Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Investor Presentation (May 2006)
34 slides from Ashok Leyland's investor presentation, May 25, 2006
Slide 1: Annual Investor Meet 25th May 2006
Annual Investor Meet 25th May 2006
Slide 2: The Hinduja Group
The Hinduja Group
Slide 3: The Hinduja Group Profile
The Hinduja Group Profile • The Group was established in 1914 in Mumbai • Entered Middle East in 1919 to grow trading initiatives • Privately owned by the Hinduja Family • Presence in more than 25 countries and operates across the globe • Entered India for major activities in 1987 • Employs over 30,
Slide 4: Hinduja Group: Business Activities
Hinduja Group : Business Activities Media & Entertainment Automotive Banking & Finance Energy & Chemicals Real Estate IT/ITES
Slide 5: Presentation Outline
Presentation Outline • Indian CV Industry Outlook • Ashok Leyland – Performance and Plans
Slide 6: Indian CV Industry Outlook
Indian CV Industry Outlook
Slide 7: CV Demand Drivers
CV Demand Drivers • Economy – Growth in FY06 – Industrial Production : 8.2 % – Agriculture Growth : 2.5% – Imports / Exports : 31.7% / 25% Source: CMIE Freight generating sectors witnessed significant growth
Slide 8: CV Demand Drivers (Contd..)
CV Demand Drivers (conta..) CV demand and Y-o-Y growth in IIP (per cent) 8 2 8 So CV demand (000 nos} ay 0Y growth IIP (AHS) Source: CRIS INFAC
Slide 9: CV Demand Drivers (Contd..)
CV Demand Drivers (Contd..) • Infrastructure – Road construction projects - NHAI launched in 1999 • Total coverage increased to 18,372 Kms - pan India • 35% completed by 31.03.06 • 40% under implementation • 25% to be implemented
Slide 10: M&HCV TIV Volumes
M&HCV TIV Volumes Bus Truck Total FY 01 24,785 57,175 81,960 FY 02 16,814 73,185 89,999 FY 03 19,970 95,741 115,711 FY 04 24,591 136,804 161,395 FY 05 25,638 172,868 198,506 FY 06 28,126 179,320 207,446
Slide 11: M&HCV TIV Growth Trends
M&HCV TIV Growth Trends 225,000 200,000 Bus Truck Total 175,000 150,000 125,000 100,000 75,000 50,000 25,000 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 • Truck volume trebled in last 5 years • Bus volumes stagnated
Slide 12: CV Demand Drivers (Contd…)
CV Demand Drivers (Contd…) • Legislation • Recent Supreme Court decision on overloading to trigger demand. – “Growth in MHCVs partially on account of positive impact of the supreme court’s order, accompanied by strong freight availability ,allowing operators to increase freight rates “ – CRIS INFAC.
Slide 13: Freight Rate Movement
Freight Rate Movement Uptrend in freight rates indicates absorption in market
Slide 14: Freight Rate Buoyancy and Operators' Cost Structure
Freight Rate Buoyancy and Operators’ Cost Structure 35% Inc. in Freight Rates 30% Inc. over 12 months Inc. in Diesel Price 25% 20% 15% 10% 5% 0% South North East West 7% 18% 13% Capital cost Staff Expense 4% Fuel Expenses Maintenance Others 58% No significant impact of adverse interest rates
Slide 15: Railways Efficiency Improvement - Not a concern
Railways Efficiency Improvement - Not a concern • Proposed dedicated Freight Corridor – looking to build partnerships with road transporters to move to interior areas - will boost demand for CVs – Investment Rs.650 Billion: Phase I Rs.224 Billion – Time frame : 10 years – Phase I completion by 2011
Slide 16: Outlook for FY07
Outlook for FY07 • “Growth up to 9-10%“ – CRIS INFAC. • Industry Analysts’ projection – Average growth >10% AL targets to outperform industry
Slide 17: Ashok Leyland's Performance
Ashok Leyland’s Performance
Slide 18: Composition of Sales Q4FY06
Composition of Sales Q4FY06 Q4FY06 Q4FY05 YOY % D o m e stic - Civilian Bus 3558 3355 6.1 Truck 15164 12180 24.5 Total 18722 15535 20.5 Defence 500 146 242.5 Exports 1180 2648 (55.4) Total Vehicles 20402 18329 11.3 Engines 2497 2243 11.3 Spares incl. Defence (Rs. Mn) 1788 1911 (6.4)
Slide 19: Composition of Sales FY06
Composition of Sales FY06 FY06 FY05 YOY % D o m e stic - Civilian Bus 14168 10730 32.0 Truck 42106 37052 13.6 Total 56274 47782 17.8 Defence 502 146 243.8 Exports 4879 6812 (28.4) Total Vehicles 61655 54740 12.6 Engines 7261 6254 16.1 Spares incl. Defence (Rs. Mn) 7838 5460 43.6
Slide 20: M&HCV: AL's Market Share
M&HCV: AL’s Market Share Year P a ss Goods Total FY06 % TIV 28,126 179,320 207,446 AL 13,408 42,585 55,993 MS % 47.7% 23.7% 27.0% FY 05 TIV 25,638 172,868 198,506 AL 10,469 37,137 47,606 MS % 40.8% 21.5% 24.0% FY 04 TIV 24,591 136,804 161,395 AL 11,025 33,471 44,496 MS % 44.8% 24.5% 27.6% • MS gains
Slide 21: Financial Results FY06
Financial Results FY06 FY06 % FY05 % YOY FY04 % Net Sales / Income from Operations 52,477 100.0 41,819 100.0 25.5 33,920 100.0 Gross Operating Margin 5,401 10.3 4,229 10.1 27.7 3,946 11.6 Financial Expenses 165 0.3 28 0.1 489.3 208 0.6 Gross Profit 5,566 10.6 4,738 11.3 17.5 3,924 11.6 Depreciation
Slide 22: Operations Highlights in FY06
Operations Highlights in FY06 • Capacity enhanced to 77,200 vehicles p.a. • Introduction of BS3 variants • Volume growth at 17.6%, outperformed industry growth of 4.5% • Market share improvement by 300 bp - Improvement across all regions / segments • Turnover Rs.52 Bn. (US $ 1.1 Bn.) • No borrowal d
Slide 23: Operations Highlights FY06 (Contd…)
Operations Highlights FY 06 (Contd…) • Loan funds excluding FCCN - Rs 3.5 Bn. • Net interest bearing loans - Rs 1.8 Bn. • Capital expenditure - Rs 2.4 Bn. • Net Working capital - Rs 4.2 Bn. Better asset utilisation
Slide 24: Performance Highlights – 5 yrs
Performance Highlights – 5 yrs FY06 FY05 FY04 FY03 FY02 EPS - Diluted (In Rs.) 2.46 2.04 1.63 1.01 0.78 R O C E (%) 31.0 26.2 20.9 13.4 11.6 RONW (%) 19.9 21.2 20.1 12.4 9.6 Dividend Payout (%) 55.7 50.0 52.0 55.8 58.0 Asset Turnover 4.0 3.6 2.7 1.8 1.4 (Times) WC Turns (Times) 6.7 5.9 5.7 3.6 2.6 D
Slide 25: Other Business Initiatives
Other Business Initiatives • Component / aggregates business including exports to US / European countries – turnover target at US$ 100 million in the next three years • Engine business expansion - volume increase by 100% in FY 07. Potential for further growth. Improving shareholder returns with mini
Slide 26: Plans
Plans
Slide 27: Plans
Plans • Capacity expansion • Product launches • Performance improvement through – Focus on non-cyclical portfolios – Efficiency improvements
Slide 28: Capacity Expansion
Capacity Expansion • Vehicle assembly capacity to be augmented to 100,000 in next 2 years • Production / sales target FY07 - 75,000 vehicles • Cabin facility to 40,000 • Indigenisation of “J “ series engines • R&D facilities to reduce time-to-market Capex spend around Rs.6 billion over FY07 and FY08
Slide 29: New Product Launches
New Product Launches • ICV - 1512 with H Series engine • Semi Forward Control in Tipper and Haulage segments • Tractor range - 6x2 / 6x4 with 210-350 hp engine and GTW up to 49T • Tipper 8x4 with 350 hp engine • InterCentury Luxura bus • Branded Buses • Defence sector - HMV and other logistics vehic
Slide 30: Non-Cyclical Business
Non-Cyclical Business Share of revenue (% of turnover) FY 06 FY 05 FY 04 Defence / Spare Parts 12.4 10.1 11.4 Exports 8.3 13.2 8.4 Indl. / Marine Engines 2.1 2.3 2.1 Total 22.9 25.7 22.0 • Non-cyclical revenue streams growing in absolute quantum as also in share of total revenue. • FY 05 includes on
Slide 31: Efficiency Improvements
Efficiency Improvements • Material cost reduction – Emphasis on e-sourcing and global sourcing to play a beneficial role – Continued focus on value engineering initiatives to improve margins in all existing / new products • Mission Gemba – Shop floor-led team initiative with focus on creating value
Slide 32: Ashok Leyland Stock Performance
Ashok Leyland Stock Performance 4000 nifty 45.00 3500 40.00 ALL 3000 35.00 2500 30.00 25.00 (Rs. per Share) 2000 Points 20.00 1500 15.00 1000 10.00 500 5 .00 0 0 .00 Se l-03 Se l-04 Se l-05 Ju 03 Ju 05 Ma r-04 Ma r-05 6 Ju 4 Ma -04 Ma -06 Ja -03 Ja -04 Ja -05 Ma r-03 Ma -05 No -03 No -05 No -04 r-0
Slide 33: Shareholding Pattern
Shareholding Pattern Promoters 51% Public & Others 12% Corporates 2% Foreign Domestic Institutions Institutions 16% 19% • FIIs holdings doubled over 1 year • FCCN conversion as on date : 84% (Including Promoters)
Slide 34: Thank you
Thank you