ANNUAL INVESTOR CONFERENCE 2017
9th June 2017, Mumbai Seeking Happiness | Finding Growth World Economy – Slow Pace of Revival
Projections % Change 3.6 3.5 3.4
3.1
2015 2016 2017 2018
Source: IMF World Economic Outlook, April 2017
3 However, Uncertainties Loom
• Inward orientation of countries – “Reverse
Globalization”
• Globalization of terrorism
• Risks to cyber-security
4 India – Continued Growth Momentum
% Change Projections 7.9 7.7
7.2
6.8
FY 2015 2016 2017 2018
Source: IMF World Economic Outlook, April 2017
5 2017 – 2018 : Year of Disruptions
• Implementation of GST
• Reform push by government especially in
Infrastructure, Railways and Urban Development
• Impact of technology transformation
6 Re-imagining Businesses
• CEAT – from commodity to consumer
• KEC – resurgence through focused diversification
• Zensar – being digital and selling digital
• RPG Life Science – improvement trajectory continues
7 Why RPG?
- Best in class governance and disclosure standards
- People-centric ethos; thrust on innovation and diversity
- Learning Environment & Operational Excellence
- Robust Strategy
8 Shareholder Wealth Creation
CEAT KEC Zensar RPG LS SENSEX CEAT: 17.3x
Combined Market Cap US$ 3.0 bn
RPG LS: 6.8x
Zensar: 5.3x KEC: 3.3x
SENSEX: 1.7x Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Market Caps and SENSEX indexed to 1 on 2nd April 2012
9 RPG @ the forefront of Digital
reimagine RPG
Smart Products Future Factories
Connected Customers Intelligent Workplaces
10 KEC INTERNATIONAL LIMITED
Power T & D Cables Railways Water Water Power T & D Cables Railways Civil Solar Overview: FY 2016-17
MULTI-LOCATIONAL PAT for FY17MANUFACTURING grows 106% YoY Significant improvement in profitability. 8 Manufacturing facilities EBIDTAacross Margins India, Brazil increase and by Order Intake for FY 17 grew by 42% over FY 16. 130 bps toMexico 9.3% in FY 17 Manufactures Towers, Cables, Poles and Hardware Order Book for FY 17 shows 35% increase YoY. PBT for Q4 FY 17 crosses Rs 200 crs for the first time Robust L1 pipeline. EBITDA Margin for Q4 FY 17 at 10.4% Foray into civil business
Successful Resurgence of Remarkable Uptick Broadening of Significant International in Railways and Customer Base in improvement in Business Solar Business India working capital
12 Key Growth Drivers
. International Order book grows 27% YoY . Entered/ re-entered 8 new countries in FY 17 Resurgence of . Added East Asia Pacific as a new focus region international . De-risked concentration exposure in Saudi business . SAE continues on growth trajectory . Secured large sub-station orders in Africa.
. Balanced order book Successful . Increasing presenceGLOBALwith SOURCINGexisting SEB clientele broadening Material . Evaluating business potential with new SEBs of customer Working capital funding base in India . Working with major privateEquipmentdevelopers . Actively engaging withManpowernew entrants
13 Key Growth Drivers
Railways Rs crs Revenue Order Book . Revenue doubles, order book triples 1,522 . Margins of railways moving closer to T&D 518 446 Remarkable . Increase in budgetary allocation for railways 210 uptick in the . Overhead electrification targets doubled railways and Mar-16 Mar-17 solar Solar Rs crs business Revenue Order Book 464 . Installed 65 MW of projects with trackers GLOBAL SOURCING . Commissioned 100 MW of projects till date Material . 140 MW of projectsWorkingcurrently capital fundingunder execution 160 Equipment 93 . Entered the ‘Big League’ in Solar EPC 39 Manpower
. Established strategic partnerships Mar-16 Mar-17
14 Key Growth Drivers
MULTI-LOCATIONAL Improvement in FCFE: EBITDA Margins % trendMANUFACTURING 10.4% 8.9% 9.3% 8.4% 8.7% • Reduction in interest costs 8% 7% 7.3% 7.3%8 Manufacturing7.3% facilities 6.4% 6.3% 5.9% across India, Brazil and • Improvement in working capital cycle 5.6% 5.1% Mexico • Reduction of debt Manufactures Towers, Cables, Poles and Hardware Improvement in ROCE:
• Significant improvement in EBIT Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 • Reduction in capital employed across SBUs
Mar Mar Mar Mar Particulars Particulars 2017 2016 Incr/(Decr) 2017 2016 Incr/(Decr) Receivables (Rs cr)* 5,355 5,902 (547) Net Debt (Rs cr)* 1,767 3,098 (1,331) Receivable (days) 231 247 (16) Acceptances (Rs cr) 969 794 175 Working capital (days) 108 139 (31) Total (Rs cr): 2,736 3,892 (1,156)
* Receivables and net debt exclude amounts related to the company’s BOT Project
15 Future Growth Drivers
Solar - International T&D EPC- Brazil Substation- International Improving financials
Additional capacity of Close to 30,000 kms of Built/ building around Continuing reduction in 30 GW expected in lines to be built till 70 sub stations in the finance costs through addressable 2019. AIS & GIS Space. better working capital geographies. management and Estimated investment Completed/ ongoing 20 borrowing profile. Exploring global of close to Rs 60,000 crs projects across 19 markets like UAE, in transmission lines. countries in past 2 Improving operating Jordan, Thailand, South years. leverage in railways and Africa. Shift from solar business. manufacturing to EPC Replicate success story To leverage T&D infra by leveraging KEC’s of domestic substation Better margin profiles and capabilities, use expertise. business in international through participation in PQs from India. market. high value tenders.
Solar park- India EPC- Brazil Substation- Afghanistan
16 Strategy: FY 2017-18 and beyond
MULTI-LOCATIONAL Prudent Financial AugmentedMANUFACTURING Operational & Progressive & Evolving Management & Execution Excellence; Focus Cultural Ethos on 8Delivering Manufacturing Projects facilities Control across India, Brazil and Ahead ofMexico Schedule Manufactures Towers, Cables, Poles and Hardware Valuing People; Enhanced Client Focus Investment in Human to meet the evolving Capital; Focus on aspirations of KEC’s Diversity & Inclusion Global Customer Base.
Committed to Digital Transformations Focused Social Ensuring & Endeavors Inspiring Innovation Safety@Workplace
17 CEAT LIMITED MAKING MOBILITY SAFER AND SMARTER. EVERYDAY. Overview
One of India’s leading tyre company with over 50 yrs of presence 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 #No 1 player in Sri Lanka in terms of market share
* Under commissioning FY 17 Revenue Breakup by Product FY 17 Revenue Breakup by Market
Farm, 7% Speciality, Exports, 14% (6%) 5% (5%) (14%)
Passenger Truck and Cars / UV, Buses, 33% 13% (11%) (38%)
OEM, LCV, 13% Replacement, 23% (23%) (13%) 63% (63%) 2/3 wheelers, 29% (27%) Note : Figures in parenthesis denote FY16
19 Key Updates
Financial Update
. FY17 Sales at Rs 5,722 Crs; 5% growth . PAT at Rs 361 Crs; margin at 6.3% . Debt / equity ratio at 0.4 times . Long term credit rating upgrade to AA by CARE and India Ratings & Research
Accolades
. Ranked highest in India for OE Tyre customer satisfaction as per J.D. Power 2017 India Original Equipment Tyre Customer Satisfaction Index (TCSI)
. Halol plant conferred with “Sword of Honour Award” by British Safety Council
20 Strategy
1 Differentiated Products Two wheelers Domestic Market Passenger cars & 2 Strong Brand Utility vehicles
3 Extensive Distribution Profitable growth
4 Deep OEM Partnerships
International Off Highway Tyres Market Emerging markets 5 World Class R&D
6 Expanding Global Reach
21 1 Differentiated Products
. “Fuelsmarrt” tyres for Passenger Cars . “Win Series” tyres for Truck & Bus Reduced rolling resistance High-strength rubber & steel Less fuel consumption, more savings High load carrying capability Endurance & overheating prevention
. “Puncture Safe” tyres for 2 Wheelers - India’s 1st Self Sealing tyre
. “Milaze” tyres for SUV Taxi segment . “Buland” tyres for Small Commercial Vehicles Improved life & load carrying capacity Stiffer shoulder & sidewall gives higher Higher mileage up to 1,00,000 loadability kilometers Higher tread radius delivers longer life
22 2 Strong Brand
TVCs/ Campaigns In the Game of Roads, CEAT Helps Be Monsoon Smart Tubeless Bike Tyres Drive Safe Dad
23 3 Extensive Distribution
Shoppe Shop in Shop (SIS) Distribution Network . 4,500+ dealers
. 450+ CEAT Franchisees (Shoppes + Hubs)
. 250+ two-wheeler distributors
. 350+ Multi Brand Outlet / Shop in Shops
. Launched CEAT Bike Shoppes
Multi Brand Outlet (MBO) Bike Shoppe District Coverage No. of CEAT Shoppes
290 601 464 176
212 102
FY12 FY15 FY17 FY12 FY15 FY17
24 4 Deep OEM Partnerships
25 5 World Class R&D
. State of the art R&D facility at Halol plant
. R&D focussed on development of breakthrough products, alternate materials, green tyres, smart tyres
. Partnerships with global institutes and technology partners
. Increased allocation towards R&D
26 6 Expanding Global Reach
Key Export Clusters Emerging markets
. Sri Lanka: Europe Cluster Leadership position with 50+% market US Cluster share
Middle East . Focused Cluster product and distribution ASEAN strategy for Cluster West Africa East Africa select clusters LATAM Cluster Cluster Cluster
27 Passenger Segment Trends
2/3 wheelers (Rs Cr) PC / UV (Rs Cr) 743 1,648 1,483 619 561 1,246 476 899 376
639 284
525 Revenue
FY 12 FY13 FY 14 FY 15 FY 16 FY 17 FY 12 FY13 FY 14 FY 15 FY 16 FY 17
. 2 Wheeler plant at Nagpur (Phase I) commissioned in March 2016; Expanding Capacity of 120 MT/day by Q2 FY18 . Passenger Car Radial plant at Halol (Phase II) commissioned in September Capacities 2015; Capacity of 120 MT/day by Q2 FY18 . FY17/ FY16 volume growth: 2/3 wheelers (+20% ), PC/UV (+15%)
28 Off Highway Tyres
Status Update . Greenfield OHT (Off Highway Tyres) radial plant in Ambernath
. Investing Rs 330 Crs for a Phase 1 capacity of 40 MT/day which will be further ramped up to 100 MT/day
. Plant is now live and tyres are being tested across multiple global markets
29 Strategic Expansion Plans
. On-going expansions - Investment of Rs. 1,400 Crs:
Passenger Car & Utility Vehicle tyres plant at Halol (Phase II) 2/3 Wheeler tyres plant at Nagpur (Phase I) OHT tyres plant at Ambernath
. Up-coming expansions - Investment of Rs. 2,800 Crs:
Truck & Bus Radial tyres plant at Halol (Phase III) 2/3 Wheeler tyres plant at Nagpur (Phase II) Passenger Car & Utility Vehicle tyres plant at a new location (Greenfield)
30 Strategic Focus Areas – Continued Momentum
Strategic Focus Areas (2 Wheelers, Passenger Cars, Others Utility Vehicles, Specialty 57% 54% 61% 68% Exports & Emerging Markets) 80% . CAGR of 25%
. Substantial contribution towards increasing 43% 46% profitability 39% 32% Strategic Focus 20% Areas . Market share growing
FY 10 FY14 FY15 FY16 FY17 % of Sales value
31 ZENSAR TECHNOLOGIES LIMITED RETURN ON DIGITAL
Power T & D Cables Railways Water Water Major disruption in IT market as Digital substitutes traditional IT spending
Majority of new enterprise tech spend to come from Digital Stack – Analytics, Cloud, Mobile, Automation, Security, IoT, CX/UX, BPM, Commerce
Global Enterprise IT spend ($B) New spend, 80% of CX/UX, Fall in 80% digital traditional IT stack incremental Automation, Greater Tech spend RPA, DevOps efficiency by 3,500 to 3,600
+ 950 to 1,100 to be on are opening automation, Tail Winds Tail 2,750 - 450 to 650 Digital Stack new avenues Cloud etc.
Traditional IT Apps/Infra Maturing Protectionism services industry, policies facing competition adds
Head Head Winds pressure & in-sourcing uncertainty
FY15 FY20 Source: NASSCOM McKinsey study
Decline in spend on traditional IT services, among other factors, has largely reduced the growth of Indian IT sector
33 Digital @ Zensar
Zensar’s Intelligent Managed Services Digital Revenue in Zensar has grown at a Platform for Maximum Agility and 58.9% CAGR over the last 2 years Efficiencies
29.8% 27.0% ZenAnalytica Predictive Analytics – Extract Valuable Insights Faster 12.6%
Blockchain – Digital Transactions get Secure and FY15 FY16 FY17 Transparent
Zensar has made multiple investments – both organic and inorganic - over the course of last Robotic Process Automation – year to boost its Digital capabilities RPA Transforming Business through Automation
Digital is expected to be ~35% of Zensar’s revenues in the next 4 quarters Gear up for the Office of the Future with Digital Workplace Services
34 Zensar’s Unique Living Digital Offering for clients
Engaging Digital Operating Digital Managing Digital Partnering Digital
Employee Engagement Operating & Productivity Reporting & Dash Boarding Customer Engagement
Employee engagement Operating and productivity Reporting and dash boarding Customer engagement solutions to enhance employee solutions to improve core solutions for the leadership to solutions that help improve innovation, efficiency and business processes. assist in informed decision customer outreach, engagement. making. engagement and satisfaction.
10-15% 15-20% 15-20% 10-20% Employee Satisfaction Operating Productivity Customer Satisfaction Sales Acceleration
Zensar's Platform Based | Mobile First | Cloud First | 100% Digital | Pre packaged & Customized Development
35 At Zensar, we are LIVING DIGITAL
Investing in innovations for transformations in future technology
Zensar’s Intelligent Command Centre
36 Multiple Digital and Traditional Wins over last 12 months
Digital Services Wins Traditional Services Wins
Digital Xformation for Europe Auto Asso. / Insur. Mobile Solutions for American Multinational financial services corporation
App Cloud Migration & Management for leading US Hi tech manufacturing company Application Management deal with top UK departmental store
Omni channel implementation for leading US Clothing and accessories retailer Application Dev and support for leading industrial manufacturing company in US
RPA for South Africa’s leading Financial Services company Oracle deal with Japanese multinational information tech equipment & services company
Digital Testing services for leading online / mobile gaming company IMS Cloud deal with leading Airlines in the US
Total large deals worth $ 300+ Million closed through the year
37 Digital Conversations with Top Clients
Zensar retained 100% its top clients in FY 17 Digital conversations with more than 70% of our top 50 clients
1 Million $ + Clients
51% 54% 56% 72 64
FY16 FY17
45% 45% 46% 5 Million $ + Clients 7 36% 37% 38% 5
FY16 FY17
FY15 FY16 FY17 Top 5 Clients Top 10 Clients Top 20 Clients
38 Revenue and Profitability Trend
376 331 322 64 67 59
43 47 122 137 37 54
FY 15 FY 16 FY 17
Legacy Revenue ($M) FY 15 FY 16 FY 17
Digital Revenue ($M) EBITDA ($M) PAT ($M)
FY 17 profitability impacted by: Legacy Revenue ↓ by 7.3 % . Exchange rate fluctuation CAGR over last 3 years . Projects delays leading to lower utilization . Clean-up of the MVS business Digital Revenue ↑ by 58.9% . Clean-up of Debtors in India CAGR over last 3 years . Other one-time expenses of ~$0.5M
39 Key highlights of FY17
Successful completion of 2 acquisitions Growth across Verticals Both acquisitions augment Zensar’s Digital capability ^ Retail – 21.8 %
^ BFSI – 1.9 % Leading UK based Experience Design agency ^ Manufacturing – 0.4 % Zensar + Foolproof = End-to-End Digital services for the CMO and CDO organizations Growth in Key Markets
^ Europe – 35.7 % Leading Omni-channel and Digital Supply chain company Zensar + Keystone = End to End provider of Omni Channel ^ Africa – 11.6 % Customer experience from Commerce to Fulfilment
Addition of several new Fortune 500 clients Digital at ~35% of Zensar’s revenues on a run-rate basis
40 RPG LIFE SCIENCES LIMITED Overview
. Mostly APIs for captive use . TGA approved unit in Thane . Revenue: Rs 43 crs
API Revenue : Rs 298 crs PBT : Rs 15.3 crs 2 Production Units Exports : 33% ~1150 Employees
Domestic International FormulationsAPI Formulations . EUGMP approved unit in . Field force of 500 people Ankleshwar . Strong brand in Nephrology . Immuno-suppressant focus . Strong presence in anti-diarrhoeal, antacid, iron- . Europe, Canada, ROW as main vitamin segments markets . Acquired 7 brands from Sun Pharma last year . Revenue: Rs 65 crs . Revenue: Rs 184 crs
42 Key Updates – FY17 (1/2)
Business portfolio streamlining . Biotech business divested . 7 brands acquired from Sun Pharma to strengthen Domestic Formulation business . Urology division launched; brands from Sun and additional products . Strong focus on International formulations; growth of 39%
Improving Financial Performance . Second consecutive year of good results . Revenue growth of 16% on a like-to-like basis* . PBT of 13.77 crs vs 8.39 crs last year; growth of 64% . Very strong H1-Weaker H2; bunching of export orders in H1 and portfolio restructuring in H2 * without biotech business
43 Key Updates – FY17 (2/2)
Further strengthening of India Formulations business . Continue to perform above industry growth . PCPM improvement to 3.88 lakhs vs 3.59 lakhs last year . EBIDTA improvement to 15.8 crs vs 12.4 crs last year . Romilast & Sildura (brands acquired from Sun) gaining momentum
Results showing in International Formulations business . 39% growth over last year; large contribution by ROW . 56 new product registrations filed in ROW market (39 to be filed in FY 18) . Significant progress on building product portfolio for regulated markets . 2nd product (Nicorandil) added; UKMHRA approval received; commercialisation from H2 2018 . Intense efforts to get Ankleshwar production unit ready for USFDA audit in 2018
44 FY 17 : Improvement trajectory continues
FY 16 FY 17
292 Revenue* (Rs Crs) 251
27 EBIDTA* (Rs Crs) 19 9.5% (+2.1%) EBIDTA (%) 7.6%
13.8 PBT* (Rs Crs) 8.4 4.7% (+1.4%) PBT (%) 3.3%
12.0 EPS 7.0 * Excludes revenue from Biotech business
45 India Formulations : Fundamentals getting stronger
₹ cr Sales ₹ lakhs PCPM 3.9 200 183 4.0 3.6 168 2.8 150 143 3.0
100 2.0
1.0 50
0.0 - FY15 FY16 FY17 FY15 FY16 FY17
20% New Product % 40% DPCO sales % 16% 34% 30% 24% 25% 9% 10% 20%
4% 10%
0% 0% FY15 FY16 FY17 FY15 FY16 FY17
46 Int’l Formulations : Growth starting to materialize
Regulatory Approvals Revenue (Rs cr) . EUGMP (Formulation) 39% . TGA (API) 70 growth . Nigeria FDA Customer Approvals 60 . Apotex (Canada) 50 . Teva (Europe) . Tillomed (UK) 40
. Aqvida (Europe) 30 . Medac (Germany) 20 Product Lines . Tablets 10 . Hard Gel Capsules 0 . Low RH tablet FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
ROW sales grew by almost 100 % in FY 17
47 Strategy: No change; continue to be on same path
. Focus : Captive molecules for Global Formulation . Approach : Own the technology; outsource manufacturing to USFDA approved sites
API
Domestic . Focus : Few therapy areas/ Formulations product segments . Focus : Immediate term- . Approach : New products & Domestic International ROW; Medium term – extensions, field-force FormulationsAPI Formulations Regulated markets productivity enhancement . Approach : Niche products own-NPD; USFDA approval of production unit
48 Overview on Group Financials Economic Outlook : Momentum for growth in discretionary spending
. Stable growth in GDP & IIP in recent years
GDP & IIP Growth Rate
GDP growth IIP growth
7.9 6.5 7.2 6.8 5.5 4.1 3.3 3.4 5.0 3.3
2012 2013 2014 2015 2016
. Government boost to infrastructure and Energy Sector Govt spending on infrastructure to be Rs.4 Trillion Solar capacity addition of 20,000 MW in Budget 2017 Rural electrification outlay increased by 25% to INR 48.14 Billion.
. Key Policy changes spurring growth Direct Transfer of Subsidy led to savings of Rs 140 Billion. In LPG alone IBC along with Central Bank intervention for resolution of stressed loans to banks
50 RPG Group: Key Differentiators
. Diversified Group Presence across key Growth sectors
. Established Business Governance Structure Empowers decision making with timely execution
. Sound Corporate Governance Practice Ensures practices and processes create long term value
. Robust Financials Orientation towards low gearing with sufficient liquidity
51 RPG Group: Improving Financials
CEAT KEC International Revenue Growth – 24% Revenue Growth – 51% PAT Growth – 1,906% PAT Growth – 46% 5,767 8,784 11.9% 4,653 5,815 9.3% 8.1%
5.9%
361 18 209 305
FY12 FY17 FY12 FY17 Zensar Technologies RPG Life Sciences Revenue Growth – 71% Revenue Growth – 57% PAT Growth – 51% PAT Growth – 2,307% 304 3,060 9.4% 9.6% 13.9% 12.6% 194 1,794
238 20 159 1
FY12 FY17 FY12 FY17
Note: Net Revenue = Net Sales + Other Operating Income; EBITDA does not include non-operating income; EBITDA % is taken on Net Revenue FY17 financials as per IND AS; FY12 as per IGAAP; CEAT FY17 EBITDA includes profit from Sri Lanka JV (after tax) 52 RPG Group: Improving Financials
Returns Ratios Leverage Ratios
3,715 6,026 5,225 3,103 4,806 2,756 2,486 2,544 3,818 3,250 2.3 1.9 19% 17% 1.8 17% 17% 1.5 1.2 12% 0.8 0.8 14% 14% 14% 0.7 11% 12% 0.5 0.4
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Net Worth (Rs Cr) ROCE ROE Net Debt Net D/E (x) Net Debt / EBITDA Assets
5,688 5,317 5,590 5,038 4,823 4,263 4,435 3,566 3,432 3,489
FY13 FY14 FY15 FY16 FY17 Net Block (Rs Cr) Gross Block (Rs Cr)
Note: FY16 & FY17 financials as per IND AS; Others as per IGAAP ROCE is calculated by taking EBIT multiplied by (1 minus tax rate @ 33%) divided by Average Capital Employed; ROE on Average Equity Gross Block and Net Block does not include Goodwill 53 Delivering Value to Stakeholders
. Innovation led product . Shifting gears based on Business differentiation opportunities . Expanding customer & market . Focus on Deleveraging reach
. Driving Digital Initiatives . Consolidating existing . Building capability through business lines inorganic growth . Improved product portfolio
Business Transformation Led Growth
54 T H A N K Y O U