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CORPORATE PRESENTATION

CORPORATE PRESENTATION. 9 th November, 2004. Corporate Profile - Background. Established as : Asahi India Safety Glass Ltd. Commercial Production : 14 th March, 1987 Equity Structure : Labroo’s 24% : Asahi Glass Co. Ltd. 24% : Maruti Udyog Ltd. 12% : Public 40%

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CORPORATE PRESENTATION

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  1. CORPORATE PRESENTATION 9th November, 2004

  2. Corporate Profile - Background Established as : Asahi India Safety Glass Ltd. Commercial Production : 14th March, 1987 Equity Structure : Labroo’s 24% : Asahi Glass Co. Ltd. 24% : Maruti Udyog Ltd. 12% : Public 40% Initial Equity : Rs. 1.85 crores Products : Automotive Safety Glass Initial equity increased to Rs. 7.40 crores through two successive bonus issues made by the Company.

  3. Corporate Profile - Merger of Floatglass India Ltd. • In 2001, Asahi Glass Co., Japan decided to bring the India operations under one roof, by passing on control of Floatglass India Ltd. to AIS – driven by the evidence of AIS’s performance. The formal takeover of Floatglass India Ltd. was completed in February 2002. • Floatglass India Ltd. was subsequently merged into AIS. • Post merger, the equity structure of AIS stands as under: Total equity currently stands at Rs. 8 crores, up from the pre-merger level of Rs. 7.40 crores.

  4. Corporate Profile – Past Perspective These figures contain, in brief, the story of AIS’s growth from a supplier of automotive tempered glass to Maruti Udyog (Suzuki) when we began, to the current situation of India’s largest glass company, with profitable growth flowing from all the actions taken since the birth of the organization.

  5. Corporate Profile – Present • AIS today is the largest glass company in India, manufacturing wide Range of international quality automotive safety glass and float glass. AIS has the following two operating business units : • - AIS (Automotive) • - AIS (Float) • AIS (Automotive), one of the two operating business units of AIS, is India’s largest manufacturer of world class automotive safety glass and is, in fact, one of the largest in the field in Asia. • AIS (Float), the other operating business unit, is the leading • manufacturer of international quality float glass. AIS is in the process of transforming itself from being a manufacturer of world- class products to a solutions provider. AIS is now moving up the exciting value chain of glass by providing design, products and services that make glass more versatile, more user friendly.

  6. Key Initiatives & Achievements

  7. Value-creating growth - Creating shareholder value • AIS’s growth plans are designed to create a stronger company and enhance shareholder value. Example : - An investment of Rs. 1000 in equity shares of AIS at the time of the IPO in 1987 had grown over 500 times into a holding of Rs. 5 lakhs. - The investment of Rs. 1000 in the IPO had generated dividends of Rs. 22,406 until 2003-04. - A holding of 100 equity shares of a face value of Rs.10 each had grown into a holding of 4000 shares of a face value of Re. 1 each through bonus issues and a sub-division in the face value of the Company’s equity shares. • AIS has been guided by the financial goal of generating free cash flows from operations to earn a rate of return on capital employed (ROCE) of 40 per cent and to pay out 25 per cent of profits as dividends.

  8. Business de-risking • AIS’s transition from an automotive glass manufacturer supplying a single customer to becoming India’s largest glass company is reflective of its de-risking strategy. This has helped AIS - Improve competitive advantage - Expand business platform - Reduce business risk - Enhance strategic position • AIS’s growth strategy is aimed at realizing the vision of becoming India’s leading integrated glass company, with a meaningful presence in every part of the automotive and architectural glass businesses leading to the eventual effective capture of value across the complete chain.

  9. Quest for Excellence • AIS has been benchmarking its operational performance to global levels and set out targets as milestones to achieve these levels. These targets are being challenged constantly. • As a result, shop floor performance in AIS (Automotive), for example, is in line with the best in class benchmarks on following parameters : - Shop floor yields, at over 96 per cent - Customer claims, within 100 ppm - machine uptime, in the range of 98 per cent • Production in AIS (Float), the erstwhile Floatglass India Ltd., has gone up by over 37 per cent, compared to FY 2000-01 levels, the last year before the takeover. AIS (Float) achieved a record production of 31.36 million csqm. in FY 03-04, against the rated capacity of 29.2 million.

  10. Pioneering initiatives in India • AIS is credited with the following initiatives in India : - First to introduce laminated safety glass - First to manufacture printed glass - First to introduce modular assembly window - First to make complex shaped glass - First to introduce tinted float glass

  11. Value through world-class quality • AIS is the first Indian glass company to be credited with : • - ISO 9002, QS 9000 and TS 16949 certifications for the • production and servicing of automotive safety glass. • - ECE’s ‘E Mark’ and US Department of Transportation’s • approval for its range of automotive safety glass. • AIS has been following holistic systems-centric quality discipline under the umbrella of Total Quality Management. • All the improvements and efforts at raising efficiency over the • last five years have been carried out under the umbrella of TQM – • which has been spread through all processes in the company.

  12. Technology Development • A key strategic initiative at AIS has been in the area of building • “relevant” self sufficiency in technology. • AIS (Automotive) is fully equipped with CMM, CAD and a CNC Milling station, which provides self sufficiency in the area of product development. At AIS, we have gone beyond this into the area of developing and building glass processing equipment. Example : • AIS (Automotive) has developed its own CNC lines for the pre-processing of glass (cutting to shape, edging and washing) – at 1/6th the import cost. The resultant automation implies a raise in manpower productivity “cost effectively”.

  13. Strong Market Position • AIS (Automotive) is the sole glass supplier to almost the entire Indian passenger car industry, with current market share of over 90 % of automotive glass sales to OEMs. Building presence in the after market has been a key element of the strategy to diversify sales. AIS currently enjoys a market share of 55% in terms of value. • Sales of automotive safety glass are made directly to OEM customers and through two nation-wide distributors, with 27 depots, to the direct after market, covering the length and breadth of the country. • AIS (Float) enjoys a market share of approximately 25 % of the Indian float glass market. • Sales of float glass are made through a network of over 320 authorized stockists into the retail market spread across the country and serviced through its zonal offices. • AIS (Float) has been conferred with the “Certificate of Recognition” by CAPEXIL in recognition of outstanding export performance.

  14. World-class Manufacturing Facilities • AIS (Automotive) is India’s largest manufacturer of world class automotive safety glass and is, in fact, one of the largest in its field in Asia. • State-of-the-art automotive glass manufacturing facilities, with a total production capacity of 1.2 million car sets located at Bawal, District Rewari (Haryana). • First Indian glass company to get the QS 9000, ISO 9002, ISO 14001 and TS 16949 by TUS SUDDEUTSCHLAND, ECE’s “E Mark” and US Department of Transportation’s approval for its entire product range of automotive safety glass. • Own power generation facilities to ensure uninterrupted supply of quality power. • AIS (Float) has a state-of-the-art float glass manufacturing plant at Taloja near Mumbai, with installed production capacity of 500 MT / day, the third largest in the country. The plant is ISO 9001 certified by TUV Bayern Sachsen.

  15. Well Balanced Product Portfolio • AIS (Automotive) has the ability to address customer requirements of the full range of technologically advanced products in the automotive safety glass field. • Present product range includes laminated windshields, tempered glass for side and back lites, zone tempered glass for windshields, silver printed defogger glass, black ceramic printed flush fitting glass and PVC-encapsulated fixed glass. • AIS (Float) offers a diversified product range of international quality float glass of thickness of 2mm – 12mm, in different shades and tints of clear, green, grey and bronze and in varying sizes. • Product portfolio of AIS (Float) now includes world class STOPSOL range of international quality heat-reflective glass and world’s finest quality copper free and corrosion resistant MNG mirrors.

  16. AIS FINANCIALS - H1FY05

  17. Financials Highlights - H1FY05 • Gross Sales and Net Sales increased 20 % and 27 % to Rs. 331.41 crores and Rs. 284.61 crores respectively • Operating profit increased 9 % to Rs. 64.41 crore • Operating margin (PBDIT / Net Sales) declined 3 % to 23 % • Cash profit up 10 % to Rs. 63.73 crores • Profit after tax declined 3 % to Rs. 32.80 crores • Declared an interim dividend @ Re. 1/- (100 % on par value of Re. 1/-) on equity shares

  18. Financials Highlights - H1FY05 (Continued) • ROCE (PBDIT / ACE) and RONW recorded at 29 % and 44 % • Total debt / equity and interest bearing debt / equity stand at 1.92 and 0.43 respectively • Financial coverage (PBIT / Interest) stands at 39 • CEPS and EPS at Rs. 8 and Rs. 4

  19. Financials Highlights - H1FY05 (Continued) • Profitability has been impacted due to higher input costs, as below, which are one-time / non-recurring. Total impact in H1 FY05 has been approximately Rs. 12 crores : - Increase in power generation cost - Increase in freight cost, mainly due to premium freighting to ensure uninterrupted supplies for our OEM customers - Increase in cost of colourants and raw materials - Increase in overheads, largely relating to advertising / brand building

  20. AIS - Financial Results

  21. AIS - Financial Results

  22. AIS - Segment Results

  23. AIS - AUTOMOTIVE

  24. AIS - Automotive Highlights - H1FY05 • Sales up by 23 % to Rs. 156.82 crores • Segment Profit (EBIT) increased 29 % to Rs. 28.38 crores • Segment Margin marginally up at 18 %

  25. Vehicle Production for April - Sep Car Exports 61128 in 2004 32507 in 2003

  26. AIS - FLOAT

  27. AIS - Float Highlights - H1FY05 • Sales up by 19.5 % to Rs. 133.50 crores • Segment Profit increased 18 % to Rs. 13.22 crores • Segment Margin maintained at 10 %

  28. INDIAN FLAT GLASS SALES : IN 2004-05 Despatches in August 2004 were adversely impacted on account of a trucker’s strike towards the end of the month.

  29. FLOAT Sales & Production Qty Increase in Sales Qty by 18% over last year Increase in Production Qty by 6% over last year

  30. Market Breakup

  31. Zone wise Domestic Sales

  32. Sales by Thickness & Colour

  33. Monthly Realization Rs per CSQM ( Net of excise and Price difference)

  34. Share of Business - Float

  35. Looking Forward……

  36. AIS Group Vision To be India's leading integrated glass company AUTOMOTIVE GLASS VALUE CHAIN Automotive glass manufacture (AIS Auto) Allied Products distribution (eg. sealants) (AWAGS) Auto Glass Fitment Services Automotive Glass distribution (AIM) Third Party tie ups, eg. Windshield Experts (GREENcells indicate our existing spread of activities and BLUEcells indicate the areas where work has already commenced in line with plans announced earlier) Float Glass manufacture (AIS Float) Value Added Products : Reflective : Mirror Processing: : Laminated : Tempered : Insulated Glass : Products Installation Fabrication AIS Glass Solutions Ltd. Servicing Distributed Markets Being considered along with 2nd float and/or at Taloja during hot/cold repair VALUE ADDED GLASS SOLUTIONS CHAIN

  37. Capturing value chain presence • In the automotive glass business, AIS already has a value chain presence, reaching out to end consumer. Second automotive plant coming • up in Chennai, with initial capacity of 500,000 windshields, will have a • capacity of 1.50 million laminated windshields and 1.0 million tempered car sets, after being fully set up. • In the architectural glass business, AIS has initiated steps to capture the value chain, through its subsidiary – AIS Glass Solutions, with the setting up of architectural glass processing facility at Taloja, to address • the following segments : • - Architectural processing & glass products • - Product and knowledge development • - Glass Services • - Sales & Marketing • Second float glass plant, with production capacity of 700 MT / day being set up in the State of Uttranchal.

  38. EXPANSION – BRIEF HIGHLIGHTS

  39. 2ND AUTOMOTIVE GLASS PLANT - CHENNAI • Asahi India’s laminated plant at Bawal, with a capacity to manufacture 1.2 million windshields, is currently operating at full capacity. • With most of the new capacity having been established by majors like Hyundai, Toyota and Ford in South India, the second automotive glass plant is being set up in Chennai in South India. Car production in this area is expected to rise from the current level of 220K to over 470K in next five years • Besides proximity to key customers, Chennai is a Port city, thus allowing cost reduction in import of raw material (such as PVB)as well as in possible future exports. • In Phase 1, only laminated plant to be established in Chennai – with capacity of 500,000 windshields. Plan for raising laminated capacity to 1.5 million windshields to be decided later, depending on overall demand situation.

  40. 2ND AUTOMOTIVE GLASS PLANT - CHENNAI • Commercial production of laminated windshields (Phase I) commencing from November, 2004. Capex for Phase I planned at Rs. 56 crores. Phase- I completed, on cost and time. • Plant to be set up in modular fashion – i.e. ability to take capacity up to 1.50 million windshields with some de-bottlenecking and additional investment. • Plan to invest in Chennai for tempered capacity in Phase II during 2005-06. • Once fully set up, new facility in Chennai planned at capacity of 1.50 million laminated windshields and 1.0 million tempered car sets. • Chennai facility to include Value Addition capability (Assemblies, Add-ons) as required.

  41. AIS GLASS SOLUTIONS – THE CONCEPT • An exercise in value addition • 5 year objectives • Consume 6000 tons of float glass per month • Raise glass consumption in the country from the current level of 0.55 kg per capita by introducing innovative product lines, including: • A line of bath enclosures. • Standard line of glass shelving. • Line of specialty laminated glass called “Frontage”for burglar-resistance, energy saving and sound proofing applications. • A line of manufactured windows. • Establish dominant presence through the value chain, including through processed glassas well as down stream through Glass Services to provide a one stop shop to consumers. • Make AIS the No. 1 glass brand in India

  42. Architectural Processing & Glass Products Product Development Knowledge Development Glass Services Sales Marketing Cost Centers Profit Centers AIS GLASS SOLUTIONS – AN INTRODUCTION Forms of AIS Glass Solutions AIS Glass Solutions

  43. AIS GLASS SOLUTIONS – PRODUCTS AND SERVICES • Processed glass for architectural applications • Laminated glass • Tempered glass • Insulated glass units • Product lines, starting with bath enclosure line • Glass installation service for low volume, high-value jobs in top 8 urban centres – distributed markets.

  44. ARCHITECTURAL PROCESSING • Market size estimated to be Rs. 140 crores in 2002-03. • Total glass consumption in 2002-03 estimated to be 21,500 tons (1792 tons/month). • Currently growing at 25.3%. • Our estimates show that this growth should ramp up to 34.1% CAGR over 5 years. • At these rates, architectural processing will still account for about 11% of total flat glass consumed in the country – up from 4% today. To put this in perspective, architectural processing consumed 45.3% of the flat glass produced in USA in 2002.

  45. ARCHITECTURAL PROCESSING • AIS plan • One integrated plant with tempered, laminated and insulated glass at Taloja, near current float plant – in 2004-05. Unit to commence from January, 2005. • Additional tempering lines in Chennai (April / May, 2005) and North India (2007-08). • Lamination and IG demand can be serviced from planned Taloja facility in this five year period. • Total planned capital expenditure – for integrated facility at Taloja – to cost approximately Rs. 20 crores.

  46. 2ND FLOAT GLASS PLANT • The Board in its meeting held on 30th October, 2004 approved, in principle, setting up of second float glass plant in the State of Uttranchal. The facility will have a production capacity of 700 MT / day. • Final cost and time schedule to be finalized and approved by the Board shortly, by end November, 2004. • Location of the second float plant finalized, considering the following factors : • Closeness to market. • This will be the first float plant in North India, which is the largest market in the country, with approximately 38 % of total market. • Closeness to raw material • Availability of tax incentives – explained in some more detail in the following slide.

  47. 2ND FLOAT GLASS PLANT : TAX INCENTIVES • Three States in India (Uttranchal, Himachal Pradesh & Jammu & Kashmir) are offering substantial tax incentives, as described below: • a) No Excise Duty for 10 years. Excise Duty is currently levied at an ad valorem rate of 16% of the ex factory selling price. • b) 100% Income Tax exemption for 5 years followed by 30% Income Tax • exemption for the subsequent five years. Uttranchal offers the tax incentives as described and is selected for AIS second float plant considering the locational advantages and the tax benefits.

  48. LOCATIONALLY….. • Roorkee: • Planned • Float • Glass Solutions • Auto (laminated) for after market. • Rewari: • Current • Auto • Future • 1. Glass Solutions? • Taloja: • Current • Float • Future • Glass Solutions • Chennai: • Planned • Auto • Glass Solutions

  49. FIFTEEN YEAR PERSPECTIVE….. • FLOAT • Even at an average growth of 10%, from the current levels, the Indian float market would grow to 5650 tpd in 15 years. From the current three float plants, the country would require about 15. Even assuming a share of 1/3rd, AIS would need 5 float plants. AUTOMOTIVE • Even at an average growth of 10%, India’s car production should rise to over 3 million units in fifteen years. OVERALL, India should be amongst the largest glass markets in the world.

  50. GUIDINGPRINCIPLES All actions of AIS are driven by the following guiding principles : 1. Creation of Value for Shareholders 2. Customer satisfaction 3. Respect for the Environment 4. Use of facts 5. Continuous Improvement 6. Strengthening of Systems 7. Upgradation of human potential by education and training 8. Social Consciousness

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