Subros Limited · NSE:SUBROS
Subros — Investor Presentation (December 2023)
58 slides from Subros's investor presentation, Dec 11, 2023
Slide 1: Exchange filing cover letter: Investors Presentation
SL/BSE/NSE/2023-24/ 24/ December 11, 2023 The Manager, Dy. General Manager, Listing Department, Department of Corporate Services, National Stock Exchange of India Ltd., BSE LIMITED, ‘Exchange Plaza’ C-11 , Block G, First Floor, P.J. Towers, Bandra-Kurla Kurla Complex, Bandra (E), Dalal Street, Fort,
Slide 2: Cooling the Planet - Investors Meet Mumbai
Cooling the Planet Investors Meet Mumbai 11th December 2023
Slide 3: Safe Harbour
Safe Harbour This presentation, which have been prepared by Subros Limited (the “Company”), is solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with an
Slide 4: Presentation Outline
Presentation Outline 01 Subros an update (Company Profile) 02 Industry update and Business Performance (Automotive Industry status and key drivers) 03 Business Outlook (Key Indicators, Strategic Initiatives etc) Cooling the Planet 3/32
Slide 5: Subros An Update
Subros An Update Cooling the Planet
Slide 6: Company Profile
Company Profile Established in 1985, Subros is the Largest Air Conditioning & Thermal Products company in India. A Joint Venture company between Indian Promoters-36.79%, Equity Distribution Denso,Japan-20%, Suzuki,Japan-11.96%, Other Public-31.25% Integrated Thermal Products manufacturer for auto an
Slide 7: Board of Directors
Ms. Shradha Suri Dr. Jyotsna Suri Mr. P. K. Duggal Mr. Hisahi Takeuchi Mr. Tomoaki Yoshimori Mr. Yoshuira IIDA Mr Naohisa Kuriyama Chairperson & Managing Director Whole Time Director and Chief Representative of Suzuki Representative of Alternate Director Representative of Director Executive Officer
Slide 8: Strategic and Operation Executive Committees
Strategic Executive Committee Shradha Suri Marwah Mr P K Duggal Mr Y Negi CMD Chief Executive Officer EVP & COO-SCM Operation Executive Committee Mr. Hemant Agarwal Mr. A Parashar Mr. D Srini Mr. Roopak Agarwal Mr. Gaurav Gupta Mr. Ajay Agarwal CFO & VP Finance EVP & COO- EVP (Technical Centre & STE
Slide 9: What Inspires Us
What Inspire Us Core Core Core Ideology Envisioned Vivid Description – Core Purpose Ideology Values Core Values Future 25 Years Later Envisioned Future Core Purpose Respect for Level Vivid We aim to provide In the not-too-distant future, we Respect Description comfort by adopting shall be redefining
Slide 10: Passenger Vehicle Segment
Passenger Vehicle Segment HVAC HVAC Assy MC Raditor Raditor Facn Assy Compressor P & S Series Hoses & Tubes Condenser Assy
Slide 11: Truck Segment
Truck Segment LCV BLower HCV Cabin Blower Truck Blower ICV AC Condensor Hose and Tube Condenser Compressor
Slide 12: Bus Segment
Bus Segment Rooftop Unit Compressor Compressor HIgh Electricity Compressor Cooling Capacity Applications 7.5 KW to 45 KW Tourist , Staff , School , Intercity , Vehicle Range City , Ambulances etc Condensor Cooling Unit 4m to 12m Buses Unit Bus Kit Solution for ICE, EV, Hydrogen
Slide 13: Railways Segment
Railways Segment Driver Cab Tower Deisel Loco AC Loco AC Electric CAB HVAC CAB AC Train 18 Coach AC
Slide 14: Refrigeration Truck Segment
Refrigeration Truck Segment SL-500 SL-1400 SL-2500 SL-3000 SL-4000 SL-5000 SL-8000
Slide 15: Tractor Segment
Tractor Segment AHVAC UNIT(C,Su,Lu) Radiator Assembly Condensor Unit Compressor SV-97
Slide 16: Residential Home Aircon
Residential Home Aircon Ductable IDU : 5.5 ~ 16.5 TR Ductable ODU : 5.5 ~ 16.5 TR Split AC: 1.5 TR & 2.0 TR Window AC: 1.5 TR & 2.0 TR 3 Star & 5 Star 3 Star & 5 Star Heat Exchanger
Slide 17: Customer Map
Customer Map Passenger Car Segment (AC+ECM) Refrigeration Trucks Commercial Vehicle Segment (Bus, Truck, Tractor) Railways (Driver Cabin + Coach) Residential and Commercial Tooling
Slide 18: Technical Capability of Subros
Technical Capability of Subros Cooling the Planet
Slide 19: STC, DSEC, STEC
STC DSEC STEC Subros Technical Centre Denso Subros Engineering Centre Subros Tool Engineering Centre Indian Market Understanding Global Market Understanding Expediting tooling Trends for R&D and application engineering Trends for application engineering development Subros have realized complete 83%
Slide 20: Design Infrastructure
Design Infrastructure CAD CAE Research & Development New Product Design New Technology New Product Design, Development, IP Creation Design verification & & Management validation, RFQ Handling CFD “Design in India” PLM Project Management Business Support In-house Simulation Capability Subros Technica
Slide 21: Denso Subros Thermal Engineering Centre India (DSEC)
Name Denso Subros Thermal Engineering Centre India Private Limited (DSEC) Ownership 74% by DENSO, 26% by Subros Business Description Application Engineering for Air Conditioner and Engine Cooling Systems & Components Customer Subros and DENSO group (DNKI, DNHA, DIAM, DNJP etc.) – Denso Global R&D Ce
Slide 22: Subros Tool Engineering Centre (STEC)
Subros Tool Engineering Centre (STEC) Key Tooling developed by STEC Car AC HVAC Parts ECM Shroud P Tank ECM Fan Location STEC , A-16 , Sector 68 , Noida Oil Pan Precision Plastic Injection Molds, Specialty Aluminum Die Casting Dies Tank Header Capabilities Precision Progressive Stamping Dies RAC IDU
Slide 23: Subros Sustainability Roadmap
Subros Sustainability Roadmap Carbon Neutrality Roadmap→ Target 2040 2030 2040 Scope 1 +2 -50% (Direct + Indirect) Cooling the Planet Scope 3 -35% Cooling the Planet (Value Chain) Objective Carbon Neutral Our Approach CSR Innovations in the process, Optimize/reduce Transition to Suppliers & Logistic
Slide 24: Our point of distinction
Our point of distinction Backward integrated to enable built-in quality India’s leading Strong manufacturing and automotive AC process technology company infrastructure Proven capabilities in Highly reliable and energy-efficient full-system design, validation, products manufacturing, and supplies Co
Slide 25: Presentation Outline
Presentation Outline 01 Subros an update (Company Profile) 02 Industry update and Business Performance (Automotive Industry status and key drivers) 03 Business Outlook (Key Indicators, Strategic Initiatives etc) Cooling the Planet 3/32
Slide 26: Industry performance 2022-23
Industry performance 2022-23
Slide 27: Industry Performance 2022-23
Industry Performance 2022-23 • Healthy Demand momentum across segment Passenger Vehicle (Production Data) 4.01 4.03 4.58 30% 3.79 3.65 in domestic market Volume in Million 3.41 3.43 Growth Rate 4.00 3.22 25% 3.07 3.06 19% 10% 11% 6% 6% • Semiconductor shortage continues to be 2.00 -5% 5% 0% -10% dyn
Slide 28: Key Factors driving Industry Performance 2022-23
Key Factors driving Industry Performance 2022-23 Passenger Vehicle Bus Truck Tractors • Personal mobility • Infrastructure outlay • Infrastructure development • Healthy monsoon levels pushing sales M&HCV • Pent-up replacement demand • Shared Mobility • Government measures and healthy • Urbanization
Slide 29: Subros Business Performance
Subros Business Performance
Slide 30: Share of Business
Share of Business All Time High Share of Business PV AC Segment Truck AC/Blower Segment 40% 42% 40% 42% 40% 45% 43% 51% 2017-18 2021-22 2022-23 H1 23-24 2017-18 2021-22 2022-23 H1 23-24 We remain market leaders in both the segments Long Term Target PV Segment ~45% and Truck Segment ~55% Calculated b
Slide 31: Revenue Trend
Growth Drivers Revenue Trend Performance CAGR 8.77% •Steep • recovery after Covid-19 due to high market demand • 3,000 25.28% •Key contributors to the total revenue: Sales Value (Rs Cr) 2,500 1741 1968 • New Vehicle (new Business ) SOP →20% 1333 1479 57 •Green Mobility (Thermal products for Hybrid,
Slide 32: EBITDA Trend
Growth Drivers EBIDTA Trend Performance •Key contributors to improve EBIDTA margins: 14.00% • Cost down initiatives across the organisation 11.5% 11.8% 12.00% 11.4% 11.4% 11.4% 11.2% 10.5% • Fabrication cost normalised and impact reduced at Tier 2/3 10.00% 9.1% 9.0% supplier • Reduction in Container
Slide 33: Material and Operational Cost Improvement
MSR improvement Operational cost improvement MSR trend Operational Cost trend 78.0% 76.6% 74.7% 12.0% 10.9% 10.8% 76.0% 74.3% 9.7% 9.5% 9.4% 9.5% 9.2% OPERATION COST % 74.0% 10.0% 9.0% 8.6% 8.5% 71.9% 72.0% 70.7% 8.0% 69.5% 69.8% 69.9% MSR % 70.0% 68.3% 67.8% 6.0% 68.0% 4.0% 66.0% 64.0% 2.0% 62.0% 0
Slide 34: Interest Coverage and Operating Profit Per Share
Interest Coverage Ratio Growth Drivers Performance Initiatives LT Outlook Improvement trend 18.00 • Higher consistent Cash • Increase in efficiency • Working capital loans 16.00 accruals resulting low of the M/c thru Cycle will remain as per 14.00 debts and low interest time improvement and business
Slide 35: Net working capital days
Net working capital days Inventory Debtors Creditors Work Cap Days Growth Drivers 150 23 3 Performance Initiatives LT Outlook 100 5 7 19 27 24 42 8 28 31 37 • Working capital cycle • Efficient management • Our target to remain 31 29 35 27 50 achieved 8 days basis of - working capital cycle 53 57 52
Slide 36: Return on Capital Employed and Asset Turnover
Return on Capital Employed Growth Drivers Impacted by adverse 20.0% Improvement marked condition, started Performance Initiatives LT Outlook 18.0% 16.0% 18.4% showing recovery • ROCE is at 14%# based on H1 • Rationalise Business • Our target of ROCE 17.4% 14.0% FY24 performance planning and alignmen
Slide 37: Debt to Equity and Long Term Borrowing
Improvement in Debt to Equity Growth Drivers 1.5 Performance Initiatives LT Outlook Towards a Debt Free Company •Higher consistent • Better Capex and • Working capital loans 1.0 working capital will remain Cash accruals resulting management out of Ratio low debts. •It has improved to cash accruals •
Slide 38: (Int+Depr)/EBITDA Ratio
(Int+Depr)/EBITDA 100% Improvement 80% 60% Ratio 40% 84% 83% 78% 66% 71% 61% 61% 62% 51% 50% 20% 0% FY 15 FY 16 FY 17 FY 18 FY19 FY20 FY21 FY22 FY23 H1 FY24 Growth Drivers Performance Initiatives Outlook •Improvement from • Effective utilization of • No plan of Long term 84% in FY15 to 50% in fixed-
Slide 39: PAT and EPS Trend
PAT and EPS PAT trend PBT Tax Tax % EPS 12.32 EPS 14.09 14,000 34.57% 40.00% 33.20% 31.63% 32.29% 12,000 35.00% 28.21% 10,000 25.17% 30.00% 25.00% 8,000 16.18% 20.00% 6,000 15.00% 4,000 10.00% 2,000 5.00% - 0.00% FY19 FY20 FY21 FY22 FY23 H1 FY24 FY24 at New Tax regime Growth Drivers Performance Init
Slide 40: Presentation Outline
Presentation Outline 01 Subros an update (Company Profile) 02 Industry update and Business Performance (Automotive Industry status and key drivers) 03 Business Outlook (Key Indicators, Strategic Initiatives etc) Cooling the Planet 3/32
Slide 41: Business Outlook
Business Outlook
Slide 42: Future Disruptions
Future Disruptions Alternate Fuels Sustainability Light-weighting (New materials, Lighter technology) Disruptions in the Auto Industry Regulations Hybrid & Electric Vehicles Capability , Capacity & Collaboration are key actions to manage these disruptions
Slide 43: Long Term Outlook - Economic Indicators
Long Term Outlook Economic Indicators Indian Economy is the 5th largest in the world Year 1990 2020 2030 Global 2nd or 3rd 15th 5th Ranking (Estimates) The automobile Industry in India is contribute 49% of India Core Sector manufacturing GDP and 7.5% to total overall GDP India has the world's larges
Slide 44: Long Term Outlook - Vehicle Volumes
Long Term Outlook Sales (Qty) figures in Lacs Overall Market→~ 26 Million Automobile production (all mobility)(FY23)→ increase to 47 Million(FY30) → CAGR~7%- 3rd Largest in P{V Vehicle production Passenger Vehicle 80 72 57 60 46 48 Car Segment 31 40 • SUV segment vehicle and Fuel Efficiency are key
Slide 45: Future Trends impacting Auto Component Industry
Future Trends impacting Auto Component Industry Trends could give rise to attractive opportunities for auto component manufacturers Shifting Market Dynamics Changing OEM Needs Technology Regulations Make in India Premium and Platform ACES to gain pace Emissions –RDE, for India and convenience consol
Slide 46: Short Term Outlook
Short Term Outlook New Product CAPEX towards Development of additions & upcoming advanced Product regulatory technologies, EV development for changes and Localisation ICE & Capacities platforms 6-9% 2 -4% 10-12% 8~10% Electrification • Revenue growth of 6-8% for auto ancillaries in FY2024. • While d
Slide 47: Managing Disruption, Opportunities, Vision of Subros
Comprehensive approach for Long Term to be considered by Subros to remain market leader by having ~45% market share in PV Thermal Products with Improved Profitability (EBIDTA>10%) Managing Disruption Opportunities Vision of Subros Renewed approach in view of changing industry scenario Technology ICE
Slide 48: Key Initiatives and Segment Expansion Plan
Key Initiatives and Segment Expansion Plan Segments
Slide 49: Digitalization and Automation
Digitalization and Automation • Business process Automation- • Manufacturing Process Automation • ERP, PLM Drive Efficiency Gains Support Evolving Business Model • IIOT -Electronics & Sensors • Artificial Intelligence • Machine Learning • Programmable Enable Controls Data Driven Decision making • MI
Slide 50: Investing in Local D&D and R&D
Investing in Local D&D and R&D Value Creation and Growth through D&D and R&D Re-Imagining Engineering Localise D&D ---->>>> R&D Design and Development Research and Development Flexible and Modular -Go Local -Develop As Is -Incremental Improvement -Learn in the process -Innovate -Develop standards -T
Slide 51: Passenger Vehicle and EV Outlook
• India’s Uniqueness - Dominance of IC Engine Passenger Vehicle will continue in PV segment 73 • Uncertainty and volatility are now the new 57 46 48 normal. 40 • Planning for growth is not new, but what’s new 2018-19 2022-23 2023-24 2025-26 2029-30 is that volatility implies a trade-off situation be
Slide 52: Truck Segment Growth Drivers
• Commercial Vehicle Industry is Growing in both the Truck (Vol. in Lac) Segment for M&HCV and LCV and reached to Pre- N1 N2 N3 Pandemic Levels 14 • Industry is expected to Grow @ CAGR of 6% 12 10 10 4.5 9 • N2 & N3 Category of CV segment falls under the 3.6 1.4 3.2 2.9 3.2 regulation of forced vent
Slide 53: Bus Segment
• Passenger Carrier industry is expected to grow at CAGR of 5% from FY 23to FY30 Bus (Vol In Lac) • Structural shift will have main impact on Passenger Carrier industry growth, with policies like Make in 1.2 India 1.0 1.0 0.9 0.9 •Modular design to offer on multiple models •AC Penetration in ICE is
Slide 54: Tractor Segment
• In India Agriculture is Primary source of livelihood for 55% of Population Tractor (Vol in Lac) • Tractor Industry is one of most promising Industry of 19 Indian Economy 14 • USA - largest export market for India mainly with AC 12 11 cabin. AC penetration is ~1% 9 • Major export 50+ HP - 61%, foll
Slide 55: Rail AC
RAIL AC • India has the fourth largest railway network Coach AC ( LHB, EMU) Train 18 Coach AC Cab AC • India is projected to account for 40% of the total global share of rail activity by 2050. Potential Market 835 Cr in FY30 2840 2660 • Government has allowed 100% FDI in the railways 2240 1000 2000
Slide 56: Home AC
• India is fastest growing market for RAC products Home AC (Vol in Lac) • Current market size stands close to 1Mn units (FY23) • China + 1 Policy presents export opportunity to Indian 246 Manufacturers 141 • Low penetration (<10%) of RAC in Indian household 106 creates unique opportunity of growth 9
Slide 57: Business Excellence thru Sustainability: Revival and Growth
Business Excellence thru Sustainability : Revival and Growth Key Drivers Mid Term targets Material Cost reduction Revival ~10% EBIDTA 1 EBIDTA and Profitability Efficiency Improvement (Aggressive Recovery Plan) ~6% PBT Optimum Utilisation of Resources ~15% EV/SHE Business Growth (Sustainable Technol
Slide 58: Thank You
Thank You Cooling the Planet www.subros.com