DALMIA CEMENT (BHARAT) LTD. Financial Results for quarter and year ended March 31, 2010

Transcription

1 DALMIA CEMENT (BHARAT) LTD. Financial Results for quarter and year ended March 31, 2010 May 26, 2010

2 Disclaimer Certain statements in this presentation describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Forward looking statements are identified, by using the words 'anticipates', 'believes', 'expects', 'intends' and similar expressions in such statements. Although our expectations are based on reasonable assumptions, these forward-looking statements may be influenced by numerous risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed or implied. The Company takes no responsibility for any consequence of decisions made based on such statements and holds no obligation to update these in the future.

3 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 3

4 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 4

5 Key Strategic Initiatives Diversify Regional Presence Increased stake in OCL to 45.4% Provides platform for access to the fast growing Eastern region Contributes Rs. 45 Cr to the consolidated PAT of DCBL Restructuring Businesses for Growth Opportunities Launched platform for independent entities for cement, sugar and power businesses by attracting quality capital Approvals have been received from all the stock exchanges Scheme has already been filed with Madras High Court KKR (Global PE Firm) to Invest upto Rs. 750 Cr Largest PE investment in cement industry in India To bring in better Corporate Governance and best global practices To part fund organic / inorganic growth and deleveraging balance sheet 5

6 Key Awards and Certifications Awards Amongst Top 10 best employers in manufacturing category as per Hewitt Best employer survey National Award for Environmental Excellence in Indian Cement Industry, awarded by National Council for Cement and Building Materials Key Certifications Certified for Occupational Health & Safety Management System [OH&SMS - IS 18001:2007] Certified for Environmental Management System [EMS IS/ISO 14001:2004] 6

7 Proposed Structure Post Restructuring Public/ Others Promoters DCBL (Listed) Sugar - 22,500 TCD Distillery - 80 KLPD Cogeneration - 79 MW 15-21% KKR 100% 45% 43% 58% 79-85% Avnija Operating Cement Capacity 9 MnT Dalmia Bharat Enterprises Ltd. (to be Listed) Dalmia Refractories Dalmia Cement Ventures Ltd. Plans for10 MT of Greenfield cement projects OCL India Ltd. (Listed) Cement capacity Mn T Refractories 26% 100% Dalmia Power Ltd. 74% Dalmia Power Ventures Ltd. Thermal - 72 MW OCL Promoters 25% Public / Others 30% 7

8 DCBL Outperforms Nifty in FY10 by 3 Times Returns - DCBL vs. Nifty Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Institutional Shareholding DCBL - Indexed Returns Mar 09 Mar 10 Promoters 56.2% 57.6% Institutions 10.6% 15.4% Actis 6.5% 6.5% DIIs 3.8% 5.4% FIIs 0.3% 3.5% Others 33.2% 27.0% Nifty Returns Improving shareholder profile Institutional holdings cross 15% as at year end Reflecting confidence in management initiatives and strategy Promoters too ramping up holdings No shares pledged by promoters Total 100% 100% 8

9 Corporate Initiatives Human Resource Initiatives & Recognition Setting up of Human Resource Management System in SAP Applied Leadership Programme launched in October 2009 for developing future leaders in the company Wider acceptance of formal values programme in the company Corporate Social Responsibilities Initiatives in Key Areas Education: Remedial education programmes run across units Environment: Construction of water reservoirs, roads to benefit the local communities Several steps taken to reduce carbon emission at all plants Health & Sanitation: Health awareness programmes, counselling and treatment carried out in two units 9

10 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 10

11 Accelerated Growth Continues 2,500 2,000 1,500 1, Net Sales (Rs. Cr) EBITDA from Operations (Rs. Cr) CAGR 37% CAGR 47% FY05 FY06 FY07 FY08 FY09 FY10 FY05 FY06 FY07 FY08 FY09 FY10 Cross milestone of over Rs. 2,000 Cr in Total Annual Income Increasing volumes and realizations across businesses Company enhances cement capacity to 9 MnT Strategic Investments for regional diversification through OCL stake Create platform for independent business entities in core businesses Partner with KKR, leading PE global player for tapping opportunities 11

12 Standalone Results Highlights Income Q4 10 (YoY) FY10 (YoY) Gross Sales : Rs. 573 cr; 8% Rs. 2,344 cr; 19% Net Sales : Rs. 525 cr; 8% Rs. 2,154 cr; 23% Total Income : Rs. 547 cr; 11% Rs. 2,194 cr; 23% Profits Q4 10 FY10 EBITDA : Rs. 87 cr Rs.500 cr Net Profit : Rs. 2 cr Rs.137 cr Margins Q4 10 FY10 OP Margin : 16% 23% Post highest ever turnover for the company at Rs. 2,344 Cr Board declares total dividend of 100% 12

13 Q4 10 Results Business wise Period ending Q4'09 Q4'10 YoY% (Rs In crores) Cement Sugar Others Total Cement Sugar Others Total Cement Sugar Others Total Gross Sales % 36% 6% 8% Net Sales % 38% 6% 8% Operating Other Total Income % 42% 10% 11% Operating Expenses EBITDA EBITDA Margins % 34% 39% 52% 36% 14% 16% 36% 16% Other Income (31) 6 Depreciation EBIT Interest Tax Provision 39 2 Net Profit 44 2 PAT Margin % 10% 0% Highest ever Turnover in Q4 Realizations: Sugar 56% ; Cement 19% Volume: Sugar 15% ; Cement 21% Profitability impacted Higher input costs in Sugarcane Rising depreciation and interest charges *Cement includes wind farm power business; Sugar includes Cogeneration and Ethanol businesses ** Previous period numbers have been reclassified/regrouped as per current quarter groupings 13

14 Q4 10 Business Mix Net Revenue Mix 5% EBITDA Mix 13% 29% 66% 29% 59% Rs. 344 cr Cement* Rs. 51 cr Rs. 153 cr Sugar Rs. 27 cr Others Rs. 25 cr Rs. 11 cr Higher sugar realization lead to increased revenue mix contribution *Cement includes wind farm power business; Sugar includes Cogeneration and Ethanol businesses 14

15 FY10 Results Business wise Period ending FY'09 FY'10 YoY% (Rs In crores) Cement Sugar Others Total Cement Sugar Others Total Cement Sugar Others Total Gross Sales 1, ,972 1, ,344 9% 59% 18% 19% Net Sales 1, ,753 1, ,154 12% 63% 21% 23% Other Operating Total Income 1, ,779 1, ,194 13% 63% 19% 23% Operating Expenses ,249 1, ,693 EBITDA EBITDA Margins % 34% 17% 25% 30% 26% 17% 18% 23% Other Income (36) 11 Depreciation EBIT Interest Tax Provision Net Profit PAT Margin % 9% 6% Net Sales grow 23% Realizations: Sugar 58%; Cement 7% Volume: Sugar 13% ; Cement 20% EBITDA margins at 23% Higher depreciation on additional capacity Interest for the year at Rs. 176 Cr Cement includes wind farm power business; Sugar includes Cogeneration and Ethanol businesses; Previous period numbers have been reclassified/regrouped as per current period groupings 15

16 FY10 Business Mix Net Revenue Mix EBITDA Mix 27% 6% 20% 4% 67% 76% Rs. 1,449 cr Cement* Rs. 378 cr Rs. 578 cr Sugar Rs. 127 cr Others Rs. 98 cr Rs. 24 cr 2/3 rd revenue flow in from cement business Witness higher growth in sugar realizations and volumes *Cement includes wind farm power business; Sugar includes Cogeneration and Ethanol businesses 16

17 Key Balance Sheet Parameters (Rs. In Crore) 31-Mar Mar-10 Equity Capital Reserves & Surplus 1,252 1,361 Debt 2,338 2,850 Term Loans 1,782 2,285 Soft Loans Working Capital Deferred Tax Total 3,835 4,517 Net Fixed Assets* 2,667 2,832 Investments Cash and equivalents Net Current Assets Total 3,835 4,517 Net Debt to Equity * including CWIP Net debt as at year end at Rs. 1,987 cr vs. Rs. 1,507 as on March 31,

18 Strategic and Other Investments Strategic Investments* (Rs Cr) 714 Liquidity Summary* (Rs Cr) 298 OCL India Ltd 377 Subsidiary Companies 226 Bharathi Cement 95 Others 16 Marketable Equity 80 MFs 7 Cash & Bank 211 * As on March 31, 2010 OCL India Ltd Listed company with business interests in cement and refractory Significant player in Eastern markets; contributed Rs. 45 Cr for the year to consolidated profits Investments in subsidiaries for growth opportunities Marketable Equity & MF Equity stands at ~ Rs. 80 Cr as on date Surplus funds parked in MFs Investments in Bharathi liquidated after annual 47% annualized return 18

19 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 19

20 Cement Highlights FY10 Total Cement Capacity Increased to 9 MnT (at 100% PPC) Commissioned 2.5MnT (at 100% PPC) Cement Plant in June 2009 at Ariyalur Clinker unit commissioned in December 2009 Enhancing Volume Growth 20% Y-o-Y increase in volume, 4 times regional industry growth rate Increased market share in new markets (Karnataka +4.8% and AP +3.4%) Yearly EBITDA/T stands at Rs. 948/T, variable cost reduced by Rs. 102/T Rise in Power Production and Sales Trial runs for TPP of 27 MW at Ariyalur in March 2010 Accelerated ramp up of 18 MW Power Plant at DPM Sold Surplus Power from TPPs at DPM to the grid 20

21 Volumes ('000 T) Q4'09 Q4'10 YoY% Production 871 1,076 23% Sales 889 1,077 21% Cement Operating Metrics Geographic Mix FY'10 13% 10% 5% 46% Volumes ('000 T) FY'09 FY'10 YoY% Production 3,374 4,073 21% Sales 3,381 4,063 20% Highest ever sales in Quarter and Year 26% Tamil Nadu Kerala Karnataka AP Others Expanding Distribution Network Changing product mix towards OPC; C:C ratio at 1.28 Product Mix for FY'10 31% 3% 66% PPC OPC Others Per Tonne Analysis (Rs/T) Q4'09 Q4'10 YoY% Net Sales Realization 3,900 3,166-19% EBITDA 1, % Per Tonne Analysis (Rs/T) FY'09 FY'10 YoY% Net Sales Realization 3,796 3,543-7% EBITDA 1, % Lower realisations and higher excise duty impact the profitability 21

22 Cement Key Challenges Demand Slowdown in Parts of South Imperative that developmental projects should take off Fuel Security for Stability in Costs Acquisition of coal mine/blocks Option for fuel mix Geo mix - South Africa vs. Indonesia Logistics Constraints Availability of rakes/ fleets for material dispatch Other infrastructure bottlenecks such as railway sidings Uninterrupted Power Supply Getting consistent power supply in plant without CPP 22

23 Per Tonne Analysis Particulars (Rs./T) Q4'09 Q4'10 YoY% FY'09 FY'10 YoY% NSR 3,900 3,166-19% 3,796 3,543-7% Raw Material Consumed % % Inc/(Dec) in stock (271) (63) -77% (91) (37) -59% Power & Fuel 1, % 1,134 1,014-11% Freight Charges % % Employee Costs % % Others % % EBITDA 1, % 1, % Non-recurring Items EBITDA 1, % 1, % Coal Prices Fall in FY Avg. price: $101 Avg. price: $66 Freight costs up due to higher dispatches through road at 74% Operating leverage to come in play on higher volumes going forward Lower power & fuel cost due to fall in coal prices API4 Indonesian 23

24 Capacity Additions in FY10 Installed Capacity (MnT) Mar 10 Commissioned in FY10 All India : South : East : Bunched up capacity additions outpace 11% demand growth rate Source: CMA, Company estimates 24

25 Demand Picks up in Our Key Markets All India 11% 36% 16% 19% All India: 11% Y-o-Y demand at 197 MnT South: 5% Y-o-Y demand at 57 MnT Accelerated in Q4 10 7% Y-o- Y for the quarter. East: 17% Y-o-Y demand at 33 MnT 11% 7% 6% -2% 11% DCBL Markets OCL Markets Strong revival of demand in some of our key markets in 4Q 10: Karnataka grows 19% Y-o-Y Kerala grows 8% Y-o-Y Source: CMA 25

26 Cement Prices in South Show Sharp Fall in FY10 Pricing (Y-o-Y) Q4 10 FY10 All India 1% 2% South 19% 8% East 12% 9% Source: CMA December qtr. to March qtr. prices up; average for the qtr. lower Demand growth rates to determine price trends 26

27 Cement Outlook Positive Long Term Prospects of Cement Cement demand multiple as a % of GDP likely to improve GDP growth likely to sustain at higher levels Government Thrust on Infrastructure Growth to Drive Demand Urban development and upliftment of rural areas to boost demand Recovery in the housing sector expected to continue Capacity Utilizations Likely to Bottom Out in 2H 11 Rising demand likely to absorb additional supply through the year 27

28 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 28

29 Integrated Sugar Highlights FY10 Enhanced Volumes for Better Sugar Capacity Utilization 27% additional cane crushed Improved Imported ~75,000 T of raw sugar Raw sugar imports supplement volumes Initiated the Process for Increasing Cogen Capacity Utilization Converting boiler at Jawaharpur unit to use multiple fuels To help increase plant utilization during off season Surplus power for merchant sales at higher realisation Realized Revenue through Sale of Certified Emission Reduction Cogen project at Ramgarh registered with United Nations Framework Convention on Climate Change (UNFCCC) and revenue realized through sale of CERs Two additional projects under CDM taken up in sugar co-generation units 29

30 Integrated Sugar Metrics Operational Metrics Sugar Units Q4'09 Q4'10 Growth %/bps FY'09 FY'10 Growth %/bps Crushed cane T 588, ,358 63% 1,196,415 1,514,743 27% Recovery % 9.5% 9.4% (12) 8.9% 9.2% 34 Production Volume T 56, , % 106, ,177 92% Sales Volumes T 43,742 36,724-16% 162, ,752 13% Sales Realizations Rs/T 19,380 30,222 56% 17,139 27,076 58% YTD enhanced volumes and higher realizations drive up sugar metrics 91% growth in production volume Higher cane crushed Increased recovery Raw sugar processing 66,264 tonnes in FY10. Sales volumes rise 13% with higher average realizations despite increased mix of levy sugar 30

31 Integrated Sugar Metrics Cogeneration Units Units Q4'09 Q4'10 Growth FY'09 FY'10 Growth Installed Capacity MW Power generated lakh kwh 851 1,177 38% 1,952 2,009 3% Power Exported lakh kwh % 1,319 1,359 3% Distillery Units Q4'09 Q4'10 Growth FY'09 FY'10 Growth Installed Capacity KLPD Production Volumes KL 2, % 6,556 5,706-13% Sales Volumes KL 1,244 1,581 27% 6,819 6,258-8% Co-gen Realizations up 26% post rate revisions Average realization for distillery down 8% Y-o-Y in FY10. 31

32 Integrated Sugar Key Challenges Access to Raw Material Better predictability of cane crops Linking procurement prices to sugar prices Taking all stakeholders interest and views Stable Government Regulations Too many changes too frequently upset business predictability Awaiting reinstatement of incentive policy for increased ROCE Order for revised levy rates still awaited Imposition of duty on sugar imports is the key in near future Registration of Jawaharpur & Nigohi as CDM Projects Getting UNFCCC registration for Jawaharpur and Nigohi units 32

33 More than Anticipated Sugar Production in India Indian Sugar Demand Supply Scenario (MnT) e Production Consumption Inventory Free Sugar Sale Price (Rs./Kg) for DCBL Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan All India sugar production estimates for SY10 revised 23% upwards to 18.5 MnT Prices correct 16% from Jan 10 peak of over Rs. 37 per kg to Rs. 31 per kg in March 10 Spot prices at Rs. 29.6/Kg in our markets 33

34 Regulatory Update Regulatory Changes in SY10 Futures trading in sugar in domestic exchanges suspended up to September 2010 impacted trading and global prices if the commodity Stockholding limit of 15 days for bulk consumers. Import of raw sugar at zero duty under OGL up to December 2010 helped increase value Duty free import of white / refined sugar under OGL opened to other Central / State Government agencies and to private trade brought about price reduction Levy obligation removed in respect of all imported raw sugar and white / refined sugar leading to higher overall percentage of free sale sugar 34

35 Sugar Outlook Inventory Position Likely to Improve Indian sugar production is expected to improve due to diversion of crop towards sugarcane because of remunerative prices Increased production to lead to higher inventory levels Sugar Prices Likely to Remain Volatile in SY11 Increase in inventory levels to impact sugar prices downwards Prices expected to remain volatile; might face some downward pressure 35

36 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 36

37 Greenfield Projects Ramping Up of 5 MnT Cement Plants at Ariyalur and Kadapa Plants are ramping up well Utilization rates now dependent on market dynamics Trial Run on at 27 MW TPP at Ariyalur Power generation reached up to 22 MW OCL s Rajgangpur s 27*2 MW TPP Line 1 expected to be completed by October 2010 Line 2 expected to be completed by December

38 Ariyalur Production Commenced in Q4 10 Linear Stock pile shed completed Trial run on for Boilers 38

39 TPP RGP CPP Project Progress Boiler 1 Ariyalur Overall View 39

40 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 40

41 OCL 4Q 10 Results Business wise Q4'09 Q4'10 YoY% (Rs In crores) Cement Refractory Total Cement Refractory Total Cement Refractory Total Gross Sales % 7% 20% Net Sales % 7% 19% Operating Other Income Total Income % 10% 20% Operating Expenses EBITDA % 64% 68% EBITDA Margins % 25% 7% 21% 34% 10% 30% Other Income 1 8 Depreciation EBIT % Interest Tax Provision Net Profit % PAT Margin % 7% 13% 19% increase in Net Sales Realizations: Cement 20%; Refractory 13% Volume Cement 2% ; Refractory 23% Net profit more than doubles EBITDA margin jumps 900 basis points due to higher realizations in the cement business Efficient cost management 41

42 OCL FY10 Results Business wise FY09 FY10 YoY% (Rs In crores) Cement Refractory Total Cement Refractory Total Cement Refractory Total Gross Sales ,276 1, ,522 28% -8% 19% Net Sales ,119 1, ,374 32% -6% 23% Operating Other Income Total Income ,129 1, ,391 32% -4% 23% Operating Expenses EBITDA % -8% 50% EBITDA Margins % 28% 12% 24% 33% 11% 29% Other Income 5 18 Depreciation EBIT % Interest Tax Provision Net Profit % PAT Margin % 10% 12% Highest ever gross sales Realizations: Cement 19%; Refractory 7% Volume Cement 11% ; Refractory 12% with 50% growth in EBITDA Backed by strong cement growth & cost efficiencies 41% net profit growth despite significantly higher depreciation on new assets 42

43 OCL Operating Metrics Volumes ('000 T) Q4'09 Q4'10 YoY% Cement Production % Sales % Refractory Production % Sales % Volumes ('000 T) FY'09 FY'10 YoY% Cement Production 2,687 3,035 13% Sales 2,698 3,008 11% Refractory Production % Sales % Per Tonne Analysis (Rs./T) Q4'09 Q4'10 YoY% Cement Sales Realizations 3,137 3,775 20% EBITDA 797 1,318 65% Refractory Sales Realizations 38,117 33,106-13% EBITDA 2,663 3,550 33% Product Mix for FY10: 97% PBFS C:C ratio at 2.0 Per Tonne Analysis (Rs./T) FY'09 FY'10 YoY% Cement Sales Realizations 3,108 3,690 19% EBITDA 868 1,233 42% Refractory Sales Realizations 32,057 34,236 7% EBITDA 3,825 3,986 4% Geographic Mix FY10 9% 11% 2% 17% 61% Orissa W.Bengal Bihar Jharkhand Others 43

44 OCL - Improved Financials 31-Mar Mar-10 (Rs. Crs) Equity Capital Reserves & Surplus Debt Long Term Working Capital Loan Deferred Tax Total 1,474 1,742 Net Fixed Assets 1,218 1,309 Investments 6 6 Cash & Equivalents Net Current Assets Total 1,474 1,742 Net Debt to Equity Improving balance sheet (Net Debt to Equity of 0.5) opportunity for growth 44

45 Presentation Plan Corporate Highlights Standalone Financial Results Cement Business Integrated Sugar Business Projects Update Standalone OCL Financial Results Contact Us 45

46 Contact Us Conference Call Wednesday, May 26, 2010, at 1800 hours Chaired by Mr. Puneet Dalmia, MD Dial-in Numbers: Mumbai: / Delhi: / Chennai: Bangalore: Hyderabad: National Access: For Queries and Comments Investor Relations - Dalmia Cement (Bharat) Limited Contact: Ms. Nidhi Aggarwal, Head Investor Relations Tel: / 5201/ 5200 nidhi.aggarwal@dalmiacement.com investorquery@dalmiacement.com 46