Hero Motocorp Limited · NSE:HEROMOTOCO
Hero Motocorp — Investor Presentation (September 2018)
39 slides from Hero Motocorp's investor presentation, Sep 17, 2018
Slide 1: Exchange filing cover letter
I ~Hero September 17, 2018 Asst. Vice President, Listing Deptt. The Secretary, National Stock Exchange of India Ltd., BSE Limited Exchange Plaza, Plot C/1, G Block 25th Floor, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers, Bandra (E), Dalal Street, MUMBAI - 400 051 MUMBAI - 400 001 Scrip Code: HER
Slide 2: Investor Presentation UK Meetings September 2018
Investor Presentation UK Meetings September 2018
Slide 3: Safe Harbor Statement
Safe Harbor Statement The views expressed here may contain information derived from publicly available sources that have not been independently verified by Hero MotoCorp Limited. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the accuracy, comp
Slide 4: The Flow
The Flow 01 02 03 04 Macro Economic Two Wheeler ~$ Our Story Key Takeaways Overview Industry • ~ Hero Investor Relations Investor Meetings: Sep. 2018 3
Slide 5: India: Leading economic growth
India: Leading economic growth 2018 Japan 1.3% Russia 7.7 Brazil 2 us 2.5 Europe 2.7 China 6.4 India 7.3 ... r Q1 Growth 8.2% ) GDP Growth % Source: World Bank, Centre for Economics and Business Research (CEBR), FICCI-Ernst & Young • ~ Hero Investor Relations Investor Meetings: Sep. 2018 4
Slide 6: Multiple levers exist for future growth of Indian economy
Multiple levers exist for future growth of Indian economy… Women workforce Urbanization tt participation % population in urban area • ••• •• •••• 50% Today 2030 Increasing women literacy & ••••• ···• 2030 35% 34% Ministry of Housing & Urban Affairs Road connectivity labor force • Today 25% McKinsey
Slide 7: Reform agenda creating solid platform
Reform agenda creating solid platform Realising the Goal of One Nation - WHAT ntE RW.lV Bill HOLDS Swachh One Tax · One Market m,..., ,... Bharat ·-......... ............ _ Rl:IUUll! g_ · -,_,,...,~_. ~- . ..._ . . . .I; G$T rolled oot on tie midnis#lt of 30 June. W17 Mission and came lo1o effro1fro
Slide 8: Poised for sustained growth
Poised for sustained growth Projected population in 2030 Rank Country Rank Projected 2017 2018 (In million) 1,461 l,39 l Pr~jected median age 1 us ·---------------------------------- 1 China will overtake ~ 32 43 39 2 China -4 ___ Germany ______~-- France 3 ·---------------------------------- 2_ ...
Slide 9: Two Wheeler Industry
01 02 03 04 Macro Economic Two Wheeler ~$ Our Story Key Takeaways Overview Industry • ~ Hero Investor Relations Investor Meetings: Sep. 2018 8
Slide 10: 2W Industry Segments
2w Industry Segments Entry Premium Deluxe 16% Mostly Urban Mostly Rural 14% 33% 33% 4% Scooters Mopeds Domestic 2w Segments Source: Internal Industry Data • ~ Hero Investor Relations Investor Meetings: Sep. 2018 9
Slide 11: Strong growth in each segment is powered by different levers
Strong growth in each segment is powered by different levers: The story of many Indias… 2w Industry Growth: +14.82% Motorcycle Growth: +13.29% Mopeds 0.8 Entry Growth 4% 3.1 Scooters +20.84% 16% Mopeds -3.46% Scooters Motorcycle 12.6 FY18 Deluxe 6.6 • Entry +21.73% 6.7 33% 63% 33% • Deluxe +11.29% P
Slide 12: Penetration still significantly lower than Asian peers
Penetration still significantly lower than asian peers: will continue to drive growth 2w penetration per ’000 people: Well below Asian peers 2w penetration levels in India 281 291 40% industry Rural volumes Average: ~20 - 25% 166 .--- .. I 102 I Urban Average: 78 I I ~40 - 45% I I I I 60% industry N
Slide 13: Our Story
01 02 03 04 Macro Economic Two Wheeler ~$ Our Story Key Takeaways Overview Industry • ~ Hero Investor Relations Investor Meetings: Sep. 2018 12
Slide 14: Hero: Strong, successful track record
Hero: Strong, successful track record . ...,, ~,;., ~---·· H~;O ~1;:t.!;!>:~l~!!?.;! -*- 0 ... • .... ,......... ~~; ;;; :· World’s # 1 Two $5 Bn Revenue; 50% motorcycle market Wheeler Company ~$9 Bn Market Cap share in India World class R&D Centre Presence in 37 Volume 2x; Revenue 3x; Countries Pro
Slide 15: Over the years and across segments
Over the years and across segments 30+ Years of experience of catering to varied #1 Two-wheeler company in the world for 17 customer aspirations in the two-wheeler consecutive years industry ~35% market share in the domestic two- >50% Market share in the domestic motorcycle wheeler market market 9Mn
Slide 16: Based on a strong governance framework
Based on a strong governance framework Audit Committee Stakeholder’s Nomination and CSR Committee Risk Management Relationship Remuneration Committee Committee Committee The Audit Committee’s Looks into investor Reviews and recommends Responsible for Assists the Board in its composition and mandate
Slide 17: Under the guidance of an eminent Board
Under the guidance of an eminent Board Non-Executive & Independent Director Ex-SEBI Chairman, a retired IAS officer serves as a governance consultant with various 1. M. Damodaran government & regulatory bodies. Founder Chairman of IIM, Tiruchirappalli. Graduated with distinction in Economics and in
Slide 18: Professional management team drives Hero's growth agenda
Professional management team drives Hero’s growth agenda Niranjan Gupta, Chief Financial Officer Sanjay Bhan, Head Sales & After Sales Niranjan served as CFO for the Aluminium & Power vertical of Vedanta Group. He has also Sanjay joined Hero in Jan 1991 in Sales based out of Vadodara and worked his
Slide 19: Our Strengths
Our Strengths Research & World class Manufacturing Development Capabilities • la-- - Industry Leading Vast Distribution Brands Network Image Credit: Google Images • ~ Hero Investor Relations Investor Meetings: Sep. 2018 18
Slide 20: Best in class R&D capabilities at Jaipur CIT
Best in class R&D capabilities at Jaipur CIT leads our product development Concept design studios equipped Multiple with latest design laboratories for software and clay 11-storey ‘Iconic part, function and modelling/ Tower’ each floor vehicle milling facility World class 16-KM plate orientation is
Slide 21: Building and partnering to institute world class R&D capabilities
Building and partnering to institute world class R&D capabilities The Global Centre of Innovation & Technology (CIT) at Jaipur, Rajasthan was commissioned with an investment of $125Mn; Operations began in March 2016 More recently, our R&D efforts led to the introduction “i3s” technology. Improves
Slide 22: We continue to focus on building brands for long term
We continue to focus on building brands for long term … Hi-Tech Quality Reliability Brand Hero credited with some Then… iconic advertisements including the Global Value “Fill it. Shut it. Forget it” and the “Hero salutes” campaigns! Innovation Durability Indian & Now Source: FY18 AR data Highest A&P
Slide 23: World-class manufacturing facilities in India and overseas
World-class manufacturing facilities in India and overseas Dharuhera Gurgaon Haridwar Neemrana Halol 2.1Mn 2.1Mn 2.7Mn 1.1Mn 1.2Mn Villa Rica, Chittor Overseas Manufacturing facility Bangladesh Colombia 0.12Mn Future Plans Indian Manufacturing facilities 0.08Mn 1.1 Mn Investor Relations Investor Mee
Slide 24: Massive scale...but with green philosophy
Massive scale...but with green philosophy 18 seconds 7.6 Mn sold in All new FY18 facilities are Speed green Vol Green GreenCo Platinum IGBC Platinum O2 (green) wall Greenhouses Skylight Bigfoot Investor Relations Investor Meetings: Sep. 2018 23
Slide 25: Sold through wide distribution network
Sold through wide distribution network Widest distribution Rural Talukas Service visits/ day Rural touch Distn network in India coverage 6,500+ 90% 125,000 While we have the largest footprint in the country, we continue to experiment with new distribution channels Brick & Mortar Online Source: HMCL
Slide 26: Strong financial performance: FY18
Strong financial performance: FY18 Volume & Growth % Revenue EBITDA Margin % 7.6 Mn $5 Bn 16 % 14% Net Profit Margin % Cash generation RESERVES 11.5% $0.5 Bn $1.5 Bn Source: HMCL Annual Report, FY18 Nos rounded off Investor Relations Investor Meetings: Sep. 2018 25
Slide 27: And further opportunities moving forward
And further opportunities moving forward… Domestic penetration opportunity Low penetration across the 2w industry 01 segments offers significant growth potential Emerging segments Opportunity Build full premium portfolio 05 Moving 02 Launch Xtreme 200R and build After sales & accessories market Fo
Slide 28: Industry leading brands in our stable to capitalise on penetration opportunity
Industry leading brands in our stable to capitalise on penetration opportunity 2.8 Mn 4 out of 5 1.9 Mn Largest selling 2 wheeler brands are Hero brands 0.9 Mn 0.9 Mn 2 Brand franchises sell over a million+ units per annum Source: HMCL Analysis Investor Relations Investor Meetings: Sep. 2018 27
Slide 29: Building premium portfolio: 2 launches this year
Building premium portfolio: 2 launches this year - more to come in future Differential Premium positioning associations High decibel Compelling advertisements proposition Basket of Aspirational products Premiumization Investor Relations Investor Meetings: Sep. 2018 28
Slide 30: Enhance our share in scooters
Enhance our share in scooters… Moped 4% Scooter 2 new products planned in the 33% Industry faster growing 125cc scooter Motorcycl segment e 63% Industry Split as of FY18 Sharp positioning 13% Maestro Edge Advert HMCL 3600 communication campaigns including digital 51% Hero Market Share as of FY18 Inv
Slide 31: Scale up Global business
Scale up Global business Global Expansion Early Success Expanded presence to Strong success in few 37 countries markets; 25%+ market share in Bangladesh Scale Product Portfolio Focus on building scale Expanding premium in each key market and scooter portfolio to help further Investor Relations Inves
Slide 32: Twin strategy on EV
Twin strategy on EV… 1. Investment in Ather energy- a start up Oct. 2016 $31Mn for a ~30% stake Jul. 2018 $19Mn in a bridge - CCD; stake: To be based on Series C Valuation 2. Inhouse development of EV Project started at our R&D Centre Source: Company Financial Reports and Analysis Investor Relations
Slide 33: Growth agenda while caring for safety, environment, and community
We will deliver on our growth agenda, while caring for safety, environment, and community Safety norms: ABS/ CBS regulations preparedness o All Hero scooters already CBS equipped o Most motorcycles will come with CBS by end of 2018 o Xtreme 200R launched with ABS as standard Emission norms: BSVI
Slide 34: Our sustainability vision
Our sustainability vision is “We must give back to the society from whose resources we generate wealth” 1st Sustainability report to be published by FY 2019 Source: Company Financial Reports and Analysis Investor Relations Investor Meetings: Sep. 2018 33
Slide 35: CSR programmes: Flagship Programs
We play our part in building communities through various CSR programmes Flagship Programs SAFER GREENER EQUITABLE 160000 Road safety 1 Mln trees beneficiaries of campaigns – planted so far; Hamari Pari ,E2, 500000 + people survival rate 90% other programs 75 + Million views on social media campaigns
Slide 36: Key challenges being addressed suitably
Key challenges…being addressed suitably CHALLENGES Scooter segment Navigating regulatory Commodity & Expiry of fiscal Challenges landscape Currency benefits • Sustained investments • R&D investments • Hedge • Capacity expansion Measures • Sharp positioning • Partnerships • Cost optimization • New pl
Slide 37: Key Takeaways
01 02 03 04 Macro Economic Two Wheeler Our Story Key Takeaways Overview Industry Investor Relations Investor Meetings: Sep. 2018 36
Slide 38: In summary
In summary… Focus on building Healthy macro premium portfolio & 01 04 economic factors enhancing scooter presence 2w industry growth supported by Scale up global 02 multiple growth 05 business levers Brands with high Getting Future 03 recall and strong 06 ready customer connect Investor Relations In
Slide 39: Thank You
AV in, YouTube \ Thank You
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