GREAVES COTTON LIMITED
INVESTORS MEET 2011
CONTENTS
GREAVES SNAPSHOT
HIGHLIGHTS OF 2010-11
THE ROAD AHEAD…
2
GREAVES HAS A PIONEERING HISTORY IN INDIAN INDUSTRY SPANNING OVER 150 YEARS
1859
1947
James GREAVES forms the company, joined later by George COTTON
India attains independence. Lala Karamchand Thapar buys Greaves - becomes an Indian Company
1939
1859
1947
1996
1986
Introduces Transit Mixer and Batching Plants
Technical collaboration with BOMAG, Germany, to manufacture Vibratory Compactors
1980
1986
1994
1939
1980
1994
Enters into Joint Venture with Ruston & Hornsby Ltd., U.K. for diesel engine manufacturing in India
Starts manufacturing high power MWM diesel engines for Gensets
Acquires two Plants from Enfield India Ltd., to manufacture Petrol / Kerosene engines
1996 2001
Introduces new concreting equipment in technical collaboration with CIFA of Italy
2007 Acquires Bukh Farymann Diesel GmbH , Germany
2001
2004
2009 Crosses two million in light diesel engines, launches 19 ton Compactor heaviest in India
2007
2008
2004
2008
Millionth Light Diesel Engine rolls out
Technology Centre and manufacturing facility for the new G Series engines opens in Pune.
2010 Acquires Ascot International FZC, UAE
2009
Greaves has continuously evolved in the past 150 years transforming itself into an Engineering Major
2010
3
GREAVES TODAY IS ONE OF THE LEADING SINGLE CYLINDER ENGINE MANUFACTURERS IN THE WORLD
GREAVES TODAY Consolidated Net Sales of INR 1,725 Cr (9M FY11 - INR 1,279 Cr )
CORE COMPETENCE 1
Manufactures over 5 Lac IC engines in 1.4 to 1000 HP range p.a. for various applications Produces modern construction machinery for road building and concreting applications Extensive marketing and service network thro’4 Regional and 12 Sales offices and over 1200 dealers in India. Overseas representative offices in China and UK Competent workforce of ~ 4,000
Engine Technology Development State of Art R&D centers with over a 100 technical personnel
2
Cost efficient Engine Manufacture Leveraging 9 Manufacturing Units in India and 1 in Germany
3
Contemporary Technology Construction Machinery Cost efficient manufacture of globally contemporary heavy machinery
Greaves is proud recipient of Frost & Sullivan India Manufacturing Excellence Award (GOLD)
4
THE COMPANY OPERATES THROUGH FIVE BUSINESS DIVISIONS WITH AUTOMOTIVE BEING THE LARGEST
GCL - Business Divisions AUXILIARY POWER
AGRO EQUIPMENT
Fuel efficient, rugged and reliable Gensets conforming to latest emission norms
Range: 500 VA to 550 kVA
Manufacturing & Product Development Facilities at Pune
In-house foundry for custom built castings
AUTOMOTIVE Light Diesel Engines for automotive application - Range : 4.4 to 25 HP
Wide range of agroequipment to enhance farm productivity
Market leader in Petrol / Kerosene Engines
Product Range: o Petrol / Kerosene engines & Pumps o Portable / Conventional Diesel Pump-sets o Power Tillers, Reapers & Mini agro equipment
Product conformance to emission norms
Manufacturing & Product Development Facilities at Aurangabad (MH) and Ranipet (TN)
Market leader in single cylinder diesel engine
Manufacturing & Product Development Facility at Gummidipoondi (TN) ENGINE SEGMENT
I
INDUSTRIAL ENGINE Diesel Engines from 1.4 to 750 HP range with option for CNG / LPG fuel Leverages manufacturing platform of other business divisions Provide engines for different industrial applications
CONSTRUCTION EQUIPMENT
Construction machinery for infrastructure sector
Compaction Products - Vibratory, Tandem & Pneumatic Tyre Rollers
Concreting Products -Concrete pumps, Transit Mixers, Batching Plants
Earthmoving - Wheel Loader & Motor Grader
Manufacturing & Product Development Facilities at Gummidipoondi (TN)
INFRA SEGMENT
5
GREAVES OFFERS A DIVERSIFIED PRODUCT PROFILE TO ITS VALUED CUSTOMERS…
GCL - Major Products AUXILIARY POWER
AGRO EQUIPMENT
AUTOMOTIVE
Portable Genset
Power Tiller
Single Cylinder Engine
Marine Engine
Road Compactor
Canopised Genset
Reaper
Twin Cylinder Engine
8 Cylinder Engine
Paver
Non-canopised Genset
Petrol Engine
Twin Cylinder Engine with Power-pack
INDUSTRIAL ENGINE
G-Series Engine
CONSTRUCTION EQP
Transit Mixer
… AND SERVES MULTIPLE SECTORS OF INDUSTRY
GCL – End Use Sectors AUXILIARY POWER
AGRO EQUIPMENT
• Manufacturing Enterprises
• Medium & Small Farms
• Commercial & Residential Complexes
• Gardens & Landscaping
• Hotels • Hospitals • Defence • Retail Outlets • Marine Applications
AUTOMOTIVE
• 3 Wheeled Commercial Vehicle manufacturers • 4 Wheeled Small Commercial Vehicle manufacturers
INDUSTRIAL ENGINE
• Agriculture • Fire Fighting • Mining & Construction • Material Handling • Rail Cars • Road Sweepers • Marine Propulsion
CONSTRUCTION EQP
• Concreting Industry • Construction Industry • Roads Building; Asphalt Paving
THE COMPANY SERVES ITS CUSTOMERS THROUGH A STRONG SALES & SERVICE NETWORK
8
INSTITUTIONAL SHAREHOLDING HAS GONE-UP BY 5% DURING 2010-11
SHAREHOLDING PATTERN (as on 31.03.11) 9%
• Share Capital : INR 48.84 Cr
52%
39%
Promoters Institutional Investors Indian Public
• Listing : • Bombay Stock Exchange (BSE) • National Stock Exchange (NSE) • Market Capitalization : INR 2,327 Cr (as on 31.03.11)
GREAVES COTTON LIMITED – Subsidiary Companies International Subsidiaries • Greaves Cotton Netherlands B.V., Netherland • Greaves Farymann Diesel GmBH, Germany • Ascot International FZC, UAE
Indian Subsidiaries • Greaves Leasing Finance Ltd • Dee Greaves Ltd • Greaves Auto Ltd 9
CONTENTS
GREAVES SNAPSHOT 10
HIGHLIGHTS OF 2010-11
THE ROAD AHEAD…
GREAVES CONTINUED ITS IMPROVED PERFORMANCE IN 2010-11 AS WELL
Sound operating performance in FY11
Produced ~390,000 engines in 9M FY11, corresponding to over 500,000 units on annualized basis
Consolidated EBITDA improved to INR 199 Cr in 9M FY11 (up 22%), corresponding to INR 256 Cr on annualized basis
Consolidated Cash Profit improved to INR 150 Cr in 9M FY11 (up 34%), corresponding to INR 198 Cr on annualized basis
Accounting Year Changed from July – June cycle to April – March Cycle to align with the Indian Financial Calendar. 2010-11 performance consequently is for 9 Months 11
9 MONTHS PERFORMANCE WAS CLOSE TO 12 MONTHS PERFORMANCE OF LAST YEAR
REVENUE (INR Cr) 1684
1347
434
347 1000
FY10
1250
FY11*
358
453
Q3FY10
Q3FY11
EBITDA (INR Cr)
9M EBITDA continued to grow strongly and reached INR 198 Cr in 2010-11 up by 23%
253 206 45 161
FY10
55
198
FY11*
* FY 11 is annualized figure
9M Revenue grew by 25% on account of strong performance by all business units
58
67
Q3FY10
Q3FY11
9 MONTHS PROFITABILITY PERFORMANCE EXCEEDED 12 MONTHS PERFORMANCE OF LAST YEAR
PROFIT BEFORE TAX (INR Cr) 238 54
173 39 134
FY10
184
FY11*
50
67
Q3FY10
Q3FY11
9M PBT grew by 37%
9M PAT continued to grow strongly and reached INR 127 Cr in 2010-11 up by 41%; an all time high
PROFIT AFTER TAX (INR Cr) 167 118
40
28 90 FY10
127
FY11*
* FY 11 is annualized figure
34
47
Q3FY10
Q3FY11
13
RETURN ON CAPITAL EMPLOYED IMPROVED TO 49% AND ROE IMPROVED TO 35% IN FY11
RETURN ON CAPITAL EMPLOYED (%) 52%
49% 39%
38% 22%
FY07
FY08
FY09
FY10
FY11*
RETURN ON EQUITY (%)
ROCE improved to 49% in FY11 (annualized) from 39% in FY10
ROE improved to 35% in FY11 (annualized) from 28% in FY10
48% 33%
28%
35%
14% FY07
FY08
FY09
* FY 11 is annualized figure
FY10
FY11*
14
WHILE ENGINES SEGMENT CONTINUES TO DOMINATE, INFRA EQUIPMENT SEGMENT’S SHARE HAS INCHED-UP SEGMENT REVENUE SPLIT 12%
4%
84% Engine
Infrastructure Equipment
Trading
SEGMENT PROFIT SPLIT 6% 0.4%
Engine segment continues to dominate the company with 84% (last year 85%) share of revenue and 93% share of profits (last year 96%)
93% Engine
Infrastructure Equipment
Trading 15
THE COMPANY PROVIDED BETTER SHAREHOLDER RETURNS IN FY11 SHARE HOLDER RETURNS 8.0
100 6.9
7.0
87
80 5.0 66
70
4.8
4.5
60
4.0
2.0
3
42
3.0
50
50
40
2.3 1.4
1.2
1.0
INR
INR/ Share
6.0 5.0
90
30
1.5
22 0.8
20 10
0.0
0
FY07
FY08 EPS
FY09 Dividend
FY10
FY11
Avg. Market Price
EPS expanded to 5.2 in 9M FY11 which corresponds to 6.9 in FY11 on annualized basis
Figures restated to reflect the stock-split in FY11
16
SNAPSHOT - INCOME STATEMENT
FY10
FY11
Q3
9M
Q3
9M
Revenue
358.0
999.5
452.7
1250.4
EBITDA
58.4
161.0
66.7
197.8
Depreciation
6.6
20.2
7.2
21.0
Operating Profit
51.8
140.8
59.5
176.8
Interest
3.0
10.2
2.4
7.2
Other Income
1.5
3.1
9.8
14.1
PBT
50.3
133.7
66.9
183.7
PAT
33.6
90.2
46.7
127.3
Rs Cr
17
SNAPSHOT - BALANCE SHEET
Mar’10
Jun’10
Mar’11
484
441
526
Loan Fund
6
5
6
Deferred Tax Liability (Net)
26
25
26
516
471
558
Fixed Assets (Net)
259
266
287
Investment
95
130
84
Net Current Assets
162
75
187
516
471
558
Rs Cr Sources Shareholders Fund
Total Applications
Total
18
SNAPSHOT - KEY FINANCIAL & OPERATIONAL RATIOS
Category
Unit
FY 10
9MFY10
9MFY11
EBITDA Margin
%
15.3
16.1
15.8
Net Profit Margin
%
8.8
9.0
10.2
Fixed Asset Turnover
Times
5.1
5.0
6.0
Average Debtor Days
Days
49
51
54
Average Inventory Days
Days
58
54
53
Average Trade Creditors Days
Days
59
58
62
Profitability
Activity
19
SNAPSHOT - KEY INITIATIVES 2010-11
KEY INITIATIVES UNDERTAKEN IN 2010-11 BS III emission norms achieved for automotive engines using cost competitive technology developed by in-house R&D Construction of new plant at Shendra (Aurangabad) initiated to augment capacity for Automotive engines Construction equipment division entered the earth moving segment with Motor Grader and Wheel Loaders Acquired Ascot International FZC, UAE, to strengthen presence in Middle East and North Africa Investments in R&D to develop new products & enlarge current range Shop-floor productivity improvement through re-layout , modernization and workforce skill development Sales & Service network strengthened with opening of new branches and appointment of new dealers across the country
20
CONTENTS
GREAVES SNAPSHOT
HIGHLIGHTS OF 2010-11
THE ROAD AHEAD…
GLOBAL ECONOMIC GROWTH EXPECTED TO MODERATE IN 2011; INDIA EXPECTED TO GROW AT 8.3%
GLOBAL GDP GROWTH RATE (%) 3.2 3.4
World
7.1
BRICS 5.5
Emerging Markets
6.8
8.9
China
8.3 8.7
India Russia
4 4
Brazil
USA Fitch Ratings
4.5
1.6 1.3
UK
Euro Area
8.4
1.9 2.4
Advanced Economies
Japan
• Global GDP growth expected to moderate to 3.2% in 2011 from 3.4% in 2010 on account of increase in oil prices due to geopolitical tensions in the Middle East and impact on economic activity due to Japan’s earthquake and tsunami
1
3.9
1.2 1.7 3 2.9 2011
2010
7.5
10.3
• Growth in BRIC nations also expected to moderate on account of policy tightening to control inflation
• India’s economic growth expected to slow marginally from 8.7% in FY11 to 8.3% in FY12 on account of expected policy tightening to reignin inflation • While growth in industrial production is expected to slowdown marginally, exports are expected to pick-up 22
KEY SECTORS OF GREAVES’ PRESENCE EXPECTED TO SUSTAIN GROWTH IN THE YEAR AHEAD AUTOMOTIVE SECTOR
INFRASTRUCTURE & CONSTRUCTION SECTOR
INDUSTRIAL SECTOR
AGRICULTURE SECTOR
•
Continued growth in domestic market, coupled with strong exports, expected to support volume growth in FY12
•
3-Wheeled and 4-Wheeled SCV segment expected to grow rapidly in FY12 due to additional thrust from rural marketing and further development of hub & spoke transport model
•
However, increasing oil & commodity prices and tight liquidity situation may impact growth
•
High growth in infrastructure sector over the medium term expected based on the number of projects in pipeline and underway, however, long running concerns over the level of investment filtering through to projects on the ground need to be addressed
•
Power plants and transmission grids along with Transport sector (rail, road, airport) expected to be the growth drivers in the next few years
•
Industrial activity likely to continue during FY12 on account of growth in domestic consumption and global demand for Indian manufactured produccts
•
Shortage of power and the need to maintain back up generation will ensure high rate of growth in the demand for generating sets
•
However, high crude oil prices and rising interest rates coupled with the high base of previous year might limit the pace of industrial growth in FY12.
•
A relatively plentiful monsoon in 2010 and forecasts of a normal monsoon in 2011 augurs well for continued growth of the agricultural sector
•
Government thrust on improving efficiencies in the agricultural sector, shortage of farm labour, coupled with increased buying power of farmers with better agri-product prices are will increase mechanization and grow the agri-equipment business
23 All businesses of Greaves Cotton are expected to be beneficiary of this enabling growth environment.
THE COMPANY HAS ALSO PLANNED SEVERAL STRATEGIC INITIATIVES FOR FY12 TO STRENGTHEN ITS POSITIONING KEY INITIATIVES PLANNED IN 2011-12
Increased R&D investments to: - evolve products for new regulations on Emission and Noise while maintaining optimum product cost - add new products categories (multi fuel engines, Indigenous power tillers and reapers, Larger capacity Gensets, Bigger Batching Plants and Concrete Pumps) Increase contribution from spare and service business through renewed focus on after market support Increase focus on International Business especially from SAARC countries, Middle East, SE Asia and Africa Establish production of Automotive engines at the new plant at Shendra; expand capacity of the Ranipet plant Strengthen HR processes to enhance organizational capability
24
THANK YOU
GREAVES COTTON LIMITED www.greavescotton.com 25
