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Transformation

Disclaimer
The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of this information. Certain statements in this release concerning our future growth prospects are forward-looking statements within the meaning of applicable securities laws and regulations , and which involve a number of risks and uncertainties, beyond the control of the Company, that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition including those factors which may affect our cost advantage, wage increases, our ability to attract and retain highly skilled professionals, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Arvind Ltd. may, from time to time, make additional written and oral forward looking statements, including our reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company. Certain figures in this release have been worked out from information available to the company and in some cases by making several assumptions which may not be entirely verifiable or can be interpreted differently with different set of assumptions. The Company also expects the media to have access to all or parts of this release and the managements commentaries and opinions thereon, based on which the media may wish to comment and/or report on the same. Such comments and/or reporting maybe made only after taking due clearance and approval from the Companys authorized personnel. The Company does not take any responsibility for any interpretations/ views/commentaries/reports which may be published or expressed by any media agency, without the prior authorization of the Companys authorized personnel.

Poised for Sustained Growth and Value Creation


Revenue: Rs 3280 Cr. EBITDA: Rs 432 Cr. Market Cap: Rs 1080 Cr
Real Estate A Capital Employed Reduction Plan
Arvind has a large land bank which it does not require for growth of its other businesses Company sold some land as well as formed JV with a reputed local developer Land portfolio is likely to fetch at least Rs. 1,000 Cr over next 4 years which will be used to cut down debt levels /capital employed

Textiles & Garments


Robust domestic demand and improving international environment Emphasis on retailing products through dedicated outlets and provide customized clothing solutions Improve margins across categories and increase market share Knit fabrics and garment exports break even expected in FY 2011

Branded Apparel & Retail


Achieved critical mass with FY 2010 revenues of Rs 850+ Cr Increase own retail stores and share in department stores Introduce new brands in both own and licensed segments Roll out MegaMart stores in new markets and strengthen private brands portfolio Target CAGR of 35% for the next 5 years

Revenue to grow by CAGR 20% over next 5 years ROCE set to double from current <9% to 18% over next 2 years as capital employed reduces and margins improve

Arvind Indias leading player, well placed to participate in the upside due to improving
domestic consumer sentiment and favorable dynamics for Indian players.

Textiles, Retail & Brands Business in India are on upswing


Indian Textiles Industry is on upswing
- Sharp increase in domestic demand for apparel (brands & retail business growing by about 30% since last 12 months) leading to increase fabric demand
Most of the fabric manufactures have full order book

- Global demand recovery following reduced inventories and improved sales - Apprehending that Chinese costs will rise due to wage & interest rate increases as well as Yuan appreciation, several large buyers have not only expressed interest but started purchasing textile products from India

Indian Apparel Brand & Retail business is on upswing


- Set to grow at 25% + over next 3-4 years on account of
Burgeoning middle and higher middle class Improved sentiments on account of improved macro-economic factors and positive forecast Significant addition to organized retail space : reasonable rent

Arvinds Transformational Initiatives coupled with Industrys Buoyancy shall create Sustainable Growth Platform
Historical
Demand of fabrics (particularly denim) was severely affected in the exports market by the meltdown Conservative expansion at MegaMart due to slump in demand

Revenue (Rs Cr)


2,674 2,745 2,127 2,182 3,280

Current Scenario & Outlook


Robust domestic and international demand Aggressive rollout of stores in new markets and better product mix Larger share from downstream brands and retail business

Top Line

2006

2007

2008

2009

2010

100 Million meters of fabric manufacturing capacity being added High cotton and yarn costs remains a challenge though company better placed to pass input costs Massive productivity improvement drive in the garments plants Long term tie ups for gas supply All businesses have turned profitable

Bottom Line

Higher power costs due to non availability of gas Losses in garments business due to sluggish export demand Shredding of inventory build up with retailers slowing off takes

EBITDA margins (%)


22% 14% 18% 11.3% 12.5%

2006 2007 2008 2009 2010

Balance Sheet

Debt accumulation due to large capital expenditure Higher interest cost on account of higher working capital deployment due to cotton inventory Sharp depreciation of rupee led to significant MTM losses on ST loans

Debt / Equity ratio (x)


1.8 1.2 1.4 1.3 1.3
Trending down

Monetizing real estate assets to pay off long term debt Internal accruals to fund expansion capex across businesses Enhance working capital efficiencies

2006

2007

2008

2009

2010

Arvinds Consolidated Financials

Balance Sheet ( Rs in crores )

Income Statement (Rs in crores) Mar-31 Revenue EBIDTA Cash Accruals PAT 2010 change 3280 18% 432 24% 220 245% 53 148%

Mar-31 Shareholders' Funds Borrowing Sources Fixed Assets Investments Net Current Assets Capital Employed

2010 1283 2230 3513 2489 44 980 3513

Consolidated Financial Performance Q1 2010-11

Q1 Rs in Crs 2010-11 2009-10 Change Revenue 865 781 11% EBIDTA 118 99 19% Margin 14% 13% Other Income 13 4 Intrest & Finance Cost 65 62 Cash Accruals 66 41 62% Depreciation 47 45 (Loss)/ Profit Before Taxes 19 -4 Net Profit after Minority Interest 20 -3

Arvinds Revenue
Revenue set to grow at 20% Share of Brands & Retail as well as fabric retail expanding to 40% Share of domestic revenue likely to increase to 75% from current around 65% To add 100 Million Meters fabric manufacturing capacity: cap ex Rs. 850 cr.

2010-11: Rs. 3900 cr.

2014-15: Rs 8000+ cr

Textile Business

Arvinds Textiles Business

Textile Business at a Glance


volume Mn mtrs

60 50 40 30 20 10 0

56 40

Consists mainly of voiles business Growing at 15% p.a & Highly profitable Plans to add 20 M meters processing capacity

41%

2008-09 2009-10

Shirting & Khakis

Shirting & Khaki volume

grew by 41% to 56 M in 2009-10 Capacity to increase by 30 Million Mtrs to 100 M mtrs

Denim volume grew by 31% to 88 M in 2009-10 Capacity to increase by 50 Million Mtrs to 150 M mtrs. Plans to set up denim plants in Bangladesh Denim volume M Mtrs 100

Incurred losses till 2009-10 Expected to break even in the current FY To consolidate operations for the time being

80 60 40 20 0

67

31%

88

2008-09

2009-10

Denim
Our size With over 100 Million denim fabric manufacturing capacity, Arvind is one of the largest producers of denim in the world. Our Customers Miss Sixty | Diesel | Replay | Armani Exchange | Ann Taylor | Hugo Boss | Calvin Klein | Polo Ralph | A & F | Jack & Jones | Levis | Lee | Wrangler | Gap | Zara | Esprit | H & M | Quick silver |

Our market share in India Arvind sold over 44 Million meters in India in FY 2009-10- a 37% rise against about 15% growth in market. With market share of over 13%, Arvind is the largest player in domestic market in India. Arvind has about 50% market share with leading national & international brands in India.

Denim
Denim growth

Arvinds denim volume grew by 31% in FY 2009-10 . It expects to grow by 20% in current FY Arvind is planning to increase its denim capacity by about 50 Million over next 4 years at a total investment of Rs. 300 cr.

Out of this, 30 Million denim capacity will come up in Bangladesh over next 3 years. The first 10 Million plant will commence operation in FY 2011-12

Shirting and Khakis Fabrics


Our size With over 70 Million denim fabric manufacturing capacity, Arvind is the largest producers of shirting & Khaki fabrics in the country.

Our Customers Banana Republic | Brooks Brothers | Ann Taylor | Hugo Boss | Calvin Klein | Polo Ralph | Eddie Bauer| Express | J Crew | Louis Phillip | Van Heusen | Arrow | Color Plus | Esprit | Paul Smith | Park Avenue

Growth Arvinds shirting & Khaki volume grew by 41 % in FY 2009-10 . It expects to revenue to grow by over 20% in current FY Arvind is planning to set up 30 Million shirting fabric capacity at a total investment of Rs. 400 cr. over next 3 years. The first 10 Million plant will commence operation in FY 2011-12.

Retailing of Fabrics & Introduction of Innovative Products Began focus on retail of fabrics in Sept 2008: Within a span of 1 years, Arvind
has opened 832 Shop in Shop (SIS)

Arvind, while continuing to rapidly add SIS,


franchised basis over next 3 years

plans to open 100 exclusive stores on

Arvinds Revenue from Fabric Retailing to grow to Rs. 800 cr from current Rs. 400 cr

2010-11

2012-13

Shirting, 125, 31%

Voiles, 300, 35%

Shirting, 260, 30%

Voiles, 200, 49%

Suiting, 30, 7% Denim, 10, 2% RTS, 45, 11%

Denim, 30, 4% RTS, 150, 17%

Suiting, 120, 14%

The Arvind Store

The Arvind Store brings together the best of Arvind under one roof

New standards of Bespoke tailoring

Innovative and futuristic fabrics with clear functional benefits

The best of Arvinds ready-made apparel portfolio

Experience 2020 in 2010

Welcome to the Future.

Innovative Fabrics
Three in One Miracle Fabric Ever Fresh

A new world of Bespoke tailoring

Margin Improvements
EBIDTA margins likely to improve going forward :
Denim & Shirting Share in Revenue 64% 36% 100% EBIDTA Margin 22% 3% 15% Volume 2009-10 144 M Planned addtion 80 M consolidati on

Denim & shirting & Khaki business generated margin of 22% in 2009-10

Others

However, overall margin for entire textile business in 2009-10 was 15% as garments activity and knit fabric unit incurred losses Capacity addition of 80 Million Meters (about 50% increase) planned over next 34 years in these businesses while other businesses consolidating Garments activity is likely to break even in the current FY

Significant capacity additions leading to 15% revenue growth with relatively lower overhead increase (7-8%)

Improving pricing power as share of retail revenue is growing (set to become 20% of textile Business in next 3 years)

Risk Factors
Foreign Exchange
Net FX inflows of about $ 200 M Appreciation of rupee hurts margin Company takes forward covers for 2-3 years on rolling basis so that it can achieve at least Rs. 47 Share of exports from present 33% of revenue likely to fall to 25% next FY Increase in cotton prices may impact the margin to the extent the company is not able to pass on the cost increase to its customers. In the recent past the price increases have been very steep and signficant

Cotton prices

Gas prices
Arvind has a 9 year contract with GAIL for supply of gas for its power plants. The gas price are decided by Central Government

Leverage
Company is planning to realize about Rs. 1000 crores from real-estate divestment over next 4 years which will help it pay off all its long term debt. Global recessionary conditions do affect the volume of sale as well as pricing power. Arvinds reliance on exports has been steadily falling due to:
Focus on domestic market for fabrics Significant revenue growth coming from brands & retail business

Global Recession

Arvind Lifestyle Brands Ltd & Arvind Retail Ltd : Brands & Retail Powerhouse in Apparel space

Arvinds Brand Portfolio is unmatched in India

Owned

Licensed

Private Labels

Joint Venture

Arvinds Brands & Retail Business

Arvind Brands & Retail Business Sales Rs. 857 Crs

Arvinds pedigree in Apparel Brands & Retail is un-parallelled in India

Brands & Retail subsidiaries Sales: Rs 555 crs

VF Arvind Brands Retail Sales: Rs 50 Crs

VF Arvind JV Arvind: 40% VF : 60% Sales: Rs 197 Crs. Arvinds share 40%=78 cr

Arvind Tommy JV Arvind: 50% Murjani: 50% Sales: Rs 55 Crs Arvind share 50%=28 cr

In the following slides, the business strategy of Arvinds Brands and Retail Subsidiary companies is discussed

Fastest Growing Apparel Brands & Retail Company in India


Rs. In Crs

530 480 430 380 330 280 230 2005-06

Sales Trend 05-06 to 09 - 10

555
CAGR 28% 06-07 to 09-10

443

355

250

264
2006-07 2007-08 2008-09 2009-10

Published Q1 Results of Brands & Retail Companies Indicate that Arvind is the Fastest growing Company in the Brands & Retail Space
Company Shoppers Stop Trent Pantaloon Megamart (Arvind) Koutons Growth % 24 33 (1.3) Not Comparable 41 (20%) Company Arvind Brands Madura Provogue Zodiac Kewal Kiran Titan Growth % 95 37 41 11 36 20

Revenue Growth in 2010-11 have been exceptional


Following a 33 % revenue growth in 2009-10, the revenue grew by 52% in first 5 months of the current FY
Revenue- April-August 2010
Revenue Rs Crs ALBL ARL Total 149 146 295 % Growth 76 34 52

One of the key growth drivers was like to like growth.


Like to Like Growth April-August 2010
% LTL ALBL ARL 26 29

Each of brands and the value retail chain-Mega-Mart are generating profit at PBT levels

Arvind will emerge as a Powerhouse in Apparel Brands & Retail Space

Factor 1

Differentiated Strategy

Factor 2

Efficient Organization

Factor 3

Strong Growth Engines

Consumer Needs & Arvinds Portfolio


Income Pyramid in 2015 (households mn.)
Bridge to Luxury Globals (3) Seeks
- Aspirational
India 1

Consumer Need

Arvind Portfolio

Brands
- Lifestyle

Premium Brands

Strivers & Seekers (61)

Presentation

Seeks Value Retail Aspirers (106)


India 2

- Value Offering - One-stop-shop

convenient offering
`Arvind Strategy of catering to both Masses & Classes through portfolio of brand & retail formats is unique & differentiated vis--vis other Players The strategy is yielding Excellent Results over the last Two Years

Efficient Organization Structure to drive exceptional growth at lower cost


Finance
Information Technology

Logistics

Human Resources

Sourcing

Shared Services
Senior Management with an average experience of 21 years

Business Groups

ESOP linked to Revenue growth & ROCE

Dress Furnishings

Denim & Sportswear

Value Retail

Design & Merchandising Wholesale & Retail Sales Operations Marketing Licensing

Multiple Growth Engines to Drive Accelerated Growth

Growth Engine 1

Rapid Roll Out of Successful MegaMart Hub & Spoke Model

Growth Engine 2

Distribution Expansion of Brands

Growth Engine 3

Category Expansion of Brands

Growth Engine 4

Launch of New Brands to fill up Market Segment Opportunities

Growth Engine 1 will be Rapid Roll out of Successful Megamart Hub & Spoke Model
Large Format Megamart Tier 1 Towns
Own Stores in Tier 2 & Tier 3 Towns

Large Format Megamart 2 or 3 large format stores in tier 1 towns of the state to drive brand imagery Wide offering 200 brands at discount under one roof for consumer convenience Small Format MegaMart Neighbourhood stores in tier 1 towns to provide high accessibility

Franchise Stores in Tier 4 Towns

Neighbourhood Stores in Tier 1 Towns

Own stores in tier 2 & tier 3 towns Franchise stores in tier 4 towns Scope to expand to 785 towns

To add 300,000 sq ft. every year leading to Rs. 250 crs. of incremental revenue per year apart from Like to Like Growth

Large Format MM

Example of MegaMarts Hub & Spoke Model Bangalore & South

% Contribution to MegaMart Revenues

Ot hers, 24%

K a r na t a k a & Ker ela, 39%

Andhr a Pr adesh, 13%

Tamil Nadu, 24%

Benefits of saturating the market:

Exploiting fully the market potential before moving to new markets Leverage scale for : Supply Chain Efficiencies Media Effectiveness

35 Stores Across Bangalore

MegaMart Retail Space will grow to 2 Million sq. ft. by 2014 - 15

M Sq ft
2.5

2 2

1.5 1.5

1 0.6 0.5 0.13 0 2006 2011 2014 2015

Growth Engine 2 : Rapid expansion of Distribution for Brands


Distribution Expansion 1: Exclusive Brand Store Expansion
000 Sq Ft of Retail Space

700 600 600

500

400 300 300 205 200

100

0 2010-11 2011-12 2013-14

Arrow store

US POLO store

Club America

Flying Machine

Growth Engine 2 : Rapid expansion of Distribution for Brands

(contd)

Distribution Expansion 2: Department Stores & Multi Brand Outlets

With its brand portfolio Arvind Brands will dominate Menswear department of Department Stores

Categories in Menswear Department Super Premium Brands in Select Stores Formal Sportswear Denim

No. of Brands stocked in Each Category

No. of Arvind Brands

% Share

200910 Lifestyle 3.59 7.43 4.62 1.64 17.28

201011 13.25 14.5 9.64 3.06 40.45

% Growth 269% 95% 109% 86% 134%

8 7 7 8 30

2 2 3 2 9

25 28 43 25 30

Shoppers Stop Central Globus Total

Total

Arvind Brands will occupy 30% of Menswear Departments of Department Stores


First 6 Months Sales Growth indicate more than doubling of Sales in Department Stores

Growth Engine 2: Rapid expansion of Distribution for Brands (contd)


Distribution Expansion 3: International Expansion

Arrow introduced in Splash, the No. 1 Department Store Chain of the Middle East adding 70 new doors for Arrow in the Middle East Cherokee License got extended to Middle East

Growth Engine 3 :Category Expansion of Brands


Brand Possible Category Extension Leather Goods Footwear Launch Timeline Sept 2010 Feb 2011

Footwear

October 2010

Kids Footwear Luggage

Feb 2011 Sept 2011 Dec 2010

Active Wear

Sept 2011

Growth Engine :New Brands to occupy vacant segment Opportunities


Men Formal Sports Youth Women

Bridge to Luxury

Premium Brands Collection

BRAND X BRAND Y

Value Retail

To Launch 2 new International Brands in the Youth & Women's Spaces in the year 2011

Arvind is well on its way to be Brands & Retail Powerhouse in the Apparel Space

Strong Growth Engines

Rapid Roll Out of Successful


Hub & Spoke Model
Differentiated Multi Brand Strategy

Rs 1100 Crs by 2011-12 Rs. 2500 Crs by 2014-15

Efficient Organization

Distribution Expansion of Brands

+
Category Expansion of Brands Launch of New Brands to fill up
Market Segment Opportunities

Arvind Brands & Retail business will invest Rs. 550 cr. over next 5 years

Brands & Retail Business-ROCE


Arvind Brands & Retail business, in current FY, ROCE will improve to 13% from 7%
Improved asset turn (2.8 from 2.3) Increase in margin Scale advantage Gross margin improvement

With 35% CAGR, Arvind Brands & Retail estimates its ROCE to over 20% over next 3 years:
Improved buying efficiency Increase in same store sales Operating leverage on account of rapid increase in scale Further improvement in asset turns

Real Estate

Real Estate
Economic upturn in the city/ location

Value Addition

Construction/ Marketing Project Launch Regulatory Approvals Change of Land use Land Aggregation Time

Handover Possession

Real Estate

Arvind has a large land bank which it does not require for growth of its other businesses

Get Regulatory approvals to significantly increase the market value


Realize

Realize the cash flow either through sale of land or development in form of JV or on our own

Cash flow

Develop Expertise In this business

Over 500 acres of surplus land: Expected to generate Rs. 1000 Crs. over next 4 years : No incremental investment required

Real Estate- Recent Developments


Company sold some land as well as formed JV with a reputed local developer:
cash flow expected during FY 2010-11 Rs. 100 crores FY 2011-12 Rs. 100 crores

Companys application for a township on about 135 acres of land near Ahmedabad has been approved by State government
. The total project revenue will be about Rs. 3000 crores

The company is looking at development of part of the land over next 2 years Phase I project revenue expected to be Rs. 750 crores and net cash flow realization is expected to be Rs. 180 crores over next 2-3 years. Company is also evaluating various proposals from reputed national developers for a JV

Investment Considerations
Revenue Growth 20% Sharp EBIDTA Margin Improve ment 23% EBIDTA Increase

Improved returns on shareholders equity

Real Estate Divestme nt Rs. 1000 cr

Reduced Capital Employe d

ROCE Improveme nt

Thank You

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