Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Shareholder Meeting (August 2006)
54 slides from Ashok Leyland's shareholder meeting presentation, Aug 1, 2006
Slide 1: Annual General Meeting
Annual General Meeting August 1, 2006
Slide 2: A Presentation in Two Parts
A Presentation in Two Parts • 2005-06 : a retrospective – Market – Financials – Operations – Technology – Investor Relations / Servicing • Future : a perspective – Market prospects – Exports – Other business streams – Recent Developments
Slide 3: 2005-06: A Retrospective
2005-06 : A Retrospective
Slide 4: Market
Market
Slide 5: CV: Influences
CV : Influences • Economic buoyancy • Accelerated infrastructure development • ‘Hub & Spoke’ model becoming a reality • Fluctuating fuel prices • Hardening interest rates • Q4 spurt from ruling on overloading
Slide 6: CV: Double Digit Growth
CV : Double Digit Growth • 10.6% growth in 2005-06, following 24.3% CAGR for four years • MDV growth a moderate 4.5%
Slide 7: MDV TIV: Pass & Goods
MDV TIV : Pass & Goods Nos 172868 179320 136804 Pass Goods 95741 Source: SIAM 73185 24591 25638 28126 16814 19970 '01-02 '02-03 '03-04 '04-05 '05-06
Slide 8: Ashok Leyland Performance
Ashok Leyland Performance • Domestic MDV volume up 17.6% vis-à-vis TIV growth of 4.5% • MDV market share up 3%, to 27%, with gains in all segments • With 50%+, bus market leadership regained • Engine sales up 16.1%
Slide 9: Composition of Sales
Composition of Sales 2004-05 2005-06 % Inc. Domestic - Civilian Passenger 10 469 14 168 32.0 Goods 36 991 42 106 13.6 Total 47 460 56 274 17.8 Defence 146 502 243.8 Exports 6 812 4 879 (28.4) Total Vehicles 54 740 61 655 12.6 Engines 6 254 7 261 16.1 Spares incl. Defence 5 460 7 838 43.6 (Rs.Mil.)
Slide 10: After-market Support
After-market Support Added Current Dealership outlets 30 157 Authorized Service 28 143 Centres Work bays 275 1,918 Half the dealership outlets offer extended hours/ 2nd shift operations
Slide 11: Always: 24 hr helpline
Always : 24 hr helpline (For BSNL/MTNL Users)
Slide 12: Exports
Exports Nos 6812 4879 3782 2411 2550 2170 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 • Net of Iraq order for 3,322 trucks in 04-05, exports growth continues • Significant volume growth in Sri Lankan market
Slide 13: Financials
Financials
Slide 14: Gross Sales / Income from Operations
Rs.Million 2004-05 2005-06 G ross Sales / Income from Operations 48 108.01 60 531.08 Excise Duty 6 289.04 8 054.51 G r o s s O p e r a t i n g M a rgin 4 228.50 5 400.70 Financial Expenses 27.98 164.53 G ross Profit 4 738.07 5 565.91 Depreciation 1 092.14 1 260.06 Profit Before Tax 3 550.10 4 523.00
Slide 15: Performance Highlights – 5 years
Performance Highlights – 5 years 01-02 02-03 03-04 04-05 05-06 R O C E (%) 10.3 11.7 17.6 18.6 21.2 Inventory Turns 3.3 3.7 5.2 5.7 5.3 (Times) Debtors (Days) 33 26 21 14 18 Debt : Equity 1.0 0.8 0.5 0.3 0.2 EPS (In Rs.) 0.78 1.01 1.63 2.04 2.46
Slide 16: Operations
Operations
Slide 17: Copper: International Price Movement
Copper : International Price Movement $5,500 $5,102 $5,000 $4,500 $4,000 USD / MT $3,500 $3,000 $2,949 $2,500 Jun-04 Jun-05 Apr-04 Apr-05 Aug-04 Aug-05 Feb-05 Feb-06 Oct-04 Oct-05 Dec-04 Dec-05 Period
Slide 18: Rubber: Indian Trade Price
Rubber : Indian Trade Price 90.00 84.00 80.00 70.00 60.00 Rs/KG 50.00 40.00 30.98 30.00 20.00 1999-00 2001-02 2003-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar'06 Period
Slide 19: Containing Cost Increases
Containing Cost Increases • Value Engineering – Continued focus on initiatives to improve margins in all existing / new products • Global sourcing – Increased global sourcing of select items and implementation of e-sourcing ideas
Slide 20: Operational Efficiency
Operational Efficiency • Vehicle production up 19%, to an all time high of 65,000 nos • Flexibility to meet market demand fluctuations • Labour productivity up 25% • Operating cost per vehicle down 8.8%
Slide 21: Mission Gemba
Mission Gemba • Shop floor-led team initiative with focus on creating value through empowerment and improving resource utilization
Slide 22: Productivity
Productivity Output per employee 7.1 5.8 4.9 3.1 3.5 '01-02 '02-03 '03-04 '04-05 '05-06
Slide 23: Asset Turns (Times)
Asset Turns (Times) 2.53 2.65 2 .4 1 1.81 1.42 '0 1 - 0 2 '02-03 '03-04 '0 4 - 0 5 '05-06
Slide 24: Inventory Turns (Times)
Inventory Turns (Times) 5.66 5.26 5.21 3.65 3.34 '01-02 '02-03 '03-04 '04-05 '05-06
Slide 25: Current Assets Turns (Times)
Current Assets Turns (Times) 3.85 4.05 3.48 2.56 1.96 '01-02 '02-03 '03-04 '04-05 '05-06
Slide 26: Technology
Technology
Slide 27: Focus on R & D
Focus on R & D • Engine transient dynamometer facility installed • Common Rail engine developed • R&D spend : 1.7% of turnover
Slide 28: New Product Introductions: 2005-06
New Product Introductions: 2005-06 • Viking BS3 compliant City Bus – running in Chennai • Semi-Low Floor BS3 Bus – running in Mumbai • Cheetah BS3 compliant coaches • Viking BS3 compliant CNG Bus • 12m Haulage trucks • 35T fuel-efficient tractor with H-series engine • 2214 MAV with 6ETI H-series eng
Slide 29: Investor Relations / Servicing
Investor Relations / Servicing
Slide 30: Shareholding pattern as on 31st March 2006
Shareholding pattern as on 31st March 2006 Category No. of No. of Shares % Holders Promoter - LRLIH Ltd. 1 605,766,750 49.59 (Includes 164600070 shares in GDR Form) Foreign Institutional Investors 87 178,868,949 14.64 Non-Resident Indians/ OCB / Corporate Bodies - 1375 23,797,280 1.95 Foreign / Bank
Slide 31: Shareholding Pattern
Shareholding Pattern LRLIH 49.59% NRI & others 3.2% Body corporate 1.8% Banks & MFs FIIs 5.4% 14.6% Resident individuals / Trust / Clearing FIs, Insurance Co, Members State Govt, Govt 11.5% Companies, UTI 13.8%
Slide 32: Number of Shareholders (since 2002)
Number of Shareholders (since 2002) 186312 146824 137244 79804 75323 71103 as on as on as on as on as on as on 31.3.2002 31.3.2003 31.3.2004 31.3.2005 31.3.2006 10.7.2006
Slide 33: Dividend Record: 5 years
Dividend Record : 5 years Percentage 120 100 75 50 45 2001-02 2002-03 2003-04 2004-05 2005-06
Slide 34: Shareholders / Investors Grievance Committee
Shareholders / Investors Grievance Committee • Constituted in 2001 – meets 4~5 times in a year • Deals with : – Specific grievances of shareholders – Letter from Statutory Authorities like SEBI, Stock Exchanges and MCA – Feedback / finding of Shareholders’ Satisfaction Survey – Review of performance
Slide 35: Investor Updates
Investor Updates • Started in the year 1998 as a Guide to investors, now regular annual feature • Covers Investor Rights, good investor practices • Current developments of interest to investor • Useful tips on demat, ECS mechanism etc • Explaining and encouraging demat
Slide 36: Future: A perspective
Future : A perspective
Slide 37: Market Prospects
Market Prospects • Economic growth story to continue – GDP growth estimate : 7.5~8.0% • Emphasis on infrastructure – Significant investments by Govt. & private sector • Double digit growth expected : interest rates and oil prices - two possible retarders
Slide 38: Market Prospects (contd…)
Market Prospects (contd…) • Growing emphasis on fully-built transport solutions • Increasing power to weight ratio • Hub & spoke model : further progress • Greater demand for aesthetics and comfort • The entry of leading global brands
Slide 39: Market Prospects: Responses
Market Prospects : Responses • Fully-built transport solutions – Luxury bus – with Irizar TVS – Tippers and Tractor Trailers – through ACCL and PLHT – Bus body building facility in north India
Slide 40: New Products
Market Prospects : Responses New Products • 49T High Power Tractor • 31T High Power 8x4 Tipper • 16T Semi-Forward Control Tipper • 16T Truck with H series 4 Cyl engine • 25T High Performance Mining Tipper • 12m Low-Floor Bus • AL branded buses • ABS Safety System on Trucks and MAVs
Slide 41: Product Development
Market Prospects : Responses Product Development • Full-fledged Technical Centre ready, soon to be operational – Modern 400-seat Design Office – Unique 6 poster testing facility • Euro IV compliant engine development commenced
Slide 42: Business / Product folio Expansion
Business / Product folio Expansion • Inroads into defence markets with new applications such as TFF, LRV and water bowzers • Engine range expansion in lower and higher ends : now spanning 20 hp to 500 hp
Slide 43: Exports
Exports • New bus assembly unit in Middle East with a capacity of 2,000 numbers • Sri Lanka : volume growth through tie-ups with local finance companies
Slide 44: Other Business Streams
Other Business Streams
Slide 45: Ashley Design & Engineering Services (ADES)
• Ashley Design & Engineering Services (ADES) will cater to overseas OEM Tier 1 companies for developing, testing and validating vehicle design • Auto Components Group (ACG) : targeting US $ 100 million in the next three years by targeting markets like US, Europe, Malaysia and Austria
Slide 46: AL Share Price vs. NSE Index
AL Share Price vs. NSE Index Daily QASOK.NS [Line, VOL], Q.NSEI [Line] [Professional] 4/1/2005 - 7/31/2006 (GMT) Price QASOK.NS, Close(Last Trade), Line Price INR 7/31/2006 35.00 INR 3600 Q.NSEI, Close(Last Trade), Line 48 7/31/2006 3,143.20 46 3400 44 3200 42 40 3000 38 36 2800 34 2600 32 30 2400 2
Slide 47: AL Share Price vs. BSE Index
AL Share Price vs. BSE Index Daily QASOK.BO [Line, VOL], Q.BSESN [Line] [Professional] 4/1/2005 - 7/31/2006 (GMT) Price QASOK.BO, Close(Last Trade), Line Price INR 7/31/2006 34.90 INR 12000 Q.BSESN, Close(Last Trade), Line 48 7/31/2006 10,743.88 11500 46 44 11000 42 10500 40 10000 38 9500 36 9000 34
Slide 48: 2006-07: Q1 results
2006-07: Q1 results Rs.Million Q1 2006-07 Q1 2005-06 G ross Sales / Income from 16,413.77 12,319.12 operations Excise duty 2,175.05 1,694.82 G ross operating margin 1,186.56 890.43 F in a n c i a l e x p e n s e s - n e t 5.17 (3.45) G ross profit 1,320.23 935.48 Depreciation 327.70 297.49 Profit be
Slide 49: Recent Developments
Recent Developments
Slide 50: Hinduja Group buy out of IVECO's stake
Hinduja Group buy out of IVECO’s stake • By mutual consent, enabling greater freedom to Ashok Leyland to pursue its strategic priorities and global ambition • Hinduja Group committed to Ashok Leyland’s technological excellence and global competitiveness, through strengthening in-house capabilities,
Slide 51: AVIA Truck Business Unit Acquisition
AVIA Truck Business Unit Acquisition • Framework agreement covers Prague facility with 20,000 vehicles p.a. capacity, modern paint shop and R&D facilities • 6~12T modern trucks – Euro III / IV compliant; high brand equity • A significant window to Europe and neighbouring markets
Slide 52: Slide 52
Slide 53: Plans for AVIA Truck Business Unit
Plans for AVIA Truck Business Unit • Improve operational efficiency through global sourcing cost advantages • Strengthen traditional markets : Czech Republic, Hungary, UK, Ireland, Italy, Slovakia and Spain • Foray into Middle East, South East Asia, Russia and Ukraine • Progressive induction of new
Slide 54: Thank You
Thank You