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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.
12
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.
14
WAGON : THE OPPORTUNITY
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AGENDA
15
1. ABOUT US
2. FINANCIAL RESULTS
3. BALANCE SHEET
4. OPERATIONAL HIGHLIGHTS
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
2. FINANCIAL RESULTS
3. BALANCE SHEET
4. OPERATIONAL HIGHLIGHTS
5. OUTLOOK 2012-13
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BALANCE SHEET
20
(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
2. FINANCIAL RESULTS
3. BALANCE SHEET
4. OPERATIONAL HIGHLIGHTS
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
23
(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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25
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
26
*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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