Tata Motors Passenger Vehicles Ltd · NSE:TMPV
Tata Motors Passenger Vehicles — Tata Motors — FY2008 Earnings Presentation
43 slides from Tata Motors Passenger Vehicles's earnings presentation, May 28, 2008
Slide 1: Analyst Meet
Analyst Meet 28th May, 2008 INVESTOR RELATIONS 1 1
Slide 2: Forward-looking statements disclaimer
Statements in this presentation describing the Company’s objectives, projections, estimates, expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors th
Slide 3: Analyst Meet agenda
Business Highlights • Commercial Vehicles • Passenger Vehicles Financial • International Business Highlights • Vehicle Financing • Subsidiaries Looking Ahead Analyst Meet 28th May, 2008 INVESTOR RELATIONS 3 3
Slide 4: FY08 – A challenging year, marginal volume growth due to weak demand drivers
FY08 – A challenging year, marginal volume growth due to weak demand drivers 578,952 582,352 312,935 298,586 226,892 214,758 53,474 54,659 FY2007 FY2008 Commercial Passenger Exports Total Sales Vehicles Vehicles INVESTOR RELATIONS 4 4
Slide 5: CV Industry witnessed moderate growth of 6.9% in FY08
After 6 years of continuous growth, CV Industry witnessed a moderate growth of 6.9% in FY08 246,863 ( 5.9%) 232,339 + 11.7% 188,140 Volume demand impacted by 168,467 FY07 Reduction in economic activity FY08 Poor credit availability + 51.6% Hardening of interest rates 79,499 52,435 Increase in fuel p
Slide 6: Tata Motors maintained its leadership position in Commercial Vehicles
Tata Motors maintained its leadership position in the Commercial Vehicles, though it did lose some market share Tata Motors Domestic Market share 64.7 64.2 67.6 64.2 64 62.7 54.6 48.9 MHCV T LCV T Bus* Total CV *Includes Magic and Winger FY07 FY08 Loss of market share due to Non availability of a fe
Slide 7: New products helped the Industry grow by 6.9%
New products introduced by the Company helped the Industry to grow by 6.9% and constituted 20% of Industry sales in FY08 Industry growth ACE 6.9% Launched FY06 Industry growth (without new products) 499,978 (0.3%) Magic Launched 467,765 FY08 Winger FY 2007 FY 2008 Launched FY08 INVESTOR RELATIONS 7
Slide 8: The Passenger Vehicle industry also witnessed moderation in growth
The Passenger Vehicle industry also witnessed moderation in growth 1,534,864 PV Industry Segment-wise Performance +11.2% Segments Y-o-Y Growth 1,379,979 Small car 11.6% Mid-size 14.6% Utility Vehicles 9.7 % FY07 FY08 Industry growth due to Launch of new products Over 16 new cars and 50 variants laun
Slide 9: 5.3% decline in the Company's passenger vehicle sales
After 6 years of consecutive growth, 5.3% decline in the Company’s sales due to increase in competition and a mature product portfolio Tata Motors Market Share 39.0% 32.4% 21.8% 17.4% 19.8% 16.4% 14.6% 14.0% Small Car Entry Midsize Utility Total PV FY07 FY08 One Millionth car rolled out on the Indic
Slide 10: Moderate growth in vehicle exports
The Company witnessed a moderate growth in its vehicle exports amidst a challenging environment Total exports at 54, 659 units in FY08 were up from 53,474 units in FY07 Top 5 markets constituted over 50% of export volumes • South Africa • Largest export market with 14.5% share of TML exports • TML i
Slide 11: Vehicle financing continues to be a critical support to core business
Vehicle financing continues to be a critical support to core vehicle business in a challenging business environment Disbursals and Market Share Rs Bn Book size of Rs.87.21 Bn as on 31st March’08 • on Tata Motors books – Rs.25.87 Bn 96.00 33.6% 34% • on TMFL books – Rs.61.33 Bn 94.00 34% NIM of vehic
Slide 12: Tata Daewoo Commercial Vehicles witnessed 39% growth in volumes
Tata Daewoo Commercial Vehicles witnessed 39% growth in volumes Total Volume Sales 11,899 + 39% MHCV Market Share 3,312 + 10% 33.5% 8,588 26.1% Export 3,016 8,587 + 54% Domestic 5,572 FY07 FY08 FY07 FY08 Strong industry growth of 23.1% in HCV segment and 18.9% in MCV segment due to advancement of pu
Slide 13: Construction Equipment Business – Telcon
Construction Equipment Business – Telcon (53%) ( Mkt Shares) & Volume 5,003 (53%) (11.5%) 3,499 (10%) 2,638 1,860 Excavators Wheel & Backhoe Loaders FY07 FY08 Growing Product portfolio and capabilities Telcon at 38th position among Global CE OEMs, up from 47th position last year 9 new products launc
Slide 14: Construction Equipment Business – Telcon acquisitions
Construction Equipment Business – Telcon Recent Two Acquisitions to strengthen capabilities Spanish market leader and 6th largest in the world Provides technology for range of concrete equipments (79% Ownership) Access to the Fastest Growing Economy and Construction Equipment Markets (India and Chin
Slide 15: Engineering Design Services: TATA Technologies
Engineering Design Services : TATA Technologies Revenue Distribution* Customer Analysis APAC, Revenue % FY08 25.51% Top 1 customer 15.5% Top 5 customers 36.5% USA, 50.72% Top 10 customers 47.5% * Dollar revenue Europe, 23.77% Dollar revenue witnessed highest growth over Fiscal 2007 in the APAC regio
Slide 16: Auto Components: HVAL, HVTL
Auto Components : HVAL , HVTL Building capabilities to diversify customer base • IPRs sold to HVAL and HVTL by Tata Motors • Value unlocked through sale of 15% equity stake each in HVAL and in HVTL Capacity expansion initiated in line with long-term market opportunities Technological capabilities un
Slide 17: Analyst Meet – Financial Highlights
Business Highlights • Stand Alone Financials • Consolidated Financials Financial Highlights • Balance Sheet • Key Subsidiaries Looking Ahead Analyst Meet 28th May, 2008 INVESTOR RELATIONS 17 17
Slide 18: Standalone Financial Performance of Tata Motors
Standalone Financial Performance of TATA Motors Rs millions FY07 FY08 % change • Net Revenues 4.6% Gross Revenue 318194.8 330939.3 4.0% Net Revenue 274700.3 287308.2 4.6% • EBITDA 6.6% EBITDA 33123.7 30923.2 -6.6% • PAT 6.0% EBITDA Margin 12.06% 10.76% ( 130 bps) PBT 25731.8 25764.7 0.1% • Basic EPS
Slide 19: Consolidated Financial Performance of Tata Motors
Consolidated Financial Performance of TATA Motors • Net Revenues 10 % Rs millions FY07 FY08 % change Gross Revenue 369214.9 403407.9 9.3% • EBITDA 7 % Net Revenue 323600.8 356514.8 10.2% • PBT 31.5% EBITDA 41147.2 44108.5 7.2% EBITDA Margin 12.72% 12.37% ( 34 bps ) • Net profit maintained at PBT 308
Slide 20: Successfully Managed to Maintain Negative Working Capital
Successfully Managed to Maintain Negative Working Capital Inventory (No of Days) Debtors Receivables 29 11 9 22 FY07 FY08 FY07 FY08 Net Working Capital (No of Days) FY07 FY08 - 20 (Net Working Capital is net of vehicle -26 financing business) INVESTOR RELATIONS 20 20
Slide 21: Returns on Capital
Returns on Capital ROCE ROE 31% 28% 26% 21% FY07 FY08 FY07 FY08 INVESTOR RELATIONS 21 21
Slide 22: Strong Balance Sheet
Strong Balance Sheet Rs Bn Rs Bn 41 0.60 158 42 33 0.55 133 35 117 0.50 28 74 21 0.48 0.48 0.45 14 0.40 7 0.35 FY07 FY08 0 0.30 Gross Capital Employed FY07 FY08 Capital Employed net of vehicle financing Net Debt Net Debt/Equity Vehicle financing portfolio on Tata Motors books reduced to Rs 24.4 bn a
Slide 23: Subsidiary Annual Performance: TDCV and Telcon
Subsidiary Annual Performance TDCV Rs. Bn TELCON Rs. Bn 30.75 27.18 23.34 18.10 3.20 1.58 1.84 0.83 FY07 FY08 FY07 FY08 Turnover PAT Turnover PAT INVESTOR RELATIONS 23 23
Slide 24: Subsidiary Annual Performance: Tata Technologies and TMFL
Subsidiary Annual Performance TATA Technologies Rs. Bn Tata Motor Finance Limited Rs. Bn 11.0 8.37 9.6 0.29 1.6 0.17 0.45 0.13 FY07 FY08 FY07* FY08 Turnover PAT Turnover PAT * Consolidated results * FY07 data is for the period June’06 – Mar’07 INVESTOR RELATIONS 24 24
Slide 25: Subsidiary Annual Performance: HVTL and HVAL
Subsidiary Annual Performance HVTL Rs. Bn HVAL Rs. Bn 1.92 2.0 2.03 1.75 0.63 0.58 0.47 0.45 FY07 FY08 FY07 FY08 Turnover PAT Turnover PAT INVESTOR RELATIONS 25 25
Slide 26: Analyst Meet – Looking Ahead
Business Highlights • Macro Environment • Tata Motors’ Growth Plans Financial Highlights • Jaguar and Land Rover Acquisition • Key challenges and Levers Looking Ahead Analyst Meet 28th May, 2008 INVESTOR RELATIONS 26 26
Slide 27: Near term Economic Conditions
Near term Economic Conditions Risks Opportunities • High interest rates • GDP growth in India expected to be at 7.97% during 2008-13, much higher than • High Crude Prices 5.4% growth witnessed in 1998-02 • High raw material costs (Source : IMF WEO) • Increased risk aversion among • Fiscal incentives
Slide 28: Strategic Elements: Commercial Vehicles
Commercial Vehicles • Ace variants • Marcopolo Buses New Products • World Truck • Defence Vehicles • Ready – to –use solutions Strategic Elements • Flexible new platforms : Ace, World Truck Enhancing • Dedicated production facilities Capabilities • Product Development Capability in Fully Built Buses
Slide 29: Strategic Elements: Passenger Vehicles
Passenger Vehicles • Sumo Grande • New Indigo New Products • New Indica • New UV platform • Nano • Fiat Punto • Crossover • Fiat Linea Strategic Elements • Fiat Joint Venture ( 50:50 JV ) Enhancing • Enhanced value proposition through world class car Capabilities engine technology from Fiat • Supple
Slide 30: The Company unveiled Tata Nano in 2008
The Company unveiled Tata Nano to the Indian and World audience in 2008 India’s Income Pyramid (Mn. no. of Households) 3.2 Annual Income 5.5 >1,000k 1.2 2.4 Annual Income 55 500-1,000 11 Annual Income 91 106 200-500k Annual Income 101 90-200k 74 Annual Income 2005 2015F <90k Source : McKinsey Tata N
Slide 31: Enhancing Product and Production Capabilities at Tata Motors
Enhancing Product and Production Capabilities at Tata Motors Dedicated plants to improve efficiency, to be supported by improved logistics management Pant Nagar : Ace Family Lucknow: MHCV, Bus Ranjangaon : JV with Fiat Singur : Nano Pune: LCV, UV, Cars Jamshedpur: MHCV Dharwad : JV with Marcopolo Ex
Slide 32: Partnering with World class Players: Marcopolo JV
Enhancing Capabilities – Partnering with World class Players JV with Marcopolo for product development and participate in mass transport opportunities in Indian and International markets Ownership Tata Motors (51%) ,Marcopolo (49%) Location Dharwad, Karnataka & Lucknow, Uttar Pradesh Production Capa
Slide 33: Partnering with World class Players: Fiat
Enhancing Capabilities – Partnering with World class players Fiat Distribution of Fiat Products in India • Enhance choice for customer • Opportunity to enhance dealer profitability Manufacturing JV in India • Access to World Class Car Engine Technology • Supplement vehicle capacity • Ownership Tata
Slide 34: Increasing Presence in International markets
Increasing Presence in International markets Thailand : Growing automotive hub in ASEAN • Joint venture formed in Thailand with Thonburi • Ownership Tata Motors (70%) , Thonburi (30%) • Production Capacity 12,500 units per annum in Phase I • Xenon launched in Thailand in March’08 to an encouraging r
Slide 35: JLR Acquisition
JLR Acquisition Jaguar Land Rover acquisition builds a comprehensive portfolio immediately with a global footprint Unique opportunity to move into the Premium car and SUV segment with access to two world class, iconic brands • Land Rover A fit above Tata UV / SUV/ Crossover offerings for the Premium
Slide 36: Key Terms of Acquisition
Key Terms of Acquisition $ 2.3 bn for 100% of JLR Assets Purchased : • 3 major UK manufacturing plants • 2 advance design centres Price • 26 National Sales Companies (existing and to be carved out of Ford operation), • IP rights, perpetual royalty free licenses and • Minimum guaranteed accumulated c
Slide 37: Key Terms of Acquisition: pension and contractual terms
Key Terms of Acquisition Up to about $600 mn approx. contribution by Seller to be made prior to Completion Next actuarial valuation to be carried out only as at April 2009 Pension Liability Clearance for transaction obtained from The Pensions Regulator in the UK Trustee have confirmed their support
Slide 38: Key Challenges Ahead: profitability
Key Challenges Ahead Profitability concerns in rising cost environment Challenge New Platforms: Opportunity to ‘design’ effective cost reductions Cost reduction efforts : Over Rs. 10 bn of cost reduction achieved since FY06 Levers Pursue on going cost reduction efforts – vendor rationalization, valu
Slide 39: Key Challenges Ahead: JLR integration
Key Challenges Ahead Impact of JLR acquisition and integration challenges Challenge Building blocks for a successful turnaround have already been put in place : Land Rover turned EBIT positive in 2005, and has been showing a steady growth since then. Jaguar's performance is demonstrating strong sign
Slide 40: Key Challenges Ahead: funding
Key Challenges Ahead • Funding of JLR Acquisition Challenge • Funding of future growth requirements • Capex over the next 3-4 years expected to be Rs.100 Bn Free Cash Flow generation : FCF in FY08 was Rs.16.8 Bn Unlock value from key investments : 20% stake sold in Telcon in FY06, 15% stake in HVAL
Slide 41: Fund Raising Plans
Fund Raising Plans Board approval obtained to raise about Rs.92 bn – Rs.96 Bn through issue of equity / equity linked instruments 3 simultaneous but unlinked Rights Issues of about Rs.72 Bn of the following securities • Equity shares upto Rs.22 Bn • ‘A’ Equity shares carrying differential voting rig
Slide 42: Tata Motors is well poised to emerge as a leading automobile player
Tata Motors is well poised to emerge as the leading automobile player in the world automotive market in coming years Combining capabilities and cost advantage to emerge as a world class automotive company Improve Over 100 new revenue Develop products / About 150% stability Prudent capital expertise
Slide 43: Thank You
Thank You INVESTOR RELATIONS 43 43