annual investor conference 2018 - rpg group · 2018-08-02 · electrified over 40% (15,000 km) of...

14th June 2018, Mumbai

ANNUAL INVESTOR CONFERENCE 2018

World Economy: Brighter ?

3.2

3.8 3.9 3.9

2.52.2

4.95.1

2018 est. 2019 est.

World Advanced economies Emerging market and developing economies

2016 2017

Global economic activity firming up

Annual GDP Growth %

Source: IMF World Economic Outlook, April 2018

2

- Landmark Tax Reforms

- Crude Price Volatility

- Geo-political risks

- Strengthened $

World Economy: Opportunities with risks

3

India: Improved Global status

World Bank’s Ease of Doing Business ranking

India in

Top 100

Moody’sSovereign Rating scale

improved India’s rating

after 14 years

7.1

6.7

7.4

7.8

2016 2017 2018 estm. 2019 estm.

Source: IMF World Economic Outlook, April 2018; India Soars Higher - KPMG

Annual India GDP Growth %

4

- Healthy Debt-Equity

- Corporate Governance - Independent Boards

- Best practices

- Robust Growth Strategy & Acquisitions

RPG - Committed to Creating Value

5

Re-imagining Businesses

• CEAT – from commodity to consumer

• KEC – Scaling-up through portfolio diversification

• Zensar – delivering value by leveraging digital

• RPG Life Science – firmly on profitable growth trajectory

6

Saying Hello to Happiness

• From Unleash to Outperform

• Hello to new markets, products,

opportunities

• A sense of purpose and optimism

7

People and Culture

Key People PracticesVibrant workplace

Best Hires from

premier Institutions

4-tier Leadership Development Program

Cutting-edge

Policies

Strong alumni

program

8

Our Commitment to Society

9


10


11

Shareholder Wealth Creation

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

CEAT: 19.0x

RPG LS: 6.2xZensar: 3.8x

KEC: 6.8x

SENSEX: 1.8x

Group Market Cap : May 2018

Stock Markets Rewarding RPG Group’s Consistent Performance

Group market cap ~ Rs 25000 Cr

12

KEC

Annual Investor ConferenceJune 14, 2018

Composite Railway Project

Large Cement Silos

PGCIL GIS Substation

Key Achievements In FY 2017-18

14

MULTI-LOCATIONAL

MANUFACTURING

8 Manufacturing facilities across India, Brazil and

Mexico

Manufactures Towers, Cables, Poles and Hardware

ROCE doubles to 25% in two years

Revenue:

Rs 10,000 Crs+

EBITDA:

Rs 1,000 Crs+

Order Book:

Rs 17,000 Crs+

Market Cap:

Rs 10,000 Crs+

Growth of 15% over FY17




Consistent Growth Across All Parameters

15

693

818 1,006

8.0%

9.3%10.0%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

0

200

400

600

800

1000

1200

FY 16 FY 17 FY18

EBITDA (Rs Crs) EBITDA %

EBITDA – CAGR of 20%

191305

4602.2%

3.5%

4.6%

0%

5%

0

100

200

300

400

500

FY 16 FY 17 FY18

PAT (Rs Crs) PAT%

PAT – CAGR of 55%

139

10893

FY16 FY17 FY18

NWC Days – Reduction of 46 days Net Debt to Equity – Reduced by ~3x

3,160

1,932 1,538

2.4x

1.2x

0.8x

0.0x0.0x0.0x0.1x0.1x0.1x0.1x0.1x0.2x0.2x0.2x0.2x0.2x0.3x0.3x0.3x0.3x0.3x0.4x0.4x0.4x0.4x0.4x0.5x0.5x0.5x0.5x0.5x0.6x0.6x0.6x0.6x0.6x0.7x0.7x0.7x0.7x0.7x0.8x0.8x0.8x0.8x0.8x0.9x0.9x0.9x0.9x0.9x1.0x1.0x1.0x1.0x1.0x1.1x1.1x1.1x1.1x1.1x1.2x1.2x1.2x1.2x1.2x1.3x1.3x1.3x1.3x1.3x1.4x1.4x1.4x1.4x1.4x1.5x1.5x1.5x1.5x1.5x1.6x1.6x1.6x1.6x1.6x1.7x1.7x1.7x1.7x1.7x1.8x1.8x1.8x1.8x1.8x1.9x1.9x1.9x1.9x1.9x2.0x2.0x2.0x2.0x2.0x2.1x2.1x2.1x2.1x2.1x2.2x2.2x2.2x2.2x2.2x2.3x2.3x2.3x2.3x2.3x2.4x2.4x2.4x2.4x2.4x2.5x2.5x2.5x2.5x2.5x2.6x2.6x2.6x2.6x2.6x2.7x2.7x2.7x2.7x2.7x2.8x2.8x2.8x2.8x2.8x2.9x2.9x2.9x2.9x2.9x3.0x3.0x3.0x3.0x3.0x3.1x3.1x3.1x3.1x3.1x3.2x3.2x3.2x3.2x3.2x3.3x3.3x3.3x3.3x3.3x3.4x3.4x3.4x3.4x3.4x3.5x3.5x3.5x

0

1000

2000

3000

4000

FY 16 FY 17 FY18

Net Debt (Rs Crs) Net Debt to Equity

T&D – Profitable Growth Continues

16

MULTI-LOCATIONAL

MANUFACTURING

8 Manufacturing facilities across India, Brazil and

Mexico

Manufactures Towers, Cables, Poles and Hardware

▪ India T&D

➢ Significant growth during the year

➢ Order intake more than doubled over FY17 – growth led byState Utilities and Private clients

➢ Order intake from PGCIL almost at same level as FY17

▪ International T&D

➢ Brazil: Focus shifts from manufacturing to EPC; Securedtwo large EPC orders totaling ~Rs 800 Crs; EPC contributes~70% to Rs 1,800 Crs SAE Order Book;

➢ Substantial inroads in SAARC: ~40% Y-o-Y Revenue growth

➢ Successfully de-risked Middle East business

▪ Substations business continues to do well (~20% of T&DOrder Book)

▪ Excellence in Project Delivery “Ahead of Time” continues

▪ Utilizing state-of-the-art technology – Drone stringing / Useof LIDAR technology for aerial surveys; IOT in manufacturing

Bhutan - Stringing using Drone

GIS Substation - South Asia

▪ Electrified over 40% (15,000 KM) of IndianRailways;

▪ 854 Kms OHE done by KEC in FY18 – being 22% of3,800 Kms OHE completed by Indian Railways

▪ Order Book as on date ~Rs 5,000 Crs – 28% of totalOrder Book

➢ Includes OHE, Doubling & 3rd Line Works,Signaling & Telecom jobs

▪ Customer base diversified with addition of IRCON,PGCIL and RITES apart from CORE and RVNL

▪ Control over Supply Chain / Execution throughInhouse manufacturing of Railway SteelStructures, Contact & Catenary Conductors andSignaling Cables

▪ Excellence in Project Delivery “Ahead of Time”

Railways – Exponential Growth

17

518

1,522

3,910

FY16 FY17 FY18

210

456

844

FY16 FY17 FY18

Order Inflows (Rs Crs)

Revenues (Rs Crs)

7.5x

4.0x

▪ Revenues in excess of Rs 250 Crs – 1st year of commercial operations

▪ PBT and Cashflow positive

▪ Diversified order book in factories, buildings and townships

▪ Marquee clientele in various sectors such as Automotives, Cement, Metals, etc.

▪ Order inflows of ~Rs 700 Crs till date

Civil – Successful Takeoff

18

Heavy equipment erection works Structural steel works - Paint shop Construction of 55mt dia. Clinker

Silo using Jump Formwork

Key Growth Drivers

19

T&D

CivilRailways

T&D

▪ Brazil: Auctions worth USD 4 - 5 Bn expected every year over next 3 years

▪ SAARC: T&D infrastructure highly underdeveloped – Significant Increase in investments

▪ India: Private clientele and State Utilities

Railways

▪ Budgetary allocation: Rs 1,49,000 Crs for FY19

▪ International markets:Large opportunities in Africa and SAARC

▪ DFCC & Metros

Civil

▪ Sustained growth from Existing Verticals:Factories & Townships

▪ New Verticals:

➢ Affordable / Mass housing - Rs 300,000 Crs under PMAY’s urban housing project for next 3 years

➢ Residential

CEAT


Overview

21

One of India’s Leading Tyre company

Distribution Network : 4,500+ dealers, 450+ exclusive CEAT franchisees

6 Manufacturing facilities - Bhandup, Nasik, Halol, Nagpur, Ambernath & Sri Lanka

100+ countries where products are sold with strong brand recall

FY 18 Revenue Breakup by Product FY 18 Revenue Breakup by Market

Note : Figures in parenthesis denote FY17

Truck and Buses, 32%, (33%)

2/3 wheelers, 31%, (29%)

LCV, 12%, (13%)

Passenger Cars / UV, 14%, (13%)

Farm, 7%, (7%)Speciality, 4%, (5%)

Exports, 12%, (14%)

OEM, 27%, (23%)Replacement,

61%, (63%)

22

Key Financial Updates

▪ FY18 Sales at Rs 6,231 Crs; 8.1% growth

▪ EBITDA at Rs 638 Crs; margin at 10.2%

▪ PAT at Rs 233 Crs; margin at 3.7%

▪ Debt / equity ratio at 0.3 times

Revenue Growth in Focus SegmentsFinancial Update

639

899

1,246

1,483 1,651

1,902

FY13 FY 14 FY 15 FY 16 FY 17 FY18

2/3 wheelers (Rs Cr)

376

476 561

619

744

848

FY13 FY 14 FY 15 FY 16 FY 17 FY18

PC / UV (Rs Cr)

23

Key Capacity Updates

Operational facilities

PCR/TBR –

WIP

Key Outsourcing facilities

Overall Capacity: > 1,200 MT / day and “Increasing”

TBB

TBB/Farm2 Wheelers

All

OHT

24

CEAT won the prestigious ‘Deming Prize’

Recognition for Total Quality Management (TQM)

Strategy

✓ Two wheelers

✓ Passenger cars & Utility vehicles

Profitable growth

Differentiated Products1

Strong Brand2

Extensive Distribution3

Deep OEM Partnerships4

World Class R&D 5

Expanding Global Reach6

25

✓ Off Highway Tyres

✓ Passenger Segments

Domestic Market

International Market

Differentiated Products 1

26

Mileage up to

100,000 kms Puncture-safe tyre

Exciting New Products Launched every year

Strong Brand2

27

Continued association with Cricket

Ajinkya Rahane Rohit Sharma

Ishan Kishan Harmanpreet

Shubhman GillCEAT Cricket Awards IPL’s Strategic Time-Out

Strong Brand2

28

Campaigns and TVCs

Extensive Distribution 3

Distribution Network

▪ 4,500+ dealers

▪ 500+ CEAT Franchisees (Shoppes + Hubs)

▪ 280+ two-wheeler distributors

▪ 400+ Multi Brand Outlet / Shop in Shops

▪ Launched CEAT Bike Shoppes

29

Shoppe Shop in Shop (SIS)

Multi Brand Outlet (MBO) Bike Shoppe District Coverage No. of CEAT Shoppes

102

~350

FY12 FY18

212

464

601

FY12 FY15 FY18

30

Deep OEM Partnerships 4

31

World Class R&D 5

▪ State of the art R&D facility at Halol plant

▪ Set-up an R&D centre at Germany with CEAT R&D Head and ~20 people based out

of there.

▪Partnerships with global institutes and technology partners

▪ Increased allocation towards R&D: Among the highest YoY increase in R&D spend*

Source: Global Tyre Industry – An Analysis, 2017 (ATMA Report)

32

Expanding Global Reach 6

▪ Exports to 90+ Countries in 7 clusters

▪ Sri Lanka: Manufacturing facility and Leadership position in the market and with 50+% market share

▪ Focused product and distribution strategy for select clusters and countries

▪ Establishing footprint in Europe through PCR

33

Off Highway Tyres

Status Update

▪ Greenfield OHT (Off Highway Tyres) radial plant in Ambernath

▪ Plant is now live and commercial sales have begun across all key markets

Zensar

Technologies

Investor Presentation

June 14, 2018

35

IT Industry shifting to Digital at Scale to drive real business impact

• Average digital share to be ~38% of the total revenues by 2025; from the current level of ~20%

• Bundled deals has around 65% share of the total IT services market; 24x growth in the value of bundled deals

Autonomics

IP & Platform

Full Scale Digital

Multi nodal buyers

1

3 4

2

M&A Digital Talent

5 6

Industry focused on expanding portfolio of Digital capabilities

36

Digital

Experience117%

CAGR

Omni

channel22% CAGR

Autonomics,

Cloud55% CAGR

FY15 FY16 FY17 FY18

12.6%

27.0%

29.8%

38.2%

$ 54.2m

$ 122.3m

$ 135.8m

$ 184.2m

Dig

ital

Rev

en

ue

as

a %

of

tota

l rev

en

ue

1. Full Scale Digital @ Zensar through Return on Digital ®

37

2. Autonomics led Agile Cloud & Infrastructure

“The Vinci” - Digital Ready Autonomics Platform delivering Cloud Orchestration

Cloud & Infrastructure

Transformation Partner to a top 5

US Airline

Next Gen Cloud Management, IT

Modernization and Automation

Scalability of Infrastructure

Operations to a Top 10 US

city

DC Operations, Unified Comm,

Network system

38

3. IP, Platforms - driving differentiated growth and new wins

Living Digital at Zensar

• 25 patents filed FY18

• Enterprise AI, Conversational AI,

Blockchain, IOT, AR/VR, NLP

• Zenlabs conversations with All

top tier Clients

• Key element of all new WinsInfluenced wins worth $32m in FY18

30+ Digital Platforms

450+ Releases 700KDownloads

50+Process Digitized

100%Adoption by Associates

39

4. Multi Nodal Buyers - large deal wins over last 12 months

At a Fortune 100 Technology LeaderAnalytics, Data, Campaign Applications and Digital Services

$100m TCV

City of San Diego, USAMulti-million, Multi Year contract for Cloud Infrastructure Services

$79m TCV

Global Diversified BrandMulti-year for Application Management and Digital Services

$100 M TCV

Fortune 500 Manufacturing leaderApplications and Cloud Infrastructure Services

$25 M TCV

$600m+ TCV wins over the last 12 months

TCV = Total Contract Value

40

5. M&As - aligned to business impact through Return on Digital TM

Experience DesignDigital Agency

Digital Supply ChainLeadership in Omni channel

Guidewire ImplementationP&C Insurance Carriers

Nov’16 Mar’17 Mar’18

India Innovation Award 2018 Winner of Skillsoft (USA) in a

category of “Creating an Impact – IT Skills”.

41

6. Digital Talent at Zensar

Digital Training100% associates trained on Digital Learning modules

Boost to Digital LearningTotal 1,72,936 hours of learning completed

Growth in Digital TeamDigital Experience team is now 1000+ strong

Talent HiringMobile, connected, tech savvy workforce including PhDs from top colleges

42

Thought Leadership

Zensar wins MEGA Business Operations deal at a Fortune 100 Technology Conglomerate, registering the largest win in our history

Zensar Technologies: On the digital highway

Zensar - A Transformative Case Study at Harvard Business School

Zensar takes a co-creation approach with its clients and utilizes a modular approach to delivering services adapted for any organization at any level of maturity in its digital initiative

45

Key Financials

• Core business* grew at 9.8% YoY (FY18) and is now at 90.8% of overall revenues.

• Overall Growth of 5.8% YoY (FY18)

• All profitability metrics achieved growth in FY18; GM 4.7%, EBIDTA 0.7% & PAT 7.1%

• $5m+ clients up from 14 to 17 in FY18 ; Revenue from top 20 clients @ 56%

• Crossed 9,000 associates; Utilization increased from 79.6% to 84.4%

• 38.2% of the overall business is Digital

• Geo Focus ; Europe + Africa has increased from 20.8% in FY16 to 26.2% in FY18 of Core Business

• US continues the growth momentum, revenue increased by 3.6%; 72.8% of the total revenue

* without MVS & ROW

46

Zensar Stock Outperforming the IT Index by over 25%

0

5000

10000

15000

20000

25000

30000

35000

40000

0

200

400

600

800

1000

1200

1400

1-Sep-17 1-Oct-17 1-Nov-17 1-Dec-17 1-Jan-18 1-Feb-18 1-Mar-18 1-Apr-18 1-May-18

Sto

ck P

rice

Zensar vs Stock Indices (Sep’17 – May’18)

Zensar S&P IT Index Sensex BSE Mid Cap Index

Stock price

growth

(Sept’17 – May’18)

Zensar S&P IT Index SensexBSE Mid Cap

Index

58.0% 32.5% 10.3% 2.8%


RPG Lifesciences

Business Overview

▪ EUGMP approved unit in Ankleshwar

▪ Immuno-suppressant focus▪ Europe, Canada, ROW as main markets

▪ Revenue: Rs 73 crs

▪ TGA approved unit in Thane

▪ APIs for captive use and external sale

▪ Revenue: Rs 53 crs

▪ Field force of 450 people▪ Strong brands in anti-diarrhoeal, antacid, iron-vitamin,

and Nephrology; recent entry in Urology and Oncology▪ Revenue: Rs 218 crs

International Formulations

API

APIDomestic

Formulations

2 Production Units~1240 Employees

Revenue : Rs 344 crsEBIDTA : 38 crs

PBT : Rs 20.4 crsExports : 33%

48

FY 16 FY 17 FY 18

344

292

Sales* (Rs Crs) 251

38

28 11%

EBIDTA* (Rs Crs) 19 9.5%

EBIDTA (%) 7.6%

20.4

14.5 5.9%

PBT* (Rs Crs) 8.4 4.9%

PBT (%) 3.3% 13.45

12.09 3.9%

PAT* (Rs crs) 8.4 4.1%

PAT (%) 3.3%

FY 18: Improvement trajectory continues

* Excludes revenue from Biotech business

49

Continuing focus on Business Portfolio strengthening

▪ Continued focus on growing formulations business – domestic and global

▪ Significant investment continues in ramping up Uro & Onco division

▪ Derma division closed – product value proposition was not strong enough; very different segment as compared to our other Speciality Divisions

Consistently improving Financial Performance

▪ Third consecutive year of good results

▪ Sales growth of 18% against a backdrop of poor industry performance

▪ EBIDTA increase of 36%; PBT increase of 41%

▪ 340 bps improvement in EBIDTA% over last 3 years; 260 bps in PBT%; still more headroom as against to industry peers

FY 18 : Key Updates (1/2)

50

Further strengthening of Domestic Formulation business

▪ 19% Y-O-Y growth; higher than industry

▪ Growth driven by New Products

▪ Renewed focus on legacy products; increasing prescriber base

▪ Profitability driven by higher Sales Force productivity (PCPM)

Momentum building in International Formulation business

▪ 12% growth; driven mainly by regulated markets – UK, Canada

▪ Increasing investment in R&D, Manufacturing and Quality

▪ 2 new products added through CRAMS route

▪ US ANDA filing and USFDA audit targeted for FY 19

FY 18 : Key Updates (2/2)

51

India Formulations : Fundamentals getting stronger

143

168183

218

-

50

100

150

200

250

FY15 FY16 FY17 FY18

2.8

3.63.9 4.1

0.0

1.0

2.0

3.0

4.0

5.0

FY15 FY16 FY17 FY18

4%

9%

16%

26%

0%

10%

20%

30%

FY15 FY16 FY17 FY18

24% 25%

34% 34%

0%

10%

20%

30%

40%

FY15 FY16 FY17 FY18

₹ cr ₹ lakhsSales PCPM

New Product %DPCO%

52

30

47

65

73

-

10

20

30

40

50

60

70

80

FY15 FY16 FY17 FY18

Revenue (Rs cr)

53

Int’l Formulations : Strong Growth Momentum

Customer Approvals

▪ Apotex (Canada)

▪ Teva (Europe)

▪ Tillomed (UK)

▪ Aqvida (Europe)

▪ Medac (Germany)

▪ Amneal(UK)

Regulatory Approvals

▪ EUGMP

▪ TGA

▪ Nigeria FDA

Product Lines

▪ Tablets

▪ Hard Gel Capsules

▪ Low RH tablet

Strategy Going Forward

DomesticFormulations

▪ Focus : Captive molecules for Global Formulation

▪ Approach : Own the technology; outsource manufacturing to USFDA approved sites

▪ Focus : Few therapy areas/ product segments

▪ Approach : New products & extensions, field-force productivity enhancement

▪ Focus : Immediate term-ROW; Medium term –Regulated markets

▪ Approach : Niche products, Partnership for NPD; USFDA approval of production unit

54

International Formulations

API

API

Domestic Formulations


Group CFO

56

RPG Group – Consolidation Led Growth

Rs Crore

Particulars FY2018 FY2013 5 year CAGR

Total Turnover 23,500 17,000 +6.7%

EBITDA 2,450 1,270 +14.0%

EBITDA Margin 10.4% 7.5% +~300bps1

PAT 1,031 379 +22.2%

Market Cap2 21,978 3,169 +47.3%

Notes :2013 figures are as per IGAAP and 2018 figures are as per IND AS(1) Represents margin expansion(2) Market Cap (NSE) as on End of March 20XX

RPG Group – Efficient Oversight Mechanism

Aimed to Deliver Sustainable Growth

Robust risk management framework

Sound internal control processes

Financial prudence in capital allocation

57

58

RPG Group – Return Ratios

13.3%

14.8%

FY2013 FY2018

ROE

10.0%

12.2%

FY2013 FY2018

ROCE

NotesGroup constitutes : KEC, CEAT, Zensar & RPG Life SciencesROCE = Post Tax ROCE calculated as NOPAT/ Capital Employed; NOPAT = EBIT * (1 – Effective Tax Rate)ROE = PAT/ Networth

59

RPG Group – Debt to Equity

1.1x

0.4x

1.3x

0.3x

1.5x

0.9x

0.3x0.0x

0.8x0.4x

FY2013 FY2018

FY2013 FY2018

NotesGroup constitutes : KEC, CEAT, Zensar & RPG Life SciencesDebt = Short Term Borrowings + Long Term Borrowings + Current Maturities

60

RPG Group – Debt to EBITDA

2.6x

1.3x

2.4x

1.4x

4.4x

1.8x

0.8x0.0x

3.3x1.4x

FY2013 FY2018

FY2013 FY2018

NotesGroup constitutes : KEC, CEAT, Zensar & RPG Life SciencesDebt = Short Term Borrowings + Long Term Borrowings + Current Maturities

61

RPG Group – Debt Service Coverage Ratio

0.8x

1.7x

0.5x1.0x

0.9x1.7x

2.9x

94.1x

1.3x3.0x

FY2013 FY2018

FY2013 FY2018

NotesGroup constitutes : KEC, CEAT, Zensar & RPG Life SciencesDSCR = EBIDA / (Principal Repayments + Finance Cost)

62

RPG Group – Credit Rating History

Company FY2013 FY2018

CEAT BBB+ AA

KEC International A+ AA-

Zensar Technologies AA AA+

RPG Life Sciences BBB+ A-

63

RPG Group – Way Forward

Diversification Led Growth

tempered by

Sound Financial Principles

Y O UT H A N K

annual investor conference 2018 - rpg group · 2018-08-02 · electrified over 40% (15,000 km) of...

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