Grasim Industries Ltd. · NSE:GRASIM

Grasim Industries — Investor Presentation (November 2011)

50 slides from Grasim Industries's investor presentation, November 2011

  1. Slide 1: Grasim Industries Limited – A Cement and VSF Major

    Grasim Industries Limited A Cement and VSF Major November 2011

  2. 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

  3. Slide 3: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2011-12 Summary 3

  4. 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  Conglomerate with leadership position across b

  5. Slide 5: Grasim: Market leader across business segments

    Grasim: Market leader across business segments Leading player in India with 18% market share, Cement 9th largest in the world Revenue ` 160 Bn. – Capacity : 52 Mn. TPA (US$ 3,260 Mn.) – 9.2 Mn. TPA capacity expansion under implementation – Market leader in White Cement (0.6 Mn. TPA) and Ready Mix Co

  6. Slide 6: Grasim's “Two Business” strategy has paid off

    Grasim’s “Two Business” strategy has paid off  Consistently growing cash flow generation from VSF FY11 1,752 business FY10 1,464  Moderate capex need for VSF leading to substantial free Global FY09 676 Melt down cash flow FY08 1,247  Cement Business – high growth business with large FY07 834 cape

  7. Slide 7: Substantial Capacity Buildup Outpacing Industry Growth

    Substantial Capacity Buildup Outpacing Industry Growth FY FY FY FY FY FY Product / Facility Unit 2000 2007 2010 2011 2013E 2014E Mn. 62.0 Cement TPA 8.20 31.1 48.8 51.8 52.8 (Early FY14) No. of Ready Mix Concrete Plants 2 21 60 66 90 90 „000 Viscose Staple Fibre TPA 221 270 334 334 490 490 „000 Chem

  8. Slide 8: Strong growth in Revenue and Profits

    Strong growth in Revenue and Profits Capital Employed : CAGR 22% Revenue : CAGR 16% Profit after Tax : CAGR 17% (` Bn.) (` Bn.) (` Bn.) 300 30 276.7 250 215.9 250 25 22.8 200 200 20 150 150 15 102.2 101.9 100 10.4 100 10 50 5 50 0 0 0 FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 FY11 FY06

  9. Slide 9: Grasim Business Mix – Half Year

    Grasim Business Mix – Half Year Net Revenues (` Bn.) PBIDT (` Bn.) 4.1 3.4 1.5 0.8 1.3 0.6 19.8 6.6 19.5 88.3 Cement VSF Pulp and Fibre JVs Chemical Others 9

  10. Slide 10: Strong Financials

    Strong Financials Standalone Consolidated Full Year Full Year ( ` Bn.) H1 FY12 H1 FY12 2010-11 2010-11 Net Worth 81.3 87.9 145.7 157.8 Debt 8.1 7.2 67.8 67.6 Capital Employed 91.8 97.5 276.7 292.0 Debt:Equity (x) 0.10 0.08 0.36 0.33 Interest Cover 30.3 35.8 10.8 12.3 Book Value (`) 887 959 1,589 1,7

  11. Slide 11: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2011-12 Summary 11

  12. Slide 12: Cement

    Cement Leading player in India Revenue ` 160 Bn. – 52 Mn. TPA capacity, Ninth largest in the world (US$ 3,260 Mn.) – 504 MW of captive power plants across all major locations – Market leader in White Cement (0.6 Mn. TPA) and Ready Mix Concrete

  13. Slide 13: Indian Cement Industry: Overview

    Indian Cement Industry : Overview  Second largest cement market in world  Cement Capacity ~ 314 Mn. TPA (September 2011), (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  Large Domestic

  14. Slide 14: Indian Cement Industry

    Indian Cement Industry Top Cement Producing Countries - Per Capita Consumption - 2010 2010 Mn. Tons Kgs./Person 1800 1800 1340 1350 1500 1200 1050 1200 900 840 730 900 750 600 475 600 440 450 310 300 210 300 209 173 64 60 59 150 56 55 0 0 China India USA Turkey Brazil Japan Iran ChinaTurkey Iran Wor

  15. Slide 15: Cement – Major Growth Drivers

    Cement – Major Growth Drivers  Favorable demographics with growing young population  Rising affordability - Increasing income level Housing  Rapid Urbanisation (28.7% in 2005 to 37.2% in 2025) 1  No. of Cities with population of 1Mn.+ to grow from 33 in 2005 to 56 in 2025 1  As per 11th Five ye

  16. Slide 16: 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

  17. Slide 17: Cement Sector Outlook

    Cement Sector Outlook  Demand to grow in line with GDP growth 15 % Growth  H2FY12: Likely growth of 7% - 8% 12.1 12 10.2 9.8  Medium to Long Term : Likely growth of 8%-9% 9.3 9 6.9  Surplus scenario should subside gradually in 5.3 6 next 2-3 years with expected growth in demand 3 1.4  Realisati

  18. Slide 18: Cement Business: Key Strengths

    Cement Business : Key Strengths  Operations spread across India (18% 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 FY11  Market Leadership  “UltraTech” - Premium national brand  Leadership in key consuming markets 

  19. Slide 19: Cement Business: H1FY12 Performance

    Cement Business : H1FY12 Performance Industry Scenario H1: (` Bn.) 2009-10 2010-11  Excess capacity continues in the sector 2011-12  Cement capacity at ~ 314 Mn. Ton in Sep‟11 Capacity (Mn. TPA) 48.8 51.8 51.8  Industry added ~ 40% capacity in last 2 years  Demand growth rate witnessed moderate

  20. Slide 20: 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 Holcim - Switzerland required in next five years Lafarge - France  As a first

  21. Slide 21: Viscose Staple Fibre (VSF)

    Viscose Staple Fibre (VSF) Leading global player – Capacity : 334K TPA (10% global share) – Group is world’s largest with 21% global share Revenue ` 48 Bn. – Captive Pulp Plants : 1 in India (70K TPA), 3 JVs abroad (525K TPA) (US$ 985 Mn.) – Fibre JV in China (70K TPA) – 258K TPA caustic capacity, l

  22. Slide 22: VSF Global Scenario

    VSF Global Scenario Global Fibre Pie (80 Mn. MT)  VSF: A cellulosic fibre Others  4% of global fibre market 1% VSF 4% Cotton  6% of global man-made fibre market Raw Wool 31% 1%  Major Global Players‟ Capacity „000 TPA Synthetic 63%  AVB group (incl. Grasim) : 744  Grasim : 334 ________________

  23. Slide 23: VSF: Global Presence

    VSF: Global Presence Sweden • Domsjo pulp plant China,Hubei Canada • Fibre plant (70 K TPA) • 2 Pulp plants in Joint Venture in Joint Venture P India • 3 fibre plants • Pulp plant South East Asia • Caustic soda plant • 2 fibre plants of Group Co. of 334K TPA Fibre Plant - Own • Wood plantation at La

  24. Slide 24: 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

  25. Slide 25: VSF: H1FY12 Performance

    VSF: H1FY12 Performance H1: Global Industry Scenario (` Bn.) 2009-10 2010-11 2011-12  Cotton prices stabilise in Q2 after witnessing sharp correction in Q1 from Capacity („000 tpa) * 334 334 334 peak levels Sales Volume („000 MT) * 308 305 134  VSF prices staged marginal recovery globally in Q2 Ne

  26. Slide 26: VSF: Outlook

    VSF: Outlook  In the short to mid term, demand is expected to be `/ Kg. Domestic Fibre Prices 175 volatile due to macro economic conditions and Euro Zone uncertainties 125 130 99 98  Profitability in the short term will be governed by 75 the prices of competing fibres, input and energy 25 costs 

  27. Slide 27: VSF: Strategy for Growth

    VSF: Strategy for Growth  Expansion plan under implementation to meet growing demand  Greenfield project of 120,000 TPA at Vilayat, Gujarat  Brownfield expansion of 36,500 TPA at Harihar, Karnataka  Total capacity to increase by ~ 50%  Both projects expected to be commissioned in FY13  182,500

  28. Slide 28: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2011-12 Summary 28

  29. Slide 29: Capex plan

    Capex plan ` Bn. Net Cash Outflow Capex to Capex FY12 FY13 & spent be spent during as on Onward 01.04.11 H1 FY12 VSF Business 21.1 - Expansion Projects: Vilayat (120KTPA), Harihar (36KTPA) - Other Capex 3.4 Chemical Business – Vilayat (182K TPA) 7.6 Balance Capex (Including normal capex for Chemical

  30. Slide 30: Presentation Structure

    Presentation Structure Introduction Business Review Capex Highlights – Quarter 2: 2011-12 Summary 30

  31. Slide 31: Highlights - Quarter 2

    Highlights - Quarter 2  Both VSF and Cement businesses recorded better performance on YoY basis  In VSF Business – The markets are stabilising after volatility witnessed in Q1 – Increase in volumes led by improved consumption and restoring of dried pipeline inventory – Nagda plant could operate fu

  32. Slide 32: Financial Snapshot – Quarter 2

    Financial Snapshot – Quarter 2 Quarter - 2 : Standalone Quarter - 2 : Consolidated ( ` Bn) 2011-12 2010-11 % Change 2011-12 2010-11 % Change Revenue 12.5 9.6 30 57.7 45.0 28 Operating Costs 9.1 6.7 36 47.5 37.2 28 PBIDT 5.1 4.3 19 11.3 8.8 28 Interest 0.1 0.1 4 0.9 1.0 (8) Depreciation 0.4 0.5 (21)

  33. Slide 33: Financial Snapshot – First Half

    Financial Snapshot – First Half Half Year : Standalone Half Year : Consolidated ( ` Bn.) 2011-12 2010-11 % Change 2011-12 2010-11 % Change Revenue 22.9 19.3 19 117.1 96.2 22 Operating Costs 15.8 13.1 21 90.4 74.7 21 PBIDT 9.6 7.9 22 28.8 23.5 23 Interest 0.2 0.2 4 1.8 1.9 (3) ` Depreciation 0.7 0.9

  34. Slide 34: Revenue Chart

    Revenue Chart ` Bn. Half Year Quarter -2 Net Revenue 2011-12 2010-11 2011-12 2010-11 16% 19.8 17.1 Viscose Staple Fibre 10.8 8.6 26% 45% 3.4 2.4 Chemical 1.9 1.2 60% 0.5 0.4 Others 0.3 0.2 (0.9) (0.6) Inter Segment Eliminations (Intra Company) (0.5) (0.3) 19% 22.9 19.3 Standalone Net Revenue 12.5 9.

  35. Slide 35: PBIDT Chart

    PBIDT Chart ` Bn. Half Year Quarter -2 PBIDT 2011-12 2010-11 2011-12 2010-11 14% 6.6 5.8 Viscose Staple Fibre 3.1 2.7 13% 28% 0.8 0.6 Chemical 0.5 0.3 44% 2.2 1.5 Others 1.5 1.2 22% 9.6 7.9 Standalone PBIDT 5.1 4.3 19% Subsidiaries 24% 19.5 15.7 UltraTech Cement Ltd. 6.9 4.8 45% 0.1 0.1 Grasim Bhiwa

  36. Slide 36: Net Profit Chart

    Net Profit Chart ` Bn. Half Year Quarter -2 2011-12 2010-11 2011-12 2010-11 Total Net Grasim's Total Net Grasim's Total Net Grasim's Total Net Grasim's Profit share Profit share Profit share Profit share 31% 6.6 5.0 Standalone Reported PAT 3.4 2.8 23% 38% 9.3 5.6 6.8 4.1 UltraTech Cement (60.34%) 2.

  37. Slide 37: Presentation Structure

    Presentation Structure Introduction Highlights – Quarter 1: 2011-12 Business Review Capex Summary 37

  38. Slide 38: Summary

    Summary  Both Cement and VSF businesses performed well in Q2  Healthy recovery in VSF business  Cement business performed better on YoY basis  Grasim continues to derive strength from leadership position and cost competitiveness in both its core businesses  Capacity expansions under implementat

  39. Slide 39: 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]

  40. Slide 40: Grasim Industries Limited – A VSF and Cement Major (Supplement)

    Grasim Industries Limited - A VSF and Cement Major (Supplement) November 2011

  41. Slide 41: Supplement

    Supplement • Consolidated Financial Performance : Pg. 42 • Standalone Financial Performance : Pg. 43 • Balance Sheet - Grasim : Pg. 44 • Balance Sheet – UltraTech (Consolidated) : Pg. 45 • Consolidated Businesswise Performance : Pg. 46- 47 • Business Data : Pg. 48- 49 • Cement Plant Location : Pg. 5

  42. Slide 42: Consolidated Financial Performance

    Consolidated Financial Performance ` Bn. Quarter - 2 Half Year Full Year % Chg. % Chg. 2011-12 2010-11 2011-12 2010-11 2010-11 Net Turnover & Op. Income 57.7 45.0 28 117.1 96.2 22 215.9 Other Income 1.1 1.0 9 2.2 1.9 11 4.0 PBIDT 11.3 8.8 28 28.8 23.5 23 54.0 Interest 0.9 1.0 (8) 1.8 1.9 (3) 4.1 Gro

  43. Slide 43: Standalone Financial Performance

    Standalone Financial Performance ` Bn. Quarter - 2 Half Year Full Year % Chg. % Chg. 2011-12 2010-11 2011-12 2010-11 2010-11 Net Turnover & Op. Income 12.5 9.6 30 22.9 19.3 19 46.5 Other Income 1.7 1.3 29 2.5 1.7 46 3.0 PBIDT 5.1 4.3 19 9.6 7.9 22 18.2 Interest 0.1 0.1 4 0.2 0.2 4 0.5 Gross Profit 5

  44. Slide 44: Balance Sheet - Grasim

    Balance Sheet - Grasim Consolidated Standalone ` Bn. March March March Sep.' March March March Sep.' 2009 2010 2011 2011 2009 2010 * 2011 * 2011 * Gross Block (Incl. CWIP) 210.4 217.2 241.7 259.2 122.8 31.5 30.8 34.8 Net Block (Incl. CWIP) 142.2 145.5 157.9 169.8 83.1 18.3 16.4 19.8 Goodwill 20.0 20

  45. Slide 45: Balance Sheet – UltraTech (Consolidated)

    Balance Sheet – UltraTech (Consolidated) ` Bn. March March Sept.' 2010 2011* 2011* Gross Block (Incl. CWIP) 83.7 202.8 196.9 Net Block (Incl. CWIP) 52.2 135.1 143.1 Goodwill 0.1 4.7 5.2 Investments 16.4 35.1 33.0 Net Current Assets 2.0 4.9 9.4 Capital Employed 70.7 179.8 190.7 Net Worth 46.2 106.4 1

  46. Slide 46: Consolidated Businesswise Performance - Quarter 2

    Consolidated Businesswise Performance- Quarter 2 ` Bn. PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) 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 * 42.1 32.8 6.9 4.8 16.3 14.4 4.5 2.6 209.8 189.0 8.8 5.

  47. Slide 47: Consolidated Businesswise Performance - Half Year

    Consolidated Businesswise Performance- Half Year ` Bn. PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) 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 * 88.3 72.6 19.5 15.7 21.9 21.3 14.8 11.3 209.8 189.0 14

  48. Slide 48: Cement: Summary

    Cement : Summary Quarter -2 Half Year Full Year % Chg. % Chg. 2011-12 2010-11 2011-12 2010-11 2010-11 Grey Cement Capacity Mn. TPA 51.75 51.75 - 51.75 51.75 - 51.75 Production Mn. MT 9.51 8.61 11 19.83 18.53 7 39.67 Sales Volumes $ Mn. MT 9.76 8.96 9 20.10 18.73 7 39.89 Clinker Sales Volumes Mn. MT

  49. Slide 49: Viscose Staple Fibre (consolidated): Summary

    Viscose Staple Fibre (consolidated): Summary Quarter 2 Half Year Full Year % Chg. % Chg. 2011-12 2010-11 2011-12 2010-11 2010-11 Capacity TPA 3,33,975 3,33,975 - 3,33,975 3,33,975 - 3,33,975 Production MT 83,516 69,802 20 1,53,414 1,39,130 10 3,05,087 Sales Volumes MT 78,959 67,488 17 1,33,798 1,34,

  50. Slide 50: 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

Grasim Industries — Investor Presentation (November 2011) on 6ix