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INVESTOR PRESENTATION JUNE 2017

JUNE 2017 - JK Tyre · 2019-04-23 · JK Tyre - Overview Consolidated Growth (Five –year CAGR) Manufacturing excellence with world class consistent quality JK Tyre become first

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INVESTOR PRESENTATIONJUNE 2017

Safe Harbour

This presentation and the accompanying slides (the “Presentation”), which have been prepared by JK Tyre &Industries Limited (the “Company”), have been prepared solely for information purposes and do not constituteany offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basisor be relied on in connection with any contract or binding commitment whatsoever. No offering of securities ofthe Company will be made except by means of a statutory offering document containing detailed informationabout the Company.

This Presentation has been prepared by the Company based on information and data which the Companyconsiders reliable, but the Company makes no representation or warranty, express or implied, whatsoever, andno reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contentsof this Presentation. This Presentation may not be all inclusive and may not contain all of the information thatyou may consider material. Any liability in respect of the contents of, or any omission from, this Presentation isexpressly excluded.

This presentation contains certain forward looking statements concerning the Company’s future businessprospects and business profitability, which are subject to a number of risks and uncertainties and the actualresults could materially differ from those in such forward looking statements. The risks and uncertaintiesrelating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations inearnings, our ability to manage growth, competition (both domestic and international), economic growth in Indiaand abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, ourability to manage our international operations, government policies and actions regulations, interest and otherfiscal costs generally prevailing in the economy. The company does not undertake to make any announcementin case any of these forward looking statements become materially incorrect in future or update any forwardlooking statements made from time to time by or on behalf of the company.

2

OUR BOARD

Dr. Raghupati Singhania

Chairman & Managing Director

• Dr. Raghupati Singhania

• Arvind Singh Mewar

• Bakul Jain

• Sunanda Singhania

• Kalpataru Tripathy

• Shreekant Somany

• Vimal Bhandari

• Dr. Wolfgang Holzbach

• Bharat Hari Singhania

(Managing Director)

• Anshuman Singhania

(Whole-time Director)

• Arun K. Bajoria

(Director & President – International

Operations)

3

Anshuman Singhania

Whole-time Director

V.K. Misra

Technical DirectorA.K. Kinra

Finance Director

Vikram Malhotra

Marketing Director

Sanjiv Saxena

VP- Corporate Accounts

A.K. Makkar

Manufacturing

Director

Dr. R.Mukhopadhyay

Director (R&D)

Kumar Joshi

Executive Director – JK TORNEL

Arun K. Bajoria

Director & President –

International Operations

Ashish Pandey

VP- Materials

MANAGEMENT TEAM

4

Indian Tyre Industry – over ` 50000 Crs. (US $ 8 Bn)

Commercial Tyre segment (Truck/Bus & LCVs)

• About 75% (by value) of total tyre market

Exports to over 100 countries

Radialisation

- Car tyres – over 98%

- Truck tyres – 46% (OEM - 68%)

3 / 4 top Indian players dominate the market

Indian Tyre Industry - Overview

Revenue Segmentation

Truck & Bus,28%

Passenger Car/Light

Truck,58%

Others, 14%

Global Tyre Industry

Truck & Bus,55%

Passenger Car/Light

Truck,22%

Others, 23%

Indian Tyre Industry

For Jan-Mar’17 Qtr.

Domestic - 47%

OEM - 74%

5

2012-13 2013-14 2014-15 2015-162016-17

(Exp)2017-18

(Proj)2017-18

(Proj)

GDP growth 5.1 6.9 7.3 7.9 7.1 7.6 7.8

5.1

6.97.3

7.97.1 7.6 7.8

3.0

5.0

7.0

9.0

11.0

13.0

15.0

GD

P G

row

th (

%)

Projected Actual

Decline in GDP due to demonetization but

India growth story to continue

India – GDP Growth

6

811

1719

2226

33

4446

50

57

66

73

6

25

34 34

42

51

61

7268 69

75

8082

0

10

20

30

40

50

60

70

80

90

200

8-0

9

200

9-1

0

201

0-1

1

201

1-1

2

201

2-1

3

201

3-1

4

201

4-1

5

2015-1

6

201

6-1

7

201

7-1

8

201

8-1

9

201

9-2

0

202

0-2

1

Radialisation (%)

Domestic

OEM

Actual

Expected

Truck & Bus Radialisation In India

Radialisation will

be driven by :

• Cost - Benefit Ratio

• Road Development

• Overload Control

• User Education

• Retreading

Infrastructure

…Radialisation Will Drive Indian Tyre Industry Growth…

For Jan-Mar’17 Qtr.

Domestic - 47%

OEM - 74%

7

JK Tyre - Overview

Consolidated Growth

(Five –year CAGR)

Manufacturing excellence with

world class consistent quality

JK Tyre become first tyre

company in India to have

verified Carbon Footprint

as per IS -14064

Pioneer of Radial Technology in India

India’s No. 1 Truck/Bus Radial (TBR) manufacturer,

Market Share -30% approx.

Global Brands

Ranked 24th largest tyre manufacturing company

12 Manufacturing Plants

Total Capacity – 35 Mn. Tyres p.a.

Large Talent pool of about 15000 employees

1st in Asia to receive ISO 50001 certification for

energy management, and 2nd in the world

1st company in India to commission India’s

biggest & foremost research centre - HASETRI

Revenue 2% 10% up for FY17 over FY16

EBITDA 29%

Gross Block 19%

8

JK TYRE –Outperforms Industry

A. Growth

B. Truck

Radialisation

C. Truck Bus Radial

Growth

On basis of Volume

Industry JK Tyre*

Figures in %

2016-17

7 8

46 55

8 17

[(*) – Including CIL ]

9

JK Tyre – The Growth Journey

1951 1975 1991 1997 1999 2008 2010 20122013

& 20142016

Incorporated

as a Private

Limited

company

First Tyre

plant

in Kankroli,

Rajasthan

Set up

second tyre

plant at

Banmore,

MP

Acquired

Vikrant Tyres

Ltd., Mysore

Started All

Steel Truck

radial

Mysore

Acquired

Tornel plant

in Mexico

New OTR

Plant in

Mysore

New plant in

Chennai

Major

brownfield

expansion

undertaken

in Chennai

Acquired

Cavendish

Industries

10

Leadership - No.1 position in Truck/Bus

Radials

About 13 million JK Tyre TBRs on the

roads

Truck Radialisation catching up Fast

Jan’17-Mar’17 Qtr- 47%

OEMs driving Radialisation in Truck & Bus

Jan’17-Mar’17 Qtr- 74%

JK Tyre's Major Shift in Sales from Bias to

Radial

JK Tyre -Major shift in Truck Tyre mix

JK TYRE – Radial Leaders of India

(On Basis of Domestic Sales Value)

(%)

(On Basis of Total sales Value)

(%)

(%)

JK Tyre, 31%

Apollo, 24%

MRF, 13%

Birla, 2%

Ceat, 4%

Others/Imports,

26%

Truck Bus Radial FY 2016-17

Particulars 13-14 14-15 15-16 16-17

Total (Domestic) 26 33 44 46

OEM 51 61 72 68

Particulars 13-14 14-15 15-16 16-17

Bias 54 48 42 39

Radial 46 52 58 61

Particulars 13-14 14-15 15-16 16-17

Bias 56 51 42 39

Radial 44 49 58 61

11

(On basis of

Domestic Sales

Nos.)

Highest TBR Market Share

Extensive Distribution

Network

Strong OEM Presence

Cost Competitive

R& D Focus

Continuous Innovation

Manufacturing Excellence

Strong presence across globe

Key Competitive Strengths

12

Strategic Manufacturing Locations - India

JK Tyre has 9 modern plants in India -

strategically located at:

- Kankroli, Rajasthan -1

- Banmore, Madhya Pradesh -1

- Mysore, Karnataka -3

- Chennai, Tamil Nadu -1

- Laksar (Haridwar), Uttarakhand. - 3

Madhya Pradesh

Rajasthan

Tamil Nadu

Karnataka

Uttarakhand

13

Truck / Bus Bias

FarmPCR

OTR

Racing

Truck / Bus

Radial

LCV / SCV Bias

LCVRadial

Military / Defense

Industrial&

Specialty

JK Tyre – Wide Product Range

2/3 wheeler

Balanced

Product

Portfolio

14

Size : 40.00-57 VEM 045Weight : 3700 KgHeight : 12 feet

JK Tyre produces India’s Largest OTR Tyre

15

JK Tyre – Distribution and Service Network

141 JK Tyre Selling Points

4000 Dealers across India

– 1000 exclusive

30 JK Tyre Truck

Wheels Fully equipped Truck Tyre

service centre

For enhancing customer

experience by offering Total

Tyre Solution

230 JK Tyre Steel WheelsExclusive Passenger Car Tyre Retailing

11 Xpress Wheelsfor Small Towns & Semi Urban Markets

Also caters to 2/3 wheeler

Over 1000

Fleet ManagementDirect Partnership with Fleet

Owners

- As on 31.3.17

16

Expert Products

Truck Wheels

Expert

Tyre Care

Fleet Management

Expert services

CRM

Expert Relationship

Retread

Expert Total Life

Expert Associations

JK Tyre - Total Solution : For Fleet acquisition

17

JK Tyre - Key Partners to Leading OEMs...

Maruti

Mahindra

x

x

X

India/Mexico

JK Tornel, Mexico India/MexicoJK Tornel, Mexico - LTR

18

TPM Consistency Award 2015” by Japan Institute

of Plant Management (JIPM) – JK Tyre &

Industries Limited, Vikrant Tyre Plant, Mysuru.

JK Tyre – Quality Excellence Journey

2015SA 8000|:2008ISO 27001:2013

NABL 17025:2005ISO 14064

TPM Consistency Award-VTPGRI-4 (Sustainability Reporting )

2013OHSAS 18001:2007- CTP

ISO 14001:2004 - CTPEnMs ISO-50001 - CTP, VTP

CII GreenCo Rating - KTP

2012EnMs ISO-50001-KTP

TS 16949:2009 LOC CTP

2010 TPM

2003 ISO 9000-2000

TS-16949

2001 EFQM

Commendation

1999 ISO 14001

1994 ISO 9001

& QS -9000

2017ISMS ISO 27001:2013 – HO & ERP

NABL 17025/2005- Main Laboratory

– 5 locations

19

Brand Building – Racing

JK Tyre acquired Formula BMW Series

Rechristened “JK Racing Asia Series” (JKRAS)

Created history in Indian Motorsport

First Indian company to acquire an FIA

(Fédération Internationalede l'Automobile)

accredited series

The legend of Racing in India

20

Low cost acquisition of additional

capacity

Free access to NAFTA & other

trade blocks

Enlarge JK Tyre’s global footprint

North America and emerging Latin

America markets

JK Tornel, Mexico – a Strategic Acquisition

21

JK Tornel - Mexico

Entered OEM Ist time

• Chrysler

• Nissan – Car/Light Truck

Radial (LTR)

• John Deere – Farm

• Case New Holland (CNH)

Product range

• Passenger Car Radial

• Truck Radial (outsourced)

• Light Truck Radial

• Truck Bias

• Light Truck Bias

• Farm Tyres

• Industrial Tyres

Significantly improved operation in

last 9 years through :

• Tornel awarded ‘Outstanding Quality

Award winner’ by Chrysler

• Enhanced capacity utilisation (40% to 70%)

• Improved Plant efficiencies

• Enhanced market share across all products

• Awarded “ Superbrand”, 2015

Capacity :

8.3 Mn Tyres p.a.

No of Plants :

3 plants in Mexico

(Azcapotzalco,

Tultitlan &Hidalgo)

Present Market

Share:

• Truck Bias : 91%

• LCV Bias : 84%

• Passenger Line

Radials : 9%

• LTR : 6%

Financials(Apr’16-Mar’17)Audited

MnPesos

`/Crs.

Sales 3497 1218

EBITDA 394 114

PBT 129 44

PAT 67 22

22

Outsourcing (2)

Marketing Hub - Presence in 105 countries across the globe

2016-17 USD Mn ` Crs.- From India 97 633 - Global 145 937

JK Tyre : Global Footprint

Mexico (3)

India (9)

Own Plants (12)

China

Existing – 9

Sri Lanka

IndonesiaNairobi

USA

Moscow

Dubai

Thailand

Planned – 3

(India, Mexico, Dubai, Uruguay,Colombia, US.A, Indonesia, Thailand,Moscow)

Colombia Lagos

Brazil

( Nairobi, Brazil, Lagos)

Uruguay

23

Combined Facility

12 Tyre Plants

India -9

• Kankroli, Rajasthan

• Banmore, Madhya Pradesh

• Mysore, Karnataka -3

• Chennai, Tamil Nadu

• Laksar, Haridwar – 3

Mexico -3

• Azcapotzalco

• Tultitlan

• Hidalgo

Capacity

In Mexico City

Lac Nos. p.a.

S.No. Particulars JKTIL CILTotal -

India

Tornel,

Mexico

Total -

India &

Mexico

1 Truck Bias 23.18 17.57 40.75 6.38 47.13

2 Truck Radial 22.65 11.99 34.64 34.64

Total Truck 45.83 29.56 75.39 6.38 81.77

3 Passenger Line Radial 98.85 98.85 52.00 150.85

4 2/3 Wheeler 63.02 63.02 63.02

5 Others (LCV,Car, Farm -Bias

& OTR)

22.27 7.48 29.75 24.85 54.60

6 Total 166.95 100.06 267.01 83.23 350.24

7 Tons per day (TPD) 1143 627 1770 340 2110

% TPD to Total 54 30 84 16 100

24

JK Tyre - Revenue Segmentation

(Value)Apr’16- Mar’17By Market

By Product Line

Truck, 67%

Light Truck, 12%

PCR, 15%

Farm, 4%OTR & Others,

2%

Replacement 56%

Exports, 10%

OEMs, 34%

25

JK Tyre - Current Customer Mix

(Apr’16 – Mar’17)

Truck & Bus Tyres

Passenger Car Tyres

(Nos.)

Truck Radial Tyres

Replacement 51%

Exports, 14%

OEMs, 35%Replacement,

40%

Exports, 13%

OEMs, 47%

Replacement, 42%

Exports, 4%

OEMs,54%

26

Highlights

FY 2016-17

27

Domestic Sales growth

(FY17 over FY16)

Consolidated Gross Sales of Rs. 2356 crs. in Q4FY17 …..Growth ~ 23% (yoy)

Consolidate Gross Sales of Rs. 1000 crs.+ in Mar’17

Exports (consolidated) to over 100 countries

2016-17 – Rs. 937 crs …..Growth ~ 11%

2015-16 – Rs. 847 crs.

Key Achievements 2016-17

PCR – 7.4%

TBR* – 17.4%

(In nos.)

76078383

1141 1198

2015-16 2016-17

Gross Sales & OtherIncome

EBITDA

up by 5%

up by 10%

10% Increase in Turnover for FY 17 (Consolidated)

[(*) – Including CIL ]

Rs. Crs.

28

Operating efficiencies achieved:

3 MW Rooftop Solar Project completed at CTP

Biggest Grid synchronised Roof top Solar installation

in Tamil Nadu

21% of Energy requirement being met through Renewable Sources (Target : 37% for FY18)

Key Achievements 2016-17

Among the top 4 energy efficient tyre

companies in the world and most

water efficient across all tyre

companies

Particulars Unit FY17 FY16

Energy Costs Rs./MT 8434 8588

Water Consumption Ltrs/Ton 2.8 3.5

Manpower Productivity Mandays/Ton 9.5 10.1

Energy Cost Savings – Rs. 4.2 crs p.a.

Optimization of Storage Space & Logistics cost savings - Rs. 7 crs. p.a

29

30

JK Tyre & Industries acquired Cavendish Industries ..effective 13th April, 2016, at an

EV of Rs. 2170 crs.

CIL acquisition gives JK Tyre strategic entry into 2/3 Wheeler Category

Product line : TBB tyres, TBR tyres, 2-3W tyres, Tractor tyres, Tubes &Flaps

Capacity – 100 lacTyres p.a.

Laksar plant is an excise benefit zone -excise exemption of 10 years (upto 2020)

Laksar (Haridwar)

• Truck Bias: 17.5 Lacs

• Truck Radial: 12 Lacs

• Non-Truck Bias: 7.5 Lacs

• 2/3 Wheeler : 63 Lacs

30

Completed Acquisition of Cavendish Industries Ltd. (CIL)

– Operations of CIL Turned Around in 1st Year

itself

Launched a premium 2/3 Wheeler tyre ‘BLAZE’ – well

received & volume increasing month by month

Entry in Fast growing 2/3 wheeler segment

31

The only company in India to have three tier Brand strategy

A Strategic Move to synchronize with Market Requirement to have Three Different Brand Portfolio at different Price Points.

Technology evolved to Develop products to meet the Challenging Requirements.

32

JK Tyre Product Basket : Tyre for every price point

33

131 New Products for domestic & International markets

(OE and Replacement)

• TBR – 25

• PCR: India -47, Mexico – 27

28 New Products for 2/3 wheeler for Indian Market

New Products

Launched

40 2011-12

62 2012-13

65 2013-14

63 2014-15

121 2015-16

159 2016-17

In August 2016, rolled out 10 millionth TBR at Mysuru

plant,

…unparalleled feat by any Indian Tyre Co.

Key Achievements 2016-17 (Cont.)

34

Launched New Format in FY 2016-17

Xpress Wheels - for Small Towns & Semi Urban Markets (11)

JK Tyre Retread Centre Franchisees (12)

Response to demonetization -Going Cashless –

Tied up with Paytm for PCR tyre , selling through online

IT ERP System shifted to SAP HANA

- In memory database for faster processing

Key Achievements 2016-17 (Cont.)

35

Dr. Raghupati Singhania, CMD, conferred with:

Industry Leadership Award by Indo-American

Chamber of Commerce

'Distinguished Fellow of IOD for 2016’ by The

Institute of Directors (IOD), India

Listed in the list of – 100 Top CEOs of the Country

by Business Today Magazine

JK Tyre

Awarded ‘Superbrand 2016-17’…First & Only

Tyre Superbrand in India having selected 6

times in row, since 2004

Most Trusted Brand 2017 by Reader’s Digest

Selected Amongst India’s fastest growing

Companies by Business World

Key Achievements 2016-17 (Cont.)

36

Technology : All solutions under one roof

Raghupati Singhania Centre of Excellence for

Tyre and Vehicle Mechanics

“A Joint Venture R&D Center” at IIT Madras,

Chennai

One of the India’s biggest Academia – Industry

partnership for Advanced Research

State of the Art R&D

All facilities under one roof

HASETRI : Elastomer & Tyre Research &

Development

Tech Center : Product Design, Project

Management, Benchmarking and Key

Account Management

Central Test Centre – Enhanced with new

high end test capabilities‘Raghupati Singhania Center of Excellence’

37

Transforming JK Tyre Supply Chain (2016-17)

38

Increase in product availability across all selling

locations (from 72% to 95%)

15 MODEL warehouses created (best warehouse

practices being followed)

Savings in Logistics cost (Rs 7 crores)

IT enabling entire supply

- increased efficiencies & reduced redundancies

Use of SAP in

• OE just-in-time warehouses

• export order management

• fulfillment process

- reduced lead times & end to end visibility

Reduction in export port stock & overall FG Inventory

Significant improvement in internal/external customer

experience by streamlining various processes

NETWORK OPTIMIZATION in logistics/warehousing with new GST regime

Key Raw materials

Raw Material Composition (by value) – 2016-17

Natural Rubber,

38%

Synthetic Rubber,

18%

Other Crude Derivative,

29%

Others, 15%

39

40

Livelihood enhancement: Skill building

trainings, Self Help Groups, agricultural

improvement & livestock development.

Education: Adult literacy programs in

remote villages & Mysuru prison,

Adoption of ITI’s and schools, road

safety awareness & Lakshmipat

Singhania school in Jaykaygram

Healthcare & sanitation: HIV/ AIDS

prevention program, Reproductive and

child health care program “Parivartan”,

Health camps & eye camps, toilets

construction under Swach Bharat

Mission & Pushphawati Singhania

Research Institute.

Water conservation & Environment:

Construction/ de-silting of water tanks &

farm ponds, field bunding and plantation

Corporate Social Responsibility