annual investor meet, 10th may 2018 - raymond.in meet_may18.pdf · kpi guidance for fy18 actual...
TRANSCRIPT
Annual Investor Meet, 10th May 2018
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“At Raymond, we are at the cusp of
transformation today. As we continue
to shape our future and build sustainable
competitive advantage through our
products, brand, retail and enabling
platforms, it is imperative that we
embrace customer centricity
which is now at the heart of Raymond
Reimagined“
3
Agenda
FY18 Results
Lifestyle Business - Initiatives
The Journey Ahead
4
Agenda
FY18 Results
Lifestyle Business - Initiatives
The Journey Ahead
5
A Momentous Year for the Economy
The year began with short-term disruptions caused by
…two major Structural reforms – Demonetization & GST roll-out
However, the economy recovered from the above blips as the year ended
Indian Consumption story continues to be strong
Supported by Government’s focus on rural economy
Impetus being given to rural infra and agricultural prices
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A Defining Year for Raymond
Strong recovery from the impacts of recent structural reforms - Cash crunch due to Demonetization & GST
Successful execution of initiatives set in stated strategy – Focus on Profitable Growth & Value Creation
Growth across all business resulting in ...
7
Strong growth in Revenue & Profitability
* Exc. GST impact
Revenue EBITDA
Net Profit
EBITDA
Margin
EPS (Rs)
6,025
5,509
546
423 135
26
9.1%
7.7% 21.9
4.2
13%* 29%
428%
led by….
INR Cr.
8
…the following Key Drivers
Strong growth in Flagship Branded Textile
by 10%
Robust growth in Branded Apparel by 19% and
Positive EBITDA margin
Successful Turnaround of T&H business &
continued profitable momentum in
Auto Components business
9
INR Cr. FY 18 FY 17 Amt %age Revenue 6,025 5,509 516 9.4% EBITDA 546 423 124 29.3% EBITDA margin 9.1% 7.7% +140 bps Net Profit (Underlying)** 115 32 83 259% Net Profit (Reported) 135 26 109 428%
Growth across all segments…
Consolidated Results – Profitable Revenue Growth Achieved in FY18
*Sales growth is excluding GST impact
13%*
** Adjusted for exceptional items (net of tax)
10 10
Branded Textiles
Branded Apparel
Garmenting
High Value Cotton Shirting
Auto Components
Tools & Hardware
10% 16%
2%
Sales (INR Cr.)
Sales Growth (%)*
EBITDA Margin (%)
2,915
1,424 19%
5% 691 8%
17% 10%
21%
575
218 36%
9% 365 10%
Segment Performance FY18
* Sales growth is excluding GST impact
Raymond Consolidated 6,025 13% 9.1%
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INR Cr. FY 18 FY 17 Amt %age Sales 2,915 2,714 201 7.4% EBITDA 458 384 74 19.3%
EBITDA margin 15.7% 14.1% +160 bps
Suiting (+7%*) – Driven by the wholesale channel bounce back
– Emergence of institutional sales as a strong category
B2C Shirting (+23%*) – Growth led by high consumer demand & deeper market penetration
Higher EBITDA margin driven by strong sales growth and reduction in discretionary
expenses
Branded Textile – Strong growth witnessed
*Sales growth is excluding GST impact
10%*
12
INR Cr. FY 18 FY 17 Amt %age Sales 1,424 1,270 154 12.1% EBITDA 23 (12) 35 NA
EBITDA margin 1.6% (1.0%) +260 bps
Branded Apparels – Momentum on achieving scale
Power Brands achieving scale
Supported by New Customer Segments – Ethnix & Next Look
Rapid Channel Network Expansion across – EBOs, LFS doors and MBOs
Higher EBITDA margin led by strong sales growth and reduction in
discretionary expenses
* Sales growth is excluding GST impact
19%*
Power Brands Achieving Scale…
290 598 280 219
33% 7% 10% 35%
Sales
(INR Cr.)
% Growth*
*Sales growth is excluding GST impact
Last 4 Year
CAGR* 22% 17% 9% 19%
14
Garmenting – Expansion in key large accounts
INR Cr. FY 18 FY 17 Amt %age Sales 691 639 53 8.2% EBITDA 36 54 (18) (32.9%) EBITDA margin 5.2% 8.4% -320 bps
Revenue growth driven by key large accounts & new client acquisitions
Strengthen its global manufacturing capability - Commissioned State-of-the-art
Garmenting plant in Ethiopia
Continued focus on expanding global footprint - Opened offices in New York,
London and Dubai
EBITDA margin impacted due forex loss and initial operation costs of Ethiopia
plant
15
High Value Cotton Shirting : Improved performance
INR Cr. FY 18 FY 17 Amt %age Sales 575 500 75 15.0% EBITDA 59 49 10 19.8% EBITDA margin 10.2% 9.8% + 40 bps
Sales growth driven by better offtake from customers
Reaffirming its commitment to ‘Make in India’ initiative, the Group set up a
Greenfield Linen manufacturing facility in Amravati, Maharashtra
Improvement in EBITDA margin on account of reduction in raw material prices
and better product mix
*Sales growth is excluding GST impact
17%*
Results are shown for 100% operations & include minority interest
16
Tools & Hardware : Successful turnaround
350
365
FY17 FY18
Sales EBITDA
7
33
FY17 FY18
Continued focus on customer engagement & optimizing manufacturing capabilities
The turnaround strategy of building operational efficiency and product
rationalization helped in significantly improving EBITDA margins
2.0%
9.0%
*Sales growth is excluding GST impact
INR Cr.
Results are shown for 100% operations & include minority interest
17
Auto Components – Robust sales & profit growth
Profitable growth momentum maintained post turnaround
Increased demand from PV & CV segments and industrial segments
EBITDA margin expansion supported by better product mix & cost
reduction
164
218
FY17 FY18
24
45
FY17 FY18
*Sales growth is excluding GST impact
14.5%
20.8% INR Cr.
Results are shown for 100% operations & include minority interest
Sales EBITDA
18
FMCG – Enhancing customer centricity
Acquisition of ‘KamaSutra’ Brand**
Focus on building ‘KamaSutra’ brand as Brand of Choice in Sexual Wellness Category
Launched ‘One Park Avenue’
**Raymond Group is in final stage of acquiring JV partner’s stake
~ INR 440 cr. * of Business
* Revenue for 100% Operations of FMCG business
Unified visual identity
New contemporary brand positioning
Brand to extend its global presence
New identity in West Asia and SAARC
19
Denim – Headwinds faced yet growth achieved
Product innovations with new functionalities and finishes
New differentiated product offerings – Organic Cotton, Post-Consumer Waste & Waterless technologies
Growth momentum enabled by
Business faced various headwinds Rupee appreciation
High cotton prices
Excess capacity
FY 18 Revenue ~ INR. 937 cr. *, 7% growth
* For 100% Indian Operations
20
Guidance for FY 2018 Achieved
KPI Guidance for FY18 Actual Results
Revenue Growth 7-9% 13% *
EBITDA Margin +100 – 150 bps +140 bps
ROCE (Underlying)** 8% - 9% 9.2%
Net Debt/ EBITDA Stable From 4.0x to 3.5x
Free Cash Flow - ve -ve
* Excluding GST impact * * Excludes real-estate impact
21
Agenda
FY 18 Results
Lifestyle Business - Initiatives
The Journey Ahead
22
Lifestyle Business – FY 18 Initiatives
Brands & Innovations
Product Innovations
Service Innovations
New Offerings
Product Extension
MTM Portfolio
expansion
Market & Network Expansion
Mini TRS
Channel Expansion
Institutional
Business
Tailoring
Eco-System
Amravati, Ethiopia
Retail Experience
Store Activities
Store Renovations
Digitization
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Market & Network Expansion
Mini TRS
Channel Expansion
Institutional
Business
Tailoring
Eco-System
Amravati, Ethiopia
Retail Experience
Store Activities
Store Renovations
Digitization
Lifestyle Business – FY 18 Initiatives
Brands & Innovations
Product Innovations
Service Innovations
New Offerings
Product Extension
MTM Portfolio
expansion
24
Product Innovations - Expansion of portfolio
Techno-Series Monza Merino Wool
Jacquards Linen
New variants introduced …………………………………. Broadened the Sweater Portfolio
Options increased by 10%
Innovative PW fabric offering
Premium Jacquard introduced
25
Techno-Series – Success story continues
TechnoSmart
2 mn metres of Technoseries fabric sales – 30% YoY growth
TechnoStretch
TechnoFresh TechnoComfort
26
Brand & Innovations – Campaigns & Expansions Raymond All Blacks Garment Exchange
High impact
Campaign
Category
Expansion
Customer Segments
1,000 styles of Black Suiting Fabrics ~3.6 lac garments exchanged
MTM Footwear
Hand-crafted, Ultra-light
& Wrinkle-free Further catapulting the
growth
New segments to
enhance portfolio
27
New Customer Segments - Ethnix
Positioned as stylized elegant offering
To be retailed through extensive TRS network, select MBOs and LFS
Opportunity in high growth premium Ethnic Wear segment
Sherwanis Bandhgalas Fusion Wear Kurtas
28
New Customer Segments - Khadi
Perfect blend of Fashion & Fabric
To be retailed through extensive network of Raymond stores
Khadi for Nation, Khadi for Fashion
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Opportunity in untapped value segment due to shift from Unorganized to
Organized sector
Targeted at youth & young professionals – Aspirational designs at value price
Strong focus on Tier II - IV cities To leverage existing strong retail presence in 450 towns
New Customer Segments – Next Look
30
MTM – Category extension & Concierge service
Ceremonial
Casual Wear Concierge
Service
Lounge Wear
Track pants,
shorts, hoodies,
round & V neck
T-shirts
Curated Line of
Special edition
products
Denim, Polo &
Chinos piloted
Revamped
website to
attract online
bookings
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Brands & Innovations
Product Innovations
Service Innovations
New Offerings
Product Extension
MTM Portfolio
expansion
Lifestyle Business – FY 18 Initiatives
Market & Network Expansion
Mini TRS
Channel Expansion
Institutional
Business
Tailoring
Eco-System
Amravati, Ethiopia
Retail Experience
Store Activities
Store Renovations
Digitization
33
Mini-TRS – Asset light model of expansion
91 Mini TRS opened
70+ Tier III to VI towns
New Design Low Investment
Tier III - VI towns
Right Size
Attractive Pay-Back Fully Franchised
Stores Opened LOI Signed
Map not to scale
34
Highest number of stores added in a year ever
19 10 22
108 18
64
Mar 17 TRS MTM EBO TRS MTM EBO Mar 18
763
257
TRS
1.99mn
sq ft
EBO
MTM
1,080
60
852
299
68
1,219
2.15mn
sq ft
• Additions include 91 Mini TRS in 70+ towns • ~75% of total stores are franchised • Completed 41 stores renovation, currently 25 stores under renovation • Blended sales growth across our retail formats was 11% for the year
190 additions
51 closures
Mar 17 TRS MTM EBO TRS EBO Mar 18 MTM
35
35
Expansion through EBO & MTM network
Increased LFS presence
B2C Shirting – Retail & Wholesale
Added 82 new stores
Added 100+ new doors
Added 300+ new doors
Network Expansion
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Network Expansion
CMD Launches “Chairman’s 100” annual
event for Top MBOs
CMD on a market visit in Delhi
37
Expanding Tailoring Eco-system
Capacity Capability Connect Consumer
Up-grading Skillset Dignity of Profession Quality Infrastructure Superior Service
38
Expanding Tailoring Eco-system
3 Pillars of Execution
Tailoring Hubs Centre of Excellence Custom Tailoring
• 25 operational hubs • Annual Conversion capacity
of > 1mn metres of fabric • Franchisee model
• Skill Training of Tailors/ Kharigars
• 20,000+ tailors trained • More than 1 lakh hours of
training
• Online Tailoring piloted in Mumbai & Pune
• Launch of Premium and Express Tailoring
Capacity Capability Connect Consumer
39
Market expansion through Institutional Business
Institutional Sales emerging as major channel of growth
Industry-wise coverage
Public-Sector coverage
INDIAN ARMY
40
Peak capex completed in FY 2018
Amravati Plant installation completed (High Value Shirting)
• Commissioned during the year
• 4.8 mn mt Linen & Blended Fabrics & 1,200 tons of Linen Yarns
• Will largely cater to the high-margin linen portfolio
41
CMD conferred with Maha Udyog Shri Award by Govt. of Maharashtra
Magnetic Maharashtra – 18th to 20th Feb, 2018
42
Peak capex completed in FY 2018
Amravati Plant installation completed (High Value Shirting)
• Commissioned during the year
• 4.8 mn mt Linen & Blended Fabrics & 1,200 tons of Linen Yarns
• Will largely cater to the high-margin linen portfolio
Ethiopia Plant started commercial operation (Garmenting)
• Phase I operation commissioned from June’17
• 2.4 mn pieces capacity
• Will meet the demand for increasing global business
43
CMD meets Top Global Customers in USA
Meeting with Douglas Raicek ,
President, Peerless Clothing
CMD with Collin Campbell
Global Buying Head- Express Meeting with Michael Stang, Head
Global Sourcing- JC Penney
44
Market & Network Expansion
Mini TRS
Channel Expansion
Institutional
Business
Tailoring
Eco-System
Amravati, Ethiopia
Retail Experience
Store Activities
Store Renovations
Digitization
Lifestyle Business – FY 18 Initiatives
Brands & Innovations
Product Innovations
Service Innovations
New Offerings
Product Extension
MTM Portfolio
expansion
45
Store activities for Customer Engagement
10,000 Point of Sale activations at Raymond Stores (10x)
46
Store Renovations - TRS
THEN
47
Store Renovations - TRS
NOW
48
Store Renovations – Park Avenue
THEN
49
Store Renovations – Park Avenue
NOW
50
Store Renovations – Color Plus
THEN
51
Store Renovations – Color Plus
NOW
52
Store New Formats : Parx
Beach Box Store at Alibaug Denim SIS in MBOs
53
Digitization– Raymond Rewards & Digital Reach
Connects 1,200 stores and > 600 Franchisee partners
Large base of 5.3 mn members contributing to 75% of retail sales
Over 1 million repeat customers, growing at 18-19% Y-o-Y
Member ATV Rs 6,200, up 12% vs PY
New launches
communicated
Product
recommendations
Special
customized
offers
Incremental footfalls + Spends
STRONG DIGITAL REACH
630 mn Digital impressions
Unique Digital reach to 70 mn individuals
54
Investment in Learning & Development
PROGRAMS
• Top 25 employees
• Visit to world class companies & live projects with personal coaching
• Top 50 employees
• 7 Live projects on customer centricity, transformation & digital
Harvard Business Publishing Cornell University
• 100% employees
• 240 free courses in 9 domains
• 556 enquiries with 187 enrolments
Self Learning
55
Lifestyle Business – FY 19 Initiatives
Product & Service Offerings
Network & Market Expansion
Product & Service Offerings
Channel Expansion
Product Re-engineering
Implemented Initiatives to gain momentum
New Initiatives
56
Lifestyle Business – FY 19 Initiatives
Product & Service Offerings
Network & Market Expansion
Product & Service Offerings
Channel Expansion
Product Re-engineering
Implemented Initiatives to gain momentum
New Initiatives
57
Implemented Initiatives to gain Momentum
Scaling up of new customer segments – Khadi, Ethnix & Next Look
MTM – Expansion of Casual, Lounge & Denim Categories – Scaling up of Concierge services
Innovations to continue - Technoseries, Monza, Linen
Tailoring – 50 additional hubs to be opened by 2020
Product & Service Offerings
58
Implemented Initiatives to gain Momentum
Mini TRS – Another 200 to be rolled out by 2020
Scaling-up of Online Tailoring
LFS & MBOs – door expansions
Wholesale – Continuation of Tag Dealer loyalty program - Appointment of ~1,000 Tag dealers under Shirting business
Network & Market Expansion
59
Lifestyle Business – FY 19 Initiatives
Product & Service Offerings
Network & Market Expansion
Product & Service Offerings
Channel Expansion
Product Re-engineering
Implemented Initiatives to gain momentum
New Initiatives
60
New Initiatives for FY 19
Extend KHADI
Adopt 200 clusters to enhance quality & expand product range
To be retailed via Raymond
retail network and KVIC outlets
61
Extend KHADI
62
Extend KHADI
63
New Initiatives for FY 19
Extend KHADI
Adopt 200 clusters to enhance quality & expand product range
To be retailed via Raymond
retail network and KVIC outlets
Channel Expansion - STYLE PLAY
Exclusive MBOs selling Raymond Apparel Brands
Focus on high potential, lower tier markets – FOFO Model
64
Style Play Stores
65
New Initiatives for FY 19
Extend KHADI
Adopt 200 clusters to enhance quality & expand product range
To be retailed via Raymond
retail network and KVIC outlets
Channel Expansion - STYLE PLAY
Exclusive MBOs selling Raymond Apparel Brands
Focus on high potential, lower tier markets – FOFO Model
Service Offering - STYLE ADVISORY
Salesmen, Tailors or Technology as “Stylist” at Raymond Stores to create customized looks
66
Service Offering - STYLE ADVISORY
Magic Mirror installed in select stores
67
New Initiatives for FY 19
Extend KHADI
Adopt 200 clusters to enhance quality & expand product range
To be retailed via Raymond
retail network and KVIC outlets
Channel Expansion - STYLE PLAY
Exclusive MBOs selling Raymond Apparel Brands
Focus on high potential, lower tier markets – FOFO Model
Service Offering - STYLE ADVISORY
Salesmen, Tailors or Technology as “Stylist” at Raymond Stores to create customized looks
Product Re-engineering – Wool
To part neutralize wool price increase Approach includes wool microns
optimization, product re-engineering and process optimization
68
Agenda
FY 18 Results
Lifestyle Business - Initiatives
The Journey Ahead
69
Transformation Drivers
Enhancing Stakeholders’ Value
Innovate & Sustain Invest & Grow Unlock value & De-leverage Management
► Further strengthen corporate governance
► Industry repute Advisory Board
► Dynamic leadership
Transforma-tion
Growth
► Product innovations
► Service innovations
► Market & Category expansion
► Channel penetration
► Sustain the margins
Textile – The Core Business Apparel – The Growth Engine ► Asset light network expansion
► Stabilize Brand investments
► Retail experience – store of the future
► Omnichannel penetration
► Full wardrobe & services solution
► Engineering – Turnaround in progress of T&H business
► Sustain profitable growth in Auto business
► FMCG – Category expansion, leverage Raymond brand & channel Specific Focus
► Real Estate – An opportunity
70
Board approves development of 20
acres of land at Thane for residential
purposes
Potential of over 3 million sq ft of
saleable area
To be developed over 5-6 years
~Rs 300 cr estimated project
expenditure in FY 19
Launch expected in FY 19
Management team in place,
Processes & Systems are being
developed
Plans are under finalization &
pending for statutory approvals
Real Estate Update
* Excluding real estate project
The Journey ahead - Create consistent shareholder value
On track of achieving FY 2020 guidance
FY-2018 Results
FY-2020*
Revenue Growth
EBITDA Margin
ROCE Underlying
Net Debt to EBITDA
Free cash flow
13%*
9.1%
(+140 bps)
9.2%*
3.5x (from 4x)
-ve
10% - 12%
+70 - 100 bps
12% - 15%
1.5x to 2.5x
+ve
FY-2018 Guidance
7% -9%
+100 - 150 bps
8% - 9%
Stable
-ve
FY-2019*
7% - 9%
+80 - 100 bps
-ve
Q&A
73
Disclaimer
• The particulars of this presentation contain statements related but not limited to revenues, financial results and supplemental financial information which has been compiled by the management, not to be construed as being provided under any legal or regulatory requirement and are not intended to invite any investment in the Company. The information contained in this presentation has not been subjected to review by any auditors or by the Board of Directors of the Company. Commentary in the presentation describes the reporting quarter performance versus the same quarter of the corresponding previous year, unless specified otherwise. The figures for the previous periods in this presentation have been regrouped/ reclassified, wherever necessary. The Company assumes no responsibility and does not provide any warranty to the accuracy or comprehensiveness of the information contained in this presentation.
• This presentation is not intended to be a “prospectus” (as defined under the Companies Act, 2013, SEBI Regulations and relevant provisions of applicable laws, the Companies (Prospectus and Allotment of Securities) Rules, 2014). This is for information purposes only and does not constitute or form part of, and should not be considered as any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscription for securities in any jurisdiction. No part of this presentation and the information contained herein should form the basis of, or be relied upon, in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities.
• Statements in this presentation describing the Company’s objectives, projections, estimates, expectations or predictions may constitute forward looking statements. Such statements are based on the current expectations and certain assumptions of the Company's management, and are, therefore, subject to risks and uncertainties. Actual results may differ materially from those expressed or implied. The Company neither intends, nor assumes any obligation to amend, modify, revise or update these forward looking statements, on the basis of any subsequent developments which differ from those anticipated.
Thank You