Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — Investor Presentation (September 2011)
50 slides from Grasim Industries's investor presentation, September 2011
Slide 1: Grasim Industries Limited
Grasim Industries Limited A Cement and VSF Major September 2011
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 1: 2011-12 Summary 3
Slide 4: The Aditya Birla Group
The Aditya Birla Group Amongst the top business houses in India Operations spread over 25 countries Revenue at $35 Bn.(60% from overseas operations) Goal is to become a US$65 Bn. Group by 2015 133,000 employees, belonging to 42 nationalities Conglomerate with leadership position across b
Slide 5: Grasim: Market leader across business segments
Grasim: Market leader across business segments Leading player in India with 18% market share, Cement 9th largest in the world Revenue ` 160 Bn. – Capacity : 52 Mn. TPA (US$ 3,570 Mn.) – 9.2 Mn. TPA under implementation – Market leader in White Cement (0.6 Mn. TPA) and Ready Mix Concrete World’s top
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 FY09 676 Global Melt down cash flow FY08 1,247 Cement Business – high growth business with large FY07 834 cape
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 Tons 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 Che
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 30 276.5 250 215.9 25 250 22.6 200 200 20 150 150 15 102.2 101.9 10.4 100 100 10 50 50 5 0 0 0 FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 FY11 FY06
Slide 9: Grasim Business Mix – FY11
Grasim Business Mix – FY11 Net Revenues (` Bn.) PBIDT (` Bn.) 8.5 0.6 1.6 5.4 1.2 1.6 41.7 14.8 159.7 34.8 Cement VSF Pulp and Fibre JVs Chemical Others 9
Slide 10: Strong Financials
Strong Financials Standalone Consolidated Full Year Quarter 1 Full Year Quarter 1 ( ` Bn.) 2010-11 2011-12 2010-11 2011-12 Net Worth 81.3 84.5 145.7 153.3 Debt 8.1 7.8 67.8 67.5 Capital Employed 91.8 94.6 276.7 286.7 Debt:Equity (x) 0.10 0.09 0.36 0.34 Interest Cover 30.3 34.1 10.8 14.7 Book Value (
Slide 11: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2011-12 Summary 11
Slide 12: Cement
Cement Leading player in India Revenue ` 160 Bn. – 52 Mn. TPA capacity, Ninth largest in the world (US$ 3,570 Mn.) – 504 MW of captive power plants across all major locations – Market leader in White Cement (0.6 Mn. TPA) and Ready Mix Concrete
Slide 13: Indian Cement Industry: Overview
Indian Cement Industry : Overview Second largest cement market in world Cement Capacity ~ 304 MTPA (March 2011), (Against 2,380 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 Market ~ 1
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 900 840 730 900 750 600 475 440 600 450 310 300 210 300 209 173 150 64 60 59 56 55 0 0 China India USA Turkey Brazil Japan Iran ChinaTurkey Iran Wor
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
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 Roads
Slide 17: Cement Sector Outlook
Cement Sector Outlook % Growth Cement demand expected to grow at >7.5% from 15 12.1 H2FY12 onwards; linked to 12 10.2 9.8 9.3 Expected improvement in infrastructure spending 9 Rural demand emanating from good agricultural growth 5.3 6 Presently surplus capacity in the sector 3 Gap should r
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
Slide 19: Cement Business: Q1FY12 Performance
Cement Business : Q1FY12 Performance Industry Scenario Q1: (` Bn.) 2009-10 2010-11 Overcapacity continues to impact industry 2011-12 Cement capacity at ~ 308 Mn. Ton in June’11 Capacity (Mn. TPA) 48.8 51.8 51.8 Industry added ~ 40% capacity in last 2 years Sales Volume Grey Cement and Growth
Slide 20: Cement Business: Strategy for profitable growth
Cement Business: Strategy for profitable growth Focus on achieving accelerated profitable growth Cement Global Ranking* (Capacity) Aim to grow faster than the market Holcim - To maintain the market share, 25 Mn. TPA capacity Switzerland required in next five years Lafarge - France As a first
Slide 21: Viscose Staple Fibre (VSF)
Viscose Staple Fibre (VSF) World’s top producer – 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$ 1,080 Mn.) – Fibre JV in China (70K TPA) – 258K TPA caustic capacity,
Slide 22: VSF Global Scenario
VSF Global Scenario Global Fibre Pie (70 Mn MT) VSF: A cellulosic fibre Others VSF 4% of global fibre market 1% Cotton 4% 32% 6% of global man-made fibre market Raw Wool 2% Major Global Players’ Capacity ‘000 TPA Synthetic AVB group (incl. Grasim) : 744 61% Grasim : 334 _________________
Slide 23: VSF: Global Presence
VSF: Global Presence Sweden • Recently acquired 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 • Woo
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%) Captive power and steam Two JVs in Canada for pulp manufacturing Self managed water supply resources Recent acquisition
Slide 25: VSF: Q1FY12 Performance
VSF: Q1FY12 Performance Q1: Global Industry Scenario (` Bn.) 2009-10 2010-11 2011-12 Quarter started on a strong note Capacity (‘000 tpa) * 334 334 334 However, led by cotton, prices of all fibres corrected sharply from peak levels Sales Volume (‘000 MT) * 308 305 55 In the downward trend, use
Slide 26: VSF: Outlook
VSF: Outlook • Slackness in demand will affect Q2 performance `/ Kg. Domestic Fibre Prices 175 Expected to recover gradually thereafter • Profitability in the short term will be governed by 125 130 90 93 the prices of competitive fibres, input and energy 75 costs 25 Margins on decline due to sof
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
Slide 28: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2011-12 Summary 28
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 Q1 FY12 VSF Business 21.0 - Expansion Projects: Vilayat (120KTPA), Harihar (36KTPA) - Other Capex 3.4 Chemical Business – Vilayat (182K TPA) 7.6 Balance Capex (Including normal capex for Chemical
Slide 30: Presentation Structure
Presentation Structure Introduction Business Review Capex Highlights – Quarter 1: 2011-12 Summary 30
Slide 31: Highlights - Quarter 1: Operational
Highlights - Quarter 1 OPERATIONAL Both VSF and Cement businesses show better performance over last year In VSF Business – After reaching peak in April, market shows signs of weakness with sharp decline in cotton prices and Chinese demand – Volumes also impacted as buyers preferred to reduce pip
Slide 32: Highlights - Quarter 1: Strategic
Highlights - Quarter 1 STRATEGIC Acquisition of 1/3 stake in Swedish Pulp Company “Domsjo” completed – Consolidated results include pro-rata profits of Domsjo from 13th June, 2011 VSF expansion (Vilayat, Gujarat and Harihar, Karnataka) and Cement expansion (Raipur, Chhattisgarh and Malkhed, Karn
Slide 33: Financial Snapshot – Quarter 1
Financial Snapshot – Quarter 1 33
Slide 34: Revenue Chart
Revenue Chart ` Bn. Quarter - 1 Net Revenue 2011-12 2010-11 Viscose Staple Fibre 9.0 8.6 5% Chemical 1.5 1.2 29% Others 0.3 0.2 Inter Segment Eliminations (Intra Company) (0.4) (0.3) Standalone Net Revenue 10.4 9.6 8% Subsidiaries UltraTech Cement Ltd. * 46.2 39.7 16% Grasim Bhiwani Textiles Ltd. 0.
Slide 35: PBIDT Chart
PBIDT Chart ` Bn. Quarter- 1 PBIDT 2011-12 2010-11 Viscose Staple Fibre 3.5 3.0 15% Chemical 0.3 0.3 11% Others 0.7 0.3 Standalone PBIDT 4.5 3.6 26% Subsidiaries UltraTech Cement Ltd. 12.6 10.9 16% Grasim Bhiwani Textiles Ltd. 0.05 0.05 Joint Ventures (Pro Rata) Pulp JVs (45%) and Fibre JV (31%) 0.4
Slide 36: Net Profit Chart
Net Profit Chart ` Bn. Quarter -1 2011-12 2010-11 Total Net Grasim's Total Net Grasim's Profit share Profit share Standalone Reported PAT 3.1 2.2 40% UltraTech Cement (60.34%) 6.7 4.0 5.6 3.4 Pulp (45%) and Fibre (31%) JVs / Associate (33%) 0.6 0.3 (0.02) - Idea Cellular (5.18%) 1.8 0.09 2.0 0.1 Gra
Slide 37: Presentation Structure
Presentation Structure Introduction Highlights – Quarter 1: 2011-12 Business Review Capex Summary 37
Slide 38: Summary
Summary Both the businesses – Cement and VSF performed well in Q1FY12 However, difficult market conditions creating pressure in both the businesses Should emerge stronger in difficult conditions with cost efficiency and contineous improvement plans Capacity expansions under implementation in
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]
Slide 40: Grasim Industries Limited – Supplement
Grasim Industries Limited - A VSF and Cement Major (Supplement) September 2011
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
Slide 42: Consolidated Financial Performance
Consolidated Financial Performance ` Bn. Quarter 1 Full Year % Chg. 2011-12 2010-11 2010-11 Net Turnover & Op. Income 59.4 51.2 16 215.9 Other Income 1.1 1.0 13 4.0 PBIDT 17.5 14.6 19 54.0 Interest 0.9 0.9 3 4.1 Gross Profit 16.5 13.7 21 49.9 Depreciation 2.8 2.7 5 11.4 PBT 13.7 11.1 24 38.5 Total T
Slide 43: Standalone Financial Performance
Standalone Financial Performance ` Bn. Quarter 1 Full Year % Chg. 2011-12 2010-11 2010-11 Net Turnover & Op. Income 10.4 9.6 8 46.5 Other Income 0.8 0.4 102 3.0 PBIDT 4.5 3.6 26 18.2 Interest 0.1 0.1 4 0.5 Gross Profit 4.4 3.5 27 17.7 Depreciation 0.4 0.4 (21) 1.8 PBT 4.1 3.1 33 16.0 Total Tax 0.9 0
Slide 44: Balance Sheet - Grasim
Balance Sheet - Grasim Consolidated Standalone As on As on As on As on As on As on (` Bn.) 31.03.10 31.03.11 30.06.11 31.03.10 31.03.11 30.06.11 Gross Block (Incl. CWIP) 217.2 241.6 249.9 31.4 30.8 32.8 Net Block (Incl. CWIP) 145.5 157.9 163.4 18.3 16.4 18.1 Goodwill 20.1 24.2 24.2 -- -- -- Cement S
Slide 45: Balance Sheet – UltraTech (Consolidated)
Balance Sheet – UltraTech (Consolidated) As on As on As on (` Bn.) 31.03.10 31.03.11* 30.06.11* Gross Block # 83.7 202.8 208.9 Net Block # 52.2 135.1 138.9 Goodwill 0.1 4.7 4.8 Investments 16.4 35.1 37.8 Net Current Assets 2.0 4.9 5.3 Capital Employed 70.7 179.8 186.8 Net Worth 46.2 106.4 113.0 Mino
Slide 46: Consolidated Businesswise Performance - Quarter 1
Consolidated Businesswise Performance- Quarter 1 ` 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 * 46.2 39.7 12.6 10.9 27.1 27.0 10.2 8.8 207.7 179.2 20.
Slide 47: Consolidated Businesswise Performance - FY11
Consolidated Businesswise Performance- FY11 ` Bn. PBIDT Margin Capital ROAvCE (%) Revenue PBIDT PBIT Business (%) Employed (PBIT basis) 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 Cement * 159.7 154.7 34.8 47.7 21.6 30.6 25.6 39.7 200.6 172.0 13.7
Slide 48: Cement: Summary
Cement : Summary Quarter -1 Full Year % Chg. 2011-12 2010-11 2010-11 Grey Cement Capacity Mn. TPA 51.75 48.75 6 51.75 Production Mn. MT 10.32 9.92 4 39.67 Sales Volumes $ Mn. MT 10.34 9.85 5 39.96 Clinker Sales Volumes 0.37 0.45 (17) 1.60 White Cement Production '000 MT 121.0 133.0 (9) 540.8 $$ Sale
Slide 49: Viscose Staple Fibre (consolidated): Summary
Viscose Staple Fibre (consolidated): Summary Quarter 1 Full Year % Chg. 2011-12 2010-11 2010-11 Capacity TPA 333,975 333,975 - 333,975 Production MT 69,898 69,328 1 305,087 Sales Volumes MT 54,839 67,302 (19) 305,072 Net Revenue ` Bn. 11.0 9.7 14 48.3 Avg. Realisation `/MT 152,409 117,910 29 126,614
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
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