INDIA'S LARGEST CORPORATE CEMENT DOSSIER COMPANY Stock code: BSE: 532538 NSE: ULTRACEMCO Reuters: UTCL.NS Bloomberg: UTCEM IS / UTCEM LX Contents ADITYA BIRLA OPERATIONAL ECONOMIC INDIAN CEMENT ULTRATECH GROUP- AND FINANCIAL ENVIRONENT SECTOR LANDSCAPE OVERVIEW PERFORMANCE GLOSSARY Mnt – Million Metric tons Lmt – Lakhs Metric tons MTPA – Million Tons Per Annum MW – Mega Watts Q1 – April-June Q4 – January-March CY – Current year period LY – Corresponding Period last Year FY – Financial Year (April-March) ROCE – Return on Average Capital Employed ROIC – Return on Invested Capital 2 Note: The financial figures in this presentation have been rounded off to the nearest ` 1 cr. 1 US$ = ` 64.46 ADITYA BIRLA GROUP - OVERVIEW Aditya Birla Group – Overview Premium global US$ ~41 billion Corporation conglomerate In the League of Fortune 500 Operating in 36 countries with over 50% Group revenues from overseas Anchored by about 120,000 employees from 42 nationalities Ranked No. 1 corporate in the Nielsen’s Corporate Image Monitor FY15 # 1 cement player in India by Capacity A global metal powerhouse – 3rd biggest # 4 largest cement producers globally producers of primary aluminum in Asia (ex China) # 1 in viscose staple fibre in globally # 2 player in viscose filament yarn in India Globally 5th largest producer of acrylic Globally 4th largest producer of insulators fibre A leading player in life insurance and AM Indian Listed Entities Entities Listed Indian # 3 cellular operator in India Top fashion and lifestyle player in India Among top 2 supermarket chains in retail in India Our Values Integrity Commitment Passion Seamlessness Speed 4 UltraTech Cement India’s largest cement company No. 1 RMC player in India’s Largest Market Cap FY17 Consolidated India with ~ 100 plants Cement Selling Brand of > US$ 16.5 Bn Revenue ~US$ 3.7 Bn Different Products to provide complete No.1 Player of White Building Solutions About 1,000 million ~ 41,000 Direct & Cement & Cement ~ 1450 stores bags every year Indirect Employment based Putty 5 UltraTech Cement Building Products Portfolio Complete Building Solutions under one Umbrella 6 Our Vision and Mission Vision To be The Leader in Building Solutions Mission To deliver superior value to our stakeholders on the four pillars of Team Team Centricity Customer Innovation Sustainability Empowerment 7 UltraTech journey UTCL Share Price Trend BSE Sensex Trend 15x 93 mtpa 6x 2017 Completion of JPA 2017 Aug'04 Mar'07 Mar'10 Mar'13 Mar'16 Mar'17 acquisition #4 global cement player by capacity (ex. China) 1.0 mtpa 8.5 mtpa 2016 1983-85 1998 1st cement plant set Merger of Indian up for Grasim Rayon and Grasim (Vikram Cement) Cement business 2011 69 mtpa and Indian Rayon (Rajashree Cement) Current Mkt Cap > US$15bn New Capacity addition 1983-85 2008 52 mtpa Organic – 12.7 mtpa and Inorganic – 4.8 mtpa 1998 2004 2011 Acquisition in progress: 21.2 Mkt Cap – US$7bn mtpa 31 mtpa 42 mtpa Organic Capacity Capacity under addition:15 mtpa commissioning: 4.1 mtpa 2008 2004 Group Cement business Mkt Cap – US$2bn Mkt Cap – US$1bn under one roof Focus on Cost Leadership between 2005-2009 Acquisition of L&T Became India’s Largest Cement Business Synergy of Cement Business of ABG under one Cement Company roof Listing as part of the Acquisition of Star Investments in TPPs – 80% power self-sufficient acquisition Cement: 3 mtpa 8 Governance Board of Directors Non-Executive Chairman Independent Directors Executive Directors Mr. KM Birla Mr. GM Dave Mr. KK Maheshwari- MD Mr. SB Mathur Non-Executive Directors Mr. Atul Daga- CFO Mr. Arun Adhikari Mrs. Rajashree Birla Mrs. Renuka Ramnath Mr. DD Rathi Mrs. Sukanya Kripalu Mr. OP Puranmalka Ms. Alka Bharucha 9 Management Team Mr. KK Maheshwari- Managing Director - He is a Fellow Chartered Accountant with over 38 years of experience. Held a variety of roles in Group having exposure in multi- business, multi-geography and multi-culture. - He has brought in strong execution rigor to his work, and has considerably strengthened both innovation and new products development. He scripted the growth of the Group’s VSF Business towards a more competitive and sustainable model. Mr. KC Jhanwar - Chief Manufacturing Officer - A Fellow Chartered Accountant and has over 35 years of experience in Group. Has worked across finance, operations and general management roles in the Cement and Chemicals business of the Group. Carries deep expertise in project management and commercial skills, as well as significant experience in acquisitions and integration. - Prior to moving current role, was heading Chlor Alkali Chemicals Business of the Group. Mr. Atul Daga – Executive Director & CFO - A Chartered Accountant by profession and has over 29 years of experience Mr. Daga joined the group as an Executive Assistant to Late Mr. Aditya Vikram Birla. Has gained experience different roles like Financial Planning, Treasury Management, Business Strategy, Merger & Acquisition, Investor Relations. Mr. Vivek Agrawal- Chief Marketing Officer - A bachelor of Engineering (Mechanical) and an MBA from FMS, Delhi, Mr Agrawal has experience of over 30 years and with Group about 22 years. A veteran with the Cement business of the Group, brings with him a vast experience in marketing. Played key role in growing Ready Mix Concrete Business of the Company. - Prior to moving into current role, was CEO of our subsidiary Star Cement. Mr. Ramesh Mitragotri – Chief Human Resource Officer - A post graduate in PM and IR, Mr. Mitragotri brings with him over 30 yrs of experience, with organizations like Owens Corning, HCC Limited and Philips India in different roles of human resources management. Has joined the group in 2007. - Prior to moving into current role, had worked as CHRO in Retail & Chemical businesses of the group along with a small stint in cement business as Head –HR Marketing. 10 Shareholding Pattern th Other Public GDRs, 1.7% As on 30 June,2017 Mutual Fund, Holding, 9.8% Insititutions, 5.5% Foreign Portfolio Investors, 21.9% Promoter Group, 61.1% Promoter Group Non-promoter Shareholding > 1% Name Holding % Name Holding % Grasim Industries Limited 60.23% Aberdeen 2.78% Hindalco Industries Limited 0.46% LIC of India 2.20% Trapti Trading & Investments Pvt Ltd 0.24% Oppenheimer Developing Markets Fund 1.45% Turquoise Investments and Finance Pvt Ltd 0.19% Euro Pacific Growth Fund 1.37% Others 0.02% Total FPI holding 21.89% Total 61.14% 11 Economic Environment Macro Indicators … taking towards good growth cycle Government- Continuous Focus on Macro Indicators improving business sentiments GST rolled out from 01.07.17 FY17: GDP growth 7.1% v/s LY 8.0% Relaxation in FDI policies, GAAR Weak IIP for Q1 18 at 2.0% (LY:7.1%) prospective from 2017 Manufacturing PMI declined to 50.6 in Industry status to Affordable Housing June’17, weakest in four months programe Appreciation in Indian Rupee against Identified 98 Smart Cities for USD development plan has been finalized for first 20 cities with total expenditure of USD 7.5 bn in next 5 years Implementation of RERA (Real Estate Regulation & Development Act) 13 Indian Cement Sector Indian cement industry Overview GLOBAL CEMENT CONSUMPTION Second largest market Globally with capacity of ~ 425 mtpa after China (~ 2400 MTPA). 7% India Asia (Excl. China, India) 17% Europe & Others America (Excl. USA) 2nd fastest-growing cement market globally: 57% 8% USA Compounded Average Growth: 8% 5% Africa (Last decade) 5% 2% China Market Composition: North - 21%,Central – 13%, East - 17%, West - 13%, South - 35% Source: Cement Consumption Cembureau, Company Estimates 15 Indian cement industry Overview (contd…) PER CAPITA CEMENT COSNUMPTION (KG) Per Capita Cement Consumption at 200 kg lowest among the developing countries; 1780 World average ~ 580 Kg China Turkey Vietnam Consolidation in industry at regular intervals 830 World 660 580 470 Russia 355 280 Brazil Entry of new players (non-cement) 200 USA India Fragmented Market: No of plants ~ 195, owned by ~ 55 players Source: Cement Consumption Cembureau, Top 5 players holds ~ 50% of capacity Company Estimates Population IMF 16 Indian cement industry GDP growth v/s cement demand growth Long-term average cement demand 14 growth: 1.2x of GDP 12 (‐) ve +ve co‐relation Cement volume growth has been weak 10 co‐relation in past 3-4 years, led by a slowdown in 8 housing and commercial 6 However, …sustained cement 4 consumption growth ~ 7.5% in last 16 years (2001 onwards) 2 0 FY02 FY05 FY08 FY11 FY14 FY17 Demand likely to reach it’s normal level ‐2 with improved focus on infrastructure, Despatches Growth GDP Growth low cost housing and uptick in rural housing 17 Indian cement industry Demand-supply trend In MnT Incremental Supply - 220 mnt > Demand - 101 mnt S - 62 mnt < D - 85 mnt 155 473 482 459 132 436 Industry capacity more than 407 420 392 368 357 350 doubled in last decade 319 324 304 300 279 276 267 265 241 247 255 216 214 229 198 203 164 178 Around 50 million tons capacity added in last 3 years Though demand remained low in last 3 years FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY20FY21 Capacity Demand In % Surplus capacity in the sector FY ’08 ‘09 ‘10 ‘11 ’12 ’13 ‘14 ’15 ’16 ’17 ‘18 ‘19 ‘20 ‘21 c 155 million tonnes Gr. 9.8 8.5 12.1 5.7 7.1 5.2 2.6 3.2 4.6 (0.6) 5.0* 7.5 8.0 8.0 Util. 83 82 74 70 72 68 67 65 67 63 64 65 68 73 * Estimated in the range of 4 to 6% Sector capacity utilization to improve gradually 18 Source: Company estimates & DIPP data.