Holcim Invest Relation Mar09

8/3/2019 Holcim Invest Relation Mar09

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ACC Ltd 2009 Investor Presentation March 2009

Investor Presentation

March, 2009


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Agenda

Indian Cement Industry : Overview

ACC : An Introduction

ACC: Key Financials & Capex Program

Conclusion

1

2

3

4


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Indian Cement Industry: over the years

1982 - Watershed point:Partial decontrol of cement industry 1989-Total decontrol of cement industry

Snapshot Comparison

Decontrol has spurred fast expansion / modernization of

Indian Cement Industry

Description 1982 1989 20082009

Projected

Installed

Capacity29 MTPA 56 MTPA 207 MTPA 252 MTPA

Production 21 MT 42 MT 177 MT 189 MTPA

TechnologyPredominantlyWet Process

Wet / DryProcess

PredominantlyDry Process

PredominantlyDry Process


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Overview of Indian Cement Industry

India is the second largest cement producer in theworld

Healthy CAGR of ~ 9.3% per annum

Amongst the lowest per capita consumption in the worldat 145 kg

Future Demand Drivers

Expected GDP Growth level of > 6% Initiatives for growth of Housing

Development of Roads/Other Infrastructure Gradual process of consolidation continuing

Indian Cement industry is among the largest in the world

and has been growing steadily


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Cement demand scenario [2002-08]: CAGR ~ 9.3%

Key drivers of Demand for cement were primarily economic growth,spending on infrastructure, commercial and housingconstruction and industrial activities

Cement demand emanated from four key segments namely:

Housing: ~ 67%

Infrastructure: ~ 13%

Commercial Construction: ~ 11%

Industrial: ~ 9%

The average GDP growth rate for India during 2004-2008 has beenabout > 7%

The cement demand during 2002-08 has registered a growth of~ 9.3%

Source: Cris Infac, MF Global India Research Institute,2008


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GDP growth and cement demand

8% 10% 10% 9%

7%

8%

11%

10%

8%

5%

0%

2%

4%

6%

8%

10%

12%

2004-05 2005 2006 2007 2008

0%

2%

4%

6%

8%

10%

12%

GDP Growth % Cement Consumption Growth %

RBI,CMA Cement Statistics 2008


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Cement production & consumption growth

2003-08 ~ 9%

145 154 160 166

179207

115 125 137 153 164

177

5%

8% 8%

11%

9% 9%

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008

QtyMillionTons

0%

2%4%

6%

8%

10%

12%

G

rowth%

Capacity Installed Cement Prod. Consumption Growth

Source:CMA Cement Statistics 2008


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India will benefit from a demographic divide: Major driverfor cement demand

India Demographic Profile

-60 -40 -20 0 20 40 60

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-5455-59

60-64

65-69

70-74

75-79

80+

Mn people

Age group

204060

20 - 35 age group :

325 mn people (~25 %)

China Demographic Profile

-60 -40 -20 0 20 40 60

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-5455-59

60-64

65-69

70-74

75-79

80+

Mn people

Age group

204060

20 - 35 age group :

308 mn people (~21 %)

France Demographic Profile

-3 -2 -1 0 1 2 3

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-5455-59

60-64

65-69

70-74

75-79

80+

Mn people

Age group

123

20 - 35 age group :

11 mn people (~17 %)

Female Male

While EU and even China are aging rapidly, more than half of Indias population is belowthe age of 30

Source: CII Conference 2002; CSFB Report; UN Population Division; BCG analysis


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Government stimulus measures to spur cement demand

Authorizing India Infrastructure Finance Company Limited (IIFCL) to raiseRs. 10,000 cr. to refinance bank lending for infrastructure projects.

Additional plan expenditure up to Rs. 20,000 cr. in the current year mainly forcritical rural, infrastructure and social security schemes such as PradhanMantri Gram Sadak Yojana (PMGSY), Jawaharlal Nehru National UrbanRenewal Mission (JNNURM), Accelerated Irrigation Benefit Programme andNational Social Assistance Programme (NSAP)

To facilitate access to funds for the housing sector, the 'development ofintegrated townships' would be permitted as an eligible end-use of the ECB,

under the approval route of RBI NBFCs, dealing exclusively with infrastructure financing, would be permitted

to access ECB from multilateral or bilateral financial institutions, under theapproval route of RBI.

An across-the-board cut of 8% in ad-valorem Cenvat rate and reduction incenvat on bulk cement from 10% to 8%

Several other measures to support housing including infusion of liquidity andreduction in interest rate by RBI

Removal of ban on export of cements and re-introduction of customs duty onimported cement


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Rural areas key to generate and sustain cement demand

Rural areas are not as dependent on financial markets or monetary policy

Rural market demand is more impacted by

Agricultural productivity gains and crop yields

Population growth and migration trends

Water and power generation availability

Regional food supply and demand dynamics

Household savings

Brand recognition and commercial activities are also important

Factors in rural markets

Retail market sold predominantly in bags

Reliance on do-it-yourself (DIY) market


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Rural areas key to generate and sustain cement demand

In India, more than 72% of population is ruralIndividual Home Builder (IHB) make up 45% of market

Projected rural housing creation estimated at 40 millionunits

over the next 15 years Marketing focus on rural and low cost housing needs

ACC help designed to support IHBs in every aspectincluding libraries, website, home plans, testing, etc.

Agreement with internet provider (ITC E-Choupal) toestablish direct access to agricultural community

Expansion of rural distribution network throughpartnerships and agreements

Low cost housing initiatives based on thin-shell materialproviding low-weight and long life


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Agenda




Conclusion

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2

3

4


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GoodBusinessPractice

Technology

ProcessesSkills

Most respectedorganization

Historicmerger of 11

companies

belonging to4 groups

Award/Accreditations

Formed in1936

Receivedvarious

awards forEnvironment,Safety, Energy

AccreditedISO 9000,9002, 14001,18001 to

various units

Ethical

values

An Indian corporate saga


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Brief history

Established 1936 as a result of a merger of 10 existing companies

Long and proud history

1945 - First CSR initiative Rural Welfare Scheme at Sevalia (Gujarat)

1947 - Indias first indigenous cement plant, designed and built by ACC

at Chaibasa

1956 - Pioneered bulk cement distribution at Okhla, Delhi

1961 - First production of slag cement in India at above plant

1965 - Central Research Station at Thane opened

1979 - Award of management contract for Yanbu (Saudi Arabia)

1982 - Indias first indigenous 1 mtpa plant at Wadi, built by ACC

1993 Pioneered Commercial Ready Mix Concrete in Mumbai, India

2004 - ACC named Indias only Super Brand in cement sector


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Subsidiary companies

Bulk Cement Corporation (India) Limited: Year of Incorporation: 1992-93

Business: Pioneering of bulk handling facility funded by World Bank. Located at

Kalamboli, Mumbai

ACCs Stake & [Investment]: 94.65% [ Rs 37.27 Cr]

Lucky Minmat Private Limited:

Year of Acquisition: 2007

Business: Limestone mining. Location Sikar district, Rajasthan ACCs Stake & [Investment]: 100% [ Rs 38.10 Cr]

ACC Concrete Limited:

Year of Incorporation: 2008 [ACC transferred the RMX business]

Business: Ready Mix Concrete. 29 plants located pan India

ACCs Stake & [Investment] 100% [ Rs 100.00 Cr]


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A New Vision

A Renewed Commitment

To be one of the most respected companies in India;

recognized for challenging conventions and delivering on ourpromises


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Restructuring and resurgence

1986 to 1989 Period ofrestructuring

1990 to 2008 - Period ofConsolidation

Divested six wet process

plants

Focus on manpowerreduction and efficiency

improvement, productivityoptimization.

Conversion and

rationalization of wet processcapacity

Capacity expansion projects

Significant improvements in

energy, manpower andtransportation costs

Investment in Infrastructure /RMC / Bulk Cement

Exiting non-core activities Unlocking value of assets

Resurgence of last 5 years provides a strong base for rapid growth by

taking advantage of emerging opportunities

Resurgence of last 5 years provides a strong base for rapid growth by

taking advantage of emerging opportunities


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Pan India presence in attractive markets

15

1

23

5 4 6

78

911

1229

13 14

1617

18

19

20

21 22

23

24

25

26

28

30

68

27

39

43

56 57

55

41

42

52

45

48

53

5051

36

49 31

34

35

46 47

40

32

38

37

67

66

65

73

72

71

64

63

61

60

69

70

74

76

75

54

33

44

59

58

10

62

Gagal (4.4 MTPA)

Tikaria (2.31 MTPA)

Jamul(1.58 MTPA)

Kymore (2.2 MTPA)

Wadi(5.19 MTPA)

Madukkarai

(1.18 MTPA)

Chanda(1 MTPA)

Damodhar(0.53 MTPA)

Chaibasa(0.87 MTPA)

Bargarh(0.96 MTPA)

Sindri(0.91 MTPA)

Lakheri(1.5 MTPA)


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Strong position nationwide

Improved efficiency, brand image and nationwide presence ensure competitiveedge/ sustained profitability for ACC

A national presence helps ACC to withstand regional fluctuations in prices andadapt its distribution to market place needs

Source: CMA

Installed capacity: ~ 22.63 MTPA

Significant market share in anotherwise fragmented industry

Leader also in blended cements:83%

Steady improvement in costprofile

Unique R&D facility

Installed capacity: ~ 22.63 MTPA

Significant market share in anotherwise fragmented industry

Leader also in blended cements:83%

Steady improvement in costprofile

Unique R&D facility

Only Company with nationwidepresence capacities in all fiveregions

ACC Brand : Recognized for

superior quality and timelydelivery

Widest distribution network ofany cement company in Indiawith around 250 warehouses and

over 9,000 dealers

Downstream and supportingbusiness: RMX, Bulk Cement

Only Company with nationwidepresence capacities in all fiveregions

ACC Brand : Recognized forsuperior quality and timelydelivery

Widest distribution network ofany cement company in Indiawith around 250 warehouses and

over 9,000 dealers

Downstream and supportingbusiness: RMX, Bulk Cement


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Production capacity

Capacity as on 31-12-2008

Location

Clinker

Capacity

MTPA

Cement

Capacity

MTPA

Bargarh 0.78 0.96Chaibasa 0.94 0.87

Chanda 0.79 1.00

Damodhar 0 0.53

Gagal 2.87 4.40

Jamul 0.59 1.58

Kymore 2.94 2.20

Lakheri 0.93 1.50

Madukkarai 0.68 1.18

Sindri 0 0.91Tikaria 0 2.31

Wadi 3.62 5.19

Total 14.14 22.63


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Production capacity across regions

Region Industry's ACC's ACC's

Capacity (Mn.T) Capacity (Mn.T) Share%

North 48.34 5.90 12%

East 29.89 4.85 16%

Central 28.16 4.51 16%

South 69.03 6.37 9%

West 31.84 1.00 3%

Total 207.26 22.63 11%

Cement Capacity 2008

Source: CMA


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Cement dispatch profile

Source: CMA Dec,2008

ACC's Region wise Cement Despatch

Distribution % Jan-Dec2008

South, 19%

Central, 23%

North, 24%

East, 21%

West, 13%


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Dispatch across regions

Region Qty Mn.t % Share

Northern 34.63 19.89%

Eastern 27.14 15.59%

Central 25.22 14.48%

Southern 53.35 30.64%

Western 33.79 19.41%

Total 174.13 100.00%

Industry's Cement Despatch Cy. 2008

Region Qty Mt % Share

Northern 5.02 14%

Eastern 4.39 16%

Central 4.80 19%

Southern 3.95 7%

Western 2.68 8%

Total 20.84 12%

ACC's Despatch Cy. 2008

Source: CMA,Cement Statistics 2008


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Shareholding pattern as on Dec.31,2008

Share capital Rs 187.88 Cr

The Company is managed by professionals and is committed to

enhancing shareholder value at all times


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Market capitalization reflect value creation

Period Amt Rs Cr

2003-04 4,5112004-05 6,435

2005 9,856

2006 20,340

2007 19,222

2008 8,969

Market Capitalisation as at year end

Planned capacity creation contributing to


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p y gincreased cement production

2004-05 2005

90

2006

91

2007

93

2008

Capacity Utilisation [%]

Cement Production [Mio Tons]


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Captive power generation capability

Chanda 15 1

Jamul 25 1

Kymore 50 2

Lakheri 25 1

Madukkarai 15 1

Tikaraia 15 1

Wadi 75 3

Total 241 12

Renewable Energy Source:Windmill

Madukkarai 9.0

Lakheri 7.5

Captive Power Generation all Thermal based and meet about

70% of plant power requirement.


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Agenda




Conclusion

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2

3

4


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Improved fixed assets turnover ratio

2004-05 2005 2006 2007 2008

Asset Turnover Ratio [Re]

Fixed Assets [Rs. Cr]


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Sales volume has grown over time

Sales Volume [Mio Tons]

Growth [%]

20082004-05

6.8

5.2

2007

5.9

2005 2006


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3,902

3,221

5,803

6,991

7,309

2006

2007

2004-05

Net Sales [Rs. Cr]

2008

2005

+5%

715

616

1,717

1,993

1,899

-5%

2005

2004-05

2006

2007

EBITDA [Rs. Cr]

2008

Impressive net sales & EBITDA growth

Better EBITDA & EBITDA margin despite cost


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616715

30

19

18

0

5

10

15

20

25

30

2004-05 2005

1717

2006

29

1993

2007

26

1899

2008

EBITDA Margin [%]

EBITDA [Rs. Cr]

0

1000

1500

2000

500

pressures

Interest cost per Rs/ Tonne of cement down


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significantly

PBT & PAT i t i d d it t


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1,737

1,930

1,620

684

444

1,213

1,439

1,232

544

378

2004-05 2005 2006 2007 2008

Profit Before Tax [Rs. Cr]Profit After Tax [Rs. Cr]

PBT & PAT maintained despite cost pressures

Effective utilization of capital employed to generatehi h t


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higher return

18

2004-05

19

2005 2006 2007

40

2008

ROCE [%]

Capital Employed [Rs. Cr]

Net worth has increased over time


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Net worth has increased over time

2004-05 2005 2006

35

2007

25

2008

Return on Net Worth [%]

Net Worth [Rs. Cr]

Increased EPS translated to increase in DPS


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65

77

66

30

21 2020

1587

2004-05 2005 2006 2007 2008

Earning Per ShareDividend Per Share

Increased EPS translated to increase in DPS

Consistent & higher dividend payout


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Consistent & higher dividend payout

2004-05 2005

26

2006

31

2007

36

2008

Dividend Payout Ratio [%]

DPS Rs .

Strong Net Cash Generated from Operations


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Strong Net Cash Generated from Operations

Net Cash Generated from Operations [Rs. Cr]

2008

2007

2006

2005

2004-05

Strong cash position (net of borrowings) and lowinterest outgo


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502437

-151

-969

-1,350

-0.5

0.3

0.9

2.0

2.3

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2004-05 2005 2006 2007 2008

Interest as a %age of Sales [%]

Cash & Bank Balance (Net of Borrowings) [Rs. Cr]

interest outgo

Financial debt, maturity and liquidity as of31/12/08


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31/12/08

Cash and cash equivalent =Rs.1436 crores (A)

(A)+Unused committed credit lines =Rs.1586 crores

Debt Summary

Fixed To floating 100%

Capital Markets 27% and Loan 73%

Total Maturity 5 years

CP Borrowings NIL

Corporate Credit lines

Credit Lines Maturity Yearly renewalNumber of Counterparties 14

Rating Summary

CRISIL FITCH ICRA

Long Term Loan / NCD AAA stable AAA stable

Fund Based Facilities (Cash

Credit)

AAA Stable AAA stable

Non Fund Based (LC /BG) P1+ F1+

Short Term (CP) A1+

Liquidity Summary

0

50

100

150

200

250

1y 2y 3y 4y 5y 6y 7y 8y 9y 10y >10y

Capital MarketsLoans

`

2008:Debt: Equity ratio 0.10X

Expansion plans to drive growth agenda


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Expansion plans to drive growth agenda

East Bargarh Expansion [OR] [ 1.35 Mtpa] 2009

South & West Madukarai Grinding Augmentation [TN]| 0.22 Mtpa ] 2008 New Wadi Grinding Augmentation [KA] [ 0.60 Mtpa ] 2009 New Wadi Expansion[KA] [3.00 Mtpa] 2009

Grinding unit at Bellary (KA) [ 1.1 Mtpa ] 2009Grinding unit at Kolar (KA) [ 1.6 Mtpa ] 2009

Grinding unit at Wadi (KA) [0.3 Mtpa] 2009 Chanda New Line [MH] [ 3.0 Mtpa ] 2010

With the projects at hand, the total capacity would be enhanced to

~ 30.58 Mtpa by the end of 2010 and would allow the Company to

strengthen its presence in strategic markets

Capex spend during 2009-10

around Rs 3,000 Cr, funded

thru internal accruals & debt

Year

CapacityAdditions

[MTPA]

Capacity

at yearend

[MTPA]

2007 22.41

2008 0.22 22.63

2009 4.95 27.58

2010 3.00 30.58

CPP capacity addition program


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CPP capacity addition program

CPP

CapacityMW No: ofPlants Year

Existing 241 12

Bargarh 35 1 2009

Wadi 50 2 2009

Chanda 25 1 2010

Grand Total 351 16

CPP Capacity Addition Program

CPP capacity to enhance companys reliance oninternal

power generation and contribute to reduced costs

Agenda


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Agenda




Conclusion

1

2

3

4

Conclusions


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Conclusions

The cement industry is attractive even during recessionaryperiods, cement demand has historically held up well and

recovered quickly

ACC is well positioned due to its balanced geographical

diversification

ACC with its strong balance sheet has a:

Management team with a long standing track record in

successfully managing through rough timesStrong liquidity

Low leverage with balanced maturity profile

Limited short-term refinancing needs

Conclusions


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The rural markets offer unique opportunities but require:Strong customer focus and understanding of localrequirements

Brand recognition and brand loyalty

Value proposition for low-cost housing

Stimulus packages will provide the basis for building materialdemand over the next two to three years

ACC is well prepared for the challenging times ahead

Disclaimer


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sc a e

Cautionary statement regarding forward looking statements

This presentation may contain certain forward-looking statements relating to

the Companys future business, developments 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 andpolitical 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 new coverage, which could cause actual developments and results todiffer materially from the statements made in this presentation. ACC assumes

no obligation to update or alter forward-looking statements whether

as a result of new information, future events or otherwise

Contact information


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Sunil Nayak

Krishnamurthy Shankar

Investor RelationsPhone: 91 22 66654485

Phone: 91 22 66317419

Fax: 91 22 66317421

www.acclimited.com

Documents

Holcim Invest Relation Mar09