Vardhman Investor Presentation March10

  • Upload
    ranikpr

  • View
    224

  • Download
    0

Embed Size (px)

Citation preview

  • 8/3/2019 Vardhman Investor Presentation March10

    1/26

    Vardhmn

    Rooted in Values, Creating World Class Textiles

    Vardhman Group

  • 8/3/2019 Vardhman Investor Presentation March10

    2/26

    Vardhmn

    Overview of the Presentation

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    3/26

    Vardhmn

    Vardhman Group Incorporated in 1965 under the leadership of Mr. S.P. Oswal

    One of the largest integrated textile houses in the country with a turnover of over $700

    million and a workforce of more than 23,000 employees

    One of the largest installed capacity in spinning in India at 800,000 spindles

    Amongst the largest Yarn producer in India

    Amongst the largest manufacturer & exporter of Cotton Yarn from India

    One of the largest consumers of raw cotton in the country

    Market Leader in Hand Knitting Yarn

    Second largest producer of Sewing Threads

    One of the leading integrated fabric producer

    Highest quality acrylic manufacturer of the country

    High economies of scale due to integrated operations and large cotton inventory holding

    capacity

    VALUE ADDITION THROUGH SUPPLY CHAIN

    The unique business model of the company having presence in entire value chain

    from Fibre (acrylic) to Fabric gives it flexibility in down turn and advantages over

    competitors to rise in upturn of the industry cycle

  • 8/3/2019 Vardhman Investor Presentation March10

    4/26

    Vardhmn

    1965

    Investment & Financing

    93

    Listed on BSE, NSE

    ISIN Code: INE701A01023

    1973

    Yarn, Fabric, Steel

    24,954

    Listed on BSE, NSE

    ISIN Code: INE825A01012

    Vardhman Textiles

    Limited (VTEX)

    Vardhman Holdings

    Limited (VHL)

    Year of Commencement

    Business

    Revenue (Rs.Mln)

    Market Status

    Group Snapshot

    59%

    Acrylic Staple Fibre

    60,400 tpa

    Vardhman Acrylics

    Limited (VAL)

    2,539

    51%

    RMG / Industrial /

    Speciality Threads

    33 tpd Threads

    60k spindles (captive)

    Vardhman Yarns &

    Threads Ltd (VYTL)

    3,324

    73%

    100% Cotton Yarn

    45,872 spindles

    1,010

    VMT Spinning Co.

    Limited (VMT)

    Stake

    Business

    Capacity

    Collaborations

    Revenue (Rs.Mln)

    100%

    NBFC

    N.A

    VTL

    Investments Ltd

    37

    Stake 26.66%

    Listed on NSE

    ISIN : INE116G01013Unlisted UnlistedMarket Status Unlisted

    -J.V with A&E, USAJV with Marubeni &

    Toho Rayon, Japan-

  • 8/3/2019 Vardhman Investor Presentation March10

    5/26

    Vardhmn

    Major Alliances...Partnering with Global Players

    2002NISSHINBO, JAPANCotton Yarns

    2007NISSHINBO, JAPANCotton Fabric

    2001AMERICAN & EFIRD (A&E) INC USASewing Threads

    1998TOKAI SENKO, JAPANFabric Dyeing & Finishing

    1996EXLAN AND MARUBENI CORP, JAPANAcrylic Fibre (ended in 2009)

    1995TOHO RAYON, JAPANCotton Yarns

    1994KYUNG BANG, SOUTH KOREAGassed Mercerized Yarns

    1992NIHON SANMO, JAPANFibre and Yarn Dyeing

    2009NISSHINBO, JAPANGarments

    USA, EU, Australia, Canada, China, Egypt, Mauritius, Hong Kong,

    Indonesia, Israel, Italy, Japan, Korea, Malaysia, Singapore, U.K.

    Major Export Destinations

  • 8/3/2019 Vardhman Investor Presentation March10

    6/26

    Vardhmn

    Group Capacities

    Sewing Thread (Tons per day)

    1619 19

    25

    3033 33 33

    2000 2002 2006 2007 2008 2009 2010(E)1998

    Greige Fabric - Looms (No.)

    144 160208

    432460

    810

    900 900

    2000 2002 2006 2007 2008 2009 2010(E)19981998 2000

    2002 20062007 2008

    2009 2010

    (E)

    828282

    4230

    2015

    0

    Processed Fabric (Mln Mtrs pa)

    0.87

    0.79

    0.75

    0.59

    0.51

    0.50

    0.40

    0.39

    Yarn - Spindles (Mln)

    1998 2000 2002 2006 2007 2008 2009 2010 (E)

    1998 2000 2002 2006 2007 2008 2009 2010 (E)

    Dyeing-Tpd 25.50 34.50 52.00 55.00 55.00 55.00 55.00 55.00

    Mercerization-Tpd 1.70 5.00 6.75 6.75 8.00 8.50 10.00 10.00

    Acrylic Fibre-Tpa 16,500 16,500 16,500 16,500 18,000 18,000 18,000 18,000

    Steel-Mtpa 65,000 40,000 40,000 80,400 80,400 80,400 80,400 80,400

    OtherCapacities:

  • 8/3/2019 Vardhman Investor Presentation March10

    7/26

    Vardhmn

    Business-wise Analysis

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    8/26

    Vardhmn

    Business - Yarn

    Largest spinning capacity in the country with > 0.87 mln spindles

    12 production plants located in the states of Punjab, Himachal Pradesh and Madhya

    Pradesh

    Technical tie-ups with the world leaders from Switzerland, Germany, Japan and Korea

    Amongst the largest exporter of yarn from India. The total export of the group is about 5%of total export of cotton yarn from the country

    Virtually a Supermarket for Yarn with a wide range of specialized grey, dyed, & a variety

    of blended yarns

    Gas

    Mercerised

    Auto-ConedBranding of

    Carded Yarn

    Blends (Acrylic,

    P/C, A/C)Yarn Dyed

    Melange

    (Rangoli)Grey Carded

    Grey Combed

    Compact / Contamination

    ControlledLycra

    Organic

    Fair TradeVortex (MVS) > 0.87

    million spndls

    14,000

    spndls

    Yarn - The journey so far.

  • 8/3/2019 Vardhman Investor Presentation March10

    9/26

    Vardhmn

    Yarn :De-risking the Revenue Model

    Cotton Lyocell Cotton Silk

    Cotton Bamboo Cotton Modal

    Cotton Tencel Cotton Viscose

    Specialized Products

    De-risking by Value Addition

    Compact Yarn Fibre Dyed

    Cotton Lycra Gas MercerisedMelange Yarn Fancy Yarns

    Cotton Dyed Slub Yarns

    PC Yarn Dyed Acrylic Yarns

    Yarn Dyed Hand Knitted Yarns

    Value Added Products

    GasMercerised

    MelangeCompact

    Slub Yarns

    Fancy YarnsHand Knitted yarns

    Cotton Lycra Yarn

    De-risking by Specialization

    Environment Friendly Yarns Organic Cotton Fair Trade Yarn

    Environment Friendly Products

    Contamination Free Yarn

    Cotton BambooCotton Silk

    Organic Cotton

    yarn

  • 8/3/2019 Vardhman Investor Presentation March10

    10/26

    Vardhmn

    Changing Spreads in Cotton Yarns

    1.0

    1.2

    0.66

    0

    1

    1

    2

    2

    3

    3

    4

    Jun06 Dec06 Jun07 Dec07 Jun08 Dec08 Jun09 Dec09

    ($

    perkg)

    0

    0

    0

    1

    1

    1

    1

    1

    ($

    perkg)

    Avg Cott on Prices

    Avg Yarn Prices (30s CH)

    Spread

    53.0156.80

    34.77

    0

    20

    40

    60

    80

    100

    120

    140

    Jun06 Dec06 Jun07 Dec07 Jun08 Dec08 Jun09 Dec09

    (Rs.perkg)

    0

    10

    20

    30

    40

    50

    60

    (Rs.perkg)

    Avg Cott on P rices

    Avg Yarn Prices (30s CH)

    Spread

    Spread over Indian Cotton(Rs./kg)

    Spread over Cot-A Index

    ($/kg)

  • 8/3/2019 Vardhman Investor Presentation March10

    11/26

    Vardhmn

    Business - Fabric

    Continuing its onward march on the value curve, the group entered

    Fabric business in 1992 with Greige (unprocessed) Fabric

    Entered the Processed Fabric market in 1999

    Current capacity 900 Looms & 82 million meters of processed fabric.

    One of the few fully integrated fabric suppliers in the country Dedicated to product innovation, world class quality, state-of-art

    technology and excellence in service

    Produces fabrics for both tops (shirting) & bottom weights

    (trousers/pants) for the apparel segment

    Making specialized fabrics like

    Yarn Dyed, Special White, Melanges, Nylon, Modal & Linen.

    Doing specialized finishes like

    Teflon / Nanocare (oil & water repellent), ETI etc.

    Supplier

    of Fabric toTop of the

    Line customers

  • 8/3/2019 Vardhman Investor Presentation March10

    12/26

    Vardhmn

    Changing Proportion of Fabric Sales

    4%6%

    14%

    35%

    41%

    6%7%

    19%

    30%

    39%

    4%

    7%

    17%

    31%

    42%

    7%4%

    17%

    35%37%

    0%

    10%

    20%

    30%

    40%

    50%

    2006-07 2007-08 2008-09 2009-10 (Est.)

    Ot her Exp orts Brands RM G Exp ort s

    Distributors Buying Houses

    Segment-Wise Sales Process-Wise Sales

    Buying Houses: Associated with International Labels, engaged inthe sourcing & merchandising activity for them. Usually result in

    higher margins for fabric suppliers.

    Distributors: Works for a number of smaller brands / garmenters

    and places a collective larger order.

    RMG Exports: fabric can be sold directly to the vendor factory

    Brands: fabric supplied to prestigious Indian Brands like MaduraGarments (Indian Rayon), Color Plus, Raymonds, Zodiac etc

    Other Exports: To Customers & Buying houses operating

    overseas which source fabric for vendors factories that are outside

    India

    Full Bleach : Special whites

    Ready for Dyeing : For Prints & Garment Dyeing

    Yarn Dyed : Yarn is first dyed and then converted to fabric

    Piece Dyed : Fabric is manufactured first and then dyed

    9% 10%13%

    68%

    12%9%

    19%

    60%

    10% 11%14%

    65%

    9%

    16%12%

    63%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    2006-07 2007-08 2008-09 2009-10 (Est.)

    Full Bleach RFD Yarn Dyed Piece Dyed

  • 8/3/2019 Vardhman Investor Presentation March10

    13/26

    Vardhmn

    Business - Sewing Thread

    The Group entered Thread business in 1982 as a forward integration to its Yarn business.

    Current capacity 33 tpd in 4 plants at Punjab, Tamil Nadu & Himachal Pradesh.

    In 2002, joined hands with American & Efird, Inc. USA (A&E) for manufacturing &

    distribution of A&E branded sewing threads in India.

    Spun off the Threads business into a new company (Vardhman Yarns & Threads Ltd) in 2007and entered into a 51:49 Joint Venture with A&E.

    The second largest brand of specialized threads in the country.

    A wide product range, which includes:

    Apparel Sewing Threads

    Specialty Threads

    Textile Crafts

    Embroidery Threads

    Kite Flying Threads

    Tea Bags

    Cosmetic Threads

    Industrial Threads

  • 8/3/2019 Vardhman Investor Presentation March10

    14/26

    Vardhmn

    Business - Acrylic Fibre

    Ventured into manufacture of Acrylic Staple Fibre in 1999 -Vardhman Acrylics Limited

    The plant was set up in Gujarat, in collaboration with Marubeni & Japan Exlan of Japan.

    Current Capacity 18,000 mtpa

    World class wet spun technology with highly automated, microprocessor controlled systems

    Products are marketed under the brand name VARLAN

    It is used in manufacturing of hand knitted yarns, blankets, jerseys, sweater, saris,

    upholstery, carpets etc.

  • 8/3/2019 Vardhman Investor Presentation March10

    15/26

    Vardhmn

    Business - Steel

    Started Steel business in 1972 as a diversification strategy, with capacity of 35,000 mtpa.

    Subsequently capacity has been expanded to 100,000 mtpa.

    Caters to high technology quality conscious special & alloy steel segment

    Application of products in automotive components, forging, ball bearings, piston

    pins, engineering applications, railways, defense etc.

    Preferred OE supplier to leading OEMs like Telco, Ashok Leyland, Maruti, Hindustan

    Motors, Toyota, M&M and Escorts among others

    Greaves, Simpson, Siemens India, Caterpillar India, Bharat Earth Movers, RailwaysOthers

    Graziano, Bonfiglioli, Spicer, Dana, Meritor, Arvin Meritor, Isuzu, Shriram Pistons & Rings,India Pistons, Sona Okeygawa, Sona Koyo, Brakes India, Toyota Kirloskar Auto Parts

    Auto Components

    HMT, PTL, ITL, Eicher Motors, Escorts, Tractor Engineers, TAFE, L&T John Deere, Mahindra &

    Mahindra

    Tractors

    Bajaj TempoThree-Wheelers

    Hero Honda, Yamaha, Honda Scooters & Motorcycles, Kinetic, LMLTwo-Wheelers

    Maruti Udyog, Toyota, Tata Motors, General Motors, Hindustan Motors, Mahindra & MahindraCars / Multi Utility

    Vehicles

    Tata Motors, Ashok Leyland, Mahindra & Mahindra, Eicher Motors, Swaraj MazdaCommercial Vehicles

    OEMCategory

  • 8/3/2019 Vardhman Investor Presentation March10

    16/26

    Vardhmn

    Financial Performance

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    17/26

    Vardhmn

    Group Financials

    90

    510

    95

    584

    95

    646

    111

    749

    0

    200

    400

    600

    800

    1000

    (Mln$)

    2006 2007 2008 2009

    Vardhman Group

    EBIDTA Revenue

    511

    613

    795

    931

    0

    200

    400

    600

    800

    1,000

    (Mln

    $)

    2006 2007 2008 2009

    Capital Employed

    Revenue Mix

    FY 2008-09Thread , 10%

    Yarn, 55%

    Fibre, 7%Steel, 8%

    Fabric, 20%

    Note: Conversion for above data taken @ Rs.47/$

  • 8/3/2019 Vardhman Investor Presentation March10

    18/26

    Vardhmn

    Business-wise Financials

    52

    277

    57

    313

    60

    361

    64

    416

    0

    100

    200

    300

    400

    500

    (Mln$)

    2006 2007 2008 2009

    Yarn Business

    EBIDTA Revenue

    11

    70

    10

    88

    11

    96

    19

    146

    0

    50

    100

    150

    200

    (Mln$)

    2006 2007 2008 2009

    Fabric Business

    EBIDTA Revenue

    10

    68

    11

    73

    11

    71

    15

    72

    0

    20

    40

    60

    80100

    (Mln$)

    2006 2007 2008 2009

    Thread Business

    EBIDTA Revenue

    3

    36

    8

    46

    7

    49

    4

    54

    0

    20

    40

    60

    80

    100

    (Mln$)

    2006 2007 2008 2009

    Fibre Business

    EBIDTA Revenue

    11

    59

    10

    64

    9

    70

    9

    61

    0

    20

    40

    60

    80

    100

    (Mln$)

    2006 2007 2008 2009

    Steel BusinessEBIDTA Revenue

    Note: Conversion for above

    data taken @ Rs.47/$

  • 8/3/2019 Vardhman Investor Presentation March10

    19/26

    Vardhmn

    Strategic Direction

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    20/26

    Vardhmn

    Yarn

    Continuous capacity expansion to maintain customer satisfaction. There is a capital

    proposal of Rs.2,500 mln currently on the drawing board to increase the spindlage by 55 k

    taking the total capacity upto 0.93 mln spindles

    Continuous improvement in capacity utilisations through line balancing Focus on Value Added yarn (compact, blends, core spun, slub, organic etc)

    Focus on high value customers

    Focus on diversifying customer base

    Strategic Direction

    Fabric

    Focus on Value Added products esp. cotton Lycra based fabrics & compact yarn based fabric

    New project commissioned in M.P. with reduced energy costs & improved logistics

    Formation of Creative Design Cell for strong thrust on Designing & Product Development

    Entering new market segments like work wear & OTC

    Developing new small distributors for high value fabric

    Strengthening of the RMGE segment

    Reducing cycle time & reducing lead time

    Strategic relationship with key exporters

    Developing yarn dyed shirting market

  • 8/3/2019 Vardhman Investor Presentation March10

    21/26

    Vardhmn

    Thread

    In 2007 entered into a Joint Venture Agreement with American & Efird, Inc. USA in

    51:49 ratio, for manufacturing & distribution of A&E branded sewing threads

    Consolidation of the thread business under Vardhman Yarns & Threads Limited

    It opens up a possibility of strategic tie-ups or attracting financial investors

    Garments Vardhman has forayed into Garments with a joint venture with Nisshinbo Textile Inc.

    for production of shirts in Ludhiana, Punjab (India) with Vardhman holding 51% stake.

    The shirts will be sold in India as well as exported to US, Europe & Japan.

    Vardhman is producing yarns & fabrics and will perform liquid ammonia processing

    with technology cooperation from Nisshinbo.

    Production expected to start from Dec 2010 with 1.20 mln units of which 400,000 will be

    sold in domestic market.

    Production slated to increase to 1.80 mln in 2nd year.

    Strategic Direction (cont)

  • 8/3/2019 Vardhman Investor Presentation March10

    22/26

    Vardhmn

    Corporate Social Responsibility

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    23/26

    Vardhmn

    Corporate Social Responsibility & Human Development

    Sri Aurobindo Socio-Economic and Management Research Institute

    Sri Aurobindo College of Commerce and Management (One of the leading colleges of

    management in Ludhiana)

    Sri Aurobindo Public School

    Promoter member of Nimbua Greenfield Punjab Limited

    Setting up of HRD centers for worker training

    In House Training and Development Centre for staff and management

    TQM and TPM

    Quality Circle, Competitions,

    Suggestion Scheme

    Olympiads

    Workers competition on

    skills and productivity

    Regular benchmarking

  • 8/3/2019 Vardhman Investor Presentation March10

    24/26

    Vardhmn

    Active member of Village Cluster Adoption Program (VCAP) in Punjab to improve the yield ofcotton per hectare to match World average (724kg)

    Corporate Social Responsibility

    75196543324694055266502006-07

    59282354099916246557702007-08

    64187019185329342947252005-06

    55182013445292132058102004-05

    3918001241160812112003-04

    Punjab Yield

    (Kg lint/ ha)

    Yield

    Achieved

    (Kg lint/ ha)

    Area under

    Cotton

    (Acre)

    Total

    cultivated

    area (Acre)

    No of

    Farmers

    No of

    Villages

    Year

    Started the Village Cluster Adoption Program in M.P. as well following the huge success of

    the same in Punjab. 2 Villages have been adopted so far with 316 farmers and total area

    under cultivation of 480 acres.

  • 8/3/2019 Vardhman Investor Presentation March10

    25/26

    Vardhmn

    Market Performance

    Brief Snapshot of Vardhman Group

    Business-wise Analysis

    Financial Performance

    Strategic Direction

    Corporate Social Responsibility

    Market Performance

  • 8/3/2019 Vardhman Investor Presentation March10

    26/26

    Vardhmn

    Market Performance (VTXL)

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    2003 2004 2005 2006 2007 2008 2009

    40.1052 Week Low

    280.9552 Week High

    13,186Market Cap (Rs mn)

    228.25Last price

    Rs/shareVardhman Textiles