Copyright © 2013 by The Boston Consulting Group, Inc. All rights reserved.
Management presentation
DEMERGER AND THE WAY FORWARD
CG Investor Presentation v17.pptx
Draft—for discussion only
1
Disclaimer!
Certain statements in this Investors’ Forum concerning our future growth prospects are forward-­‐looking statements, which involve a number of risks and uncertain+es that could cause actual results to differ materially from those in such forward-­‐looking statements. The risks and uncertain+es rela+ng to these statements include, but are not limited to, global economic condi+ons, the economic condi+ons of the regions, loca+ons and industries that are major markets for Crompton Greaves Limited (“CGL”), risks and uncertain+es regarding fluctua+ons in earnings, our ability to manage growth, intense compe++on in sectors where we operate including those factors which may affect our cost advantage, wage increases in India and worldwide, trends in raw material prices, market acceptance of new products and services, changes in governmental regula+ons and costs associated with compliance ac+vi+es, withdrawal of governmental fiscal incen+ves, poli+cal instability and regional / loca+onal conflicts, legal restric+ons on raising capital or acquiring companies within and outside India, and unauthorized use of our intellectual property, interest rates, fluctua+ons in currency exchange rates and general economic condi+ons affec+ng our industry. CGL may, from +me to +me, make addi+onal wriRen and oral forward-­‐looking statements, including statements contained in the company's filings with the Stock Exchanges and Securi+es and Exchange Board of India and our reports to shareholders. The company does not intend or undertake to update any forward-­‐looking statements that may be made from +me to +me by or on behalf of the company. © CG. Confiden+al. All rights reserved 2 2
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (“CGL”)
Crompton Greaves Consumer Products Ltd (“CGCPL”)
Q&A
3
3
CG today: Two different businesses under the same umbrella
Engineering and infrastructure
Domestic electrical appliances
Customer
EMEA
35%
Regions(1)
Americas
18%
India
35%
Channels
Key success
factors
SE Asia
12%
100%
•  Direct
•  Multichannel
•  Technology
•  Cost leadership
•  Brand
•  Products
•  Marketing
(1): Revenue split by geography for FY14.
Two strong businesses
4
4
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (“CGL”)
Crompton Greaves Consumer Products Ltd (“CGCPL”)
Q&A
5
5
Right time for the demerger
Market conditions
CGL
CGCPL
Why are we ready?
•  Demand revival for energy efficient
and smart grid infrastructure
•  Integration of acquisitions completed
and synergies captured
•  Market moving
towards consolidation
•  CGL has reached the critical mass
to establish global position
•  Consumer demand revival
•  Consumer business has reached the
right size to operate independently
•  Increasing preference for brands,
faster product cycles, larger
premium segment
•  Crompton is a brand ready to be
leveraged for acceleration
Two potential leaders
6
6
Benefits of the de-merger are substantial
Strategic
Operational
•  Agile and
focussed strategies
•  Specialized board
and management
•  Compete with distinct
competitors in channels
and products
•  Potential to tie up with
global partners
•  Simplified
organization structures
•  Customised infrastructure
and processes
Strong potential to create value
Financial
•  Unlock shareholder value
•  Cost and cash
cycle optimization
•  Focused
investor opportunities
7
7
Two entities going forward
CGL
Systems
Services
CGCPL
Appliances
SE Asia
Americas
FY 2014
revenue mix
India
Pumps
Fans
Light
Products
Revenue
growth
Key product
segments
Key customer
segments
EMEA
•  FY 2011 to FY 2014 growth: 9%
•  FY 2011 to FY 2014 growth: 12%
•  Power T&D
•  Power conversion – motors,
generators and drives
•  Automation solutions
•
•
•
•
•
•
•
•
•  Households
•  Commercial
•  Institutions
Power and utilities
Railways
Oil and gas
Mines and minerals
Air circulation
Lighting
Consumer water products
Home and kitchen appliances
Focused and agile businesses
8
8
Demerger structure and shareholding
Public
Promoters
57%
43%
Public
32%
CGL
43%
CGCPL
25% plus one share
Industrial
Indicative
timing
Brand
arrangement
Power Systems
•  October 2014 – August 2015: requisite filings approval from stock exchanges,
shareholders, creditors and high court
•  Q4 CY2015 – proposed listing of CGCPL
•  Trademark “Crompton Greaves” to be assigned to CGCPL
•  CG logo shall continue to be used and developed by CGL
9
9
Agenda
CG at a glance
Rationale and plan for demerger
Way forward
Crompton Greaves Ltd (“CGL”)
Crompton Greaves Consumer Products Ltd (“CGCPL”)
Q&A
10
10
Copyright © 2013 by The Boston Consulting Group, Inc. All rights reserved.
Crompton Greaves Ltd (“CGL”)
CG Investor Presentation v17.pptx
Draft—for discussion only
11
CGL has been on a transformational journey
Build
Increased
revenue
Improved
presence in
key markets
Acquisition
Consolidation
2005
2011
2014
3.2
8.0
10.5
•  Indian Play
•  International expansion
with distributed field force
•  Regional focus with Strong
focus on EMEA
•  Largely electrical products
(EHV range)
•  Expanded electrical range
to UHV (765kV)
•  Best in class electrical
and electronic range,
expanded to 1200 kV
•  Introduced range of motors
and traction electronics
Widened
product portfolio
and improved
technology
•  Strong systems offering
and growing services
business on large
installed base
<500
Increased
customer access
Source: CGL internal data.
•  Introduced drives
and automation
<2K
>5K
•  Largely India based utilities •  Started making inroads in
select industries
Revenue – INR '000Cr
•  Approved in several
global utility and
industrial players
# of customers
12
12
We have invested in moving up to high-end plays
Electrical Products – Key segments and CGL presence
Acquisitions
2,500 Cr(1)
Manufacturing
1,000 Cr(2)
Low
Large ticket size
No. of competitors
CGL
in 2014
High-end
•  Ultra high voltage
•  Large ratings
•  Value-added solutions
•  Turnkey play
•  T&D: UHV research center (1600 KV)
•  Power conversion: BCC manufacturing in India,
LRM plant in Bhopal
Mid-end
•  Mid to High Voltage
•  Medium ratings
•  Product Play
CGL in 2011
•  Automation: Smart Grid lab (Spain), plant
in Bangalore
Technology
400 Cr(2)
•  1200KV PT, IT, LA
Low-end
Low ticket size
•  Low Voltage
•  Non-Industrial
Only Niche LVRM play in this segment
•  245KV GIS, SLIM® / BIO SLIM®
•  IE2 / IE3 motors, IP21 drives, Global design center
•  AMI (Smart Meter), DAS, SAS
High
(1)
(2)
Investments from 2005–2014 on acquisitions – Exchange rate assumption – INR 65 / Euro.
Investments from 2011–2015.
13
13
Today, we are a significant player across segments
Power – T&D
Offering
Technology
Geography
Power Conversion
Automation Solutions
•  ~100,000 MVA power
transformer capacity
globally (majorly in BCC)
•  No.1 rotating machines
player in India
•  1.5 Mn p.a. smart
meters capacity
•  Full range of IE2 motors,
IE3 launch by FY 2015
•  Transmission and
distribution solutions
•  100th UHV transformer
to PGCIL in 2014
•  State-of-the-art large motor
manufacturing facility
•  >20 AMI projects /
pilots globally
•  First Indian indigenous
maker of 800 kV
circuit breakers
•  Executed 10 MW (4-pole)
large motor
•  First Smart Grid facility
in India
•  Focus on EMEA and India
•  Focus on EMEA and
India where we are large
OEMs and leading
end-users
•  Among top six esteemed
suppliers for Linky, France
•  50% of Europe’s offshore
wind farms use
CG transformers
•  Extensive presence in
Europe and India
14
14
These investments have helped grow the business we have in the
more attractive market segments
CGL Revenue & drivers – (March 2012 – March 2014)
INR Cr.
H1 FY 15 ~ INR 5,363 Cr2
~7%
9,015
10,294
9,171
3,304
+44%
1,054
860
(28%)
5,675
6,131
6.8%
1,599
2,442
1,678
5,739
FY 11-12
CAGR
FY 12-13
FY 13-14
•
•
•
•
•
•
22% growth in high-end UHV play
28% growth in high margin India exports3
~690 Cr automation segment created
97% growth in high margin services
31% growth in profitable EMEA systems
18% growth in Railways vertical
•  >50% de-growth in low margins 400kV
segment
•  10% reduction in share of low profitable US
& India Systems1
Attractive segments
Unattractive segments
Base business
Source: CG internal data; Annual reports.
1. Change from FY 12-13 to FY 13-14.
2. From the board presentation (may include IDT).
3. Only includes Power BU exports.
15
15
Market has been challenging but is in a phase of transition
Markets declined but expected to revive…
Global Power T&D Capex ($ bn)(1)
Margin(4) dip tough but stabilizing
Margins(4)
Slowdown
phase
20
205
2005
+6.8%
+1.4%
+8.5%
262
2008
234
2011
369
284
2014
India and EMEA
to account for
45%–50% of
T&D capex in
future(2)
ABB(5)
10
Alstom(6)
TBEA
CG
2018
Global Nominal GFI $ '000 bn(3)
Uptick
Hyosung
0
Siemens(7)
+11.3%
10
2005
+7.0%
+4.1%
13
2008
15
2011
17
2014
22
2018
India and EMEA
to account for
30%–35%
of GFI(3)
-10
FY
07–08
FY
09–10
FY
11–12
FY
13–14
Margin pressure easing out, uptick continues
in H1 FY 2014–2015
Source: Economist Intelligence Unit, CG Update Nomura Analyst report (Dec'13), Analyst Reports / Declaration, World Energy Investment Outlook 2014, GBI Research 2012
(1) GBI Research 2012; (2) World energy outlook 2014. (3) GFI – Total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of
raw materials. (4) Margins – OI + D&A 5. ABB Power Products & Power Systems margins considered. (6) Alstom Grid data available only for last 4 years; Segment created only then.
(7) Siemens Power Transmission EBIT considered (Nomura Analyst Report).
16
16
Part of the FY 12-13 EBITDA decline due to one-time costs,
improvements visible in FY 13-14
Consolidated EBITDA bridge (March '12 – March '14)
EBITDA (%)
10
2.2
-3.5
Recurrent benefit due to
one-time costs
3.6
-2.9
6.2
-3.0
5
4.9
2.3
1.9
0
EBITDA
FY 11-12
Ongoing
Improv
ements
(BTP)1
Mkt. Pricing
Pressure
One-time
costs
•  1.2% in restructuring & COPQ
cost4
•  1.8% market access cost2
EBITDA
FY 12-13
Recurrent
benefits
from onetime costs
Ongoing
Improv
ements
(BTP)1
Mkt. Pricing
Pressure
EBITDA
FY 13-14
•  0.8% by reduction in employee costs
•  0.3% improvement due to increased India
exports, UHV play & Automation
•  1.2% reduction in process cost3
Source: CGL internal data; Annual Reports; Internal pricing estimates.
1. Improvements after adjusting for price decline & includes material cost reduction due to market scenario. Also netted off for process cost increase in FY 13.
2. Market access cost is the increase in employee cost due to front-end and back-end investments.
3. Process Cost improvement significant in international operations; 4. Additional 120 Cr below the line.
17
17
Key themes – Power / Industrials
•  India and EMEA to account for 45%–50% of T&D capex in future(1)
Recovery in
international
markets
•  Automation orders driven by increasing investments in smart grids
•  Margin recovery from higher margin automation orders as compared to
power transformers
•  Complete and customized offerings including EPC to create strong
competitive advantage
•  India recovery delayed but expected to deliver strong growth in T&D and Power
Conversion in the longer term
India capex
spends
improving
•  Conducive macroeconomic environment and policies to drive further power
capacity addition in the country
•  Increased spends expected in the high end T&D space to meet the higher
demand requirements
•  Automation / smart grid solutions are becoming increasing relevant
•  Revival in domestic industrial capex cycle with new government initiatives
Robust
industrial
demand
•  Stricter regulations for energy efficiency to drive robust growth in demand for
energy efficient motors
•  Product offering to railways expected to witness better demand going forward
with pending deliveries being cleared
(1) World energy outlook 2014.
18
18
3 scenarios exist for CGL's future direction
"Multi-local"
In-country supply
chain
"Focus: EMEA+ India"
Optimized sales & mfg
footprint
•  Continue to play
across regions –
India, EMEA, SEAP
& NAM
•  Build front end sales
focus in EMEA and
India
•  Supply from local
factories
•  Add footprint in BCC
to serve these
markets
•  Technology adds
relevant to region
•  Continue to invest in
technology
"Expansive Play"
Partner to enter new
segments
•  Global sales focus
•  New segment entry
using partnerships
•  Acquisitions for
technology &
customer access
19
19
"Focus: EMEA+ India" is best suited for CGL at this point
"Multi-local"
In-country supply
chain
"Focus: EMEA+ India"
Optimized sales & mfg
footprint
"Expansive Play"
Partner to enter new
segments
Economics
•  Moderate
margins with
continued
investment
•  Investments
required to continue
to move up the
value chain
•  Partner will share in
the value created
over the next few
years
Sustainability
•  Short term
growth with high
long term
unpredictability
•  Sustainable
position in key
growth markets
(EMEA, India)
•  Broad based
presence with
sustained
investment
•  Loss of cost
competitiveness
•  Market recovery &
investments
•  Competitive
response
•  Finding the right
partner
•  Integration of the
key technologies
Risks
?
20
20
"Focus: EMEA+ India" is based on three pillars
1
2
Offering
•  Acquire technology for Highend products in T&D and
power conversion
•  Value-added
automation solutions
•  Systems play in Europe
and SEA
3
Footprint
•  Geographical focus
(EMEA, India)
•  Vertical specialization (power,
railway, oil and gas) and key
account management
Manufacturing and
Cost Excellence
•  India Hub for manufacturing
•  Best cost
country sourcing
•  Lean operating model
•  Vendor Rationalization and
Centralized Procurement
•  Services play $10bn
installed base
21
21
CGL has developed a strong offering of high-end and competitive
products with different routes to market
•  Automation
Solutions
•  UHV transformers
•  High voltage SG
and motors
Automation(1)
•  Strong INR 700 Cr.(2)
revenue
•  Good ~8%–10% EBITDA(3)
•  Market growing at a strong
rate of 15%
22%
LVRM – IE2 / IE3
motors introduced
•  4%–6% margin benefits
430
289
Exports
FY
11–12
808
FY
13–14
•  Exports share in India
production increased to
26% in H1 FY 2015
CG internal data.
ZIV acquisition made in FY 11–12.
Figures for FY 13–14; Last 3 years average.
Only Power BU exports considered.
FY
13–14
Systems
Export Revenue(3) (INR Cr.)
28%
Source:
(1)
(2)
(3)
UHV revenue (INR Cr.)
FY
11–12
496
•  Business models
•  Margin
improvements
Power Conversion
LRM – Entered > 3 MW
•  Success in 6MW bid
High-end
products
Enhancing
route to market
T&D
Service
EMEA UEOB (€ Mn)
15%
115
FY
11–12
Service Revenue – INR Cr.(2)
153
FY
13–14
•  ~INR 110 Cr. negative
working capital
•  ~INR 30–35 Cr. cash
inflow from operations
97%
44
FY
11–12
171
FY
13–14
•  Growing strongly in services
driven by installed base
•  $10bn installed base
in EMEA
22
22
Focus on EMEA + India will translate to a different footprint over
the next few years
%
FY 2004–2005
FY 2013–2014
Exports
Target
Exports
10.0
Asia In-country
21.0
Supply model
towards cost
competitive Asia
50.0
79.0
90.0
Asia In-country
EMEA
Asia In-country
Exports
NAM
10.0
Diversified
customer base
with focus on
EMEA and India
50.0
NAM
10.0
India
18.0
35.0
35.0
90.0
EMEA
India
India
35.0
40.0
12.0
EMEA
SEA
15.0
SEA
23
23
In summary: Our strategy combines capabilities of BCC and front end
acceptance in European markets
European players
•  Best in class technology
and quality
•  Wide geo-footprint
•  Strong service focus
and installed base
•  Relatively high cost
supply base
CG strategy
•  Leverage technology
and installed base from
EU acquisitions
•  Front-end focus in
EMEA and India with
on ground presence
Low cost country players
•  Relatively behind
on technology
•  Low service focus and low
installed base as entry in
last 10 years
•  Poor quality perception
•  Cost competitive supply
base in India
•  Low cost
manufacturing units
•  Invested in building R&D
capabilities in India
•  Low cost and flexible
R&D setups
24
24
5 key segments for CGL to focus on ...
Annual Report
Segments
Key segments
Power Products T&D
Power
Power Systems &
Services
Automation & Smart
Grid solutions
Power Conversion
Industrials
Transport & Defence
Brief Description
Transformer & switchgears offerings
Full T&D system implementation and
service of installed base
Value added solutions for substation
& distribution automation
Motors & drive offerings for power
conversion to industrial business
Dedicated vertical focused offerings
including products above as others
e.g. Rail Signalling
1. Excluding Electric Transportation revenue
Note: Doesn't includes Jalgaon
25
25
We have a very senior management
team with significant relevant experience
Laurent
Demortier
CEO and MD
•  CEO-MD since Jun-2011
•  Over 25 years of
experience and has
worked with Alstom,
Honeywell, etc.
Noberto Santiago
President,
Automation
•  Ex-CEO and President of
ZIV (which he founded 20
years ago)
Madhav Acharya
CFO & CIO
•  Leads Global Finance
(incl. M&A)
•  A part of Avantha Group
for last 12 years
Sanjay Singh
Global Head - HR
•  Extensive experience in
HR best practices
globally
•  Previously Tata Motors
CV Business HR Head
J. G. Kulkarni
President,
Power BU
•  34 years of experience in
the industry
•  Actively involved in CII,
IEEMA, ERDA
Srinivas
Ponnaluri
CTO
•  19+ years of R&D
experience
•  Worked with ABB,
Bombardier, etc. and is a
owner of 15 patents and
multiple publications
Anil Raina
President,
Industrial BU
•  Over three decades of
global experience
•  Deep management
experience in design and
marketing projects
Ravi Rajagopal
EVP Legal,
Secretariat & Risk
•  27+ years of experience
working with Essar steel,
Vedanta Resources, JP
Industries, etc.
26
26
Copyright © 2013 by The Boston Consulting Group, Inc. All rights reserved.
Crompton Greaves Consumer Products Ltd
(“CGCPL”)
CG Investor Presentation v17.pptx
Draft—for discussion only
27
Top 3 domestic
small consumer durables player in India
FY14 revenue of ~INR 2,900 Cr
with EBITDA of 12.3%
Highest growth in revenues & highest
ROCE compared to peers
Revenue & EBITDA Margin (%)
INR Cr.
+16 %
3000
2,847
1800%
1600%
2,134
1,604
2000
1500
11.10%
14%
51%
13%
82%
16%
195%
1400%
1200%
12.70%
ROCE FY 14 (%)
2000%
2,593
2500
Revenue Growth
FY 12–14 (%)
12.30%
12.34%
1000
1000%
EBIT
in
FY'15 H1
800%
600%
400%
500
Crompton
200%
0
0%
FY’12
FY’13
EBITDA (%)
Source:
FY’14
FY’15 H1
Revenues (Cr)
Crompton has the highest ROCE due to market
leadership in air circulation and residential pumps
and a tight, largely outsourced model (~60% sourced
through vendors)
CG internal data, Analyst reports (Ambit report dated September 2014).
28
28
We have a strong brand with the promise of quality and reliability
reflecting in each of our product offering
"Crompton taught
everyone how to make
good fans"
"Quality of Crompton's
LED is good, and price is
better than Philips, so good
positioned"
"Crompton delivers what
it promises..."
Reliability
Quality
"Crompton is like a father
figure - stable, reliable
and responsible"
Crompton
"Crompton products are good,
sturdy"
Durability
Trustworthy
"Good brand with trusted
quality"
"Crompton is an old and
trusted brand"
Source: CG internal data
29
29
Our brand resonates well among consumers for each of our
product segments
Our core brand
promise
Durability
Quality
Reliability
Trustworthy
Why consumers purchase Crompton products?
Consumer Water
Products
Home & Kitchen
appliances
Air circulation
Lighting
Long Life
High warranty
Low replacement
cycle
High speed air
circulation &
trouble-free
High brightness,
low power
consumption, good
technology
Higher star rating in
water heaters
BIS mark
Multi-purpose use
Good after-sales
service
Low maintenance
Good after-sales
service
Low maintenance
Recommended by a
trusted source
Retailer recommendation
Peer
recommendation
Crompton brand
equity
30
30
Strong performance across all product segments
Air circulation
Lighting
Consumer water
products
Home and kitchen
appliances
13%
10%
2%
20%
Revenue
(FY 12–14)
(INR Cr.)
837 FY 12
Market
position and
market
share (%)
Our
positioning
vs. closest
competitor
Source:
1,201 685 FY 14
FY 12
879 552 FY 14
FY 12
665 60
63
FY 14
FY 12
FY 14
•  No.1 position with
26% market share,
very strong hold in
ceiling fans
•  Top 3 position; 14%
market share in
conventional lighting;
strong position in LED
•  No.1 position in
domestic pumps, top 4
in water heaters, 10%
market share
•  Relatively newer entrant
in kitchen appliances;
new segments to
be launched
•  CGCPL: Wide product
portfolio
•  Closest competitor:
Leadership only in
premium segment
•  CGCPL: Value offering
with mid-range pricing
•  Closest competitor:
Strong brand and
awareness
•  CGCPL: Superior
domestic portfolio with
excellent service
•  Closest competitor:
Distant No.2
in domestic
•  CGCPL: Value offering
across
price segments
•  Closest competitor:
Strong presence in
kitchen and home
CG internal data, Analyst reports (Ambit report dated Sep'14).
31
31
Indian consumer spend is set to increase rapidly in core categories
Overall Indian consumer spend ($bn) to grow by 3.6x...
Housing and consumer durable spend to increase 4x
•  From $186bn in 2010 to $752bn in 2020
... leading to market expansion in all our core categories
Market size (INR Cr.)
CAGR (%)
37,683
Driven by growth in all key indicators:
33,706
Income growth
Consumer
confidence
~3 times increase in average
household income
India ranks No.1 in Global Consumer
Confidence survey(1)
30,164
27,068
Nuclearization
Growing
work force
Note:
(1)
Source:
40% population will live in urban
cities in 2020 (31% in 2010)
All spends in nominal dollars. Years represented as calendar year.
Nielsen Global Consumer Confidence Survey, Q2 2014.
Euromonitor, NSSO; BCG Indian Consumer Survey December 2010, N=6278.
10%
Air
circulation
12%
8,661
Lighting
12%
6,481
7,724
6,915
6,222
180 m nuclear households growing at 4%
vs. 2% population growth
137 m people will be added to the
workforce by 2020 (total :752 m)
Water
products
7,128
5,963
Urbanization
7,866
5,864
5,188
4,558
13%
6,576
Home and
kitchen
appliances
10,325
11,580
FY 2015
FY 2016
12,990
FY 2017
14,580
FY 2018
32
32
Key themes – India consumer
•  Macroeconomic recovery in urban discretionary demand in India
Consumer
expenditure
story intact
•  Rural household electrification to drive further growth in domestic
electrical products
•  Huge untapped opportunity with rural having large share of many categories
“Rural” the
new focus
•  Most of the consumption is still un-branded / local brands
•  Power quality and brand consciousness continuously improving
•  Shift from unorganized to organized and unbranded to branded
Changing
consumer
preferences
Brand and
distribution –
Drivers for
value creation
•  Premiumization trend to accelerate, especially in the metros / Tier I cities
•  Brand and distribution penetration key drivers for sustainable
competitive advantage
•  Advertising critical for driving customer aspiration and brand positioning
•  Distributor loyalty for on-the-ground push
33
33
Demerger opens new avenues for Crompton
Follow the market
"As-is"
Lead the market
"Transform"
•  Retain share in strong
market
•  Build a strong brand
with focus on NPD
•  Mid-market positioning;
limited portfolio
expansion
•  Enter adjacent markets
by leveraging sourcing
partners
Enter new markets
"Full consumer play"
•  Play in a wide range of
attractive consumer
markets
•  Enter into partnerships,
JV, M&A to access
product and reach
34
34
Transform scenario best suited for Crompton
Follow the market
"As-is"
Lead the market
"Transform"
Enter new markets
"Full consumer play"
•  Maintain current
margins
•  Industry leading
RoCE
•  Industry leading
margins from pricing
and premium portfolio
•  Moderate RoCE due to
investments
•  Low margins on
account of split with
partner
•  Low RoCE from high
investments
Sustainability
•  Short term growth
along with market
but with long term
unpredictability
•  Sustainable higher
growth than market
•  Multifold growth
due to capturing
the entire consumer
growth
Risks
•  Potential loss of
share to new
entrants as market
shifts
•  Multi/sub-brand
architecture needs to
succeed
•  Finding the right
partner
Economics
?
35
35
CGCPL's early consumer connect will be leveraged to enter
successfully in new segments
Our core segments are first to enter a customer's home...
Air circulation
Air
Circulation
Decorative
lights
Consumer
Water
Products
Small
kitchen
appliances
...we will leverage this early consumer connect to succeed in new segments
Large kitchen
appliances
(hoods and hobs)
Personal
care
Rooftop solar lighting
solutions
Street light
automation
36
36
Our four dimensional strategy to transform CGCPL
FY 2014
Target
1
Brand equity
•  Single brand across
segments
•  Low youth awareness
•  Low advertising spend(1)
•  Multi / sub-brand positioning
•  High brand awareness
•  Double advertising spend(1)
2
Offering
•  Value offering with midrange pricing
•  Limited portfolio expansion
•  Premium offerings in air circulation,
consumer water products and
kitchen appliances
•  New product offering in adjacent
segments
3
Reach
•  156,000 retailers
•  270,000 retailers
•  Urban middle
class customers
•  Urban elite, urban and small town
middle class customers
•  Material costs: 74% of sales
•  Material costs: 71% of sales
4
Cost & SCM
optimization
(1):
Refers to Advertising and Sales Promotion spend.
Further, the organization and processes are being
re-designed to support this transformation
37
37
Crompton will build on this connect and invest in the brand
Brand Crompton (FY 2014)
•  Single brand for all segments
Brand
equity
Target
consumer
Brand
awareness
•  Brand equity strongest in air
circulation, lighting and consumer
water products
•  Strong brand connect with
consumers aged 40–65 years
•  Low awareness among younger
consumers
•  Advertising and promotion spend
of 1.7%
Brand Crompton (Target)
•  Multi/sub-brand strategy focusing on
premium, mid-market and rural offering
•  Clear and differentiated brand strategy
for each segment
•  Strong brand connect with consumers
aged 25–39 and 40–65 years
•  High awareness among
younger consumers
•  Advertising and promotions spend to
double and to be in line with best in
class
•  Improved in-store experience
38
38
Full product range to support brand positioning and consumer connect
Air Circulation
Lighting
Consumer Water
Products
Home & Kitchen
appliances
New designs in premium ceiling
fans, air circulators, TPW &
personal fans
Home and street light automation
and pole lighting
Stainless steel pumps, premium
range of water heaters
Premium range of small kitchen
appliances
Current
portfolio
New
products
in existing
range
New product segments
Source: CG internal data
We have already begun development process in many of these
categories
We have already begun development process in many of these categories
39
39
Transformation strategy: Expand our customer base
Urban elite
•  Buy aesthetic premium products
•  Brand conscious
Urban middle class
•  Core segment which historically
drove growth
•  Demand reliability & performance
Small town middle class
•  High aspirations
•  Access / availability is a
challenge
Current focus (42 mn households1 )
Drive premium
offering &
target using
new channels
Leverage existing connect to cross-sell through wider
product portfolio (86 mn households2 )
Drive reach &
nurture loyalty
1. Number of Households in 2015.
2. Number of Households in 2020.
We have already begun development process in many of these
categories
40
40
We have a very senior management
team with significant relevant experience
Ash Gupta
President
•  Previously President
and CEO at Honeywell
India
•  Prior to this, he has spent
19 years with GE in
various roles
Premanand Bhat
PL Head - Pumps
•  32 years of experience
of which 23 years are
with Crompton Greaves
Ltd.
•  Previously worked as
All India Marketing
Manager – Fans and
Marketing Manager –
West Region Amit Ganguly
Finance Head
•  16 years of Finance
experience
•  Previously Finance
Controller for Pernod
Ricard India and Finance
Manager for Pepsico
India
Ramesh Kumar
Global Sales &
Service
•  30 years of experience.
•  Joined Crompton
Greaves Ltd. in 1990
•  Through the years has
moved across roles as
AGM, AIMM,
Unit Head and PL
Head – Lighting Dhruva Chandrie
PL Head
•  20 years of experience
across E-tail, Retail,
Automobiles and
Petroleum
•  Previously worked with
HomeShop18, Reliance,
Tata and Videocon Sundar Iyer
Strategy &
Business Planning
Head
•  21 years of experience.
•  Previously worked with
ABB Ltd. as Vice
President. Joined
Crompton Greaves Ltd. in
2012 as General
Manager – Strategy Kunal Dhawan
CMO & PL
Head - Lighting
•  16 years of experience
•  Previously worked with
companies such as
Aditya Birla Retail, Dabur,
Reckitt Benckiser and
Heinz Uday Mahajani
PL Head - Fans
•  35 years of experience
with Crompton Greaves
Ltd.
•  Started his career with
Pumps division of
Crompton Greaves Ltd.
as General Manager
Accounts in 1979 41
41
Agenda
CG at a glance
Rationale and plan for demerger
Market environment
Way forward
Crompton Greaves Ltd (“CGL”)
Crompton Greaves Consumer Products Ltd (“CGCPL”)
Q&A
42
42