CIE Mahissndra Presentation

8/13/2019 CIE Mahissndra Presentation

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Industrial Group specialized in Managing High Value Added Processes 1

MAHINDRA CIE AUTOMOTIVEJune 2013


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Table of Contents

Rationale for the Alliance3 Introduction to CIE Automotive & Systech

4 Key Transaction Steps



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CIE Automotive + Mahindra Global AllianceOverview

CIE Automotive, Spain and Mahindra & Mahindra (M&M), India enterinto a lobal Alliance in the automotive com onent business

CIE Automotive, through Autometal, to invest in automotive component businessesof M&Ms Systech Sector (Mahindra Systech)

o nves n u omo ve pa n

Merge of all automotive component companies of Mahindra Systech and CIEEuropean Forging companies into an India-listed automotive supplier creatingMahindra CIE Automotive that consists of

Mahindra Systechs automotive components business (FY13 Sales EUR 575 Mn)

with operations in India and EuropeCIEs European Forgings business (CY12 Sales EUR 150 Mn) with operations inS ain and Lithuania


*CY2012: Jan 2012-Dec 2012 / FY2013: April 2012-March 2013


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CIE Automotive + Mahindra Global AllianceSchematic Representation

CIE Automotive

Mahindra Systech

Autometal

CompositesForgings GearsMachining

Forging*Brazil

Forgings, MachiningCastings, Stampings,Plastics, Painting

StampingsCastings Aluminum

Plastic

Mexico Aluminum, Forgings,Machining, Stampings,Plastics, Painting

Mahindra CIE Automotive Limi ted

USA Plastics

Bio Fuels

Inf. & CommTech.

Indicates transaction

* CIE Forgings plantsin Spain & Lithuania

China Forgings

Note:Mahindra S stech is not a le al entit


Listed company

All companies, listed or unlisted, will be merged into Mahindra

Forgings Ltd. to be renamed as Mahindra CIE Automotive Ltd


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Table of Contents

Rationale for the Alliance

3 Introduction to CIE Automotive & Systech




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Industry structure

As industry consolidates via acquisitions/partnerships, global presence is key

60

30,000

M s 1

N

40

20,000

o t i v e

O m b er

o

2010,000

o f A u t o s u

p pl i

9 5 0

9 5 5

9 6 0

9 6 5

9 7 0

9 7 5

9 8 0

9 8 5

9 9 0

9 9 5

0 0 0

0 0 5

0 1 0

0 1 5

0 2 0

N u m

b e r

r s

Supplier consolidation is faster than OEM consolidation

1 1 1 1 1 1 1 1 1 1

Source: Boston Consulting Group, E&Y


Global presence (emerging + developed world) becoming key for suppliers


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Strategic positioning in highgrowth markets

Annual Vehicle production: Period 2012 2017 (Mn units.)

19

222,4

4,34,0 98

2,1

3,7

,

3,22,9

80

2012 2017E2012 2017E2012 2017E

In 2013 year isexpected aweaker marketwith medium term

Growth in 2013Eby 4%. SofterMedium termrecovery

2013E Growth by4%. Growingfuture prospectscontinue

2013E Growthby 9%.

Growing futureprospects

2013E Growthby 9%.

Growthcontinue year

2013E Growthby 2%.

Growthcontinue year

Source : Vehicle Production, CSM March 2013Growth % : CAGR (Compound Annual Growth Rate)

.

CIE Automotive bet is to increase its resence in Mexico


and settle in India


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Why India?

In Asia we are committed toINDIA

Significant growth in the coming years.

,

and export.

or ea er n eavy e c e n us ry.

.

A country with great opportunity to lead the growth in the


region (Indonesia, Thailand, etc.).


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Transaction impact

For in s Stam in s Castin s

CIE Automotive Mahindra Systech

Machining, Plastics, Paintings,

AluminumSegments org ngs, as ngs, ompos es,Stamping, Gears

Customers

Nafta Mercosur Euro e China India and Euro e

Russia, Morocco

Amongst top European, BrazilianMarket Leader in India crankshafts (Car+UV) groupsPosition Leader in Heavy Vehicle Forgings (Europe) Amongst top 7 Indian auto comp groups

. (CY2012*)

(EUR Mn) (FY2013*)



mongs op au o componen s groups g o a y


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Complementary product market presence

Process EU NAFTA Brazil Russia India China

amp ngs

Forgings (1)

Machining (2)

Plastics

AluminumCastings

a n ng

Roof Sys.

Magnets

(1) Forgings in EU largely complementary CIE serves car markets while Systech


CIE Presence Systech Presenceserves CV market(2)Gears/ Machining complementary Systech manufactures gears while CIEmachines other components


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New forging powerhouse underAutometal management

Forgings Europe

Forgings Nafta

Forgings India

Forgings Brazil


Creation of a major forging group with global footprint


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Diversifying into new high growthmarkets

Asia

Europe Asia

Europe America

America

Sales 2012 Sales 2017

Consolidating a significant market share in the Asian market,continuin with the strate of emer in markets rowth



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Diversification bringing less volatility tocash flows

Diversifying financial markets

Three different vehicles to invest in the Auto sector:CIE Automotive: Global market investment

Autometal: Investment in emerging marketsMahindra CIE Automotive: Investment in Asia and GlobalForgings

Highest standards of corporate governance in each market

Diversifying finance: raising where cash flows are generatedBanks

Relationships with global and local banks in every region

Global access to debt capital markets

and Debt

Markets

Diversification and transparency of being listed


compan es mproves cre qua y


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Alliance with a partner that has aperfect match

CIE Automotive & Mahindra groups have similar values &focus areas

Focus on financial returns

Stron or anic & inor anic rowth

Multi - technology

Decentralized (local) decision process

Independent business unitsJV / Acquisition Focus



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The transaction in numbers

Integration of a Group of companies with a recurrent level (1) of:Revenues: EUR 650 MnEBITDA : EUR 66 Mn

Net financial debt: EUR 170 Mn

The transaction is mainly cash neutral at CIE Automotive level:Cash paid for equity acquisitions for Mahindra stake in Systech companies isreinvested by Mahindra into CIE Automotive shares (13,5%)Only cash out comes from tender offers: aprox EUR 25 Mn (2)

CIE Automotive Group merges its European Forgings into Mahindra CIE

As a result CIE Automotive Grou holds 51%~ 53% (2) and Mahindra 20%of Mahindra CIE


(1) Recurrent level figures: Proforma calculated at normal 2011 market levels in Europe and India

(2) Depending on the tender offer acceptance


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Thoughts on value creation

BENEFICIAL FOR ALL SHAREHOLDERS

CIE Automotive has proven financial performance over last 16 years with domain knowledgein automotive components business, in all different geographical areas.

CIE Automotive, with successful track record of M&As, has also proved its integrationcapacity, improving margins of integrated companies and creating value for shareholders.

Europe. Indian operations are on the cusp of upturn.

Mahindra CIE will also have access to other geographic markets where CIE has presence.

M&M continues to be a strategic investor in auto comp business with 20% stake in MahindraCIE and 13.5% stake in Spain at parent level.

anagemen s o e a ance w e a gne opera ona y an s are o ers are a gnestrategically.

Together, the alliance becomes close to EUR 2,2 Bn and fulfills M&Ms & CIEs ambition to


be a global player in this business.


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Table of contents






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Overview of CIE Automotive

Company Overview Financial Summary

subsidiary listed in Brazil

Key business areas include forgings,

Sales 1,591 1,840 1,647

EBITDA 193 234 224, , , , Aluminum and painting.

Locations - Europe, Brazil, Mexico,USA China Russia Morocco

marg n . . .

PAT 41 61 61

Net Debt 507 342 394

Shareholding Pattern of Corporate Structure


Gestamp

T.S.10,0%

CIE(Spain )

Sales: EUR 1,647 MnEBITDA: EUR 224 MnMarket Cap: EUR 659Mn

Key businesses: Aluminum,Forgins,Castings,Stampings,

,

Management Team /

Family OfficeInstitutions

Free float 21,5%

ac n ng,Plastics.Non key businesses:Biofuels,Info & Comm Tech

75%

Sales: Eur 641 MnEBITDA: Eur 108 Mn


24,4%18,5%(Brazil) Market Cap: Eur 978Mn


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Overview of Systech auto components

Business Overview Financial Summary

(~80%)

FY13 Sales of ~INR 40,000 mn / Euro580 mn

mnSales: India 13,364 18,231 18,413

Sales: Europe 22,448 26,488 22,175 19 Manufacturing facilities in 4 countries

55% of revenues from Europeanoperations

Sales: India 191 260 263Sales: Europe 321 378 317*1 Euro = INR 70.0

Sales by Business Corporate Structure


Forgings / 55%

Others / 4% Systech Sector

Gears / 13%

Auto Components ee

Eng. Services

Aerospace

Listed:ForgingsStampings (part of MUSCO)CompositesPrivate:


Castings / 9%Hinoday (Castings + Magnets)Gears Not Part of Transaction


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CIE Automotive performance

Profitable growth history over 10 years; successful trackrecord of 50 M&As

Sales Evolution (EUR Mn) EBITDA Evolution (EUR Mn)

RoCE (2) 15,5% in 2012RoCE (2) 15,5% in 2012 Auto EBITDA margin of 15,8% in 2012Auto EBITDA margin of 15,8% in 2012

CIE Automotive s growth and profitability trend keeps in double digit rates,

(1) 2006 to 2011 data deducting turnover of diesel oil used for blending(2) ROCE calculated as EBIT divided by average employed capital (equity + net financial debt)


av ng reac e an op ma ac v y an eve an a recor e

Result in its history


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CIE Automotive unique positioning

Tier 1.5 : Supply parts to OEMs and Tier 1

Business Characteristics

Excellent relationship and penetration with all OEM and Tier 1customersStrong Commercial

Relationships

Track record with over 50 new integrations in the last 10 year ona global scaleGrowth Fuelled by

Al liances & Joint Ventures

Lean and robust procedures with effective cost controlEmphasis on CorporateCulture of Productivi ty

Products serving global platforms and local customer needsProduct Portfolio

R&D in multiple technologies as a differentiating factor offeringbroad growth potentialMulti-technology Portfolio


ver me as een a e o ac eve g er marg ns an eindustry average


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Table of contents






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Transaction structure (STEP 1)

CIE Automotive, through Autometal, to purchase stake in MFL,MHIL, and MCL from M&M

M&MCIE 75%

MahindraForgings

(Spain )

Autometal(Brazil)

arePurchase +Open Offer

Mahindra

SharePurchase +Open offer

72%

Mahindra

(Spain)

SharePurchase

28%

HinodayIndustries

AssetInte ration


CIE Forgings


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Transaction structure (STEP 2)

Mahindra CIE Automotive is created

M&M CIE Automotive

~20%

~75%

.

72%

28%

Autometal~[51]%

(Spain)

a n ra u omo ve

Limited*

Merger Mahindra Forgings

(Europe)

MahindraComposites

Mahindra

Investments

Mahindra

GearsMahindraHinoday PIA 3MUSCO .

Mahindra Gears &


*Erstwhile Mahindra Forgings Limited

Transmission India Ltd. (India) o rg ngs


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Swap ratios

Mahindra Hinoday 1.10

a n ra ompos es .

Mahindra Gears Europe 0.17

Mahindra Gears India 0.20

MUSCO 2.84

CIE Forgings 1.05

*Swap ratios are based to 1 share of Mahindra Forgings Limited


i d i li f i d


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Estimated timeline for transaction andregulatory approvals

Event Estimated Dates

Transaction Signing [June 15, 2013]

Closure of Open Offer [Oct, 2013]

Receipt of High Court Approval [April, 2014]

Regulatory approvals

Bundeskartelamt, Germany (Anti-Trust Authority)

SEBI Clearance for the Letter of Offer (Open Offer)

High Court and shareholders approval for the merger



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Advisors

Legal Advisors

Manager of the tender offers

Independent valuers providing SwapRatios for Merger

NM RAIJI

Independent valuers for the capitalincrease in CIE



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CIE Mahissndra Presentation

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