ambuja cement 1 ambuja cement august 2005. ambuja cement 2 indian economy in a sustainable high...
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AmbujaCement
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Ambuja Cement
August 2005
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Indian Economy
In a Sustainable high growth mode
Impetus on Service Sector
Changing Demography - A Growth Driver
Economy getting delinked from Agriculture
& unpredictable monsoons
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GDP Constituent 1997 - 98 2004 - 05
Agriculture 40 23
Industry 35 25
Services 25 52
(%)
Agrarian to a Service Economy
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Cement Growth
A Proxy to GDP Growth
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Other Asian countries experience has been that
whenever Per Capita GDP crosses USD $ 500
there is a substantial rise in the cement
consumption
India set to witness this growth in Cement
Consumption
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Cement Growth in India
Not a Challenge
As
Demand has been growing at a
CAGR of 7% over last Decade
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Cement Demand(Apr - June)
Mn. Tonnes Growth (%)
2005 - 06 34.3 12
2004 - 05 30.7 3
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Momentum of Growth to continue
due to Initiatives in Housing & Infrastructure
Development
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Large forex reserves
Abundant liquidity
Consumer Driven
Low interest rates
Enabled by :
Infrastructure Development now Not only Viable but Profitable
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Expected Cement Demand
2005-06 2006-07
Base Domestic Demand 121 131
Growth - 8% 10 10
Expected Domestic Demand 131 141
Exports (Potential to be even higher) 4 4
Expected Cement Demand 135 145
mn tonnes
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Cement Production Capability
2005-06 2006-07Base Clinker Production 108 111 Increased Production due to improvements 3 4 111 115Clinker Export 6 6 Clinker for Cement Grinding 105 109
Blending Ratio 1.27 1.29
Cement Production 133 141
mn tonnes
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Demand set to outstrip Supply
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As
Last Plant was set up in March ’03
No new supply expected till March ‘06
It Never happened in past
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Structural change in Pricing Scenario Result
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Cement Prices- Domestic -
Aug 2005 Aug 2004 Dec 2004
Bombay 172 163 158
Delhi 158 131 135
Kolkatta 174 175 173
Ahmedabad 151 149 110
Jaipur 143 139 135
Hyderabad 118 121 117
Chennai 145 155 160
Rs. / per Bag
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- International -
Cement Clinker
2004 - 05 37 28
2005 - 06 (E) 42 32
US$ (FOB)
(E) - Expected
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Sea terminalsCement factories
HP
Gujarat
Rajasthan
Maharashtra
Punjab
Ambuja Cement
Gujarat 5.0
North India 6.0
Maharashtra 3.0
Total Capacity 14.0
Mn. tonnes
1986 - 0.7 Mn. Tonnes Today - 14 Mn. Tonnes
A growth of 18 times since inception
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Growth
With
A Sound Business Model
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Our Business Model
Huge owned Infrastructure
Presence in the growing markets of North & West
Premium Brand - only selling in Retail Markets.
Largest Exporter of cement – 15% of Production
35% Cement transport by sea - Cheapest Mode
Low Cost Cement Producer
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7 Owned Ships for transporting Cement by Sea
Large port in Gujarat to handle export of Cement
3 Cement receiving terminals
200 MW of Captive Power Plants at various
Cement Plants to give reliable and cheap power
Own Infrastructure
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Premium Brand
India - A bagged marketIndividual home builder - key driver of demand
Our focus :
Best quality cement
Good packaging
Logistic management - strong distribution network
Customer service
Ambuja Cement - Most preferred brand - Fetching higher realisation
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Direct Cost
FY 2005
Power 202
Fuel 298
Raw material 172
Consumables 49
Direct cost 721
US $ 16.4
Rs./ tonne
USD/INR = Rs. 44
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A Comparison (April - June 2005)
Ultratech Grasim ACC GAC
Sales
- Volume (mn tonnes) 4.00* 3.34 4.44 3.28
- Net Sales 8471 7381 9848 7205
Operating Profit 1691 1726 2335 2350
Operating Margin (%) 20 23 24 33
O/P Per tonne (Rs.) 423 516 525 716
(US$) 9.6 11.8 12.2 16.3
Rs. Mn.
Source : Stock Exchange Filing
* Including Export & Sale of clinker - 0.40 mn. tonnesUSD/INR = Rs. 44
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Gujarat Ambuja Cements Limited(Consolidated Income Statement)
FY2005 FY 2004 Growth (%)Sales 30855 24150 28Operating Profit 9278 7098 31Interest 902 900 -Depreciation 2195 2082 6Profit Before Tax 6181 4116 50Prior Period Adjs (credit) - 425 -Tax 831 688 20Profit After Tax 5350 3853 39Minority Interest 169 229 (26)Net Profit 5181 3624 43Operating Margin 30 % 29 % --
Rs. Mn.
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Gujarat Ambuja Cements Limited (Consolidated Balance Sheet)
FY2005 FY2004Sources of FundsShareholders’ Funds 24873 17314 Minority Interest 79 6375 Deferred Tax 3811 3209Net Debt 8447 11845Total 37210 38743 Application of Funds Gross Fixed Assets 39210 44434Less: Depreciation 14792 16005 Net Fixed Assets 24418 28429 Investments 10835 9637Net Current Assets 1957 677 Total 37210 38743
Rs. Mn.
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Ratios
FY 2005 FY 2004
Interest Cover 9.4 7.5
Operating Margin 31 % 30 %
Net Debt / EBIDTA 1.1 2.2
Net Debt / Networth 0.37 0.61
ROCE 17 % 12 %
RONW 21 % 18 %
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Our Score Card (1987 - 2005)
Parameters CAGR (%)
Capacity 18
Sales 29
Net Profit 36
Networth 30
Return to Shareholders 29
Wtd. Avg. EBIDTA Margin 33
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Our Shareholders
Management24%
Domestic Pension & Mutual Funds
18%
FII's (Incl. GDR)41%
Others17%
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Strategic Alliance with Holcim
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Structure
Due to this Structure GACL’s effective shareholding in ACC goes
up to 11.5% from 8.3 % without any fresh investments by GACL.
ACEL
94.6%
ACC
13.8%
ACIL
GACL AIG/GIC
60% 40%
ACEL
97%
ACC
34.70%
ACIL
GACL HOLCIM 33% 67%
Before Current
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Salient Features of the Partnership
Holcim Investments in India through ACIL only
Access to Holcim’s best practices in areas such
as waste heat recovery, use of alternative fuels,
human resources and Information technology
Opening of new cement trading opportunities in
Middle East and Indian Ocean
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Ambuja Growth Plans
Plan to increase capacity by 3 to 4 mn. tonnes
in immediate future
Growth to be funded from free cash flows
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Thank You