Post on 10-Apr-2018
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Annual Investor Meet
25 th May 2006
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The Hinduja Group
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The Hinduja Group Profile
The Group was established in 1914 inMumbaiEntered Middle East in 1919 to grow
trading initiativesPrivately owned by the Hinduja FamilyPresence in more than 25 countries andoperates across the globeEntered India for major activities in 1987Employs over 30,000 personnelworldwide
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Hinduja Group :Business Activities
Media &Entertainment
IT/ITES
Automotive Banking &Finance
Real Estate
Energy &Chemicals
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Presentation Outline
Indian CV Industry Outlook Ashok Leyland Performance and Plans
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Indian CV Industry Outlook
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CV Demand Drivers
Economy Growth in FY06 Industrial Production : 8.2 % Agriculture Growth : 2.5% Imports / Exports : 31.7% / 25%
Freight generating sectors witnessedsignificant growth
Source: CMIE
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CV Demand Drivers (Contd..)
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CV Demand Drivers (Contd..)
Infrastructure Road construction projects - NHAI
launched in 1999
Total coverage increased to18,372 Kms - pan India35% completed by 31.03.06
40% under implementation25% to be implemented
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M&HCVTIV VolumesBus 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
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M&HCVTIV Growth Trends
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Bus Truck Total
Truck volume trebled in last 5 years
Bus volumes stagnated
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CV Demand Drivers (Contd)
LegislationRecent Supreme Court decision onoverloading to trigger demand. Growth in MHCVs partially on account
of positive impact of the supreme courtsorder, accompanied by strong freightavailability ,allowing operators toincrease freight rates CRIS INFAC.
One time demand upto 28,000 vehicles
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Freight Rate Movement
U ptrend in freight rates indicates absorptionin market
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Freight Rate Buoyancy andOperators Cost Structure
0%5%
10%15%20%25%
30%35%
South North East West
I n c . o v e r
1 2 m o n
t h s Inc. in F re ight R ates
Inc. in Di esel P r ice
8
4
8
7Capital cost taff Ex pense
Fuel Ex penses Maintenance
Others
No significant impact of adverse interest rates
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Railways EfficiencyImprovement - N ot a concern
Proposed dedicated Freight Corridor looking to buildpartnerships 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 Coverage 9000 kms Phase I - 2900 kmsSimilarity with Chinese market Massive expansion inRailway network in China during 1992 to 2002,
accompanied by CV growth rate of 8.9%. Similar trendexpected in Indian market.Structural change in industry with higher sales of HCVsfor highway transport and LCVs for last mile transport
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Outlook for FY07
Growth up to 9-10% CRIS INFAC.
Industry Analysts projection Averagegrowth >10%
AL targets to outperform industry
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Ashok Leylands Performance
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Composition of Sales Q4FY06
Q4FY06 Q4FY05 YOY %
Domestic - Civilian
s 6 T 64 0 4 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)
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Composition of Sales FY06
FY06 FY05 YOY %
Domestic - Civilian
s 6 0 0 0 ck 06 0 6
Total 56274 47782 17.8 Defen c e 502 146 243.8 Exports 4879 6812 (28.4) Total Vehi c les 61655 54740 12.6 Engines 7261 6254 16.1 Spares in c l. Defen c e (Rs. Mn) 7838 5460 43.6
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M&HCV: ALs Market Share
% Year Pass Goods Total
FY06
V ALMS % 47.7% 23.7% 27.0%
FY 05TIV 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%
M S gains across all regions
Stronger in high growth segments
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Financial Results FY06
Improved margins despite raw materialcost increase
Dividend increased to 120%
FY06 % FY05 % YOY FY04 %Net Sales / Income fromOperations 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 1,260 2.4 1,092 2.6 15.4 965 2.8 Profit Before Tax 4,523 8.6 3,550 8.5 27.4 2,865 8.4 Net Profit - PAT 3,273 6.2 2,714 6.5 20.6 1,936 5.7
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Operations Highlights in FY06
Capacity enhanced to 77,200 vehicles p.a.Introduction of BS3 variantsVolume growth at 17.6%, outperformed industry
growth of 4.5%Market share improvement by 300 bp -Improvement across all regions / segmentsTurnover Rs.52 Bn. (US $ 1.1 Bn.)No borrowal during 2005-06
Asset base Rs.23 Bn.Market capitalization :Rs.55 Bn. (US$ 1.2 Bn.)
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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
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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 9.6Dividend Payout (%) 55.7 50.0 52.0 55.8 58.0
Asset Turnover (Times)
4.0 3.6 2.7 1.8 1.4
WC Turns ( Times) 6.7 5.9 5.7 3.6 2.6
Debt : Equity 0.2 0.3 0.5 0.8 1.0
Significant growth over five years
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Other Business Initiatives
Component / aggregates businessincluding exports to US / Europeancountries turnover target at US$ 100
million in the next three yearsEngine business expansion - volumeincrease by 100% in FY 07. Potential for further growth.
Improving shareholder returns withminimum investment
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Plans
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Plans
Capacity expansionProduct launchesPerformance improvement through Focus on non-cyclical portfolios Efficiency improvements
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Capacity Expansion
Vehicle assembly capacity to beaugmented to 100,000 in next 2 yearsProduction / sales target FY07 - 75,000vehiclesCabin facility to 40,000Indigenisation of J series engines
R&D facilities to reduce time-to-market
Capex spend around Rs.6 billionover FY07 and FY08
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New Product Launches
ICV - 1512 with H Series engineSemi Forward Control in Tipper andHaulage segments
Tractor range - 6x2 / 6x4 with 210-350 hpengine and G TW up to 49 TTipper 8x4 with 350 hp engineInterCentury Luxura busBranded BusesDefence sector - HMV and other logisticsvehicles
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Non-Cyclical Business
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 2.1Total 22.9 25.7 22.0
Share of revenue (% of turnover)
N on-cyclical revenue streams growing inabsolute quantum as also in share of total
revenue.FY 05 includes one-time order from Iraq
From FY 07, component business expected togrow exponentially
N on-cyclical revenue targeted to grow >30%
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Effi ciency ImprovementsMaterial cost reduction Emphasis on e-sourcing and global
sourcing to play a beneficial role Continued focus on value engineering
initiatives to improve margins in allexisting / new productsMission Gemba Shop floor-led team initiative with focus on
creating value through empowerment andimproving resource utilisation
Target to achieve 300 bp improvement inoperating margins over 2 years
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Ashok Leyland Stock Performance
a r a y l S e
o a n a r a y l S eo a n a r a y l S e
o a n a r
P o i n t s
R s .
e r S
h a r e
n fty
ALL
AL sto ck o u tper f or m s N IFTY m o ve m ent
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Shareholding Pattern
ForeignInstitutions16%
Corporates
2%
Public &Others
12%
Promoters
51%
DomesticInstitutions
19%
FIIs holdings doubled over 1 year
FCC N conversion as on date : 84% (IncludingPromoters)
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Thank you