Ambuja Cement

November 2005

Ambuja Cement

Indian Economy
On a Consistent growth path Impetus on Service Sector Changing Demography - A Growth Driver Moved from being an Agrarian Economy to Services & Manufacturing Economy

Ambuja Cement

Agrarian to a Service Economy

(%)

GDP Constituent 1997 - 98 2005 - 06 Agriculture Manufacturing Services

40 35 25

22 27 51

Ambuja Cement

Infrastructure & Housing

New Drivers of Economic Growth

Ambuja Cement

Cement - Proxy to Growth

Ambuja Cement

Future Cement Scenario

Indian economy expected to grow at - 7 to 8% Infrastructure development at an inflection point Housing to be the main driver of cement growth Cement Growth expected to be over 9%

After a long gap demand would exceed supply

Ambuja Cement

Cement Demand
(Apr - Nov)

Mn. Tonnes Growth (%)

2005 - 06*
2004 - 05

89.7
81.8

10
8

* Estimated for November 2005

Ambuja Cement

Expected Cement Demand

Mn. Tonnes

2005-06 2006-07 2007-08

Base Domestic Demand Growth - 8% 123 10 133 10 143 -

- 9%
Expected Domestic Demand Exports

133 4

143 4

13
156 4

Expected Total Cement Demand

137

147

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Ambuja Cement

Cement Production Capability

Mn. Tonnes

Base Clinker Production Increased Production due to improvements/Expansions Clinker Export Clinker for Cement Grinding Blending Ratio Cement Production

2005-06 2006-07 2007-08 109 113 118

4 113 6 107 1.28 137 5 118 6 112 1.28 143 6 124 6 118 1.28 151

Ambuja Cement

Demand set to outstrip Supply

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Ambuja Cement

Result A Structural change in Pricing Scenario.

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Ambuja Cement

. As
No Major Cement Capacity expected in near future

Reasonably Consolidated Industry

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Ambuja Cement

Fragmentation To Consolidation

Top 5 Groups 26%

Top 5 Groups 65%

Others 74%

Others 35%

1995
13

2005
Ambuja Cement

Average Cement Prices

- Domestic -

US $/ Per Tonne

US $

% Change

2005 - 06
2004 - 05

45
40

13
8

Cement Prices Net of Duties, Taxes and Freight

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Ambuja Cement

- International -

US $/ Per Tonne (FOB)

2005 - 06 Cement Clinker

(FOB) - Free on Board

2004 - 05 37 28

45 35

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Ambuja Cement

Ambuja Cement
Punjab HP

1986 - 0.7 Mn. Tonnes Today - 14 Mn. Tonnes

Predominant Player in West & North India

Rajasthan Gujarat Maharashtra

Cement factories Sea terminals

Mn. tonnes

Western India Northern India Total Capacity

8.0 6.0 14.0

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Ambuja Cement

Growth With A Sustainable Business Model

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Ambuja Cement

Our Business Model

Owned Infrastructure Logistic Management Premium Brand - Only selling in Retail Markets Environment Friendly operations Social Corporate Citizen Low Cost Cement Producer
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Ambuja Cement

Infrastructure & Logistic Management

200 MW of Captive Power Plants 100% captive power - Reliable & cheap generation Large port handling Export of Cement & Import of Coal

3 Cement receiving terminals

7 Owned Ships for transporting Cement by Sea 35% Cement transport by sea - Cheapest Mode Largest Exporter of Cement - 15% of Production
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Ambuja Cement

Premium Brand
India - A bagged market

Individual home builder - Key driver of demand

Our focus : Best quality cement Good packaging Strong distribution network Customer service
Ambuja Cement - Most preferred brand - Fetching higher realisation
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Ambuja Cement

Environment Friendly Operations

Use of surface miners - Blast free mining

Restoration of mines - green spots & water reservoirs

Use of bio-gas, agro waste as alternate fuels

Rose Garden & Cement Plants - Co-exist

Many International Awards in Environment Management Global Standards for Environmental Measures ISO 14001 for Environment Management System
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Ambuja Cement

Corporate Social Responsibility

Raising Environment Awareness Building up of check dams, salinity ingress checks Water Harvesting & Ecology Pits - Visit of Siberian Cranes Programs for rural healthcare and women development Asian CSR Awards 2005 for Environmental Excellence among 94 companies participating from 16 countries

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Ambuja Cement

Direct Cost
Rs./ tonne

FY 2005
Power Fuel 202 298

Raw material
Consumables Direct cost US $
USD/INR = Rs. 45

172
49 721 16.0

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Ambuja Cement

Operating Margin

F.Y

Operating Margin (%)

2005 2004 2003

30 29 29

Highest Operating Margins in the Indian Cement Industry

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Ambuja Cement

Gujarat Ambuja Cements Limited

(Consolidated Income Statement)
Rs. Mn.

Sales Operating Profit Interest Depreciation Profit Before Tax Prior Period Adjs (credit) Tax Profit After Tax Minority Interest Net Profit Operating Margin

FY2005 30855 9278 902 2195 6181 831 5350 169 5181 30 %
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FY 2004 Growth (%) 24150 28 7098 31 900 2082 6 4116 50 425 688 20 3853 39 229 (26) 3624 43 29 % -Ambuja Cement

Gujarat Ambuja Cements Limited

(Consolidated Balance Sheet)
Rs. Mn.

FY2005

FY2004 17314 6375 3209 11845 38743 44434 16005 28429 9637 677 38743
Ambuja Cement

Sources of Funds Shareholders Funds Minority Interest Deferred Tax Net Debt Total Application of Funds Gross Fixed Assets Less: Depreciation Net Fixed Assets Investments Net Current Assets Total
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24873 79 3811 8447 37210 39210 14792 24418 10835 1957 37210

Ratios
FY 2005 Interest Cover Operating Margin 9.4 30 % FY 2004 7.5 29 %

Net Debt / EBIDTA

Net Debt / Networth ROCE RONW

1.1
0.37 17 % 21 %

2.2
0.61 12 % 18 %

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Ambuja Cement

Our Score Card

(1987 - 2005)

Parameters Capacity Sales

CAGR (%) 18 29

Net Profit
Networth Return to Shareholders Wtd. Avg. EBIDTA Margin
28

36
30 29 33
Ambuja Cement

Our First Quarter Financials

(June - Sept 2005)
Rs. Mn.

1Q 2006 1Q 2005 Sales 6774 7066 Operating Profit 1714 1894 Other Income 8 234 Interest 220 229 Depreciation 495 607 Share Profit of Associates 339 Profit Before Tax 1346 1292 Tax 265 204 Minority Interest 79 Profit After Tax 1081 1009
The Results are not comparable as ACEL during the current quarter has been considered as an associate as compared to a subsidiary company in the previous quarter.

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Ambuja Cement

Our Shareholders
Current Market Capitalization - Over US$ 2 Bln.

Others 17%

Management 24%

FII's (Incl. GDR) 41%

Domestic Pension & Mutual Funds 18%

One of the most traded shares in India

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Ambuja Cement

Payout Ratio
Rs. Mln.

Year

Equity Capital

PAT

Dividend (%)

Payout Ratio (%) 46 * 47 55

2005 2004 2003

27038 17940 15530

46829 33679 22209

90 80 70

* On Expanded Capital

A Policy of 40 - 60% Payout

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Ambuja Cement

Partnership with Holcim

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Ambuja Cement

Structure
Before Current

GACL
60%

AIG/GIC
40%

GACL
33%

HOLCIM
67%

ACIL

ACIL

ACC 13.8%

ACEL

ACC 34.7%

ACEL

94.6%

97.0%

Due to this Structure GACLs effective shareholding in ACC goes up to 11.5% from 8.3 % without any fresh investments by GACL.
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Ambuja Cement

Salient Features of the Partnership

Holcim Investments in India through ACIL only Access to Holcims best practices in areas such as waste heat recovery, use of alternative fuels, human resources and Information technology Opening of new cement trading opportunities in Middle East and Indian Ocean
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Ambuja Cement

Ambuja Growth Plans

Plan to increase capacity by 3 to 4 mn. tonnes in next 2 - 3 years by way of acquisition, upgradation & brown field expansion. Growth to be funded from free cash flows

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Ambuja Cement

Thank You

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Ambuja Cement