Indian Cement Sector. Vaibhav Agarwal

Transcription

1 Indian Cement Sector A Play on Volume Growth Size of capacity increase to be the benchmark for determining incremental volume share for players Invest in players who have well defined capex plans and growth oriented strategy!!! Current Current Capacity Capacity (mnt), (mnt), LHS LHS Forecasted Forecasted Capacity Capacity (mnt), (mnt), LHS LHS % Increase, Increase, RHS RHS ACC ACC IN IN ACEM ACEM IN IN UTCEM UTCEM IN IN ICEM ICEM IN IN SRCM SRCM IN IN JKCE JKCE IN IN MGC MGC IN IN JKLC JKLC IN IN HEIM HEIM IN IN DBEL DBEL IN IN OSC OSC IN IN 12% 12% 1% 1% 8% 8% 6% 6% 4% 4% 2% 2% % % Elections will sooner or later result in a spurt in demand Industry cannot afford to break the price discipline Current profitability is not sufficient enough for a smooth execution of planned capacities Realistically, utilisations will improve as delays in execution of few capacities are inevitable Industry remains and will remain focused on minimum required EBITDA/tonne Valuations will be largely dependent on volume growth potential of cement manufacturers Average profit margins of Tier I and Other cement manufacturers do not always differ very significantly, though Tier I players command significant and consistent brand premium Capacity additions remains in favor of mid caps, barring aggressive major UltraTech Cement Vaibhav Agarwal

2 Indian Cement Sector Notwithstanding growth; discipline won t be compromised! PhillipCapital (India) Pvt. Ltd. 28 January 213 Demand surprise on the cards, given the election era It is often argued that elections can trigger the demand substantially. To verify this theory, we have analysed the demand trends across various states and regions during the pre election era / election era. The results indicate that this theory is true and on an average, elections can trigger ~15% demand growth. Given the upcoming elections across various states of India, we strongly believe, cement demand can surprise us positively in 4QFY13E and FY14E. Over FY13E 17E, we believe cement demand has the potential to grow by a CAGR of minimum of 7%, even in a worst case scenario. In a best case scenario, demand has a potential to grow at CAGR of +1% over FY13E 17E. Cement pricing to remain strong; realistically utilisations will improve We strongly believe cement prices will remain strong on pan India basis. Going as per the book schedule of capacity additions, utilisations may remain low. However, given the delays / deferrals of new capacities (as cash flows are not strong enough for a smooth execution of all planned additions); realistically we believe utilisations will show signs of improvement hereon. Penalty levied by Competition Commission of India (CCI) on eleven cement manufacturers of the Indian cement industry believing these players are forming a cartel to increase prices is keeping and likely to continue to keep cement manufacturers indifferent towards pricing. In most cases we have factored in a marginal 5% price hike on an annual basis. Weighted average cement realisations have grown at CAGR of 9.6% between FY4 12 as against a cost CAGR of 9.%. Hence, in our opinion a 5% annual price hike is the least we can expect from the industry. Strong cement prices is a necessity for the industry to execute smooth capex. In our thesis we will also evaluate a need for a healthy pricing environment and put forward some strong arguments why we expect pricing to remain favorable. Timely execution of capacity additions will be far lower than actually planned Industry has created 141 mn tonnes p.a. of new capacity over the last five years (Since FY7) and another 135 mn tonnes is in pipeline for the next 3 years. If it goes through on time, effectively industry will be adding ~28mn tonnes of capacity over a 1 year time line. It is to be noted that the said 135 mn tonnes of new capacity addition is the possible and planned additions by the industry. Actual additions are likely to be materially lower than planned additions on account of the current surplus capacity available and lack of sufficient cash flows to support these additions, as per schedule (Discussed in detail in later sections of this report). Voluntary deferrals will also lead to delayed capex. Industry players have now understood the importance of behaving maturely and we will highlight the strong discipline of the industry in various sections of this report. Focused and dedicated cement manufacturers will continue to grow with strong capex while players lacking vision of capacity additions will remain at a clear disadvantage and may ultimately seek an exit. Companies Covered ACC Ltd. CMP Reco Target Price Ambuja Cements CMP Reco Target Price UltraTech Cement CMP Reco Target Price Shree Cement CMP Reco Target Price India Cements CMP Reco Target Price Mangalam Cement CMP Reco Target Price Dalmia Bharat CMP Reco Target Price OCL India CMP Reco Target Price JK Cement CMP Reco Target Price JK Lakshmi Cement CMP Reco Target Price HeidelbergCement India CMP Reco Target Price Report priced as of 25 th January 213 Vaibhav Agarwal ( vagarwal@phillipcapital.in Rs1,331 SELL Rs1,142 Rs199 BUY Rs255 Rs1,918 BUY Rs2,727 Rs4,456 BUY Rs5,46 Rs88 BUY Rs131 Rs155 BUY Rs217 Rs182 BUY Rs294 Rs15 BUY Rs283 Rs331 BUY Rs485 Rs146 BUY Rs211 Rs5 BUY Rs81

3 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Table of Contents Valuation & Operating Matrix... 3 Demand: Positive surprise seems very likely... 4 Overcapacity will remain a long term reality Capacity Additions Industry s Operating Matrix Simple & Weighted Avg Why cement pricing will remain strong?... 2 Absolute Prices V/s. Absolute Volumes High capex makes healthy cement prices a necessity... 3 Cement Prices Vs. Average Capacity Utilisations Regional Section North India South India East India West India Central India Companies Covered ACC Ltd Ambuja Cements UltraTech Cement Shree Cement The India Cements Mangalam Cement Dalmia Bharat OCL India JK Cement JK Lakshmi Cement HeidelbergCement India Note: Please also refer our separate attachment in the on Pictorial Depiction of Plants for better and easy understanding of investors of the cement manufacturing process. 2 of 133

4 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Valuation & Operating Matrix Company CMP Rating Target Price % Upside / EPS, (Rs) P/E, x (Rs) (Rs) Downside on TP FY13E FY14E FY13E FY14E ACC Ltd.* 1,331 Sell 1,142 14% Ambuja Cements Ltd.* 199 Buy % UltraTech Cement Ltd. 1,918 Buy 2,727 42% India Cements Ltd. 88 Buy % Shree Cement Ltd. 4,456 Buy 5,46 13% JK Cement Ltd. 331 Buy % Mangalam Cement Ltd. 155 Buy 217 4% JK Lakshmi Cement Ltd. 146 Buy % HeidelbergCement India Ltd.* 5 Buy 81 61% Dalmia Bharat Enterprises Ltd. 182 Buy % OCL India Limited 15 Buy % Company EV/EBITDA, x EV/Tonne, US$_ Target EV/tonne Discount/Premium to Replacement Cost at Capacity Growth FY13E FY14E FY13E FY14E FY14E US$15/tonne FY13E FY14E FY14E ACC Ltd.* % % Ambuja Cements Ltd.* % % UltraTech Cement Ltd % % India Cements Ltd % % Shree Cement Ltd % % JK Cement Ltd % % Mangalam Cement Ltd % % JK Lakshmi Cement Ltd % % HeidelbergCement India Ltd.* % % Dalmia Bharat Enterprises Ltd % % OCL India Limited % % Company Volume Growth EBITDA/tonne Growth FY13E FY14E FY14E FY13E FY14E FY14E ACC Ltd.* % % Ambuja Cements Ltd.* % % UltraTech Cement Ltd % % India Cements Ltd % % Shree Cement Ltd % % JK Cement Ltd % % Mangalam Cement Ltd % % JK Lakshmi Cement Ltd % % HeidelbergCement India Ltd.* % % Dalmia Bharat Enterprises Ltd % % OCL India Limited % % Estimates *Calendar year end 3 of 133

5 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Demand: Positive surprise seems very likely 213 and 214 will see 17 states entering election phase (1 states in 213 and 7 states in 214). Do Elections Really Impact Demand Growth? Spurt in cement demand is often correlated to the pre election / election spending by the state / political parties / various governments. We have therefore highlighted the historical variation in cement demand across various states of India during pre election / election phase. The same can be elaborated in the table below: East India has seen the maximum increase in demand during elections 2.1% while South India has seen the minimal On an average, results indicate the historical average demand growth during pre election / election phase ~15%. State Region Historical average Demand Growth during Pre Election / Election Phase Madhya Pradesh Central 15.% Uttar Pradesh Central 9.6% Average Central India 12.3% Arunachal Pradesh. East 21.1% Assam East 26.8% Bihar East 44.3% Chhattisgarh East 9.1% Jharkhand East 16.1% Manipur East 1.4% Meghalaya East 31.1% Mizoram East NA Nagaland East NA Odisha East 15.9% Sikkim East NA Tripura East NA West Bengal East 5.7% Average East India 2.1% Haryana North 28.7% Himachal Pradesh North 17.3% Jammu & Kashmir* North 1.4% New Delhi North 35.3% Punjab North 13.% Rajasthan North 6.3% Uttarakhand North 4.5% Average North India 15.2% Andhra Pradesh South 21.8% Goa South 14.4% Karnataka South 6.2% Kerala South 8.6% Puducherry South 5.7% Tamil Nadu South 5.4% Average South India 8.5% Gujarat West 15.9% Maharashtra West 6.4% Average West India 11.2% All India Average 14.8% It is clear from the above table that elections do have a significant impact on cement demand growth. Given the upcoming elections in various states of India and based on the historical trends, we will now evaluate the potential of demand growth in the country and the various regions in various scenarios (Optimistic / Realistic / Pessimistic Scenario) over the next five years. 4 of 133

6 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Assuming 2% growth in cement consumption for states going in for elections and 8% growth for other states. Optimistic Scenario Demand Growth FY13E 17E In optimistic scenario, the following are our key assumptions: Demand growth in consumption in states going in for elections 2% Demand growth for other states of the country 8% The following table summarizes our thesis on demand growth in an OPTIMISTIC scenario. All India North South East West Central FY13E Demand Projection Average Contribution by States going in for Elections as % of All India 29.3% 49.58% 22.7% 3.93% 37.81% 31.44% Consumption / Regional Consumption (A) Total Despatches FY12 (mn tonnes) (B) (A*B) = (C ) Expected consumption growth for States going in for Elections 2.% 2.% 2.% 2.% 2.% 2.% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 8.% 8.% 8.% 8.% 8.% 8.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 11.5% 13.9% 1.7% 8.5% 12.5% 11.8% FY14E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 3.2% 21.21% 28.6% 3.91% 62.19%.% India Consumption / Regional Consumption (A) Total Despatches FY13 (mn tonnes) (B) (A*B) = (C ) Expected consumption growth for States going in for Elections 2.% 2.% 2.% 2.% 2.% 2.% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 8.% 8.% 8.% 8.% 8.% 8.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 11.6% 1.5% 11.4% 11.7% 15.5% 8.% FY15E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 5.72% 3.3%.% 3.74%.%.% India Consumption / Regional Consumption (A) Total Despatches FY14 (mn tonnes) (B) (A*B) = (C ) Expected consumption growth for States going in for Elections 2.% 2.% 2.% 2.% 2.% 2.% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 8.% 8.% 8.% 8.% 8.% 8.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 8.7% 8.4% 8.% 11.7% 8.% 8.% FY16E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 18.92%.% 47.41% 33.15%.%.% India Consumption / Regional Consumption (A) Total Despatches FY15 (mn tonnes) (B) (A*B) = (C ) Expected consumption growth for States going in for Elections 2.% 2.% 2.% 2.% 2.% 2.% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 8.% 8.% 8.% 8.% 8.% 8.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 1.3% 8.% 13.7% 12.% 8.% 8.% 5 of 133

7 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR FY17E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 15.98% 25.15% 1.1%.28%.% 68.56% India Consumption / Regional Consumption (A) Total Despatches FY16 (mn tonnes) (B) (A*B) = (C ) Expected consumption growth for States going in for Elections 2.% 2.% 2.% 2.% 2.% 2.% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 8.% 8.% 8.% 8.% 8.% 8.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 9.9% 11.% 8.1% 8.% 8.% 16.2% Total Demand as at end of FY17E Estimates Demand CAGR in an optimistic scenario (FY13E 17E) 12.% 1.% In an optimistic scenario, all India demand growth is CAGR of 1.4% p.a.; coincidentally, regional demand growth (across all regions) is also 1.4% p.a. 8.% 6.% 4.% 2.%.% All India North South East West Central Estimates 6 of 133

8 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Assuming 14.8% (historic actual) growth in cement consumption for states going in for elections and 7% growth for other states. Realistic Scenario Demand Growth FY13E 17E In realistic scenario, the following are our key assumptions: Demand growth in consumption in states going in for elections Historical Actual (All India at 14.8%) Demand growth for other states of the country 7% The following table summarizes our thesis on demand growth in a REALISTIC scenario. All India North South East West Central FY13E Demand Projection Average Contribution by States going in for Elections as % of All India 29.3% 49.58% 22.7% 3.93% 37.81% 31.44% Consumption / Regional Consumption (A) Total Despatches FY12 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 7.% 7.% 7.% 7.% 7.% 7.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 9.3% 11.1% 7.3% 7.5% 8.6% 8.7% FY14E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 3.2% 21.21% 28.6% 3.91% 62.19%.% India Consumption / Regional Consumption (A) Total Despatches FY13 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 7.% 7.% 7.% 7.% 7.% 7.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 9.3% 8.7% 7.4% 11.% 9.6% 7.% FY15E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 5.72% 3.3%.% 3.74%.%.% India Consumption / Regional Consumption (A) Total Despatches FY14 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 7.% 7.% 7.% 7.% 7.% 7.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 7.4% 7.2% 7.% 11.% 7.% 7.% FY16E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 18.92%.% 47.41% 33.15%.%.% India Consumption / Regional Consumption (A) Total Despatches FY15 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 7.% 7.% 7.% 7.% 7.% 7.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 8.5% 7.% 7.7% 11.3% 7.% 7.% 7 of 133

9 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR FY17E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All India Consumption / Regional Consumption (A) 15.98% 25.15% 1.1%.28%.% 68.56% Total Despatches FY16 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 7.% 7.% 7.% 7.% 7.% 7.% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 8.2% 9.1% 7.% 7.% 7.% 1.6% Total Demand as at end of FY17E Estimates Demand CAGR in a realistic scenario (FY13E 17E) 12.% In a realistic scenario, all India demand growth is CAGR of 8.6% p.a.; demand CAGR is likely to be the highest in East 9.6% and least in South 7.3%. 1.% 8.% 6.% 4.% 2.%.% All India North South East West Central Estimates 8 of 133

10 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Assuming historic actual growth rates for growth in cement demand for states going in for elections and 6.5% growth rate for other states. Pessimistic Scenario Demand Growth FY13 17E In pessimistic scenario, the following are our key assumptions: Demand growth in consumption in states going in for elections Historical Actuals (All India at 14.8%) Demand growth for other states of the country 6.5% The following table summarizes our thesis on demand growth in a PESSIMISTIC scenario. All India North South East West Central FY13E Demand Projection Average Contribution by States going in for Elections as % of All India 29.3% 49.58% 22.7% 3.93% 37.81% 31.44% Consumption / Regional Consumption (A) Total Despatches FY12 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 8.9% 1.8% 6.9% 7.% 8.3% 8.3% FY14E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 3.2% 21.21% 28.6% 3.91% 62.19%.% India Consumption / Regional Consumption (A) Total Despatches FY13 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 9.% 8.3% 7.1% 1.7% 9.4% 6.5% FY15E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 5.72% 3.3%.% 3.74%.%.% India Consumption / Regional Consumption (A) Total Despatches FY14 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 7.% 6.8% 6.5% 1.7% 6.5% 6.5% FY16E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All 18.92%.% 47.41% 33.15%.%.% India Consumption / Regional Consumption (A) Total Despatches FY15 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 8.1% 6.5% 7.4% 11.% 6.5% 6.5% 9 of 133

11 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR FY17E Demand Projection Average (FY5 FY12) Contribution by States going in for Elections as % of All India Consumption / Regional Consumption (A) 15.98% 25.15% 1.1%.28%.% 68.56% Total Despatches FY16 (mn tonnes) (B) (A*B) = (C ) Actual historical consumption growth for States going in for Elections 14.8% 15.2% 8.5% 2.1% 11.2% 12.3% Incremental Demand for States going in for Elections (mn tonnes) Despatches of Other States (mn tonnes) Expected minimum consumption growth for other States 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% Incremental Demand for Other States (mn tonnes) Total Incremental Demand (mn tonnes) Demand Growth 7.8% 8.7% 6.5% 6.5% 6.5% 1.5% Total Demand as at end of FY17E Estimates Demand CAGR in a pessimistic scenario (FY13E 17E) 9.% 8.% In a pessimistic scenario, all India demand growth is CAGR of 7.2% p.a.; demand CAGR is likely to be the highest in East 8.2% and least in South 5.9%. 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% All India North South East West Central Estimates 1 of 133

12 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Across all three scenarios we have analysed, East India seems to remain most promising region (as far as demand is concerned). At pan India level, even in a worst case scenario, demand is likely to grow at a CAGR of minimum of 7.2% over FY13E 17E In order of preference as far as demand growth is concerned, the most preferred region is East India, followed by North India, Central India, West India and South India Demand Growth Summary FY13 17E Year / Scenario All India North South East West Central Optimistic FY13E 11.5% 13.9% 1.7% 8.5% 12.5% 11.8% FY14E 11.6% 1.5% 11.4% 11.7% 15.5% 8.% FY15E 8.7% 8.4% 8.% 11.7% 8.% 8.% FY16E 1.3% 8.% 13.7% 12.% 8.% 8.% FY17E 9.9% 11.% 8.1% 8.% 8.% 16.2% Demand CAGR (FY13E 17E) 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% Realistic FY13E 9.3% 11.1% 7.3% 7.5% 8.6% 8.7% FY14E 9.3% 8.7% 7.4% 11.% 9.6% 7.% FY15E 7.4% 7.2% 7.% 11.% 7.% 7.% FY16E 8.5% 7.% 7.7% 11.3% 7.% 7.% FY17E 8.2% 9.1% 7.% 7.% 7.% 1.6% Demand CAGR (FY13E 17E) 8.6% 8.6% 7.3% 9.6% 7.8% 8.1% Pessimistic FY13E 7.5% 8.3% 5.8% 6.8% 6.4% 6.8% FY14E 7.5% 7.3% 5.6% 9.1% 6.3% 6.5% FY15E 6.7% 6.6% 6.5% 9.1% 6.5% 6.5% FY16E 7.1% 6.5% 5.1% 9.3% 6.5% 6.5% FY17E 7.% 7.4% 6.5% 6.5% 6.5% 7.1% Demand CAGR (FY13E 17E) 7.2% 7.2% 5.9% 8.2% 6.4% 6.7% Estimates To summarize, the range of FY13E 17E CAGR for all India demand is likely between 7.2% 1.4%. The expected CAGRs (FY13E 17E) for pan India and all regions interestingly remains the same at 1.4% in an optimistic scenario. In a realistic scenario, the all India CAGR (FY13E 17E) is expected at 8.6% with East India s growth being the highest at 9.6% and South India s growth lowest at 7.3%. In a pessimistic scenario, the all India CAGR (FY13E 17E) is expected at 7.2% with East India s growth being the highest at 8.2% and South India s growth lowest at 5.9%. In other words, we can expect the all India demand CAGR (FY13E 17E) to be at a minimum of 7.2% and can trigger upto 1.4%. As far as demand is concerned, East India is likely to remain the most favorable, followed by North, Central, West and South. 11 of 133

13 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR FY14E and FY15E very likely to restore the aberration in Cement Consumption / GDP ratio with a reasonably high consumption growth multiple. Cement Consumption Vs GDP Growth 12.% 1.% 8.% 6.% 4.% 2.%.% GDP, lhs Cement Consumption, lhs Cement Consumption Growth / GDP Growth, rhs Estimates Cement Consumption & GDP CAGR s; Cement Consumption Growth / GDP Growth (FY5 12) CAGRs (FY5 12) of GDP growth rate and cement consumption growth over FY % and 8.8%, respectively. Demand recovery seems very likely in near term given these materially high CAGR s than the current growth rates. 8.9% 8.8% 8.7% 8.6% 8.5% 8.4% 8.3% 8.8% %.3 8.2% 8.1% GDP Cement Consumption Cement Consumption Growth / GDP Growth. 12 of 133

14 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Overcapacity will remain a long term reality Overcapacity scenario will not change in foreseeable future. Industry will need to continue to operate at controlled capacity utilisations (though utilisations will be better than current) to ensure a stable and healthy pricing environment. Indian cement industry, in our opinion will continue to be bothered by overcapacity for the next few years and increasing average pan India capacity utilisations materially for the industry will remain a challenging task. Existing players and few maiden entrants such as Reliance Cement remain ambitious of adding new capacities, given an opportunity. Consolidation moves by larger players such as UltraTech Cement will be structurally a very positive move for the sector. All India Matrix Regional scenarios will differ significantly. Over the next three years, we expect North India capacity utilisations to remain most favorable (~9%) followed by Central and Western regions. South will continue to remain most impacted by overcapacity and utilisations in South India are likely to remain at more or less 6% levels for the next few years. Capacity utilisations in East may drop significantly post FY13E on back of capacity additions. However many of the capacities likely to be added in this region remain questionable with regards to their execution. Overall, we believe there is no complete relief to the industry from over capacity in the near term or foreseeable longer term. North, West and Central regions are likely to perform relatively better than other regions of the country. Summary for FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13E FY14E FY15E CAGR CAGR E EOP Cement Capacity (mtpa) % 13.2% Average Cement Capacity (mtpa) % 8.7% Growth YoY 5.6% 3.4% 4.9%.1% 6.% 5.6% 21.% 15.7% 16.3% 9.2% 6.2% 9.9% 9.9% Cement Production (mn tonnes) % 8.4% Growth YoY 8.7% 5.6% 8.5% 11.1% 9.1% 8.8% 7.8% 1.7% 4.7% 7.2% 8.6% 8.7% 7.9% Cement Consumption (mn tonnes) % 8.4% Growth YoY 8.7% 5.8% 8.1% 1.1% 9.9% 1.1% 8.4% 1.6% 4.6% 7.8% 8.6% 8.7% 7.8% Cement Exports (mn tonnes) Average pan India cement prices (Rs/bag) % 5.% Growth YoY 7.5% 2.7% 1.1% 6.9% 25.7% 11.2% 2.8% 1.5%.6% 11.% 5.% 5.% 5.% Clinker Production (mn tonnes) % 9.6% Growth YoY 1.3% 5.5% 6.6% 6.3% 4.% 7.1% 6.8% 11.% 3.1% 4.8% 1.2% 9.7% 8.9% Clinker Exports (mn tonnes) Cement:Clinker, x Average Cement Capacity Utilisation, (%) 79% 81% 83% 86% 95% 98% 11% 9% 86% 78% 76% 78% 77% 76% State Wise Capacity Share All India Andhra Pradesh constitutes the largest state capacity. States of Rajasthan and Tamil Nadu follows. These three states constitute ~42% of all India cement capacity. Other states with large capacity chunks include states of Gujarat, Madhya Pradesh, Karnataka, Maharashtra & Chhattisgarh. Karnataka, 8% Maharashtra, 7% Gujarat, 8% Kerala, % Andhra Pradesh, 16% Tamil Nadu, 12% Jammu & Kashmir, % Uttarakhand, 1% Madhya Pradesh, 8% Uttar Pradesh, 4% Jharkhand, 3% Chattisgarh, 5% Punjab, 2% West Bengal, 3% Orissa, 3% Meghalaya, 1% Bihar, % Assam, % Rajasthan, 15% Himachal Pradesh, Haryana, 1% 3% Delhi, % 13 of 133

15 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Capacity Additions Originally planned and book schedule of addition by the industry (No delays captured here). Indian cement industry has planned ~135 mn tonnes of capacity additions over the next 3 years. The table below highlights the total planned addition of the industry, as a whole till FY15E. FY13E FY14E FY15E % of Total Row Labels Cent East North South West Cent East North South West Cent East North South West Additions ABG Cement % ACC % Ambuja Cement % Amrit Cement Ind % Bhavya Cement % Birla Corporation % BMM Cement % Calcom.9.9 1% Cement Manu. Co % Century Textiles % Chettinad Cement % Dalmia Cement % Goldstone Cement.5.5 % HeidelbergCement India % Jaiprakash Associates % JK Cement % JK Lakshmi Cement % JSW Cement % KCP % KJS Cement % Lafarge % Lalitha Cement % Madras Cement % Mangalam Cement % Mawmluh Cherra.2.2 % Meghalaya Cement.7.7 1% My Home Industries % OCL India % R K Marble % Reliance Cement % Revathi Cement % RNB Cement.3.3 % Sagar Cement % Shiva Cement % Shree Cement % Siddhi Vinayak Cement % Toshali Cements Pvt.8.8 1% UltraTech Cement % Zuari Cement % Grand Total % Estimates Significant delays cannot be ruled out in the capacity additions mentioned above. We expect that not more than 5% of capacities mentioned above will commission on time. It is to be noted, capacity addition in the above table includes all possible capacities (including probable capacities) which may or may not be executed as per timeline or schedule. It also includes capacities which have a probability of being rolled back or not being executed at all. The table above is an exhaustive possible list of expansions and at best industry will add ~135 mn tonnes of capacity by the end of FY15E. We strongly believe Industry will not execute more than 5% of the capacities above as per schedule. We will discuss the reasons for the same in the forthcoming sections of this report. 14 of 133

16 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Industry s Operating Matrix Simple & Weighted Avg. 75% of industry data referred to as Industry In this section, we will discuss and list down the industry s overall operating matrix and its behavior since FY4. For the purpose of our calculations, we have collated data for 75% of the industry s current capacity and have referred to as Industry. The following tables will highlight these data points. Simple Average Operating Matrix Rs/Tonne FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13E FY14E CAGR FY4 12 Net Realisation 1,9 2,38 2,342 2,919 3,249 3,431 3,622 3,483 4,1 4,3 4, % Total Operating Expenses 1,588 1,684 1,885 2,63 2,25 2,531 2,611 2,861 3,26 3,391 3, % Raw Materials % Employee Cost % Power & Fuel ,48 1,85 8.5% Freight Cost % Stores & Spares % Repairs & Maintenance % Other Miscellaneous % EBITDA ,44 9 1, , % Growth YoY Net Realisation 7% 15% 25% 11% 6% 6% 4% 15% 7% 5% Total Operating Expenses 6% 12% 9% 7% 15% 3% 1% 14% 4% 3% Raw Materials 19% 51% 1% 3% 24% 1% % 23% 1% 2% Employee Cost 6% 4% 19% 29% 8% 4% 11% 11% 8% 4% Power & Fuel 22% 3% 9% 5% 19% 7% 17% 9% 5% 4% Freight Cost % 2% 1% 12% 8% 5% 9% 9% 9% 2% Stores & Spares 5% 4% 28% 8% 4% 9% 1% 4% 1% 2% Repairs & Maintenance 17% 71% 29% 1% 27% 3% 29% 1% 16% 6% Other Miscellaneous 1% 35% 16% 4% 15% 19% 3% 29% 3% 3% EBITDA 13% 29% 87% 22% 14% 12% 38% 21% 21% 15% Cost / EBITDA as a % of Net Realisation Net Realisation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% Total Operating Expenses 84% 83% 8% 71% 68% 74% 72% 82% 81% 79% 77% Raw Materials 6% 7% 9% 7% 6% 8% 8% 8% 9% 8% 8% Employee Cost 6% 5% 5% 4% 5% 5% 5% 6% 6% 6% 6% Power & Fuel 27% 31% 26% 23% 22% 25% 22% 26% 25% 24% 24% Freight Cost 2% 18% 16% 14% 14% 15% 15% 17% 16% 16% 16% Stores & Spares 5% 5% 5% 5% 5% 5% 4% 5% 4% 4% 4% Repairs & Maintenance 3% 3% 4% 2% 2% 2% 2% 3% 2% 2% 2% Other Miscellaneous 16% 13% 16% 15% 14% 15% 17% 18% 2% 18% 18% EBITDA 16% 17% 2% 29% 32% 26% 28% 18% 19% 21% 23% Cost Heads as a % of Total Opex Total Operating Expenses 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% Raw Materials 8% 8% 11% 1% 9% 1% 11% 1% 11% 1% 1% Employee Cost 7% 6% 6% 6% 7% 7% 7% 7% 7% 7% 7% Power & Fuel 33% 38% 33% 33% 32% 33% 3% 32% 31% 31% 31% Freight Cost 24% 22% 2% 2% 21% 2% 2% 2% 19% 2% 2% Stores & Spares 6% 6% 6% 7% 7% 6% 6% 6% 5% 5% 5% Repairs & Maintenance 4% 3% 5% 3% 3% 3% 3% 3% 3% 3% 3% Other Miscellaneous 19% 16% 19% 21% 2% 2% 23% 22% 25% 23% 23% 15 of 133

17 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Weighted Average Operating Matrix Rs/tonne FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13E FY14E CAGR FY4 12 Net Realisation 1,947 2,135 2,239 2,856 3,284 3,485 3,613 3,439 4,65 4,424 4,71 9.6% Total Operating Expenses 1,62 1,745 1,89 1,956 2,198 2,537 2,564 2,757 3,23 3,46 3,554 9.% Raw Materials % Employee Cost % Power & Fuel ,7 1,52 1,14 8.2% Freight Cost % Stores & Spares % Other Miscellaneous % EBITDA , , ,18 1, % Growth YoY Weighted Average Realisation 1% 5% 28% 15% 6% 4% 5% 18% 9% 6% Weighted Average Operating Cost 8% 4% 8% 12% 15% 1% 8% 17% 5% 4% Raw Materials 8% 51% 3% 3% 25% 8% 1% 21% 4% 2% Employee Cost 2% 3% 17% 35% % 1% 1% 14% 9% 5% Power & Fuel 22% 9% 6% 12% 21% 1% 15% 13% 4% 5% Freight Cost 12% 1% 7% 17% 1% 2% 6% 13% 11% 4% Stores & Spares 9% 3% 9% 4% 8% 7% 3% 5% 19% 2% Other Miscellaneous 19% 21% 35% 14% 1% 17% 7% 36% 2% 7% EBITDA 19% 1% 11% 21% 13% 11% 35% 22% 22% 13% Cost / EBITDA as a % of Net Realisation Net Realisation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% Total Operating Expenses 83% 82% 81% 68% 67% 73% 71% 8% 79% 77% 76% Raw Materials 13% 13% 18% 14% 12% 14% 15% 16% 16% 15% 15% Employee Cost 6% 5% 5% 4% 5% 5% 5% 6% 6% 6% 5% Power & Fuel 28% 31% 27% 22% 22% 25% 21% 26% 25% 24% 23% Freight Cost 17% 17% 18% 15% 15% 16% 16% 17% 17% 17% 17% Stores & Spares 5% 5% 5% 4% 4% 4% 3% 4% 3% 3% 3% Other Miscellaneous 16% 11% 9% 9% 9% 9% 11% 12% 14% 12% 12% EBITDA 17% 18% 19% 32% 33% 27% 29% 2% 21% 23% 24% Cost Heads as a % of Total Opex Total Operating Expenses 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% Raw Materials 15% 15% 22% 2% 18% 2% 21% 19% 2% 2% 19% Employee Cost 7% 6% 6% 6% 7% 6% 7% 7% 7% 7% 7% Power & Fuel 33% 38% 33% 32% 32% 34% 3% 32% 31% 31% 31% Freight Cost 2% 21% 22% 22% 23% 22% 22% 22% 21% 22% 22% Stores & Spares 6% 6% 6% 6% 6% 5% 5% 5% 4% 4% 4% Other Miscellaneous 19% 14% 11% 13% 13% 13% 15% 15% 17% 16% 16% Estimates Similar CAGR s of Net Realisations and Opex suggests it is unfair to hold the industry responsible for cement price increase. Raw materials have seen the maximum increase at a CAGR of 12.7%. Also, current EBITDA margins significantly lower than the peak margins for the industry registered in FY8 (@33%). From the above table following are our key observations (observations based on Weighted Average calculations): Net Realisations and Total Operating Expenses FY4 12 CAGRs (at 9.6% and 9.%, respectively) of the industry have grown largely in line with each other. Hence, we believe, it will be unfair to hold the industry responsible for cement price escalation. EBITDA has grown at a CAGR of 12.4% from Rs327/tonne to Rs836/tonne. EBITDA margins peaked out in FY8 at ~33%. Current EBITDA margins are ~12% lower than peak EBITDA margin in FY8. Raw material costs have seen the highest escalation with a CAGR of 12.7%. Stores and spares show the least escalation with a CAGR of 2.7%. All other expense heads viz. Employee Cost, Power & Fuel Cost, Freight Cost and Other Expenses have registered CAGR s in the range of ~8% 9.5%. 16 of 133

18 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Top Players vs. Others Operating Matrix Rs/tonne CAGR FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13E FY14E FY4 12 Top 3 (Excludes Jaypee Cement) Net Realisation 2,75 2,313 2,397 2,97 3,381 3,569 3,725 3,542 4,112 4,44 4,71 8.9% Total Operating Expenses 1,695 1,866 1,983 2,28 2,324 2,66 2,689 2,84 3,281 3,398 3, % Raw Materials % Employee Cost % Power & Fuel ,1 8.2% Freight Cost % Stores & Spares % Other Miscellaneous % EBITDA , , ,6 1, % Top 4 Net Realisation 1,984 2,23 2,255 2,829 3,23 3,383 3,616 3,456 4,2 9.2% Total Operating Expenses 1,636 1,771 1,826 1,922 2,144 2,429 2,515 2,697 3, % Raw Materials % Employee Cost % Power & Fuel % Freight Cost % Stores & Spares % Other Miscellaneous % EBITDA , , % Impact of Jaypee Cement in Avg. Realisation (91) (11) (142) (78) (151) (186) (19) (86) (92) Diff. in Avg. Opex of Top 3 Vs. Jaypee Cem Impact of Jaypee Cement in Avg. EBITDA (31) (16) (52) All Other Players (Excluding Top 4) Net Realisation 1,8 1,97 2,278 2,96 3,229 3,432 3,616 3,463 3,981 4,261 4, % Total Operating Expenses 1,481 1,581 1,85 2,28 2,17 2,53 2,592 2,865 3,29 3,389 3, % Raw Materials % Employee Cost % Power & Fuel ,16 1,74 1,113 9.% Freight Cost % Stores & Spares % Other Miscellaneous % EBITDA , , ,7 11.7% Diff. in Top 4 & Others in Avg. Realisation (23) (76) 1 (49) (1) (7) 39 Diff. in Avg. Opex of Top 4 & Others (17) (27) (74) (77) (168) 32 Diff. in Top 4 & Others in Avg. EBITDA 3 15 (44) Impact in Avg. Realisation / tonne Difference between Top 3 & Others in Industry Difference between Top 4 & Others in Industry (23) (76) 1 (49) (1) (7) 39 Variation in Opex/tonne Difference between Top 3 & Others in Industry Difference between Top 4 & Others in Industry (34) (55) (18) (49) (6) 11 Variation in EBITDA/tonne Difference between Top 3 & Others in Industry (59) 3 (2) (21) Difference between Top 4 & Others in Industry 3 15 (44) Estimates 17 of 133

19 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Tier I brands clearly command a premium in cement realisation to the extent of ~Rs2/bag. Realisations of Jaypee Cement have not been favorable to sustain the premium of Top Cement manufacturers. The impact has been negative to the tune of Rs4 1/bag. Expense pattern of the industry players seems largely similar. Majors tend to spend more on advertising and marketing activities which increases their overall opex. EBITDA/tonne in our opinion remains the key in deriving the ultimate cement price. Cost benefits on account of location advantage etc. are generally passed on Key observations Leaders such as ACC Limited, Ambuja Cements and UltraTech Cement clearly command a premium in realisations as compared to all other cement manufacturers. The premium can be as high as Rs2/bag. Realisations of Jaypee Cement have not been favorable to the overall average realisations of top cement manufacturers. The impact of Jaypee Cement to the overall average net realisation of top cement manufacturers has been to the tune of negative ~Rs4 1/bag. We can infer from this that strong branding and advertising does really make a material impact on realisations of cement manufacturers. We strongly believe that companies which intend to create a premium brand value for themselves and which remains focused on its brand premium, will continue to enjoy premium in realisations vis à vis others. Unified brand identity and having thrust on continuous improvements in supply chain management systems are some of the add ons which can help cement manufacturers garner better premium. Opex/tonne of cement majors is generally a higher (Rs7 14/bag) than that of the smaller cement manufacturers and this seems higher largely on other expenses front (marketing, advertising, commissions etc.). Freight cost of majors (upto Rs6/bag) also tends to be higher which is indicative of the larger lead distances and market reach for them. On all other expenses front, the expense pattern of the industry is largely similar (Some marginal variations can be observed in other spend heads which does not seem to be very material). The pie below indicates the operating cost structure of the industry in FY12. Interesting, no consistent trend can be established in EBITDA/tonne of the top cement manufacturers and the regional leaders / smaller players. This probably, is indicative of the fact that players adopt strategies based on their inherent strengths of location advantage, market reach, local distribution network etc. This is also an indication that majority of the players target a similar EBITDA/tonne. Players having competitive advantage to others generally pass on the cost benefits to consumers to ensure a firm market grip in their markets. EBITDA/tonne, in our view remains the base to derive the ultimate cement price. The variation in average EBITDA/tonne does not seem to be higher than Rs7/bag between majors and other players. Expense Pattern of Industry on Total Cost FY12 Power & Fuel is the biggest cost followed by Freight Cost, Raw Materials and Other Expenses. Other Miscellaneous, 17% Stores & Spares, 4% Raw Materials, 2% Employee Cost, 7% Freight Cost, 21% Power & Fuel, 31% 18 of 133

20 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Cost / EBITDA structure of the Industry Cost Structure of the industry has remained largely similar in our period of analysis (FY4 12). On an average the matrix structure is as: Raw Materials (15%), Employee Cost (5%), Power & Fuel (25%), Freight Cost (16%), Stores & Spares (4%), Other Miscellaneous (11%) and EBITDA (24%). 1% 8% 6% 4% Raw Materials Employee Cost Power & Fuel Freight Cost Stores & Spares Other Miscellaneous EBITDA 2% % FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13E FY14E Industry s Revenue / Cost / EBITDA CAGR (FY4 12) CAGRs of realisation are not too different from CAGR of expense / cost. Raw materials cost increase is the biggest concern for the industry. 14% 12% 1% 8% 6% 4% 9.6% 9.% 12.7% 9.5% 8.2% 9.5% 2.7% 7.9% 12.4% 2% % Realisation Total Cost Raw Materials Employee Power and Fuel Freight Stores and Spares Other Expenses EBITDA Industry s EBITDA & Cost / Revenue FY12 EBITDA, 21% Operating costs in FY12 accounts for ~79% of revenues. This cost structure is ~3bps higher than the average cost structure of the industry over FY4 12. Operating Cost, 79% Estimates 19 of 133

21 28 January 213 / INDIA EQUITY RESEARCH / INDIAN CEMENT SECTOR Why cement pricing will remain strong? Industry is expected to continue to behave maturely keeping utilisations at favorable levels and thereby ensuring a healthy pricing scenario. Behavioral study of the industry suggests industry is well capable of showcasing such an intelligent and mature behavior. No monthly data publication from Cement Manufacturers Association of India (CMA) and majority of the other cement manufacturers makes data analysis a practically impossible process thereby avoiding any allegations of cartelisation. We strongly believe that cement prices in the country will continue to hold strong. Industry is expected to behave in a much more disciplined and matured fashion given the pipeline of capex for the industry. Though utilisations will improve, it will be kept at relatively low and favorable levels to ensure a healthy pricing scenario. Here we will analyse in detail the behavioral pattern of the industry and its players. We will highlight the reasons for a favorable cement pricing environment largely on the following grounds: Behavioral patterns of various players of the industry (largely in terms of despatches and relative movement in despatches). Absolute cement prices Vs. absolute cement volumes (Historical trends and key observations from these trends). High capex commitment will mean healthy cement prices or shelving off of new capacities. In this section, we will plot the behavioral patterns of Top Players Vs. Other Players on all India and Regional basis to understand the sync in overall industry s despatch pattern which will ultimately support cement prices. In our regional study, we have also highlighted the behavioral pattern in the key states of the region. We can clearly see that, in most cases the behavior of cement companies have been favorable to a healthy pricing environment. The sync in behavioral pattern will be more visible post Oct 9 in most cases. It is also to be noted that Cement Manufacturers Association (CMA) which was the representative body of the Indian Cement Industry has stopped publishing monthly production/despatch and related data from June 212 onwards. Also many of the top cement producers of the country have opted to stop publishing monthly cement production and despatch data. Hence in all our analysis, the data considered has been until the period ending May 212 (till the time CMA published such data). Though, the decision to not publish monthly data will make research analysis a cumbersome process, the industry is likely to remain in a safe position avoiding any allegations of cartelisation. Despatches of Top 15 Vs. All Others ( tonnes) The adjoining graph highlights the relative despatch movement of Top 15 and other players of the industry. The gap between the two lines indicates the relative behavior of these two categories of players. Clearly, in order to avoid price wars with low capacity utilisation, the sync between these two categories of players has seen a material improvement which makes us surer of a healthy pricing environment. Despatches from other players, lhs Total Despatches of Top 15 Players, rhs 4,5 19, 18, 4, 17, 16, 3,5 15, 14, 3, 13, 12, 2,5 11, 2, 1, 9, 1,5 8, Aug 5 Dec 5 Aug 6 Dec 6 Aug 7 Dec 7 Aug 8 Dec 8 Aug 9 Dec 9 Aug 1 Dec 1 Aug 11 Dec11 April 12 2 of 133