manish presentation

Ambuja Cement Limited

By

Manish Agarwal

November 14, 2007

Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Capacity built up from 0.7 Mio t in 1986 to 18.0 Mio t as of today at CAGR of 18%

Organic growth and growth through acquisitions 2001 - Private equity investors (American International

Group & Government of Singapore) invested in ACIL 2005 - ACIL restructured as a joint venture with

Holcim 2006 - Founder promoters sold part of their holding in

ACL in favour of Holcim ACL is a Holcim Group company since May 2006

Brief History -- a growth story

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Cement Plant

Grinding Station

Terminal

Port

North – Central Region

Cement Capacity 7.0 Mio t

Positioning - ACL

South-West Region

Cement Capacity 8.0 Mio t

Eastern Region

Cement Capacity 3.0 Mio t

Overseas: Cement receiving station at Galle (Sri lanka), which is not indicated in the map above Overseas: Cement receiving station at Galle (Sri lanka), which is not indicated in the map above

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Strategy

Strong presence in growing markets of North & West

Largest exporter of cement Grinding close to market Premium brand Extensive & primarily exclusive distribution network

Over 6,600 dealers and 20,500 retailers Captive Infrastructure

Port, Receiving Terminals and Power Plants (230 MW)

Sea Transportation Seven vessels

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Export

Cement and clinker export volumes

[Mio t] ACL exports

1.4 2.0 2.0 1.5 1.8

Gujarat provides around 80% of Indian cement exports. Exports markets are mainly in the Middle East but also in Sri Lanka (0.8 million t)

Export flows from Gujarat are expected to decline from 2008-2009, due to strong demand and better realization in the local market.

6.5

9.29.9 9.7 9.5

0

2

4

6

8

10

2002 2003 2004 2005 2006

Comments

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Asset footprint South West

Optimised logistics costs through use of sea transportation to serve the key Mumbai market

Optimised logistics costs through use of sea transportation to serve the key Mumbai market

SuratAmbujanagar

Maratha

Panvel

AhmadabadAsset Cement

capacity [million t]

Add. cem capacity [million t]

Year

Ambujanagar 5.0

Maratha 3.0  

Surat 1.0 2007

Ahmadabad 1.5 2009

Total 8.0 2.5

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Asset footprint North Central

Dadri

Nalagarh

Rauri

Roorkee

Ropar

Bathinda

Darlaghat

Rabriyawas

Asset Cement capacity [million t]

Add. cem capacity [million t]

Add. clk capacity [million t]

Year

Darlaghat 2.0    

Rauri     2.2 2009

Rabriyawas 2.0   0.6 2007

Ropar 2.5      

Bathinda 0.5      

Roorkee   1.0   2007

Dadri   1.5   2009

Nalagarh   1.5   2009

Total 7.0 4.0 2.8

Pioneered the concept of split grinding units to optimise logistics costs.

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Asset footprint East

Farakka

Bhatapara

Sankrail

Asset Cement capacity

[mt]

Add. clk capacity

[mt]

Year

Bhatapara 1.0 2.2 2009

Sankrail 1.0

Farakka  1.0   2007

Total 3.0 2.2  

Entry into the eastern market through acquisition of Bhatapara cement plant in 1997

Entry into the eastern market through acquisition of Bhatapara cement plant in 1997

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ACL sales evolution – all India

36 37 36 36 36

12 11 10 12 12

40 37 40 42 41

12 15 14 10 11

0

20

40

60

80

100

2002 2003 2004 2005 2006

In %In %ACL Market Share in %ACL Market Share in %

101010109

South West Region Eastern Region

North Central region Exports

By Region Comments

Sales up from 10.9 million t in 2002 to 16.3 million t in 2006

Consistent regional distribution

Sales up from 10.9 million t in 2002 to 16.3 million t in 2006

Consistent regional distribution

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Sales and market share: South West

Top three players represent around 52% of the market share*

Dominance of regional players in the southern market

Comments

* In 2005 and 2006, Top 3 are: ACL+ACC; Grasim + Ultratech, ICL

Sales developmentTop 3* [%]

39 37

ACLACC

Grasim

UltraTech

ICL

Madras Kesoram

Zuari Others

Market share

8.0 9.0 9.0 8.0 8.0

11.0 11.0 10.0 10.0 9.0

11.0 11.0 10.0 10.0 10.0

17 15 15 14 13

12.0 11.0 11.0 12.0 12.0

6.0 6.0 6.0 6.0 7.0

5.0 5.0 5.0 5.0 5.0

4.0 4.0 4.0 4.0 4.0

27.0 27.0 30.0 31.0 32.0

0

20

40

60

80

100

2002 2003 2004 2005 2006

5436 52

[Mio t]9 98 8 8

4.04.9 5.1 5.2

6.0

0

2

4

6

8

2002 2003 2004 2005 2006

ACL Market Share in %ACL Market Share in %

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Sales and market share: North Central

* In 2005 and 2006, Top 3 are: ACL+ACC; Grasim + Ultratech, Jaypee

ACLACCGrasim UltraTec

hCentury

JK

Jaypee

Shree

Others

Top 3* [%]

11.0 12.0 13.0 14.0 13.0

15.0 15.0 16.0 16.0 16.0

12.0 13.0 13.0 13.0 13.02 2

3 2 16.0 6.06.0 5.0 5.0

11.0 11.011.0 11.0

10.0

9.0 9.0 8.0 9.010.0

8.0 8.0 8.0 8.0 8.07.0 7.0 7.0 7.0 9.0

18.0 17.0 17.0 17.0 16.0

0

20

40

60

80

100

2002 2003 2004 2005 2006

5355414039

Birla Corp

Market share

[Mio t]12 1311 14 13

4.45.0 5.8 6.3

6.6

0

2

4

6

8

2002 2003 2004 2005 2006

Sales development

ACL Market Share in %ACL Market Share in %

Top three players now represent around 53% of the market* but still fragmented among 2nd and 3rd tier players

Jaypee and Shree are relatively aggressive competitors

Currently the region with the highest ACL presence

Comments

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Sales and market share: EastMarket share

* In 2005 and 2006, Top 3 are: ACL+ACC; Grasim + Ultratech, Lafarge. Their market share could reach close to 80% with the likely integration of Century into Grasim/Ultratech

Top 3* [%]

ACL ACC Grasim

UltraTech

Century Lafarge Orissa

Birla Corp Others

8.0 8.0 8.0 8.0 8.0

14.019.0 18.0 17.0 17.0

7.07.0 7.0 8.0 8.0

1313 13 12 14

11.012.0 12.0 14.0 11.0

20.018.0 19.0 17.0 18.0

6.07.0 7.0 7.0 8.05.06.0 5.0 5.0 4.0

15.010.0 12.0 12.0 11.0

0

20

40

60

80

100

2002 2003 2004 2005 2006

51 62 6647 50

[Mio t]8 88 8 8

1.31.4 1.5

1.8 2.0

0

2

4

6

8

2002 2003 2004 2005 2006

Sales development

ACL Market Share in %ACL Market Share in %

Most consolidated compared to all India

Top three players represent around 66% of the market*

Comments

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Financial performance showing improving trajectory

  2001-2002 2002-03 2003-04 2004-05 2006*

ROCE (%) 9 9 13 17 47

ROE (%) 12 14 17 22 43

5 5 68

22

14 17 2026

63

34

30 30

31

36

0

10

20

30

40

50

60

70

2001-02 2002-03 2003-04 2004-05 2006

Sal

es a

nd

EB

ITD

A (

INR

Bil

lio

n)

27

28

29

30

31

32

33

34

35

36

37

EB

ITD

A M

arg

in (

%)

Sales EBITA EBITA margin

ACL’s EBITDA in FY 2006 witnessed an impressive growth

* Figures for 2006 pertain to 18 months period July 05 – December 2006* Figures for 2006 pertain to 18 months period July 05 – December 2006

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Rs. In crores

Full Year Nine Months

2006 2006 2007 % (+/-)

Sales Volume 16.3 12.2 12.5 2.46

Sales 4847.86 3518.77 4198.13 19.31

EBITDA 1880.68 1321.66 1669.76 26.33

EBITDA margin 38.8% 37.56% 39.75%

Profit after tax** 1340.07 1,099.53 967.61 13.63

Key financial figures *

* IGAAP. Figures for FY 2006 have been restated to make it comparable, on account of change in accounting year and merger of ACEL** Excluding extraordinary income * IGAAP. Figures for FY 2006 have been restated to make it comparable, on account of change in accounting year and merger of ACEL** Excluding extraordinary income

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Power

Clinker content

Fuel (coal)

Transport

Captive Power Plants, AFR

AFR/process efficiency / international sourcing

Composite cement

Grinding facility close to end user, production close to raw materials

Terminal logistics

Cost drivers

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80

81

82

83

84

85

86

87

88

89

90

2001-02 2002-03 2003-04 2004-05 2006

700

705

710

715

720

725

730

735

740

745

Electricity (Kw h/T of Cmt) Coal/Other Fuel (Kcal/Kg of clinker)

Consumption per unit of Production

Increase Captive Generation

66

72 7276

80

50

550

1050

1550

2050

2001-02 2002-03 2003-04 2004-05 2006

50

60

70

80

90

Total Consumption Captive %

Measures Shift from liquid to solid

fuel to reduce cost of captive energy cost by approx. Rs.2 per unit.

Reduction dependence on grid power, with the construction of additional power plants aggregating to 178 MWs

Captive power ensures continuous and consistent supply of power

Energy

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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2.2

-

-

-

0.6

2.2

-

5.0

Expansion projects

North

North

North

North

North

SW

SW

East

East

ClusterLocation 2007 2008 2009 2010 2011

Cement (million t)

-

1.5

1.5

1.0

-

1.0

1.5

-

1.0

7.5Grinding

Grinding

Grinding

Grinding

Clinkering

Clinkering

Clinkering

Greenfield Brownfield

Rauri

Dadri

Nalagarh

Roorkee*

Rabriyawas

Surat

Ahmedabad

Bhatapara

Farraka*

Total

Clinker (million t)

Grinding

Capital outlay (in USD million)

Clinker 388

Grinding 302

Captive power plant 203

* Already commissioned* Already commissioned

Grinding

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Million USD 2001-02 2002-03 2003-04 2004-05 2006*

Net Cash from 28 68 144 180 453

Operating Activities

Debt:Equity 1.10 1.09 0.63** 0.52 0.25

Debt:EBITDA 3.83 3.42 2.61 1.41 0.38

Improvements in operational efficiency

Favourable pricing environment

Net cash positive in 2007

Call option in ACIL to generate approx. USD 150 Mio

Financial position

Strong cash flows and low debt : equity ensures financial flexibility for new projects

* Figures for 2006 pertain to 18 months period July ’05 – December 2006** improvement on account of conversion of convertible bonds* Figures for 2006 pertain to 18 months period July ’05 – December 2006** improvement on account of conversion of convertible bonds

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Content

Brief History

Positioning in Indian Cement Industry

Financial Performance

Cost drivers

Expansion Project

Financing of expansion projects

Conclusion

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Conclusions

Solid market position built up within short period of time through organic growth and acquisitions

Pin-pointed positioning tied to substantial captive infrastructure to serve markets including sea transportation, capability to export

High use of alternative raw materials in production of composite cements

Substantial greenfield and brownfield expansions plans to grow within the attractive markets and an internal financing capability to fund expansion projects

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Cautionary statement regarding forward-looking statements

This presentation may contain certain forward-looking statements relating to the future business, development and economic performance.

Such statements may be subject to a number of risks, uncertainties and other important factors, such as but not limited to (1) competitive pressures; (2) legislative and regulatory developments; (3) global, macroeconomic and political trends; (4) fluctuations in currency exchange rates and general financial market conditions; (5) delay orinability in obtaining approvals from authorities; (6) technical developments; (7) litigation; (8) adverse publicity and news coverage, which could cause actual development and results to differ materially from the statements made in this presentation. Ambuja assumes no obligation to update or alter forward-looking statements whether as a result of new information, future events or otherwise.

Disclaimer