Cummins India Limited · NSE:CUMMINSIND
Cummins India — Shareholder Meeting (July 2009)
47 slides from Cummins India's shareholder meeting presentation, Jul 29, 2009
Slide 1: Cummins India Limited 48th Annual General Meeting
Cummins India Limited 48th Annual General Meeting July 29, 2009
Slide 2: Cummins Inc.
Cummins Inc. Engine Business Distribution Business Power Generation Business Components Business Group HQ HQ in in Columbus, Columbus, Cummins Business Operations Operations in in 190 190 Countries Countries Indiana Indiana since since 1919 1919 Services 50 50 manufacturing manufacturing locations l
Slide 3: Cummins Inc. - Revenue
Cummins Inc. - Revenue 2008 Revenue $14.34 Billion Distributor Business 12% Components Business Engine 18% Business 50% Power Generation Business 20% 3
Slide 4: Cummins Business Model
Cummins Business Model Guiding Principles - Vision, Mission, Core Values Corporate & BU Objectives, Strategies, Initiatives, Projects -- (Goal Trees) Cummins Operating System (COS): – Ten Common Practices – Functional Excellence Framework (FE Statements, Measures, Processes, Tools, People Developmen
Slide 5: Why We Are Here – Guiding Principles
Why We Are Here – Guiding Principles Vision/Purpose: “Making people’s lives better by unleashing the power of Cummins” Personality: Decisive Driven To Win Agile Passionate Caring Values: Mission Integrity Motivating people to act like owners working together Innovation Exceeding customer expectation
Slide 6: COS Practices
COS 10 Practices Put the Synchronize Design quality Involve people Ensure equipment customer flows (material, in every step of and promote and tools are first, and physical and the process teamwork available and provide real information) capable value Create Establish the Treat preferred Follow comm
Slide 7: Ten India Functional Excellence Areas & Leaders
Ten India Functional Excellence Areas & Leaders 1. Quality – K N Harish 2. Manufacturing – Nitin Mantri 3. Technical – Craig Barnes 4. Supply Chain - Sandeep Chaudhry 5. Purchasing - B K Bose 6. Finance - Rajiv Batra 7. Information Technology – TBA (Rajiv Batra acting) 8. Human Resources – Nagarajan
Slide 8: Functional Excellence Framework
Functional Excellence Framework Functional Excellence Statements Measures & Targets Functional Processes Tools People Development 8
Slide 9: Role of India FE leaders
Role of India FE leaders Support performance cells in achieving their goal trees effectively Drive common, zero defect processes across India Share best practices to improve overall performance People development – Identify high performer/high potential employees – Create bench strength (0 delay in
Slide 10: One Focus. One Cummins.
One Focus. One Cummins. Convey and reinforce the Cummins Brand Promise – Dependability – Dependable people – Dependable products – Dependable services We do what we say we will do 10
Slide 11: Cummins in India
Cummins in India •• In In India India since since 1962 1962 Valvoline Tata Cummins •• 99 companies Cummins Fleetguard Filters companies (4 (4 JVs) JVs) •• Close New Delhi Jamshedpur Close toto 13,000 13,000 employees employees •• $1.6B $1.6B unconsolidated unconsolidated sales sales Cummins Turbo Te
Slide 12: India Organization Snapshot
India Organization Snapshot Cummins in India Cummins Entities in India Business Units: 1. Cummins India Ltd. • Engine Business 2. Cummins Research & Technology Automotive India Ltd. Industrial 3. Cummins Generator Technologies PSMI India Ltd. • Power Generation Business 4. Cummins Technologies India
Slide 13: India ABO Leadership Team: Business Leaders
India ABO Leadership Team: Business Leaders Anant Talaulicar Vikram Jaisinghani Arun Ramachandran Beau Lintereur Sandeep Sinha Amit Kumar Sandeep Chaudhry Industrial Business Automotive Power Generation PSMI CSS, Distribution Tata Cummins Business Business Business Operations Nitin Mantri Pradeep Bh
Slide 14: India ABO Leadership Team: Functional Leaders
India ABO Leadership Team: Functional Leaders Anant Talaulicar Rajiv Batra Craig Barnes KN Harish Dinesh Castellino Bijoy Bose Finance, IT, CRTI & Quality Legal, Facilities Purchasing Strategy Engineering Champion & HSE K.C. Ravi Senthil Kumaran J. Nilakantan Nagarajan Balanaga Government CBS Intern
Slide 15: Greatness – Zero Defect Companies
Greatness – Zero Defect Companies Cummins Values: Integrity, Delivering Superior Results Brand Promise: Dependability Process: Six Sigma ZERO Excellence: Good to Great Quality Goal: Continuous improvement towards defect free processes that satisfy customer needs and achieve business results 15
Slide 16: Business Strategy
Business Strategy Domestic Market Share Leadership - Automotive, Industrial and Power Generation focus - Customer focus (market planning, segmentation, Key Account Management, marketing communications) - Customer Support Excellence - Cross-business synergies Low Cost Producer - Six Sigma - Lean manu
Slide 17: Business Strategy
Business Strategy Exports - Components, Engines, Generators, Human Services Great Place to Work - Leadership excellence - Cummins OnTrack PMS/IDP/ODR - Diversity - Employee satisfaction surveys and improvement actions - Employee Communication - Compensation, Benefits and Recognition - Recruitment &
Slide 18: Customer Support Excellence
Domestic market share leadership Customer Support Excellence (CSE) Three ways in which we plan to accomplish CSE : - Through the Lens of the Customer (TLC) - Repair Event Cycle Time Reduction - Customer Focused Six Sigma Established our Customer Experience Philosophy and a set of Customer Experience
Slide 19: Domestic market share leadership
Domestic market share leadership Cummins supported the Indian Railways’ project of developing the railroad network in the J&K valley. The first specially developed train, J&K DEMU is powered by: Cummins 50 litre KTA50 engine for traction purposes 14 litre NTA14RG under floor engines for 320 kVA gene
Slide 20: Domestic market share leadership
Domestic market share leadership Our Industrial Engine Business launched three new products for the domestic market: GTA855 engine fuelled by natural gas to power 1200 SCMH gas compression packages for India 15 litre QSX15 series engines to power 9.5m3 hydraulic excavators, dozers, snow cutters and
Slide 21: Domestic market share leadership
Domestic market share leadership Our Industrial business launched the 260 HP 6C series engine to our existing range of 104 HP, 140 HP & 200 HP engines for powering Deep Sea Fishing Trawler applications. 21
Slide 22: Domestic market share leadership
Domestic market share leadership Our Power Generation Business launched two new products for the domestic market: Automatic Transfer Switches (ATS) 750 kVA electronically controlled QSK23 high horsepower generator set 22
Slide 23: Domestic market share leadership
Domestic market share leadership Our Automotive Business will power the buses of all OEMs that are fulfilling the orders as per the Delhi Transport Corporation (DTC) tender for 2,500 low floor buses. These busses will be powered by the 230 horsepower B Gas Plus engines, powered by compressed natural
Slide 24: Domestic market share leadership
Domestic market share leadership Cummins was adjudged a ‘Business Superbrand’ second time in a row. Cummins received the ‘Innovative Product/Service’ Award at CII’s National Award for Excellence in Energy Management 2008 for its ‘Power Quality & Adequacy Analysis’ 24
Slide 25: Domestic market share leadership
Domestic market share leadership Contributions of our Industrial Business were recognized by two of our leading OEMs. Telco Construction Equipment Company Limited, a market leader in construction equipment in India conferred upon us a Certificate of honour for making significant contributions to “De
Slide 26: Exports
Exports Revenue grew 80% Developed and launched the Tier II emission compliant 50 litre HHP engine New line of generator sets based on the X3.3 engines of 30 to 38 kVA at 50Hz and 30 to 35kW at 60Hz, witnessed great demand in the exports market Power Generation business launched the 14 litre NT Cool
Slide 27: Low Cost Producer
Low Cost Producer Six Sigma at Cummins India Limited 400 Green Belts, 20 Black Belts and 5 MBBs since inception 248 Six Sigma projects completed during the year Annualized savings of INR 76 crores Six Sigma 2008 India ABO Black Belt Symposium 27
Slide 28: Low Cost Producer
Low Cost Producer ACE II Launched ACE brought Rs. 253 crores gross accrued savings to CIL Since the launch of ACE II, we have achieved approximately 90% of our target reduction for the year, resulting in accrued savings of Rs. 15 crores Launch of ACE II 28
Slide 29: Great Place to Work: Safety
Great Place to Work Safety – Journey towards becoming ‘Zero Defect’ Certified four lead auditors in OHSAS-18001 and twelve lead auditors in ISO-14001 Rolled out policies - Contractor Safety, Forklift Safety, Road and Driving Safety, and Near Hits & First Aid Reporting Created greater awareness about
Slide 30: Great Place to Work: Employee Development
Great Place to Work Employee Development Partnered with management institutes like SP Jain and the Kelley School of Business at the Indiana University - 13 employees were provided with the opportunity to further their educational qualifications. Launched a new global internet based Performance Manag
Slide 31: Great Place to Work: Diversity
Great Place to Work Diversity Expanded our representation of women from 4% in 2005 to 15% in 2008 Expanding our representation of women 31
Slide 32: Corporate Responsibility: Higher Education
Great Place to Work Corporate Responsibility Higher Education Cummins Scholarship Program – Awarded scholarships to 30 deserving candidates in 2008 – Our employees individually sponsored another 12 students – Mentorship of students by Cummins employees Scholars of the Cummins Scholarship Program 32
Slide 33: Corporate Responsibility: Infrastructure development
Great Place to Work Corporate Responsibility Infrastructure development - Donated a community hall to the village of Kasaramboli near Pirangut - Helped resolve a water crisis problem at Bhatkya Vimukt Jati Shikshan Sanstha, a school for abandoned street / tribal children in Wagholi by working on wat
Slide 34: Corporate Responsibility: Energy and environment
Great Place to Work Corporate Responsibility Energy and environment - Undertook to support the Village Energy Security Program of the government aimed at electrifying villages by 2012 Others - Every Employee Every Community (EEEC) program - 346 employees dedicated 5,769 hours towards various meaning
Slide 35: Cummins India Limited
Cummins India Limited 47 years of successful operation Over 2,500 employees FY 2009 net sales – INR 28,611 million (excluding CSS & CASL) 35
Slide 36: Downturn Management Actions Taken To Emerge Stronger
Downturn Management Actions Taken To Emerge Stronger Rings of defense Increased Six Sigma focus on productivity & cost Accelerated Cost Efficiency II – 20% TCO reduction in direct materials over three years 30% reduction in indirect material spend over three years Discretionary spending cuts Working
Slide 37: Financial Performance 2008-09
Cummins India Limited Financial Performance 2008-09 Rs. In Crs CIL Legal Entity Consolidated 08-09 07-08 B/ ( W ) 08-09 07-08 B/ ( W ) Income Sales 3,274 2,331 40% 3,529 2,656 33% Other Income 151 123 23% 122 106 16% Share in Associated PAT - - 18 26 -32% # Total 3,425 2,453 40% 3,668 2,787 32% PBT
Slide 38: Consistently Profitable Growth
Consistently Profitable Growth Revenue Revenue 28% CAGR 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 04-05 05-06 06-07 07-08 08-09 Profit After Tax (PAT) 500 32% 450 CAGR 400 350 300 250 200 150 100 50 - 04-05 05-06 06-07 07-08 08-09 38
Slide 39: Gross Material Cost Reduction
Gross Material Cost Reduction 70.0 61.0 60.0 57.2 G ro ss Sav in g s (R s C r) 50.0 42.3 40.0 34.0 30.9 30.0 20.0 10.0 0.0 2005 2006 2007 2008 YTD June 09 39
Slide 40: Strong Cash Flow Generation
Strong Cash Flow Generation Free cash flow 250 200 150 100 50 - 04-05 05-06 06-07 07-08 08-09 (50) Rs.in Cr 04-05 05-06 06-07 07-08 08-09 Free cash flow (35) 138 90 221 170 40
Slide 41: Strong ROE Performance
Strong ROE Performance ROE 35.0 30.0 25.0 20.0 15.0 10.0 5.0 - 04-05 05-06 06-07 07-08 08-09 Year 04-05 05-06 06-07 07-08 08-09 Return on Equity 19.6% 22.4% 26.0% 25.5% 31.3% 41
Slide 42: Share Price Appreciation
Share Price Appreciation Share Price Trend 400 349 350 300 237 265 260 250 200 188 150 98 112 100 50 0 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Jul 09 Total returns @ 19% compounded annually mar ‘04-mar ‘09 42
Slide 43: Financial Performance Q1 09-10
Financial Performance Q1 09-10 Financial Performance - April to June 2009 Rs. In Crs. Apr09-Jun 09 Apr08-Jun 08 Including CSS Excluding CSS B/ ( W ) Net Sales 626 707 -11.5% PBT 125 121 3.0% PBT % 19.9% 17.1% PAT 90 88 101.6% Notes : In view of the CSS/CASL merger, above results for Q1 09-10 include
Slide 44: Financial Performance Q1 09-10
Financial Performance Q1 09-10 Financial Performance - April to June 2009 Rs. In Crs. Apr09-Jun 09 Apr08-Jun 08 Excluding CSS Excluding CSS B/ ( W ) Net Sales 507 707 -28.3% PBT 94 121 -22.2% PBT % 18.6% 17.1% Note : Above results exclude CSS/CASL Hence revenue is comparable, but PBT is not 44
Slide 45: Financial Performance Q1 09-10
Financial Performance Q1 09-10 Financial Performance - Apr -Jun 2009 Vs Jan - Mar 09 Rs. In Crs. Apr09-Jun 09 Jan 09 Mar 09 Excluding CSS Excluding CSS B/ ( W ) Net Sales 507 615 -17.6% PBT 94 90 4.0% PBT % 18.6% 14.7% INR 212 cr. or approx. 75% decline in exports quarter to quarter INR 104 cr. or 3
Slide 46: CIL Positioned Strongly
CIL Positioned Strongly Values based performance ethic Strong balance sheet Zero debt Respectable cash reserves Strong customer and supplier partnerships Access to global ‘cutting edge’ technology with significant localization capabilities Customer support capabilities Sustaining business strategy E
Slide 47: Outlook & Conclusion
Outlook & Conclusion Positive domestically and tough for exports Well positioned to weather any storm and will emerge stronger We remain steadfast: – Guiding Principles (Vision, Mission, Values, Personality) – Objectives, Four-fold strategy – Cummins Business Model / Cummins Operating System – Inclu