Greaves Cotton Limited · NSE:GREAVESCOT
Greaves Cotton — Investor Presentation (May 2012)
39 slides from Greaves Cotton's investor presentation, May 2012
Slide 1: Greaves Cotton Limited Investors Meet May 2012
GREAVES COTTON LIMITED INVESTORS MEET May 2012
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties
Slide 3: Contents
CONTENTS About GCL Key Differentiators Financial Growth Plans 3 3
Slide 4: Greaves is one of the leading engineering companies in India
GREAVES IS ONE OF THE LEADING ENGINEERING COMPANIES IN INDIA... LIGHT ENGINE UNIT V, AURANGABAD: High Quality and Efficient Manufacturing 4
Slide 5: Rich heritage of over 150 years
… WITH RICH HERITAGE OF OVER 150 YEARS • Established in 1859 by James GREAVES, joined later by George COTTON • Manufactures wide range of industrial products such as Diesel / Petrol Engines for Automotive and Industrial applications, Gensets, Pumpsets, Farming Equipment and Construction Equipment at
Slide 6: Greaves has made rapid strides over the past decade
GREAVES HAS MADE RAPID STRIDES OVER THE PAST DECADE 2012 Crosses three million in light 2010 diesel engines Acquires Ascot 2008 International Technology Centre FZC, UAE and manufacturing facility for the new G Series engines opens in Pune. 2004 Rolls Out Millionth Light Diesel Engine 2011 Shendra Pl
Slide 7: Five business divisions with automotive the largest
THE COMPANY OPERATES THROUGH FIVE BUSINESS DIVISIONS WITH AUTOMOTIVE BEING THE LARGEST GCL - Business Divisions FARMING AUTOMOTIVE I INDUSTRIAL AUXILIARY CONSTRUCTION EQUIPMENT ENGINE ENGINE POWER EQUIPMENT Light Diesel Engines Diesel Engines from Fuel efficient, rugged Construction Wide r
Slide 8: Diversified product profile
GREAVES OFFERS A DIVERSIFIED PRODUCT PROFILE TO ITS VALUED CUSTOMERS… GCL - Major Products FARMING EQP AUTOMOTIVE INDUSTRIAL ENGINE AUXILIARY POWER CONSTRUCTION EQP Single Cylinder Marine Engine Power Tiller Portable Genset Road Compactor Engine Twin Cylinder 8 Cylinder Engine Reaper Canopised Gense
Slide 9: Serves multiple sectors of industry
… AND SERVES MULTIPLE SECTORS OF INDUSTRY GCL – End Use Sectors FARMING EQP AUTOMOTIVE INDUSTRIAL ENGINE AUXILIARY POWER CONSTRUCTION EQP • Medium & • 3 Wheeled • Agriculture • Manufacturing • Concreting Small Farms Commercial Enterprises Industry Vehicle • Fire Fighting • Gardens & manufacturers •
Slide 10: Shareholding pattern
SHAREHOLDING PATTERN SHAREHOLDING PATTERN (as on 31.03.12) 12.6% • Share Capital : INR 48.84 Cr 51.6% • Listing : 35.8% • Bombay Stock Exchange (BSE) • National Stock Exchange (NSE) Promoters • Market Capitalization : INR 2,274 Cr (as on Institutional Investors 31.03.12) Indian Public GREAVES COTTON
Slide 11: Contents
CONTENTS About GCL Key Differentiators Financial Growth Plans 11 11
Slide 12: Value proposition: technology, value and reach
GREAVES VALUE PROPOSITION RESTS ON THE PILLARS OF TECHNOLOGY, VALUE AND REACH TECHNOLOGY GCL VALUE REACH 12
Slide 13: Strong in-house product development capabilities
THE COMPANY DERIVES STRENGTH FROM STRONG INHOUSE PRODUCT DEVELOPMENT CAPABILITIES…. New Products Introduced • 900 cc BSIII engine delivering 18 hp for automotive applications • 265 cc BSIII engine delivering 9.5 hp for automotive applications • 6 cylinder: 196 HP BS III diesel engine for industrial
Slide 14: World class technology centers
.... AT OUR WORLD CLASS TECHNOLOGY CENTERS Strong R&D set-up in India with State-of-Art Technology Centers for Engine Development at Aurangabad and Pune with over 100 R&D personnel Technology Center for Farming equipment development under construction Technology Centre at Aurangabad State-of-t
Slide 15: State of the art manufacturing facilities
OUR STATE OF THE ART MANUFACTURING FACILITIES DELIVER QUALITY PRODUCTS TO OUR CUSTOMERS • Greaves has 12 well equipped manufacturing facilities at Aurangabad, Pune , Ranipet, Gummidipoondi and Germany • Our high quality, low cost manufacturing facilities leverage: o New generation manufacturing equi
Slide 16: Strong sales and service network in India
GREAVES ALSO HAS A STRONG SALES & SERVICE NETWORK IN INDIA Strong Pan-India Reach 16
Slide 17: Strong relationships with stakeholders
WE BELIEVE THAT OUR STRONG RELATIONSHIP WITH VARIOUS STAKEHOLDERS DRIVES OUR SUCCESS Our Employees Our Channel Partners Our Customers Our Community 17
Slide 18: Contents
CONTENTS About GCL Key Differentiators Financial Growth Plans 18 18
Slide 19: Snapshot - key achievements 2011-12
SNAPSHOT – KEY ACHIEVEMENTS 2011-12 KEY ACHIEVEMENTS 3 millionth light diesel engine rolled out by Automotive Division Shendra Plant (Automotive Engines) and Chakan Plant (Gensets) commissioned Ranipet union agreement signed: pending for last 5 years Ranipet Unit expansion doubling the capac
Slide 20: Revenue grew but last quarter slowed
REVENUE FOR THE YEAR GREW BUT THE LAST QUARTER WITNESSED SLOWDOWN REVENUE Q4 (INR Cr) REVENUE (INR Cr) 1800 470 1753 1750 465 460 454 1700 455 10% 1650 450 -2% 445 1600 445 1600 440 1550 435 1500 430 FY 11 FY 12 FY 11 FY 12 EBITDA Q4 (INR Cr) EBITDA (INR Cr) 80 14.5% 15.0% 14.8% 70 14.5% 240 16.0% 1
Slide 21: Exceptional income; like-to-like profitability under pressure
COMPANY HAD AN ADVANTAGE OF EXCEPTIONAL INCOME; LIKE TO LIKE PROFITABILITY CAME UNDER PRESSURE PBT Q4 (INR Cr) PBT (INR Cr) 300 14.3% 14.3% 120 21.6% 25.0% 250 14.2% 100 250 250 20.0% 200 14.1% 80 14.8% 96 13.9% 15.0% 150 14.0% 60 40 67 53 10.0% 100 11.8% 13.9% 207 11.9% 207 20 223 5.0% 50 223 13.8%
Slide 22: Revenue growth driven by auto and industrial engines
THE COMPANY ACHIEVED REVENUE GROWTH DRIVEN BY AUTO AND INDUSTRIAL ENGINES REVENUE DRIVERS: Revenue up by 10%... Automotive segment growth driven by 4 Wheel SCV (< 1T) segment Farming equipment maintained its revenue contribution- lower sales in pumpsets offset by faster growth in light farming e
Slide 23: Sustained growth in last 5 years
THE COMPANY HAS SUSTAINED GROWTH IN LAST 5 YEARS REVENUE (INR Cr) EBITDA (INR Cr) CAGR CAGR of 11% 1753 of 9% 1600 237 237 1347 213 1150 168 1041 126 FY 08 FY 09 FY 10 FY11* FY12 FY 08 FY 09 FY 10 FY11* FY12 PBT (INR Cr) PAT (INR Cr) 185 250 223 207 155 144 173 110 118 138 80 56 FY 08 FY 09 FY 10 FY
Slide 24: ROCE at 33% and ROE at 31% in FY12
RETURN ON CAPITAL EMPLOYED AT 33% AND ROE AT 31% IN FY12 RETURN ON CAPITAL EMPLOYED (%) 52% 44% 38% 39% Reasons for decline: 33% 22% Pressure on profitability due to FY07 FY08 FY09 FY10 FY11* FY 12** product mix and pricing pressure on certain sectors RETURN ON EQUITY (%) Investments made in 48%
Slide 25: Better shareholder returns in FY12
THE COMPANY PROVIDED BETTER SHAREHOLDER RETURNS IN FY12 FY 08 FY 09 FY 10 FY 11* FY 12** EPS (Rs.) 4.5 2.2 4.8 6.3 7.6 DPS (Rs.) 1.6 1.4 1.4 1.5 2.0 Avg. Market Price (Rs) 42.2 19.8 30.3 76.6 85.5 Net Worth (Rs. Cr) 371 404 437 522 665 BVPS (Rs.) 15.2 16.5 17.9 18.4 27.2 Net Debt ( Rs. Cr) 49 44 5 2
Slide 26: Snapshot - income statement
SNAPSHOT - INCOME STATEMENT FY11 FY12 Rs Cr Q4 12M Q4 12M Revenue 454 1600 445 1753 EBITDA 66 237 60 237 Depreciation 7 28 9 32 Interest 1 1 1 3 Other Income 9 16 3 6 PBT 67 223 53 207 Income from Exceptional Items 0 0 43 43 PBT after Exceptional Items 67 223 96 250 PAT (excluding exceptional items)
Slide 27: Snapshot - balance sheet
SNAPSHOT - BALANCE SHEET Rs Cr Mar’11 Mar’12 Equity & Liabilities Shareholders Fund 526 669 Non- Current Liabilities 55 54 Current Liabilities 400 382 Total 981 1106 Applications Fixed Assets (Net) 273 346 Investment 17 59 Current Assets 600 611 Other Non- Current Assets 91 90 Total 981 1106 27
Slide 28: Key financial and operational ratios
SNAPSHOT - KEY FINANCIAL & OPERATIONAL RATIOS Category Unit FY 11 FY12 EBITDA Margin % 14.8% 13.5% Net Profit Margin Profitability % 9.7% 8.2% (exc. exceptional items) Net Profit Margin % 9.7% 10.6% (inc. exceptional items) Fixed Asset Turnover Times 5.9 5.1 Average Debtor Days Days 59 53 Activity A
Slide 29: Financial stability
FINANCIAL STABILITY Credit Rating upgrade from AA - to AA by Fitch Consistent track record of paying quarterly dividends Consistent Revenue growth- Improvement in Operating Cash Flows Low Gearing: Nearly debt-free 29
Slide 30: Contents
CONTENTS About GCL Key Differentiators Financial Growth Plans 30 30
Slide 31: Key sectors expected to sustain growth
KEY SECTORS OF GREAVES’ PRESENCE EXPECTED TO SUSTAIN GROWTH AUTOMOTIVE • Commercial Vehicle segment is dependent on level of industrial activity in the country. While, decline in industrial activity during the past year impacted the heavier load SECTOR categories, the LCV segment maintained a health
Slide 32: Key sectors expected to sustain growth
KEY SECTORS OF GREAVES’ PRESENCE EXPECTED TO SUSTAIN GROWTH INDUSTRIAL • Growth in industrial sector expected to revive towards second half of the current financial year. The long term growth trend remain intact and the sector will continue to attract SECTOR investments in manufacturing, infrastruct
Slide 33: Strategic growth levers to expand footprint
GREAVES IS WORKING ALONG STRATEGIC GROWTH LEVERS TO EXPAND ITS FOOTPRINT & DRIVE PROFITABLE GROWTH High Product Segments Med Low Customer Segments Local Multiple Few Regional Global Geographic Spread
Slide 34: Four important growth levers
THE COMPANY HAS IDENTIFIED FOUR IMPORTANT GROWTH LEVERS • Strengthen in-house product development • Strengthen channel partners capabilities • Enhance International Business • Close gaps in product portfolio • Enter into alliances with global players • Develop products for adjacent markets 1 2 Produ
Slide 35: Growth drivers for each business
GROWTH DRIVERS FOR EACH BUSINESS ARE ALIGNED TO THESE LEVERS AUTOMOTIVE • Expand into higher capacity engines (>1T) • Evaluate contract manufacturing opportunities • Strengthen R&D capability for higher capacity engines FARMING EQUIPMENT INDUSTRIAL ENGINE • Strengthen portfolio of light • Develop ne
Slide 36: Investing to build growth platforms and capabilities
IT IS INVESTING TO BUILD GROWTH PLATFORMS AND CAPABILITIES • Capex of Rs 105 Cr. during 2011-12 was primarily focused on capacity creation in light diesel and petrol/kerosene engine • Capex of ~ Rs 150 Cr. during 2012-13 will predominantly focus on technology and product development capabilities and
Slide 37: Plans to improve brand visibility
THE COMPANY HAS WELL LAID OUT PLANS TO IMPROVE BRAND VISIBILITY 37
Slide 38: Initiatives to strengthen corporate sustainability
THE COMPANY ALSO UNDERTAKES INITIATIVES TO STRENGTHEN CORPORATE SUSTAINABILITY Greaves is actively engaged in the empowerment of the disadvantaged and weaker sections of the society in Aurangabad (Maharashtra) and Ranipet (Tamil Nadu) Education, along with intellectual and skill development to e
Slide 39: Thank You
www greavescotton.com Thank You Customers, Vendors, Channel Partners, Business Associates and all our Employees for helping us cross the milestone of rolling out the 3 millionth light diesel engine on February 17, 2012 Syn w i j GREAVES SINCE 1859 heey ENGINEERING