Kirloskar Oil Engines Limited · NSE:KIRLOSENG
Kirloskar Oil Engines — Investor Presentation (December 2004)
30 slides from Kirloskar Oil Engines's investor presentation, Dec 28, 2004
Slide 1: Discussion with Analysts and Fund Managers
Discussion with Analysts and Fund Managers Vijay Varma December 28, 2004
Slide 2: H1 Sales, FY05 Vs. FY04
H1 Sales, FY05 Vs. FY04 (All in INR Mio.) H1, FY05 H1, FY04 Change Small Engines 915 1,040 -12% Medium Engines 2,733 2,069 32% Large Engines 325 391 -17% Total Engines 3,973 3,500 14% Bearings & Valves 493 430 15% Castings 311 229 36% Fuel Oil 643 377 71% Coke 111 307 -64% Power 120 111 8% Total (in
Slide 3: Small Engines Performance
Small Engines Performance a
Slide 4: Small Engines
Small Engines Agri Market PG Market • Diesel Market is affected by • Customers preferring – Concessions for electricity Inverters over gensets for – Increased Diesel prices smaller ratings. – Partial passing through the increase account Iron and • Factory assembled gensets Steel prices well received
Slide 5: Medium Engines Performance
Medium Engines Performance a
Slide 6: Medium Engines Customer Satisfaction Increased
Medium Engines Customer Satisfaction Increased On Scale of 100 Industrial End User Satisfaction Index 88 85 83 2003 2004 Best in Engineering, world over Dec. 28, 2004 vijay.varma@kirloskar.com 6
Slide 7: Medium Engines Customer Satisfaction Increased
Medium Engines Customer Satisfaction Increased On Scale of 100 PG End User Satisfaction Index 88 87 85 2003 2004 Best in Engineering, world over Dec. 28, 2004 vijay.varma@kirloskar.com 7
Slide 8: Domestic Market - Medium Engines
Domestic Market - Medium Engines • 8% increase in market • Received large orders from share of 15 to 82.5 kVA TELECOM and Service DG sets. Sector • About 10% share in 2nd • Increased supply to Armed year of introduction of 250 – 600 kVA DG set range. Forces for wider range of applications. • 28% inc
Slide 9: Medium Engines – Export Strategy
Medium Engines – Export Strategy • De-risk Export Revenue Stream by developing foreign OEMs. We are experiencing initial acceptance of our engines by OEMs while evaluation of samples by more OEMs continues. • Time consuming but essential activity of setting up Sales and Service network continues Dec
Slide 10: Large Engines Performance
Large Engines Performance ee
Slide 11: Large Engine Sales
Large Engine Sales Large Engines (Qty.) 16 14 FY05 Genset 12 Sales will be 10 similar to FY04. 8 6 4 2 0 FY02 FY03 FY04 FY05 AOP Marine Power Generation 9Genset customers have returned. And, we have 60% share of 2.5 MW HFO Market 9Marine Engines shipped in FY04, but Marine shipments are less in FY05
Slide 12: Domestic Market – Large Engines
Domestic Market – Large Engines • Sales are to - – shipyards for Naval and Coast Guard ships, and shipments of marine engines depends on ship building programmes – And, Diesel and Heavy Fuel generating sets to Industry • Year on year Product Mix varies substantially • In FY04, shipments of Marine en
Slide 13: Large Engine
Large Engine • With higher Sales in FY04, the SBU turned in Profits, and improved Cash Flow • We are cutting costs of 2.5 MW DG set aggressively • Good potential for Marine engines, but shipments are after FY05. • We are exploring Gas engine market in 1 to 3 MW, and addition of 6 MW HFO DG Sets Dec.
Slide 14: Export of Engines
Export of Engines suds
Slide 15: Progress on Exports - Engines
Progress on Exports - Engines • Portfolio expanded by adding Countries, Applications, and Products. • Thrust on OEM business. We have delivered samples to 12 OEMs and, samples are on way to 2 more. • Africa, Middle East, Far East, and Latin America have large potential for Small agri and agro indust
Slide 16: Engine Bearings and Valves Performance
Engine Bearings and Valves Performance
Slide 17: Domestic Market – Engine Bearings & Valves
Domestic Market – Engine Bearings & Valves • Growth – 12% in Bearings and 20% in Valves • 5 new OEMs added to customer list of Bearings • Increase in business share with 3 leading OEMs. • 25% increase in bushes for replacement market. • 35% increase in OEM business of Valves • Expanded Valve range i
Slide 18: Bearings & Valves – Focus on Exports
Bearings & Valves – Focus on Exports • We are focusing on Heavy Duty Applications – Trucks, Buses, and Tractors • OEMs first, then After Market • Initial OEM responses are encouraging • 8 new customers developed in Europe, USA & Middle East Asia. • Increased our share with 2 European OEMs. • All OEM
Slide 19: Castings, Fuel Oil and Power Performance
Castings, Fuel Oil and Power Performance
Slide 20: Fuel Oil & Power Sales
Fuel Oil & Power Sales Power & Fuel Oil Value (INR M) 818 686 492 314 255 - FY02 FY03 FY04 Fuel Oil Power FY05 Estimate : Fuel Oil – 1,298 M INR & Power – 182 M INR Dec. 28, 2004 vijay.varma@kirloskar.com 20
Slide 21: Domestic Market – Power & Oil
Domestic Market – Power & Oil Power : Oil Trading : • 8% increase in tariff • 60% growth over FY04 and 18% fuel price • Operate from JNPT increase led to de- Port, Karwar and Goa emphasising power and added Muldwarka. sales • Quality Service to • Restructured business customers is leading to long-te
Slide 22: Employee Relations and Costs
Employee Relations and Costs
Slide 23: Employee Relations
Employee Relations • The fourth successive wage agreement has increased ERE costs. • Each agreement has productivity increases built-in - multi-machine operations, cell layouts, time worked on machines per shift, etc. We have to ensure that this happens. • Team Members (Workers) are contributing tow
Slide 24: FY05 Prospects
FYO5 Prospects p
Slide 25: Growth Strategy
Growth Strategy • Continue to increase exports – cross Rs. 1,000 Mio. mark soon • Significant increase in CAPEX for Capacity increase and R&D • Expand product offering in Domestic and Export markets • Raise the bar in service levels, pre and post sales – to keep distancing the competition Dec. 28, 2
Slide 26: View of Domestic Market – FY05
View of Domestic Market – FY05 • In Small Engine range, market is affected by due to - Concessions for electricity, Increased Diesel prices and partial passing through cost increase account Iron and Steel prices • We expect Medium Engine segment to grow in all sectors – Tractors, Power Generation an
Slide 27: Opportunities in Exports
Opportunities in Exports • Specific Initiatives to develop OEM Customers for Engines, Bearings and Valves • Over 150,000 Small Engines of the kind we make are exported each year from India. • World Market in Medium Engine range is huge. • World OEM Market is huge – Bearings about USD 1.3 B (INR 59,8
Slide 28: We are making highest ever Capital Expenditure in Plant and Machinery in FY05
We are making highest ever Capital Expenditure in Plant and Machinery in FY05 Quality, Productivity and Capacity will go up while the costs will come down !
Slide 29: CAPEX – Rs. 700 M+
CAPEX – Rs. 700 M+ Engines : Bearings & Valves :: 80 : 20 Dec. 28, 2004 vijay.varma@kirloskar.com 29
Slide 30: Thank you !
Thank you ! Vijay Varma Dec. 28, 2004 vijay.varma@kirloskar.com
Kirloskar Oil Engines — Investor Presentation (December 2004) on 6ix