Bharat Forge Ltd · NSE:BHARATFORG
Bharat Forge — Q2 FY2005 Earnings Presentation
42 slides from Bharat Forge's earnings presentation, October 2004
Slide 1: Bharat Forge Limited Q2 & Half Yearly Business Review
Bharat Forge Limited Q2 & Half Yearly Business Review
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward looking statements concerning Bharat Forge’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statemen
Slide 3: Presentation Sequence
Presentation Sequence • Global Profile • Business Review • Capacity Expansion Program • Global Strategy FY 2004 - 2008 • Global Automotive Industry & outsourcing Opportunity • Bharat Forge – Strategically poised for capturing the opportunity • Conclusion
Slide 4: Global Profile
Bharat Forge Global Profile
Slide 5: Global Profile
Global Profile Background Products CV Engine Components Manufacturing in India & Germany CV Chassis Components 2nd largest forging company worldwide Passenger Car Engine & Chassis Indian Operations set up 1961 & German Components Operations set up in 1839 Heavy Engineering products Leader in Indian
Slide 6: Global Forging Conglomerate
Global Forging Conglomerate Ennepetal, Germany production base close to the customer Proximity to large marquee customers such as BMW, DCX VW, Audi, Etc. Pune, India Large & Technologically advanced Forging & Machining Facility. Proximity to fastest growing Auto markets of China & India
Slide 7: World Class Manufacturing Facilities
World Class Manufacturing Facilities India Operations Commenced production in 1961 World’s largest single location facility Global Leader in C V Chassis Components End-to-end Solution Provider German Operations Commenced operations in 1839 One of the premier forging companies in the world Leading Pa
Slide 8: Product Profile – Commercial Vehicles
Product Profile – Commercial Vehicles India’s largest auto component exporter Leading Axle component manufacturer in the world, with 30% market share 2nd largest engine component manufacturer in the world
Slide 9: Product Profile – Passenger Cars
Product Profile – Passenger Cars Between BFL & CDPBF we supply to both Engine & Chassis Component requirements for passenger cars
Slide 10: Global Customer Base
Global Customer Base Asia USA Europe
Slide 11: Key Strengths
Key Strengths • Best practices in Human Resource development – Lean management – White collar work force – Work force up-gradation – Focus on continuous training & development • Technological capability - Engineering Design & Product Development - Tool Manufacturing - Manufacturing Process - Testing
Slide 12: Business Review
Bharat Forge Business Review
Slide 13: Operations Review Q2 FY 2005
Operations Review Q2 FY 2005 • Financials – Total Revenues up by 40% ; – Quarterly Exports cross Rs. 1 billion mark for the first time at Rs. 1111 Million – PBT & PAT up by 41% & 29% respectively • Business – Entered Long term Contract for Supply of Machined Engine Components to Global OEM – Commenc
Slide 14: Improving Cost Structure and Profitability
Improving Cost Structure and Profitability
Slide 15: Strong Sustained Growth
Strong Sustained Growth (Rs in million) Particulars Quarter II H1 FY 05 FY 04 Growth FY 05 FY 04 Growth Domestic Sales 1,791 1,204 48.75% 3,403 2,269 49.98% Export Sales 1,111 834 33.21% 2,066 1,630 26.75% Other Income 7 43 -83.72% 49 78 -37.18% Total Income 2,909 2,081 39.79% 5,518 3,977 38.75% PBD
Slide 16: Improving Capital Output Ratio
Improving Capital Output Ratio 1.50 1.30 1.20 1.10 1.07 0.90 0.87 0.70 0.65 0.50 FY 2002 FY 2003 FY 2004 H1 FY 05 Ratio of Net Revenue to Average Gross Block Key to the success in the Capital Intensive Business Superior absorption of Fixed Overheads
Slide 17: Half Yearly Revenue Growth
Half Yearly Revenue Growth 5518 5500 4535 4500 3977 Rs. Million 3678 3500 2772 2500 1500 H1 03 H2 03 H1 04 H2 04 H1 05
Slide 18: Half Yearly Export Growth
Half Yearly Export Growth 2500 2066 2000 1700 1630 1566 Rs. Million 1500 1161 1000 500 H1 03 H2 03 H1 04 H2 04 H1 05 Initial Thrust Consolidation & New Contracts Accelerating Growth
Slide 19: Geographic De-risking of Exports: A Perspective
Geographic De-risking of Exports: A Perspective FY 2002 FY 2003 8% 2% 26% 11% 63% 90% USA Europe H1 FY 05 Asia Pacific FY 2004 18% 32% 44% 48% 34% 24% Exports in this slide relate to Bharat Forges’ own exports
Slide 20: Efficiency Improvement
Efficiency Improvement 10 9.8 9 Interest Cost Interest Cost (% to (% to total total revenue) revenue) 8 7.2 12 7 10.4 6.3 6.0 10 6 8 5 6.3 FY 2002 FY 2003 FY 2004 H1 FY 05 6 Salary Cost Salary Cost 3.8 (% to (% to total total revenue) revenue) 4 2.9 2 FY 2002 FY 2003 FY 2004 H1 FY 05
Slide 21: Half Yearly Profitability Growth (PBT)
Half Yearly Profitability Growth (PBT) 1200 1133 1004 900 808 693 Rs. Million 600 440 300 0 H1 03 H2 03 H1 04 H2 04 H1 05
Slide 22: Creating Shareholder Value
Creating Shareholder Value 35 32.0 Earning Per Share Rs. 28 20.7 21 14 7 5.3 0 FY 2002 FY 2003 FY 2004
Slide 23: CDP Bharat Forge GmbH Performance under New Management
CDP Bharat Forge GmbH Performance under New Management
Slide 24: Key Achievements
Key Achievements • Significant improvement in profitability. German operations enhanced its Profitability before tax from 3.6% for year 2003 to 7.03% in the first nine months of FY 2004 • CDPBF will be EPS accretive for BFL from the First year of Operations itself • Relationship with key customers c
Slide 25: CDPBF - Financial Performance
CDPBF - Financial Performance Provisional Unaudited Financial Results for the Nine months ended September 2004 (Rs in million) Sept. 30th 2004 % to Sales Sales 5,610.00 100.00% PBIDTA 649.00 11.57% PBT 394.00 7.02% PAT 238.00 4.24% EPS accretion to BFL Rs. 6.01
Slide 26: Capacity Expansion
Capacity Expansion Key to capture the global Outsourcing Boom
Slide 27: Capacity Expansion Program
Capacity Expansion Program • To address the growth opportunities in global markets, BFL is significantly expanding capacities in following areas: - Heavy forging-adding one fully automated press line - Heavy duty crankshaft machining- increasing capacity by 200,000 - Small forgings for passenger car
Slide 28: Expanded capacity already substantially Pre Sold
Expanded capacity already substantially Pre Sold Long term contracts with Three Global Engine 200,000 Machined Heavy Duty Manufacturers Crankshafts 3,000,000 Passenger Car Long term contracts with European & American Crankshafts Passenger Car Companies Additional capacity for Chassis Additional Busi
Slide 29: Changing Face of Global Automotive Industry
Changing Face of Global Automotive Industry
Slide 30: Changing Face of Global automotive Industry
Changing Face of Global automotive Industry • The global automotive industry is witnessing a paradigm shift. • Shrinking margins & consequent financial pressures. • Inability to achieve significant cost reduction from conventional supply sources • Shorter Product Lifecycles. • Shrinking Product Deve
Slide 31: Expectation of OEM
Expectation of OEM • Significant change in the focus of the automotive manufacturers • Outsource in place of in-house manufacturing • Offload component / assembly manufacturing to specialists • Outsource to low cost, technologically comparable destinations • Significant changes in OEM’s expectations
Slide 32: OEM Expectations & BFL strong positioning
OEM Expectations & BFL strong positioning State of the Art Manufacturing facilities Technology & full Service Supply Capability to offer Design to Product testing / validation Capability facilities Capability to offer required cost benefits to the OEM Cost Competitiveness Speed to Market & Product V
Slide 33: OEM Expectations & BFL strong positioning
OEM Expectations & BFL strong positioning Scalability Largest single location forging facility Doubling Forging capacity Substantially enhancing machining capacity Strong Profitability Financial Stability Robust Cash Flows Optimum Capital Structure Global Reach Presence in India & Germany Vision of
Slide 34: Bharat Forge Set to Accelerate Growth
Bharat Forge Set to Accelerate Growth
Slide 35: Outsourcing Opportunity for BFL
Outsourcing Opportunity for BFL Passenger Car market Commercial Vehicle market Engine Component Engine Component Major long term contracts with Ford and Daimler Chrysler Supplier to leading global for Global Engine Engine Manufacturers platforms Chassis Chassis Component Component Boost Through : •
Slide 36: Wider Product Offering in Global Market
Wider Product Offering in Global Market Past Present In Future Machined engine & Chassis component for heavy CV Pre-dominantly Engine & chassis Value Commercial Vehicle components Added Product Chassis Component for Passenger Cars extension Oil & Gas Sector Heavy Engg. Entry Point Strategic Exports
Slide 37: Global Strategy 2004 - 2008
Bharat Forge Global Strategy 2004 - 2008
Slide 38: BFL Today
BFL Today • Strong presence in India & Europe • USD 330 Mio FY 2004 Product Organic Growth Inorganic Growth Diversification Enhancement of forging & machining Complementary & Value capacities at Indian Mergers & Acquisitions added products Operations Strategic Partnerships USA : Strong Automotive Ma
Slide 39: Strongly moving towards Global Leadership
Strongly moving towards Global Leadership Global Manufacturing base Global Customer base • Technologically Advanced operations • Strong relationships with global in Germany marquee customers. • Low Cost Country operations in India • Strong presence in all the continents – • Proximity to customers vi
Slide 40: Conclusion
Conclusion • Bharat Forge is the Leading supplier of Engine & Chassis Components to Global Customers. • Enjoys strong relationship with Over 36 global customers. • Identified as a Strong Long Term Supply Partner by leading global OEMs’ & Tier I customers. • Earns more than 65% of the consolidated re
Slide 41: Bharat Forge is well positioned to accelerate its revenue and earnings growth
Bharat Forge is well positioned to accelerate its revenue and earnings growth
Slide 42: Thank you
Bharat Forge Thank you