Redington Limited · NSE:REDINGTON
Redington — Investor Presentation (May 2017)
44 slides from Redington's investor presentation, May 30, 2017
Slide 1: Striking ahead in tougher times
TECHNOLOGY AS A TOOL LOGISTICS PLAY Striking ahead in tougher times INDIA FOCUS EMERGING SHIFT BUSINESS TOWARDS SEGMENTS “SERVICES” Analyst Meet 2017 May 30, 20171
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: Analyst Meet 2016 takeaways: Professionally managed company
Professionally Analyst Meet 2016 managed company takeaways 3
Slide 4: Analyst Meet 2016 takeaways
Professionally Analyst Meet 2016 managed company takeaways 4
Slide 5: Analyst Meet 2016 takeaways: Robust Infrastructure
Analyst Meet 2016 Robust takeaways Infrastructure 5
Slide 6: Operating in challenging but potential markets
Analyst Meet 2016 takeaways Operating in challenging but potential markets 6
Slide 7: Understand, Manage, Mitigate Risk
Analyst Meet 2016 takeaways Understand, Manage, Mitigate Risk 7
Slide 8: Inherent Relevance of a Distributor
INHERENT RELEVANCE OF A DISTRIBUTOR 15 % Margin 4 ~ 6 % Margin 9 ~ 11% Margin PROCUREMENT CHANNELS CUSTOMER Online, Retail Manufacturers Chain/LFRs, End User, SMB, & Dealer, VAR/ Corporate, Brand owners System Govt, etc Integrator, etc Risk adjusted margin Duopoly/Oligopoly– a global phenomenon High
Slide 9: Geo-political tensions continue unabated
GEO-POLITICAL TENSIONS… CONTINUE UNABATED 9
Slide 10: FY17 Performance
FY17 PERFORMANCE Rs. 9,117 mn Free cash flow 16% 6% 10% 16 days Reduction in WC ₹ in million days 4,11,561 8,662 4,642 REVENUE EBITDA PAT 15.3% 15.4% ROCE ROE Revenue contribution 2% -0.03% 38% 27% Inventory Provision 62% 71% 0.08% AR Provision India Overseas IT Mobility Services 10
Slide 11: Dividend Distribution
DIVIDEND DISTRIBUTION Dividend Policy : 20% pay-out on profits earned 215% 105% 95% 55% 45% 20% 20% FY11 FY12 FY13 FY14 FY15 FY16 FY17 Dividend % on Face Value of shares 11 As recommended by Board plus Special Interim Dividend declared
Slide 12: Shareholding Pattern (as at Mar 31st, 2017)
SHAREHOLDING PATTERN (AS AT MAR 31 ST, 2017) Other prominent shareholders Fidelity ICICI Prudential Life Insurance Others, 8.8% Synnex Mauritius Morgan Stanley Ltd, 23.6% Mutual Funds, 14.2% Franklin Templeton Fund Harrow Investment Holding Ltd, HDFC Small & Midcap Fund 8.2% Foreign Institutional In
Slide 13: Ten Years Since Listing (2007-2016)
TEN YEARS SINCE LISTING(2007-2016) Redington 55th Redington MEA amongst top ranked No.24 in Redington MEA No.1 Global Tech Great Place to Work Distributor for 12 companies UAE consecutive years Commenced Support Cloud biz & Logistics Services Investment in distribution of services under under Turkey
Slide 14: 10 Year Performance
10 YEAR PERFORMANCE ₹ in million REVENUE EBITDA PAT 4,11,561 4,642 8,662 4,235 3,54,762 8,176 CAGR 17% CAGR 16% CAGR 16% 3,865 7,619 3,16,227 7,196 6,842 2,80,051 3,366 3,231 6,334 2,42,104 2,927 2,12,220 4,717 2,260 1,67,227 3,657 1,843 1,32,776 3,296 1,23,760 1,597 1,05,425 2,590 1,361 88,539 1,98
Slide 15: Our Way Ahead
OUR WAY AHEAD… Less on WC SERVICES High-margin segments Incremental growth EMERGING BUSINESSES Margin/ROCE interesting Driving our core growth CORE BUSINESSES Sustainable margins Faster Protect & growth in consolidate India Overseas 15
Slide 16: Our Way Ahead
OUR WAY AHEAD… 16
Slide 17: Core Businesses
Driving our core growth CORE BUSINESSES Sustainable margins 17
Slide 18: GST and Our Business
GST AND OUR BUSINESS Possible reduction in No. of warehouses from 56 to 30 10% Probable reduction in Logistics cost – Delivery timings expected to improve by 1-3 days Potential reduction on Inventory holding days by 3-4 days GST Credit available for domestic customers – Pricing advantage Consolidati
Slide 19: GST and Our Business
GST AND OUR BUSINESS 19
Slide 20: E-Com: Complementing than Competing
E-COM – COMPLEMENTING THAN COMPETING Opportunities Clients Serves as yet another GTM Revenue contribution All the major E-Com players THE WAY AHEAD Opportunities for channel partners to sell 16% Build our own in marketplace marketplace of India FY17 Mobility revenues (B2B, B2C4B, B2B4C) Opportunitie
Slide 21: E-Com: Complementing than Competing
E-COM – COMPLEMENTING THAN COMPETING 21
Slide 22: Core Distribution: Growth Drivers
CORE DISTRIBUTION – GROWTH DRIVERS 2 IT INFRASTRUCTURE SPENDING IN INDIA 0 GOVERNMENT IT SPENDING IN INDIA 1 $2.2 7 billion ICT SPENDING IN META $7.8 SMARTPHONE SALES - F billion $243 INDIA PC SHIPMENTS- O 1.5% billion 125 mn INDIA R 9.5% units 9 mn E C 3.6% units A 15% S 5% T S CORE • Govt IT spend
Slide 23: Emerging Businesses
EMERGING BUSINESSES • Incremental growth • Margin/ROCE interesting 23
Slide 24: Solar Equipments
SOLAR EQUIPMENTS OUR FOCUS – “Rooftop Solar Market” Rooftop solar constitutes 10-12% share of overall solar capacity – Substantial potential for increase 11.9 GW of new rooftop solar capacity addition between 2017 and 2021 Vendor Distributor System End user SUPPLY CHAIN Integrators INDIA’S ROOFTOP S
Slide 25: Health & Medical Equipments
HEALTH & MEDICAL EQUIPMENTS OUR FOCUS – “Equipment & Instruments” (Mid-size) Equipments & Instruments – 53% of total Indian Medical Device and Equipment sector SUPPLY CHAIN Vendor Distributor Partners End user INDIA’S EQUIPMENTS & PRODUCT FOCUS MAJOR BRANDS INSTRUMENTS MARKET • Ultrasound • Siemens
Slide 26: Services
SERVICES • Less on WC • High-margin segments 26
Slide 27: Slide 27
Slide 28: ProConnect: Snapshot
PROCONNECT – SNAPSHOT FY 17 Revenue contribution Services Offered from Services Warehousing Transportation 8% Mission Critical Services Warehousing 3PL to E-Commerce Import & IOR Services 26% Transportation 66% Reverse Logistics Others Cold Storage Industries Served FY 17 Revenue contr
Slide 29: ProConnect: The Growth Story
PROCONNECT – THE GROWTH STORY Revenue Mix Redington Outside Biz WAREHOUSES SKUs TONS PINCODES 24% 29% 49% Current 192 60,000 1,50,000 36,000 65% 76% 71% 51% Beginning 45 39,876 94,567 26,875 35% 2013-14 2014-15 2015-16 2016-17 Revenue EBITDA PAT ROA – 21% CAGR – 41% CAGR – 68% CAGR – 66% ROE – 34% R
Slide 30: Growth Drivers & Focus Areas
GROWTH DRIVERS & FOCUS AREAS GST roll out Industrial Growth GROWTH Make in India initiatives & Digitalization road map DRIVERS Improvement in Infrastructure E-Com as a growth industry Opportunities from GST – Consolidation and Transportation Focus on expanding into FMCG/Pharmaceuticals and Cold Stor
Slide 31: Growth Drivers & Focus Areas
GROWTH DRIVERS & FOCUS AREAS 31
Slide 32: 240+ service centres across India, ME & Africa
DOA Validation 240+ Service centres across India, ME & Africa 75,000 repairs per month in India 1,000+ cities serviced per month in India 32
Slide 33: Evolving into the Future
EVOLVING INTO THE FUTURE PAT Margin – 8% CONSULTING Managed Security Services Provider (MSSP) Infrastructure Management Managed Services Services (IMS) Provider (MSP) Warranty/Out of warranty services 33
Slide 34: Evolving into the Future
EVOLVING INTO THE FUTURE 34
Slide 35: Cloud Business
CLOUD BUSINESS ORACLE’s VISION – “To become a premium cloud solution provider” Cloud(IaaS/PaaS) Transformation Partner of the Year 2016 INDIA’S PUBLIC CLOUD MARKET Digital Partner 2020 Enablement 2016 Platform Program $4.1bn $1.3bn $0.72bn OUR $0.02bn CLOUD Managed Services PRACTICE Business OUR MAJ
Slide 36: 3D Printing
3D PRINTING OUR FOCUS – 3D Printing & Parts Manufacturing Digital Parts Manufacturing Facility through SUPPLY CHAIN Vendor Distributor End user INDIA’S 3D PRINTING PRODUCTS & PRODUCTS & SERVICES MAJOR BRANDS SERVICES MARKET FOCUS 2020 • 3D Printers • 3D Systems 2015 • 3D Scanners • Zeiss Rs.520 crs
Slide 37: Navigating Successful Transformation
NAVIGATING SUCCESSFUL TRANSFORMATION FLEXIBILITY • Navigating the • Technologically volatile ambiguous environment times • Responding with clarity • Ability to embrace • Necessitates quick and & precision change prudent response • Ability to identify & convert an opportunity ADAPTABILITY AGILITY REL
Slide 38: Our Transformation
OUR TRANSFORMATION Supply END-TO- Trader Distributor chain END consolidator SERVICE PROVIDER Logistics Support Digital printing Cloud 3D services services services services Services 20% PAT CONTRIBUTION OF SERVICES IN 2020 40
Slide 39: Our Transformation
OUR TRANSFORMATION 39
Slide 40: Redington CSR: Making a Difference
Lf exed > Makinga Difference - REDINGTON CSR
Slide 41: Project Read, Project Reach, Project Excellence
Project Read Employability Skills 1406 Training to Socially & students Economically Challenged benefitted Project Reach 651 Vocational Training to students Differently abled benefitted Project Excellence 18,734 beneficiaries Bring Excellence in Student’s Community 41
Slide 42: How We Measure Success
HOW WE MEASURE SUCCESS Stakeholders Objectives Key metrics Rating Shareholders Constant endeavour to increase shareholder’s Operating margin, Medium value ROCE, Revenue & Earnings growth EPS, Dividend per share, ROE Vendors Be the preferred distributor to the vendor Remain No.1 or No.2 High distribu
Slide 43: Key Objectives in the Way Forward
KEY OBJECTIVES IN THE WAY FORWARD • Services business to contribute to 20% of PAT by 2020 • Positive free cash flow generation • Foray into new Emerging businesses – to drive profitable growth • Monetization of assets to deliver “higher” shareholders’ value • To be a digitalized company in the next
Slide 44: Thank You
THANK YOU Investor Contact M. Muthukumarasamy Compliance Officer Redington (India) Limited SPL Guindy House, 95 Mount Road, Guindy, Chennai 600 032 https://www.redingtonindia.com Sowmiya M Manager – Investor Relations sowmiya.manickam@redington.co.in CIN - L52599TN1961PLC028758