Welspun Living Limited · NSE:WELSPUNLIV
Welspun Living — Welspun India — H1 FY2017 Earnings Presentation
31 slides from Welspun Living's earnings presentation, Nov 15, 2016
Slide 1: Half Yearly Investor Conference
HALF YEARLY INVESTOR CONFERENCE 15th Nov, 2016 1
Slide 2: Agenda
1. Chairman’s address on traceability issue AGENDA 2. Business Highlights 3. Financial Highlights 2
Slide 3: Chairman's Address
WELSPU CHAIRMAN’S ADDRESS
Slide 4: Background on the Egyptian Cotton Issue
BACKGROUND ON THE EGYPTIAN COTTON ISSUE ● On August 19th, one of our customers issued a statement relating to traceability for Egyptian cotton bed sheets supplied by Welspun ● The customer reassured its own consumers that it was not an issue of safety and there was no risk in continuing to use the p
Slide 5: Immediate Response by Welspun
IMMEDIATE RESPONSE BY WELSPUN Reached out to all the Started engaging with Appointed EY for review key stakeholders – other customers to of the supply chain answer any of their lenders, investors, rating process concerns/queries agencies etc Closely worked with retailer partners to address their con
Slide 6: Challenges in Establishing Traceability
CHALLENGES IN ESTABLISHING TRACEABILITY Supply Chain Complexity Outsourced Outsourced yarn from greige from various regions various regions in in India India Added difficulty Added difficulty in in tracing to bale tracing to bale USA India Greige Dyed Finished Cotton Yarn fabric fabric good Spinning
Slide 7: Challenges in Establishing Traceability (Contd..)
CHALLENGES IN ESTABLISHING TRACEABILITY (Contd..) Egyptian Cotton and its sourcing ▪ Type of long staple cotton which provides strength, brightness and Definition stress resistance to fabrics. ▪ Commercially, long-staple cotton is grown in various places – US, India, Peru, Sudan ▪ High quality cotto
Slide 8: Update from Stakeholders
UPDATE FROM STAKEHOLDERS • Continue to do business with all customers except one • Customers considering Egyptian • Credit rating reaffirmed Product with ‘Gold Certification’ or • Long term rating at ‘AA-’ with relabeling of such products • Short term rating at ‘PR1+’ 8
Slide 9: Key Take Away from Independent Consultant's Report
KEY TAKE AWAY FROM INDEPENDENT CONSULTANT’S REPORT Measure Type Recommended Remedial Measures Timeline Improve procurement process to ensure cotton from certified . sources Deploy resource at Egypt to better oversee the buying activity Jan 2017 Ensure vertically integrated manufacturing including an
Slide 10: Key Take Away from Independent Consultant's Report
KEY TAKE AWAY FROM INDEPENDENT CONSULTANT’S REPORT Measure Type Recommended Remedial Measures Timeline Ensure Egyptian cotton planning & verification always done . separately Better manage rush orders with adequate buffer stock planning Increase audits, including surprise visits to vendor facilities
Slide 11: Financial Impact
FINANCIAL IMPACT • One time provision of Rs. 5 billion • Sufficient to cover all one-time likely cost • Likely to see muted revenue growth in FY18 • Confident of regaining growth momentum as we go forward 11
Slide 12: Business Highlights
BUSINESS HIGHLIGHTS 12
Slide 13: Building a Sustainable Leadership Position
BUILDING A SUSTAINABLE LEADERSHIP POSITION Innovation New New New & Brands Markets Channels Products Patents 13
Slide 14: Innovation & Patents
INNOVATION & PATENTS ▪ 27 unique inventions filed globally ▪ 9 Patents are granted across product categories ▪ Introduction in hospitality ▪ Received Asthma and ▪ Presence across all the segment Allergy Free major retailers ▪ Good traction in domestic Certification for bedding ▪ Good traction across
Slide 15: Smart Textiles: An Exciting New Opportunity
SMART TEXTILES: AN EXCITING NEW OPPORTUNITY ▪ Creating interactive experiences through seamless integration of smart technology with home textiles ▪ Patented augmented reality home décor 15
Slide 16: Smart Textiles: Launching Soon
SMART TEXTILES: LAUNCHING SOON… ▪ Spin Tales- the first product under brand TILT ▪ To be launched during Christmas on our online platform TILTTEXTILES.com 16
Slide 17: Global Expansion of Owned Brands
GLOBAL EXPANSION OF OWNED BRANDS ▪ Revamping and Rejuvenating the Christy Brand ▪ Healthy growth in US, China and Middle East ▪ Working on getting more associations similar to Wimbledon and Rugby World Cup ▪ India – one of the fastest growing economies in the world ▪ Very promising market for Welspu
Slide 18: New Channels
NEW CHANNELS Hospitality ▪ Tied up with prominent international hotel chains ▪ Strong growth potential in US and globally, including the Indian market E-Commerce ▪ Continues to be a focus area ▪ Own portal – shopwelspun.com ▪ Available at major e-commerce websites in India and abroad 18
Slide 19: Capex Plans on Track
CAPEX PLANS ON TRACK Expected ▪ Capex of Rs. 8 bn for FY17 Product Capacity FY17 ▪ Around Rs. 4.5 bn completed in 1H ▪ No significant capex expected in towels and Towels (MT) 72,000 sheets going forward Sheets (‘000 Mtrs) 90,000 ▪ Intermediate products to be done through ancillarisation Rugs & Carpe
Slide 20: Flooring Solutions to Drive Growth
FLOORING SOLUTIONS TO DRIVE GROWTH ▪ Flooring solution to be the next growth driver for international as well as domestic market ▪ Consists of rugs, decorative carpets, tile carpets, accent rugs ▪ Capex of Rs. 6 bn earmarked for flooring facility ▪ Capacity of 7 million square meters per annum ▪ Fac
Slide 21: Vision 2020
VISION 2020 Revenue Net Debt $2 BN NIL Innovative/Branded Women Share of Share of Revenue employees Domestic Revenue 50% 20% 20% 21
Slide 22: Financial Highlights
WELSPU FINANCIAL HIGHLIGHTS
Slide 23: Key Highlights – Q2 FY17
KEY HIGHLIGHTS – Q2 FY17 Highest ever quarterly Sales growth at 22% Operating EBITDA sales and operational YoY at 24.1% EBITDA Net debt to Net Debt to Equity at 1.2x Op.EBITDA at 1.5x ROCE (pre-tax) at 25.1% (Vs 1.3x at FY16 –end) (Vs 1.6x at FY16-end) Innovative sales Branded sales share Foray into
Slide 24: Financial Performance – Q2 FY17
FINANCIAL PERFORMANCE – Q2 FY17 (Rs. Million) Particulars Q2FY17 Q2FY16 Change YoY Q1FY17 Revenue 17,899 14,694 21.8% 15,926 Operating EBITDA 4,318 3,834 12.6% 4,225 Op. EBITDA Margin 24.1% 26.1% -197 bps 26.5% EBITDA 4,569 4,040 13.1% 4,414 EBITDA Margin 25.5% 27.5% -197 bps 27.7% Finance Cost 320
Slide 25: Financial Performance – H1 FY17
FINANCIAL PERFORMANCE – H1 FY17 (Rs. Million) Particulars H1FY17 H1FY16 Change YoY Revenue 33,825 28,625 18.2% Operating EBITDA 8,542 7,503 13.8% Op. EBITDA Margin 25.3% 26.2% -96 bps EBITDA 8,982 7,995 12.4% EBITDA Margin 26.6% 27.9% -137 bps Finance Cost 673 1,108 -39.3% Depreciation 2,385 1,693 4
Slide 26: Profitability Trend
PROFITABILITY TREND (Rs. Million) Particulars FY15 FY16 H1 FY17 Revenue 53,025 59,371 33,825 Revenue growth % 21.3% 12.0% 18.2% Operating EBITDA 12,742 15,899 8,542 Op EBITDA Margin 24.0% 26.8% 25.3% EBITDA 13,691 16,849 8,982 EBITDA Margin 25.8% 28.4% 26.6% Depreciation 3,329 3,718 2,385 Finance co
Slide 27: Balance Sheet Trend
BALANCE SHEET TREND (Rs. Million) Particulars 31-Mar-15 31-Mar-16 30-Sep-16 Net Worth 14,318 19,739 20,461 Short Term Loans 10,034 7,716 11,351 Long Term Loans 20,817 18,945 21,435 Gross Debt 30,851 26,661 32,786 Cash & Cash Equiv. 4,297 1,386 7,900 Net Debt 26,554 25,275 24,886 Capital Employed# 45
Slide 28: Financial Ratio Trend
FINANCIAL RATIO TREND FY15 FY16 H1 FY17* Solvency Net debt/Op. EBITDA 2.08 1.59 1.46 ratios Net debt/Equity 1.85 1.28 1.22 EBIT/Interest 3.66 5.55 9.81 Current Ratio 1.10 1.15 1.23 Operational ratios Fixed Asset turnover 2.04 1.77 1.91 Total Asset turnover 0.93 0.97 0.95 Inventory days 76 69 58 Debt
Slide 29: Key Financial Trends
KEY FINANCIAL TRENDS 18,000 Operating EBITDA 15,899 Revenues 16,000 70,000 59,371 14,000 12,742 60,000 53,025 12,000 Rs. miilion 50,000 43,730 9,211 10,000 8,542 Rs. million 40,000 36,473 33,825 8,000 5,946 30,000 6,000 20,000 4,000 10,000 2,000 0 0 FY13 FY14 FY15 FY16 H1 FY17 FY13 FY14 FY15 FY16 H1
Slide 30: Key Ratio Trends
KEY RATIO TRENDS ROCE % (Pre- Tax) ROE % 50% 36% 43.5% 45% 42.5% 31% 27.4% 40.0% 40% 26% 22.8% 25.1% 21.9% 36.8% 35% 21% 30% 16% 11% 25% 6% 20% 1% 15% FY14 FY15 FY16 H1FY17* FY14 FY15 FY16 H1FY17* Net Debt / Equity 4.0x 2.5x 2.4x Net Debt / Op. EBITDA 3.5x 2.0x 1.9x 3.0x 2.9x 2.5x 2.1x 1.5x 1.3x 2.0
Slide 31: Thank You
THANK YOU For further details, please contact: Harish Venkateswaran Altaf Jiwani Sr. General Manager - Group Finance and Strategy Director (Finance) & CFO - Welspun India Limited Email: harish_venkateswaran@welspun.com Email: altaf_jiwani@welspun.com 31