Bajaj Auto Limited · NSE:BAJAJ_AUTO

Bajaj Auto — Investor Presentation (September 2006)

34 slides from Bajaj Auto's investor presentation, September 2006

  1. Slide 1: Bajaj Auto Limited Analyst Presentation, September 2006

    1 © Bajaj Auto Limited, India, Sept 2006.

  2. Slide 2: Bajaj leader in 3 growth segments of the economy

    Bajaj leader in 3 growth segments of the economy AUTOMOBILES ¾ Leading Indian automobile manufacturer ¾ World’s 4th largest manufacturer of 2 wheelers ¾ World’s largest manufacturer of 3 wheelers ¾ Largest 2 & 3 wheeler exporter from India : 14% of volumes ¾ Strong presence in Indian motorcycle mark

  3. Slide 3: Bajaj Auto: Consolidated

    Bajaj Auto : Consolidated ¾ Consolidated revenues for FY 06 at Rs.120 Revenue Composition : FY 06 billion (USD 2.6 billion), up 54% Invest. & Others 4% Insurance ¾ Market capitalization at Rs. 278 billion (USD 32% 6 billion) Promoters holding : 29.8% ¾ Auto business exhibits strong growth and profit

  4. Slide 4: Automobiles

    AUTOMOBILES 4 © Bajaj Auto Limited, India, Sept 2006.

  5. Slide 5: Growth Drivers: Demographics, Replacement Demand

    Growth Drivers ¾ Demographics ƒ Target age of population, between 18 – 45 years ƒ Addition of 100 million people in target population by 2009 ƒ Increasing job opportunities for the youth - in BPO’s and service sector ƒ Average age of first time buyer, down from 26 to 20 years 6 ¾ Replacement Demand

  6. Slide 6: Growth Drivers: Spread of Finance

    Growth Drivers … 2000 80% ¾ Spread of Finance 1800 FINANCING 70% No. of locations covered 1600 60% ƒ Consumers aversion to debt has 1400 50% 1200 changed 1000 40% 800 30% ƒ Vehicles under finance, up from 600 400 20% 30% to 70% 200 10% 0 0% ƒ Financing of 2Wh’s attractive for FY02 FY 03 FY 04 FY 05

  7. Slide 7: Growth Drivers: Low Penetration

    Growth Drivers … Market preference ¾ Low Penetration 600 ƒ Penetration at 40 per 1000, well below 500 Taiw an that of similar developing countries 400 2W per 1000 ƒ Penetration per 100 household … 300 - 25 in urban area ThailandMalaysia Italy 200 - below 10 in rural area Vietnam Indonesia Japan 100

  8. Slide 8: Two Wheeler Industry: Growth remains robust

    2 Wheeler Industry Growth remains robust Two Wheeler Industry Volumes ƒ Growth over last 5 years … 10 9 8.7 7.6 2 wheelers : 15% CAGR, 8 Volumes in millions 6.6 7 Motorcycles : 25% CAGR 5.6 6 5.1 4.3 5 3.8 ƒ Estimated volumes for FY 07 : 4 3 8.7 million total 2Wh’s, 2 1 7.3 million motorcycles - FY

  9. Slide 9: BAL Performance - Motorcycles

    BAL Performance - Motorcycles Share of Market : FY 04 ƒ Top 3 players hold 95% of the market 12% 24% 16% ƒ Competition from new entrants is limited ƒ CAGR for last 5 years … Market : 25% BAL : 35% 48% Others TVS HH BAL ƒ Consistently outperforming the industry Share of Market : FY 07 (4M) ƒ BAL succ

  10. Slide 10: BAL Strategy: Last few years

    BAL Strategy ……. Last few years ƒ Pre 2000, largely a homogenous market ƒ Major Characteristics - 100 cc, 4 stroke, Fuel efficient, Homogenous Price point USD 1000 ƒ Dominated by very few models Market ( mainly 100 cc ) BAL focused on market segmentation through differentiated products to satisfy va

  11. Slide 11: Bajaj remains No. 1 in Price segment; dominates Premium segment

    Bajaj remains No. 1 in Price segment Price Segment - SOM : FY 05 Price Segment - SOM : FY 07 (4M) 8% 6% 40% 8% 49% 27% 35% 27% BAJAJ HH TVS Others BAJAJ HH TVS Others Bajaj dominates the Premium segment Premium Segment - SOM : FY 05 Premium Segment - SOM : FY 07 (4M) 20% 51% 20% 64% 29% 16% BAJAJ HH

  12. Slide 12: Bajaj fastest growing in value segment

    Bajaj – fastest growing in value segment Value Segment - SOM : FY 05 Value Segment - SOM : FY 07 (4M) 7% 6% 21% 9% 3% 17% 67% 70% BAJAJ HH TVS Others BAJAJ HH TVS Others In 2005-06, value segment grew by 173,000 units, BAL grew by 212,000 units. 06-07 (4M ) 2005-06 2004-05 % % % Resultant, a richer

  13. Slide 13: BAL Strategy: 2005-06

    BAL Strategy ……. 2005-06 ƒ In 2005-06, BAL further segmented the value segment into 100 cc and 125 cc ƒ Launched Discover DTS-i in the 125 cc value segment and Discover 110 cc in the 100 cc value segment The 125 cc segment expanded from 5 to 18% The segment grew by 110,000 units, 60% accrued to BAL

  14. Slide 14: BAL Strategy: going forward

    BAL Strategy …… going forward Leveraging R & D to transform the motorcycle market into a normal “ Value proposition ” pyramid structure of products ƒ To move the customer up the value chain by leveraging the company’s R & D and Technology P 150cc+ technological capabilities. R O ƒ Expanding the mark

  15. Slide 15: Three Wheeler Industry

    3 Wheelers Industry Industry Volumes - in 000's ƒ Growth over last 5 years – 15% CAGR 500 15% CAGR 495 450 ƒ Market segments :- 400 358 420 Passenger Carriers - 68% 350 Volumes 283 334 300 Goods Carrier - 32% 250 ƒ Features : 200 222 231 150 Price point - USD 1600 - 2400 100 Carrying Capacity – 750

  16. Slide 16: BAL's Performance: three wheelers

    BAL’s Performance ƒ Leader in Passenger segment, SOM 80% Numbers in 000's FY 04 FY 05 FY 06 ƒ Though a late entrant in Goods Carrier Passenger vehicles segment, SOM up from 15% to 26% in 3-seater 4yrs Industry sales 222 219 269 ƒ New product – MEGA launched; GC 1000 Bajaj Auto sales 204 188 216 bein

  17. Slide 17: Major Initiatives: Distribution Network

    MAJOR INITIATIVES Distribution Network Dealer Network re-aligned for better market focus Pro-biking Urban Technology showcase Rural Service & Brand building Market Penetration ƒ Network of 500+ dealers and 1,500+ Authorized Service Centres ƒ Propose to expand this touch points from 4,000 to 7,000 no

  18. Slide 18: Vendor Development and Labour Productivity

    Vendor Development ƒ Vendors consolidated from 1200 nos to ~ 200 nos ƒ Vendors plants situated near mother plant of BAL ƒ Expansions based on concept of “ Cluster Layout ” ƒ Facilitating vendors in technical tie-ups with foreign collaborators ƒ Working closely with vendors for design, development, p

  19. Slide 19: Research & Development

    Research & Development ƒ Building our R & D strength and capabilities Current team of over 500 people, and adding ƒ Have a state of art integrated R & D centre, including in-house design, prototyping and pilot production. ƒ New Engineering Research Centre (ERC) being set-up. ƒ CAPEX planned for next

  20. Slide 20: Capacity and Capital Expenditure

    Capacity and Capital Expenditure Product wise capacities ¾ Increase in Capacity Product FY 05 FY 06 FY 07E FY 09P Motorcycles 1,680,000 2,640,000 3,660,000 4,260,000 ƒ Plans to ramp up capacity from 3.1 to Scooters 720,000 240,000 120,000 360,000 5.1 million vehicles by 2009 3 wheelers 300,000 300,0

  21. Slide 21: Overseas Market: BAL Exports

    Overseas Market BAL Exports ƒ BAL, 4th largest 2 wheeler 18 18,000 manufacturer, SOM approximately 5% 15 15,000 Exports as % to Net Sales Exports (Rs. In Million) 12.1 12.2 11.3 ƒ Leading brand in Bangladesh, 12 9,334 12,000 8.2 Srilanka, Columbia, Peru & Egypt 9 7,190 9,000 5,563 6 4.3 6,000 ƒ Move

  22. Slide 22: Financials

    Financials Rs in millions Change FY 04 FY 05 FY 06 over FY 05 Net sales & Other income 49,168 59,147 76,679 30% Treasury & Others 3,535 4,081 4,385 7% Total Turnover 52,703 63,228 81,064 28% Gross Profit - Auto 8,951 9,304 13,690 47% - Treasury & Others 3,111 3,910 4,257 9% - Total 12,062 13,214 17,

  23. Slide 23: Operating EBITDA, ROCE, cash flow and investment portfolio

    Operating EBITDA & Pre Tax Operating ROCE ƒ Highest Operating EBITDA in the Rs. in Million % 16,000 200 industry – 16% 14,000 13,690 180 174 160 ƒ Pre-tax return on operating capital 12,000 9,304 140 10,000 8,951 employed, >150% 8,000 8,633 120 100 6,205 ƒ Negative working capital of Rs. 3,158 6,000

  24. Slide 24: Bajaj Allianz General Insurance Co. Ltd.

    BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD. 24

  25. Slide 25: Bajaj Allianz General Insurance

    Bajaj Allianz General Insurance ƒ Until 1999, wholly Government 250 Gross Premiums 01-02 to 05-06 Rs Bn. owned 200 ƒ In 2000, market opened to private players, foreign investment capped 150 at 26% 100 ƒ Industry growing at 16%, private 50 sector growth at 52% 0 ƒ Gross Premium at Rs. 210 billion Gov

  26. Slide 26: Strengths

    Strengths ƒ Strong reinsurance network – Allianz ƒ Balanced business mix AG, GIC, National Indemnity Co., Swiss ( 42% Auto, 31% property, Re., SCOR. 7% health / travel ) ƒ Allianz AG only one of two in India with expertise in General insurance, Life ƒ Amongst private players highest assurance and Re

  27. Slide 27: Financial highlights 2006

    Financial highlights 2006 Reported highest underwriting profit and ROE in the industry for the 2nd year running - clear focus on profitable growth. 27 © Bajaj Auto Limited, India, Sept 2006.

  28. Slide 28: Bajaj Allianz Life Insurance Co. Ltd.

    BAJAJ ALLIANZ LIFE INSURANCE CO. LTD. 28

  29. Slide 29: Bajaj Allianz Life Insurance

    Bajaj Allianz Life Insurance CAGR – 3 years ƒ Until 1999 - LIC the only player 400,000 Private Insurers – 120% ƒ In 2000, market opened to private 350,000 Market – 28% 102,528 players, foreign investment capped at 300,000 N B P re m iu m (in IN R M n ) 26% 250,000 55,569 200,000 ƒ Market - grossly u

  30. Slide 30: FY 2005-06 Performance – Major Players

    FY 2005-06 Performance – Major Players In INR Mn Private Life Insurers GWP NB Prem ium Deficit/ Share Capital Surplus ICICI PRU 42,610 26,025 (1,778) 11,850 BAJAJ ALLIANZ 31,336 27,168 (367) 4,998 HDFC 15,699 10,427 (1,262) 6,259 BIRLA SUNLIFE 12,557 6,781 (611) 4,600 MAX NEWYORK LIFE 7,881 4,714 (5

  31. Slide 31: Retail Financing

    RETAIL FINANCING 31 © Bajaj Auto Limited, India, Sept 2006.

  32. Slide 32: Bajaj Auto Finance

    Bajaj Auto Finance ¾ Retail financing 30000 700 655 25000 549 600 542 ƒ Fastest growing segment Disbursals Rs. millions 425 500 20000 19545 ƒ Spread of consumerism to towns and 7825 400 15000 14070 rural areas 6250 300 10000 9780 ƒ Untapped potential immense – still 7840 4090 4780 11720 200 5000 hig

  33. Slide 33: To summarize … Vision 2010

    To summarize … ‰ Highest growth rate in 2 & 3 wheeler Industry. ‰ Huge opportunity to leverage cost leadership, technological strengths, scale economies and free cash to expand overseas. ‰ Significant investments in sunrise areas of insurance and retail finance. Vision 2010 … ‰ Mobilise India – by s

  34. Slide 34: Thank you

    Thank you No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from Bajaj Auto Limited, Mumbai-Pune Road, Akurdi, Pune-411 035, India. Certain part of this presentation describing estimates, objectives and projections may be a “f

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