Professional Documents
Culture Documents
Management presentation
DEMERGER AND THE WAY FORWARD
Disclaimer!
Certain
statements
in
this
Investors
Forum
concerning
our
future
growth
prospects
are
forward-looking
statements,
which
involve
a
number
of
risks
and
uncertain+es
that
could
cause
actual
results
to
dier
materially
from
those
in
such
forward-looking
statements.
The
risks
and
uncertain+es
rela+ng
to
these
statements
include,
but
are
not
limited
to,
global
economic
condi+ons,
the
economic
condi+ons
of
the
regions,
loca+ons
and
industries
that
are
major
markets
for
Crompton
Greaves
Limited
(CGL),
risks
and
uncertain+es
regarding
uctua+ons
in
earnings,
our
ability
to
manage
growth,
intense
compe++on
in
sectors
where
we
operate
including
those
factors
which
may
aect
our
cost
advantage,
wage
increases
in
India
and
worldwide,
trends
in
raw
material
prices,
market
acceptance
of
new
products
and
services,
changes
in
governmental
regula+ons
and
costs
associated
with
compliance
ac+vi+es,
withdrawal
of
governmental
scal
incen+ves,
poli+cal
instability
and
regional
/
loca+onal
conicts,
legal
restric+ons
on
raising
capital
or
acquiring
companies
within
and
outside
India,
and
unauthorized
use
of
our
intellectual
property,
interest
rates,
uctua+ons
in
currency
exchange
rates
and
general
economic
condi+ons
aec+ng
our
industry.
CGL
may,
from
+me
to
+me,
make
addi+onal
wriRen
and
oral
forward-looking
statements,
including
statements
contained
in
the
company's
lings
with
the
Stock
Exchanges
and
Securi+es
and
Exchange
Board
of
India
and
our
reports
to
shareholders.
The
company
does
not
intend
or
undertake
to
update
any
forward-looking
statements
that
may
be
made
from
+me
to
+me
by
or
on
behalf
of
the
company.
2
2
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (CGL)
Crompton Greaves Consumer Products Ltd (CGCPL)
Q&A
Customer
EMEA
35%
Regions(1)
Americas
18%
India
35%
Channels
Key success
factors
SE Asia
12%
100%
Direct
Multichannel
Technology
Cost leadership
Brand
Products
Marketing
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (CGL)
Crompton Greaves Consumer Products Ltd (CGCPL)
Q&A
CGCPL
Market moving
towards consolidation
Operational
Agile and
focussed strategies
Specialized board
and management
Simplified
organization structures
Customised infrastructure
and processes
Financial
Unlock shareholder value
Cost and cash
cycle optimization
Focused
investor opportunities
Services
CGCPL
Appliances
SE Asia
Americas
FY 2014
revenue mix
India
Pumps
Fans
Light
Products
Revenue
growth
Key product
segments
Key customer
segments
EMEA
Power T&D
Power conversion motors,
generators and drives
Automation solutions
Households
Commercial
Institutions
Air circulation
Lighting
Consumer water products
Home and kitchen appliances
Promoters
57%
43%
Public
32%
CGL
43%
CGCPL
25% plus one share
Industrial
Indicative
timing
Brand
arrangement
Power Systems
October 2014 August 2015: requisite filings approval from stock exchanges,
shareholders, creditors and high court
Q4 CY2015 proposed listing of CGCPL
Trademark Crompton Greaves to be assigned to CGCPL
CG logo shall continue to be used and developed by CGL
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (CGL)
Crompton Greaves Consumer Products Ltd (CGCPL)
Q&A
10
10
Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.
11
Improved
presence in
key markets
Acquisition
Consolidation
2005
2011
2014
3.2
8.0
10.5
Indian Play
International expansion
with distributed field force
Widened
product portfolio
and improved
technology
Increased
customer access
Introduced drives
and automation
<2K
>5K
Approved in several
global utility and
industrial players
# of customers
12
12
Acquisitions
2,500 Cr(1)
Manufacturing
1,000 Cr(2)
Low
Large ticket size
No. of competitors
CGL
in 2014
High-end
Ultra high voltage
Large ratings
Value-added solutions
Turnkey play
CGL in 2011
Technology
400 Cr(2)
Low-end
Low ticket size
Low Voltage
Non-Industrial
High
(1)
(2)
13
13
Offering
Technology
Geography
Power Conversion
Automation Solutions
Transmission and
distribution solutions
Executed 10 MW (4-pole)
large motor
Extensive presence in
Europe and India
14
14
INR Cr.
~7%
9,015
10,294
9,171
3,304
+44%
1,054
860
(28%)
5,675
6,131
6.8%
1,599
2,442
1,678
5,739
FY 11-12
CAGR
FY 12-13
FY 13-14
15
15
20
205
2005
+6.8%
+1.4%
+8.5%
262
2008
234
2011
369
284
2014
ABB(5)
10
Alstom(6)
TBEA
CG
2018
Uptick
Hyosung
Siemens(7)
+11.3%
10
2005
+7.0%
+4.1%
13
2008
15
2011
17
2014
22
2018
-10
FY
0708
FY
0910
FY
1112
FY
1314
Source: Economist Intelligence Unit, CG Update Nomura Analyst report (Dec'13), Analyst Reports / Declaration, World Energy Investment Outlook 2014, GBI Research 2012
(1) GBI Research 2012; (2) World energy outlook 2014. (3) GFI Total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of
raw materials. (4) Margins OI + D&A 5. ABB Power Products & Power Systems margins considered. (6) Alstom Grid data available only for last 4 years; Segment created only then.
(7) Siemens Power Transmission EBIT considered (Nomura Analyst Report).
16
16
EBITDA (%)
10
2.2
-3.5
3.6
-2.9
6.2
-3.0
4.9
2.3
1.9
EBITDA
FY 11-12
Ongoing
Improv
ements
(BTP)1
Mkt. Pricing
Pressure
One-time
costs
EBITDA
FY 12-13
Recurrent
benefits
from onetime costs
Ongoing
Improv
ements
(BTP)1
Mkt. Pricing
Pressure
EBITDA
FY 13-14
17
17
India capex
spends
improving
Robust
industrial
demand
Stricter regulations for energy efficiency to drive robust growth in demand for
energy efficient motors
Product offering to railways expected to witness better demand going forward
with pending deliveries being cleared
18
18
"Multi-local"
In-country supply
chain
Continue to play
across regions
India, EMEA, SEAP
& NAM
Technology adds
relevant to region
Continue to invest in
technology
"Expansive Play"
Partner to enter new
segments
19
19
"Multi-local"
In-country supply
chain
"Expansive Play"
Partner to enter new
segments
Economics
Moderate
margins with
continued
investment
Investments
required to continue
to move up the
value chain
Sustainability
Short term
growth with high
long term
unpredictability
Sustainable
position in key
growth markets
(EMEA, India)
Broad based
presence with
sustained
investment
Loss of cost
competitiveness
Risks
?
20
20
Offering
Footprint
Geographical focus
(EMEA, India)
Vertical specialization (power,
railway, oil and gas) and key
account management
Manufacturing and
Cost Excellence
21
21
Automation(1)
Strong INR 700 Cr.(2)
revenue
Good ~8%10% EBITDA(3)
Market growing at a strong
rate of 15%
22%
430
289
Exports
FY
1112
808
FY
1314
CG internal data.
ZIV acquisition made in FY 1112.
Figures for FY 1314; Last 3 years average.
Only Power BU exports considered.
FY
1314
Systems
Source:
(1)
(2)
(3)
FY
1112
496
Business models
Margin
improvements
Power Conversion
High-end
products
Enhancing
route to market
T&D
Service
FY
1314
97%
44
FY
1112
171
FY
1314
22
22
FY 20042005
FY 20132014
Exports
Target
Exports
10.0
Asia In-country
21.0
Supply model
towards cost
competitive Asia
50.0
79.0
90.0
Asia In-country
EMEA
Asia In-country
Exports
NAM
10.0
Diversified
customer base
with focus on
EMEA and India
50.0
NAM
10.0
India
18.0
35.0
35.0
90.0
EMEA
India
India
35.0
40.0
12.0
EMEA
SEA
15.0
SEA
23
23
European players
CG strategy
Leverage technology
and installed base from
EU acquisitions
Front-end focus in
EMEA and India with
on ground presence
Relatively behind
on technology
Low service focus and low
installed base as entry in
last 10 years
Poor quality perception
Low cost
manufacturing units
24
24
Annual Report
Segments
Key segments
Industrials
Brief Description
25
25
Laurent
Demortier
CEO and MD
Noberto Santiago
President,
Automation
Madhav Acharya
CFO & CIO
Sanjay Singh
Global Head - HR
Extensive experience in
HR best practices
globally
Previously Tata Motors
CV Business HR Head
J. G. Kulkarni
President,
Power BU
34 years of experience in
the industry
Actively involved in CII,
IEEMA, ERDA
Srinivas
Ponnaluri
CTO
Anil Raina
President,
Industrial BU
Ravi Rajagopal
EVP Legal,
Secretariat & Risk
26
26
Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.
27
Top 3 domestic
small consumer durables player in India
FY14 revenue of ~INR 2,900 Cr
with EBITDA of 12.3%
+16 %
3000
2,847
1800%
1600%
2,134
1,604
2000
1500
11.10%
14%
51%
13%
82%
16%
195%
1400%
1200%
12.70%
ROCE FY 14 (%)
2000%
2,593
2500
Revenue Growth
FY 1214 (%)
12.30%
12.34%
1000
1000%
EBIT
in
FY'15 H1
800%
600%
400%
500
Crompton
200%
0
0%
FY12
FY13
EBITDA (%)
Source:
FY14
FY15 H1
Revenues (Cr)
28
28
"Crompton taught
everyone how to make
good fans"
"Quality of Crompton's
LED is good, and price is
better than Philips, so good
positioned"
Reliability
Quality
Crompton
Durability
Trustworthy
29
29
Durability
Quality
Reliability
Trustworthy
Air circulation
Lighting
Long Life
High warranty
Low replacement
cycle
High brightness,
low power
consumption, good
technology
BIS mark
Multi-purpose use
Good after-sales
service
Low maintenance
Good after-sales
service
Low maintenance
Recommended by a
trusted source
Retailer recommendation
Peer
recommendation
Crompton brand
equity
30
30
Air circulation
Lighting
Consumer water
products
13%
10%
2%
20%
Revenue
(FY 1214)
(INR Cr.)
837
FY 12
Market
position and
market
share (%)
Our
positioning
vs. closest
competitor
Source:
1,201
685
FY 14
FY 12
879
552
FY 14
FY 12
665
60
63
FY 14
FY 12
FY 14
No.1 position in
domestic pumps, top 4
in water heaters, 10%
market share
CGCPL: Superior
domestic portfolio with
excellent service
Closest competitor:
Distant No.2
in domestic
31
31
37,683
Consumer
confidence
30,164
27,068
Nuclearization
Growing
work force
Note:
(1)
Source:
10%
Air
circulation
12%
8,661
Lighting
12%
6,481
7,724
6,915
6,222
Water
products
7,128
5,963
Urbanization
7,866
5,864
5,188
4,558
13%
6,576
Home and
kitchen
appliances
10,325
11,580
FY 2015
FY 2016
12,990
FY 2017
14,580
FY 2018
32
32
Huge untapped opportunity with rural having large share of many categories
Rural the
new focus
Brand and
distribution
Drivers for
value creation
33
33
Mid-market positioning;
limited portfolio
expansion
34
34
Maintain current
margins
Industry leading
RoCE
Industry leading
margins from pricing
and premium portfolio
Moderate RoCE due to
investments
Low margins on
account of split with
partner
Low RoCE from high
investments
Sustainability
Sustainable higher
growth than market
Multifold growth
due to capturing
the entire consumer
growth
Risks
Potential loss of
share to new
entrants as market
shifts
Multi/sub-brand
architecture needs to
succeed
Economics
?
35
35
Air
Circulation
Decorative
lights
Consumer
Water
Products
Small
kitchen
appliances
...we will leverage this early consumer connect to succeed in new segments
Large kitchen
appliances
(hoods and hobs)
Personal
care
Street light
automation
36
36
Target
1
Brand equity
2
Offering
3
Reach
156,000 retailers
270,000 retailers
Urban middle
class customers
4
Cost & SCM
optimization
(1):
37
37
Brand
equity
Target
consumer
Brand
awareness
38
38
Air Circulation
Lighting
Consumer Water
Products
Current
portfolio
New
products
in existing
range
39
39
High aspirations
Access / availability is a
challenge
Drive premium
offering &
target using
new channels
40
40
Ash Gupta
President
Previously
President
and CEO at Honeywell
India
Prior to this, he has spent
19 years with GE in
various roles
Premanand Bhat
PL Head - Pumps
32 years
of
experience
of which 23 years are
with Crompton Greaves
Ltd.
Previously
worked as
All India Marketing
Manager Fans and
Marketing Manager
West Region
Amit Ganguly
Finance Head
16 years of Finance
experience
Previously Finance
Controller for Pernod
Ricard India and Finance
Manager for Pepsico
India
Ramesh Kumar
Global Sales &
Service
30 years of experience.
Joined Crompton
Greaves Ltd. in 1990
Through the years has
moved across roles as
AGM, AIMM,
Unit Head and PL
Head Lighting
Dhruva Chandrie
PL Head
20 years
of
experience
across E-tail, Retail,
Automobiles and
Petroleum
Previously worked with
HomeShop18, Reliance,
Tata and Videocon
Sundar Iyer
Strategy &
Business Planning
Head
21 years of experience.
Previously worked with
ABB Ltd. as Vice
President. Joined
Crompton Greaves Ltd. in
2012 as General
Manager Strategy
Kunal Dhawan
CMO & PL
Head - Lighting
16 years
of
experience
Previously worked with
companies such as
Aditya Birla Retail, Dabur,
Reckitt Benckiser and
Heinz
Uday Mahajani
PL Head - Fans
35 years
of
experience
with Crompton Greaves
Ltd.
Started his career with
Pumps division of
Crompton Greaves Ltd.
as General Manager
Accounts in 1979
41
41
Agenda
CG at a glance
Rationale and plan for demerger
Market environment
Way forward
Crompton Greaves Ltd (CGL)
Crompton Greaves Consumer Products Ltd (CGCPL)
Q&A
42
42