Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Shareholder Meeting (July 2010)
51 slides from Ashok Leyland's shareholder meeting presentation, Jul 27, 2010
Slide 1: Annual General Meeting July 27, 2010
Annual General Meeting July 27, 2010
Slide 2: The presentation format
The presentation format 2009-10 The economy and the CV market Ashok Leyland performance The Financials Ashok Leyland strategy 2010-11 Outlook Thrust areas MD / AL / AGM / 27/07/2010
Slide 3: 2009-10 – Gaining lost ground
2009-10 – Gaining lost ground MD / AL / AGM / 27/07/2010
Slide 4: The economy: Slow start but quickly revved up
The economy: Slow start but quickly revved up Quicker, easier recovery than other economies thanks to strong fundamentals GDP growth of 7.4% achieved on the back of Government spending - stimulus packages Greater liquidity - RBI funding The IIP index witnessed a northward trend Infrastructure develo
Slide 5: CV industry rode the crest of the recovery wave
CV industry rode the crest of the recovery wave Growth in sectors that impact the CV industry, albeit in the second half Mining, quarrying, real estate, manufacturing Growth in several freight-generating sectors too Coal, cement, steel, fertilizers, petroleum, iron ore NHAI projects: saw movement 99
Slide 6: M&HCV TIV
M&HCV TIV Buses Trucks Truck segment grew by 36%, bus by 23.5% Source: SIAM MD / AL / AGM / 27/07/2010
Slide 7: TIV grew by 33.5%
TIV grew by 33.5% Growth sectors like MAV, ICV trucks grew; tractors maintained levels while tippers only spurted in the last two quarters MD / AL / AGM / 27/07/2010
Slide 8: But there were growth dampeners
But there were growth dampeners Increase in fuel prices Freight rates did not rise as expected in key sectors like Delhi and Mumbai RBI’s CRR hike in Jan ‘10 hardened interest rates Excise duty hike of 2% in the Union Budget made vehicles dearer by an average ` 20,000 Supply constraints FIPs, tyres
Slide 9: Ashok Leyland performance
2009-10 – Ashok Leyland performance MD / AL / AGM / 27/07/2010
Slide 10: Sales up 17%
Sales up 17% 83094 83307 63926 61655 54740 54431 48654 36444 29673 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09 '09-10 MD / AL / AGM / 27/07/2010
Slide 11: A sluggish start; a strong finish
A sluggish start; a strong finish Began the year with ‘Cash-and-Carry’ system to clean up the inventory pipeline 2009-10 50000 40000 30000 20000 10000 0 first half second half Outperformed TIV in Q4; TIV up 116%, AL up 163% MD / AL / AGM / 27/07/2010
Slide 12: Reasons for a strong 2nd half
Reasons for a strong 2nd half Advancing of purchases due to the anticipated change in emission norms Growth in CV-impacting sectors Funding for NHAI projects Liquidity in the market improved MD / AL / AGM / 27/07/2010
Slide 13: Bus segment up thanks to JnNURM
Bus segment up thanks to JnNURM Orders recd. Deliveries made JnNURM Status 5,209 nos. 3,342 nos. 35% of the orders remain to be executed Along with the regular STU orders, the order book position is very healthy 369 nos. invoiced during Q1 FY11 Current order outstanding 1,498 nos. MD / AL / AGM / 27
Slide 14: Composition of Sales
Composition of Sales 2008-09 2009-10 % Inc (Dec) Over 2008- 09 Domestic Civilian Passenger 16 548 17 217 4 Goods 30 651 40 541 32 Total 47 199 57 758 22 Defence 420 189 (55) Exports 6 812 5 979 (12) Total vehicles 54 431 63 926 17 Engines 21 447 19 050 (11) Spares incl Defence 79 969 88 506 10 (` La
Slide 15: The Financials
The Financials MD / AL / AGM / 27/07/2010
Slide 16: Unbroken track record of profitability maintained
Unbroken track record of profitability maintained ` Lakhs 2008-09 % of Net 2009-10 % of Net % Sales Sales growth Net Sales / income from operations 598107 100.0 724471 100.0 21.1 Gross operating margin 46944 7.8 76284 10.5 62.5 Financial expenses 11871 2.0 8113 1.1 (31.7) Other income 4962 0.8 7045
Slide 17: Performance Highlights – 5 Years
Performance Highlights – 5 Years 05-06 06-07 07-08 08-09 09-10 R O C E (%) 21.2 24.7 23.2 8.7 13.2 Inventory Turns 5.3 5.5 5.0 3.5 3.5 (Times) Debtors (Days) 18 17 6 73 25 Debt : Equity 0.2 0.3 0.4 0.9 0.9 EPS (In `) 2.74 3.38 3.53 1.43 3.18 MD / AL / AGM / 27/07/2010
Slide 18: The story behind the numbers
The story behind the numbers MD / AL / AGM / 27/07/2010
Slide 19: Concentration on non-cyclical business as de-risk policy continued
1. Concentration on non-cyclical business as de-risk policy continued Contribution slightly lower because of lower off-take of engines by Telecom sector MD / AL / AGM / 27/07/2010
Slide 20: Sectoral performance
Sectoral performance The LEYPARTS business grew by 12% LEYPOWER Power Solutions Business fell because of lesser off take of DG sets by the Telecom sector New markets in Africa and SAARC countries opened up and exports doubled International Operations Robust growth in Sri Lanka and Bangladesh New mar
Slide 21: Defence: Entry into armoured space
Defence: Entry into armoured space Armoured Stallion Armoured Bus Mine Protected Vehicle MD / AL / AGM / 27/07/2010
Slide 22: Focus on improving operating margins
2. Focus on improving operating margins Cost control Material costs • Effectively contained cost increases in steel and rubber Operating costs • Variable costs and administration overheads controlled A slew of other internal cost cutting measures started during the tough times continued MD / AL / AG
Slide 23: Hinduja Leyland Finance gets RBI nod
3. Hinduja Leyland Finance gets RBI nod A much-needed financing arm HLF has commenced operations in 130 centres covering 16 states Target to have a presence in all Indian states in a year’s time and network strength of 300 centers in three years Initial capital of ` 100 crore contributed by Ashok Le
Slide 24: Capacity expansion
4. Capacity expansion Modern, fully-integrated manufacturing facility at Pantnagar inaugurated Represents a renewed focus on the north To roll out 50,000 vehicles, including the U-Truck Set up with an investment of ` 1,100+ crores Tax incentives available of around ` 40,000 per vehicle MD / AL / AGM
Slide 25: Capacity expansion
4. Capacity expansion Hosur – the AL-Nissan project to be commissioned before the year-end Alwar: New bus body building facility put up with globally bench-marked processes and machinery From where the high-end ULE buses roll out MD / AL / AGM / 27/07/2010
Slide 26: Product Introductions of 2009-10
Product Introductions of 2009-10 MD / AL / AGM / 27/07/2010
Slide 27: Trucks
Trucks CG 1613 ETK 3116 2518 H Tipper 14 cum. 3516 Super MD / AL / AGM / 27/07/2010
Slide 28: Trucks
Trucks Ecomet Smart – 912 & 1112 Ecomet Strong – 912 & 1112 MD / AL / AGM / 27/07/2010
Slide 29: Buses
Buses 2516 HT HYBUS - India’s first CNG iBus2 –Emergency Response Plug-in Hybrid Bus Centre on Wheels Latest in green technology for Developed with CISCO , it mass urban transportation. It combines user-friendly mobility combines a CNG engine with with best-in-class connectivity an electric propulsi
Slide 30: Customer Care: Raising the bar
Customer Care: Raising the bar The national helpline comes with the promise of Response within 4 hours anywhere on the Golden Quadrilateral Restoration (vehicle back on road) in 48 hours MD / AL / AGM / 27/07/2010
Slide 31: After-market strength
After-market strength Added Current 2516 HT Dealership outlets 20 180 Authorized Service Centres 13 151 Work bays 96 2396 MD / AL / AGM / 27/07/2010
Slide 32: 2010-11 – Prospects
2010-11 – Prospects MD / AL / AGM / 27/07/2010
Slide 33: Outlook – appears promising
Outlook – appears promising Positives Traction in the economy Estimated to grow at 9.2% (source: CMIE) Infrastructure development in high gear Growth will be fueled by private consumption Negatives Rise in fuel and raw material prices Cost of ownership will rise due to • Hike in Excise duty • Migrat
Slide 34: Industry growth prospects
Industry growth prospects With the economy doing well and infrastructure high on Govt.’s priority list, the CV industry should do well Better road systems will increase demand for superior, factory-built, fully-built vehicles Govt. mandate for use of School Buses over private utility vehicles augurs
Slide 35: Ashok Leyland – Thrust areas
Ashok Leyland – Thrust areas MD / AL / AGM / 27/07/2010
Slide 36: Rolling out the U-Truck platform
1. Rolling out the U-Truck platform 2516 HT MD / AL / AGM / 27/07/2010
Slide 37: The U-Truck platform …
The U-Truck platform … Roll out by October, 2010 25 models over 18 months The platform will progressively morph with the introduction of new features and technologies Will be powered by BS III and BS IV compliant engines Will have superior, electronic and efficient engine management system Equipped
Slide 38: Buses on the anvil
Buses on the anvil Stag 4900 – School Bus The IT 09 – Developed by the AL-TVS-IRIZAR joint venture. MD / AL / AGM / 27/07/2010
Slide 39: Ready for migration
Ready for migration Now slated for October ’10 Ready with the products fro upgrading and both technologies SCR – with the ‘H’ series engines EGR – with the Neptune range and now with the ‘H’ series engines too MD / AL / AGM / 27/07/2010
Slide 40: Capacity creation
2. Capacity creation Bus plant at Ras Al Khaimah A vital manufacturing facility to feed GCC and African markets Production has already begun Initially to produce 2,000 buses annually Eventually to produce trucks too MD / AL / AGM / 27/07/2010
Slide 41: Exports
3. Exports To explore new markets in: Latin America CIS Africa SAARC countries With products configured to the specific requirements of these new markets Target for FY11 – growth of 17% with volumes to touch 7,000 vehicles MD / AL / AGM / 27/07/2010
Slide 42: CAPEX Plans
4. CAPEX Plans FY ‘09-’10 Capex incurrence was ` 810 crores Investments in JVs – ` 142 crores Going forward over the next 2 years Planned Capex incurrence - ` 1200 crores Investments in JVs – ` 800 crores MD / AL / AGM / 27/07/2010
Slide 43: Q1 Financials
Q1 Financials MD / AL / AGM / 27/07/2010
Slide 44: Composition of Sales Q1 2010-11
Composition of Sales Q1 2010-11 Q1 Q1 % Inc / 2009-10 2010-11 (Dec) Domestic Civilian Passenger 2339 4402 88.2 Goods 4303 15043 249.6 Total 6642 19445 192.8 Defence 148 15 (89.9) Exports 903 1940 114.8 Total vehicles 7693 21400 178.2 Engines 4106 3886 (5.4) Spares incl Defence 19350 18431 (4.7) (Rs
Slide 45: Unbroken track record of profitability maintained
Unbroken track record of profitability maintained Rs Lakhs Q1 % of Q1 % of % Inc 2009- Net 2010- Net / (Dec) 10 Sales 11 Sales Net Sales / income from operations 91807 100.0 234798 100.0 155.8 Gross operating margin 1779 1.9 23540 10.0 1223.4 Financial expenses 2580 2.8 3162 1.3 22.5 Other income 55
Slide 46: Joint Ventures on schedule
5. Joints Ventures on schedule With Nissan for LCVs Well on course Launch date: mid 2011 With John Deere Manufacturing facility being built at Gummdipoondi Pilot production to start by November ‘10 Product roll out – Early 2011 Ashley Alteams Plant inaugurated in January 2010 Production on in full s
Slide 47: Investor Relations
Investor Relations MD / AL / AGM / 27/07/2010
Slide 48: Value-added services for share-holders
Value-added services for share-holders Annual shareholders satisfaction survey Conducted for 9 years consecutively Responses are summarised and reviewed by the Share-holder/Investor Grievance Committee of the Board Investor Guide Sent to every share-holder every year since 1998 Annual Reports Disclo
Slide 49: Sharing profits
Sharing profits Percentage 150 150 150 120 100 100 75 50 March '03 March '04 March '05 March '06 March '07 March '08 March '09 March'10 MD / AL / AGM / 27/07/2010
Slide 50: Our family of shareholders
Our family of shareholders 303954 306126 200091 220586 146824 137244 75323 71103 March '03 March '04 March '05 March '06 March '07 March '08 March '09 March'10 MD / AL / AGM / 27/07/2010
Slide 51: Thank You
Thank You MD / AL / AGM / 27/07/2010