THE INDIA CEMENTS LTD

Corporate presentation

December
December 2007
2007
 Disclaimer
This presentation and the accompanying slides (the “Presentation”), which have been prepared by The India Cements Limited (the “Company”), have
been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any
securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of
the Company will be made except by means of a statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company
makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness
and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you
may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.

Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are
individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to:
the performance of the Indian economy and of the economies of various international markets, the performance of the cement industry in India and
world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion,
technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its
exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially
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inform themselves about and observe any such restrictions.

2
Company Snapshot
Southern cement giant well positioned to capitalize on high growth opportunity

Malkapur
1.4mt
■■ Experienced
Experienced cement
cement player
player with
with over
over six
six decades
decades inin
business
business Vishnupuram
2.3mt
■■ Third
Third largest
largest cement
cement group
group in
in India
India with
with aa capacity
capacity of
of 9.1
9.1 Andhra
mtpa – plan to double capacity Chilamkur
mtpa – plan to double capacity 1.3mt
Pradesh

■■ Largest
Largest manufacturer
manufacturer in
in South
South India
India with
with 18%
18% market
market share
share Yerraguntla
Brief
Brief Overview
Overview Karnataka
0.5mt
in 1HFY08
in 1HFY08 Sankaridurg
0.7mt
■■ Strong
Strong brands
brands –– Sankar,
Sankar, Coromandel
Coromandel andand Raasi
Raasi
Tamil Nadu
■■ Wide
Wide spread
spread marketing
marketing network
network Dalavoi
Kerala 1.3mt
■■ Capacity
Capacity increased nearly 66 times
increased nearly times since
since 1990
1990 primarily
primarily Sankarnagar
through acquisitions 1.6mt Source: Company
through acquisitions

18.0

14.2 Expansion to
North India

Brownfield at
Raasi;
9.1
Grinding unit at
Growth
Growth history
history 6.8 7.0 Chennai / Parli;

4.0 Visaka Second line at

commissioning Tandur;
2.8 Dalavoi
1.6 commissioning Raasi Upgradation of Upgradation of
Chilamkur Yerraguntla acquisition plants
acquisition acquisition plants

1989 - 90 1990 - 97 1997 - 98 1998 - 99 1999 - 01 2001 - 07 2007 - 09* 2010

Source: Company
Note: *15mtpa with additional blending / outsourcing clinker
3
Meeting Agenda

Industry: Current Buoyancy Expected to Continue

ICL – Well Positioned to Capitalize on Growth

Key Strategies

Financials

Summary

4
 Indian Cement Industry Overview
Second largest cement market globally

■■ Second
Second largest
largest cement
cement market
market after
after China
China with
with aa capacity
capacity of
of 165.5mtpa
165.5mtpa (CMA
(CMA Mar’2007)
Mar’2007)
■■ Sustained
Sustained consumption
consumption growth
growth rate
rate –– CAGR
CAGR of of 8.7%
8.7% over
over past
past 55 years
years
Industry
Industry ■■ Significant
Significant consolidation
consolidation has
has led
led to
to the
the top
top five
five players
players controlling
controlling 54%
54% of
of capacity
capacity in
in
Overview
Overview FY2007
FY2007 vs.
vs. 43%
43% in
in FY2000
FY2000
■■ Regional
Regional play
play due
due to
to high
high freight
freight costs
costs
■■ Primarily
Primarily aa bagged
bagged retail
retail driven
driven market
market

Low per capita consumption points to Capacity concentration – consolidation

significant potential for future growth underway
JK Group
7% Dormant Capacity Dormant Capacity, Jaypee , 4%
777 India Cements
Per Capita Consumption (Kg)

5% 5% J K Group, 4%
7% India
Cements, 5% Century, 4%
522 Others
44% Grasim /
348 342 Grasim Ultratech,
301
9% 19%

131 L&T ACC / Others, 38%

11% GACL, 21%
ACC GACL
11% 6%
China Europe World USA Asia (Ex India
Average China) FY2000 (108.6mt) FY2007 (165.5mt)
Source: Industry reports, May 2007 Source: CMA

5
 Demand growth continuing unabated…
Demand trend – sustained growth YoY

Domestic demand Exports (Cement + Clinker) 224 251

201
181
158
133 145
123
Mtpa

104 115
12.3% CAGR
8.7% CAGR

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Source: CMA and NCAER

Key demand drivers Significant capacity addition required

Infrastructure, ■■ Demand
Demand to
to increase
increase >90mt
>90mt over
over next
next four
four years
years
Housing, 20%-25%
60%-65% ■■ Increased
Increased government
government focus
focus on
on infrastructure
infrastructure
Commercial ■■ Shift
Shift in
in consumption
consumption from
from housing
housing to
to
construction,
10%-15% infrastructure
infrastructure
■■ All
All round
round growth
growth in
in key
key consuming
consuming segments
segments
Industrial
segments, ■■ Domestic
Domestic cement
cement consumption
consumption growth
growth over
over 10%
10%
5%-10% in
in last
last two
two years
years
Source: Industry Research, 2007

6
…Capacity creation lagging behind
Additional capacity of over 100mt required by 2011 to meet incremental demand

Capacity utilizations at a high Significant incremental production required

Demand (High Growth - Possible)
Capacity mtpa Capacity Utilization 291
Demand (Average Growth - Optimistic)
158 166
144 152 93% 252
137
222
94% 196 251
90% 86
224
84% 201
81% 81% 181

FY03 FY04 FY05 FY06 FY07 1HFY08 FY07 FY08 FY09 FY10 FY11
Source: CMA Source: CMA and NCAER

Capacity additions lag demand growth

Capacity additions Mtpa Inc. demand* mtpa

Capacity Growth Demand Growth ■■ Industry
Industry operating
operating at
at near
near full
full capacity
capacity
10% ■■ Significant
Significant capacity
capacity addition
addition required
required to
to match
match
9% 9%
7% 8% demand
demand
6% 5% 5% ■■ 80mtpa
4%
80mtpa capacity
capacity creation
creation announced
announced
5% ■■ Lead
Lead time
time for
for new
new capacity
capacity 24
24 –36
–36 months
months
7 10 7 8 7 10 6 12 8 14
■■ Additional
Additional delays
delays expected
expected in
in commissioning
commissioning
FY03 FY04 FY05 FY06 FY07
Source: CMA *including exports

7
 Demand Supply mismatch leading to improved prices
Healthy demand reflected in stable prices
Chennai Ernakulam Hyderabad Bangalore
240 245 245 245

230 230 229 231 240235

226
INR per 50kg bag

225 225 225 225 235 235

231 226
220
220 220 221 216 220 220 220 220
218
215 215 215 215
207
200 200 200 200 200 207

185 185
180 180 180 181 Source: CMA

Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07

■■ Prices
Prices expected
expected to
to remain
remain firm
firm backed
backed by
by continuing
continuing demand
demand growth
growth and
and supply
supply constraints
constraints
■■ Prices
Prices continue
continue to
to rise
rise despite
despite government
government initiatives
initiatives to
to ease
ease supply
supply position
position
8 Excise
Excise duty
duty structure
structure modified
modified to
to incentivise
incentivise industry
industry to
to reduce
reduce prices
prices
8 Scrapping
Scrapping of
of import
import duties
duties and
and dilution
dilution of
of quality
quality requirements
requirements

8
Meeting Agenda

Industry: Current Buoyancy Expected to Continue

ICL – Well Positioned to Capitalize on Growth

Key Strategies

Financials

Summary

9
Strategically located plants
Proximity of plants to principal markets
Strategically located
and ports

■■ 44 of
of 77 plants
plants supplying
supplying deficit
deficit markets
markets of
of Tamil
Tamil Nadu
Nadu
and
and Kerala
Kerala
Maharashtra ■■ Plant
Plant locations
locations provide
provide easy
easy access
access to
to key
key markets
markets
■■ Average
Average lead
lead of
of only
only 350kms
350kms for
for domestic
domestic sales
sales
■■ Ports
Ports provide
provide access
access to
to international
international markets
markets //
Andhra Pradesh imported
imported fuel
fuel

Access to raw materials

Karnataka
■■ Three
Three plants
plants in
in Tamil
Tamil Nadu,
Nadu, aa state
state with
with no
no
significant
significant unallocated
unallocated limestone
limestone reserves
reserves
Tamil Nadu Addressed Market ■■ Adequate
Adequate limestone
limestone reserves
reserves at
at all
all plant
plant locations
locations
Plant locations ■■ Fly-ash
Fly-ash sourced
sourced from
from thermal
thermal plants
plants nearby
nearby
Kerala
Key markets ■■ Proximity
Proximity to
to ports
ports provide
provide easy
easy access
access to
to imported
imported
Ports coal
coal
Grinding units
Source: Company / Map of India under installation

10
 Market leader in South India

Leadership position by a wide margin Strong Marketing & Distribution

FY07 1HFY08
Market Share %

17.7%

17.5% 11.0%
7.8% 7.7% 7.7%
11.5%
8.2% 8.0% 8.1%
■■ Dominant
Dominant player
player in
in all
all key
key South
South Indian
Indian markets
markets
India Madras ACC Ultratech Grasim ■■ Brand
Brand strength
strength allows
allows for
for premium
premium pricing
pricing
Cements Cements ■■ Strong
Strong and
and widening
widening distribution
distribution network
network
Source: CMA

Ability to switch distribution to remunerative markets with higher realizations

FY06 (Sales break-up) 1HFY08 (Sales break-up) Karnataka

17%
Karnataka Andhra Pradesh Kerala
14% 28% 15%
Andhra Pradesh
Kerala 23%
16%
Maharashtra
8% Tamil Nadu Maharashtra
Tamil Nadu 36% 6%
28% Others + Exports Others
6% 3%
Source: Company
Note: All charts are based on Volumes
11
Strong management execution track record

■■ Six
Six decades
decades of
of experience
experience
■■ Professional
Professional and
and experienced
experienced management
management
Experience
Experience &&
technical
technical ■■ In-depth
In-depth understanding
understanding and
and knowledge
knowledge of
of market
market and
and customer
customer behaviour
behaviour
know-how
know-how
■■ Ability
Ability to
to acquire
acquire and
and integrate
integrate plants
plants and
and processes
processes
■■ Proven
Proven track
track record
record of
of setting-up
setting-up greenfield
greenfield plants
plants at
at optimum
optimum cost
cost // time
time

■■ Continuous
Continuous improvement
improvement in
in operating
operating efficiencies
efficiencies
Manufacturing
Manufacturing ■■ Constant
Constant focus
focus on
on debottlenecking
debottlenecking and
and upgrading
upgrading to
to enhance
enhance capacity
capacity at
at minimal
minimal
costs
costs

■■ Management
Management plays
plays key
key role
role in
in negotiating
negotiating periodic
periodic industry-wide
industry-wide wage
wage settlements
settlements
■■ Cordial
Cordial industrial
industrial relations
relations –– no
no strikes
strikes // lockouts
lockouts
Employees
Employees
■■ Successful
Successful implementation
implementation of
of multiple
multiple VRS
VRS programs
programs
■■ Negligible
Negligible senior
senior management
management turnover
turnover

12
Meeting Agenda

Industry: Current Buoyancy Expected to Continue

ICL – Well Positioned to Capitalize on Growth

Key Strategies

Financials

Summary

13
 Improve supply chain management for power / fuel

Average unit rate of power Increasing cost of coal

3.39 3,516

3,192 3,183

INR per tonne

3,073
INR / KWh

3.06

2,644
2,568

FY03 FY04 FY05 FY06 FY07 1HFY08 FY03 FY04 FY05 FY06 FY07 1HFY08

Source: Company

Initiatives
Initiatives ■■ Plans
Plans toto acquire
acquire freight
freight ships
ships to
to counter
counter increasing
increasing freight
freight costs
costs for
for imported
imported coal
coal --
undertaken
undertaken to to MoA’s signed for acquiring two second hand dry bulk carriers
MoA’s signed for acquiring two second hand dry bulk carriers
improve
improve
supply ■■ Initiated
Initiated steps
steps to
to secure
secure long-term
long-term coal
coal off-take
off-take arrangement
arrangement
supply chain
chain
management
management ■■ Commissioning
Commissioning of Railway Siding at Malkapur Unit to
of Railway Siding at Malkapur Unit to reduce
reduce dependence
dependence on on road
road
for
for fuel
fuel movement
movement

14
Continuous improvement in operating efficiencies

Efficiency in fuel consumption Manpower reduction …..

850
K/Cals per tn of clinker

Manpower Strength
4,697
790 33% reduction

in numbers
3,154

FY99 1HFY08 FY03 FY07

Source: Company Source: Company

…..leading to increase in
Reducing power consumption
employee productivity
105
Kwh/tn of cement

2,768

Tonnage per person

86
1,230

FY99 1HFY08 FY03 FY07

Source: Company Source: Company

15
Sustain utilization levels and maximize contributions

Operating at full capacity Increasing share of blended cement

OPC PPC
105% 67%
99%
96% 60%

74%
72%
65%
40%

33%

FY03 FY04 FY05 FY06 FY07 IHFY08 FY03 1HFY08

Source: Company Source: Company

■■ ICL
ICL operating
operating at
at full
full capacity
capacity
■■ Plans
Plans to
to further
further increase
increase share
share of
of blended
blended cement
cement from
from current
current 67%
67% to
to 80%
80% levels
levels

16
 Sustenance of average production cost despite rising input costs

Average production cost per tonne

2,085 Variable Cost Other Costs Depreciation

1,726 1,713
1,640 1,660
1,587
INR / Tonne

1,121 1,182
1,067 1,100 1,109
1,021

FY03 FY04 FY05 FY06 FY07 1HFY08

Source: Company

■■ Continuous
Continuous focus
focus on
on cost
cost control
control
–– Leading
Leading to
to reduction
reduction in
in total
total cost
cost with
with consistent
consistent variable
variable cost
cost despite
despite rising
rising input
input costs
costs

■■ Further
Further initiatives
initiatives to
to control
control rising
rising input
input costs
costs underway
underway
–– Acquisition
Acquisition of of freight
freight ships
ships to
to counter
counter increasing
increasing freight
freight costs
costs for
for imported
imported coal
coal
–– Steps
Steps Initiated
Initiated to
to secure
secure long-term
long-term coal
coal off-take
off-take arrangement
arrangement

17
 Plans to double capacity - establishing Pan-India presence
Phase I: Additional 5mtpa at marginal cost Phase II: Pan-India plans initiated

■■ Additional
Additional 5mtpa
5mtpa atat less
less than
than USD
USD 4040 per
per tonne
tonne ■■ Plans
Plans to
to diversify
diversify geographically
geographically toto de-risk
de-risk model
model
■■ Kiln upgrades: Yerraguntla (400tpd); Malkapur
Kiln upgrades: Yerraguntla (400tpd); Malkapur ■■ Establish
Establish pan-India
pan-India presence
presence through
through plants
plants in
in
(350tpd);
(350tpd); Raasi
Raasi (1300tpd);
(1300tpd); Sankarnagar
Sankarnagar (300tpd)
(300tpd) Northern India with 3.5mtpa
Northern India with 3.5mtpa
■■ Second
Second line
line at
at Malkapur
Malkapur ■■ MoU
MoU signed
signed forfor Himachal
Himachal Pradesh
Pradesh plant
plant
■■ 22 grinding
grinding units
units for
for additional
additional cement
cement from
from clinker
clinker ■■ Mining
Mining leases
leases secured
secured in
in Rajasthan
Rajasthan
expansion
expansion
■■ Scouting
Scouting limestone
limestone deposits
deposits in
in Madhya
Madhya Pradesh
Pradesh
■■ Dalavoi
Dalavoi additional
additional cement
cement mill
mill –– being
being put
put up
up

Phase I Phase II
9.1 to 14.2mtpa 14.2 to 18mtpa

3.5
Current capacity Incremental capacity
2.4 2.2 3.5
1.0 2.1 1.9 1.5 0.7 2.5
0.2
0.5 1.0 2.2
0.6
0.2
0.3
0.2
0.7 1.6 1.3 1.3 0.5 2.3 1.4

Sankaridurg Sankarnagar Dalavoi Chilamkur Yerraguntla Raasi Malkapur Grinding Units Expansion to
Source: Company North

18
Key success factors

Continuing
Continuing to
to implement
implement measures
measures to
to reduce
reduce costs
costs

Sustaining
Sustaining high
high utilization
utilization levels
levels

Optimizing
Optimizing blending
blending ratio
ratio

Maximizing
Maximizing price
price realization
realization

Ability
Ability to
to select
select and
and switch
switch markets
markets with
with high
high realizations
realizations

19
Meeting Agenda

Industry: Current Buoyancy Expected to Continue

ICL – Strongly Positioned to Capitalize on Growth

Key Strategies

Financials

Summary

20
 Multi-fold increase in profitability

Combination of cost control and higher realizations reflected in bottom-line

EBITDA PAT
6,719
5,872

4,785
4,060

2,682
INR Mn

1,524
1,040
332 415
32

(969)

(2,282)

FY03 FY04 FY05 FY06 FY07 1HFY08

Source: Company
Note: All financials to FY07 are consolidated; 1HFY08 stand-alone basis

21
 Significant EBITDA improvement

Net Realizations and EBITDA per tonne

EBITDA per tonne Net realization per tonne

3185
2,667
2530
2,342 2,346
2,058 2,029 2,081 2,047
INR / Tonne

1,689 1,733 1,806

1,283

883
692 658 559 610
496
341 354
179 239
66

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 1HFY08
Source: Company

■■ Record
Record high
high net
net realizations
realizations with
with continuous
continuous focus
focus on
on costs
costs resulting
resulting in
in significant
significant EBITDA
EBITDA improvement
improvement
■■ EBITDA
EBITDA growth
growth highest
highest among
among key
key players
players in
in 1HFY08
1HFY08
■■ EBITDA
EBITDA per
per tonne
tonne increased
increased from
from INR
INR 66
66 per
per tonne
tonne in
in FY03
FY03 to
to INR
INR 1283
1283 per
per tonne
tonne in
in 1HFY08
1HFY08

22
 Substantial increase in revenues, margins and ROE
Improving EBITDA margin Increasing growth and profitability
40%
Sales growth (%)
33% ROE (%) 50.8%
47.4%
46%

17% 31% 30%

13%
10%
19%
4% 15% 9.8%

1.7%
FY03 FY04 FY05 FY06 FY07 1HFY08 FY03 FY04 FY05 FY06 FY07 1HFY08
Source: Company
Note: All numbers to FY07 are consolidated; 1HFY08 stand-alone basis

-26%

-48.2% -42.2%

Source: Company
Note: ROE and Sales growth for 1HFY08 annualized

23
 Improved leverage ratios

Net Debt* / Equity (X) Net Interest Cover (X)

8.8x
10.4x 11.5x

7.0x
4.9x

2.2x 1.8x
1.1x
1.0x 0.8x
0.7x 0.5x

FY03 FY04 FY05 FY06 FY07 1HFY08 FY03 FY04 FY05 FY06 FY07 1HFY08
Source: Company Source: Company
Net Debt excludes non-interest bearing debt

Balance sheet restructuring complete – turnaround effected

Note: All numbers to FY07 are consolidated; 1HFY08 stand-alone basis

24
Meeting Agenda

Industry: Current Buoyancy Expected to Continue

ICL – Well Positioned to Capitalize on Growth

Key Strategies

Financials

Summary

25
To sum it up…..

Strong
Strong and
and experienced
experienced management
management team
team

Market
Market leader
leader in
in South
South India
India –– well
well positioned
positioned to
to capitalize
capitalize on
on growth
growth

Strong
Strong brands
brands and
and widening
widening distribution
distribution network
network

Continuous
Continuous focus
focus on
on cost
cost control
control led
led to
to significant
significant EBITDA
EBITDA improvement
improvement

Improve
Improve fuel
fuel supply
supply chain
chain management
management

Plans
Plans to
to doubling
doubling capacity
capacity from
from 9.1
9.1 to
to 18mtpa
18mtpa through
through modernization
modernization of
of
existing
existing plants
plants and
and expansion
expansion to
to North
North India
India

26