Welspun India Limited

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Presentation on
Welspun India Limited
Seizing The Emerging Global Textiles Opportunity
CONFIDENTIAL
DRAFT
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Welspun Group Profile

• US 400 million, engaged in
• Terry Towels
• Largest Terry Towel producer in Asia
• Polyester Filament Yarn
• One of the largest Specialty Polyester Filament
  Yarn producer In India
• Polyester Buttons and Resins
• Largest producer of Polyester Buttons in Asia
• Cotton Yarn
• One of the prominent players in India
• Saw Pipes
• One of the largest capacities of Saw Pipes in
  Asia, outside Japan.

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WELSPUN INDIA LTD- Overview

• Asias largest and worlds 4th largest Terry
  towel producer
• Current Terry towel capacity 10,800 Tons being
  expanded to 23000 tons
• Becoming a complete home textile player by
  addition of bed linen
• Plant at Vapi Gujarat and Anjar, coastal Gujarat,
  India
• Distribution network in 32 countries
• Exports revenue- 94 of total revenue ( 68 to
  the US market)
• Certification
• ISO 9002/14001 and SA 80002001 by M/S BVQI
• Only Indian company to license life-style brand
  in Home Textiles
• Nautica for towels in US and Canada
• Tommy Hilfiger for Home Textiles in India

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Welspun Journey to become a Global Home textile
Player
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CIRCA 1994

• Polyester yarn manufacturer
• Turnover was Rs 90 Crs, Net Profit of Rs 4 Crs
• Started Towel Business
• Challenges
• To produce Towel New Business Line
• To produce Quality Towel
• To Export Quality Towel EOU status
• To Export Quality Towel to Knowledgeable Matured
  Market

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CIRCA 1994 Cont..

• Emphasis on Maximum Production
• Quality improvement at each stage of production
• Product Analysis based on Customer feed-back
• Emphasis on Volume Growth
• Focus on Sales from the maximum Outlets
• Started Business through Intermediaries
  Exporters, Buying Houses.

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CIRCA 1999

• Produced Quality Towels
• Exported Quality Towels
• Expanded Capacities from 2500 Tons to 7800 Tons
• Grew in Volume and Value Terms
• Emerged as largest Exporter of Towels from India
• Turnover Rs 325 Crs significant for Towel Co
• Profit after Tax of Rs (31.5 Crs)

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CIRCA 1999 - Cont..

• External Dependence- All Business through
  Intermediaries
• Presence in Generic Products Yarn and Plain
  Dyed Towels
• Focus on Sales rather than Marketing
• Limited Designing Efforts
• Limited Processing capabilities right
  color/right shade/right mix was a challenge
• Financial Crunch
• In nut shell Innovation was a missing Link

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CIRCA 2000 - Putting heads together for a New
Beginning
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Strategy

• Adopted Vision to become a Truly Global Player
  and communicate to all our employees
• Breaking the midriff - middle-men/agents from the
  business cycle Jettisoning Extra Baggage
• Direct Relationships even at the cost of dip in
  sales
• Decided to invest in Product Developments and
  Design Capabilities
• In Essence Adopted Innovation in entire Business
  Operation - Product, Processes, Practices and
  People

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Innovation In Products

• Paradigm shift from USE to COLLECTION range of
  products
• New Value added product lines Egyptian Cotton,
  Embroidery, Supima (American
  Cotton), Kid Centric Towels.
• Experimented with different inputs like PVA
  fibers
• New Product development
• Hygro Cotton
• Zero-twist
• Subslistatic Printed
• Blister Pile Towels
• Developed new shades and floral prints that are
  trendy and inline with the Fashion Industry

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Innovation In Processes

• Process House Fully Atomized color mixing
• Design Innovation
• Developed new Designs by creating one of the best
  Home textile designing team
• Design Studios
• Design house in India - 5 people
• 2 designers each in US and UK
• Appointed World class Designer from the Industry

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Innovation In Processes

• Innovation in Sales and Marketing Processes
• Selection of Right Business Partners
• Created Marketing Infrastructure
• Sales team in US
• 6000 sq. ft. exclusive showroom in New York
• Distribution alliance in the US for distribution
  and warehousing
• Created Welspun USA - 100 subsidiary to handle
  customers directly

Product Development skills complimented by Global
Sales Network
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Innovation In Practices

• Utilizing IT as Integrator
• EDI RFID in Welspun USA
• Integration with Customers
• Electronic Coloring and Design Matching which
  integrates Product Design Development
• SAP R/3 - Integrates Operations, Marketing and
  Supply Chain
• Reverse Auction

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Innovation In Practices

• Market Intelligence Conducted Grid analysis of
  top retailers with respect to
• Product range,
• Fast Moving Items best selling SKUs
• Profit margin expectation
• Collection of Samples to understand
• global developments

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People

• Paradigm shift in Mindset from Manufacturer to
  Marketer.
• Adequate Training in SAP enabled Production and
  Operations
• Appointed International Textile consultant to
  improve skill sets of employees
• Appointed Experienced and result oriented people
  from the Industry .
• Performance based Reward system

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YEAR 2004 - Revisited
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Product wise sales in terms of (based on
ex-mill values)
The proportion of the value added products has
increased
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Progress in Value Chain
Value Creation
Marketing Outsourcing
Choose Pick amongst Retailers High end products
Branding
Direct Export
Indirect Export
2000
2003
2004
2005
Time
95
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Customer Relationship

• Long standing relationship with 12 out of 20 top
  retailers in the world
• Customer centric Planning and Production
  mechanism

BETTERNWELT
MITSUKOSH
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Value Chain contribution
Tommy Hilfiger, Nautica, Polo Ralph Lauren, DKNY,
Calvin Klein
2003
2004
2005
Retail Price Expansion
Designer Brands
8
12
15
3
4
10
MayCo, Federated, Dillards
Department Stores
2x
1
5
10
BBB, LNT, Kohls
Specialty Stores
13-15
22
12
15
J C Penny, Target, Shopko
5-7
Fashion Stores
x
Mass Merchants
Wal-Mart, K Mart, Costco
33
15
32
8
2
0
Indirect Business
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Comparison
FY 1999 (Rs. Crs) Particulars FY 2005 (Rs. Crs)
325 Turnover 374
(35) Net Profit 295
41 Market Cap. 800
- FII Holdings 24
2.66 Venture Capital Mutual Funds 32.19
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Global Opportunities
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Todays Global market place

• Quota phase out An additional market of 1.25
  bn in Towel and 1.75 bn in bed linen Segment
  alone
• Shrinking supplier base released
• Pillowtex - bankruptcy - 450 mn of towel and
  220mn of bed linen supply.
• WPS - Chapter 11 455 mn of towels and 580
  mn of bed linen supply.
• Lucrative European market of 600 mn with
  shrinkage of supplier base.
• Australian and New Zealand market of 50 mn
• Dropping duties 25 to 17.5, rendering there
  capacities idle
• Increased domestic demand
• Few organized player in the home arena to cater
  to the market
• Low interest rates and higher disposable income

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Key Differentiators
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• Success Algorithm

• Textiles has been forecasted as another BPO
  success story, what Y2K did for IT , Y2K5 could
  do for Textile Industry
• Mantra For Success as followed by Infoys -
• P Profitability
• S Scalability
• P Predictability
• D Dependability

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Vision 2005 and Beyond
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Innovation in 2005 and beyond

• Products Continuous Innovations in Products-
  Bamboo Filaments, Hollow Yarn, Natural Towels
• New Business Lines like Bed Linen
• Processes Automatic Recipe matching Orgatex,
  Automated Operations like Cut and Sew.
• Practices Patenting of New products to Create
  differentiators.
• People Knowledge Management, Six Sigma and ESOPs

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Vision This is what we are aiming at.

• Fully integrated textile company 4 Fs - from
  farming to factory to fashion to foreign
  retailing
• Organic and inorganic initiatives to target
  Growth
• Preferred partner in Home Textiles for any global
  initiative.
• Leader in embracing new technologies, product
  innovation, market intelligence - to offer
  competitive end-to-end solutions to our
  customers.
• Among top three home textile companies in the
  world.
• Market leader in Indian home textile market.

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• RECOGNITIONS

National Export Award for outstanding performance
from Government of India, for the year
1996-97
Texprocil gold trophy for outstanding export
performance for successive three years (1999-00,
2000-01 2001-02)
Best Global Vendor by Wal-Mart in 2002 for
Terry towel
Vendor of the year , FY 2002 by Shopko Stores
Inc., USA for all its product categories
Operational Excellence Award by JC Penney
Stores, USA for Year 2003
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WE APPRECIATE YOUR VALUABLE TIME
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