annual general meeting july 28, 2009 - ashok · pdf fileashok leyland performance ... will...

Annual General MeetingAnnual General MeetinggJuly 28, 2009

gJuly 28, 2009

The presentation format The presentation format

2008-09Market performance pAshok Leyland performance Combating the downturnProduct launches

2009-10 OutlookOutlookAshok Leyland – Focus areas Joint venturesJoint ventures

MD / AL /AGM presentation / 28/07/2009

2008-09 – Battling the odds2008-09 – Battling the odds


The economy shifted gears … downwardThe economy shifted gears … downward

Global economy in reverse gearThe Indian economy deceleratedThe Indian economy deceleratedThe CV industry hit hard, especially M&HCV


M&HCV TIV – Fell by 33% M&HCV TIV – Fell by 33% 246863

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Bus segment fell by about 10% , Truck by 37%


Fall, expected; suddenness and severity, notFall, expected; suddenness and severity, noty,y,

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First Half Second Half

Lack of cash, capital and confidenceMD / AL /AGM presentation / 28/07/2009

2008-09Ashok Leyland performance

2008-09Ashok Leyland performancey py p


Sales dropped by 34.7%Sales dropped by 34.7%

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'01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09


Why 1.8% market share was lostWhy 1.8% market share was lost

Regional imbalances adversely affectedSteep drop in South – traditionally AL strongholdLack of significant presence in East where the market held its own

Demand moved up for SFC (Semi Forward Cab) p ( )vehicles


Leadership in bus market retainedLeadership in bus market retained

Maintained leadership position in the bus segment with 46% market shareg


Composition of SalesComposition of Sales2007-08 2008-09 % Inc

(Dec)Domestic CivilianDomestic Civilian

Buses 18 244 16 548 (9.3%)Trucks 57 364 30 651 (46.6%)Trucks 57 364 30 651 (46.6%)Total 75 608 47 199 (37.6%)

Defence 414 420 1.4%Exports 7 285 6 812 (6.5%)Total vehicles 83 307 54 431 (34.7%)E i 11 757 21 447 82 4%Engines 11 757 21 447 82.4%Spares incl. Defence(Rs Lakhs)

79 124 79 969 1.1%(Rs Lakhs)


Significant growth in the engine business

The Financials The Financials


Unbroken track record of profitability maintainedUnbroken track record of profitability maintainedp yp y

Rs Lakhs

2007-08 2008-09 % growth

Net Sales / income from operations 774 258 598 107 (22.8)

Gross operating margin 82 038 46 944 (42.8)

Financial expenses 4 974 11 871 138.7

Other income 5 760 4 962 (13.9)Gross Profit (PBDT) 82 824 40 035 (51.7)Depreciation 17 736 17 841 0.6Profit from ordinary activities before tax 65 088 22 194 (65.9)

Net Profit 46 931 19 000 (59.5)Paid up equity share capital (face value per share Re 1 each)

13 303 13 303 -

Basic earnings per share (Rs) 3.53 1.43 (59.4)

Dividend per share (Rs) 1.5 1.0 (33.3)


Performance Highlights – 5 YearsPerformance Highlights – 5 Years

04-05 05-06 06-07 07-08 08-09

R O C E (%) 18.6 21.2 24.7 23.2 8.7( )

Inventory Turns (Times)

5.7 5.3 5.5 5.0 3.5

Debtors (Days) 14 18 17 6 73

Debt : Equity 0 3 0 2 0 3 0 4 0 9Debt : Equity 0.3 0.2 0.3 0.4 0.9

EPS (In Rs.) 2.28 2.74 3.38 3.53 1.43


Financial resilience Financial resilience

Maintained financial stabilityManaged downturn without getting over-Managed downturn without getting overleveraged


Combating the downturnCombating the downturn


1. Focused on non-cyclical businesses 1. Focused on non-cyclical businesses

%

FY09FY08

Non-cyclical business contribution up; from 34% to 50%Non cyclical business contribution up; from 34% to 50%


1. Focused on non-cyclical businesses 1. Focused on non-cyclical businesses

Power solutionsVolumes grew by 82.4% to 21447 units o u es g e by 8 % o u sBusiness transformation: from trading in engines to value-added power solutions b i LEYPOWERbusiness: LEYPOWER

LeypartsRevenues maintained at Rs 79 969 lakhsRevenues maintained at Rs. 79,969 lakhs


2. Cash conserved 2. Cash conserved

CAPEX reduced from Rs. 3,000 crores to Rs. 2,000 crores over the next 3 years yReduced capacity build-up at Uttarakhand from 70,000 to 50,000 vehicles per annum Froze all discretionary capital expenditureHowever, all R&D expenses left untouched


3. Internal cost-cutting steps taken 3. Internal cost-cutting steps taken

Production cut by reducing working days in the manufacturing units g3-4% gain from drop in commodity prices 20% savings through voluntary salary cuts Cut in travel, advertising and all other discretionary expenses Overall, austerity measures resulted in a saving of Rs. 90 crores in operating cost


4. Improved competitiveness 4. Improved competitiveness

A slew of projects were undertaken at the UnitsInnovationsInnovationsProductivity enhancements Improvement projectsp o e e t p ojectsValue engineering Value Stream Mappingpp gConversion of non-moving models into saleable ones with changes in aggregates


Product Introductions of 2008-09 Product Introductions of 2008-09


Product introductions: TrucksProduct introductions: Trucks2516 Super

2516 HT

3516 ETK


Product introductions: Trucks Product introductions: Trucks

Ecomet 912 Tipper Comet 1613


Product introductions - BusesRear Engine SLF (CNG) – BS III

T C h ULE (CNG) BS IIITarmac Coach ULE (CNG) – BS III


India’s first H-CNG engineIndia’s first H-CNG engine

6-cylinder, 6-litre 123 hp BS-4 engine with blend of natural gas and hydrogen (20% by volume)g y g ( y )

Further reduces emissions Stimulates combustion Improves efficiency of the engine


After-market supportAfter-market support

Added CurrentAdded Current

Dealership outlets 11 170

Authorized Service Centres 09 146

Work bays 185 2,300


2009-10 – Prospects 2009-10 – Prospects


Outlook Outlook

The worst seems behind us and the first green shoots of growth visible gA strong government at the Centre will bring political stability The new government’s focus on reviving economic activity augurs well

R t t f t ll d i f t tRe-start of stalled infrastructure development projects; fillip to the housing and construction segmentsand construction segmentsRapid implementation of the JnNURM-funded projects will lift demand for buses

A single digit swing either way is possible MD / AL /AGM presentation / 28/07/2009

Ashok Leyland – Focus areas Ashok Leyland – Focus areas


1. GENMOD process 1. GENMOD process Transformational new matrix management processpCustomer Inspired Solutions – to design break-through products To offer products at a new price-performance point


2. Product development2. Product development

The UNITRUCK platform The all-new modular, universal platform to meet e a e odu a , u e sa p a o o eediverse requirements of both domestic and global markets Thi d ff hi h l tfThis on and off-highway platform range can create variantsWill span truck models from 16 ton GVW to 49Will span truck models from 16 ton GVW to 49 ton GCWTo feature new family of engines and cabs (i l di th NEXTGEN b)(including the NEXTGEN cab) Roll out by April, 2010


2. Product development2. Product development

The NEPTUNE engine rangeA new family of 4 and 6 cylinder inline engines e a y o a d 6 cy de e e g esranging from:

• 160 – 230 hp in 4 cylinder engines• 270 – 380 hp in 6 cylinder engines

Of modular capacity from 4.7 litre to 8 litre –BS3 and BS4 / Euro IV compliant and protectedBS3 and BS4 / Euro IV compliant and protected for Euro-V, with cooled EGR and SCR optionsQuieter, stronger and more reliable by design, with higher power and torque and better fuel efficiencyAlso benchmarked for lower operating andAlso benchmarked for lower operating and maintenance costs


3. New products – Trucks3. New products – Trucks

4019 -Launched yesterday

MD / AL / Annual Press Conference / 15/05/2009

3. New products – Trucks3. New products – Trucks

31163518 TT3518 TT2521 Tipper


3. New products – Buses3. New products – BusesULE – BS III

Apart from the 875-bus order received from DTC, under JnNURM, we have received 5,185 bus orders out of

9,966 vehicle orders released, constituting 52% share


State-of-the-art bus body building facility at Alwar

4. Hinduja Leyland Finance4. Hinduja Leyland Finance

New finance company to support vehicle sales formedAwaiting RBI approvalPlans to commence operation in next couple of monthsFocus areas: pockets not currently serviced by

i ti fi t k d dd d fexisting finance network and address need for promoting specific models / product segmentsGeographically will initially cater to the NorthGeographically, will initially cater to the North and East markets before spreading its ambit


5. Exports5. Exports

Expect market revival post cessation of hostilities in Sri Lanka Consolidation in newly entered markets (Angola, Honduras) Introduction of exclusively designed truck range for export marketsT it li f t d d d f iTo capitalise of expected demand for price competitive products following revival in global marketsmarkets


6. Capacity creation6. Capacity creation

Uttarakhand unitInvestments cut by Rs. 1,000 croresInvestments cut by Rs. 1,000 croresTo go operational before March 2010

Bus plant at Ras Al Khaimiah pTrial productions have begun


Joint VenturesJoint Ventures


Light truck JV with NissanLight truck JV with Nissan

Product development in progress Product portfolio expansion underProduct portfolio expansion under consideration, by including Nissan products initially slated for production outside India Roll out postponed to 2011; due to market conditions and land acquisition delays


Construction equipment JV with John DeereConstruction equipment JV with John Deere

A 50:50 JV; new company formed Land options identified; negotiations onLand options identified; negotiations onProduct plans in place; testing on

Initial products: Backhoe loaders, Wheel-t a p oducts ac oe oade s, eeloaders, Excavators Access to full range of products

Pilot production by Oct 2010; serial production by Jan 2011


HDPC JV with ALTEAMS HDPC JV with ALTEAMS

Fully established to meet requirements from both the telecom and automobile sectorsSupplies have commenced


Infotronics JV with Continental AGInfotronics JV with Continental AG

Vehicle electronics expected to play an increasingly important role in CVs in futureg y pJV is well positioned to develop innovative solutions in vehicle electronic systems viz., instrument cluster applications, cockpit electronics and body control units for CVs and special vehiclesspecial vehiclesJV commenced operation in FY ‘09 and has been developing products, providing p g p p gengineering services support to Continental AG


International Operations –AVIA Ashok Motors , Czech RepublicInternational Operations –AVIA Ashok Motors , Czech Republic

Sold 518 LCVs in 2008 in Europe despite tough market conditionsgSuccessfully completed major cost reduction program in 2008/2009, (15% reduction in

)material cost)Currently focused on restructuring of operations strengthening of dealerships andoperations, strengthening of dealerships and introducing products in new export markets


Investor Relations Investor Relations


Value-added services for share-holdersValue-added services for share-holders

Annual shareholders satisfaction surveyConducted for 8 years consecutively Responses are summarised and reviewed by the Shareholder/Investor Grievance Committeethe Shareholder/Investor Grievance Committee of the Board

Investor GuideSent to every shareholder every year since 1998

Annual ReportsAnnual ReportsDisclosures beyond mandatory requirements

MD / AL / Annual General Meeting / 30/07/2008

Sharing profits even during a downturnSharing profits even during a downturn

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March '02 March '03 March '04 March '05 March '06 March '07 March '08 March '09

Our family of shareholdersOur family of shareholders

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March '02 March '03 March '04 March '05 March '06 March '07 March '08 March '09

Thank You

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