9% CAGR in cement demand over FY03-08.

(mn tons) 180 145 110

coupled with limited capacity additions

(mn tons) 32

drove a sustained increase in cement prices

(Rs / bag) 250

33mn tons of incremental capacity

24 16

225 200 175

75 40 FY03 FY04 FY05 FY06 FY07 FY08

8 0 FY03 FY04 FY05 FY06 FY07 FY08

150

Dec-05

Sep-06

Dec-06

Sep-07

Dec-07

Strong realizations and profitability now driving large expansions

(mn tons) 300 34 225 31 150 280 153 31 23

75

0 FY07 FY08 FY09E FY10E FY11E Total

Cement industry to add record 120mn tons of new capacity over 4 years
2

Sep-08

Jun-06

Jun-07

Mar-06

Mar-07

Mar-08

Jun-08

Large capacity additions to create domestic surplus

Even with falling capacity utilization
(mn tons) 280 Capacity (LHS) Capacity Utilisation (RHS) (%) 98

210

93

140

88

70

83

large capacity additions will increase the demand-supply gap

(mn tons) 230 Demand Supply

0 FY07 FY08 FY09E FY10E FY11E

78

200

170

140 FY07 FY08 FY09E FY10E FY11E

We expect a net cement surplus of 8mn tons in FY10

3

Cement cycle set to turn

All India Demand Demand Growth (%) Capacity Supply Domestic surplus / deficit Cement Exports Clinker Exports Net surplus / (deficit) Capacity utilization (%) FY03 107.6 8.7 % 133.3 111.3 3.8 3.5 3.5 0.3 83.6 FY04 113.8 5.8 % 138.6 117.4 3.6 3.4 5.6 0.3 84.7 FY05 121.1 6.4 % 144.2 125.6 4.5 4.1 6.0 0.4 87.1 FY06 135.6 12.0 % 153.1 141.8 6.2 6.0 3.2 0.2 92.7 FY07 149.0 9.9 % 160.6 155.3 6.3 5.9 3.1 0.5 96.7 FY08 164.0 10.1 % 191.6 168.3 4.3 3.6 2.4 0.6 87.8 FY09E 177.5 8.2 % 223.1 180.6 3.0 3.0 2.2 0.0 80.9 FY10E 193.5 9.0 % 256.8 205.0 11.5 3.8 2.2 7.7 79.8 FY11E 212.9 10.0 % 279.7 223.7 10.8 4.2 3.2 6.6 80.0

Capacity utilization to fall to 80% in FY10E from 97% in FY07

4

Can the cement cycle extend beyond FY09?

Arguments favouring an extension Cement capacities get delayed
Capacities are staggered over a period of time Demand catches up to absorb incremental supply

Actual demand growth higher than estimated

Higher demand catches up with large capacity additions

Exports absorb excess supply in the domestic market Cement industry consolidation intensifies

# 1: Delays in commissioning of capacities

Capacity delayed, is NOT capacity denied A delay does not mean the planned capacity will never be commissioned Delays result in bunching of capacities Bigger problem as larger quantity needs to be absorbed in a limited timeframe Funding concerns unlikely to impact capacities already under execution Strong profitability over last 2-3 years to ensure sufficient cash flows for execution Capacity announcements over the last 3-4 months (commissioning only post FY11)
likely to be impacted

Capacity commissioning delays do not alleviate the oversupply concerns

6

# 2: Demand growth accelerates

To fully absorb supply, demand CAGR required = 12% over FY08-11E
Base case - 9% CAGR (mn tons) 230 216 202 188 174 160 FY08 FY09E FY10E FY11E 90 6.0% DD' 14% CA GR DD' 12% CA GR Supply

Demand is weakening, after 3 years of strong growth

(mn tons) 120 Demand (mn tons) (LHS) % yoy (RHS)
(%)

12.0%

110

10.0%

100

8.0%

80 Apr-Nov '05 Apr-Nov '06 Apr-Nov '07 Apr-Nov '08

4.0%

Recent figures also indicate a declining trend in demand

(mn tons)
18

20%

Falling housing demand clearly impacting cement offtake Some large real estate developers have deferred projects No respite likely in the near term as concerns mount on
the sector

mn tons

% yoy

14

15%

9 10%

Can infrastructure be the silver lining? Depressed financial markets will impact medium term
growth

5%

Infrastructure cannot replace housing demand eg.,

national highways are mainly bitumen roads

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

0%

Temporary slowdown in spending possible due to elections

(mn tons) 18

20 Demand unlikely to be a key factor in changing the scenario

Dispatches (LHS)

% yoy (RHS)

(%)

# 3: Exports absorb excess supply

Exports to pick up, but unlikely to impact demand-supply balance
(mn tons) 6 mn tons (LHS) % yoy (RHS) 40

Large capacities being planned in hinterland

MP, Chhattisgarh, HP,
Rajasthan

20

Gujarat to see 14mn tons of new

capacities over FY08-11E

-20

0 FY07 FY08 FY09E FY10E FY11E

-40

Competition from other exporting nations to intensify

Large surplus in Capacity additions picking up in the
Middle East, North Africa etc.

Year
Demand Supply

FY08
164.0 168.3

FY09E
177.5 180.6

FY10E
193.5 205.0

FY11E
212.9 223.7

Domestic surplus
Exports required to absorb surplus

4.3

3.0
3.0

11.5
11.5

10.8
10.8

Oil price crash could hamper

economic activity in the Gulf

Required exports (% of total supply)

1.7%

5.6%

4.8%

Reports of real estate meltdown

already doing rounds

Remote possibility of exports absorbing domestic cement surplus

8

# 4: Higher level of consolidation to keep prices firm

No incremental market share gains for large players
(%) 100 Top 3 Groups 10mn + 5 - 10nm tons 2 - 5mn tons Up to 2mn tons

Large players lagging in capacity additions

Holcim Groups large capacities to
come on-stream only in FY11

75

50

Top players likely to lose market

share in the interim

25

0 FY06 FY07 FY08 FY09 FY10 FY11

New entrants making bold moves

Not only large number of 1st timers, Each new entrant planning
2mn+ mtpa capacities

Small players and new entrants are adding large capacities Company Raghuram Cem Cement Manu. ABG Cements Nirma Murli Inds Jayajothi Cem Capacity (mn tons) 5.0 1.0 3.3 2.0 3.0 3.2 State A P Meg Guj Guj Mah A P Status Expansion orders also placed Planning expansions Major orders placed Major orders placed Planning more capacities Major orders placed

Volume growth critical for smaller players in the initial period post commissioning
Likely to sacrifice price growth for
pushing volumes

# 4: consolidation (contd)
Erstwhile regional players challenging geographical barriers
JPA in West and North, JK Cement
in
JK JPA

Regional balances likely to be upset in

the medium term

South etc.

Long term checks and balances

established pricing discipline could normalise over time

Century

Large capacity additions = expanding market radius

India

Companies making inroads into

nontraditional markets Fight for market share to intensify

Pricing discipline to come under severe threat

10

Cement prices set to fall

Weakening demand Real estate meltdown
Cement prices are weakening and would fall further

Temporary slowdown in infrastructure spending

(mn tons) 240

All India Average Price (LHS)

% yoy (RHS)

12%

236

9%

Realizations squeeze Strengthening supply Large capacity addition pipeline

232

6%

228

3%

224 Jan08 Feb08 Mar08 Apr08 May08 Jun- Jul-08 Aug08 08 Sep08 Oct08 Nov08

0%

Increasing fragmentation

Cement price growth is showing signs of tapering off

Cost control to remain the key to maintaining profitability

11

Controlling costs continues to be a challenge

Imported coal prices increased over 2.5x in 12 months
(US$/ton) 200 (Rs / ton) 1,900 150 1,600 100 1,300 50 1,000 0

EBITDA hit mainly by rising power and fuel costs

India GACL Madras UTCL ACC Dalmia

Jul-07

Jun-07

Jan-08

Feb-08

Mar-08

Jun-08

Oct-07

Jul-08

Sep-07

Nov-07

Dec-07

Sep-08

Oct-08

May-07

May-08

Aug-07

Aug-08

Nov-08

Apr-07

Apr-08

700 Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 2Q FY09

Raw material costs have also been consistently on the rise

(Rs / ton) 700 ACC Ambuja Ultratech Madras India

Recent inflationary conditions have impacted all inputs

Significant margin erosion across the sector

550

Sharpest increase in power and fuel costs

Imported coal prices up over 150% in 12 months Domestic coal prices increased by 10% in Dec-07 Linkage quantities reduced, requiring purchase of
higher cost open market purchases

400

250

100 Q1FY07 Q3FY07 Q1FY08 Q3FY08 Q1FY09

Incremental pressure on fuel costs to ease, from softening imported coal prices
12

News flow continues to be negative

The slowdown being witnessed by the real estate and infrastructure sectors has resulted in slackening of demand for cement. The price of cement may come under pressure from CY 2009 owing to the bunching of capacity expansions expected in FY10 and FY11.

Grasim Industries Q2FY09 results press release, October 23, 2008

There is no dramatic rise in demand. On a few occasions, we had to cut down production as there were no place to store, godowns are overflowing.

Mr. A L Kapur, MD, Ambuja Cements in Business Line, December 4, 2008

Poor cement demand in both Himachal Pradesh and Punjab on account of the economic slowdown (both these states are showing negative demand of approximately 8% as compared to last year) has resulted in increase of clinker stocks at our Gagal works in HP, necessitating a shutdown of manufacturing operations for balancing the clinker stocks. The poor demand scenario coupled with duty free and CENVAT (CVD) free imports has resulted in the clinker stock at Gagal plant of ACC increasing from August onwards to reach a high level in December, forcing the company to shut one of its kilns wef 16th December, 2008, for 15 days.

Extract from ACCS press release on shutdown of Gagal clinker unit for 15 days, December 16, 2008
Cement players specifically in the North are being forced to shut units due to imported cement from Pakistan. Fresh capacity is also another factor.

Mr. H M Bangur, CMD, Shree Cement, December 19, 2008

"We have completely put on hold our capacity enhancement for an indefinite period. Due to the credit crunch, demand from developers have fallen drastically,"

Mr. Hans Fuchs, CEO, ACC Concrete, December 22, 2008

Cement companies increasingly admitting pressures on profitability

13

Valuations: Pay for profitability, NOT replacement cost

How much EV/ton determined by plant profitability
EV/ton valuations in the last 2 years driven by strong EBITDA/ton and ROCE of cement plants
(Rs/ton ) 1,00 0 EBITDA/ton (LHS) EV/tonne (RHS)

EBITDA/ton could fall 62% on a 10% yoy drop in realizations in CY09

(US$/ton ) 24 0

ACCs ROCE could fall to FY01 levels with just a 10% fall in cement prices in CY09 EV/ton as on end-FY01 was as low as US$62 A 10% yoy fall in cement realisations results in a 62% fall in EBITDA/ton to FY02 levels End-CY09 EV/tonne is estimated at US$52; end-FY02 EV/tonne
was US$53

75 0 50 0

18 0 12 0

25 0 0 FY00 FY01 FY02 FY03 FY04 FY05 CY05 CY06 CY07 CY08P CY09E

6 0 0

At US$95/ton replacement cost and desired EBIT of 15%, EV/ton can fall to US$63, if ROCE falls to 10%

A 10% yoy fall in realizations in CY09 can pull down ROCE to FY02 levels
ROCE (% - LHS) 40 EV/tonne (RHS) 240

EV/ton has to fall despite replacement cost to justify falling ROCE ROCE 30% 25% 20% 15% 10% 5% EV/ton 190 158

30

180

20

120

127 95 63 32
0 FY00 FY01 FY02 FY03 FY04 FY05 CY05 CY06 CY07 CY08P CY09E 10 60

* ACC valuations used as indicative EBITDA/ton, and therefore valuations, expected to drop across companies

Current valuations factor a mere 10% fall in cement prices in CY09

14

Comparative valuations
FY09E Companies Reco Price (Rs) ACC * Ambuja * @ Grasim ^ UTCL Underperformer Underperformer Outperformer Underperformer 457 66 1,192 361 Mkt cap (Rs bn) 86 100 109 45 FY08-10 Earning s CAGR (%) (6.9) (11.2) (9.3) (12.2) EP S (Rs) 58.4 7.5 229.1 60.1 P/E (x) 7.8 8.8 5.2 6.0 EV/EBITDA (x) 3.9 4.0 2.7 4.0 RO E (% ) 23.8 21.8 23.4 24.6 ROC E (% ) 25.9 27.0 19.1 21.5 EV/ton ($) 60 64 28 50

* Dec year-ending;^ EV/ton adjusted for valuation of other businesses

15

Grasim
Consolidated earnings to fall ahead of standalone earnings
300 Standalone EPS Consl EPS

Outperformer
Adding large capacities in north India 9.9mn tons in Rajasthan, with split grinding units in
Haryana and UP

225

Higher volume growth to be offset by falling realisations Medium term pressures in the VSF business from weak volumes and cost inflation Production scaled down by 30% from Oct 08 due to global
slowdown in the textiles segment

150

75

FY06 FY07 FY08 FY09 FY10

Incremental profitability to improve from sharp fall in

costs of key inputs wood pulp and sulphur

Increased captive pulp sourcing to ease cost pressures AV

Nackawick plant converted to rayon grade in Aug 08
As on 31 March Net sales Shares in issue (m) Adj. EPS (Rs) % growth PER (x) Price/Book (x) EV/EBITDA (x) ROE (%) ROCE (%) FY06 99,163 91.7 98.7 (5.6) 12.1 1.8 6.2 21.5 14.7 FY07 135,141 91.7 207.4 110.1 5.7 1.4 3.2 37.7 27.4 FY08 157,238 91.7 277.7 33.8 4.3 1.0 2.7 36.7 28.7 FY09E 168,892 91.7 229.1 (17.5) 5.2 0.8 2.7 23.4 19.1 FY010E 195,559 92 228.3 (0.3) 5.2 0.7 2.7 19.8 17.6

Sponge iron business divestment likely to be completed by end-FY09 Rs10bn cash to aid expansion in VSF, cement and RMC Standalone earnings to see a compounded annual decline of 8.6% over FY08-10E Consolidated earnings to see a 9.3% compounded annual
decline over FY08-10E

Valuations attractive despite medium term pressures on VSF business and cement cycle downturn 5.2x FY09E earnings, 2.7x FY09E EV/EBITDA and US$28/ton

16

AC
EPS set to fall as growth in realisations slows
Realizations (Rs/ton) - LHS 3,600 EPS (Rs) - RHS 240

Underperformer
Capacity additions of 7.2m tons to drive volumes in CY09 and CY10 No benefits of higher volumes likely as cement prices set
to decline sharply

2,700

180

Steep fall in imported coal prices to benefit marginally

1,800 120

Relatively low share of imported coal in total fuel Reduced availability through linkage to push up cost of
domestic coal

900

60

0 CY06 CY07 CY08E CY09E

Significant power cost savings likely over the long term Holcims expertise in alternative fuels already in
application industrial waste re-processing commenced 1st wind energy farm (9 MW) commissioned in Tamil Nadu

As on 31 Dec Net sales Shares in issue (m) Adj. EPS (Rs) % growth PER (x) Price/Book (x) EV/EBITDA (x) ROE (%) ROCE (%)

CY05* 32,034 184.7 19.5 (8.0) 23.5 3.9 13.5 19.0 13.5

CY06 58,035 187.6 57.6 196.2 7.9 2.7 5.2 40.9 34.3

CY07 70,072 187.6 64.1 11.3 7.1 2.1 3.9 33.0 34.6

CY08E 73,364 187.6 58.4 (8.9) 7.8 1.7 3.9 23.8 25.9

CY09E 82,690 187.6 55.6 (4.8) 8.2 1.5 3.3 19.1 20.8

Upsides from tax benefits and carbon credits RMC capex (under 100% sub, ACC Concrete) put on hold indefinitely Limiting capex commitments in uncertain markets Earnings to see a compounded annual decline of 7% over CY07-09E While valuations at 7.8x CY08E earnings, 3.9x CY08E EV/EBITDA and US$60/ton appear attractive, Further downside possible from deteriorating business
fundamentals

* CY05 was a 9-month period ending December 31, 2005

17

AC
Earnings to decline in CY09 as realisations fall
Realizations (Rs/ton) - LHS 4,000 EPS (Rs) - RHS 12 3,000 9

Underperformer
Clinker capacity being expanded by 4.4mn tons in the East and North Associated split grinding stations being added close to key
markets Dadri, Ahmedabad etc.

2,000

Substantial fuel cost advantages from falling imported coal prices Significant power cost savings also likely going forward 112MW of captive power plants under commissioning grid
dependence likely to reduce to nil by end-CY08

1,000

FY05 CY06 CY07 CY08E CY09E

Leveraging Holcims expertise in alternative fuels

CY09E 65,965 1,521 6.6 (10.9) 9.9 1.5 3.7 16.1 20.3

As on 31 Dec Net sales Shares in issue (m) Adj. EPS (Rs) % growth PER (x) Price/Book (x) EV/EBITDA (x)

FY05 41,789 1,521 7.0 105.2 9.5 2.7 6.1

CY06* 20,894 1,521 7.0 0.0 9.5 2.7 6.0

CY07 57,049 1,521 8.4 20.7 7.8 2.1 3.7

CY08E 62,432 1,521 7.5 (11.3) 8.8 1.7 4.0 21.8 27.0

Optimising freight costs with procurement of 3 new ships Falling realisations to negate benefits of aggressive cost control measures Earnings to see a compounded annual decline of 7% over
CY07-09E

Currently valued at EV/ton of US$64, 8.8x CY08E earnings, 4.0x CY08E EV/EBITDA Valuations do not adequately factor in negative outlook on
cement prices and profitability

ROE 35.8 29.1 31.3 (%) ROCE 28.6 25.4 35.8 (%) * CY06 was an 18-month period ending December 31, 2006

18

UTCL
Falling realisations to negate benefits of cost savings; FY09E EPS to fall sharply
Realizations (Rs/ton) - LHS 4,000 EPS (Rs) - RHS 100

Underperformer
Capacity expansion by 4.9mn tons completed Clinker expansion at Tadipatri (AP), with split grinding unit
at Ginigera (Karnataka)

Expansion in the southern region to give limited period

3,000 75

benefits relatively better realisations

2,000

50

92MW lignite-based CPP and 50MW coal-based CPP to lead to ~30% savings in power costs 46MW lignite-based and 25MW coal-based CPP already
commissioned

1,000

25

FY06 FY07 FY08 FY09E FY10E

Large savings in fuel costs also likely, from falling imported coal prices High leverage to cement prices to offset benefits of higher volumes and lower power & fuel costs Earnings to see a compounded annual decline of 12.2% over FY08-10E Valuations expensive at 6.0x FY09E earnings, 4.0x FY09E EV/EBITDA and EV/ton of US$50/ton Further downsides possible from falling cement prices and
resultant decline in ROCE/EBITDA per ton

As on 31 March Net sales Shares in issue (m) Adj. EPS (Rs) % growth PER (x) Price/Book (x) EV/EBITDA (x) ROE (%) ROCE (%)

FY06 32,995 124.4 18.5 188.3 19.5 4.3 10.3 21.8 11.2

FY07 49,105 124.5 62.9 240.3 5.7 2.5 3.9 55.8 34.9

FY08 55,087 124.5 80.1 27.3 4.5 1.7 3.5 44.7 34.9

FY09E 58,915 124.5 60.1 (25.0) 6.0 1.3 4.0 24.6 21.5

FY10E 67,320 124 61.7 2.7 5.9 1.1 3.0 20.5 20.2

19

Thank You

20

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