Welspun Living Limited · NSE:WELSPUNLIV
Welspun Living — Welspun India — Investor Presentation (October 2019)
53 slides from Welspun Living's investor presentation, October 2019
Slide 1: Investor Presentation October 2019
INVESTOR PRESENTATION October 2019 Owned Brands Innovations ® ® ® Licenses 1
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation is provided by Welspun India Limited (the “Company”), although care has been taken to ensure that the information in this presentation is accurate, and that the opinions expressed are fair and reasonable, the information is subject to change
Slide 3: Introduction to Welspun Group
INTRODUCTION TO WELSPUN GROUP Global Leader in Global Leader in Infrastructure Home Textiles Large Diameter Pipes Investments in Oil & Gas Group Revenue Fixed Asset Base Employees US$ 2.7 Billion US$ 0.9 Billion 25,000+ 3
Slide 4: Agenda
1. Welspun India: An Introduction 2. Industry Overview AGENDA 3. Welspun India: Key Differentiators 4. Key Strategic Initiatives 5. Welspun 2.0 & Way Forward 4
Slide 5: Welspun India: An Introduction
WELSPUN INDIA: AGENDA AN INTRODUCTION 5
Slide 6: Welspun India: Overview
WELSPUN INDIA: OVERVIEW Largest Ranked #1 Home Textiles Company Globally(1) among Home Textile Suppliers With presence in to USA Bed, Bath & Flooring by Home & Textiles Today magazine Presence in 5 Times in Last 6 Years 50+ Countries Every 5th Towel Trusted and Preferred Suppliers to Every 9th Sheet
Slide 7: Key Milestones
KEY MILESTONES 66 CAGR 14% 61 Revenues (Rs. Bn) 53 (2008-19) 32 16 Began 4.5 Operations 1.3 FY 1985 1995 2005 2008 2012 2015 2018 2019 FY 1985 1993 1995 2005 2006 2008 2010 2012 2014 2015 2016 2017 2018 2019 Entry into Rugs Ranked No.1 Home Embarked upon Began the Set up Anjar, Gujarat Textile expor
Slide 8: Shareholding and Trading Snapshot
SHAREHOLDING AND TRADING SNAPSHOT Shareholding Pattern Mar 31, 2019 September 30, 2019 12.4% 13.0% 0.6% Promoter 1.8% FIIs 10.2% 8.1% Mutual Funds / AIF 8.3% 8.6% Banks and Insurance Cos 68.5% 68.5% Public Market Statistics As on September 30, 2019 INR USD Price per share 52.65 0.74 No of Shares out
Slide 9: Industry Overview
INDUSTRY AGENDA OVERVIEW 9
Slide 10: Asian Dominance in Home Textiles
ASIAN DOMINANCE IN HOME TEXTILES India 5% Textiles & US$ 811 bn Apparel China 35% India 6% Textiles US$ 318 bn China 37% India 12% Home Textiles US$ 48 bn China 36% Source: WTO - 2018 report, Texprocil, OTEXA 10
Slide 11: Global Market Opportunity
GLOBAL MARKET OPPORTUNITY Global Home Textile Market Market Composition 242 (USD Bn) Row 25% 80 145 Wholesale Level 48 Retail Level Europe 44% US 31% 2017 2025E US Home Textile Market (2018) US Home Textile Market US and Europe are the major end markets (USD Bn) valued at c.$15 bn comprising a 75%
Slide 12: India - Largest Player in US Market
INDIA- LARGEST PLAYER IN US MARKET Market Share in US Towel Market 9 percentage pts 38% 40% 39% 39% 39% 30% India continues 23% 24% 25% 23%22% 24% 25% 25% to dominate the 22% 22% 21% 20% 21% 15% 15% 16% 16% 15% US Towel Market CY2009 CY2015 CY2016 CY2017 CY2018 YTD2019 India China Pakistan ROW 23 pe
Slide 13: Factors Contributing India's Competitive Advantage
FACTORS CONTRIBUTING INDIA’S COMPETITIVE ADVANTAGE Largest Favourable Competitive Producer of Socio-Economic Costs Cotton Factors 4 5 6 Strong Political Global Strong Domestic Leadership Manufacturing Market with Supportive Scale Potential Policies 13
Slide 14: Welspun India: Key Differentiators
WELSPUN INDIA: AGENDAKEY DIFFERENTIATORS 14
Slide 15: Welspun India: Global Leader in Home Textiles
WELSPUN INDIA: GLOBAL LEADER IN HOME TEXTILES 8 1 Leading Market Player Consistent focus on free with a Wide Product cash flow Range 7 2 Experienced Board and Vertically Integrated Management with Proven Presence with Significant Track Record Capabilities 6 3 Global Distribution Sustainability at th
Slide 16: Leading Market Player with a Wide Product Range
1 LEADING MARKET PLAYER WITH A WIDE PRODUCT RANGE Widest product range in the Home Textiles segment Towels, Bath Sheets, TOB, Basic Carpets, Rugs, Robe & Fashion Bedding Flooring Solutions A differentiated End-to-end Solutions Provider in Home Textiles Uniquely positioned for cross-selling due to Cu
Slide 17: Leading Market Player
1 LEADING MARKET PLAYER Ranked No.1 supplier to the US 5 times in last 6 years by Home & Textiles Today magazine Every 5th towel sold in US is made by Welspun Every 9th sheet sold in US is made by Welspun 11% 19% 15% 7% CY13 CY18 CY13 CY18 Welspun’s Market Share in US Towels Market Welspun’s Market
Slide 18: Vertically Integrated Presence with Significant Capabilities
2 VERTICALLY INTEGRATED PRESENCE WITH SIGNIFICANT CAPABILITIES India Supply Vertically Integrated Facilities Across Manufacturing Chain Advantage Cotton Spinning Weaving Processing Cutting & Sewing Logistics Captive Power Current integration of about 70% in Spinning and Weaving Captive power gen
Slide 19: Global Distribution Network with Marquee Clients
3 GLOBAL DISTRIBUTION NETWORK WITH MARQUEE CLIENTS Warehouses Manufacturing Facility Corp HQ/Marketing Offices Country Served Delivery and Reach in Over 50 Countries 19
Slide 20: Diversified Brand Portfolio
4 DIVERSIFIED BRAND PORTFOLIO Spectrum of Welspun Brands: Continue to Evolve Premium & Sustainability & Value Innovation Luxury Empowerment ® ® Coveted Licenses Branded Products Contribution to Sales at 17% in FY19 20
Slide 21: Track Record of Innovation
5 TRACK RECORD OF INNOVATION Increasing Share of Innovative Products • 38% of Sales from Innovative Products 34% 36% 37% 38% 30% • 30 unique inventions filed globally • Contributes more than $180 Mn of Sales annually ® FY15 FY16 FY17 FY18 FY19 • Gaining traction in hospitality & domestic market The
Slide 22: Sustainability
MA RBZ Vy wrtsren nor HOME TEXTILES (6) SUSTAINABILITY Sustainable Celio Zero Fresh Green Inclusive & Sourcing & Waters usage & Cover & Workforce @ SOURCING OF RAW MATERIALS MANUFACTURING PROCESS G ij eo | | , OFKO-TEX® Organic | BEY “fed le 6— MADE IN GREEN Cotton or ited) 7 PRODUCTS Yemowers / & O
Slide 23: Inclusive Growth: Corporate Social Value
6 INCLUSIVE GROWTH: CORPORATE SOCIAL VALUE ENVIRONMENT. Sustainable business practices, clean water, improved sanitation and development of green spaces within the communities. EMPOWERMENT. Welspun 2.0, Spun centers, Smart Villages are empowering the women in Gujarat to lead the way to economic inde
Slide 24: Experienced Board & Management with Proven Track Record
7 EXPERIENCED BOARD & MANAGEMENT WITH PROVEN TRACK RECORD Board of Directors Management Team B.K.Goenka, Chairman Rajesh Mandawewala, Managing Director; Member of Board • Amongst India’s most dynamic businessmen • In-charge of textile business; instrumental in growing reach over 50 countries • Ranke
Slide 25: Awards & Accolades
7 AWARDS & ACCOLADES – TESTIMONY TO EXCELLENCE Dipali Goenka Platinum Award Digital / Social Media Water Stewardship Campaign of the Year Featured at #16 in (2018) Christy Asia’s Top 50 Power (2018) Businesswomen (2016) Asia’s 50 STP Water Power Social Media Recycle & Reuse Businesswoman Marketing S
Slide 26: Continued Focus on Free Cash Flow
8 CONTINUED FOCUS ON FREE CASH FLOW 3,770 2,405 Rs. in Millions 859 785 907 795 714 786 773 787 FY15 FY16 FY17 FY18 FY19 FCF Dividend FCF positive for five consecutive years 26
Slide 27: Trend of Financial Performance
8 TREND OF FINANCIAL PERFORMANCE Total Income EBITDA 16,831 16,639 CAGR 10% 67,211 66,084 60,143 61,318 CAGR 10% 13,691 54,924 12,046 11,467 44,772 10,253 Rs. miilion 36,965 Rs. million 35,682 7,746 6,438 FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20 FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20 Net Profit*
Slide 28: Key Strategic Initiatives
KEY STRATEGIC AGENDA INITIATIVES 28
Slide 29: Welspun's Patented Global Cotton Integrity Process
WELSPUN’S PATENTED GLOBAL COTTON INTEGRITY PROCESS ® Welspun’s patented Wel-Trak® process, supplemented by scientific traceability from Oritain™, is now the industry defining end-to-end fiber tracking process. ® - Verifies fiber from the origin and at every stage of production - Ensures rigorous pro
Slide 30: Smartsourcing: Asset Light Future Growth
SMARTSOURCING: ASSET LIGHT FUTURE GROWTH SYNERGISTIC BENEFITS Assured Lower Lower inventory Recycling of Supply transportation Lower Interest packaging costs cost Collaboration with • Already Established Ancillaries Suppliers for Lead Time • Spinning Reduction via Exclusive Set-up of Welspun • Trims
Slide 31: Omni-Channel Support to Top Global Retailers
Omni-Channel Support to Top Global Retailers via Product Development, Warehousing, Pick and Pack, Drop-Ship and Analytics SCM Analytics for Our Customers 31
Slide 32: Welspun 2.0 & Way Forward
WELSPUN 2.0 AGENDA & WAY FORWARD 32
Slide 33: Welspun India: Vision 2022
WELSPUN INDIA: VISION 2022 + + + + 1 2 3 4 5 New Channels / Innovation Brands Sustainability New Products Markets Innovative / Branded Women Share of Domestic Revenue Net Debt Revenue Share Revenue Employees $1.5bn NIL 50% 20% 20% 33
Slide 34: Innovation & Patents
1 INNOVATION & PATENTS Focus on expanding innovative & patented products portfolio offering SUPER CELLUSOSE WEL-TRAK™ ® Sustainable blend of Cellulosic fibre: Welspun’s proprietary supply chain Naia™ sourced from wood & recycled transparency program. We’ve ® polyester. Ensures long-lasting color par
Slide 35: Brands: Christy
2 BRANDS : CHRISTY Christy Brand Reinvigorated & Launched Globally Introduced the brand in US, China and Middle East; witnessed healthy growth Coveted Associations like Wimbledon, Rugby World Cup and Royal Ascot Brexit uncertainty has impacted sales in recent quarters However, UK retail appe
Slide 36: Brands: Spaces
2 BRANDS : SPACES Focus on tapping Domestic Market potential India – one of the fastest growing economies in the world with huge potential for increasing organized market ‘Spaces’ was recently recognized as a best brand in home category by Myntra. Also, received Amazon Marketing Services Award f
Slide 37: Brands: Welspun
2 BRANDS : WELSPUN Value brand ‘Welspun’: Focus on tapping a larger segment of the domestic market Campaign starring Amitabh Bachchan IPL: Official Partner of Kings XI Outdoor Advertising Punjab Election TVC on News Channels Campaign at Kumbh Mela Reaching Larger Audience 37
Slide 38: Sustainability in Everything That We Do
3 SUSTAINABILITY IN EVERYTHING THAT WE DO STP Installed with a Capacity to Process 30 million Liters Per Day; 85% treated water used at plant Saved 6,920 million Liters of recycled water in CY2018 (Equal to New York City Water consumption for 5 years) 68 million KWH energy saved in CY2018 (Equal to
Slide 39: New Markets
4 NEW MARKETS Composition of Sales (FY19) Presence in Japan, the Middle Future Strategy East, Australia, Russia and • Indian Urban Home Textile market South Africa is expected to grow from INR • Welspun India to focus on increasing 257bn in 2016 to INR 438bn by presence in subscale / new markets RoW
Slide 40: New Channels: E-commerce
4 NEW CHANNELS : E-COMMERCE In key developed markets, E-commerce constitutes 10-15% in Home Textiles. Expected to reach ~25% by FY23 Welspun approach to tap the Ecommerce opportunity Key Ecommerce Big-Box Retailers’ Exclusive Online Platforms Own Website Websites D2C Players • Key Ecommerce players
Slide 41: New Channels: Hospitality
4 NEW CHANNELS : HOSPITALITY Opportunity Welspun only constitutes ~3% of total US hospitality market - The US hospitality market is c. $1.5bn (i.e. for towels and sheets) - Welspun’s revenue from this segment is c. $50mn indicating huge growth potential High potential global wellness economy of abou
Slide 42: New Products: Flooring Solutions
5 NEW PRODUCTS : FLOORING SOLUTIONS Wide range of Flooring products Carpet Tiles Broadloom Carpets Luxury Performance Artificial Grass & Area Rugs Tiles (LPT) Welspun Flooring: Fully integrated flooring vertical - Aim to become a one-stop flooring solutions provider for domestic and international ma
Slide 43: Flooring - Export Opportunities Opening Up
5 FLOORING – EXPORT OPPORTUNITIES OPENING UP U.S. Flooring Industry: $27.2 Billion *Resilient Flooring includes: Resilient category has seen the LVT (13%), Vinyl Sheet & Floor fastest growth with a CAGR of Tile (7%) & Others (cork,rubber, 5.3% from $1.9 billion in 1996 to Resilient Flooring* $5.6 bi
Slide 44: New Products
5 NEW PRODUCTS 1 Untapped Opportunity in Bedding • Large untapped opportunity in basic bedding, comforters and quilts • Currently, China dominates the market; India is gradually making inroads • Contributed ~3% of sales in FY19 2 Technical / Advanced Textiles • Products for specialized use in health
Slide 45: Moving Towards Vision 2022
RAISING THE BAR Differentiation Strategy : Industry Defining Focus on New Product Innovation, Traceability New channels Domestic Market Lines Branding & Solution Sustainability ® MOVING TOWARDS VISION 2022 Volatile raw Rising energy costs Volatile Rupee material costs 45
Slide 46: Key Highlights & Financials
KEY HIGHLIGHTS & AGENDA FINANCIALS 46
Slide 47: Key Highlights - Q2FY20
KEY HIGHLIGHTS – Q2FY20 Roped in Amitabh Emerging business grew by Bachchan as brand ‘Rangana by Spaces’ 30% YoY ambassador; Launched grew 74% YoY ‘Badal dalo’ campaign Flooring business – Awarded ‘Vendor of the year’ Prepaid term loans of Commenced operations for sustainability by Macy’s Rs. 2,842
Slide 48: Financial Performance - Q2 FY20 / H1 FY20
FINANCIAL PERFORMANCE – Q2 FY20 / H1 FY20 (Rs. Million) YoY QoQ YoY Particulars Q2FY20 Q2FY19 Q1FY20 H1FY20 H1FY19 Change Change Change Total income 18,371 17,978 2.2% 17,363 5.8% 35,682 33,756 5.7% EBITDA 4,034 3,186 26.6% 3,712 8.7% 7,746 6,437 20.3% EBITDA Margin 22.0% 17.7% 424 bps 21.4% 58 bps
Slide 49: Financial Performance Trend
FINANCIAL PERFORMANCE TREND (Rs. Million) Particulars FY15 FY16 FY17 FY18 FY19 H1FY20 Total income 54,924 60,143 67,211 61,318 66,084 35,682 Growth % 22.7% 9.5% 11.8% -8.8% 7.8% 5.7% EBITDA 13,691 16,831 16,639 12,046 11,467 7,746 EBITDA Margin 24.9% 28.0% 24.8% 19.6% 17.4% 21.7% Depreciation 3,329
Slide 50: Balance Sheet Trend
BALANCE SHEET TREND (Rs. Million) Particulars 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 30-Sep-19 Net Worth 14,732 19,700 23,971 26,057 27,793 30,377 Short Term Loans 13,936 13,533 11,721 12,580 14,080 13,747 Long Term Loans 20,864 18,945 21,393 20,228 19,024 16,226 of which Welspun Flooring
Slide 51: Financial Ratio Trend
FINANCIAL RATIO TREND FY15 FY16 FY17 FY18 FY19 Q2 FY20 Solvency Net debt/Equity 2.07 1.58 1.27 1.16 1.09 0.92 ratios Net debt/EBITDA 2.23 1.85 1.83 2.51 2.64 1.81 EBIT/Interest 3.66 5.54 7.32 4.98 4.46 7.76 Current Ratio 1.12 1.15 1.41 1.42 1.25 1.24 Operational ratios Fixed Asset turnover 2.04 1.77
Slide 52: Dividend Policy
DIVIDEND POLICY Board Approved 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 DPS EPS per share Percentage FY15 5.09 1.05 0.21 25% FY16 5.99 1.30 0.26 26% FY17
Slide 53: Thank You
THANK YOU For further details, please contact: Altaf Jiwani Director (Finance) & CFO - Welspun India Limited Email: altaf_jiwani@welspun.com Harish Venkateswaran AVP - Group Finance and Strategy Email: harish_venkateswaran@welspun.com 53