Commercial Engineers and Body Builders Co Ltd. (CEBBCO) Investor - - PowerPoint PPT Presentation

Commercial Engineers and Body Builders Co Ltd. (CEBBCO) Investor Presentation November 2011

Important Notice

Forward Looking Statements This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to CEBBCO’s future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial

• performance. CEBBCO undertakes no obligation to publicly revise any forward looking

statements to reflect future / likely events or circumstances

2

Agenda

3

1. Investment Highlights 4 2. Business Overview 5 3. Strategy 11 4. Management and Board of Directors 12 5. Financial Overview 14 6. Industry Overview 18 7. Corporate Social Responsibility 20

Investment Highlights

4 Strong Market Position  One of the leading producers of tippers and load bodies for defence and domestic market  Comprehensive product portfolio in commercial vehicles for application across industries  Presence across 3 segments of railways rolling stock – locomotives, coaches and wagons Attractive Growth Opportunity  Expansion in the high growth power fabrication segment with strong customer recognition  State of the art railway wagon plant with latest machinery and equipment  Exposure to the high growth infrastructure sectors in India – Road transport and railways Operational Excellence  Blue chip customer base with focus on diversification  Strategically placed manufacturing facilities with proximity to customers and vendors  Design and engineering capabilities provide high quality and industry leading standards

Diverse Product Portfolio

5 Commercial Vehicles

Mining & Road Construction Goods Transportation Miscellaneous Applications Solid Waste Management Municipal Applications Defense Application Products

• Tipper bodies
• Tanker bodies
• Refrigerator-fitted vehicle bodies /containers
• Load cargo bodies
• Trailer bodies
• Skip loaders
• Garbage bin collectors
• Water tanker bodies
• Light recovery vehicle bodies
• Garbage tippers
• Troop carrier vehicle bodies
• Prison van bodies
• Water bowser bodies
• Vehicle bodies for transportation of animals
• Fire engine bodies
• Ambulance bodies

Diverse Product Portfolio

6 Railways

Railways Components Application Products

• Upgradation and refurbishment of BOXN wagons
• Components for locomotives
• Components for BOXNR wagons
• Components for coaches

Power

Boilers and ESP Application Products

• Structurals for boilers and electrostatic

precipitators (ESPs)

20 40 60 80 100 2008 2011 (%) Top Client Other Clients

Blue Chip Customer Base

7 Top Customer Accounted for 63% of Total Sales in FY2011 Compared 74% in FY2008

Commercial Vehicles Railways Power

2008-11 Revenue CAGR (%) 36% 15%

Revenue Contribution by Client Above clients are arranged alphabetically

Strategically Placed Manufacturing Locations

8

Proximity to Customers  Jabalpur serves as a central location to major OEM hub across India  Near key customer in Indore and Jamshedpur Proximity to Suppliers  Strategically located closer to the suppliers of steel in Orissa and Jharkhand Manufacturing facilities (6) Major OEM hubs in India Suppliers of Raw Material Other Locational Advantages  Lower labour, land and overhead costs provides advantage over

• ther locations

 Benefits under the Madhya Pradesh Industrial Investment Promotion Assistance Scheme, 2004 Jabalpur (4) Jamshedpur (1) Indore (1)

Location in Central India Provides Competitive Advantage

State of the Art Manufacturing Facilities

9

Richhai I, Jabalpur Factory Locations Mandla, Jabalpur Richhai II, Jabalpur Indore Jamshedpur

Focus on Technology and Quality

Research & Development Quality Certifications

Weld Testing and Training Facility ISO 9001:2008 Certificate for Quality Management System for Automobile Bodies and Components for Commercial Vehicles ISO 9001:2008 Certificate for Quality Management System for Railways Products

• 20 engineers to develop new designs

for a range of products

• First Indian company to

manufacture a complete stainless steel tipper; under evaluation by customers

• Manufactured a unique bulker that

carries fly ash on one side and clinkers on the other side for the most optimum utilization

• State of the art reefer plant to

manufacture refrigerated vans as per European ATP (food grade) standards

New Railway Plant, Jabalpur

Receipt of Order

Advance Product Quality Planning Product Part Approval Process Failure Mode and Effect Analysis Tooling Raw material procurement Machine shop

• peration

Sub-assembly Cleaning and rust proofing Final fitment / cubbing assembly Final painting Fitting of accessories Inspection as per check list Final finishing Document check

Dispatch

Order receipt and procurement Manufacturing process Quality check and dispatch

Integrated Manufacturing Process

10 Manufacturing Process Supported by World Class Infrastructure

Robotic fabrication system Computerized numerical control press Numerical control shearing machine Centralized gas bank for welding Shot blasting booth Five-ton electric

• perated

trolley Paint booth 200 and 300 cubic feet per minute compressors

Power World Class Manufacturing Facilities State of the Art Technology Experienced Management Team

Growth Strategy

11 Leverage Existing Capabilities to Expand Product Offering and Mitigate Risk

Commercial Vehicles

• Expand presence in

emerging sub segments

• Consolidate market position

and win new clients

• Focus on business from

private fleet owners

• Strengthen relations with

existing customers

• Leverage partnership in the

refrigerated segment Railways

• Strong expected demand from

Indian Railways

• Setting up a wagon and EMU

coach manufacturing plant in Jabalpur

• Aggressively bid for new railway

tenders Power

• Capitalize on strong demand
• Continued focus on power structurals, i.e. ESPs and boilers
• Brownfield expansion ongoing

Management & Board of Directors

12 Experienced Management Team

Key Executives Background

• Dr. Kailash Gupta

Chairman and Managing Director

• Over 30 years of industry experience
• Former President of the Federation of Automobile Dealers Associations (FADA)
• Currently an active member of FADA Governing Council
• He holds a post graduate degree in Physics from DAV College, Meerut University. He was

awarded a Doctorate degree by the Jabalpur University Ajay Gupta Executive Director

• Instrumental in conceiving and extending business in the railways industry
• A Commerce graduate from University of Mumbai and has completed a one- year Business

Leaders Programme from IIM, Kolkata Amit Kumar Jain Chief Financial Officer

• Over 15 years of experience in finance, taxation and accounts
• A Chartered Accountant from the Institute of Chartered Accountants of India

Abhishek Jaiswal Executive Vice President

• Over 18 years of experience in sheet metal fabrication and 3 years in the automobile industry
• Currently responsible for production and operations
• Holds a graduate degree in Production Engineering from GSI, Indore

Pradeep Gupta Executive Vice President, Railways

• Over 30 years of experience in project management, manufacturing, marketing, product

engineering, vendor development and export execution in the railway industry

• Holds a graduate degree in Mechanical Engineering from Punjab Engineering College,

Chandigarh

Management & Board of Directors

13 Board of Directors

Shyam Mani Managing Director, Tata Motors Finance (a 100% subsidiary of Tata Motors)

• Dr. Kailash Gupta

Chairman and Managing Director Ajay Gupta Whole-time Executive Director Akhil Shriprakash Awasthi Managing Partner, Tata Capital Private Equity Sevantilal Popatlal Shah Retired General Sales Manager, Tata Motors Arun Kumar Rao Retired Director General, RDSO, Lucknow Sudhir K Vadehra Managing Director, Kewaunee Labway (Singapore) Ravi Gupta Industrialist

Experienced and Independent Board Members

Independent Directors Non-Executive Directors

Key Board Member Background Shyam Mani Additional Director

• Currently Managing Director of Tata Motors Finance, a 100% subsidiary of Tata Motors
• Previously Mr. Shyam Mani was VP, Sales and Marketing at Tata Motors Commercial Vehicles

Business Unit Arun Kumar Rao Independent Director

• Served Indian railways for 38 years and retired as Director General, RDSO, Lucknow
• Graduate from BITS, Pilani and the Institution of Mechanical Engineers, London

Sevantilal Popatlal Shah Independent Director

• Retired General Sales Manager, Tata Motors and is currently the Director General of Federation of

Automobile Dealers Associations

• He is a qualified Mechanical Engineer

Promoters 54.96% Foreign Institutional Investors 7.34% Venture Capital Funds 10.93% Foreign Venture Capital Investors 11.94% Retail 14.83%

Ownership Structure

14 Backed by Blue Chip Global Investors

Shareholding as of Sep 30, 2011 Other Corporate Information  Outstanding Shares (Sep 30, 2011): 54,942,964  52 Week High /Low (`): 144.80 / 27.50  Bloomberg: CEBB:IN  Reuters Ticker: CEBB.BO  BSE / NSE Ticker: 533272 / CEBBCO

* As of November 8, 2011

1,842 1,930 4,286 6,184 7,544 2008 2009 2010 2011 H1 FY2012

Order Book (` million)

65 14 203 57 164 5.5% 1.3% 11.1% 2.7% 8.3% 2008 2009 2010 2011 H1 FY2012

Net Income (` million) Margin (%)

1,192 1,120 1,829 2,122 1,973 2008 2009 2010 2011 H1 FY2012

Net Sales (` million)

160 98 413 204 302 13.5% 8.7% 22.6% 9.6% 15.3% 2008 2009 2010 2011 H1 FY2012

EBITDA incl Other Income (` million) Margin (%)

Financial Overview

15 Order Book Net Sales EBITDA and Margin Net Income and Margin

Financial Overview

16

(` million) Q2 FY2012 Net Revenue 1,161 EBITDA (incl. Other Income) 157 EBITDA Margin (%) 13.5% Cash Profit 118 Cash Profit Margin (%) 10.1% Net Profit 95 Net Profit Margin (%) 8.2% Basic EPS (`) 1.73

Q2 FY2012 Financial Highlights

Operational Efficiency

17 Ensure Better Productivity and Healthier Balance Sheet

Lean Manufacturing Six Sigma Activities Improved Margins and Cash Flows Competitive Cost Advantage

• Lower land, labor and
• verhead costs due to location

in smaller cities

• Economies of scale
• Ability to re-negotiate prices

with vendors Steel Price Fluctuation

• Ability to pass on price hikes

to customers

• Focus on working capital

management

• Long standing relationship

with key suppliers 83% 6% 1% 4% 1% 5% Raw Materials Consumed Stores and Spares Consumed Power and Fuel Labour Charges Repairs and Maintenance Personnel Expenses FY 2011 COGS

9.3% 8.9% 8.3% 7.8% 8.4% 8.5% 6.0% 8.0% 10.0% 12.0% Q1 Q2 Q3 Q4 FY2012E FY2013E 150 160 170 180 190 200 210 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Manufacturing General

Macroeconomic Overview

18 Real GDP Growth Rate Index of Industrial Production Per Capita Income and Growth Per Capita Consumption

FY2011

Source: Ministry of Statistics and Programme Implementation, World Bank Source: Ministry of Statistics and Programme Implementation Source: indiabudget.nic.in

32,012 34,533 37,328 38,695 40,745 7.6% 7.9% 8.1% 3.7% 5.3% 3.0% 5.0% 7.0% 9.0% 9,000 18,000 27,000 36,000 45,000 FY2006 FY2007 FY2008 FY2009 FY2010 Per Capita Income (Rs.) Growth (%) 18,909 20,168 21,841 23,012 23,626 59.1% 58.4% 58.5% 59.5% 58.0% 57.0% 57.5% 58.0% 58.5% 59.0% 59.5% 60.0% 9,000 18,000 27,000 FY2006 FY2007 FY2008 FY2009 FY2010 Per Capita Consumption (Rs.) as % of Income

Source: indiabudget.nic.in

567 1,420 2,230 2010 2015E 2020E

~ $540 mn

• Setting up a factory to manufacture LCVs

$62 mn

• New engine plant in Madhya Pradesh

~$44 mn

• Product development

~$32 mn

• Investment plans in Madhya Pradesh with capacity of 12,000 units

n/a

• Investments to achieve annual sales of approximately 2,000 trucks, 1,000

buses and 1,500 engines in next 5 years  Economic growth  Availability of financing  Government support and initiatives  Scheme for promotion of cold chain infrastructure  Restriction on overloading  Increasing CV ownership by fleet operators

Industry Overview

19 Commercial Vehicles Commercial Vehicle Production ('000 units) Industry Growth Drivers Continued Investments by Global OEMs

Source: ACMA and IBEF

168 266 447 559 621 830 157 245 396 517 559 747 11 21 51 42 62 84 VI Plan VII Plan VIII Plan IX Plan X Plan XI Plan (billion units) Demand Supply Deficit 33,909 6,912 690 555 255,227 43,968 4,644 3,726 Wagons Passenger Coaches Diesel Locomotives Electric Locomotives Short Term (FY2011 - FY2012) Long Term (FY2013 - FY2020)

Industry Overview

20 Indian Railways Power

Source: Indian Railways Vision 2020

 Aggressive plans for expansion, modernisation and replacement of old coaches and wagons  2011-12 Budget allocated the highest ever annual

• utlay of ` 57,630 Crore

 Estimated procurement of 18,000 wagons in FY2012  The gap between in-house production capacity and future demand is to be filled through Public Private Partnerships (PPP)  The Government of India has set capacity addition targets of 62 GW for the ongoing Eleventh Five Year Plan Period  The majority of capacity additions will be for thermal power generation, which is expected to account for 81.4% of the total capacity additions by 2012

Source: IBEF

Corporate Social Responsibility

21 Committed Towards Welfare of the Society

Health Check up for Employees Community Drinking Water Health Check up for People in the Locality Active Participation in Local School Events Distribution of Toys to Kids Distribution of Prizes on Independence Day

22

Contact: Commercial Engineers & Body Builders Co Ltd (CEBBCO) 124, Napier Town Jabalpur 482 001, India  +91 761 245 1941 - 43

Divitya Bansal, CEBBCO divit@cebbco.com Saket Somani, Churchgate Partners saket@churchgatepartnersindia.com