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Welspun India Limited Presentation on Seizing The Emerging Global Textiles Opportunity

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  • 1. W elspun India Limited Presentation on Seizing The Emerging Global Textiles Opportunity CONFIDENTIAL DRAFT

2. Welspun Group Profile

  • US$ 400 million, engaged in
  • Terry Towels
    • Largest Terry Towel producer in Asia
  • Polyester Filament Yarn
    • One of the largest SpecialtyPolyester Filament Yarn producer In India
  • Polyester Buttons and Resins
    • Largest producer of Polyester Buttons in Asia
  • Cotton Yarn
    • One of the prominent players in India
  • Saw Pipes
    • One of the largest capacities of Saw Pipes in Asia, outside Japan.

PAGE 3. WELSPUN INDIA LTD- Overview

  • Asias largest and worlds 4 thlargest Terry towel producer
  • Current Terry towel capacity :10,800 Tons being expanded to 23000 tons
  • Becoming a complete home textile player by addition of bed linen
  • Plant at Vapi Gujarat and Anjar, coastal Gujarat, India
  • Distribution network in 32 countries
  • Exports revenue- 94% of total revenue ( 68% to the US market)
  • Certification:
    • ISO 9002/14001 and SA 8000:2001 by M/S BVQI
  • Only Indian company to license life-style brand in Home Textiles
    • Nautica for towels in US and Canada
    • Tommy Hilfiger for Home Textiles in India

PAGE 4. PAGEWelspun Journey to become a Global Home textile Player 5. CIRCA 1994

  • Polyester yarn manufacturer
  • Turnover wasRs 90 Crs, Net Profit of Rs 4 Crs
  • Started Towel Business
  • Challenges:
    • To produceTowel New Business Line
    • To produceQuality Towel
    • ToExport Quality Towel EOU status
    • ToExport Quality Towel to Knowledgeable Matured Market

PAGE 6. CIRCA 1994 Cont..

    • Emphasis on Maximum Production
      • Quality improvement at each stage of production
      • Product Analysis based on Customer feed-back
    • Emphasis on Volume Growth
      • Focus on Sales from the maximum Outlets
      • Started Business through Intermediaries Exporters, Buying Houses.

PAGE 7. CIRCA 1999

    • Produced Quality Towels
    • Exported Quality Towels
    • Expanded Capacities from 2500 Tons to 7800 Tons
    • Grew in Volume and Value Terms
    • Emerged as largest Exporter of Towels from India
    • Turnover Rs 325 Crs significant for Towel Co
    • Profit after Tax of Rs(31.5 Crs)

PAGE 8. CIRCA 1999- Cont..

    • External Dependence- All Business through Intermediaries
    • Presence in Generic Products Yarn and Plain Dyed Towels
    • Focus on Sales rather than Marketing
    • Limited Designing Efforts
    • Limited Processing capabilities right color/right shade/right mix was a challenge
    • Financial Crunch
    • In nut shell Innovation was a missing Link

PAGE 9. CIRCA 2000- Putting heads together for aNew Beginning PAGE 10. Strategy

    • Adopted Vision to become a Truly Global Player and communicate to all our employees
    • Breaking the midriff - middle-men/agents from the business cycle Jettisoning Extra Baggage
      • Direct Relationships even at the cost of dip in sales
    • Decided to invest in Product Developments and Design Capabilities
    • In Essence Adopted Innovation in entire Business Operation -Product, Processes, Practices and People

PAGE 11. Innovation In Products

    • Paradigm shift fromUSE to COLLECTIONrange of products
    • New Value added product lines Egyptian Cotton, Embroidery,Supima (American Cotton), Kid Centric Towels.
    • Experimented with different inputs like PVA fibers
    • New Product development
      • Hygro Cotton
      • Zero-twist
      • Subslistatic Printed
      • Blister Pile Towels
      • Developed new shades and floral prints that are trendy and inline withthe Fashion Industry

PAGE 12. PAGE

  • Process House: Fully Atomized color mixing
  • Design Innovation
    • Developed new Designs by creating one of the best Home textile designing team
    • Design Studios
    • Design house in India - 5 people
    • 2 designers each in US and UK
    • Appointed World class Designer from the Industry

Innovation In Processes 13.

    • Innovation in Sales and Marketing Processes
    • Selection of Right Business Partners
    • Created Marketing Infrastructure
      • Sales team in US
      • 6000 sq. ft. exclusive showroom in New York
      • Distribution alliance in the US for distribution and warehousing
      • Created Welspun USA - 100% subsidiary to handle customers directly

Product Development skills complimented by Global Sales Network Innovation In ProcessesPAGE 14.

    • Utilizing IT as Integrator
      • EDI & RFID in Welspun USA
      • Integration with Customers
      • Electronic Coloring and Design Matching which integratesProduct Design & Development
      • SAP R/3- Integrates Operations, Marketing and Supply Chain
      • Reverse Auction

Innovation In Practices PAGE 15. Innovation In Practices

  • Market Intelligence : Conducted Grid analysis of top retailers with respect to:
  • Product range,
  • Fast Moving Items best selling SKUs
  • Profit margin expectation
  • Collection of Samples to understand
  • global developments

PAGE 16. People

  • Paradigm shift in Mindset from Manufacturer to Marketer.
  • Adequate Training in SAP enabled Production and Operations
  • Appointed International Textile consultant to improve skill sets of employees
  • Appointed Experienced and result oriented people from the Industry .
  • Performance based Reward system

PAGE 17. YEAR 2004 - RevisitedPAGE 18. Product wise sales in terms of % (based on ex-mill values) The proportion of the value added products has increased PAGE 19. Time Value Creation 95 2000 2003 2004 2005 Indirect Export Direct Export Choose & Pick amongst Retailers High end products Branding Marketing & Outsourcing PAGEProgress in Value Chain 20.

  • Long standing relationship with 12 out of 20 top retailers in the world
  • Customer centric Planning and Production mechanism

BETTERNWELT MITSUKOSH Customer Relationship PAGE 21. Value Chain contribution May&Co, Federated,Dillards BB&B ,LNT ,Kohls J C Penny ,Target ,Shopko Wal-Mart ,K Mart, Costco Tommy Hilfiger ,Nautica, Polo Ralph Lauren, DKNY, Calvin KleinDesigner Brands Department Stores Specialty Stores Fashion Stores Mass Merchants x + 5-7% + 13-15% 2x Retail PriceExpansion PAGE2003 2004 2005 8% 2% 0% 32% 33% 15% 22% 12% 15% 1% 5% 10% 3% 4% 10% 8% 12% 15% Indirect Business 22. Comparison PAGE32.19% Venture Capital & Mutual Funds 2.66% 24% FII Holdings - 800 Market Cap. 41 295 Net Profit (35) 374 Turnover 325 FY 2005 (Rs. Crs) Particulars FY 1999 (Rs. Crs) 23. Global Opportunities PAGE 24. Todays Global market place

  • Quota phase out An additional market of $ 1.25 bn in Towel and $ 1.75 bn in bed linen Segment alone
  • Shrinking supplier base released
    • Pillowtex - bankruptcy - $ 450 mn of towel and $ 220mnof bed linen supply.
    • WPS - Chapter 11 $ 455 mn of towels and $ 580 mn of bed linen supply.
  • Lucrative European market of $ 600 mn with shrinkage of supplier base.
  • Australian and New Zealand market of $ 50 mn
    • Dropping duties 25 to 17.5%, rendering there capacities idle
  • Increased domestic demand
    • Few organized player in the home arena to cater to the market
    • Low interest rates and higher disposable income

PAGE 25. Key Differentiators PAGE 26.

  • Success Algorithm
  • Textiles has been forecasted as another BPO success story, what Y2K did for IT , Y2K5 could do for Textile Industry
  • Mantra For Success as followed by Infoys -
  • P: Profitability
  • S: Scalability
  • P: Predictability
  • D: Dependability

PAGE 27. Vision 2005 and Beyond PAGE 28. Innovation in 2005 and beyond

  • Products:Continuous Innovations in Products-Bamboo Filaments, Hollow Yarn, Natural Towels
    • New Business Lines like Bed Linen
  • Processes: Automatic Recipe matching Orgatex, Automated Operations like Cut and Sew.
  • Practices: Patenting of New products to Create differentiators.
  • People: Knowledge Management, Six Sigma and ESOPs

PAGE 29. Vision This is what we are aiming at.

  • Fully integrated textile company4 Fs - from farming to factory to fashion to foreign retailing
  • Organic and inorganic initiatives to target Growth
  • Preferred partner in Home Textiles for any global initiative.
  • Leader in embracing new technologies, product innovation, market intelligence - to offer competitive end-to-end solutions to our customers.
  • Among top three home textile companies in the world.
  • Market leader in Indian home textile market.

PAGE 30.

  • RECOGNITIONS

National Export Awardfor outstanding performance fromGovernment of India,for the year 1996-97 Texprocil* gold trophyfor outstanding export performance for successive three years(1999-00, 2000-01 & 2001-02) Best Global Vendorby Wal-Martin2002 for Terry towel Vendor of the year,FY 2002 byShopko Stores Inc., USA for all its product categories Operational Excellence Awardby JCPenney Stores, USA for Year 2003 PAGE 31. W E APPRECIATE YOUR VALUABLE TIME PAGE