Pearl Global Industries Limited · NSE:PGIL

Pearl Global Industries — Investor Presentation (August 2016)

39 slides from Pearl Global Industries's investor presentation, August 2016

  1. Slide 1: Pearl Global Industries Limited Investor Presentation

    PEARL GLOBAL INDUSTRIES LIMITED INVESTOR PRESENTATION August 2016 Private & Confidential

  2. Slide 2: Safe Harbor Statement

    SAFE HARBOR STATEMENT This presentation and the following discussion may contain ͞ĨŽƌǁĂƌĚ looking ƐƚĂƚĞŵĞŶƚƐ͟ by Pearl Global Industries Limited ;͞WĞĂƌů 'ůŽďĂů͟ or ͞W'/>͟Ϳ that are not historical in nature. These forward looking statements, which may include statements relating to future results of

  3. Slide 3: The global apparel sourcing landscape has become highly complex and challenging

    THE GLOBAL APPAREL SOURCING LANDSCAPE HAS BECOME HIGHLY COMPLEX & CHALLENGING STIFF CHALLENGES FOR LEADING APPAREL BRANDS & RETAILERS Pressure to offer Increasing Shortening fashion Highly volatile & uncertain omnichannel retail internationalisation & innovation timelines market demand experience re

  4. Slide 4: Long term shift in the global apparel sourcing market

    LONG TERM SHIFT IS BEING WITNESSED IN THE GLOBAL APPAREL SOURCING MARKET Global apparel sourcing market China is witnessing a shift from China ‡ Losing competitive edge ‡ Rising production & to other low cost Asian labour costs countries primarily Bangladesh, ‡ Appreciating currency China India and

  5. Slide 5: Global solution partner to the world's apparel industry

    '>K>^K>hd/KEWZdEZdKd,tKZ>͛^WWZ>/Eh^dZz DELHI Presence in UK / USA, through which UNITED KINGDOM we provide better market intelligence ĂŶĚŚŝŐŚĞƌƐĞƌǀŝĐĞůĞǀĞůƐĂƚƌĞƚĂŝůĞƌ͛Ɛ door step. DHAKA NEW YORK HONKONG Excellent infrastructure for sampling and product design. Exclusive facilities JAKARTA with over

  6. Slide 6: Pearl Global: preferred long term vendor

    PEARL GLOBAL IS FAVOURABLY ESTABLISHED IN THE FAST EVOLVING GLOBAL APPAREL SOURCING MARKET Multi-Product Offerings Multi-Location Presence ‡ One-stop shop offering wide variety of ‡ Well-diversified and de-risked products across wovens & knitwears. manufacturing base located in India, ‡ Value additi

  7. Slide 7: Why Pearl Global?

    WHY PEARL GLOBAL? ‡ ONE OF THE LARGEST ORGANISED GARMENT EXPORTERS IN INDIA. GARMENT EXPORT ‡ MULTI COUNTRY OPERATION PARTNER TO GLOBAL RETAILERS. BUSINESS ‡ ONLY INDIAN GARMENT PLAYER WITH DIVERSIFIED MANUFACTURING BASE - INDIA, BANGLADESH AND INDONESIA. ‡ VISION TO PROVIDE INTERNATIONAL FASHION CL

  8. Slide 8: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 8

  9. Slide 9: About Us: Company Overview

    ABOUT US: COMPANY OVERVIEW ‡ The erstwhile business of Pearl Global consisted of manufacturing, trading, marketing & distribution and exports of readymade garments. Business ‡ The Company decided to segregate its global marketing, sourcing & distribution business from its Overview garment manufactur

  10. Slide 10: Shareholding Structure

    SHAREHOLDING STRUCTURE Shareholding % Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Market Data As on 24.08.16 (BSE) Promoters 66.58% 66.58% 66.58% 66.58% 66.58% Market capitalization (Rs Mn) 4,480.1 FII 6.51% 6.51% 6.58% 5.50% 5.53% Price (Rs.) 206.8 DII 6.24% 6.29% 6.29% 6.42% 6.42% No. of shares outstanding

  11. Slide 11: About Us: Board of Directors

    ABOUT US: BOARD OF DIRECTORS Mr. Deepak Seth ‡ Economics Graduate from St. Stephens College, Delhi University, MBA from Jamanalal Bajaj Institute of Management Studies, Mumbai, India. ‡ He is an active member of the Apparel Export Promotion Council of India. Chairman ‡ He ǁĂƐĂǁĂƌĚĞĚƚŚĞ͞Udyog Ratna͟ǁ

  12. Slide 12: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 12

  13. Slide 13: Key Sustainable Advantage: Multi-Country Manufacturing Presence

    KEY SUSTAINABLE ADVANTAGE: MULTI-COUNTRY MANUFACTURING PRESENCE Global Manufacturing Facilities & Capabilities INDIA BANGLADESH INDONESIA ‡ Core centre for cotton fabrics. ‡ Core centre for knitwears. ‡ Core for cotton & synthetic fabrics. ‡ Specialization in handmade wovens ‡ Large and highly skill

  14. Slide 14: Key Sustainable Advantage: Vertically Integrated Manufacturing

    KEY SUSTAINABLE ADVANTAGE: VERTICALLY INTEGRATED MANUFACTURING VERTICALLY INTEGRATED MANUFACTURING CAPACITY Total Capacity EFFECTIVE SUPPLY CHAIN MANAGEMENT Location Products Factories Machines Mn Pieces / Month ‡ Strategic tie-ups with dyeing mills in Bangladesh. North India Woven Soft Sep 2 1,800

  15. Slide 15: Key Sustainable Advantage: Multi-Product Offerings

    KEY SUSTAINABLE ADVANTAGE: MULTI-PRODUCT OFFERINGS MULTI-LOCATION PRESENCE PROVIDES AN COMPETITIVE EDGE TO MEET THE COMPLEX & DIVERSE PRODUCT DESIGN REQUIREMENTS OF THE LEADING GLOBAL RETAILERS WĞĂƌů'ůŽďĂů͛ƐŝǀĞƌƐĞ Presence and Product Specialisations Region Product Offering Specialization Garment In

  16. Slide 16: Key Sustainable Advantage: Approved Vendor to Global Brands

    KEY SUSTAINABLE ADVANTAGE: APPROVED VENDOR TO GLOBAL BRANDS Target Australia 16

  17. Slide 17: Key Sustainable Advantage: Strong Design Capabilities

    KEY SUSTAINABLE ADVANTAGE: STRONG DESIGN CAPABILITIES STRONG EMPHASIS ON IN-HOUSE DESIGN & PRODUCT DEVELOPMENT ‡ Dedicated in-house design team of 75 designers located in Hong Kong, India and Indonesia. ‡ The design teams continually shop markets all over the world and visit all the globally renowne

  18. Slide 18: Key Sustainable Advantage: Strong Quality Check & Systems

    KEY SUSTAINABLE ADVANTAGE: STRONG QUALITY CHECK & SYSTEMS COMMITMENT TO LEAN PROCESSES, HIGH PRODUCTIVITY AND QUALITY COMPLIANCE ‡ All manufacturing units are using SAP, an integrated ERP software system, to run day to day operations and monitor key performance indicators. ‡ System integration has c

  19. Slide 19: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 19

  20. Slide 20: Understanding the Balance Sheet

    UNDERSTANDING THE BALANCE SHEET Total Capital Employed ʹ Rs 5,482 Mn Net Debt ʹ Rs 524 Mn Net Debt / Equity ʹ 0.2x C&CE Core Asset Base Non - Core Asset Base Holding Fixed Assets Net Current Other Net Cash & Fixed Assets Fixed Assets Under Use Assets excl. C&CE Assets Investments Idle Rented Out Rs

  21. Slide 21: Understanding the Profitability in Core Business

    UNDERSTANDING THE PROFITABILITY IN CORE BUSINESS PROFITABILITY IN CORE BUSINESS Particulars (Rs Mn) FY15 FY16 Total Revenues 10,237 13,934 Other Operating Income 185 183 ‡ The garment manufacturing business operates at modest operating margins. Cost of goods sold # 5,364 7,931 Processing, Shipping &

  22. Slide 22: Understanding the Seasonality Impact on Capacity Utilisation

    UNDERSTANDING THE SEASONALITY IMPACT ON CAPACITY UTILISATION Sales Breakup Around 85% of Pearl ~85% - United States Average Capacity Utilisation of 70% - 75% 'ůŽďĂů͛ƐƐĂůĞƐĂƌĞƚŽ Post Seasonality Impact United States. ~15% - EU, Canada, South America, December ʹ July The seasonal decline in South Afri

  23. Slide 23: Focus on Improvement in Capacity Utilisation

    FOCUS ON IMPROVEMENT IN CAPACITY UTILISATION Current Sales Breakup Expected Sales Breakup < 5% United States 15% < 5% United States 10% - 15% Europe Others Australia 80% Others 85% Capacity Rationalisation through diversification into new geographies: ‡ Currently, ~85% of sales are accounted by US w

  24. Slide 24: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 24

  25. Slide 25: Capacity Expansion Plan

    CAPACITY EXPANSION PLAN CAPACITY EXPANSION PLAN Capacity Capacity Expansion Capacity Post Expansion Particulars FY16 FY17 FY17 No. of Machines 8,900 650 800 10,350 Capacity (Mn Pieces/Month) 3.83 0.20 0.26 4.29 India (43.9%) India (49.9%) Location Bangladesh (47.0%) Gurgaon Chennai Bangladesh (41.9%

  26. Slide 26: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 26

  27. Slide 27: Balance Sheet: Non-Core Assets

    BALANCE SHEET ʹ NON-CORE ASSETS ASSET BASE ʹ RENTED TO THIRD PARTIES Area Land Building Total Rent per Year Particulars (Acres) (Rs Mn) (Rs Mn) (Rs Mn) (Rs Mn) Plot No 10, Sector-5, GC Bawal, Haryana 9.87 58 207 265 43.6 Plot No.51, Sector 32, Gurgaon ** 1.00 8 144 152 41.6 21/13, Naraina, Delhi 0.2

  28. Slide 28: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model ¾ Capacity Expansion Plan ¾ Balance Sheet ʹ Non-Core Assets ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ ¾ Q1 FY17 Results and Business Outlook ¾ Annexure ¾ Scheme of Arrangement Post De-Merger 28

  29. Slide 29: Future Growth Opportunity: E-Retail Initiative

    FUTURE GROWTH OPPORTUNITY ʹ E-Zd/>/E/d/d/s͞^hz^͟ Pearl Global has forward integrated into online fashion apparel retailing ƵŶĚĞƌƚŚĞďƌĂŶĚ͞^hz^͟ 29

  30. Slide 30: Pearl Global: E-Retail Strategy

    PEARL GLOBAL ʹ E-RETAIL STRATEGY ‡ Forward integration into online fashion apparel retailing under the brand Business Growth ͞^hz^͘͟ Opportunity ‡ Online retailing is a high-growth space and offers strong potential to build a business model with healthy margin profile. ‡ Leverage its strong knowledg

  31. Slide 31: Discussion Summary

    DISCUSSION SUMMARY ¾ About Us ¾ Key Sustainable Advantages ¾ Understanding the Business Model 20 - 23 ¾ Capacity Expansion Plan 25 ¾ Balance Sheet ʹ Non-Core Assets 27 ¾ Future Growth Opportunity ʹ E-ZĞƚĂŝů/ŶŝƚŝĂƚŝǀĞ͞^hz^͟ 29 ʹ 35 ¾ Q1 FY17 Results and Business Outlook 37 ʹ 39 ¾ Annexure 41 ʹ 43 ¾ S

  32. Slide 32: Q1 FY17 Result Highlights

    Q1 FY17 RESULT HIGHLIGHTS In Rs Mn Q1 FY17 YoY ANALYSIS REVENUES EBITDA & EBITDA MARGIN % PAT & PAT MARGIN % 7.1% 5.3% 4.3% 3.5% 3,751.1 2,820.8 199.9 198.5 162.7 171.4 5% 129.9 121.8 33 % 1% 7% Q1 FY16 Q1 FY17 Q1 FY16 Q1 FY17 Q1 FY16 Q1 FY17 EBIDTA EBIDTA % PAT Cash PAT PAT % NOTE ** ʹ Q1 FY17 incl

  33. Slide 33: Q1 FY17 Result Analysis

    Q1 FY17 RESULT ANALYSIS FINANCIAL UPDATE: ‡ Q1 FY17 revenues increased by 33.0% YoY driven by strong growth in demand. ‡ Overall capacity utilisation improved from 70% in Q1 FY16 to 75% in Q1 FY17. ‡ All three manufacturing facilities ʹ India, Bangladesh and Indonesia, witnessed strong activity. ‡ I

  34. Slide 34: Consolidated Profit & Loss Statement

    CONSOLIDATED PROFIT & LOSS STATEMENT Particulars (In Rs Mn) Q1 FY17 Q1 FY16 YoY % FY16 Total Income from Operations 3,751.1 2,820.8 33.0% 13,934.2 Cost of Goods Sold 2,028.8 1,487.7 36.4% 7,931.2 Cost of Material Consumed 1,569.4 1,489.1 5.4% 6,031.0 Purchase of stock-in-trade 432.5 118.3 265.7% 1,8

  35. Slide 35: Consolidated Balance Sheet Statement

    CONSOLIDATED BALANCE SHEET STATEMENT Particulars (Rs Mn) FY15 FY16 Particulars (Rs Mn) FY15 FY16 Share ,ŽůĚĞƌƐ͛ Funds: Non-current assets: Equity share capital 216.6 216.6 Fixed Assets 2,076.2 2,150.2 Reserves and Surplus 2,957.6 3,242.2 Goodwill on Consolidation 83.2 56.1 Total of Shareholder funds

  36. Slide 36: Business Outlook

    BUSINESS OUTLOOK ‡ Multi-product offerings, multi-location diversified & vertically integrated Preferred Vendor to Global manufacturing base, strong design capabilities and strong quality compliance Brands & Retailers systems. ‡ High operational flexibility & scalability as the manufacturing operati

  37. Slide 37: Thank You

    FOR ANY FURTHER QUERIES PLEASE CONTACT - THANK YOU Mr. Raj Chawla Mr. Nilesh Dalvi / Mr. Kapil Jagasia Chief Finance Officer IR Consultant Pearl Global Industries Email ʹ [email protected] Email ʹ [email protected] [email protected] Contact No ʹ +91 8447594225 Co

  38. Slide 38: Annexure

    ANNEXURE 38

  39. Slide 39: Scheme of Arrangement Post De-Merger

    SCHEME OF ARRANGEMENT POST DE-MERGER Pearl Global Industries Limited operates across three business streams ʹ ‡ Manufacturing ‡ Marketing & Distribution ‡ Sourcing of garments through subsidiaries Till recently, the Company operated (through its subsidiaries) with two distinct business segments: ‡ M

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