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Investor Presentation

March, 2009

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ACC Ltd 2009 Investor Presentation March 2009

Agenda
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Indian Cement Industry : Overview ACC : An Introduction ACC: Key Financials & Capex Program Conclusion

2 3 4

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ACC Ltd 2009 Investor Presentation March 2009

Indian Cement Industry: over the years


1982 - Watershed point:Partial decontrol of cement industry 1989-Total decontrol of cement industry Snapshot Comparison
Description Installed Capacity Production 1982 29 MTPA 21 MT Predominantly Wet Process 1989 56 MTPA 42 MT Wet / Dry Process 2008 207 MTPA 177 MT Predominantly Dry Process 2009 Projected 252 MTPA 189 MTPA Predominantly Dry Process

Technology

Decontrol has spurred fast expansion / modernization of Indian Cement Industry


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ACC Ltd 2009 Investor Presentation March 2009

Overview of Indian Cement Industry


India is the second largest cement producer in the world Healthy CAGR of ~ 9.3% per annum Amongst the lowest per capita consumption in the world at 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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ACC Ltd 2009 Investor Presentation March 2009

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


Key drivers of Demand for cement were primarily economic growth, spending on infrastructure, commercial and housing construction 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 been about > 7% The cement demand during 2002-08 has registered a growth of ~ 9.3%

Source: Cris Infac, MF Global India Research Institute,2008 ACC Ltd 2009 Investor Presentation

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March 2009

GDP growth and cement demand


12% 10% 8% 8% 6% 10% 4% 2% 0% 2004-05 2005 GDP Growth % 2006 2007 2008 8% 10% 9% 7% 5% 11% 10% 8% 10% 8% 6% 4% 2% 0% 12%

Cement Consumption Growth %


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RBI,CMA Cement Statistics 2008 ACC Ltd 2009 Investor Presentation

March 2009

Cement production & consumption growth 2003-08 ~ 9%

250 Qty Million Tons 200 150 100 50 0 2003 2004 2005
145 115 154 125 5% 160 137 8% 8%

11% 9% 9%

12% 10% 8% 6%
179164 207 177

166153

4% 2% 0%

2006

2007

2008

Capacity Installed

Cement Prod.

Consumption Growth

Growth %
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March 2009

Source:CMA Cement Statistics 2008 ACC Ltd 2009 Investor Presentation

India will benefit from a demographic divide: Major driver for cement demand
India Demographic Profile
Age group
80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 -60 60 -40 40
Female Male

China Demographic Profile


Age group
80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4
80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4

France Demographic Profile


Age group

-20 20

20

40

60

-60 60

-40 40

-20 20

20

40

60

-3 3

-2 2

-1 1

Mn people

Mn people

Mn people

20 - 35 age group : 325 mn people (~25 %)

20 - 35 age group : 308 mn people (~21 %)

20 - 35 age group : 11 mn people (~17 %)

While EU and even China are aging rapidly, more than half of Indias population is below the age of 30
Source: CII Conference 2002; CSFB Report; UN Population Division; BCG analysis
ACC Ltd 2009 Investor Presentation

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March 2009

Government stimulus measures to spur cement demand


Authorizing India Infrastructure Finance Company Limited (IIFCL) to raise Rs. 10,000 cr. to refinance bank lending for infrastructure projects. Additional plan expenditure up to Rs. 20,000 cr. in the current year mainly for critical rural, infrastructure and social security schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Accelerated Irrigation Benefit Programme and National Social Assistance Programme (NSAP) To facilitate access to funds for the housing sector, the 'development of integrated 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 the approval route of RBI. An across-the-board cut of 8% in ad-valorem Cenvat rate and reduction in cenvat on bulk cement from 10% to 8% Several other measures to support housing including infusion of liquidity and reduction in interest rate by RBI Removal of ban on export of cements and re-introduction of customs duty on imported cement
ACC Ltd 2009 Investor Presentation

March 2009

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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ACC Ltd 2009 Investor Presentation March 2009

Rural areas key to generate and sustain cement demand


In India, more than 72% of population is rural Individual Home Builder (IHB) make up 45% of market Projected rural housing creation estimated at 40 million units over the next 15 years Marketing focus on rural and low cost housing needs ACC help designed to support IHBs in every aspect including libraries, website, home plans, testing, etc. Agreement with internet provider (ITC E-Choupal) to establish direct access to agricultural community Expansion of rural distribution network through partnerships and agreements Low cost housing initiatives based on thin-shell material providing low-weight and long life

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ACC Ltd 2009 Investor Presentation March 2009

Agenda
1

Indian Cement Industry : Overview ACC : An Introduction ACC: Key Financials & Capex Program Conclusion

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ACC Ltd 2009 Investor Presentation March 2009

An Indian corporate saga


Formed in 1936 Most respected organization Award/ Accreditations

Historic merger of 11 companies belonging to 4 groups

Good Business Practice

Techn ology

Ethical values
Skills Processes

Received various awards for Environment, Safety, Energy Accredited ISO 9000, 9002, 14001, 18001 to various units

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ACC Ltd 2009

Investor Presentation

March 2009

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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ACC Ltd 2009 Investor Presentation March 2009

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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ACC Ltd 2009 Investor Presentation March 2009

A New Vision
A Renewed Commitment

To be one of the most respected companies in India; recognized for challenging conventions and delivering on our promises

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ACC Ltd 2009 Investor Presentation March 2009

Restructuring and resurgence


1986 to 1989 Period of restructuring
Divested six wet process plants Focus on manpower reduction and efficiency improvement, productivity optimization.

1990 to 2008 - Period of Consolidation


Conversion and rationalization of wet process capacity Capacity expansion projects Significant improvements in energy, manpower and transportation 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 Resurgence of last 5 years provides a strong base for rapid growth by taking advantage of emerging opportunities taking advantage of emerging opportunities
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ACC Ltd 2009 Investor Presentation March 2009

Pan India presence in attractive markets


1

Gagal (4.4 MTPA)


2 6 8 11 10 29 12 13 14 16 15 60 61 21 23 22 65 66 63 64 70 62 69 72 71 67 33 34 35 73 74 76 7

3 5 4 9 26

Tikaria (2.31 MTPA) Kymore (2.2 MTPA)


68 75

Lakheri (1.5 MTPA)


28

25 27 30

18 17

20 19 45 48 46 24 47 31 32 40 41 42 44 43 55 56 57 58 59

Sindri (0.91 MTPA) Damodhar (0.53 MTPA) Chaibasa (0.87 MTPA)

Chanda (1 MTPA)

50 51

49 53

52

Bargarh (0.96 MTPA) Jamul (1.58 MTPA)

36

54

Wadi (5.19 MTPA) Madukkarai (1.18 MTPA)


ACC Ltd 2009

37 38 39

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Investor Presentation March 2009

Strong position nationwide


Installed capacity: ~ 22.63 MTPA Installed capacity: ~ 22.63 MTPA Significant market share in an Significant market share in an otherwise fragmented industry otherwise fragmented industry Leader also in blended cements: Leader also in blended cements: 83% 83% Steady improvement in cost Steady improvement in cost profile profile Unique R&D facility Unique R&D facility Only Company with nationwide Only Company with nationwide presence capacities in all five presence capacities in all five regions regions ACC Brand : Recognized for ACC Brand : Recognized for superior quality and timely superior quality and timely delivery delivery Widest distribution network of Widest distribution network of any cement company in India any cement company in India with around 250 warehouses and with around 250 warehouses and over 9,000 dealers over 9,000 dealers Downstream and supporting Downstream and supporting business: RMX, Bulk Cement business: RMX, Bulk Cement Improved efficiency, brand image and nationwide presence ensure competitive edge/ sustained profitability for ACC A national presence helps ACC to withstand regional fluctuations in prices and adapt its distribution to market place needs

ACC Ltd 2009 Investor Presentation

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Source: CMA
March 2009

Production capacity
Capacity as on 31-12-2008 Clinker Capacity MTPA 0.78 0.94 0.79 0 2.87 0.59 2.94 0.93 0.68 0 0 3.62 14.14 Cement Capacity MTPA 0.96 0.87 1.00 0.53 4.40 1.58 2.20 1.50 1.18 0.91 2.31 5.19 22.63

Location Bargarh Chaibasa Chanda Damodhar Gagal Jamul Kymore Lakheri Madukkarai Sindri Tikaria Wadi Total

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ACC Ltd 2009 Investor Presentation March 2009

Production capacity across regions


Cement Capacity 2008
Region Industry's Capacity (Mn.T) North East Central South West Total 48.34 29.89 28.16 69.03 31.84 207.26 ACC's Capacity (Mn.T) 5.90 4.85 4.51 6.37 1.00 22.63 ACC's Share% 12% 16% 16% 9% 3% 11%

Source: CMA ACC Ltd 2009 Investor Presentation

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March 2009

Cement dispatch profile


ACC's Region wise Cement Despatch Distribution % Jan-Dec2008

West, 13% South, 19%

North, 24%

East, 21% Central, 23%

Source: CMA Dec,2008

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ACC Ltd 2009 Investor Presentation March 2009

Dispatch across regions


Indus try's Ce m e nt De s patch Cy. 2008 Re gion Qty M n.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% ACC's De s patch Cy. 2008 Re gion Qty M t % 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%
Source: CMA,Cement Statistics 2008 ACC Ltd 2009 Investor Presentation

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March 2009

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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ACC Ltd 2009 Investor Presentation March 2009

Market capitalization reflect value creation


Market Capitalisation as at year end Period 2003-04 2004-05 2005 2006 2007 2008 Amt Rs Cr 4,511 6,435 9,856 20,340 19,222 8,969

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ACC Ltd 2009 Investor Presentation March 2009

Planned capacity creation contributing to increased cement production


Capacity Utilisation [%] Cement Production [Mio Tons]

91 90

93

2004-05

2005

2006

2007

2008
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ACC Ltd 2009

Investor Presentation

March 2009

Captive power generation capability


Chanda Jam ul Ky m ore Lakheri M adukkarai Tikaraia Wadi Total M aduk k ar ai Lak he r i 15 25 50 25 15 15 75 241 9.0 7.5 1 1 2 1 1 1 3 12

Re ne w able E ne r gy Sour ce :Windm ill

Captive Power Generation all Thermal based and meet about 70% of plant power requirement.
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ACC Ltd 2009 Investor Presentation March 2009

Agenda
1

Indian Cement Industry : Overview ACC : An Introduction ACC: Key Financials & Capex Program Conclusion

2 3 4

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ACC Ltd 2009 Investor Presentation March 2009

Improved fixed assets turnover ratio


Asset Turnover Ratio [Re] Fixed Assets [Rs. Cr]

2004-05

2005

2006

2007

2008
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ACC Ltd 2009

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March 2009

Sales volume has grown over time


Growth [%] Sales Volume [Mio Tons]

6.8

5.9 5.2

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March 2009

Impressive net sales & EBITDA growth


2008 2007 Net Sales [Rs. Cr] 2006 2005 2004-05

7,309

+5%
6,991 5,803 3,221 3,902

2008 2007 EBITDA [Rs. Cr] 2006 2005 2004-05

1,899

-5%
1,993 1,717 616 715
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ACC Ltd 2009 Investor Presentation March 2009

Better EBITDA & EBITDA margin despite cost pressures


EBITDA Margin [%] EBITDA [Rs. Cr]

2000

30
1717

1993 1899

30 25

29

26

1500

19 18
1000

20 15

715 616
500

10 5

0 2004-05
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March 2009

Interest cost per Rs/ Tonne of cement down significantly

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ACC Ltd 2009 Investor Presentation March 2009

PBT & PAT maintained despite cost pressures


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

1,930 1,737 1,620 1,439 1,232 1,213

684 544 444 378

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March 2009

Effective utilization of capital employed to generate higher return


ROCE [%] Capital Employed [Rs. Cr]

40

18 19

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Net worth has increased over time


Return on Net Worth [%] Net Worth [Rs. Cr]

35 25

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Increased EPS translated to increase in DPS


Earning Per Share Dividend Per Share

77 66 65

30 21 15 7 8 20 20

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Consistent & higher dividend payout


Dividend Payout Ratio [%] DPS Rs .

36

26

31

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Strong Net Cash Generated from Operations


Net Cash Generated from Operations [Rs. Cr]

2008

2007

2006

2005

2004-05

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ACC Ltd 2009 Investor Presentation March 2009

Strong cash position (net of borrowings) and low interest outgo


Interest as a %age of Sales [%] Cash & Bank Balance (Net of Borrowings) [Rs. Cr]

600 400 200 0 -200 -400 -600 -800 -1,000 -1,200 -1,400

2.3 2.0

437

502

2.5 2.0 1.5

-151 1.0 0.9 0.5 -969 0.3 -0.5 -1,350 -0.5 0.0

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Financial debt, maturity and liquidity as of 31/12/08


Liquidity Summary
250 200 150 100 50 0 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y >10y
Long Term Loan / NCD Fund Based Facilities (Cash Credit) Non Fund Based (LC /BG) Short Term (CP) Cash and cash equivalent =Rs.1436 crores (A)

Capital Markets Loans

(A)+Unused committed credit lines =Rs.1586 crores Debt Summary Fixed To floating 100% Loan 73%

Capital Markets 27% and

Total Maturity CP Borrowings Corporate Credit lines Credit Lines Maturity

5 years NIL

Yearly renewal

Number of Counterparties 14 Rating Summary CRISIL AAA stable AAA Stable P1+ FITCH AAA stable AAA stable F1+ A1+ 41
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ICRA

2008:Debt: Equity ratio 0.10X

ACC Ltd 2009

Investor Presentation

Expansion plans to drive growth agenda


Capex spend during 2009-10 around Rs 3,000 Cr, funded thru internal accruals & debt

Bargarh Expansion [OR] [ 1.35 Mtpa] 2009

East

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 ] 2009 Grinding 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

Capacity Additions Year [MTPA] 2007 2008 0.22 2009 4.95 2010 3.00

Capacity at year end [MTPA] 22.41 22.63 27.58 30.58

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
ACC Ltd 2009 Investor Presentation

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March 2009

CPP capacity addition program


CPP Capacity Addition Program CPP Capacity No: of MW Plants Existing Bargarh Wadi Chanda Grand Total 241 35 50 25 351 12 1 2 1 16 2009 2009 2010

Year

CPP capacity to enhance companys reliance on internal power generation and contribute to reduced costs
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ACC Ltd 2009 Investor Presentation March 2009

Agenda
1

Indian Cement Industry : Overview ACC : An Introduction ACC: Key Financials & Capex Program Conclusion

2 3 4

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ACC Ltd 2009 Investor Presentation March 2009

Conclusions
The cement industry is attractive even during recessionary periods, 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 times Strong liquidity Low leverage with balanced maturity profile Limited short-term refinancing needs

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ACC Ltd 2009 Investor Presentation March 2009

Conclusions The rural markets offer unique opportunities but require: Strong customer focus and understanding of local requirements Brand recognition and brand loyalty Value proposition for low-cost housing Stimulus packages will provide the basis for building material demand over the next two to three years

ACC is well prepared for the challenging times ahead


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ACC Ltd 2009 Investor Presentation March 2009

Disclaimer
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 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 new coverage, which could cause actual developments and results to differ 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
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ACC Ltd 2009 Investor Presentation March 2009

Contact information
Sunil Nayak Krishnamurthy Shankar Investor Relations Phone: 91 22 66654485 Phone: 91 22 66317419 Fax: 91 22 66317421 www.acclimited.com

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ACC Ltd 2009 Investor Presentation March 2009