NO LIMITS! GOKALDAS EXPORTS LIMITED - A PRESENTATION OF OUR 2019-20 PERFORMANCE
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NO LIMITS!
GOKALDAS EXPORTS LIMITED
A PRESENTATION OF OUR
2019-20 PERFORMANCE AND
OUR COUNTER-COVID-19 STRATEGY
1
THIS PRESENTATION IS SEGREGATED
INTO THREE PARTS FOR EASY READING
Part two.
How are we
transforming the
company
Part one.
Review of Gokaldas’
performance in
Part three.
2019-20
The impact of Covid-19
pandemic
2
WHAT YOU NEED TO KNOW
ABOUT OUR COMPANY
BACKGROUND PRODUCTS GLOBAL FOOTPRINT MANUFACTURING
STRENGTH
Leading apparel Producing a wide variety of Exporting to more than 50
exporter of India; high-quality outerwear, countries including US, Capacity to produce 30
four decades of track sportswear, casual wear Europe, Canada, Japan, million apparel pieces per
record. and formal wear for Russia, Middle East, South annum supported by a
women, men and children. Africa and South America. complement of 13,000+
machines.
INTEGRATED LOCATIONS PEOPLE
Functions comprise design, Multiple self-contained Supported by
development, making, large-scale facilities approximately 25,000
embroidery, quilting, across South India. highly skilled people of
printing, washing, lazer which over 20,000 are
finishing and polyfill. women.
3
OUR PROMINENT CUSTOMERS
GAP H&M Adidas
Largest specialty retailer in One of the global leaders in Global leader in athletic
the United States whose fashion with a presence in apparel and the second-
products are available in about 60 countries, along largest sportswear
over 90 countries. with an online presence in manufacturer in the world.
over 35 countries.
Columbia Carhartt Puma
Industry leader in outdoor Delivering best-in-class German multinational that
apparel products like apparel, respected for designs and manufactures
jackets, fleece, pants, shoes rugged construction, athletic and casual
and boots. innovative design and footwear, apparel and
exceptional standards of accessories. Third largest
quality, durability and sportswear manufacturer
comfort for 125 years. in the world.
4
OUR PROMINENT CUSTOMERS
Vero Moda Marks & Spencer A&F
One was the first brands to Iconic British multinational American lifestyle retailer
launch within the family- retailer that specialises in that focuses on casual wear.
owned Bestseller company. selling clothing, home and Operates two offshoot
Emerged as the brand of food products brands, Abercrombie Kids
choice for the fashion- and Hollister Co., with 1,049
conscious, independent stores across all three
young woman who wants brands
to dress well
Zara Walmart Carrefour
Biggest fashion retailer US multinational retail French multinational retail
globally that launches over corporation engaged in the corporation with a global
12,000 designs every year operations of a chain of network of over 12,000
hypermarkets, department stores. Offers consumer
stores and grocery stores. goods, food and non-food
The Company operates products, household supplies,
over 11,500 stores under textiles, electronics, home
56 banners in 27 countries appliances and local products
5
PART 1
OUR PERFORMANCE
FOR 2019-20
6
THE BIG PICTURE OF
OUR 2019-20 PERFORMANCE
1400 102* 7.3% 30
Rs cr, Revenues, EBIDTA, 2019-20 EBIDTA margin %, Rs cr, PAT, 2019-20
2019-20 2019 -20
1196 83
Rs cr, Revenues, EBIDTA , 2018-19
7.0% 26
EBIDTA margin %, Rs cr, PAT, 2018-19
2018-19 2018-19
17 23 30 15
% growth in % growth in EBITDA BPS growth in % growth in PAT
Revenues EBIDTA margin
*Adjusted for exceptional items
The revenues and margins were relatively muted in 2019-20 on account of a retrospective
reversal of the MEIS income, retrospective implementation of increase in minimum wages and
impact of Covid-19
7
FURTHER EXPLANATION OF
OUR PERFORMANCE
Figures in Rs. Crs.
PAT PAT
FY20 FY19
Reported result 30.4 25.6
Loss of MEIS 41.3
Additional ROSCTL (5.3)
One-time Provisions* 7.7 6.3
MEIS of Prior Year 6.1 (6.1)
Total 80.2 25.8
Less: One-time Income 26.0
Adjusted Result 54.2 25.8
*Largely represents provision for bad debts consequent to customer bankruptcy and impairment of investments
8
THE CHALLENGES AGAINST WHICH
THIS PERFORMANCE WAS DELIVERED
Complete withdrawal The outbreak of Covid- General economic
of 4% MEIS 19 pandemic slowdown
Announced in Jan 2020 Affected the supply Global GDP^ growth
effective retrospectively chain, operations and declined from 3.0% to 2.4%.
from Mar 2019 order pipeline. Impacted Indian apparel exports fared
Affected topline and Q4 in the financial year worse declining from
bottomline by Rs. 41 cr. $16.1bn to $15.4bn* in FY20
Upward revision of Retrospective impact of Currency Impact
labour cost contracts
INR depreciated against
10% in October 2019 Impact could not be USD by a mere 1.39% in
(retrospective effect passed on to customers FY20 vs CNY depreciation
from 1 April 2019) of 3.78% weakening our
competitiveness and not
suitably ameliorating
inflation effects
Source : ^ World Bank | * Ministry of Commerce, Government of India. 9
THE PRINCIPAL HIGHLIGHT
OF OUR 2019-20 PERFORMANCE
17%
revenue growth
Highlights
▪ Highest growth reported by the
company in 10 years
▪ Growth across all product categories
over all the seasons, indicating a
secular and sustainable performance
▪ Revenue growth would have been
over 20% had MEIS not been
withdrawn with retrospective effect
▪ This is against India’s apparel exports
declining by 4.1% in FY20
10THE FACTORS BEHIND
OUR EXCEPTIONAL GROWTH IN 2019-20
Revenue from new Increased wallet share Reduced customer
customers on-boarded from more profitable concentration risk and
in FY19 customers diversified product
portfolio
1 2 3
Consistency in product Improved market Invested in design and
quality and service visibility through development
delivery sustained efforts department to expand
portfolio offering
4 5 6
11HOW OUR AGGRESSIVE REVENUE GROWTH
TRANSLATED DOWN THE LINE
Secular trend of rising Strengthening Cash on hand (incl.
margins profitability investment in liquid funds)
7.0 EBIDTA margin %,
2018-19 9.2 RoCE%, 2018-19
11 Rs cr, 2018-19
5.5 EBIDTA margin %,
Q1 2019-20, MEIS
adjusted
10.3 RoCE%, 2019-20
48 Rs cr, 2019-20
4.3 EBIDTA margin %,
Q2 2019-20, MEIS
adjusted
Total net debt
on our books
10.2 EBIDTA margin %,
Q3 2019-20 184 Rs cr, 2018-19
8.3 EBIDTA margin %,
Q4 2019-20 (COVID
Impacted)
149 Rs cr, 2019-20
FY20 was impacted by retrospective
reversal of MEIS, retrospective
implementation of minimum wage
increase and COVID in Q4 12PART 2
HOW ARE WE TRANSFORMING
THE COMPANY
13BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
1 Expanding
customer engagement
Initiatives Strategic advantages
▪ Engaged with large ▪ Enduring customer
international customers relationship
▪ Expanded relationship to ▪ Diversified revenue
additional brands within the streams
customer portfolio
▪ Tapping new
▪ Enlarged the product mix - opportunities
High fashion garments,
▪ Multi-seasonal
Outerwear, Work wear,
engagement reducing
Denims, Sportswear,
business volatility
Healthcare Garments
through the year
14BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
2 Inducting high quality
and diverse talent
Initiatives Strategic advantages
▪ Expanded the team to include ▪ Bring in new ways of
top industry talent with addressing conventional
international experience challenges
▪ Recruited people from other ▪ Transformed the culture
industries where feasible to to a can do, growth
usher in a new outlook oriented one
▪ Brought in an entrepreneurial ▪ Inspired a ‘No Limits’
mindset with accountability optimism
for performance
▪ Focused on employee
engagement to yield a strong,
caring and performance-
oriented factory work culture
15BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
3 Strengthened
design
Initiatives Strategic advantages
▪ Expanded the design team ▪ Positioned the company
beyond that of a mere
▪ Recruited for competencies
convertor
in line with emerging trends
▪ Facilitated engagement
▪ Encouraged design team to
with different teams
play the role of a
within customers
merchandise advisor to large
retail brands ▪ Deeper engagement
with customer
16BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
4 Digitalization of
Manufacturing
Initiatives Strategic advantages
▪ Focused on extensive data ▪ Easy and accurate
capture and analytics management of
components from cutting
▪ Introduced a sophisticated
to packing resulting in
Production Management and
superior control
Operations Control System
integrated to our ERP ▪ Lower turnaround time in
operational corrections
▪ Digitized tracking of material
throughout the assembly line ▪ Informed data backed
using QR codes decision-making
▪ Video-analysis of operations ▪ Standardise and optimise
operations
▪ IOT-enabled machines, smart
factories, supply chain ▪ Lower setup time and
automation faster turnaround when
switching styles
17BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
5 Driving consistency in
everything we do
Initiatives Strategic advantages
▪ Strengthened Quality ▪ Strengthened the
Management across business company’s position as a
processes reliable supplier
▪ Continuous improvement in ▪ Earned respect among
all processes from sourcing, global apparel
supply chain and customers with
manufacturing benchmark
performance
▪ Organisational focus on
consistent quality and on-time ▪ Provided confidence to
delivery prospective customers
18BUSINESS STRENGTHENING
INITIATIVES IN 2019-20
6 Doing it all
Sustainably
Initiatives Strategic advantages
▪ Adopted comprehensive ▪ Positioned the company
policies and procedures for as a sustainable
sustainable growth. All our supplier
factories have been certified
▪ Will ensure that
with SMETA, BSCI, GOTS, OCS,
Gokaldas Exports is a
FSC, GRS, BCI
supplier of the future in
▪ All factories enrolled in Higg tune with global needs
Index FEM 3.0 and we stand
best in industry in overall
score and consistent
improvement for betterment
of environment
▪ Invested in LED lighting,
rainwater harvesting, effluent
treatment systems for zero
19
liquid dischargeFOCUSED ON ACTIONS DRIVING
SUPERIOR OPERATIONAL PERFORMANCE
OPERATIONS MANAGEMENT CUSTOMER MANAGEMENT CASH FLOW MANAGEMENT
▪ Increased throughput at the ▪ Added marquee customers to ▪ Invested QIP funds in new
factories by 9% via better drive revenue growth and machinery helping capacity
management on systems increase diversification expansion for growth and
driven approach ▪ Customer addition helped in improving product quality
▪ Superior supply chain securing 8% incremental and consistency
performance as enabler for revenue ▪ Superior receivables and
operations improvement ▪ Expanded into new product payables management,
▪ Reduced wastage and categories and subcategories coupled with tighter factory
rejections by 0.5% improving operations reduced working
▪ Design led engagement to capital requirement
operating margin strengthen partnership with
▪ Improved on-time delivery to customers ▪ Moderated working capital
customers against orders cycle from 102 days to 84
days in FY20
20RESULTS OF RELENTLESS FOCUS ON
STREAMLINING OPERATIONS
Became a critical
member of the
customers’ eco-
system
Consistently reported
higher in vendor
rating exercises
Gokaldas Exports
carried out by
brand evolved in
customers
the global markets
as a supplier of
repute
21HOW WE TRANSFORMED
IN NUMBERS
Operational health
53 978 -47
Customers, 2016-17 Rs cr, Revenues, 2016-17 Rs cr, PAT, 2016-17
40 1079 -31
Customers, 2017-18 Rs cr, Revenues, 2017-18 Rs cr, PAT, 2017-18
41 1196 +26
Customers, 2018-19 Rs cr, Revenues, 2018-19 Rs cr, PAT, 2018-19
38 1400 +30
Customers, 2019-20 Rs cr, Revenues, 2019-20 Rs cr, PAT, 2019-20
22HOW WE TRANSFORMED
IN NUMBERS
Operational health
1.0% -1.3% -0.2x
% EBIDTA margin, % RoCE, 2016-17 2016-17, Interest cover
2016-17
2.2% 1.2% 0.2x
% EBIDTA margin, % RoCE, 2017-18 Interest cover, 2017-18
2017-18
7.0% 9.2% 1.7x
% EBIDTA margin, % RoCE, 2018-19 Interest cover, 2018-19
2018-19
7.3% 10.3% 1.8x
% EBIDTA margin, % RoCE, 2019-20 2019-20, Interest cover
2019-20
23HOW WE TRANSFORMED
IN NUMBERS
Working capital management
138 4.3x 85
Working capital cycle Inventory turns, 2016-17 Receivables (days of
(days), 2016-17 turnover), 2016-17
121 5.1x 76
Working capital cycle Inventory turns, 2017-18 Receivables (days of
(days), 2017-18 turnover), 2017-18
102 4.9x 59
Working capital cycle Inventory turns, 2018-19 Receivables (days of
(days), 2018-19 turnover), 2018-19
84 4.6x 41
Working capital cycle Inventory turns, 2019-20 Receivables (days of
(days), 2019-20 turnover), 2019-20
24HOW WE TRANSFORMED
IN NUMBERS
Balance sheet health
114 158 0.93
Gross block (Rs cr), Net debt (Rs cr), 2016-17 Net debt-equity ratio,
2016-17 2016-17
128 190 1.45
Gross block (Rs cr), Net debt (Rs cr), 2017-18 Net debt-equity ratio,
2017-18 2017-18
155 184 0.76
Gross block (Rs cr), Net debt (Rs cr), 2018-19 Net debt-equity ratio,
2018-19 2018-19
200 149 0.66
Gross block (Rs cr), Net debt (Rs cr), 2019-20 Net debt-equity ratio,
2019-20 2019-20
25WE ARE A CREDIBLE SUPPLIER
ABLE TO ADDRESS THE GLOBAL NEED
▪ Shorter fashion cycles; need for lower TAT
Global ▪ Increasing dominance of online purchase; driving a
context nimble global supply chain
▪ Tighter integration of suppliers into brand strategy
▪ Retailers seek supply chain that offers lead time
advantage while delivering labour and tariffs
arbitrage
▪ Sustainable sourcing that minimizes water
consumption, chemical discharge and assures worker
safety and health
▪ Clearly positioned as a go-to global supplier of repute
Our ▪ Provides customers trend forecasting, fashion
credentials designing, product engineering, optimized
manufacturing and innovation competencies
▪ Manufactures complex products and designs
▪ Value adding through laundry, embroidery, printing,
quilting and poly wadding services
▪ Respected for on-time delivery, high product quality
▪ Supported by a stronger Balance Sheet and enhanced
financial sustainability
▪ Complete compliance and environment responsibility
26
▪ Validated by global marquee brandsPART 3
THE IMPACT OF COVID-19
ON GOKALDAS EXPORTS
27THE IMPACT OF COVID-19
ON GOKALDAS EXPORTS
Overview Impact
▪ An unprecedented event so sudden and ▪ Closed factories from
extensive in its sweep, that it has caught the 24 March 2020 to 3
world unprepared for the economic May 2020.
consequences ▪ Resumed
▪ Economic shocks across the entire textiles value manufacturing partially
chain from Q4 FY20 with social distancing
▪ Supply chains were interrupted when parts of on 4 May 2020
China went into a lockdown ▪ Partial cancellation and
▪ Markets closed in Europe from February 2020 deferment of orders
leading to near term demand contraction resulting from
lockdown. Impacted
▪ India went into lockdown from last week of Mar Q1 demand
2020 leading to stopped production
▪ One of our customers
declared bankruptcy
28COVID-19 IMPACT
AND OUR RESPONSE
With over 50% of the Leveraged new business opportunity
quarter’s production ▪ Supported the country in times of need by entering
lost, strong corrective PPE manufacturing. Emerged as one of the leading
actions were high-quality PPE producers in the country
necessary ▪ Generated cash flows even when lockdown was in
effect
Initiated structural corrections
15%
capacity utilization, April 2020
▪ Realigning capacities to market demand
▪ Bringing down fixed costs and thereby breakeven
level
50%
capacity utilization, May 2020
Rightsized the operations
▪ Regulated the operations and support
infrastructure and team to business need
▪ Salary cost alignment to business flow
75%
capacity utilization, June 2020
Tightened cash management
▪ Deferred capex and other expenses where possible
▪ Renegotiated supplier terms
▪ Ensured extra line of credit was available from
29
banks for contingencySTRATEGIES TO SUSTAIN AND
BOUNCE BACK
1 2
Protecting team morale Increase market share
▪ Constant communications with ▪ Capitalize on global supplier
all employees consolidation
▪ Engaging with factory ▪ Reinforce our strong capability
employees closely credentials
▪ Stay high on customer engagement
3 4
Manufacturing efficiency Protecting our brand
▪ Focus on running operations ▪ Engaging extensively with clients
at high levels of efficiency
▪ Impressing upon them that our core
▪ Recover as much of Q1 capability remains strong
production loss as possible
▪ Working closely to adapt to
customer destocking / restocking
needs
▪ Updating customers about ramp up,
precautions and preparedness 30STRATEGIES TO SUSTAIN AND
BOUNCE BACK
5 6
New revenue streams Financial austerity
▪ Build upon the opportunity ▪ Identify wasteful expenditures and
presented in the healthcare eliminate
space leveraging our expertise in
▪ Continue structural corrections for
design and manufacture of PPEs
long term health
▪ Continue supplies to
▪ Freeze capital expenditures till
Government of India and
business certainty revives
institutional customers
▪ Focus on lean operations
▪ Target global markets leveraging
our capabilities
31WHY WE ARE SECURE OF
WHERE WE STAND TODAY
We have demonstrated our skills sets and
reliability
We possess the headroom to ramp up
output with alacrity
Our customer relationships are robust and
growing
We are likely to capitalize on vendor
consolidations that are expected to arise
We have built new revenue streams in areas
like healthcare garments
32WHY DO WE EXPECT TO REMAIN INTEGRAL
TO GLOBAL BUSINESS FLOW
Consistently outperformed global industry
service delivery metrics
Beyond commodity; a complex value-added
garments manufacturer
Ability to address a range of garments
product type; hence de-risked
No long-term debt on the Balance Sheet
Leadership in Health, Safety and
Environmental compliance
33WE ARE 100% COMMITTED
TO A SUSTAINABLE FUTURE
OUR GOAL OUR GOAL
FOR FY21 FOR FY22
Deliver a superior engagement Outperform the industry in growth
with customers, ensure financial and profitability parameters. Drive
thrift, reduce structural costs and revenue growth over FY20 with
hence breakeven levels and superior operating margin
recover operational metrics by
second half
34THANK YOU
Should you have more questions, please
connect with info@gokaldasexports.com
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