NANDAN DENIM LIMITED Q3 & 9M FY16 RESULTS UPDATE February 2016 India is favourably positioned to become a global denim fabric and apparel production hub driven by – - Abundant availability of cotton, low cost of production and competitive currency. - Favourable central and state government textile policies. - China’s decreasing competitiveness due to high domestic demand, rising labour cost and appreciating currency.
SAFE HARBOR STATEM ENT This presentation and the following discussion may contain “forward looking statements” by Nandan Denim Limited (“ Nandan Denim”) that are not historical in nature. These forward looking statements, which may include statements relating to future results of operations, financial condition, business prospects, plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and projections of the management of Nandan Denim about the business, industry and markets in which it operates. These statements are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond Nandan Denim’s control and difficult to predict, that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of Nandan Denim. In particular, such statements should not be regarded as a projection of future performance of Nandan Denim. It should be noted that the actual performance or achievements of the company may vary significantly from such statements. 2 Nandan Denim Limited
DISCUSSION SUM M ARY Q3 & 9M FY16 Results Highlights 04 – 06 Q3 & 9M FY16 Financials & Summary Outlook 07 – 09 About Us 10 – 20 Appendix 22 – 26 3 Nandan Denim Limited
Q3 FY16 RESUL TS – YoY Analysis REVENUES EBITDA & EBITDA M ARGIN PAT & PAT M ARGIN 16.7% 5.4% 15.7% 2,874 2,776 4.6% 156 480 436 126 4% 24% 10% Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 REVENUES M IX REVENUE M IX VOLUM ES & REALISATIONS % Growth % Growth 139.7 134 129.7 4.7% 335 313 10.9% -60% -6% 333 12.1% 103.1 12.0% 100.2 19.1 18.5 2,674 11% 89.1% 93.0% 2,561 5% 88.0% 2,404 2,443 86.6% 3.3 1.3 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Denim Shirting Exports Domestic Shirting Denim Denim Realisations Shirting Realisations In Rs M n, Volumes in M n M etres, Realisations in Rs/ M etre 4 Nandan Denim Limited
9M FY16 RESUL TS – YoY Analysis REVENUES EBITDA & EBITDA M ARGIN PAT & PAT M ARGIN 16.7% 5.4% 15.6% 8,624 4.4% 8,182 1,440 468 1,279 361 5% 30% 13% 9M FY15 9M FY16 9M FY15 9M FY16 9M FY15 9M FY16 REVENUES M IX REVENUE M IX VOLUM ES & REALISATIONS % Growth % Growth 137.0 549 132.3 1,146 13.3% 899 6.4% 13.3% 1,073 11.0% -39% 7% 103.0 102.3 56.4 53.1 7,721 7,478 10% 7,008 7,029 86.7% 89.5% 7% 86.7% 85.9% 8.7 5.4 9M FY15 9M FY16 9M FY15 9M FY16 9M FY15 9M FY16 Denim Shirting Exports Domestic Shirting Denim Denim Realisations Shirting Realisations In Rs M n, Volumes in M n M etres, Realisations in Rs/ M etre 5 Nandan Denim Limited
Q3 & 9M FY16 RESUL TS HIGHLIGHTS Q3 FY16 Revenues grew by 3.5% Y oY driven by Healthy growth in denim business on the back of higher volumes (+3.3% Y oY) and higher realizations (+7.7% Y oY) Lower demand in shirting business While the exports market showed weakness, the company continued to drive sales in the domestic denim market. Q3 FY16 Gross M argin increased by 121 bps Y oY to 33.0% driven by Improvement in denim realization on the back of higher share of value added denim grades Q3 FY16 EBITDA margin expanded by 100 bps Y oY to 16.7% driven by Improvement in gross margin coupled with efficient operating cost control Q3 FY16 PAT M argins expanded by 89 bps Y oY to 5.4% primarily due to Improved EBITDA margins Lower Taxes 6 Nandan Denim Limited
Q3 & 9M FY16 P&L STATEM ENT Q3 FY16 Q3 FY15 YOY% Q2 FY16 QOQ% 9M FY16 9M FY15 YOY % Sales from Operations 2,874 2,776 3.5% 2,945 -2.4% 8,624 8,182 5.4% Other Operating Income - - - - - - - - Total Sales 2,874 2,776 3.5% 2,945 -2.4% 8,624 8,182 5.4% Cost of Goods Sold 1,924 1,892 1.7% 1,910 0.8% 5,707 5,618 1.6% Gross Profit 950 884 7.5% 1,036 -8.3% 2,917 2,564 13.8% Gross M argin % 33.0% 31.8% 121 bps 35.2% -212 bps 33.8% 31.3% 249 bps Employee Expenses 130 128 1.6% 137 -5.5% 378 323 17.1% Other Expenses 340 320 6.2% 391 -13.1% 1099 962 14.2% 480 436 10.1% 508 -5.4% 1440 1279 12.6% EBITDA EBITDA M argin % 16.7% 15.7% 100 bps 17.2% -52 bps 16.7% 15.6% 107 bps Depreciation 167 153 9.0% 167 0.2% 500 458 9.1% 12 13 -7.9% 4 175.6% 26 26 -1.4% Other Income Profits Before Interest and Taxes 325 296 9.9% 345 -5.8% 966 847 14.0% Interest Expense 97 93 4.6% 104 -6.2% 299 296 0.9% 228 203 12.3% 241 -5.6% 667 551 21.1% Profits Before Taxes Taxes 71 76 -6.8% 85 -16.4% 200 190 5.0% Tax rate 31.3% 37.7% -642 bps 35.3% -404 bps 29.9% 34.5% -460 bps 156 126 23.8% 156 0.3% 468 361 29.6% Profits After Tax PAT M argin % 5.4% 4.6% 89 bps 5.3% 15 bps 5.4% 4.4% 101 bps EPS (Rs.) 3.44 2.77 24.2% 3.43 0.3% 10.26 7.92 29.5% 7 Nandan Denim Limited
ABOUT US: CHIRIPAL GROUP – EM ERGING CONGLOM ERATE BUSINESSDIVISION GROUP COM PANIES DETAILS Nandan Denim Ltd. Fully integrated facilities for manufacturing range of products viz. woven fabrics, circular knitted fabrics, polar Chiripal Industries Ltd. Textiles fleece fabrics, cotton hosiery, denim, etc. (Processing Division) Vishal Fabrics Pvt. Ltd. Chiripal Industries Ltd. Offers integrated range of productsranging from POY– 50-250 denier and FDY– 50-150 denier. Petrochemicals (Petrochemicals Division) Employs latest and fully automated machinery operated with Japanese and German technology. CIL Nova Petrochemicals Ltd. Chiripal Industries Ltd. Operatestwo major divisions– Adhesives & Speciality Performance Chemicals. Chemicals (Chemicals Division) Equipped to provide world classsolutionsto the paints, paper, leather, packaging & textile industries World Class two imported Biaxial orientation of polypropylene (BOPP) lines from Bruckner, Germany for manufacturingfilms capacity of 77,550 MTPA. Packaging Chiripal Poly Films Ltd. In addition, CPFL has two Metalizersfor producing metalized films. The company is also implementing BOPETLine to cater to wide demand for BOPETProducts. Shanti Developers Operatesa fully equipped industrial park for SME enterprisesin the textile sector Infrastructure Dholi Integrated Spinning Park Has made a successful foray in the area of residential infrastructure as well. Vraj Integrated Textile Park Runs 5 schoolsunder the brand “ Shanti Asiatic” across the country with over 3,000 students. Education Shanti Educational Initiatives Ltd. Present in the management education space having student strength of 560 students. Successfully running over 185 pre-K franchise – Shanti Juniors with over 10,000 students. 8 Nandan Denim Limited
ABOUT US: COM PANY OVERVIEW Nandan Denim Limited is a part of a leading conglomerate, Chiripal Group, which was established in 1972 and is currently diversified across several businesses like Textiles, Petrochemicals, Chemicals, Packaging, Infrastructure and Education. STRONG PEDIGREE Nandan Denim commenced its operations in 1994 with textile trading business and forayed into textile manufacturing in 2004. The company currently engages in manufacturing of denims, cotton fabrics and khakis. The company is run by a professional management team with an average experience of more than two decades.. Nandan Denim has one of the largest denim fabric manufacturing capacities in the world. LEADING The company expanded its denim fabric capacity from 71 MMPA to 110 * MMPA in FY15. INTEGRATED The company plans to backward integrate by expanding its spinning capacity from 64 TPD (tonnes per day) to 124 DENIM TPD in FY15-16 resulting into higher operating margins and improved return ratios. M ANUFACTURER The company also owns a captive power plant of 15 MW. Consolidated revenues, EBITDA and PAT were Rs 10,965 mn, Rs 1,654 mn and Rs 514 mn in FY15 having grown at CAGR of 21%, 25% and 31% over last five years. STRONG Stable EBITDA margins of around 14% - 15% over last five years. FINANCIAL Return ratios have improved over last five years driven by improving asset turnover. PERFORM ANCE ROCE – 10.6% in FY11 to 15.8% in FY15. ROE – 12.7% in FY11 to 21.6% in FY15. FY15 Debt : Equity was 1.8:1. * Post complete expansion 9 Nandan Denim Limited
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