KPIT Technologies Ltd — Regulatory Filings 2019

Aug 23, 2019

KP 11·

August 23, 2019

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001.

Scrip ID: KPITTECH Scrip Code: 542651

Kind Attn: The Manager, Department of Corporate Services

National Stock Exchange of India Ltd., Exchange Plaza, C/ 1, G Block, Bandra - Kurla Complex, Bandra (E), Mumbai - 400051.

Symbol: KPITTECH Series: EQ

Kind Attn: The Manager, Listing Department

Subject: Update of Investor Conference held on August 20, 2019. Ref: Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement s) Regulations, 2015.

Dear Sir/ Madam,

In furtherance to our communication made on August 19, 2019, please find attached herewith Investor Presentation.

Request you t o please take the same on your records and further dissemination.

Thanking you.

Yours faithfully,

Nida Deshpande Company Secretary & Compliance Officer

0 +91 20 6770 6000 E info@kpit.com W kpit.com

August, 2019

Investor Conference August 2019

1

KPIT New Brand Video was embedded here. Deleted from slide deck for sharing. Video available at https://www.youtube.com/watch?v=WL3IbzJb504

Forward Looking Statements

Some of the statements in this update that are not historical facts are forwardlooking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce Their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry

Agenda

1	Welcome and Introduction	Vinit Teredesai
2	Industry Trends and Our Vision	Ravi Pandit
3	Mission, Strategy and Business Outlook	Kishor Patil
4	Vertical and Customer Strategy	Sachin Tikekar
5	Technology Roadmap	Anup Sable
6	Technology Overview – Autonomous Driving	Manaswini Rath
7	Technology Overview – Vehicle Diagnostics	Stefan Zeppetzauer

INDUSTRY TRENDS AND OUR VISION

Mega Trends in Mobility Industry

Increase in number of vehicle platforms

New Players are emerging in the EV & AD domains

Compliance & regulations

Emergence of new business models

OEMs separating out H/w & S/w spend & buying u ••

Software and Electronics to outgrow the Automotive Sales

469
In USD Billion			34 50	Components	CAGR (2020-30)
				Power Electronics (excl. Battery Cells)	15%
			81	Software (functions, OS, Middleware)	9%
238	13 20 20		304	Integration, Verification and Validation	10%
				Hardware (ECUs/DCUs, Sensors, others)	5%
	185			Automotive Sales (USD Billion)
				2020	2030
2020		2030		2,755	3,800
Hardware (ECU, Sensors etc) Power Electronics ■ ■				Auto Sales CAGR 2020-30 : 3%
Software ■ ■		Integration, Verification & Validation

Software Growth to be driven by these Domains

Source : Automotive Software and Electronics 2030 – McKinsey & Company KP 11·

Software Growth to be driven by these Stages

New Technology Investments – Major Mobility Players

Technology Investments are driving high growth and predictability for technology focused niche players like KPIT

Source : Public announcements by these companies in last 6 months. List not exhaustive. All images - copyrights belong to the rightful owner. KP 11·

Our Vision

Reimagining mobility with you for creation of a cleaner, smarter and safer world

Mobility: Technologies that enable people and goods to move in cleaner, smarter and safer way. This includes passenger, commercial & off-highway vehicles. Also, organizations that offer mobility as a service

Reimagining: The paradigm shift in mobility gives us an opportunity to think afresh

MISSION, STRATEGY AND BUSINESS OUTLOOK

Our Mission

Know "software" better than any auto company in the world and know "auto" better than any other software company in the world.

Become a bridge to the New Mobility industry.

We will create value by nurturing a CULTURE OF EXCELLENCE by

Becoming the leading Company in PLATFORM business

Delivering ZERO DEFECT

Being the BEST PLACE to GROW

Having strategic relationship with our T25 CUSTOMERS

Platforms, Tools and Accelerators Strategy

OEMs, New Mobility Companies and Tier1s want to bring newer features to the market faster

KPIT provides innovative, speedy and trusted development of features from design to production

Our value proposition - Faster time to deployment through …

• 1. Platforms, Tools, Accelerators
• 1. Deep Domain Expertise
• 1. Ability to scale globally

Work closely with Semiconductor companies for the suitable Platforms

We are well positioned for these Opportunities

McKinsey &ColTipany

July 2019 : KPIT features in report on "Automotive software and electronics 2030"

3.4 New partnerships and cooperation models are emerging primarily for software- and electronics-related topics

closely tog1ether. One example would be the close collaboration of BMW, FCA, linte l, Magna, Aptiv, Continental, LiDAR suppl ier lnnoviz, and SW specialists TTTech and KPIT to jointly develop an A D platform. IBaiidu is trying to build an open platforrn for AD with its OEM, tier-1 supplier, tier-2 suppli,er, and research insti 'ution partners, shariing1 source code and data.

April 2019 : Automotive Software Global Market Outlook report by Research and Markets

According to this research, the maI1t:et accounted for \$15.53 billion in 2017 and is exp,ected tc reac!h \$82.58 bi llion b 2026 growing at a CAGR of 20.4% durin the forecast eriod. Factors

Some of the key players profilled n the mariket iinclude NXP 1, Aimotii'1ve1, Airbiquiity1, Apple, A1utone Mob1Il le1, Blackberry, Elektrobit, Googlle, Green IHillllls Software, K it Technologie~, llt1Ixon Microsoft Gorporatio11111, NVIDIIA, 1ReInesas Electronics, Riightware, Robert Bosch1, Saferide Technologies Ltd, s ·gIma Softwar,e GrouIp1, Vector llnfro,rmatik and Wind IRiiver SysteIm ..

Financial Performance and Outlook

Revenue

▪ 28.6% CAGR from FY17 to FY19

• Growth driven by T25 Customers.
• T25 Customer across GEO's with mix of OEM's & Tier 1's

Revenue

GEO Mix

Practice Mix

Well balanced geography revenue spread

70% of the Revenue coming from

New Age practices

EBITDA & Net Cash

EBITDA

▪ EBITDA improvement despite rupee appreciation of 1.75%

▪ Net Cash Generation of 1139 INR million in 6 months post de-merger FY20

▪ 16% to 18% comparable constant currency revenue growth

EBITDA %

• 14% to 15% EBITDA Margin
• 40% to 50% absolute EBITDA

growth

Medium Term Goal

• \$ 500 million Revenue
• 16% to 18% EBITDA
• Free Cash Flow to EBITDA 70%+
• Return on capital employed*25 %+

EBITDA improvement Bridge

Strong Fundamentals

6800+ Automobelievers

20+ Nationalities

We are Ready

20% Masters & PhD Holders

25 Innovation Awards

51 Patents

4% - 5% of Revenue spent on R&D

25

VERTICAL AND CUSTOMER STRATEGY

Mobility Vertical Trends

Passenger Cars

• •Partnerships for Autonomous, Electric and Connected
• •Slow down in car sales across markets
• •Leadership changes globally
• •Electric car production and sales are projected to rise

Commercial Vehicles

• •Ramp up of efforts for electrification at medium volume
• •We are seeing a move from ADAS to AD
• •Industry consolidation leading to restructuring of engineering teams
• •Clear demand for connected vehicles, however monetization unclear

New Mobility

• •Customer moving from ownership to mobility
• •OEMs seeking long term partnerships with shared mobility and technology companies
• •Usage of micro mobility and last mile logistics
• •Tech giants (Intel, Microsoft, Amazon etc.) actively looking at mobility as a service

Vertical Focus Strategy - Organizing business to increase our play in mobility

Passenger Cars
-----------------------	--

• Significant revenue at present
• Select customers with qualitative growth
• •Create large deals
• Platform & annuity business

Passenger Cars Commercial Vehicles New Mobility

• Account based strategy
• Build offerings tailored
• for these customers

• Build customized offerings leveraging existing practices

• Two wheelers, Fleet Management, Shared Mobility

• Leverage existing platforms Maximus Pro, JRM
• Build solutions for Shared Mobility
• Build partnerships

Focused Accounts Strategy for Accelerated Profitable Growth

Selection Criteria will be…

• Important to us from overall Mobility ecosystem perspective
• Highest level of relationship and committed to strategic partnership
• Strategic for our practices
• High quality of engagement (platforms, tools, accelerators and long-term large annuity deals)

T17 accounts have been identified out of T25, developing next 8 accounts from potential accounts

Robust Growth across the Geographies

• AMERICAS EUROPE ASIA

• .·.~. r:.91,.-~-~ . .. ...

• Largest Market

• Balanced growth in non-CASE and CASE
• Strong relationship with passenger and commercial vehicles customers

• Growth driven by CASE - especially electrification and AD

• Fastest growing geography

• Growth across passenger cars and new mobility • High profitable growth

A Glocal Strategy Bangalore - India

Build customer intimacy through...

Practice and program management presence at key global locations

Global delivery model

Consistent customer experience across all locations

Diverse teams in cultures, languages and thoughts

TECHNOLOGY ROADMAP

Software in Mobility – it's a complex affair !

• One 6 Core Processor

Modern high-end car

• 100+ Processors
• 4 different network technologies
• 8-10 networks
• High speed Real time performance

• Safety

Premium you pay now is only for software

Software in mobility – complexity in lines of code is growing leaps and bounds!

Lines of Code

KP 11· Source : Electronicdesign.com

Digital Cockpit – Enhanced user experience is set to grow.

KPIT is present in digital cockpit world through platforms

Its all about Software

Our Strategy

OEMs, New Mobility Companies and Tier1s want to bring newer features to the market faster

KPIT provides innovative, speedy and trusted development of features from design to production

Our value proposition - Faster time to deployment through …

• 1. Platforms, Tools, Accelerators
• 1. Deep Domain Expertise
• 1. Ability to scale globally

Work closely with Semiconductor companies for the suitable Platforms

We deliver software with deep expertise through our practice structure

Autonomous Driving Connected Vehicles Conventional and Electric Powertrain

AUTOSAR Mechatronics Vehicle Diagnostics

By 2030 almost 100% cars will be connected

~100% new cars to be connected ~15% of new cars to be autonomous Digital Shift Revenue Shift ~25% vehicles will be electric Today ·e 10 e" C) I I

Future digital services that connectivity may enable

Why doesn't current sales volume affect the development project work?

In summary

• Vehicle software complexity is growing. What we are paying as premium, is mostly for software.
• Number of platforms are increasing for Autonomous and Electric Vehicles. Software is critical for both these new emerging areas.
• Digital cockpit will enhance the user experience, software will drive this experience. The scale and complexity will increase as a result for software.
• New vehicles architectures will be dominated by software.

KPIT is well positioned to leverage these changes with

Platform driven Services approach | Practice focus that we have created

AUTONOMOUS DRIVING

Autonomous Driving

Largest independent engineering services and solutions provider

Services

Development of SW Functions

Solutions

AD platform

Global Talent from 14 Countries

Software components

Scenario libraries

More than 45 Patents and Publications

Ground Truth Generation Tools & Operations

Growth of Autonomous Driving business over last 3 years

45%+ Global AD Customers 12 OEMs and 9 Tier 1s

	Americas	Europe	Asia
OEMs	3	4	5
Tier 1s	3	3	3

Revenue has grown at an average Y-O-Y growth of 50+% over last 3 years; with higher % from L4-L5

Key Take Away

VEHICLE DIAGNOSTICS

Vehicle Diagnostics process chain from Engineering to Aftersales

Seamless diagnostics data exchange and enabling toolchain through the entire process holds the key

Main industry opportunities for Vehicle Diagnostics

With knowledge of various vehicle sub-systems and vehicle engineering process, KPIT is Uniquely positioned to address above pain points of OEMs

Growth of this business over last 3 years

Split: Service Vs License revenue

Revenue has grown at an average Y-O-Y growth of 40+% over last 3 years; Percentage of License revenue also has grown consistently

Thank You

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