ceat ceat ltd. rpg house worli, mumbai 400030, india · worli, mumbai 400030, india +91 22 24930621...
TRANSCRIPT
CEAT
November 19, 2018
CEAT LTD.
RPG House
463 Dr. Annie Besant Road,
Worli, Mumbai 400030, India
+91 22 24930621
CIN: L25100MH1958PLC011041
www.ceat.com
BSE limited,
Corporate Service Department,
1st Floor, P.J. Towers,
The National Stock Exchange of India Limited,
Exchange Plaza, 3cd Floor,
Plot No. C/1, "G" Block,
Dalal Street, Bandra Kurla Complex,
Mumbai 400 001 Band ra East,
Mumbai 400 051
Security Code: 5001178 Symbol: CEATLTD
Sub: Investor conference participation - Disclosure under Reg. 30
Dear Sir/Madam,
Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 read with Part A of Schedule III and Company's Policy on Determination of
Materiality of Events, please find below details of the investors conference which will be
participated by the Company along with the presentation to be made at the same:
Date Particulars
November 19, 2018 Conference arranged by !DFC
Kindly take the same on record and acknowledge receipt.
Thanking you,
Sincerely,
For CEAT Limited
Encl. A/a
location
Grand Hyatt, Kalina, Mumbai
An®Rr'GCompany
This presentation may include statements which may constitute forward-looking statements. All statements that address expectations or projections about thefuture, including, but not limited to, statements about the strategy for growth, business development, market position, expenditures, and financial results, areforward looking statements. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guaranteethat these assumptions and expectations are accurate or will be realized. The actual results, performance or achievements, could thus differ materially fromthose projected in any such forward-looking statements.
The information contained in these materials has not been independently verified. None of the Company, its Directors, Promoter or affiliates, nor any of its ortheir respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contractor otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising,directly or indirectly, from any use of this document or its contents or otherwise in connection with this document, and makes no representation or warranty,express or implied, for the contents of this document including its accuracy, fairness, completeness or verification or for any other statement made orpurported to be made by any of them, or on behalf of them, and nothing in this document or at this presentation shall be relied upon as a promise orrepresentation in this respect, whether as to the past or the future. The information and opinions contained in this presentation are current, and if not statedotherwise, as of the date of this presentation. The Company undertake no obligation to update or revise any information or the opinions expressed in thispresentation as a result of new information, future events or otherwise. Any opinions or information expressed in this presentation are subject to changewithout notice.
This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase orsubscribe for, any securities of CEAT Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on inconnection with, any contract or commitment therefore. Any person/ party intending to provide finance / invest in the shares/businesses of the Company shalldo so after seeking their own professional advice and after carrying out their own due diligence procedure to ensure that they are making an informeddecision. This presentation is strictly confidential and may not be copied or disseminated, in whole or in part, and in any manner or for any purpose. No personis authorized to give any information or to make any representation not contained in or inconsistent with this presentation and if given or made, suchinformation or representation must not be relied upon as having been authorized by any person. Failure to comply with this restriction may constitute aviolation of the applicable securities laws. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possessionthis presentation comes should inform themselves about and observe any such restrictions. By participating in this presentation or by accepting any copy of theslides presented, you agree to be bound by the foregoing limitations.
Disclaimer
Section 1: RPG Group Overview
Section 3: Operational & Financial Overview
Section 2: Business Overview
5-6
19-26
8-17
Table of Contents
KEC International
World leader in Power
TransmissionEPC space
CEAT
One of India’s leading
manufacturer of automobile tyres
ZensarTechnologies
Softwareservices provider spread across 20
countries,400+ customers.
RPG Life Sciences
Pharma company with
wide range medicines in
global generics and synthetic
APIs.
Raychem RPG
Engineering products and
servicescatering to
infrastructure segment
of the economy.
Harrisons Malayalam
One of India’s largest plantation companies with tea, rubber and
other agro products.
RPG Enterprises was founded in 1979. The group currently operates in various
industries - Infrastructure, Technology, Life Sciences, Plantations and TyreManufacturing. The group has a history of business dating back to 1820 AD in
banking, textiles, jute and tea. The Group grew in size and strength with several
acquisitions in the 1980s and 1990s. CEAT became a part of the RPG Group in 1982,which is now one of India’s fastest growing conglomerates with 20000+ employees,
presence in 100+ countries and annual gross revenues of ~$3 Bn.
RPG Group: Powered by Passion, Driven by Ethics
UNLEASHTALENT
TOUCHLIVES
OUTPERFORM
AND☺
5
FY14-18 CAGR: EBITDA 8.0% PAT 11.7%
Note:1) ROCE is calculated by taking EBIT*(1-ETR) divided by Capital Employed2) ROE is calculated by taking PAT divided by Net-worth3) Market Cap updated till 18th July 2018
FY14-18CAGR: 4.9%
RPG Group: Key Financials
6
17,94919,183 19,271 20,052
21,766
FY14 FY15 FY16 FY17 FY18
Gross Total Income (Rs Cr.)
1,630 1,668
2,014 2,0452,218
663 739879
980 1,031
FY14 FY15 FY16 FY17 FY18
EBITDA PAT
3,8074,611
5,260
6,066
6,925
17.4%16.0% 16.7% 16.2% 14.9%
12.1% 10.6% 11.6% 12.3% 12.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
FY14 FY15 FY16 FY17 FY18
Net Worth ROE ROCE
19,260
4,442
7,182
6,260
0
5,000
10,000
15,000
20,000
25,000
30,000
Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18
Market Cap
Group CEAT KEC Zensar
Harsh Vardhan GoenkaChairman, Non Executive Director
Anant Vardhan GoenkaManaging Director
Arnab BanerjeeWhole -Time Director
Atul C. ChokseyNon Executive
Independent Director
Hari L. MundraNon Executive
Non Independent Director
Mahesh S. GuptaNon Executive
Independent Director
Paras K. ChowdharyNon Executive
Independent Director
Punita LalNon Executive
Independent Director
Ranjit PanditNon Executive
Independent Director
S. DoreswamyNon Executive
Independent Director
Vinay BansalNon Executive
Independent Director
Board of Directors
Haigreve KhaitanNon Executive
Independent Director
8
Pierre E. CohadeNon Executive
Non Independent Director
Anant Goenka
Managing Director Chief Financial Officer
Arnab Banerjee
Executive Director- Operations
Tom Thomas
Executive Director - Projects & Chief Mentor Technology
Dilip Modak Chandrashekhar Ajgaonkar
Senior Vice President- Manufacturing
Senior Vice President- Quality Based Management
Kumar Subbiah
9
Leadership Team
Milind Apte
Senior Vice President- Human Resources
Peter Becker
Senior Vice President- R&D and Technology
India’s leading tyre company with over 50 yrs of presence
Distribution Network : 4,500+ dealers, 500+ exclusive CEAT franchisees
6 Manufacturing facilities - Bhandup, Nasik, Halol, Nagpur, Ambernath & Sri Lanka
100+ countries where products are sold with strong brand recall
#No 1 player in Sri Lanka in terms of market share
H1 FY19 Revenue Breakup by Product H1 FY19 Revenue Breakup by Market
10
Overview
Note : Figures in parenthesis denote H1 FY18
Exports, 12%, (12%)
OEM, 29%, (26%)
Replacement, 59%, (62%)
Truck and Buses, 32%,
(30%)
2/3 wheelers, 31%, (31%)
LCV, 11%, (12%)
Passenger Cars / UV, 14%, (14%)
Farm, 7%, (8%)Speciality, 4%, (4%)
11
Strategy
Differentiated Products1
Strong Brand2
Extensive Distribution3
Deep OEM Partnerships4
World Class R&D5
Expanding Global Reach6
✓ Two wheelers
✓ Passenger cars & Utility vehicles
Profitable growth
✓ Off Highway Tyres
✓ Passenger Segments
Domestic Market
International Market
12
Differentiated Products1
Key developments
▪ Focus on OEM, recent entriesin new models – Ashok LeylandDost, Mahindra E Alpha, BajajNew Platina, Honda Cliq, AshokLeyland Stag and Partner, TorkT6X, Hero Motocorp Achiever150, Renault Kwid, HimalayanABS (Royal Enfield), The AceDeluxe – Cleveland Cycleworks
▪ Recent entries into OEM’sexisting models – Bajaj Pulsar150, Honda (Livo, Shine andDream Yuga), Bajaj Pulsar 160,Tata Motors TBR, AL PartnerLCV, Escort Tractors, Wagon R,Zylo, Daimler Truck Radials,Suzuki Gixxer, RE Classic,Yamaha FZ, Volvo etc.
▪ Platforms like Fuelsmart, Gripp,Mileage X3, SecuraDrive etc.
New Entries and Supplier to OEM’s
13
Strong Brand2
CEAT became the official tyre partner of Torino FC, an elite Serie A football club based in Italy
CEAT’s SecuraDrive platformtargeting Superior Control at Higher Speed
No. of CEAT Shoppes
▪ 4,500+ dealers
▪ 500+ CEAT Franchisees (Shoppes + Hubs)
▪ 280+ two-wheeler distributors
▪ Developed Multi Brand Outlet / Shop in Shop model over last 2 years.
Over 400 outlets so far
▪ Launched CEAT Bike Shoppes in Bangalore and Kolkata
Distribution Network
14
Extensive Distribution
District coverage
3
Shoppe Shop in Shop (SIS)
Multi Brand Outlet (MBO) Bike Shoppe
212
464
601
FY12 FY15 FY18
102
~350
FY12 FY18
16
World Class R&D5
▪ State of the art R&D facility at Halol plant
▪R&D focussed on development of breakthrough
products, alternate materials, green tyres &
smart tyres
▪Partnerships with global institutes and
technology partners
Breakthrough Products
▪ “Puncture Safe” tyres for Two Wheelers – India’s 1st Self Sealing tyre
▪ “FuelSmarrt Tyres” for Passenger Cars – Reduced rolling resistance, less fuel consumption and more savings
▪ “Milaze Tyres” for SUV segment– Higher mileage up to 1,00,000 kilometers
Expanding Global Reach
▪ Exports to 90+ Countries in 7 clusters
▪ Sri Lanka: Manufacturing facility and Leadership position in the market and with 50+% market share
▪ Focused product and distribution strategy for select clusters and countries
Far East 1 Cluster
Africa
Cluster
LATAM
Cluster
Middle East
Cluster
Europe Cluster
US Cluster
Emerging markets
Key Export Clusters
Far East 2 Cluster
6
19
Q2 FY19 Operational Highlights
OEM Model EntryManufacturing Excellence
Ace Deluxe Cleveland CycleworksCEAT’s Nagpur plant awarded the
British Safety Council’s ‘Sword of Honor’
Q2 FY19 v/s Q1 FY19 (Q-o-Q)
▪ Net revenue from operations increased by 2.8% at INR
1,755 Crs from INR 1,706 Crs
▪ Gross margins remained flattish at 39.3%
▪ EBITDA stood at INR 165 Crs compared to INR 181 Crs;
margins at 9.4% from 10.6%
▪ PAT stood at INR 63 Crs compared to INR 71 Crs
▪ Debt / equity at 0.34x compared to 0.28x
20
Consolidated: Q2 FY19 Financial Highlights
Q2 FY19 v/s Q2 FY18 (Y-o-Y)
▪ Net revenue from operations increased by 15.2% at INR
1,755 Crs from INR 1,523 Crs
▪ Gross margins contracted marginally to 39.3% from 39.4%
▪ EBITDA stood at INR 165 Crs compared to INR 181 Crs;
margins at 9.4% from 11.9%
▪ PAT stood at INR 63 Crs compared to INR 73 Crs
▪ Debt / equity at 0.34x compared to 0.41x
Rev
en
ue
gro
wth
Mar
gin
tre
nd
s
21
Consolidated: Financial Trends
NoteFY16 onwards the figures are per IND AS; Other financial figures are as per IGAAP as published in previous periodsFY16 onwards the Company’s investment in Sri Lanka JV is accounted using Equity method under IND AS which was earlier consolidated using proportionate consolidation methodFY16 onwards the EBITDA includes profit from Sri Lanka JVEBITDA does not include Non- operating income
5,508 5,705 5,447 5,722 6,231
1,706 1,755
FY 14 FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19
Net Sales (Rs Cr)
658 680 809
685 638
181 165
11.9% 11.9%
14.9%
12.0%10.2% 10.6%
9.4%
FY 14 FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19
EBITDA (Rs Cr)
EBITDA to NetSales %
PAT
tre
nd
s
NotesFY16 onwards the figures are per IND AS; Other financial figures are as per IGAAP as published in previous periods 22
Consolidated: Financial Trends
271 317
438 361
233
71 63
4.9%5.6%
8.0%
6.3%
3.7%4.2%
3.6%
0.0 %
1.0 %
2.0 %
3.0 %
4.0 %
5.0 %
6.0 %
7.0 %
8.0 %
9.0 %
-
50
100
150
200
250
300
350
400
450
500
FY 14 FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19
PAT (Rs Cr)
PAT to Net Sales%
23
Consolidated: Q2 FY19 Financials
NotesFigures are as per IND AS Company’s investment in Sri Lanka JV is accounted using Equity method under IND AS which was earlier consolidated using proportionate consolidation methodEBITDA includes profit from Sri Lanka JVEBITDA does not include Non- operating income
Parameter Q2 FY18 Q1 FY19 Q2 FY19 QoQ YoY
Net Revenue from operations 1,523 1,706 1,755 3% 15%
Raw Material 923 1,035 1,065 3% 15%
Gross margin 600 671 690 3% 15%
Gross margin % 39.4% 39.3% 39.3% Flattish -8 bps
Employee Cost 111 119 142 19% 28%
Other Expenses 314 377 389 3% 24%
EBITDA 181 181 165 -9% -9%
EBITDA % 11.9% 10.6% 9.4% -118 bps -249 bps
Finance Cost 24 20 19 -9% -22%
Depreciation 41 46 48 4% 17%
Operating PBT 117 114 99 -14% -15%
Exceptional expense 8 2 2 -13% -75%
Non-Operating income 6 4 3 -11% -49%
PBT 115 116 100 -13% -13%
PAT 73 71 63 -12% -14%
De
bt
bre
aku
pLe
vera
ge r
atio
s
Total Debt (INR Cr)
1174 775 663 872
24
Consolidated: Leverage / coverage Profile
NoteFY16 onwards the figures are per IND AS; Other financial figures are as per IGAAP as published in previous periodsCompany’s investment in Sri Lanka JV is accounted using Equity method under IND AS which was earlier consolidated using proportionate consolidation methodEBITDA includes profit from Sri Lanka JV; EBITDA does not include Non- operating incomeFor Debt / EBTIDA, quarterly EBITDA has been annualisedFor debt break-up, we have reclassified Current Maturities of Long Term Debt under Long Term debt
924 755 943
658 680809
685638
181 165
1.8 1.1 0.81.3 1.4
1.0 1.43.8
5.2
8.5 8.4
6.6
8.9 8.9
0
100
200
300
400
500
600
700
800
900
FY 14 FY 15 FY 16 FY 17 FY18 Q1 FY19 Q2 FY19
EBITDA (Rs Cr)
Debt / EBITDA(x)
EBITDA /Interest (x)
597
27234
58196 106
363
577
503630
866676
649
5811.14
0.460.32 0.38 0.33 0.28 0.34
FY 14 FY 15 FY 16 FY 17 FY18 Q1 FY19 Q2 FY19
LT Debt (Rs Cr)
ST Debt (Rs Cr)
D/E
NotesFinancials are as per IND ASEBITDA does not include Non- operating income 25
Standalone: Q2 FY19 Financials
Parameter Q2 FY18 Q1 FY19 Q2 FY19 QoQ YoY
Net Revenue from operations 1,512 1,674 1,718 3% 14%
Raw Material 920 1,028 1,058 3% 15%
Gross margin 592 646 660 2% 12%
Gross margin % 39.2% 38.6% 38.4% -15 bps -72 bps
Employee 105 110 132 19% 25%
Other Expenses 306 362 372 3% 22%
EBITDA 182 174 157 -10% -14%
EBITDA % 12.1% 10.4% 9.1% -127 bps -293 bps
Finance Cost 23 15 13 -16% -45%
Depreciation 41 41 44 5% 7%
Operating PBT 118 118 100 -15% -15%
Exceptional expense 1 2 2 -13% 256%
Non-Operating income 8 6 12 118% 46%
PBT 125 121 111 -8% -12%
PAT 83 78 75 -3% -10%
▪ Market Price (October 25): INR 1,049/share
▪ Face Value : INR 10/share
▪ Market Cap (October 25): INR 4,244 Cr
Shareholding Pattern as onSep 30, 2018 Market Information
Source : Capitaline. The above data is updated till 24th October, 2018
26
Equity Shareholding & Price trends
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
Oct/17 Nov/17 Dec/17 Jan/18 Feb/18 Mar/18 Apr/18 May/18 Jun/18 Jul/18 Aug/18 Sep/18 Oct/18
Close Price (Rs) Total Volume