ABC Company Limited -...
Transcript of ABC Company Limited -...
December 2016
Corporate PresentationCorporate Presentation
June 2017
2
Disclaimer
The information in this presentation has been prepared by Spicejet Limited (the “Company”) and has not been independently verified. No representation or warrantyexpressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions containedherein. 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 notguaranteed. Neither the Company, nor any of its advisers or representatives, nor any of their respective affiliates makes any undertaking to update any suchinformation subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. No consideration has been given to theparticular objectives, financial situation or particular needs of any recipient. Neither the Company nor any of its advisors or representatives, nor any of their respectiveaffiliates 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 inconnection 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 usewould 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 priorconsent of the Company, is prohibited. This presentation should be distributed and read in its entirety. This presentation remains the property of the Company and onrequest 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, or solicitation of any offer to buy or subscribe for, any securities of the Company nor should it, or any part of it, form the basis of, or be relied on 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 anysecurities 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 anexemption 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 isnot intended to be fully inclusive and may not contain all of the information that you may consider material. This presentation contains historical information of theCompany 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 touncertainty 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.
3
Table of Contents
1 Industry Snapshot
2 Spicejet: Fact Sheet
3 Corporate Strategy
4 Key Financials and Stock Price Performance
4
Table of Contents
1 Industry Snapshot
2 Spicejet: Fact Sheet
3 Corporate Strategy
4 Key Financials and Stock Price Performance
Real GDP Growth ProjectionCY2016 – CY2022E
7.8%
6.0%
5.2%
3.5%
3.1%2.3%
1.8% 1.8%
India China ASEAN-5 Sub-Saharan Africa Middle East & NorthAfrica
Latin America &Caribbean
European Union Advanced economies
5
Favourable Demographics
From 2016 through 2025, the share of elite, affluent and aspirers households will increase from 23% to 36% of the total while the share of strugglers will drop from 31% to 18%
The number of middle class households in India will exceed 90 million, retaining its current rank as the world’s 2nd largest middle class
Continued Population Growth
2nd most populous country with1.31 billion people growing at aCAGR of 1.3%
Strong Economic Growth
India retains its position as thefastest growing major economy ofthe world ahead of China in FY16
The Asian Development Bank expects Indian economy to grow at 7.4% in 2017-18 and 7.6% in 2018-19.
World average of 3.7%
Source: IMF, World Economic Outlook, April 2017
Note: 1. CY2016 population data is updated for all countries except Germany, for which data has been estimated by the IMF. CY2017 to CY2022 population data for all countries are estimates by the IMF.2. Income distribution is calculated in constant 2015 dollars, $1 = 65 Rupees
1,383 1,309
259 206 143 127 122 104 83 80 69 65 61 49 46 36 32 24 5
Ch
ina
Ind
ia
Ind
on
esi
a
Bra
zil
Ru
ssia
Jap
an
Mex
ico
Ph
ilip
pin
es
Ger
man
y
Turk
ey
Thai
lan
d
Fran
ce
Ital
y
Co
lom
bia
Spai
n
Can
ada
Mal
aysi
a
Au
stra
lia
No
rway
Population Growth 1
(CY2016 – CY2022)
0.4% 1.3% 1.3% 0.7% (0.1% (0.4%) 1.0% 2.0% 0.2% 1.0% 0.1% 0.5% 0.4% 1.1% (0.1)% 1.2% 1.7% 1.7% 1.2%
Source: BCG Report “The New Indian: The Many Facets of a Changing Consumer”, March 2017
Indian Economy: Steady Growth Supported by Strong Fundamentals
Source: IMF, World Economic Outlook, April 2017
6.5
17
40
121
82
15.8
33
61
140
55
3.1
7
17
89
93
Elite (>30.8)
Affluent (15.4-30.8)
Aspirers (7.7-15.4)
Next billion (2.3-7.7)
Strugglers (<2.3)
Indian Households by Income (Millions) 2
2005 2016 2025
Annual Gross Household Income ($ ‘000)
10.7%
7.6% 7.4%8.0%
5.8%5.0%
4.3%5.0%
4.5%
5.8%
6.8%
5.7%
4.3%
5.4%
6.5%
4.6%3.9%
4.6%
2.8%
4.5%
0%
2%
4%
6%
8%
10%
12%
Domestic India Domestic PRC Domestic Turkey DomesticEmerging Asia
Domestic SubSahara Africa
Domestic SouthAmerica
Domestic SouthAfrica
Domestic Brazil Domestic NorthAfrica
DomesticCaribbean
Domestic Air Passenger Traffic Forecast(Top 10 Markets)
2016-2026 CAGR 2026-2036 CAGR
0.09 0.36 0.32 0.41 0.39 0.43 0.53 0.520.83 0.96
1.34
4.65
3.072.59
1.84 1.721.42 1.21 1.20 1.28
Ind
ia
Ch
ina
Ph
ilip
pin
es
Ind
on
esi
a
Mex
ico
Bra
zil
Ru
ssia
Co
lom
bia
Thai
lan
d
Turk
ey
Mal
aysi
a
No
rway
Au
stra
lia
Spai
n
USA
Can
ada
Ital
y
Jap
an
Fran
ce
Ger
man
y
Annual Trips per Capita – CY 2016
6
Indian Aviation: Market Forecast
Strong Growth in Tourism
Total contribution of Travel &Tourism to GDP was INR14,019 bn(9.5% of GDP) in 2016 and isforecasted to rise by 6.7% p.a. toINR28,492bn (10% of GDP) by 2027
According to IATA, India’s air travelsector supports 8 million jobs andcontributes USD 72 billion in theGDP
Untapped Market Potential
India has the lowest penetration
rate – 0.09 annual trips per capita
for CY 2016
Lowest amongst developing
nations like Brazil, Turkey,
Indonesia and China
Expansion in Infrastructure & Capacity to Support Growing
Demand
Public-private partnerships
State-of-the-art greenfield airports
– work on for brownfield airports
Domestic India is projected to be
fastest growing aviation market at
10.7% CAGR (2016-26) and 8.8%
CAGR (2016-2036)
Source: Airbus Global Market Forecast 2017
Source: WTTC
Source: Airbus Global Market Forecast 2017
10,398 10,97211,846
12,94014,019
2012 2013 2014 2015 2016
Total Contribution of Travel & Tourism to GDP(INR Billions)
Source: IATA, October 2016
483
616
110
107
38
1300
1100
442
242
150
China
US
India
Indonesia
Vietnam
Passengers Forecast: Five Fastest Growing Markets (Millions)
2015
2035
69 72
62
70 76
82
91
14 16
FY11 FY12 FY13 FY14 FY15 FY16 FY17 02MFY17
02MFY18
50 54
48
55 60
65
71
11 13
FY11 FY12 FY13 FY14 FY15 FY16 FY17 02MFY17
02MFY18
53 59 57 59
67
81
99
16 18
FY11 FY12 FY13 FY14 FY15 FY16 FY17 02MFY17
02MFY18
68
79 76 81
85
98
117
19 21
FY11 FY12 FY13 FY14 FY15 FY16 FY17 02MFY17
02MFY18
Indian Aviation: Demand & Supply Trends
Strong underlying demand to match supply
India is a growth market.
Demand growth has outpaced
growth in supply.
Domestic growth has seen a spurt
in the last 2 years on account of
economic buoyancy and
reasonable fares due to low ATF
prices.
The UDAAN scheme, introduced
as part of National Civil Policy,
will provide a boost to regional
connectivity and drive demand
from the Tier-II and Tier-III cities.
Under this scheme, more than
100 regional airports will be
operationalized by the end of
FY18-19.
International sectors keep
opening up and the travel
patterns are becoming more
Point to point.
RPK of Domestic Scheduled Services (billions)
ASK of International Scheduled Services (billions)
Source: DGCA data as of 31 May 2017
RPK of International Scheduled Services (billions)
ASK of Domestic Scheduled Services (billions)
7
Source: DGCA data as of 31 May 2017
Source: DGCA data as of 31 May 2017
Source: DGCA data as of 31 May 2017
Indian Domestic Full-Service Carriers vs. Low-Cost Carriers Market ShareLCCs consistently gaining market share and expect to reach 75% -80% within two years as per CAPA
8
Indian Aviation Landscape
Airline PromoterMarket Share(1) #
(Domestic)Capacity Share(1) *
(Domestic)Service Type(2) Fleet Size(2) Aircraft Type(2) Airports(2)
Air India Govt of India 12.8% 14.0% FSC 150A319, A320, A320N, A321, B747, B777, B787, ATR42/72
69-Dom37-Int
Jet Airways Naresh Goyal 17.6% 17.7% Dual 105(4) A330, B737, B777, ATR7245-Dom20-Int
IndiGo InterGlobe Enterprises 41.3% 41.5% LCC 135 A320, A320N39-Dom7-Int
SpiceJet Ajay Singh 12.6% 11.2% LCC 52(3) B737, Q40039-Dom7-Int
GoAir Wadia Group 8.5% 8.04% LCC 23 A320, A320N 23-Dom
Source: (1) DGCA (May 2017)(2) Company website and Internet search (31 May 2017)
49.8%60.8% 63.4% 64.9% 64.2% 67.6%
50.2%39.2% 36.6% 35.1% 35.8% 32.4%
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
LCC Market Share FSC Market Share
Source: DGCA
Note:,(3) Company operates 1 aircrafts on wet lease ; (4) Doesn't include data for subsidiaries #Percentage of total passengers carried; *Percentage of total ASKM deployed
9
Table of Contents
1 Industry Snapshot
2 Spicejet: Fact Sheet
3 Corporate Strategy
4 Key Financials and Stock Price Performance
10
Key Highlights: Strong Performance, Consistent Execution
Best positioned to capitalize on aviation growth backed by strong demand from India’s secondary centres
One of the few airlines globally to turn in nine successive quarters of profitability after near shutdown (1)
#1 Best performing Indian airline stock in terms of investor returns over the last 2 years
#2
#3 Average OTP of 81.2% since February ’16 at metro stations: Highest amongst Indian operators (2),(3)
#4 Industry Leading Load Factor of 90%+ for 26 months in a row (2)
#5Unique two pronged fleet strategy helps in optimizing network and adapting to existing infrastructure conditions & different demand profiles
#6Strong foothold in domestic market and substantial presence in regional and international operations. Spicejet is in a better position to take advantage of the growth witnessed in tier 2 / tier 3 cities
Note: 1. Data as of March 2017, 2. Source: DGCA (May 2017)3. Average of OTP from February 2016 to May 2017, Source: DGCA Statistics
#7 Strong management team with Mr. Ajay Singh at the helm – pioneer of low cost aviation in India
11
Route Network
~ Pax carried per day47,550
~ Flights per day350
Domestic destinations 39
International destinations7
Note: Data for May 2017
12
Operations Overview
History and Corporate Matters
Started in May 2005, 2nd largest airline by Jul’14
Change of control in 2010,Acquired by Marans
Change of control again,Ajay Singh takes over following scheme of reconstruction and
revival in Feb’15
Fleet Details(1)
Scale of OperationsPassengers Ferried:
47,550 per day1.44 million per month(2)
Market Share(2):12.6% on domestic operations
Passenger Load Factor(2):94.3% - Highest in industry
(domestic) consistently
Total Fleet Size:52 aircraft
Share Market Data(1)
CMP: Rs.105.6552week H/L: Rs. 123.40 / 54.50
Market Cap: ~Rs. 64,412 Mn(31st May’17)
Promoter Shareholding: 60.3%Stock Performance since Jan’15
(announcement of change in control): 476%
B737-700Fleet: 2 aircraft
B737-800Fleet: 27 aircraft
B737-900Fleet: 4 aircraft
Q400Fleet: 19 aircraft
Note: (1) Data as of 31 May 2017(2) Source: DGCA Statistics as of 31 May 2017
13
Key Management Personnel
The Company has a strong management team supported by robust middle management
Management Team
Manjiv Singh
Chief Projects Officer
SPS Suri
Head of Flight Operations
Chandan Sand
Head of Legal & Company Secretary
GP Gupta
Chief Administrative Officer
Kiran Koteshwar
Chief Financial Officer
Debojo Maharshi
Chief Marketing Officer
Ajay Singh
Chairman & MD
Arun Kashyap
Head of Engineering
Shilpa Bhatia
SVP - Sales and Revenue
Bhavesh Mishra
Chief of Flight Safety
Kamal Hingorani
SVP IFSD & Customer relations
14
Awards and Recognition
Awarded as ‘Best Historic Turnaround’ at the 9th ASSOCHAM International Conference & Awards
Voted as ‘Best Transportation’ brand and ‘Best Airline’ brand in India by Brand Trust Report
Public relations (PR) campaign ‘Rising like a Phoenix’ awarded at the Global SABRE Awards as among the 40 best PR campaigns in the world
Spicejet PR was awarded the best ‘Individual: Consultancy Professional’ award at Fulcrum 2016
SpiceJet CMD Mr. Ajay Singh received the ‘DDP Game Changer’ award at the North India Travel Award
Awarded for ‘Best Employee Engagement’ at the 4th DMA-Thomas Associates National Award
Awarded the ‘Best Check-in Initiative’ by Future Travel Experience global awards for its introduction of Bluetooth Low Energy (BLE) beacons and Near Field Communication (NFC) technology.
Won the ‘Best Domestic Airline for South India’ award by DDP TravTalk
SpiceJet CMD Mr. Ajay Singh received the ‘World Travel Leaders’ award at the World Travel Market Awards in London
SpiceJet received 'Asia's Greatest Brands - 2016' award at the Asia One Awards and SpiceJet CMD Ajay Singh and CFO Kiran Koteshwar were honored with 'Global Asian of the year' and 'Asia's Greatest CFO 2016' awards respectively
2016
2016
2016
2016
2016
2016
2016
2016
2016
2017
15
Table of Contents
1 Industry Snapshot
2 Spicejet: Fact Sheet
3 Corporate Strategy
4 Key Financials and Stock Price Performance
16
Corporate Strategy
Maximize passenger related ancillaries through a range of value-based products
Integrate travel related services like hotels, vacations, car hire etc.
Develop cargo and merchandise business units
Maintain fleet reliability
Develop a continuous line of trained professionals through its academy
Implement and maintain high level of automation
Highly skilled and motivated work force
Build its financials to avoid shocks
Monitoring and improving fuel consumption
Readiness for import of fuel or hedging
Lower aircraft acquisition & associate maintenance costs
Bring down other costs by insourcing or securing long terms contracts
Maximize asset utilization
Expand international
Focus on key sectors
Develop regional markets with Q400
Dynamic fleeting capability to address seasonality variations
Sizing capacity to demandLow Cost
Operations
Increase Ancillary Revenue
Consolidate Operations &
Strengthen Financials
Revenue Maximization /
Optimization
64.2%59.8%
69.9%
77.1%73%
82%78%
75%
85%
77%
SpiceJet Air India Jet Airway and JetLite Indigo GoAir
Dec-14 May-17
86.7% 85.9%
89.1% 88.8%
84.2%
94.3%
80.7%
85.2%
91.2%
93.0%
SpiceJet Air India Jet Airway and JetLite Indigo GoAir
Dec-14 May-17
Others
10.5%
18.3%
23.3%
36.2%
9.4%
2.3%
12.6% 12.8%
17.6%
41.3%
8.5% 7.1%
SpiceJet Air India Jet Airway and JetLite Indigo GoAir Others
Dec-14 May-17
17
Market leading load factors testament to strong brand connect and improving OTP performance
Will increase market share responsibly by gaining stronger presence in profitable & key markets
Increased regional connectivity together with focus on international expansion to propel market share
Growth in Market Share Market Leader in terms of Load Factor Significant Improvement in OTP *
Consolidating Market Presence and Strengthening Performance
Source: DGCA Source: DGCA Source: DGCA
Note: * Average of 04 metro stations
Maintain operational efficiency with strong focus on high OTP and low cancellations
• Operates 19 Q400s: 13 on finance lease and 6 on dry operating lease
• With 78 seats each, these serve as excellent connecting agents for niche routes with high passenger yields
• Provide the airline with significant flexibility to develop regional routes and test new markets
• Operates 32 B737 family aircraft on operating lease
• Serves 39 domestic and 7 international routes
• Additionally, the company operates 1 aircraft on wet lease making it a total of 33 narrow body operations.
18
Current Fleet and Expansion PlansFocus on Increasing Regional & International Presence; Create Strong Foothold Domestically
Boeing Fleet Bombardier Fleet
Fleet Size (1)
Seat capacity
Aircraft Type • Boeing 737-700
• 2 aircraft
• 149 Y
• Boeing 737-800
• 27 aircraft
• 189 Y
• Boeing 737-900
• 4 aircraft
• 212 Y
• Q400
• 19 aircraft
• 78 Y
Expansion plans
Description
• Placed an order with Boeing for 155 firm and 50 optional aircraft for narrow body fleet
• Fleet expansion to serve regional routes/ UDAAN scheme
• Placed an order with Bombardier for 25 firm and 25 optional aircraft for regional fleet at recently held Paris Air Show
Note: (1) Data as of 31 May 2017
19
Sustain Profitability: Focus on increasing Margins by Reducing Costs
Continuous Focus on
Reducing Costs
Manage StructuralMatters
Focus on increasing ancillary revenues through travel related
opportunities
Increase contribution of direct sales; Spicejet APP
was launched.
Manpower optimisation to cater to maximise utilisation & increased productivity
Drastic improvement in efficiencies of key functions like cargo handling and call centre after being taken in-house
Renegotiation of unfavourable contracts and SLA management
Fuel saving methods such as fuel hedging, lightweight seats being considered. Invested in fuel dashboard software system for monitoring fuel conservation measures.
Route optimization – reduce unproductive flight time;
Will invest in technology & upgrading aircraft specifications.
Dynamic fleeting to address seasonality variations
Work in progress for direct import of ATF – estimated cost saving of 12-
15% on fuel cost
Cost reduction initiatives by dedicated cross-functional task-force
20
Increasing Focus on Ancillary Revenue
Ancillary Products & Services* Ancillary Products and Services Focussed Communication
Excess Baggage Charges
Spice Max Seats
Meals
Pre Book Seats
Insurance
Hand Baggage
My Flexi Plan
Spice Vacations
Priority Check in
Lounge
Visa
Cab
Note: * The list is not exhaustive
21
Increasing Brand Acceptance
Improving OTP Changing perception
Focused Marketing and Promotion Campaigns riding on Spicejet’s Strong Brand Recall to Deliver Maximum Impact at Optimum Cost
Targeting to be more Customer Friendly
Trendy Taglines – Getting the Point Across with High Impact
22
Table of Contents
1 Industry Snapshot
2 Spicejet: Fact Sheet
3 Corporate Strategy
4 Key Financials and Stock Price Performance
23
Improved Operational Efficiency Bringing Stability to our Financials
Net worthRs. MN
(2,244)
(9,945)
(14,852)
(10,389)
(6,091)
FY13 FY14 FY15 FY16 FY17
14,610 15,112
12,178
9,2008,271
FY13 FY14 FY15 FY16 FY17
Profit and Loss Account(1) Balance Sheet(1)
Net Revenue from OperationsRs. MN
56,007
62,387
51,727 50,204
61,013
FY13 FY14 FY15 FY16 FY17
EBITDAR(2)
Rs. MN
8,163
3,348 4,675
15,643 16,549
FY13 FY14 FY15 FY16 FY17
Net ProfitRs. MN
(1,911)
(10,032)
(6,871)
4,498 4,307
FY13 FY14 FY15 FY16 FY17
Annual Financial Performance – SpiceJet recorded second successive profitable year
Net Revenue from OperationsRs. MN
11,032 10,291 14,394 14,487
15,064 13,785
16,027 16,138
Q1 Q2 Q3 Q4
FY16 FY17
EBITDAR(2)
Rs. MN
Net ProfitRs. MN
Quarter Financial Performance – SpiceJet recorded ninth consecutive profitable quarter
3,081 2,693 5,409 4,461
4,743
3,334
4,842
3,630
Q1 Q2 Q3 Q4
FY16 FY17
730 290 2,399 1,079
1,490
589
1,811
416
Q1 Q2 Q3 Q4
FY16 FY17
• Calculated as sum total of long term and short term borrowings net of cash and bank balances
• Debt is substantially on account of finance lease on Q400 aircraft
Calculated as sum total of share capital and other equity
Note 1: Source – BSE filingsNote 2: EBITDAR is calculated as total income net of (i) operating expenses (ii) employee benefit expenses (iii)other expenses and adding rentals
Net DebtRs. MN
50
70
90
110
130
150
170
190
01-Jun-16 13-Aug-16 25-Oct-16 06-Jan-17 20-Mar-17 01-Jun-17
SpiceJet 57% Jet Airways -16% Indigo 10% Sensex 17%
20
120
220
320
420
520
620
720
15-Jan-15 01-Jun-15 16-Oct-15 01-Mar-16 16-Jul-16 30-Nov-16 16-Apr-17
SpiceJet 476% Jet Airways 8% Indigo 29% Sensex 11%
Operational Turnaround Rubbing off on Stock Price
Best performing Indian airline stock in terms of investor returns over the last 2 years
Co
mp
aris
on
wit
h D
om
est
ic P
eer
sC
om
par
iso
n w
ith
Glo
bal
Pe
ers
Price Performance – Rebased to 100Last 1 year
Price Performance – Rebased to 100Last 1 year
Source Reuters as of 31st May 2017
Price Performance – Rebased to 100Since 15th January, 2015 (Change of Control) till date
Price Performance – Rebased to 100Since 15th January, 2015 (Change of Control) till date
24
20
70
120
170
220
270
15-Jan-15 01-Jun-15 16-Oct-15 01-Mar-16 16-Jul-16 30-Nov-16 16-Apr-17
Thai Airways 19% Cathay Pacific -34% Qantas Airways 114%
Air Asia -25% Air Arabia -40% Singapore Airlines -20%
50
70
90
110
130
150
170
190
210
01-Jun-16 13-Aug-16 25-Oct-16 06-Jan-17 20-Mar-17 01-Jun-17
Thai Airways 9% Cathay Pacific -5% Qantas Airways 64%
Air Asia 9% Air Arabia -24% Singapore Airlines -6%
Thank YouSpiceJet LimitedRegd. Office: Indira Gandhi International Airport, Terminal 1D, New Delhi – 110 037
Website: www.spicejet.com; Email: [email protected];T: +91 124 3913939; F: +91 124 3913844
For detailed quarter/annual financial performance information, visit investor section on our company website