KIRLOSKAR BROTHERS LTD. FINANCIAL ANALYSTS MEET · PDF fileKIRLOSKAR BROTHERS LTD. FINANCIAL...

1This is a proprietary document of Kirloskar Brothers Ltd.

KIRLOSKAR BROTHERS LTD.

FINANCIAL ANALYSTS MEET

QUARTER IV

FY 2011-12

26TH APRIL, 2012

This is a proprietary document of Kirloskar Brothers Ltd.

COMPANYWIDE HIGHLIGHTS


• Instability in some states and at centre led to slow decision making that affected the

overall business environment.

• Cash crunch in the power sector – major policy reforms expected to boost further

investments in the sector & ease liquidity

• Completed work on 68 projects and closed 27 sites during the year

• Focus on selective sale depending on financial position of customer.

• A.P. government has slowly started releasing money for pending / old projects

• Only product orders booked in project sectors.

• Distribution Sector crossed a significant milestone of Rs. 500 crores sale

SECTOR HIGHLIGHTS

3This is a proprietary document of Kirloskar Brothers Ltd. 3This is a proprietary document of Kirloskar Brothers Ltd.

Irrigation

• Thrust on site closures & recovery of retention money continued

• Pre-bidding for Karnataka & Odisha LIS and for OLIC, Bhubaneshwar conducted

Power

• First primary heat transfer pump is assembled and being tested.

• Secondary heat transfer pump for BHAVINI project dispatched.

• Successfully commissioned CW systems for following projects:

� 5 X 660 MW for Adani Tiroda

� 2 X 600 MW Salaya Project of Essar Power

� 2 X 500 MW NTPC Simhadri Project

� 5 X 800 MW Unit 3 at CGPL Tata Mundra

� 1 X 600 MW BGR Mettur Project

SECTOR HIGHLIGHTS


Power (contd..)

• Successfully completed PG test of CW System for 3 X 660MW NTPC Sipat Stage I and AWRS

3 X 660MW NTPC Sipat I.

• KBL's first Pelton Turbine successfully manufactured for a hydro project.

Water Resource Management

• VT pumps in duplex material supplied for 100MLD desalination plant for the CMWSSB project

at Nemeli, Tamil Nadu.

• PVC of Rs. 94 million collected against BWSSB Project.

Gas Oil & Defense

• Successfully completed string test and dispatch of all eight offshore fire fighting pump sets to

US & UK

• Received cooling water pumps order from BPCL by changing the specifications from API to

non-API.

SECTOR HIGHLIGHTS


Gas Oil & Defense (contd..)

• Received sea water cooling water pump order from HPCL.

• Feasibility analysis conducted to ascertain a tie up with Danfoss Semco, Denmark for

High Pressure Water Mist System.

Industry

• Numerous presentations were conducted in the coal & mining industries across the

country.

• Improvement in LLC pump and auto-prime orders.

• Registered for condensate extraction pump by Siemens, Baroda.

Building & Construction

• Bagged 42 sets of Multi Stage Multi Outlet ( MSMO) pumps orders across India through

continued promotion.

SECTOR HIGHLIGHTS


Building & Construction (contd..)

• Bagged 18 sets of orders in two months on marketing initiatives taken for HYPN

integration units.

Distribution

• Successfully completed the pilot project on Synchronized Manufacturing & Distribution

system (SMDS) in west zone covering 7 Dealers and 98 models.

• Successfully launched new series of 4" Submersibles - KP 4, MINI model - 'Jalraj' and

Open well model ' KOS J' in selected price sensitive 'bottom of the pyramid' market and to

increase KBL’s market share.

• Thirty road shows done in Maharashtra and Gujarat as an effective & economic way to

reach the potential villages and major towns.

• Cumulative booking in SOLAR business to date has crossed Rs. 50 million.

SECTOR HIGHLIGHTS


Customer Support & Spares

• Established fully equipped Kirloskar Refurbishment Center (KRC) at Baroda with pump

test & painting facilities.

• CRM -7.1 implementation started for seamless integration of spare parts execution.

• Initiated project ‘Mithas’ with focus on spare parts business for the sugar industry.

SECTOR GAP ANALYSIS


Irrigation

• Strategic decision on restricting supplies to Andhra Pradesh in view of sluggish recovery

led to lower sales.

• Delay in commissioning & site closure of projects in Andhra Pradesh led to reduced

collection of retention money than planned.

Power

• Hold on some orders of a few private sector players due to non-recovery for earlier

supplies led to reduced sales.

• Slowdown in the industry due to issues related to land acquisition, coal linkage and water

availability led to lower booking.

SECTOR GAP ANALYSIS



• Hold on execution of HMWSSB, PHED-Shillong orders and shortfall in book and bill

orders resulted in lower sales as compared to plan.

• Bookings lower on account of:

� Most of the large EPC projects in water supply sector include distribution

network & long cross country pipe line within the scope, areas where KBL

has no pre-qualification.

� Unfavorable payment terms in many small and medium projects

SECTOR GAP ANALYSIS


Gas Oil & Defense

• Delay in receipt of ONGC offshore packages order led to lower sales and recovery as compared to

plan.

• Deferment of some major fertilizer projects led to lower booking.

Industry

• Lower investments in projects and unfavorable payment terms in some orders let to lower order

booking during the quarter.

• Retention payment terms of some old orders and LD led to lower recovery.


• Slowdown in the market in the last six months led to lower order booking and sales.

• Restriction on order booking due to a downturn in the financial market and high demand of open

credit periods led to lower booking.

Distribution

• Slowdown in market in the second quarter lead to slow secondary sales thereby leading to lower

sales than planned.

FACTORY HIGHLIGHTS


Kirloskarvadi

LPD Pumps

• Dispatched secondary heat transfer pump worth Rs.75 million for Bhavini project

• Execution of spares of secondary heat transfer pump worth Rs. 24 million

• First Pelton turbine - 2 MW assembly successfully completed.

SMPD Pumps

• Layout completed for Splitcase , Process Pumps , Multistage pumps division - with Lean

techniques.

• Improved productivity in splitcase division.

• Warehouse for spare parts established.

FACTORY HIGHLIGHTS


Dewas

• Achieved 87% employee engagement score, as per a survey conducted by AON Hewitt.

• Established DB pump manufacturing setup in Dewas.

• Created the HYPN system manufacturing set up at Shirval plant.

• Solar controller "JALVERTERS" was tested and approved by ERDA.

• All manufacturing zones and offices achieved 5'S certification.

FACTORY HIGHLIGHTS


Kondhapuri

• Surveillance audit (1st & 2nd) for FM Approval completed - no NCRs

• First two orders booked for FM valves

• 1500mm PN1.6 MDNRV developed for BWSSB

• Integrated Management System (EHS) Surveillance audit conducted by BVIS – few

minor NCRs raised.

Coimbatore

• Established production capacity – 20,000 pumps single shift basis

14

AHMEDABAD PLANT PROGRESS


External View Machine Shop

15

AHMEDABAD PLANT PROGRESS


Motor Assembly Line Pump Assembly Line


COMPANYWIDE PENDING ORDERS


Orders Received Q - I Q-II Q - III Q - IV

Rs. In Crores 352 306 210 366

Sector 1Q 2Q 3Q 4Q 4Q(Rs.In Crores) Jun-11 Sep-11 Dec-11 Mar-12 %of Total

IRR 1,463 1,424 1,359 1,310 51%

WRM 356 353 292 243 13%

PWR 854 790 710 616 24%

GOD 120 125 107 145 6%

IND 75 65 78 72 3%

BAC 20 27 25 30 1%

DIS 17 32 40 38 1%

CSS 44 27 23 30 1%

TOTAL 2,949 2,843 2,635 2,484 100%


COMPANYWIDE MAJOR ORDERS


Sector Order Type Customer Value

(Rs.mil)

Irrigation Rural Electrification NTPC 49

Power 800 MW Power Plant in Israel Woodgroup Power, USA 21

Gas, Oil & Defence Turnkey ONGC 87

Industry DSM + Pontoon + Automation Sesa Goa -Sonshi Mines 13

Building & Construction MSMO Logix City centre. 26

Distribution Solar pumping systems

127 Gram Panchayats through a

scheme by Groundwater Surveys &

Dev Agency (GSDA) 33

Customer Support & Service BHQ62M & BHR70 spare parts Essar Oil - Gujrat 11


STANDALONE FINANCIAL HIGHLIGHTS


• A few figures shown in this presentation are as per the old Schedule VI format so

as to be consistent with previous years. As a result, these figures may not exactly

match with the published results which are as per the revised Schedule VI format.

• Total sales are at Rs. 1,769 Cr as against Rs.1,937 Cr in PY – drop of 9%.

• All sectors have crossed sales over previous year except Irrigation, Water and

Power sectors. This was due to our emphasis on collection of money over top-line

growth. For the first time Distribution sector has cross Rs. 500 Cr of sales.

• KBL continued to be selective with orders and execution to improve sales mix,

which resulted in share of own product sales to total sales going up to 58% as

against 51% in the previous year.



•Composite material cost as % to sales has increased to 71.6% from 69.3% in PY,

mainly due to increase in prices of inputs for foundries & shift in sales mix.

•Other expenses are Rs. 285 Cr as against Rs 303 Cr in PY. Current year expenses

include provision for doubtful claims of Rs 15 Cr and write off of claims of Rs 48 Cr of

the claims assigned by KCEL to KBL. Previous year other expenses include write off of

advance given to KCEL amounting to Rs 67 Cr.

• As per guidelines of revised schedule VI, foreign exchange gain / loss on borrowings

is considered in finance cost. Due to pressure on working capital, rise in interest

rates, and impact of Rupee depreciation, total finance cost has increased by Rs. 18 Cr.

• Increase in other income from Rs. 13 Cr to Rs. 46 Cr is mainly on account of profit on

sale of investment in Gondwana Engineering Ltd. of Rs. 35 Cr.



• PBT for CY is at Rs. 34 Cr as against Rs. 103 Cr in PY. PBT without profit on sale of

investment in Gondwana Engineering Ltd and KCEL provision & write off is Rs. 62 Cr as

compared to Rs.170 Cr in PY.

• The effective tax rate for the current period is low, as the long term capital gains arising out

of sale of shares of subsidiary company are subject to concessional rates of taxes.

• Gross current assets have reduced to Rs. 1,398 Cr from Rs. 1,662 Cr in previous year (by

16%).

• Net current assets have reduced to Rs. 567 Cr from Rs. 630 Cr in previous year (by 10%)

• Inventory is higher by Rs.17 Cr over March 11, mainly because of our decision of holding

back of dispatches since customers have not paid the earlier dues.

• Trade receivables have significantly decreased from Rs. 449 Cr in the PY to Rs. 298 Cr in

the CY due to focused efforts to improve collections

• Total Loan funds have remained more or less flat at Rs.350 Cr compared to Rs. 349 Cr on

March 2011, due to pressure on working capital throughout the course of the year.

Rs. In Crores

Year FY 08 FY 09 FY 10 FY 11 FY 12

Turnover 1,525 1,831 2,018 1,947 1,782

Domestic 1,377 1,602 1,848 1,764 1,667

Exports 148 229 169 183 115

Total Assets 861 1,036 1,078 1,096 1,101

Net Current Assets 318 421 594 630 567

Investment 347 338 190 167 215

Fixed Assets 196 277 294 299 319


FIVE YEAR FINANCIALS – STANDALONE

Rs. In Crores


Shareholder's Funds 662 709 713 743 754

Subscribed Capital 21 21 16 16 16

Reserves 641 688 698 728 738

Borrowings 192 321 357 349 350


FIVE YEAR FINANCIALS STANDALONE (CONT’D)

Rs. In Crores


EBDITA 185 149 233 163 128

% to Sales 12% 8% 12% 8% 7%

EBDITA w/o extra ordinary income & expense 185 149 233 230 156

% to Sales 12% 8% 12% 12% 9%

PBT 150 98 173 103 34

% to Sales 10% 5% 9% 5% 2%

PBT w/o extra ordinary income & Expense 150 98 173 170 62

% to Sales 10% 5% 9% 9% 3%

Profit After Tax 110 67 118 61 31

% to Sales 7% 4% 6% 3% 2%

PAT w/o extra ordinary income 110 67 118 128 59

% to Sales 7% 4% 6% 7% 3%

Cash Profit 128 88 144 91 61




Earnings Per Share - Rs. 10 6 15 8 4

Cash Earnings Per Share - Rs. 12 8 18 12 8

Dividend Payout - Rs. In Crores 42 21 44 28 16

Dividend - % 200% 100% 275% 175% 100%

Book Value / Share - Rs. Per Share 63 67 90 94 95

Market Cap - Rs in Crores 2,457 816 2,073 1,055 996

No. of Employees 2,875 2,723 2,932 2,965 3,053

Turnover / Employee - Rs in Crores 0.5 0.7 0.7 0.7 0.6




FIVE YEAR FINANCIALS CONSOLIDATED

Rs. In Crores


Turnover 2,059 2,453 2,659 2,670 2,554

Domestic 1,679 1,945 2,160 2,201 2,056

Exports 379 508 499 469 498

Total Assets 1,022 1,219 1,256 1,255 1,268

Net Current Assets 397 501 728 734 734

Investment 294 277 11 5 2

Goodwill 41 47 65 78 71

Fixed Assets 290 394 451 439 462


FIVE YEAR FINANCIALS CONSOLIDATED (CONT’D)

Rs. In Crores


EBDITA 231 200 276 262 194

% to Sales 11% 8% 10% 10% 8%

PBT 183 129 192 159 75

% to Sales 9% 5% 7% 6% 3%

Profit After Tax 133 83 113 98 51

% to Sales 6% 3% 4% 4% 2%

Cash Profit 157 113 152 144 97

Rs. In Crores


Shareholder's Funds 746 813 792 855 887

Subscribed Capital 21 21 16 16 16

Reserves 725 792 776 839 871

Borrowings 266 398 452 392 377


CONSOLIDATED ACCOUNTS -2011-12

Rs. In Crores

PARTICULARS

Mar-12 Mar-11 Mar-12 Mar-11 Mar-12 Mar-11 Mar-12 Mar-11

PARENT COMPANY

KIRLOSKAR BROTHERS LTD 1,828 1,960 34 103 3 41 31 61

SUBSIDIARY COMPANIES

KIRLOSKAR BROTHERS INTERNATIONAL B V 591 428 43 23 13 8 30 16

KIRLOSKAR CONSTRUCTION & ENGINEERS LTD 62 124 (16) (1) 0 (1) (16) (1)

GONDWANA ENGINEERS LTD. - 67 - 7 - 2 - 4

THE KOLHAPUR STEEL LTD. 34 37 1 8 0 3 1 4

KIRLOSKAR BROTHERS (THAILAND) LTD. - 9 - (1) - (1) - (1)

HEMATIC MOTORS PVT. LTD. 216 167 21 7 7 2 14 5

KIRLOSKAR CORROCOAT PVT LTD. 29 41 2 7 1 2 1 4

KIRLOSKAR SYSTECH LTD. 3 1 0 0 0 0 0 0

935 874 52 49 22 16 31 32

JOINT VENTURE COMPANIES

KIRLOSKAR EBARA PUMPS LTD. (SHARE 45%) 86 61 0 12 0 4 0 8

SUB TOTAL 2,849 2,895 87 163 25 62 62 101

LESS INTRA GROUP TRANSACTIONS 246 206 12 3 - - 12 3

SUB TOTAL 2,603 2,689 75 159 25 62 51 98

SHARE IN PROFIT 0F ASSOCIATE COMPANIES - - - - - - - -

TOTAL (KBL) 2,603 2,689 75 159 25 62 51 98

TOTAL INCOME PROFIT / LOSS

BEFORE TAX

INCOME TAX PROFIT AFTER

TAX


KBI BV CONSOLIDATED ACCOUNTS -2011-12

PARTICULARS

Dec-11 Dec-10 Dec-11 Dec-10 Dec-11 Dec-10 Dec-11 Dec-10

PARENT COMPANY

Kirloskar Brothers International BV 8 8 7 8 - - 7 8

SUBSIDIARY COMPANIES

SPP Pumps UK (Consolidated) 526 408 37 26 12 7 25 19

Micawber 784 (Consolidated) 20 11 2 0 1 0 2 0

Kirloskar Brothers Thailand Ltd. 22 - 1 - 0 - 1 -

Kirloskar Brothers Europe BV 23 9 3 (2) 0 0 3 (3)

SUB TOTAL 599 437 51 32 13 8 37 24

Less: Intra group transactions 8 8 8 8 - - 8 8

TOTAL (KBI BV) 591 428 43 23 13 8 30 16

Rs. In Crs

TOTAL INCOME PROFIT / LOSS

BEFORE TAX

INCOME TAX PROFIT AFTER

TAX


THE WAY FORWARD…


Irrigation

• Thrust on collection of retention amounts from I&CAD and JV partners.

• Focus on project execution and site closures.

• Focus on product orders so as to avoid the creation of retention money.

Power

• ASME-N Stamp- ASME audit to be done

• Co-operation with Turbo Institute Slovenia.

• Technology tie up for boiler feed pumps.


• Collection of retention amounts .

• Closure of 20 sites in FY 2012-13

• Focus on marketing activities and book orders with positive cash flows.

• Target product business especially, LLC products.


THE WAY FORWARD… CONT’D


Gas Oil & Defense

• Focus on promoting FM/UL and LLC products.

• Impetus on water mist solution for Indian Navy and other onboard solution.

• Develop self priming range of products for “on board” requirement.

• Focus on oil & gas valve approvals and replacement business.

Industry

• Optimization of product mix to maximize realizable margin.

• Business development through replacement business and identifying new markets/upgraded

markets for existing products.





• Better sales realization through improving differentiation in market.

• New B2B dealer appointment for non fire business.

.

Distribution

• Pan India implementation of Synchronised Manufacturing & Distribution System (SMDS) for

ensuring the availability of products and improvement of ROI.

• Introduction of Water Filled KU3 / Aquamast / UT and Mini's new range in 0.5 & 1 HP to

complete the product basket.

• Tap opportunities in the fast expanding solar pump market.



Customer Support & Sales

• Additional three Kirloskar Refurbishment Centers to be established.

• Introduce the Rapid Call Service (RCS) for Dewas range of products to reduce the service

delivery time.

Manufacturing units

• Leverage plant layout for increased productivity and efficiency

• Fully exploit production facilities at Coimbatore and Ahmedabad

• Work on reducing conversion cost

• Enhance product quality, reliability and aesthetics



• Continue to focus on ROCE, cash generation and cash flow improvement.

• Work on selective basis with sound partners for electromechanical portion of projects

• Matching recovery with sales and closing of projects

• Focus on projects only where positive cash flow exists and payment terms are as

desired by KBL

• Increase product business inflow

• Improve global presence through enhanced business of international subsidiaries

• Thrust on establishing Project Management Office (PMO) with the objective of

improving project management capabilities

• Take a decision on disposal of KCEL or merger into KBL during the year


THANK YOU


TURNOVER

1,525

1,831

2,018 1,947

1,782

1,377

1,602

1,848 1,764

1,667

148 229

169 183 115

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

FY 08 FY 09 FY 10 FY 11 FY 12

Rs. In Crores

Total Turnover Domestic Exports


TOTAL ASSETS

0

200

400

600

800

1000

1200

FY 08 FY 09 FY10 FY11 FY12

318 421

594 630 567

347

338

190 167

215

196

277294 299 319

NET CURRENT ASSETS INVESTMENTS FIXED ASSETS

10361078

11011096


NET WORTH AND BORROWINGS

-

200

400

600

800

1,000

1,200

FY 08 FY 09 FY 10 FY 11 FY 12

662 709 713 743 754

192

321 357

349 350

Rs. in Crores

NET WORTH BORROWINGS


EBDITA

185 149 233 163 128 185 149 233 230 156

12%

8%

12%

8%

7%

12%

8%

12% 12%

9%

0%

2%

4%

6%

8%

10%

12%

14%

-

50

100

150

200

250

FY 08 FY 09 FY 10 FY 11 FY 12

Rs. In Crores

EBDITA

EBDITA W/O EXTRA ORDINARY INCOME & EXPENSE

EBDITA % TO SALES

EBDITA W/O EXTRA ORD INCOME % TO SALES


PBT

150 98 173 103 34 150 98 173 170 62

10%

5%

9%

5%

2%

10%

5%

9% 9%

3%

0%

2%

4%

6%

8%

10%

12%

-

50

100

150

200

250

300

350

400

450

500

FY 08 FY 09 FY 10 FY 11 FY 12

Rs. In Crores

PBT PBT W/O EXTRA ORDINARY INCOME

PBT % TO SALES PBT W/O EXTRA ORDINARY INCOME


PAT

110 67 118 61 31 110 67 118 128 59

7%

4%

6%

3%

2%

7%

4%

6%

7%

3%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-

20

40

60

80

100

120

140

FY 08 FY 09 FY 10 FY 11 FY 12

PAT

PAT WITHOUT EXTRA ORDINARY INCOME

PAT % TO SALES

PAT WITHOUT EXTRA ORDINARY INCOME


CASH PROFIT

-

20

40

60

80

100

120

140

160

180

200

FY 08 FY 09 FY 10 FY 11 FY 12

110

67

118

61

31

18

21

26

30

30

Rs. In Crores

PAT WITHOUT EXTRA ORDINARY INCOME DEPRECIATION

128

88

144

91

61


EARNING PER SHARE

10

6

15

8

4

12

8

18

12

8

-

2

4

6

8

10

12

14

16

18

20

FY 08 FY 09 FY 10 FY 11 FY 12

Rupees

EARNINGS PER SHARE CASH EARNINGS PER SHARE


DIVIDEND PAYOUT

200%

100%

275%

175%

100%

38.4%

31.6%

37.1%

45.2%

50.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0%

100%

200%

300%

400%

FY 08 FY 09 FY 10 FY 11 FY 12

DIVIDEND % DIVIDEND OUT GO AS % TO PAT


BOOK VALUE PER SHARE

63 67

90 94 95

-

10

20

30

40

50

60

70

80

90

100

FY 08 FY 09 FY 10 FY 11 FY 12

Rupees



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