The Aditya Birla Group

Taking India to the World

By

Kumar Mangalam Birla

Chairman, The Aditya Birla Group

February 2006

The Aditya Birla Group: An introduction

Amongst the largest and most reputed business groups in India Domestic market leaders in most of our product areas Cost leaders in most of our global businesses Aggregate revenues of US$7.9 bn; Net Profits of US$ 820 mn* Group Market capitalisation of over US$ 10bn* * Anchored by 72,000 employees; Trusted by 800,000 shareholders Group companies
Grasim Hindalco Aditya Birla Nuvo UltraTech Idea Cellular Essel Mining
9M FY06 Annualized Data ** As on 31st Jan 2006

- Cement & Viscose Staple Fibre - Metals - Apparels, Insurance, IT / ITeS, Carbon Black, Fertilisers & VFY - Cement - Telecom - Mining & Power
2

The Group Today

Internationa International l Operation Operationss M.Cap: US$3.0bn M.Cap: US$4.3bn M.Cap: US$1.3bn
Aluminium Copper VFY Carbon Black Textiles Garments IT/ ITeS Insurance Financial services Fertilisers Telecom Thailand Indonesia Malaysia Philippines Egypt Canada Australia China

J o in Joint t Venture Venturess

M.Cap: US$1.5bn
Cement VSF

Strong Global operations with successful joint ventures

Key themes going forward

Significant Growth aspirations Global Size and Scale in each operation Global cost competitiveness Organizational Development

Key themes going forward

Significant Growth aspirations Global Size and Scale in each operation Global cost competitiveness Organizational Development

Increasing growth momentum

Strong growth in Revenues
8
($ bn)

Increasing Market Capitalisation

Group M Cap (as on Jan 2006 ) ($ 10.2 bn)
Sensex Group Mkt. Cap

CAGR 30%

5
Group M Cap (as on Jan 1999) ($ 1.5 bn) CAGR 18% Sensex (as on Jan 2006) 9920

3
Sensex (as on Jan 1999) 3060

Source: Bloomberg, Company data * -FY06 data annualized

Superior value creation in the past

6

Strategy for growth in the future

Inherent Strengths

Market Opportunities

G r o wt h

Core strengths

In d i a P o te n ti a l

Strong balance sheet and Cash flows Cost Leadership and Efficiencies World- Class Quality Streamlined Systems & Processes Corporate Governance Principle of Trusteeship

Consumption led growth Increasing urbanization Manufacturing cost advantage Resource base

The next phase Fortune 500 aspiration

+ Regional
market opportunities

Shifting of manufacturing towards Asia Regional demand potential

Fortune 500 aspiration: In the global league

Aggregate Group Turnover
$18-20bn

At the threshold of Fortune 500 Entry*

$7.9bn
International

$3.1bn
Domestic Others Aditya Birla Nuvo Hindalco Grasim

FY99
EBITDA - $522mn Gearing 37%

FY06e
EBITDA - $1,540mn Gearing 36%

FY10e
EBITDA - $3,400mn Target Gearing 40%
Based on Fortune 500 study in 2004 Threshold Sales - $12.4bn Median Sales - $22.5bn

Restructuring & Consolidation

Growth Phase

Shifting gears
8

Key themes going forward

Significant Growth aspirations Global Size and Scale in each operation Global cost competitiveness Organizational Development

Moving beyond boundaries

Overseas operations contribute over 30% of Group revenues Successful operations in 18 countries across 4 continents
Manufacturing across 9 countries
Canada

Egypt

Successful recent ventures

Acquired St. Anne Nackawic Pulp Mill in Canada VSF expansion in Indonesia making it the world single largest VSF plant Expansions in Carbon Black across units in Egypt, Thailand and China Acrylic fibre in Egypt Copper mines in Australia

China

Thailand

Malaysia

Philippines

Indonesia

Australia

10

Building Global businesses: Viscose Staple Fibre

Strong growth in production (Indexed)
200 175 150 125 100 75
EquiFibres 4%

Global VSF market share

AVB Group World

Chinese Producers (Fragmented) 37% Others 20%

AVB Group Total 22%

Grasim (3 units) 12% Group overseas units (Thailand & Indonesia) 10% Lenzing 17%

50

Total Revenues Total EBITDA

= $ 761 mn = $ 230 mn

Source: Company data, Fiber Organon

Attained size and scale in a profitable niche segment

11

VSF: Integrating upstream to control factor costs

Pulp facilities in Canada for VSF
Atholville Pulp Mill (127,000 TPA) a JV with Tembec Inc., USA Strategic investments in St. Anne Nackawic Pulp Mill in New Brunswick province Leading to 50% backward integration

Plans for fully integrated operations in Laos

Plans to develop plantations over the next 7 years (US$ 50mn) Proposed Greenfield pulp facility (180,000TPA) during 6th and 7th year (US$ 300mn)

Tembec St.Nackawic Proposed new plantation facility (Laos)

VSF Plants

12

Building Global Businesses: Carbon Black

Groups Capacity Growth in Carbon Black Global Carbon Black Market Share

(TPA)

Columbian Chemicals

Aditya Birla Group China Synthetic Rubber 6.2%

CAGR = 8%
355,000
Cabot 22.2%

14.5%

China (various) 11.6%

Others 28.1%

FY99

FY06e

Total Revenues Total EBITDA

= $ 306 mn = $ 76 mn

India

Thailand

Egypt

China

Source: Company Data, Freedonia Carbon Black Report 2005

4th largest and amongst the fastest growing Carbon Black operations
13

Carbon Black: Proximity to key growth markets

Carbon Black demand
5.3% 4.9%

2.2% 2.5% 2.5%

2.4%

8.4%

7.5%

2003-08 2008-13 E Europe

2003-08 2008-13 W Europe 2003-08 2008-13 N. America 2003-08 4.3% 4.1% 2003-08 2008-13 Africa / M. East 4.1% 6.6% 2008-13 China 5.2% 4.9%

3.9%

6.2%

2003-08 2008-13 Other Asia / Pacific 2003-08 2008-13 India

Groups Carbon Black operations

2003-08 2008-13 L. America

Source: Freedonia Carbon Black Report 2005

14

Key themes going forward

Significant Growth aspirations Global Size and Scale in each operation Global cost competitiveness Organizational Development

15

Global cost competitiveness

Tight control over costs Through upstream integration Continuous benchmarking Innovative cost control efforts
Use of alternative fuels in cement Energy sales in Carbon Black

Results encouraging across the Group Amongst Top-15% low cost producers in alumina and aluminium Cost leadership position in VSF Moving towards Top-25% amongst custom copper smelting costs One of the most energy efficient urea plants in the world Cost competitive in Carbon Black
16

Key themes going forward

Significant Growth aspirations Global Size and Scale in each operation Global cost competitiveness Organizational Development

17

An Organization built on Values

Integrity Honesty in every action

Commitment Deliver on the promise

Passion Energized action

Seamlessness Boundary less in letter and spirit

18

An Organization built on Values

Speed One step ahead always

19

People The backbone for Growth

Diverse culture
Operations across 4 continents Employ 20 different nationalities

Favourable organization demographics

48% of employees are below 38 years

Talent Management efforts

Lateral inductions & Global recruitments Gyanodaya and e-learning programmes

Performance Management Systems towards building meritocracy

Individual variable pay across business Job evaluation by international experts

20

People Encouraging progress

Internal satisfaction External appreciation

73

Overall Satisfaction

72

69 68

Awards in 2005 for Best Employers Thailand Thai Rayon India

OHS III Birla Group Gallup India Avg OHS IV Gallup Mfg. Avg 21

Aditya Birla Management PSI Data Systems

Building strong brands

Cement

Metals

Fibres/Textiles

21

Building strong brands

Garments

(Contd..)

Financial Services

Telecom

Fertilisers

UREA

DAP
22

Significant restructuring in recent times

Consolidation of cement businesses of Grasim and Indian Rayon

Hindalcos Acquisition of controlling stake in Indal

Acquisition of PSI Data System From Group Bull SA, France

Metals business restructured Hindalco acquires Copper

Hindalcos acquisition of Mt. Gordon in Australia

Aditya Birla Nuvo Formed through merger of IRIL with Birla Global and Indo Gulf

Aditya Birla Nuvo - Substantial acquisition in Idea Cellular

$225mn

$22mn

$1.5bn

$1.0bn

$150mn

1998

1999

2000

2001

2002

2003

2004

2005

$65mn

$95mn

$15mn

$500mn

$12mn

Grasims Acquisition of Sri Digvijay and Dharani Cement

Acquisition of Madura Garments

Life Insurance Joint Venture with Sun Life, Canada

Hindalcos acquisition of Nifty Mines in Australia

Foray into the BPO sector through the acquisition of Transworks

Grasims Acquisition of L&T Cement (UltraTech)

Grasims Acquisition of St. Anne Nackawic Pulp Mill in Canada

23

Achieving global aspirations

Emerging metals major

Hindalco : A metals powerhouse with integrated operations

Hindalco
Aluminium
Upstream Metal Downstream
Rolled Products 170 ktpa Alumina 1160 ktpa Aluminium 425 ktpa Copper mines Reserves 2,458 kt Cathodes 500 ktpa Gold 20 tpa

Copper
Upstream Metal By-products

Wire Rods 50 ktpa

Foils 33 ktpa Power 987 MW

Copper Rods 97.2 ktpa

Silver 75 tpa

Extrusions 21.7 ktpa

Alloy Wheels 300,000 Nos.

DAP 400 ktpa 25

Aluminium: Amongst largest and lowest cost producers

4,098

Global Aluminium Producers

(000 TPA)
3,394

Aluminium Cash Costs

2400
(US$/Ton)

2100
2,780

1800
1,832

Hindalco (Renukoot) Cash Cost

Asian Majors
1,347 1,221

1500

1200
768 752 735 425

900

BHP Billiton

Rio Tinto

RusAl

Hindalco

Hydro

Chalco

Alcoa

Alcan

Alba

Dubal

600 0 25 50
(% of Production)
Source: CRU Aluminium Production Costs 2004

75

100

Source: CRU Oct 2005

In the first quartile of global costs in Alumina as well

26

Domestic leadership in a high growth sector

Domestic market share Domestic demand

90%

(KTPA)

1000

CAGR=9 % (2001-05e)

63%

800

46% 33%

600

CAGR=3.6 % (1991-2000)

400

21%
200

Spl. Alumina

Metal

Rolled Products

Foils

Extrusion

Source: Company data, Aluminium Association of India

Domestic demand has surged in recent times with nearly 22% of current market size being created in last 2 years

27

Regional markets are growing rapidly

Word Alumina Consumption
90,000

World Aluminium Consumption

40,000

(000 TPA)
Rest of World Asia

(000 TPA)
Rest of World Asia

80,000 35,000 70,000 30,000 60,000 25,000 50,000 20,000 40,000 15,000 30,000 10,000

20,000

10,000

5,000

0 2001 2002 2003 2004 2005e 2006e 2007e 2008e 2009e

0 2001 2002 2003 2004 2005e 2006e 2007e 2008e 2009e

CAGR (2001-2009e) Asia: Rest of World:

12.8% 2.8%

CAGR (2001-2009e) Asia: Rest of World:

9.2% 3.7%
28

Aluminium: Growth plans charted out

Alumina Growth Plans
4,500 4,000 3,500 3,000
825 (000 TPA) 4,110 500 3,610 1,000

Aluminium Growth Plans

(000 TPA)
1,400 1,200 1,000 800
65
Current Capacity

Alumina capacity to grow 3.7 times

Metal capacity to grow 2.8 times

325

1,186

2,500 2,000 1,500

460
Current Capacity

796 260 81 65

640

600 400 200 0

345 45

1,000 500 0

685

Renukoot Current

Muri & Blg Muri & Blg Current Expansion

Utkal 55%

Aditya

Total

Rkt Blg / Hirakud Current Alupuram Current

Hirakud Expn

Aditya

Rajbar

Total

* Source: Company Data

Hindalco to reach global Top-10 in both alumina and aluminium by 2010

29

Copper: Global sized and cost competitive already

Global Top-10 Producers
(000 TPA)
1582

Copper Cash Costs

35
(US/lb)

30

937

25
870 870

645

644 563 549 500

20
Dahej At 500 KT

Dahej At 250 KT

15

10

Gmexico

AngloAmerican

Mitsubishi

Hindalco

Xstrata

BHP

Codelco

PhelpsDodge

Rio

5 0 1000 2000 3000 4000 5000 6000 7000 Cum ulative Production ('000M T)
Source: CRU Copper Smelting Costs 2003, Company Data

Source: CRU

30

Copper: Regional Demand and Deficit to Grow

Regional Copper Demand Regional Copper Deficit

(kt)
12,000

(kt) CAGR 5.5%

(2005-09e)

0 -726 -922

-1,217

-1,303

-1,387

-1,294

4,751

8,000

4,883

(2001-05)

4,673

4,176

4,074

-1,225

3,775

-796

-779

-1,500

-1,236

6,000

4,422

4,405

4,529

-910

-1,000

4,000

2,256

2,557

3,040

2,000

3,468

3,763

4,128

4,449

4,827

5,238

-2,500

0 2001 2002 2003 2004 2005e 2006e 2007e 2008e 2009e China Rest of Asia -3,000 2001 2002 2003 2004 2005e 2006e 2007e 2008e 2009e China Source : CRU Quarterly October 2005 Rest of Asia

Source : CRU Quarterly October 2005

-850

-2,000

-1,444

-985

-752

-1,679

CAGR 7.9%

-1,411

-500

-1,223

10,000

31

Copper: Focus on value extraction

Sweating assets and attaining cost competitiveness Byproduct value addition
Precious metals demand remains firm Fertiliser (DAP) demand too buoyant

Captive port provides further advantages Strong prevailing TcRc margins to aid profitability Significant locational advantages Moving up the value chain through mines
Mt Gordon output remains firm Shipments from Nifty to begin by end FY06

Addition of further mines remains key priority

32

Achieving global aspirations

A Cement and VSF major

Cement: Aggressive growth towards attaining global size

Grasim Capacity additions (FY91-05)
Capacity Growth
(Mn Tonnes)

Leadership position in domestic market

hNo hNo

1 in 7 states with 24% of demand 2 in 6 states with 32% of demand 3 in 4 states with 20% of demand
Zone Zonal Distribution Industry Grasim Combine 33 16 27 18 6 100 24 16 23 28 9 100

CAGR FY91 to FY05 Industry Grasim Consolidated Grasim (standalone) 7% 23% 18%

35 30 25 20 15 10 5

hNo

Grasim Combine Mkt. Rank Share % 15 20 17 33 2nd 2nd 2nd 1st 1st 2nd

UltraTech

North East South West Export Total

30 20

Source: CMA 9m FY06, Company Data

Amongst Top-10 producers in the World

34

Cement : Domestic demand potential remains strong

Rising demand & per capita consumption
(Mn Tonnes) 140

Per capita consumption still low

1200

Demand Per capita consumption

(Kgs) 120

120

Cement Consumption (Kg per capita)

S. Korea
1000

100

Spain Ireland
800

100 80 80 60 60 40 40 20

Taiwan

600

Malaysia Turkey China

400

Japan Belgium US France

Thailand Mex ico

200

20

Brazil Russia Philippines

Norway Denmark UK Sw eden

India
0
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

GDP per capita (US$, Purchasing Power Parity)

Source: CMA

Source: Citigroup Research

35

Buoyant end user sectors to keep demand growth robust

Housing shortfall
(Mn)

Unfolding of the capex cycle

(Rs. bn)

No of Households (LHS) Housing Shortfall 21.8 23.4 19.4 19.8

250

700 600 500

200 14.6
400 300 200

150

13.5

100

50
100

0 1961
Source : NBO

1971

1981

1991

2001

2005

FY00

FY02

FY04

FY06e

Source : Citigroup estimates

Grasim to maintain market share in the fast growing cement business

36

Backed by sustained cash from VSF

VSF Operating Earnings (PBIDT)
(US $ mn)

Significant Competitive strengths

Enviable domestic market leadership Cost leadership with integrated operations

139 124 127 102

89

89

91 71

Application development competencies

Proximity to key growth markets

Firm domestic demand with the India Textile Advantage Impressive exports prospects to South Asian countries

Concentrated efforts to increase fibre exports to key regional textile hubs

Source: Company data

Grasim: On a sustainable growth path

37

Achieving global aspirations

Portfolio of value and growth businesses

Aditya Birla Nuvo: Building a balanced portfolio

Value Businesses

High Growth Businesses

VFY

Carbon Black

Textiles

Fertilisers Insulators

Garments

Financial Services JV

Subsidiaries

Telecom JV (21%) IT (70%)

Mutual Fund (50%) Life Insurance (74%) Distribution (50%)

ITeS (100%)

39

Restructured to move on a high growth trajectory

Indian Rayon Revenue Mix FY00 Indian Rayon Revenue Mix FY05 Aditya Birla Nuvo Revenue Mix FY08e

Tex tiles
Textiles Others Insulators Carbon Black Garm ents VFY

Tex tiles
Life Insurance

Financial Serv ices

Insulators VFY Fertilisers C arbon Black Garments Softw are Telecom BPO

Insulators Carbon Black Garments Softw are BPO Telecom VFY

Value businesses

High growth businesses

FY00 Revenues Market Cap $ 246 mn $ 75 mn

FY05 $ 413 mn $ 531 mn

CAGR 11% 48%

High growth businesses to contribute over 75% of revenues by FY08

40

IDEA Cellular : Strong growth prospects

Group raised its stake to 50.2%
Aquired 16.5% of Cingulars stake for $144 mn Aditya Birla Nuvos share 20.7%
India Cellular growth
In Mn
160.1

Idea Cellular: 5th largest cellular operator in India

Nationwide presence with

CAGR 45%

52.2

operations in 11 circles Plans to roll out in 3 new circles

CAGR 79%

Strong presence in a high growth sector

0.9

Source: TRAI, Merrill Lynch estimates

41

IDEA Cellular : Rising subscriber base and improving financials

IDEA Subscriber growth (FY01 - FY06e) 8 7 6 5 4 3 2 1 0
In Mn

IDEA Revenue and EBITDA (FY01 - FY06e)

800 700 600 500 400 300 200 100 0

Revenue
(US$ Mn)

EBITDA

EBITDA Margins

40% 35% 30% 25% 20% 15% 10% 5% 0%

Source: Company Data

42

Birla Sun Life Insurance: Promising prospects in a high growth sector

Exciting prospects in Life Insurance
Life Insurance market to triple to $45bn by 2013 50 US$ Bn

High potential, given low penetration 40 Demographic profile and economic 30 outlook predict rapid growth 20 Private sector entry spurs product and market development Birla SunLife, a strong player Amongst leading private life insurers Strong, expanding distribution network Several first mover advantages
250 200 150 100 50 0
Source: Company Data ; Swiss Re, Kotak Research

10 0 1990 1993 1996 1999 2002 2005e 2008e 2011e

Birla Sun Life: Exponential Premium Growth

US$ mn

Unit Linked Products Multi-Channel distribution

FY02

FY03

FY04

FY05

43

Madura Garments: Leadership in a high growth business

Surging consumer demand provides the opportunity Branded menswear market to be $3.3bn by 2010; growing 15% annually Womens wear & denim to reach critical mass for Nuvo to reap benefits Leadership backed by strong brands Transform to life style / full wardrobe brands Strategic tie-ups with leading global brands Retail thrust to bolster leadership Retail space to double in 2 years
44

Gross revenues
160 US$ mn

140

CAGR 16%
120

100

80

60

40 FY01 FY02 FY03 FY04 FY05 FY06e

Source: Company Data

Current valuations

(In US$ mn)

Revenues

EBIDTA

Net Profit

Current Mkt. Cap

PER

EV/ EBITDA

Hindalco
(Rs.165)

2,294

547

267

4,332

11.4

7.6

Grasim
(Rs.1,452)

1,434

334

178

3,017

14.1

10.3

UltraTech
(Rs.519)

653

104

25

1,462

36.8

11.6

Aditya Birla Nuvo (Rs. 710)

489

71

28

1,314

27.0

11.3

( month FY06 annualized data Stock price, market cap and as on 31st Jan 2006 Valuations based on FY06 Bloomberg consensus estimates

45

Moreover; a caring corporate citizen

Towards improving quality of life of the under-privileged
Aditya Birla Centre for Community Initiatives and Rural Development Partnering with the Governments, SIFPSA, CARE India & BBC Worldwide, Leprosy Mission, UNICEF and WHO

Over 2 million beneficiaries, across several states in India Aditya Birla Group of Schools The third largest chain of schools in India
Presence in 12 states with over 40,000 students

Reaching the poorest of the poor with key focus on

Health care Mother and Child Care Education Sustainable livelihood Women Self Help groups & Social Welfare
Asian CSR Award 2003 Excellence in Poverty Alleviation

Social Vision: To actively contribute to the social and economic development of the communities in which we operate and beyond. In so doing, build a better, sustainable way of life for the weaker sections of the society and raise the countrys HUMAN DEVELOPMENT INDEX 46

Thank You