Elecon Engineering Co. Ltd. · NSE:ELECON
Elecon Engineering — Merger or Acquisition (July 2012)
23 slides from Elecon Engineering's merger presentation, Jul 31, 2012
Slide 1: Group Restructuring and Consolidation of MHE & PT Businesses
July 31, 2012 Group Restructuring and Consolidation Of MHE & PT Businesses 1
Slide 2: Table of Contents
Table of Contents Transaction Overview and Objectives Group Restructuring Elecon Engineering – Consolidated & Focused Transaction Summary and Approvals Appendix * MHE refers to “Material Handling Equipment”; and PT refers to “Power Transmission Equipment” in this document; 2
Slide 3: Objectives of Restructuring
Objectives of Restructuring Consolidation of Group’s MHE and PT businesses Creation of focussed and separate MHE and PT entities Group Restructuring Eliminates majority of intra-group transactions by Elecon Engineering and thereby enhancing value to minority shareholders Deleverage Balance Sheet by
Slide 4: Transaction Highlights
Transaction Highlights • The Boards of Directors of Elecon Engineering Company Ltd., Prayas Engineering Ltd., EMTICI Engineering Ltd. and Aakaaish Projects Ltd. have approved the scheme of arrangement and the swap ratio Process • The scheme is subject to shareholders, creditors and regulatory Group
Slide 5: Elecon Engineering - Comprises two different businesses
Elecon Engineering - Comprises of two different (MHE & PT) Businesses FY12 Revenues Power Transmission business manufactures transmission equipment and is the largest PT manufacturer of Industrial Gears in Asia and 44% commands the largest market share in India MHE Group Restructuring 56% MHE busine
Slide 6: Prayas Engineering
Prayas Engineering FY12 Revenues Power Transmission business includes ferrous, non- ferrous & steel foundry, coupling & machining shops PT which primarily derive their revenues from Power MHE 47% Transmission division of Elecon Engineering 53% Group Restructuring MHE business is involved in manufact
Slide 7: EMTICI Engineering
EMTICI Engineering FY12 Revenues PT and MHE business primarily involves the sales, marketing and services business, of the Elecon PT Engineering Company 44% MHE PT business also includes the service-center business 56% Group Restructuring unit located at Madurai and Investment in the Elecon Group’s
Slide 8: Current Group Structure
Current Group Structure Public Promoter Group Shareholders Group Restructuring 54.01% 45.99% 100% 100% Elecon Engineering Prayas Engineering EMTICI Engineering M P W M P R M P O 100% Aakaaish Projects M M M MHE Business W Alternate Energy Business, Windmills, and other non-core assets P P P PT Busin
Slide 9: Proposed Group Structure (1/2)
Proposed Group Structure (1/2) Elecon P W P P Aakaaish M M M Group Restructuring Prayas R EMTICI O Existing pre-restructuring Added via restructuring Group Restructuring and Business consolidation involves the following steps - • Transfer of MHE business from Elecon Engineering to Aakaaish projects
Slide 10: Proposed Group Structure (2/2)
Proposed Group Structure (2/2) Public Promoter Group Shareholders Group Restructuring 46.04 % 53.96 % Elecon Engineering Consolidated & Focused: Elecon Engineering P W P P Power Transmission Equipment 60.49 % 39.51 % Aakaaish Projects Aakaaish Material Handling Equipment M M M 10
Slide 11: Table of Contents
Table of Contents Transaction Overview and Objectives Group Restructuring Elecon Engineering – Consolidated & Focused Transaction Summary and Approvals Appendix 11
Slide 12: Vertical Integration to enhance profitability
Vertical Integration to enhance profitability • Adds Sales & distribution network to Elecon Engg. • Adds manufacturing capability with ~15 plant • Sales and marketing personnel of ~ 220 employees units to Elecon Engg. • Operates 18 branch offices along with country- • Provides in-house Iron, Aluminu
Slide 13: Enhanced Profitability
Enhanced Profitability FY12 Revenue - MHE FY12 Revenue – PT Revenue (INR crores) Revenue (INR crores) 1,000 1,000 86 750 187 750 846 160 94 745 - 660 500 500 594 - Group Restructuring 250 250 0 0 Elecon Prayas & Eliminations Total Elecon Prayas & Eliminations Total EMTICI EMTICI FY12 EBITDA margin –
Slide 14: Robust Balance Sheet
Robust Balance Sheet FY12 Debt / EBITDA FY12 ROCE* 3 40% 2 Group Restructuring 20% 1 0 0% MHE PT MHE PT Pre Restructuring Post Restructuring Pre Restructuring Post Restructuring Kindly note that MHE refers to Aakaaish Projects, which is a subsidiary of Elecon Engineering; and PT refers to standalone
Slide 15: Table of Contents
Table of Contents Transaction Overview and Objectives Group Restructuring Elecon Engineering – Consolidated & Focused Transaction Summary and Approvals Appendix 15
Slide 16: Transaction Mechanics
Transaction Mechanics Slump sale the MHE business from Elecon to Aakaaish Step 1 Group Restructuring Demerge PT & MHE business of Prayas into Elecon & Aakaaish respectively Step 2 Elecon & Aakaaish to issue fresh equity shares to the Promoters as consideration for the PT & MHE businesses of Prayas D
Slide 17: Swap Ratios
Swap Ratios Issued by Elecon Engineering Issued to 49 shares of Elecon (face value INR 2/- each) for every Prayas Shareholders 4 shares of Prayas (face value INR 10/- each) Group Restructuring 39 shares of Elecon (face value INR 2/- each) for every EMTICI Shareholders 4 shares of EMTICI (face value
Slide 18: Transaction Approvals
Transaction Approvals Shareholders and Creditors of Elecon Engineering, Prayas Group Restructuring Engineering, EMTICI Engineering and Aakaaish Projects Stock Exchanges High Courts in Gujarat, India Other regulatory authorities 18
Slide 19: Key Advisors
Key Advisors Valuation advisor ◦ SSPA & Co. Chartered Accountants Group Restructuring Independent fairness opinion bankers ◦ Keynote Corporate Services Private Limited Restructuring (Tax & Regulatory) Advisor ◦ PricewaterhouseCoopers Private Limited Financial Advisor ◦ Ambit Corporate Finance Privat
Slide 20: Table of Contents
Table of Contents Transaction Overview and Objectives Group Restructuring Elecon Engineering – Consolidated & Focused Transaction Summary and Approvals Appendix 20
Slide 21: Proforma Financials – Elecon (PT)
Proforma Financials – Elecon (PT) FY 2011-12 Pre Restructuring2 Post Restructuring3 (INR crores) Elecon1 Prayas EMTICI Elecon % increase Revenues4 594 129 31 660 11.1% Group Restructuring EBITDA 97 24 5 126 29.5% margin % 16.4% 18.3% 16.5% 19.1% PBT 37 7 4 49 30.5% margin % 6.3% 5.5% 13.9% 7.4% Net
Slide 22: Proforma Financials – Aakaaish (MHE)
Proforma Financials – Aakaaish (MHE) FY 2011-12 Pre Restructuring1 Post Restructuring (INR crores) Elecon Prayas EMTICI Elecon % increase Revenues2 745 147 40 846 13.6% Group Restructuring EBITDA 111 20 21 152 37.3% margin % 14.9% 13.7% 53.3% 18.0% PBT 73 14 21 108 48.0% margin % 9.8% 9.5% 52.5% 12.
Slide 23: Disclaimer
Disclaimer Certain statements in this 'Press Release' may not be based on historical information or facts and may be 'forward looking statements' within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans and strategy of
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