Pearl Global Industries Limited · NSE:PGIL
Pearl Global Industries — Investor Presentation (June 2015)
42 slides from Pearl Global Industries's investor presentation, June 2015
Slide 1: Pearl Global Industries Limited Investor Presentation June 2015
PEARL GLOBAL INDUSTRIES LIMITED INVESTOR PRESENTATION June 2015 Private & Confidential
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation and the following discussion may contain “forward looking statements” by Pearl Global Industries Limited (“Pearl Global” or “PGIL”) that are not historical in nature. These forward looking statements, which may include statements relating to future results of
Slide 3: Global apparel sourcing landscape has become highly complex and challenging
THE GLOBAL APPAREL SOURCING LANDSCAPE HAS BECOME HIGHLY COMPLEX & CHALLENGING STIFF CHALLENGES FOR LEADING APPAREL BRANDS & RETAILERS Pressure to offer Increasing Shortening fashion Highly volatile & uncertain omnichannel retail internationalisation & innovation timelines market demand experience re
Slide 4: Long term shift in the global apparel sourcing market
LONG TERM SHIFT IS BEING WITNESSED IN THE GLOBAL APPAREL SOURCING MARKET Global apparel sourcing market China is witnessing a shift from China • Losing competitive edge • Rising production & to other low cost Asian labour costs countries primarily Bangladesh, • Appreciating currency China India and
Slide 5: Pearl Global favourably established in fast evolving apparel sourcing market
PEARL GLOBAL IS FAVOURABLY ESTABLISHED IN THE FAST EVOLVING GLOBAL APPAREL SOURCING MARKET Multi-Product Offerings Multi-Location Presence • One-stop shop offering wide variety of • Well-diversified and de-risked products across wovens & knitwears. manufacturing base located in India, • Value additi
Slide 6: Why Pearl Global?
WHY PEARL GLOBAL? • ONE OF THE LARGEST ORGANISED GARMENT EXPORTERS IN INDIA. GARMENT EXPORT • MULTI COUNTRY OPERATION PARTNER TO GLOBAL RETAILERS. BUSINESS • ONLY INDIAN GARMENT PLAYER WITH DIVERSIFIED MANUFACTURING BASE - INDIA, BANGLADESH AND INDONESIA. • VISION TO PROVIDE INTERNATIONAL FASHION CL
Slide 7: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 8: About Us: Company Overview
ABOUT US: COMPANY OVERVIEW • The erstwhile business of Pearl Global consisted of manufacturing, trading, marketing & distribution and exports of readymade garments. Business • The Company decided to segregate its global marketing, sourcing & distribution business from its Overview garment manufactur
Slide 9: About Us: Shareholding Structure
ABOUT US: SHAREHOLDING STRUCTURE Shareholding % Mar-15 Dec-14 Sep-14 Jun-14 Market Data As on 03.07.15 (BSE) Promoters 66.58% 66.58% 66.58% 66.58% Market capitalization (Rs Mn) 4,673 FII 6.73% 5.42% 4.32% 3.51% Price (Rs.) 215.7 DII 6.48% 6.60% 6.63% 6.63% No. of shares outstanding (Mn) 21.66 Public
Slide 10: About Us: Board of Directors
ABOUT US: BOARD OF DIRECTORS Mr. Deepak Seth • Economics Graduate from St. Stephens College, Delhi University, MBA from Jamanalal Bajaj Institute of Management Studies, Mumbai, India. • He is an active member of the Apparel Export Promotion Council of India. Chairman • He was awarded the “Udyog Ratn
Slide 11: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 12: Key Sustainable Advantage: Multi-Country Manufacturing Presence
KEY SUSTAINABLE ADVANTAGE: MULTI-COUNTRY MANUFACTURING PRESENCE LONG TERM PREFERRED VENDOR TO LEADING GLOBAL APPAREL BRANDS Global Manufacturing Facilities & Capabilities INDIA BANGLADESH INDONESIA • Core centre for cotton fabrics. • Core centre for knitwears. • Core for cotton & synthetic fabrics.
Slide 13: Key Sustainable Advantage: Vertically Integrated Manufacturing
KEY SUSTAINABLE ADVANTAGE: VERTICALLY INTEGRATED MANUFACTURING VERTICALLY INTEGRATED MANUFACTURING CAPACITY Total Capacity EFFECTIVE SUPPLY CHAIN MANAGEMENT Location Products Factories Machines Mn Pieces / Month • Strategic tie-ups with dyeing mills in Bangladesh. North India Woven Soft Sep 2 1,800
Slide 14: Key Sustainable Advantage: Multi-Product Offerings
KEY SUSTAINABLE ADVANTAGE: MULTI-PRODUCT OFFERINGS MULTI-LOCATION PRESENCE PROVIDES AN COMPETITIVE EDGE TO MEET THE COMPLEX & DIVERSE PRODUCT DESIGN REQUIREMENTS OF THE LEADING GLOBAL RETAILERS Pearl Global’s Diverse Presence and Product Specialisations Region Product Offering Specialization Garment
Slide 15: Key Sustainable Advantage: Approved Vendor to Global Brands
KEY SUSTAINABLE ADVANTAGE: APPROVED VENDOR TO GLOBAL BRANDS Target Australia 15
Slide 16: Key Sustainable Advantage: Strong Design Capabilities
KEY SUSTAINABLE ADVANTAGE: STRONG DESIGN CAPABILITIES STRONG EMPHASIS ON IN-HOUSE DESIGN & PRODUCT DEVELOPMENT • Dedicated in-house design team of 75 designers located in Hong Kong, India and Indonesia. • The design teams continually shop markets all over the world and visit all the globally renowne
Slide 17: Key Sustainable Advantage: Strong Quality Check & Systems
KEY SUSTAINABLE ADVANTAGE: STRONG QUALITY CHECK & SYSTEMS COMMITMENT TO LEAN PROCESSES, HIGH PRODUCTIVITY AND QUALITY COMPLIANCE • All manufacturing units are using SAP, an integrated ERP software system, to run day to day operations and monitor key performance indicators. • System integration has c
Slide 18: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 19: Understanding the Balance Sheet
UNDERSTANDING THE BALANCE SHEET Total Capital Employed – Rs 4,841 Mn Net Debt – Rs 611 Mn Net Debt / Equity – 0.2x C&CE Core Asset Base Non - Core Asset Base Holding Fixed Assets Net Current Other Net Cash & Fixed Assets Fixed Assets Under Use Assets excl. C&CE Assets Investments Idle Rented Out Rs
Slide 20: Understanding the Profitability in Core Business
UNDERSTANDING THE PROFITABILITY IN CORE BUSINESS PROFITABILITY IN CORE BUSINESS Total Production (Mn Pieces) 30.3 Average Realisation (Rs / Piece) 338.3 • The garment manufacturing business operates at Total Revenues (Rs Mn) 10,237 modest operating margins. Other Income (Interest on Fixed Deposits a
Slide 21: Understanding the Seasonality Impact on Capacity Utilisation
UNDERSTANDING THE SEASONALITY IMPACT ON CAPACITY UTILISATION Sales Breakup More than 90% of Pearl ~90% - United States Average Capacity Utilisation of 60% - 65% Global’s sales are to Post Seasonality Impact United States. ~10% - EU, Canada, South America, December – July The seasonal decline in Sout
Slide 22: Focus on Improvement in Capacity Utilisation
FOCUS ON IMPROVEMENT IN CAPACITY UTILISATION Current Sales Breakup Expected Sales Breakup < 5% 10% < 5% United States 10% - 15% United States Europe Others Australia 90% 80% Others Capacity Rationalisation through diversification into new geographies: • Currently, ~90% of sales are accounted by US w
Slide 23: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 24: Capacity Expansion Plan
CAPACITY EXPANSION PLAN CAPACITY EXPANSION PLAN Current Capacity Capacity Expansion Capacity Post Expansion Particulars FY14 Feb - 2015 FY16 FY16 No. of Machines 8,500 500 800 9,800 Capacity (Mn Pieces/Month) 3.65 0.18 0.26 4.09 India (41.1%) India (47.4%) Location Bangladesh (49.3%) Bangalore Chenn
Slide 25: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 26: Balance Sheet – Non-Core Assets
BALANCE SHEET – NON-CORE ASSETS ASSET BASE – RENTED TO THIRD PARTIES Area Land Building Total Rent per Year Particulars (Acres) (Rs Mn) (Rs Mn) (Rs Mn) (Rs Mn) Plot No 10, Sector-5, GC Bawal, Haryana 9.87 58 211 269 23 Plot No.51, Sector 32, Gurgaon ** 1.00 8 147 155 37 21/13, Naraina, Delhi 0.29 6
Slide 27: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 28: Future Growth Opportunity – E-Retail Initiative SBUYS
FUTURE GROWTH OPPORTUNITY – E-RETAIL INITIATIVE “SBUYS” Pearl Global has forward integrated into online fashion apparel retailing under the brand “SBUYS” 28
Slide 29: India is Witnessing an E-Retail Boom
INDIA IS WITNESSING A E-RETAIL BOOM India’s E-Retail Market is Growing at a Rapid Pace 504 Online Retail Market Size(Rs Bn) 334 224 139 91 58 24 38 15 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Source: e-tail eats into Retail, CRISIL Report, Feb 2014 29
Slide 30: Strong Potential for Higher E-Retail Penetration in India
STRONG POTENTIAL FOR HIGHER E-RETAIL PENETRATION IN INDIA Key Growth Drivers Increasing internet penetration Total Retail Market Rs 25.3 tn in 2012-13 Shopping experience at ease & convenience Organized Retail Market Increasing penetration of electronic devices Rs 1.8 tn, 7% of total retail like tab
Slide 31: Pearl Global – E-Retail Strategy
PEARL GLOBAL – E-RETAIL STRATEGY • Forward integration into online fashion apparel retailing under the brand Business Growth “SBUYS”. Opportunity • Online retailing is a high-growth space and offers strong potential to build a business model with healthy margin profile. • Leverage its strong knowled
Slide 32: SBUYS – Brand Visibility
SBUYS – BRAND VISIBILITY • Strategic Tie-Ups: Myntra, Snapdeal, Fashion and You and Hopscotch • Strategic Tie-Ups under process: Flipkart, Jabong, Amazon. 32
Slide 33: SBUYS – Fashions & Designs
SBUYS — FASHIONS & DESIGNS = ‘ FALE, COLLECTION The colour of the season es ~ NOTHING SAYS FEMININITY LIKE A LITTLE BIT OF LACE. 4 = 33
Slide 34: SBUYS – Marketing Campaigns
SBUYS – MARKETING CAMPAIGNS 34
Slide 35: Discussion Summary
DISCUSSION SUMMARY About Us 08 – 10 Key Sustainable Advantages 12 – 17 Understanding the Business Model 19 - 22 Capacity Expansion Plan 24 Balance Sheet – Non-Core Assets 26 Future Growth Opportunity – E-Retail Initiative “SBUYS” 28 – 34 Q4 & FY15 Results and Business Outlook 36 – 39 Annexure 42 Sch
Slide 36: Q4 FY15 & Full Year FY15 Results Highlights
Q4 FY15 & FULL YEAR FY15 RESULTS HIGHLIGHTS REVENUES EBITDA & EBITDA MARGIN % PAT & PAT MARGIN % 50.5% 49.8% 47.6% 5.4% 6.1% 2.3% 2.9% 3.3% 2.4% 46.1% 45.4% 4.4% 4.8% 0.8% 3.2% 10,237 497 409 251 202 146 3,340 111 2,380 2,452 132 111 2,076 106 67 54 95 16 57 70 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 FY15 Q
Slide 37: Q4FY15 & Full Year FY15 – Consolidated Profit & Loss Statement
Q4FY15 & FULL YEAR FY15 – CONSOLIDATED PROFIT & LOSS STATEMENT The consolidated results are not comparable as the previous period numbers are not restated to reflect the demerger of company’s SDM business. Particulars in Rs Mn Q4 FY15 Q3 FY15 QOQ % FY15 Total Sales 3,339.9 2,451.9 36.2% 10,237.4 Cos
Slide 38: FY15 – Consolidated Balance Sheet Statement
FY15 – CONSOLIDATED BALANCE SHEET STATEMENT The consolidated results are not comparable as the previous period numbers are not restated to reflect the demerger of company’s SDM business. Particulars in Rs Mn FY15 Particulars in Rs Mn FY15 Non-current assets: Share Holders’ Funds: Fixed assets 2,076.
Slide 39: Business Outlook
BUSINESS OUTLOOK • Multi-product offerings, multi-location diversified & vertically integrated Preferred Vendor to Global manufacturing base, strong design capabilities and strong quality compliance Brands & Retailers systems. • High operational flexibility & scalability as the manufacturing operati
Slide 40: Thank You
FOR ANY FURTHER QUERIES PLEASE CONTACT - THANK YOU Mr. Raj Chawla Mr. Ammeet Sabarwal / Mr. Nilesh Dalvi Chief Finance Officer IR Consultant Pearl Global Industries Email – ammeet.sabarwal@dickensonir.com Email – rajkumar.chawla@pearlglobal.com nilesh.dalvi@dickensonir.com Contact No – +91 844759422
Slide 41: Annexure
ANNEXURE 41
Slide 42: Scheme of Arrangement Post De-Merger
SCHEME OF ARRANGEMENT POST DE-MERGER Pearl Global Industries Limited operates across three business streams – • Manufacturing • Marketing & Distribution • Sourcing of garments through subsidiaries Till recently, the Company operated (through its subsidiaries) with two distinct business segments: • M
Pearl Global Industries — Investor Presentation (June 2015) on 6ix