Redington Limited · NSE:REDINGTON
Redington — Investor Day (June 2016)
65 slides from Redington's investor day presentation, Jun 24, 2016
Slide 1: Redington (India) Limited Analyst Meet
REDINGTON (INDIA) LIMITED ANALYST MEET 24 JUNE 2016
Slide 2: Safe Harbor
Safe Harbor This presentation contains “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Redington India Limited’s future business developments and economic performance. While these for
Slide 3: Our journey
To an emerging market Supply Chain Our journey Solution Provider I-SA-METACIS To a multi product/ multi brand/ pan India , pan Arab and pan Africa distributor From a single product/ single brand/ single country distributor 1993 1994 - 2007 2016 3
Slide 4: Our transformation
Our transformation Professionally Board Managed Managed Diversified shareholder base Listed Company Home grown Single Shareholder Promoter controlled Family run Company 4
Slide 5: Redington Supply Chain
Redington Supply Chain PROCUREMENT CHANNEL CUSTOMER Online, Retail End User, SMB, Brand Chain/LFRs, Corporate, owners Dealer, VAR/ Govt System Integrator Warehousing Credit to After Sales Distribution & Logistics Reseller Service 5
Slide 6: Consistent growth in products, brands, countries
Consistent growth in 10+ PRODUCTS 200+ BRANDS 24 COUNTRIES 3 DISTRIBUTION LOGISTICS SUPPORT SERVICES VERTICALS 6
Slide 7: Our Pillars of strength
Our Pillars of strength 40,000+ 80+ 100+ 350+ 7,000+ PARTNERS SALES OFFICE WAREHOUSES SERVICE CENTRES PEOPLE POWER INDIA - 1 DISTRIBUTION: 200+ SOUTH AISA - 3 MIDDLE EAST - 7 SERVICES: 50+ AFRICA - 12 PRESENCE IN 24 COUNTRIES TURKEY - 1 7
Slide 8: Lines of business across geographies
Lines of business across geographies MIDDLE INDIA/ LINES OF BUSINESS AFRICA TURKEY CIS EAST SOUTH ASIA ** DISTRIBUTION *** IT SERVICES * LOGISTICS SERVICES * IN UAE ** ARENA, LINKPLUS *** ADEO 8
Slide 9: Distribution
DISTRIBUTION IT / MOBILITY PRODUCTS ACROSS CONSUMER / ENTERPRISE SEGMENTS 9
Slide 10: Distribution Business Performance – Revenue
Distribution Business Performance – Revenue CAGR 14% FY12 FY13 FY14 FY15 FY16 10
Slide 11: Business Performance
Business Performance IT Non-IT CAGR – 12.5% CAGR – 19.0% FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 11
Slide 12: Logistics
LOGISTICS IMPORT CLEARNACES WAREHOUSING Industries: IT | Pharma & Office automation| FMCG | Telecom & IN PLANT MANAGEMENT TRANSPORTATION Infrastructure | Chemicals & Plants | Beverages| Consumer Durables | Electrical & Electronics | Engineering | Garments | Education | E-Com PAN INDIA PRESENCE OVERS
Slide 13: ProConnect Snapshot
ProConnect Snapshot • Offering End to End Services Import • Adhering best practices in Supply chain CAPABILITIES Reverse Logistics Warehousing • Pan India Network • IT Enabled operation • Support to all verticals 3PL Services • Expertise in IT & telecom verticals Call Centre offered Transportation •
Slide 14: ProConnect Clientele
ProConnect Clientele IT Telecom & Consumer Electrical & Chemicals Engineering e commerce Infrastructure Durables Electronics Office Automation Pharmaceutical FMCG 4PL Garments Retail 14
Slide 15: Automated Distribution Centres
Automated Distribution Centres Chennai CHENNAI Kolkata Dubai Land Area – 11.56 Acres Land Area – 13.76 Acres Land Area* – 5.17 Acres Operational since July ’09 Operational since Feb ’14 Operational since Sep ’10 Capacity – 3.35 lakhs sq ft Capacity – 1.50 lakhs sq ft Capacity – 94,723 sq ft * Long l
Slide 16: ProConnect Performance – FY16
ProConnect Performance – FY16 ₹ Million ^ 59% ^ 81% 95.5 ^ 45% 176.7 PAT 1,121.5 EBITDA Redington Outside Biz Revenue 26% 30% 29% 32% 38% 48% 53% 53% 74% 70% 71% 68% 62% 52% 47% 47% ^ growth over previous year 16
Slide 17: Support Services
SUPPORT SERVICES HARWARE SUPPORT WARRANTY SERVICES INFRASTRUCTURE SERVICES AMC SERVICES 350+ Service centres across • India • Middle East • Africa SOFTWARE SUPPORT SERVICES 17
Slide 18: Ensure Performance - Revenue
Ensure Performance - Revenue CAGR 10% FY12 FY13 FY14 FY15 FY16 INDIA OVERSEAS 18
Slide 19: Ensure - Brands Serviced
Ensure - Brands Serviced 4 acer ZAcrnis MSA @ ASUS *alacktery sROcADE 2 <= co . canon ‘tht ou) EMC FUJITSU Haier e 2 =| : ; Or iy M2 LE RE oll, lenovo $ Lifesize Logitech HUAWEI © Biicost Gorde MEM Nercear angutny’ RICOH oP oO ee rapecire (TREND. vmware fT) Leading Innovation »)) 19
Slide 20: Our Board
Our Board Independent Directors Executive Directors Prof. Ramachandran V. S. Hariharan Keith WF Bradley Suchitra Rajagopalan Raj Shankar E H Kasturi Rangan Chairman Ex. V.P Hewlett-Packard Ex.President Ingram Micro Director Managing Director Whole time Director Professor Corporate Policy Singapore N
Slide 21: Our Management Team
Our Management Team E H Kasturi Rangan P S Neogi Ramesh Natarajan Dr. R. Arunachalam S V Krishnan Stephen Aranha Whole time Director Joint COO- IT Senior President Senior Vice President, CFO, India President Division, India India ProConnect Logistics , India Ensure Service , India Ashish Bharti Aloy
Slide 22: Key differentiators
Key differentiators • BRANDS & MARKETS Unmatched bouquet of brands Extensive footprint • INVESTMENTS Infrastructure, Systems and processes Customized to local needs • PEOPLE Professionals with long service Product and market knowledge 22
Slide 23: Our Performance
Our Performance 23
Slide 24: Performance
Performance ₹ Million REVENUE EBIDTA PAT 354,762 4,257 CAGR 8,176 316,227 CAGR CAGR 3,865 16% 17% 7,619 17% 280,051 7,196 6,842 3,367 3,231 242,104 6,334 2,927 212,220 167,227 4,717 2,260 132,777 123,760 3,657 1,843 105,425 3,296 1,597 88,539 2,590 1,361 1,985 1,017 *Post acquisition of following en
Slide 25: Geographical split
Geographical split ₹ Million REVENUE PAT CAGR CAGR INDIA 13% INDIA 19% 2,171 1,894 OVERSEAS 20% 219,952 OVERSEAS 16% 1,582 1,422 186,574 1,112 159,629 133,157 836 112,477 719 85,286 719 69,044 2,086 64,355 1,971 653 1,815 1,809 55,875 49,550 1,785 134,810 129,653 46,040 42,499 120,422 1,424 570 108,
Slide 26: Performance: ROCE and ROE
Performance ROCE ROE 24% 23% 19% 19% 18% 18% 18% 17% 17% 21% 22% 20% 16% 16% 19% 19% 18% 18% 15% 17% *Post acquisition of following entities - FY08 Easyaccess Financials Services Ltd,FY11 Arena. ^ Post sale of Easyaccess financial services . 26
Slide 27: Revenue by Vertical
Revenue by Vertical 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 5% 8% 9% 14% 18% 16% 18% 19% 21% 23% 93% 90% 89% 84% 80% 82% 80% 79% 77% 75% FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY16 IT Non IT Service 27
Slide 28: Return to Shareholders
Return to Shareholders Amt. in INR ` EPS BOOK VALUE / SHARE DIVIDEND 105% 67 10.6 95% 9.7 58 8.4 49 8.1 7.4 40 55% 5.7 50% 32 33 45% 4.7 27 40% 26 4.1 35% 3.5 3.1 19 16 20% 20% ^ Subjected to approval by members in ensuing AGM 28
Slide 29: Working Capital Days
Working Capital Days Inventory days Debtor Creditor days Working capital days 62 59 58 57 54 52 53 53 47 48 46 40 41 38 33 35 31 30 31 32 FY 12 FY 13 FY 14 FY 15 FY 16 Operating Cashflow – ₹ Mn 2,584.2 2,876.7 2,413.1 2,568.3 (1,421.4) 29
Slide 30: Top vendors
Top 5 vendors OTHERS 43% 41% 44% 50% MICROSOFT 55% 58% 4% SAMSUNG 4% 4% 7% 5% 5% 9% 4% 7% 9% 8% 3% 4% 7% LENOVO 3% 3% 5% 1% 3% 11% 13% 15% 2% 7% APPLE 34% 30% 28% 26% 25% 24% HP FY 11 FY 12 FY 13 FY 14 FY 15 FY16 30
Slide 31: Provisions
Provisions Provision for AR-% of Sales Provision for Inventory -% of Sales 0.15% 0.14% 0.12% 0.11% 0.11% 0.12% 0.11% 0.11% 0.11% 0.10% 0.10% 0.07% 0.06% 0.05% 0.05% 0.05% 0.04% 0.02% 0.01% 0.00% -0.01% -0.05% -0.06% -0.10% FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 31
Slide 32: Risk Management
Risk Management % of Bank limits utilised for FY16 43% Long term Short term CRISIL AA - (stable) A1+ ICRA AA - A1+ Credit insurance - % of Revenue 44% 32
Slide 33: Ability to manage challenges
Ability to manage challenges % of Consolidated revenue Total REDIL Event FY Revenue YOY Before the After the growth event event HP de-growth in MEA 2010 46% 39% 7.3% HP restructuring in India 2011 34% 22% 25.9% Nokia Exit in Africa 2013 13% 3% 14.1% Blackberry slump 2013 17% 11% 14.1% iPhone change
Slide 34: Redington India Operations
REDINGTON INDIA OPERATIONS 34
Slide 35: Business Performance - India
Business Performance - INDIA CAGR: 5.5% CAGR: 13.0% 35
Slide 36: DQ Channel: Top Distributor – India
DQ CHANNEL : Top 50 Distributor – INDIA 36
Slide 37: India IT Industry vs. Redington FY14-16
India IT Industry vs. Redington FY14-16 Overall Market size : ~ ₹ 80,000 Cr Distribution addressable business : ~ ₹ 45,000 Cr Redington Share : ~ 17% of ₹ 45,000 Cr Industry CAGR ~3% 38% 33% 18% 14% 24% 16% 11% Redington 10% CAGR ~7% Networking Servers Commercial/ Security Software/ Enterprise Stora
Slide 38: India IT Industry – FY17–20
India IT Industry – FY17–20 Overall Industry CAGR : ~ 8 -10% 18% 14% 12% 10% 8% 5% PC SERVER SOFTWARE STORAGE NETWORKING SECURITY GROWTH DRIVERS Digital India and Smart City Projects Brand Acquisition & Channel expansion in T3 / T4 cities Increase wallet-share in targeted volume vendors 38
Slide 39: On-Prem vs Cloud
On-Prem vs Cloud : FY 15-16 FY 19-20 TOTAL TOTAL TOTAL ON-PREM CLOUD IT MARKET BUSINESS BUSINESS FY 2015-16 $ 12.0 Bn $ 11.3 Bn $ 0.70 Bn FY 2019-20 $ 17.5 Bn $ 14.0 Bn $ 3.5 Bn CAGR 10% 5.5% ~ 50% REDINGTON ADDRESSABLE CLOUD REVENUE IN FY19-20 : $1.3 Bn 39
Slide 40: Smartphone Shipments – Global and India
Smartphone Shipments – Global and India 1,666.8 1,577.1 1,438.1 1,482.4 1,301.6 Mn Units 1,018.7 726.7 81.5 102.9 115.0 139.5 166.4 16.3 43.8 CY12 CY13 CY14 CY15 CY16# CY17# CY18# Global India # Projected 40
Slide 41: REDIL Smartphone Sales – Past and Projected
REDIL Smartphone Sales – Past and Projected Mn Units CY12 CY13 CY14 CY15 CY16# CY17# CY18# # Projected 41
Slide 42: Growth Strategy
Growth Strategy Increase in Portfolio - Predominantly Blackberry & Apple in the past to bouquet of brands including MNC, India and Chinese brands Platform agnostic - In addition to BB & iOS focus on Android as well Present in all GTM - LFR, D2R, RDS, OT chains, Enterprise and Online Expand Geo - Nat
Slide 43: ProConnect
PROCONNECT Capitalise on 3PL market potential in India 43
Slide 44: Industry forecast
Industry forecast 15% -20% of India’s GDP spent Demand to grow at 9% CAGR on Logistics and transportation to 1439 Mi Sq ft by 2019 To grow by 3-4x 3PL to grow by 12% reaching constitutes 15% - 35% of the targeting US $ 44.1Bn in US$ 19.2 Bn by 2020 total Logistics Cost 2018 LOGISTICS WAREHOUSING E-C
Slide 45: ProConnect financial growth and vision
Proconnect FINANCIAL GROWTH VISION ACHIEVED THROUGH Warehousing 15% 30% Ecom including 10% last mile 774 1,122 Transportation 652 65 89 147 Mission Critical FY14 FY15 FY16 FY17^ FY20^ 25% 20% Revenue PAT Others (^ Projected ) FY14 33 FY15 53 FY16 74 Growth in Clientele base 45
Slide 46: Expected Benefits of GST to Redington
Expected Benefits of GST to Redington No. of WHs for Redington Biz to come down from 53 To 36 Net reduction in SCM cost Reduction in Inventory by 3-5 days Improvement in Return ratios Increased business opportunities for ProConnect 5 additional ADCs in key locations, for increased throug
Slide 47: Way Forward - India
Way Forward - India Product Category - Enterprises / Smartphones Business - Logistics Objectives - Improve ROE & ROCE - Double-Digit Earnings Growth 47
Slide 48: Redington Overseas Operations
REDINGTON OVERSEAS OPERATIONS 48
Slide 49: Turkey and overseas markets
TURKEY = TURKEY KAZAKHSTAN 2 NORTH AFRICA - LIBYA Ss? 1] MOROCCO _ > , SOUTH ASIA > ALGERIA —— SINGAPORE >) TUNISIA SRILANKA BANGLADESH Zz NEPAL >) MALDIVES NIGERIA — | / 5 GHANA oy, SENEGAL Z | 7 MIDDLE EAST — SOUTHERN AFRICA Wap EAST AFRICA UAE KUWAIT =) SOUTH AFRICA ANGOLA | ETHIOPIA SAUDIARABIA
Slide 50: Evolution & Transformation
Evolution & Transformation 50
Slide 51: Overseas expansion and evolution
COUNTRY: “IN-COUNTRY” SOUTH ASIA cis TELCO DISTRIBUTION - | EXPANSION | MIDDLE EAST AFRICA TURKEY PROCONNECT SUPPORT SERVICES — AnpiSTRIBUTION y ensure BUSINESS Veeam amimn TELCO DISTRIBUTION - Bl ial AFRICA NHEISER * = Te a. \ RACLE wtftetfte rae GY symantec cisco TP-LINK es re NOKIA @ Juner OF or
Slide 52: Redington Gulf board
Redington Gulf board NON-EXECUTIVE EXECUTIVE INDEPENDENT Ms RAMA BIJAPURKAR Mr R SRINIVASAN Mr RAJ SHANKAR Successful Management Chairman Managing Director Consultant in Market Strategy & Independent Director in other Bluechip Boards Mr R JAYACHANDRAN Mr STEVEN PINTO Ex-Chairman Ex-Head, Osool Finan
Slide 53: Performance over the years
PERFORMANCE OVER THE YEARS z mil REVENUE aa FY07 FY 08 FY9 FY 10 FY""1 FY"2 FY43 FY4 FY 45 FY 16 m META @SA MARKET VERTICAL m= MIDDLE EAST = AFRICA m CIS m TURKEY m SOUTH ASIA all = MOBILITY m SERVICES 53
Slide 54: Performance over the years
Performance over the years 54
Slide 55: Our Growth
Our Growth 55
Slide 56: Leadership position for 12 consecutive years
Leadership position for 12 consecutive years 56
Slide 57: Distribution landscape
Distribution landscape No global player present on a regional basis - present only in select businesses/markets Adapt to a changing landscape 2 of the Top 5 global distributors exited the region 7 of the top 10 regional distributors degrew in FY’16 None of the regional distributors have a co
Slide 58: Risk Management
CONTROL Risk Management 58
Slide 59: Risks
ROR POLITICAL INSTABILITY 2 PARLIAMENTARY ELECTIONS
Slide 60: Risk Management
RISK MANAGEMENT FOREX USD DENOMINATED TRANSACTIONS SHORTER CREDIT CYCLES EXCHANGE RATE ARRANGEMENT WITH RESELLERS FORWARD COVER LOCAL CURRENCY BORROWING z o 2 > {e) i a Wu onl ra] < = uu oO Ww 4 INVENTORY PROVISION FY '12 FY '13 FY '14 FY '15 FY 16 om i — FY 12 FY '13 FY '14 FY '15 FY 16 60
Slide 61: Focus Market
Way forward MIDDLE EAST UAE, KSA QATAR, KUWAIT IRAQ, IRAN & LEVANT TANZANIA, KENYA, ETHIOPIA, GHANA, SENEGAL KAZAKHSTAN UZBEKISTAN, TURKMENISTAN, GEORGIA 61
Slide 62: Way forward
Way forward SHORT TERM MEDIUM - LONG TERM o IT VAD VAD, IOT, CONNECTED DEVICES a saan = = ” z 2) 2 MOBILITY SMART PHONES ST Ree i? n Windows Phone 3 —— = Ce as —* fe] SUPPORT SERVICES REPAIR SERVICES IN ME IMS, SOLUTIONS LOGISTICS SERVICES UAE SAUDI ARABIA, QATAR, KUWAIT COMPANY OBJECTIVE IN 3-5 YEA
Slide 63: Summary
Summary LEADING DISTRIBUTOR IN META FOR 12 YEARS IN ROW ONLY COMPANY ADDRESSING 37 MARKETS WITH EXTENSIVE INCOUNTRY INFRASTRUCTURE AND PROFESSIONAL TEAM ONLY COMPANY HAVING BOTH DISTRIBUTION AND SERVICES IN META REGION 10 FINANCIAL YEARS ACHIEVED DOUBLE DIGIT OVER LAST CAGR GROWTH IN REVENUE AND PRO
Slide 64: Questions
Questions 64
Slide 65: Investor contact
Investor contact Investor Contact M. Muthukumarasamy Compliance Officer Redington (India) Limited SPL Guindy House, 95 Mount Road, Guindy, Chennai 600 032 https://www.redingtonindia.com CIN - L52599TN1961PLC028758 65