David Atkinson

1
Ambuja Cements Limited

• By
• David Atkinson
• CFO
• 13th March 2008

2
Content

• Brief history
• Cement Outlook
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

3
Brief history a growth story

• Capacity built up from 0.7 Mio t in 1986 to 18.
  5 Mio t as of today at CAGR of 18
• Organic growth and growth through acquisitions
• 2001 Private equity investors (American
  International Group and 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 favor of Holcim
• ACL is a Holcim Group company since May 2006

4
Content

• Brief history
• Cement Outlook
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

5
Cement Outlook

• Domestic cement consumption grew by 9 in CY 07.
  CAGR (5 years) - 9
• Double digit cement demand growth expected in the
  long term on the back of strong infrastructure
  development
• New capacity of around 110 Mn tons over next 5-7
  years.
• Prices expected to remain stable
• Cost pressure on account of rising energy prices

6
Content

• Brief history
• Cement Outlook
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

7
Our Positioning
Eastern Region 3.0 million t 1
North Central Region 8.0 millon t 1
Cement plant Grinding station Terminal Port
South West Region 7.5 million t 1
1 Cement Capacity
8
Strategy

• Strong presence in growing markets of North
  West
• Hub Spoke Strategy - Grinding close to markets
• Premium brand
• Extensive primarily exclusive distribution
  network
• Over 6,000 dealers and 20,000 retailers
• Captive infrastructure
• Port, Receiving Terminals and Captive Power
  Plants (260 MW)
• Sea transportation
• Seven dedicated vessels for faster cheaper
  transportation

9

Asset footprint South West
Ahmedabad
Ambujanagar
Surat
Maratha
Panvel

• ACL exports its cement from Ambujanagar
• Export flows are expected to decline due to
  strong domestic demand
• Optimise logistics costs through use of sea
  transportation to serve the key Mumbai market

Cochin
10
Asset footprint North Central
Darlaghat
Rauri
Ropar
Nalagarh
Bathinda
Roorkee
Dadri

• Adopted the concept of split grinding units to
  optimise logistics costs.

Rabriyawas
11
Asset footprint East
Barh

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

12
Sales and market share South West
Market share
Sales development
ACL Market Share in
Mio t


8.4
8.3
9.1
9.1
8.3
Comments
UltraTech
Grasim
ACC
ACL
Kesoram
ICL
Madras
Zuari

• Top three players represent around 49.5 of the
  market share1
• Dominance of regional players in southern market

Others
1 In 2007, top three are ACL/ACC,
Grasim/Ultratech, ICL
Source CMA
13
Sales and market share North Central
Market share
Sales development
Mio t
ACL Market Share in

12.9
12.2
13.6
12.7
12.2
Comments
UltraTech
Grasim
ACC
ACL
Jaypee
Century
JK
Birla Corp

• Relatively fragmented top three players now
  represent around 53 of market1
• JK and Shree are relatively aggressive competitors

Shree
Others
1 2007top three are ACL/ACC, Grasim/Ultratech, JK
Source CMA
14
Sales and market share East
Sales development
Market share
Mio t
ACL Market Share in

8.4
7.9
7.7
8.0
9.1
Comments
UltraTech
Grasim
ACC
ACL
Orissa
Century
Lafarge
Birla Corp

• Most consolidated compared to all India
• Top three players represent around 66 of the
  market1

Others
1 In2007, top three are ACL/ACC,
Grasim/Ultratech, Lafarge.
SourceCMA
15
Content

• Brief history
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

16
Key financial figures1
/-
Full Year
Full Year
Rs. Crores
2007
2006
16.3
3.68
16.9
2
Sales volume
17.68
5705
Sales
4848
19.03
EBITDA
1881
2239
-
EBITDA-margin
38.8
39.2
32.01
3
Profit after tax
1340
1769

• IGAAP. Figures for FY 2006 have been restated to
  make it comparable, on account of change in
  accounting year and merger of ACEL
• Sales were impacted due to floods
• Including extraordinary income

17
Financial performance showing improving trajectory
2006
2007
2004 -05
2003-04
2002-03
63
17
13
9
ROCE ()
47
43
38
22
17
14
ROE ()
ACLs EBITDA witnessed an impressive growth
Figures for 2006 pertain to 18 months period
July 05 December 2006
18
Content

• Brief history
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

19
Cost Drivers - Energy

• Consumption per unit of Production

• Measures
• Shift from liquid to solid fuel to reduce cost of
  captive energy.
• Reduction dependence on grid power, with the
  construction of additional power plants
  aggregating to 112 MWs
• Captive power ensures continuous and consistent
  supply of power

• Increase Captive Generation

Figures for 2006 pertain to 18 months period
July 05 - December 2006
20
Cost drivers - Others

• Captive power plants, AFR

Power

• AFR / process efficiency / international sourcing

Fuel (coal)

• Composite cement

Clinker content

• Grinding facility close to end user, production
  close to raw materials
• Terminal logistics

Transport
21
Content

• Brief history
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

22
Expansion projects
Cluster
Location
Cement (million t)
Clinker (million t)
2007
2008
2009
2010
North North North SW SW SW East East
Rauri Dadri Nalagarh Surat Ahmedabad Cochin Bhata
para Barh Total
2.2 - - - - 2.2 _ 4.4
- 1.5 1.5 1.0 1.5 - 1.0 6.5
Clinkering
Grinding
Grinding
Grinding
Grinding
Terminal
Clinker
Grinding
Greenfield
Brownfield
Major Capital outlay (in Rs. Crores.)

• Clinker plants 1600
• Grinding units 1050
• Captive power plants 545
• Ships Terminals 245

23
Expansion Projects Update

• Project implementation progressing satisfactorily
• Clinkerisation expansion projects at Bhatapara
  and Rauri, each with capacity of 2.2mn tonne
  progressing as per plan.
• Associated grinding unit projects and captive
  power plants at various locations remain on
  track.
• The outlay on capital expenditure is estimated to
  be approximately Rs.3,500 crores.

24
Content

• Brief history
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

25
Financial position
Rs. Crores
2007
2004-05
2003-04
2002-03
2006
Net Cash from Operating Activities
1796
1559
548
482
202
DebtEquity
0.07
0.52
0.63
1.09
0.25
1.41
2.61
3.42
Debt EBITDA
0.38
0.15

• Improvements in operational efficiency
• Stable pricing environment
• Net cash positive
• Call option in ACIL to generate approx. Rs.589
  crores.

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
26
Our Shareholders
As on 31st December 2007
27
Content

• Brief history
• Positioning in Indian cement industry
• Financial performance
• Cost drivers
• Expansion projects
• Financing of expansion projects
• Conclusion

28
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 expansion
  plans to grow within the attractive markets and
  an internal financing capability to fund
  expansion projects

29
Disclaimer
Cautionary statement regarding forward-looking
statements This presentation may contain certain
forward-looking statements relating to the
Groups 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 or
inability 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.