Cement Outlook by Ambuja Cement

1
Cement Outlookby Ambuja Cement
December 2003
2
Indian EconomyGDP

• 1Q 2004 FY 04 Estimates
  
• Sectors Actuals
  CMIE
• Services 7.6 7.3
• Industrial 5.8 5.0
• Construction 5.7
  6.7
• Agriculture 1.7 10.7
• Consolidatd GDP 5.7
  7.4

3
Cement Demand - Supply ( Calendar year 2003)
mn tonnes

• Clinker Production 101.5
• Less Clinker Export 4.5
• Clinker Grounded for Cement 97.0
• Maximum Cement Production
• (At Conversion Ratio of 1.23 ) 119
• Cement Demand 115
• Surplus
  4

Actuals till Nov. Dec. estimated
4
Cement Production Capability( On most
optimistic scenario of Supply based on maximum
clinker production converted at maximum
conversion Ratio )
mn tonnes

• Clinker Production Capability
• (Including Sanghi) 110
• Clinker Production (95 utilisation) 105
• Clinker Export 5
• Clinker available for Cement 100
• Conversion Ratio (times) 1.25
• Maximum Cement Production Capability 125

5
Cement Demand

• Calendar Year mn tonnes Growth
• 2002 (A) 109 11
• 2003 (E) 115 6
• 2004 (E) 125 8

Monthly Cement Despatch of 10 mn tonnes will
bring a balance between Demand Supply
A - Actuals
E- Estimates
6
Cement Industry - A Paradigm Shift

• No new cement plants in next two years
• Demand supply gap likely to be over in the next
  couple of months
• Consolidation is well on its way to bring
  stability in pricing
• Future Demand to be much higher on account of
  building of Roads, Ports other infrastructure
• Housing becoming a major activity in the economy

Contd
7

• Due to
• Low Interest Rates
• Availability of mortgage finance due to ample
  liquidity
• Increasing disposable Income

During Calendar year 2004 Cement demand supply
will balance A situation not seen in past
several years
8
Trend in Cement Prices
Rs. per Bag

• Dec. 2003
  July 2003 Dec. 2002
• Bombay 153 143 149
• Delhi 121 110 116
• Calcutta 158 160 155
• Chennai 160
  150 130
• Hyderabad 132
  97 128
• Nagpur 119 110 117
• Ahmedabad 102 122 132
• Chandigarh 146 138 140

9
Cement Despatches ( January to November 2003)
mn tonnes

• ACC 13.7
• Ambuja Group 12.0
• Grasim
  11.2
• L T
  11.0
• India Cements 5.5
• Total Industry 105

Top 5 Players contribute above 50 of Despatches
Source CMA
10
Ambuja Cement - Capacity
mn tonnes

• Gujarat 5.0
• North India 5.0
• Maharashtra 2.5
• West Bengal 2.0
• Total Capacity 14.5

11
Ambuja Cement - Sales Pattern(Calendar Year
2004 Estimates)
mn tonnes

• Gujarat
  2.0
• North India
  4.5
• Maharashtra
  2.5
• East India
  1.8
• Others
  1.0
• Exports
  2.2
• Total
  14.0

12
Gujarat Ambuja Cement - StructurePost ACRL
Merger (Expected in January 04)

• GAC ( 12.5 mn )
• 60
• 40 ACIL
• Pvt. Equity Investors
• ACC ACEL
• 14.4 94
• ( 18 mn ) ( 2 mn )

13
Convertible Bonds

• Brief terms
• Date of Issuance January
  2001
• Coupon 1p.a.
• Maturity January 2006
• Conversion Price Rs. 222
• Conversion Into GDRs/ Shares
• Amount US 99.3 million
• Conversion Option of the
• Bondholder Any time till maturity
• Call Option of company 31st January 2004 onwards

14
Ambuja Cement - Key Financials(Post Merger of
ACRL Conversion of Bonds)

Rs. Millions


Pre
Post Share
Capital 1551 1775
Net Worth
16120 21310
Gross Debt 17510
12500
15
Shareholding Pattern( Post Merger and Conversion
of Bonds)

• Equity Shares of Holding
• Mn. Nos.
• Management 43.1 24
• FIs Mutual Fund 32.7
  18
• Warburg Pincus 13.4 8
• FIIs (Incl. GDR) 60.9
  34
• General Public 27.4 16
• Total 177.5 100

Conversions of Bonds into GDRs
16
Gujarat Ambuja Cement LimitedValuation

• EV/EBIDTA (Based on 03) 9
  times
• Cash Earning Per Share (Based on 03) Rs.
  27
• Debt/ Equity - (on Conversion)
  0.60
• Debt/ EBIDTA - (on Conversion) 2.1
  times

17
Summation

• GDP to grow at around 7
• Cement demand to grow at 8
• Paradigm shift in the cement industry from 2004
• Cement Prices are already moving up in
  anticipation of the above shift

Ambuja Cement well poised to participate being
the most profitable efficient producer in the
country