Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Investor Presentation (December 2010)
57 slides from Ashok Leyland's investor presentation, Dec 3, 2010
Slide 1: Investor Meet
Investor Meet December 3, 2010
Slide 2: Presentation outline
Presentation outline Overview of Hinduja Group Economy & CV industry performance AL’s Performance Strategies / Plans Product introductions in FY ’11 Volume & Margin Outlook Capital expenditure & JVs 2
Slide 3: Hinduja Group Overview
Hinduja Group Overview ` Hinduja group was established in 1914 in Mumbai Employs more than 50,000 personnel worldwide Global presence across 30 countries Automotive Energy & Chemicals Ashok Leyland is India's second largest Gulf Oil is arguably one of the most commercial vehicles and diesel engine e
Slide 4: Economic outlook conducive
Economic outlook conducive Economic growth estimates by CMIE are as under: 2009-10 2010-11 Agriculture 0.2 5.7 Industry 9.3 9.4 Services 9.3 10.0 Construction 8.5 10.0 Outlay planned in Exports -2.6 15.2 Union Budget for Road building Imports -4.4 19.9 Rs. 199 bn. – GDP 7.4 9.2 increase by 13%. RBI
Slide 5: Infrastructure plan – NHAI projects
Infrastructure plan – NHAI projects NHAI Projects Kms Total length 49 987 Completed (till Sep ’10) 14 425 Under Imp. / Balance 35 562 Total Completed Kms Kms % Golden Quad 5846 5801 99% NS-EW Ph I & II 7300 5258 72% NHDP Ph III 12109 1851 15% NHDP Ph IV 14799 -- -- NHDP Ph V 6500 302 5% NHDP Ph VI /
Slide 6: Boost from increased infrastructure spending
Boost from increased infrastructure spending Increase in infrastructure spending propel CV demand through: Substantial growth in freight movement in various sectors such as steel and cement Development in road infrastructure, which boosts long-haul freight movement, increasing M & HCV demand. Better
Slide 7: Boost from increased infrastructure spending contd..
Boost from increased infrastructure spending contd.., Bloomberg six infrastructure industries index growth (viz., Crude petroleum, petroleum refinery products, coal, electricity, cement and finished steel) versus CV volume growth 7
Slide 8: Road transport continues to take share from Indian Railways
Road transport continues to take share from Indian Railways Railways share of freight traffic fell from 40% in ‘99-00 to 32% in FY ‘09. Share of freight moved by road over the same period rose from 61% to 68%, mainly due to focus on developing road infrastructure ahead of rail infrastructure. 8
Slide 9: Road transport continues to take share from Indian Railways contd..
Road transport continues to take share from Indian Railways contd.., Roadways will continue to gain freight movement market share over railway as: Indian Railways continues to suffer from capacity constraints, as there has been very limited capacity augmentation in comparison to growth in freight
Slide 10: Buoyancy in macro indicators - intact
Buoyancy in macro indicators - intact Transporter profitability continue to remain positive despite diesel price hikes. Substantial increase in freight availability will translate to higher utilisation levels. 10
Slide 11: Business outlook for transporters to remain strong says UBS Survey
Business outlook for transporters to remain strong… says UBS Survey In Sep ‘10, UBS conducted survey of 53 goods transporters across India (21% of 53 transporters owned > 100 trucks, 38% owned 51 – 100 trucks & 26% owned 10-50 trucks) Survey indicates that transporters remain optimistic about busine
Slide 12: Business outlook for transporters to remain strong says UBS Survey
Business outlook for transporters to remain strong… says UBS Survey Survey response Fleet Utilization Respondents >80% 74% 60 – 80% 17% 40-60% 6% <40% 4% Total 100% Higher utilisation and improving freight rates to drive growth in M & HCV demand going forward. 12
Slide 13: Age Analysis
Age Analysis Estimated age of CV in India M&HCV Fleet Age analysis Source: Shriram Transport Finance Source: UBS Estimates Scrapping of truck older than 15 yrs could boost replacement demand by 1.1 Mn if implemented. – Sriram Transport Finance UBS expects ratio of trucks under 5 yrs old in the fl
Slide 14: CV Market Performance – Trucks
CV Market Performance – Trucks Segmt Q1 Q2 Oct Cum Q2 Oct Cum Q 2 FY Q-o- Y-o- FY ‟11 FY ‟11 2010 Oct „10 FY ‟10 2009 Oct „09 „11 Q Y Over (%) (%) Q 2 FY Cum „10 (%) Oct Haulage 8022 9114 2328 19464 6912 2414 14279 32 14 36 Tippers 7824 9052 2443 19319 5877 2356 13327 54 16 45 Tractors 6065 8035 192
Slide 15: CV Market Performance - Buses
CV Market Performance - Buses Segment Q1 Q2 Oct Cum Q2 Oct Cum Q 2 FY Q-o-Q Y-o- FY „11 FY ‟11 2010 Oct ‟10 FY „10 2009 Oct „11 (%) Y 2009 Over Q Cum 2 FY Oct „10 (%) (%) Private 3895 4984 1188 10067 4084 1289 8380 22 28 20 STU (Incl. JnNURM) 3575 4447 1479 9501 2427 1374 6003 83 24 58 ICV 4104 3651
Slide 16: Segment wise volume growth outlook - Trucks
Segment wise volume growth outlook - Trucks Segment GVW 2009-10 % CAGR 09-10 to 14-15 % (tonnes) ICVs 7.5-12 60.1 12-14 Haulage 12-16.2 30.5 (1)-(3) Tippers >12.5 (9.7) 22-24 Tractors >16.2 87.4 17-19 MAVs >16.2 46.1 13-15 M & HCVs 34-36 13-15 Source -Crisil Research Significant growth foreseen in h
Slide 17: Outlook – appears promising
Outlook – appears promising Positives: With the economy doing well and infrastructure high on Govt’s priority list, CV industry should do well Better road systems will increase demand for superior, factory built, fully built vehicles Govt. mandate for use of school buses over private utility vehicle
Slide 18: ALL's Performance
ae ALL’s Performance
Slide 19: Why did AL lose MS in FY '10?
Why did AL lose MS in FY ‘10? Segment Q1 Q2 Q3 Q4 Full Yr FY ‟10 FY ‟10 FY ‟10 FY ‟10 2009-10 Consistent MS growth observed Bus – TIV 7482 9347 11764 14488 43081 Growth Y-O-Y % (16.2) (14.8) 106.0 56.1 23.5 Drop in Q 1 MS due to - ALL 2211 3647 5062 5485 16405 cash & carry policy Growth Y-O-Y % (4
Slide 20: AL's performance FY '11
AL’s performance FY ’11 Segment FY Q1 Q2 Oct ‟10 Cum 2009-10 FY ‟11 FY ‟11 Oct ‟10 Consistent volume & MS growth observed Bus – TIV 43081 11574 13082 3486 28142 Growth Y-O-Y % 23.5 54.7 40.0 5.1 39.7 Highest ever HY 1 sale volume - ALL 16405 4184 5435 1469 11088 in Company‟s history Growth Y-O-Y %
Slide 21: AL's exports performance
AL’s exports performance Country / zone wise exports in comparison with PY is given under: 2010-11 2009-10 FY ’11 Q1 Q2 Oct Cum Q2 Oct HY 1 (cum 2010 Oct „10 2009 Oct ‘10) Sri Lanka 761 1135 592 2488 597 114 898 export Bangladesh 644 581 276 1501 630 205 1227 volume higher Middle East 371 413 99 883
Slide 22: Q2/HY1 FY '11 Financial Performance
Q 2/HY 1 FY ‘11 Financial Performance Rs Lakhs % of % of % of YOY % II Qtr HY 1 Net HY 1 Net growth Net 2010-11 2010-11 Sales 2009-10 Sales Sales HY1 Net Sales / income from operations 271395 100.0 506193 100.0 249536 100.0 102.9 Gross operating margin 30626 11.3 54166 10.7 18344 7.4 195.3 Financial
Slide 23: AL's Strategies/Plans
ae AL’s Strategies/Plans
Slide 24: U Truck range unveiled
U Truck range unveiled The U TRUCK platform 10 models of tipper and tractor trailers in 16-49 tonne segment were rolled out in Chennai on 2nd Nov ’10 Vehicles available for sale pan-India in a phased manner over next 1 ½ months. Another 15 models are set to enter the market in next 12 months U truck
Slide 25: U Truck range unveiled contd..
U Truck range unveiled contd.., Features include • Superior suspended long haul sleeper cabs in tractors and day cabs in tippers with sleeper provision • Better noise, vibration, harshness characteristics • Optional A/c • Optional music system • Ride quality improvement through a choice of parabolic
Slide 26: U Truck range unveiled contd..
U Truck range unveiled contd.., Every U truck given a driver kit worth Rs. 15k which includes mobile phone with life time incoming connection, a blanket, a windcheater, two T shirts, a torch and document holder. Fully built U Trucks are available with optional features like telematics for real time
Slide 27: U Truck 4023 Tractor
U Truck 4023 Tractor Configuration: 4x2 Tractor Factory built twin sleeper cab GVW – 40 T 6S850 synchromesh gear box H Series CRS BS III Diesel Engine 15” dia RDC with organic facing matl. Max Power: 225 HP at 2500 rpm Full air, dual line HLP brakes 27
Slide 28: U Truck 4923 Tractor
U Truck 4923 Tractor Configuration: 6x4 Tractor Factory built twin sleeper cab GVW – 49 T 9S1110 heavy duty 9S gear box H Series CRS BS III Diesel Engine 15” dia RDC with organic facing matl. Max Power: 225 HP at 2500 rpm Full air, dual line HLP brakes 28
Slide 29: U Truck 3123 Tipper
U Truck 3123 Tipper 8x4 Tipper 31 T Front end tipping H series CRS BS III 225HP @ 2500 rpm Heavy duty 9S synchromesh gearbox 15” Dia RDC with ceramic clutch disc 19 Cu Mtr and 22 Cu Mtr box options Optional music System, AC & alerts Higher Fuel efficiency 3 yr care package Higher load
Slide 30: U Truck 2516 Tipper
U Truck 2516 Tipper 6x4 Tipper 25T Higher fuel efficiency H Series BS III engine Lower operating cost Max power 160 HP @ 2400 rpm 3 year care package 6 speed synchromesh gear box Suitable for construction 15” dia RDC (sand and blue metal), road Full air, dual line brakes work and earth wor
Slide 31: U Truck 2523 Tipper
U Truck 2523 Tipper Configuration: 6x4 Tipper 14 Cu. Mtr. Box and Scow body GVW – 25 T 16 Cu Mtr Box H Series CRS BS III Diesel Engine 9 Speed synchromesh gear box Max Power: 225 HP at 2500 rpm 15” dia RDC with organic facing matl. Full air, dual line brakes 31
Slide 32: U truck 1618 Tipper
U truck 1618 Tipper Configuration: 4x2 Tipper 8.5 Cu. Mtr. Box and Scow body GVW – 16 T 6 Speed synchromesh gear box H Series BS III Diesel Engine 15” dia RDC with organic clutch disc Max Power: 180 HP at 2400 rpm Full air, dual line brakes 32
Slide 33: Bus on the anvil
Bus on the anvil The IT 09 – Developed by the AL-TVS-IRIZAR joint venture. 33
Slide 34: India's first plug-in CNG hybrid bus & intelligent vehicle
India’s first plug-in CNG hybrid bus & intelligent vehicle Hybus India’s first plug-in CNG AL and Cisco signed an MOU to develop hybrid bus was unveiled by AL in sector specific solution to enable vehicle recent auto expo. to infrastructure communication. Focus Greener than CNG, 20-30% more fuel on
Slide 35: Engine Platform – H Series
Engine Platform – H Series Turbocharged intercooled H Series BS 3 Diesel engine (160 HP – inline) Turbocharged intercooled H Series BS 3 Diesel engine (180 HP – rotary) Turbocharged intercooled H Series BS 3 Common Rail engine (ensures higher fuel efficiency) 35
Slide 36: Engine Platform – Neptune Series
Engine Platform – Neptune Series The NEPTUNE engine range A new family of 4 and 6 cylinder inline engines ranging from: • 160 – 230 hp in 4 cylinder engines • 270 – 380 hp in 6 cylinder engines Of modular capacity from 4.7 litre to 8 litre – BS3 and BS4 / Euro IV compliant and protected for Euro-V,
Slide 37: New Cab
New Cab NEXT Gen Cab A modular cabin that has features / ergonomics comparable to best in class Variants to cater to vehicles with tonnages from 9T to 49T including specials and off-road applications A cabin with architecture protection for the lowest cost market in India as well as for higher end c
Slide 38: Customer Care: Raising the bar
Customer Care: Raising the bar The national helpline comes with the promise of Response within 4 hours anywhere on the Golden Quadrilateral Restoration (vehicle back on road) in 48 hours; If not restored, AL will pay Rs.1000/day of delay TatkaAL rolled out along GQ in 2nd Jan ’10 & well received by
Slide 39: Capacity expansion
Capacity expansion Modern, fully-integrated manufacturing facility at Pantnagar commissioned in Mar ’10 Balanced capacity availability between North & South. Benefits of logistics to accrue. At full capacity, will roll out 50,000 vehicles, including the U-Truck on two shift basis. Set up with an inv
Slide 40: Hinduja Leyland Finance
Hinduja Leyland Finance A much-needed financing arm HLF has commenced operations in 130 centres covering 16 states Target to have a presence in all Indian states in a year’s time and network strength of 300 centers in three years Initial capital of Rs 125 Cr. - contribution by AL & other group compa
Slide 41: Volume projection Vs Capacity available
Volume projection Vs Capacity available Cum Oct „10 Full Year Full Year YOY 2010-11 2010-11 2009-10 Growth Actual Estimate Actual FY ‟11 BUSES - TIV 28142 51500 43081 20 - ALL 11088 20600 16405 26 - MS % 39 40 38 TRUCKS - TIV 144861 263500 201977 30 - ALL 34835 64400 40734 58 - MS % 24 24 20 TOTAL -
Slide 42: Migration status and margin impact
Migration status and margin impact Migration has come into effect from October ’10 Ready with the products for upgrading under both technologies SCR – with the ‘H’ series engines EGR – with the Neptune range BS III trucks costs around Rs. 40k more than BS II Similarly, BS IV costs around Rs. 100k mo
Slide 43: Margin Outlook
Margin Outlook Targeting to maintain / improve operating margins above 10.5% for FY ‘11 to be supported by: Pricing actions around 10% so far in current year Commodity based price increase pressure (mainly steel, rubber and aluminum) to be contained. Stringent controls on operating cost / working ca
Slide 44: Capex and funding Plans
Capex and funding Plans In FY 2010 Capex incurrence was Rs. 810 Cr Investments in JVs Rs. 142 Cr Total loan outstanding at Rs. 2200 Cr by Mar ’10 with gearing at 0.9:1 In next 2 years likely level of: Capex Rs. 1200 Cr Investment in JVs Rs. 800 Cr Plan to contain total borrowings within Rs.800 Cr. o
Slide 45: Strategic investments & Progress on JVs
Strategic investments & Progress on JVs
Slide 46: IRIZAR TVS
IRIZAR TVS JV between AL, TVS & Sons & Irizar of Spain State of art coach building facility at Viralimalai (near Trichy) with an investment of Rs. 30 Cr. Has built up area of 2 lakh Sq. Ft. Has three production lines & seven paint booths Assembly and sub assembly under one roof Capacity to produce 2
Slide 47: Capacity expansion
Capacity expansion Alwar: New bus body building facility put up with globally bench-marked processes and machinery – Capacity: 1800 buses; Investment Rs. 20 Cr. High-end ULE buses roll out from Alwar Unit for supply to Northern STUs Shift this along with RAK slide for global bus strategy Capacity to
Slide 48: Capacity creation
Capacity creation Bus plant at Ras Al Khaimah A vital manufacturing facility to feed GCC and African markets Production has already begun Initially to produce 2,000 buses annually Eventually to produce trucks too 48
Slide 49: Investment in Optare UK
Investment in Optare UK Subscribed for a 26% stake in Optare Plc UK (US$ 7.5 Mln). Pioneer of low floor double decker in UK. Optare known for its low carbon range of low floor, mid buses and modern range of city buses. Optare’s electric bus has secured several orders as more countries in Europe prom
Slide 50: Light truck JV with Nissan
Light truck JV with Nissan LCV JV progressing well Product introduction in mid 2011. Investment by AL in JV to be around Rs. 400 Cr. over few years. Initial phase of LCV production in Hosur. Benefits AL on capacity utilisation Next phase of production in green field site. 50
Slide 51: Construction equipment JV with John Deere
Construction equipment JV with John Deere New company formed with 50:50 partnership with John Deere Manufacturing facility inaugurated on 21st Oct ‘10 at Gummidipoondi (near Chennai) Pilot production to start by Nov/Dec ‘10 Product roll out early 2011 Investment by AL in JV to be around Rs. 50 Cr sp
Slide 52: Joint venture with ALTEAMS
Joint venture with ALTEAMS Plant inaugurated in January 2010 Fully established to meet both Telecom and automobile sector requirements Production on in full swing Supplying Gear box casing, case oil coolers & connection housings to AL. Cost advantage 5% Future supplies to include cylinder head cover
Slide 53: Value Creation - Upside potential
Value Creation - Upside potential Better operating leverage thanks to increasing demand for higher tonnage vehicles. Capacity not a constraint. Better utilisation of Pant Nagar facility resulting in higher profits. Better capacity utilisation consequent to production of LCVs for Nissan JV. Export vo
Slide 54: Wider presence in Automobile Sector
Automotive Sector LCVs M&HCV Defence Construction equipment Foundry Engines & Components Business Auto Electronics Exhaust System Engineering and Testing Services Technology Wider presence in Automobile Sector 54
Slide 55: Ashok Leyland shareholding pattern
Ashok Leyland shareholding pattern (as on 30th Sep, 2010) Hinduja Automotive Ltd 50.98% Residents 9.67% Body corporate & others 6.52% Banks & MFs 4.04% Fis, Insurance FIIs Co, State 15.05% Govt, Govt Companies 13.74% 55
Slide 56: Thank You
ae Thank You
Slide 57: Freight rates movement
Freight rates movement Truck rates from Kolkata to major cities Truck rates from Chennai to major cities 3.50 5.00 3.00 4.00 2.50 3.00 (Rs. '000) (Rs. '000) 2.00 1.50 2.00 1.00 1.00 0.50 0.00 0.00 Oct-07 Oct-08 Oct-09 Jan-10 Apr-10 Jul-10 Sep-10 Oct-10 Oct-07 Oct-08 Oct-09 Jan-10 Apr-10 Jul-10 Sep-1
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