Ashok Leyland Limited · NSE:ASHOKLEY
Ashok Leyland — Investor Presentation (May 2010)
58 slides from Ashok Leyland's investor presentation, May 2010
Slide 1: Investor Meet May, 2010
Investor Meet May, 2010 © ASHOK LEYLAND GHD HINDUJA GROUP
Slide 2: Presentation outline
Presentation outline Overview of Hinduja Group 2009-10 Economy & CV Market performance AL’s Performance Product Introductions in FY ’10 2010-11 Outlook for CV Industry Strategies / Plans Volume & Marging Outlook Capex & cash flows Progress on JV front AL / Investor Meet/ May’10
Slide 3: Hinduja Group Overview
Hinduja Group Overview ` Hinduja group was established in 1914 in Mumbai Employs more than 35,000 personnel worldwide Global presence across 30 countries Automotive Energy & Chemicals Ashok Leyland is India's second largest Gulf Oil is arguably one of the most commercial vehicles and diesel engine e
Slide 4: 2009-10
2009-10 AL / Investor Meet/ May’10
Slide 5: Economy - Drivers of CV Demand
Economy - Drivers of CV Demand Economic Outlook conducive Economy has been registering consistent growth since the decline in Oct – Dec ’08 Qtr. Quarter GDP Growth % IIP Growth % Jul – Sep ‘08 7.5 5.8 CV industry Oct – Dec ‘08 08 62 6.2 21 2.1 growth - twice Jan – Mar ‘09 5.8 2.1 the IIP Apr – Jun ‘
Slide 6: Growth in freight generating sectors
Growth in freight generating sectors Coal 9% Cement 7% Rail Freight Coal for steel plants 8% Contributed earnings grew by 8.8% Y-O-Y Fertilizer 5% Apr’09 Apr 09 - Feb ’10 10 Steel 3% Petroleum and other 1% liquids Cargo traffic at Ports grew by Contributed 5.4% YOY Iron ore 49% Apr ‘09 - Feb ‘10 Est
Slide 7: Infrastructure plan – NHAI projects
Infrastructure plan – NHAI projects Details of PPP projects awarded during 2008-09 and 2009-10 by NHAI is given under: Period Project Length Share of South cost in Kms South portion (Rs. Cr) (Rs. Cr) 2008-09 8591 643 3857 45% Apr – Jun ’09 2926 323 2131 73% Jul – Sep ’09 6581 614 2678 41% Oct – Dec
Slide 8: CV Market Performance - Trucks
CV Market Performance - Trucks Segment Q3 Q3 Q-o- Q4 Q4 Y-o-Y FY FY Y-o-Y FY ’10 FY’09 Q% FY ‘10 FY ’09 % 2009-10 2008-09 % Haulage 7596 3870 96 10500 5959 76 29962 22380 34 Tippers 7918 5036 57 11649 6161 89 30534 33834 (10) Tractors 4038 603 570 6560 1157 467 16717 9205 82 MAV 19960 7528 165 30052
Slide 9: CV Market Performance – Trucks contd…
CV Market Performance – Trucks contd… Growth registered in Q 4 FY ‘10 over Q 3 in all segments Though Tippers registered overall –ve growth for the year, Q 3 and Q 4 witnessed a Y-o-Y growth of 57% & 89% respectively During Q 4, Tippers registered growth of 47% over Q3 Growth in Heavy end segments (
Slide 10: CV Market Performance - Buses
CV Market Performance - Buses Segment Q3 Q3 Y-o-Y Q4 Q4 Y-o- Y FY FY Y-o-Y FY ’10 FY’09 % FY ’10 FY ’09 % 2009-10 2008-09 % Private 3361 1521 121 4819 4404 9 15238 13361 14 STU (Incl. 6555 3591 83 6972 3322 110 18179 14780 23 JnNURM) ICV 1848 600 208 2697 1558 73 9664 6751 43 Total 11764 5712 106 14
Slide 11: But there were growth dampeners
But there were growth dampeners Increase in fuel prices (Rs. 2.55 /ltr: Feb ‘10 – 6% increase) Softening of freight rates in some routes in last three months viz., Delhi and Mumbai affecting operators viability RBI’s CRR hike in Jan ‘10 hardened interest rates Excise duty hike of 2% in the Union Bud
Slide 12: Ashok Leyland Performance
2009-10 Ashok Leyland y Performance AL / Investor Meet/ May’10
Slide 13: AL's performance FY 2009-10
AL’s performance FY 2009-10 Segment Q1 Q2 Q3 Q4 Full Yr FY ’10 FY ’10 FY ’10 FY ’10 2009-10 Consistent MS growth observed Bus – TIV 7482 9347 11764 14488 43081 Growth Y-O-Y % (16.2) (14.8) 106.0 56.1 23.5 Drop in Q 1 MS due to - ALL 2211 3647 5062 5485 16405 cash & carry policy Growth Y-O-Y % (44.
Slide 14: MS Movement
MS Movement % AL / Investor Meet/ May’10
Slide 15: A sluggish start; a strong finish
A sluggish start; a strong finish Began the year with ‘Cash-and-Carry’ system to clean up the inventory pipeline 2009‐10 50000 40000 30000 20000 10000 0 f first h half lf second half h lf Outperformed TIV in Q4; TIV up 116%, AL up 163% AL / Investor Meet/ May’10
Slide 16: Highlights – Trucks
Highlights – Trucks ALL’s MAV and Tractor sales growth in Q 4 FY ‘10 over Q 3 at 112% & 118% is significantly higher than TIV growth of 58% and 62%. Similarly, ALL’s Haulage segment growth in Q 4 at 99% is better than TIV growth of 38%. ALL’s Tipper growth in Q 4 at 43% is lower than TIV growth of 4
Slide 17: Bus segment up thanks to JnNURM
Bus segment up thanks to JnNURM Orders recd. Deliveries made JnNURM Status (Nos.) 5,089 3,798 Only 25% of the orders remain to be executed Along with the regular STU orders (around 2000 NNos.), ) th the order d b book k position iti iis very healthy AL / Investor Meet/ May’10
Slide 18: AL's exports performance
AL’s exports performance Country / zone wise export in CY and PY is given under: 2009 10 2009-10 2008 09 2008-09 Sri Lanka 1948 1076 12% drop B ‘desh 2303 1214 in export Middle East 867 2523 volume in Others 861 1999 FY ‘10 Total 5979 6812 Middle East - yet et to recover reco er from the downturn.
Slide 19: AL's engines, parts & kits sales
AL’s engines, parts & kits sales The LEYPARTS business grew by 12% LEYPOWER power solution business showed a drop because of lesser offtake in DG sets by the Telecom Sector New Markets in Africa and SAARC countries opened d up and d exportst off engines i d doubled bl d Defence kits supplies to VFJ
Slide 20: Concentration on non-cyclical business
Concentration on non-cyclical business as de-risk p policy y continued 2008-09 Revenue break up 2009-10 Revenue break up Bus 18% Bus Cyclical 22% Cyclical 55% 50% Def. Kits & Spares 11% Def kits & Spares 10% Exports Exports 15% 8% Engines Engines 4% 6% Noncyclical business revenues around 45%; will
Slide 21: Product Introductions in 2009-10
Product Introductions in 2009-10 AL / Investor Meet/ May’10
Slide 22: Ecomet Strong- 912 & 1112
Ecomet Strong- 912 & 1112 Product Highlights Strong Load carrying capability Powered by fuel efficient H TQ series engine Optimized drive train- 6 S ODGB New responsive S New, S-Cam Cam brakes Improved, longer lasting clutch and fail- safe electricals Up-rated suspension Application A li ti Areas A
Slide 23: CG1613 (Inline)
CG1613 (Inline) Product Highlights No. of vehicles sold in 09-10: approx 980 H Series Engine g with Inline FIP Higher torque Faster Turn Around Time Better Pick up, acceleration Application Areas Market Load Tanker Parcel Load, Courier Construction Inline FIP AL / Investor Meet/ May’10
Slide 24: 2516S (32')
2516S (32’) Product Highlights First batch of 10 no’s produced in March 2010 Optimized power for improved fuel average Highest in loading span (32’) Inline FIP advantage Heavy duty aggregates Application Areas Contract load,, Parcel Automotive carrier (car, tractors, two wheelers) FMCG Another 32’ –
Slide 25: Defence Vehicles
Defence Vehicles Armored Bus, Mine protected vehicle and Armored Stallion displayed at Defence Expo at New Delhi during Feb ’10 AL signed principle of cooperation with Paramount Group South Africa for development and manufacture of mine protected vehicles AL / Investor Meet/ May’10
Slide 26: India's first plug-in CNG hybrid bus & intelligent vehicle
India’s first plug-in CNG hybrid bus & intelligent g vehicle Hybus India’s first plug-in CNG AL and Cisco signed an MOU to develop hybrid bus was unveiled by AL in sector specific solution to enable vehicle recent auto expo. to infrastructure communication. Focus Greener than CNG, 20-30% more fuel o
Slide 27: Stag 4900mm WB – 40 seater school bus
Stag 4900mm WB – 40 seater school Parameters Specifications Engine H Se Series es (Diesel ( ese ‐ 4 Cyl) y ) ‐ 120 0 HP BS3 S3 Gearbox 5 Speed synchromesh Clutch Diaphragm type ‐ 330 mm Suspension Parabolic Suspension Steering Power Steering Rear Axle RS120 Tyres 8 25 x 16 8.25 AL designed body and
Slide 28: After-market strength
After-market strength Added Current 2516 HT Dealership outlets 20 180 Authorized Service Centres 13 151 Work bays 96 2396 AL / Investor Meet/ May’10
Slide 29: Customer Care: Raising the bar
Customer Care: Raising the bar The national helpline comes with ith the promise of Response within 4 hours anywhere on the Golden Quadrilateral Restoration (vehicle back on road) in 48 hours TatkaAL rolled out along GQ in 2nd Jan ’10 & well received by customers. AL / Investor Meet/ May’10
Slide 30: Capacity expansion
Capacity expansion Modern, fully-integrated manufacturing facility at Pantnagar commissioned in Mar ’10 Balanced capacity availability between North & South South. Benefits of logistics to accrue. At full capacity, will roll out 50,000 vehicles, including the U T k on two U-Truck t shift hift basis.
Slide 31: Capacity expansion contd..
Capacity expansion contd.., Alwar: New bus body building facility put up with g globally y bench-marked p processes and machinery From where the high-end ULE buses roll out AL / Investor Meet/ May’10
Slide 32: Unbroken track record of profitability maintained
Unbroken track record of profitability maintained Rs Lakhs % of % of % 2008-09 Net 2009-10 Net growth Sales Sales N t Sales Net S l / iincome ffrom operations ti 598107 100 0 100.0 724471 100 0 100.0 21 1 21.1 Gross operating margin 46944 7.8 76284 10.5 62.5 Fi Financial i l expenses 11871 2.0 8113
Slide 33: Quarter over quarter margin movement
Quarter over quarter margin movement Rs. Lacs % of % of % of % of Q1 Q2 Q3 Q4 SR SR SR SR Revenue (SR) 91245 100 157768 100 181553 100 293904 100 Raw Material 66267 73 110792 70 129599 71 215094 73 Staff Cost 14409 16 16750 11 17362 10 18071 6 Other Expense 9352 10 13620 9 13970 8 22900 8 Operating
Slide 34: Reasons for margin improvement
Reasons for margin improvement Focused on improving operating margin through: g – Pricing – Cost control Pricing: 5% (Rs. 47500/- per vehicle) pricing action taken in three tranches comprising 2.1% in July ‘09 1 ‘09, 1.5% 5% iin O Octt ‘09 and d11.4% 4% iin JJan ’10 ’10. AL / Investor Meet/ May’10
Slide 35: Reasons for margin improvement contd..
Reasons for margin improvement contd.., Cost Control Material cost – Recovery y of material cost increases sanctioned during g HY 1 of FY ’09 (Around Rs. 55000/- per vehicle) – Effectively contained steel and rubber cost increases during Q 3 & Q 4 (Increase granted Rs. 16000/- per vehicle). Operatin
Slide 36: Highlights of Financial performance
Highlights of Financial performance Working Capital: Rs. Cr Inventory Vehicle Receivables Net I Inventory t W ki Working (in Nos.) Capital Mar ‘09 1330 6358 931 1090 S ‘09 Sep 1252 5890 637 885 Dec ‘09 1747 9169 785 1618 Mar ‘10 1638 7062 915 892 Cash & carry system introduced in May ’09. Days out
Slide 37: CV Industry Outlook
2010-11 CV Industryy Outlook
Slide 38: Economic outlook conducive
Economic outlook conducive Economic growth estimates are as under: 2009-10 2010-11 CMIE CMIE Agriculture -1.0 5.8 Industry 9.4 9.6 Outlay planned in Services 8.2 9.8 Union Budget for Road building Construction 8.5 10.0 Rs. 199 bn. – p Exports -7.7 15.0 increase by 13%. 13% Imports -5.7 12.5 GDP 7.1
Slide 39: Outlook – appears promising
Outlook – appears promising Positives: With the economy doing well and infrastructure high on G t’ priority Govt’s i it list, li t CV iindustry d t should h ld d do wellll Better road systems will increase demand for superior, factoryy built, fullyy built vehicles Govt. mandate for use of school bus
Slide 40: AL's Strategies/Plans
AL’s Strategies/Plans AL / Investor Meet/ May’10
Slide 41: Unveiling U Truck range
Unveiling U Truck range The U TRUCK platform Roll out by July, 2010 25 models d l planned l d ffor llaunch h iin next 18 months h U 4932 Tractor & U 2523 Tipper unveiled in Jan ‘10 Auto Expo. p U Truck platform will straddle entire range of tractors, tippers and haulage covering 16 – 49 tonnage segm
Slide 42: U Truck 4932 Tractor
U Truck 4932 Tractor Faster F t turnaround, more up time, higher pay p y load Increased fuel efficiency greater comfort f t and safety Configuration: g 6x4 Tractor 16 Speed Synchro Mesh overdrive GVW – 49 T with triple axle trailer Gear Box (16 forward + 2 reverse) Neptune 6 Cyl 8 ltr inline engine
Slide 43: U Truck 2523 Tipper
U Truck 2523 Tipper Faster turnaround, more uptime Increased and higher fuel payload efficiency greater comfort & fully built solutions Configuration: g 6x4 Tipper pp Brakes: Dual Line air brakes GVW – 25 Tonne Cab: Suspended tiltable day cab with H Series 6 Cylinder 5.7 ltr inline CRS optional a/c
Slide 44: Bus on the anvil
Bus on the anvil Th IT 09 – Developed The D l d by b the th AL-TVS-IRIZAR AL TVS IRIZAR joint j i t venture. t AL / Investor Meet/ May’10
Slide 45: Ready for migration
Ready for migration Now slated for October ’10 Ready with the products for upgrading and both technologies SCR – with the ‘H’ series engines EGR – with the Neptune range BS III trucks to cost around Rs. 40k more than BS II Similarly, BS IV costs around Rs. 100k more th BS III than AL / Investor Meet
Slide 46: Exports
Exports To explore new markets in: Latin America CIS Africa ca SAARC countries With pproducts configured g to the specific p requirements of these new markets Target for FY 11: growth of 17% with volumes to cross 7000 vehicles AL / Investor Meet/ May’10
Slide 47: Capacity creation
Capacity creation Bus plant at Ras Al Khaimah A vital a manufacturing a u ac u g facility ac y too feed eed GCC a and d African markets Production has already begun Initially to produce 2,000 buses annually Eventually to produce trucks too AL / Investor Meet/ May’10
Slide 48: Hinduja Leyland Finance gets RBI nod
Hinduja Leyland Finance gets RBI nod A much-needed financing arm commenced operations p in Mar ‘10 HLF is in readiness to commence operations in 130 centres covering 16 states Target to have a presence in all Indian states in a year’s time and network strength of 300 centers in three years Initial c
Slide 49: Volume projection Vs Capacity available
Volume projection Vs Capacity available 2010-11 2009-10 2008-09 YOY % (estimate) (actual) (actual) FY ’11 BUSES - TIV 51000 43081 34892 18 - ALL 22000 16405 16026 34 - MS % 43 38 46 TRUCKS - TIV 234000 201977 148603 16 - ALL 55000 40734 31067 35 - MS % 24 20 21 TOTAL - TIV 285000 245058 183495 16 -
Slide 50: Margin Outlook
Margin Outlook Targeting to maintain / improve operating margins g around 10% for FY ‘11 to be supported by: Pricing action Rs. 15000/- per vehicle (1 %) taken during Apr ‘10 (1.5%) Commodity based price increase pressure (mainly steel, steel rubber and aluminum) to be contained. Stringent controls
Slide 51: Profit predictions by research analysts
Profit predictions by research analysts y of broking g firms CLSA Credit Suisse BNP Paribas Nomura FY ‘11 FY ’12 FY ‘11 FY ’12 FY ‘11 FY 12 FY ‘11 FY’12 Vehicle (Nos.) 83119 88682 80900 93200 81521 89843 83192 89848 Revenue (Rs. Cr) 9894 10874 9891 11818 9561 10960 9669 10952 EBITDA (Rs. (Rs Cr) 108
Slide 52: Capex and funding Plans
Capex and funding Plans In FY 2010 Capex incurrence was Rs. 810 Cr Investments in JVs Rs. 142 Cr Fresh borrowing in FY ’10: Rs. 500 Cr Total loan outstanding at Rs Rs. 2200 Cr by Mar ‘10 ‘10. Current debt equity: 0.9:1 In next 2 years likely level of: Capex Rs. 1200 Cr Investment in JVs Rs. 800 Cr P
Slide 53: Progress on JVs
Progress on JVs AL / Investor Meet/ May’10
Slide 54: Light truck JV with Nissan
Light truck JV with Nissan LCV JV progressing well Product introduction in 2011. Investment by AL in JV to be around Rs. 350 Cr. over few years. AL / Investor Meet/ May’10
Slide 55: Construction equipment JV with John Deere
Construction equipment JV with John Deere New company formed with 50:50 partnership with John Deere Manufacturing facility being built Pilot production to start by October ‘10 Product roll out early 2011 Investment by AL in JV to be around Rs. 50 Cr spread over few years AL / Investor Meet/ May’10
Slide 56: Joint venture with ALTEAMS
Joint venture with ALTEAMS Plant inaugurated in January 2010 Fullyy established to meet both Telecom and automobile sector requirements Production on in full swing Supplying Gear box casing, case oil coolers & connection housings to AL. Cost advantage 5% Future supplies to include cylinder head cove
Slide 57: Ashok Leyland shareholding pattern
Ashok Leyland shareholding pattern (as on 31st March, 2010) Hinduja Automotive Ltd 50.98% Residents 10.54% Body corporate & others 6.35% Banks & MFs 5.56% Fis,, Insurance FIIs Co, State Govt, 12.68% Govt Companies 13.89% AL / Investor Meet/ May’10
Slide 58: Thank You
Thank You AL / Investor Meet/ May’10