Cummins India Limited · NSE:CUMMINSIND
Cummins India — Investor Presentation (2002)
27 slides from Cummins India's investor presentation, 2002
Slide 1: Analyst & Investors Meet 2002
analyst & investors meet 2002 Making people’s lives better by unleashing the Power of Cummins... Cummins India Limited
Slide 2: Our Credentials
Our Credentials... Dominant Market Share… Market Leader Strong Balance Sheet Modern Manufacturing Facility State-of-the-art Strong OEMs R&D Facility Thousands of Satisfied Customers Extensive Dealer Network Large Installed Base Access to Cutting Global Company Edge R&D and Technology Complete Power
Slide 3: The Economic Scorecard
The Economic Scorecard ■ GDP growth ~ 5%, but some sectors bullish ◆ Telecom… sectoral growth of 16.5% over last six years, but penetration still low (<28 mn lines for >1 bn people)… significant growth for yet another year ◆ Financial services, retailing, real estate… increased demand for quality po
Slide 4: Strategy Roadmap
Strategy Roadmap We continue to focus on restructuring our current business, while initiating a range of growth initiatives, aimed at a turnover of USD 1 billion • Scale up Mining, Power • Roll out Power Solutions and Auto Solutions • Extend Engine Range: • Strive for `Greater Share • Build High Per
Slide 5: Strategy Roadmap
Strategy Roadmap But, it all boils down to the same ageless truisms… our focus will continue to be... ✦ Create wealth for shareholders ✦ Partner with customers to extend market leadership ✦ First to market with innovative new products and services ✦ Grow exports of engines, components and services ✦
Slide 6: Our Achievements
Our Achievements… Contained costs, improved productivity and, boosted cash flow ◆ suppliers reduced from > 800 to 300 ◆ material costs reduced by > Rs 150 million ◆ closed foundry (Plant 2) ◆ older, less profitable engines being made obsolete ◆ implemented first-ever VRS in Cummins India; employee c
Slide 7: Our Achievements
Our Achievements… Partnered with customers to extend market leadership ◆ successful overhaul of PowerGeneration distribution system… closer to customers ◆ engine alliances with Industrial OEMs - Elgi, Ingersoll Rand, Tata Hitachi… ◆ major account programs with key customers in fast growing sectors…
Slide 8: In Partnership with Customers
In Partnership with Customers... Infosys Tata Telecom Domino’s Pizza Honda Mitsubishi Electric Nestle Dell Cisco Systems Hindustan Lever HDFC Bank AT&T Pizza Hut L&T John Deere Reliance McDonald’s Café Coffee Day Bharat Petroleum ICICI Bank Making people’s lives better by unleashing the Power of Cum
Slide 9: Mission Innovation
Mission Innovation Introduced innovative new products and services… ◆ completely new product line… down to 15kVA and upwards to 3MW… 2003 emissions and noise compliant ◆ fuel efficient; alternate fuels - gas, SKO, LDO… Share Share of of new new ◆ alliance with Yanmar for six base load ratings on HFO
Slide 10: Auto Solutions
Auto Solutions Cummins Auto Services… ◆ India’s first on-highway full service network for commercial vehicles ◆ focus on preventive rather than breakdown maintenance… offers uptime guarantees to customers through customized maintenance sessions ◆ Suraksha Stops, Genuine Spare Parts and AMC businesse
Slide 11: Auto Solutions
Auto Solutions Cummins Auto Services… ◆ 550 AMC customer across the 5 Suraksha Stops ◆ 10,500 vehicles served already ◆ alliance with IBP ✦ ‘asset-light’ model going forwards ✦ IBP fuel, lubes and greases available at all Suraksha Stops ✦ 49 Suraksha Stops planned over next 3 years… going the franch
Slide 12: Exports @ Cummins India
Exports @ Cummins India ■ Exports to Cummins decline for the first time in 3 years ◆ fall in demand for generator sets in the US and global adjustment of inventory in the supply chain...likely to recover by late 2003 ■ Cummins Inc. commitment to increasing sourcing from low cost countries especially
Slide 13: Cash
Cash ■ Improvement in cash flows ◆ inventory reductions ~ 16% over last year ◆ total cash reserves > Rs 2500 million ◆ free cash flow improved to ~ Rs 400 million ■ Major CAPEX behind us ◆ Rs 400 - 500 million p.a. next few years ■ Continue to examine available options for use of excess cash ◆ share
Slide 14: People and Organization… the Foundation of Execution Capability
People and Organization… the Foundation of Execution Capability + - ■ performance driven ■ clash of ideas and values ■ entrepreneurial ■ insecurity - VRS ■ empowerment and involvement ■ old v/s new ■ training and development ■ still too slow ■ Six Sigma, TurboKaizen ■ productivity ■ diversity ■ exte
Slide 15: A Stronger Company
A Stronger Company ■ Sound solutions and services based strategy ■ Dynamic leadership team ■ Strong OEM - enduser marketing ■ More customer centered ■ 3 out of 4 new businesses profitable and growing ■ Lowest cost manufacturing base by 2004 ■ Newly overhauled operations… product line, supply chain,
Slide 16: Operations
Operations... Making people’s lives better by unleashing the Power of Cummins... 16
Slide 17: Performance Review (2001-02)
Performance Review (2001-02) ■ Material costs to sales ~ 60% Cost of Sales ◆ indigenization efforts in full swing 11% 9,000 reduction ◆ efforts under way to reduce material costs by 5-10% 8,000 31-Mar-01 31-Mar-00 ◆ inventory reductions ~ 16% 7,000 31-Mar-97 31-Mar-02 31-Mar-98 6,000 31-Mar-99 5,000
Slide 18: Overview of TurboKaizen
Overview of TurboKaizen Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Generate & Implement Develop evaluate Select Plan & track database improvement Go Ideas implementation improvement and KPI ideas ideas 3 weeks 5 weeks 1 week 2 weeks Ongoing Budget Rollout Idea Presentation Implementation for Approval P
Slide 19: TurboKaizen in Manufacturing
TurboKaizen in Manufacturing... A highly structured process for a quantum improvement in Cost, Quality and Services at a rapid speed ◆ very aggressive improvement targets… 40% in our case ◆ focused exclusively on performance ◆ involves active participation of associates… ideas to reduce costs, impro
Slide 20: Financials
Financials... Making people’s lives better by unleashing the Power of Cummins... 20
Slide 21: Performance Review (2001-02)
Performance Review (2001-02) CIL Sales & Profits have declined Sales for the Year ◆ Weak domestic economy ◆ global slowdown especially post 9/11... 12,000 impacted exports 10,000 factors beyond our sphere of influence / Rs Million ◆ 8,000 control 6,000 4,000 2,000 ■ Have generally managed factors wi
Slide 22: Performance Review (2002)
Performance Review (2002) Cummins India Limited - unaudited financial results as on Sep 30, 2002 Rs Million Q2, 2001 Q2, 2002 Change H1, 2001 H1, 2002 Change Net Sales 1,813.47 1,793.67 -1% 3,655.02 3,261.00 -11% Other Income 73.18 76.37 4% 133.39 137.59 3% Total Income 1,886.65 1,870.03 -1% 3,788.4
Slide 23: 2002 vs Last Year
2002 vs Last Year ■ Q2 results solid, not spectacular… 1% decrease in net 4,000 450 sales as compared to Q2 last year 3,500 400 3,000 350 300 ■ Cost reduction efforts gaining traction - have not 2,500 250 allowed costs to increase over last year; half-yearly 2,000 200 results have seen a decline in
Slide 24: Quarterly Performance Review (2002)
Quarterly Performance Review (2002) 2,000 ■ Q2 sales increased 22% over Q1, 2002 to Rs 1,793 1,800 million 1,600 1,400 Rs Million 1,200 ■ Domestic sales increased 30% over last quarter 1,000 800 ■ Gross margins improved… operating profit up 44% in 600 Q2 as compared to Q1, 2002 400 200 - ■ PAT in Q2
Slide 25: The Crystal Ball
The Crystal Ball... PowerGen ■ capacity addition of ~ 3,500 MW last year ■ strong growth in demand from Telecom and Construction sectors expected to continue ■ customers increasingly seeking ‘Total Solutions’… global products from Cummins ■ customers seeking lowest life-cycle costs and alternate fue
Slide 26: Performance Outlook (2002-03)
Performance Outlook (2002-03) Cummins India Performance (2001-02) Cummins India Performance (2002-03 est.) Export PGBU Export 24% 31% PGBU 35% 36% Spares IBU 21% Spares 14% IBU 20% 19% ■ No significant improvements in the economy barring some sectors ■ Exports will remain depressed… weak demand and
Slide 27: India… powered by Cummins
India… powered by Cummins Cummins India Cummins Diesel Sales & Service Cummins Auto Services Cummins Power Power Systems India Solutions Fleetguard Filters KPIT Cummins Infosystems Valvoline Cummins Newage Electrical India Tata Cummins Nelson Engine Systems Tata Holset Questions Please... Making peo