CIE Automotive India Ltd · NSE:CIEINDIA
CIE Automotive India — Investor Presentation (October 2010)
39 slides from CIE Automotive India's investor presentation, October 2010
Slide 1: Investor Meet October 2010
Investor Meet October 2010
Slide 2: Agenda
Agenda • Systech Evolution & Overview of Key Verticals • Environment & Market Situation • Short Term Initiatives & Financials • Long Term Outlook & Strategy • One Systech – Key Differentiator • Mahindra Forgings – Deep Dive • Aerospace – An Introduction 2
Slide 3: Systech – A Significant Part of M&M Group
Systech Evolution Systech – A Significant Part of M&M Group M&M Group Overview Strong Historical Growth in Consolidated Revenue • USD 7.1bn Indian conglomerate In Rs bn • Among the top tractor manufacturers in the world (by volume) and the market leader in multi utility vehicles in India • Over 50,0
Slide 4: Systech Formed in 2004 with the objective of becoming a Global Auto-Component Player
Systech Evolution Systech Formed in 2004 with the objective of becoming a Global Auto- Component Player Background • Around 2004-2005, European and US auto component manufacturers were going through tough times – – 35+ auto part makers filed for bankruptcy protection; S&P downgraded 25 US-based auto
Slide 5: Holding Structure Created to Enable Global Strategy: MFL case study
Systech Evolution Holding Structure Created to Enable Global Strategy: MFL case study M&M MFL SCHONEWEISS JECO STOKES M&M: 47.1% M&M: 100.0% M&M: 67.9% M&M: 99.5% Others: 52.9% Others: 32.1% M&M M&M: 51% Others: 49% MFL SCHONEWEISS JECO STOKES M&M: 100.0% M&M: 100.0% M&M: 99.9% Note: Investments in
Slide 6: Mission Statement – To Become Global "Art to Part" Player
Systech Evolution & Overview of Key Verticals Mission Statement – To Become Global “Art to Part” Player To create India‟s most Valuable, Innovative, “Art to Part” auto component entity that partners with its global customers to meet & surpass their business needs 6
Slide 7: Aspiration – Thinking Big
Systech Evolution Aspiration – Thinking Big 2010 X $1Bn X $1Bn 7
Slide 8: Verticals at a Glance
Overview of Key Verticals Verticals at a Glance Forgings Castings Gears Stampings & Steel Engineering Composites Services Mahindra Forgings Mahindra Hinoday Mahindra Gears and MUSCO (Listed) Mahindra Engineering Mahindra (Listed) (with PE partner) Transmission Pvt. Design and Composites
Slide 9: Systech is diversified presence across products, customers & geographies
Overview of Key Verticals Systech is diversified presence across products, customers & geographies Products (% of Key Customers Plant Locations Revenue – FY10) Engg Services Others 6% 2% DAIMLER India Germany Gears 11% Forgings Castings & 40% UK Italy Ferrites 9% Steel & Stampings 33% 100%= $725 mn
Slide 10: Indian auto component industry expected to double by 2015
Environment Indian auto component industry expected to double by 2015 Source: E&Y 10
Slide 11: German auto component industry is inherently strong
Environment German auto component industry is inherently strong Industry Average German Suppliers Source: Automotive Supplier Study 2008 by Rothschild & Roland Berger 11
Slide 12: Globally, Auto and auto component industries are undergoing transformation
Environment Globally, Auto and auto component industries are undergoing transformation OEMs • Increasingly focused on light weighting and materials • Increased reliance on electronic technology With dual shore • Focus on alternative power trains presence in India & Europe, • Increasing profitability
Slide 13: India: Auto sector experiencing double digit growth
Market Situation India : Auto sector experiencing double digit growth Cars UVs LCVs M&HCVs 2,400,000 2,200,000 2,000,000 Apr-Aug 2010 1,800,000 All segments experiencing double digit YOY growth 1,600,000 • UVs: 16% • Cars: ~30% 1,400,000 • LCVs (3.5 to 7.5T): 11% 1,200,000 • M/HCVs: 62% 1,000,000 •
Slide 14: German Market improving
Market Situation German Market improving Production of Heavy Trucks (>6T) in Germany (Month-wise) YTD AugF11 Vs YTD AugF10: 104% Germany experiencing export driven growth but need to watch the sustainability 14
Slide 15: F10 results lower than F09 because of downturn especially in Europe
Short Term Initiatives & Financial Results F10 results lower than F09 because of downturn especially in Europe All figures in Rs cr. Business F10 Actuals F09 Actuals Revenue EBITDA Revenue EBITDA Forgings 1330 (6) 2243 127 Consolidated* Steel & 1086 81 1072 64 Stampings Castings & 298 28 259 (3) Fer
Slide 16: Systech put a systematic program in place to face the crisis
Short Term Initiatives & Financial Results Systech put a systematic program in place to face the crisis Mahindra Forgings Mahindra Gears Cost Reduction Program: RM India : Operational costs, Job work charges and fixed improvement expenses Europe : Fixed cost reduction and technology innovation M
Slide 17: Q1F11 results reflect the results of action taken and market upturn
Short Term Initiatives & Financial Results Q1F11 results reflect the results of action taken and market upturn All figures in Rs cr. Business Q1F11 Actuals Q1F10 Actuals Revenue EBITDA Revenue EBITDA Forgings 405 41 302 (26) Consolidated Steel & 303 24 225 11 Stampings Castings & 90 7 55 3 Ferrites
Slide 18: Systech Strategy: REBOOT, REINVENT, REIGNITE
Long Term Outlook & Strategy Systech Strategy : REBOOT, REINVENT, REIGNITE REIGNITE REINVENT Leverage Core Capability – Centres of Excellence REBOOT Strengthen Customer Relationship Integrate India & Europe Diversify Revenue Improve Operational Streams – Increase Performance Machining & Non Auto 18
Slide 19: Long Term Strategy: Create centres of excellence
Long Term Outlook & Strategy Long Term Strategy : Create centres of excellence Vertical Centre of Excellence •All verticals to Forgings - India Crankshafts target best in class processes Foundry Turbocharger housings •Becoming module suppliers Gears Off Highway gears, remains long Transmission syste
Slide 20: Strategy: Vertical Wise
Long Term Outlook & Strategy Strategy : Vertical Wise Vertical Strategy Engg Expand auto presence in US, Europe Services Enter emerging markets viz. China, Iran, India Enter aerospace & hitech engg services Forgings Return Europe to profitability - increase share at OEMS through innovation Buil
Slide 21: Strategy: Vertical Wise…contd.
Long Term Outlook & Strategy Strategy : Vertical Wise…contd. Vertical Strategy Gears Consolidate Rajkot & Italian operations Create greenfield gears unit to cater to European OEMs Explore transmissions Stampings Be the lowest cost and price player Enter warm stampings and products like tailor w
Slide 22: MES capabilities will help us differentiate ourselves
Long Term Outlook & Strategy MES capabilities will help us differentiate ourselves 3 Cylinder Crank Shaft @ Forgings MES – the Fuel Filler Project Rear Axle for McLaren @ engineering Carrier Contract Sourcing department @ Foundry, of Systech Hinoday IDEE Product Seat Project for Honda Design @ Magne
Slide 23: Systech Today – One Systech being created
„One Systech‟ – Key Differentiator Systech Today – One Systech being created 53% Mahindra & Mahindra PE1 PE2 47% 35% 65% 51% 53% 47% Mahindra Mahindra Forgings Mahindra Gears Castings Limited * (Rajkot ) India (Urse) (Chakan) Europe Mahindra MetalCastello Forgings Europe We are considering combining
Slide 24: One Systech – Key Issues being assessed
„One Systech‟ – Key Differentiator „One Systech‟ – Key Issues being assessed 1 Unified Legal Entity Objectives • Driving homogeneity of culture 4 Common strategic 2 Shared Services • Presenting single face to market functions Key Areas of • Admin • Business Assessment • Accounts • Deriving maximum s
Slide 25: Mahindra Forgings: Organic and Inorganic growth to achieve scale, technology and customer reach
Mahindra Forgings – Deep Dive Mahindra Forgings: Organic and Inorganic growth to achieve scale, technology and customer reach Q1 09 • Installation of 12,800 T press in Germany and 6,300 T press in Chakan Q4 08 • 2nd 4,000T press at Chakan • 1st 4,000T press at Chakan Q3 08 • New m/c shop at Jeco • N
Slide 26: Overview of Operations
Mahindra Forgings – Deep Dive Overview of Operations Europe India • Main area of operation - CV Forgings • A Leading manufacturer of crankshaft and stub axles for Indian cars/ MUVs and tractor manufacturers • >100 years of manufacturing history • Non-M&M business accounts for >70% of total sales • S
Slide 27: Diversified & Complementary Product Portfolio
Mahindra Forgings – Deep Dive Diversified & Complementary Product Portfolio Passenger Cars • Links/Arms • Links/Arms • Knuckles • Piston Schoneweiss • Wheel Carriers Jeco • Knuckles • Spindles • Ball Joints • Shafts • Axle Shafts • Hubs/Spindles • Crankshafts • Links/Arms • Knuckles Stokes • Shafts/
Slide 28: Forgings: Marquee Customers
Mahindra Forgings – Deep Dive Forgings: Marquee Customers Europe India DAIMLER DAIMLER 28
Slide 29: MFL, Chakan Performance: Recovery in Place
Mahindra Forgings – Deep Dive MFL, Chakan Performance: Recovery in Place Actions in FY10 Productivity: up by a quarter Yield: Savings of Rs 3cr p.a. Rejections: Halved Improve die life: by 2 times 29
Slide 30: MFE Performance: Starting to Recover
Mahindra Forgings – Deep Dive MFE Performance : Starting to Recover Actions in FY10 Reduction of personnel costs by 45% reduction of head count by 31 % up to 100 % short time working Reduction of fixed costs by 40 % Stock reduction by € 20mn Closure of Walsall plant, UK Other plants un
Slide 31: Consolidated Performance
Mahindra Forgings – Deep Dive Consolidated Performance Parameters FY10 FY09 Revenue (Rs cr) 1,327 2,243 EBIDTA (Rs cr) (9) 143 EBITDA % 0.0% 6.4% 31
Slide 32: MFE using innovation to strengthen customer relationships
Mahindra Forgings – Deep Dive MFE using innovation to strengthen customer relationships Example of Innovation Key insights • Steering knuckle and high uncertainty among our manufacturing process customers due to supplier insolvencies • DE 202007018728.9 No customer lost even in • working title:
Slide 33: MFE transferring knowhow to Chakan to improve operations
Mahindra Forgings – Deep Dive MFE transferring knowhow to Chakan to improve operations Example of Cross Pollination Old method New method Bolster MFE transferring knowhow to Chakan : Key Areas 1. Engineering & Design 2. Tool Shop 3. Forge Shop 4. Maintenance Cassette 5. Quality Management Dies Dies
Slide 34: Mahindra Forgings Growth Strategy
Mahindra Forgings – Deep Dive Mahindra Forgings Growth Strategy Reboot Re-invent Re-ignite Europe Europe • Focused centres of excellence • Fundamentally restructure costs • Focus on process innovation to – Crankshafts and stub-axles in differentiate India • No further investments required Europe to
Slide 35: Setting up Mahindra Aerospace: Grabbing opportunities as they came
Aerospace – An Introduction Setting up Mahindra Aerospace: Grabbing opportunities as they came “Street- Board MES Plexion Next steps cred” approval: established acquired identified enhanced NM5 2004 2005 2006 2007 2008 • Then: Rs10 cr, • Excellent • Manufacture of • Approval of Rs 30 • Offset policy
Slide 36: Mahindra Aerospace: Building Blocks
Aerospace – An Introduction Mahindra Aerospace: Building Blocks Building Blocks Mahindra Aerospace Aero Engg Gippsland – Services Australian (ESO) Aircraft maker Aircraft Mfg. ESO Aerostaff – NM5 – Joint Parts Component project with in India MSO Manufacturer in NAL (Component Australia mfg) • Consol
Slide 37: Aero Components: Dual Shoring between India & Australia
Aerospace – An Introduction Aero Components: Dual Shoring between India & Australia ... and in time, major assemblies ... sub-assemblies... Small parts: simple & complex... Increasing complexity handled with time 37
Slide 38: Aircrafts: Focus on general aviation (<20 seater)
Aerospace – An Introduction Aircrafts: Focus on general aviation (<20 seater) Mahindra Aerospace Aircraft Portfolio GA200 NM5 GA8NA GA8TC GA10 GA18 Seats 2 5 8 8 10 18 Fuel Aviation Gasoline Aviation Turbine Fuel Agricultural Air taxi / Charter / Freight / Tourism / Corporate travel / Patrol / Surve
Slide 39: Thank You
THANK YOU 39
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