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Transformation
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Disclaimer
The views expressed here may contain information derived from publicly available sources that have not beenindependently verified. No representation or warranty is made as to the accuracy, completeness or reliability of thisinformation.
Certain statements in this release concerning our future growth prospects are forward-looking statements within themeaning of applicable securities laws and regulations , and which involve a number of risks and uncertainties, beyondthe control of the Company, that could cause actual results to differ materially from those in such forward-lookingstatements. The risks and uncertainties relating to these statements include, but are not limited to, risks anduncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition including thosefactors which may affect our cost advantage, wage increases, our ability to attract and retain highly skilledpro ess ona s, po ca ns a y, ega res r c ons on ra s ng cap a or acqu r ng compan es ou s e n a, an
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 oron behalf of the company. Certain figures in this release have been worked out from information available to thecompany and in some cases by making several assumptions which may not be entirely verifiable or can be interpreteddifferently with different set of assumptions. The Company also expects the media to have access to all or parts of thisrelease 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 approvalfrom 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 authorizationof the Companys authorized personnel.
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Poised for Sustained Growth and Value Creation
Textiles & Garments Branded Apparel & RetailReal Estate A Capital
Employed Reduction Plan
Robust domestic demand andimproving international environment
Emphasis on retailing productsthrough dedicated outlets andprovide customized clothingsolutions
Achieved critical mass with FY 2010revenues of Rs 850+ Cr
Increase own retail stores and share indepartment stores
Introduce new brands in both own andlicensed segments
Arvind has a large land bank whichit does not require for growth of itsother businesses
Company sold some land as well asformed JV with a reputed localdeveloper
Revenue: Rs 3280 Cr. EBITDA: Rs 432 Cr. Market Cap: Rs 1080 Cr
Revenue to grow by CAGR 20% over next 5 years
ROCE set to double from current
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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 wellas Yuan appreciation, several large buyers have not only expressed interest butstarted 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 positiveforecast
Significant addition to organized retail space : reasonable rent
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Arvinds Transformational Initiatives coupled with Industrys Buoyancyshall create Sustainable Growth Platform
Demand of fabrics (particularlydenim) was severely affected inthe exports market by themeltdown
Conservative expansion atMegaMart due to slump indemand
Historical Current Scenario & Outlook
e
To
pLine
Higher power costs due to nonavailabilit of as
Robust domestic and internationaldemand
Aggressive rollout of stores in newmarkets and better product mix
Larger share from downstream brandsand retail business
100 Million meters of fabricmanufacturing capacity being added
High cotton and yarn costsremains a challen e thou h
Revenue (Rs Cr)
2,127 2,182
2,674 2,7453,280
2006 2007 2008 2009 2010
22%
EBITDA margins (%)
B
alanceSheet
BottomL
in
Losses in garments business dueto sluggish export demand
Shredding of inventory build upwith retailers slowing off takes
Debt accumulation due to largecapital expenditure
Higher interest cost on account ofhigher working capital deploymentdue to cotton inventory
Sharp depreciation of rupee led to
significant MTM losses on ST loans
company better placed to passinput costs
Massive productivity improvementdrive in the garments plants
Long term tie ups for gas supply
All businesses have turnedprofitable
Monetizing real estate assets to payoff long term debt
Internal accruals to fund expansioncapex across businesses
Enhance working capital
efficiencies
18%
14%
11.3%
12.5%
2006 2007 2008 2009 2010
1.2
1.4
1.3
1.8
1.3
2006 2007 2008 2009 2010
Debt / Equity ratio (x)
Trending down
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Arvinds Consolidated Financials
Balance Sheet ( Rs in crores ) Income Statement (Rs in crores)
Mar-31 2010
Shareholders' Funds 1283
Borrowing 2230
Sources 3513
Mar-31 2010 change
Revenue 3280 18%EBIDTA 432 24%Cash Accruals 220 245%
Fixed Assets 2489
Investments 44
Net Current Assets 980
Capital Employed 3513
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Consolidated Financial Performance Q1 2010-11
2010-11 2009-10 Chang
Revenue 865 781 11%EBIDTA 118 99 19%
Margin 14% 13%
Q1 Rs in Crs
Intrest & Finance Cost 65 62
Cash Accruals 66 41 62%
Depreciation 47 45
(Loss)/ Profit Before Taxes 19 -4Net Profit after Minority Intere 20 -3
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Arvinds Revenue
2010-11: Rs. 3900 cr. 2014-15: Rs 8000+ cr
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.
Revenue set to grow at 20%
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Textile Business
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Arvinds Textiles Business
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Textile Business at a Glance
Consists mainly of voiles business
Growing at 15% p.a & Highly profitable
Plans to add 20 M meters processingcapacity
40
56
0
10
20
30
40
50
60
2008-09 2009-10
volume Mn mtrs
41%
Shirting & Khakis
Denim volume grew by 31% to 88 M in
2009-10
Capacity to increase by 50 Million Mtrsto 150 M mtrs.
Plans to set up denim plants inBangladesh
Shirting & Khaki volumegrew by 41% to 56 M in2009-10
Capacity to increase by30 Million Mtrs to 100 Mmtrs
Incurred losses till 2009-10 Expected to break even inthe current FY
To consolidate operationsfor the time being
67
88
0
20
40
60
80
100
2008-09 2009-10
Denim volume M Mtrs
31%
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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 about15% growth in market.
With market share of over 13%, Arvind is the largest player in domestic market inIndia.
Arvind has about 50% market share with leading national & international brands inIndia.
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Denim
Denim growth
Arvinds denim volume grew by 31% in FY 2009-10 .
It expects to grow by 20% in current FY
rv n s p ann ng o ncrease s en m capac y y a ou on
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
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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 | PoloRalph | Eddie Bauer| Express | J Crew | Louis Phillip | Van Heusen | Arrow | Color
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.
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Retailing of Fabrics & Introduction of Innovative Products
Began focus on retail of fabrics in Sept 2008: Within a span of 1 years, Arvindhas opened 832 Shop in Shop (SIS)
Arvind, while continuing to rapidly add SIS, plans to open 100 exclusive stores onfranchised basis over next 3 years
Arvinds Revenue from Fabric Retailing to grow to Rs. 800 cr from current Rs. 400 cr
Shirting,125, 31%
Suiting,30, 7%
RTS, 45,11%
Denim,
10, 2%
Voiles,200,49%
Shirting,260, 30%
Suiting, 120,14%
RTS, 150,17%
Denim, 30,4%
Voiles, 300,35%
2010-11 2012-13
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he Arvind Store
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Innovative andfuturistic fabrics
New standards of
Bespoke tailoring
The best of Arvinds
The Arvind Store brings together the best of Arvindunder one roof
Experience2020 in 2010
with clear
functional benefits
-
portfolio
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Welcome to the Future.Welcome to the Future.Welcome to the Future.Welcome to the Future.
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Innovative Fabrics
Three in One Miracle Fabric Ever Fresh
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A new world of Bespoke tailoring
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Margin Improvements
EBIDTA margins likely to improve going forward :
Denim & shirting & Khaki business generated
margin of 22% in 2009-10 However, overall margin for entire textile business in 2009-10 was 15% as
garments activity and knit fabric unit incurred losses
Share in
Revenue
EBIDTA
Margin
Volume
2009-10
Planned
addtion
Denim & Shirting 64% 22% 144 M 80 M
Others 36% 3%
100% 15%
consolidati
on
apac y a on o on e ers a ou ncrease p anne over nex -
4 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)
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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
Cotton prices Increase in cotton prices may impact the margin to the extent the company is not able to
.
In the recent past the price increases have been very steep and signficant Gas prices
Arvind has a 9 year contract with GAIL for supply of gas for its power plants. The gasprice are decided by Central Government
Leverage
Company is planning to realize about Rs. 1000 crores from real-estate divestment over next4 years which will help it pay off all its long term debt.
Global Recession 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
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Retail Powerhouse in Apparel space
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Owned Licensed
Arvinds Brand Portfolio is unmatched in India
Joint VenturePrivate Labels
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Arvind Brands &Retail Business
Sales Rs. 857 Crs
Arvinds pedigree inApparel Brands & Retail
is un-parallelled inIndia
Arvinds Brands & Retail Business
Brands &Retail subsidiariesSales: Rs 555 crs
VF Arvind BrandsRetail
Sales: Rs 50 Crs
VF Arvind JV Arvind: 40%
VF : 60%
Sales: Rs 197 Crs.
Arvinds share 40%=78 cr
Arvind Tommy JVArvind: 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
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Rs. In Crs
250 264
355
443
555
280
330
380
430
480
530 CAGR28%
06-07 to 09-10
Fastest Growing Apparel Brands & Retail Company in India
Sales Trend05-06 to 09 - 10
230
2005-06 2006-07 2007-08 2008-09 2009-10
Published Q1 Results of Brands & Retail Companies Indicate that Arvind is the Fastest growingCompany in the Brands & Retail Space
Company Growth %
Shoppers Stop 24
Trent 33
Pantaloon (1.3) NotComparable
Megamart (Arvind) 41
Koutons (20%)
Company Growth %
Arvind Brands 95
Madura 37
Provogue 41
Zodiac 11
Kewal Kiran 36Titan 20
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RevenueRs Crs
% Growth
ALBL 149 76
ARL 146 34
Revenue Growth in 2010-11 have been exceptional
Following a 33 % revenue growth in 2009-10, the revenue grew by 52% infirst 5 months of the current FY
Revenue- April-August 2010
% LTL
ALBL 26
ARL 29
One of the key growth drivers was like to like growth.Like to Like Growth April-August 2010
Each of brands and the value retail chain-Mega-Mart are generating profit at PBT levels
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Differentiated Strategy
Arvind will emerge as a Powerhouse in Apparel Brands & Retail Space
Factor 1
Strong Growth Engines
Factor 3
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Globals
(3)
Strivers &
Bridge to
Luxury
Premium
Income Pyramid in
2015 (households mn.) Arvind Portfolio
India 1
Seeks- AspirationalBrands
- Lifestyle
Presentation
Consumer Need
Consumer Needs & Arvinds Portfolio
Aspirers
(106)
Seekers
(61)
Value
Retail
Brands
`Arvind Strategy of catering to both Masses & Classes through portfolio of brand & retail formats is unique & differentiated vis--vis otherPlayers
The strategy is yielding Excellent Results over the last Two Years
India 2
Seeks
- Value Offering
- One-stop-shopconvenientoffering
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FinanceInformationTechnology
Logistics SourcingHuman
Resources
Shared Services
Efficient Organization Structure to drive exceptional growth at lower cost
Business Groups
DressFurnishings
Denim &Sportswear
ValueRetail
Design & MerchandisingWholesale & Retail Sales Operations
MarketingLicensing
ESOP linked toRevenuegrowth & ROCE
enior Management
with an averageexperience of
21 years
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Rapid Roll Out of
Successful MegaMart Hub & Spoke Model
Distribution Expansion of Brands
Multiple Growth Engines to Drive Accelerated Growth
Growth Engine 1
Growth Engine 2
Category Expansion of Brands
Launch of New Brands to fill up
Market Segment Opportunities
Growth Engine 3
Growth Engine 4
Growth Engine 1 will be Rapid Roll out of Successful Megamart Hub &
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2 or 3 large format stores intier 1 towns of the state todrive brand imagery
Wide offering 200 brandsat discount under one roof forconsumer convenience
Small Format MegaMart
Large Format MegamartLarge FormatMegamart
Tier 1 Towns
Own Stores inTier 2 & Tier 3
Towns
Growth Engine 1 will be Rapid Roll out of Successful Megamart Hub &Spoke Model
Neighbourhood stores intier 1 towns to providehigh accessibility
Own stores in tier 2 & tier 3towns
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 revenueper year apart from Like to Like Growth
Franchise Storesin Tier 4 Towns
NeighbourhoodStores in
Tier 1 Towns
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Large Format MM
Example of MegaMarts Hub & Spoke Model Bangalore & South
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Example of MegaMart s Hub & Spoke Model Bangalore & South
% Contribution to MegaMart Revenues
K a r n a t a k
a
& K e r e l a ,
3 9 %
Others,
24%
Andhra
Pradesh, 13%
Tamil
Benefits of saturating the market:
Exploiting fully the market potential
before moving to new markets
Leverage scale for :
Supply Chain Efficiencies
Media Effectiveness
35 StoresAcross
Bangalore
Nadu, 24%
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MegaMart Retail Space will grow to 2 Million sq. ft. by 2014 - 15
M Sq ft
2
2
2.5
0.13
0.6
.
0
0.5
1
1.5
2006 2011 2014 2015
Growth Engine 2 : Rapid expansion of Distribution for
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Distribution Expansion 1: Exclusive Brand Store Expansion
000 Sq Ft of Retail Space
Growth Engine 2 : Rapid expansion of Distribution forBrands
600600
700
205
300
0
100
200
300
400
2010-11 2011-12 2013-14
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Arrow store US POLO store
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Club America Flying Machine
G h E i 2 R id i f Di ib i f B d
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Distribution Expansion 2: Department Stores & Multi Brand Outlets
With its brand portfolio Arvind Brands will dominate Menswear department of DepartmentStores
Categories inMenswear
No. ofBrandsstocked
No. ofArvind
%
Growth Engine 2 : Rapid expansion of Distribution for Brands (contd)
2009-10
2010-11
%Growth
Department in Each
Category
Brands
Super PremiumBrands in Select
Stores8 2 25
Formal 7 2 28
Sportswear 7 3 43Denim 8 2 25
Total 30 9 30
Arvind Brands will occupy 30% of Menswear Departments of Department Stores
Lifestyle 3.59 13.25 269%
ShoppersStop
7.43 14.5 95%
Central 4.62 9.64 109%
Globus 1.64 3.06 86%
Total 17.28 40.45 134%
First 6 Months Sales Growth indicate more than doubling of Sales in Department Stores
Growth Engine 2: Rapid expansion of Distribution for Brands ( d)
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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 EastCherokee License got extended to Middle East
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Brand Possible Category Extension Launch Timeline
Leather Goods
Footwear
Sept 2010
Feb 2011
Footwear October 2010
Growth Engine 3 :Category Expansion of Brands
Kids
Footwear
Luggage
Feb 2011
Sept 2011
Dec 2010
Active Wear Sept 2011
Growth Engine :New Brands to occupy vacant segment Opportunities
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Bridge to
Luxury
Premium
Women
Men
Youth
BRAND X
Formal Sports
Growth Engine :New Brands to occupy vacant segment Opportunities
Value
Retail
Brands
BRAND YCollection
To Launch 2 new International Brands in the Youth & Women's Spacesin the year 2011
Arvind is well on its way to be Brands & Retail Powerhouse in the
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Rapid Roll Out of Successful
Hub & Spoke Model
Strong Growth Engines
Rs 1100 Crs
by 2011-12
Apparel Space
Multi
Brand Strategy
Category Expansion of Brands
Launch of New Brands to fill up
Market Segment Opportunities
Rs. 2500 Crs
by 2014-15
Efficient
Organization+ +
Arvind Brands & Retail business will invest Rs. 550 cr. over next 5 years
OC
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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
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
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Real Estate
R l E t t
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Real Estate
dition
Economic upturn in the city/ location
HandoverPossession
Valu
eAd
Time
Change of Land
useLandAggregation
RegulatoryApprovals
Project Launch
ons ruc onMarketing
R l E t t
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Real Estate
Get Regulatory approvals tosignificantly increase the marketvalue
Arvind has a large land bank which it does not require for growth of its other businesses
Realize the cash flow either throughsale of land or development in form
of JV or on our own
Realize
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
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Real Estate- Recent Developments
Company sold some land as well as formed JV with a reputed localdeveloper:
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 nearAhmedabad 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
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Investment Considerations
RevenueGrowth
20%
EBIDTAMargin
Improvement 2-
Sharp
EBIDTAIncrease
3
RealEstate
Divestment Rs.
1000 cr
ReducedCapital
Employe
d
ROCEImproveme
nt
Improvereturns on
shareholdersequity
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Thank You