Investor Presentation February 2016
Contents 1 Journey over last decade 2 Current Scenario 3 Financial Performance 4 What Next 5 Cement Industry & Our Region 6 Improving Macro Indicators 2
Contents 1 Journey over last decade 2 Current Scenario 3 Financial Performance 4 What Next 5 Cement Industry & Our Region 6 Improving Macro Indicators 3
Dalmia Bharat: Snapshot Asset Overview Corporate Overview • Third largest cement player in India • 25 Million Tons of installed cement capacity • 180.5 MW of captive power capacity • Strong presence in South, East and North East • More than 75 years of presence Corporate Office Delhi • Listed on BSE and NSE Dalmia Bharat Ltd. (DBL) KKR 25 MnT (Cement), 180.5 MW (CPP) 8.5% 100% 100% 26% Dalmia Cement Bharat Ltd “DCBL” Dalmia Power Ltd. 74% 75% OCL India Ltd. “OCL” DCBPVL (99 MW) DCBL 100% * Dalmia Cement East Limited OCL “ Bokaro ” Calcom 100% Adhunik * Adhunik Cement Ltd. “ Adhunik ” DCEL 76% Head Office * Calcom Cement India Ltd. “ Calcom ” Listed entities * Acquired entities 4
Capacity over last 10 Years 2005 2010 2015 Installed Capacity: 1.2 MnT Installed Capacity: 9 MnT Installed Capacity: 25 MnT Lanka Bokaro Meghalaya Medinipur Rajgangpur Kapilas Kadapa Kadapa Belgaum Dalmiapuram Dalmiapuram Dalmiapuram Ariyalur Ariyalur #1 plants in #1 states #5 plants in #3 states #11 plants in #8 states 5
Our Markets 2005 2010 2015 11% 7% 4% % Represents our Market share 6
Our Growth has been with a judicious mix of organic and inorganic expansions 7
Organic Expansions 1 Grown organically in Southern Region from 1 state to 3 states 2 Organic growth from 1.2 MnT in 2006 to more than 11 MnT in 2015 3 Serves the entire South region including Maharashtra 4 Set up the state of art plants at replacement costs less than industry average 5 Enjoys regional leadership position 8
Inorganic expansion 1 Geographical diversification in growing markets 2 Strengthening market share in existing markets Strategic fit to business model 3 4 Reduced lead distance 5 Replicating operational efficiencies initiatives 9
Board with a thrust on Corporate Governance Pradeep Kumar Khaitan, Chairman, DBL • Over 46 years of experience; A partner in Khaitan & Co., Solicitors and Advocates G.N. Bajpai : Chairman, DCBL • Former Chairman of SEBI and LIC Sanjay Nayar: Board Member, DCBL • CEO - KKR India • Ex-Head Citibank India Paul Hugentobler: Board Member, DCBL • Ex-Member, Holcim Executive Committee Jai Hari Dalmia: Board Member • Masters in Electrical Engineering from University of Illinios, Urbana, Champagne • Over 40 years of experience across industries Yadu Hari Dalmia: Board Member • A qualified Chartered Accountant • Over 39 years of experience in Cement industry An Independent Board to Ensure High Standards of Corporate Governance Professionals / Independent Promoters 10
…And a Strong Management Team Puneet Dalmia : Managing Director & Board Member • B.tech from IIT Delhi; P.G. from IIM, Bangalore • Over 11 years of experience in the cement industry • Conceptualized the growth strategy and governance architecture for the Group and is spearheading the growth plans for the Group Gautam Dalmia: Managing Director & Board Member • B.S. and M.S. degrees in electrical engineering from Columbia University • 15 years of experience in the cement and sugar industries • Responsible for leading the operations and execution of cement projects besides providing leadership to the commercial functions of the group Mahendra Singhi: Whole time Director & Group CEO – Cement • Chartered Accountant & Science, Law Graduate. • 38 years of experience in Cement Industry including 19 years with Shree Cement Ltd. • Passion for efficiency, people management & sustainability. • Member of Board of Governors of the National Council for Cement & Building Materials. • Served as a leader of Indian Cement Sector Task Force for Energy Conservation, Ministry of Power we well as President of the Rajasthan Cement Manufacturers Association. T. Venkatesan: Dy. Managing Director • Chartered Accountant • Over 31 yrs of experience in various sectors • Expertise lies in accelerating growth of large businesses • Ex-CEO Sterlite Group Copper Segment Jayesh Doshi: Whole Time Director & Group CFO • Chartered Accountant and a Law graduate from Bombay University • Over 28 yrs of experience with 19 yrs experience in cement industry and other industries being pharma, shipping offshore oil services & real estate Judicious mix of experience and youth 11
Contents 1 Journey over last decade 2 Current Scenario 3 Financial Performance 4 What Next 5 Cement Industry & Our Region 6 Improving Macro Indicators 12
Current Scenario Third largest player in India with regional leadership position Diversified locational advantages Current Moving to Sustainable Business Model Scenario Premium Brand Positioning Efficient Deployment of Capital 13
Leadership Position by Capacity National 66.0 61.4 25.0 24.0 22.8 22.2 15.9 14.7 14.2 13.3 AV Birla H+L Dalmia Shree B K Birla Jaypee India Ramco Chettinad Birla Corp. Cement 14
Diversified Locational Advantages Proximity to Input Sources Logistics savings vis-a-vis competitors in key markets South East North East 38% 40% 30% 15% 20% 14% 8% 7% 6% 5% 10% 4% Bongaigan TPP 2.5 MW 0% Tamil Nadu Karnataka Kerala Orissa West Bengal Jharkhand Assam Meghalaya Lanka Bokaro Meghalaya BCW Lead Distance – 300 kms Rajgangpur Kapilas Road Cement Demand Growth Tata Steel Kalinganagar 13% 14% Kadapa Belgaum 12% MRPL 10% NE 12% 8% Ariyalur 6% Dalmiapuram 5% 6% South 47% 4% East 2% 41% 2% Plant sites 0% Input sources FY14 FY15 Sales Mix – FY15 Potential Sources We are located where it matters! 15
Moving towards Sustainability….. Lesser use of mineral resources Lesser use of Fossil Fuel Reduce usage of energy Conserve water Best practices of sustainability introduced 16
…..Resultant Effect Power & Fuel Cost (Rs/T) Power Consumed/T (Kwh) 75 75 1027 74 967 941 908 869 72 781 740 726 71 666 70 69 69 68 FY14 Q1'15 Q2'15 Q3'15 Q4'15 FY15 Q1'16 Q2'16 Q3'16 FY14 Q1'15 Q2'15 Q3'15 Q4'15 FY15 Q1'16 Q2'16 Q3'16 Variable Cost (Rs//T) 1658 1647 1618 1565 1549 1520 1410 1391 1333 Commissioning of new clinker unit in North Continuous East would result in improvement in further improving operating efficiencies efficiencies in FY16 FY14 Q1'15 Q2'15 Q3'15 Q4'15 FY15 Q1'16 Q2'16 Q3'16 17
Premium Brand Positioning Uniform Branding Launched Dalmia Brand across markets South North East Improved South Market Share Enjoys premium pricing East Market Leader in core serving markets. Serving 18 states. 18
Efficient Deployment of Capital Expansions Comparative Costs ($/T) 160 2010 140 140 Belgaum 110 USD 100 / T 120 2012 100 100 OCL USD 74/ T 80 2012 Jaypee Bokaro 60 USD 90/ T 40 2014 Adhunik 20 USD 112/ T 0 Present Replacement Acquisition Our New Greenfield Calcom 2015 Cost USD 126 / Ton • Present Replacement Cost – For setting up 1 MnT cement plant 2015 Kadapa/Ariyalur • Acquisition – Average Cost for acquired units USD 85 / T (Adhunik/Calcom/Bokaro/OCL) • Greenfield – Belgaum Cost Organic Inorganic 19
Contents 1 Journey over last decade 2 Current Scenario 3 Financial Performance 4 What Next 5 Cement Industry & Our Region 6 Improving Macro Indicators 20
Aggregated Financials Particulars (Rs. Cr.) Q3 FY15 Q3 FY16 9M FY15 9M FY16 Total Income 1,343 1,474 3,799 4,525 Operating Expenses 1,124 1,126 3,223 3,448 EBITDA 219 348 576 1,077 EBITDA Margin % 16% 24% 15% 24% Other Income 44 20 93 67 Depreciation 96 116 279 333 EBIT 167 252 390 811 Finance Cost 122 171 331 518 Profit Before Tax 45 81 53 293 10.78 10.12 Sales in Sales in MnT MnT FY14 FY15 21
Aggregated Balance Sheet (Rs. Cr.) As on As on Particulars 30-Sep-15 31-Mar-15 Equity Funds 3,925 3,840 Debt 8,260 8,487 Term Loan 7,535 7,805 Working Capital 725 682 Deferred Tax 493 401 TOTAL 12,678 12,728 Fixed Assets 9,838 9,702 Non Current Investments 104 108 Cash & Equivalents 2,145 2,112 Net Working Capital 591 806 TOTAL 12,678 12,728 22
Contents 1 Journey over last decade 2 Current Scenario 3 Financial Performance 4 What Next 5 Cement Industry & Our Region 6 Improving Macro Indicators 23
Debt Structure….Facilitating Cash Accumulations Group Debt Repayment (Rs. Cr.) 1,800 25% 1,600 1,711 16% 20% 1,400 20% 14% 1,368 1,200 12% 15% 1,000 10% 1,250 800 10% 600 997 875 6% 5% 5% 4% 4% 4% 400 5% 497 448 367 200 448 365 334 - 0% FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 - FY33 Repayments (Rs.In Crores) Repayment (%) Optimum leverage….Long maturity with >61% repayment in last 6 years…. Cost below 9.6% & floating…. Distinct advantage for any equity holder! 24
Setting Benchmarks 25
Summarizing….. Asset Sweating 26
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