Tata motors

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Tata motors

  1. 1. Leading The FutureSep. - Oct., 2003
  2. 2. Statements in this presentation describing the Company’s objectives, projections,estimates, expectations may be “forward looking statements” within the meaning ofapplicable securities laws and regulations. Actual results could differ materially fromthose expressed or implied. Important factors that could make a difference to theCompany’s operations include, among others, economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which theCompany operates, changes in Government regulations, tax laws and other statutesand incidental factors 1
  3. 3. Presentation Outlinex Introduction to Tata Group & Tata Motorsx Growth Strategyx De-risking The Businessx The Way Forward 2
  4. 4. Tata Group – Leading Business Group in Indiax Among the prominent industrial houses of India, with a pioneering track record of more than 125 yearsx Over 80 companies with dominant presence in a wide range of businesses such as Materials, Chemicals, Energy, Engineering, Communications & Information Systems, Services and Consumer Goodsx Turnover : Rs 542 bn (US$ 11.2 bn) in FY03 (equivalent to 2.4% of India’s GDP at current prices)x Net Profit : Rs 39 bn (US$ 805 mn) in FY03x Strong Brand Equityx Good Business Ethics 3
  5. 5. Tata Motors – India’s Largest Automotive Companyx India’s first and only fully integrated Automobile manufacturer, with a significant presence in Commercial and Passenger vehicle marketsx Commenced operations in 1945x Indigenous technology development for all its productsx FY03 Financial Overview - Highest ever Net Revenues (unconsolidated) of Rs 91 bn (US$ 1.9 bn) - PAT (unconsolidated) of Rs 3 bn (US$ 63 mn) - Operating EVA positive - Operating ROIC of 13.6% - Dividend of 40% - Asset base of Rs 41.6 bn (US$ 877 mn) 4
  6. 6. Three millionth vehicle rolled outMilestones 200,000 th Indica sold, 500,000 th PV rolled out Indica platform achieves break-even Indigo launched 2003 Agreement with MG Rover for Indica exports 2002 100,000 th Indica rolled out Indica V2 launched 2001 1998 Two millionth vehicle rolled out. 1997 Indica launched 100,000 th Sumo rolled out 1994 Tata Sumo (UV) launched Entered the Car market with Sierra & Estate 1991 Produced one millionth vehicle 1990 Produced first in-house LCV Tata 407 1986 Technical agreement with Benz expired 1969 1967 Engineering Research Centre set up at Pune 1954 Daimler-Benz collaboration for CVs 1945 Incorporated as a Public Ltd. Company with a factory at Jamshedpur for manufacturing locomotives 5
  7. 7. Wide Product RangeTrucks (2MT– 40 MT GVW) Buses (12 -60 seater) Passenger Vehicles 6
  8. 8. Maintaining Leadership In Domestic Market Growth +30% +17% 120,000 107,438 104,414 100,000 88,865 82,564 80,000 Market share in FY03 60,000 x CVs: 56% 40,000 x PVs: 15% 20,000 0 CVs PVs FY02 FY03April-August, 2003 CVs: Volumes +39% Market share: 58% (+410 bps) PVs: Volumes +45% Market share: 16% (+220 bps) 7
  9. 9. Financial Snapshot Last 2 years Revenue CAGR of 16% & PBT swing of Rs 10 bn Net Revenue and EBITDA Margin PBT and PAT Rs bn % Rs bn100 91 15 8 5.1 80 75 68 12.5% 4 3.0 10 60 9.9% 0 40 6.1% 5 (1.1)(0.5) (4) 20 (5.0) (5.0) 0 0 (8) FY01 FY02 FY03 FY01 FY02 FY03 Net Revenue EBITDA Margin PBT PAT 8
  10. 10. Financial Performance – 1Q FY04 x Net Revenues of Rs 25 bn (up 43% YoY) x EBITDA margin of 13.3% - highest in last 21 quarters x Pre-tax Cash Profit of Rs 2.9 bn (up 125% YoY) x PBT of Rs 1.6 bn against Rs 0.4 bn in 1Q FY03 x PAT of Rs 1 bn - highest since April 1998 9
  11. 11. Stock Price Performance Index Rs bn 250 88 100 200 218 80 63 148 150 50 52 50 60 40 42 100 120 40 50 20 0 0 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Tata Motors Mcap (RHS) Total Auto Index Tata Motors BSE Sensex Apr 1, 2002 Sep 19, 2003 % change BSE Sensex 3,500 4,217 +20% Auto Index (April 1, 2002=100) 100 148 +48% Tata Motors Stock Price (Rs) 126 275 +118% Tata Motors Market Cap (Rs bn) 40 88 +118% 10
  12. 12. Presentation Outlinex Introduction to Tata Group & Tata Motorsx Growth Strategyx De-risking The Businessx The Way Forward 11
  13. 13. Strategy Ladder - Turnaround Turnaround (FY01-03) Improving Internal Efficiencies Further BE point reduction Platform strategy Customer-centric activities Positive PBT in Car ProjectAggressive Cost reductionRe-engineered processesMarket share gainsOrganisational transformation 12
  14. 14. Strategy Ladder – Growth Phase New Generation Products Capitalise on prod. dev. skills and costs globally Turnaround (FY01-03) Improving Internal Efficiencies Revenue growth through - Consolidation in domestic market - Significant presence in international markets Further BE point reduction New business activities Platform strategy ROIC improvement Customer-centric activities Positive PBT in Car ProjectAggressive Cost reduction Profitable Growth (FY04-06)Re-engineered processes Leveraging StrengthsMarket share gainsOrganisational transformation 13
  15. 15. Economic Recovery Economic Growth x Industrial recovery x Improvements in Capital Equipment industry x Normal monsoon Indian Economy Infrastructure Fiscal Initiatives xStrong construction activity xBenign interest rates xRoad Projects xRationalisation of Excise duties Auto sector to benefit from increased Industrial and Consumer demand 14
  16. 16. India Commercial Vehicle Market Pickups LCV Truck LCV Bus 12% 18% 10% (17%) (65%) MHCV Bus (37%) 10% (51%) ICV trucks 6% (28%) MCV trucks HCV trucks 24% (80%) 20% (63%) FY03 Market size : 192,000 units No. of foreign players: 2 Tata Motors’ Market share: 56% Market share: 0.3% Tata Motors – Leading the CV market 15
  17. 17. Road Development Programme Dramatic impact on Year-wise completion schedule of NHDP 1000 volumes in initial Stage 900 stage of road development Germany Planned length – 14,000 km 800 MHCV / m population France 700 Truck penetration 2004 UK 2003 21% 600 Turkey 500 Spain 12% 4 400 Portugal Australia Russia 300 Argentina Brazil 3 200Completed China South Africa 2 100 Indonesia 1 15% 0 India 2005-07 0 0.5 1 1.5 2 52% Source: NHAI Road Density Paved Highway (km) / Area (km2)Between 1997 - 2002, Highway length in China increased by around 15,000 km and CV volumes nearly doubled from 1.2 mn to 2.1mn … ….. Indicative of likely future directions in Indian market 16
  18. 18. Emerging Trends In CV Demand 160000MHCVs 120000 80000 40000 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 HCV trucks MCV trucks MHCV Buses 100000LCVs 80000 60000 40000 20000 0 FY97 FY98 FY99 FY00 FY01 FY02 FY03 Pickups LCV Trucks Buses HCVs gaining strength due to lower cost of operation Growth in Pickups indicating desegregation of load at the lower end 17
  19. 19. Tonnage Addition – More Than A Cyclical Recovery Despite lower GDP growth, the tonnage addition in FY03 nearly equalled the addition in last peak (FY97) Transporters’ 1.6 9% ROE continues 1.4 1.4 7.8% 1.3 to be healthy 1.2 1.2 6.5% 1.0 6% 1.0 1.0 5.1% 0.8 0.8 4.8% 0.8 0.7 0.7 0.7 5.6% 0.6 4.3% 0.5 4.0% 0.6 3% 0.4 0.2 1.3% - 0% FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 Tonnage Addition (mn MT) GDP GrowthFactors behind the recovery Economic Recovery Lower Interest rates Market Share gains from Railways Replacement & Upgradation of Vehicles Infrastructure Projects 18
  20. 20. Upside Potential In Bus Demand China Bus market India Bus market Total 701,000 822,000 1,046,000 Total 37,000 31,000 38,000 (‘000) (‘000)1200 401000 71 30 800 58 344 20 25 44 17 600 276 20 247 400 631 10 410 488 18 200 14 12 0 0 2000 2001 2002 FY01 FY02 FY03 Mini Light Medium/Large Light Medium With a geographic & population profile similar to China, India bus market is under-penetrated 19
  21. 21. Tata Motors – Initiatives & Achievementsx MHCV & LCV segment x Pick-up Segment – Superior range of EX series of – 207DI pickup launched in Aug’02 M&HCVs and 709LPT launched – Gained market share in high growth segmentx Fully Built Vehicles – Increased thrust on fully built vehicles & solutions – Wide range of buses, tippers & other applications – FBV volumes doubled 20
  22. 22. Tata Motors – Capturing The Upswingx Focus on hi-performance Total x Range of Fully Built Buses CV solutions – Contract manufacturing route – Truck of the Future to match for body building global standards x Non-vehicular business – Higher GVW, power to weight – Customer Financing ratio – Spares, Recon, AMC 21
  23. 23. India Passenger Vehicle Market Sumo, Safari (22%) Mid-size Cars MUVs Indigo(7%) 16% 13% Others 9% Compact Mini Cars Cars 20% 42% Indica (24%) FY03 Market size : 715,000 units No. of foreign players: 9 (excluding MUL) Tata Motors Market share: 15% Market share: 29% Tata Motors’ current product range addresses 70% of the market 22
  24. 24. India Passenger Vehicle Market Potential Growth Drivers PV Market potential ‘000 units x Demographics 1,187 1% GR1 x Infrastructure CA x Economic Factors 647 x Competitive Intensity x Technology x Regulations 2002 2008E 23
  25. 25. Growth Drivers China PV market India PV market ‘000 units ‘000 units 10001400 FY04 YTD1200 1,121 growth 25% 800 +56% 6471000 800 717 600 624 606 ? 612 600 400 400 200 200 0 0 2000 2001 2002 2000 2001 2002 2003Ex Release of pent-up demand in 2002 x Similar conditions in India – Price cuts by OEMs – Excise duty reduction – Easing of Regulations – Low cost finance – Low cost finance – Finance availability – Finance availability – New product launches 24
  26. 26. Passenger Vehicles – Initiatives & AchievementsIndica Indigox Among the top two selling models in the x Launched in Dec 2002 Compact segment since mid-2001x “Lowest Ownership cost per km” - NFO x Market leader in its segment since launch Automotive 2002 x “Most Exciting New Car of the Year” at the ICICI Bank and Overdrive Awards,MUVs 2003x Introduced “EX” & “+” series of Sumo & Safari 25
  27. 27. Tata Motors - Capturing The Upswing Models to address all key segments including: x Indica Sport x Indigo Estate x Safari Petrol x Others (Launched in Sep. 2003) Supported by new technologies 26
  28. 28. Presentation Outlinex Introduction To Tata Group & Tata Motorsx Growth Strategyx De-risking The Businessx The Way Forward 27
  29. 29. Going Globalx Near term strategy – Strengthen presence in traditional and niche markets • Exports volumes up 71% in first five months of FY04 – Establish regional alliances for marketing Focussed markets identified for growth – Re-launched CVs in Colombo and 5 other cities in Sri Lanka Reflected in the agreement with MG Rover Group – Intend to export 100,000+ Indica to EU over 5 years • Shipments to begin in 3Q FY04 – Distribution of Safari & Pick-ups in EUx Long term strategy – Develop ”Truck of the future” – Leverage technical capabilities for product development Significantly expand presence in the global market 28
  30. 30. Non-Cyclical Revenue Stream Revenue from Non-cyclicalx Exports Business in FY03x Sparesx Vehicle Financingx Reconditioned Vehicles / Aggregatesx Marine & Industrial Engines 13% of Net Revenue Plan to increase it to around 20% of Net Revenue in next 2-3 years 29
  31. 31. Cost Reduction Total Cost Reduction Cost Reduction Elements FY01 – FY03 Rs bn 10 3.3 9.5 9 Raw 8 Mat. 65% 7 3.3 6 5 4 3 2.8 2 Interest Var. 1 25% Conv. 0 10% FY01 FY02 FY03 Total Total Cost reduction of Rs 9.5 bn in last three years 30
  32. 32. Lower Break-even Points % CVs % Cars60 95% 100 54%50 45% 43% 80 45%40 36% 62% 31% 6030 54% 40 29% 44% 48%2010 20 0 0 FY01 FY02 FY03 FY01 FY02 FY03 BEP as % of capacity BEP as % of capacity Capacity utilisation Capacity utilisation 31
  33. 33. Reduction In Balance Sheet Size Rs bn 72 68 63 48 42 70 7 8 60 9 14 8 50 2 1 10 12 14 1 12 0 40 12 30 20 40 40 38 35 33 10 0 (4) FY99 FY00 FY01 FY02 FY03 -10 Net Fixed Assets Investments Net Working Capital Deferred Revenue Expenses Deferred Tax Assets (Net)Avg. Asset Turnover 0.8 1.0 1.0 1.4 2.0ROCE (pre-tax) 3.7% 2.7% -1.1% 5.4% 17.4% 32
  34. 34. Tighter Fiscal DisciplineDays of sale Days of sale Inventory 60 Net Working Capital 48 47 50 41 41 120 112 39 40 100 77 20 80 60 0 FY98 FY99 FY00 FY01 FY02 FY03 40 33 Receivables (non-HP) 20 100 7 80 74 0 0 (15) 57 60 -20 FY98 FY99 FY00 FY01 FY02 FY03 40 29 28 25 18 20 Negative Working Capital 0 for the first time in the Company’s history FY98 FY99 FY00 FY01 FY02 FY03 33
  35. 35. Stronger Cash Flows & Debt Reduction Free Cash Flow Debt & D/E Rs bn Rs bn 12 11 35 1.27 1.4 30 1.2 10 25 0.94 1 8 7 6 20 0.8 6 30 15 15 0.6 23 4 0.56 10 0.4 2 5 0.2 0 0 0 FY01 FY02 FY03 FY01 FY02 FY03 Debt D/E (adj.) - RHS 34
  36. 36. Presentation Outlinex Introduction to Tata Group & Tata Motorsx Growth Strategyx De-risking the businessx The Way Forward 35
  37. 37. Leveraging Our Strengths Global scales in CVs Distribution network Integrated & cost competitive mfg. & service reach facilities Advantage Tata Motors Partnerships for Excellent R&D components/ capabilities aggregates Low cost product development capability Backed by TATA Brand 36
  38. 38. The Way Forwardx Domestic demand drivers in place – Capture advantage of CV uptrend and growth in PVsx Expand presence in global marketsx Reduce interest costx Explore further opportunities for cost reductionx Disciplined capex programmex Better working capital management 37
  39. 39. Tata MotorsCombining capabilities and cost advantage to emerge as a world class automotive company Leading the future …… 38
  40. 40. Thank YouVisit us at www.tatamotors.com 39

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