Welspun Group | Home Textiles Leadership
Welspun India Limited (WIL)
Investor Presentation July 2014
Welspun Group | Home Textiles Leadership
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Welspun Group | Home Textiles Leadership
Disclaimer
Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking
statements,” including those relating to general business plans and strategy of Welspun India Limited (“WIL"), its future outlook and
growth prospects, and future developments in its businesses and its competitive and regulatory environment. Actual results may differ
materially from these forward-looking statements due to a number of factors, inter alia including future changes or developments in
WIL's business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological changes
and political, economic, regulatory and social conditions in India. This presentation does not constitute a prospectus, offering circular
or offering memorandum or an offer invitation, or a solicitation of any offer, to purchase or sell, any securities of WIL and should not
be considered or construed in any manner whatsoever as a recommendation that any person should subscribe for or purchase any of
WIL's securities. Neither this presentation nor any other documentation or information (or any part thereof) delivered or supplied
under or in relation thereto shall be deemed to constitute an offer of or an invitation by or on behalf of WIL to subscribe for or
purchase any of its securities.
WIL, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with
respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information
contained in this presentation, unless otherwise specified is only current as of the date of this presentation. WIL assumes no
responsibility to publicly amend, modify or revise any forward looking statements contained herein, on the basis of any subsequent
development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is
based on management information and estimates. The information contained herein is subject to change without notice and past
performance is not indicative of future results. WIL may alter, modify or otherwise change in any manner the content of this
presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and
disseminated in any manner.
THE INFORMATION PRESENTED HERE IS NOT AN OFFER INVITATION OR SOLICITATION OF ANY OFFER TO
PURCHASE OR SELL ANY SHARES OR ANY OTHER SECURITY OF WIL.
This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.
These materials are not an offer or solicitation of any offer of securities for purchase or sale in or into the United States, Canada or
Japan.
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Welspun Group | Home Textiles Leadership
WIL – An Overview
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Global leader in Home Textiles (Speciality) 1st among Home Textile Suppliers to US*
Rank # 1: Bath Towels; Rank # 2: Bed Sheets & Pillow case; Rank # 4: Rugs 14 of Top 30 global retailers serviced Global Reach and Delivery (more than 50 countries) State-of-the-art manufacturing facilities at Anjar and Vapi (Gujarat)
Innovation emphasis: Patents / Pending patents – 6 ; Trademarks – 7 About 25% of sales comes from innovative products
Export focus: About 95% of production exported
* Based on ranking by Home Textiles Today
Welspun Group | Home Textiles Leadership
Promoters, 73.10%
Banks, MF, & Institutions,
10.92%
Non-Institutional
Public, 15.98%
WIL - Financial Overview
Shareholding Pattern as on March 31, 2014 Summary Market Statistics
Consolidated Financial Summary – Continuing business*
*All figures re-grouped and restated to show the continuing textile business
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As on July 2, 2014
Price per share - INR 193.8
No: of Shares Outstanding (Mn) 100
Market Capitalization (INR mn) 19,442
Enterprise value (INR mn) 46,077
P/E (x)* 4.63
EV/EBITDA (x)* 5.00
* On TTM basis
24,471
29,329
36,473
44,954
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
FY11 FY12 FY13 FY14
Revenue in INR Million
3,994
5,960 6,438
10,253
0
2,000
4,000
6,000
8,000
10,000
12,000
FY11 FY12 FY13 FY14
EBITDA in INR Million
Welspun Group | Home Textiles Leadership
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12 16 17
26 28
32 36
45
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
WIL – Revenue Milestones
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WIL Revenue in Rs. Billion
Textiles business has been growing at a CAGR of 27% since the start of Anjar Facility.
Sustained growth points out the potential of Home Textile market in the world.
International operations has been the major part of the revenues.
Anjar facility is the largest home textiles facility in Asia.
• 1993: Towels facility at Vapi
• 2000: JV for bath robes
Pre-2005
Towels & Sheets Facility at Anjar
Entry into bath rugs & top of bed
Welspun Group | Home Textiles Leadership
Structural Change in Global Textile & Specialty Textile
Welspun India – Global Leader in Home Textiles
Financial Highlights
Road Ahead – Maintaining leadership
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Welspun Group | Home Textiles Leadership
Structural Change: Asian Dominance in Home Textiles
Textiles and Clothing
US$708 bn
Textiles
US$286 bn
Home textiles
US$45 bn
• China: 36%
• India : 4%
• China: 33%
• India : 5%
• China: 35%
• India : 11%
Source :- WTO, Texprocil, Company estimates 7
Welspun Group | Home Textiles Leadership
Structural Change: Non-India players facing challenges
China Pakistan Bangladesh
Big importer of cotton
Losing export Competitiveness
Focus shift from textiles to higher value-added industries
Wage inflation
Rising power costs
Stricter environmental compliance
Focus on domestic consumption
Yarn capacity closures
Yuan appreciation
Cotton Importer
Energy issues
Geopolitical issues
Compliance issues
Negligible Cotton Production
Environmental compliance issues
Workers’ safety issues
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Welspun Group | Home Textiles Leadership
Structural Change: Tailwinds favoring India
India Advantage
Socio-economic
factors
Competitive costs
Good quality, surplus cotton available 2nd largest producer & net exporter of cotton Yarn exporter
Democracy with stable government Better environmental and labour law compliance
Raw material
availability
Supportive Govt.
policies
Factor costs, particularly power and wages, competitive with other key producers Chinese costs have risen substantially
Textile Upgradation Fund scheme Holistic enabling environment
Integrated textile
presence
Significant presence across the value chain from cotton to made-ups
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Welspun Group | Home Textiles Leadership
Structural Change: Reflecting in India’s market share
Source: WTO
4.2% 4.3%
5.1% 5.2% 5.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
5
10
15
20
2008 2009 2010 2011 2012
Textile exports (US$ bn)- LHS Market share - RHS
India’s Global textile exports
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India is now the second largest exporter of textile products, behind China
In textiles (excl clothing), India’s share of world exports at ~5% and rising
Within that, India’s share in Home Textiles much higher at ~11%
India’s share in “Cotton” Home Textiles is even higher and better than China in many products
Welspun Group | Home Textiles Leadership
US Imports from Various countries – Market share
Structural Change: Home Textile Market Share
Source: Otexa
30% 31% 35% 36% 36%
23% 27% 25% 26% 26%
22% 23% 24% 22% 23% 24% 20%
16% 15% 16%
2009 2010 2011 2012 2013
Towels (Cotton) India China Pakistan ROW
27% 33%
38% 45% 47%
29% 30% 24% 22% 24% 26%
21% 22% 18% 17% 18% 16% 16% 15% 13%
2009 2010 2011 2012 2013
Sheets (Cotton) India China Pakistan ROW
India’s share increased by 6 percentage points in 4 years
India’s share increased by 20 percentage points in 4 years
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Welspun Group | Home Textiles Leadership
Structural Change: Advantage India in Addressable opportunity
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Market Size
US market
European market
Other markets
Home textile market at US$45 bn
Constitutes about one-third of the global market
India best placed among competing countries
Potential to increase penetration in key categories (TOB, carpets, basic bedding etc.)
Constitutes about one-third of the global market
India competitive in spite of duty disadvantage
Proposed India - EU FTA to reduce duties by 5% - 10%
Potential to increase presence in markets like Japan, Korea, Australia
FTA with Japan, Korea to boost trade
Indian domestic market is a huge potential opportunity
Welspun Group | Home Textiles Leadership
Structural Change in Global Textile & Specialty Textile
Welspun India – Global Leader in Home Textiles
Financial Highlights
Road Ahead – Maintaining leadership
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Welspun Group | Home Textiles Leadership
WIL
Home Textiles
Leadership
Global scale
Global customer base and brands
Presence in multiple
categories
Focus on innovation
Significant market share
in key geographies
Clients moving towards Vendor
Consolidation
One –stop Solution provider
Leadership: WIL - Well Placed to Address Global Opportunities
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Welspun Group | Home Textiles Leadership
Leadership: Focus and Execution
Focussed on Home Textiles as a differentiated End-to-end Solutions Provider
Widest product range in Home Textiles segment
Uniquely positioned for cross-selling due to Customer reach, Competitive manufacturing and Global delivery model empowering higher wallet share
Track record of satisfied customers and repeat business from them
Bath Bedding Flooring
Towels Sheets Carpets
Bath robes TOB Rugs
Basic and Fashion Bedding
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Welspun Group | Home Textiles Leadership
Rest of India , 22%
Welspun, 14%
China , 26%
Pakistan, 23%
ROW, 16%
US Import of Cotton Towels in 2013
Rest of India , 38%
Welspun, 9%
China , 24%Pakistan, 17%
ROW, 13%
US Import of Cotton Sheets in 2013
Leadership: Categories
Significant market share in Towels and Sheets in the US
Rugs and TOB are relatively new products – Gaining market share
Filled products and carpets are recently launched – Expected to gain market share over the next 2-3 years
Source : Otexa, Company Estimates 16
Welspun Group | Home Textiles Leadership
• Wal Mart • Bed Bath & Beyond • Macy’s • J C Penney • Target • Kohl’s • K Mart- Sears ….. and many more
Leadership: Best-in-Class Customer Base
• Ikea • Carrefour • JYSK • El Corte Ingles • Vincenzo Zucchi S.p.A … and many more
• ASDA • Tesco • Marks & Spencer • Debenhams • House of Frazer • Christy ….. and many more
• Spaces- Home & Beyond • Welhome
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Welspun Group | Home Textiles Leadership
Leadership: Global Reach & Delivery Model
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Welspun Group | Home Textiles Leadership
“Ranked No. 1” for last 2 years by US Home Textiles Today Magazine in “Top 15 Home Supplier Giants to USA”
Largest Bath
Towels Supplier
2nd Largest Bedding Supplier
4th Largest
Bath Rugs Supplier
Leadership: Scale
Capacity: 45,000 MTPA (60,000 MTPA by FY16) Location: Anjar/Vapi Cap. Utilization: 99%
Capacity: 55 million Mtrs/year (72 mn Mtrs/year by FY16) Location: Anjar Cap. Utilization: 89%
Capacity: 12,000 MTPA (20,000 MTPA by FY16) Location: Vapi Cap. Utilization: 68%
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Welspun Group | Home Textiles Leadership
Leadership: Brands and Innovation
Exclusive Licensee for towels
Innovation
Innovation is a key differentiator for Welspun.
Innovative products account for ~25% of the revenues.
Focus on Product, Process and Supply Chain innovation
Six patents applied for till date
Hygrocotton Yarn patented in UK
(pending in USA and India)
Five other patents pending approval
Other Key Innovations
a. Eco Dry Towels
b. Hygrocotton yarn
c. License for Flex Fit
Brands and Licenses Innovation and Patents
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Welspun Group | Home Textiles Leadership
Leadership: Enhancing Resilience
Further working to develop Lat Am, Asia pacific, Indian markets and exploit the full potential of European markets.
73%
60%
27%
40%
20%
30%
40%
50%
60%
70%
80%
FY10 FY14
Geographical Revenue Mapping US Sales ROW Sales
53%
41%
20%
25%
30%
35%
40%
45%
50%
55%
FY 10 FY14
% Sales - Top 5 Customers
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Welspun Group | Home Textiles Leadership
Leadership: Pricing power
Welspun has developed strong relationships with clients over the years, which gives it better pricing power
Most clients on an index-based pricing Price varies up or down with changes in major input costs
This reduces volatility in margins
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60
80
100
120
140
160
180Index (Jan 10 = 100)
Contact price – Sample contract with one of our clients for a particular product
Welspun Group | Home Textiles Leadership
Leadership: Recognitions
2012 2013
Golden Peacock Eco-Innovation Award
Wilkinson Award for Best Product.
Tesco Homeshop Gold Supplier Award.
Texprocil Awards 2011-12 Special Gold Trophy for
Highest Global Exports
Gold Trophy for Highest Exports of Terry Towels in Made-ups
Gold Trophy for Highest Exports of Made-ups in Merchant Exporter
Sears/K-mart Vendor of the Year.
5 Star Vendor award for the year 2013 by Macy’s.
Textile Conclave 2013 Brand INDIA Largest Producer Made Ups
& Home Textiles.
Largest Exporter Made Ups & Home Textiles.
Texprocil Award 2012-13 Special Gold Trophy for
Highest Global Exports
Gold Trophy for Highest Exports of Terry Towels in Made-ups
CEO award from Sears Holding.
Green Believers Award from Frost and Sullivan's at Green Manufacturing Excellence Awards and Summit 2014.
“Best Corporate Social Responsibility Practices” award at Global CSR Excellence Leadership award 2014 by World CSR Congress.
2014
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Welspun Group | Home Textiles Leadership
“Global CSR Excellence & Leadership award”
World CSR Congress 2012 and 2013
“Outstanding CSR in Textiles Sector”
Wockhardt Foundation 2011
Welspun’s social vision is enshrined in the 3E’s
Education - Quality Education Program with 18 Govt. Schools in Kutch from 15 villages
reaching out to 5720 students and 157 teachers.
- 4 Balwadis (Pre-primary Education Centers) with 170 children being benefited.
Empowerment - 8 Vocational Centers to train women in Cutting & Stitching. 600 women
trained in stitching. Avg. earning per women per month INR 5050.
Environment & Health - Drinking water purification RO plant in Vapi reaching out to approx. 6200 people.
- Welspun has planted 2,29,654 Trees at Anjar.
Leadership: Social, Environmental and Corporate Values
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Welspun Group | Home Textiles Leadership
Leadership: Vision
Global leadership position
Best-in-class, end – to - end product
and service offering
Continuous improvement in
systems and processes
Develop human capital – The most
valuable asset
Across all business verticals and product categories
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Welspun Group | Home Textiles Leadership
Structural Change in Global Textile & Specialty Textile
Welspun India – Global Leader in Home Textiles
Financial Highlights
Road Ahead – Maintaining leadership
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Welspun Group | Home Textiles Leadership
Financial Highlights: Income statement (Continuing business)
(Rs. in million)
Strong improvement in financial performance
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* Note: On account of the change in depreciation policy from straight line method to reducing balance method, the
company had taken an additional one–time depreciation of Rs. 4,631 million in Q2FY14. In order to maintain
consistent accounting policies, the subsidiaries have also provided depreciation on reducing balance method,
resulted in an additional depreciation of Rs. 329 million in Q4 FY14. FY14 figures are normalized for these effects.
Particulars FY11 FY12 FY13 FY14*
Sales revenue 24,471 29,329 36,473 44,954
Sales growth % 20% 24% 23%
Operating EBITDA 3,615 5,566 5,946 9,211
Operating EBITDA Margin 14.8% 19.0% 16.3% 20.5%
EBITDA 3,995 5,960 6,438 10,253
EBITDA Margin 16.3% 20.3% 17.7% 22.8%
Depreciation 1,228 1,309 1,449 1,903
Finance cost 1,304 1,840 1,977 2,352
PBT 1,463 2,811 3,013 5,997
PAT 951 1,986 2,248 4,195
PAT Margin 3.9% 6.8% 6.2% 9.3%
Cash PAT 2,642 3,603 4,178 6,237
Welspun Group | Home Textiles Leadership
Financial Highlights: Balance Sheet
Debt increase in FY14 mainly on account of backward integration capex
(Rs. in mn except Ratios )
If Depreciation Policy had not been changed,
Gross Debt/ Equity : 2.10x Net Debt / Equity 1.84x
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Particulars FY11 FY12 FY13 FY14
Net Worth 7,461 7,428 9,902 11,097
Short Term Loans 6,847 7,313 9,166 11,349
Long Term Loans 13,255 12,309 11,079 18,944
Gross Debt 20,102 19,621 20,244 30,293
Cash, Cash Eqnts & Inv. 2,590 3,041 2,798 3,658
Net Debt 17,512 16,580 17,446 26,635
Net Fixed Assets (incl CWIP) 17,979 17,995 18,615 25,609
Net Current Assets** 9,033 6,290 8,221 9,991
Solvency ratios FY11 FY12 FY13 FY14
Fixed assets/Long term debt 1.44 1.47 1.68 1.35
Gross debt/Equity 2.69 2.64 2.04 2.73
Net debt/Equity 2.35 2.23 1.76 2.40
Net Long Term Debt / Equity 1.43 1.25 0.84 1.38
Long term debt/Equity 1.67 1.65 1.12 1.71
Net debt/Op. EBITDA 4.88 2.98 2.93 2.89
Average interest cost of long-term debt
at ~7%
** Net Current Assets does not include Cash & Cash Equivalents
Welspun Group | Home Textiles Leadership
Financial Highlights: Improving Operating and Return Ratios
Strong improvement in ROE and ROCE
Note : ROCE = EBIT x (1-tax rate) / Average Capital Employed; ROE = Net Profit / Average Net worth
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Operational ratios FY11 FY12 FY13 FY14
Asset turnover 0.83 1.02 1.13 1.09
Inventory days 98 83 82 82
Debtor days 28 28 28 33
Payable days 66 59 50 50
Cash conversion cycle 60 52 60 65
Return ratios FY11 FY12 FY13 FY14
ROE 14.0% 26.7% 25.9% 40.0%
ROCE (post-tax) 7.2% 11.9% 12.2% 16.3%
Welspun Group | Home Textiles Leadership
Key Financials - Trends (Continuing business)
29,329
36,473
44,954
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
FY12 FY13 FY14
Rs.
in m
illio
n
Revenues
1,986 2,248
4,195
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
FY12 FY13 FY14
Rs.
in M
illio
n
PAT After Minority
3,603 4,178
6,237
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
FY12 FY13 FY14
Rs.
in M
illio
n
Cash PAT
5,960 6,438
10,253
0
2,000
4,000
6,000
8,000
10,000
12,000
FY12 FY13 FY14
Rs.
in m
iilio
n
EBIDTA (Reported)
30
Rs.
in m
n
Rs.
in m
n
Rs.
in m
n
Rs.
in m
n
Welspun Group | Home Textiles Leadership
Structural Change in Global Textile & Specialty Textile
Welspun India – Global Leader in Home Textiles
Financial Highlights
Road Ahead – Maintaining leadership
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Welspun Group | Home Textiles Leadership
Road Ahead: Maintaining Leadership | Revenue growth
Revenue Growth
Underpenetrated Markets
Underpenetrated
Channels
Underpenetrated Product Categories
India E-Commerce Bath Robes
Europe Hospitality Carpets
Asia Pacific Branded Sales Filled Products
Latin America
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Welspun Group | Home Textiles Leadership
Road Ahead: Maintaining Leadership | Quality & Scale
Total capex plan of Rs. 24bn
Phase-1 – Capex of Rs. 11 bn, completed
Focused on backward integration and debottlenecking
To mitigate quality and availability issues of key intermediates
Phase- 2 – Potential maximum Capex of Rs. 13bn over FY15 and FY16
To be focussed on plant modernisation, automation and calibrated finished product capacity expansion
Capacity growth to be achieved without headcount increase
Capacities FY14 FY15 FY16
Yarn (MT) 38,500 50,000 60,000
Towels (MT) 45,000 50,000 60,000
Sheets (‘000 metres) 55,000 60,000 72,000
Rugs incl Carpets(MT) 12,000 15,000 20,000
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Welspun Group | Home Textiles Leadership
Summary: Key Investment Considerations
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Welspun India
Clear Leader in Large and Addressable Market with Favourable Growth
Dynamics
Broad, High Quality Product Portfolio
with Well-Recognised Brands
Entrenched Customer
Relationships across Geographies
One Stop Solution Provider from Product
Development to Supply Chain Management
Best-in-class Manufacturing
Infrastructure and Distribution Network
Strong Operational Cashflows with
Deleveraging and Dividends as Key
Focus
Highly Experienced Management Team Focussed on Value
Creation
Welspun Group | Home Textiles Leadership
Thank You
For further details, please contact:
Harish Venkateswaran
General Manager - Group Finance and Strategy
Email: [email protected]
Akhil Jindal
Director – Group Finance and Strategy
Email: [email protected]
Company Website: www.welspunindia.com
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Welspun Group | Home Textiles Leadership
India – Only Textile Exporter with Cotton surplus
COUNTRY OPENING
STOCK OUTPUT IMPORT CONSUMPTION EXPORTS
ENDING STOCK
WORLD 90 117.1 38.5 109.5 38.5 97.9
U.S. 3.9 12.9 0.00 3.6 10.4 2.8
INDIA 12.0 29.5 0.8 23.0 8.8 10.4
CHINA 50.4 32.0 12.8 35.5 0.10 59.6
PAKISTAN 2.9 9.5 2.5 11.5 0.4 2.9
BANGLADESH 0.9 0.1 3.7 3.8 0 0.9
Cotton Balance Sheet – MY 2013-14 (In mn Bales - 480 LB)
India produces 25% of world’s cotton and consumes about 20% ; rest is exported
China holds 61% of world’s cotton stock.
India set to be the largest producer of cotton in MY14-15
Source :- USDA
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Welspun Group | Home Textiles Leadership
Benchmarking Input Costs
Wages, Power Cost, Manufacturing Cost Competitiveness
Source :- GHERZI
India’s Position:-
Wages are Half of China’s.
Power costs at par with China, Pak, Turkey.
Competitive in manufacturing costs.
100
601
214 174 160
89 53
0
100
200
300
400
500
600
700
Ind
ia
Turk
ey
Ch
ina
Egyp
t
Ind
on
esia
Pak
ista
n
Ban
glad
esh
100 101 94 93
76 63
34
0
20
40
60
80
100
120
Ind
ia
Ch
ina
Pak
ista
n
Turk
ey
Ind
on
esia
Ban
glad
esh
Egyp
t
Wages (Base India =100) Power Costs (Base India =100)
100
140
111 99 98
87
0 20 40 60 80
100 120 140 160
Ind
ia
Turk
ey
Ch
ina
Ind
on
esia
Pak
ista
n
Ban
glad
esh
Manufacturing Costs (Base India =100)
37
Welspun Group | Home Textiles Leadership
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Bed Technologies
• Flexifit (exclusive licensee)
• Eversmooth
• Cotton Touch
• Smart Bedskirt
• Perfect Sheet
• Hygro Comfort
• Bleach safe
Bath Technologies
• Hygro cotton
• Quick Dry
• Bleach safe
• Eucalyptus
• Silk
• Bamboo
• Aerospun
• Spot Stop
Sleep Solutions
• Earth Pillow
• Sneeze eezzz
• Hygrofil
• My Favorite Pillow
Rugs
• Bleach safe
• Eucalyptus
• Drylon
• Hygro
• Quick Dry
• Aerofil
• Hygro cotton
Innovative Product Range