Mahindra Forgings Feb 2012 / Investor Meet Systech Sector 1 - - PowerPoint PPT Presentation

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Mahindra Forgings Feb 2012 / Investor Meet Systech Sector 1 - - PowerPoint PPT Presentation

Nov 03, 2022 255 likes •489 views

Mahindra Forgings Feb 2012 / Investor Meet Systech Sector 1 Mahindra Forgings : Structure Holding structure created to enable global strategy M&M MFL SCHONEWEISS JECO STOKES M&M: 67.9% M&M: 47.1% M&M: 100.0% M&M:

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SLIDE 1

Systech Sector

Mahindra Forgings

Feb 2012 / Investor Meet

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SLIDE 2

Systech Sector

Mahindra Forgings : Structure

Holding structure created to enable global strategy

1 Note: Investments in JECO & Schöneweiss are held through investment companies in Mauritius

M&M

MFL SCHONEWEISS JECO STOKES

M&M: 47.1% Others: 52.9% M&M: 100.0% M&M: 67.9% Others: 32.1% M&M: 99.5%

M&M

MFL SCHONEWEISS JECO (renamed MFE) STOKES

M&M: ~53% Others: ~47% MFL: 100.0% MFL: 100.0% MFL: 99.9%

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SLIDE 3

Systech Sector

Mahindra Forgings: Capabilities

Each acquired company has a distinct value proposition

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Location India UK Germany Germany Plants 1 Plant 2 Plants 4 Plants 2 Plants Key highlights

  • Leading supplier of

crankshafts and stub-axles for cars/ MUVs in India

  • Machined products
  • Expertise in

producing „flashless‟ parts and near-net forgings for car market

  • Provides a

basket of forgings products to truck industry

  • Cost Leader
  • Machined

products

  • Among leading

axle beam manufacturers globally

  • Focused on truck

market

  • Very strong co-

development abilities % of Revenue (FY11 = Rs 19310 mn)

“German operations are the largest” 19% 8% 50% 23%

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SLIDE 4

Systech Sector

Mahindra Forgings: End User Segments

Europe and India have complementary products and end user segments

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CVs, 60% Cars, 7% Non Auto, 33% % of Sales (FY11)

Europe India Market Share

  • Market leader in CV forgings with a

basket of products but excluding crankshafts Market Share

HCV 4% LCV 10% MCV 1% MPV 1% Non Auto 4% Passenger Car 32% Tractor 12% UV 36%

% of Sales (FY11)

  • Market

leader in crankshaft & knuckles for cars/ MUVs and tractor market

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SLIDE 5

Systech Sector

Mahindra Forgings : Customers

Supply to Market Leading OEMs

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Europe / CV Market India / Vehicles < 3T

2010 Share MFE Customer Daimler 24%  MAN 17%  Paccar DAF 14%  Volvo 11%  Scania 10%  Iveco 10% Renault 10% source: Daimler 2011 2010 Share MFL Customer MarutiSuzuki 32%  Hyundai 18% n/a Tata Motors 17%  M&M 10%  Ford 4% n/a GM 4% Toyota 3% n/a VW 3% n/a source: CSM

n/a: OEM does not use or buy forged crankshafts in India

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SLIDE 6

Systech Sector

Market Situation : Europe

Stable market in the near term

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Source - VDA

Registration of Heavy Trucks (>6T) in Germany (Quarter-wise)

26442 45679 19646 16979 16355 15217 12650 13734 17974 20448 21529 21527 23327 22917 21491 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 Q1F09 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q3F12

Q-o-Q Growth rates:

Market (CV>6T) MFE Q1F12 30% 43% Q2F12 12% 26% Q3F12 0% 9%

Note: Year in the graph refers to Financial Year

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SLIDE 7

Systech Sector

Market Situation: Europe

Long term outlook remains positive

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  • Commercial vehicles production in Germany is our core market
  • 60-70% of the production is exported, exports to non W European countries

account for 35-40% of production (Source: VDA)

  • CV Industry is susceptible to fluctuations in the economy but experts

forecast a stable growth

  • CAGR~7-9% for our key customers in the next three years (Source: E&Y)
  • Transportation demand in Europe will continue to be strong because of

inequities between Western and Eastern Europe

  • New emission regulations driving new products and fleet renewal
  • All major truck OEMs planning new launches in the next 3-5 years
  • We expect higher share of business in the new launches
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SLIDE 8

Systech Sector

Performance Overview: MFE

Breakeven : Q2F12 EBITDA% = Q2F09 EBITDA% @ 75% of volumes

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9.5% 9.4% 2.4%

  • 3.6% -15.6%

4.7%

  • 5.5%

6.9% 10.2% 8.5% 8.2% 8.4% 8.5% 9.4% 7%

EBITDA %

MFE Quarterly Revenue & EBITDA(Euro mn)

~

102 99 72 50 36 36 38 49 56 62 67 77 80 78 73 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 9.7 9.3 1.7

  • 1.8
  • 5.6

1.7

  • 2.1

3.4 5.7 5.3 5.5 6.5 6.8 7.3 5.1

EBITDA Revenue

Note: Year in the graph refers to Financial Year

Press Breakdown

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SLIDE 9

Systech Sector

Key Initiatives: MFE

Focus on profitability : ROCE> WACC, EBITDA% & FCF

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  • Maximise utilisation of existing forgings capacity
  • Focus on product portfolio and personnel costs to boost profitability
  • Increased share in new launches will help boost margins
  • Increase share of machined parts
  • Growth Capex focused on machining (plus some maintenance required to keep

the plant in good condition) to increase margins

  • Self funding of capex (cash flow)
  • Improvement of Gearing
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SLIDE 10

Systech Sector

Market Situation : India

Healthy growth/ near term headwinds

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Source - SIAM

Production of Vehicles in India (Quarter Wise)

457384 476422 392818 499202 495697 566620 600183 672581 653276 742570 737777 853074 760553 730645 709755 127688 127284 71629 89890 102743 132910 139979 189953 163061 184312 184776 220768 202711 228293 228744 100000 200000 300000 400000 500000 600000 700000 800000 900000

Q1F09 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q3F12

Q-o-Q Growth rates

Passenger Vehicles (PV) Commercial Vehicles (CV)

PVs CVs MFL Q1F12 16% 24% 21% Q2F12

  • 2%

24% 23% Q3F12

  • 4%

24% 21%

Note: Year in the graph refers to Financial Year

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SLIDE 11

10

617 768 397 599 696 742 733 841 785 910 912 966 952 1123 1099 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 39 68

  • 31
  • 19

93 128 120 129 82 66 97 72 87 124 116 6.3% 8.9%

  • 7.8%
  • 3.2% 13.4%

17.3% 16.4% 15.3% 10.5% 7.3% 10.6% 7.5% 9.1% 11.0% 10.6%

MFL India Quarterly Revenue & EBITDA(Rs mn)

Performance Overview: MFL India

Back on track

EBITDA %

EBITDA Revenue

Note: Year in the graph refers to Financial Year

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SLIDE 12

Key Initiatives: MFL India

  • Growth
  • F12: Better than market growth
  • F13: In line with market growth
  • To sustain growth momentum, initiate action now to diversify product

range and increase export business (both directly and through MFE) without losing sight of current competencies

  • One project on shifting parts from MFE stabilised while another is WIP
  • Other projects from MFE to be evaluated for cost benefits
  • Build internal competencies in quality, productivity & process

parameters to become a global forging company via mentorship program with MFE

  • Build technical competencies for Compact crankshaft forging and

Machining

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SLIDE 13

Systech Sector

Mahindra Forgings : Strategy Summary

Challenges Ahead

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Europe India F12/F13

(Short term)

Focus F14+

(Medium term)

Focus

  • Operational excellence

–Use mentorship program to improve consistency in EBITDA%

  • Maintain customer traction

–Innovation to improve customer relationships: 20 patents, higher sob @Daimler Actros

  • Keep an eye on costs
  • Centre of Excellence in

crankshafts

  • Product Diversification, Exports
  • Respond to changing market needs

–emission norms, lightweighting

  • Address capacity plateau
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SLIDE 14

Systech Sector

Mahindra Forgings: Financials

Financial Summary

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Standalone Financials

INR Mn FY 09 FY 10 FY 11 YTD Dec,F12 Net Sales 2380 3012 3573 3174 EBITDA 71 470 320 328 EBITDA (% of net sales) 3.0% 15.6% 9.0% 10.3% One-time write-off (Stokes)

  • 902

Profit (loss) (excluding one-time writeoff)

  • 414
  • 45
  • 32

57 Shareholders' Funds 6710 8026 8026 Total Debt 2430 1487 1382 Total Fixed Assets (inc CWIP) 2391 2266 2276 Cash and Bank Balance 47 78 19 INR Mn FY 09 FY10 FY101 YTD Dec,F12 Net Sales 22429 13281 19258 18258 EBITDA 1434

  • 88

1764 1778 EBITDA (% of net sales) 6.4%

  • 0.7%

9.2% 9.7% One-time write-off (Stokes)

  • 182

Profit (loss) (excluding one-time writeoff)

  • 1166
  • 1663

38 541 Shareholders' Funds 7444 7943 7912 Total Debt 8740 6536 6970 Total Fixed Assets (inc CWIP) 14004 12355 12031 Cash and Bank Balance 348 287 183

Consolidated Financials

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SLIDE 15

Systech Sector

India: Auto Components

Outlook holding up

– Exports accelerating

Challenges

– Inflation – Power (Cost and Availability) – Labor (Cost and Availability) – Export Incentives

Opportunities

– Localization – Volumes – Rupee Depreciation

Growing as Forecast, but Cost Challenges Emerging

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Market 2011-12 2012-13

Domestic 16~18 % 13~15% Export 23 % 25 %

Source: E&Y

  • 100,000

200,000 300,000 400,000 500,000 600,000 2009 2015F 2020F

  • Dom. Potential
  • Exp. Potential

INR, Crores

Source: E&Y

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SLIDE 16

Systech Sector

Mahindra Systech : Business Snapshot

Diverse Products with Diverse Automotive Markets

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F2011 Revenues USD929M / INR42B

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SLIDE 17

Systech Sector

Mahindra Hinoday

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CASTINGS

India‟s leading ductile iron foundry

Leadership in axle & transmission components and turbocharger housings

Casting weight upto 70 kg

New materials in production include ADI

Machining lines for turbocharger housings

1 Plant MAGNETS

India‟s largest producer of magnetic products

Key products include arc magnets, cores and ferrite bars for auto and non-auto applications

Innovation-driven growth to energy efficient product solutions like Industrial Lighting

1 Plant

Technical Leadership in Ductile Iron and Magnetic Materials

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SLIDE 18

Systech Sector

Mahindra Gears

Focus on Excellence and Volumes in Offroad Applications

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GEARS INDIA

Transmission gears/shafts and engine timing gears for offroad and CV/UV markets

Gears upto DIN7 Class

Building capability and capacity for domestic and export markets

Developing aggregates

Two plants in India GEARS EUROPE / METALCASTELLO

Transmission gears/shafts and Crown Wheel Pinions for offroad and defense markets

Focus on low volume, high complexity applications

Gears upto DIN4 Class

Two plants in Italy

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SLIDE 19

Systech Sector

MUSCO Stampings

Business Transformation through Value Addition

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STAMPINGS

Supplier of Skin Panels and B/C Panels to domestic OEMs

Growth focus on value added products

– fuel tanks, suspension arms, cross car beams etc

Press range from 60T – 1200T for parts upto 35 kg

– expanding robotic handling

4 Plants in India

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SLIDE 20

Systech Sector

Mahindra Composites

SMC/DMC Compounding and Components

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COMPOSITES

Vertically integrated composites company

– SMC/DMC Compounding – Concept Design, Engineering, Prototyping – Compression Moulding (100T-2000T) – Hand lay-up – RTM facilities – Painting – Assembly

Non auto products include electrical enclosures and GRP pipes (2013)

2 Plants

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SLIDE 21

Disclaimer

Mahindra Forgings Limited herein referred to as MFL, and its subsidiary companies provide a wide array of presentations and reports, with the contributions of various professionals. These presentations and reports are for informational purposes and private circulation only and do not constitute an offer to buy or sell any securities mentioned therein. They do not purport to be a complete description of the markets conditions or developments referred to in the material. While utmost care has been taken in preparing the above, we claim no responsibility for their accuracy. We shall not be liable for any direct or indirect losses arising from the use thereof and the viewers are requested to use the information contained herein at their own risk. These presentations and reports should not be reproduced, re-circulated, published in any media, website or

  • therwise, in any form or manner, in part or as a whole, without the express consent in writing of MFL or its
  • subsidiaries. Any unauthorized use, disclosure or public dissemination of information contained herein is
  • prohibited. Unless specifically noted, MFL or any of its subsidiary companies is not responsible for the

content of these presentations and/or the opinions of the presenters. Individual situations and local practices and standards may vary, so viewers and others utilizing information contained within a presentation are free to adopt differing standards and approaches as they see fit. You may not repackage or sell the presentation. Products and names mentioned in materials or presentations are the property of their respective owners and the mention of them does not constitute an endorsement by MFL or its subsidiary companies. Information contained in a presentation hosted or promoted by MFL is provided “as is” without warranty of any kind, either expressed or implied, including any warranty of merchantability or fitness for a particular purpose. MFL or its subsidiary companies assume no liability or responsibility for the contents of a presentation or the opinions expressed by the presenters. All expressions of opinion are subject to change without notice.

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SLIDE 22

Systech Sector

Thank You