Vardhman Textiles Limited · NSE:VTL
Vardhman Textiles — Vardhman Group — Investor Presentation (April 2006)
47 slides from Vardhman Textiles's investor presentation, April 2006
Slide 1: Vardhman Group
Vardhman Group Textile Solutions for the World of Tomorrow...
Slide 2: Contents
Content s 1 The Indian Textile Industry 2 Vardhman - The Group 3 Plans and prospects Vardhman
Slide 3: The Indian Textile Industry
1 The Indian Textile Industry 2 Vardhman - The Group 3 Plans and prospects Vardhman
Slide 4: The Indian Textile Sector
The Indian Textile Sector • A large domestic industry, significant for the country’s economy – At Rs $535 bln, accounts for 6% of the GDP – At US$ 15 bln, is 17% of India’s exports – Provides employment to 18% of India’s industrial workforce Vardhman
Slide 5: Indian Textile Industry: Spinning
Indian Textile Industry:Spinning (Installed Capacity) World installed capacity Share In World Capacity(%) (Mn spindles) 60 55 35 31 50 30 39 22 40 25 20 30 15 20 10 5 5 3 3 9 9 5 10 5 0 0 CHINA INDIA PAKISTAN BRAZIL INDONESIA SOURCE:ITMF India has 39 Mn spindles, which is 22% of the world installed
Slide 6: India: Exports of Cotton Yarn
India: Exports of Cotton Yarn Export of Cotton Yarn Indian Share In World Trade In Cotton Yarn(%) (000 tons) 600 513 511 445 450 22 500 438 25 14 400 20 244 300 15 200 121 10 4 100 5 0 0 1991 1995 2000 2001 2002 2003 2004 1990 1995 2004 SOURCE:ICAC Cotton yarn exports recorded a growth rate of 10.36
Slide 7: Indian Textile Industry: Weaving
Indian Textile Industry:Weaving (Installed capacity) Installed capacity of Shuttleless looms World Shipment of Shuttleless looms(%) (nos.) 1992-2003 70000 60930 60000 INDIA 3% 50000 OTHER 31% 40000 27000 30000 21000 21000 20000 16000 16000 CHINA 20000 46% 10000 TAIWAN 10% THAILAND 2% PAKISTAN 0 INDO
Slide 8: India: Fabric Processing
India: Fabric Processing INDIA Vs WORLD ( COMPOSITION OF FABRIC EXPORT) 100 40 80 74 60 40 60 20 26 0 INDIA WORLD AVERAGE GREY FABRIC PROCESSED FABRIC Fabric processing is the weakest link in India’s entire textile chain. The INDIA: SECTOR WISE FABRIC PROCESSING(%) technology driven mill sector has
Slide 9: Government Initiatives
Changing Face of the Indian Textile Industry Government Initiatives... A target of USD 30 Bn of exports of textiles in 2010 (current USD 13 B) Textile Up-gradation Fund (TUFS) to provide finance at 5% cheaper interest cost In addition to the above 5% interest subsidy, the processing sector has
Slide 10: The Turning Point
The Turning Point..…. Quotas have ended on Jan 1 2005 Abolition of quota throws up immense opportunity for countries in Indian subcontinent as a base for outsourcing The world trade in apparels is slated to increase from US$200 Billion to US$300 Billion in the next 5 years. India’s share is
Slide 11: Growth drivers for domestic consumption of textiles
Growth drivers for domestic consumption of textiles and textile products Growth of the “purchasing population” Domestic Demand Drivers Rising income Increasing levels urbanisation Vardhman
Slide 12: India: Fibre Consumption Outlook 2010
India: Fibre Consumption Outlook 2010 PER CAPITA FIBRE CONSUMPTION(KG) 34 35 30 25 20 15 8.4 8 10 3 Increasing exports and 5 0 AVER AGE C HINA IND IA US A W O R LD Growing domestic market Would lead to increase in fibre consumption from about PER CAPITA FIBRE CONSUMPTION OUTLOOK 2010 6 Mn tons at pr
Slide 13: On Supply Side: Strong Base For Cotton
On Supply Side: Strong Base For Cotton Is The Fundamental Strength COTTON PRODUCTION BY 2010 COTTON PRODUCTIVITY PER (MN TONS) HECTARE(KG) 555 5.5 6 600 430 4.1 5 500 4 400 3 300 2 200 1 100 0 0 2005 2010 2005 2010 SOURCE:INDUSTRY ESTIMATES Largest area under cotton cultivation in the world - 9 ml
Slide 14: The Catalyst Of Growth: Conducive Fiscal Policy Framework
The Catalyst Of Growth Conducive Fiscal Policy Framework Transition Point of Inflexion Phase 2-4 years PRE-2005 POST 2005 A mix bag of removal of quota restrictions and fiscal policy initiatives taken by the government would change the growth trajectory upwardly in post ATC regime Vardhman
Slide 15: Investment Outlook 2010
Investment Outlook 2010 ESTIMATED CAPACITY EXPANSION INVESTMENT(RS BILLION) ADDITIONAL SPINDLES 7 Million 140 REQUIREMENT (No.) ADDITIONAL SHUTTLE 70000 280 LESS LOOMS (No.) FABRIC PROCESSING 10 Billion Mtrs 90 CAPACITY (p.a.) BASED ON ACCENTURE ESTIMATES TOTAL 510 Vardhman
Slide 16: Expected Outcome: Exports US$ 30 Bln
Expected Outcome: Exports-US$ 30 Bln 35 30 CLOTHING 25 THE MAJOR GAINER 20 20 15 10 6 7 FABRIC 5 3 2 3 YARN 0 2003 2010 SOURCE : CII Accenture Study Vardhman
Slide 17: Vardhman - The Group
1 The Indian Textile Industry 2 Vardhman - The Group 3 Plans and prospects Vardhman
Slide 18: Vardhman Group Mission Statement
Vardhman Group “Mission Statement” Vardhman aims to be a world class textile organisation producing diverse range of products for the global textile market. Vardhman seeks to achieve customer delight through excellence in manufacturing and customer service based on a creative combination of state-of
Slide 19: Vardhman Group: An Overview
Vardhman Group : An Overview Incorporated in 1965 under the Leadership of Mr. S.P.Oswal Ethics and system based organisation US$ 500 million group OTHERS 94% VARHDMAN 6% Largest installed The largest capacity in spinning in The largest yarn processor manufacturer & exporter India - 500,000 spi
Slide 20: Vardhman Group: Snapshot
Vardhman Group : Snapshot Mahavir Spinning Mills Ltd (Mahavir) Largest Company in the group incorporated in 1973. Main Business : Yarn, Fabric, Sewing Thread & Steel Gross Turnover for FY 2004-05 : Rs.19.31 billion Vardhman Threads Ltd (VTL) VMT Spinning Co. Ltd (VMT) Started as Joint Ventur
Slide 21: Vertically Integrated Group
Vertically Integrated Group…. Sewing Acrylic Thread Yarn 1982 Staple Cotton/Blended Fibre 1965 1999 Grey Fabric Fabric Processing 1992 1999 …with a detour in Steel. Steel 1973 Started During.. Vardhman
Slide 22: Yarn
Yarn Largest spinning group of the country with 0.50 mln spindles Turnover as on March 31, 2005 : Rs. 11.34 billion Ten production plants located in the states of Punjab, Himachal Pradesh and Madhya Pradesh. Technical tie-ups with the world leaders from Japan and Korea The largest exporter
Slide 23: Yarn (Cont...)
Yarn (Cont...) Product Range Wide range of specialised grey, dyed and a variety of blended yarns in cotton, polyester and acrylic : Grey yarns Dyed yarns-cotton Dyed yarns-Blended and Synthetics Cotton hosiery, weaving Crayons (Cone dyed Paragon (fibre dyed open end and tyrecord yarns cotton y
Slide 24: Focus on more value addition
Focus on more value addition- %age of domestic yarn sold 100 93 Normal 87 Specialised Yarn 80 68 60 40 32 20 13 7 0 1980 1995 2005 Vardhman
Slide 25: Sewing Thread
Sewing Thread Started in 1982 as forward integration to Yarn Business. Current capacity of apprx 20 tpd in its plants at Punjab, H.P. & Tamilnadu. Turnover as on March 31, 2005 : Rs. 2.78 billion Products: Apparel Sewing Threads Specialty Threads Textile Crafts Kite Flying Licensing
Slide 26: Fabric
Fabric The group entered Fabric business in 1992. Capacity as on 31st Dec 2005 264 Looms. Entered the processed fabric market in 1999. Turnover as on March 31, 2005 was Rs 2.81 billion One of the few fully integrated fabric suppliers in the country. Dedicated to product innovation, world c
Slide 27: Quality Consciousness
Adopted global Quality Consciousness quality standards Uster standards- quality certification AZO free dyes certification for overseas markets Preferred Fabric Supplier to Global Brands ISO-9002- Vardhman is the first Indian textile company in India to have it Vardhman
Slide 28: Fibre
Fibre Ventured into manufacture of Acrylic Staple Fibre in 1999 Located at Bharuch in Gujarat in collaboration with Marubeni Corporation and Japan Exlan Co. Ltd., of Japan. Capacity 16,500 mtpa Turnover as on March 31, 2005 : Rs. 2.05 billion World class wet spun technology with highly autom
Slide 29: Steel
Steel Vardhman Special Steels established in the year 1972. Manufactures Special and Alloy Steel. Turnover as on March 31, 2005 : Rs. 3.21 billion Application of products in automotive components, forging, ball bearings, engineering applications, railways, defence etc. Preferred OE supplie
Slide 30: Technology and Research
Technology and Research “QUEST FOR THE BEST” VARDHMAN GLOBAL ALLIANCES Fibre and Yarn Dyeing NIHON SANMO, JAPAN 1992 Gassed Mercerised Yarns KYUNG BANG, SOUTH KOREA 1994 Cotton Yarns TOHO RAYON, JAPAN 1995 JAPAN EXLAN AND MARUBENI CORP, Acrylic Fibre 1996 JAPAN Fabric Dyeing & Finishing TOKAI SENKO,
Slide 31: Some Export Destinations
Some Export Destinations E. Union USA Australia Canada China Egypt Mauritius Hong Kong Bangladesh Israel Italy Japan Export Turnover FY 2005 Korea USD 100 million apprx. Malaysia South Africa Sri Lanka Vardhman
Slide 32: Shift towards value added items
Shift towards value added items 200 5 2002 Spg - 0.04 lac spindles Dyeing - 1 tpd 2000 Weaving - 56 looms Spg - 0.14 lac spindles Spg - 0.96 lac spindles Sewing Thread - 1.5 tpd Dyeing- 9 tpd Dyeing - 17.5 Steel - 40400 tpa Weaving - 16 looms Weaving - 48 looms Mercerization - 2.3 tpd Mercerization
Slide 33: The Journey so far in the last few years
Key Financials (Rs.in Billion) 1991 2005 Turnover 3.29 22.19 Business Portfolio Gross Block 1.75 18.03 1991 2005 Net Block 1.02 9.54 Spinning Spinning Net Worth 1.12 9.91 Sewing Thread Sewing Steel Thread Specialty Yarns Steel Grey Fabric Processed Fabric Acrylic Fibre CAGR 15% V
Slide 34: Group Financials for the Year Ended March 31, 2005
Group Financials for the Year Ended March 31,2005 (Rs.in Billion) Operating Profit Operating Return on Company Turnover Net Worth Profit after Tax Margin Net Worth MSML 19.31 3.16 1.21 16% 8.00 15% VAL 2.05 0.43 0.20 21% 1.27 16% VMT 0.62 0.08 0.01 13% 0.34 3% VTL 0.21 0.06 0.06 29% 0.30 20% Vardhma
Slide 35: Segment-wise Financials for the Year Ended March 31, 2005
Segment-wise Financials for the Year Ended March 31,2005 (Rs. in Billion) PBDIT as PBDIT as Capital Segments Turnover PBDIT Dep. PBIT % % Cap. Employed Turnover Emp. Yarn 11.34 1.82 0.80 1.02 11.17 17% 17% Sewing 2.78 0.37 0.05 0.32 1.45 13% 26% Thread Fabric 2.81 0.44 0.15 0.29 2.16 16% 20% Fibre 2
Slide 36: Segment-wise Financials for Nine Months ended 31.12.2005
Segment-wise Financials for Nine Months ended 31.12.2005 (Rs. in Billion) PBDIT as PBDIT as Capital Segments Turnover PBDIT Dep. PBIT % % Cap. Employed Turnover Emp. Yarn 9.54 2.17 0.62 1.55 11.28 23% 19% Sewing 2.55 0.42 0.04 0.38 1.72 16% 24% Thread Fabric 2.32 0.43 0.13 0.30 3.33 19% 13% Fibre 1.
Slide 37: Shareholding Pattern as on 31st Dec, 2005
SHAREHOLDING PATTERN AS ON 31st Dec, 2005 Mahavir share Trust 4% Others 17% foreign holdings 5% Banks/FI's 3% Promoters & Persons Mutual Funds acting in concert 8% 63% Vardhman
Slide 38: Vardhman: Competitiveness Drivers
Vardhman : Competitiveness Drivers Scale of operations - Vertical integration Focus on diversified and value added products Quality consciousness Technology and research People processes Learning and knowledge driven organisation Vardhman
Slide 39: People Processes
People Processes Setting up of HRD centers for worker training In House Training and Development Centre for staff and management Regular benchmarking within & outside group Olympiads- workers competition on skills Strong workforce of and productivity around 17,000 people Quality circle com
Slide 40: Learning And Knowledge Driven Organisation
Learning And Knowledge Driven Organisation Focus on continuous product and process development Product development cells Knitting centre R&d facilities Marketing-manufacturing joint committees Service Orientation Reducing Cycle Times Fabric Design Centre for Fabric Development Stro
Slide 41: Plans and prospects
1 The Indian Textile Industry 2 Vardhman - The Group 3 Plans and prospects Vardhman
Slide 42: Vardhman Group Is Well Positioned To Take Advantage Of Positive Developments
The Vardhman Group Is Well Positioned To Take Advantage Of Positive Developments In The Industry Vardhman
Slide 43: Our Investment Plans
Our Investment Plans …. To maintain its share of around 1.5%, Vardhman Group is planning to go in for expansions of Rs.15-16 billion approx.* in the next 3 years (including F.Y. 2005-06) depending upon opportunities, profitability and management of business, primarily in fabric with some investmen
Slide 44: On Going Expansion
On Going Expansion ….. The Group is planning expansions in it fabric processing capacity in view of the post quota opportunities and for the growth of the textile business. The expansion of Weaving and Spinning capacities will also be taken up as backward integration Increase in its Fabric Process
Slide 45: Capex Plan in Mahavir Spinning Mills Ltd (MSML)
Capex Plan in Mahavir Spinning Mills Ltd (MSML) MSML is proposing to go in for expansions of Rs.15-16* Bn approximately in the next 3 years (including FY 2005-06) through expanding/modernizing its current capacities of Spinning, Weaving & Fabric Processing at H.P. and Punjab. doubling its capaci
Slide 46: Market Performance
MARKET PERFORMANCE The Stock has outperformed the Sensex in the past 250 one year -- Normalised MSML -- 200 -- Normalised Sensex -- 150 100 50 0 June-05 Dec-04 Aug-05 Feb-05 Apr-05 Oct-05 Oct-04 Mahavir Rs/share Last price 291 Market Cap (Rsmn) 16810 52 Week High 325 52 Week Low 144 1 year average 2
Slide 47: Vardhman Geared to Explore a World Beyond Boundaries
Vardhman Geared to Explore a World Beyond Boundaries Vardhman