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Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
Company xyz   introduction
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Company xyz introduction

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  • 1. Company XYZ Introduction June 2006
  • 2. XYZ has two business lines– Automotive Lamps and General LightingLampsOverview of XYZ’s Business Lines XYZ Automotive Lamps General Lighting Lamps (58%)(1) (42%)(1)• Started manufacturing in 1991• Manufactures halogen lamps for Compact Fluorescent General Lighting Halogen two wheelers and four wheelers Lamps (CFL) Lamps• Markets under the “H” brand (31%)(1) (11%)(1) name as well as white label• Manufactures a variety of halogen • Started manufacturing in 2000 • Started manufacturing in 1991 lamps such as H1, H3, H4, H7 • Manufactures integral and non • Manufactures halogen lamps and H13 and 9000 series halogen integral types CFL for general lighting purpose lamps • Used for indoor domestic and marketed under the J – Series• Commands > 90% of domestic office lighting purposes brand name market share • Variants in terms of shapes, size • Used predominantly for public and number of pins and floodlighting purposes (indoor and outdoor) • Markets under "H" brand name as well as white labels • Commands market share of >30%Note: (1) Percentage of total revenues in 2005-06Source: Company Annual Report 2005-06 2
  • 3. XYZ’s Automotive business is balanced between exports and domesticmarkets, while the General Lighting business is predominantly focusedon the domestic marketBusiness overview – Revenues Breakup for FY 05/06 Customers White Label Contract • TRIFA • Philips Manufacturing • IMPEX • OS Sylvian (USA) • GLC Exports (Rs. 83 Crores) (58%) • None right now Own Brands • Planning an acquisition in Europe to enhance global manufacturing & distribution footprint Automotive (Rs.143 Crores) OE’s through Head Lamp • Lumax (58%) Manufacturers 55% • Ford OEM’s for Aftermarket Domestic • Hyundai (Rs. 60 Crores) (42%) XYZ Own Brands (Rs. 14 Cr) • "H" (Rs. 245 Crores) 45% • Philips • Lumax White Label Contract • GE • TVS Manufacturing (Rs.13 Cr) • MICO • CGL • Philips White Label Contract • Bajaj • GE Domestic Manufacturing General Lighting (Rs. 94 Crores) • OS (Rs.102 Crores) (92%) (42%) Own Brands (Rs. 40 Cr) • "H" Exports (Rs. 8 Crores) (8%)Source: XYZ 3
  • 4. XYZ’s manufacturing footprint includes four current units and one up-coming unit Plant IV- DehradunPlant I & II - Noida • Established in 2004 • Unit enjoys 10 year excise • Established in 1991 exemption and five year income • 2 Export Oriented Units (EOUs) tax exemption manufacturing halogen • Capacity automotive lamps – CFL : 12.9Mn. units p.a • Capacity (27.5+13.4 Mn. units – HAL : 14.8 Mn. units p.a p.a) Plant V - HaridwarPlant III - Noida • To be commissioned by the end of FY2006 • Established in 1991 • Located in Haridwar Industrial • Manufactures halogen lamos for estate Automobile and General Lighting • Caters to domestic market • Capacity – HAL : 8.2 Mn. units p.a – CFL : 12.6 Mn. units p.aSource: XYZ 4
  • 5. XYZ is positioned as a Tier II supplier in the Automotive Industry ValueChainValue Chain For Automotive Lighting XYZ’s Domain Components/Raw Front and Rear end Light Source Lamp assemblies Final assembly Materials modules • Tungsten • Source raw materials • Reflector • Headlamps • Passenger • Glass tube • Manufacture/assembly of • Glass Cover • Air Conditioning Vehicles • Molybdenum Lamps • Sockets System • Two Wheelers • Glass • Supply to OEMs and • Wire Harness • Bumper • Commercial • Other metal parts aftermarket • Plastics Vehicles • XYZastic parts • Tractors • Gases • Packaging goodsMapping of Capabilities Across Value Chain Magnetti Marelli, Koito/NAL, Stanley, SamLip, Hella Faurecia, Hella Behr Omnium GM, Ford, Toyota, Global Hyundai, Suzuki etc. Philips, Osram, GE, Sylvania Visteon XYZ, Patodia Glass Indian Maruti, Tata Motors, Mahindra etc. Lumax (part owned by Stanley, Japan), Minda, India Japan Lighting (TVS Group)Source: XYZ 5
  • 6. XYZ is currently a pure light source Player in the general lightingbusinessValue Chain For General Lighting XYZ’s Domain Components/Raw Lighting Light Source Luminaires Lighting Controls Materials Solutions • Glass tube • Source raw materials • Reflector • Dimmable Ballasts • Commercial • Emitter paste • Manufacture/assembly of • Glass Cover • Infrared/microwave Lighting • Filament Lamps • Sockets Sensors • Retail/Mall Lighting • Mercury • Supply to OEMs and sell • Downlighter • Presence Detection • Office Lighting • Inert Gases as branded product ("H") • Recess • Managed Lighting • Home Lighting • Electronic Ballast • Plastic holderMapping of Capabilities Across Value Chain Philips, Osram Sylvania , GE Lighting Global XYZ, Samay, Arya Indian Bajaj, CGL, Osram, Surya Roshni, Havells Wipro, PhilipsSource: XYZ 6
  • 7. General lightings is expected to drive XYZ’s revenue growthVolume Trend Revenue Trend(Mn Units) (Rs. Crores) 325 CAGR 27% CAGR 245 General 36% 74 24% 151 Lighting 203 (53%) 56 26 General 35% 102 (35%) 49 Lighting (42%) 81 17 (40%) 14 (30%) (29%) Automotive 20% Automotive 18% 174 Lamps 48 Lamps 143 (47%) 34 39 (65%) 121 (71%) (70%) (60%) (58%) FY05 FY06 FY 07E FY05 FY06 FY 07E • 62% of revenue growth is expected to come from General Lighting • Given the export proportion in the automotive business, the automotive segment growth appears to be in line with the industry growth rates • Given the current low levels of CFL penetration in India, growth projections for the general lighting business are in line with industry projectionsSource: XYZ 7
  • 8. Price realization is higher in own-brand products and EBITDA marginsare higher in the automotive business 100 Price Realization for 05/06 EBITDA Realization for 05/06 Avg. Revenue Realization (Rs./unit) 90 Rs. 87 80 70 20 18% 18 Avg. EBITDA Realization (%) 60 Rs. 39 16 Rs. 51 Rs. 41 14% 50 14 Rs. 43 12 40 Rs. 33 10 30 (52%) (42%) 8 20 6 (34%) (19%) (6%) (22%) (16%) (3%) 4 10 2 0 0 Auto Exports Auto Domestic CFL Domestic CFL Domestic Automotive General Lighting Own Brands White Labels Own Brands General Lighting Export Auto Domestic – White Labels % of Total Revenue % of Total RevenueSource: XYZ 8
  • 9. Market Assessment: General Lighting 9
  • 10. Market Assessment Summary Key Findings Market Size And Growth • CFL market is expected to grow from ~INR 700 Cr. in 2005 to increase to ~ INR 2,400 Cr. by 2010 at CAGR of 23%. This growth seems reasonable given the relatively lower levels of CFL penetration in India General • CFL unit prices have declined by 400% over the last 5 years. Can expect a further 20-25% decline, before which the prices stabilize by 2008 Lighting Market • Although there are competing lighting technologies, CFL is expected to be the dominant Assessment technology that would survive for the next 8-10 years Automotive DD - XYZ Lighting Market Assessment 10
  • 11. The General Lighting business of XYZ consists of the "H" brand andwhite labeling for other manufacturersXYZ – General Lighting Business XYZ OEM / White "H" Labeling • Revenues of INR 63 Cr. in • Revenues of INR 40 Cr. in FY2006 FY2006 • Products include both retrofit • Product portfolio includes and non-retrofit type models both retrofit and non-retrofit models of CFL, coupled with • Customers include Philips, metal halide, flood lighting Bajaj, Crompton Greaves and and MV/SV lamps GE Lighting • Present mainly in North India • Has a mid-market perception amongst dealers and customers alikeSource: XYZ 11
  • 12. We understand that XYZ intends to drive growth through its "H" brand,with a focus on the CFL businessesXYZ – Revenue Growth DriversRevenue Breakup Of XYZ (in INR Cr.) Revenue Split Across CFLs And Non CFL Business (in % of total revenues) Projected 158 Growth CAGR: 53% "H": 80% 72 103 73% CFL 81% 40 86 OEM: 37% 63 27% Non-CFL 19% FY2006 FY2007E FY2006 FY2007ESource: XYZ 12
  • 13. Penetration levels of CFL in India are currently quite low compared toother countries, indicating significant growth potentialCFL Penetration Comparative Penetration Of CFL InDifferent Countries (% of value to the total lighting market) 24% 22% Comments • CFLs are the fastest growing segment in countries 18% where energy concerns are higher – namely India and China • High penetration are observed in Europe and 11% specially Scandinavian countries are on account of government subsidies and environmental concerns • India has a number of unelectrified households where CFLs can be introduced to reduce electricity consumption and thereby reduce the current deficit India China Germany DenmarkSource: ELCOMA 13
  • 14. Moreover we believe government initiatives like the EnergyConservation Act and Rural Electrification will further drive growthGovernment Initiatives In India Energy Conservation Act Rural ElectrificationStandards and Labeling Program Scope• Mandatory BIS marking for CFL lamps to be introduced • 100 Mn homes to be electrified and connected to the grid from Jan 2007 to enforce stringent quality standards to within 5 years drive energy conservation OpportunitiesDemand Side Management • MSEB is encouraging use of CFL lamps in villages under• Government will provide resources to setup DSM cells the “Akshay Prakash Yojana” by reducing load shedding within utilities to work out schemes to manage demand in areas which follow its schemesEnergy Efficiency in Buildings and Establishments Threats• Energy audit to be conducted in various government • For a low usage consumer in rural areas which have low offices to identify energy-saving methods power rates, an initial upfront investment of INR 80-125• Maharashtra government has decided to change to CFL in may not be feasible as it equals their monthly electricity 10,000 official buildings charges itselfEducation Programs• Special initiatives in schools and colleges to increase awareness of energy savings mechanismsSource: Ministry of Power, India 14
  • 15. While there are emerging technologies to compete with CFL, theindustry view is that CFL would be dominant for the next 7-10 yearsLamps Industry – New Technologies New Technologies Cold Cathode Fluorescent Lamp (CCFL) • Uses cold cathode unlike hot cathode in CFLs “LED-based lamps are • Can be flashed thousands of millions of times available in the market but without shortening the life of the lamp CFLs will remain the largest • Has a lifespan of more than 25,000 hours compared usage product for the next 5-8 to the 6,000 hours for CFLs years” – Regional Sales • Introduced in China by M/s GFL Lighting group Manager, A Lighting Major Light Emitting Diodes (LEDs) • Growing need for energy efficient and environment friendly products is driving usage • Developed countries are slowly becoming conscious to the environmental concerns associated with mercury usage in lamps • LEDs provide an environment friendly yet efficient “CFLs will continue to grow option for our lighting needs at 20-25% for the next 5-8 • Applications in rural areas where LEDs are driven years before we have a by solar lamps substitute product” – VP, Lighting, A Lighting majorSource: Web Articles 15
  • 16. Landed costs of comparable quality Chinese products are ~8-10%higher than comparable Indian products, due to the anti-dumping dutyLanded Cost Breakup – India And China Typical Cost Breakup In India Typical Cost Breakup In China 8% 133% 25% 125% 12.5% 142% 4% 2.50% 8% 100% 20% 95%Material Depr., Excise Excise Landed Material Depr., CVD Freight Clearing Anti- Total Cost Labor, Free Duty Cost Cost Labor, Dumping Maint. duty Maint. Zone Industry bodies should also actively lobby the government to impose anti- circumvention duties to reduce routing of Chinese products through other countriesSource: Industry Interviews 16
  • 17. Market Assessment:Automotive Lighting 17
  • 18. Market Assessment Summary Key Findings • Global demand for Automotive halogen lamps, currently ~ 400 MN units, is expected to remain robust in the near future on account of continued penetration in new vehicles in emerging markets as well as significant after- market size • HID penetration in headlamps has been rising gradually especially in developed markets like Japan and Europe. In Japan, manufacturers expect HID penetration in new cars to be >40% by 2008; usage of LEDs in headlamps is Automotive currently at prototyping stage and is expected to be used in mass-market vehicles by 2010 Lighting Market – Indian market is a near-100% Halogen market in the four-wheeler Assessment segment – Penetration of Halogens in motor-cycles has also been increasing and almost all new models are launched with halogen bulbs – The Indian market for halogen bulbs currently 30-35 MN units is General expected to grow at 12% DD - XYZ Lighting Market • XYZ is in a near-monopoly position in the organized Indian halogen Assessment lamps market; it also has a high brand recall in the after-market • Going forward, it has the strategic option of deepening its automotive lamps portfolio or forward-integrating into lamps assemblies 18
  • 19. Indian Competitive Landscape : Automotive Lighting Company Bulbs Headlamps XYZ Largest Manufacturer of halogen lamps in India No presence Produced 39 million automotive lamps in 2005Philips, Osram Current does not have a manufacturing footprint No presence globally or locally Imports automotive bulbs / lamps  No manufacturing of halogens in India Head lamps, tail lamps, fog lamps, ornamental lamps, signal lamps for OEMs & Aftermarket Plants at Chennai & Rewari; produces about 0.35 India Japan Private Ltd. million headlamps a year (2002) No in-house production Headlamps, tail lamps, auxiliary lamps, sundry lamps, front combination lamps, blinkers, indicators for OEMs Sources from Philips and others and the Aftermarket Plants at Gurgaon, Rewari, Pune, Chennai; manufacturers about 3.8 million headlamps a year No manufacturing for Halogens in India  Headlamps, signalling lamps, sundry lamps for OEMs Purchases and sells about 0.15 million bulbs a year Plants at Faridabad; it manufactures & sells about 0.4 million headlamps a year OTHER SMALL Patodia Glass Industries Ltd., Autolite Industries, Jagan PGIL’s product portfolio includes Automobile Lamps, Lamps, J S Lamps Head light Assemblies, Machined Forgings and Gears PLAYERS : Patodia Group is a manufacturer of incandescent and Claims to manufacture head/ tail light assemblies to halogen bulbs; produces 3 million units of halogens p.a. the tune of a million units a year under a total capacity of 50 million bulbs p.a. Has 7 Plants overall, 1 of which manufactures halogen 19

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