Alok Industries Limited · NSE:ALOKINDS
Alok Industries — CLSA Investors Forum 2006
47 slides from Alok Industries's conference presentation, Sep 13, 2006
Slide 1: Alok Industries Limited: Striking A Balance
CLSA Alok Industries Limited Striking A Balance 1 September 13, 2006 INVESTORS FORUM 2006
Slide 2: Contents
Contents Emergence of a New Sourcing Scenario Retailer and Supplier Trends Alok Industries: Striking a Balance 2
Slide 3: Contents
Contents Emergence of a New Sourcing Scenario Retailer and Supplier Trends Alok Industries: Striking a Balance 3
Slide 4: The 1st Year Of Post Quota Era
The 1st Year Of Post Quota Era Ushered in a number of changes at demand as well as supply end While imports by US and EU increased, prices in both the major markets declined by 3-5% China, India and Other South Asian countries were the main winners while Caribbean Basin Initiative (CBI) , Sub-Sahara
Slide 5: US Imports Increased By 7% To US$ 89 Billion
At Trade Level, US Imports Increased By 7% To US$ 89 Billion… US Textile and Apparel Imports 100000 Rest of the +7% US$ 89 Bn World US$ 83 Bn SSA 9611 80000 US$ 77 Bn 10922 Asean 10112 12788 Taiwan & 12143 Korea 3548 60000 11678 South Asia US$ Million 7038 4684 4752 6197 4617 India 5648 3633 3212 Ch
Slide 6: China & India Were The Major Gainers In US
…China & India Were The Major Gainers While SSA, CBI & Mexico Were The Main Losers China + 54% CBI & India Mexico +27% (6%) SSA (16%) % Change in 6Exports by Value (04 Vs 05)
Slide 7: EU Imports Increased By 1%
EU Imports Increased By 1% To Reach US$ 188 Billion EU Textile and Apparel Imports 200000 US$ 188 Bn +1% US$ 185 Bn US$ 180 Bn 10210 10771 Rest of the World 15254 20520 Romania & 160000 20602 Bulgaria 20210 8555 Euro Med 9398 6661 7992 5710 US$ Million 120000 3936 24628 30497 ASEAN 20203 South Asia
Slide 8: China & India Were The Major Gainers In EU Also
…China & India Were The Major Gainers In EU Also Turkey +3% China India +41% +17% ASEAN (18%) % Change in 8Exports by Value (04 Vs 05)
Slide 9: Prices Declined In US As Well As EU
Prices Declined In US As Well As EU…. % Change in Prices in US Market (04 Vs 05) % Change in Prices in EU Market (04 Vs 05) Made Ups Made Ups Apparel Apparel Fabric Fabric Yarn Yarn -6% -4% -2% 0% 2% 4% -4% -3% -2% -1% 0% Source: Technopak Analysis 9
Slide 10: Indian Textiles & Apparel Exports Grew By ~26%
Indian Textiles & Apparel Exports Grew By ~26% India Textile and Apparel Exports (2004 vs 05) 17 Billion 16 +26% 13.5 Billion 8.2 12 US$ Billion 6.2 8 4 8.8 7.3 0 2004 2005 Source: Ministry of Textiles, India Textile Apparel 10
Slide 11: Indian Exports Increased To All Major Markets
Indian Exports Increased To All Major Markets… Growth Rate of Indian Exports by Value (2004 vs 05) Growth Rate Apparel 34% 31% 8% 32% Textile 16% 2% 2% N.A Source: Technopak Analysis 11
Slide 12: And In All Major Categories
….And In All Major Categories Growth Rate of Indian Exports by Category to US Exports Growth Between Categories Jan 05 and June 06 Apparel 58% Fabrics 21% Cotton Sheets 76% Pile Towels 75% Source: Technopak Analysis 12
Slide 13: Future Looks Extremely Bright For India: US Apparel Imports 2010
Future Looks Extremely Bright For India As Well As South Asia Country wise share in US Apparel Imports - 2010 100% 5% 11% 14% Rest of the 90% 16% 12% World SSA 80% 14% 11% 13% 9% Asean 70% 8% 8% Taiwan & 60% 8% 8% Korea 6% South Asia 4% 4% 50% India 15% 38% 18% 27% 40% China & HK 5% 30% 5% Europe 5%
Slide 14: Future Looks Extremely Bright For India: EU Apparel Imports 2010
Future Looks Extremely Bright For India As Well As South Asia Country wise share in EU Apparel Imports - 2010 100% 9% 9% 8% 7% Rest of the 90% World 11% 12% 10% Romania & 80% 11% Bulgaria 70% 5% 5% 5% 8% Euro Med 3% 3% 4% 7% 60% 9% 10% 13% ASEAN 50% 25% South Asia 40% India 30% 56% 54% 53% China 20%
Slide 15: India Is Set To Become The Second Largest Textile Base
India Is Set To Become The Second Largest Textile Base In The World Indian Exports are expected to reach US$ 40 Bn by 2010 800 6.2% India’s Share in World Trade 650 6% 600 580 5% 480 5% 4% US$ Bn 400 3.5% 3% 390 350 280 2% 200 1% 200 230 260 0 2005 2008 2010 India’s Share in World Trade Textile Appa
Slide 16: Contents
Contents Emergence of a New Sourcing Scenario Retailer and Supplier Trends Alok Industries: Striking a Balance 16
Slide 17: Emergence Of A New Scenario: Key Trends
Emergence Of A New Scenario: Key Trends Retail consolidation is increasing the power of retailers. Changing consumer demographics, spending patterns & preferences have made Retailers / Brands innovate harder to differentiate from competition. These changes at retail end are leading to changes in com
Slide 18: Retailer Consolidation Has Forced Buyers To Consolidate
Retailer Consolidation Has Forced… Lord & Taylor Meier & Frank Strawbridge Foley’s Buyers Consolidate Filene’s 2002 Famous Barr Kaufmann’s Hecht’s 2005 The Jone’s Store David’s Bridal L.S. Ayers Federated After Hours Priscilla of Boston Bloomingdales The ‘Bon Marche’ Burdone Goldsmith’s Lazarus Cons
Slide 19: Vendor Rationalization And Consolidation
…Vendor Rationalization And Consolidation Building Partnership with top vendors From: To: Strategic, long-term relationships Transactional relationships Consolidated vendor base Many vendors Commitment to large order Fragmented sourcing volumes Greater operational efficiency 19
Slide 20: Meaning Lesser Vendors, More Volumes
Meaning Lesser Vendors, More Volumes Benefits of vendor consolidation: Higher volumes yield better service levels, lower costs, and improved control of quality. Fewer points of contact yield greater economy of scale Better partnerships to share risk Increased information sharing yields shorter lead
Slide 21: Changing Consumer Proposition
Changing Consumer Proposition… Assortment Apparel & Home Textiles Retailers Re-defining X Price Their Position 21 Solutions/ Fashion
Slide 22: In Apparel
… In Apparel Assortment +10% Growth in Apparel Sales: 2005 +3-4% +30% Price Fashion 22
Slide 23: As Well As In Home Textiles
…As Well As In Home Textiles Assortment Growth in +15% Home Textiles Sales: 2005 +15% 3-5% Price Solutions/ Fashion 23
Slide 24: Retailers Change Strategy From Price
….Has Forced A Number Of Retailers To Change Strategy From Price Assortment Exsto Solutions/ Price Fashion 24
Slide 25: And Move Towards Fashion
….And Move Towards Fashion 25
Slide 26: Changing The Way They Work With Suppliers
…Thus, Changing The Way They Work With Suppliers More closer relation with fewer large suppliers rather than working with many small suppliers Very large volume runs at one end, smaller orders at the other end. Requirement of Speed and Flexibility Sharper sourcing price points Without compromising q
Slide 27: Areas Of Leadership
Areas Of Leadership Cost/Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Creativity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fashion Content. . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 28: The Requirement: Striking a Balance
The Requirement: Striking a Balance Size Partnerships Solutions Speed Cost Flexibility 28
Slide 29: Contents
Contents Emergence of a New Sourcing Scenario Retailer and Supplier Trends Alok Industries: Striking a Balance 29
Slide 30: Alok Industries: Spearheading A New Generation In Indian Textiles
Alok Industries: Spearheading A New Generation In The Indian Textile Industry One of the largest and the fastest growing vertically integrated Indian textile companies. Strategically located in one of the fastest growing textile and apparel bases...India. Manufacturing the highest growth categories.
Slide 31: One Of India's Largest And Fastest Growing Textile Companies
Alok Is One Of India’s Largest And Fastest Growing Textile Companies Size Partnerships Solutions Speed Cost Alok has grown at a CAGR of 35% Flexibility 400 over the last 7 years Sales of US$ 305 Million 300 and PAT of US$ 23.7 Million. 200 Is one of the largest US$ Million home textile mfgr and 100
Slide 32: With Presence Across The Value Chain
With Presence Across The Value Chain Size Partnerships Solutions Presence across the value chain Speed Cost Flexibility Versatile Product Range Is vertically integrated from spinning to CMT and Retail (through partnerships). Has one of the largest and most modern weaving and processing facilities. H
Slide 33: Moving Towards Becoming A Full Package Supplier
Is Moving Towards Becoming A Size “Full Package Supplier” Partnerships Solutions Speed In the last few years Alok has aggressively Cost Flexibility increased package exports of home textiles. The company is now looking at doing the same in apparel. 100% Alok Industries- Product Mix 17% 21% 20% 26% 2
Slide 34: Aggressive Scale Up To Reduce Costs
Alok Is Undergoing An Aggressive Size Scale Up To Reduce Costs Partnerships Solutions Speed Cost Divisions Current Capacity Capacity Increase Flexibility Capacity Post Phase Post Phase in I & II p.a. III p.a. capacity Home Textiles Phase 1& Sheeting Fabric (mn. Mtrs) 37.5 60.00 82.50 120% II are Ter
Slide 35: Retaining Speed And Flexibility
Yet Retaining The Speed And Flexibility Size To Make The Elephant Run And Dance Partnerships Solutions Speed Cost Reduction in Lead time Flexibility Lead times has been reduced by about 25-30% in the last 3-4 yrs Variability of Order size Alok has the capability to handle order sizes ranging from ve
Slide 36: Alok Supplies To Largest Brands In The World
Alok Supplies To Largest Size Brands In The World Partnerships Solutions Speed Cost Flexibility Nominated/ Preferred vendor to GAP, JC Penney, Marks & Spencer, Liz Claiborne, Target, Wal- Mart, Federated, Costco, Macy’s, Kohl’s, Springs etc. Awarded Valued Business Partner of the year 2005 by 36
Slide 37: Strategic Partnerships and Ventures To Add Value
And Has “Strategic Partnerships and Size Ventures” To Add Value Partnerships Solutions Speed Cost MoU with Teviz Textil Vizela SA (Teviz), a Flexibility European manufacturer of high end yarn dyed shirting. Strategic alliance for getting Teviz’s products manufactured at Alok. The Portugal based Tevi
Slide 38: Financial Highlights and Earnings Outlook
Financial Highlights and Earnings Outlook 38
Slide 39: Growing Profitably
Growing Profitably Consistent dividend paying track record of 13 years 400 Net Sales 305.53 Particulars 2005-06 2004-05 2003-04 320 263.33 US$ Million 229.86 US$ Million (Audited) (Audited) (Audited) 240 160 Net Sales 305.53 263.33 229.86 EBITDA 64.79 52.63 42.67 80 Interest 14.36 13.69 14.28 0 2003
Slide 40: Balance Sheet Analysis
Alok Industries: Balance Sheet Analysis 200 Tangible Net Worth 173.7 Analysis of 2005-06 2004-05 2003-04 160 Balance Sheet (Audited) (Audited) (Audited) 127.9 US$ Million 120 (US$ Million) 80 65.8 Equity Share Capital 33.86 28.82 18.97 40 Reserves & Surplus 139.80 99.08 46.88 0 2003 - 04 2004 - 05 2
Slide 41: Quarterly performance
Alok Industries: Quarterly performance Quarter ended Quarter ended (US$ Million) Particulars % Growth 30.06.2006 30.06.2005 US$ Million Local Sales 55.19 44.96 22.76% Exports 21.77 19.38 12.32% Total Sales 76.96 64.34 19.62% EBITDA 17.25 13.13 31.38% Interest 3.66 3.57 2.41% Depreciation 5.28 3.45 5
Slide 42: Equity Capital Structure
Alok Industries: Equity Capital Structure Equity Share Capital Rs.1703.72 mn. (US$ 36.6 Million.) No. of issued Shares 170.37 mn. Shares Listed at BSE and NSE Market Price Rs. 65.20 as on 04.09.2006 Market Capitalisation Rs.11,108 mn. (US$ 238.89 mn.) 52 weeks high / Low High High: Rs.99.20 Low: Rs.
Slide 43: Earnings Outlook: External Factors
Earnings Outlook For The Future: External Factors Increased Demand of Cotton products from India. India has carved a niche for itself in cotton based textiles. Demand growth will thus positively affect Alok and other companies in the cotton sector. Closure of home textile manufacturing units in the
Slide 44: Earnings Outlook: External Factors, Cotton Demand and Supply
Earnings Outlook For The Future: External Factors While on the sales side, prices are expected to be stable Increased cotton output and relatively stable demand are expected to keep cotton prices under control. 5000 Indian Cotton Demand and Supply 4572 ‘000 Mt Tonnes 4137 4180 4000 3647 3440 3222 30
Slide 45: Earnings Outlook: Internal Factors
Earnings Outlook For The Future: Internal Factors Increase in topline, realisations and margins is expected from the following initiatives: Shift towards full package supplies Increased capacities across the value chain Backward integration into spinning & reduced outsourcing of key activities like
Slide 46: Challenges And Strategy For Future
Challenges And Strategy For Future Challenges Opportunities Managing Growth High Growth in Home Textiles Timely execution of large projects Becoming nominated / preferred Quick Response and turnaround supplier for Apparel fabric time Diversifying into new markets and Increasing Competition product s
Slide 47: Thank You !
Thank You ! Alok Industries Limited Peninsula Towers ’A’, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013. Tel. +91 (22) 24966200 / 500, Fax: +91 (22) 2493 6078 E-mail: info@alokind.com Website: www.alokind.com 47