Cummins India Limited · NSE:CUMMINSIND
Cummins India — Shareholder Meeting (August 2010)
38 slides from Cummins India's shareholder meeting presentation, Aug 12, 2010
Slide 1: Cummins India Limited 49th Annual General Meeting
Cummins India Limited 49th Annual General Meeting August 12, 2010
Slide 2: Cummins Inc.
Cummins Inc. Engine Business Distribution Business Power Generation Business Components Group HQ HQ in in Columbus, Columbus, Cummins Operations Operations in in 190 190 Countries Countries Indiana Indiana since since 1919 1919 Business Services 50 50 manufacturing manufacturing locations locations
Slide 3: Cummins Inc.: 2009 Revenue - $10.8 Billion
Cummins Inc. : 2009 Revenue - $10.8 Billion Distribution Business 12% Engine Business 54% Components Group 17% Power Generation Business 17% 3
Slide 4: Cummins Business Model
Cummins Business Model Guiding Principles - Vision, Mission, Core Values Corporate & BU Objectives, Strategies, Initiatives, Projects -- (Goal Trees) Cummins Operating System (COS): – Ten Common Practices – Functional Excellence Framework (FE Statements, Measures, Processes, Tools, People Deve
Slide 5: Why We Are Here – Guiding Principles
Why We Are Here – Guiding Principles Vision: “Making people’s lives better by unleashing the power of Cummins” Personality: Decisive Driven To Win Agile Passionate Caring Core Values: Mission: Integrity Motivating people to act like owners working together Innovation Exceeding cust
Slide 6: COS 10 Practices
COS 10 Practices Put the Synchronize Design quality Involve people Ensure equipment customer flows (material, in every step of and promote and tools are first, and physical and the process teamwork available and provide real information) capable value Create Establish the Treat preferred Follow comm
Slide 7: Ten India Functional Excellence Areas and Leaders
Ten India Functional Excellence Areas and Leaders 1. Quality – K N Harish 2. Manufacturing – Nitin Mantri 3. Technical – Craig Barnes 4. Supply Chain - Sandeep Chaudhry 5. Purchasing - B K Bose 6. Finance - Rajiv Batra 7. Information Technology – Sudha Dhar 8. Human Resources – Nagarajan Balanaga 9.
Slide 8: Cummins in India
Cummins in India •• In In India India since since 1962 1962 Valvoline Tata Cummins •• 99 companies companies (4 (4 JVs) JVs) Cummins Fleetguard Filters •• Over New Delhi Jamshedpur Over 11,000 11,000 employees employees •• $1.3B $1.3B unconsolidated unconsolidated sales sales Cummins Turbo Technolog
Slide 9: India Organization Snapshot
India Organization Snapshot Cummins in India Entities : Business Units: 1. Cummins India Ltd. • Engine Business 2. Cummins Research & Technology Automotive India Ltd. Industrial 3. Cummins Generator Technologies ReCon India Ltd. • Power Generation Business 4. Cummins Technologies India Ltd. •
Slide 10: Strategic Leadership Team
Strategic Leadership Team Anant Talaulicar President – Components Group and Managing Director – India ABO Raj Menon Rajiv Batra Dinesh Nagarajan K.C. Ravi Qureish Sudha Dhar Chief Operating Finance & Castellino Balanaga Government Shipchandler Chief Officer Strategy Legal, Human Relations Internal I
Slide 11: Operating Leadership Team
Operating Leadership Team Raj Menon Chief Operating Officer – India ABO Mahesh Arun Beau Lintereur Sandeep Amit Kumar Sandeep KN Harish Narang Ramachandran Power Sinha Distribution Chaudhry Quality Industrial Engine Automotive Generation ReCon India Business Tata Cummins Champion Business Business B
Slide 12: Cummins Group in India – Business Objectives
Cummins Group in India – Business Objectives Grow from $640M in 2004 to $2B in 2011 ($3B by 2014) Exceed 25% ROANA Exceed 10% PBIT and 20% annual PBIT growth Achieve and sustain the respect of all stakeholders (“Dependable Institution”) i.e. Zero Defect 12
Slide 13: Greatness – Zero Defect Companies
Greatness – Zero Defect Companies Cummins Values: Integrity, Delivering Superior Results Brand Promise: Dependability Process: Six Sigma ZERO Excellence: Good to Great Quality Goal: Continuous improvement towards defect free processes that satisfy customer needs and achieve business results 13
Slide 14: Cummins – Brand Promise
Cummins – Brand Promise Convey and reinforce the Cummins Brand Promise of Dependability through – People – Products – Services We do what we say we will do 14
Slide 15: Dependability to Shareholders - Financial Performance
Dependability to Shareholders Cummins India Limited - Financial Performance 2009-10 Rs. Cr CIL 2009‐10 2008‐09 B/(W) Income Net Sales 2,845 3,304 ‐14% Operating Income 54 77 ‐30% Total Income 2,899 3,382 ‐14% GM 769 775 ‐1% GM% 27.0% 23.5% 3.6% SAR* 227 256 ‐11% Other Income 67 73 ‐8% PBT (after e
Slide 16: Downturn Management Actions Taken To Remain Dependable and Emerge Stronger
Downturn Management Actions Taken To Remain Dependable and Emerge Stronger Rings of defense Increased Six Sigma focus on productivity & cost Accelerated Cost Efficiency II – 20% TCO reduction in direct materials over three years TRIMS - 30% reduction in indirect material spend over three years
Slide 17: Dependability towards Shareholders - Focus on Six Sigma
Dependability towards Shareholders Focus on Six Sigma – Now in its 10th year – 331 Six Sigma projects executed : A significant increase of 33 percent over the previous year, bringing a total annualized savings of Rs. 94 crores to Cummins India Limited. 17
Slide 18: Sales: Domestic & Exports
Sales: Domestic & Exports 3,000 SALES 2,412 2,500 2,021 2,000 1,602 1,500 1,239 1,283 932 1,000 728 531 602 433 500 ‐ Mar 06 Mar 07 Mar 08 Mar 09* Mar 10* Domestic Exports *Including DBU 18
Slide 19: Sales: By Business Units
Sales : By Business Units 1,400 1,283 1,200 — 1,000 739 800 600 439 400 — 259 "i 200 PGBU IBU Auto DBU Exports @Mar09 mMari0
Slide 20: Consistently Profitable Growth
Consistently Profitable Growth 18% CAGR 26% CAGR 4,000 600 SALES PAT Rs. Crs 3,500 3,304 500 434 444 3,000 2,845 400 2,500 2,331 2,000 1,841 300 281 242 1,463 1,500 200 176 1,000 100 500 ‐ 0 05‐06 06‐07 07‐08 08‐09 09‐10 05‐06 06‐07 07‐08 08‐09 09‐10 20
Slide 21: Gross Savings (Rs Cr.)
Gross Material Cost Reduction 007 80 75.1 70 Gross Savings (Rs Cr.) 61.1 57.2 60 50 42.3 40 30.9 30.1 30 v 20 10 0 2005 2006 2007 2008 2009 May 2010 21
Slide 22: Generating Strong Cash Flow
Generating Strong Cash Flow 38% CAGR 600 568 FREE CASH FLOW 500 400 300 190 180 200 154 132 100 0 05‐06 06‐07 07‐08 08‐09 09‐10 22
Slide 23: Strong ROE Performance
Strong ROE Performance 35% ROE 31% 30% 28% 26% 25% 25% 22% 20% 15% 10% 5% 0% 05‐06 06‐07 07‐08 08‐09 09‐10 23
Slide 24: Dividend trend
Dividend trend 700% Dividend % 600% 600% 500% 450% 400% 300% 230% 200% 200% 200% 100% 0% 05‐06 06‐07 07‐08 08‐09 09‐10 24
Slide 25: Share Price Appreciation
Share Price Appreciation 700 SHARE PRICE 635 600 513 500 400 322 300 265 238 185 200 100 0 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Aug 10 * 25
Slide 26: Dependability towards Customers - Industrial Engine Business
Dependability towards Customers Our Industrial Engine Business: – Seeded a prototype unit for a Self Propelled Accident Relief Train (SPART). – Launched seeding units in 21 ton excavator segment through Hyundai. – Improved its presence in the mining segment with the introduction of a 15 litre elec
Slide 27: Dependability towards Customers - Power Generation
Dependability towards Customers Our Power Generation Business : – Launched the X 1.3, X 1.7 and X 2.5 generator platforms. With the X 1.3 series our Company has ventured into the manufacturing of small generator sets in India with ratings of 7.5 kVA and 10 kVA, marking our entry into the consumer
Slide 28: Dependability towards Customers - Automotive
Dependability towards Customers Our Automotive Business : – Continued to serve customers with the Cummins manufactured 6.7 liter full authority, electronically controlled ISB engine with a high pressure common rail fuel system 28
Slide 29: Dependability towards Suppliers
Dependability towards Suppliers Six Sigma : – Trained 43 supplier employees and closed 69 Supplier Focused Six Sigma (SFSS) projects during the financial year. ACE II : – Achieved 72 percent of the targeted cost reductions for the year and delivered accrued savings of Rs. 47.25 crores in the 2009-
Slide 30: Dependability towards Employees
Dependability towards Employees Conducted interactive sessions on Leadership Excellence for over 130 senior leaders Offered job rotations to 250 deserving employees across businesses and functions of Cummins Companies in India Continued our tie up with the SP Jain institute in India and the Kelle
Slide 31: Dependability towards Employees
Dependability towards Employees Signed three comprehensive long-term settlements Conducted training sessions on Cummins Code of Business Conduct and Treatment of Each Other Policy for over 6,700 employees from all categories across our Group Companies Introduced policies on Contractor Safety, For
Slide 32: Dependability towards Community
Dependability towards Community Collaborated with CERF at IIT Bombay and READ Foundation, an NGO for developing a sustainable and replicable electrification model for remote villages in India. The pilot project was validated in March this year in a small tribal village called Kolha in Orissa Ope
Slide 33: Cummins India Limited
Cummins India Limited 48 years of successful operation Over 2,500 employees FY 2009 -10 net sales – INR 28,449 million (including CSS & CASL) 33
Slide 34: Financial Performance Q1 10-11 vs Q1 09-10
Financial Performance Q1 10-11 vs Q1 09-10 Rs. Cr CIL Q1 10‐11 Q1 09‐10 B/(W) Income Net Sales 910 626 45% Operating Income 18 14 30% Total Income 928 640 45% GM 252 161 57% GM% 27.7% 25.7% 2.0% SAR* 65 53 21% Other Income 10 17 ‐42% PBT (after exceptional items) 197 125 58% PBT % 21.7% 19.9% 1.8% P
Slide 35: Financial Performance Q1 10-11 vs Q4 09-10
Financial Performance Q1 10-11 vs Q4 09-10 Rs. Cr CIL Q1 10‐11 Q4 09‐10 B/(W) Income Net Sales 910 772 18% Operating Income 18 16 13% Total Income 928 788 18% GM 252 207 22% GM% 27.7% 26.8% 0.9% SAR* 65 57 14% Other Income 10 14 ‐30% PBT (after exceptional items) 197 165 20% PBT % 21.7% 21.3% 0.4% P
Slide 36: Company Positioned Strongly
Company Positioned Strongly Values based performance ethic Strong balance sheet Zero debt Respectable cash reserves Strong customer and supplier partnerships Access to global ‘cutting edge’ technology with significant localization capabilities Customer support capabilities Sustaining
Slide 37: Cummins Megasite at Phaltan
Cummins Megasite at Phaltan 37
Slide 38: Outlook and Conclusion
Outlook and Conclusion Positive domestically and improving exports outlook Well positioned to weather any storm and have emerged stronger We remain steadfast on : – Guiding Principles (Vision, Mission, Values, Personality) – Objectives, Four-fold strategy – Cummins Business Model / Cummins Ope