Presentation By

Ambuja Cement

November 19, 2003

1 Ambuja
Cement
 Indian Economy
GDP Growth - Estimates
(2003 - 2004)

1Q 2004 (A) Estimated ’03-04

Service Sector 7.6 % 7.3 %
Industrial Sector 5.8 % 5.0 %
Construction Sector 5.7 % 6.7 %
Agriculture Sector 1.7 % 10.7 %

Economy expected to grow by about 7.4%

A- Actual
CMIE - Estimates 2 Ambuja
Cement
 Cement in India
Why ?
 Indian economy will keep growing in band of - 5 - 7% annually
 To achieve larger GDP growth rate Country will need more
Roads, Ports, Irrigational facilities & other Infrastructure
 Housing will continue to be a major construction area
 Cement as a product or technology does not suffer from
obsolescence
 There is no “Substitute” for Cement

3 Ambuja
Cement
 Roads - New Dimension

 Major Investments in Road Development

 Special Cess of Rs. 1.50 per liter on petrol and diesel

for Road Development

 Total outlay over next 2/3 years - Rs. 600 Billion

4 Ambuja
Cement
 Road Development

Golden Quadrilateral- 5846 Sq.. Km

(Already Completed 1408 km)(Expected completion - June 2005)

North-South & East-West Corridors - 7300 Sq.. Km

( Already Completed 980 km) (Expected completion - 2007)

48 New Road project - 10000 Km.

(Expected completion - 2006)

Government commits to 25% Concrete Roads

Expected additional consumption -3/4 mn tonnes per annum

Source : NHAI 5 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

6 Ambuja
Cement
 Cement Supply

Other side of the equation

7 Ambuja
Cement
 Cement Supply - The Dynamics

Cement Production 2003 111 mn tonnes

Maximum Clinker Production Capability

(Including Sanghi) 103 mn tonnes

Current Clinker to Cement

Conversion Ratio (the best in
last 5 years) 1.21times

Maximum Cement Production Capability 127 mn tonnes

at Conversion Ratio - 1.23

8 Ambuja
Cement
 Cement Supply - A Reality Check

 No new cement capacity under construction

 Lenders unwilling to fund new cement plants

 Maximum Cement production capability at a

conversion ratio of 1.23 - 127 mn tonnes

 Existing players going through Consolidation

9 Ambuja
Cement
 Indian Cement Industry
Next 3 Years

mn tonnes

Financial Clinker Cement Cement Demand

Year Capacity Conversion Production
Ratio at Peak 8%
( Maximum Level)

2003(A) 103 - 111 111

2004(E) 103 1.21 125 117
2005(E)* 105 1.22 128 126
2006(E)* 107 1.23 132 136

* On account of some debottlenecking

A- Actual
E- Estimated 10 Ambuja
Cement
 Cement Outlook

 Cement demand growth should exceed 8% if the GDP is

growing at over 6 %
 FY 2003-04 would be the First year in last decade to
not to have a single new plant commissioning
 Next 2 years also there is no new capacity expected
 Cement Demand to expected exceed Supply after a gap
of several years

All these point to good demand & better Cement Prices

11 Ambuja
Cement
 Ambuja Cement
Punjab HP

Rajasthan

Gujarat Chattisgarh WB
Maharashtra Cement factories
Sea terminals

mn tonnes
1986 2003
Capacity 0.7 14.0

Growth of 20 times in 15 years

12 Ambuja
Cement
 Growth

With

A Sound Business Model

13 Ambuja
Cement
 Our Business Model

 Own Infrastructure -Logistics Management

 Strong brand & efficient distribution

 Presence in prime markets

 Lowest cost cement producer

14 Ambuja
Cement
 Own Infrastructure

 7 Owned Cement Ships for transporting Cement by Sea

 Large port in Gujarat to handle export of Cement

( 2 mn tonnes this year) & Import of Coal / Oil

 3 Cement receiving terminals

 190 MW of Captive Power Plants at various Cement

Plants to give reliable and cheap power

15 Ambuja
Cement
 Strong Brand

India - A bagged market

Individual home builder - key driver of demand

Our focus :
 Best quality cement
 Good packaging
 Logistic management - strong distribution network
 Customer service

Ambuja Cement - Most preferred brand

- Fetching higher realisation
16 Ambuja
Cement
 Lowest Cost Producer

Rs./ tonne

FY 2003 FY 2002 Increase /

(Decrease) (%)
Power 187 179 4
Fuel 227 254 (11)
Raw material 136 133 2
Consumables 47 48 (2)
Direct cost 597 614 (3)

17 Ambuja
Cement
 Gujarat Ambuja Cement - Shareholding

GAC ( 12 mn )

40% ACIL 60%

Pvt. Equity Investors

ACC ACEL
14.4% 94%
( 17 mn ) ( 2 mn )

18 Ambuja
Cement
 Convertible Bonds
Brief terms:
Date of Issuance January 2001
Coupon 1%p.a.
Maturity January 2006
Conversion Price Rs. 222
Conversion Into GDRs/ Shares
Amount US$ 100 million
Conversion Option of the
Bondholder Any time till maturity
Yield to maturity at
redemption 4.6%
Call Option of company From January 2004 till Maturity

19 Ambuja
Cement
 Gujarat Ambuja Cements Limited
(Effect of Conversion)
Rs. Million

Before After
Sources of Funds
Shareholders’ Funds 16166 20680
Deferred Tax 3053 3053
Convertible Bonds 4614 --
Debt 12436 12436
Total 36269 36269
Application of Funds
Gross Fixed Assets 30239 30239
Less: Depreciation 10120 10120
Net Fixed Assets 20119 20119
Investments in ACIL 8572 8572
Other Investments 2445 2445
Net Current Assets 5133 5133
Total 36269 36269
20 Ambuja
Cement
 Debt Profile
(As of 30.9.2003)

%
Tenor
Long Term 79
Short Term 21
Total 100
Mix
Rupee Debt 56
Foreign Currency Debt 44
Total 100

21 Ambuja
Cement
 Gujarat Ambuja Cement Limited
Valuation

EV/Ton US$ 90
EV/EBIDTA 9 times
Cash Earning per Shares (CEPS) Rs. 27
Earning Per Shares (EPS) Rs. 14
Price to Cash Earning 10 times
Debt/ Equity -( on Conversion) 0.60
Debt/ EBIDTA - (on Conversion) 2.4 times

22 Ambuja
Cement
THANK YOU

23 Ambuja
Cement