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B Today Cover Story


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B Today Cover Story

  1. 1. <ul><li>March 22, 2009 </li></ul>Presented by: Ashish Dargan RR1801A09
  2. 2. <ul><li>COVER STORY </li></ul><ul><li>Winners </li></ul><ul><li>in the </li></ul><ul><li>downturn </li></ul>
  3. 3. What makes winners apart from rest of the pack <ul><li>Benefit of size and pedigree. </li></ul><ul><li>The have been notching smart growth even as their rivals flounder. </li></ul><ul><li>They also prove that being an early bird helps in getting the worm—even during a downturn </li></ul><ul><li>Balanced, profitable growth. </li></ul>
  4. 4. <ul><li>No bridge too far </li></ul>
  5. 5. L&T’s Chairman and Managing Director A. M. Naik
  6. 6. Why L&T is a winner <ul><li>A strong order book of Rs 68,800 crore as of December 2008 </li></ul><ul><li>Unmatched expertise in executing large projects </li></ul><ul><li>No major cancellation or delay of orders from clients </li></ul><ul><li>A low debt-equity ratio </li></ul>
  7. 7. Why L&T is a winner <ul><li>85 per cent of its revenues come from domestic projects. </li></ul><ul><li>L&T’s biggest strength is its sheer depth of experience in project execution. </li></ul><ul><li>Close to 70 per cent of contracts are on a cost-plus basis, and the company also has a very structured payment schedule. </li></ul>
  8. 8. Some more facts regarding L & T <ul><li>L&T is one amongst the several companies in the fray to acquire the scandal-struck Satyam Computer </li></ul><ul><li>After going through several economic cycles, the company appears to be coming close to perfecting the art of winning in a slowdown </li></ul><ul><li>The 25 per cent growth in net profit for the December-ended quarter was much better than what most analysts tracking the company were expecting. </li></ul>
  9. 9. <ul><li>Ringing in the gains </li></ul>
  10. 11. Why Bharti is a winner <ul><li>Expanding beyond mobility—long distance connectivity, besides DTH and IPTV </li></ul><ul><li>Growing presence in rural India driving subscriber growth </li></ul><ul><li>Well thought-out network expansion plan </li></ul><ul><li>Low debt-equity ratio </li></ul>
  11. 12. Why Bharti is a winner <ul><li>Despite intense competition and the economic slowdown, company has been able to post strong growth results. </li></ul><ul><li>Gaining market share—that too without eroding profit margins— in a downturn is a classic winning strategy. </li></ul>
  12. 13. Some more facts regarding Bharti <ul><li>In the October-December period, Bharti Airtel’s top line surged by 38 per cent year on year. </li></ul><ul><li>Bharti recorded net subscriber additions of over 8 million for the second consecutive quarter. </li></ul><ul><li>Increased its market share by one percentage point to 24.7 per cent. </li></ul>
  13. 14. Some more facts regarding Bharti <ul><li>After tapping the high-potential metros first, the company has moved further down the pyramid into other circles </li></ul><ul><li>Its network now covers approximately 79 per cent of the country’s population </li></ul><ul><li>Bharti has committed $3.5 billion as capital expenditure for mobile services and infrastructure for the next financial year </li></ul>
  14. 15. <ul><li>Dawn in the dusk </li></ul>
  15. 17. Why Sun Pharma is a winner <ul><li>Focusing on the Indian branded prescription segment as well as on export of branded drugs </li></ul><ul><li>Carved a niche in US generics </li></ul><ul><li>Spend of 8-9 per cent of sales on R&D is paying rich dividends </li></ul><ul><li>Acquiring loss-making drug companies and turning them around </li></ul>
  16. 18. Some more facts regarding Sun Pharma <ul><li>Till September, it was the best performing stock on the Indian markets for 2008 </li></ul><ul><li>It is one of the few Indian companies that are able to consistently turn out growth rates of 30 per cent </li></ul><ul><li>The company focuses on four sectors. The four segments are: Domestic branded prescription drugs, export of branded drugs, US generics and bulk drugs. </li></ul><ul><li>Its huge investment in R &D helps it to get approval ftom the US FDA (Food & Drug Administration) </li></ul>
  17. 19. <ul><li>Into the headwind </li></ul>
  18. 21. Why Hero Honda is a winner <ul><li>Building a wide product range across segments </li></ul><ul><li>Differentiated brand building campaigns </li></ul><ul><li>Focus on driving sales in rural India </li></ul><ul><li>Launching new models </li></ul>
  19. 22. Some more facts regarding Hero Honda <ul><li>Market leader Hero Honda has consistently shown an ability to stay ahead of the pack </li></ul><ul><li>In 2007-08, the company had increased its overall market share by one percentage point to 42 per cent </li></ul><ul><li>While the motorcycle industry’s increase was less than 1 per cent in the first three quarters, Hero Honda’s rose by 11 per cent </li></ul><ul><li>Hero Honda launched as many as seven new models across categories in the third quarter of 2008-09 </li></ul>
  20. 23. <ul><li>On solid ground </li></ul>
  21. 25. Why simplex is a winner <ul><li>Diversifications within construction have helped it de-risk </li></ul><ul><li>Has moved into new geographies like West Asia </li></ul><ul><li>Has stayed away from higher-risk BOT (Build, Operate and Transfer) projects </li></ul><ul><li>Own machines and equipment make for better profit margins </li></ul><ul><li>Simplex’s order book stood at a healthy Rs 10,200 crore as of end-December 2008 </li></ul>
  22. 26. Some more facts regarding Simplex <ul><li>Internal Rate of Return (IRR) for core construction business is over 20 per cent </li></ul><ul><li>The company decided to diversify our operations from just three segments to eight segments </li></ul><ul><li>Before 2002, Simplex’s activities consisted of piling work, and setting up industrial and power plants. In the following years, it stretched its wings into areas like urban infrastructure, real estate, railways, roads and water. </li></ul><ul><li>Its biggest order is just 5 per cent of the order book, which makes the company less susceptible to orders getting cancelled. </li></ul>
  23. 27. <ul><li>No heavy burden </li></ul>
  24. 29. Why Allcargo is a winner <ul><li>Minimal exposure to the US </li></ul><ul><li>Low debt & healthy cash pile helps it in buyouts </li></ul><ul><li>Branches into equipment leasing </li></ul><ul><li>Restructured international acquisition to advantage </li></ul>
  25. 30. Some more facts regarding Allcargo <ul><li>In 2006, the company had acquired Belgian logistics firm ECU Line for $29 million </li></ul><ul><li>ECU Line contributes almost 60 per cent of the total revenues. </li></ul><ul><li>It had laid off some 50 people at a time when no slowdown was in sight </li></ul><ul><li>AGL is expanding its Container Freight Station (CFS) business by putting up a new facility in Indore with a capacity of 40,000 tonnes. Shetty is also doubling AGL’s Chennai CFS to 90,000 tonnes </li></ul>
  26. 31. Some more facts regarding Allcargo <ul><li>Analysts expect the profit growth to come down to 16 per cent in 2009-10 —a fall no doubt, but still it’s the kind of growth that many Indian companies will give an arm and a leg for. </li></ul><ul><li>The company has debt of just Rs 125 crore, cash of Rs 50 crore, and expects to receive around Rs 250 crore from private equity firm Blackstone </li></ul><ul><li>Blackstone held 5.26 per cent of AGL’s equity as of end December— by September on conversion of warrants </li></ul>
  27. 32. <ul><li>Safe harbour </li></ul>
  28. 33. Why Mundra Port is a winner <ul><li>Diversified cargo (crude, dry, containers) de-risks the port operations </li></ul><ul><li>Deepest draft (17 meters) allows big ships to come in and more cargo to be handled </li></ul><ul><li>Good road and rail connectivity both to Mumbai and New Delhi </li></ul><ul><li>Lower turnaround time for cargo than in other ports </li></ul>
  29. 34. Some more facts regarding Mundra Port <ul><li>Mundra Port’s operating profit margin increased to 63 per cent in the December quarter from 60.5 per cent a year ago </li></ul><ul><li>Net profit margin stood at 33.5 per cent versus 25.5 per cent a year ago </li></ul>
  30. 35. <ul><li>In a niche of its own </li></ul>
  31. 36.   Why AIA Engineering is a winner <ul><li>High entry barrier in the area it operates </li></ul><ul><li>Its products for replacement market are recession-proof </li></ul><ul><li>Diversified customer base </li></ul><ul><li>Low debt on the books </li></ul>
  32. 37. Some more facts regarding AIA Engineering <ul><li>AIA has no competitors in India—and few globally—it’s because of the high entry barrier the business has </li></ul><ul><li>AIA has diversified into a range of user industries— like cement, mining </li></ul><ul><li>its biggest customer does not contribute more than 10 per cent to sales. </li></ul><ul><li>AIA is looking to hedge its risks by entering new geographies and looking for new opportunities within mining </li></ul>