Ambuja Cement

Brief History

Gujarat Ambuja Cements Ltd was established as Ambuja Cements Private Ltd in 1981 by Narotam Satyanarayan Sekhsaria. In 1983 the company floated a public issue and in 1993, GACL commissioned its second cement plant at Ambuja Nagar. In 1996 , GACL set up its third 1 mtpa plant at Ambuja NAgar, named Guj Line In 1997, GACL acquired Modi Cement. This plant was renamed as Ambuja Cement Eastern Limited

In 1998 GACL acquired the Nadikudi and Proddatur. In 1999 GACL acquired 51% stake in Delhi based DLF Cement.

This company invested its money in the cement business because of factors such as : stable demand lack of substitutes limited competition

About Ambuja Cement

Its focus :Best quality cement Good packaging Logistic management - strong distribution network Customer service

Capacity built up from 0.7 Mio t in 1986 to 18.0 Mio t as of today at CAGR of 18%

Organic growth and growth through acquisitions

2001 - Private equity investors (American International Group & 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 favour of Holcim ACL is a Holcim Group company since May 2006

 Capacity

built up from 0.7 mn. Tonnes in 1986 to 16.0 mn. Tonnes today. transportation of bulk cement from Gujarat to 3 terminal ports at Surat, Mumbai & Sri Lanka.

Sea

captive port at Muldwarka (Gujarat) for inward / outward movement of goods. 10

Positioning - ACL
North Central Region
Cement Capacity 7.0 Mio t

Eastern Region
Cement Capacity 3.0 Mio t

South-West Region
Cement Capacity 8.0 Mio t Cement Plant Grinding Station Terminal Port

Demand Drivers
Investment in India Core Themes Capital spending continues to be strong Uptrend in industrial cycle Avg. IIP growth at 10.2% being strongest in the past 11 years. Strong underlying strength reflected in secular rising trend in the Indian Capital market. Emphasis on infrastructure US$ 320Billion planned expenditure. Real Estate Backed by IT/ITES leading to development of Tier II cities Retail Malls & Multiplexes World gaining confidence in Indian economic growth 6

Strategy
Strong presence in growing markets of North & West Largest exporter of cement Grinding close to market Premium brand Extensive & primarily exclusive distribution network

Over 6,600 dealers and 20,500 retailers

Captive Infrastructure

Port, Receiving Terminals and Power Plants (230 MW)

Sea Transportation

Financial performance showing improving trajectory

70 36 60 35 37 36

Sales and EBITDA (INR Billion)

50 40

33 63 32 22 31 30 8 29 28 27 2001-02 Sales 2002-03 2003-04 EBITA 2004-05 EBITA margin 2006

30 20 30 30

31

10 0

14

17

20

26

ACLs EBITDA in FY 2006 witnessed an impressive growth

EBITDA Margin (%)

34

34

Cost drivers
Power

Captive Power Plants, AFR

Fuel (coal)

AFR/process efficiency / international sourcing

Clinker content

Composite cement

Transport

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

Energy
Consumption per unit of Production
90 89 88 87 86 85 84 83 82 81 80
2001-02 2002-03 Electricity (Kw h/T of Cmt) 2003-04 2004-05 2006 720 715 710 705 700 745 740 735 730 725

Measures

Shift from liquid to solid fuel to reduce cost of captive energy cost by approx. Rs.2 per unit. Reduction dependence on grid power, with the construction of additional power plants aggregating to 178 MWs
Captive power ensures continuous and consistent supply of

Coal/Other Fuel (Kcal/Kg of clinker)

Increase Captive Generation

Total Consumption Captive %

2050 1550
76 80 72 66 72

90 80 70 60 50 2001-02 2002-03 2003-04 2004-05 2006

1050 550 50

power

GACL has a large distribution network of 11500 outlets. it is one the first cement companies in the country to recognize the importance of brand building. GACL had merged as one of the most energy efficient and technologically advanced cement manufacturer in India. GACL was the overall market leader in the Indian cement industry and earned a huge profit

GACL worked hard to reduce mining expenses. GACL implemented new technologies that could access lime stone in smaller areas where blasting is not possible.

Ambuja Cement 2009 Capacity to increase from 16 mn. Tonnes to 22 mn. tonnes
Rauri Panipat Dadri

New Projects: Eastern Region 2.2 mn. tonne clinkerisation plant at Bhatapara in Chhattisgarh (Q12009)

Bhatapara Cement Plants Grinding Station Sea Terminal Port

Northern Region 1.8 mn. tonne clinkerisation plant in Himachal Pradesh with 2 mn. tonnes grinding stations aggregating to 3.0 mn. tonnes. (Q2 2009) Power Plants: 178 MW at different locations.

Total Outlay of Rs. 3500 Crores

The way forward

Demand expected to grow by over 10%, on a back of strong GDP growth (Cement historically has grown 1.2 times of GDP) New Supply is limited in next two years Demand to outstrip supply. Consolidation drive has changed the face of industry.
7

Ambuja Growth Plans

Plan to grow to 20 mn. tonnes in next 3 years By way of Productivity enhancement and Acquisitions

Growth to be funded from free cash

flows

Challenges

Cement is energy intensive

industry

Coal, Power & Oil constitute major

costs

Increasing cost of fuel Better realisation only in few

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