Presentation By Ambuja Cement

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Presentation ByAmbuja Cement
November 19, 2003
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Indian EconomyGDP Growth - Estimates (2003 -
2004)

• 1Q 2004 (A) Estimated 03-04
• Service Sector 7.6 7.3
• Industrial Sector 5.8 5.0
• Construction Sector 5.7 6.7
• Agriculture Sector 1.7 10.7

• Economy expected to grow by about 7.4

A- Actual
CMIE - Estimates
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Cement in India

• Why ?
• Indian economy will keep growing in band of - 5 -
  7 annually
• To achieve larger GDP growth rate Country will
  need more Roads, Ports, Irrigational facilities
  other Infrastructure
• Housing will continue to be a major construction
  area
• Cement as a product or technology does not
  suffer from obsolescence
• There is no Substitute for Cement

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Roads - New Dimension

• Major Investments in Road Development
• Special Cess of Rs. 1.50 per liter on petrol and
  diesel for Road Development
• Total outlay over next 2/3 years - Rs. 600
  Billion

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Road Development

• Golden Quadrilateral- 5846 Sq.. Km
• (Already Completed 1408 km)(Expected
  completion - June 2005)
• North-South East-West Corridors - 7300 Sq..
  Km
• ( Already Completed 980 km) (Expected
  completion - 2007)
• 48 New Road project - 10000 Km.
• (Expected completion - 2006)
• Government commits to 25 Concrete
  Roads
• Expected additional consumption -3/4 mn tonnes
  per annum

Source NHAI
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Housing Construction

• Huge potential
• Unfulfilled demand - 33 mn units
• Increasing disposable income
• Younger generation aspiring to have Own
  House
• Low real estate prices
• Easy availability of Housing Finance -
  Growing over 30
• Interest Rates have come down by 700 bps in
  last 3 years
• Monthly instalment on mortgage is now
  equivalent to rentals

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• Cement Supply
• Other side of the equation

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Cement Supply - The Dynamics

• Cement Production 2003 111
  mn tonnes
• Maximum Clinker Production Capability
  
• (Including Sanghi)
  103 mn tonnes
• Current Clinker to Cement
• Conversion Ratio (the best in
• last 5 years)
  1.21times
• Maximum Cement Production Capability 127 mn
  tonnes
• at Conversion Ratio - 1.23

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Cement Supply - A Reality Check

• No new cement capacity under construction
• Lenders unwilling to fund new cement plants
• Maximum Cement production capability at a
  conversion ratio of 1.23 - 127 mn tonnes
• Existing players going through Consolidation

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Indian Cement IndustryNext 3 Years
mn tonnes

• Financial Clinker Cement Cement
  Demand
• Year Capacity Conversion Production
• Ratio at Peak 8
• ( Maximum Level)
• 2003(A) 103 - 111 111
• 2004(E) 103 1.21 125 117
  
• 2005(E) 105 1.22 128 126
  
• 2006(E) 107 1.23 132 136
  

On account of some debottlenecking
A- Actual E- Estimated
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Cement Outlook

• Cement demand growth should exceed 8 if the GDP
  is growing at over 6
• FY 2003-04 would be the First year in last decade
  to not to have a single new plant commissioning
• Next 2 years also there is no new capacity
  expected
• Cement Demand to expected exceed Supply after a
  gap of several years
• All these point to good demand better
  Cement Prices

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Ambuja Cement
HP
Punjab
Rajasthan
Gujarat
Chattisgarh
WB
Cement factories
Maharashtra
Sea terminals
mn tonnes 1986 2003 Capacity 0.7
14.0
Growth of 20 times in 15 years

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Growth With A Sound Business Model
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Our Business Model

• Own Infrastructure -Logistics Management
• Strong brand efficient distribution
• Presence in prime markets
• Lowest cost cement producer

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Own Infrastructure

• 7 Owned Cement Ships for transporting Cement by
  Sea
• Large port in Gujarat to handle export of Cement
  ( 2 mn tonnes this year) Import of
  Coal / Oil
• 3 Cement receiving terminals
• 190 MW of Captive Power Plants at various Cement
  Plants to give reliable and cheap power

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Strong Brand

• India - A bagged market
• Individual 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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Lowest Cost Producer
Rs./ tonne

• FY 2003 FY 2002 Increase / (Decrease) ()
• Power 187 179 4
  
• Fuel 227 254 (11)
• Raw material 136 133 2
• Consumables 47 48 (2)
• Direct cost 597 614 (3)

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Gujarat Ambuja Cement - Shareholding

• GAC ( 12 mn )
• 40 ACIL 60
• Pvt. Equity Investors
• ACC ACEL
• 14.4 94
• ( 17 mn ) ( 2 mn )

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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 100
  million
• Conversion Option of the
• Bondholder Any time till maturity
• Yield to maturity at
• redemption 4.6
• Call Option of company From January 2004 till
  Maturity

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Gujarat Ambuja Cements Limited(Effect of
Conversion)
Rs. Million

• Before After
• Sources of Funds
• Shareholders Funds 16166 20680
• Deferred Tax 3053 3053
• Convertible Bonds 4614 --
• Debt 12436 12436
• Total 36269 36269
• Application of Funds
• Gross Fixed Assets 30239 30239
• Less Depreciation 10120 10120
• Net Fixed Assets 20119 20119
• Investments in ACIL 8572 8572
• Other Investments 2445 2445
• Net Current Assets 5133 5133
• Total 36269 36269

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Debt Profile (As of 30.9.2003)

• Tenor
• Long Term 79
  
• Short Term
  21
• Total 100
  
• Mix
  
• Rupee Debt
  56
• Foreign Currency Debt
  44
• Total 100
  

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Gujarat Ambuja Cement LimitedValuation

• EV/Ton US 90
• EV/EBIDTA 9 times
• Cash Earning per Shares (CEPS) Rs. 27
• Earning Per Shares (EPS) Rs. 14
• Price to Cash Earning 10 times
• Debt/ Equity -( on Conversion) 0.60
• Debt/ EBIDTA - (on Conversion) 2.4
  times

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THANK YOU