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Investor Presentation
Eicher Motors Ltd.
JOINT INVESTORS MEET March 28th, 2012 | Pithampur
Siddhartha Lal MD & CEO, Eicher Motors Ltd.
Investor Presentation
In this Presentation
1. Eicher Motors Limited
Journey so far
EML: Overview
2. Royal Enfield
3. VE Commercial Vehicles Limited
4. Financials
2 Joint Investors Meet Presentation 1
Investor Presentation
1959 1984 1991 1993 2002 2005 2008
Eicher Motors Limited – Journey so far…
India’s first tractor rolls out of Eicher factory in Faridabad
JV with Mitsubishi Motors to make ‘Canter’ trucks
JV with Mitsubishi ended, enters MD bus segment
Divests tractor and allied businesses to focus on CV and motorcycle businesses
Royal Enfield motorcycles acquired
Enters HD trucks segment
Forms JV with AB Volvo of Sweden; transfers CV business to the JV
3 Joint Investors Meet Presentation 2
Investor Presentation
EML
AB Volvo
Retail Investors Institutional Investors
Promoter Group
Eicher Motors Limited Overview
8.4%
11.5% 24.9%
55.2%
VE Commercial Vehicles Ltd.
Royal
Enfield
45.6%
54.4%
5 Joint Investors Meet Presentation 3
Investor Presentation
Eicher Management Philosophy
An evolved business model with 50+ years of experience in automotive space in India, that:
In-depth customer insights and market understanding
Best-in-class Capital Optimization:
Frugal engineering practices
Extensive knowledge of suppliers
Operational Excellence
Global Quality Standards
Break-through Market Business Model
Fully empowered management teams
Regular board meetings, every two months - full review with management
Strategic quarterly reviews and regular monthly operations review
Product board, Quality board, Customer Satisfaction board, Soft products board (after-market) held every quarter along with other statutory meetings
Established Corporate Governance
Corporate conduct rooted in highest standards of ethics, integrity and transparency
Highly professional work ethic based on mutual respect
Very strong HR and IR culture and brand
Long-term orientation
Long history of institutionalized CSR and community activities
Strong Values
6 Joint Investors Meet Presentation 4
Investor Presentation Joint Investors Meet Presentation 5
S Sandilya
Non Executive Chairman
Siddhartha Lal
Managing Director & CEO
MJ Subbaiah
Independent Director
Priya Brat
Independent Director
Prateek Jalan
Independent Director
R L Ravichandran
Executive Director
Established Governance Structure: EML Board
Investor Presentation
Moving forward...
29 Joint Investors Meet Presentation 6
ROYAL ENFIELD
Investor Presentation
Royal Enfield “Bullet” is the longest running model in continuous production. Royal Enfield Motorcycles are unique in terms of the engine character - Single Cylinder, Air-Cooled, Push-rod &Valve operated for the distinctive Bullet beat. The authentic vintage styling , traditional paint schemes, 1950’s style, nacelle and toolboxes contribute to its “distinctive classic” appeal.
Royal Enfield
1901: Royal Enfield rolls out its first Motor Cycle
1955: Enfield India is incorporated.
1994: Eicher Motors acquires Enfield India Ltd.
26 Joint Investors Meet Presentation 7
Investor Presentation
After successfully managing 2010, the year of transition,
Royal Enfield continues to grow and evolve
Bullet Thunderbird Classic
27
10606
14871
0
10
20
30
40
50
0
5000
10000
15000
20000
YTD Feb '11 YTD Feb'12
Gro
wth
(%
)
Sale
s V
olu
me
(un
its)
4.1 1.7
5.5 7.2
12.7 17.7 20.0
1.2
41.9
0
5
10
15
20
25
30
35
40
45
0
10000
20000
30000
40000
50000
60000
70000
80000
2003 2004 2005 2006 2007 2008 2009 2010 2011
Gro
wth
(*
%)
Sale
s V
olu
me
(un
its)
Sales Volume
Growth (%)
40.2
Joint Investors Meet Presentation 8
Transition of all models to UCE
platform; Surge in demand Introduced UCE engine in Bullet’s
export model & launched Classic 500 with UCE
Demand continues to be ahead of capacity; optimising production in TVT; commencement of capacity
expansion at new site in Oragadam
Investor Presentation
Market Trading Up
Upper end segment, less price sensitive,
growing
Rich Heritage
Enhanced Product Removed perceptual &
physical purchase barriers
Practical Leisure Motorcycling
Uniquely differentiated offering
Sold as a leisure bike; bought as a practical bike
Joint Investors Meet Presentation 9
Investor Presentation
Thriving in “Community”: Both physical & virtual
Joint Investors Meet Presentation 10
Investor Presentation
Plans being executed for profitable growth
• Enhance production for CY 2012 to 1,00,000 units;
• Capacity increase to 150, 000 pa after start of commercial production from new site at Oragadam, Chennai, India from 1st half, 2013
• Focus on cost management
• Exploit significant opportunities after market
• Thunderbird 500 launch planned in Q2, 2012
• Café Racer to be launched in Q1, 2013
• Accessories launch planned in Q2, 2012
• Increase reach in India and global markets
• Currently, there are 175 distribution and after market points in India. Exports to more than 30 countries
Enhance production capacity
Improve profitability
New product launches
Distribution and after market footprint
28 Joint Investors Meet Presentation 11
Investor Presentation Joint Investors Meet Presentation 12
Future: Café Racer
Investor Presentation
Moving forward...
29 Joint Investors Meet Presentation 13
VE COMMERCIAL VEHICLES Ltd. (VECV)
Investor Presentation
VECV was established in 2008 with strong parentage
Volvo strengths
Global expertise
Leadership in product
technology
Good infrastructure
facilities
Well-defined processes
and controls
Brand image and
customer relationships
Eicher strengths
Leadership in LD / MD
segments
Specialist skills and
experience in developing
low cost, better
performance products
Wide dealer network
After sales infrastructure
for LD / MD
Cost effective operations
VECV vision
“To be
recognised as
the industry
leader driving
modernisation in
commercial
transportation in
India and the
developing
world” Eicher transferred its CV, components and engineering solutions businesses into VECV
Volvo demerged Volvo Truck India’s sales & distribution business from Volvo India Pvt Ltd.
12 Joint Investors Meet Presentation 14
Investor Presentation
Dec 2007: Signing of Letter of intent
May 2008: Signing of definitive agreements
Jul – Aug 2008: Commencement of JV
Dec 2008: Volvo Board Visit
Mar 2009: Launch of Quality Improvement CSI-1 Initiative
April 2009: Inauguration of the new gear plant at Dewas
Jan 2010: Launch of VE-series of Eicher HD trucks
June 2010: Launch of MDE Project
October 2010: Groundbreaking ceremony of MDEP plant site
February 2012: Groundbreaking ceremony of Eicher Bus manufacturing plant site at Dhar, Madhya Pradesh
VECV milestones
May 2008: Signing of definitive agreements
13 Joint Investors Meet Presentation 15
Investor Presentation
VECV Overview
Eicher Trucks & Buses
Volvo Trucks India
Eicher Engineering Components
Eicher Engineering
Solutions
Medium Duty Engine Project
14 Joint Investors Meet Presentation 16
Investor Presentation
VECV - Wanted position in 2015
Wanted position 2015: Operations
Long term operating margin target >8% over a business cycle
Customer satisfaction to reach >80%
Wanted position 2015: Strategic
4819
26425
4219
2010
17,500
36,400
44,000
2015
0
100,000
60,000
80,000
Sales in units
40,000
20,000 15%
35%
16%
Market
share
(2015)
38181 inclusive of 2717
exports
Bus
LD/MD
HD Seen as a
leading CV group in
India
Recognized competitive advantages
"Best of
both" company culture
Most innovative products
covering entire range
Comprehensive network
Proactive solution / service
provider
Lean organization
Culture incorporating best of
Eicher values and Volvo Way
Professionalism, honesty,
people caring to attract best
talents in industry
Best fuel economy
Reliable products
Superior service quality
Safety and comfort setting
industry standards
24
100,000 including 11000
exports
Joint Investors Meet Presentation 17
Investor Presentation
Moving forward...
29 Joint Investors Meet Presentation 18
FINANCIALS
Investor Presentation
EML Consolidated: Optimising returns on capital
employed and effective cash management
Joint Investors Meet Presentation 19
56.1
125.0
77.0
0
20
40
60
80
100
120
140
CY09 CY10 CY11
Return on operating capital employed (%)
7.1
10.0
8.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
CY09 CY10 CY11
Net Sales/Net Fixed Assets
29,386
43,971
56,775
(563)
(1,289)
(1,815)
-2000
-1600
-1200
-800
-400
-
10,000
20,000
30,000
40,000
50,000
60,000
CY09 CY10 CY11
Net sales Working Capital (excl cash) In INR Million In INR Million
10347
11936
14476
6090
7160
8832
5500
6250
7000
7750
8500
9250
10000
7500
10000
12500
15000
CY09 CY10 CY11
Shareholders fund - Eicher Motors
Shareholders funds - AB Volvo
Investor Presentation 29 Joint Investors Meet Presentation 20
THANK YOU