Investor Presentation November 2014
Disclaimer The information in this presentation has been prepared by CEAT Limited (the “Company”) and has not been independently verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. The information presented or contained in these slides is current as of the date hereof and is subject to change without notice, and its accuracy is not guaranteed. Neither the Company, nor any of its advisers or representatives, nor any of their respective affiliates makes any undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. No consideration has been given to the particular objectives, financial situation or particular needs of any recipient. Neither the Company nor any of its advisors or representatives, nor any of their respective affiliates shall have any liability whatsoever (in negligence or otherwise) for any loss arising from the use of this presentation or its contents or otherwise arising in connection with this presentation. By assessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation is intended for financial institutions and professional investors only and is not intended for distribution or reproduction to, or use by, retail investors. This presentation is also not intended for distribution or reproduction to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information in this presentation is given in confidence, and reproduction of this presentation, in whole or in part, or disclosure of any of its contents, without prior consent of the Company, is prohibited. This presentation should be distributed and read in its entirety. This presentation remains the property of the Company and on request must be returned and any copies destroyed. This presentation is for information and convenient reference and does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of the Company nor should it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended or an exemption from such registration. Please refer to the financial statements of the Company that have been filed with the stock exchanges and is available on the Company’s website. This presentation is not intended to be fully inclusive and may not contain all of the information that you may consider material. This presentation contains historical information of the Company that should not be regarded as an indication of future performance or results. Certain statements in these slides may be considered forward-looking. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. By accepting any copy of this presentation, you agree to be bound by the foregoing limitations. 2
Table of Contents 1 Indian Tyre Industry: Outlook 2 CEAT: An Overview 3
Indian Tyre Industry: Robust Fundamentals Domestic Tyre Industry: An Overview Break up by End Use 1 Break up by Customer 1 Turnover (Rs Bn) 2/3 Others OEM Wheelers 3% 382 367 355 32% 12% 293 235 Tractors MHCV 11% 49% Replacement Cars & LCV 68% UVs 7% FY'10 FY'11 FY'12 FY'13 FY'14 18% Competitive Landscape Market Share 2 The domestic tyre industry has grown at a CAGR of • 12.9% driven by robust growth in the Indian Others MRF Ltd. 29% automobile industry 27% CEAT Commercial vehicles (M&HCV and LCV) account • 12% for > 50% of the domestic market Apollo Tyres JK Tyre & Inds. Top 4 players account for ~ 70% market share Ltd. • Ltd. 19% 13% Source CRISIL 1. Based on total tonnage of 15,92,000 in FY’14 2. Market share of FY’14 as per CRISIL based on turnover 4
OEM Demand is likely to rebound on Economic Revival OEM OEM Production across Key Segments (000’ Tonnes) Growth (‘000s) Growth rates 9-11% 6% 560 M&HCV 385 281 523 222 504 FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ (‘000s) Growth rates FY'12 FY'13 FY'14 FY'15P 3% 3,231 PC + UV 3,146 3,066 Replacement (000’ Tonnes) Growth FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ 1,088 (‘000s) Growth rates 5-7% 1,055 16,879 2/3 Wheeler 18% 15,744 978 15,428 FY'12 FY'13 FY'14 H1 FY'15 (YOY)¹ FY'12 FY'13 FY'14 FY'15P Improved Economic Growth and Consumer Sentiment will drive sales across categories (M&HCV, PC + UV and 2/3 Wheeler) Source CRISIL 1. Growth in H1 FY’15 is over H1 FY’14 5
Radialisation Trend M&HCV & Passenger Cars (%) 35% 100% 98% 98% 98% 98% 97% 97% 30% 95% 95% 96% 25% 25% 92% 20% 22% 18% 15% 88% 10% 12% 10% 84% 5% 6% 4% 3% 0% 80% FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13 FY'14 M&HVC (LHS) Passenger Cars (RHS) Radialisation in M&HCV and LCV Segment to gain momentum on back of improved road infrastructure , launch of multi- axle vehicles and stricter regulation Source: ATMA 6
Raw Material Price Trend Natural Rubber 3.5 200 184.6 180 3.0 3.0 160 2.5 140 123.3 2.0 120 1.7 1.5 100 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 International ($ per Kg) (LHS) Domestic (Rs per Kg) (RHS) Source CRISIL Brent Crude Oil (US$/bbl) 115.0 110.0 105.0 102.1 100.0 95.0 90.0 85.0 82.6 80.0 1-Sep-12 23-Dec-12 15-Apr-13 6-Aug-13 27-Nov-13 20-Mar-14 11-Jul-14 4-Nov-14 Source Bloomberg Rubber Prices have fallen due to weak global demand amidst an increase in supply 7
Table of Contents 1 Indian Tyre Industry: Outlook 2 CEAT: An Overview 8
RPG Group : Overview � � � � RPG Group is a leading Business Group in India Diversified business operations with Diversified business operations with � � � � presence in key sectors of the economy � � � � Over 20,000 employees TYRE INFRASTRUCTURE PHARMA PLANTATIONS POWER / TELECOM ANCILLARY IT SPECIALITY 9
CEAT : Overview India • Leading Tyre Company in India with CEAT Distribution Reach over 50 yrs of presence • 4 th Largest Company in India with Market Share of ~ 12% 1 • Manufacturing Facilities in Bhandup, Nashik and Halol • Pan India Distribution Network comprising of 3,500+ Dealers and 300+ CEAT Franchisees (CEAT Shoppe + CEAT Hubs) Sri Lanka • Presence through 50% interest in a JV with Kelani Tyres Ltd 88 countries where • Strong presence in the Sri Lankan tyre CEAT Products were sold market in FY’14 • Sri Lanka JV companies operates from two manufacturing facilities in Sri Lanka Note 1. Market share of FY’14 as per CRISIL based on turnover 10
3 Pronged Growth Strategy… • Strong Brand Recall Passenger Brand segment 1 • Barriers to Entry Building Focus on • Proven Model in Sri Lanka Emerging Channel Profitable markets Expansion • Replicate in Bangladesh Growth R&D • Competitive Advantage Exports Capability • CEAT Global Brand Effective Implementation of Business Strategy resulting in Improved Profitability Note 1. Consists of Two Wheeler, Passenger Cars and Utility Vehicles sub segments 11
…resulting in Favourable change in Business Mix Gross Sales 1 by Customer Gross Sales 1 by End Use Gross Sales 1 by Tyre Type FY’12 FY’12 FY’12 Farm & Last Mile 4% Radial 13% Speciality 15% Exports 20% Cars & Uvs 6% OEM 16% Truck & Bus Replacement 53% LCV 10% 64% Bias 87% 2/3 Wheeler 12% FY’14 FY’14 FY’14 Farm & Speciality 14% Last Mile 5% Radial 19% Exports 18% Cars & Uvs 9% Truck & Bus 46% OEM 21% Replacement LCV 8% 61% Bias 81% Two Wheeler² 17% Gradual shift towards profitable segments and radial tyres Note 1. Gross Sales represents Standalone Gross Sale of Products (Including excise Duty before discount) 12
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