Welspun Living Limited · NSE:WELSPUNLIV
Welspun Living — Welspun India — Q2 FY17 Earnings Presentation
43 slides from Welspun Living's earnings presentation, November 2016
Slide 1: Investor Presentation Q2 - FY17
INVESTOR PRESENTATION Q2 - FY17 November, 2016 November, 2016 1
Slide 2: Welspun Group at a glance
Welspun India Limited Global Leader in Home Textiles Welspun Welspun Enterprises Limited Corp Limited Infrastructure Global Leader in Oil & Gas Large Diameter Pipes Revenue : US$ 2.3 Billion; Asset Base : US$ 1.8 Billion; Employees: 25,000+ 2
Slide 3: Agenda
1. Company Overview 2. Industry Overview: Advantage India 3. Welspun India: Global Leader in AGENDA Home Textiles 4. Q2 - FY17 & H1 - FY17 Highlights 5. Way forward 3
Slide 4: WIL - An Overview
WIL - AN OVERVIEW Global Home Textiles Leader Among the top three home textile manufacturers in the world and the largest home textile company in Asia Leading Home Textile exporter to the US for four years in a row (2012-15) Distribution network in more than 50 countries Centered on excellen
Slide 5: Financial Overview
FINANCIAL OVERVIEW EBITDA in Rs. Million 18,000 16,849 Revenues 16,000 70,000 13,691 59,371 14,000 60,000 53,025 12,000 10,253 50,000 43,730 10,000 8,982 Rs. million 40,000 36,473 33,825 8,000 6,438 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 FY17 Sh
Slide 6: WIL - Revenue Milestones
WIL - REVENUE MILESTONES WIL Revenue in Rs. Billion Entry into Accent Rugs/ Carpets 60 • 1993: 53 Entry into bath Towels Christy Towels rugs 44 facility at Acquisit & Vapi ion 36 Sheets Facility 32 at Anjar 28 26 16 17 12 7 Pre-2005 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Textiles b
Slide 7: Industry Overview: Advantage India
INDUSTRY OVERVIEW: ADVANTAGE INDIA 7
Slide 8: Global Home Textile Scenario
GLOBAL HOME TEXTILE SCENARIO Market Size Key Consumers Key Producers Home textile market at US , Europe and Japan India, Pakistan and China US$45 bn are the largest consumers are the largest producers; Bath constitutes ~25% Global demand equally Account for 85% of cotton Bed constitutes
Slide 9: Structural Change: Asian Dominance in Home Textiles
STRUCTURAL CHANGE: ASIAN DOMINANCE IN HOME TEXTILES Textiles and Clothing • China : 37% US$797 bn • India : 5% Textiles • China : 36% US$314 bn • India : 6% Home textiles • China : 35% US$45 bn • India : 11% US Cotton Home Textiles • China : 39% US$7.5 bn • India : 31% India has emerged as significa
Slide 10: Advantage India
ADVANTAGE INDIA Largest producer of Major importer of Cotton Importer cotton cotton and yarn Energy issues 25% surplus available Losing export Geopolitical issues for export as Competitiveness cotton/yarn Compliance issues Wage inflation Exporter of yarn Rising power costs Co
Slide 11: Indian Players Gaining Prominence Globally
INDIAN PLAYERS GAINING PROMINENCE GLOBALLY 40% India’s share 38% increased by 10 Towels (Cotton) 36% percentage 30% points in 6 years 26% 25% 23% 24% 23% 22% 22% 22% 21% 15% 15% 15% 2009 2012 2015 YTD Sep 2016 Sheets (Cotton) 48% 49% India’s share 45% increased by 22 percentage 29% points in 6 years
Slide 12: Welspun India Home Textiles
i HOME TEXTILES WELSPUN INDIA PON
Slide 13: Leadership: Focus and Excellence
LEADERSHIP: FOCUS AND EXCELLENCE A differentiated End-to-end Solutions Provider in Home Textiles Uniquely positioned for cross-selling due to Widest product range in the Home Textiles segment Customer reach Competitive manufacturing Bath Bedding Flooring Global delivery model Towels Shee
Slide 14: Leadership: Strategic Partnership with Global Retail Giants
LEADERSHIP: STRATEGIC PARTNERSHIP WITH GLOBAL RETAIL GIANTS Bed Bath & Beyond Carrefour ASDA Shopper’s Stop Macy’s JYSK Tesco Lifestyle J C Penney Auchan Sainsbury HomeTown Kohl’s Kaufland John Lewis @Home Wal Mart Rusta House of Fraser ….. and many more Cos
Slide 15: Leadership: Global Reach & Delivery Model
LEADERSHIP: GLOBAL REACH & DELIVERY MODEL Delivery & Reach in over 50 countries 15
Slide 16: Leadership: Scale
LEADERSHIP: SCALE Expected End-FY16 Sales volume Product Unit Utilisation % Capacity Capacity FY16 FY17 Towels MT 60,000 55,400 92% 72,000 Sheets ‘000 Mtrs 72,000 66,500 92% 90,000 Rugs & Carpets ‘000 Sq. mtrs. 8,000 6,100 76% 10,000 Capacities running at Investment of Rs. 8 bn New investment of hig
Slide 17: 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 18: Welspun: Beyond Manufacturing
WELSPUN: BEYOND MANUFACTURING… Evolved from being a Superior commodity Product manufacturer to a Personality creator of unique Functionality customer experiences Brands and Commodity Experiences created Unique through brands, product Experiences and technologies and new channels Problem Performa
Slide 19: Delivering Unique Experiences
DELIVERING UNIQUE EXPERIENCES Consumer INNOVATION FOCUS Needs BRAND AND DELIVERY FOCUS CONSUMER INSIGHTS Continuous Idea • Welspun Innovation Lab Ingredient Generation • Product Development /Technology Brands Owned Certifications Licensed • Innovation Partners Technology • B2C/ B2B Connect Innovatio
Slide 20: 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 ▪ Spin Tales- the first product under brand TILT ▪ To be launched during Christmas on our online platform TILTTEX
Slide 21: Leading to a Unique Revenue Mix
LEADING TO A UNIQUE REVENUE MIX INCREASED SHARE OF INCREASED SHARE OF INCREASED SHARE OF INNOVATIVE PRODUCTS BRANDED PRODUCTS NEW CHANNELS 34% 13% 5% Note: Figures of FY16 21
Slide 22: Welspun's Improved Market Share
WELSPUN’S IMPROVED MARKET SHARE CY13 CY14 CY15 Towels 14.7% 16.4% 20.1% Bed Linen 7.3% 9.9% 11.3% US Market-Source OTEXA 22
Slide 23: Branding Our Innovation
BRANDING OUR INNOVATION Launched nation-wide campaign in the US in FY16 to introduce patented Hygrocotton® technology to consumers First ever such campaign in textiles in the past 15 years 23
Slide 24: Steps to Strengthen Supply Chain
STEPS TO STRENGTHEN SUPPLY CHAIN Measure Type Proposed 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 ancillary Structural units Estab
Slide 25: Steps to Strengthen Supply Chain
STEPS TO STRENGTHEN SUPPLY CHAIN Measure Type Proposed 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 Process Gold Seal Certificati
Slide 26: Focus 2016 - Inclusive Growth
FOCUS 2016 - INCLUSIVE GROWTH Virtuous Cycle of Social Development at Welspun Quality Education at Sustainability Focus Govt. Schools Need based Health Adult Literacy Camps Education for women Mobile Medical Vans THE 3 Es OF CORPORATE SOCIAL VALUE Vocational Training Natural/ Recycled
Slide 27: Focus 2016 - Inclusive Growth (Contd.)
FOCUS 2016 - INCLUSIVE GROWTH (Contd.) Girls Hostel Vocational Centers for SPUN Skill Development Global Women Economic Education: Students and Smart Village Empowerment Initiative Govt. Schools Covered 27
Slide 28: Financial Highlights
WELSPUN INDIA HOME TEXTILES FINANCIAL HIGHLIGHTS =, a NGES REMAINING IBM»
Slide 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: Key Financial Trend
KEY FINANCIAL TREND 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 36: Key Ratio Trend
KEY RATIO TREND 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 2.0x
Slide 37: Focus on Free Cash Flow
FOCUS ON FREE CASH FLOW Cash flow improvement through tight working capital management and calibrated capex FCF positive in the last two years 5,000 3,762 2,456 795 714 239 0 Rs. in million FY14 FY15 FY16 -5,000 -6,217 -10,000 FCF Dividend Rs. 10 bn positive swing in FCF in two years 37
Slide 38: Dividend Policy
DIVIDEND POLICY Clear, defined Dividend Distribution policy 25% of standalone PAT to be the total payout (incl. dividend tax) Standalone Dividend tax Payout Period EPS DPS per share Percentage H1FY15 2.43 0.30 0.06 15% H2FY15 2.66 0.75 0.15 34% FY15 5.09 1.05 0.21 25% H1FY16 3.15 0.65 0.13 25% H
Slide 39: Way Forward
WAY FORWARD aX BES: ty WELSPUN INDIA HOME TEXTILES 39
Slide 40: Building a Sustainable Leadership Position
BUILDING A SUSTAINABLE LEADERSHIP POSITION New New New Innovation Brands Markets Channels Products 40
Slide 41: Vision 2020
VISION 2020 LEADING TOMORROW TOGETHER Innovation Leveraging technology Inclusive growth Brands People development Collaboration 41
Slide 42: Vision 2020 Targets
VISION 2020 Revenue Net Debt $2 BN NIL Innovative/Branded Women Share of Share of Revenue employees Domestic Revenue 50% 20% 20% 42
Slide 43: 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 43