alok industries ltd: vision 2012 corporate presentation - march...plant locations vapi, silvassa,...

INTEGRATED TEXTILE SOLUTIONS


Corporate Presentation

March 2010


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Disclaimer

The information and opinions contained in this presentation are current, if not statedotherwise, as of the date of this presentation. We undertake no obligation to update orrevise any information or the opinions expressed in this presentation as a result of newinformation, future events or otherwise.

This presentation contains certain forward looking statements concerning Alok IndustriesLimited (“Company”) and its subsidiaries' future business prospects and businessprofitability, which are subject to a number of risks and uncertainties and the actualresults could materially differ from those in such forward looking statements. The risksand uncertainties relating to these statements include, but are not limited to, risks anduncertainties, regarding fluctuations in earnings, our ability to manage growth,competition (both domestic and international), economic growth in India and globally, ourability to manage our international operations, government policies, fiscal deficits,regulations, etc. The Company does not undertake to make any announcement in caseany of these forward looking statements become materially incorrect in future or updateany forward looking statements made from time to time by or on behalf of the Company.No part of this presentation shall be reproduced, copied, forwarded to any third partyeither in print of in electronic form without prior express consent of the Company.

This presentation does not constitute an offer or solicitation of an offer to purchase orsubscribe for any securities in any jurisdiction including India and the United States. Nopart of this presentation should form the basis of or be relied upon in connection with anyinvestment decision or any contract or commitment to purchase or subscribe for anysecurities. None of our Company‟s securities may be offered or sold in the United States,without registration under the U.S. Securities Act of 1933, as amended, or pursuant to anexemption from registration therefrom.

This presentation is confidential and may not be copied or disseminated, in whole or inpart, and in any manner. No person is authorized to give any information or to make anyrepresentation not contained in or inconsistent with this presentation and, if given ormade, such information or representation must not be relied upon as having beenauthorized by us.


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Sales of Rs. 2,976.93

crores (US$ 620.2 mn.)

and PAT of Rs. 188.37

crores (US$ 39.2 mn.) in

FY 2009

Export of Rs. 1,054.50

crores (US$ 219.7 mn.) in

FY 2009

Consistent dividend

paying company for 17

years

CAGR of about 28% in

Sales and 40% in EBIDTA

over the past 3 years

Alok Overview Vertically Integrated

Textile Company both in

cotton and polyester

1US$ - Rs. 48.00


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Alok Industries Ltd – TMIntegrated Textile SolutionsINTEGRATED TEXTILE SOLUTIONS


5

Segment Target Customer

Share of

Business HY

September 2009

(Provisional)

Share of

Business 2009

(Audited)

Share of

Business 2008

(Audited)

COTTON & COTTON

YARN

Captive Consumption

Export to traders, manufacturing units,

weavers

110.66

(US$ 23.05 mn.)

(6.28%)

111.10

(US$ 23.15 mn.)

(3.73%)

294.05

(US$ 61.26 mn.)

(14%)

APPAREL FABRICS

(Woven & Knits)

Garment exporters in India /

converter countries

Domestic garment manufacturers,

retailers and traders

756.85

(US$ 157.68 mn.)

(42.95%)

1,609.56

(US$ 335.33 mn.)

(54.06%)

894.80

(US$ 186.42

mn.)

(41%)

HOME TEXTILES

(Sheet sets, comforters,

Terry Towels, etc)

Export to Overseas retailers and

brands

Domestic Sales through Alok H&A

312.09

(US$ 65.02 mn.)

(17.72%)

498.54

(US$ 103.86 mn.)

(16.75%)

389.00

(US$ 81.04 mn.)

(18%)

GARMENTS

(Woven & Knits)

Export to Overseas retailers and

brands

Domestic Sales through Alok H&A

72.98

(US$ 15.20 mn.)

(4.14%)

138.58

(US$ 28.87 mn.)

(4.66%)

99.56

(US$ 20.74 mn.)

(5%)

POLYESTER YARN

(POY & Texturised Yarn)

Domestic power loom weavers

Direct exports

508.49

(US$ 105.94 mn.)

(28.88%)

619.15

(US$ 128.99 mn.)

(20.80%)

493.00

(US$ 102.71

mn.)

(22%)

Total

1,761.07

(US$ 366.89 mn.)

(100%)

2,976.93

(US$ 620.19 mn.)

(100%)

2,170.41

(US$ 452.17

mn.)

(100%)

Segment Wise Revenue Rs. in Crores

1US$ - Rs. 48.00


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Alok’s Advantage

Timely expansions resulting in first mover advantage

Exports increased from about Rs. 642 crores (US$ 133.75 mn.) in 2007 to

about 1,050 crores (US$ 218.75 mn.) in 2009 at a CAGR of 28%

Preferred Vendor status for several brands / retailers

Capacities in design and manufacturing and with quality control practices,

makes sourcing cost effective and efficient for our customers

Economies of scale coupled with low interest cost giving competitive

advantage

Forward and backward Integration will have positive impact on our margins

Wide range of products offered across different market segments

Product development and designing strength

State of the art infrastructure with modern machines

1US$ - Rs. 48.00


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Global Sized Capacities

Divisions Units Current CapacitiesCapacities under Implementation

Capacities Post Expansion

SPINNINGTons

(Spindles)

58,500

(300,096)

17,960

(111,744)

76,460

(411,840)

HOME TEXTILES

Processing mn. Mtrs 82.50 - 82.50

Weaving mn. Mtrs 68.00 - 68.00

Terry Towels Tons 6,700 - 6,700

APPAREL FABRICS

Processing Woven

mn. Mtrs 105.0 16.80 121.8

Weaving mn. Mtrs 93.00 - 93.0

Knits Tons 18,200 - 18,200

GARMENTS mn. Pcs. 22.0 - 22.0

POLYESTER YARN

Tons

(Machines)

114,000

(92)

56,000

(48)

170,000

(140)

POY Tons 182,500 146,000 328,500

FDY Tons - 65,700 65,700


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Special Finishes

Stain Guard Flame Retardant

Anti Static Water Repellent

Soil Release Infra Red Finish

3X Dry Insect Repellent

Brushed Fabric High Visibility

Anti Bacterial

Finish

Aroma FinishUser Industry

Defense Fire Brigades

Aviation Oil Refineries

Hospitality Petrol Pumps

Construction &

Infrastructure

Welding Industry

Health Care Coal Mines

Industrial Research

Product Development – Speciality Fabrics


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Global retailers and brands increasingly prefer „fair trade‟ and organic cotton,since it: Promotes eco-friendly textile products Addresses global warming concerns

Tie up with an NGO

Entered into agreement for complete supply chain and product developmentsolution

Organic Cotton Initiatives

International

BrandsINTEGRATED TEXTILE SOLUTIONS

NGO


ISO Certifications

The company is now accredited with Integrated Management

System (IMS). There are 4 certificates under this system:

1. ISO 9001: 2000 – Quality Management System

2. ISO 14001:2004 – Environmental Management System

3. OHSAS 18001: 2007 – Occupational Health & Safety

Assessment System

4. SA 8000: 2008 – Social Accountability

Certifications

ECO-Certification

Alok is the first Indian Textile company to have been

awarded all three certifications for its eco-friendly products

as under:

EU Flower – the eco-certificate from European Union

KRAV certification for organic products

SWAN certification – a Nordic eco-labelling certification

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Financial Analysis


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General Information – Alok Industries Ltd.

1US$ - Rs. 48.00

Present Equity Rs. 605.69 crores (about US$ 126.18 mn.) (605.69 million shares)

Listed at BSE and NSE

Market Price Rs. 23.60 as on March 02, 2010

Market Capitalization Rs. 1,429 crores

52 weeks High / Low High: Rs.29.50 Low: Rs. 11.32

Plant Locations Vapi, Silvassa, Navi Mumbai and Bhiwandi

Directors 12 directors (4 Executive Directors)

Employees 19,000 +

Particulars No. of Shares % Holding

Promoters & Promoter Group 222,906,351 36.80%

Mutual Funds/Insurance Companies/Venture Capital Funds/Banks 58,874,581 9.72%

Foreign Institutional Investor 151,989,816 25.09%

OCB‟s & Indian Public 171,927,282 28.38%

Total 605,698,030 100.00%

Share Holding Pattern as on February 2010


Rs. in Crores

Historical Financials

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Particulars Sept. 30, 2009

(Provisional)

2009

(Audited)

2008

(Audited)

2007

(Audited)

Profitability

Sales 1,761.07 2,976.93 2,170.41 1,824.68

Operating EBITDA 507.13 803.75 547.75 410.96

Operating PAT 89.01 217.04 167.73 135.18

Cash Profit 252.01 542.65 329.69 258.22

Basic EPS (Rs.) 1.92 8.81 11.40 9.70

Balance Sheet Sept. 30, 2009

(Provisional)

2009

(Audited)

2008

(Audited)

2007

(Audited)

Tangible Networth 2,155.54 1,755.06 1,431.34 1,024.44

Net Debt 6,353.51 6,251.41 4,093.57 2,551.46

Net Fixed Assets 6,420.80 5,983.87 3,891.30 2,583.80

Current Assets 3,069.97 2,685.93 3,377.53 1,992.66

Net Debt / Equity 2.56 3.03 2.86 2.49

Current Ratio 1.71 1.36 1.49 1.42

Rs. In Crores


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1824.68

2170.41

2976.93

0

500

1000

1500

2000

2500

3000

3500

2006-07 2007-08 2008-09

Rs. in

Cro

res

Sales

CAGR 28 %

410.96

547.75

803.75

0

100

200

300

400

500

600

700

800

900

2006-07 2007-08 2008-09

Rs. in

Cro

res

EBIDTA

CAGR 40 %

135.18

167.73

217.04

0

50

100

150

200

250

2006-07 2007-08 2008-09

Rs. in

Cro

res

PAT

CAGR 27 %

1024.44

1431.34

1755.06

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2006-07 2007-08 2008-09

Rs. in

Cro

res

Networth

CAGR 31 %

Historical Financials


EBITDA Enhancement through

Integration and Optimizations

1515


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Particulars Amount

(Rs. Per Kg)

Raw Material Cost

Raw Cotton Cost 73.00

Add: Additional Cotton consumed ( 0.33%) 24.00

Sub-Total 97.00

Less: Waste Realized 12.00

Total Raw Material Cost (a) 85.00

Conversion Cost

-Spinning (Conversion from Cotton to Cotton yarn) 32.00

-Weaving (Conversion from Cotton yarn to Fabric) (1 kg = 4 mtrs) 32.00

-Processing (for processing and Finishing of fabrics) 50.00

Total Conversion Cost (b) 114.00

Sub – Total (a+b) 199.00

Add: Wastage about 5% 10.00

Total Cost 209.00

Average Selling Price (Rs. 82.50 per mtrs X 4 mtrs) 330.00

Contribution 121.00

Contribution as a % of Sales 36.7%

From Cotton to Finished Fabric*

16* Management Representation


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Particulars Amount

(Rs. per garment)

Raw Material Cost

Fabric Cost 82.50

Add: Additional Fabric Coat (1.6 mtrs. per garment) 49.50

Total Raw Material Cost (a) 132.00

Conversion Cost

- Accessories 30.00

- Labour 70.00

Total Conversion Cost (b) 100.00

Sub – Total (a+b) 232.00

Add: Wastage @ 2% 5.00

Total Cost 237.00

Average Selling Price ( USD 5.8 per garment) 270.00

Contribution 33.00

Contribution as a % of Sales 12.2%

From Finished Fabric to Garment*



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Particulars DTY

(Rs. /Kg)

POY

(Rs. /Kg)

Raw Material Cost

PTA/MEG Cost 49.00 49.00

Conversion Cost

- From PTA/MEG to POY 6.00 6.00

Sub – Total 55.00 55.00

Conversion Cost

- From POY to DTY 9.00 -

Total Cost 64.00 55.00

Average Selling Price 81.00 69.00

Contribution 17.00 14.00

Contribution as a % of Sales 21% 20.3%

From PTA to DTY*



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Textile Industry Synopsis


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2007

Global trade in textiles and clothing increased to US$ 583 bn from US$ 342 bn.

in 2001 - CAGR of 9%

2015

Global trade expected to grow to US$ 805 bn from US$ 583 bn in 2007 - CAGR

of 4.12%

Source: - WTO

Top Exporters Amount US$ BN. %

Europe 183.99 31.56%

China 176.17 30.22%

Turkey 22.73 3.90%

India 19.10 3.28%

United States 16.68 2.86%

Others 164.33 28.18%

Total 583.00 100.00%

USD bn.

Global Textile Trade –Vision 2015

Expected Growth World Trade

219 238 260 300

311 345390

505

0

200

400

600

800

1000

2006 2007 2010 2015

Textile Apparel

530583

650

805


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Snapshot

Second largest producer of cotton yarn in the world

Second largest employer in India (after agriculture) – Direct Employment

to 38 mn. People

Constitute 26% of India‟s Manufacturing Sector

Constitutes 17% of India‟s total exports earnings

Contributes 14% to Industrial production

Contributes 6% to GDP

Indian Textile Industry

Advantage

Growing Domestic Market – Growing @18% since last 5 years

Cost Advantage – Labour cost is about USD 0.70/hr against USD 20/hr

Skilled Labour Availability – High Literacy Rate

Raw Material Availability – Second largest producer of cotton

Integrated Set up – Covers entire textile value chain


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Particulars Domestic Export Total

Textiles 12.00 12.00 24.00

Apparels 33.00 10.00 43.00

Total 45.00 22.00 67.00

Source: Ministry of Textiles – India/Technopack

USD bn.Size – 2009 (E)

Indian Textile Industry


Holding Structure and Subsidiaries

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Present Status

• The Company‟s cash & carry operations have now been transferred from

Alok Retail (India) Limited to cash and carry company “Alok H&A Limited”,

a 100% subsidiary of the company

• Stores offer products in home textiles, mens wear, womens wear, kids

wear and accessories like ties, handkerchiefs, cuff lings etc.

• 154 Dealership as on date on dealership basis

• Private Equity tied up with Asiabridge Fund I, LLC for growth of the venture

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Alok H&A Limited


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Overseas Retail - Grabal Alok (UK) Ltd


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Alok Group presently has a stake of 90.4% in Grabal Alok (UK) Ltd. (Alok

Industries International Ltd. 41.7% and 48.7% by Grabal Alok International Ltd.)

Currently, the chain comprises of 215 stores and employ about 2,500 people

The stores offer a value proposition for quality apparel for women, men, and

children. They also sell accessories (artificial jewellery, shoes, leather bags,

toys etc. ), which complement the apparel range

Turnover of about GBP 91 million as on March 2009

The company has been able to reduce its total cost from GBP 62 mn. in 2007-

08 to GBP 57 mn. in 2008-09 and further expected to be about GBP 48 mn in

2009-10

Gross Sales grew by 6.45% to GBP 51.01 mn. during April – Sept 2009

compared to GBP 47.9 mn. in corresponding period of previous year with cash

profits of GBP 0.01 mn. compared to a loss of GBP 10.06 mn. during April –

Sept 2008


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Alok holds 79.62% stake in Mileta, a Czech based manufacturingcompany through its wholly own subsidiary Alok Industries Internationallimited

Derived benefits from Mileta‟s technology skills in yarn-dyed fabrics andhemming: results in higher per-unit realizations and new product lines

Extensive marketing network in Europe, Russia and Africa: a gatewayfor Alok products

Brands like Mileta, Erba, Cottonova, Wall Street and Lord Nelson:available for introduction in the domestic market

Overseas Textile Manufacturing - Mileta International


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Alok Realtors Pvt. Ltd.

Peninsula Business Park, Lower Parel, Mumbai

Ashford Royale

Premium Residential Complex, Nahur, Mumbai

641,589 sq ft of office premises with 600 car

parks

Total project cost Rs. 1,225 crores; Funded by

Equity of Rs. 525 crores and Debt of Rs. 700

crores

Possession – December 2010

Ashford Investment & Trading Company Pvt.

Ltd and Alok Infrastructure Pvt. Ltd. jointly

propose (50:50) to develop an residential

complex on a 7 acre plot at Nahur

Proposed saleable area of 1.1 mn Sq. ft.

Total project cost is estimated to be about Rs.

450 crores; Funded by Equity of Rs. 150

crores and Debt of Rs. 300 crores

Possession – March 2012


Corporate Social Responsibility (CSR)

CSR is an integral part of Alok - some of the CSR initiatives includes:

Employment to tribal women on weaving looms and garment/made up stitching

machines after intensive training and orientation

Proposal to set up a 50 bed hospital at Silvassa with a portion set aside for

charitable purpose

Proposal to set up a CBSE Board School at Silvassa

Best in class ETP system for primary, secondary and tertiary treatment of

effluents. Reverse Osmosis plant to optimize water conservation

“Green Zones” around our facilities and planting of saplings to conserve

ecological balance

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Product and Plant Gallery

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Silvassa Plant

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Spinning Unit

32


Weaving Unit

33


Quilting Unit

34


Knitting Unit

35


POY Unit

36


Vapi Plant

37


Knit Processing Unit

38


Apparel Processing Unit

39


…Products - Home Textiles

– Sheet Sets, Quilts, Comforters, Blankets, Bed in a bag

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41

…Products - Home Textiles

–Towels


…Products – Apparel Fabrics

42


…Products – Knitted Fabrics

43


…Products – Dyed & Polyester

Yarn

44


…Products – Garments

45


Alok Industries Limited

Peninsula Towers, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel,

Mumbai – 400 013. Tel. +91 (22) 24966200 / 500, Fax: +91 (22) 2493 6078

E-mail: [email protected]

Website: www.alokind.com

Thank you

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alok industries ltd: vision 2012 corporate presentation - march...plant locations vapi, silvassa,...

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