INDIAS LARGEST CEMENT COMPANY Q u a r t e r l y u p d a t e , Q 4 - PowerPoint PPT Presentation

INDIA’S LARGEST CEMENT COMPANY Q u a r t e r l y u p d a t e , Q 4 F Y 1 9 S t o c k c o d e : B S E : 5 3 2 5 3 8 | N S E : U L T R A C E M C O | R e u t e r s : U T C L . N S | B l o o m b e r g : U T C E M I S / U T C E M L X

Macro and Sector updates Key Company updates C O N T E N T S Performance Sectoral guidance GLOSSARY MNT – Million metric tons LMT – Lac metric tons MTPA – Million tons per annum Q1 – April-June Q2 – July-September Q3 – October-December Q4 – January-March 9M – April-December CY – Current year period LY – Corresponding period last year FY – Financial year (April-March)

Macro indicators Q3 GDP IIP growth for Average crude Appreciation in WIP stood at contracted to April-February prices for the INR v/s US$ 3.0% v/s 4.5% 2019 period: quarter of ~2% over during Q3 6.6% v/s 7.7% lowered ~8% FY19 in LY 4% (LY: 4.4%) Q3 FY19 v/s Q3 FY19 , but up 21% in FY19 UltraTech Cement Limited 3

Sector updates The industry in it’s upcycle with double -digit volume for full-year, the first time since FY10 Industry demand growth and capacity utilization trend Cap.Utilisation Industry growth trend  Capacity utilisation for Q4 ~15% ~14% ~14% reached its highest level in ~12% ~12% the last 28 quarters ~ 10% 78% 75% 74%  Annual industry capacity 70% ~6% ~67% 66% 66% utilisation rate increased to ~71%, about 5% 60% 3% improvement over the previous year Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Annual Growth estimated at ~ 12% (Source: Published results and internal estimates) UltraTech Cement Limited 4

Sector updates Key cement industry growth drivers Q4 FY19 Infrastructure Low-cost housing Housing Industrial & commercial Growth drivers ~54% ~12% ~22% ~12% Growth High double digit Office space Major construction Road execution Key contributors growth in housing demand speed now at ~ 30 projects in Madhya bank credits improvement kms/day Pradesh, Uttar Pradesh, West Consistent demand Increasing trends Double digit growth in from rural housing in manufacturing bank lending for Bengal, Odisha and consumption capacity utilization Infrastructure Andhra Pradesh Ports development on full swing (Source: RBI, Research reports and internal estimates) UltraTech Cement Limited 5

Sector updates State/region-wise performance Vol. State/Region I LCH RH UH C Key drivers Gr. Haryana Urban Housing and Infrastructure Delhi + NCR Infrastructure Punjab Panchayat elections and sand availability Himachal Pradesh Heavy rains & snow Rajasthan Infrastructure North Infrastructure and IHB Madhya Pradesh IHB and PMAY Uttar Pradesh Rural IHB and Infrastructure Central IHB and PMAY Maharashtra Infrastructure and Affordable Housing Gujarat Weak rural demand West Infrastructure and Affordable Housing Key growth driver: Infrastructure Spending and Rural Housing I: Infrastructure, LCH: Low-cost housing, RH: Rural housing, UH: Urban housing, C: Commercial, IHB: Individual Home Builder, PMAY: Pradhan Mantri Awas Yojana. UltraTech Cement Limited 6

Sector updates State/region-wise performance State / Region Vol. Gr. I LCH RH UH C Key Drivers West Bengal IHB Bihar Infrastructure and IHB Jharkhand Infrastructure and PMAY Odisha Infrastructure and IHB Chhattisgarh Heavy rains and shortage of funds East Infrastructure, IHB and PMAY Andhra Pradesh Amaravati Development, Polavaram / Telangana Dam and IHB Karnataka Commercial Tamil Nadu Infrastructure and Rural Housing Kerala Post floods rehabilitation work South Infrastructure and Housing Key growth driver: Infrastructure Spending & PMAY I: Infrastructure, LCH: Low-cost housing, RH: Rural housing, UH: Urban housing, C: Commercial, IHB: Individual Home Builder, PMAY: Pradhan Mantri Awas Yojana. UltraTech Cement Limited 7

Sector updates Buoyant demand-supply environment supported Average cement prices improved price hikes in majority of the markets ~ 1-2 % over Q3 Region Eastern India Western India Northern India Southern India Central India Demand Growth Change* Price Flat + 2% Flat + 4 to 5% + 1% * QoQ Change in price UltraTech Cement Limited 8

UltraTech updates Key steps for integration of UltraTech Nathdwara (UNCL) Emerged as a sector benchmark by turning around the asset within a quarter Stabilised operations with Improved pet coke usage Carried out routine plant capacity from Zero to ~ 40% during maintenance activity utilization at 72% the quarter in February 2019 in March 2019 Benchmarked norms to Achieved a cost reduction Started realizing UltraTech emulate UltraTech’s of ~ Rs. 200/t since brand premium quality standards acquisition Achieved an EBIDTA of Rs. 830/t (excluding one-offs), an improvement of ~ Rs. 740/t UltraTech Cement Limited 9

UltraTech updates The next steps for integration of UNCL Benchmark safety Step-by-step Kick-start a cost Strengthen dealer Synergize logistics norms to emulate capacity ramp-up reduction program network to create and procurement UltraTech to take utilisation in order to improve 1,000+ strong costs standards to 80%+ level efficiency norms sales network and achieve with increased further cost productivity reduction -Rs. 50/t PBT breakeven target: Q4 FY20 10 10 UltraTech Cement Limited UltraTech Cement Limited

UltraTech updates Acquisition of Century’s cement assets Transfer of National Company Final order from Likely limestone mines Law Tribunal National Company completion to be concluded hearing scheduled Law Tribunal in Q2 FY20 after the final on 3rd May 2019, likely in May / order comes in following the June 2019 from the National admission of the Company Law petition Tribunal Ready with integration plan UltraTech Cement Limited 11

At UltraTech, We deliver what we promise Focus on Deleveraging the Balance Sheet Reduced Achieved a EBITDA-to cash leverage by Rs. 900 Crs conversion 0.73x in the reduction in ratio improved quarter working capital at ~ 93% Generated free cash flow of ~ Rs. 2180 crore during the quarter UltraTech Cement Limited 12

At UltraTech, We deliver what we promise 98.8 @ 98.8 89.0* 89.0 3.44 2.71 70.3 2.36 2.09 (0.04) Mar'17 Sep'17 Mar'18 Dec'18 Mar'19 Consolidated Net Debt EBDITA Consolidated Capacity (mtpa) India Operations : 2.50x @ Acquisition of 6.25 mtpa capacity in Nov’18 * Acquisition of 21.2 mtpa capacity Jun’17 ` Crs Mar'17 Sep'17 Mar'18 Dec'18 Mar'19 8474 20824 19480 24169 22818** Gross Borrowings Treasury Surplus (8690) (5034) (5419) (2371) (3226) (215) 15790 14062 21798 19593 Net Debt **Including overseas debt of Rs. 2000 crores at an interest rate of 1.6% Reduction of net debt by Rs. 2205 crore in Q4 v/s Q3 FY19 UltraTech Cement Limited 13

UltraTech Performance – India Operations All-round performance Domestic Volume (million tonnes) Turnover (Rs Crs) 69.70 35128 57.75 28930 20.47 10299 17.64 17.33 8750 8742 Q4'18 Q3'19 Q4'19 FY 18 FY 19 Q4 18 Q3 19 Q4 19 FY 18 FY 19 Operating EBITDA (Rs Crs) PAT (Rs Crs) 2376 6597 5883 988 2282 2231 488 398 1703 1398 Q4'18 Q3'19 Q4'19 FY 18 FY 19 Q4'18 Q3'19 Q4'19 FY 18 FY 19 Q4 : Operating EBITDA improved at Rs. 1072/t ; ~ 40% up over Q3 UltraTech Cement Limited 14

UltraTech Performance Key factors behind Q4 performance Increased Increased Improved Enhanced Opened ~110 Price Optimised penetration sales sales contribution USB outlets improvement costs on the deeper into volumes of volumes of of value- during the of 1-2% back of a the retail blended ready-mix added quarter over Q3 reduction in segment cement concrete products in FY19 fuel prices, contributed terms of improved +200 bps +100 bps 10% over over 7% in overall sales consumption over Q3 over Q3 Q3 FY19 terms of rates and no + 30% over FY19 FY19 overall major Q3 FY19 sales shutdowns UltraTech Cement Limited 15

Q4 sales performance – India Operations We deliver what we promise MnT Q4 Annual Particulars  %  % CY LY CY LY Capacity (mtpa) 94.8 85.0 12 94.8 85.0 12 Domestic sales 20.47 17.64 16 69.70 57.75 21 Exports and others 1 4 0.83 0.82 3.00 2.90 Total 21.30 18.47 15 72.70 60.65 20 A year of robust volume growth UltraTech Cement Limited 16

Operating costs 34% 31% 14% of total of total of total cost cost cost Logistics costs : Energy Costs: Raw material costs Lower 2 % y-o-y to up 7 % y-o-y to remained flat y-o-y to Rs. 1146/t Rs. 1057/t Rs. 472/t: • • Improved blending ratio • Lower diesel prices Currency depreciation of 10 % impacted the landed cost of • • Improved lead distance Increased production of imported fuels composite cement • Comparatively poor consumption norms for UNCL Total costs reduced 7% over Q3 and increase 1% YoY Note: Performance represents India operations – Grey Cement UltraTech Cement Limited 17