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Rodolfo Danielli Chief Operating Officer Milano, February 23 rd , 2006

India: the Italcementi experience. Rodolfo Danielli Chief Operating Officer Milano, February 23 rd , 2006. Index. Italcementi Group. The Indian Market. Indian Presence. The Group has secured a worldwide presence... (at 30/06/2005). ALBANIA. NORTH AMERICA (U.S.A./CANADA). 1. 9 1. 5

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Rodolfo Danielli Chief Operating Officer Milano, February 23 rd , 2006

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  1. India: the Italcementi experience Rodolfo Danielli Chief Operating Officer Milano, February 23rd , 2006

  2. Index Italcementi Group The Indian Market Indian Presence

  3. The Group has secured a worldwide presence... (at 30/06/2005) ALBANIA NORTH AMERICA (U.S.A./CANADA) 1 9 1 5 1 BULGARIA SPAIN 2 37 9 3 KAZAKHSTAN 1 MOROCCO 17 3 3 1 INDIA 2 MAURITANIA THAILAND 1 3 35 GAMBIA 1 SRI LANKA 1 FRANCE 193 81 9 1 EGYPT (*) CIPRUS (**) ITALY BELGIUM 5 1 1 11 3 246 52 18 8 TURKEY GREECE 4 1 18 1 TOTAL GROUP 1 8 2 152 Quarries 4 Terminals (one of which is also grinding center)Over 20.000 Employees (*) 19 Countries62 Cement plants 12 Grinding centres 570 Concrete plants (*) including 2 plants of Asec Cement, consolidated from August 2005 (**) Not consolidated on a line-by-line basis (*) N° employees in the consolidated area

  4. CEO Carlo Pesenti Staff Staff COO Rodolfo Danielli Staff Staff North America Europe MENA a) Asia - United Staes - Canada - Puerto Rico - Italy - France - Belgium - Spain - Greece - Morocco - Egypt - Turkey - Cyprus - Bulgariab) - India - Thailand - Kazakhstan Mature Emerging ...with an organisation focused on four strategic areas... a) Middle East North Africa b) Included in MENA for consistency with Italcementi Group strategic portfolio

  5. Million tons Italy > 70 Other mature countries ~ 50% Emerging countries 42% > 45 11% 47% 31% ~ 50% > 20 42% 27% 94% 1997 1992 2002 2007 a) full capacity included for participation > 33%, ...and a perspective of further growth in emerging markets... 1992-2007 Influenced Cement Capacity a)

  6. Kazakhstan Shymkent Cement India Zuari Cement (JV 50%) Thailand Asia Cement ...particularly in Asia where the Group already operates in Kazakhstan, India and Thailand (at 30/06/2005)

  7. Index Italcementi Group The Indian Market Indian Presence

  8. 1.080 m Population: 1,5% Pop. CAGR '99-'04: 610 US $ GDP per head: GDPa) CAGR ’99 - ’04: 5,7 % GFIb) CAGR ’99 - ’04: 6,9 % Cement sector ‘04: 55 Companies: 127 Plantsc): 146 Production Capacityc) (mt): Cement Consumption: • million tons: • Kg/inhab: 119,4c) 110 Source: macroeconomic data, EIU January ’05 cement data, Cement Manufacturers Ass. a) Gross Domestic Product b) Gross Fixed Investment c) CMA plants with production capacity > 200 kt, 2005 est. 131 mt India is the second largest national cement market worldwide, driven by an emerging economy and a buoyant population …

  9. GDP at cost of factors by origin (index 1993-94=100) Agricolture Construction Industry Services GDP Source: Ministry of Statistics ...with a construction sector showing solid growth, overcome in recent years only by the growth of Services... • Construction sector accounts today for 5% of Indian GDP • Strong growth in recent years driven by non-residential (incentives to FDI) • Increasing weight of residential (easier access to financial credit, strong development of major cities)

  10. ...and is expected to further grow due to high development rates and infrastructure programs... Infrastructures development supported by private/public partnerships: • National Highway Development Plana) • National Marine Development Programb) • Airports development c) • Relaunch of railways d) Creation of 52 thousands km of new highways and modernisation of secondary roads Modernisation of 180 Indian ports New airports (Hyderbad, Bangalore) and modernisation of existing (New Delhi, Bombay) New 9 thousand km railway corridor

  11. ... with a positive impact on cement demand growth in the medium and long term India cement demand, mt/year Long term expected growthCAGR 5,5%

  12. Index Italcementi Group The Indian Market Indian Presence

  13. Italcementi plants in South India • January 2001:acquisition of 50% of Zuari Cement (Yerraguntla) • Capacity 1.950 kt • Net Sales 2005: USD82,6m Sitapuram Yerraguntla • January 2002:acquisition (through Zuari Cement) of Sri Vishnu Cement (Sitapuram) • Capacity 1.250 kt • Net Sales 2005: USD39,5m Italcementi invested USD120m since 2001 to acquire 2 plants with 3,2 mt capacity and a 7%a)- 8%b) share of the South India market... a) on total market b) on CMA market

  14. ...with the aim to further develop its presence in the country • It has taken time to fully assimilate the complexities of operating in the country (challenging cement market, strong price pressure, changing fiscal environment) • The high expertise of local human resources allows today to maintain only one expatriate as General Manager in the organisation, and various plans are underway to capitalise Groupwide on Indian resources • Several important industrial investments are underway: - 40 MW steam coal power plant- second clinker line in Yerraguntla- grinding centre in Chennai • The Group is continuosly seeking opportunities for further growth in the Country through acquisitions

  15. India: a successful integration and an increasingly bright future

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