Welspun Living Limited · NSE:WELSPUNLIV
Welspun Living — Welspun India — Investor Day (April 2017)
60 slides from Welspun Living's investor day presentation, Apr 25, 2017
Slide 1: Annual Investor Conference
ANNUAL INVESTOR CONFERENCE 25th April, 2017 1
Slide 2: Safe Harbour
SAFE HARBOUR This presentation and the accompanying slides (the “Presentation”), which have been prepared by Welspun India Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securi
Slide 3: Agenda
1. Chairman’s address 2. Business Insights AGENDA 3. Financial Highlights 3
Slide 4: Chairman's Address
WELSPU CHAIRMAN’S ADDRESS
Slide 5: Macro-Economic Overview
RRB Ww teesres ios HOME TEXTILES Macro-Economic Overview
Slide 6: Macro Economic Developments FY17 Events
MACRO ECONOMIC DEVELOPMENTS Change in US Administration Commodity Price Escalation Brexit FY17 EVENTS Currency Demonetisation Appreciation Stronger India 6
Slide 7: Stronger India
STRONGER INDIA Political Economic Social Stable govt. with a strong GDP growth at 65% of population leadership 7.1% in FY17 below 35 yrs age Improving ‘Ease of doing business’ Per Capita Income crossed $1500 p.a Increasing Brand consciousness Initiatives like “Make In India”, “Skill India” FDI inflo
Slide 8: Currency Comparison
CURRENCY COMPARISON USD/INR USD/PKR USD/CNY USD/BDT USD/LKR USD/VND 110 108 106 China 104 SriLanka Bangladesh 102 Vietnam 100 Pakistan 98 India 96 94 92 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Mar -17 Indian Rupee appreciated by 6% from recent peak Positive for importers Exporters struggling t
Slide 9: Commodity Price Escalation
COMMODITY PRICE ESCALATION Cotton Shankar 6 Price (Index 100) Coal Price (Index 100) 29% 37% Crude Oil Price (Index 100) Metal Price Index (Index 100) 38% 26% Mar-17 Coal price is Coal Futures - (UCXMc1), Metal index includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, & Uranium Price Indic
Slide 10: Welspun Group
WELSPU WELSPUN GROUP
Slide 11: Welspun Group – Journey So Far
WELSPUN GROUP – JOURNEY SO FAR… CONTINUED STRATEGIC EFFORTS TIMELY REFOCUS ON SIMPLIFICATION OF ASSET MONETISATION + CORE BUSINESSES DELEVERAGING CORPORATE STRUCTURE WELSPUN GROUP SALIENT ACTIVITIES FY 2016-17 Renewable Energy business sale Buyback of 15.49% shares in Welspun Enterprises India’s fir
Slide 12: Reaping Benefits of the Efforts
REAPING BENEFITS OF THE EFFORTS Net Debt/Equity Net Debt / EBITDA 3.50 0.80 0.70 3.00 3.32 0.75 0.60 0.73 2.50 0.65 0.50 1.97 2.00 1.57 0.40 0.49 1.50 1.32 0.30 1.00 0.20 0.10 0.50 - - FY13 (A) FY15 (A) FY16 (A) FY17 (E) FY13 (A) FY15 (A) FY16 (A) FY17 (E) 2.00 Interest Coverage Ratio 1.80 Current R
Slide 13: Welspun Group Companies - Credit Rating
WELSPUN GROUP COMPANIES - CREDIT RATING Long Term Short Term Welspun India AA- A1+ Welspun Global Brands AA- A1+ Welspun Corp AA- A1+ Welspun Enterprises A A1 As per CARE/FITCH 13
Slide 14: Global Leader in Home Textiles
Global Leader in Global Leader in Infrastructure Home Textiles Large Diameter Pipes Oil & Gas Group Revenue Market Cap Employees US$ 2.3 Billion US$ 2 Billion 25,000+ 14
Slide 15: Welspun India - Home Textiles Industry
WELSPUN INDIA - HOME TEXTILES INDUSTRY 15
Slide 16: India Advantage – Home Textiles
INDIA ADVANTAGE – HOME TEXTILES Largest Favourable Competitive Producer of Socio-Economic Costs Cotton Factors 4 Supportive Govt Policies 5 Strong Domestic Market Potential 6 Global Manufacturing Scale 16
Slide 17: India - Largest Player in US Market
INDIA- LARGEST PLAYER IN US MARKET Towels (Cotton) 38% 40% 10% points 36% In 7 years 30% 26% 25% 23% 24% 23% 22% 22% 22% 22% 15% 15% 15% 2009 2012 2015 2016 Sheets (Cotton) 48% 49% 22% points 45% In 7 years 27% 29% 26% 22% 23% 21% 18% 18% 16% 15% 15% 14% 13% 2009 2012 2015 2016 India China Pakistan
Slide 18: Domestic Market Opportunities
DOMESTIC MARKET OPPORTUNITIES Indian Urban Home Textile Market Size is Rs. 257 Bn.* in 2016 and Is Expected to reach Rs. 438 Bn. in next 5 years with CAGR of 11.25% 500 438 450 CAGR 11.25% 397 35 400 356 32 350 316 83 29 75 287 300 26 Rs. Billion 257 67 24 60 250 20 53 200 47 150 290 320 230 260 100
Slide 19: Welspun India Ltd
WELSPUN INDIA LTD 19
Slide 20: Aug '16 Traceability Issue – Our Response
AUG ’16…. TRACEABILITY ISSUE ……OUR RESPONSE Business as usual with all other Customers • Strategic partnership with Cotton Egypt Association (CEA) • Promoting & marketing Egyptian cotton products worldwide Constituted an independent advisory council comprising of international experts from cotton in
Slide 21: Our Resilience
……OUR RESILIENCE Revenue Net Debt to Current Positive FCF Credit Ratings Growth Equity Ratio Ratio in spite of Long Term 12% 1.3x 1.4x one-time item AA- Resilience Customer Lender’s Trust & Welspunites Community Relationships Belief 21
Slide 22: Welspun India – Consolidating Leadership Position
WELSPUN INDIA – CONSOLIDATING LEADERSHIP POSITION 21.7% 20.1% 11.3% 11.1% 9.9% 16.4% 14.7% 7.3% CY 13 CY 14 CY 15 CY 16 CY 13 CY 14 CY 15 CY 16 Market Share in Towels Market Share in Sheets * Based on OTEXA CY2016 data 22
Slide 23: Welspun India – Consistent Performance
WELSPUN INDIA – CONSISTENT PERFORMANCE What We What We Achieved FY17 Guided 3-Yr Average Revenue Growth 10-15% 15% 12% EBITDA 22-23% 25% 24% Margin Net Debt Constant 30 bn 30 bn CAPEX 8 bn 8 bn 7 bn 23
Slide 24: Building a Sustainable Leadership Position
BUILDING A SUSTAINABLE LEADERSHIP POSITION New New New Innovation Brands Markets Channels Products 24
Slide 25: Vision 2020
VISION 2020 Revenue Net Debt $2 BN NIL Innovative/Branded Women Share of Share of Revenue employees Domestic Revenue 50% 20% 20% 25
Slide 26: Business Insights
BUSINESS INSIGHTS 26
Slide 27: Winning with Core Values
WELSPUN INDIA A TIL winning 27
Slide 28: Being Customer Centric
Living the Welspun Values everyday being adapting CUSTOMER TECHNOLOGY CENTRIC delivering embracing INCLUSIVE COLLABORATION GROWTH 28
Slide 29: Customer Centric Creating Value with Innovation & Brands
being CUSTOMER CENTRIC creating value with INNOVATION & BRANDS 29
Slide 30: A 150-year old legacy.. reinvented
A 150-year old legacy.. reinvented
Slide 31: Welspun's Brand Spectrum
WELSPUN’S BRAND SPECTRUM Premium & Sustainability & Innovation Technology Luxury Empowerment Innovation 36% and brands 16% of Welspun’s revenues in FY17 Coveted Licenses 31
Slide 32: Adopting Technology, Accelerating Growth
adopting TECHNOLOGY accelerating GROWTH 32
Slide 33: Proprietary Industry-Defining Multi-Level Traceability Process
Welspun’s proprietary industry-defining multi-level traceability process Tracking Cotton from Farm - Factory - Finished Goods - Shelf using RFID, Barcodes, QR Code Scanners with ERP System integration 33
Slide 34: Embracing Collaboration, Leading Together
embracing COLLABORATION leading TOGETHER 34
Slide 35: Global Collaboration on Innovation
Top Universities Global Collaboration Technology Partners on Innovation Industry Associations 26 Unique Inventions Across The Globe 35
Slide 36: Omni-channel Support to Top Global Retailers
Omni-channel support to top global retailers via product development, warehousing, pick and pack and drop-ship 36
Slide 37: Smartsourcing: Asset Light Future Growth
SMARTSOURCING: ASSET LIGHT FUTURE GROWTH SYNERGISTIC BENEFITS Lower Assured transportation Lower inventory Recycling of Off-take costs Lower Interest cost packaging • Collaboration with Suppliers for lead time • Commencement from Oct.16 reduction via Exclusive • Established Top 10 Vendors of set-up
Slide 38: Collaboration with Industry Bodies
Collaboration with leading Industry bodies to enhance supply security and authenticity. 38
Slide 39: Focus on Sustainability
focus on SUSTAINABILITY investing in OUR FUTURE 39
Slide 40: Water: Sewage and Effluent Treatment
Sewage Treatment Plant (STP) and Effluent Treatment Plant (ETP) to conserve and reuse the scare resource – WATER. STP installed with a capacity to process 30 MN litres per day. 40
Slide 41: Sustainability in Everything That We Do
Sustainability in everything that we do saved 3 MN kwH 85% water recovered from STP of energy in FY17 used at mill REACH SA 8000 certified operations for socially regulations responsible practices adopted for chemical management 41
Slide 42: Delivering Inclusive Growth
delivering INCLUSIVE GROWTH securing our FUTURE 42
Slide 43: Vocational Centres for Women
10 Vocational Centres 1200+ Women Engaged across our vocational Centres 540k Bedsheets Produced till date 2.29 mn products developed across all vocational centres Rs. 17.4 mn Total Earning of Women beneficiaries till date 43
Slide 44: Skill Development Program
TEXTILE VERTICAL covering spinning, weaving, processing, cut & sew ENGINEERING VERTICAL covering 10,000 youth trained in FY welding technology, metal testing, 2017 via Welspun’s skill engineering – maintenance development program OTHER AREAS include retail, logistics, house keeping, security & fire,
Slide 45: First Smart Village Versamedi (Gujarat)
FIRST SMART VILLAGE VERSAMEDI (GUJARAT) School Renovation Vocational Center Health Programs SMART Class Versamedi village has about 1500 households and population of about 6000 people 5E: Education | Empowerment | Environment & Health |Essential Infra | E-Connectivity Green & Clean Village Developme
Slide 46: Vision 2020 on Track
BUILDING A SUSTAINABLE LEADERSHIP POSITION Vision 2020 on track.. Innovation & 40% Revenue Share Patents Brands 25% Revenue Share Focus on Hospitality, Wellness and Ecommerce New Channels segment New Products Advanced Textiles, Flooring Solutions & Smart Textiles Tapping into huge domestic market op
Slide 47: The Next Growth Engine: Flooring Solutions
The Next Growth Engine: Flooring Solutions Categories covered Area Rugs, Carpets, Location Carpet Tiles, Accent Anjar Rugs, Wall to Wall Carpets Investment Focus Markets Rs. 6 Bn to be Domestic as well as invested in a phased overseas markets manner over FY18 and FY19 47
Slide 48: Financial Highlights
WELSPU FINANCIAL HIGHLIGHTS
Slide 49: Key Highlights – FY17
KEY HIGHLIGHTS – FY17 Revenue growth at Christy sales growth at Domestic retail Growth 12% 12% at 21% Net debt to Op.EBITDA Net Debt to Equity at Operating EBITDA at 1.27x at 1.92x 23.8% (Vs 1.58x at FY16 –end) (Vs 1.95x at FY16-end) Net debt maintained ROCE (pre-tax) at 19.3% Positive Free Cash Flo
Slide 50: Financial Performance – Q4 FY17
FINANCIAL PERFORMANCE – Q4 FY17 (Rs. Million) Particulars Q4FY17 Q4FY16 Change YoY Q3FY17 Revenue 17,572 16,162 8.7% 15,009 Operating EBITDA 3,829 4,353 -12.0% 3,463 Op. EBITDA Margin 21.8% 26.9% -514 bps 23.1% EBITDA 3,946 4,515 -12.6% 3,505 EBITDA Margin 22.5% 27.9% -548 bps 23.4% Finance Cost (Ne
Slide 51: Financial Performance – FY17
FINANCIAL PERFORMANCE – FY17 (Rs. Million) Particulars FY17 FY16 Change % FY15 Revenue 66,405 59,239 12.1% 53,025 Operating EBITDA 15,834 15,927 -0.6% 12,742 Op. EBITDA Margin 23.8% 26.9% -304 bps 24.0% EBITDA 16,155 16,550 -2.4% 13,407 EBITDA Margin 24.3% 27.9% -361 bps 25.3% Finance Cost (Net) 1,0
Slide 52: Balance Sheet Trend
BALANCE SHEET TREND (Rs. Million) Particulars 31-Mar-15 31-Mar-16 31-Mar-17 Net Worth 14,732 19,700 23,971 Short Term Loans 13,936 13,533 11,721 Long Term Loans 20,864 18,945 21,393 Gross Debt 34,800 32,478 33,114 Cash & Cash Equiv. 4,321 1,388 2,725 Net Debt 30,479 31,090 30,389 Capital Employed# 4
Slide 53: Financial Ratio Trend
FINANCIAL RATIO TREND FY15 FY16 FY17 Solvency Net debt/Op. EBITDA 2.39 1.95 1.92 ratios Net debt/Equity 2.07 1.58 1.27 EBIT/Interest 3.66 5.54 7.32 Current Ratio 1.12 1.15 1.41 Operational ratios Fixed Asset turnover 2.04 1.77 1.86 Total Asset turnover 0.90 0.90 0.91 Inventory days 76 68 70 Debtor d
Slide 54: Key Financial Trend
KEY FINANCIAL TREND Revenues Op. EBITDA 18,000 66,405 15,927 15,834 70,000 CAGR 16% 16,000 CAGR 28% 59,239 60,000 14,000 53,025 12,742 50,000 43,730 12,000 Rs. miilion 36,473 10,000 9,211 40,000 Rs. million 8,000 30,000 5,946 6,000 20,000 4,000 10,000 2,000 0 0 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY1
Slide 55: Key Ratio Trend
KEY RATIO TREND 2.4x Net Debt / Equity Net Debt / Op. EBITDA 2.1x 2.9x 2.4x 1.6x 2.0x 1.3x 1.9x FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 ROCE % (Pre-Tax) ROE % 42.8% 40.0% 41.8% 24.6% 21.9% 21.8% 19.3% 29.6% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 ROCE and ROE FY17 figures are excluding one time impa
Slide 56: Capex as per Demand
CAPEX AS PER DEMAND Expected End-FY17 Sales volume Effective Product Unit Capacity Capacity FY17 Utilisation % FY18 Towels MT 72,000 70,000 97% 80,000 Sheets ‘000 Mtrs 90,000 66,000 86% 90,000 Rugs & Carpets ‘000 Sq. mtrs. 10,000 7,200 85% 10,000 Expansion of Towel Investment of around Investment of
Slide 57: Focus on Free Cash Flow
FOCUS ON FREE CASH FLOW 4000 3,770 2,405 2000 795 714 859 785 239 0 FY14 FY15 FY16 FY17 -2000 -4000 -6000 -6,217 FCF Dividend -8000 FCF positive for three consecutive years 57
Slide 58: Dividend Policy
DIVIDEND POLICY Clear, defined Dividend Distribution policy 25% of standalone PAT to be the total payout (incl. dividend tax) Consistent track record of dividend distribution Standalone Dividend tax Payout Period EPS DPS per share Percentage FY15 5.09 1.05 0.21 25% FY16 5.99 1.30 0.26 26% FY17
Slide 59: Moving Towards Vision 2020
RAISING THE BAR Macro Challenges Increasing Raw Material Moving towards Cost Environment Rising Energy Cost Vision 2020 Rupee Appreciation Differentiation Strategy: Innovation, Branding and Sustainability Industry Defining Traceability Solution Focus on Domestic Market New Initiatives wit
Slide 60: 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