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Presentation plan 1. Global two wheeler scenario 2. Two wheeler industry in India 3. TVS Motor performance 4. Key initiatives / achievements 5. Future plans 2
1. Global two wheeler scenario 3
Global two wheeler market - 2002 Figures in % 43 18 7 15 3 3 5 6 China India Indonesia Vietnam Thailand USA Brazil Others Size of the total market in 2002: 28 million numbers 4
Two wheeler per 1000 people 600 500 400 300 200 100 0 Relationship between GDP & Penetration Taiwan Thailand Malaysia Italy Japan Indonesia France India China Germany USA UK 0 5000 10000 15000 20000 25000 30000 35000 40000 GDP per capita in $ at PPP, 2001 5
2.Two wheeler industry All India 6
India Macro Economic Scene Population : 1 Billion GDP growth (CAGR 5 yrs) : 5.5% Inflation : < 5% Growing urban middle class Good monsoon triggering growth in rural economy 7
Consumer profile & trends Younger age profile Emerging youth power and equality of sexes Multiple ownership families Media reach rapidly growing (Urban 80%, Rural 40%) Urbanisation is growing at 3.5% p.a now at 30% Personal transportation led by personal aspirations 8
Two-wheeler industry sales trend All India Monthly average (000 s ) 490 445 430 370 10 % CAGR 360 421 315 313 310 283 250 1998-99 1999-2000 2000-01 2001-02 2002-03 Apr-Sep'03 Two wheeler industry has grown by 10% CAGR. In Apr-Sep 03, industry growth is 8%. Good monsoon is likely to trigger higher growth in second half 9
Two wheeler industry categorywise sales growth Category 10 1998-99 to 2002-03 Apr-Sep 2003 Motorcycles 31% 13% Step thrus -26% -55% Ungeared scooter 22% 26% Geared scooter -23% -32% Mopeds -13% -9% Total two wheeler 10% 8% Two wheeler sales growth is fuelled by motorcycle and ungeared scooters sales growth
Two-wheeler industry All India Category share % 1998-99 35 2002-03 74 2003-04 (Apr-Sep 03) 77 8 7 7 6 7 33 11 7 1 12 4 1 Mopeds Motorcycles Step thrus Geared scooters Ungeared scooters Significant growth in motorcycles category 11
Two wheeler industry projections - Categorywise Volume in 000 s 6000 5054(17%) 5000 4000 3000 2000 3401 238 1116 246 1177 3785 372 986 203 1613 3757 397 605 159 2028 4321 408 534 91 2866 527 338 70 3757 1000 624 611 568 422 362 0 1998-99 1999-00 2000-01 2001-02 2002-03 Figures in ( ) indicate growth over previous year Mopeds Motorycles Step thrus Geared scooters Ungeared scooters Two wheeler industry is expected to grow by 10 % over 2002-03 fuelled by growth in motorcycles and ungeared scooters. 12
3.TVS Motor performance 13
Profile of TVS Motor One of the largest two wheeler companies Two state of the art manufacturing plants Capacity 1.6 mn vehicles. Being increased to 2 mn Strong in-house R & D Robust supplier base Extensive all India sales & service network 2002-03 Sales : Rs. 27260 mn EBITDA : Rs. 2839 mn PAT : Rs. 1280 mn 14
TVS Motor s vehicle sales (categorywise) Volume (in 000 s ) 1400 1100 800 500 200 703 334 101 268 CAGR 12.8% 836 863 866 382 127 326 366 142 355 272 144 450 248 152 719 1998-99 1999-00 2000-01 2001-02 2002-03 1119 (29%) Motorcycles Scooters Mopeds Figures in ( ) indicate growth over previous year Actual growth of TVS Motor total sales in first half is 5% over previous year with better product mix. Growth in second half will be triggered by new products 15
TVS Motor s total market share Market share( % ) 24% 23% 22% 22% 22% 22% 21% 20% 20% 18% 16% 14% 1998-99 1999-2000 2000-01 2001-02 2002-03 Apr-Sep'03 16
TVS Motor s motorcycle market share Market share( % ) 24% 23% 22% 20% 20% 18% 18% 18% 18% 16% 16% 14% 1998-99 1999-2000 2000-01 2001-02 2002-03 Apr-Sep'03 Despite drop in 2 stroke, growth of TVS Victor and new products will help in improving market share 17
Changing profile of TVS Motor Composition of sales numbers in 1998-99 Composition of sales numbers in 2002-03 Mopeds 48% Motorcycles 38% Mopeds 22% Scooters 14% Motorcycles 64% Scooters 14% 18
Changing profile of TVS Motor Composition of turnover in 1998-99 Composition of turnover in 2002-03 Mopeds 28% Scooters 11% Mopeds 12% Motorcycles 57% Scooters 15% Motorcycles 77% 19
TVS Motor motorcycle revenue % of total vehicle revenue 90% 75% 66% 77% 60% 57% 57% 60% 45% 30% 1998-99 1999-2000 2000-01 2001-02 2002-03 Percentage revenue from motorcycles has substantially increased 20
Changing product profile Capacity of 4 stroke vehicles in total vehicles 2001-02 2003-04 projn. 2004-05 projn. 93 32 10 90 7 68 2 S Motorcycles 4 S Motorcycles 21
Monthly average sales (in 000s) Changing profile in motorcycles 80 60 40 25 15 20 0 24 22 27 5 (17%) 26 46 35 11 1998-99 1999-00 2000-01 2001-02 2002-03 Apr/Sep'03 (75%) 4-Stroke Mc 2-Stroke Mc Successful conversion of sales from 2 stroke to 4 stroke 22
Complete product range Ex-Showroom Price-Bangalore (Oct`03) 50000 45000 40000 35000 30000 25000 20000 15000 XL XL Super HD XL Super Scooty ES Scooty Pep Max100 Max 100R Max100 Dlx Victor GL Fiero F2 10000 MOPEDS UNGEARED SCOOTERS MOTORCYCLES Centra & Victor GLX will be launched in second half of 2003-04 23
4. Key initiatives / achievements 24
Key initiatives / achievements Research & Development World class facility for product design and development During 2002-03, applied for 16 patents and published five technical research papers in international conferences Projects in association with leading international research labs and Indian institutes Employing over 400 engineers 25
Key initiatives / achievements Research & Development (continued) Successful launch of new products Victor GL - 110 cc 4 stroke motorcycle Scooty PEP - 75cc 4 stroke ungeared scooter Fiero F2-150 cc 4 stroke motorcycle Two more motorcycles to be launched in second half Centra Victor GLX N 40 will be launched in early 2004-05 R & D 2001-02 2002-03 2003-04 projn. Expenditure 1.5% 2.2% 3.2% (% of sales) 26
TVS Victor Marching ahead 56000 42500 35880 36690 41067 44512 Sales in nos. 29000 17382 24697 32786 15500 10472 3925 2000 Sep'01 Dec'01 Mar'02 Jun'02 Sep'02 Dec'02 Mar'03 Jun'03 Sep'03 Fastest ramp-up to 50,000 per month in 12 months Sold 650,000 units within 2 years of launch 27
Key initiatives / achievements Sales & Marketing Enhanced and balanced distribution network Improved total customer satisfaction Brand investment more than doubled in last three years 1999-2000 Rs.278 mn (1.7% of sales) 2002-2003 Rs.1059 mn (3.9% of sales) 28
Number of Dealers Distribution network Year 2000 Year 2003 92 28% 94 28% 140 30% 160 34% 145 44% 165 36% North & East South West North & East South West 29
Regionwise total sales numbers 1998-99 Volumes in ( 000) 2002-03 161 23% 110 16% 279 25% 332 30% 421 61% 499 45% North & East South West North & East South West Significant growth in non South markets 30
Regionwise motorcycles sales numbers Volumes in ( 000) 1998-99 2002-03 92 35% 77 29% 185 26% 291 41% 96 36% 231 33% North & East South West North & East South West Significant growth in non South markets 31
Key initiatives / achievements Growing exports 28000 24000 21000 Volume in nos. 14000 7757 10194 7000 0 2001-02 2002-03 2003-04 projn. 32
Key initiatives / achievements Cost management : Value engineering Global sourcing Manufacturing cost reduction through TPM/JIT Waste elimination projects Channel financing to dealers and suppliers - Achieved Rs 1 billion cost reduction during 2002-03 (3.7% of sales) and plan for 2003-04 is Rs. 1.1 billion - Release of Rs. 1 billion in working capital during last year 33
Key initiatives / achievements Leveraging information technology Integration of suppliers, dealers and service centers through web ( mysap) Improved response through integrated supply chain - Raw materials turn times improved from 17 to 21 Extensive usage of IT in engineering applications - Lead time for new product development reduced from 27 to 18 months (target 12 months) Investment of Rs 200 mn Identified Rs 200 mn savings potential 34
Summary of financials Rs.in million Particulars 2001-02 2002-03 Growth % Gross income 19444 27261 40% EBITDA 1436 2839 98% Profit before tax 825 2011 144% Profit after tax 539 1280 137% EPS (in Rs.) 23 55 137% 35
Key ratios Sl.no RATIOS 2001-02 2002-03 1 EBITDA % 7.4 10.4 2 Profit after tax / sales % 2.8 4.7 3 Fixed cost / sales % 16.7 18.0 4 Sales / net fixed assets Times 4.6 5.8 5 Inventory turn - total Times 9.5 10.4 6 Total debt / equity ratio Times 0.5 0.3 7 Return on capital employed % 17.4 34.2 8 Return on networth % 15.9 34.3 9 Earnings per share Rs. 23.3 55.4 10 Sales / employee Rs mn 4.9 6.1 All interest bearing debts will be fully repaid next year. The cash and investments as on date is more than the value of debt 36
Summary of financials Rs.in million Particulars Apr/Sep'02 Apr/Sep'03 Growth % Gross income 13049 14447 11% EBITDA 1237 1456 18% Profit before tax 917 1072 17% Profit after tax 576 691 20% EPS (not annualised in Rs.) 25 30 20% 37
Key ratios Sl.no RATIOS Apr/Sep'02 Apr/Sep'03 1 EBITDA % 9.2 10.1 2 Profit after tax / sales % 4.3 4.8 3 Fixed cost / sales % 16.1 18.3 4 Sales / net fixed assets Times 5.7 5.6 5 Inventory turn - total Times 10.4 10.5 6 Total debt / equity ratio Times 0.4 0.2 7 Return on capital employed % 31.5 32.4 8 Return on networth % 32.8 30.2 9 Earnings per share Rs. 24.9 29.9 10 Sales / employee Rs mn 6.1 5.8 All interest bearing debts will be fully repaid next year. The cash and investments as on date is more than the value of debt 38
PAT ( Rs Million ) Profit after tax 1550 1280 1100 821 874 650 626 539 200 1998-99 1999-00 2000-01 2001-02 2002-03 39
EPS ( Rs ) Earnings per share 70 55 55 40 36 38 25 27 23 10 1998-99 1999-00 2000-01 2001-02 2002-03 40
5.Future plans 41
New product development Customer engineering Multiple product development Develop advanced technologies Leverage information technology in the area of product data management Three new products every year 42
Sales and marketing Build TVS brand globally Improve channel management Trigger growth through retail finance Leverage customer relationship management (CRM) through IT 43
International business Increase distribution in Asian, African and Latin American countries Intensive sales and marketing efforts in Srilanka and Bangladesh to establish leadership Market entry into South east Asia. 44
Three wheeler business Entry into three wheeler business by next year Investment in phase 1 of Rs. 500 million To cater to both passenger and cargo segments 45
Investments Annual capital expenditure of Rs 2.5 billion towards: Capacity expansion New products R & D infrastructure Three wheeler operations Overseas project 46
Merger of Lakshmi Auto Components with TVS-M: Rubber & Plastics division of LAC will be transferred to Sundaram Auto Components Ltd. (100% subsidiary of LAC) effective 1 st April 2003 Engine components division of LAC together with other investments and assets will merge with TVS-M Public shareholder of LAC will get one share of TVS-M for every seven shares of LAC 47
Merger of Lakshmi Auto Components with TVS-M The exchange ratio is fixed based on valuation report submitted by M/s Deloitte, Haskins & Sells, Chartered Accountants, Mumbai The scheme of amalgamation is subject to approval by shareholders and by the Honourable High Court of Madras. Restructuring will lead to substantial synergy benefits 48
Awards and recognitions Deming application prize by JUSE (First powered two wheeler company in the world) Technology award 2002 from Indian Government for best indigenous technology Best managed company award from Business Today 49
Thank you No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from TVS Motor Company Limited, PB 4, Harita, Hosur-635109, Tamilnadu, India. Certain part of this presentation describing estimates and future plans may be a forward looking statement within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied. This material is not a complete record of the discussion. 50