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![Page 1: ANNUAL INVESTOR CONFERENCE - Business Standardbsmedia.business-standard.com/_media/bs/data/... · Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 USD/INR USD/PKR USD/CNY USD/BDT USD/LKR](https://reader036.vdocuments.net/reader036/viewer/2022070711/5ec947633f32ed629069c126/html5/thumbnails/1.jpg)
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ANNUAL INVESTOR CONFERENCE 25th April, 2017
1
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AGENDA
1. Chairman’s address
2. Business Insights
3. Financial Highlights
2
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CHAIRMAN’S ADDRESS
3
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Macro-Economic Overview
4
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MACRO ECONOMIC DEVELOPMENTS
Demonetisation
Brexit
Commodity
Price
Escalation
Change in US
Administration
Currency
Appreciation
FY17
EVENTS
5
Stronger
India
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STRONGER INDIA
6
Social
Strong Growth Expected in next 5-7 Years
Economic Political Stable govt. with
a strong
leadership
Initiatives like “Make In
India”, “Skill India”
Improving ‘Ease of
doing business’ Increasing Brand
consciousness
65% of population
below 35 yrs age
Internet penetration to
reach 60% by 2020
GDP growth at
7.1% in FY17
Per Capita Income
crossed $1500 p.a
FDI inflows
growth at 18% in
CY2016
Inflation under control;
RBI closely monitoring it Policy measures like GST
accelerate move towards
organised sector
“Digital India”
initiative to transform
India into a digitally
empowered society
“Affordable housing”
scheme to boost home-
related consumption
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CURRENCY COMPARISON
7
92
94
96
98
100
102
104
106
108
110
Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17
USD/INR USD/PKR USD/CNY USD/BDT USD/LKR USD/VND
Mar -17
India
China
SriLanka
Bangladesh
Vietnam
Pakistan
All figures indexed to 100 taking 1st April 2016 as base
Indian Rupee appreciated by 6% from recent peak
Positive for importers
Exporters struggling to recalibrate to the new level
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COMMODITY PRICE ESCALATION
8
Crude Oil Price (Index 100)
Cotton Shankar 6 Price (Index 100)
38%
Coal Price (Index 100)
37% 29%
Metal Price Index (Index 100)
26%
Coal price is Coal Futures - (UCXMc1), Metal index includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, & Uranium Price Indices
Mar-17
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WELSPUN GROUP
9
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10
WELSPUN GROUP – JOURNEY SO FAR…
TIMELY
ASSET
MONETISATION
REFOCUS ON
CORE
BUSINESSES
SIMPLIFICATION OF
CORPORATE
STRUCTURE
DELEVERAGING
CONTINUED STRATEGIC EFFORTS
WELSPUN GROUP SALIENT ACTIVITIES FY 2016-17
Renewable Energy business sale
HAM Project construction progressing ahead of schedule
Awarded discovered field in B9 Cluster
Keystone XL & Dakota Access pipeline project cleared by US government
India’s first financial closure in a HAM project
Buyback of 15.49% shares in Welspun Enterprises
+
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11
REAPING BENEFITS OF THE EFFORTS
Group Level Ratios are Continuously Improving
0.75 0.73
0.65
0.49
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
FY13 (A) FY15 (A) FY16 (A) FY17 (E)
Net Debt/Equity
3.32
1.97 1.57
1.32
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
FY13 (A) FY15 (A) FY16 (A) FY17 (E)
Net Debt / EBITDA
1.28 1.51
1.69 1.77
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
FY13 (A) FY15 (A) FY16 (A) FY17 (E)
Current Ratio
1.34
1.92
3.14 3.20
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
FY13 (A) FY15 (A) FY16 (A) FY17 (E)
Interest Coverage Ratio
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Welspun India AA-
Welspun Global
Brands
Welspun Enterprises
Welspun Corp
AA-
A
AA-
A1+
A1+
A1
A1+
Long Term Short Term
As per CARE/FITCH
12
WELSPUN GROUP COMPANIES - CREDIT RATING
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13
Global Leader in
Large Diameter Pipes
Global Leader in
Home Textiles
Infrastructure
Oil & Gas
Employees
25,000+
Market Cap
US$ 2 Billion
Group Revenue
US$ 2.3 Billion
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WELSPUN INDIA
- HOME TEXTILES INDUSTRY
14
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4 5
INDIA ADVANTAGE – HOME TEXTILES
15
6
Largest
Producer of
Cotton
Supportive
Govt Policies
Strong Domestic
Market
Potential
Global
Manufacturing
Scale
Favourable
Socio-Economic
Factors
Competitive
Costs
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27%
45% 48% 49%
29%
22% 23% 21% 26%
18% 16% 15% 18%
15% 13% 14%
2009 2012 2015 2016
Sheets (Cotton)
India China Pakistan ROW
30%
36% 38% 40%
23% 26% 25%
23% 22% 22% 22% 22%
24%
15% 15% 15%
2009 2012 2015 2016
Towels (Cotton)
16 Source: Otexa
INDIA- LARGEST PLAYER IN US MARKET
10% points
In 7 years
22% points
In 7 years
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190 210 230 260 290 320
4753
6067
7583
2024
2629
32
35
0
50
100
150
200
250
300
350
400
450
500
2016 2017 2018 2019 2020 2021
Rs.
Bill
ion
BED LINEN BATH LINEN OTHERS
17
DOMESTIC MARKET OPPORTUNITIES
Indian Urban Home Textile Market Size is Rs. 257 Bn.* in 2016 and
Is Expected to reach Rs. 438 Bn. in next 5 years with CAGR of 11.25%
CAGR 11.25%
* Excluding curtains, kitchen linen, upholstery
~40% Urban Market is in top Metro cities
~14% Market in Top Metros is Organised
257
287 316
356
397
438
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WELSPUN INDIA LTD
18
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19
AUG ’16…. TRACEABILITY ISSUE ……OUR RESPONSE
Business as usual with all other Customers
Successful implementation of remedial measures on structural,
technology, process and people
Implemented Wel-TrakTM - an industry-defining, multi-level traceability
process to track the finished product back to raw material
• Strategic partnership with Cotton Egypt Association (CEA)
• Promoting & marketing Egyptian cotton products worldwide
Constituted an independent advisory council comprising of international
experts from cotton industry, retail, branding & supply chain
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20
Revenue
Growth
12%
Credit Ratings
Long Term
AA-
Net Debt to
Equity Ratio
1.3x
Current
Ratio
1.4x
Positive FCF
in spite of
one-time item
……OUR RESILIENCE
Welspunites Customer
Relationships Community
Resilience
Lender’s Trust &
Belief
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21
WELSPUN INDIA – CONSOLIDATING LEADERSHIP POSITION
* Based on OTEXA CY2016 data
14.7%
16.4%
20.1%
21.7%
CY 13 CY 14 CY 15 CY 16
7.3%
9.9%
11.3% 11.1%
CY 13 CY 14 CY 15 CY 16
Market Share in Towels Market Share in Sheets
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Revenue
Growth
What We
Guided
What We
Achieved 3-Yr Average
10-15% 15%
EBITDA
Margin
Net Debt
CAPEX
22-23% 25%
Constant 30 bn
8 bn 8 bn
FY17
12%
24%
30 bn
7 bn
22
WELSPUN INDIA – CONSISTENT PERFORMANCE
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Innovation Brands New
Markets
New
Channels
New
Products
23
BUILDING A SUSTAINABLE LEADERSHIP POSITION
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Revenue Net Debt
Innovative/Branded
Share of Revenue
Share of
Domestic Revenue Women
employees
$2 BN NIL
50% 20% 20%
24
VISION 2020
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BUSINESS INSIGHTS
25
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winning
WITH CORE
VALUES
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Living the Welspun Values everyday
being
CUSTOMER
CENTRIC
embracing
COLLABORATION
delivering
INCLUSIVE
GROWTH
adapting
TECHNOLOGY
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being
CUSTOMER CENTRIC
creating value with
INNOVATION & BRANDS
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A 150-year old
legacy.. reinvented
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30
Premium &
Luxury
Sustainability &
Empowerment Technology
Coveted Licenses
Innovation 36% and brands 16% of Welspun’s revenues in FY17
WELSPUN’S BRAND SPECTRUM
Innovation
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adopting
TECHNOLOGY
accelerating
GROWTH
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Welspun’s proprietary industry-defining
multi-level traceability process
Tracking Cotton from Farm - Factory - Finished Goods - Shelf
using RFID, Barcodes, QR Code Scanners with ERP System integration
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embracing
COLLABORATION
leading
TOGETHER
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Global
Collaboration
on Innovation
Top Universities
Technology Partners
Industry Associations
26 Unique Inventions Across The Globe
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Omni-channel support to
top global retailers via
product development,
warehousing, pick and
pack and drop-ship
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• Collaboration with
Suppliers for lead time
reduction via Exclusive
set-up of Welspun
Ancillary Units
Assured
Off-take
Lower
transportation
costs Lower inventory
Lower Interest cost
Recycling of
packaging
SYNERGISTIC BENEFITS
SMARTSOURCING: ASSET LIGHT FUTURE GROWTH
• Commencement from Oct.16
• Established Top 10 Vendors of
Trims & packaging materials
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37
Collaboration with leading
Industry bodies to enhance
supply security and
authenticity.
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38
focus on
SUSTAINABILITY
investing in
OUR FUTURE
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Sewage Treatment
Plant (STP) and
Effluent Treatment
Plant (ETP) to
conserve and reuse
the scare resource –
WATER.
STP installed with a capacity
to process 30 MN litres per
day.
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Sustainability in everything that we do
saved 3 MN kwH of energy in FY17
REACH
regulations adopted for chemical
management
SA 8000 certified operations for socially
responsible practices
85% water recovered from STP
used at mill
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41
delivering
INCLUSIVE GROWTH
securing our
FUTURE
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42
10 Vocational Centres
1200+ Women Engaged across
our vocational Centres
540k Bedsheets Produced till
date
2.29 mn products developed
across all vocational centres
Rs. 17.4 mn Total Earning of
Women beneficiaries till date
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43
10,000 youth trained in FY
2017 via Welspun’s skill
development program
TEXTILE VERTICAL covering
spinning, weaving, processing, cut &
sew
ENGINEERING VERTICAL
covering
welding technology, metal testing,
engineering – maintenance
OTHER AREAS include
retail, logistics, house keeping,
security & fire, mobile repair, home
appliances
TRAINING & EMPLOYMENT
for specially abled youth
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5E: Education | Empowerment | Environment & Health |Essential Infra | E-Connectivity
FIRST SMART VILLAGE VERSAMEDI (GUJARAT)
Versamedi village has about 1500 households and population of about 6000 people
CC TV, PA System, WIFI & LED Lighting Development of Lawn Green & Clean Village
School Renovation SMART Class Health Programs
Vocational Center
44
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BUILDING A SUSTAINABLE LEADERSHIP POSITION
45
Vision 2020 on track..
Innovation &
Patents 40% Revenue Share
Brands
25% Revenue Share
New Channels Focus on Hospitality, Wellness and Ecommerce
segment
New Products Advanced Textiles, Flooring Solutions & Smart Textiles
New Markets Tapping into huge domestic market opportunity
Increased footprint in EU, Japan, Middle East, Australia
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46
The Next Growth Engine: Flooring Solutions
Categories covered
Area Rugs, Carpets,
Carpet Tiles, Accent
Rugs, Wall to Wall
Carpets
Investment
Rs. 6 Bn to be
invested in a phased
manner over FY18
and FY19
Focus Markets
Domestic as well as
overseas markets
Location
Anjar
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FINANCIAL HIGHLIGHTS
47
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Operating EBITDA at
23.8%
Net Debt to Equity at
1.27x
(Vs 1.58x at FY16 –end)
Revenue growth at
12%
ROCE (pre-tax) at 19.3%
Net debt to Op.EBITDA
at 1.92x
(Vs 1.95x at FY16-end)
Christy sales growth at
12%
48
KEY HIGHLIGHTS – FY17
Net debt maintained
at Rs 30 Bn for
consecutive 3 years
Domestic retail Growth
at 21%
Positive Free Cash Flow
for consecutive 3 years
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(Rs. Million)
* PBDT - Tax Outflow
#Adjusted for stock split
49
FINANCIAL PERFORMANCE – Q4 FY17
Particulars Q4FY17 Q4FY16 Change YoY Q3FY17
Revenue 17,572 16,162 8.7% 15,009
Operating EBITDA 3,829 4,353 -12.0% 3,463
Op. EBITDA Margin 21.8% 26.9% -514 bps 23.1%
EBITDA 3,946 4,515 -12.6% 3,505
EBITDA Margin 22.5% 27.9% -548 bps 23.4%
Finance Cost (Net) 392 598 -34.5% 313
Depreciation 1,365 1,036 31.8% 1,305
PBT before exceptional 2,190 2,882 -24.0% 1,888
Exceptional Gain / (Loss) 9 - - 239
Profit After Tax (After Minority Interest) 1,538 1,959 -21.5% 1,494
Cash Profit* 3,263 3,310 -1.4% 3,009
EPS (Rs.)# 1.53 1.95 -21.5% 1.49
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(Rs. Million)
* PBDT – Tax Outflow
#Adjusted for stock split
50
FINANCIAL PERFORMANCE – FY17
Particulars FY17 FY16 Change % FY15
Revenue 66,405 59,239 12.1% 53,025
Operating EBITDA 15,834 15,927 -0.6% 12,742
Op. EBITDA Margin 23.8% 26.9% -304 bps 24.0%
EBITDA 16,155 16,550 -2.4% 13,407
EBITDA Margin 24.3% 27.9% -361 bps 25.3%
Finance Cost (Net) 1,099 2,087 -47.4% 2,545
Depreciation 5,054 3,718 35.9% 3,329
PBT before exceptional 10,003 10,745 -6.9% 7,533
Exceptional Gain / (Loss) (4,648) - - -
Profit After Tax (After Minority Interest) 3,576 7,365 -51.5% 5,398
Cash Profit* 9,131 12,074 -24.4% 9,095
EPS (Rs.)# 3.56 7.33 -51.5% 5.38
Maintained double digit Revenue Growth
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(Rs. Million)
# Capital Employed (Average) = Total assets - Current liabilities (excl short-term debt and long-term debt repayable in one year)
* Net Current Assets does not include Cash & Cash Equivalents
51
Particulars 31-Mar-15 31-Mar-16 31-Mar-17
Net Worth 14,732 19,700 23,971
Short Term Loans 13,936 13,533 11,721
Long Term Loans 20,864 18,945 21,393
Gross Debt 34,800 32,478 33,114
Cash & Cash Equiv. 4,321 1,388 2,725
Net Debt 30,479 31,090 30,389
Capital Employed# 47,619 53,331 58,189
Net Fixed Assets (incl CWIP) 26,049 33,508 35,713
Net Current Assets* 17,630 16,845 20,114
Total Assets 58,960 65,491 73,283
BALANCE SHEET TREND
Maintained Net Debt at Rs. 30 billion
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1. ROCE = EBIT / Average Capital Employed; ROE = Net Profit / Average Net worth
2. Total asset turnover = Sales/ (Fixed assets + Gross current assets)
3. FY17 Return Ratios figures are excluding one time impact of Exceptional item of Rs. 5,005 Mn
Continuous Improvement in Net Debt/Equity
52
FINANCIAL RATIO TREND
FY15 FY16 FY17
Net debt/Op. EBITDA 2.39 1.95 1.92
Net debt/Equity 2.07 1.58 1.27
EBIT/Interest 3.66 5.54 7.32
Current Ratio 1.12 1.15 1.41
Fixed Asset turnover 2.04 1.77 1.86
Total Asset turnover 0.90 0.90 0.91
Inventory days 76 68 70
Debtor days 40 52 53
Payable days 30 41 41
Cash conversion cycle 86 79 82
ROE 41.8% 42.8% 29.6%
ROCE (pre-tax) 21.8% 24.6% 19.3%Re
turn
rati
os
So
lve
nc
y
rati
os
Op
era
tio
na
l ra
tio
s
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5,946
9,211
12,742
15,927 15,834
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
FY13 FY14 FY15 FY16 FY17
Rs.
miil
ion
36,473
43,730
53,025
59,239
66,405
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
FY13 FY14 FY15 FY16 FY17
Rs.
mill
ion
4,178
6,237
9,017
12,074
9,131
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY13 FY14 FY15 FY16 FY17
Rs.
mill
ion
2,248
4,195
5,398
7,365 6,979
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY13 FY14 FY15 FY16 FY17
Rs.
mill
ion
Net Profit FY17 figure is excluding one time impact of Exceptional item of Rs. 5,005 Mn
53
Revenues
CAGR 16%
Op. EBITDA
CAGR 28%
Net Profit
CAGR 33%
Cash Profit
CAGR 22%
KEY FINANCIAL TREND
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54 ROCE and ROE FY17 figures are excluding one time impact of Exceptional item of Rs. 5,005 Mn
21.9% 21.8%24.6%
19.3%
FY14 FY15 FY16 FY17
40.0% 41.8%42.8%
29.6%
FY14 FY15 FY16 FY17
2.4x
2.1x
1.6x
1.3x
FY14 FY15 FY16 FY17
2.9x
2.4x
2.0x
1.9x
FY14 FY15 FY16 FY17
KEY RATIO TREND
ROCE % (Pre-Tax) ROE %
Net Debt / Equity Net Debt / Op. EBITDA
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55
CAPEX AS PER DEMAND
Product Unit End-FY17
Capacity
Sales volume
FY17
Effective
Utilisation %
Expected
Capacity
FY18
Towels MT 72,000 70,000 97% 80,000
Sheets ‘000 Mtrs 90,000 66,000 86% 90,000
Rugs & Carpets ‘000 Sq. mtrs. 10,000 7,200 85% 10,000
Expansion of Towel
capacity and new
flooring solutions to be
the focus
Capex Calibrated to Cash Flow
Investment of Rs. 7.2 bn
completed in FY17
Investment of around
Rs. 7 bn planned in
FY18
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FCF positive for three consecutive years
56
FOCUS ON FREE CASH FLOW
-6,217
795
3,770
859
239714
2,405
785
-8000
-6000
-4000
-2000
0
2000
4000
FY14 FY15 FY16 FY17
FCF Dividend
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Clear, defined Dividend Distribution policy
25% of standalone PAT to be the total payout (incl. dividend tax)
Consistent track record of dividend distribution
57
DIVIDEND POLICY
Period
Standalone
EPS DPS
Dividend tax
per share
Payout
Percentage
FY15 5.09 1.05 0.21 25%
FY16 5.99 1.30 0.26 26%
FY17 3.05 0.65 0.13 26%
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58
RAISING THE BAR
Increasing Raw Material
Cost Environment
Rising Energy Cost
Rupee Appreciation
Differentiation Strategy: Innovation, Branding and Sustainability
Industry Defining Traceability Solution
Focus on Domestic Market
New Initiatives with investment in Flooring & Advanced Textile
New channels incl. E-Com & Hospitality
Macro Challenges
Welspun Strategy
Moving towards
Vision 2020
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THANK YOU
For further details, please contact:
Altaf Jiwani
Director (Finance) & CFO - Welspun India Limited
Email: [email protected]
Harish Venkateswaran
Sr. General Manager - Group Finance and Strategy
Email: [email protected]