Presentation By Ambuja Cement

Presentation By Ambuja Cement

February 12,2003 1

Ambuja Cement

Indian Economy ( 2002 - 2003)

GDP is expected to grow at about 5% Despite negative growth of Agriculture

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Ambuja Cement

As .. ... Services Industry doing very well Construction Sector growing at about 7 % Leading to a multiplier effect on GDP

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Ambuja Cement

Growth Rates ( April - September) Percent

Source : CSO

2002

2001

Service

7.5

5.5

Construction

6.8

1.2

GDP

5.9

4.4

4

Ambuja Cement

Construction Industry to continue its growth at much faster pace for next few years

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Ambuja Cement

Due to .. … Good Liquidity in the economy Lower Interest Rates Efforts undertaken for Infrastructure growth

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Ambuja Cement

Construction growth reflects Cement growth

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Ambuja Cement

Cement In India

A paradigm shift from supply driven to demand driven

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Ambuja Cement

Cement Supply - The Dynamics Cement Production 2002

110 mn tonnes

Maximum Clinker Capacity (Including Sanghi)

103 mn tonnes

Current Clinker to Cement Conversion Ratio (the best in last 5 years)

1.21times

Maximum Cement Production

125 mn tonnes

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Ambuja Cement

Cement Production Capability ( Various Scenario) Clinker Capacity available - 103 mn tonnes Clinker to Cement Conversion Ratio

Maximum Cement Production ( mn tonnes)

1.21

125

1.22

126

1.23

127

1.24

128

1.25

129

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Ambuja Cement

Cement Supply - A Reality Check

 No new cement capacity under construction  Lenders unwilling to fund new cement plants  Maximum Cement production capability even at a conversion ratio of 1.25 - 129 mn tonnes

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Ambuja Cement

Cement Demand Other side of the equation

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Ambuja Cement

Cement Demand (January - December)

Calendar Year

Source : CMA

Sales (mn tonnes)

Growth (%)

2002

109

11

2001

98

3

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Ambuja Cement

Cement Demand To Grow Much faster then in past on account of Housing and Road Development

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Ambuja Cement

Housing Construction Huge potential: Unfulfilled demand - 33 mn units Increasing disposable income Younger generation aspiring to have “Own House” Low real estate prices Easy availability of Housing Finance - Growing over 30% Interest Rates have come down by 700 bps in last 3 years Monthly instalment on mortgage is now equivalent to rentals

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Ambuja Cement

Roads Road Development Golden Quadrilateral- 5846 Sq.. Km (Already Completed 1202 km)(Expected completion - Dec 2003)

North-South & East-West Corridors - 7300 Sq.. Km ( Already Completed 832 km) (Expected completion - 2007)

Expected consumption - 4 mn tonnes per annum

Source : NHAI

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Ambuja Cement

Indian Cement Industry Next 3 Years mn tonnes

Calendar Clinker Cement Cement Demand Surplus/ Year Capacity Conversion Production (Deficit) Ratio 10% 11% 10% 11% (At Maximum Level)

(Maximum)

2002(A)

103

-

109

109 109

-

-

2003(E)

103

1.25

129

120 121

9

8

2004(E)

103

1.25

129

132

(3)

(5)

2005(E)

103

1.25

129

145 149

134

(16) (20)

A- Actual E- Estimated 17

Ambuja Cement

Cement Industry Outlook -(2003-04) Distinctively Firm

 Cement demand growth expected to be over 10%  No new capacity this year, also no new capacity for next couple of year  Cement Demand to exceed Supply after a gap of several years

All these point to good demand & Higher Cement Prices

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Ambuja Cement

Ambuja Cement

Growth of about 20 times in 15 yea

Started production in 198 mn tonnes

Cement Plants Sea terminals

1986 2002 Capacity 0.7 13.0

Markets

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Ambuja Cement

Cement Despatches (January - December) mn tonnes

2002

2001

Industry

109

98

11

Ambuja

9

7

34

Source : CMA

20

Growth (%)

Ambuja Cement

Our 2nd Quarter Performance

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Ambuja Cement

Production (October-December)

Lac Tonnes

Category

2002

2001

Clinker

22.92

14.48

58

Cement

23.66

17.94

32

22

Increase %

Ambuja Cement

A Comparison ( October - December 2002)

mn tonnes

Clinker

Cement

ACC

2.73

3.31

L&T

3.24

2.92

Grasim

2.77

2.87

Ambuja Group

2.96

3.05

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Ambuja Cement

Cement - Sales (October-December) Lac Tonnes

Category

2002

2001

Increase %

Domestic

19.06

14.97

29

3.96

3.05

30

23.02

18.02

28

Export Total

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Ambuja Cement

Quarterly Results (October-December) Rs. Crores

2002 Sales -Volume (mn tonnes) - Value Operating Profit Interest Cash Profit Depreciation Profit Before Tax Current Tax Profit after Current Tax Deferred Tax Profit After Tax Net Operating Margin

2001 2.30 487 136 26 110 44 66 5 61 4 57 32.3%

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Growth % 1.80 399 121 26 95 34 61 4 57 7 50 34.6%

28 22 12 16 29 8 25 7 (43) 12

Ambuja Cement

Sequential Growth ( FY 2003) Rs. Crores

2Q2003 Sales -Volume (mn tonnes) - Value Operating Profit Interest Cash Profit Depreciation Profit Before Tax Current Tax Profit after Current Tax Deferred Tax Profit After Tax Net Operating Margin

1Q 2003 2.30 487 136 26 110 44 66 5 61 4 57 32.3%

26

Growth % 2.14 434 89 22 67 43 24 2 22 4 18 24%

7 12 53 18 64 275 250 277 317

Ambuja Cement

O/P Margin - A Comparison ( October - December 2002) O/P Margin (%) ACC

13

L&T

15

Grasim

20

ACEL

24

ACRL

24

GACL

32

Source: Published Information

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Ambuja Cement

Performance of Our Subsidiary & Associate Company

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Ambuja Cement

Ambuja Cement Eastern Limited (October-December) Rs. Crores

2002

2001

3.07

3.91

21

86.8

89.5

3

18.3

0.9

Interest

4.6

5.5

(16)

Depreciation

6.2

6.7

(7)

Profit after tax

7.5

(11.3)

Sales - Volume-Lac tonnes - Value Operating Profit

Net Operating Margin

24.1%

29

Growth %

1.1%

Ambuja Cement

Ambuja Cement Rajasthan Limited (October-December)

Rs. Crores

2002

2001

3.35

3.17

6

77.1

72.7

6

15.2

7.6

100

Interest

9.9

11.7

(15)

Depreciation

6.3

6.3

-

Loss

1.0

10.4

(90)

Sales - Volume Lac tonnes - Value Operating Profit

Net Operating Margin

23.8%

30

Growth %

12.4 %

Ambuja Cement

Group Debt Profile ( Estimated - June 2003) Rs. Crores

GACL Debt FCCB

1250

(Convertible Bonds)

1711 ACEL ACRL Total Debt

461 150 50 1911

Group Debt/ Equity Ratio: - Including FCCB as Debt - Including FCCB as Equity 31

1.0 0.6 Ambuja Cement

Valuation EV/Ton

US$ 62

EV/EBIDTA

6 times

Operating Margin

33%

Price to Cash Earning

6 times

Historically most attractive valuation - A Growth Stock

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Ambuja Cement

Economic Value Added (EVA) A Study by Stern & Stewart

Their findings .. ...  Positive EVA implies Stakeholders’ Wealth Creation  Globally 3 Cement Companies have positive EVA  GAC - The only Indian Cement Company having positive EVA

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Ambuja Cement

A recent survey carried out by Financial Times adjudged Gujarat Ambuja as one of the world’s Most Respected Companies in the Property and Construction Sector

Financial Times - London January, 20 , 2003 34

Ambuja Cement

THANK YOU

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Ambuja Cement