Arvind Limited – At an Inflection
23rd May 2013, Ahmedabad
Agenda
•
Snapshot of Arvind – A Changing Picture
•
Overall Vision and Division-wise Growth Plans
•
Summary and Conclusion: Overall Value Creation Path
2
Arvind Limited – At a Glance
17% topline growth over the last 5 years
Op. Rev, Rs Cr
5,000
2,793 3,280
...and higher returns with lower leverage
Margins %
+17%
10,000
Coupled with rising margins... 15
5,293
4,085 4,925
FY ’09 FY ’10 FY ’11 FY ’12 FY ’13
13
13
10
5
0
10
D/E %
6
8
10
13
12
11
2.2
14
11
1.7
12
15
1.0
11
0
FY ’09 FY ’10 FY ’11 FY ’12 FY ’13
Op. EBITDA %
3
RoCE %
0
5
7
1.3
1.1
0
FY ’09 FY ’10 FY ’11 FY ’12 FY ’13
EBIT %
ROCE %
D/E ratio
Largely stable mix of businesses over this period – to balance investment needs in new businesses with internal cash flow accruals
100%
6%
25%
4%
22%
5%
23%
5%
27%
4%
25%
Other
38%
41%
39%
36%
43%
Other Textiles
30%
32%
33%
33%
28%
Denim
FY ’09
FY ’10
FY ’11
FY ’12
FY ’13
Brands & Retail
3
Continued Q-o-Q improvement in margins for both
Textiles as well as Brands & Retail businesses
Textiles
B&R
Total
EBIDTA margin
17.3%
15.6%
13.6%
15.7%
15.6%
14.7%
10.3%
Q1 11-12
13.6%
7.2%
Q2 11-12
11.2%
7.7%
Q3 11-12
14.4%
12.4%
12.0%
6.6%
16.2%
13.4%
13.1%
18.1%
1.2%
1.1%
Q4 11-12
Q1 12-13
6.0%
6.6%
6.8%
Q2 12-13
Q3 12-13
Q4 12-13
Margins in B&R improving even after including losses from the newly acquired brands
4
Revenue, EBIDTA and PAT are at all-time high
Revenue Rs Cr
EBIDTA Rs Cr
1500
1405 1406
250
1325
1250
1211
1254
1270
191
200
165
164
1208
1157*
165
143
150
203
131
129*
100
1000
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13
PAT Rs Cr
80
61
67
62
60
75
76
Q3 13
Q4 13
65
52
40
32*
20
* Strike period
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
5
Arvind Limited – A Changing Picture
Overall, 20%+ growth targeted over the next 5 years with stable margins...
Op. Rev, Rs Cr
20%
15,000
10,000
5,000
5,293
13,000
Maintaining EBIT at ~11-12%
8,000
0
FY ’13
FY ’15
FY ’18
Through greater focus on B2C portfolio and relatively asset-light businesses
100%
4%
25%
6%
31%
43%
40%
10%
Other
38%
Brands & Retail
35%
Other Textiles
Denim
28%
24%
17%
FY ’13
FY ’15
FY ’18
Arvind at the inflection of accelerating growth in B2C businesses
Critical mass across major businesses to fund growth largely through internal cash flows
• Target higher growth in differentiated
B2C businesses of brands and retail, in an asset-light manner
• Focus on lean management of highasset businesses, with scale advantage • Further optimization of cash flows through opportunistic monetization of real-estate •
6
Agenda
•
Snapshot of Arvind – A Changing Picture
•
Overall Vision and Division-wise Growth Plans
•
Summary and Conclusion: Overall Value Creation Path
7
Arvind is uniquely positioned to leverage the immense India and global opportunity in clothing
Platform of strong P&L and Balance Sheet
• Critical mass across major businesses to fund growth vehicles largely through internal cash flows
• Lean management of high-asset businesses, with scale advantage and greater differentiation
Huge India consumption story
• Rising disposable incomes • Younger earning population • Catching up with western trends
• More quality conscious, more brand conscious Sweet spot of global textile and apparel competitiveness Uniquely positioned to leverage the massive opportunity
• Integrated value chain capabilities
• Ability to manufacture with best cost-quality-design, build great brands, and sell globally
• Strong track record of success
• Cotton production
• Availability of young low cost workforce
• Increasing competitiveness Vs China
• Proximity and conducive business environment to
Bangladesh
Strategy statement: Pivot around the unique position to diversify into less cyclical, more differentiated B2C
