ANNUAL INVESTOR CONFERENCE 2019
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2
The Macro Outlook – Undergoing a Change
Over 70% of the world’s economies are expected to decline in 2019, led by the consistentdecline projected for Advanced Economies. The Emerging Economies are expected to pickup the growth starting from 2020
2.2%
1.8% 1.7% 1.7%
4.5% 4.4%
4.8% 4.9%
3.6%
3.3%
3.6% 3.6%
1.0 %
1.5 %
2.0 %
2.5 %
3.0 %
3.5 %
4.0 %
4.5 %
5.0 %
5.5 %
2018 2019E 2020E 2021E
Advanced economies Emerging market and developing economies World
Source: “World Economic Outlook (April 2019)” released by International Monetary Fund
Real GDP Growth
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The Macro Outlook – Headwinds
▪ Escalating Trade Disputes – China , Iran. Divided Political scenario
▪ Falling levels of manufacturing and retail sales; US Trade tariffs
▪ Brexit stalemate. Impact across all EU economies
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The India Story
Real GDP Growth Rate
Slew of measures anticipated from new government to generate growth.
7.1%
7.3%
7.5%
7.7%
6.8 0%
6.9 0%
7.0 0%
7.1 0%
7.2 0%
7.3 0%
7.4 0%
7.5 0%
7.6 0%
7.7 0%
7.8 0%
2018 2019E 2020E 2021E
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The India Story – Possible Headwinds
▪ Volatile crude oil prices
▪ Liquidity Crunch
▪ Agri and Rural sector challenges
▪ Social Costs
▪ Global macroeconomic risks
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RPG Group – How We Will Withstand the Challenges
▪ Healthy balance sheet and fundamentals
▪ Setting standards in Corporate Governance
▪ Core sector presence. Established players with track record
▪ Talent pool
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RPG Group – How did we Fare?
▪ KEC - Successful scaling up of Railway and Civil businesses
▪ CEAT - Laying the capital expansion foundation for future growth
▪ Zensar - All the core engines firing in all the right ways. Digital Push
▪ RPG Life Sciences - Evolving in the dynamic and challenging environment
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RPG Group Culture – Inspiring Innovation
▪ KEC – Innovation in tower design. Drones for transmission line stringing
▪ CEAT - Puncture Safe tyre, Milaze 1L kilometer tyre
▪ Zensar – ZenATS provides real-time asset tracking & allocation for enterprises
▪ RPG Life Sciences –Adopting sustainable practices in API business
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Shareholder Wealth Creation
KEC: 5.2x
RPG LS: 4.1x
Zensar: 4.8x
CEAT: 11.7x
BSE Sensex: 2.3x
Group market cap ~ Rs 19,000 Cr
-3.00
2.0 0
7.0 0
12. 00
17. 00
22. 00
Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19
KEC CEAT Zensar RPG LS Sensex
KEC
Annual Investor ConferenceJune 12, 2019
OHE Railway Project
Transmission Line, SAE, Brazil
Tallest Tower in Bangladesh – 184 metres
Factory For A Reputed Automobile Manufacturer
Highlights For The Year 2018-19…
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MULTI-LOCATIONAL
MANUFACTURING
8 Manufacturing facilities across India, Brazil and
Mexico
Manufactures Towers, Cables, Poles and Hardware
Financial Highlights
• Revenue crosses Rs 11,000 Crs
• EBITDA margins at 10.5%; improved by 50bps over FY18
• PAT closer to Rs 500 Crs mark at Rs 496 Crs
• Closing Order Book at Rs 20,307 Crs; Y-o-Y growth of 17%
• ROCE improves to 26.6% vis-à-vis 24.7% in FY18
Non T&D Revenue share increases to 36% in line with our diversification strategy
T&D Order inflows backed by buoyant international markets; Strong closing order book of Rs 15,000 Crs
Working Capital and Borrowing levels normalized in Q4;Gross Borrowings at Rs 1,845 Crs – same level as FY18
SAARC & Brazil - T&D, Railways & Civil continue to remain the Growth drivers …
Transmission & Distribution – Strong Orderbook Ahead
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Order book +L1 of Rs 18,000 Crs plus to drive FY20 T&D growth
Key Highlights
• FY19 T&D Revenues of Rs 7,305 Crs
• Significantly strengthened presence in SAARC with Market share of ~25%;
• Expanded into 5 new countries including Nicaragua (Americas) & Papua New Guinea (Oceania)
• SAE: Execution of all 3 EPC projects commenced
• Widened Middle East portfolio from Abu Dhabi, Oman, Saudi to include Dubai, Jordan & Egypt
• Substation footprint widened
• Execution headwinds faced in private projects in India in FY19;
220 kV Tower to GIS Substation, Khalste (Kargil)
Railways – Over 100% Revenue Growth Y-o-Y
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Key Highlights
• Key operational areas : Track doubling/tripling, Electrical work, Signaling & Telecom, New Lines
• Order Book at Rs 5,000 Crs plus with a pan India presence in Conventional Railway contracts
• Composite projects contribute ~70% to the Order Book
• 1,850 Kms OHE done by KEC in FY19 – being 33% of 5,500 Kms OHE completed by Indian Railways
Revenues:
• Doubling Revenues for third consecutive year -nearing Rs 2,000 Crs mark
Traction Substation work Sleeper Lifting work
Major Bridge work at a Composite project
210446
844
1,918
FY16 FY17 FY18 FY19
9.1x
Railways Business Revenue (Rs Crs)
Civil
• Revenues doubled closer to Rs 500 Crs mark
• Pan India presence with projects in Factories, Buildings
• Deploying latest equipment and best in class Formwork technology for Silo construction
• Client base expanded to 17 clients;
• Marquee clientele in various sectors such as Automotives, Cement, Metals, FMCG, Residential, etc.
• Fast track execution of projects; Use of digital technology to optimize work
Cables
• Revenue growth (Y-o-Y) of 17%
• Higher share of Exports / EHV cables
Smart Infra
• Successfully taken off in first year of commercial operations
• 2 order wins in Aurangabad and Bidkin Smart Cities aggregating to Rs 230 Crs
Other Non T&D Businesses – Growth Momentum Continues
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100 000+Cubic meters of concreting
5700+Metric Tons of PEB erected
2 000 000+Square feet of industrial workshop
Construction of a 140 m tall Preheater & 40 m wide Clinker Silo for a Cement plant
Growth Drivers For Next 3 Years
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TRANSMISSION & DISTRIBUTION
R
A
I
L
W
A
Y
S
C
I
V
I
L
• SAARC: Bangladesh building national grid; Afghanistan rebuilding network; 3 yrs - USD 6.5 Bn opportunities
• Brazil: Market size of USD 3-4 Bn in Brazil, keeping the EPC opportunities strong
• India: Green Energy segment, Power for all & State T&D Capex to drive T&D growth
• Strong Budgetary allocation continues: Rs 1,59,000 Crs for FY20
• Target areas
✓ OHE & Conventional Railways
✓ Signaling & Telecom
✓ DFCC / Metros / RRTS
• International markets
• Ongoing focus on Factories & Buildings
• Government contracts in commercial buildings, hospitals, etc
• Airports
• Capex light infrastructure – elevated corridors, station redevelopment, etc.
The macro indicators listed above in addition to our existing order book to drive mid-term growth
CEAT
Annual Investor ConferenceJune 12, 2019
Overview
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✓ FY19 Sales at INR 6,985 Crore; 11.2% growth
✓ EBITDA at INR 663 Crore; margin at 9.5%
✓ PAT at INR 251 Crore; margin at 3.6%
✓ Debt / Equity ratio at 0.54x
Financial Update
CEAT became a
$1 Billion Revenue
Organization
FY 19 Revenue Breakup by Product
FY 19 Revenue Breakup by Market
Note : Consolidated revenue breakup
Truck and Buses, 31%
2/3 Wheelers, 31%
LCV, 12%
Passenger Cars / UV, 13%
Farm, 7%
Speciality, 6%
Exports, 14%
OEM, 31%Replacement, 55%
Auto Sector Performance
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7%20%
38%
-3% -2% -6% 2%-3% 0% -2% -1% -3% 3%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY19
Passenger Vehicles (YoY growth per month)
76%
43% 42%30% 30% 24% 25%
6%-8% 2% -3% 3%
18%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY19
Commercial Vehicles (YoY growth per month)
17%9%
22%
8%3% 4%
18%
7%-2% -6% -4% -17%
5%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY19
2-Wheelers (YoY growth per month)
Strategy
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Global Reach
Strong Brand
OEM RelationshipsDifferentiated Product
Extensive Distribution
World Class R&D
Differentiated Products
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1
130K Kms
140K Kms
Benchmark WinMile X3-D
CEAT
Gripp X3 Everlasting Grip Tyres
for motorcycles
Milaze X3Mileage up to
1,00,000 Kms for cars
WinMile X3-DBest mileage in
Long-haul for trucks
Strong Brand
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2
Continued association with Sports
Innovative Marketing
Cricket Association grows stronger… Official Partner of Torino FC
Extensive Distribution
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CEAT Shoppe Shop in Shop (SIS) Multi Brand Outlet CEAT Bike Shoppe
3
4500+Dealers
280+2W Distributors
500+ CEAT Franchisees
400+ MBO / SIS
212
464
612
FY12 FY15 FY19
CEAT District Coverage
OEM Relationships
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Excellence in Customer Delight
Top OEM Recognitions
Consistent High Performance
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Hyundai Maruti Suzuki
OEM Relationships
KIA Motors Ford Hyundai Skoda Renault Nissan
Volkswagen Piaggio Peugeot TATA Motors HondaDaimler
Maruti Suzuki Ashok Leyland Eicher BajajDatsun Hero
Mahindra & Mahindra Escorts Royal Enfield SuzukiYamaha
Project entered/launched over last 18 months
World Class R&D
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State-of-the-Art R&D Center, Halol
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R&D Office, Germany
▪ Significant investment on tyre testing infrastructure like Anechoic Chamber, Flat Track Test Machine
▪ Focus on upcoming technologies like Electric Vehicle, Sustainability and Smart Tyres
Global Reach
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Successful Launch in Europe
4 Season Drive &Endura Drive
Official Tyre Partner of Torino FC
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Italy and Spain continue to perform well
✓ Exports to 90+ Countries in 7 clusters
✓ Sri Lanka: Leadership position in the market and with 50+% market share
✓ Entering other territories like Australia and New Zealand
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Growing Share of Passenger Segment
26%
14% FY10
45%
Revenue % from Passenger Car and 2/3 Wheeler
FY14
FY19
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Capacity Expansion – the Game Changer
1. 2-Wheeler includes outsourcing capacity
Total CAPEX of Rs. 4,000 Crore
Existing Additional
TBR 2,800 tyres/day at Halol1,400 tyres/day Rs. 1,000 Cr
PCR 28,000 tyres/day at Chennai20,000 tyres/day Rs. 2,050 Cr
2W¹ 50,000 tyres/day at Nagpur90,000 tyres/day Rs. 450 Cr
OHT 60 tons/day at Ambernath40 tons/day Rs. 500 Cr
Zensar Technologies
Annual Investor ConferenceJune 12, 2019
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Digital is growing ~6.5X faster
Technology Spend in Zensar’s Focus Verticals
Technology Spend in Zensar’s Focus Verticals & Regions
Digital Spend in Zensar’s Focus Verticals & Regions
Overall Global Technology
3.3% CAGR
Digital
24.6% CAGR
$ 3.1 Tn
2018 2022$ 3.6 Tn
$ 170+ Bn
$ 410+Bn
$ 580+ Bn$ 510+ Bn
$ 790+ Bn $ 910+ Bn
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3 years ago,we embarked on a bold journey to
make Zensar
100%Living Digital
Enterprise
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Living Digital Journey, so far
Sessions Downloads
Releases Business Processes
Platforms Adoption
25M+ 1.9M+
930+ 50+
34 100%Marketing, Sales
Finance
Zenlabs, Innovation
Client Projects
Skill Training, HR
Talent Supply Chain
IT Systems
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Innovation through Zenlabs
Imagine Design Engineer Accelerate
Amazing Zensarians200+
Uniquepatents55
Total patentfilings across all geos
90
Co
nve
rsa
tion
al A
I
Blo
ckch
ain
2+ Years
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Experience Design
Europe
Digital
Supply Chain
Digital P&C
Insurance
Experience Design
US
Through strategic acquisitions in last 2+ years
Significantly enhanced Digital expertise
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@ Scale winning momentum
$750 Mn+ TCV wins, LTM
Medical Device Mfg.
$50 MnFortune 500 Technology Leader
$40 Mn
Global Financial Services
$30 MnTier 2 Insurer carrier
$30 Mn
Tier 1 Retailer
$50 MnGlobal 500 Diversified Brand
$100 Mn
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Growing significantly faster than the industry
110.9
114.3
118.6
122.6
126.6
135.0
138.1
143.7
150.1
Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19
*Nasscom DataZensar financials in US$ Mn
Zensar Growth
3.9% CQGR
Industry Growth
2.1% CQGR*
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FY 19 – Executive Summary
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Thought Leadership – Global Recognition
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Zensar wins MEGA Business Operations deal at a Fortune 100 Technology Conglomerate, registering the largest win in our history
Next phase of Market Growth – Move beyond Digital
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ROD NeXT
Zensar wins MEGA Business Operations deal at a Fortune 100 Technology Conglomerate, registering the largest win in our history
Business value from AI at $ 1.2
Trillion
Cloud and Platform spend
at $ 530 Billion
DX spend at $ 1.7 Trillion
AI is central to
Digital Transformation
Smart, Secure, Integrated Platforms
Human Experience is
the new value chain
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World’s leading technology company crafts new brand positioning for its premium line of products
Human Experience strategy helps boost sales by
32%Human
Experience
Case Study - Human Experience
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AI driven real-time
telematics, weather,
driving pattern etc,
reduce vehicle
maintenance cost by
48%
ArtificialIntelligence
Case Study - Artificial Intelligence
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Global Tech Leader
utilizes Blockchain & SaaS
platforms to transform
Supply Chain, Sales and
Services
- 20 X improvement in
attach rate for advance
tech solutions
SmartPlatforms
Case Study - Smart Platforms
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Global operations
Sharp focus on core
Talent Transformation: Skill Development @ Scale
Lean First, Automation First
Platform at the core
Operationalizing ROD NeXT
Annual Investor ConferenceJune 12, 2019
RPG Lifesciences
RPGLS: A transformation journey in progress
Bio-tech sell-off
Brands acquisition
Specialty strengthening
ANDA filing
USFDA approval
Portfolio clean-upGrowth restorationProfitability upliftmentLeadership strengthening
Focused investment in Formulations business
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FY19: A difficult year, after 3 strong years
FY 15-16 FY 16-17 FY 17-18 FY 18-19
Results Results Results Results
Sales (Rs cr.) 251 292 344 331
PBT (Rs cr.) 8.4 14.5 20.4 15.05
PBT % 3.3% 4.9% 5.9% 4.5%
PAT (Rs cr.) 8.4 12.09 13.45 10.81
PAT % 3.3% 4.1% 3.9% 3.3%
Note : Sales, PBT figures are excluding bio-tech business for all the two past years FY 16 and FY 17 to provide a like-to-like comparison. Thepublished gross results are provided at the end of this presentation.
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▪ Market slowdown in represented segments
▪ High reliance on trade; low focus on Rx generation
▪ High in-market inventories, expiries & returns
Domestic: Set back in Mass Formulations
▪ Change in business leadership
▪ Renewed focus on Rx generation
▪ Discounts & promotion optimization
▪ Product Portfolio Augmentation : Chronic Therapies; Line Extensions of Legacy Products
Challenges Faced
Actions Initiated
35%
De-growth of 21%
Loss after 2 years of profits
Gross Margin maintained ~55%
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▪ Low volume growth in Nephrology business
▪ Price control and low margins in Oncology business
▪ Slower than targeted ramp-up in Urology business
Domestic: Specialty segment continues to grow
▪ Focus on new prescribers & new indications for Azoran
▪ Continued product portfolio augmentation (Bio-similars, Therapy gaps, Co-Rx products)
▪ Diligent Medico-Marketing engagement with target doctors especially in Urology
Challenges Faced
Actions Initiated
24%
Growth of 12%
Improved profitability
Continued investment in Specialty
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▪ Loss of 1 key customer in UK for Azathioprine
▪ Steep price corrections in UK market
▪ High dependence on tenders/ B2B in emerging countries
Intl Formulations: Challenging year but investment continues
▪ Significant efforts to ensure 24X7 audit readiness
▪ Second plant being upgraded to regulated market standards
▪ ANDA filed for first product for the US market
▪ Dossier filed in UK for Sodium Valproate
Challenges Faced
Actions Initiated
20%
De-growth of 8%
Investment towards plant upgrade and product pipeline continues
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▪ Limited customer & molecule base
▪ Legacy plant not capable of upgradation to regulated market standards
API: Continues to be a strong cash cow
▪ Manufacturing Strategy optimisation - Outsourced manufacturing initiated with USFDA approved API suppliers for key molecules
▪ US DMF approval for Azathioprine received; source change process started
Challenges Faced
Actions Initiated
21%
Strong growth & profitability
Good demand momentum for exports
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FY19: Improvements visible in H2
66% 67%
H1 H2
58%55%
H1 H2
9%
12%
H1 H2
5.69
9.36
H1 H2
Gross Contribution (% to Sales) Opex (% to Sales)
EBDITA (% to Sales) PBT (Rs Crs)
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Strategy Forward : Continued focus on Formulations
▪ Focus : Downstream integration for formulation business; selective market expansion
▪ Strategy : Own technology; judicious mix of In house and outsourced manufacturing
▪ Focus: Above market growth with strong profitability
▪ Strategy: Product portfolio augmentation, Prescriber base expansion, Field force capability building
▪ Focus: Growth/ Entry in regulated/B2C markets
▪ Strategy: Niche products pipeline, Partnership for NPD; USFDA approval of the plant
International Formulations
API
API
Domestic Formulations
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Annual Investor ConferenceJune 12, 2019
Group Performance
Focused on core area to Play and Win:▪ Identified strategic priorities▪ Augmented related capability / capacity
Pursued financial discipline▪ Reduce leverage▪ Working capital efficiency
Profitability improvement:▪ Cost optimization ▪ Securing margin profile
RPG Group – Transformational journey
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Unlocking Value
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An impactful turnaround
Rs Crore
Particulars FY2014 FY2019 5 year CAGR
Total Turnover 18,000 25,500 +7.2%
Operating Profit 1,600 2,660 +10.7%
PAT 599 1,085 +12.6%
Market Cap3 6,741 19,239 +23.3%
Debt / Equity 1.06x 0.50x
Debt / EBITDA 2.29x 1.58x
Notes :1. 2014 figures of Turnover and Operating Profit are as at end of Q3 FY14 on a TTM basis2. 2014 figures are as per IGAAP and 2019 figures are as per IND AS3. Market Cap (BSE) as on 3rd June 2014 and 3rd June 2019
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Significantly improved rating profile
Company FY2014 FY2019
CEAT AA- AA
KEC International A+ AA-
Zensar Technologies AA AA+
RPG Life Sciences BBB+ A-
*Credit rating for long term debt
Resilient Business & Financial Profile
With high quality teams
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RPG Group – Underlying attributes
Growth With Sustainable Agenda
Diversified conglomerate
With growth oriented mindsetConservative approach
With strong culture pillarsDynamism led
With financial robustnessPrudent conduct
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Strategic - Way forward
Building Capability
Profit Orientation
Liquidity Management
Enhancing Capacity
Poised for Creating Value
Y O UT H A N K
