Precision Camshafts Ltd. · NSE:PRECAM
Precision Camshafts — FY2018 Earnings Presentation
47 slides from Precision Camshafts's earnings presentation, Jun 1, 2018
Slide 1: Precision Camshafts Limited - Submission of Investors Presentation
Precision Camshafts Limited (100% EOU Division) ;plc/-S/-oJv Works : D-5,D-6,7,7-1, M I D C, Chincholi, Solapur 413 255 Date: 1St June, 2018 SEC/JUN/SE/N&B/2018 TO TO The Listing Department The Listing Department Bombay Stock Exchange Limited The National Stock Exchange of India Phiroze Jeejeebhoy T
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 MARCH 2018 Camshaft design, manufacturing process and machining requir
Slide 3: Continuous developments in engine technology are expanding opportunities
CONTINUOUS DEVELOPMENTS IN ENGINE TECHNOLOGY ARE EXPANDING OPPORTUNITIES FOR CAMSHAFT MANUFACTURERS Engine technology isundergoing continuous developments– - Improvement in engine efficiency and VVT DOHC performance Evolving engine SOHC OHV technology Increasing efficiency andperformance - Complianc
Slide 4: OEMs 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: PCL leading camshaft manufacturer with marquee OEMs
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 2017 • Incorporation of • Technical and • Tata Capital • JV with Shenglong • Exclusive • Acquisition of PCL financial JV with G. invests in PCL by Automotive agreement with Nashik based • Started with Clancey Limited, purchasing shares Powertra
Slide 10: Marquee Customers and Global Footprint
COMPANY OVERVIEW MARQUEE CUSTOMERS AND GLOBAL FOOTPRINT 9
Slide 11: Marquee Customers and Global Footprint
COMPANY OVERVIEW MARQUEE CUSTOMERS AND GLOBAL FOOTPRINT EMOSS 10
Slide 12: Marquee Customers and Global Footprint - Customer Location
COMPANY OVERVIEW MARQUEE CUSTOMERS AND GLOBAL FOOTPRINT Customer Location 11
Slide 13: 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 14: Key Management
COMPANY OVERVIEW KEY MANAGMENT Mr. Karan Shah He holds a Bachelor of Science in Engineering from Purdue University and an MBA from Harvard Business School Executive, Business Development Joined PCL in 2017 and has 2+ years of work experience in automotive manufacturing Mr. Achyut Gadre He hold
Slide 15: 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 14
Slide 16: 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 17: 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 18: 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 19: PCL: Revenue & Margins
BUSINESS MODEL PCL: REVENUE & MARGINS Camshaft Castings (50%) FY18 Revenue - Rs 407.87 crore Machined Camshaft (50%) SALES REALISATION OF MACHINED CAMSHAFT IS 2.5X - 3.0X TIMES OF CAMSHAFT CASTING GEOGRAPHICAL DISTRIBUTION OF SALES HIGHER SALES OF 43% MACHINED CAMSHAFTS 58% TO DRIVE MARGIN EXPANSION
Slide 20: Competitive Advantages
DISCUSSION SUMMARY COMPANY OVERVIEW BUSINESS MODEL COMPETITIVE ADVANTAGES BUSINESS STRATEGY & OUTLOOK FINANCIAL RESULTS 19
Slide 21: 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 22: 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 21
Slide 23: 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 24: 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 Utilised Rs
Slide 25: 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 26: Technology Evolution & Comprehensive Product Offering
COMPETITIVE ADVANTAGE TECHNOLOGY EVOLUTION & COMPREHENSIVE PRODUCT OFFERING • Fuel Injection Components for Conventional and CRDi Diesel Engines • Brake Components • High Pressure Diesel Injector Connectors for Naval Ships • Stainless Steel Components for Instrumentation • Nozzle Holder Body • Nozzl
Slide 27: Technology Evolution & Comprehensive Product Offering
COMPETITIVE ADVANTAGE TECHNOLOGY EVOLUTION & COMPREHENSIVE PRODUCT OFFERING Balancer Shafts • Fully machined, hardened and balanced (vertical and horizontal) • Forged, ductile iron. Prismatic Components • Various Powertrain, Brake and Chassis components • Machining of all casting materials (GG, GGG,
Slide 28: Technology Evolution & Comprehensive Product Offering
COMPETITIVE ADVANTAGE TECHNOLOGY EVOLUTION & COMPREHENSIVE PRODUCT OFFERING 27
Slide 29: 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 facilities Operational
Slide 30: 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 31: 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 32: Financial Results
DISCUSSION SUMMARY COMPANY OVERVIEW BUSINESSMODEL COMPETITIVEADVANTAGES BUSINESSSTRATEGY&OUTLOOK FINANCIALRESULTS 31
Slide 33: Quarterly Result Highlights (Standalone)
Quarterly Result Highlights (Standalone) 140 30.00% 120 26.00% 25.00% 24.31% 100 20.00% 21.40% 80 In Rs cr 12.62% 15.00% 60 7.15% 10.00% 40 9.05% 20 5.00% 123.69 93.04 104.71 0 0.00% Q4FY17 Q3FY18 Q4FY18 Total Revenue EBITDA Margin PAT Margin 32
Slide 34: FY18 Result Highlights (Standalone & Consolidated)
FY18 Result Highlights (Standalone & Consolidated) 480 30.00% 460 28.25% 440 24.82% 20.00% 420 13.03% 8.52% 400 10.00% 380 467.01 407.87 360 0.00% FY17 FY18 Total Revenue EBITDA Margin PAT Margin In Rs cr 480 30.00% On Standalone Basis 28.02% 460 24.37% 20.00% 440 11.04% 14.28% 10.00% 420 466.33 428
Slide 35: Quarterly Revenue & Volume Break-up (Standalone)
Quarterly Revenue & Volume Break-up (Standalone) 80 100 63.7 76.84 80 60 47.72 51.43 50.69 48.87 57.07 In Rs cr 43.25 60 48.89 In Rs cr 40 37.55 42.08 43.23 40 20 20 0 0 Casting Machined Domestic Exports Q4FY17 Q3FY18 Q4FY18 Q4FY17 Q3FY18 Q4FY18 2,000 1,903 1,468 1,566 1,500 In ‘000 1,000 467 416 46
Slide 36: FY18 Revenue & Volume Break-up (Standalone)
FY18 Revenue & Volume Break-up (Standalone) 300 264.93 400 250 297.25 196.9 193.13 300 In Rs cr 200 169.16 224.18 In Rs cr 150 200 165.85 136.83 100 100 50 0 0 Casting Machined Domestic Exports FY17 FY18 FY17 FY18 10,000 7,643 8,000 6,233 6,000 In ‘000 4,000 1,643 1,837 2,000 0 Casting Machined FY17
Slide 37: Key Financials – Balance Sheet Snapshot
Key Financials BALANCE SHEET Snapshot – As on 31st March, 2018 Networth – Rs 570 cr Debt – Rs 21.98 cr Cash & Investments – Debt / Equity – 0.038 Rs 118.44 cr Standalone Balance sheet 36
Slide 38: FY18 (Consolidated) Result Analysis
FY18 (CONSOLIDATED) RESULT ANALYSIS RESULT HIGHLIGHTS FY18 Total Revenues decreased by 8% to Rs. 429 crore • Revenue drop was result of change in sales mix, due to increased share of domestic sales and decrease in exports EBITDA declined 20% to Rs. 104 crore. EBITDA margins were down 366 bps at 24.3
Slide 39: Key Developments – Acquisition of MEMCO
KEY DEVELOPMENTS Acquisition of 95% stake in 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 enjoys long term relationships with mar
Slide 40: Key Developments – Acquisition of MFT
KEY DEVELOPMENTS Acquisition of 76% shares in MFT Motoren und Fahrzeugtechnik GmbH (MFT), through PCL’s wholly owned Dutch subsidiary PCL (International) Holding B.V for Rs 25 crore • This acquisition will help strengthen PCL’s niche machining capabilities and diversify into a new product range. • M
Slide 41: Key Developments – Acquisition of Emoss
KEY DEVELOPMENTS PCL acquires 51% stake in Dutch electric mobility company - Emoss Mobile Systems B.V. via its 100% subsidiary PCL (International) Holding B.V. for a total consideration of Rs 58 crore • PCL forays into electric mobility with the acquisition of Emoss – a one stop solution for electri
Slide 42: Standalone P&L Statement
STANDALONE P&L STATEMENT Particulars (In Rs Crore) Q4FY18 Q4FY17 Y-o-Y % Q3FY18 Q-o-Q % FY18 FY17 Y-o-Y% Revenue from Operations 104.71 123.69 -15.34% 93.04 12.55% 407.87 467.01 -12.66% Other Income 9.53 7.62 25.04% 3.75 154% 24.60 31.35 -21.55% Total Revenues 114.24 131.31 -13% 96.79 18.03% 432.47
Slide 43: 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, 2018 March 31, 2017 March 31, 2018 March 31, 2017 ASSETS Equity I. Non-current assets (a) Equity share capital 94.88 94.79 (a) Property, plant and equipment 241.87 215
Slide 44: Consolidated P&L Statement
CONSOLIDATED P&L STATEMENT Particulars (In Rs. Crore) FY18 FY17 YoY% Revenue from Operations 428.61 466.33 -8.09% Other Income 24.72 31.46 -21.42% Total Revenues 453.34 497.79 -8.93% COGS 133.41 137.82 3.20% Gross Profit 295.21 328.51 -10.14% Gross Margin 68.87% 70.45% -157 bps Employee Expenses 58.
Slide 45: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET Particulars Consolidated Particulars Consolidated As at As at As at As at March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 Equity ASSETS (a) Equity share capital 94.88 94.79 I. Non-current assets (b) Other equity (a) Property, plant and equipment 314.26 215.29 S
Slide 46: Shareholding Structure
SHAREHOLDING STRUCTURE % Shareholding – 31st March 2018 Institutions, 14.17% Key Institutional Investors – As on 31st March 2018 Non- Institutions, Promoters SBI Magnum Balanced Fund 7.16% 22% and Promoter Group, IDFC Premier Equity Fund 3.43% 63.83% Promoters and Promoter Group Non-Institutions Ins
Slide 47: 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