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Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
Business as usual Started as leading player; gradually lost share Old plants (wet process) with high cost structure
Survive 5 non-performing old plants, mostly wet process, sold off to generate cash and reduce fixed cost
Diversify Growth in profits Several JVs with global companies in diversified areas like tyre, glass, machinery, food processing, casting, soft ferrites, advanced micromaterials
Consolidate Poor financial condition Sell off/shut-down of several unrelated businesses Key operational initiatives launched blended cement, cost reduction etc. Modernization of several plants
ACC direction
Market Share
~ 28 20%
~ 17%
~ 14%
~ 11%
~ 13%
Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
3 4 8 9
2 6 11 10 29 12 13 68 14 16 22 23 20 65 66 72 71 67 33 34 35 73 15 60 61 21 63 64 70 62 69 74 76 75 7
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28 27
25 30
18 17
Cement demand is expected to grow @ 9-10% CAGR over the next five years ACCs intends to increase its market share in the attractive markets
19 45 48 50 51 49 53 52 32 40 41 42 44 37 43 55 46
24 47 31
36
56 57 38 39 58 59
ACC Limited
Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
2003-04
2004-05
2005 *
2006
9 10
1600 1400 1200 1000 800 600 400 200 0
91 671 776 14%
12 15
18 24
18 33
35%
30%
38 39
30% 25%
EBITDA Margin (%)
16%
18%
19% 1341
904 163
749 143
5% 0%
121
2002-03
2003-04
2004-05
EBITDA
2005 *
2006
Sales Revenue
EBITDA Margin
10
EBITDA / ton more than doubled in 2006 and EBITDA margins in cement increased to 32%
Factors contributing towards increased EBITDA / ton
EBITDA Margin (%)
25
EBITDA** / Ton of Cement (USD)***
32%
35% 30%
20
21% 20%
25% 20%
15 10 5
5
13%
17%
21 10 10
15% 10%
Clinker factor improvement Logistics optimization Product mix rationalization Sales realizations
7
2003-04
5% 0%
0
2002-03 2004-05 2005 * EBITDA Margin 2006 EBITDA / Ton
* Figures for 2005 pertain to 9 months period April December 2005 ** EBIDTA pertains to Cement segment *** 1 USD = INR 44.28 (31/12/2006 Exchange Rate)
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Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
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Clinker content
Composite cement Grinding facility close to end user, production close to raw materials Network optimization
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Transport
Use of imported coal Improving efficiency of kilns Upgrading wet to dry kilns (Chaibasa) Increased share of production from dry kilns
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Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
15
8.69% 9.32%
18.7
2000
13.4 1492
14.7 1602
16 14 12 10
1620
1500
1199 1215
1000
941
975
8 6
500
4 2
17
Sindri (0.9 MTPA) DCSL (0.7 MTPA) Chaibasa (0.9 MTPA) Shiva (0.2 MTPA)
50 51
49 53
52
36
Madukkarai (1 MTPA)
18
East
Bargarh (OR) (B)| 1.1 Mtpa | 2009
Market attractiveness3 High Medium Low Very low Excluded Key Metros ACC Plants New ACC Plants
Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
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Financial position
2002-03 Cash flow (USD Mn)** Cash flow (%) *** Debt:Equity 100 109 1.46 2003-04 108 90 1.09 2004-05 135 83 0.96 2005 * 145 102 0.55 2006 321 81 0.29
Cash flow from operating activities are growing constantly Cash flow as a % of EBIDTA reduced in 2006 due to high income tax payment ( in 2005 tax was less due to tax carry forward losses) Debt Equity Ratio constantly reducing due to strong operating cash flows
Strong cash flows and low debt equity ensures financial flexibility for new projects
* Figures for 2005 pertain to 9 months period April December 2005 ** indicates Cash flows from Operating activities *** indicates Cash flows from Operating activities as a % of EBIDTA
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Content
Brief history about ACC Positioning in Indian cement industry Financial performance Cost drivers Expansion projects Financing of expansion projects Conclusion
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Conclusion
Solid market position with vast footprint in attractive markets Respected player known for efficient production processes and high cement quality Geared up to enter fast growing ready mix concrete in major population centers History of strong operational and financial performance improvements EBITDA margin and active strategies in place for cost management Clear expansion plans to grow within the attractive markets and an internal financing capability to fund expansion projects
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Disclaimer
Cautionary statement regarding forward-looking statements
This presentation may contain certain forward-looking statements relating to the Groups future business, development 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 news coverage, which could cause actual development and results to differ materially from the statements made in this presentation. Holcim 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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