - Capex plan of Rs.1,520 Crs. in next two years - 2 CPP (142 MW, Total Project Co
Slide 30: Presentation Structure
Presentation Structure Introduction Introduction BusinessReview Business Review& &Outlook Outlook FinancialHighlights Financial Highlights Summary Summary 30
Slide 31: Consolidated Financials
Consolidated Financials (Figures in Rs. Crores) FY04 FY05 FY06 h Strong Consolidated Balance sheet Net Turnover 7,782 9,292 10,165 h Leveraging in real term even lower, viewed PBIDT 1,909 2,272 2,331 in the context of PAT (After Minority share) 761 880 1,039 − Cash surplus EPS (Rs.) 83.0 96.0 113.3
Slide 32: Grasim Standalone Financials
Grasim Standalone Financials (Figures in Rs. Crores) FY99 FY04 FY05 FY06 h Over 9 times growth in market cap. to Net Turnover 3,757 5,213 6,229 6,620 Rs.143 Bn.* (US$3.1 Bn.) since FY99 PBIDT 674 1,504 1,785 1,591 h Low gearing PAT *105 779 886 863 h Excellent returns on Equity EPS (Rs.) *12.5 85.0
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 strong competitive strengths h Domestic leadership in cement − Well timed acquisitions, ahead of improvement in sector profitability − Expansion plans in place to meet growing demand − Improving performance of cement subsidiaries h VSF – Leading globa
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 l Grow and strengthen main businesses: VSF and Cement l Sweat other assets optimally Strategy l Improve margins through stringent cost control and greater efficiency 35
Slide 36: Thank You
IG RA STM! Thank You
Slide 37: Grasim Industries Limited - A VSF and Cement Major (Supplement)
Grasim Industries Limited - A VSF and Cement Major Corporate Presentation (Supplement) June 2006
Slide 38: Presentation Structure
Presentation Structure Introduction Introduction FinancialHighlights Financial Highlights BusinessReview Business Review& &Outlook Outlook Summary Summary Supplements Supplements • Consolidated Financial Performance (Pg. 39) • Standalone Financial Performance (Pg. 40) • Balance Sheet (Pg. 41) • Segm
Slide 39: Consolidated Financial Performance
Consolidated Financial Performance (Rs. Crores) Q4FY06 Q4FY05 % Chg. FY06 FY05 % Chg. Net Turnover & Op. Income 2,901.4 2,474.8 17 10,200.3 9,314.8 10 Other Income 66.8 88.8 (25) 218.7 222.1 (1) PBIDT 725.2 637.2 14 2,331.2 2,272.4 3 Interest 48.7 72.5 (33) 212.4 284.6 (25) Gross Profit 676.5 564.7
Slide 40: Grasim Standalone Financial Performance
Grasim Standalone Financial Performance (Rs. Crores) Q4FY06 Q4FY05 % Chg. FY06 FY05 % Chg. Net Turnover & Op. Income 1,815.1 1,642.2 11 6,655.7 6,252.4 6 Other Income 57.5 82.5 (30) 169.1 167.0 1 PBIDT 464.0 478.1 (3) 1,590.9 1,784.7 (11) Interest 23.5 33.9 (31) 97.4 138.8 (30) Gross Profit 440.5 44
Slide 41: Balance Sheet
Balance Sheet Consolidated Standalone (Rs. Crores) FY05 FY06 FY05 FY06 Gross Block 11,317 11,932 6,052 6,417 Net Block 6,299 6,419 3,204 3,307 Goodwill 1,958 1,958 -- -- Cement Subs. Investments -- -- 2,362 2,352 Investments 769 1,352 939 1,422 Net Current Assets 673 571 426 461 Capital Employed 9,6
Slide 42: Segmental Performance-FY06
Segmental Performance-FY06 Standalone (Rs. Crores) PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) FY06 FY05 FY06 FY05 FY06 FY05 FY06 FY05 FY06 FY05 FY06 FY05 VSF 1.935.4 1,962.7 495.0 610.8 25.8 31.2 429.6 553.6 999 1,027 45.4 63.3 Chemical 386.4 351.8 125.1 10
Slide 43: Segmental Performance-Q4FY06
Segmental Performance-Q4FY06 Standalone (Rs. Crores) PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) Q4FY06 Q4FY05 Q4FY06 Q4FY05 Q4FY06 Q4FY05 Q4FY06 Q4FY05 Q4FY06 Q4FY05 Q4FY06 Q4FY05 VSF 501.5 462.0 155.7 124.0 31.1 26.9 138.1 109.1 999 1,027 58.4 49.9 Chemica
Slide 44: Viscose Staple Fibre: Summary
Viscose Staple Fibre : Summary % % Q4 FY06 Q4 FY05 FY06 FY05 Chg. Chg. Capacity TPA 257,325 253,675 1 257,325 253,675 1 Production MT 64,606 63,304 2 228,981 247,952 (8) Sales Volumes MT 60,636 54,182 12 242,399 231,533 5 Net Turnover Rs. Crs. 500.7 461.7 8 1,918.8 1,956.4 (2) Avg. Realisation Rs./M
Slide 45: Chemical: Summary
Chemical : Summary Q4 Q4 % FY06 FY05 % FY06 FY05 Chg. Chg. Capacity (Caustic) MT 190,800 190,800 -- 190,800 190,800 -- Production (Caustic) MT 42,687 42,165 1 165,509 161,966 2 Sales Volume(Caustic) MT 44,136 42,793 3 165,853 163,111 2 Net Turnover Rs. Crs. 88.7 102.6 (14) 385.0 350.9 10 Avg. ECU Re
Slide 46: Cement: Summary
Cement : Summary Q4 Q4 % % FY06 FY05 FY06 FY05 Chg. Chg. Grey Cement Capacity Mn. MT 13.12 13.12 -- 13.12 13.12 -- Production Mn. MT 3.78 3.30 15 13.83 12.44 11 Sales Volumes Mn. MT * 3.87 3.36 15 * 13.99 12.63 11 Net Turnover Rs. Crs. * @ 898.9 699.4 29 *@3,009.6 2,577.8 17 Avg. Realisation Rs./MT
Slide 47: Sponge Iron: Summary
Sponge Iron : Summary Q4 Q4 % % FY06 FY05 FY06 FY05 Chg. Chg. Capacity TPA 900,000 900,000 -- 900,000 900,000 -- Production MT 109,073 219,746 (50) 505,805 780,341 (35) Sales Volumes MT 95,949 202,646 (53) 478,291 772,799 (38) Net Turnover Rs. Crs. 109.8 281.3 (61) 633.6 1,021.4 (38) Avg. Realisatio
Slide 48: Textiles: Summary
Textiles : Summary Q4 Q4 % % FY05 FY06 FY05 FY06 Chg. Chg. Net Turnover Rs. Crs. 64.8 65.9 (2) 236.9 249.9 (5) PBIDT Rs. Crs. (1.1) 3.1 -- 3.4 11.9 (71) PBIDT Margin % (1.7%) 4.7% -- 1.4% 4.8% -- PBIT Rs. Crs. (3.1) 0.5 (3.0) (0.5) -- Capital Employed Rs. Crs. 93 101 (9) 92 101 (9) ROAvCE (PBIT basi
Slide 49: Capex plans
Capex plans • Capex Summary (Rs. Crores) Cash Outflow Capex Plan FY07 FY08 Cement 3,736 1,421 2,095 - 4 Mn. TPA Greenfield Project at Kotputli, Rajasthan 1,275 - 4 Mn. TPA Brownfield Project at Shambhupura, Rajasthan 1,200 - Power plants (4 Nos, 102 MW, Project Cost Rs.455 Crs.) 386 - Grinding unit
Slide 50: UltraTech (consolidated) Financial Performance
UltraTech : (consolidated) Financial Performance (unaudited) (Rs. Crores) Q4 FY06 Q4 FY05 % Inc. FY06 FY05 % Inc. Net Turnover & Other Income * 962.1 741.1 30 * 3,052.5 2,702.9 13 PBIDT 226.5 132.3 71 607.3 378.9 60 PBIDT Margin (%) 23.7% 18.0% -- 20.1% 14.1% -- Interest 22.3 27.0 (17) 90.2 109.3 (1
Slide 51: SDCC: Financial Performance
SDCC : Financial Performance (Rs. Crores) % % Q4FY06 Q4FY05 FY06 FY05 Chg. Chg. Net Turnover & Op. Income 64.8 47.7 36 214.4 168.9 27 Other Income 1.5 1.4 10 4.8 4.8 -- PBIDT 14.2 9.8 45 44.3 18.1 146 PBIDT Margin 21.9% 20.6% -- 20.7% 10.7% -- Interest * 0.4 3.7 -- 3.2 12.8 -- Depreciation 1.5 1.7 (
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