Annual Investor Meet, 10th May 2018 - raymond.in Meet_May18.pdf · KPI Guidance for FY18 Actual...

Annual Investor Meet, 10th May 2018

2

“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

6

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%

11

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

23

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

29

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

31

32

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

36

36

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