Investor Presentation

February 2016

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

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

Listed on BSE and NSE

KKR

Corporate Office
Delhi

Dalmia Bharat Ltd. (DBL)

25 MnT (Cement), 180.5 MW (CPP)

8.5%

100%
Dalmia Cement Bharat Ltd DCBL

100%
26%
Dalmia Power Ltd.
74%

75%
OCL India Ltd. OCL
100%
100%

76%

DCBPVL (99 MW)

DCBL
OCL
Calcom
Adhunik
DCEL
Head Office

* Dalmia Cement East Limited

Bokaro
* Adhunik Cement Ltd. Adhunik
* Calcom Cement India Ltd.
Calcom

Listed entities
*

Acquired entities

Capacity over last 10 Years

2005

2010

2015

Installed Capacity: 1.2 MnT

Installed Capacity: 9 MnT

Installed Capacity: 25 MnT

Lanka
Bokaro
Rajgangpur

Meghalaya
Medinipur

Kapilas

Kadapa
Belgaum
Dalmiapuram

#1 plants in #1 states

Ariyalur

Dalmiapuram

#5 plants in #3 states

Ariyalur

Kadapa
Dalmiapuram

#11 plants in #8 states

5

Our Markets
2005

2010

2015

11%

4%

7%

% Represents our Market share

Our Growth has been with a judicious mix of

organic and inorganic expansions

Organic Expansions
1

Grown organically in Southern Region from 1 state to 3 states

4
5

Organic growth from 1.2 MnT in 2006 to more than 11 MnT in 2015

Serves the entire South region including Maharashtra

Set up the state of art plants at replacement costs less than industry average

Enjoys regional leadership position

Inorganic expansion
1

Geographical diversification in growing markets

4
5

Strengthening market share in existing markets

Strategic fit to business model

Reduced lead distance

Replicating operational efficiencies initiatives

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

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

12

Current Scenario

Third largest player in India with regional leadership position

Current
Scenario

Diversified locational advantages

Moving to Sustainable Business Model

Premium Brand Positioning

Efficient Deployment of Capital

13

Leadership Position by Capacity

National
66.0
61.4

25.0

AV Birla

H+L

Dalmia

24.0

Shree

22.8

B K Birla

22.2

Jaypee

15.9

14.7

India
Cement

Ramco

14.2

13.3

Chettinad Birla Corp.

14

Diversified Locational Advantages

Proximity to Input Sources

Logistics savings vis-a-vis competitors in key markets

South

East

North East
38%

40%
30%
7%

8%

6%

Orissa

West Bengal

5%

10%

Bongaigan
TPP 2.5 MW

15%

14%

Kerala

20%

4%

BCW
Rajgangpur

Meghalaya

Assam

Meghalaya

Jharkhand

Tamil Nadu

Lanka

Bokaro

Karnataka

0%

Lead Distance 300 kms

Kapilas Road

Cement Demand Growth

Tata Steel
Kalinganagar
13%

14%

Belgaum

Kadapa

MRPL

Dalmiapuram

Plant sites
Input sources
Potential Sources

Ariyalur

12%
10%

NE
12%

East
41%

8%
South
47%

6%

5%

6%
4%

2%

2%
0%

Sales Mix FY15

FY14

FY15

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)

967

941

Power Consumed/T (Kwh)

1027

75

74

908
781

75

869
740

726

72

71

666

69

FY14

Q1'15 Q2'15 Q3'15 Q4'15

FY15

FY14

Q1'16 Q2'16 Q3'16

Q1'15 Q2'15 Q3'15 Q4'15

69

FY15

70
68

Q1'16 Q2'16 Q3'16

Variable Cost (Rs//T)

1647

1618

1658

1565

1520

1549

Commissioning of new
clinker unit in North
East would result in
further improving
efficiencies in FY16

1391

1410

1333

Continuous
improvement in
operating efficiencies

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

Improved
Market
Share

South

South

North East

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
USD 100 / T

110
120

2012

100

OCL
USD 74/ T

100
80

2012
Jaypee Bokaro
USD 90/ T

60
40

2014

Adhunik
USD 112/ T

20
0

2015

Present Replacement
Cost

Calcom
USD 126 / Ton

2015

Kadapa/Ariyalur
USD 85 / T

Organic

Acquisition

Our New Greenfield

Present Replacement Cost For setting up 1 MnT cement plant

Acquisition Average Cost for acquired units

(Adhunik/Calcom/Bokaro/OCL)

Greenfield Belgaum Cost

Inorganic

19

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

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
MnT

FY14

Sales in
MnT

FY15
21

Aggregated Balance Sheet

(Rs. Cr.)

Particulars
Equity Funds
Debt
Term Loan
Working Capital
Deferred Tax
TOTAL
Fixed Assets
Non Current Investments
Cash & Equivalents
Net Working Capital
TOTAL

As on
30-Sep-15
3,925
8,260
7,535
725
493
12,678
9,838
104
2,145
591
12,678

As on
31-Mar-15
3,840
8,487
7,805
682
401
12,728
9,702
108
2,112
806
12,728

22

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

23

Debt Structure.Facilitating Cash Accumulations

Group Debt Repayment (Rs. Cr.)

1,800

25%

1,600

1,711

16%

1,400

1,368

1,200

12%

1,000

10%

15%
10%

600
200

20%

1,250

800
400

20%

14%

4%

4%

365

334

FY16

FY17

5%

997

875

448

6%

5%

497

448

367

FY23

FY24

FY25

4%

5%

0%

FY18

FY19

FY20

FY21

Repayments (Rs.In Crores)

FY22

FY26 - FY33

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

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

27

Indian Cement Industry Overview

Second largest cement market in the world

Sustained growth of 7% in last five years
Low per capita consumption of ~200 kgs compared to world average of ~400 kgs

Significant consolidation lead to 49% capacity under control of top 5 players

Regional play due to high freight costs
Primarily bagged retail sales driven (65 %)
Location and branding plays a critical role
FY2015 : All India Capacity Distribution

FY2009 : All India Capacity Distribution

Other Large &
Mid-Cap Players
9%

Dalmia
3%

Top 5 Players
42%

Small Players
17%

Grasim
9%
Ultratech
Ambuja
10%
8%

Ultratech
15%

Other Large &

Mid-Cap Players
37%

ACC
10%

Small Players
46%

Top 5 Players
47%
Holcim
13%

Jaypee
7%
B K Birla
5%
Dalmia
6%

India Cements
5%

DCBL #3 Pan-India Player

80% capacity under control of top 20 players

28

Housing Sector Demand Drivers

Urbanisation: India vs. other
developing nations (2011)

100

100%
78%

80%
60%

51%

31.2%

34%

40

61.8%

68.8%

2030

2011

2001

1991

Brazil

Mexico

0
Indonesia

0%
China

20

38.2%

35
23

Thailand

2026E

53

60

51%

20%
India

2011

80

1971

31%

India Population (in Crore)

87

85%

1951

40%

No. of million plus cities in India

121.1 Crore

139.9 Crore

Sharp rise in nuclear families; Households

with size less than 5 persons has increased
to 74% in 2011 from 66% in 2001

All India Housing Demand in 2022

All India Housing Shortage

West (inc.
Maha & Goa),
14%

>45% shortage in
South, East & NE

Census of India

North
40%

South
20%

32%
46%
52%
68%

North East,
4%

East
23%

Urban

Rural

29

Infrastructure Expected to Fuel Growth

Roads

Railways

Hydel Power

20,000 km

5000 km

10,330 MW

20 MnT

14 MnT

28 MnT

Ports

354 MnT
Capacity
35 MnT

Irrigation
Projects

100 MnT

Incremental Demand of 200 MnT by 2020

Proposed Capital Expenditure of USD 1 Trillion by 2020

30

Infrastructure Sector Demand Drivers

Dedicated Freight Corridor

1483 Km

Delhi

Kolkata
Mumbai

1839 Km

1000 Km

Chennai

Metro Rail
Total Investment (US$ BN)

Connecting all
Metro cities
Huge investment in
the periphery of the
corridor such as
Industrial Parks
and Townships and
SEZs
The Largest
Infrastructure
Project in India

42
Delhi
(Phase III)

16.7

Current
Kolkata
(Phase II)

Mumbai
(Phase II)

2020E

Current Length (kms)

2,500

Chennai
(Phase II)

Bengaluru

800

300
Thiruvananthapuram

Current

2020E

2030E

260 Km
Under construction

Mono Rail Projects

Advanced stage of completion

Roads
7,000

kms

6,000

6000

Ports

5000

5,000

3,000

3500

4,000
2500

2,000

1,000
0
FY15E

FY16E

FY17E

FY18E

Work yet to start

[Currently, 2000 km
of roads laid
annually]
Acceleration
expected to 30004000 kms annually
Greater Government
focus seen for
Concrete roads,
going forward

2,500
2,000
943

1,500
1,000
500

703

545

Capacity

Traffic

100% FDI: Automatic

route for port
development projects

87 new port projects

sanctioned in the last
4 years; Investment
of INR 430 billion

SEZs to be
developed in close
proximity to ports

815

560
352

1,229

1,457

Capacity

Traffic

FY12

FY17E

Major Ports

Non Major Ports

31

Slower Capacity Addition to Increase Utilisations

Planning to Execution

2.5 years
4 years

Execution

Inception

Brand visibility
Volatile pricing scenario

Conception

Financial closure

Raw material availability

Talent procurement

Logistics Management

Environmental clearances

Ordering

Forest clearances

Construction

Mining lease
Land acquisition

The replacement costs are up ~15% (CAGR)-currently at ~$ 140/T

32

.... And Stabilization of Cement Prices Expected

Cement Prices (Rs./Bag)

333
322
317

153

FY05

06

07

08

09

East (incl North East)

10

11
South

12

13

14

FY15

All India

33

Demand Supply Gap Narrowing

500

480

68%

71%

77%

74%

CAGR

Consumption

Capacity

FY00 - FY15 (15 Yr)

7%

9%

FY05 - FY15 (10 Yr)

8%

10%

FY10 - FY15 (05 Yr)

6%

7%

FY15 FY20E (05 Yr)

8%

3%

70%

474

60%

444

440

Narrowing demand-supply gap

90%
80%

459

460

420

80%

84%
489

50%

429
414

40%
30%

400

20%
380

10%

360

0%
FY15

FY16
FY17
Supply (MnT)

FY18
FY19
FY20
Capacity Utilization

300

21%

15 Year demand CAGR 7%

10 Year demand CAGR 8%

13%

250

242

15%

200

10%

150

8%

9%

80

92

90

99

108

10%

114

123

136

149

261

268

16%

11%

10%

8%
6%

100
50

10%

257

164

177

224
197

11%

8%
6%

8%

6%
3%
1%
1%

-2%

-4%
FY 99

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

Demand (MnT)

FY 08

FY 09

Growth

FY 10

FY11

FY12

FY13

FY 14

FY 15

34

Our Regions

35

First phase of Smart Cities

Guwahati

Bhubaneswar
Pune
Sholapur

Vishakhapatnam
Kakinada

Belagavi

Devangere
Chennai

Kochi

Coimbatore

11 out of 20 are in our served markets

36

South Narrowing Demand Supply Gap

Smart Cities 35 smart cities to be developed in
Tamilnadu (6), Karnataka (7), Kerala (7), Telangana (5), AP
(4) and Maharashtra (6).

Upcoming Projects
JNPT fourth container
terminal
Nagpur Metro & Intl. Airport

Maharashtra

Metro Line 3
Mumbai

About $ 75 bn will be spent.

First phase to be completed by June 2018.

Navi Mumbai Intl. Airport

5

Pune Metro &

Intl. Airport

JNPT fourth container terminal Port of Singapore

authority (PSA) signed Rs.8000 Cr. Agreement for
development of JNPT fourth container terminal at Navi
Mumbai.

Bidar

Telangana

Goa

Karnataka

Bangalore Metro

Amaravathi i.e. New Capital for AP Situated near

Vijayawada-Guntur region.

Transharbour Link Distance of 35.6-km costing $1.3 bn

Seemandhra
Hyderabad Metro

Bellary - 6 MnT

Amaravathi
Hasan

(Proposed
Capital)

Capital Investment in next 5 yrs.

Kerala
6

Kochi Metro

Particulars

Tamil Nadu

International Airports
No. of Smart Cities in a state

Domestic Airport

Capacity Steel Plant

Ruled by NDA Govt

Elections in 2016

Metro Projects

Capacity

Ports
19 no.
Power
19160 MW
Metro Projects
6 no.
Airports
17(1)
Steel
6 Mnt
Hydel
460 MW
Total

Cost
($ bn)
5.0
18.3
11.7
5.0
5.0
0.3
45.3

Expected
Cement Demand
(in MnT)
21.7
14.9
7.5
4.2
0.8
0.7
49.8

Note
1) Airports Low cost (13), International (3), Domestic (1).

37

East Expected to Continue Growing

Coal Allocations Total funds to be realized from
auctioning of 204 coal mines will be around $ 167 bn
out of which around 85% will be in east region.

Upcoming Projects

Railway Budget $ 419 mn for Orissa i.e. 77% higher

then last year.
Ludhiana

Centre to provide Rs.1 lacs crore for Bihar ahead of

polls.

Bihar
Muzzaffarpur

Chapra
Sasaram
3

Smart Cities 18 Smart cities to be developed in WB

(5), Bihar (5), Orissa (5) and Jharkhand (3).

Hazaribag

Jharkhand

Jindal -Patratu (6 Mnt)

West Bengal

Shahdol
Bokaro
Chhattisgarh

Visa Steel Raigarh

(2.5 Mnt)
Jindal Steel - Angul (12.5 Mnt)

Jindal Steel - Raipur

(7 Mnt)

Kolkata

Dhanbad
Kendujhar

East Freight Corridor Connectivity b/w Ludhiana

and Kolkata, spread over distance of 1839 Kms, out of
which 631 kms is in east region.
AIIMS in Bihar

Dharma Port (10,000 Cr.)

Orissa

POSCO Paradip (8 Mnt)

Capital Investment in next 5 yrs.

Brahmpur

Expected
Cement Demand
(in MnT)

Power

32115 MW

31.7

24.9

Ports

7 no.

5.0

20.0

Steel

36 Mnt

30.0

5.1

Hydel

160 MW

0.3

0.5

9 no.

0.8

0.6

Particulars

No. of Smart Cities in a state

Low Cost Airports

Steel Plants - Capacity in million tons.

Ruled by NDA Govt

Elections in 2016

Capacity

Cost
($ bn)

East Freight Corridor

Airports

Total
67.8
51.1
The above table excludes investment on metros, railways & East
freight corridor)
38

North East Huge Potential

Rs 3000 Cr and Rs 1000 Cr specifically allocated for roads
and railways respectively.

Upcoming Projects

Smart Cities - 10 Smart Cities to be developed in Assam

(5), Sikkim (3) and Manipur (2).
Along

Arunachal
Pradesh
Bomdila

Tezu

Arunachal Pradesh
2904 MW (5) ,
18844 Cr

Sikkim
2622 MW (10),
20271 Cr
Tezpur
Assam
Guwahati Metro
Silchar

Indian institute of Science Education and Research (IISER)

in Nagaland.
Centre for Film Production, Animation and Gaming in
Arunachal Pradesh.

Jorhat.

3
5

Upcoming Guwahati Metro Spread over distance of 196

Km, Estimated cost Rs.1800 Cr.

AIIMS in Assam

Nagaland

Capital Investment in next 5 yrs.

Meghalaya

40 MW (1),
461 Cr

Manipur
2

Particulars

Capacity

Hydel

5626 MW

6.7

12.7

5.0

10.8

Mizoram

60 MW (1),
914 Cr

Railways
Roads

6418 Kms

5.0

7.00

Power

951 MW

1.0

0.7

6 no.

0.5

0.4

18.2

31.6

Airports
Total
No. of Smart Cities in a state
Capacity, no. and cost Hydel Projects
Elections in 2015/16

Expected
Cement Demand
(in MnT)

Cost
($ bn)

Low Cost Airports

Metro Project

Due to upcoming capital investment in North East

in next 5 yrs., there will be incremental cement
demand of around 5 Mnt every year.
39

Lowest per capita cement consumption in East..

Average All India per capita
consumption is 208 kgs

198 kgs
70

525

297
296
391
234

138

133
95

183

295

133
234

295 Kgs

133 Kgs

153

191

283

142 Kgs
High Consumption > 250

208

Medium Consumption (200 to 250)

296

Average Consumption (150 to 200)

283

Lower Consumption < 150

280

268 Kgs
40

Contents

Journey over last decade

Current Scenario

Financial Performance

What Next

Cement Industry & Our Region

Improving Macro Indicators

41

Improving Macro Fundamentals Coupled with

Stable
Government

India GDP Growth

Stable government with large majority

Focused on governance, development, investments

7.9%

8.0%

7.6%

Fiscal Deficit

Current
Account
Deficit

Indias GDP
Growth

3.99% of GDP in FY15 (4.5% in FY14)

7.3%

Target to reach 3.0% of GDP in FY18

6.9%

Down to 0.2% of GDP (quarter ended March 2015) from the

highs of 1.6% of GDP (quarter ended December 2014).

FY14

FY15

FY16E

FY17E

FY18E

Source: World Bank

Estimate for FY16: 7.9%

India will be the worlds fastest growing economy by IMF

Index for Industrial Production

8.0%
6.0%

5.6%

5.0%

4.0% 2.5%

CPI Inflation

Down to 5.17% for March 2015 from 8.25% in March 2014

2.0%
0.0%
-2.0%

Interest Rates
(Repo Rates)

Down ward trend since start of CY2015

Reduced to 7.25% (June 2015) from 8.0% (January 2014)

-2.7%
-4.0%
Jan-13 Jul-13 Jan-14 Jul-14 Feb-15
Source: Bloomberg

42

Structural Reforms
Make in India
/ Smart Cities

S&P BSE Sensex

Focus on employment generation through Make in India

Encourage investments in manufacturing sector

100 smart cities planned to accommodate increasing urbanisation

27,957
26,630

26,155

Reduction in corporate tax rate from 30% to 25% in 4 years

Taxation

Deferment of GAAR

22,386

Implementation of GST by April 2016

FDI Limits

Increased limits in insurance, defence, railways and liberalisation

of FDI conditions in real estate
Merger of FDI and FII limits

18,865

19,380

Mar'13 Sep'13 Mar'14 Sep'14 Mar'15 Sep'15

Faster clearances to projects

Impetus to
Investments

Coal block auctions completed and gas price subsidy policy

announced for power sector

CNX Nifty 100

Land acquisition ordinances promulgated

Subsidies

8,520
7,906

Rationalised subsidy policies being worked out with direct transfer

of benefits

7,949

7,181

Diesel prices deregulated

Ease of doing business with reduced approvals

Others

5,683 5,622

Visa on arrival country list increase to 150 from 43 to encourage

tourism
Fiscal federalism with higher allocation to states

Mar'13 Sep'13 Mar'14 Sep'14 Mar'15 Sep'15

Source: BSE, NSE

43

thankyou

44