Auto Ancillary Industry Study Of Exide Industries

FINANCIAL PERFORMANCE ANALYSIS

Group 07

AGENDA

Company Overview Summary Of Balance Sheet Summary of Profit & Loss Account Financial Ratios Highlights Competition Opinion & Recommendation

Industry :Auto Ancillary Company :Exide Industries This presentation provides an overview of financial performance of Exide Industries. Data Analyzed for last 3 years(2008-2010) Source:www.moneycontrol.co m

INDUSTRY & COMPANY OVERVIEW

Auto ancillary companies are suppliers to the auto industry. Parts include Engine Parts, Transmission & Steering parts, Suspension & Braking parts, Electrical, Batteries, Dashboard instruments, Fan belts, sheet metal parts The performance of the auto industry has the single largest impact on the fortunes of the auto ancillary industry. An auto ancillary company can generate revenues from two major sources, the first is from supplies to OEM (original equipment manufacturers) and the second is through after market sales Production of auto ancillaries was estimated at US$10 billion in 2005-06 and has been growing at a 24% per annum since 2000. This growth in exports if sustained for another five years will see Indias auto components exports will touch US$ 5 bn by 2011 from the US$ 2 bn at present

Exide Industries, with operations in more than 80 countries and fiscal 2010 net sales of approximately $2.7 billion, is one of the world's largest producers and recyclers of lead-acid batteries Key strengths of Exide its products and services span global markets and geographic borders, melding two significant bases of experience and technology expertise from its Transportation and Industrial battery divisions.

Stock price movement of Exide Industries from April 2008 to March 2010 Source: www.moneycontrol.com

BALANCE SHEET
2008 Exide Industries Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 2009 2010 80 80 0 0 909.45 36.9 1,026.35 272.4 77.41 349.81 1,376.16 80 80 0 0 1,137.75 32.6 1,250.35 179.62 137.56 317.18 1,567.53 85 85 0 0 2,104.51 30.26 2,219.77 0.17 89.82 89.99 2,309.76

1,097.47 542.36 555.11 46.67 518.28 570.74 259.21 1.68 831.63 57.16 0 888.79 0 527.29 105.39 632.68 256.11 0 1,376.17 2.03 12.37

1,256.70 588.7 668 17.31 668.18 438.47 231.02 33.71 703.2 62.64 0 765.84 0 445.89 105.91 551.8 214.04 0 1,567.53 9.96 15.22

1,336.46 659.78 676.68 37.76 1,335.37 606.77 254.58 2.88 864.23 54.96 0 919.19 0 560.7 98.54 659.24 259.95 0 2,309.76 2.3 25.76

BALANCE SHEET CONTD..

Snap shot of Company's Health The balance sheet shows that it has set aside a good amount of money as reserve in 2010 as compare to earlier which can act as a buffer against future losses/to pay claims.

In FYI 2010 the total debt amount has reduced and investment have increased significantly(around 50%) contributing to a higher net worth of a company. It indicates the company can expand further and have a good growth rate.In turn it will attract share holders and prospect buyers. Around 40% of increase in book value for 2010 indicates theoretically that shareholders would receive more for the total value of the company's assets if a company were liquidated. Higher value in Net Current asset for 2010 indicates capital is being generated or used up by day-to-day activities in a better way than the last year.

Financial ratio analysis will put more insight on these initial observations..

PROFIT & LOSS ACCOUNT

Financial Ratios- Analysis

Profitability Ratios
40 36.16 30 27.18 20 10 6.49 0 Mar '06 OPM(%) NPM(%) Mar '07 Mar '08 Mar '09 GPM(%) Mar '10 22.25 12.7 30.55 31.67 1.6 1.4 1.2 1 0.8 0.6 0.4 0.99 0.94 1.14 1.08 1.39

Liquidity & Solvency Ratios

7.43

7.92

7.55

0.2
0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Return On Capital Employed(%)

Current Ratio

Quick Ratio

Debt Equity Ratio

Profitability Ratios- Inference

Significant improvement in the profitability mainly due to reduction in the expense on raw materials. Company invested in Lead Smelters in 2008. YOY growth of 50% in GPM and 68% NPM speaks plenty on the operational Efficiencies brought in Total Quality Management System (TQM) implemented throughout the organization Close to 20% GPM allows the company to invest further in technology to bring in further Oper. Efficiencies A Favorable economic stimulus lowering the excise duty also contributed to the sharp rise in the profitability

Liquidity Ratios- Inference

A healthy Current Ratio that shows effective usage of investors money A low quick Ratio eluding to heavy inventory. Also visible in the low inventory turn over ratio A very low debt equity ratio which implies company's appetite for growth and diversification with some borrowed money

Financial Ratios- Analysis cont..

Management Efficiency
60 45.24

P & L Ratios
80
42.44

47.87

46.59

60 40

40

20

23.52

20 0
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

0 Inventory Turnover Ratio Asset Turnover Ratio Number of Days In Working Capital Debtors Turnover Ratio Average Raw Material Holding

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales

Management Efficiency- Inference

The debtors turnover ratio of is significantly higher than the industrial average The Company enjoys market share which could be due to the credit period they provide The inventory turn over is not in par with other industry peers causing a dip in profitability A significantly efficient No of days in working capital is a healthy sign from the investors point of view

P & Ratios- Inference

A healthy sign on raw material composition of expenses owing to captive lead smelters Operational expense s are synchronous with the company claims on operational efficiencies Good spending on the marketing and distribution resulting in market share

Outlook & Opinion

Automotive industry expected to grow 13%. Has a good market share

Industry Outlook & Opportunities

Industrial Batteries consumption to grow by 10% owing big telecom consumption

Domestic batteries [UPS] is a big segment to be captured, with heavy power shortage in many states

Company has a very robust GPM and also a very low Debt Equity ratio. Both these implies an growth opportunity A big advantage of captive raw material sourcing Larger market share helps achieve economies of scale and reflects on the relationships with oems Focus on Technology upgrades to heed to international market and prevent the entry of unorganized sector to these markets Faster realization of sales could further the profit margins

Exides placing

QUESTIONS