roadshow presentation 140907 - aceanalyser meet/132808_20070630.pdfour impressive financial track...

T R U L Y G L O B A LT R U L Y G L O B A L


1

Today's Discussion

Who We Are

How Are We Uniquely Positioned

How We Can Continue To Grow Rapidly

Our Impressive Financial Track Record And Outlook


2

Today's Discussion

Who We Are





3

House of Pearl Fashions Is A Global Apparel Company

Well Poised to Scale Up

We are an Indian-Multinational company in the ready-to-wear apparel

business offering total supply chain solutions to our customers

We have an integrated business model with three distinct business streams -

Manufacturing, Marketing Distribution and Branding & Sourcing

We offer multi-country, multi-gender and multi-product options in each

business stream to our customers

In the post-quota regime, our strategy to emerge as a "One Stop Shop" for

customers enables us to deliver strong revenue and profit growth


4

We Have An Integrated Business Model

Design and

Development

Logistics and

Warehousing

Marketing, Distribution

and Branding

Manufacturing

Sourcing

LDP**

FOB*

FOB*

R

E

T

A

I

L

E

R

S

Notes:

1. FOB: Free on Board Basis

2. LDP: Landed Duty Paid Basis

Distinctive business model offering multiple sourcing options to customers


5

We Have A Presence In Higher-End Of Apparel Value Chain

SourcingSourcing

Teams in China, India and Bangladesh accessing 150 3rd

party manufacturing units

DistributionDistribution

Distribution offices in US, UK, Hong Kong; Merchandising teams across Canada, Europe, Hong Kong, UK, US

WarehousingWarehousing

Own warehousing and processing facilities in US and UK

Branding & RetailingBranding & Retailing

Own brands ‘DCC’ and ‘Kool Hearts’ retailing in US

ManufacturingManufacturing

Own facilities for Knits, sweaters, wovens, bottoms

Design & DevelopmentDesign & Development

Dedicated teams at each

manufacturing location

HoPF’s Comprehensive PresenceHoPF’s Comprehensive Presence

Fibre

Yarn

Fabric

Apparel ManufacturingApparel Manufacturing

SourcingSourcing

Branding, DistributionBranding, Distribution

Retailing

HoPF’s Segments

Apparel Retail Value ChainApparel Retail Value Chain


6

We Have A Global Infrastructure

• Dedicated design and product development facilities at each

manufacturing location

• 182 employees in design and development, including international

designers, focused on providing design and product development

support globally

• Cross-Country Exchange of Design Ideas, Speed to Market Solutions

• Dedicated fabric development and sampling unit in China and India

• 10 modern ready-to-wear apparel manufacturing facilities with a

capacity of 20 million pieces per annum - 6 in North India, 1 in

South India, 2 in Bangladesh and 1 in Indonesia

• Manufacture a broad range of products, for both men and women

across all ages, comprising of Knits, Woven, Sweaters, Bottoms

• Source products from over 150 third-party apparel manufacturing

units in China, Bangladesh and India with access to additional

manufacturing capacities of over 120 million pieces per annum

• Strict compliance with international quality and labour standards

Design and Development

Manufacturing and Sourcing


7

We Have A Global Infrastructure

• Marketing and distribution offices located in U.S., U.K. and Hong Kong oversee marketing and merchandizing teams in Canada, Europe, Hong

Kong, U.K. and U.S.

• U.S. company engaged in the private label business and also sells apparel

under its own brands - DCC and Kool Hearts

• Experience in branding enables us to better understand the requirements of

our retail customers

• Own warehousing and processing units in the U.K. and the U.S

• Combined capability to handle over 2 million garments per month

• Warehouses linked to the buyer's inventory system deliver apparel based on customers' requirements across all warehouses

• Warehouses deliver ready for sale garments after performing pre-retailing

processes like Logistics and transportation, Garment processing and ironing, Quality control, Reverse logistics and Shipping and forwarding

Marketing, Distribution and Branding

Logistics and Warehousing


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Today's Discussion

Who We Are





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House of Pearl Fashion’s Has A Unique Global Footprint

Ontario, CanadaMarketing &

Distribution

New Jersey, USWarehousing &

Logistics

New York, US

Branding, Marketing &

Distribution

Madrid, Spain

Marketing &

Distribution

Milton Keynes, UKWarehousing,

Processing & Logistics

Watford & Cheshire, UK

Marketing &

Distribution

Chennai, India

Manufacturing

(3 mm pieces pa,

Bottoms)

Gurgaon, India

Manufacturing

(9 mm pieces pa*,

Woven/Knits)

Dhaka,

Bangladesh

Sourcing

Semarang, Indonesia

Manufacturing

(2 mm pieces pa,

Woven)

Kowloon, Hong

Kong

Marketing &

Distribution

Hangzhou, China

Sourcing

Comilla & Gazipur,

Bangladesh

Manufacturing(6 mm pieces pa, Knits &

Sweaters)

Marketing, Distribution & Sourcing

Manufacturing

6,335 Employees in India and 4,193 Employees Globally, at 11 Strategic Locations Across 10 Countries

* As at August 31, 2006


10

6054

40

0

15

30

45

60

FY04 FY05 FY06

We Have Long Standing Relationships With Leading Customers

10

7

7

5

5

5

4

4

2

2

2

Johnsons

Name of the Entity / BrandDuration of Relationship

(No. of Years)Increasing Customer Diversity

Trend Towards Vendor Consolidation

“Strategic Vendor” for JC Penney and ASDA Wal-Mart

10%

80%

90%

20%0

25

50

75

100

Current 3-4 Years Hence

Transational Vendors Strategic Partners

Source KSA Technopak


11

Geographically Diverse Customer Base

U.K.

54%

Other

Countries

20%

U.S.

26%

% of Revenue

We Have A Risk Diversified Revenue Stream(1)

0%

10%

20%

30%

40%

50%

60%

70%

Indonesia Bangladesh India

% of Total Capacity 60%

30%

10%

SemarangComilla

Gazipur

Chennai

Gurgaon

Well Spread Manufacturing Facilities

Notes:

1. Consolidated financials for 6 months ended Sept. 30, 2006

790

20782

243 229

1,532

1,879

832

0

500

1,000

1,500

2,000

FY05 FY06 Half Year Ended Sept. 30,

2006Sw eaters Knits Wovens

Multi Product Capability

(Rs in MM)

India

19%

U.S.

13%

Hong Kong

26%

U.K.

29%

Bangladesh

8%

Others

5%

Geographically Diverse Asset Base

% of Revenue

Manufacturing: 28% of Revenue; Sourcing, Distribution, Branding, Marketing: 72% of RevenueManufacturing: 28% of Revenue; Sourcing, Distribution, Branding, Marketing: 72% of Revenue


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Our Team is Stable and Experienced

Strong Corporate Leadership

Mr. Deepak Seth

Non-Executive Chairman

Mr. Pallak Seth

Non-Executive Vice-Chairman

Mr. Pulkit Seth

Managing Director

Mr. Samar Ballav MohapatraIndependent Director

Secretary, Ministry of Textiles(Retired)

Mr. Chittranjan DuaIndependent Director

Corporate Lawyer

Mr. Tom Tar SinghIndependent Director

Founder, New Look, U.K.

Strong Operational Leadership

Mr. Ezio AntoniolCountry Manager

Bangladesh

Mr. Anuj BanaikGeneral Manager

Poeticgem, U.K.

Mr. Rajesh AjwaniCEO

PT Norwest, PGL South

Mr. S. M. VijDirector and President Depa, U.S.

Mr. Vineet MathurGroup Financial Controller

Mr. Sandeep MalhotraCEONorwest, Hong Kong

Mr. Paritosh NathChief Operating Officer

HoPF, U.S.

Mr. Venkat NaganExecutive Director Norwest, China


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Today's Discussion

Who We Are





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We Have A Well Defined Growth Strategy

• Enhance the production capacity from the current 20 to 30 million pieces per annum

– Doubled production capacity in the last 6 months

Expand Existing Manufacturing Facilities and

Establish New Ones

Expand Existing Manufacturing Facilities and

Establish New Ones

30

16

10

20

Mar-06 Jun-06 Aug-06 Mar-10

Quadrupling Capacity

MM Pieces per Annum

• Add new product categories in order to increase the Company’s product offerings

– Planning to set up manufacturing of bottoms

• Expand network of third-party manufacturing units in India, Bangladesh and China

– Establish a network in Vietnam for supply of various product categories

• Expand business to new geographic locations

– Recently established marketing and distribution base in Canada

Enter New

Product Categories and Geographies

Enter New Product Categories and Geographies

• Enter into retailing in India

– Sell the products manufactured by the Company in India directly to Indian consumer

– US operations has developed brands “DCC” and “Kool Hearts”

Explore Opportunities

in the Retail Sector

Explore Opportunities

in the Retail Sector


15

We Will Focus On Improving Synergies and Efficiencies

• Consolidate functions and processes, such as freight

and cartage, to improve logistics

• Develop an enterprise resource planning system to

integrate global operations

• Improve production techniques and enhance training

to improve labor productivity

House of Pearl

Fashions Ltd (India)

House of Pearl

Fashions Ltd (India)

Pearl Global

Ltd* (India)

Pearl Global

Ltd* (India)

Multinational Textiles

Group Ltd (Mauritius)

Multinational Textiles

Group Ltd (Mauritius)

House of Pearl

Fashions (U.S.) Ltd

House of Pearl

Fashions (U.S.) Ltd

Nor-Pearl

Knitwear Ltd (Bangladesh)

Nor-Pearl

Knitwear Ltd (Bangladesh)

Norp Knit

Industries Ltd (Bangladesh)

Norp Knit

Industries Ltd (Bangladesh)

Global

Textiles Group Ltd (Mauritius)

Global

Textiles Group Ltd (Mauritius)

Norwest Industries Ltd (Hong Kong)

Norwest Industries Ltd (Hong Kong)

Poeticgem

Ltd

Poeticgem

Ltd

Depa International

Inc. (U.S.)

Depa International

Inc. (U.S.)

PT Norwest Industries

(Indonesia)

PT Norwest Industries

(Indonesia)

Pacific Logistics Ltd

(U.K.)

Pacific Logistics Ltd

(U.K.)

Poeticgem (Canada) Ltd

(Canada)

Poeticgem (Canada) Ltd

(Canada)

62.8% 100% 100% 99.9% 98%

100% 85%

75% 100% 100%

100% 100%

* Listed in India

Improve Operating EfficienciesImprove Operating EfficienciesIntegrating All Businesses Under HoPFIntegrating All Businesses Under HoPF


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We Will Use Acquisitions Selectively

Clear M&A Strategy

� Acquisitions focused on:

- Adding complementary product lines

- Foray into Retail

� Acquisitions not a substitute for organic

growth

� Pursue targeted acquisitions of apparel

companies or brands, strategic

partnerships or joint ventures

Proven Track Record

� Depa, Poeticgem: Acquired in FY2005

– Redefined their business strategies

– Net profit margins improved 3x

� Launched New Brand, Kool Hearts

– Promising response

� Augmented Marketing & Distribution

Capabilities


17

Use of Proceeds

General Corporate purposes

2,7653,598Use of Proceeds*

400400Acquisition of an existing brand in the U.K. or the U.S. for retail outside India

545733Setting up a domestic branded apparel retail business

511511Investment in Subsidiary for payment of purchase consideration for group

companies

550550Pre-payment of certain term loans availed by Company & Subsidiaries

143143Setting up an integrated Information Technology System

38143Establishment of a Design Centre and corporate Office in Gurgaon

5781,118

Increase Production Capacity by establishment of manufacturing facilities at

� SIPCOT Industrial Park, Irungattukottai, India - Woven

� Narsingpur, Gurgaon, Haryana, India - Wovens and Knits

� Khandsa, Gurgaon, Haryana, India – Knits

� Dhaka, Bangladesh – Knits

Use of ProceedsEstimated Total Cost(Rs Mn)

Contribution from the Issue(Rs Mn)


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Today's Discussion

Who We Are





19

Presentation of Financial Statements

• Integration of international businesses under HoPF (Issuer): Key Dates

– March 28, 2006: Nor-Pearl Knitwear, Bangladesh; Norp Knit Industries, Bangladesh

– March 31, 2006: Depa International Inc, US; Poeticgem, UK; PT Norwest Industries, Indonesia; Pacific Logistics, UK; Poeticgem, Canada

– June 1, 2006: Norwest Industries, Hong Kong

– August 1, 2006: HoPF, US

• For FY2005 and FY2006, Audited Consolidated Financial Statements of HoPF

– Includes only Pearl Global and its subsidiaries

– Does not include figures for global businesses

• For 6 months ended September 30, 2006, Audited Consolidated Financial Statements HoPF

– Includes the 6 month figures for Nor-Pearl Knitwear, Bangladesh; Norp Knit Industries, Bangladesh; Depa International Inc, US; Poeticgem, UK; PT Norwest Industries, Indonesia; Pacific Logistics, UK; Poeticgem, Canada

– Includes figures for Norwest Industries, Hong Kong from June 1, 2006 only

– Includes figures for HoPF, US from August 1, 2006 only


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Rapid Growth in Profitability

Revenue Growth(1)(2)(3)

7,1537,734

9,525

2,800

FY05 FY06 FY07 Q1 F8

(Rs in MM)

PAT Growth(1)(2)(3)

(Rs in MM)

Notes:

1. For FY05 and FY06, the audited restated consolidated results of HoPFL represent the consolidation of only Pearl Global and its subsidiaries during the applicable periods. HoPF’s subsidiaries in Bangladesh were

acquired on March 28, 2006; subsidiary in Mauritius, Multinational Textiles, was incorporated on March 28, 2006; and other overseas Subsidiaries, other than Norwest Industries (HK) and HoP (U.S.), were acquired on March 31, 2006. The consolidated information of HoPFL does not include income and expenses in respect of these entities for fiscal 2006.

2. For the 6 months ended September 30, 2006, the audited consolidated information of HoPFL includes the income and expenses of Multinational Textiles, Nor Pearl, Norp Knit, Global Textiles Group, Poeticgem, PT Norwest, Depa U.S., Poeticgem Canada and Pacific Logistics. The results of Norwest Industries (HK) and HoP (U.S.) is included with effect from June 1, 2006 and August 1, 2006 respectively.

3. FY05 PAT excludes the extraordinary loss of Rs. 40 mn on sale of sweater division of erstwhile subsidiary Pearl Style Ltd.

96

251

526

147

FY05 FY06 FY07 Q1 F8


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Improving Margins

7.4%

10.4%9.4%

3.4%

FY05 FY06 FY07 Q1

FY08

EBITDA Margins(1)(2)(3)

(% of Revenue)

Gross Profit(1)(2)(3)

(% of Revenue)

SG&A Costs(1)(2)(3)

(% of Revenue)

17.6%

19.3%

21.5%

19.3%

FY05 FY06 FY07 Q1 FY08

14.2%

11.9% 11.5%

9.6%

FY05 FY06 FY07 Q1 FY08

• Progressive reduction in sample development

• Reduction in sourcing cost; Own office established in Bangladesh

• Fixed cost not increasing in proportion to increase in revenues

Notes:

1. For FY05 and FY06, the audited restated consolidated results of HoPFL represent the consolidation of only Pearl Global and its subsidiaries during the applicable periods. HoPF’s subsidiaries in Bangladesh were

acquired on March 28, 2006; subsidiary in Mauritius, Multinational Textiles, was incorporated on March 28, 2006; and other overseas Subsidiaries, other than Norwest Industries (HK) and HoP (U.S.), were acquired

on March 31, 2006. The consolidated information of HoPFL does not include income and expenses in respect of these entities for fiscal 2006.

2. For the 6 months ended September 30, 2006, the audited consolidated information of HoPFL includes the income and expenses of Multinational Textiles, Nor Pearl, Norp Knit, Global Textiles Group, Poeticgem, PT

Norwest, Depa U.S., Poeticgem Canada and Pacific Logistics. The results of Norwest Industries (HK) and HoP (U.S.) is included with effect from June 1, 2006 and August 1, 2006 respectively.

3. FY05 PAT excludes the extraordinary loss of Rs. 40 mn on sale of sweater division of erstwhile subsidiary Pearl Style Ltd.


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Well Positioned To Capture The Market Opportunity

Invest in Growth, Invest in House of Pearl Fashions

We are an Indian-Multinational company in the ready-to-wear apparel

business capable of offering total supply chain solutions to our customers

We have an integrated business model with three distinct business streams -

Manufacturing, Marketing Distribution and Branding & Sourcing

We offer multi-country, multi-gender and multi-product options in each

business stream to our customers

In the post-quota regime, our strategy to emerge as a "One Stop Shop" for

customers enables us to deliver strong revenue and profit growth


23


roadshow presentation 140907 - aceanalyser meet/132808_20070630.pdfour impressive financial track...

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