PEARL GLOBAL INDUSTRIES LIMITED INVESTOR PRESENTATION June 2015 Private & Confidential
SAFE HARBOR STATEMENT This presentation and the following discussion may contain “forward looking statements” by Pearl Global Industries Limited (“Pearl Global” or “PGIL”) 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 Pearl Global 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 Pearl Global’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 Pearl Global. In particular, such statements should not be regarded as a projection of future performance of Pearl Global. It should be noted that the actual performance or achievements of the company may vary significantly from such statements. 2
THE GLOBAL APPAREL SOURCING LANDSCAPE HAS BECOME HIGHLY COMPLEX & CHALLENGING STIFF CHALLENGES FOR LEADING APPAREL BRANDS & RETAILERS Pressure to offer Pressure to offer Increasing Increasing Shortening fashion Shortening fashion Highly volatile & uncertain Highly volatile & uncertain omnichannel retail omnichannel retail internationalisation & internationalisation & innovation timelines innovation timelines market demand market demand experience experience regional differentiation regional differentiation Environmental, social & Environmental, social & Inelastic apparel prices & Inelastic apparel prices & Fluctuating raw material Fluctuating raw material Emergence of Emergence of regulatory compliance regulatory compliance rising production costs rising production costs & freight costs & freight costs new sourcing markets new sourcing markets & quality issues & quality issues & quality issues & quality issues CRITICAL SUCCESS DETERMINANTS 1. Faster Response to Highly Dynamic Apparel Market 2. Low Cost & Highly Efficient Apparel Production Process Consolidation in Apparel Sourcing Strategy with focus on Consolidation in Apparel Sourcing Strategy with focus on fewer garment suppliers offering highly efficient & integrated supply solutions fewer garment suppliers offering highly efficient & integrated supply solutions - Designs & Product Variety, Logistics, Robust SKU Systems & Technology - Designs & Product Variety, Logistics, Robust SKU Systems & Technology
LONG TERM SHIFT IS BEING WITNESSED IN THE GLOBAL APPAREL SOURCING MARKET Global apparel sourcing market Global apparel sourcing market China China is witnessing a shift from China is witnessing a shift from China Losing competitive edge Losing competitive edge • • Rising production & Rising production & • • to other low cost Asian to other low cost Asian labour costs labour costs countries primarily Bangladesh, countries primarily Bangladesh, Appreciating currency Appreciating currency • • China Rising environmental Rising environmental India and Indonesia India and Indonesia • • concerns concerns Turkey Bangladesh Pearl Global has manufacturing Pearl Global has manufacturing Pakistan Vietnam presence in leading sourcing presence in leading sourcing India Cambodia nations like India, Bangladesh nations like India, Bangladesh Sri Lanka and Indonesia. and Indonesia. Indonesia Bangladesh Bangladesh Indonesia Indonesia India India 2 nd largest exporter after China 2 nd largest exporter after China 6 th largest apparel exporter 6 th largest apparel exporter 4 th largest apparel exporter 4 th largest apparel exporter • • • • • • Apparel exports – 80% of total exports, Apparel exports – 80% of total exports, Apparel exports – 4.2% of total exports Apparel exports – 4.2% of total exports • • • • Apparel exports – 4.3% of total exports Apparel exports – 4.3% of total exports • • 76% of GDP 76% of GDP US - 36%, EU - 16%, Japan - 5% US - 36%, EU - 16%, Japan - 5% • • US – 24%, UK - 12%, Japan - 11% US – 24%, UK - 12%, Japan - 11% • • EU - 58%, US - 23%, Canada - 5% EU - 58%, US - 23%, Canada - 5% Highly skilled craftsmanship & Highly skilled craftsmanship & • • • • Highly varied skill-sets and product Highly varied skill-sets and product • • Major products – Knitwears, basic shirts, Major products – Knitwears, basic shirts, unmatched quality across wovens & unmatched quality across wovens & • • variety across wovens & knitwears variety across wovens & knitwears jackets & trousers jackets & trousers knitwears knitwears Vertically integrated textile value chain Vertically integrated textile value chain • • Strong industry backward linkages Strong industry backward linkages Vertically integrated textile value chain Vertically integrated textile value chain • • • • Low labour costs, stable political Low labour costs, stable political • • Low cost production Low cost production Low labour costs, stable political Low labour costs, stable political • • • • scenario, abundant raw material scenario, abundant raw material Duty-free & quota-free access to major Duty-free & quota-free access to major scenario, raw material availability, strict scenario, raw material availability, strict • • availability availability markets like EU, Canada, Australia, Japan markets like EU, Canada, Australia, Japan labour regulations labour regulations
PEARL GLOBAL IS FAVOURABLY ESTABLISHED IN THE FAST EVOLVING GLOBAL APPAREL SOURCING MARKET Multi-Product Offerings Multi-Product Offerings Multi-Location Presence Multi-Location Presence One-stop shop offering wide variety of One-stop shop offering wide variety of Well-diversified and de-risked Well-diversified and de-risked • • • • products across wovens & knitwears. products across wovens & knitwears. manufacturing base located in India, manufacturing base located in India, Value addition offerings like embroidery, Value addition offerings like embroidery, Bangladesh, Indonesia. Bangladesh, Indonesia. • • hand work, bead work, tie & dye designs, hand work, bead work, tie & dye designs, Factories are fully compliant & approved by Factories are fully compliant & approved by • • printing, garment washing & dyeing etc. printing, garment washing & dyeing etc. customers. customers. WHY IS WHY IS Vertically Integrated Manufacturing Vertically Integrated Manufacturing Strong Design Capabilities Strong Design Capabilities In-house setups of backend activities like In-house setups of backend activities like In-house design team of 75 designers. In-house design team of 75 designers. • • PEARL GLOBAL • • embroidery, washing, handwork. embroidery, washing, handwork. Design teams located in Hong Kong, Design teams located in Hong Kong, • • Strategic tie-ups with various cotton and Strategic tie-ups with various cotton and “PREFERRED India, Indonesia. India, Indonesia. • • rayon fabric mills. rayon fabric mills. LONG TERM VENDOR” Strong Quality Check & Systems Strong Quality Check & Systems Approved Vendor to Global Brands Approved Vendor to Global Brands SAP ERP software installed to monitor SAP ERP software installed to monitor Approved vendor to leading brands and Approved vendor to leading brands and • • • • operations & performance indicators. operations & performance indicators. retailers e.g. GAP, Ralph Lauren, Kohl’s, retailers e.g. GAP, Ralph Lauren, Kohl’s, One of the lowest rejection ratio of 2-3%. One of the lowest rejection ratio of 2-3%. Macy’s, Ann Taylor, Next etc. Macy’s, Ann Taylor, Next etc. • • 3 rd party certifications from Intertek, SGS 3 rd party certifications from Intertek, SGS Strong relationship of around 10-15 years Strong relationship of around 10-15 years • • • • and Bureau Veritas. and Bureau Veritas. with Gap, Macy’s and Kohl’s. with Gap, Macy’s and Kohl’s.
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