cebbco presentation feb 2012

8/13/2019 Cebbco Presentation Feb 2012

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ANALYST MEETThe Trident, Nariman Point, Mumbai

May 17, 2012

INDIAS LARGEST FBV PLAYER & MORE


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AGENDA

2

1. ABOUT US

2. FINANCIAL RESULTS

3. BALANCE SHEET

4. OPERATIONAL HIGHLIGHTS

5. OUTLOOK 2012-13


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LEADERSHIPCEBBCO is the largest player in the Fully Built Vehicles (Non Passenger) segment in India

with a market share of ~30% to 35% in a segment worth ~Rs. 1100 Crs.

OFFERINGSFBV, Wagons, EMUs, Refurbishment and Components for Railways, Structurals for

Electrostatic Precipitators and Boilers for the power plants

CLIENTS

Vehicle Factory (Defence) Jabalpur, Indian Railways, Tata Motors Limited, Ashok Leyland,

Eicher Motors, Man Force Motors L&T and BHEL among others.

PEDIGREE

CEBBCOs expertise comprises design, body building, fabrication and an understanding

of motion technology.

Members on Board : Non family members including Mr. Praveen Kumar (Former

Member- Mechanical, Indian Railways), Mr. Sevantilal Shah (Retired General Sales

Manager, Tata Motors), Mr. Akhil Awasthi (Nominee Director Tata Capital)

ABOUT US

3

BACKGROUND

CEBBCO was started by Mr. Kailash Gupta in September 1979. Mr. Kailash Gupta and Mr.

Ajay Gupta a re the promoters of the company. The promoters are one of the largestdistributors of Tata Motors (CV division) and enjoy a relationship of over 50 years with

them.

AUDITORS & PE

Auditors: Deloitte Haskins & Sells since 2007-08

Private Equity: TATA Capital holds 60,05,401 shares (comprising 11% of the company)


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Proximity to Customers

Jabalpur serves as a central

location to major OEM hub across

India

Near key customer in Indore and

Jamshedpur

Proximity to Suppliers Strategically located closer to the

suppliers of steel in Orissa and

Jharkhand

Other Locational Advantages

Lower labour, Land and overhead

costs provides advantage over

other locations

Benefits under the Madhya

Pradesh Industrial Investment

Promotion Assistance Scheme,

2004

Indore (1)

Manufacturing facilities (6)

Major OEM hubs in IndiaSuppliers of RAW Material

Jabalpur (4)Jamshedpur (1)

4

STRATEGIC LOCATION

Location in Central India

Provides Competitive Advantage


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Focus on Technology and Quality

R&D AND QUALITY


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Fully Built Vehicle (FBV)

Tippers, Tankers, CargoBodies, Refrigerator fitted

vehicle bodies

RAILWAYS

Wagon, Coaches,Refurbishment &

Components

POWER

Structurals for Electronicprecipitators and boilers

Designing, Fabrication, Integration, Motion Technology

BUSINESS VERTICALS

6


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What is an FBV?

7


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IntegrationMotion Technology

Chassis

Tippers

Petroleum

Tankers

Refrigerator

Fitted Vehicles

Load CargoServices

Skip Loaders

Water

Tankers

Light Recovery

Vehicles

Troop Carrier

Vehicle

Designing

Fabrication

8


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BENEFITS TO OEM

Economics

Higher revenues

Higher margins

Quality

Better products

Lesser blame

Standardization

Efficiency

Excise Duty Benefits

BENEFITS TO CUSTOMER

Funding

Full funding on the FBV, else hehad to shell cap-ex for bodies

Higher ROI

Immediately puts vehicle to userather than wait for 2 months forgarage

No EMI during body buildingstage

Efficiency

Lighter weight resulting in higher

payloads Warranty of 18 months on FBV

9

BENEFITS DRIVING FBV CONVERSION


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Commercial Vehicles

7,41,172

MHCVs

Passenger vehicles

93,175Non-passenger vehicles

6,47,997

OUR MARKET

2,74,680

FBVs (organised)

~ 55,000FBVs (unorganised)

2,25,583

LCVs SCVs

10

INDUSTRY SIZE & STRUCTURE


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2009-10 2010-11 2011-12 2012-13E 2013-14E 2014-15E 2015-16E 2016-17E

CV's (non Passengers

- SCV's) 198,400 252,000 274,680 302,148 332,363 365,599 402,159 442,375

Growth (%) 27.02% 9.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Total FBV Mkt 20,503 26,418 55,000 90,644 132,945 182,800 241,295 353,900

Growth (%) 28.85% 108.20% 64.81% 46.67% 37.50% 32.00% 46.67%

FBV Market Size (%) 10.33% 10.48% 20.02% 30.00% 40.00% 50.00% 60.00% 80.00%

11

INDIAS FBV SECTOR TO GROW >6.5x!

1. Projected FBV industry growth from ~ Rs 1100 cr in 2011-12 to Rs ~ Rs 8000 cr

by 2016-17 - a 6.5 x growth when CV growth assumed 10% and SIAM forecast

at only 12-14%.

2. The stated policy of the OEMs is to convert to 100% FBV in 5 years where as we

have estimated only 80%.

3. CEBBCO would continue in its endeavor to maintain its market share of ~40%


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Leveraging DNA

De-risking

Potential

Presence &Strategy

Wagon manufacturing and refurbishment represent an extension of ourexpertise in design, fabrication, motion technology and integration. This willenable us to provide complete railway rolling stock solutions

The 100% conversion to FBV is expected in five years. CEBBCOs entry intoRailways sector is to de-risk, catalyze growth and achieve diverse and sizablerevenue stream from Railways..

The wagon opportunity alone is estimated at Rs 6,000 cr (large probable

revenues from refurbishment, component and coaches not included).

CEBBCO will not just be a railway wagon play. The company expects toparticipate in the railway rolling stock programme (comprises wagons, coachesand locomotives as well as their refurbishment and components).

Complimentary

CEBBCO is a beneficiary from the growth of overall logistics business in India.With rail vertical and FBV, CEBBCO will map the overall growth in goodstransportation in India. This move would derisk CEBCCOs overall businessportfolio.

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RATIONALE FOR RAILWAYS


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Wagons Refurbishments

Coaches (EMUs)Components

13

BOUQUET STRATEGY FOR INDIAN RAILWAYS

ALL OUR OTHER

MAJORCOMPETITORS ONLY

DO NEW WAGONS .

WE HAVE A MUCH

LARGER BASKET OF

OFFERINGS.


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Particulars FY11-12 FY12-13 FY13-14 FY14-15

Demand estimation

Based on 12th 5 Year Plan and

Vision 2020 of Indian Railways.

18,000 28,431 28,265 28,845

Realisation/wagon (Rs. Lacs) 20 20 20 20

Total market (Rs. Crs.) 3600 5600 5600 5600

CEBBCO output (wagons) 10 500 1,200 2,000

CEBBCOs market share (Rs. Crs.) 2 100 240 400

Market share(%) 0.06% 1.75% 4.25% 7.00%

Even at three shifts and full capacity of 2,000 Wagons, we will just address only

7% of the Indian Railways requirement.

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WAGON : THE OPPORTUNITY


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AGENDA

15

1. ABOUT US


3. BALANCE SHEET


5. OUTLOOK 2012-13


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FINANCIAL RESULTS

(Rs. Crs.) 2011-12 2010-11 YoY%

Income from Operations 468.63 216.73 116%

Expenditure

Raw Materials 324.35 180.73 79%

Other Expenditure 49.38 34.96 41%

Stock Adjustment 24.69 -16.50

Total Expenditure 398.42 199.19 100%EBIDTA 70.21 17.54 300%

EBIDTA Margin (%) 14.98% 8.09%

Depreciation 6.37 3.85 65%

Interest 9.31 9.26 1%

Other Income 2.27 2.85 -20%

Profit Before Tax (PBT) 56.78 7.27 681%

Tax 15.97 1.57 917%

Profit After Tax (PAT) 40.80 5.69 617%

PAT Margin (%) 8.7% 2.6%


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FINANCIAL RESULTS Q4FY12

(Rs. Crs.) Q4FY12 Q4FY11 Q3FY12 YoY%

Income from Operations 136.40 63.63 132.78 114%

Expenditure

Raw Materials 70.10 57.59 108.70 22%

Other Expenditure 14.30 11.62 12.20 23%

Stock Adjustment 29.07 -9.04 -6.91

Total Expenditure 113.47 60.17 113.99 89%

EBIDTA 22.93 3.46 18.79 563%

EBIDTA Margin (%) 16.8 5.4 14.15

Depreciation 1.99 1.09 1.66 83%

Interest 3.78 2.19 1.97 73%

Other Income 0.04 1.65 0.49 -98%

Profit Before Tax (PBT) 17.19 1.81 15.65 850%

Tax 4.05 -0.03 4.40

Profit After Tax (PAT) 13.13 1.84 11.24 614%

PAT Margin (%) 9.6 2.8 8.4


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FINANCIAL TREND

18

(Rs. Crs.) (Rs. Crs.)

63.63

82.24

117.21

132.78 136.4

5.10

14.5315.68

18.79

22.93

1.85

6.93

9.49

11.24

13.13

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0

20

40

60

80

100

120

140

160

Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12

Total Income (LHS) EBIDTA (RHS) PAT (RHS)


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AGENDA

19

1. ABOUT US


3. BALANCE SHEET


5. OUTLOOK 2012-13


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BALANCE SHEET

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(Rs cr.) As on FY12 (unaudited) FY11

Sources of Funds

Equity 258.10 217.30

Loan Funds 29.69 0.33

Deferred Tax Liabilities (Net) 8.54 1.15

Total Sources of funds 296.33 218.78

Application of Funds

Gross Block 198.95 57.80

Less: Depreciation 21.46 15.15Net Block 177.49 42.65

CWIP 53.94 30.82

Investments 0.69 38.37

Current Assets

Inventories 49.70 69.16

Sundry Debtors 103.75 30.64Cash & Bank Balance 5.79 25.96

Loans & Advances 76.02 89.39

Total Current Assets 235.26 215.15

Total Current Liabilities 171.05 108.21

Net Current Assets 64.21 106.94

Total Application of Funds 296.33 218.78


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21

BALANCE SHEET HIGHLIGHTS

73.47

231.43

0

50

100

150

200

250

2010-11 2011-12

Net Block+CWIP (Rs Cr)

1. Expansion of Railway plant +

Capacity expansion in FBV by 50%

2. Significant increase in revenues

from the increased net block

W Cap Days 2010-11 2011-12

Inventory days 140 56

Receivable days 52 81

Payable days 106 63

Net Working Capital days 86 74

1. Reduction in working capital cycle in

line with the guidance

2. We expect the working capital cycleto be ~2 months in 2012-13


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AGENDA

22

1. ABOUT US


3. BALANCE SHEET


5. OUTLOOK 2012-13


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Revenue Breakup

As per the changes in the recent budget, the customer will now pay 14% excise duty if he buys a

commercial vehicle chassis and pays only 12% excise if he buys an FBV and hence there is

a benefit of 2% excise duty in buying FBV. This move is providing impetus to the OEMs in

conversion of FBV.

The company had initiated a cost reduction program towards the end of last year and details ofsame were also shared with our investors in the annual report for March 2011. The company is

happy to announce that the program has now started yielding dividends and we have started

seeing improvement in our EBITDA and PAT levels due the efforts put in the program.

OPERATIONAL HIGHLIGHTS

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(Rs. Cr) Q1FY12 Q2FY12 Q3FY12 Q4FY12 2011-12 2010-11

FBV 78.37 112.72 127.34 129.69 448.12 199.48

Railways 1.57 0.73 0.50 0.04 2.85 12.68

Power 1.19 2.67 3.28 4.95 12.09 0

Total 81.13 116.13 131.13 134.68 463.06 212.16


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OPERATIONAL HIGHLIGHTS

Recently, the Deori railway plant has received RDSO approval. CEBBCO is now eligible to bid for the

new wagons order by Indian Railways. We shall now be expecting to achieve a substantially higher

turnover from railways in current year. 248 wagons of Braithwaite and 250 - 500 wagons of trial orderin next railway tender along with turnovers from refurbishment as well as railway components.

The prototype wagon for Braithwaite (subsidiary of Indian Railways) has been manufactured in March

and same was approved. We have now started mass production and billing for the entire order will

be completed in Q1 and Q2.

Removal from bill discounting scheme of TATA motors.

The company was able to manage to remove itself from the vendor bill discounting scheme of TATA

motors in Q4 of 2011-12. Under the scheme , TATA Motors Limited used to discount our invoices of

30 days and pay us upfront in 3 days. However, for discounting, TATA Motors Limited used to charge

1.65 % as a discount charge from us, which used to reduce our EBITDA even though it was in reality a

finance charge.

Now, our EBITDA will increase by 1.65 % and we will however end paying interest charges to the banks

at the rate of approximately 12% and in effect save money. Due to strong cash flows, we shall not be

discounting all our invoices, and try and reduce bank charges . However, our bill discounting facility

with banks will also increase.


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MP INDUSTRIAL INVESTMENT PROMOTION SCHEME

CEBBCO stands to benefit from the TRIFAC policy of the state of Madhya Pradesh. We had

already informed the investors during our IPO about the whole scheme in detail and a note tosame is available in RHP. The company has received the first cheque under the scheme for a

amount of Rs 9,27,443 in Q4 of 2011-12. We expect to receive 230 crores (100 crores under CV

expansion and 130 crores for railway project at Deori) in the next 7 years. The following are the

advantages:

Sales Tax subsidy

The Subsidy will be granted to an establishment in payment of State Sales Tax, Central

Sales Tax and Entry Tax to the extent of Capital Investment made by the establishment. If the Investment in Project is more than Rs. 10 crores, then the establishment gets

subsidy @ 75% of the incremental Sales Tax Payable during the Year.

The Sales tax subsidy will be adjusted in the subsequent year at the time of Sales Tax

Assessment and we shall receive the amount back every year typically towards the end

of the year.

This amount of Sales tax will reflect in as Income from other sources and go directly

to the companys PBT Level.

This move will benefit CEBCCO to the tune of Rs 230 crores over a period of 7 years.

FY13 E FY14 E FY15 E FY16 E FY17 E

Total Estimated Benefit (Rs Cr) 30 cr 35 cr 40 cr 40 cr 40 cr


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1. The excise change and the subsequent 2% differential duty is expected to result in fasterconversion of the industry towards FBV. All OE are currently talking to the company to increase

capacity.

CV INDUSTRY TREND, NEUTRAL; FBV INDUSTRY TREND: VERY POSITIVE

2. 50% increase in capacity from ~22,000 FBVs in FY12 to a total of ~33,000* FBVs in FY13.

3. Wagon manufacturing to commence operations1. Expecting a trial order of ~250-500 wagons in 2012

2. To get revenues of approximately Rs. 48 cr of Braithwaite order.

4. Increase in revenues from refurbishment business with expected increased allocation in the

railway budget

5. Further, increased contribution to the top line from the Heavy Fabrication Business from the powerbusiness.

6. TRIFAC Benefit to add to approximately Rs 30 Cr to PBT.

OUTLOOK : 2012-13

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*Note: This has been derived on an average product mix as seen historically and can vary


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Disclaimer

This release contains statements that contain forward looking statementsincluding,

but without limitation , statements relating to the implementation of strategic initiatives,

and other statements relating to CEBBCOsfuture business developments and economic

performance. While these forward looking statements indicate our assessment and

future expectations concerning the development of our business, a number of risks,

uncertainties and other unknown factors could cause actual developments and results to

differ materially from our expectations. These factors include, but are not limited to,general market, macro-economic, governmental and regulatory trends, movements in

currency exchange and interest rates, competitive pressures, technological developments,

changes in the financial conditions of third parties dealing with us, legislative

developments, and other key factors that could affect our business and financial

performance. CEBBCO undertakes no obligation to publicly revise any forward looking

statements to reflect future / likely events or circumstances.


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Mr. Divitya Bansal

Head: Investor Relations

CEBBCO

Email: [email protected]

Contact: 07389207606

Website: www.cebbco.com

Mr. Hardik Bajaria

Seagull Vallue Consultants LLP

Email: [email protected]

Contact: 09820441255

Website: www.theseagull.in

THANK YOU.

For any further clarification, please contact:

Disclaimer
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cebbco presentation feb 2012

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