Investor Presentation

Transcription

1 Investor Presentation November 2014

2 Disclaimer The information in this presentation has been prepared by CEAT Limited (the Company ) and has not been independently verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. The information presented or contained in these slides is current as of the date hereof and is subject to change without notice, and its accuracy is not guaranteed. Neither the Company, nor any of its advisers or representatives, nor any of their respective affiliates makes any undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. No consideration has been given to the particular objectives, financial situation or particular needs of any recipient. Neither the Company nor any of its advisors or representatives, nor any of their respective affiliates shall have any liability whatsoever (in negligence or otherwise) for any loss arising from the use of this presentation or its contents or otherwise arising in connection with this presentation. By assessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation is intended for financial institutions and professional investors only and is not intended for distribution or reproduction to, or use by, retail investors. This presentation is also not intended for distribution or reproduction to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information in this presentation is given in confidence, and reproduction of this presentation, in whole or in part, or disclosure of any of its contents, without prior consent of the Company, is prohibited. This presentation should be distributed and read in its entirety. This presentation remains the property of the Company and on request must be returned and any copies destroyed. This presentation is for information and convenient reference and does not constitute or form part of, and should not be construed as, any offer for sale or subscriptionof,orsolicitationofanyoffertobuyorsubscribefor,anysecuritiesofthecompanynorshouldit,oranypartofit,formthebasisof,orbereliedon in connection with, any contract or commitment whatsoever. This presentation does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended or an exemption from such registration. Please refer to the financial statements of the Company that have been filed with the stock exchanges and is available on the Company s website. This presentation is not intended to be fully inclusive and may not contain all of the information that you may consider material. This presentation contains historical information of the Company that should not be regarded as an indication of future performance or results. Certain statements in these slides may be considered forward-looking. These statements are based on management s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. By accepting any copy of this presentation, you agree to be bound by the foregoing limitations. 2

3 Table of Contents 1 Indian Tyre Industry: Outlook 2 CEAT: An Overview 3

4 Indian Tyre Industry: Robust Fundamentals Domestic Tyre Industry: An Overview Turnover (Rs Bn) Break up by End Use 1 Break up by Customer /3 Wheelers 12% Tractors 11% Others 3% MHCV 49% OEM 32% FY'10 FY'11 FY'12 FY'13 FY'14 Cars & UVs 18% LCV 7% Replacement 68% Competitive Landscape Market Share 2 Others 29% MRF Ltd. 27% The domestic tyre industry has grown at a CAGR of 12.9% driven by robust growth in the Indian automobile industry CEAT 12% JK Tyre & Inds. Ltd. 13% Apollo Tyres Ltd. 19% Commercial vehicles (M&HCV and LCV) account for > 50% of the domestic market Top 4 players account for ~ 70% market share Source CRISIL 1. Based on total tonnage of 15,92,000 in FY Market share of FY 14 as per CRISIL based on turnover 4

5 OEM Demand is likely to rebound on Economic Revival OEM OEM Production across Key Segments (000 Tonnes) Growth ( 000s) Growth rates % M&HCV % 504 FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ FY'12 FY'13 FY'14 Replacement FY'15P PC + UV 3,146 ( 000s) 3,231 3,066 Growth rates 3% (000 Tonnes) Growth FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ 978 1,055 1, % 2/3 Wheeler 15,428 ( 000s) 15,744 16,879 Growth rates 18% FY'12 FY'13 FY'14 FY'15P FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ Improved Economic Growth and Consumer Sentiment will drive sales across categories (M&HCV, PC + UV and 2/3 Wheeler) Source CRISIL 1. Growth in H1 FY 15 is over H1 FY 14 5

6 Radialisation Trend M&HCV & Passenger Cars (%) 35% 30% 95% 95% 97% 97% 98% 98% 98% 98% 100% 96% 25% 25% 20% 22% 92% 15% 18% 88% 10% 5% 0% 12% 10% 6% 3% 4% FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13 FY'14 84% 80% M&HVC (LHS) Passenger Cars (RHS) Radialisation in M&HCV and LCV Segment to gain momentum on back of improved road infrastructure, launch of multiaxle vehicles and stricter regulation Source: ATMA 6

7 Raw Material Price Trend Natural Rubber Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 International ($ per Kg) (LHS) Domestic (Rs per Kg) (RHS) Source CRISIL Brent Crude Oil (US$/bbl) Sep Dec Apr-13 6-Aug Nov Mar Jul-14 4-Nov-14 Source Bloomberg Rubber Prices have fallen due to weak global demand amidst an increase in supply 7

8 Table of Contents 1 Indian Tyre Industry: Outlook 2 CEAT: An Overview 8

9 RPG Group : Overview RPG Group is a leading Business Group in India Diversified business operations with presence in key sectors of the economy TYRE INFRASTRUCTURE Over 20,000 employees PHARMA PLANTATIONS IT SPECIALITY POWER / TELECOM ANCILLARY 9

10 CEAT : Overview India CEAT Distribution Reach Leading Tyre Company in India with over 50 yrs of presence 4 th Largest Company in India with Market Share of ~ 12% 1 Manufacturing Facilities in Bhandup, Nashik and Halol Pan India Distribution Network comprising of 3,500+ Dealers and 300+ CEAT Franchisees (CEAT Shoppe + CEAT Hubs) Sri Lanka 88 countries where CEAT Products were sold in FY 14 Presence through 50% interest in a JV with Kelani Tyres Ltd Strong presence in the Sri Lankan tyre market Sri Lanka JV companies operates from two manufacturing facilities in Sri Lanka Note 1. Market share of FY 14 as per CRISIL based on turnover 10

11 3 Pronged Growth Strategy Passenger segment 1 Strong Brand Recall Barriers to Entry Brand Building Focus on Profitable Growth Emerging markets Proven Model in Sri Lanka Replicate in Bangladesh Channel Expansion Exports Competitive Advantage CEAT Global Brand R&D Capability Effective Implementation of Business Strategy resulting in Improved Profitability Note 1. Consists of Two Wheeler, Passenger Cars and Utility Vehicles sub segments 11

12 resulting in Favourable change in Business Mix Gross Sales 1 by Customer Gross Sales 1 by End Use Gross Sales 1 by Tyre Type Exports 20% FY 12 Farm & Speciality 15% FY 12 Last Mile 4% Radial 13% FY 12 Cars & Uvs 6% OEM 16% Replacement 64% LCV 10% 2/3 Wheeler 12% Truck & Bus 53% Bias 87% Exports 18% FY 14 FY 14 Farm & Speciality 14% Last Mile 5% Radial 19% FY 14 Cars & Uvs 9% OEM 21% Replacement 61% LCV 8% Truck & Bus 46% Two Wheeler² 17% Bias 81% Gradual shift towards profitable segments and radial tyres Note 1. Gross Sales represents Standalone Gross Sale of Products (Including excise Duty before discount) 12

13 Passenger Segment 1 : Overview and Strategy Gross Sales 2 (Rs mn) Market Share 3 2 Wheelers Passenger Car & Utility Vehicle (PC + UV) 2 Wheelers Passenger Car & Utility Vehicle (PC + UV) 10,652 5,557 14% 8% 6,088 3,224 8% 5% FY'12 FY'14 FY'12 FY'14 FY'12 H1 FY'14 FY'12 H1 FY'14 Achieved higher than industry growth in both the 2 Wheeler as well as PC + UV categories Partner of choice for many 2 Wheeler OEMs Increased share of business with leading passenger car OEMs mainly due to ability to produce low rolling resistant passenger car radial tyres Aim to further strengthen position by building brand loyalty through Product innovations and differentiated customer services Innovative marketing campaigns Optimum mix of in-house vs outsourced production Notes 1. Consists of Two Wheeler, Passenger Cars and Utility Vehicles sub segments 2. Gross Sales represents Standalone Gross Sale of Products (Including excise Duty before discount) 3. Market share data in FY 12 and H1 FY 14 is based on production (No of tyres) of CEAT and industry production as per ATMA for respective period 13

14 Emerging Markets: Overview and Strategy Revenue (SL Rs mn) EBITDA 1 (SL Rs mn) & EBITDA Margin (%) PAT (SL Rs mn) Net Worth (SL Rs mn) 4,889 EBITDA Margin 12.2% 20.1% ,924 4, ,071 Sri Lanka FY'12 FY'14 FY'12 FY'14 FY'12 FY'14 FY'12 FY'14 Presence through CEAT Kelani Ltd : a 50% JV with Kelani Tyres Ltd CEAT Kelani Ltd has a strong presence in the truck, light truck, three-wheeler, two-wheeler and other radial tyre segments in Sri Lanka Sri Lanka JV companies operate from twomanufacturing facilities in Sri Lanka with total capacity 2 of 61 tonnes per day Manufacturing within Sri Lanka enables avoidance of import duty on tyres thereby enabling CEAT Kelani Ltd to competitively price products Bangladesh Plans to replicate the Sri Lankan success in Bangladesh (through a 70:30 JV with AK Khan & Company Ltd) with the aim to cater to local and eastern part of Indian market Setting up a manufacturing plant with an initial capacity of 65 tonnes per day that is likely to be operational by end CY 15 Commencement of seed marketing campaign to prepare for product launch Imports from Bangladesh to India enjoy zero basic customs duty Notes 1. EBITDA = Profit before taxation + Depreciation and Amortization Exps + Finance Costs 2. Capacity refers to achievable capacity 14

15 Key Catalysts of Growth Investment in Brand Building Effie Award Winning Campaigns Branded Campaign Others Be Idiot Safe SUV Tyre Campaign Monsoon Smart Other Initiatives 15

16 Key Catalysts of Growth (Cont d) Strong R&D Capability Pan India Distribution Network State of the Art R&D Facility set up in Halol plant in 2011 Capabilities include three dimensional modeling and prototyping, tyre building, nanotechnology, structural and noise simulations amongst others 17 warehouses including distribution centers Introduced over 100 new products/ variants in FY 14 Research focused on new product development, alternate materials, green tyres as well as projects to reduce tyre weight and material cost to improve margins 3,500+ Dealers Partnerships with institutes of global repute such as Indian Institute of Technology Strong team of 70+ employees as on Sept 14 R&D led recent Product Launches 150 retail franchisees branded as CEAT Shoppefor PC + UV segment 189 CEAT Hubs for truck tyres GRIPP DHOOM Series CZAR Other Initiatives Direct coverage to the 2 Wheeler marketby establishing 2 step distribution network to directly reach mechanic shops that service 2 wheeler vehicles 16

17 Financial Overview¹ Net Revenue from Operations and its Growth (Rs mn) Growth 28.1% 8.6% 9.9% 46,527 50,522 55,540 29,003 EBITDA² and EBITDA Margin (Rs mn) EBITDA Margin 5.9% 8.7% 11.9% 10.9% 2,737 4,379 6,579 3,128 FY'12 FY'13 FY'14 H1 FY'15 FY'12 FY'13 FY'14 H1 FY'15 PAT and RoE 2 (Rs mn) Total Debt³ and Total Debt/ Net Worth (Rs mn) RoE 2.7% 15.3% 26.4% 23.3% Total Debt/ Net Worth 1.6x 1.1x 1.0x 0.7x 2,712 11,049 8,288 10,202 7,914 1,202 1, FY'12 FY'13 FY'14 H1 FY'15 FY'12 FY'13 FY'14 H1 FY'15 Notes 1. Numbers for FY12, FY13 and FY14 are based on the audited consolidated financial statements; numbers for H1FY15 are based on the auditors review report on interim condensed consolidated financial statements 2. EBITDA: Earnings before Depreciation & Amortization, Interest and Tax; RoE: Return on Equity on closing networth. For H1 FY 15 PAT has been annualized to compute RoE 3. Total Debt = LT debt + ST Debt excluding Current maturities of Long Term Debt 17

18 T H A N K Y O U 18