JK Cement Corporate Presentation 0602

7/28/2019 JK Cement Corporate Presentation 0602

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FEBRUARY 2013



Strictly Private & Confidential S t r i c t l y P r i v a t e & C

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Disclaimer

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness

or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current

after the date of this presentation. Certain statements made in this presentation may not be based on historical information or facts and may be "forward looking statements" based on the currently held beliefs and assumptions of the management of J. K. Cement Limited

(‚Company‛ or ‚JKC‛), which are expressed in good faith and in their opinion reasonable, including those relating to the Company’s

general business plans and strategy, its future financial condition and growth prospects and future developments in its industry and its

competitive and regulatory environment.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,

financial condition, performance or achievements of the Company or industry results to differ materially from the results, financial

condition, performance or achievements expressed or implied by such forward-looking statements, including future changes or

developments in the Company’s business, its competitive environment and political, economic, legal and social conditions. Further, past

performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this presentation are

cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these

forward-looking statements to reflect future events or developments.

This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational

needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any

jurisdiction, including the United States. No part of it should form the basis of or be relied upon in connection with any investment decision

or any contract or commitment to purchase or subscribe for any securities. None of our securities may be offered or sold in the UnitedStates, without registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration therefrom.

This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.

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Indian Cement Industry: Sustained Demand Growth

• Expected interest rate cuts in 4QFY13 positivelyimpacting demand from housing, infrastructureand industry segments

• Multiple state/general elections in the next 18months

• The government’s focus on reviving investmentdemand

• Positive outlook on the Rabi crop rubbing off onrural housing demand.

Demand growth - 8% (FY13) & 10% (FY14-FY15)

The Cement industry has witnessed secular growth in consumption with quarterly variation in a year

The momentum will sustain and gather further steam, driven by:

India, the 2nd largest cement producer in the world with total installed capacity of 350 mn tonnes

Source: CMA

Source: Company Estimates




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Expected Slowdown in New Capacity Addition willImprove Utilization of Current Capacity

In the current economic and political scenario, settingup a new Greenfield project has become challengingin view of the following:

• Long arduous process of environmentalapprovals

• Land acquisition

• Complexity of mineral composition in new areas

• Supporting infrastructure of rail connect andwater availability

• Greenfield project cost in current context is $135-$150/ton, depending on the site location

With strong volume growth and decline in pace ofcapacity addition, utilization (%) will improve,having bottomed out in 2H CY11

The average utilization will be 80% going ahead

• Most regions will operate at 90%+ utilizationexcept Andhra Pradesh, which has capacityoverhang

4

Capacity Utilization to improve from FY13 onwards





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Prices will Continue to Remain Robust Resulting inImproved Profitability

An annual increase of INR 20-25 / bag is expected,

considering:

• Improvement in demand growth

• Pass-on of cost-push

• Increase in capital costs

• Slowing capacity addition

The rising costs of power, fuel and freight are likely to

stabilize, although at slightly elevated levels

50% of India’s installed capacity has come up in

last 5 years

• This relatively new capacity requires an

EBITDA/ton of Rs.1,000 – 1,100 to justify

equity returns

At the current Replacement Cost and Variable

cost levels, an increase of Rs.20-25/bag is

necessitated to earn new capacities 15% RoCE

5

A significant improvement is seen in EBITDA/ton

from the trough levels of ~INR525/ton in 2HCY10.

The EBITDA/ton is likely to be ~INR1034/ton in

FY13 and INR 1,184/ton in FY14 (v/sFY12 average of

INR 850/ton).





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Company Background

J. K. Cement Ltd. (‚JKCL‛ or ‚Company‛) is part of the $3 billion conglomerate,

JK Organisation. The company is promoted by Dr. Gaur Hari Singhania & Mr.

Yadupati Singhania and entered cement business in 1975

2nd

largest white cement manufacturer in India with 0.40 MTPA capacity and oneof the leading grey cement producers in North India with over 36 years of

experience.

Highly reputed brand with extensive nation-wide distribution

Integrated Cement manufacturing company with 7.5 MTPA grey cement capacity

• Nimbahera, Mangrol and Gotan (Rajasthan): 4.5 MTPA

• Muddapur (Karnataka): 3 MTPA

• 105.5 MW of Captive power• Proximity and access to large high quality reserves of limestone, sufficient to

operate cement plants for the next 30 years.

Expanding domestic grey cement capacity to 10.5 MTPA and white cement

capacity to 0.60 MTPA and wall putty capacity to 0.60 MTPA by Sept 2014.

• Mangrol (Rajasthan): 1.5 MTPA

• Jhajjar (Haryana): 1.5 MTPA split grinding

• Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty Greenfield Expansion in the Middle East

• Fujairah (UAE): Dual process plant - 0.6 MTPA white cement or 1.0 MTPA

Grey cement

JK Cement’s LT credit rating was recently upgraded to AA- by CARE Ratings

Listed on National Stock Exchange (‚NSE‛) and Bombay Stock Exchange

(‚BSE‛) with a market capitalization of INR 23bn




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Key Highlights

7

Cement Sector on Strong Foundation with Positive Future Outlook

• Sustained demand coupled with slowdown in capacity addition resulting in higher capacity utilization

•Improvement in profitability, backed by higher cement prices and operating margins

Integrated manufacturing facilities at multiple locations

• Plants in North & South India enable the company to serve multiple regions

• 105 MW of captive power and large limestone reserves at close proximity, sufficient for the next 30 years

White cement business cash cow with strong growth and profitability

• White cement & wall putty segments contribute consistently to profitability and provide healthy margins & stable cash

flows

• White cement capacity to increase from 0.4 mtpa to 0.6 mtpa by Sept ‘14 and augment current market share of 40%.

• Wall putty capacity will increase from 0.3 mtpa to 0.6 mtpa, in phases during next two years

Domestic expansion to consolidate leadership in North and improve operating efficiencies

• Expansion plan to tap new markets, increase market share in North India and derive benefit from VAT incentives forentire production at Mangrol and Haryana

•North based plants operating at 90%+ and newer plants will offer better operating efficiency

• Increase in share from south plant, which serves higher realization markets, will improve margins

Dual process plant in UAE to grow internationally

• Cater to white cement demand in Middle East & North Africa(MENA) and infrastructure development projects in Qatar

• Unit in UAE provides logistical advantage to serve GCC and MENA countries and frees up current export quantity fromIndia for domestic sale




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Corporate Milestones

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May 1975Entered cement business with 0.3 mtpa plant at Nimbahera, becoming one of the first few toenter the cement business

Nov 2004Acquired a cement division from its affiliate through slump sale, on a going concern basis, witha capacity to manufacture 3.55 mtpa of grey cement and 0.3 mtpa of white cement along with 15MW of captive power plant

June 2005The Company got listed on the Bombay Stock Exchange (‚BSE‛)

March 2006

Successfully raised INR 2960 mn through the Follow on Public Offer (‚FPO‛)

Sept 2009Commissioned a 3 mtpa Greenfield plant in south at Muddapur, Karnataka

Oct 2012Foundation laying ceremony for brownfield expansion at Mangrol

Dec 2012Company’s long term credit ratingupgraded from A+ to AA- by CARE Rating.2.8 7.50.8

0.50.5

3.03.0

0.0

2.0

4.0

6.0

8.0

10.0

FY '04 FY '05 FY '07 FY '09 FY '10 FY '15E

Grey Cement Capacity Build-up

2007 Enhanced grey cement capacity by 0.50 mtpa, set up a 20MW coal based power plant and

13.2MW of heat recovery based power plant at Nimbahera and enhanced white cementcapacity by 0.1 mtpa at Gotan, through IPO proceeds

Acquired a 0.1 mtpa white cement unit at Gotan from Nihon Nirmaan and subsequently in2009, converted the unit to produce 0.47 mtpa grey cement

July 2012‚National Award for Excellence in Cost Management – 2011‛

from The Institute of Cost Accountants of India

Nov 2012‚Best Employer Award - 2011‛ from Employer’s Association of RajasthanFoundation laying ceremony for setting up a splitgrinding unit at Jhajjar, Haryana

Nov 2011Foundation laying ceremony at Fujairah to set up dual process plant

10.5




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Existing Plant locations and Market Reach

Cement Plant

Power Plant

Market Reach

Gotan - Nagaur (Rajasthan)

0.47 MTPA# :Grey Cement

0.40 MTPA* :White Cement

0.3 MTPA: Wall Putty

7.5 MW: Thermal Power Plant

Nimbahera – Chittorgarh (Rajasthan)

3.2 MTPA : Grey Cement

20 MW:Thermal Power Plant

13 MW: Waste Heat Recovery

15 MW (Bamania): Thermal Plant

Mangrol - Chittorgarh (Rajasthan)

0.75 MTPA - Grey Cement

Muddapur - Bagalkot (Karnataka)

3 MTPA: Grey Cement

50 MW: Thermal Power Plant

Pan-India marketreach in white

cement & presencein 13 states for greycement. 105.5MW ofcaptive power and

abundant limestonereserves

# The grey cement capacity is interchangeable with white cement* The white cement capacity is being expanded to 0.60 MTPA




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Strengths

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• Over 100 MW power generationthrough coal-based & waste heatrecovery plants

• Total power requirement met atlower cost through captivegeneration

• JK Cement has access to largereserves of high-quality limestone,adjacent to the manufacturingfacility, estimated to suffice for 30years at current productioncapacity

• Superior product mix as one ofonly 2 producers of white cementin India.

• White cement & wall puttysegment contribute ~25% of topline, providing stability in cashflows and superior margins

• Plants in Rajasthan & Karnatakagives wider market reach coveringNorth, West & Southern regions

• JK’s white cement & wall puttyare marketed and sold across thecountry

Multi-Region

Presence

SuperiorProduct

Mix

CaptivePower

AbundantLimestoneReserves




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Established Brands

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Ordinary Portland Cement (OPC) is sold underthe J.K. Cement brand name, Sarvashaktiman

Grey Cement

Portland Pozzolana Cement (PPC) and PortlandSlag Cement (PSC) variants are sold under the

J.K. Super Cement brand name

White Cement

J.K. White Cement is marketed and distributedacross the country

Value Added Products

White cement based Wall Putty and Water ProofingCompound




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Superior Product Mix on account of White Cement

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Growth Drivers

White cement growing at 10%annually and expected to increase onaccount of:

• Increase in per-capita consumption

• Demand from wall putty,registering 30% annual growth

• Increase in demand for Housingsector

JK White Cement

Current market share: 40%

Pan-India reach withestablished brand

White cement contributes ~25%to revenue & ~30% toprofitability

Sufficient to service interestliability & tax payout of theentire company

White cement provides J.K. Cement with superior product mix and unique position to leverageon high-growth, superior margin segment

White Cement Industry in India

Installed Capacity: 1.0 mtpa

Only 2 producers – UltraTech

Cement & JK Cement

Domestic Sales: 0.9 mtpa

Export Quantity: 0.1 mtpa

Key Export Markets: South-Asia,

Middle East & Africa

Entry of new players remote as:

Requirement of Special quality

limestone

High investment costs

Problems in mine allocation

Price Realization (INR/ton) – Grey vs White*

* White cement price including wall putty




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Advantageous Revenue & Market Mix

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86% 82% 81% 79% 78%

14% 18% 19% 21% 22%

0%

20%

40%

60%

80%

100%

120%

FY '08 FY '09 FY '10 FY '11 FY '12

White Cement (Inc Putty) Grey Cement

Increasing share of White Cement in Revenues

OPC,

39%

PPC, 59%

PSC, 2%

Rajasthan

19%

Haryana

18%

Maharashtra

15%

Karnataka

12%

Westen U.P

12%

MP

8%

Delhi

6%

Punjab

6%Others

4%

Product Mix – Grey Cement (FY12)

Market Mix evenly distributed (FY12)Rising share from West & South to improve Realization

49.4 45.1

14.2 17.8

16.6 19.4

19.7 17.7

0

20

40

60

80

100

FY12 1HFY13

North South West Central




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Consolidateposition in

white cement

New

DomesticMarkets

BrandVisibility

EnergyEfficiency

InternationalOpportunities

Strategy

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STRATEGY

Poised to be among top 5 white cementproducers globally

Increasing white cement and wall putty capacity

to sustain present share of revenue from thisbusiness

All plants enjoy proximity toraw material & growth markets

Brown field expansionSplit grinding in Haryana forlogistical advantage in NationalCapital Region

A leading brand in North for Grey Cement.JK White and JK Wall Putty are marketedacross the country

Enhance visibility further through print &online media and consumer promotions

Captive power generation to provide longterm sustained source of low cost power atfixed rate

Use of waster heat recovery to reduceenvironmental impact

Dual process plant in UAEto cater to growing marketsof Middle East & Africa

Infrastructure developmentdemand in Qatar for soccerworld cup




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Expansion Plan

Domestic – Rajasthan & Haryana Fujairah, UAE

Nature Brownfield

Greenfield- In a subsidiary, held 90% by JK Cement

along with Govt. of UAE (10%)

Capacity3.0 mtpa, with 1.5 mtpa grinding in Mangrol & 1.5 mtpasplit grinding at Jhajjar, Haryana

Dual process cement plant capable of producing 0.6

mtpa white cement or 0.9 mtpa grey cement

Commissioning Haryana: June ’14

Mangrol: Sep ’14 Mar ‘14

Features Abundant land

Captive thermal plant of 25 MW and 9 MW WHR

Railway siding at both locations

Connectivity to road & port

Quality limestone reserves

Flexibility to switch between white & grey cement

Capital Outley &Funding Mix

Total project cost: Rs. 1734 Cr.

Debt: Rs.1200 Cr.

Equity Contribution: Rs. 534 Cr.

Total project cost: Rs. 765 Cr.

Debt: Rs. 510 Cr.

Equity Contribution: Rs. 255 Cr

Tied-up

Proposal moved to banks and in the process of tie-up.

Company also has sufficient internal resources for

equity financing

Financial closure achieved for debt portion. Loan of

Rs.150 Cr. for promoter contribution and Rs.95 Cr. of

own resources remitted

Project Status

Entire land acquired at both locations

Mining lease allotted for additional limestone mine

Civil work has commenced

Orders placed for equipments with renowned vendors

Civil & mechanical work progressing on schedule. 60% of the RCC work completed till date

Erection of equipment has commenced

Target Market

Haryana unit provides logistical advantage to serve the

National Capital Region and helps consolidate JK’s

leadership position in the North.

Cater to Middle East and North African white cement

demand and infrastructure development projects in

Qatar for soccer world cup

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Past consolidated financials

Income Statement Highlights

INR mn FY '10 FY '11 FY '12 H1FY13

Operating Income 18,268 20,943 25,468 14,483

Other Income 193 299 469 287

Total Income 18,461 21,243 25,936 14,770

Total Operating Expenses 13,891 18,180 20,329 11,623

EBIDTA (B’fore Excep. Items) 4,570 3,063 5,608 3,147

Interest 616 1,185 1,443 665

Depreciation 855 1,128 1,256 633

Exceptional Item - (72) 78 -

PBT 3,098 823 2,830 1,850

Provisions 853 196 1,085 620

PAT 2,246 626 1,746 1,230

Balance Sheet Highlights

INR mn FY '10 FY '11 FY '12 H1FY13

Equity Share Capital 699 699 699 699

Reserves & Surplus 12,786 13,250 1,4522 15,762

Networth 13,486 13,949 15,221 16,461

Long Term Loans 10,138 10,584 9,965 9,455

Total Borrowings 10,737 11,183 10,808 10,618

Deferred Tax Liability (net) 1,858 2,109 2,291 2,436

Other Liab & Provisions 3,579 6,746 7,440 8,402

Net Fixed Assets (Incl CWIP) 22,822 23,996 24,071 23,997

Investments 48 42 92 1,483

Cash & Cash Equivalents 1,318 3,215 4,332 3,445

Other Assets 5,473 6,734 7,264 8,993

Note: H1FY13 numbers are on standalone basis.




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Latest Quarter Performance

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Particulars Q3 FY13 Q2 FY13 Change(%)

Q-o-Q

Q3 FY13 Q3 FY12 Change(%)

Y-o-Y

9M 9M Change(%)

Y-o-Y

FY 12

INR millionDec 31,

2012Sept 30,

2012Dec 31,

2012Dec 31,

2011Dec 31,

2012Dec 31,

2011Mar 31,

2012

Total OperatingIncome (Net)

6880.8 7148.7 - 3.7% 6880.8 6158.9 11.7% 21404.1 17373.8 23.2% 25467.8

EBITDA 1348.8 1316.8 2.4% 1348.8 1204.0 12.0% 4249.6 3138.8 35.4% 5166.3

PBT 775.6 830.1 - 6.6% 775.6 645.7 20.1% 2625.2 1437.1 82.7% 2857.8

PAT 543.8 540.9 0.5% 543.8 435.2 25.0% 1773.5 969.8 82.9% 1773.3

EPS – Basic & Diluted 7.78 7.74 7.78 6.22 25.36 13.87 25.36

Raw Material Cost % 15.3% 13.1% 15.3% 12.1% 13.6% 12.4% 12.2%

Power & Fuel Cost % 24.8% 24.4% 24.8% 25.3% 25.1% 26.5% 25.7%

Freight Costs % 20.5% 20.4% 20.5% 19.3% 20.0% 19.5% 19.1%

Others % 19.8% 23.7% 19.8% 23.8% 21.5% 23.6% 22.8%

EBITDA % 19.6% 18.4% 19.6% 19.5% 19.8% 18.0% 20.2%

PAT % 7.9% 7.5% 7.9% 7.0% 8.2% 5.5% 6.9%

During 9MFY12, Company’s revenue grew by 23.2% as compare to the corresponding period 9MFY11.

During 9MFY12, Company’s EBIDTA margin improved by 1.8% primarily on account of reduction in power &fuel cost and other expenses.




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Management

Board Of Directors

Gaur Hari Singhania Chairman

Yadupati Singhania Managing Director and CEO

K.B. Agarwal Independent Director

J. P. Bajpai Independent Director

Suparas Bhandari Independent Director

J. N. Godbole Independent Director

Achintya Karati Independent Director

K. N. Khandelwal Independent Director

Raj Kumar Lohia Independent Director

Ashok Sharma Independent Director

Key Management Experience

Raghavpat

Singhania Special Executive 5 years

MadhavkrishnaSinghania

Special Executive 2 years

A K Saraogi President (Corp. Affairs) & CFO 25 years

M. P. Rawal President (Tech. & Mgmt Service) 37 years

D Ravisankar President (Projects) 35 years

R. C. Shukla President (Mktng, Grey Cement) 28 years

Mohan Sharma Head (Mktng, White Cement) 24 years

KaustubhDadhich

Head (Mktng, South-West) 25 years

B. K. Arora President (J.K. White Cement Works) 34 years

K. K. Jalori Plant Head, Nimbahera 32 years

A. K. Jain Plant Head, Muddapur 26 years




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Awards & Recognition

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Best Employer Award, 2011Employers’ Association of Rajasthan

9th National Award for Excellence in Cost Management, 2011(The Institute of Cost Accountants of India)

Commemorative Stamp inhonor of the Founding Father

Productivity Excellence Award 2009-10(Rajasthan State Productivity Council)

Over All Performance Award byIndian Bureau of Mines




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Thank You

Documents

JK Cement Corporate Presentation 0602