Cummins India Limited · NSE:CUMMINSIND
Cummins India — Investor Presentation (June 2010)
83 slides from Cummins India's investor presentation, Jun 14, 2010
Slide 1: Cummins India Ltd. – Update
Cummins India Ltd. – Update 2010 June 14, 2010
Slide 2: Index
Index Where have we been? The Way Ahead - – Strategic Direction : Product Plan – Growth Projects Overview
Slide 3: Index
Index Where have we been? The Way Ahead - – Strategic Direction : Product Plan – Growth Projects Overview
Slide 4: A Journey Through Time...
A Journey Through Time... Cummins Exhaust CES India Ltd CTT(I) Kirloskar Fleetguard Tata Nelson Cummins ReCon Cummins Filters Cummins Engg India Ltd. Ltd. Ltd. Ltd. Ltd. Cummins Technologies India Ltd 1962 1967 1987 1989 1993 1994 1997 1998 2000 2002 2003 2008 - 09 Cummins KPIT Cummins Newage Tata V
Slide 5: Cummins in India
Cummins in India •• In In India India since since 1962 1962 Valvoline Cummins Tata Cummins •• 99 companies companies (4 (4 JV’s) JV’s) New Delhi Fleetguard Filters •• More More than than 11,000 11,000 employees employees Jamshedpur •• $1.3B $1.3B unconsolidated unconsolidated sales sales (2009) (200
Slide 6: Strategic Leadership Team
Strategic Leadership Team Anant Talaulicar President – Components Group and Managing Director – India ABO Raj Menon Rajiv Batra Dinesh Nagarajan K.C. Ravi Chief Operating Finance, IT, Castellino Balanaga Government Querish Officer Strategy Legal, Human Resources Relations Shipchandler Facilities & H
Slide 7: Operating Leadership Team
Operating Leadership Team Raj Menon Chief Operating Officer – India ABO Arun Beau Lintereur Sandeep Amit Kumar Sandeep KN Harish Industrial Ramachandran Power Sinha Chaudhry Distribution Quality Engine Automotive Generation ReCon India Tata Cummins Business Champion Business Business Business Operat
Slide 8: India Organization Snapshot
India Organization Snapshot Cummins in India Cummins owned operations Business Units: 1. Cummins India Ltd. • Engine Business Cummins Sales and Service (India) Ltd. Automotive (now merged with Cummins India Industrial Limited) • Power Generation Business 2. Cummins Research & Technology India • Comp
Slide 9: Cummins in India Achievements: 2009
Cummins in India Achievements: 2009 Achieved $1.3B Revenue $168 M Profit New top level diverse leadership team Enhanced performance oriented meritocracy Exceeded strategic plan financial targets
Slide 10: Cummins in India Financial Progress
Cummins in India Financial Progress after inter-company elimination $M Paramet % 2004 2005 2006 2007 2008 2009 er CAGR Revenue 639 767 1,005 1328 1572 1279 15% Profit 56 82 119 171 194 168 25% Profit (%) 9% 11% 12% 13% 12% 13% - Note: Profit includes 100% consolidated entities PBIT, plus Cummins por
Slide 11: Cummins India Ltd. – Flagship Company of Cummins in India
Cummins India Ltd. – Flagship Company of Cummins in India Established in 1962, 51% subsidiary of Cummins Inc. Manufactures a variety of engines operating on diesel, natural gas and dual fuel Provides innovative solutions across Industrial, Power Generation and Automotive applications Manufactures ov
Slide 12: CIL – Sales Trend
CIL – Sales Trend INR Cr. Sales 3,304 3,500 : 1 4% R 2,845 3,000 CAG 2,331 2,500 1,841 2,000 1,463 1,271 1,500 883 777 878 1,009 1,000 500 -
Slide 13: CIL – PAT Trend
CIL – PAT Trend INR Cr. 18% 960 16% 16% 860 13% 13% 12% 12% 12% 14% 760 11% 11% 11% 11% 12% 660 560 10% 434 444 460 8% 360 281 6% 242 260 176 4% 109 109 137 160 86 94 2% 60 0% PAT PAT% CAGR: 17%
Slide 14: CIL – Dividend Trend
CIL – Dividend Trend INR Cr. Dividend 300 600% 700% 250 600% 450% 200 500% 400% 150 200%200%200%200%200% 230% 300% 100 200% 65% 75% 50 26 30 79 79 79 79 79 91 178 238 100% - 0% 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -1 00 01 02 03 04 05 06 07 08 09 20 Dividend Divi
Slide 15: CIL – Annualised Shareholder Return
CIL – Annualised Shareholder Return* 100% 100% 90% 80% 70% 60% 50% 40% 26% 30% 20% 20% 11% 11% 6% 10% 0% 10 Yr 5 Yr 1 Yr CIL BSE *Shareholder return is excluding dividend CIL share price Sensex 1 Yr – 2009-10 2000 75 5,205 2006 178 9,920 5 Yr – 2004-05 to 2009-10 Jan-09 168 9,424 10 Yr – 1999-2000 t
Slide 16: Delivering on Commitments
Delivering on Commitments Strong balance sheet – Debt to capital 5.4% – Cash & Equivalents Rs. 789 Cr Grew our business – Sales growth (CAGR) 14% Returned value to shareholders* – Return on equity 31% – Share appreciation 103% – Dividends Rs. 238 Cr * Pertains to FY0910
Slide 17: CIL - Return on Net Assets
CIL - Return on Net Assets ROANA
Slide 18: Index
Index Where have we been? The Way Ahead - – Strategic Direction : Product Plan – Growth Projects Overview
Slide 19: The Way Forward
The Way Forward Surrounding The Customer With One Face Innovative, Cost Effective, Relevant & Dependable Solutions Tightly Integrated Legal Entities Aligned with Cummins Vision and Core Values DBU/PGBU/EBU/Components Customer Channel (Dealers & OEMs)
Slide 20: Greatness – Zero Defect Companies
Greatness – Zero Defect Companies Cummins Values: Integrity, Delivering Superior Results Brand Promise: Dependability Process: Six Sigma ZERO Excellence: Good to Great Quality Goal: Continuous improvement towards defect free processes that satisfy customer needs and achieve business results The Lead
Slide 21: India ABO Strategy
India ABO Strategy Domestic Market Share Leadership Low Cost Producer Exports Great Place To Work
Slide 22: Corporate Responsibility
Corporate Responsibility Three focus areas: Higher Education – Funded new Mechanical Engineering course at the Cummins College of Engineering for Women. – Enrolment of 2nd batch of students underway – Cummins Scholarship –30 meritorious economically /socially disadvantaged students for undergraduate
Slide 23: One Cummins Strategy : Megasite
One Cummins Strategy : Megasite Megasite Rationale Support Cummins growth plans in India Space exhausted at the Kothrud Campus in Pune Reactive case by case expansions leading to – Small size with limited expansion scope – Scattered facilities (based on immediate availability) – Higher costs Need to
Slide 24: Megasite Plan
Megasite Plan Expansion plans at Megasite Domestic TCL-2 ReCon HHP Rebuild PDC CIL Projects PGBU B Uplift & BPI SEZ ReCon PGBU CIL Projects HHP EBU Facility
Slide 25: CIL is a Profitable Growth Story
CIL is a Profitable Growth Story Proven track record Positioned well to capture growth Growing profits faster than sales
Slide 26: Industrial Engine Business Overview
Industrial Engine Business Overview
Slide 27: Cummins Product Family
Cummins Product Family Horsepower QSK78 QSK60 K50 QSK45 K38 QST30 Product QSK23 QSK19 QSX15 QSM11/M11 C8.3/QSC8.3 31 HP Cummins Products A Series - Complete Product Range 31 - 3500HP B5.9/QSB5.9 B3.9 - Common Electronic Controls B3.3 - Common Maintenance Practices - Supported by Cummins Distributors
Slide 28: Manufacturing facilities: IEBU
Manufacturing facilities: IEBU LOCATION OPERATIONS AREA – BUILT-UP I Kothrud, Pune Engine Mfg. - N14 /NT, K19, 51439 m2 V28, K38/50, Quantum series II Nagar Road, Pune “C” series assembly 5492 m2 III Loni ‘B’ Upfit, Industrial 1579 m2 I – Kothrud, Pune II - Nagar Road, Pune III - Loni
Slide 29: Markets We Serve
Markets We Serve Mining Construction Compressor Gas Compression Marine Rail Oilfield Defense Pumps
Slide 30: Construction
Construction Market Definition: – 50 HP to 300 HP Diesel powered Construction Machinery, Earthmoving Equipments & Material Handling Equipments such as Crawler Excavators, Wheel Loaders, Backhoe Loaders, Compactors, Motor Graders, Dozers, Fork lift trucks, Cranes etc. Key Segments: – Roads, Bridges,
Slide 31: Construction Product Portfolio
Construction Product Portfolio Compactors Skid Steer Loaders Crawler Excavators
Slide 32: Mining
Mining Market Definition: – Diesel powered earthmoving equipments used in Mining eg. Dumpers, Excavators/Shovels, – Dozers, Loaders, Graders, Surface Miners, Blast Hole Rigs and other support eqpt. like – Water Sprinklers, Tyre Handlers, Coal Haulers, Pipe Layer, Cranes, FE Loaders etc. – Includes O
Slide 33: Mining Product Portfolio
Mining Product Portfolio Excavators Surface Miner Dump Truck Dump Trucks - 35T, 50/60T, Dozer 100T, 120T, 190T, 240T
Slide 34: Water Well Rigs
Water Well Rigs Market Definition: – Diesel powered Screw Compressors (450 -1400 cfm /150 - 500 psi) for Water Well Rigs Key Segments: Water Well Drills / Bore wells for: – Agricultural / Irrigation – Rural and urban drinking water supply – Institutional / Commercial – Infrastructure, Industries, Co
Slide 35: Portable Compressors
Portable Compressors Market Definition : – Diesel engine powered Portable Screw Compressors (180 – 600 cfm /100 - 300 psi) Key Segments: – Construction (Roads / Ports / Infrastructure / Granite / Marble / Quarries) - Portable Compressors – Coal / Iron Ore / Limestone – Crawler mounted portable packs
Slide 36: Water Well Rigs & Portable Compressors
Water Well Rigs & Portable Compressors Water Well Drill Rigs Portable Compressors
Slide 37: Rail
Rail Market Definition: – Diesel Engines / Value Packages for self propelled rail vehicles, locomotives, track maintenance machines and power cars. Key Segments: – Main Line / Shunting Locomotives, Diesel Multiple Units, Departmental Vehicles (tower cars, rail cranes, accident relief tool vans etc.)
Slide 38: Rail
Rail Power Car Shunting Loco Track Maintenance M/c Overhead HHP Equipment DEMU Inspection Car
Slide 39: Marine
Marine Market Definition: – Main Propulsion Diesel Engines for powering Bollard Pull Tugs, Barges, Ferries, Pilot Launches, Fishing Trawlers. – Auxiliary DG sets for Warships, Frigates, Fast Attack Vessels, Patrol Vessels, Carrier Vessels etc. Key Segments: – Indian Navy, Coast Guard, Commercial Mar
Slide 40: Marine
Marine Naval Ships Fishing Trawlers INS Tarangini Iron Ore Barge FAC - Fast Attack Craft
Slide 41: Pump
Pump Market Definition & Key Segments: Engine Driven Pumps for: – Emergency Duty - Fire fighting pumps – Continuous Duty - Irrigation, Mine de-watering, Booster Application, Blast Furnace & Cooling tower - Concrete Pumps Key OEMs: – Kirloskar Brothers, Mather & Platt Pumps, Voltas, WPIL, Beacon Wier
Slide 42: Pump
eo ow 4 may iil Irrigation Pump
Slide 43: Oilfield
Oilfield Market Definition: – Diesel Engines for Oil field Equipment like AC-SCR Drill Rigs, Work over Rigs, Cementing Units, Mud Pumps, COD Pumps, Gas Engines for pump application (for transportation of crude oil) Key Segments: – AC-SCR deep drilling rigs, Work Over Rigs etc. Key OEMs: – Jiva Inter
Slide 44: Oilfield
Oilfield Electric Driven Drill Rig (AC-SCR Onshore Rig) Mechanical Mobile rigs Hydro Frac Unit
Slide 45: Emission Norms in India
Emission Norms in India Current & Proposed emission noroms for CEV enignes (as per ISO-8178 C1-8 Mode cycle) INDIA STAGE I Proposed date of NOx HC CO PM Category implementation gm / kWh 18 - 37 kW August - 2002 18.0 3.5 14.0 - 37 - 75 kW August - 2002 18.0 3.5 14.0 - 75 - 130 kW August - 2002 18.0 3
Slide 46: Segment wise trends, growth drivers & strategic initiatives
Segment wise trends of each market, major Growth drivers & Strategic initiatives As India’s economy grows over the next 5 to 10 years, the nation will have to invest more and more for the development of its infrastructure as well as other supporting industries since high growth trajectory needs ramp
Slide 47: Trends, Growth drivers & Initiatives
Trends, Growth drivers & Initiatives Demand supply gap in power sector and growth in Steel & Cement sector will fuel the demand for Mining of Coal, Iron Ore, Lignite. This will not only increase the demand for mining equipments but also improve business prospects for Shunting and Freight Locomotives
Slide 48: Trends, Growth drivers & Initiatives
Trends, Growth drivers & Initiatives There is a consistent and structured demand for diesel engines (DG Sets) from Indian Navy and coastguard in High Horse power range. Re-fits of old vessels by Indian Navy also offers opportunities for Cummins engines. The high pressure water well drill rig market
Slide 49: Strategic Initiatives
Strategic Initiatives Leveraging indigenous 3.3 litre engine to penetrate into light construction market Capturing new initiatives in High Horse Power applications in Rail & Marine segment and timely execution of current projects in hand. Partnering with key strategic OEM’s to capture new opportunit
Slide 50: Challenges
Challenges Growth figures in last few quarters suggest that the road to recovery is clear ahead but not everything can be termed so easy. Industry is yet to recover completely and it is still in a vulnerable state. For growth to continue, sustained reforms by the government are crucial. Active inves
Slide 51: Power Generation Business Overview
Power Generation Business Overview
Slide 52: Four Macro Trends Continue to Drive Sustainable Growth
Cummins Strategy Four Macro Trends Continue to Drive Sustainable Growth Price & Emission Availability Standards of Energy CMI Growth Infrastructure Globalization Growth
Slide 53: Opportunities
Opportunities Infrastructure Gap Gas Availability Emissions Growth Areas
Slide 54: India Overview
India Overview Infrastructure gap due to high growth, poor planning, and execution drives power generation equipment market – GDP growth of 7-9% – 12-16% gap between peak power demand and capacity Prime market – Average operating hours of ~500 year Key success factors of Commercial Diesel and Gas ma
Slide 55: India vs China
India vs China India China 1 Purchasing Power Parity $ 3.56 Tr $ 8.79 Tr 2 GDP $ 1.095 Tr $ 4.814 Tr 3 GDP -real growth rate 7.40% 10.00% 4 GDP composition by Top 3 Agri-17.5 % , Agri-10.9% , sectors (2009 est) Industry -20 % Industry -48.6% Services - 62.6% Services -40.5% 5 Population (July 09 est
Slide 56: Power trends: historical & current shortages
Power trends: historical & current shortages Peak power shortages of 12 – 16% since 2002 -20.00% -18.00% -16.00% -14.00% -12.00% % shortfall -10.00% -8.00% -6.00% -4.00% 19 19 19 20 20 20 20 20 20 20 20 20 97-98-99- 00-01-02- 03-04-05-06- 07-08- 98 99 00 01 02 03 04 05 06 07 08 092007 2007 2007 2007
Slide 57: Capacity Additions – historical and current
Capacity Additions – historical and current Project execution gaps of > 10% 80,000 75,000 -69% -80% Govt will miss plan 70,000 65,000 -61% -70% for March 2012 60,000 55,000 -53% -55% -48% -60% (78,000 MW). 50,000 -46% -50% Capacity in MW Shortfall expected to % Shortfall 45,000 40,000 -37% -40% -34%
Slide 58: Capacity shortfall of 80-140 GW by 2017
Capacity shortfall of 80-140 GW by 2017
Slide 59: Leading to peak deficit of 40 GW by 2017
Leading to peak deficit of 40 GW by 2017
Slide 60: 5-10X scale up required in capacity addition
5 -10X scale up required in capacity addition
Slide 61: Power Price
Power Price Diesel price escalates therefore increasing demand for gas in continuous applications 10 9.5 Power generated from 8 Diesel has become 6 4.9 5.09 increasingly costlier than Rs/kwh 4.36 4.5 utility or gas. 4 2.25 2 Consequently running hours of diesel generators have 0 reduced. Grid Gas Di
Slide 62: Market Size by segment - 2009
Market Size by segment - 2009 Market Units MW Market size $M USD Diesel generators 138,300 7,131 1,114 15-2500 kVA Lean Burn generators 100 135 38 Stoic generators 170 20 4.5 Producer Gas 16 3 2.32 ATS 1500 10 RTPFC 1000 kVAR 1 Total 1,170
Slide 63: Gas Opportunity
Gas Opportunity Overall Industry : Market revival seen. Manufacturing, Realty, Services, Telecom continue to grow. Spark Spread – High diesel cost driving gensets to standby. Increased gas availability and relative pricing will increase diesel substitution / create new opportunities. However with ga
Slide 64: India Gas Market: Potential in Power Sector
India Gas Market: Potential in Power Sector Year 2006 2007 2008 2009 2010 2011 Total Gas availability MCM/yr 37,874 36,861 52,407 84,815 92,469 99,360 Allocation for power generation % 40% 41% 41% 41% 42% 42% Gas available for power gen MCM/yr 15,149 15,113 21,487 34,774 38,837 41,731 Utilities & IP
Slide 65: Gas Pipe Line Infrastructure – Existing & Future
Gas Pipe Line Infrastructure – Existing & Future NANGAL BHATINDA DELHI BAREILLY GURGAUN AURAIYA LUCKNOW MATHANIA AGRA DISPUR JAGDISHPUR DAHEJ I & II BARMER KANPUR GWALIOR PATNA 10 mmtpa PHOOLPUR KOTA JHANSI VARANASI GAYA AGARTALA UJJAIN VIJAYPUR LNG RAJKOT BOKARO BHOPAL Existing AHMEDABAD KOLKATA HA
Slide 66: Gas Supply & Pricing
Gas Supply & Pricing Gas companies have 100% allocations contracted to users where gas price is $ 5.50 to $ 7.25 mmBTU under long term back to back agreements. New supply only by spot purchase of LNG but costly ($14 to 28 mmBTU) However, Gas pricing now stabilizing around $8 to $10 /mmBTU (Rs 16 to
Slide 67: Cummins Lean Burn NatGas product line
Cummins Lean Burn NatGas product line 2000 GQNC 2000 kWe Currently available for Grid paralleling. Needs application / load study for island mode 1500 rpm, 1750 GQNB 50Hz 1750 kWe NOTE: All HHP Lean Burn Natural 1540 GQNA Gas Gensets are rated at 1540 kWe Continuous Output Power (COP). 1400 GQKC 140
Slide 68: Cummins Producer Gas Product line
Cummins Producer Gas Product line QSK38 LB 500 kWe (Under Dev) GTA1710G NOTE: All Producer Gas Gensets 240 kWe are rated at Continuous Output Power (COP). GTA855G 120 kWe G855G 75 kWe 50Hz Product Line G B 5.9 G 25 kWe 25 kWe 75 kWe 150 kWe 240KWe 500KWe
Slide 69: Redundant Power Gen Products in Red
Redundant Power Gen Products in Red Commercial LHP and HHP – Prime : 7.5 - 3000 kVA QSK78 3000 kVA QSK60 1875 & 2000kVA K50 1250 & 1500 kVA K38 750 & 1000 kVA V28 600 & 625 kVA K19 500 kVA N Series 380 kVa N Series 320 kVa C series 250 kVA C series 160 to 200 kVA B Series 82.5 to 140 kVA S Series 30
Slide 70: Growth Area – Low Horse Power Generators
Growth Area – Low Horse Power Generators Small Quiet Efficient Low weight Easy handling Easy installation
Slide 71: Sub 12 KW distribution channel
Sub 12 KW distribution channel C Super Retailers S Distributors 350 S 5 nos nos Retail P END G CUST B GOEM OMER U G Dealers O 70 nos E M National/ Telecom & institutional
Slide 72: Distribution Business Overview
Distribution Business Overview
Slide 73: Agenda
Agenda Introduction to India DBU Business Demographics DBU Key Sector Growth Potential Key Initiatives
Slide 74: India DBU Vision and Mission
India DBU Vision and Mission Provide superior and excellent Service, Value packages, customised Solutions and Products that enable the uptime of our Customers’ Assets ….. … .. . thereby making people’s lives better by unleashing the Power of Cummins.` Dependable products Dependable service Dependabl
Slide 75: India DBU today
India DBU today CDSS Office Dealer Office Dealer Branch office CDSS Depot All India Footprint Amritsar 570 employees ‘Best in class Service Network’ : Tinnssuukkiiaa – 4 Zonal Offices Bhhi waaddi JJoorrha t – 19 Area Offices – 44 Dealerships – 212 Dealer Branch offices Bhilai – 7 Depots C Chaannddrr
Slide 76: Markets We Serve
Markets We Serve Mining Marine Oil & Gas Compressor Agriculture Automotive PowerGen Defence Railway
Slide 77: Key Customer segments
Key Customer segments Market-wise sales revenue 3% 5% 10% 39% 21% 0% 3% 2% 2% 2% 5% 3% 3% 2% Mining Agriculture Oil & Gas Defence Marine Railways Const + Pumps Water-well rigs + Compre Realty/ resi Mfg Agro Mfg (Pharma Chem & Discreet) Mfg Textile Telecom/ IT/ ITES Auto
Slide 78: Our Esteemed Customers
Our Esteemed Customers To name just a few…
Slide 79: DBU Key Economic Sector Growth & Opportunities
DBU Key Economic Sector Growth & Opportunities Total mining increased at the CAGR of 7.68% during the 2000 to 2009 period. Coal mining increased at 6.91%, Iron ore at the rate of 12.14% and limestone at the rate of 6.24% during the Mining same period Growth in coal production in India is expected to
Slide 80: DBU Growth
DBU Growth DBU Growth % over previous Year 25.0% 18% Growth Growth over previous yr (%) 20.0% 20% Growth 15.0% 10.0% 5.0% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 Based on the earlier sectoral trends, robust auto market, strong service sector performance esp. telecom and investments in the
Slide 81: Key Initiatives
Key Initiatives - – Improve Customer Support Excellence • Service Delivery Process/Structure Revamp – Enhancing Customer Value • Key Account Mgmt, Cummins ‘Value’ AMCs and Six Sigma – Focus on growth • Expand Service Solutions • Push Consumer Business Entry • HHP Rebuild Centre • DOEM Business
Slide 82: Key Initiatives
Key Initiatives - – Capability building • Improve Training Infrastructure and Manpower • Enhance ‘New’ Technology skill levels. • Develop Dealers – Focus on Efficiency Improvements • Revamp Internal processes • Right size and Right position • Improved Working Capital Management • Reduce Operational
Slide 83: Thank you!
Thank you!