CIE Automotive India Ltd · NSE:CIEINDIA
CIE Automotive India — Mahindra Forgings — Investor Presentation (March 2011)
31 slides from CIE Automotive India's investor presentation, Mar 9, 2011
Slide 1: Mahindra Forgings Investor Meet
Mahindra M hi d g g Forgings 9MAR2011 / Investor Meet Systech Sector
Slide 2: Overview
1 Overview ¨ Mahindra Forgings : An Overview ¨ Mahindra Forgings : Market Situation ¨ Mahindra Forgings: Short Term & Long Term Strategy ¨ Mahindra Forgings : Financials ¨ Mahindra Systech : An Overview ¨ Mahindra Systech : Strategy & Financials ¨ One O SSystech t h Systech Sector
Slide 3: Mahindra Forgings: Origins
2 Mahindra Forgings : Origins Organic & Inorganic Growth to achieve scale, technology & customer reach • Doubling of c/shaft machinging capacity ongoing at Chakan Q4 10 • QIP of shares completely • Installation of 12,800 T press in Germany Q1 09 and 6,300 T press in Chakan Q4 08 • 2nd 4,000T press a
Slide 4: Mahindra Forgings: Manufacturing Capabilities
3 Mahindra Forgings: Manufacturing Capabilities German operations are the largest Location India UK Germany Germany Plants 1 Plant 2 Plants 4 Plants 3 Plants • Crankshafts • Hubs / Spindles • Links / Arms • Links / Arms • Knuckles • Links / Arms • Piston • Knuckles y products Key p • Con Rods • Shaf
Slide 5: Mahindra Forgings: Structure
4 Mahindra Forgings : Structure Holding structure created to enable global strategy M&M MFL SCHONEWEISS JECO STOKES M&M: 47.1% M&M: 100.0% M&M: 67.9% M&M: 99.5% Others: 52.9% Others: 32.1% M&M MFL M&M: ~51% Others: ~49% Managed independently JECO (renamed MFE) M&M: 100.0% STOKES M&M: 99.9% by Europe
Slide 6: Mahindra Forgings: Overview of Operations
5 Mahindra Forgings : Overview of Operations Europe and India have complementary products and end user segments Europe India • Main area of operation - CV Forgings • A Leading manufacturer of crankshaft and stub axles for Indian cars/ MUVs and tractor • >100 years of manufacturing history manufactur
Slide 7: Mahindra Forgings: Product Portfolio
6 Mahindra Forgings: Product Portfolio Europe India Crankshafts Commercial Front Axle Beam Steering Knuckle Pitman Arms Vehicles Rear Axle Flange Levers Stub Axle / Steering knuckle Passenger Cross Beam Rear Bearing Hub Front Knuckle Suspension/ Cars Chassis Parts Full Floating Axle Steering Knuckle
Slide 8: Mahindra Forgings: Customers
7 Mahindra Forgings : Customers Marquee Customers Europe India DAIMLER DAIMLER Systech Sector
Slide 9: Market Situation: India
0 50000 100000 150000 200000 250000 300000 Source - SIAM Jan‐08 Feb‐08 Mar‐08 Apr‐08 May‐08 Jun‐08 Jul‐08 Aug‐08 Sep‐08 Oct‐08 Nov‐08 Dec‐08 Jan‐09 Trajectory of continuous growth Feb‐09 Mar‐09 Market Situation : India Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐
Slide 10: Market Situation: Germany
9 Market Situation : Germany @ 60% of peak levels Production of Heavy Trucks (>6T) in Germany (Month-wise) Source - VDA Systech Sector
Slide 11: Market Situation: Germany
10 Market Situation : Germany MFE Customers have a Positive Outlook Commercial Vehicle Production Volume Growth Group Name 2009 2012F 2015F CAGR Daimler Group 179 357 445 9% Volvo Group 85 250 305 12% Tata Group 129 198 222 5% MAN Group 73 139 179 9% Paccar 59 166 161 10% Isuzu 66 128 155 8% Interna
Slide 12: Market Situation: Germany
11 Market Situation : Germany Manufacturing revival expected to sustain in the future Monday, Mar. 07, 2011 How Germany Became the China of Europe By Michael Schuman / Stuttgart “…The small, often family-owned enterprises that make up the backbone of German manufacturing have historically specialize
Slide 13: MFE: Performance Overview
12 MFE : Performance Overview Breakeven lowered EBITDA% •Markets recovering •Headcount lowered 9.5% 5.1% 6.7% 9.8% 8.3% 8.2% (30%) 9.4% Core team retained •Core 2.4% ‐6.0% 6 0% •15 patents ‐4.1% 09 09 09 09 10 10 10 10 11 11 11 Q1 ‐18.9% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 •Shape of recovery? EBITDA% H1F1
Slide 14: MFL, India: Performance Overview
13 MFL, India : Performance Overview Recovering after a dip EBITDA% 17.2% 16.4% • Peak quarterly EBITDA % of 17% in Q210 8.7% 13.4% 15.3% 6.9% • Machining g capacity p y being g 10.7% doubled post QIP 10.5% 7.5% Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q Q Q Q Q Q Q Q Q Q Q •MFL perfor
Slide 15: Mahindra Forgings: Long Term Strategy
14 Mahindra Forgings: Long Term Strategy Focus on creating differentiation and capturing growth Test and validate Testing & Europe India Validation products Value Add d Advanced Expand co development Ad t new Adopt Technologies technologies Co- C/S CO COE creasing Process V Development World class o
Slide 16: Mahindra Forgings: Long Term Strategy
15 Mahindra Forgings: Long Term Strategy Mentorship program @ Chakan to bring India to European levels Peter + Ravinder MFE Technology by F12, operating parameters by F14 1. Functional teams across geographies 1 2. Time bound transfer of know-how 3. Global KAM + Dual shoring 4. 4 Uniform & Predictab
Slide 17: Mahindra Forgings: Financials
16 Mahindra Forgings: Financials Financial Summary Consolidated Financials * INR Cr FY 08 FY 09 FY10 YTD Dec,F11 Net Sales 2331 2249 1334 1359 EBITDA 196 143 (9) 119 EBITDA (% of net sales) 8.4% 6.4% 0% 8.8% One-time write-off (Stokes) (18) Profit (loss) (excluding one-time writeoff) 16 (117) (166)
Slide 18: Auto Component Industry: Bright Future
17 Auto Component Industry : Bright Future Growing with Domestic Needs + Accelerating Exports 600,000 INR, Crores ¨ The Indian auto components industry grows from INR 1.3 lac cr (USD 28B) to an estimated INR 5.5 lac cr (USD 123B) 500 000 500,000 ¨ Exports grow at a faster pace ~22% CAGR 400,000 ¨ Co
Slide 19: Structure of Indian component industry
18 Structure of Indian component industry FY-10 revenues % of industry Promoter groups Total: Rs. 108300 Cr. (Rs. Cr.) revenues T.V.S. Iyengar Group 13,866 12.80% Sumi Motherson Group 6,955 6.42% Amtek Group 4,455 4.11% Kalyani (Bharat Forge) 4,329 4.00% Group H Hero (M (Munjals) j l )G Group 2 929
Slide 20: Mahindra Systech: Origin
19 Mahindra Systech: Origin Formed in 2004 - objective of becoming a global auto-component player Background ¨ Around 2004 2004-2005 2005, European and US auto component manufacturers were going through tough times – – 35+ auto part makers filed for bankruptcy protection; S&P downgraded 25 US-based
Slide 21: Mahindra Systech: Mission
20 Mahindra Systech: Mission Become a global “art to part” player To create India’s most Valuable, Innovative, “Art Art to Part” Part auto component entity that partners with its global customers to meet & surpass their business needs Systech Sector
Slide 22: Mahindra Systech: Size
21 Mahindra Systech: Size Significant part of US$7.1bn Mahindra Group Automotive Farm Equipment Two Wheelers Trade, Retail & After Market Logistics M lti Utility Multi Utilit VVehicles hi l T Tractor t S Scooters t Inter trade Retail, Inter-trade, Retail Logistics, Middle East First Choice (used Com
Slide 23: Current Systech Schematic
22 Current Systech Schematic 53% Mahindra & Mahindra PE1 PE2 45% 35% 47% 65% 51% 53% M hi d Mahindra M hi d F Mahindra Forgings i Mahindra Gears 47% MComposites Castings Limited * (Rajkot ) (Urse) (Chakan) India Europe Mahindra MetalCastello Forgings Europe Note: Equity holding figures are approxima
Slide 24: Mahindra Systech: Overview
23 Mahindra Systech: Overview Snapshot of key verticals Forgings Castings Gears Stampings & Engineering Composites Steel Services Mahindra Mahindra Mahindra Gears MUSCO (Listed) Mahindra Mahindra Forgings (Listed) Hinoday (IVF – and Transmission Engineering Composites PE) Pvt. Ltd. Desig
Slide 25: Mahindra Systech: Business Snapshot
24 Mahindra Systech : Business Snapshot Diverse Products with Diverse Automotive Markets F2010 Revenues Market Segments USD725M / INR33B Gears, 11% Composites Stamping, 14% Casting/Ferrites, 9% Gears-IN Gears-EU Engg Services, 6% Castings Others, 2% Steel 19% Steel, Stampings p g Forgings-IN Forging
Slide 26: Mahindra Systech: Vertical wise Focus
25 Mahindra Systech : Vertical wise Focus Business Product/Service Focus Segment Focus Steel Specialty p y Microalloy y Steels Automotive,, Oil&Gas,, Mining, g, Engineeri g ng Castings Turbocharger Housings (Global), Axle and Automotive, Construction Engg Transmission Components (India) Forgings Cra
Slide 27: Mahindra Systech: Financials
26 Mahindra Systech : Financials All figures in Rs cr. Business F10 Actuals 9 Months F11 Actuals Revenue EBITDA Revenue EBITDA Forgings 1334 (6) 1359 119 Consolidated* Steel & 1086 81 974 60 Stampings Castings & 298 28 271 18 Ferrites Gears* 370 29 321 34 Engg gg Services 191 38 130 18 Total 3173 16
Slide 28: Mahindra Systech: Strategy Going Forward
27 Mahindra Systech : Strategy Going Forward Focus on growth, differentiation & synergies to achieve profitability • Keep in step with the tremendous growth opportunities in the Indian market • Capacity expansion at Castings Castings, Gears & Forgings (only machining) in India • Return Europe to pro
Slide 29: Current Systech Schematic
28 Current Systech Schematic 53% Mahindra & Mahindra PE1 PE2 45% 35% 47% 65% 51% 53% M hi d Mahindra M hi d F Mahindra Forgings i Mahindra Gears 47% MComposites Castings Limited * (Rajkot ) (Urse) (Chakan) India Europe Mahindra MetalCastello Forgings Europe We are considering combining all Indian en
Slide 30: Implications of One Systech
29 Implications of One Systech Create an organisation better positioned to exploit future opportunities • Higher value for shareholders • Higher EBITDA and ROCE for larger players • Larger L multiples lti l ffor bi bigger players l • Enhanced ability to make investments • Component industry is capit
Slide 31: Thank You
Thank You @/D Mahindra Systech Sector Rise.
Mahindra Forgings — Investor Presentation (March 2011) on 6ix