Presentation By Ambuja Cement November 19 2003 1

Presentation By Ambuja Cement November 19, 2003 1 Ambuja Cement

Indian Economy GDP Growth - Estimates (2003 - 2004) 1 Q 2004 (A) Estimated ’ 03 -04 Service Sector 7. 6 % 7. 3 % Industrial Sector 5. 8 % 5. 0 % Construction Sector 5. 7 % 6. 7 % Agriculture Sector 1. 7 % 10. 7 % Economy expected to grow by about 7. 4% A- Actual CMIE - Estimates 2 Ambuja Cement

Cement in India Why ? ã Indian economy will keep growing in band of - 5 - 7% annually ã To achieve larger GDP growth rate Country will need more Roads, Ports, Irrigational facilities & other Infrastructure ã Housing will continue to be a major construction area ã Cement as a product or technology does not suffer from obsolescence ã There is no “Substitute” for Cement 3 Ambuja Cement

Roads - New Dimension ã Major Investments in Road Development ã Special Cess of Rs. 1. 50 per liter on petrol and diesel for Road Development ã Total outlay over next 2/3 years - Rs. 600 Billion 4 Ambuja Cement

Road Development Golden Quadrilateral- 5846 Sq. . Km (Already Completed 1408 km)(Expected completion - June 2005) North-South & East-West Corridors - 7300 Sq. . Km ( Already Completed 980 km) (Expected completion - 2007) 48 New Road project - 10000 Km. (Expected completion - 2006) Government commits to 25% Concrete Roads Expected additional consumption -3/4 mn tonnes per annum Source : NHAI 5 Ambuja Cement

Housing Construction Huge potential: Unfulfilled demand - 33 mn units Increasing disposable income Younger generation aspiring to have “Own House” Low real estate prices Easy availability of Housing Finance - Growing over 30% Interest Rates have come down by 700 bps in last 3 years Monthly instalment on mortgage is now equivalent to rentals 6 Ambuja Cement

Cement Supply Other side of the equation 7 Ambuja Cement

Cement Supply - The Dynamics Cement Production 2003 111 mn tonnes Maximum Clinker Production Capability (Including Sanghi) 103 mn tonnes Current Clinker to Cement Conversion Ratio (the best in last 5 years) 1. 21 times Maximum Cement Production Capability 127 mn tonnes at Conversion Ratio - 1. 23 8 Ambuja Cement

Cement Supply - A Reality Check ã No new cement capacity under construction ã Lenders unwilling to fund new cement plants ã Maximum Cement production capability at a conversion ratio of 1. 23 - 127 mn tonnes ã Existing players going through Consolidation 9 Ambuja Cement

Indian Cement Industry Next 3 Years mn tonnes Financial Clinker Year Capacity Cement Demand Conversion Production Ratio at Peak 8% ( Maximum Level) 2003(A) 103 - 2004(E) 103 1. 21 125 117 2005(E)* 105 1. 22 128 126 2006(E)* 107 1. 23 132 136 * On account of some debottlenecking A- Actual E- Estimated 10 111 Ambuja Cement

Cement Outlook ã Cement demand growth should exceed 8% if the GDP is growing at over 6 % ã FY 2003 -04 would be the First year in last decade to not to have a single new plant commissioning ã Next 2 years also there is no new capacity expected ã Cement Demand to expected exceed Supply after a gap of several years All these point to good demand & better Cement Prices 11 Ambuja Cement

Ambuja Cement Punjab HP Rajasthan Gujarat Chattisgarh WB Cement factories Sea terminals Maharashtra mn tonnes 1986 2003 Capacity 0. 7 14. 0 Growth of 20 times in 15 years 12 Ambuja Cement

Growth With A Sound Business Model 13 Ambuja Cement

Our Business Model ã Own Infrastructure -Logistics Management ã Strong brand & efficient distribution ã Presence in prime markets ã Lowest cost cement producer 14 Ambuja Cement

Own Infrastructure ã 7 Owned Cement Ships for transporting Cement by Sea ã Large port in Gujarat to handle export of Cement ( 2 mn tonnes this year) & Import of Coal / Oil ã 3 Cement receiving terminals ã 190 MW of Captive Power Plants at various Cement Plants to give reliable and cheap power 15 Ambuja Cement

Strong Brand India - A bagged market Individual home builder - key driver of demand Our focus : ã Best quality cement ã Good packaging ã Logistic management - strong distribution network ã Customer service Ambuja Cement - Most preferred brand - Fetching higher realisation 16 Ambuja Cement

Lowest Cost Producer Rs. / tonne FY 2003 FY 2002 (Decrease) (%) Power 187 179 Fuel 227 254 (11) Raw material 136 133 Consumables 47 48 Direct cost 597 614 17 Increase / 4 2 (2) (3) Ambuja Cement

Gujarat Ambuja Cement - Shareholding GAC ( 12 mn ) 40% Pvt. Equity Investors ACIL 60% ACC 14. 4% ( 17 mn ) ACEL 94% ( 2 mn ) 18 Ambuja Cement

Convertible Bonds Brief terms: Date of Issuance Coupon Maturity Conversion Price Conversion Amount Conversion Option of the Bondholder Yield to maturity at redemption Call Option of company January 2001 1%p. a. January 2006 Rs. 222 Into GDRs/ Shares US$ 100 million Any time till maturity 4. 6% From January 2004 till Maturity 19 Ambuja Cement

Gujarat Ambuja Cements Limited (Effect of Conversion) Rs. Million Before After Sources of Funds Shareholders’ Funds Deferred Tax 3053 Convertible Bonds Debt 12436 Total 36269 Application of Funds Gross Fixed Assets Less: Depreciation Net Fixed Assets 20119 Investments in ACIL Other Investments Net Current Assets Total 36269 16166 20680 3053 4614 -12436 36269 30239 10120 20119 8572 2445 5133 36269 20 Ambuja Cement

Debt Profile (As of 30. 9. 2003) % Tenor Long Term Short Term Total Mix Rupee Debt Foreign Currency Debt Total 21 79 21 100 56 44 100 Ambuja Cement

Gujarat Ambuja Cement Limited Valuation EV/Ton US$ 90 EV/EBIDTA 9 times Cash Earning per Shares (CEPS) Rs. 27 Earning Per Shares (EPS) Rs. 14 Price to Cash Earning 10 times Debt/ Equity -( on Conversion) 0. 60 Debt/ EBIDTA - (on Conversion) 2. 4 times 22 Ambuja Cement

THANK YOU 23 Ambuja Cement