Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Shareholder Meeting (July 2009)
50 slides from Ashok Leyland's shareholder meeting presentation, Jul 28, 2009
Slide 1: Annual General Meeting July 28, 2009
Annual General Meeting g July 28, 2009
Slide 2: The presentation format
The presentation format 2008-09 Market performance p Ashok Leyland performance Combating the downturn Product launches 2009-10 Outlook Ashok Leyland – Focus areas Joint ventures MD / AL /AGM presentation / 28/07/2009
Slide 3: 2008-09 – Battling the odds
2008-09 – Battling the odds MD / AL /AGM presentation / 28/07/2009
Slide 4: The economy shifted gears … downward
The economy shifted gears … downward Global economy in reverse gear The Indian economy decelerated The CV industry hit hard, especially M&HCV MD / AL /AGM presentation / 28/07/2009
Slide 5: M&HCV TIV – Fell by 33%
M&HCV TIV – Fell by 33% 246863 235935 179345 172868 148626 136804 Bus Truck 95741 73185 Source: SIAM 38647 386 34915 28127 28693 24591 25638 16814 19970 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09 Bus segment fell by about 10% , Truck by 37% MD / AL /AGM presentation / 28/07/2009
Slide 6: Fall, expected; suddenness and severity, not
Fall, expected; suddenness and severity, y, not 160000 140000 120000 100000 2007‐08 80000 60000 2008‐09 40000 20000 0 First Half Second Half Lack of cash, capital and confidence MD / AL /AGM presentation / 28/07/2009
Slide 7: Ashok Leyland performance
2008-09 Ashok Leyland y performance p MD / AL /AGM presentation / 28/07/2009
Slide 8: Sales dropped by 34.7%
Sales dropped by 34.7% 83094 83307 61655 54740 54431 48654 36444 29673 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09 MD / AL /AGM presentation / 28/07/2009
Slide 9: Why 1.8% market share was lost
Why 1.8% market share was lost Regional imbalances adversely affected ¾ Steep drop in South – traditionally AL stronghold ¾ Lack of significant presence in East where the market held its own Demand moved up p for SFC ((Semi Forward Cab)) vehicles MD / AL /AGM presentation / 28/07/2009
Slide 10: Leadership in bus market retained
Leadership in bus market retained Maintained leadership position in the bus segment g with 46% market share MD / AL /AGM presentation / 28/07/2009
Slide 11: Composition of Sales
Composition of Sales 2007-08 2008-09 % Inc (Dec) Domestic Civilian Buses 18 244 16 548 (9.3%) Trucks 57 364 30 651 (46.6%) Total 75 608 47 199 (37.6%) Defence 414 420 1.4% Exports 7 285 6 812 (6.5%) Total vehicles 83 307 54 431 (34.7%) E i Engines 11 757 21 447 82 4% 82.4% Spares incl. Defence 79 12
Slide 12: The Financials
The Financials MD / AL /AGM presentation / 28/07/2009
Slide 13: Unbroken track record of profitability maintained
Unbroken track record of profitability p y maintained Rs Lakhs 2007-08 2008-09 % growth Net Sales / income from operations 774 258 598 107 (22.8) Gross operating margin 82 038 46 944 (42.8) Financial expenses 4 974 11 871 138.7 Other income 5 760 4 962 (13.9) Gross Profit (PBDT) 82 824 40 035 (51.7)
Slide 14: Performance Highlights – 5 Years
Performance Highlights – 5 Years 04-05 05-06 06-07 07-08 08-09 R O C E ((%)) 18.6 21.2 24.7 23.2 8.7 Inventory 5.7 5.3 5.5 5.0 3.5 Turns (Times) Debtors (Days) 14 18 17 6 73 Debt : Equity 03 0.3 02 0.2 03 0.3 04 0.4 09 0.9 EPS (In Rs.) 2.28 2.74 3.38 3.53 1.43 MD / AL /AGM presentation / 28/07/2009
Slide 15: Financial resilience
Financial resilience Maintained financial stability Managed downturn without getting over over- leveraged MD / AL /AGM presentation / 28/07/2009
Slide 16: Combating the downturn
Combating the downturn MD / AL /AGM presentation / 28/07/2009
Slide 17: 1. Focused on non-cyclical businesses
1. Focused on non-cyclical businesses % FY08 FY09 Non-cyclical Non cyclical business contribution up; from 34% to 50% MD / AL /AGM presentation / 28/07/2009
Slide 18: 1. Focused on non-cyclical businesses
1. Focused on non-cyclical businesses Power solutions Volumes o u es ggrew e by 8 82.4% % to o 21447 uunits s Business transformation: from trading in engines to value-added power solutions b i business: LEYPOWER Leyparts Revenues maintained at Rs Rs. 79 79,969 969 lakhs MD / AL /AGM presentation /
Slide 19: 2. Cash conserved
2. Cash conserved CAPEX reduced from Rs. 3,000 crores to Rs. 2,000 crores over the next 3 years y Reduced capacity build-up at Uttarakhand from 70,000 to 50,000 vehicles per annum Froze all discretionary capital expenditure However, all R&D expenses left untouched MD / AL /AGM presentation / 28/07/2
Slide 20: 3. Internal cost-cutting steps taken
3. Internal cost-cutting steps taken Production cut by reducing working days in the manufacturing g units 3-4% gain from drop in commodity prices 20% savings through voluntary salary cuts Cut in travel, advertising and all other discretionary expenses Overall, austerity measures resulted in a saving
Slide 21: 4. Improved competitiveness
4. Improved competitiveness A slew of projects were undertaken at the Units Innovations Productivity enhancements Improvement po e e tp projects ojects Value engineering Value Stream Mapping pp g Conversion of non-moving models into saleable ones with changes in aggregates MD / AL /AGM presentation
Slide 22: Product Introductions of 2008-09
Product Introductions of 2008-09 MD / AL /AGM presentation / 28/07/2009
Slide 23: Product introductions: Trucks
Product introductions: Trucks 2516 Super 2516 HT 3516 ETK MD / AL /AGM presentation / 28/07/2009
Slide 24: Product introductions: Trucks
Product introductions: Trucks Comet 1613 Ecomet 912 Tipper MD / AL /AGM presentation / 28/07/2009
Slide 25: Product introductions - Buses
Product introductions - Buses Rear Engine SLF (CNG) – BS III T Tarmac Coach C h ULE (CNG) – BS III MD / AL /AGM presentation / 28/07/2009
Slide 26: India’s first H-CNG engine
India’s first H-CNG engine 6-cylinder, 6-litre 123 hp BS-4 engine with blend of natural g gas and hydrogen y g ((20% by y volume)) Further reduces emissions Stimulates combustion Improves efficiency of the engine MD / AL /AGM presentation / 28/07/2009
Slide 27: After-market support
After-market support Added Current Dealership outlets 11 170 Authorized Service Centres 09 146 Work bays 185 2,300 MD / AL /AGM presentation / 28/07/2009
Slide 28: 2009-10 – Prospects
2009-10 – Prospects MD / AL /AGM presentation / 28/07/2009
Slide 29: Outlook
Outlook The worst seems behind us and the first green shoots of g growth visible A strong government at the Centre will bring political stability The new government’s focus on reviving economic activity augurs well R t t off stalled Re-start t ll d infrastructure i f t t development projects; fillip
Slide 30: Ashok Leyland – Focus areas
Ashok Leyland – Focus areas MD / AL /AGM presentation / 28/07/2009
Slide 31: 1. GENMOD process
1. GENMOD process Transformational new matrix management p process Customer Inspired Solutions – to design break- through products To offer products at a new price-performance point MD / AL /AGM presentation / 28/07/2009
Slide 32: 2. Product development: UNITRUCK platform
2. Product development The UNITRUCK platform Theeaall-new e modular, odu a , universal u e sa p platform a o to o meet ee diverse requirements of both domestic and global markets Thi on and This d off-highway ff hi h platform l tf range can create variants Will span truck models from 16 ton GVW to 4
Slide 33: 2. Product development: NEPTUNE engine range
2. Product development The NEPTUNE engine range A new e family a yo of 4 a and d 6 cy cylinder de inline eeengines g es ranging from: • 160 – 230 hp in 4 cylinder engines • 270 – 380 hp in 6 cylinder engines Of modular capacity from 4.7 litre to 8 litre – BS3 and BS4 / Euro IV compliant and protecte
Slide 34: 3. New products – Trucks
3. New products – Trucks 4019 - Launched yesterday MD / AL / Annual Press Conference / 15/05/2009
Slide 35: 3. New products – Trucks
3. New products – Trucks 3116 3518 TT 2521 Tipper MD / AL /AGM presentation / 28/07/2009
Slide 36: 3. New products – Buses
3. New products – Buses ULE – BS III Apart from the 875-bus order received from DTC, under JnNURM, we have received 5,185 bus orders out of 9,966 vehicle orders released, constituting 52% share State-of-the-art bus body building facility at Alwar MD / AL /AGM presentation / 28/07/2009
Slide 37: 4. Hinduja Leyland Finance
4. Hinduja Leyland Finance New finance company to support vehicle sales formed Awaiting RBI approval Plans to commence operation in next couple of months Focus areas: pockets not currently serviced by existing i ti fifinance network t k and d address dd need d ffor promoting specific models / produc
Slide 38: 5. Exports
5. Exports Expect market revival post cessation of hostilities in Sri Lanka Consolidation in newly entered markets (Angola, Honduras) Introduction of exclusively designed truck range for export markets T capitalise To it li off expected t dd demandd ffor price i competitive products following reviva
Slide 39: 6. Capacity creation
6. Capacity creation Uttarakhand unit Investments cut by Rs. 1,000 crores To go operational before March 2010 Bus p plant at Ras Al Khaimiah Trial productions have begun MD / AL /AGM presentation / 28/07/2009
Slide 40: Joint Ventures
Joint Ventures MD / AL / Annual Press Conference / 15/05/2009
Slide 41: Light truck JV with Nissan
Light truck JV with Nissan Product development in progress Product portfolio expansion under consideration, by including Nissan products initially slated for production outside India Roll out postponed to 2011; due to market conditions and land acquisition delays MD / AL / Annual Press Conference /
Slide 42: Construction equipment JV with John Deere
Construction equipment JV with John Deere A 50:50 JV; new company formed Land options identified; negotiations on Product plans in place; testing on Initial t a products: p oducts Backhoe ac oe loaders, oade s, Wheel- ee loaders, Excavators Access to full range of products Pilot production by Oct 20
Slide 43: HDPC JV with ALTEAMS
HDPC JV with ALTEAMS Fully established to meet requirements from both the telecom and automobile sectors Supplies have commenced MD / AL /AGM presentation / 28/07/2009
Slide 44: Infotronics JV with Continental AG
Infotronics JV with Continental AG Vehicle electronics expected to play an increasingly g y important p role in CVs in future JV is well positioned to develop innovative solutions in vehicle electronic systems viz., instrument cluster applications, cockpit electronics and body control units for CVs
Slide 45: International Operations – AVIA Ashok Motors, Czech Republic
International Operations – AVIA Ashok Motors , Czech Republic Sold 518 LCVs in 2008 in Europe despite tough g market conditions Successfully completed major cost reduction program in 2008/2009, (15% reduction in material cost)) Currently focused on restructuring of operations strengthening of dealer
Slide 46: Investor Relations
Investor Relations MD / AL /AGM presentation / 28/07/2009
Slide 47: Value-added services for share-holders
Value-added services for share-holders Annual shareholders satisfaction survey Conducted for 8 years consecutively Responses are summarised and reviewed by the Shareholder/Investor Grievance Committee of the Board Investor Guide Sent to every shareholder every year since 1998 Annual Reports Disclosu
Slide 48: Sharing profits even during a downturn
Sharing profits even during a downturn Percentage 150 150 120 100 100 75 50 45 March '02 March '03 March '04 March '05 March '06 March '07 March '08 March '09 MD / AL / Annual General Meeting / 30/07/2008
Slide 49: Our family of shareholders
Our family of shareholders 303954 306126 200091 146824 3 137244 79804 75323 71103 March '02 March '03 March '04 March '05 March '06 March '07 March '08 March '09 MD / AL / Annual General Meeting / 30/07/2008
Slide 50: Thank You
2 Thank You