Escorts Kubota Limited · NSE:ESCORTS
Escorts Kubota — Escorts — Investor Presentation (June 2018)
64 slides from Escorts Kubota's investor presentation, June 2018
Slide 1: Investor Presentation June 2018
INVESTOR PRESENTATION June 2018 Copyright @ Escorts Ltd. ESCORTS LIMITED 1
Slide 2: Proud Partner in National Development
PROUD PARTNER IN NATIONAL DEVELOPMENT Bringing World’s Best to India and Many firsts offering India’s Best to the World More than 60 year >1 million of collaboration satisfied customers with Indian Railways Dominant Player 1st to bring in Crane Segment Backhoe Loader in India Copyright @ Escorts Ltd
Slide 3: Our Journey So Far
OUR JOURNEY SO FAR Divested from End other business Collabor to focus on ation tractors and Compact & NETS Launch of Manufacturing of Launch Farmtrac with JCB Escorts Credit Construction construction Product Portfolio Platform under Escorts Tractors End JV with Ford equipment Partner with DLL Farmtr
Slide 4: Our Current Businesses
OUR CURRENT BUSINESSES Revenue FY17: $ 499.4 mn. Escorts Agri Machinery FY18: $ 590.7 mn. Revenue FY17: $ 90.6 mn. Escorts Construction Equipment FY18: $ 116.4 mn. Revenue FY17: $ 36.3 mn. Railway Equipment Division FY18: $ 42.8 mn. Revenue FY17: $ 629.7 mn. FY18: $ 748.6 mn. 1 USD = Rs. 67/- Copyri
Slide 5: Manufacturing Facilities
MANUFACTURING FACILITIES Escorts Agri Machinery (EAM) Three Plants: Farmtrac, Powertrac & Components with a production capacity of 100,000 tractor p.a. Poland Plant: 100% subsidiary having an installed capacity of 2,500 tractor p.a. Escorts Construction Equipment (ECE) State of the art manufacturing
Slide 6: Escorts Agri Machinery (EAM)
SCORTS AGRI MACHINERY (EAM) Copyright @ Escorts Ltd. ESCORTS LIMITED 6
Slide 7: Tractor Sowing for Bumper Harvest
TRACTOR SOWING FOR BUMPER HARVEST India Holds the 2nd Largest Improve Retail Finance Agricultural Land in The World Rural Focussed Budget Bumper Food Grain Production Government Focus to Double the Agri- 2 Years of on-time Normal Monsoon Income of Farmers By 2022 Copyright @ Escorts Ltd. ESCORTS LIM
Slide 8: Agriculture Contribution & Level of Mechanization
AGRICULTURE CONTRIBUTION & LEVEL OF MECHANIZATION RUSSIA 1 percent WESTERN EUROPE 4 percent 95 percent 5 percent 80 percent UNITED STATES 95 percent CHINA 10 percent 48 percent BRAZIL SHARE OF AGRICULTURE IN GDP 5 percent INDIA LEVEL OF FARM MECHANISATION 75 percent 14 percent 40 percent Copyright @
Slide 9: Indian Tractor Industry
..INDIAN TRACTOR INDUSTRY 55% Indians depend on agriculture. Still only 40% mechanization in India. More than 6 Lacs tractor sold every year. Compound annual growth rate of 10% in last 14 years Customer exchange their tractor in every 4-6 years. Copyright @ Escorts Ltd. ESCORTS LIMITED 9
Slide 10: Domestic Tractor Industry
↑ DOMESTIC TRACTOR INDUSTRY Increasing Trend towards 7,09,980 Mechanisation 5,80,982 Minimum Support Prices for Key Crops Scarcity of Labour 1,76,404 Ease of Credit Availability from Govt. FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 ❖ India is the largest man
Slide 11: Industry Segmentation
INDUSTRY SEGMENTATION Industry Segment Volume 3,34,797 2,84,243 2,54,460 2,55,737 2,26,825 2,02,341 2,01,508 1,80,322 59,832 54,092 67,606 53,100 41,139 53,117 32,750 32,572 < 30 HP 31-40 HP 41-50 HP > 50 HP FY15 FY16 FY17 FY18 Industry Segment Market Share in % 46.4% 48.9% 47.2% 46.0% 36.7% 36.6% 3
Slide 12: How We Are Positioned
HOW WE ARE POSITIONED Premium Economic High (> 50 HP) FARMTRAC (41-50 HP) Mkt.Size:52% Medium (31-40 HP) POWERTRAC Mkt. Size:37% Compact Tractor Low (< 30 HP) Mkt. Size:11% SteelTrac Copyright @ Escorts Ltd. ESCORTS LIMITED 12
Slide 13: Domestic (Tractors)
DOMESTIC (TRACTORS) VOLUME 22% (APPROX.) FY(16-17) FY(17-18) Copyright @ Escorts Ltd. ESCORTS LIMITED 13
Slide 14: Winning Market
WINNING MARKET Current 850+ Active Dealer Network 1 Strong Market, Strong Brand 2 Strong Market, Weak Brand 3 POWERTRAC FARMTRAC Opportunity Market OPPORTUNITY MARKET LOW TIV Copyright @ Escorts Ltd. ESCORTS LIMITED 14
Slide 15: Domestic FY'22 Market Share Outlook
DOMESTIC FY’22 MARKET SHARE OUTLOOK Share of Market 15~16% ~11% FY18 FY19 FY20 FY21 FY22 TIME (YRS) Copyright @ Escorts Ltd. ESCORTS LIMITED 15
Slide 16: Ingredients for Growth
INGREDIENTS FOR GROWTH Dual Distribution South/West Focus Strong Brand Coverage: 90 99% Channel Coverage: 55 80% Weak Brand Coverage: 33 80% Compact tractor Rice tractor Product Portfolio Escorts Credit Farmtrac: 52% 95% 6% Penetration 40% Powertrac: 74% 90% Steeltrac: 25% 75% Customer
Slide 17: Exports (Tractors)
EXPORTS (TRACTORS) VOLUME 2x FY(16-17) FY(17-18) Copyright @ Escorts Ltd. ESCORTS LIMITED 17
Slide 18: Export FY'22 Outlook
EXPORT FY’22 OUTLOOK TRACTORS ~8k-10k ~2k FY18 FY19 FY20 FY21 FY22 TIME (YRS) Copyright @ Escorts Ltd. ESCORTS LIMITED 18
Slide 19: Focus Markets
FOCUS MARKETS EUROPE US MARKETS SAARC LATAM AFRICA Copyright @ Escorts Ltd. ESCORTS LIMITED 19
Slide 20: Spare Parts & Lubes
SPARE PARTS & LUBES +20% (APPROX.) FY(16-17) FY(17-18) Copyright @ Escorts Ltd. ESCORTS LIMITED 20
Slide 21: Outlook FY'22
OUTLOOK FY’22 SPARES REVENUE 9-11% ~8 % TRACTOR REVENUE FY(17-18) FY(21-22) Copyright @ Escorts Ltd. ESCORTS LIMITED 21
Slide 22: Engines
ENGINES ~4000 UNITS ENGINE SALES FY (17-18) Copyright @ Escorts Ltd. ESCORTS LIMITED 22
Slide 23: Engines FY'22 Outlook
ENGINES FY’22 OUTLOOK REVENUE ~4x GROWTH FY (17-18) FY (21-22) TIME (YRS) Copyright @ Escorts Ltd. ESCORTS LIMITED 23
Slide 24: Tractor Is As Good As Its Attachments
TRACTOR IS AS GOOD AS ITS ATTACHMENTS ~2500 Cr Industry Copyright @ Escorts Ltd. ESCORTS LIMITED 24
Slide 25: SHIP Business
SHIP* BUSINESS TECHNOLOGY PRODUCT RANGE SUPPLY CHAIN DISTRIBUTION NETWORK SPRAYERS 10x REVENUE HARVESTERS ESCORTS PLANTERS SHIP x IMPLEMENTS FY (17-18) FY (21-22) TIME (YRS) *SHIP = Sprayers, Harvesters, Implements & Planters Business Copyright @ Escorts Ltd. ESCORTS LIMITED 25
Slide 26: New Products (FY 2016-2018) – Domestic Market
NEW PRODUCTS (FY 20162018) – DOMESTIC MARKET COMPACT SEGMENT SUB UTILITY SEGMENT UTILITY SEGMENT FARMTRAC Classic Series 35 to 45 HP Classic Series FT 6080 PRO 45 to 55 HP Compact Series - F20 Technology 22 & 26 HP - T20 Technology EURO 55 PT 434 PLUS PT 439 PLUS POWERTRAC EURO 60 STEELTRAC PT 425
Slide 27: New Products (FY 2016 to 2018) – Export Market
NEW PRODUCTS (FY 2016 TO 2018) – EXPORT MARKET Compact Segment Sub Utility Segment Utility Segment FT 6045 FT 6075 PRO EURO 60/75 4WD FT 6080 PRO FT 6090 PRO FT 6050 C 22 HP 25 HP 26 HP 30 HP Mechanical & HST FT 6090 X PRO FT 6090 X PRO CAB 22 HP 22 HP to 90 HP PRODUCTS RANGE 90HP Copyright @ Escort
Slide 28: Brand Led Product Innovation
BRAND LED PRODUCT INNOVATION <30 HP 31-40 HP 41-50 HP > 50 HP FARMTRAC Prestigious & Powerful & strong Brand Legacy Atom Series FarmTrac XP FarmTrac Classic FarmTrac Executive POWERTRAC Efficient & Superior In-House Engineering Steeltrac PowerTrac DS+ PowerTrac Euro PowerTrac Euro Products introduce
Slide 29: EAM Journey So Far
EAM JOURNEY SO FAR… Escorts Segment Market Share in % 14.3% 14.5% 12.8% 12.6% 11.7% 9.7% 10.9% 10.4% 9.7% 6.9% 7.9% 6.1% 3.5% 1.0% 1.9% 2.1% < 30 HP 31-40 HP 41-50 HP > 50 HP FY15 FY16 FY17 FY18 Products <30 HP 31-40 HP 41-50 HP 51 - 60 HP > 60 HP XP Series FARMTRAC Atom Series XP Series Classic Ser
Slide 30: EAM Journey So Far & Way Forward
…EAM JOURNEY SO FAR & WAY FORWARD SEGMENT REVENUE ($ mn.) EBIT % Way Forward To Achieve 700 .0 600 .0 13.6% 16. 0% 14. 0% 13~15% EBIT Margin 500 .0 400 .0 7.8% 9.7% 7.2% 8.2% 10.3% 12. 0% 10. 0% At Constant volume 8.0 % 300 .0 590.7 509.9 478.3 499.4 6.0 % 200 .0 434.6 408.1 4.0 % 100 .0 2.0 % - 0.0
Slide 31: Tractors Solutions
TRACTORS SOLUTIONS Copyright @ Escorts Ltd. ESCORTS LIMITED 31
Slide 32: Escorts Construction Equipment (ECE)
SCORTS CONSTRUCTION EQUIPMENT (ECE) Copyright @ Escorts Ltd. ESCORTS LIMITED 32
Slide 33: Construction Equipment Segments
CONSTRUCTION EQUIPMENT SEGMENTS Material INDUSTRY 2017 Handling & Cranes 6 % 7.9 Material 10 processing Earth 14 62.1 Construction Moving Equipment Equipment Concrete Equipment Earth Moving Concrete Equipment Material Handling including Forklift Road Road Construction Building Equipment Material Pro
Slide 34: Segments Application & Users
SEGMENTS APPLICATION & USERS Segment Major equipment types Application Segment User • Mining Small/ Individual 70% A - Backhoe loader, • Roads Earthmoving B - Excavator, Medium fleet owners 20% 1 • Real Estate/Land Development Equipment C - Wheeled loader • Power 10% • Railways/Metros Institutional/
Slide 35: Product Portfolio
PRODUCT PORTFOLIO 1) Material 60% Handling 2) Earth 20% Moving 3) Road 10% Construction % of ECE Revenue 5/22 Copyright @ Escorts Ltd. ESCORTS LIMITED 35
Slide 36: What We Did in Last 3-4 Years
WHAT WE DID IN LAST 3-4 YEARS New Product Launches • City Crane • Jungli • HYDRA 14EX Plus • F17 Backward integration of Construction Operations with Tractors Operations Excellence through Total Productive Maintenance White Collar Manpower Optimization (30% reduction) Cultural transformation ~Custom
Slide 37: Material Handling
MATERIAL HANDLING High Margin To build the segment and Slew expand Product 10-60T Basket TRX/Safe Cranes 10 – 23T Continue Market Dominance and move the market Hydra Cranes upwards 10 – 16T Low Margin Hydra F-15/ TRX Series 68% 60% 60% 68% 67% Product Split 32% 40% 40% 32% 33% FY14 FY15 FY16 FY17 FY
Slide 38: Transformational Products – ECE
TRANSFORMATIONAL PRODUCTS – ECE RT 40 POWER BOOM CT SMART 15 Jungli 4 x 4 New EC 5250 with Water Cooled Engine Copyright @ Escorts Ltd. ESCORTS LIMITED 38
Slide 39: Network
NETWORK Copyright @ Escorts Ltd. ESCORTS LIMITED 39
Slide 40: Volumes
VOLUMES +35% (APPROX.) FY(16-17) FY(17-18) Copyright @ Escorts Ltd. ESCORTS LIMITED 40
Slide 41: Construction FY'22 Outlook
FY’22 OUTLOOK High CONSTRUCTION REVENUE Single Digit EBIT Margin 3X X FY17 FY18 FY19 FY20 FY21 FY22 TIME (YRS) Copyright @ Escorts Ltd. ESCORTS LIMITED 41
Slide 42: Ready to Ride the Industry Boom
READY TO RIDE THE INDUSTRY BOOM VOLUMES (Nos.) 5,0 00 120 .00% Way Forward To Achieve High Single Digit EBIT 4,5 00 100 .00% 4,0 00 Margin 3,5 00 80. 00% 3,0 00 2,5 00 60. 00% 2,0 00 4,486 1,5 00 2,804 3,007 3,315 40. 00% 1,0 00 2,555 20. 00% Strategic Tie ups 500 0 0.0 0% FY12-14** FY15 FY16 FY17 F
Slide 43: Railway Equipment Division (RED)
RAILWAY EQUIPMENT DIVISION (RED) Copyright @ Escorts Ltd. ESCORTS LIMITED 43
Slide 44: Escorts Railways: Manufacturing Safety & Comfort
ESCORTS RAILWAYS: MANUFACTURING SAFETY & COMFORT To achieve Leadership position in Indian Railways Components Industry in the defined segment Major Sourcing partner for global Rolling Stock OEMs & Operators Copyright @ Escorts Ltd. ESCORTS LIMITED 44
Slide 45: Journey So Far
JOURNEY SO FAR Bogie mounted Axle Mounted Semi permanent couplers Electro pneumatic brake brake systems for Brake Systems for EMUs (Scharfenberg, for EMUs Composition brake blocks wagons (Indigenous) for LHB Germany) (Knorr Bremse, Germany) (ICER, Spain) NEW 1962 1966 1968 1969 1978 1997 2012 2013 2
Slide 46: Providing Cost Effective Solution to World Railways & Metros
PROVIDING COST EFFECTIVE SOLUTION TO WORLD RAILWAYS & METROS Iran Spain Myanmar Thailand Taiwan Malaysia Ivory Coast ▪ Presence across 3 continents India Indonesia Ghana ▪ Exporting Railway products to South Bangladesh Asian, South East Asian, African, Egypt Sri Lanka Australian and European countri
Slide 47: On Growth Track
ON GROWTH TRACK YOY EBIT GROWTH CONSISTENT ORDER BOOK GROWTH of more than 25 % from FY15 $ 57.2 mn. – Mar’18 SEGMENT REVENUE ($ mn.) EBIT % 45.0 13.9% 16. 0% 12.7% ✓ 40.0 14. 0% Manpower Cost, Productivity Improvements 35.0 9.5% 9.9% 12. 0% ✓ 30.0 Material Cost improvements 10. 0% 6.3% 25.0 6.0% 42.
Slide 48: Growth Momentum to Continue
Growth momentum to continue 4X Strategic Tie-up & Inorganic Leveraging Core Strengths X Copyright @ Escorts Ltd. ESCORTS LIMITED 48
Slide 49: Group Financials
GROUP FINANCIALS Copyright @ Escorts Ltd. ESCORTS LIMITED 49
Slide 50: Key Financial Metrics
↑ KEY FINANCIAL METRICES… REVENUE ($ mn.) Material Cost VA/VE % to continue further 748.7 73.1% 581.2 626.0 594.9 622.1 71.7% 71.5% 513.3 ↓6.6% 67.9% 67.0% 66.9% # # # # # # SY12 FY12-14 * FY15 FY16 FY17 FY18 FY12 FY12-14 FY15 FY16 FY17 FY18 EBITDA ($ mn.) % PAT ($ mn.) % 90.0 11.1% 12. 0% 60.0 6.9%
Slide 51: Key Financial Metrics
↑ KEY FINANCIAL METRICES… EPS (₹) Including Treasury Shares DEBT EQUITY RATIO 0.34 0.40 1.2 28.85 0.35 0.27 1 0.24 0.30 0.8 0.19 0.25 13.69 13.43 0.20 0.6 0.15 0.13 6.97 0.4 5.84 6.26 0.10 0.05 0.02 0.2 - 0 # SY12 FY12-14 * FY15 FY16 # FY17 # FY18 SY12 FY12-14* FY15 FY16 FY17 FY18 ROE % ROCE PAT (Cr
Slide 52: Consistent Rating Upgrades
↑ CONSISTENT RATING UPGRADES LBBB- LBBB LBBB+ A- A A+ ($ mn.) 90.0 82.6 18.0 16.6 80.0 71.7 16.0 70.0 14.3 65.1 14.0 60.0 43.3 52.7 12.0 30.7 45.1 39.4 50.0 10.0 40.0 8.5 8.0 7.5 7.5 30.0 32.8 6.0 23.7 39.3 4.3 4.6 20.0 4.0 34.3 26.6 10.0 20.9 2.0 15.5 - 7.5 - - FY 11-12 FY 12-14 FY 14-15 FY 15-16 F
Slide 53: Shareholding Pattern
↑ SHAREHOLDING PATTERN 35.5% 35.9% 33.0% 30.5% 36.7% 20.3% 21.5% 21.1% 27.0% 29.5% 43.0% 43.0% 43.0% 40.0% 40.0% MAR'17 JUN'17 SEPT'17 DEC'17 MAR'18 Promoters + Trust Institutions* Public * FPI/Financial Institutions/ Banks/Insurance Companies As of quarter ended Copyright @ Escorts Ltd. ESCORTS LIM
Slide 54: Corporate Governance
↑ CORPORATE GOVERNANCE Vibrant Board Big 4 as I-Auditor Young leadership Launches update Monthly Tractor Volume Disclosure Quarterly Earnings Con-calls Copyright @ Escorts Ltd. ESCORTS LIMITED 54
Slide 55: The Way Forward
THE WAY FORWARD Market Expansion Focus on Corporate Governance, Brand Development Compliances & Control Developing Emerging Businesses Leveraging Construction and Railway Business Developing Earnings Growth & New Products Investor Return Profit & Cash focus; Developing Capital Allocation New Markets
Slide 56: Vision By 2022
Vision By 2022 Copyright @ Escorts Ltd. ESCORTS LIMITED 56
Slide 57: Purpose and Vision
Purpose and Vision Copyright @ Escorts Ltd. ESCORTS LIMITED
Slide 58: Revenue (₹ Cr.)
REVENUE (₹ CR.) 2.5x FY17 Aspiration 2022 2x 3x 4x FY17 Aspiration 2022 FY17 Aspiration 2022 FY17 Aspiration 2022 Copyright @ Escorts Ltd. ESCORTS LIMITED 58
Slide 59: Vision 2022
VISION 2022 2.5X Revenue 10% Plus Margin 13~14% 25% - 30% Copyright @ Escorts Ltd. ESCORTS LIMITED 59
Slide 60: Board of Directors
BOARD OF DIRECTORS… Mr. Rajan Nanda, Chairman and Managing Director ➢ A Visionary leader, who has played a pivotal role in promoting the cause of Indian Agriculture ➢ Active member of several apex trade and industry bodies and member of CII National Council Mr. Nikhil Nanda, Managing Director ➢ Alum
Slide 61: Board of Directors
…BOARD OF DIRECTORS Mr. P.H. Ravikumar, Independent Director ➢ Founder MD & CEO of NCDEX ➢ He has worked with leading banks like ICICI Bank and Bank of India Mrs. Vibha Paul Rishi, Independent Director ➢ An Alumnus of FMS Delhi, She has been an Executive Director of Brand and Human Capital of Max In
Slide 62: Management Team
Management Team Mr. Shailendra Agrawal Group Chief Operating Officer ➢ 35 years of experience in creating product & technology roadmap and driving business transformation through Business Process Re-engineering Mr. Shenu Agarwal CE, Escorts Agri Machinery Sales & Marketing & Emerging Businesses ➢ 26
Slide 63: Safe Harbor
SAFE HARBOR Certain statements in this document include forward-looking comments and information concerning the company’s plans and projections for the future, including estimates and assumptions with respect to economic, political, technological, weather, market acceptance and other factors that im
Slide 64: The New Escorts Together 2022
THE NEW ESCORTS TOG THER 2022 Copyright @ Escorts Ltd. ESCORTS LIMITED 64