Sundaram Finance Limited · NSE:SUNDARMFIN
Sundaram Finance — Merger or Acquisition (February 2017)
50 slides from Sundaram Finance's merger presentation, February 2017
Slide 1: Scheme of Arrangement - Highlights
Scheme of Arrangement - Highlights
Slide 2: Glossary
GLOSSARY • BPO – Business Process Outsourcing • NNPA - Net Non-Performing Assets • CAGR – Compounded Annual Growth Rate • P.a – Per Annum • CCI - Competition Commission of India • PAT – Profit After Tax • Cr. - Crores • RBI – Reserve Bank of India • CRAR - Capital Adequacy Ratio/ Capital to Risk (We
Slide 3: Business Restructuring Scheme
BUSINESS RESTRUCTURING SCHEME • Sundaram Finance Ltd (“SFL”) proposes to demerge its non Financial Services (non-FS) investments into a separate listed entity, Sundaram Finance Investments Ltd (“SFIL”). This will provide an opportunity for all shareholders to participate directly in value creation i
Slide 4: Index
INDEX Snapshot of Sundaram Finance Limited Details of Scheme Details of Non Financial Services Investments 4
Slide 5: Snapshot of Sundaram Finance Limited
SNAPSHOT OF SUNDARAM FINANCE LIMITED Overview Shareholding Pattern (Holdings, %) Incorporated in 1954, Sundaram Finance is a leading player in retail finance with presence across multiple facets of the financial services industry including vehicle finance, home finance, mutual Public, Promoters, fun
Slide 6: Key Financials of Sundaram Finance Limited
KEY FINANCIALS OF SUNDARAM FINANCE LIMITED Consolidated Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 H1 FY17 3Yr CAGR 5Yr CAGR Total Revenue 3,038 3,710 4,125 4,294 5,035 2,719 10.7% 15.6% Profit after Tax 458 564 581 576 583 303 1.1% 8.4% Net worth 2,165 2,614 3,080 3,750 4,195 4,499 17.1% 18.4
Slide 7: Sundaram Finance Limited - Investment Portfolio
SUNDARAM FINANCE LIMITED - INVESTMENT PORTFOLIO Sundaram Finance Limited Financial Services Investments (Rs. 1023.96 Cr.) Non FS Investments# (Rs. 149.74 Cr.) Royal Sundaram General Insurance (Rs. 641.48 Cr.) Automotive Investments (Rs. 120.29 Cr.) Sundaram AMC (Rs. 184.87 Cr.) Flometallic Dunes Oma
Slide 8: Index
INDEX Snapshot of Sundaram Finance Limited Details of Scheme Details of Non Financial Services Investments 8
Slide 9: Rationale for Restructuring
RATIONALE FOR RESTRUCTURING Participation in Value Creation Over the years, SFL’s investments in the manufacturing and automotive sectors have not only yielded significant returns but also demonstrated a strong track record of value creation. Several of these investments have been made as a co-promo
Slide 10: Non-FS Investments: 10 Year Snapshot
NON-FS INVESTMENTS: 10 YEAR SNAPSHOT Financial Year Book Value in SFL Share of Net Worth* Dividend Received$ Share of PAT** Ended Balance Sheet (Rs. in Cr.) (Rs. in Cr.) (Rs. in Cr.) (Rs. in Cr.) 2006 18.45 165.98 6.76 40.86 2007 22.08 199.97 15.98 45.30 2008 38.45 227.45 7.44 37.03 2009 72.65 262.5
Slide 11: Scheme Objectives
SCHEME OBJECTIVES PRIMARY OBJECTIVES • To give all SFL shareholders an equal, direct, proportional right to ownership of SFIL, which will be the holding company of non-FS investments and consequently its dividends and value creation • To ring-fence the Financial Services (FS) businesses of SFL • To
Slide 12: Scheme Mechanics
SCHEME MECHANICS • The Board of Directors of SFL have approved and recommended a composite scheme of arrangement under sections 230 – 232 of the Companies Act, 2013. Following are the key steps involved in the process*: • Step 1: Sundaram Insurance Broking Services Limited and Infreight Logistics So
Slide 13: Scheme Mechanics – Entity Structure
SCHEME MECHANICS – ENTITY STRUCTURE Before Demerger After Demerger Issue of Promoters Public Promoters Public Shares 36.18% 63.82% 36.18% 63.82% 73.53% SFL SFL SFIL* 26.47% Non FS FS Investments Non FS FS Investments Investments Investments * Select shared services businesses and select real estate
Slide 14: Key Metrics of SFL With and Without Non-FS Investments
KEY METRICS OF SFL WITH AND WITHOUT NON-FS INVESTMENTS Pursuant to the scheme of arrangement, SFL assets are to be demerged into SFIL at book value (holding cost). Since the book value of investments is small relative to SFLs net worth (Rs. 150 Cr. vs Rs. 3313 Cr.), the demerger does not materially
Slide 15: Index
INDEX Snapshot of Sundaram Finance Limited Details of Scheme Details of Non Financial Services Investments 15
Slide 16: Key Non-FS Investments Over the Years
KEY NON-FS INVESTMENTS OVER THE YEARS 1960 1970 1980 1990 2000 2010 2016 Wheels India Axles India IMPAL Delphi TVS Flometallic 1960 1981 1993 2001 2010 Rs. 8.38 Cr. Rs. 10.16 Cr. Rs. 5.77 Cr. Rs. 0.18 Cr. Rs. 32.50 Cr. 11.08% 38.82% 18.52% 3.19% 40.63% Lucas-TVS Turbo Energy SBSL SBIL 1962 1989 2005
Slide 17: Non-FS Investments Snapshot
NON-FS INVESTMENTS SNAPSHOT Company Name, Book Value SF Share of Net Worth Net Worth Turbo Energy, 1.88 287.40 898.14 Sundaram Clayton, 14.28 157.60 1402.12 Brakes India, 0.15 118.04 1770.72 Dunes Oman LLC (FZC), 26.95 92.64 212.05 Lucas-TVS, 0.27 47.91 900.48 Wheels India, 8.38 45.22 408.16 IMPAL,
Slide 18: Non-FS Investments Snapshot
NON-FS INVESTMENTS SNAPSHOT Company Name, Dividend Received SF Share of PAT PAT Turbo Energy, 5.76 39.92 124.76 Sundaram Clayton, 10.68 27.37 243.50 Brakes India, 7.57 22.57 338.63 Dunes Oman LLC (FZC), 37.45 26.82 61.38 Lucas-TVS, 0.95 2.36 44.45 Wheels India, 1.07 4.43 39.99 IMPAL, 2.93 4.95 26.73
Slide 19: Turbo Energy Private Limited
TURBO ENERGY PRIVATE LIMITED Overview: Shareholding Pattern Others (Holdings, %) Setup in 1982, Turbo Energy is a joint venture between Brakes India, Sundaram 3.39% Finance and Borgwarner Turbo systems GmBH. It is engaged in manufacture of turbocharger and turbocharger parts that are used in automob
Slide 20: Turbo Energy Private Limited
TURBO ENERGY PRIVATE LIMITED Standalone Financials (Rs.Crores) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 769 915 781 844 923 0.3% 6.6% EBITDA 183 197 156 173 178 -3.4% 2.9% Reported PAT 124 149 109 112 125 -5.8% 4.7% Adjusted PAT 124 149 109 112 125 -5.8% 4.7% Net Worth 472 593 681 783 896 14
Slide 21: Sundaram Clayton Limited (Listed)
SUNDARAM CLAYTON LIMITED (LISTED) Overview Shareholding Pattern (Holdings, %) Founded in 1968, Sundaram Clayton is a world class manufacturer of precision Public aluminum cast products for automotive and non automotive industry. It is a Tier-1 25.00% Sundaram manufacturer, fully integrated from earl
Slide 22: Sundaram Clayton Limited (Listed)
SUNDARAM CLAYTON LIMITED (LISTED) Consolidated Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 8,297 8,226 9,344 11,340 12,600 15.3% 11.3% EBITDA 560 522 581 717 890 19.5% 14.9% Reported PAT 108 186 141 212 244 9.4% 30.5% Adjusted PAT 93* 113# 117@ 168& 239$ 28.5% 29.8% Net
Slide 23: Brakes India Private Limited
BRAKES INDIA PRIVATE LIMITED Overview Shareholding Pattern Sundaram Finance Ltd., (Holdings, %) Founded in 1962, Brakes India Private Limited is a joint venture between the TVS Sundaram 6.67% Group and Lucas Industries Limited UK (a 100% subsidiary of ZF TRW). The company Industries Pvt. Ltd. Lucas
Slide 24: Brakes India Private Limited
BRAKES INDIA PRIVATE LIMITED Standalone Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 3,164 3,119 3,172 3,296 3,496 3.9% 6.0% EBITDA 340 321 366 403 451 12.0% 10.6% Reported PAT 184 170 222 248 315 22.7% 13.1% Adjusted PAT 184 170 222 248 298* 20.5% 13.7% Net Worth 774 889
Slide 25: The Dunes Oman LLC (FZC)
THE DUNES OMAN LLC (FZC) Overview Shareholding Pattern (Holdings, %) Established in the year 2013, Dunes Oman LLC is headquartered in Sultanate of Oman in a free trade zone and is a Tier II manufacturer engaged in the business of ABI Showatech(India) Ltd., manufacture of iron and steel castings for
Slide 26: The Dunes Oman LLC (FZC)
THE DUNES OMAN LLC (FZC) Standalone Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 257 301 340 366 342 4.4% 23.9% EBITDA 49 67 87 94 88 9.4% 29.9% Reported PAT 37 48 70 70 61 8.3% 41.0% Adjusted PAT 37 48 70 70 61 8.3% 41.0% Net Worth 118 146 177 221 212 13.3% 23.3% Capital
Slide 27: Lucas-TVS Limited
LUCAS-TVS LIMITED Overview: Shareholding Pattern (Holdings, %) Others, Lucas-TVS was setup in 1962 as a joint venture between Lucas Plc. UK and the TVS 22.09% TVS and Sons Group and is a leading player in Auto Electrical equipment. Its product portfolio Pvt. Ltd. caters to OEM, after market and non
Slide 28: Lucas-TVS Limited
LUCAS-TVS LIMITED Consolidated Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 1717 1703 1609 2141 2280 10.2% 9.2% EBITDA 127 122 81 107 116 -1.8% -0.4% Reported PAT 82 56 35 45 44 -7.3% -10.1% Adjusted PAT 82 56 35 45 44 -7.3% -10.1% Net Worth 591 625 648 876 900 13.0% 11.1
Slide 29: Wheels India Limited (Listed)
WHEELS INDIA LIMITED (LISTED) Overview Shareholding Pattern (Holdings, %) Set up in 1960, Wheels India Ltd. is a joint venture between the TVS Group and Titan Titan Europe Ltd. Europe Ltd. It is one of the largest steel wheel manufacturers in the world and is a Others 34.23% 25.00% leading supplier
Slide 30: Wheels India Limited (Listed)
WHEELS INDIA LIMITED (LISTED) Consolidated Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 H1 FY17* 3Yr CAGR 5Yr CAGR Sales 2,078 1,924 1,823 1,980 2,016 1,080 1.6% 3.5% EBITDA 173 151 148 150 173 93 4.6% 5.9% Reported PAT 34 32 28 30 40 28 7.9% 10.2% Adjusted PAT 34 32 28 30 40 28 7.9% 10.2% Net W
Slide 31: IMPAL (Listed)
IMPAL (LISTED) Overview Shareholding Pattern (Holdings, %) Incorporated in 1954, India Motor Parts and Accessories Ltd. (IMPAL) is engaged in TVS and Sons Pvt. Ltd. the distribution of automobile spare parts and accessories of over 50 & Other promoters manufacturers. It is one of the leading third p
Slide 32: IMPAL (Listed)
IMPAL (LISTED) Consolidated Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 H1 FY17* 3Yr CAGR 5Yr CAGR Sales 501 495 512 512 502 263 0.4% 3.2% EBITDA 42 36 37 35 31 17 -5.0% -4.4% Reported PAT 32 27 30 31 27 13 -0.6% -1.3% Adjusted PAT 32 27 30 31 27 13 -0.6% -1.3% Net Worth 158 176 197 214 232 245
Slide 33: Flometallic India Private Limited
FLOMETALLIC INDIA PRIVATE LIMITED Overview Shareholding Pattern Incorporated in 2010, Flometallic India is a manufacturer of castings for the (Holdings, %) Others, automotive industry. 12.36% ABI Showatech Turbo Energy Pvt. Ltd. Ltd. Key Highlights 5.53% 42.11% Volume: Production of 22,573 tons of
Slide 34: Flometallic India Private Limited
FLOMETALLIC INDIA PRIVATE LIMITED Standalone Financials (Rs. in Cr.) FY13 FY14 FY15 FY16 3Yr CAGR Sales 76 126 155 198 37.7% EBITDA 2 18 25 35 160.4% Reported PAT -6 6 10 16 NA Adjusted PAT -6 6 10 16 NA Net Worth 59 65 90 101 19.7% Capital Employed 134 129 160 187 11.7% Debt to Equity ratio 1.27 0.
Slide 35: Axles India Limited
AXLES INDIA LIMITED Overview Shareholding Pattern (Holdings, %) Founded in 1982, Axles India is a joint venture between Wheels India, Sundaram Finance and Dana Holding Corp., USA. Axles India is a leading manufacturer of Axle Housings for medium and heavy commercial vehicles. Others Wheels India Ltd
Slide 36: Axles India Limited
AXLES INDIA LIMITED Standalone Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 515 410 330 430 494 6.4% 0.3% EBITDA 32 22 20 24 32 12.3% 0.4% Reported PAT 40 2 2 6 13 87.1% 24.4% Adjusted PAT 9# 2 2 6 13 87.1% 24.4% Net Worth 66 67 67 70 82 7.2% 18% Capital Employed 118 105
Slide 37: Delphi-TVS Diesel Systems Limited
DELPHI-TVS DIESEL SYSTEMS LIMITED Overview Shareholding Pattern (Holdings, %) Delphi-TVS is a joint venture between Delphi Corporation, USA and the TVS Group. It manufactures diesel fuel injection equipment for Cars, Sports Utility and Multi Others Utility Vehicles, Light Commercial Vehicles, Tracto
Slide 38: Delphi-TVS Diesel Systems Limited
DELPHI-TVS DIESEL SYSTEMS LIMITED Standalone Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 1034 1177 1001 887 769 -13.2% 1.8% EBITDA 145 135 106 113 96 -10.7% -4.3% Reported PAT 35 15 4 -1 0 -132.1% -146.1% Adjusted PAT 35 15 4 -1 0 -132.1% -146.1% Net Worth 269 280 285 28
Slide 39: BPO Businesses
BPO BUSINESSES Overview The BPO business of SFL, which was setup in 2005, is conducted through two entities – Sundaram Business Services Ltd. (SBSL) and Sundaram BPO India Ltd. (SBIL). Both the companies are owned 100% by SFL and its subsidiary SBSL focuses on the International market with clients
Slide 40: Sundaram Business Services Limited
SUNDARAM BUSINESS SERVICES LIMITED Standalone Financials (Rs. in Cr.) FY12 FY13 FY14 FY15 FY16 3Yr CAGR 5Yr CAGR Sales 27 25 21 24 24 -1.2% 1.5% EBITDA 1.3 -0.2 -2.4 -1.0 0.6 NA NA Reported PAT 1.0 -0.6 -2.9 -1.7 0.0 NA NA Adjusted PAT 1.0 -0.6 -2.9 -1.7 0.0 NA NA Net Worth 12 11 8 7 7 -16.1% -9.3%
Slide 41: Sundaram BPO India Limited
SUNDARAM BPO INDIA LIMITED Standalone Financials (Rs. in Cr.) FY13 FY14 FY15 FY16 3Yr CAGR Sales 11 21 20 16 13.5% EBITDA 0.5 0.7 0.9 0.4 -3.8% Reported PAT 0.1 0.1 0.7 0.05 -29.1% Adjusted PAT 0.1 0.1 0.7 0.05 -29.1% Net Worth 9 9 10 10 3.2% Capital Employed 10 9 10 11 3.6% Debt to Equity ratio 0.0
Slide 42: TVS Investments Limited
TVS INVESTMENTS LIMITED Shareholding Pattern Overview (Holdings, %) TVS Investments Ltd. is a holding company with subsidiaries including TVS Capital Sundaram Finance Ltd. Others, 0.02% 14.98% Funds Ltd. and TVS Electronics Ltd. Sundaram Southern Industries Pvt. Key Highlights Roadways Ltd. Ltd. 19.
Slide 43: TVS Investments Limited
TVS INVESTMENTS LIMITED Consolidated Financials (Rs. Cr.) FY13 FY14 FY15 FY16 3Yr CAGR Sales 303 275 295 617 26.7% EBITDA 61 20 16 16 -35.7% Reported PAT 33 5 4 9 -33.9% Adjusted PAT 33 5 3 8 -37.9% Net Worth 141 133 128 125 -3.9% Capital Employed 223 210 201 184 -6.3% Debt to Equity ratio 0.46 0.43
Slide 44: Scheme Roadmap
SCHEME ROADMAP Approval of Listing in Application to Receipt of Draft Scheme Effective Date Stock Regulators Approvals by SFL Board Exchange 17 Feb 2017 Within 30 days of Within 30 days of approval by Board Effective Date Regulatory bodies from whom Process approvals are required Stock Exchange/ S
Slide 45: Disclaimer
DISCLAIMER Presentation date: 20 Feb 2017 This presentation has been prepared by Sundaram Finance Limited (the “Company”). No representation or warranty, express or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained i
Slide 46: Thank You
THANK YOU sf | SUNDARAM FINANCE Enduring values. New age thinking.
Slide 47: Annexure – India Automotive Industry Statistics
ANNEXURE – INDIA AUTOMOTIVE INDUSTRY STATISTICS
Slide 48: Market Information – Commercial Vehicle Sales
MARKET INFORMATION – COMMERCIAL VEHICLE SALES Commercial Vehicles 2011-12 2012 - 13 2013 -14 2014 -15 2015 - 16 Apr-Jan 2017 3Yr CAGR 5Yr CAGR M & HCVs 3,76,618 2,88,213 2,24,440 2,63,407 3,37,565 2,68,530 % YoY 7% -23% -22% 17% 28% 2% 5% -1% Domestic 3,48,701 2,68,689 2,00,627 2,32,755 3,02,373 2,3
Slide 49: Market Information – Passenger Vehicle Sales
MARKET INFORMATION – PASSENGER VEHICLE SALES Cars 2011-12 2012 - 13 2013 -14 2014 -15 2015 - 16 Apr-Jan 2017 3Yr CAGR 5Yr CAGR Total Cars & MUVs 31,25,390 32,24,429 30,97,192 32,20,888 34,43,567 31,33,784 % YoY 6% 3% -4% 4% 7% 11% 2% 3% Domestic 26,18,072 26,65,015 25,03,685 25,99,547 27,89,678 25,0
Slide 50: Market Information – Tractors & 2 Wheeler Sales
MARKET INFORMATION – TRACTORS & 2 WHEELER SALES Tractors 2011-12 2012 - 13 2013 -14 2014 -15 2015 - 16 Apr-Jan 2017 3Yr CAGR 5Yr CAGR Domestic 5,36,891 5,27,768 6,34,151 5,51,463 4,93,764 4,59,597 % YoY 11% -2% 20% -13% -10% 18% -2% 0.5% Total 2 Wheelers 2011-12 2012 - 13 2013 -14 2014 -15 2015 - 16
Sundaram Finance — Merger or Acquisition (February 2017) on 6ix