Precision Camshafts Ltd. · NSE:PRECAM
Precision Camshafts — Q3 FY2018 Earnings Presentation
41 slides from Precision Camshafts's earnings presentation, Feb 15, 2018
Slide 1: Precision Camshafts Limited – Investors Presentation submission letter
Precision Camshafts Limited (100% EOU Division) Works: D-5,D-6,7,7-1, N,l I O C, Chincholi, Solapur413 255 Dater 15th February, 2018 Sec/Feb/SE/N&B/2018 BSE Limited, The National Stock Exchange of India Limited Phiroze JeeJeebhoy Towers, Exchange Plaza, Bandra kurla Complex, Dalal Street, Mumbai - 4
Slide 2: Camshaft is one of the most critical components of vehicle IC engine
CAMSHAFT IS ONE OFTHEMOST CRITICALCOMPONENTS OFVEHICLEICENGINE Camshaft and its associated parts control the functioning of an internal combustion engine Camshaft design governs the engine’s power, efficiency, mileage andemission Camshaft design, manufacturing process and machining requirement vary
Slide 3: Continuous developments in engine technology are expanding opportunities for camshaft manufacturers
CONTINUOUS DEVELOPMENTS IN ENGINE TECHNOLOGY ARE EXPANDING OPPORTUNITIES FOR CAMSHAFT MANUFACTURERS Engine technology isundergoing continuous developments– - Improvement in engine efficiency and VVT Evolving DOHC performance SOHC engine OHV technology Increasing efficiency andperformance - Complianc
Slide 4: OEMs are increasingly outsourcing camshaft manufacturing
OEMs ARE INCREASINGLY OUTSOURCING CAMSHAFT MANUFACTURING HOWEVER, STRINGENT APPROVAL PROCESS LIMITS THE NUMBER OF SUPPLIERS Camshaft manufacturing processishighly capital intensive with long gestation period OEM’s source from suppliers with demonstrated technological and manufacturing capabilities C
Slide 5: Camshaft is one of the most critical components of vehicle IC engine
CAMSHAFT IS ONE OF THE MOST CRITICAL COMPONENTS OF VEHICLE IC ENGINE PCL is one of the world’s leading manufacturer and supplier of camshafts PCL has strong relationships with marquee global & domestic OEMs General Motors Tata Motors Ford Motors Mahindra andMahindra Hyundai Toyota Maru
Slide 6: Disclaimer
DISCLAIMER This presentation and the following discussion may contain “forward looking statements” by Precision Camshafts Limited (“Precision Camshafts” or “PCL” or the “Company”) that are not historical in nature. These forward looking statements, which may include statements relating to future res
Slide 7: Discussion Summary
DISCUSSION SUMMARY PCL– India COMPANY OVERVIEW BUSINESSMODEL COMPETITIVEADVANTAGES BUSINESSSTRATEGY&OUTLOOK FINANCIAL RESULTS 6
Slide 8: Precision Camshafts – Brief Profile
COMPANY OVERVIEW PRECISION CAMSHAFTS – BRIEF PROFILE Incorporated in 1992, PCL is one of the leading manufacturer and supplier of camshafts in India and globally Global market share of 8% - 9% in passenger vehicle camshafts Supplies more than 150 varieties of camshafts for passenger vehicles,
Slide 9: Our Evolution
COMPANY OVERVIEW OUR EVOLUTION 1992 1999 2008 2012 2014 • Incorporation of PCL • Technical and financial • Tata Capital invests in • JV with Shenglong • Exclusive agreement • Started with supply JV with G. Clancey PCL by purchasing Automotive with EMAG, German of 600 camshafts / Limited, UK a shares
Slide 10: Marquee Customers and Global Footprint
COMPANY OVERVIEW MARQUEE CUSTOMERS AND GLOBAL FOOTPRINT MARQUEE CUSTOMERS GEOGRAPHICAL FOOTPRINT Canada Germany Russia UK Spain Uzbekistan Austria South Korea USA Hungary China India Brazil Geographies in which customers are serviced by PCL MARKETING NETWORK 4 continents serviced through various age
Slide 11: Board of Directors
COMPANY OVERVIEW BOARD OF DIRECTORS He holds a B.Com from Bombay University and a MBA from Pune University Mr. Yatin Shah Over 23 years of experience in the auto component manufacturing sector Chairman & Managing Director Received various awards, including J.R.D. Tata Udyog Ratna Award by Maha
Slide 12: Key Management
COMPANY OVERVIEW KEY MANAGMENT Mr. Achyut Gadre He holds a Bachelor of Science in Engineering from Shivaji University GM, Production Joined PCL in 1995 and has 19 years of work experience in automobile manufacturing Mr. Ajitkumar Jain He holds a Bachelor’s degree in production engineering from
Slide 13: Business Model
DISCUSSION SUMMARY Camshaft – High Quality Most Critical & Efficient Component Manufacturing COMPANY OVERVIEW of Engine BUSINESS MODEL COMPETITIVE ADVANTAGES BUSINESS STRATEGY & OUTLOOK Healthy Long Operating Development FINANCIAL RESULTS Margins Period – Strong Entry Barrier 12
Slide 14: What is Camshaft?
BUSINESS MODEL WHAT IS CAMSHAFT? Camshaft Why is camshaft critical? Crankshaft Cylindrical rod / shaft Cam lobe 5C’s of IC engine Connecting rod Camshaft design impacts the engine’s power, efficiency, mileage and emission Cylinder block Cylinder head How does camshaft function? CAMSHAFT Camshaft c
Slide 15: Camshaft Manufacturing Technologies
BUSINESS MODEL CAMSHAFT MANUFACTURING TECHNOLOGIES Process Chilled Cast Iron Casting Ductile Iron Casting Assembled Camshaft With the chill-cast approach, cam lobes that need local hardening have chill Assembled camshafts are produced by inserts placed in the tool. The inserts freeze the molten iron
Slide 16: Long Development Period – Strong Entry Barrier
BUSINESS MODEL LONG DEVELOPMENT PERIOD – STRONG ENTRY BARRIER Camshafts play a very critical role in impacting the overall engine performance. Hence OEMs involve camshaft manufacturers right from the engine platform design stage Camshaft development process: In case of a new engine platform under de
Slide 17: PCL: Revenue & Margins
BUSINESS MODEL PCL: REVENUE & MARGINS Camshaft Castings (61%) FY17 Revenue - Rs 467.01 crore Machined Camshaft (39%) SALES REALISATION OF MACHINED CAMSHAFT IS 2.5X - 3.0X TIMES OF CAMSHAFT CASTING GEOGRAPHICAL DISTRIBUTION OF SALES 32% HIGHER SALES OF MACHINED CAMSHAFTS 68% TO DRIVE MARGIN EXPANSION
Slide 18: Competitive Advantages
DISCUSSION SUMMARY COMPANY OVERVIEW BUSINESS MODEL COMPETITIVE ADVANTAGES BUSINESS STRATEGY & OUTLOOK FINANCIAL RESULTS 17
Slide 19: State of Art Manufacturing Facilities & Engineering Expertise
COMPETITIVE ADVANTAGE STATE OF ART MANUFACTURING FACILITIES & ENGINEERING EXPERTISE INDIA FACILITIES CHINA FACILITIES – THROUGH STRATEGIC JVs Installed Capacity – FY16 Installed Capacity – FY16 Facility Description Joint Venture (Million Units p.a.) (Million Units p.a.) EOU Unit 4 Foundries Foun
Slide 20: State of Art Manufacturing Facilities – Foundry
COMPETITIVE ADVANTAGE STATE OF ART MANUFACTURING FACILITIES - FOUNDRY Quality Certifications: ISO/ TS 16949:2009 Consistent manufacturing practices and defect free products ISO:14001:2004 Environmental Management System BS OHSAS: 18001:2007 Occupational Health & Safety Management System 19
Slide 21: State of Art Manufacturing Facilities – Machine Shop
COMPETITIVE ADVANTAGE STATE OF ART MANUFACTURING FACILITIES – MACHINE SHOP Quality Certifications: ISO/ TS 16949:2009 Consistent manufacturing practices and defect free products ISO:14001:2004 Environmental Management System BS OHSAS: 18001:2007 Occupational Health & Safety Management System 2
Slide 22: Capacity Expansion – Addition of New Machine Shop
COMPANY OVERVIEW CAPACITY EXPANSION – ADDITION OF NEW MACHINE SHOP CAPACITY EXPANSION: ADDITION OF MACHINE SHOP New machine shop for ductile / assembled / chilled cast iron camshafts at EOU division in Solapur Proposed capacity – 2.0 mn units / year Total capex – Rs 230.20 crore Capacity add
Slide 23: Technology Evolution & Comprehensive Product Offering
COMPETITIVE ADVANTAGE TECHNOLOGY EVOLUTION & COMPREHENSIVE PRODUCT OFFERING PCL’s CONTINUOUS THRUST ON IMPROVING CAMSHAFT TECHNOLOGY AND EXPAND CAMSHAFT OFFERINGS Chilled Cast Iron Solid Camshafts Chilled Cast Iron Hollow Camshafts Ductile Iron Solid Camshafts Ductile Iron Hollow Camshafts Chilled C
Slide 24: Long Term Relationships with Marquee Global OEMs
COMPETITIVE ADVANTAGE LONG TERM RELATIONSHIPS WITH MARQUE GLOBAL OEMs TIER 1 / TIER 2 SUPPLIER TO MARQUEE CLIENTS STRINGENT OEM APPROVAL PROCESSES ADDS STICKINESS General Motors Tata Motors Inspection and review of the manufacturing Ford Motors Mahindra and Mahindra Operational facilities
Slide 25: Business Strategy & Outlook
DISCUSSION SUMMARY PCL’s ONE STOP SOLUTION Chilled COMPANY OVERVIEW Cast Iron Machined Camshaft Ductile BUSINESS MODEL Iron Sliding Machined Cams Camshaft COMPETITIVE ADVANTAGES Sliding Cams BUSINESS STRATEGY Hybrid Camshaft Cam Modules & OUTLOOK FINANCIAL RESULTS Assembled Balancer Camshaf
Slide 26: Business Strategy & Outlook
BUSINESS STRATEGY & OUTLOOK Focus to offer “One Stop Solution” with diversified product range - Chilled, Ductile and Assembled Camshafts Exclusive agreement with EMAG, a German machining and tooling process company, for licensing the 'Force Free Heat Diversify Product Range Shrink' process. This
Slide 27: Financial Results
DISCUSSION SUMMARY COMPANY OVERVIEW BUSINESSMODEL COMPETITIVEADVANTAGES BUSINESSSTRATEGY&OUTLOOK FINANCIALRESULTS 26
Slide 28: Quarterly Result Highlights (Standalone)
Quarterly Result Highlights (Standalone) 110 35.00% 30.00% 105 28.98% 25.90% 24.31% 25.00% 100 20.00% In Rs cr 12.63% 15.00% 95 9.68% 10.00% 90 7.15% 5.00% 108.62 100.57 93.04 85 0.00% Q3FY17 Q2FY18 Q3FY18 Total Revenue EBITDA Margin PAT Margin 27
Slide 29: FY17 Result Highlights (Standalone & Consolidated)
FY17 Result Highlights (Standalone & Consolidated) 500.00 30.67% 35.00% 28.25% 30.00% 400.00 25.00% In Rs. Crore 300.00 20.00% Total Revenue 200.00 15.00% EBITDA Margin 12.99% 13.03% 10.00% PAT Margin 100.00 5.00% 452.36 467.01 0.00 0.00% FY16 FY17 On Standalone Basis 500.00 30.35% 35.00% 28.02% 30.
Slide 30: Quarterly Revenue & Volume Break-up (Standalone)
Quarterly Revenue & Volume Break-up (Standalone) 80 80 67.38 58.24 58.87 60 47.92 47.72 52.09 60 48.89 In Rs cr 42.5 43.25 41.13 42.08 In Rs cr 40 40 33.36 20 20 0 0 Casting Machined Domestic Exports Q3FY17 Q2FY18 Q3FY18 Q3FY17 Q2FY18 Q3FY18 2,000 1,798 1,613 1,468 1,500 In ‘000 1,000 428 478 416 50
Slide 31: 9M FY18 Revenue & Volume Break-up (Standalone)
9M FY18 Revenue & Volume Break-up (Standalone) 250 250 220.42 201.23 200 200 167.11 In Rs cr 145.47 144.26 150 122.62 In Rs cr 150 118.47 99.28 100 100 50 50 0 0 Casting Machined Domestic Exports 9MFY17 9MFY18 9MFY17 9MFY18 8,000 5,741 6,000 4,667 In ‘000 4,000 2,000 1,176 1,376 0 Casting Machined 9
Slide 32: Yearly Revenue & Volume Break-up (Standalone)
Yearly Revenue & Volume Break-up (Standalone) 350.00 324.91 297.25 280.00 In Rs. Crore 210.00 136.83 140.00 98.25 70.00 0.00 Domestic Exports FY16 FY17 Data Excluding Excise Duty, Rejection, Jobwork & Intercompany Sale 31
Slide 33: Key Financials – Balance Sheet Snapshot
Key Financials BALANCE SHEET Snapshot – As on 31st December, 2017 Networth – Rs 560 cr Debt – Rs 19 cr Cash & Investments – Debt / Equity – 0.04x Rs 341 cr 32
Slide 34: Q3FY18 Result Analysis – Result Highlights
Q3FY18 RESULT ANALYSIS RESULT HIGHLIGHTS Q3FY18 Total Revenues decreased by 14.34% to Rs. 93.04 crore • Revenue drop was result of change in sales mix, due to increased share of domestic sales and decrease in exports Q3FY18 EBITDA declined by 28.17% to Rs. 22.61 crore. EBITDA margins declined from 2
Slide 35: Key Developments
KEY DEVELOPMENTS Acquisition of MEMCO Engineering Private Limited (MEMCO) • The company acquired Nashik-based MEMCO Engineering Private Limited (MEMCO) for Rs. 38.04 crore in October 2017. The acquisition was made through internal accruals • MEMCO is a financially strong company with a CAGR of 18.5%
Slide 36: Standalone P&L Statement
STANDALONE P&L STATEMENT Particulars (In Rs Crore) Q3FY18 Q3FY17 Y-o-Y % Q2FY18 Q-o-Q % FY17 FY16 Y-o-Y% Revenue from Operations 93.04 108.62 -14.34% 100.57 -7.49% 467.01 452.36 3.24% Other Income 3.75 10.17 -63.13% 5.49 -31.73% 31.35 21.53 45.61% Total Revenues 96.79 118.79 -18.52% 106.06 -8.75% 49
Slide 37: Standalone Balance Sheet
STANDALONE BALANCE SHEET (In Rs Crore) (In Rs Crore) Particulars Standalone Particulars Standalone As at As at As at As at March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 ASSETS Equity I. Non-current assets (a) Equity share capital 94.79 94.74 (a) Property, plant and equipment 215.29 190
Slide 38: Consolidated P&L Statement
CONSOLIDATED P&L STATEMENT Particulars (In Rs. Crore) FY17 FY16 YoY% Revenue from Operations 466.33 456.42 2.17% Other Income 31.46 21.38 47.15% Total Revenues 497.79 477.80 4.18% COGS 137.82 133.33 3.37% Gross Profit 328.51 323.09 1.68% Gross Margin 70.45% 70.79% -34 bps Employee Expenses 63.26 56.
Slide 39: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET (In Rs Crore) (In Rs Crore) Particulars Consolidated Particulars Consolidated As at As at As at As at March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 ASSETS Equity I. Non-current assets (a) Equity share capital 94.79 94.74 (a) Property, plant and equipment 215.
Slide 40: Shareholding Structure
SHAREHOLDING STRUCTURE % Shareholding – 31st December 2017 Promoters Non and Promoter Institutions, Group, 21.65% 63.88% Key Institutional Investors – As on 31st December 2017 Institutions, 14.25% SBI Magnum Balanced Fund 3.90% IDFC Premier Equity Fund 3.54% SBI Magnum Global Fund 3.16% Source: BSE
Slide 41: About Us
About Us Precision Camshaft Limited (www.pclindia.in; BSE 539636; NSE PRECAM) Incorporated on June 8, 1992, PCL is one of the world's leading manufacturer and supplier of camshafts, a critical engine component, in the passenger vehicle segment. The company supplies over 150 varieties of camshafts fo
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