Raymond Limited · NSE:RAYMOND
Raymond — Merger or Acquisition (November 2019)
45 slides from Raymond's merger presentation, Nov 7, 2019
Slide 1: Cover letter to stock exchanges
SECRETARIAL DEPARTVENT Jekegram, Pokhran Road No. I . Thane rwl · 400 606 Maharashtra, India CIN No.: Ll7117MH1925PI.COOI208 Tel: (91·22) 4036 7000 I 6152 7000 Fax: (91·221 2541 2805 www.raymond.1n RLISEIACI19-20166 November 7, 2019 The Department of Corporate Services - CRD The National Stock Excha
Slide 2: Raymond Limited restructures its business for value creation
CORPORATE OFFICE NEW HIND HOUSE, NAROTTAM MORARJEE MARG, BALLARD ESTATE, MUMBAI 400 001, INDIA Press Release For Immediate Dissemination Raymond Limited restructures its business for value creation -Demerge its core Lifestyle business to be listed as a separate entity- The entire net proceeds of JKI
Slide 3: Press release continued: management commentary and About Raymond
Speaking about the financial metrics that this development would lead to, Sanjay Bahl, Group Chief Financial Officer, Raymond Limited said, “In line with our stated strategy of asset monetization, the infusion of net proceeds of JKIT land sale in Raymond Limited will help us in debt reduction leadin
Slide 4: Embarking on Transformational Journey
Embarking on Transformational Journey Nov 2019
Slide 5: Chairman's quote on transformational journey
“For over three years now, we have been relentless in building the organization that is future ready and our efforts have been unwavering during this transformational journey despite multiple challenges. As we continue to build capacities for enhanced performance and delivery across verticals, demer
Slide 6: Table of Contents
Table of Contents 4 Introduction & Overview Major Transformation & Value 9 Unlocking Initiatives undertaken 22 Lifestyle Company – Value Creation Existing Company – Focused on Sustained 31 Growth for New & Existing Businesses 39 The Journey Ahead – Raymond Group 3 3
Slide 7: Raymond Group: Introduction
Raymond Group: Introduction SUITING SHIRTING APPAREL RETAIL PRESENCE GARMENTING ENGINEERING REAL ESTATE DENIM FMCG A diversified group with interests in Textile & Apparel sectors as well as presence across diverse segments such as Real Estate, FMCG, Engineering in national and international markets
Slide 8: Raymond: A Group with Strong Leadership Position
Raymond: A Group with Strong Leadership Position No 1 player in 5th largest Suit 1st organised retailer Manufacturer of Near 100% worsted suiting manufacturer in in India world’s finest fabric consumer awareness fabrics in India the World One of the world’s 3rd largest player One of the largest Only
Slide 9: Consolidated Financial Overview
Consolidated Financial Overview Revenue (INR cr.) Profitability Ratios CAGR (2016-19) 8% 11.9% 9.6% 9.2% 10.5% 7.7% 9.1% 9.1% 6.8% 5,296 5,509 6,025 6,708 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 EBITDA Margin ROCE India Global Leverage Indicators FY 19 Revenue by 4.0 83% 17% 3.5 Geography 3.2 2.9 1.
Slide 10: Business Overview: FY19 Sales Contribution & Margins
Business Overview: FY19 Sales Contribution & Margins Consumer Business Business to Business Engineering Business Joint Venture & Associates 70% 20% 10% Denim Fabric & Garments Sales* 46% 24% 11% 9% 6% 4% FMCG Male Grooming & Sexual Wellness Branded Textiles Branded Apparel Garmenting High Value Cott
Slide 11: Table of Contents
Table of Contents 4 Introduction & Overview Major Transformation & Value 9 Unlocking Initiatives undertaken 22 NewCo – Value Creation Existing Co – Focused on Sustained Growth for 31 New & Existing Businesses 39 The Journey Ahead – Raymond Group 8 8
Slide 12: Major Transformation Undertaken
Major Transformation Undertaken ► Governance leading the transformation agenda ► Professionalizing Raymond ► Successful Transformation Initiatives 9
Slide 13: Governance - leading the transformation agenda
Governance - leading the transformation agenda Governance Structure Raymond Group Leadership Team Gautam Hari Singhania CMD, Raymond Ltd Professional Management in place Nirvik Singh Strong Advisory Council to advise on strategic Non Executive Chairman Rajeev Bakshi decisions Raymond Apparel Limited
Slide 14: Management Team
Management Team Sanjay Bahl Sanjay Behl Vipin Agarwal S L Pokharna K A Narayan Group CFO CEO-Lifestyle President – President – President – Ex- Landmark, HUL Ex- Rcom, HUL Corporate Commercial Human Resources Ex – Deepak Fertilizers, 36 years of Ex- Wockhardt Jindal Stainless Steel experience Sudhans
Slide 15: Undertaken Successful Transformation Initiatives
Undertaken Successful Transformation Initiatives Innovate & Sustain Invest & Grow Turnaround Businesses Textile – The Core Business Apparel – The Growth Engine ► Product innovations ► Asset light network ► Engineering – Turnaround in ► Service innovations expansion progress of T&H business ► Market
Slide 16: Strategy Initiatives Underway
Strategy Initiatives Underway Real Estate Deleverage Demerger Development ► ~20 acres land being ► Agreement to Sell (ATS) ~20 ► Core Lifestyle business to be developed as a acres of land of JKIT (an listed as a separate entity residential project Associate) to Virtuous ► Value unlocking strategy ►
Slide 17: Deleveraging Initiative – Land Sale Proceeds
Deleveraging Initiative – Land Sale Proceeds De-merger 14
Slide 18: Deleveraging Initiative – Land Sale Proceeds
Deleveraging Initiative – Land Sale Proceeds Preferential Issue of shares JKIT Ltd Rs. 350 cr Raymond Ltd Subscription to Issue Proceeds from Net Proceeds from Preferential Issue: sale of land Rs 350 Cr Repay debt 15
Slide 19: Preferential Issue – Transaction Highlights
Preferential Issue – Transaction Highlights Preferential Issue of • Preferential Issue through combination of equity shares and Compulsorily Convertible Preference Shares Equity Shares and (CCPS) cumulatively amounting to Rs. 350 Crs by Raymond Ltd to J. K. Investo Trade (India) Ltd (JKIT) CCPS • Ne
Slide 20: Demerger
Deleveraging Initiative – Land Sale Proceeds Demerger 17
Slide 21: Snapshot of Demerged Businesses
Snapshot of Demerged Businesses Existing Company – Lifestyle Company – Predominantly a Real Estate Branded Consumer Company Company Real Estate High Value Cotton Shirting Branded Textile Tools & Hardware Businesses Branded Apparel Auto Components Garmenting FMCG (Associate Co) Deni
Slide 22: Rationale for Restructuring
Rationale for Restructuring Proposed Restructuring a Means to Transform the Raymond Group Positioning Lifestyle as an independent branded consumer business Strategic Independent existence of sustainable and pure play businesses Focused investor opportunities and better access to capital Simp
Slide 23: Transaction Overview
Transaction Overview Key Highlights: Composite • Lifestyle Business would be demerged into a New Lifestyle Company Scheme of Arrangement • New Lifestyle Company would issue shares to the shareholders of Raymond Ltd (in the ratio 1:1) as consideration for the demerger (New Lifestyle Co shares would t
Slide 24: Table of Contents
Table of Contents 4 Introduction & Overview Major Transformation & Value 9 Unlocking Initiatives undertaken 22 Lifestyle Company – Value Creation Existing Company – Focused on Sustained 31 Growth for New & Existing Businesses 39 The Journey Ahead 21 21
Slide 25: Lifestyle Business Well Poised for Value Creation
Lifestyle Business Well Poised for Value Creation Market Conditions Lifestyle Business – Core Proposition Raymond among India’s most trusted brands with near 100% Favourable macroeconomic consumer awareness indicators Lifestyle business has reached Continued conviction in India’s the right s
Slide 26: Textile Market: Overview & Opportunity
Textile Market: Overview & Opportunity Textile Market in India – Major Role in Indian Economy India’s Share in Global Textile & Apparel Exports (USD bn) 140 0 6% 6% 7.0 % Employs about 45mn people 120 0 4% 5% 6.0 % 100 0 5.0 % 800 4.0 % 2% of GDP 600 3.0 % INDIAN 400 2.0 % ECONOMY 7% of industrial p
Slide 27: Apparel Market: Overview & Opportunity
Apparel Market: Overview & Opportunity expected CAGR of the Indian apparel market between 2018 8.1% Isandthe2028 Menswear India – USD 23 bn market dominated by Shirting & Trousers USD 118bn USD 54bn Shirts 27% 6.1 Trousers 22% 4.9 2018e 2028f Denim 16% 3.6 T-Shirts 8% 1.7 25% ofbranded total apparel
Slide 28: Opportunities in the Textile & Apparel Market
Opportunities in the Textile & Apparel Market: Increasing income and consumer spend Per Capita Income $2,000 - Inflection point for exponential growth in fashion industry... Revenue growth rate over a decade post reaching inflection point 1982 3X 2001 2X India’s Per Capita Income to reach 1984 4X 20
Slide 29: Key Growth Drivers
Key Growth Drivers: Consumer demand well supported by factors driving the supply Key Demand Drivers Industry Initiatives Higher Disposable Income World class Shopping Experience Favorable demographics coupled Convenience shopping led by Apparel with aspiration based purchasing e-commerce Market Grow
Slide 30: Branded Textile
Branded Textile #1 in Worsted Suiting, Branded Shirting and Made to Measure (MTM) categories Product & Service Quality / Sales (INR cr)^ Innovation Distribution strength ► Manufacturer of world’s finest fabric: Sales EBITDA % ► ~20,000 POS across 600+ Super 250s Sales: 9% growth* EBITDA 15.7% 550 17
Slide 31: Branded Apparel
Branded Apparel Third largest player in men’s apparel with 4 power brands Sales (INR cr) ^^ Brand Sales Mix (FY19) Offerings across spectrum of consumer preferences Sales EBITDA % 6% Park Avenue 350 Sales: 17% growth* EBITDA 3.7% LTL: 4.2% 5.0 % 4.0 % Color Plus 1.6% 16% 300 3.0 % 250 2.0 % 1.0 % 40
Slide 32: Garmenting
Garmenting B2B Business Segment Offering White Label-integrated Solutions Sales (INR cr)* HIGHLIGHTS 5th largest Suit manufacturer in the World* Sales EBITDA % Sales: 13% growth EBITDA 250 8.0 % 80% + exports driven 7.0 % 200 LTL: 5.9% 6.0 % 5.0 % 150 Jackets, trousers & shirts - Existing capa
Slide 33: Table of Contents
Table of Contents 4 Introduction & Overview Major Transformation & Value 9 Unlocking Initiatives undertaken 22 Lifestyle Company – Value Creation Existing Company – Focused on Sustained 31 Growth for New & Existing Businesses 39 The Journey Ahead – Raymond Group 30 30
Slide 34: Existing Company
Existing Company Key Businesses Raymond Realty B2B Shirting Engineering JV & Associates Auto Component Business – Turnaround completed in FMCG Business Expansion ~120 acres of land parcel 2017 (Associate companies) @ prime location in Thane B2B Shirting business catering to high value Tools and Hard
Slide 35: Raymond Realty: Land Bank & Current Project
Raymond Realty: Land Bank & Current Project ~120 acres of land parcel @ prime location in Thane • Connectivity – Eastern Expressway, Metro Line, Pokhran Rd • Eco-system – Schools, Hospitals, and High Street shopping Raymond’s maiden venture into Real Estate Development Overall 20 acres of residentia
Slide 36: Raymond Realty: Current Project Projections
Raymond Realty: Current Project Projections Financial Projection for overall 20 acres (Aspirational & Premium*) Project Revenue Rs. 4,000 – 4,200 Cr PAT Margin 25%+ Peak funding Rs.250 - 300 Cr * Premium project to be launched soon Project cash flow - Positive on year on year basis Loan is expec
Slide 37: B2B Businesses: High Value Cotton Shirting & Denim
B2B Businesses: High Value Cotton Shirting & Denim High Value Cotton Shirting (B2B) Raymond UCO Denim (JV)^ High value cotton and linen fabric supplier to Domestic and International Manufactures and markets denim fabric brands. and garments. Catering to the new-age Proximity to the weaving clu
Slide 38: B2B Businesses: Engineering
B2B Businesses: Engineering Auto Components Tools and Hardware Manufacturers of Ring gears, flex plates Leading manufacturers of Steel files in and water pump bearings the world Successful turnaround in FY17 with Dominant in India along with strong profitable growth momentum distribution net
Slide 39: FMCG - Huge Headroom for Growth
FMCG - Huge Headroom for Growth Current Core Categories Addressable Market (FY23) Size - ~5250 Cr Size - ~54000 Cr Air Care Sexual Wellness Face Care, Rs. 1,254 Cr Body Lotion, Rs 700 Cr 9,663 4,832 Condoms, Hair Color, 1,324 1,933 Air Care, Surface 1,227 Care, 4,467 Shampoo, Fragrances, 10x 7,760 4
Slide 40: FMCG Business
FMCG Business Leading Brands in Consumer Care and Sexual Wellness FY19 Revenue: INR 569 cr^ | 29% growth YoY 1 ► Achieved market leadership in Men’s Deodorants (Park Avenue + KS) * Categories ► KS Spark Deodorant is the #1 variant across India Recognized Brands ► 2nd largest player in condoms in Ind
Slide 41: Table of Contents
Table of Contents 4 Introduction & Overview Major Transformation & Value 9 Unlocking Initiatives undertaken 22 NewCo – Value Creation Existing Co – Focused on Sustained Growth for 31 New & Existing Businesses 39 The Journey Ahead – Raymond Group 38 38
Slide 42: The Journey ahead - Create consistent shareholder value
The Journey ahead - Create consistent shareholder value We are here Takeoff Strong focus on creating value Improve ROCE and cash flows through capital efficiency Market leadership with 1.5-2x market growth Top-of-the-mind brand in Core business Transformation Legacy Revitalize Core – Brand
Slide 43: Disclaimer
Disclaimer • This presentation contains details related but not limited to revenues, financial results and supplemental financial information which shall not be construed as being provided under any legal or regulatory requirement and are not intended to invite any investment in the Company. The inf
Slide 44: Disclaimer - continued
Disclaimer - continued • Recipients should not construe the contents of this presentation as legal, tax, investment or other advice. All prospective investors should make their own inquiries and consult their own advisors as to legal, tax, investment, and related matters concerning an investments in
Slide 45: Thank You
MQ Rayinona Thank You www.raymond.in