Honeywell Honeywell in India (Merrill Lynch Presentation)

1,447 views
1,327 views

Published on

Published in: Economy & Finance
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,447
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
114
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Honeywell Honeywell in India (Merrill Lynch Presentation)

  1. 1. Merrill Lynch Investor Meeting Ash Gupta / Krishna Mikkilineni March 20, 2006
  2. 2. Forward Looking Statements These materials contain certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in these materials are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward- looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. 2 Honeywell India Investor Meeting – March 20, 2006
  3. 3. Honeywell Today Automation & Control Aerospace 36% 34% 15% 15% Transportation Specialty Materials • 118,000 employees in nearly 100 countries • A Fortune 75 company – $30 billion in sales in 2006 • One of 30 select companies in the DJIA * Pie Chart calculated using 2006E Sales 3 Honeywell India Investor Meeting – March 20, 2006
  4. 4. India Overview • Economy experiencing rapid growth - Annual growth averaged 6% last 20 years - GDP expected to grow 6-8% - Growth in attractive commercial and industrial segments - Recognition by government to foster investment and trade • Honeywell tapping opportunity for domestic market and procurement - Commercial trade ~$500M - Leverage engineering and back office resources - Engaged in local manufacturing for domestic and exports 4 Honeywell India Investor Meeting – March 20, 2006
  5. 5. India Economy GDP Expected To Grow 6-8% Over Foreseeable Future GDP Expected To Grow 6-8% Over Foreseeable Future 6% annual growth (2005 - 2025) Projected GDP*, $B World • Consistent 6% in last two decades 16th 10th 8th 4th Rank • Demand driven and led by private sector 3000 Forecast (2006 -- 2010) Forecast (2006 2010) Likely to grow faster Services: 8.0 -- 8.5% Services: 8.0 8.5% • Focus on investments in infrastructure Industry: 6.5 -- 7.0% Industry: 6.5 7.0% and administrative reform 8% Agriculture: 0 -- 2.5% Agriculture: 0 2.5% Inflation: 4.5 -- 5.5% Inflation: 4.5 5.5% • Industrialization process is real 2100 - Industrial capacities peaked … new 1400 investment cycle 6% 8% • Competition, tariff reductions, income 1150 650 velocity and financing major drivers 6% 6.3% 350 • New growth engines – tourism, organized retail, aviation… • Strong inflows from overseas 1994 2004 2014 2024 … Opportunities for all our businesses … a Trillion by 2010 and $2-3 Trillion in 2 decades India Economy Has Significant Momentum Note: * Assuming 6%+ growth rate Source: Goldman Sachs BRICS Report; CERG Advisory 5 Honeywell India Investor Meeting – March 20, 2006
  6. 6. Projected Infrastructure Spend Area 2000 – 2004 2005 -2010 (P) Key Drivers ENERGY Power Gen $10B $32 - $40B Shortages, 6-10,000 MW to be added annually WATER Waste Treatment, $25B $40 - 45B Poor quality of drinking water; Supply, Irrigation shortages TRANSPORT Roads $7B $25 - 30B 14,000 Km highways program Ports $3B $8 - 10B 23 New ports; modernization of existing infrastructure Airports $1B $8 - 10B Modernization, expansion new airports Railways $11B $30 - 40B Dedicated freight corridor between key cities TELECOM $12B $25B Low teledensity ~ 14% $130-170B Massive Infrastructure Growth Source: BCG analysis; IMA Asia Forecasting; Planning Commission of India; CMIE 6 Honeywell India Investor Meeting – March 20, 2006
  7. 7. Honeywell India: 2006 Rapid progress since 2002 • From ~ $60M, 2002 to $500M, 2006E 2003 2004 2005 Q1 Q2 Q2 Q4 Q1 Q2 Q3 Q1 Q3 Q4 GBS Turbo Fire Tata- Security Novar UOP HON Total Trade $500M External Sales SM Services 29% 32% Internal to ACS External Honeywell 46% Sales 65% Sourcing TS 3% 6% Aero 19% HON Trade ~$500M In India * Note – All numbers in US Dollars 7 Honeywell India Investor Meeting – March 20, 2006
  8. 8. Honeywell India: Footprint Honeywell Life Safety BPO, Corporate Honeywell Automation India Honeywell Turbo Technologies Manufacturing NOVAR India Honeywell Technology Solutions Lab Labs Key Sales Offices, Excluding 15 additional sales offices 8 Honeywell India Investor Meeting – March 20, 2006
  9. 9. Turbo Plant In Pune HTT Production For Domestic And Exports 9 Honeywell India Investor Meeting – March 20, 2006
  10. 10. Honeywell Opportunities (2006 – 2010) Automotive Consumer Durables • Cumulative Demand • Cumulative Demand – Cars: 9 - 10M – Refrigerators: 40 - 50M – Diesel Cars: 2 - 3M – Room ACs: 15 - 20M • Key Drivers • Key Drivers – Refrigerators: 14% household – Rising incomes, retail credit, ownership 2006, 20% by 2010 tougher emissions standards – Availability of power, Cars: 4% household competitive pricing, retail credit, ownership 2006, 9% by 2010 improving quality of life Retail Credit: competition – Lifecycle cost of ownership, and low interest rates health and potential regulatory focus to drive demand for next – Diesel 30% cheaper than generation fluorocarbons, gasoline sensors Increased Quality Of Life Driving Growth Opportunities Source: Synovate Business Consulting; CMIE; NCAER; Literature Review 10 Honeywell India Investor Meeting – March 20, 2006
  11. 11. Honeywell Opportunities (2006 – 2010) Refineries Power Generation • Cumulative Demand • Cumulative Demand – Expansion 50 - 60 MTPA – 30 - 40,000 MW capacity addition – Modernization • Key Drivers • Key Drivers – 7% shortage today, (12% peak – Projected demand time) 2005 demand 112 MT, – Privatization of distribution and growing to 150 MT in 2010 new electricity act increases – New emission norms bank-ability of power projects Capacity Limitations Create Opportunities Source: Synovate Business Consulting; CMIE; NCAER; Literature Review 11 Honeywell India Investor Meeting – March 20, 2006
  12. 12. Honeywell Opportunities (2006 – 2010) Aviation Real Estate • Cumulative Demand • Cumulative Demand – 400M+ sq ft premium real estate, – 300+ new aircraft to be delivered special economic zones by 2010 • Key Drivers • Key Drivers – IT, BPO sector driving premium – Deregulation of sector, private office space airlines permitted to fly abroad 1.5-2.5M new jobs projected (2006-2010) @ 80 sq ft per – Emergence of latent demand, employee low cost carriers Banking call centers, back 25% traffic growth Y-O-Y office, telecom offices, manufacturing – Organized retail to grow to 5% of market by 2010 (from 2% in 2004) 25M sq ft of space under development in top 14 cities Strong Aircraft And Construction Cycles Source: Synovate Business Consulting; CMIE; NCAER; Literature Review 12 Honeywell India Investor Meeting – March 20, 2006
  13. 13. Honeywell In India – Our Businesses • AEROSPACE - Leading supplier of safety avionics such as TCAS, EGPWS and APUs on commercial airliners … serving all commercial airlines in India - Licensor for TPE 331 engines and radars to HAL - Supplier of Video Docking Guidance Systems at Chennai airport • AUTOMATION & CONTROL SOLUTIONS - Leaders in industrial process automation solutions … Over 50% of oil refineries in India use Honeywell process solutions - India’s largest building automation solutions provider - Leader in Energy Efficiency offerings • SPECIALTY MATERIALS - Over 50% of oil in India is refined using UOP processes and know how - Products such as fiber for armor applications, next gen fluorocarbons for air conditioning and refrigeration applications, packaging films for food and pharma applications • TRANSPORTATION SYSTEMS - Turbo manufacturing unit commissioned in Pune in November 2005 … for domestic market as well as exports • Technology Centre, Engineering & Back Office Services - HTSL at Bangalore and Madurai is one of the largest Tech centers in India - Engineering services at Pune supports and leads major Petrochemical and other projects in the Middle East, Africa and Europe - Back office centers at Delhi and Bangalore…global customer support, employee services 13 Honeywell India Investor Meeting – March 20, 2006
  14. 14. Honeywell In India – Recent Highlights • e-Retail Solutions for Indian Oil and Hindustan Petroleum … $48M … Linking 1,300 retail outlets, 2,300 product tankers and 100+ product storage terminals • Energy Performance Contract for the Rashtrapati Bhawan (President’s estate) • Building Management System for Hyderabad International Airport • Export Orders From Europe and Thailand for Turbochargers • Business Superbrand (’04-06) • “10 Great Places to Work”… Business World Leveraging Technology, Brand, People To Win 14 Honeywell India Investor Meeting – March 20, 2006
  15. 15. Honeywell Technology Solutions Lab Overview 15 Honeywell India Investor Meeting – March 20, 2006
  16. 16. Globalization Drivers Growing software Increase of software embedded product / content in products solutions market Effective Globalized Availability of Engineering workforce as a resource pool differentiator Opportunity for “Follow Expansion in controls’ HTSL the sun” work & India as a business… opportunity to market cross leverage Higher Engineering cost Retain knowledge by productivity leveraging young talent Fulfilling Business Needs For Technology And Cost 16 Honeywell India Investor Meeting – March 20, 2006
  17. 17. HTSL Journey Growth Driven • Founded in 1995 Cost in Bangalore Driven • Cross-Company 2004-2006 Engineering & 2001-2003 Technology • Electronics & 1995-2000 Center Mechanical Eng’g • Software Design & Development • Customers – • System Engineering • Software Testing & Honeywell SBUs Development Focus • Research & • Shanghai, Brno worldwide technology • Low Cost / Staff • Great Place to work (#4 - Aerospace Augmentation Driven • IT Support in 2005) - Automation • Madurai • Bangalore • CMMi L5 / PCMM L5 Control • Beijing • 4,500 Employees • CMM Level 4 Solutions • CMM Level 5 • End to End • Created a Unique - Corporate Engineering/Process Culture • Product Roadmap Functions (IT, Solutions HR, Finance) • 6 to 600 Employees Cost + Growth Orientation = Competitive Edge 17 Honeywell India Investor Meeting – March 20, 2006
  18. 18. Operating Model • Customer / Manufacturing Proximity • China Growth • Value Engineering CoE • Design to Cost Capability • Supply Chain HTSL-Brno Capabilities HON-SBUs HTSL-China • Customer HTSL-India Management • Product Roadmap • Program Management • System • Program Execution Engineering & • Technology / Engineering Integration Center of Excellence Replicating Capability • Sales & Marketing Replicating Capability • IT Expertise and Leveraging Value and Leveraging Value • Best of the Breed Commercial Technologies • Partnership Ecosystem Globalized Execution Capabilities 18 Honeywell India Investor Meeting – March 20, 2006
  19. 19. Airline Industry Trends Mega-Trends Mega- Mega-Trends • • Increasing Commercial Air Increasing Commercial Air Travel Travel Implications for Honeywell Implications for Honeywell • • New platforms will account New platforms will account for most OE sales in 10 for most OE sales in 10 years years • • Capture content in new Capture content in new • • Airline profitability Airline profitability platforms platforms challenged challenged • • Improve relative cost Improve relative cost Implications for HTSL • • Capacity and competition Implications for HTSL Capacity and competition position position increasing in Aftermarket increasing in Aftermarket • • Rapid Technology • • Grow aftermarket with Rapid Technology MRO Grow aftermarket with MRO Evaluation customized offerings Evaluation customized offerings • • Demographic Shifts, Rise of Demographic Shifts, Rise of • • Value/Sustenance • • Technology Trends and Value/Sustenance India & China Technology Trends and India & China Engineering Changes Changes Software as aa Engineering Software as • • War on Terror War on Terror Safety and Safety and • • Increased engineering value driver; Operating Increased engineering value driver; Operating Security Security productivity efficiency vs. more features productivity efficiency vs. more features • • Core platforms • • New Platforms Core platforms New Platforms development development • • Next generation product Next generation product development development • • Deliver on local needs Deliver on local needs Well Positioned For Catering To The Changing Landscape 19 Honeywell India Investor Meeting – March 20, 2006
  20. 20. Cabin Pressure Control Monitoring System • • Developed aanew Product with aaquick turn Developed new Product with quick turn around design cycle around design cycle • • Multiple derivatives with high reuse & low Multiple derivatives with high reuse & low customisation customisation • • Addresses both Addresses both ––Growth - - New market Growth New market ––Productivity - - Reuse Productivity Reuse HTSL (2005) • • Low cost ––Design to cost Low cost Design to cost • • All-electric vs electro pneumatic All-electric vs electro pneumatic • • Electronics / /software / /control laws Electronics software control laws developed and demonstrated as aaproof of developed and demonstrated as proof of concept to gain customer interest concept to gain customer interest (2004) • •Honeywell has aastrong platform and Honeywell has strong platform and presence, but opportunity exists in presence, but opportunity exists in modernizing of technology, weight and cost modernizing of technology, weight and cost (Before 2004) Improved Technology At Lower Cost 20 Honeywell India Investor Meeting – March 20, 2006
  21. 21. Supporting Advanced Technology Development 1 L g en d : e - Se n so rs - W ire e s s AP l - W ire e s s Ca m era l Wireless Communication 2 1. In cabin wireless 1. In cabin wireless 2. Arc fault detection 2. Arc fault detection 3. Perception sensing and obstacle avoidance More Electric A/C 3. Perception sensing and obstacle avoidance 4. Diagnostics algorithms 4. Diagnostics algorithms 3 5. Automated software verification 5. Automated software verification 4 Vehicle Health 5 Autonomous Navigation Dependable Software Enabling Technology Driven Growth Opportunities 21 Honeywell India Investor Meeting – March 20, 2006
  22. 22. Automation And Control – Industry Trends Mega-trends Mega- Mega-trends • • Aging population Aging population Implications for Honeywell Implications for Honeywell • • Energy efficiency Energy efficiency • • Wireless & other life style Wireless & other life style changes changes • • Lower total installed cost • • Air / /emissions regulations Lower total installed cost Air emissions regulations (Kyoto) • • Emerging business (Kyoto) Emerging business opportunities opportunities Industrial • • Homeland security Industrial Implications for HTSL Homeland security Implications for HTSL Wireless, Sensors, Comfort, Wireless, Sensors, Comfort, • • Growth in Asia Growth in Asia Energy Efficiency, • • Upgrading products / /new Energy Efficiency, Upgrading products new Emissions reduction and products Emissions reduction and products trading • • Customize products for trading Customize products for • • Industrial security/safety, emerging markets Industrial security/safety, emerging markets critical infrastructure • • Accelerate new technology critical infrastructure Accelerate new technology security, video / /access / / development security, video access development perimeter perimeter • • Advanced energy efficiency Advanced energy efficiency technology and solutions technology and solutions • • Innovate new offerings in Innovate new offerings in emerging security, emerging security, optimization, etc. optimization, etc. Emerging Market Changes Provide Critical Enabler For Growth 22 Honeywell India Investor Meeting – March 20, 2006
  23. 23. Redefining Competitive Dynamics HTSL Customer consortium + Standards Body + Before After System Design • >70% smart field devices in • Honeywell recognized as the market were HART- leader in HART + based • Portfolio with complete range • Entry barriers through of HART products technology existed • Effective Asset Management Product/ Application / Field Solutions Development + Product Management Developing Solutions Quickly To Compete 23 Honeywell India Investor Meeting – March 20, 2006
  24. 24. Focus On Critical Technology Platforms 1 Industrial Wireless 1. Industrial RF technology 1. Industrial RF technology 2 2. Video analytics 2. Video analytics 3. Planning / /scheduling applications 3. Planning scheduling applications 4. Plant wide energy solutions 4. Plant wide energy solutions 3 Video Security 5. Usability 5. Usability Plant Optimization 4 Energy Solutions 5 Software Usability Core Technology Development In Key Areas 24 Honeywell India Investor Meeting – March 20, 2006
  25. 25. Building Platforms That Can Be Used Across Businesses Aerospace Automation & Control Solutions • Replace wired avionics with wireless • RF in harsh environment • UAVs for commercial applications • Sensor networks for wide area surveillance Wireless Platform • Dependable wireless • Sensor networks • Miniature systems • Power optimization Value Creation Through Cross SBU Tech Development 25 Honeywell India Investor Meeting – March 20, 2006
  26. 26. Cycle Of Execution And Improvement … Source Of Competitive Advantage 50+ Patents Global Exchange Programs Strong Culture of Leadership innovation Product Customer Roadmaps services Proximity to Tight linkage offshoring with SBUs models Technology Regional Leverage NPI Emerging Local market ecosystem presence Strong HR Cross SBU practices leverage PCMM-Level 5 Platforms Reuse Process Customer excellence focus SEI-CMM-L5 Location DFSS & HOS COE Culture Of Innovation And Cost Efficiency 26 Honeywell India Investor Meeting – March 20, 2006
  27. 27. Unique People Practices And Culture Building Competencies Motivating & Managing Performance • Pervasive & flexible Competency • Career profiling framework • Talent-at-risk engagement • Quest for Innovation • Unique reward and recognition programs • Communities of Practice No. 4 Great Places To Work Building Workgroups & Shaping the Work Force Culture • Multilevel employee engagement • Cross industry talent • Best Practice sharing & Technology • Tier 2 cities Forums • Global exchange programs Performance And Customer Driven People Culture 27 Honeywell India Investor Meeting – March 20, 2006
  28. 28. A Systematic Mechanism To Replicate Success Replicate in new locations “HTSL Way” Platform Business & Process People Operating Maturity Capabilities Model Customer Organizational Value Focus Experience Mechanisms Replicate through new offshore based services Multiplying The Competitive Advantage 28 Honeywell India Investor Meeting – March 20, 2006
  29. 29. HTSL Summary • Cost and Growth-driven • Process excellence Building differentiable Listen to the solutions • Culture of cost take-out customers …profitable, sustainable • Source of Engineering competitive advantage HTSL Value Creation • Technology engine Align, influence & fit Serve the • Positioned to tap emerging well with the customers product & Biz well strategy of markets the SBUs Built To Deliver Value 29 Honeywell India Investor Meeting – March 20, 2006

×