Crompton Greaves Consumer Electricals Ltd. · NSE:CROMPTON
Crompton Greaves Consumer Electricals — Investor Presentation (November 2019)
31 slides from Crompton Greaves Consumer Electricals's investor presentation, Nov 13, 2019
Slide 1: Filing cover letter: Presentation at Investor/Analyst Meet
Date: November 13, 2019 Crompton Crompton Greaves Consumer Electricals Limited Registered & Corporate Office: Tower 3, 1st Floor, East Wing, Equinox Business Park, LBS Marg, Kurla (West), Mumbai 400 070, India Tel: +91 22 6167 8499 F: +91 22 6167 8383 W: www.crompton.co.in. CIN : L31900MH2015PLC2622
Slide 2: Investor Presentation November 2019
Investor Presentation November 2019
Slide 3: Disclaimer
Disclaimer This presentation does not constitute an offer from Crompton Greaves Consumer Electricals Ltd. or any of its affiliates (“Crompton”) to any party and the information contained herein will not form the basis of any contract. Neither Crompton nor any of their respective affiliates, sharehol
Slide 4: Crompton Overview (1/3)
Crompton Overview (1/3) Crompton is the #1 consumer durables company with a 75+ year old brand and a pan-India footprint Large Market with Secular Leading Brand in Market Leading Highly Experienced Growth Consumer Electricals Distribution Reach Management Team INR 40,000 Cr. #1 in Fans Distributors
Slide 5: Crompton Overview (2/3)
Crompton Overview (2/3) Crompton has cemented its position as the market leader in fans and residential pumps while delivering long term industry-leading profitable growth (17% EBIT CAGR from FY15-19) Fans Pumps Lights Appliances Key Products1 LED (Lamps, Battens) Geysers, Coolers & Residential & Re
Slide 6: Crompton Overview (3/3)
Crompton Overview (3/3) Crompton’s 4-step business model has enabled the business to scale successfully: i) product development driven by consumer needs, ii) marketing to create awareness, iii) operational focus to reduce costs and iv) wide distribution via technology-driven processes Portfolio Exce
Slide 7: Key Investment Highlights
Key Investment Highlights Large market opportunity of >INR 400bn with attractive macro drivers 1 Leading brand in consumer electricals with market leadership and market share gain 2 across major categories Widest pan-India distribution network with 3,500+ distributors and 100,000+ retailers 3 Strong
Slide 8: Attractive Macro: Large Market
1 Attractive Macro: Large Market Consumer electricals present a huge market opportunity of INR 400bn* growing at 8-11% CAGR Market Size Market Growth Long term growth drivers (INR bn) (CAGR 19-24) • 60% households in India are mud houses • Regulatory thrust by PMAY for new housing 79 10-12%1 • Fans
Slide 9: Attractive Macro: Secular Volume Growth
1 Attractive Macro: Secular Volume Growth Historically, industry volume growth has been secular, as a multiplier to GDP growth GDP Multiplier1 Fans c. 1.5x Pumps c. 1.9x Lighting – LED1 NM2 Source: Fans: IFMA, Pumps: Company estimates, LED’s: ELCOMA Note: (1) For Fans and Pumps, GDP Multiplier calcu
Slide 10: Attractive Macro: Multiple Drivers for Growth
1 Attractive Macro: Multiple Drivers for Growth Future revenue growth expected to increase due to (i) favourable demographics, (ii) strong regulatory tailwinds, (iii) low penetration and premiumization Low penetration and Favourable Demographics Government push premiumization Rising disposable incom
Slide 11: Leading Brand: Market Leader across Categories
2 Leading Brand: Market Leader across Categories Crompton is the #1 player in fans and residential pumps Market Segment Position Competitive Landscape RMS Fans #1 c. 1.8x Residential Pumps #1 1.4x Lighting #3 0.4x Source: Pulse Data for Fans, Company estimates for Pumps, Annual Reports for Lighting
Slide 12: Leading Brand: Strong Brand Recall
2 Leading Brand: Strong Brand Recall … with strong spontaneous recall across major categories; 10-40% improvement in the last 3 years driven by focused marketing efforts Spontaneous Recall Trends Fans Pumps Lights Appliances +23% +41% +12% +15% Increase in awareness through multichannel advertising
Slide 13: Leading Brand: Consistent Share Gain
2 Leading Brand: Consistent Share Gain Crompton’s strong brand has not only driven share gain in the focus segments but also translated to strong initial performance in the new appliance segment • Strong brand has helped Fans 20.8% +270bps 23.5% drive growth in the premium segment FY16 FY19 Focus Se
Slide 14: Go-to-market: Wide Pan-India Footprint
3 Go-to-market: Wide Pan-India Footprint Crompton has a pan India footprint with 3.5k+ distributors, 100k+ retailers and 500+ service centers Leverage Existing Pan-India Distribution Network Nationwide network with 3,500+ distributors and 100,000+ retailers Utilization of common channels across diff
Slide 15: Go-to-market: Strong Reach Improvement
3 Go-to-market: Strong Reach Improvement … with significant improvements in reach made in the last 3 years, especially in the South Numeric Reach (%) Overall South +8.2% +17.6% Fans +4.5% +7.6% Lights - LED Source: Pulse Data 14
Slide 16: Go-to-market: Market Leader in South
3 Go-to-market: Market Leader in South In the South, Crompton dominates in Fans and is rapidly gaining share in LED’s driven by higher coverage of distributors Fans Lights - LED FY19 Numeric Reach in South FY19 Numeric Reach in South Crompton has increased it’s reach faster than competition Manageme
Slide 17: Go-to-market: Key Initiatives
3 Go-to-market: Key Initiatives This has been driven by a revamp in channel strategy and an improvement in distribution processes and technology Key Initiatives Key Results • Hybrid Model: Introduced to help double active billing points • Rural Coverage: Focused effort to tap into 850+ New Channel A
Slide 18: Innovation: Breakthrough Innovation
4 Innovation: Breakthrough Innovation There have been 8 breakthrough innovations in the last 4 years Key examples of successful innovations Segment Customer Insight New Products Year of Key innovation launch • Accumulation of dust on the • Premium Fans : Aura FY17 • Attracts 50% less dust than fans
Slide 19: Innovation: Future Growth Drivers
4 Innovation: Future Growth Drivers Future growth will be centered around 3 themes: IoT, Solar and New appliance segments Build capability to develop IOT based products in all segments IoT Gain market share in IOT Space by providing seamless consumer experience Play in two biggest category i.e. Ligh
Slide 20: Optimized Cost Structure: Material Margin Improvement
5 Optimized Cost Structure: Material Margin Improvement Continued cost saving program has driven meaningful margin expansion (420bps); will continue as company is only partially through the journey Cost Initiatives • Ongoing cost-reduction program resulting in higher efficiency and scale • Fans: Des
Slide 21: Optimized Cost Structure: Multiple Levers to Improve Efficiency
5 Optimized Cost Structure: Multiple Levers to Improve Efficiency Apart from accruing the benefits across its multiple cost saving initiatives, Crompton is also launching initiatives in S&OP planning and analytics to further streamline operations Cost reduction has been key Operations streamlining f
Slide 22: Management: Highly Experienced CXO Team
6 Management: Highly Experienced CXO Team Strong management team with a combined 80+ years of experience in consumer durables CXO Work experience Past affiliations Background Shantanu Khosla, MD • Indian Institute of • 30 years+ Technology, Bombay • MD & CEO, P&G India, 2002-2015 • Indian Institute
Slide 23: Management: Revamped Organization Structure
6 Management: Revamped Organization Structure CXO-1 team has been revamped in the last 4 years; 5 positions newly created and 5 positions personnel replaced Key org. changes Shantanu Khosla Managing Director Enhanced Sales organization Mathew Job structure through dedicated CEO verticals: • Trade Ma
Slide 24: Management: Experienced Board
6 Management: Experienced Board Board Member Work exp. (years) Past/Current Affiliations Areas of expertise Distribution Operations Committee Resources Consumer Marketing Human Goods Audit M&A Hemant Nerurkar, Chairman of the Board, 35+ Ex-MD, Tata Steel, India Shantanu Khosla, MD, Crompton 30+ Ex-M
Slide 25: Management: Exemplary Corporate Governance & Sustainability Initiatives
6 Management: Exemplary Corporate Governance & Sustainability Initiatives Crompton has been rated among the top 10 companies for Corporate Governance and has made significant progress in sustainability efforts Governance initiatives Awards & Accolades • Board constitutes of 50% independent directors
Slide 26: Financials: Best in class Financial Performance
7 Financials: Best in class Financial Performance Compared to the universe of consumer companies, Crompton is a clear outlier in earnings growth and ROCE 1 2 Source: Annual Report for Crompton, CapitalIQ for peers; Numbers could vary from Annual Report Note: (1) FY16 PAT is taken as the sum of H1FY1
Slide 27: Financials: Strong Earnings Growth
7 Financials: Strong Earnings Growth Crompton has delivered consistent revenue (16% CAGR), EBITDA (20% CAGR) and earnings (26% CAGR) growth since demerger4 with strong FCF conversion (c. 115% of PAT) Revenue1,2,4 EBITDA2,3,4,5 PAT2,4,6 FCF Conversion7,8 Focused products CAGR: 16% Focused products CA
Slide 28: Financials: Strong Volume Growth
7 Financials: Strong Volume Growth Crompton has demonstrated consistent volume growth @12-13% CAGR for fans and pumps, a 1.6x multiplier to GDP growth GDP Multiplier 1.6x 1.7x Source: Company Note: Volume data prior to 2016 has been taken for the business division of CG 27
Slide 29: Financials: Superior ROCEs vs Peers
7 Financials: Superior ROCEs vs Peers Crompton’s has the #1 ROCE in the industry driven by its strong margins and asset light model EBIT margin Overall: RoCE Single product company (coolers) which are higher margin Median: 8% Average Net Fixed Assets Median: 7% Median: 36% Average Net Working Capita
Slide 30: Strategic Roadmap: Where to Play
Strategic Roadmap: Where to Play Crompton will maintain market leadership across core segments; attain leadership position in emerging segments and be among the top 3 in the new segments Historical (15-19) Medium term (next 2-3 years) Long term (3-5 years) Maintained Maintain Achieve #1 in Fans Core
Slide 31: Strategic Roadmap: How to Win
Strategic Roadmap: How to Win Strategic initiatives to capitalize on the Opportunity Portfolio Excellence Brand Excellence Operational Excellence GTM Strategy • Portfolio Expansion: • Marketing: Continue to • Operations: Progress from • Distribution: Transfer Launch new products in invest in the bra
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