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

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

3 Ambuja
Cement
 Growth Rates
( April - September)

Percent

2002 2001
Service 7.5 5.5
Construction 6.8 1.2
GDP 5.9 4.4

Source : CSO 4 Ambuja

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

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

6 Ambuja
Cement
Construction growth reflects
Cement growth

7 Ambuja
Cement
 Cement In India

A paradigm shift from supply

driven to demand driven

8 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

9 Ambuja
Cement
 Cement Production Capability
( Various Scenario)

Clinker Capacity available - 103 mn tonnes

Clinker to Cement Maximum Cement Production
Conversion Ratio ( mn tonnes)
1.21 125
1.22 126
1.23 127
1.24 128
1.25 129

10 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

11 Ambuja
Cement
 Cement Demand

Other side of the equation

12 Ambuja
Cement
 Cement Demand
(January - December)

Calendar Sales Growth

Year (mn tonnes) (%)

2002 109 11
2001 98 3

Source : CMA 13 Ambuja

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

14 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

15 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 16 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 1.25 129 132 134 (3) (5)
2005(E) 103 1.25 129 145 149 (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

18 Ambuja
Cement
 Ambuja Cement
Growth of about 20 times in 15 yea

Started production in 198

Cement Plants mn tonnes

Sea terminals 1986 2002

Markets Capacity 0.7 13.0

19 Ambuja
Cement
 Cement Despatches
(January - December)

mn tonnes

2002 2001 Growth

(%)

Industry 109 98 11
Ambuja 9 7 34

Source : CMA 20 Ambuja

Cement
Our 2nd Quarter Performance

21 Ambuja
Cement
 Production
(October-December)

Lac Tonnes

Category 2002 2001 Increase %

Clinker 22.92 14.48 58
Cement 23.66 17.94 32

22 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

23 Ambuja
Cement
 Cement - Sales
(October-December)

Lac Tonnes

Category 2002 2001 Increase %

Domestic 19.06 14.97 29
Export 3.96 3.05 30
Total 23.02 18.02 28

24 Ambuja
Cement
 Quarterly Results
(October-December)
Rs. Crores
2002 2001 Growth %
Sales -Volume (mn tonnes) 2.30 1.80 28
- Value 487 399 22
Operating Profit 136 121 12
Interest 26 26 -
Cash Profit 110 95 16
Depreciation 44 34 29
Profit Before Tax 66 61 8
Current Tax 5 4 25
Profit after Current Tax 61 57 7
Deferred Tax 4 7 (43)
Profit After Tax 57 50 12
Net Operating Margin 32.3% 34.6%

25 Ambuja
Cement
 Sequential Growth
( FY 2003)
Rs. Crores

2Q2003 1Q 2003 Growth %

Sales -Volume (mn tonnes) 2.30 2.14 7
- Value 487 434 12
Operating Profit 136 89 53
Interest 26 22 18
Cash Profit 110 67 64
Depreciation 44 43 -
Profit Before Tax 66 24 275
Current Tax 5 2 250
Profit after Current Tax 61 22 277
Deferred Tax 4 4 -
Profit After Tax 57 18 317
Net Operating Margin 32.3% 24%

26 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 27 Ambuja

Cement
 Performance of Our

Subsidiary & Associate Company

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

2002 2001 Growth %

Sales - Volume-Lac tonnes 3.07 3.91 21
- Value 86.8 89.5 3
Operating Profit 18.3 0.9
Interest 4.6 5.5 (16)
Depreciation 6.2 6.7 (7)
Profit after tax 7.5 (11.3)
Net Operating Margin 24.1% 1.1%

29 Ambuja
Cement
 Ambuja Cement Rajasthan Limited
(October-December) Rs. Crores

2002 2001 Growth %

Sales - Volume Lac tonnes 3.35 3.17 6
- Value 77.1 72.7 6
Operating Profit 15.2 7.6 100
Interest 9.9 11.7 (15)
Depreciation 6.3 6.3 -
Loss 1.0 10.4 (90)
Net Operating Margin 23.8% 12.4 %

30 Ambuja
Cement
 Group Debt Profile
( Estimated - June 2003)
Rs. Crores
GACL
Debt 1250
FCCB
(Convertible Bonds) 461
1711
ACEL 150
ACRL 50
Total Debt 1911

Group Debt/ Equity Ratio:

- Including FCCB as Debt 1.0
- Including FCCB as Equity 0.6
31 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

32 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

33 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

35 Ambuja
Cement