FEBRUARY 2013

Strictly Private & ConfidentialStr

ictl

y P

riva

te &

Con

fid

en

tial

Disclaimer

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness,

accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information

and opinions are in all events not current after the date of this presentation. Certain statements made in this presentation

may not be based on historical information or facts and may be "forward looking statements" based on the currently held

beliefs and assumptions of the management of J. K. Cement Limited (“Company” or “JKC”), which are expressed in good

faith and in their opinion reasonable, including those relating to the Company’s general business plans and strategy, its

future financial condition and growth prospects and future developments in its industry and its competitive and

regulatory environment.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the

actual results, financial condition, performance or achievements of the Company or industry results to differ materially

from the results, financial condition, performance or achievements expressed or implied by such forward-looking

statements, including future changes or developments in the Company’s business, its competitive environment and

political, economic, legal and social conditions. Further, past performance is not necessarily indicative of future results.

Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance

on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements

to reflect future events or developments.

This presentation is for general information purposes only, without regard to any specific objectives, financial situations

or informational needs of any particular person. This presentation does not constitute an offer or invitation to purchase or

subscribe for any securities in any jurisdiction, including the United States. No part of it should form the basis of or be

relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any

securities. None of our securities may be offered or sold in the United States, without registration under the U.S.

Securities Act of 1933, as amended, or pursuant to an exemption from registration therefrom.

This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.

2


ictl

y P

riva

te &

Con

fid

en

tial

3

Indian Cement Industry: Sustained Demand Growth

• Expected interest rate cuts in 4QFY13 positively impacting demand from housing, infrastructure and industry segments

• Multiple state/general elections in the next 18 months

• The government’s focus on reviving investment demand

• Positive outlook on the Rabi crop rubbing off on rural housing demand.

Demand growth - 8% (FY13) & 10% (FY14-FY15)

The Cement industry has witnessed secular growth in consumption with quarterly variation in a year

The momentum will sustain and gather further steam, driven by:

India, the 2nd largest cement producer in the world with total installed capacity of 350 mn tonnes

Source: CMA

Source: Company Estimates


ictl

y P

riva

te &

Con

fid

en

tial

Expected Slowdown in New Capacity Addition will Improve Utilization of Current Capacity

In the current economic and political scenario, setting up a new Greenfield project has become challenging in view of the following:

• Long arduous process of environmental approvals

• Land acquisition

• Complexity of mineral composition in new areas

• Supporting infrastructure of rail connect and water availability

• Greenfield project cost in current context is $135-$150/ton, depending on the site location

With strong volume growth and decline in pace of capacity addition, utilization (%) will improve, having bottomed out in 2H CY11

The average utilization will be 80% going ahead

• Most regions will operate at 90%+ utilization except Andhra Pradesh, which has capacity overhang

4

Capacity Utilization to improve from FY13 onwards



ictl

y P

riva

te &

Con

fid

en

tial

Prices will Continue to Remain Robust Resulting in Improved Profitability

An annual increase of INR 20-25 / bag is

expected, considering:

• Improvement in demand growth

• Pass-on of cost-push

• Increase in capital costs

• Slowing capacity addition

The rising costs of power, fuel and freight are likely

to stabilize, although at slightly elevated levels

50% of India’s installed capacity has come up in last 5 years

• This relatively new capacity requires an EBITDA/ton of Rs.1,000 – 1,100 to justify equity returns

At the current Replacement Cost and Variable cost levels, an increase of Rs.20-25/bag is necessitated to earn new capacities 15% RoCE

5

A significant improvement is seen in

EBITDA/ton from the trough levels of

~INR525/ton in 2HCY10.

The EBITDA/ton is likely to be

~INR1034/ton in FY13 and INR 1,184/ton

in FY14 (v/sFY12 average of INR

850/ton).



ictl

y P

riva

te &

Con

fid

en

tial

6

Company Background

J. K. Cement Ltd. (“JKCL” or “Company”) is part of the $3 billion conglomerate, JK Organisation. The company is promoted by Dr. Gaur Hari Singhania & Mr. Yadupati Singhania and entered cement business in 1975

2nd largest white cement manufacturer in India with 0.40 MTPA capacity and one of the leading grey cement producers in North India with over 36 years of experience.

Highly reputed brand with extensive nation-wide distribution

Integrated Cement manufacturing company with 7.5 MTPA grey cement capacity

• Nimbahera, Mangrol and Gotan (Rajasthan): 4.5 MTPA

• Muddapur (Karnataka): 3 MTPA

• 105.5 MW of Captive power

• Proximity and access to large high quality reserves of limestone, sufficient to operate cement plants for the next 30 years.

Expanding domestic grey cement capacity to 10.5 MTPA and white cement capacity to 0.60 MTPA and wall putty capacity to 0.60 MTPA by Sept 2014.

• Mangrol (Rajasthan): 1.5 MTPA

• Jhajjar (Haryana): 1.5 MTPA split grinding

• Gotan (Rajasthan): 0.20 MTPA white cement and 0.30 MTPA wall putty

Greenfield Expansion in the Middle East

• Fujairah (UAE): Dual process plant - 0.6 MTPA white cement or 1.0 MTPA Grey cement

JK Cement’s LT credit rating was recently upgraded to AA- by CARE Ratings

Listed on National Stock Exchange (“NSE”) and Bombay Stock Exchange (“BSE”) with a market capitalization of INR 23bn


ictl

y P

riva

te &

Con

fid

en

tial

Key Highlights

7

Cement Sector on Strong Foundation with Positive Future Outlook

• Sustained demand coupled with slowdown in capacity addition resulting in higher capacity utilization

• Improvement in profitability, backed by higher cement prices and operating margins

Integrated manufacturing facilities at multiple locations

• Plants in North & South India enable the company to serve multiple regions

• 105 MW of captive power and large limestone reserves at close proximity, sufficient for the next 30 years

White cement business cash cow with strong growth and profitability

• White cement & wall putty segments contribute consistently to profitability and provide healthy margins & stable cash flows

• White cement capacity to increase from 0.4 mtpa to 0.6 mtpa by Sept ‘14 and augment current market share of 40%.

• Wall putty capacity will increase from 0.3 mtpa to 0.6 mtpa, in phases during next two years

Domestic expansion to consolidate leadership in North and improve operating efficiencies

• Expansion plan to tap new markets, increase market share in North India and derive benefit from VAT incentives for entire production at Mangrol and Haryana

• North based plants operating at 90%+ and newer plants will offer better operating efficiency

• Increase in share from south plant, which serves higher realization markets, will improve margins

Dual process plant in UAE to grow internationally

• Cater to white cement demand in Middle East & North Africa(MENA) and infrastructure development projects in Qatar

• Unit in UAE provides logistical advantage to serve GCC and MENA countries and frees up current export quantity from India for domestic sale


ictl

y P

riva

te &

Con

fid

en

tial

Corporate Milestones

8

May 1975Entered cement business with 0.3 mtpa plant at Nimbahera, becoming one of the first few to enter the cement business

Nov 2004Acquired a cement division from its affiliate through slump sale, on a going concern basis, with a capacity to manufacture 3.55 mtpa of grey cement and 0.3 mtpa of white cement along with 15 MW of captive power plant

June 2005The Company got listed on the Bombay Stock Exchange (“BSE”)

March 2006Successfully raised INR 2960 mn through the Follow on Public Offer (“FPO”)

Sept 2009Commissioned a 3 mtpa Greenfield plant in south at Muddapur, Karnataka

Oct 2012Foundation laying ceremony for brownfield expansion at Mangrol

Dec 2012Company’s long term credit rating upgraded from A+ to AA- by CARE Rating.

2007Enhanced grey cement capacity by 0.50 mtpa, set up a 20MW coal based power plant and 13.2MW of heat recovery based power plant at Nimbahera and enhanced white cement capacity by 0.1 mtpa at Gotan, through IPO proceedsAcquired a 0.1 mtpa white cement unit at Gotan from Nihon Nirmaan and subsequently in 2009, converted the unit to produce 0.47 mtpa grey cement

July 2012“National Award for Excellence in Cost Management – 2011” from The Institute of Cost Accountants of India

Nov 2012“Best Employer Award - 2011” from Employer’s Association of Rajasthan Foundation laying ceremony for setting up a split grinding unit at Jhajjar, Haryana

Nov 2011Foundation laying ceremony at Fujairah to set up dual process plant

10.5


ictl

y P

riva

te &

Con

fid

en

tial

9

Existing Plant locations and Market Reach

Cement Plant

Power Plant

Market Reach

Gotan - Nagaur (Rajasthan) 0.47 MTPA# :Grey Cement 0.40 MTPA* :White Cement 0.3 MTPA: Wall Putty 7.5 MW: Thermal Power Plant

Gotan - Nagaur (Rajasthan) 0.47 MTPA# :Grey Cement 0.40 MTPA* :White Cement 0.3 MTPA: Wall Putty 7.5 MW: Thermal Power Plant

Nimbahera – Chittorgarh (Rajasthan)

3.2 MTPA : Grey Cement 20 MW:Thermal Power Plant 13 MW: Waste Heat Recovery 15 MW (Bamania): Thermal

Plant

Nimbahera – Chittorgarh (Rajasthan)

3.2 MTPA : Grey Cement 20 MW:Thermal Power Plant 13 MW: Waste Heat Recovery 15 MW (Bamania): Thermal

Plant

Mangrol - Chittorgarh (Rajasthan) 0.75 MTPA - Grey Cement

Mangrol - Chittorgarh (Rajasthan) 0.75 MTPA - Grey Cement

Muddapur - Bagalkot (Karnataka) 3 MTPA: Grey Cement 50 MW: Thermal Power Plant

Muddapur - Bagalkot (Karnataka) 3 MTPA: Grey Cement 50 MW: Thermal Power Plant

Pan-India market reach in white cement & presence in 13 states for grey

cement. 105.5MW of

captive power and abundant

limestone reserves

# The grey cement capacity is interchangeable with white cement* The white cement capacity is being expanded to 0.60 MTPA


ictl

y P

riva

te &

Con

fid

en

tial

Strengths

10


ictl

y P

riva

te &

Con

fid

en

tial

Established Brands

11

Ordinary Portland Cement (OPC) is sold under the J.K. Cement brand name,

Sarvashaktiman

Grey Cement

Portland Pozzolana Cement (PPC) and Portland Slag Cement (PSC) variants are sold under the J.K. Super Cement

brand name

White Cement

J.K. White Cement is marketed and distributed across the country

Value Added Products

White cement based Wall Putty and Water Proofing Compound


ictl

y P

riva

te &

Con

fid

en

tial

Superior Product Mix on account of White Cement

12

Growth DriversWhite cement growing at 10% annually and expected to increase on account of:

• Increase in per-capita consumption

• Demand from wall putty, registering 30% annual growth

• Increase in demand for Housing sector

JK White Cement Current market share: 40% Pan-India reach with

established brand White cement contributes

~25% to revenue & ~30% to profitability

Sufficient to service interest liability & tax payout of the entire company

White cement provides J.K. Cement with superior product mix and unique position to leverage on high-growth, superior margin segment

White Cement Industry in India

Installed Capacity: 1.0 mtpa

Only 2 producers – UltraTech Cement & JK Cement

Domestic Sales: 0.9 mtpa

Export Quantity: 0.1 mtpa

Key Export Markets: South-Asia, Middle East & Africa

Entry of new players remote as:

Requirement of Special quality limestone

High investment costs

Problems in mine allocation

Price Realization (INR/ton) – Grey vs White*

* White cement price including wall putty


ictl

y P

riva

te &

Con

fid

en

tial

Advantageous Revenue & Market Mix

13

Increasing share of White Cement in Revenues

Product Mix – Grey Cement (FY12)

Market Mix evenly distributed (FY12)Rising share from West & South to improve Realization


ictl

y P

riva

te &

Con

fid

en

tial

Strategy

14

STRATEGY

Poised to be among top 5 white cement producers globally

Increasing white cement and wall putty capacity to sustain present share of revenue from this business

All plants enjoy proximity to raw material & growth markets

Brown field expansion

Split grinding in Haryana for logistical advantage in National Capital Region

A leading brand in North for Grey Cement. JK White and JK Wall Putty are marketed across the country

Enhance visibility further through print & online media and consumer promotions

Captive power generation to provide long term sustained source of low cost power at fixed rate

Use of waster heat recovery to reduce environmental impact

Dual process plant in UAE to cater to growing markets of Middle East & Africa

Infrastructure development demand in Qatar for soccer world cup


ictl

y P

riva

te &

Con

fid

en

tial

Expansion Plan

Domestic – Rajasthan & Haryana Fujairah, UAE

Nature BrownfieldGreenfield- In a subsidiary, held 90% by JK Cement along with Govt. of UAE (10%)

Capacity 3.0 mtpa, with 1.5 mtpa grinding in Mangrol & 1.5 mtpa split grinding at Jhajjar, Haryana

Dual process cement plant capable of producing 0.6 mtpa white cement or 0.9 mtpa grey cement

Commissioning Haryana: June ’14 Mangrol: Sep ’14

Mar ‘14

Features

Abundant land Captive thermal plant of 25 MW and 9 MW

WHR Railway siding at both locations

Connectivity to road & port Quality limestone reserves Flexibility to switch between white & grey

cement

Capital Outley & Funding Mix

Total project cost: Rs. 1734 Cr.Debt: Rs.1200 Cr.Equity Contribution: Rs. 534 Cr.

Total project cost: Rs. 765 Cr.Debt: Rs. 510 Cr.Equity Contribution: Rs. 255 Cr

Tied-up

Proposal moved to banks and in the process of tie-up. Company also has sufficient internal resources forequity financing

Financial closure achieved for debt portion. Loan of Rs.150 Cr. for promoter contribution and Rs.95 Cr. of own resources remitted

Project Status

Entire land acquired at both locations Mining lease allotted for additional

limestone mine Civil work has commenced Orders placed for equipments with renowned

vendors

Civil & mechanical work progressing on schedule.

60% of the RCC work completed till date Erection of equipment has commenced

Target Market

Haryana unit provides logistical advantage to serve the National Capital Region and helps consolidate JK’s leadership position in the North.

Cater to Middle East and North African white cementdemand and infrastructure development projects in Qatar for soccer world cup

15


ictl

y P

riva

te &

Con

fid

en

tial

16

Past consolidated financials

Income Statement Highlights

INR mn FY '10 FY '11 FY '12H1FY

13

Operating Income 18,268 20,943 25,468 14,483

Other Income 193 299 469 287

Total Income 18,461 21,243 25,936 14,770

Total Operating Expenses 13,891 18,180 20,329 11,623

EBIDTA (B’fore Excep. Items)

4,570 3,063 5,608 3,147

Interest 616 1,185 1,443 665

Depreciation 855 1,128 1,256 633

Exceptional Item

- (72) 78

-

PBT 3,098 823 2,830 1,850

Provisions 853 196 1,085 620

PAT 2,246 626 1,746 1,230

Balance Sheet Highlights

INR mn FY '10 FY '11 FY '12H1FY1

3

Equity Share Capital 699 699 699 699

Reserves & Surplus

12,786

13,250 1,4522

15,762

Networth

13,486

13,949

15,221

16,461

Long Term Loans

10,138

10,584

9,965

9,455

Total Borrowings

10,737

11,183

10,808

10,618

Deferred Tax Liability (net)

1,858

2,109

2,291

2,436

Other Liab & Provisions

3,579

6,746

7,440

8,402

Net Fixed Assets (Incl CWIP)

22,822

23,996

24,071

23,997

Investments

48

42

92

1,483

Cash & Cash Equivalents

1,318

3,215

4,332

3,445

Other Assets

5,473

6,734

7,264

8,993 Note: H1FY13 numbers are on standalone basis.


ictl

y P

riva

te &

Con

fid

en

tial

Latest Quarter Performance

17

ParticularsQ3

FY13Q2

FY13 Change (%) Q-o-Q

Q3 FY13

Q3 FY12 Chang

e (%)Y-o-Y

9M 9MChange

(%)Y-o-Y

FY 12

INR millionDec 31,

2012

Sept 30,

2012

Dec 31, 2012

Dec 31, 2011

Dec 31, 2012

Dec 31, 2011

Mar 31, 2012

Total Operating Income (Net)

6880.8 7148.7 - 3.7% 6880.8 6158.9 11.7% 21404.1 17373.8 23.2% 25467.8

EBITDA 1348.8 1316.8 2.4% 1348.8 1204.0 12.0% 4249.6 3138.8 35.4% 5166.3

PBT 775.6 830.1 - 6.6% 775.6 645.7 20.1% 2625.2 1437.1 82.7% 2857.8

PAT 543.8 540.9 0.5% 543.8 435.2 25.0% 1773.5 969.8 82.9% 1773.3

EPS – Basic & Diluted

7.78 7.74 7.78 6.22 25.36 13.87 25.36

Raw Material Cost %

15.3% 13.1% 15.3% 12.1% 13.6% 12.4% 12.2%

Power & Fuel Cost %

24.8% 24.4% 24.8% 25.3% 25.1% 26.5% 25.7%

Freight Costs % 20.5% 20.4% 20.5% 19.3% 20.0% 19.5% 19.1%

Others % 19.8% 23.7% 19.8% 23.8% 21.5% 23.6% 22.8%

EBITDA % 19.6% 18.4% 19.6% 19.5% 19.8% 18.0% 20.2%

PAT % 7.9% 7.5% 7.9% 7.0% 8.2% 5.5% 6.9%

During 9MFY12, Company’s revenue grew by 23.2% as compare to the corresponding period 9MFY11.

During 9MFY12, Company’s EBIDTA margin improved by 1.8% primarily on account of reduction in power & fuel cost and other expenses.


ictl

y P

riva

te &

Con

fid

en

tial

18

Management

Board Of Directors

Gaur Hari Singhania

Chairman

Yadupati Singhania

Managing Director and CEO

K.B. Agarwal Independent Director

J. P. Bajpai Independent Director

Suparas Bhandari Independent Director

J. N. Godbole Independent Director

Achintya Karati Independent Director

K. N. Khandelwal Independent Director

Raj Kumar Lohia Independent Director

Ashok Sharma Independent Director

Key ManagementExperien

ce

Raghavpat Singhania

Special Executive 5 years

Madhavkrishna Singhania

Special Executive 2 years

A K SaraogiPresident (Corp. Affairs) & CFO

25 years

M. P. RawalPresident (Tech. & Mgmt Service)

37 years

D Ravisankar President (Projects)35

years

R. C. ShuklaPresident (Mktng, Grey Cement)

28 years

Mohan Sharma

Head (Mktng, White Cement)24

years

Kaustubh Dadhich

Head (Mktng, South-West)25

years

B. K. AroraPresident (J.K. White Cement Works)

34 years

K. K. Jalori Plant Head, Nimbahera32

years

A. K. Jain Plant Head, Muddapur26

years


ictl

y P

riva

te &

Con

fid

en

tial

Awards & Recognition

19

Best Employer Award, 2011 Employers’ Association of

Rajasthan

9th National Award for Excellence in Cost Management, 2011 (The Institute of Cost

Accountants of India)

Commemorative Stamp in honor of the Founding

Father

Productivity Excellence Award 2009-10 (Rajasthan State

Productivity Council)

Over All Performance Award by Indian Bureau of

Mines


ictl

y P

riva

te &

Con

fid

en

tial

20

Thank You

FEBRUARY 2013

Documents

Transcript of FEBRUARY 2013