Cummins India Limited · NSE:CUMMINSIND
Cummins India — Shareholder Meeting (August 2016)
46 slides from Cummins India's shareholder meeting presentation, Aug 4, 2016
Slide 1: Cummins India Limited 55th Annual General Meeting
Cummins India Limited 55th Annual General Meeting Anant J. Talaulicar August 4, 2016
Slide 2: Cummins Inc.
Cummins Inc. Engine Business Distribution Business Power Systems Business Components Business 1919 - Commenced in Cummins Operations in 190 Countries Columbus, Indiana Business Services 90 manufacturing locations 54,600 employees 600 distributor locations Capex and R&D: $1.5B 7,200 dealer locations
Slide 3: Cummins Business Model
Cummins Business Model Guiding Principles - Vision, Mission, Core Values, Personality Cummins Operating System (COS): – Ten Common Practices – Functional Excellence Framework (FE Statements, Measures, Processes, Tools, People Development) – Common Business Processes (Strategy, Performance Manage
Slide 4: Why We Are Here – Guiding Principles
Why We Are Here – Guiding Principles Vision: “Making people’s lives better by unleashing the Power of Cummins” Personality: Decisive Driven To Win Agile Passionate Caring Core Values: Mission: Integrity Motivating people to act like owners working together Innovation Exceeding cust
Slide 5: COS 10 Practices
COS 10 Practices Put the Synchronize Design quality in Involve people Ensure equipment customer first, flows (material, every step of and promote and tools are and provide physical and the process teamwork available and real value information) capable Create Establish the Treat preferred Follow comm
Slide 6: Cummins Inc. Goal Tree 2016
Cummins Inc.- Goal Tree 2016 Common Critical Initiatives Strategic Objectives Principles Become Excellent in Customer Support Develop a Growth Mindset Leverage Achieve Complementary Move from Multinational to Global Finance Businesses Targets Achieve Supply Chain Excellence Over the Increase Meet Fi
Slide 7: External Environment – Continues to be Challenging
External Environment – Continues to be Challenging 10% GDP Growth Rates – Key Economies 8% 6% 4% 2% 0% USA EU Brazil Russia China India -2% -4% Source: IHS projections, May 2016 India: on Fiscal year basis
Slide 8: Cummins Inc. Revenues
Cummins Inc. Revenues $20,000 $19,221 $19,110 $18,048 $17,334 $17,301 $17,500 $15,000 $14,342 $13,048 $13,226 $12,500 $11,362 $10,800 Millions $10,000 $7,500 $5,000 $2,500 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 9: Cummins Inc. EBIT%
Cummins Inc. EBIT% 18.0% 16.0% 14.2% 14.0% 13.6% 13.2% 12.5% 12.5% 12.5% 12.0% 10.0% 9.4% 9.1% 8.0% 7.1% 6.0% 4.0% 2.0% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: All numbers exclude special items (restructuring 2008, 2009, 2012 and 2015 and LDD impairment) Cummins Confidential
Slide 10: India Organization Snapshot
India Organization Snapshot Cummins in India Entities : Business Units : 1. Cummins India Ltd. Engine On-Highway 2. Cummins Research & Technology India Pvt. Off-Highway Ltd. Power Systems 3. Cummins Generator Technologies India Pvt. • High Horsepower Engines Ltd. • Generators 4. Cummins Tech
Slide 11: Cummins in India
Cummins Turbo Cummins in India Technologies Fleetguard Filters Valvoline • In India since 1962 Rudrapur Cummins • 7 companies (including 3 JVs) Cummins Sales Tata Cummins • Over 10,000 employees & Service Fleetguard Filters • INR 1.6B combined sales NCR Jamshedpur Engine Business (32-500 HP) Cummins
Slide 12: Strategic Leadership Team
Strategic Leadership Team Anant Talaulicar Chairman and Managing Director – India ABO Sandeep Sinha Rajiv Batra Open Position Ashish Shveta Arya Qureish Vikas Thapa Venkat Chief Operating Finance & Chief Aggarwal Strategy & Shipchandler Human Ramana Officer Facilities Information Government Chief of
Slide 13: Operating Leadership Team
Operating Leadership Team Sandeep Sinha Chief Operating Officer – India ABO Ashwath Ram Mandar Deo Amit Kumar Bhavana Anjali Pandey Niranjan Sandeep Engine HHP Business Power Bindra Components Kirloskar Kalia Business and Power Generation M&S, Distribution Business & CTT Fleetguard Valvoline Systems
Slide 14: Goal Tree 2016
Goal Tree 2016 Common Critical Initiatives Become Excellent in Customer Support Objectives Strategic Principles Develop a Growth Mindset Domestic Market Share Move from Multinational to Global Achieve Leadership Financial Achieve Supply Chain Excellence Targets Over the Cycle Meet Financial and Oper
Slide 15: Cummins India Limited – Year 2015-16
Cummins India Limited – Year 2015-16 Sales and profits – Net Sales : ₹ 4,603 crores – PBT : ₹ 906 crores – PBT% : 19.7% Dividend at 700% (last year : 700%) Investments for growth – India Technical Center in Pune – India Office Building in Pune – Training Centers in Phaltan
Slide 16: Cummins India Limited - Financial Performance
Cummins India Limited - Financial Performance 2015-16 Key Notes: 1. Raw material cost: Impacted by adverse mix and E&O provision 2. Other Income: Sale of KPIT shares in 2014-15 (₹ 83 Crore)
Slide 17: Sales and Profit After Tax (PAT) – Last 5 years
Cummins India Limited - Sales and Profit After Tax (PAT) – Last 5 years Sales PAT ₹ Cr. ₹ Cr.
Slide 18: Sales: Domestic & Exports
Cummins India Limited - Sales: Domestic & Exports ₹ Cr.
Slide 19: Sales: By Business Units
Cummins India Limited - Sales: By Business Units CAGR : - 0.3 % CAGR : 9 % ₹ Cr. CAGR : 6 % CAGR : 1 % CAGR : - 27 %
Slide 20: 2015 Estimated Market Share
Cummins India Limited - 2015 Estimated Market Share Power Generation*1 On-Highway*1 ICV RLHP 10% (7.5 - 12T) 6% MCV LHP 34% (12 - 16T) 15% MHP 50% HCV (>16T) 59% HHP 52% Bus (>7.5) 22% Industrial*2 Off-Highway*2 Rail 80% Construction 58% Mining 40% Compressor - Water Well 100% Marine 35% Compressor
Slide 21: Strong ROE Performance Despite Stepped Up Investments
Cummins India Limited - Strong ROE Performance Despite Stepped Up Investments * 2014-15 ROE higher by 3% due to sale of KPIT share (₹ 83 Cr)
Slide 22: Dividend Trend
Dividend Trend ₹ 388 ₹ 388 ₹ Cr. ₹ 360 ₹ 360 ₹ 305 Face value of share: ₹ 2.0 since Year 2000 FY 15-16 • 250% Interim Dividend • 450% Proposed Final Dividend Cummins Confidential
Slide 23: Share Price Appreciation
Cummins India Limited - Share Price Appreciation Face value of share: ₹ 2.0 since Year 2000
Slide 24: Shareholder Return (Last 5 Years)
Cummins India Limited - Shareholder Return (Last 5 Years) Sensex CIL 50% 22% 22% 19% 18% 8% 7% 4% 3% 2% -3% -10% Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 2012-2016 2012-16 CIL Shareholder return calculated as change in share price adjusted for bonus and return on dividend reinvestment (annualized) Source
Slide 25: Strongly Positioned
Cummins India Limited – Strongly Positioned Strong balance sheet – Debt to capital Zero Debt – Cash & Equivalents # ₹ 425 Cr 13.2% domestic growth in ‘15 – ’16 Returned value to shareholders – Total Shareholder Return (5 Yrs*) 22% – 700% Dividend (2015-16) ₹ 388 Cr # Includes Cash & Bank balan
Slide 26: Building on Key Capabilities for Long-Term Growth
Building on Key Capabilities for Long-Term Growth Strong Partnerships with all Stakeholders Technology Leadership Manufacturing Scale Customer Support Right Environment
Slide 27: Strong Partnerships with all Stakeholders
Strong Partnerships with all Stakeholders Towards Customers, Suppliers, Environment Customers – Competitive, fit-for-market products (e.g. - QSK50, L Mechanical) for key segments - rail, power generation and others Suppliers – Quality improvement programs such as AMaZe and Six Sigma – Strengthen
Slide 28: Towards Communities – Increased Commitment
Strong Partnerships with all Stakeholders Towards Communities – Increased Commitment Local Infrastructure and Higher Education Energy and Environment Social Justice Vikas Thapa Rajiv Batra Sandeep Sinha Women Education and Renewable Energy Rural Development Projects Employability Rajiv Batra Ashwath
Slide 29: Towards Communities
Strong Partnerships with all Stakeholders Towards Communities Energy and Higher Education Local Infrastructure Environment and Social Justice Harvested ~ 6,500 Entered 25th year of our Identified 12 additional million gallons of water association with CCEW villages for transformation for the c
Slide 30: Recognition
Recognition Of the 14 projects submitted from India for the Cummins Inc. Environmental Challenge 2015, 11 projects were recognized from amongst the many projects received from across the globe. In the Economic Times survey of the top 200 corporates practicing Corporate Social Responsibility in I
Slide 31: Technology Leadership
Technology Leadership Expanding technological capabilities with the establishment of the Cummins Technical Center India New product launches - QSK50 rail, L Mechanical generator set, ISBe 5.9 BS IV engine with SCR for commercial vehicles Commenced work on Telematics
Slide 32: Manufacturing Scale
Manufacturing Scale Increased generator set exports from the Megasite (SEZ) Expanded India Parts Distribution Center Operations Evolved our Supply Chain Organization Continued leveraging cost reduction programs – Accelerated Cost of Efficiency (annualized savings ~ ₹234 crores) – Total Cost
Slide 33: Customer Support Excellence
Customer Support Excellence Established world class training infrastructure at the Megasite – Technical Training Center for Service Technicians – ABO Training Center for Professionals Acquired Cummins Svam Sales and Service in Noida Upgraded Cummins Dealership Operating System (CDOS) Piloted
Slide 34: Great Place To Work
Great Place Cummins Leadership To Work Operating System Excellence Corporate Responsibility Recruitment and Onboarding A workplace based on the Great principles of Place to ‘Ethics/ Treatment / Diversity and Work Common Processes / Inclusion Framework Compensation Benefits and Policies / Health and
Slide 35: Employee Engagement Model
Employee Engagement Model Career Opportunities for Growth Good Meaningful Manager Work Work-Life Recognition Balance & Rewards Learning & Work Environment Development and Culture Senior Leadership
Slide 36: Fostering the ‘Right Environment’
Fostering the ‘Right Environment’ “Cummins is committed to fostering a physically and psychologically safe, integrity based, respectful, inclusive, high performance culture that breaks down hierarchies and organizational boundaries, and engaging the full talents of our diverse employees to delight a
Slide 37: Right Environment – Leadership Development
Right Environment Leadership Development – Five critical skills, Five additional for Senior Leaders – Global Leadership Development Program – Leadership Conversation Sessions – Partnerships for Sponsored Education in management studies and technical programs (Kelley School of Business, S.P. Jain,
Slide 38: Right Environment – Safety, Health
Right Environment Safety – All plants comply with Occupational Health and Safety Assessment Series (OHSAS) 18001 – Reduced Safety Incident Rate (IR) for employees and contractors to a historical low – Introduced ‘Live It Lead It’ program – Training offered on two-wheeler defensive driving – Opened
Slide 39: Right Environment – Reinforcing Right Behaviors, Diversity & Inclusion
Right Environment Reinforcing Right Behaviors – Cummins Environment and You Training Program and Right Environment Every Time Module – Cummins Code of Business Conduct, Treatment of Others and Sexual Harassment Policies – Ethics Committee – Internal Complaints Committee Diversity & Inclusion – W
Slide 40: Cummins India Limited: Sales Breakdown
Cummins India Limited : Sales Breakdown * Total sales are net of intercompany eliminations. Cummins Confidential Q4 15-16 Reinstated as per Ind AS
Slide 41: Financial Performance: Q1 16-17
Financial Performance: Q1 16-17 Q1 and Q4 15-16 Reinstated as per Ind AS 11 Cummins Confidential
Slide 42: Macro Trends and Our Capabilities Will Drive Profitable Growth
Macro Trends and Our Capabilities Will Drive Profitable Growth Macro Trends Key Capabilities Growing Middle Class & and Technology Leadership Favorable Demographics Local Manufacturing Emissions & Fuel Economy Scale Regulations Strong Partnerships Infrastructure Development Strong Customer Support N
Slide 43: Outlook and Conclusion
Outlook and Conclusion Well positioned to leverage the emerging domestic opportunities and global revival when it comes We remain steadfast on : – Guiding Principles (Vision, Mission, Values, Personality) – Cummins Operating System – Objectives, Strategies, Initiatives – Inclusiveness Based Perf
Slide 44: Thank you!
Thank you!
Slide 45: Five Leadership Skills
Five Leadership Skills Coach and Develop Foster Open Communication Diversity Management Talent Management Think Strategically / Set The Aim BACK
Slide 46: Five Additional Senior Leadership Skills
Five Additional Senior Leadership Skills Safety Authenticity & Trust Constructive Conflict Alignment Individual & Collective BACK Accountability