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S.Kumars Nationwide Limited

S.Kumars Nationwide Limited. Management Presentation. September 2008. Team Introduction. SKNL Group Highlights. 4 Pillars– Brands, Professional Management, Distribution, Manufacturing. SKNL Overview. 1. 2. Transaction Update. 3. 4.

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S.Kumars Nationwide Limited

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  1. S.Kumars Nationwide Limited Management Presentation September 2008

  2. Team Introduction

  3. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  4. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  5. SKNL Group Structure

  6. Company Overview – Strength through Diversity • The only company in India to operate across all 3 segments of the industry • Fabrics - Apparels - Home Textiles • Branded presence in all socio-economic segments • Operates in all fibre segments 2007–2008 Market Cap: Sales US$413.9mm PBIDT US$95.0mm Luxury Textiles Consumer Textiles HVFC Home Textiles (THE) Ready to Wear (TWS) • Reid & TaylorLuxury Suitings • Reid & TaylorPremium NaturalFiber Suitings • S.KumarsWork Wear • BelmonteDaily Wear • MichaelangeloPremium Wear • Uniformity Uniform fabrics • 100% Natural Fiber Shirtings • Stephens BrothersSuper Premium • Balmoral* Premium • Reid & TaylorReady to wear Premium • BelmonteMid-Premium *Being launched by end of 2008 • Benetton*Super Premium • Carmichael HousePremium • New Brand**Mid-Premium *Being launched shortly **To be launched Sales: US$95.3mm PBIDT:US$38.2mm PBIDT Margin: 40.0% Contribution Sales: 23% Sales: US$210.6mm PBIDT: US$35.3mm PBIDT Margin: 16.8% Contribution Sales: 51% Under implementation Sales: US$68.5mm PBIDT: US$13.4mm PBIDT Margin: 19.5% Contribution Sales: 17% Sales: US$39.5mm PBIDT: US$8.2mm PBIDT Margin: 20.7% Contribution Sales: 10%

  7. Presence in all Socio-Economic Segments Present across all categories and in all socio-economic segments LUXURY (To be launched) PREMIUM PLUS Stephens Brothers PREMIUM Reid & Taylor PREMIUM Reid & Taylor MID PRICE Belmonte MID PRICE World Player Belmonte ECONOMY (To be launched) ECONOMY S.Kumars Un-branded Not Catered to by SKNL Un-branded Not Catered to by SKNL READY TO WEAR LUXURY International brand (On the anvil) FABRIC MID PRICE Carmichael House ECONOMY (To be launched) Un-branded Not Catered to by SKNL HOME TEXTILES

  8. … & has become a Clothier to the Nation

  9. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  10. Well Established Brands • Diversified portfolio of well recognised brands • Strength through Celebrity endorsements • Pan India advertising campaign using different media in different languages

  11. Strong Brand Visibility • Contemporary in Design and customer friendly Stores

  12. Professional Management LUXURY SUITINGS HIGH VALUE FINE COTTONS TOTAL HOME EXPRESSIONS READY-TO- WEAR (TWS) INTERNATIONAL BUSINESS Arvind Gupta COO Martin Haemmerle CEO Dinesh Sharma CEO Janak Dave COO Vijay Bakshi President Anupam Dikshit COO Board of Directors Nitin Kasliwal Managing Director & CEO CORPORATE FUNCTIONS Anil Channa Dy. Managing Director & COO STRATEGIC BUSINESS UNITS (SBUs) D.D. Avari Corp. Affairs CONSUMER TEXTILES Anees Fazalbhoy Business Strategy Rajan K. Garg COO Col. S. K. Raje Group Admin & HRD J. S.Shetty CFO Shrikant Hazare Head - Marcom Each SBU headed by a segment specialist Nimesh Shah Company Secretary

  13. Distribution Strategy Company Operated Franchisee Model Luxury Textiles Consumer Textiles HVFC Home Textiles (THE) Ready to Wear (TWS) • Reid & TaylorLuxury Suitings • Reid & TaylorPremium NaturalFiber Suitings • S.KumarsWork Wear • BelmonteDaily Wear • MichaelangeloPremium Wear • Uniformity Uniform fabrics • 100% Natural Fiber Shirtings • Stephens BrothersSuper Premium • Balmoral Premium • Reid & TaylorReady to wear Premium • BelmonteMid-Premium • Benetton*Super Premium • Carmichael HousePremium • New Brand**Mid-Premium Institutional Sales 15% Large Format Stores 6% Multi Brand Outlets 66% Export Sales 3% Exclusive Brand Outlets 10% 60 Agents Company owned stores for SKNL Brands 400 Wholesale dealers 30,000 Retailers BRANDHOUSE RETAILS LTD. Master Franchisee for SKNL Brands India Franchisee for International Brands

  14. State of the Art Manufacturing Facilities 5 state-of-the-art plants manufacturing products to the highest quality standards Plant Products Manufactured • Reid & Taylor Worsted Suiting Unit, Mysore • adfadf

  15. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  16. GIC investment in R&T • GIC values R&T at US$840mm post money • GIC invests US$211mm in the form of shares and warrants for 25.4% stake • Post transaction, SKNL owns 74.6% in R&T • Pure Equity transaction with no conditions attached

  17. GIC investment in Reid & Taylor Source of Funds Use of Funds US$211mm Loan to SKNL to repay debt US$110mm GIC Capacity Expansion US$37.5mm Payment of debt in R&T US$62.5mm Total US$211mm Total US$211mm • Post transaction, SKNL & Reid & Taylor retire over $ 170 Mn debt • Company emerges stronger financially and has greater operating flexibility Structure Key Transaction Details • Pre Transaction • 100% subsidiary • Transfer of assets at book value as a going concern with effect from January 1, 2008 • Working capital facilities of US$25mm apportioned to R&T • Debts amounting to US$62.5mm relative to transferred assets moved to R&T for settlement • Post Transaction • GIC values R&T at US$840mm post money • GIC invests US$211mm in the form of shares and warrants for 25.4% stake • Post transaction, SKNL owns 74.6% in R&T SKNL Reid & Taylor fabric & garments business spun-off as 100% subsidiary Transfer of Assets/ Liabilities Funds to repay lenders R&T US$ 210 mm 25.4% GIC

  18. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  19. Growth Initiatives - Organic Growth Initiatives Across Different Segments Total Investment in Growth Initiatives Two new SBU’s are being added – Technical Textiles and Uniserve

  20. Luxury Textiles Capacity expansion from 8.4mm meters and to 13.2mm meters by FY10 to cater to expanding domestic and international markets Sales Growth Strategy • Domestic: • Expanding market reach by using lower price range and introducing V Fabrics • Increase retail reach by opening exclusive stores and shop-in-shop programs • International • Increasing export thrust in North America, Japan, West Asia, Europe and Middle East • Leverage global strength of R&T to access leading brand and latest technology EBITDA Margins Investment Plan • Expansion from 8.4mm to 13.2mm meters by FY10 • Total investment is projected to be US$37.7mm

  21. Total Wardrobe Solutions LUXURY (To be launched) SUPER PREMIUM Stephens Brothers PREMIUM Reid & Taylor; Balmoral (To be launched) MID PREMIUM Belmont ECONOMY S.Kumars and World Player Adding manufacturing facilities to complement distribution as well as adding new brands Sales Growth Strategy • Domestic • Expanding Reid & Taylor garments to multi brand outlets • Rejuvenating Tamarind through effective supply chain & distribution • Introducing International Labels in Luxury & Super Premium segments • Introducing Balmoral • Introducing Premium Casual Brand • Introducing Reid & Taylor Range for Women • Exports • Catering to growing demand from Reid & Taylor Scotland customers • Export own brands to Middle East & South East Asia • New manufacturing contracts with international brands EBITDA margins Investment Plan

  22. Consumer Textiles Creating value addition in existing business by introducing premium blended suiting and adding capacities for weaving and processing of high value fabrics Sales Growth Investment Plan EBITDA margins Growth Strategy Increasing operating margins due to • Orientation towards Institutional, Medallion, Uniserve and Retail market segments • Considerable shift in the industry towards branded fabrics • Shift in product mix in favour of high margin P/V designer suitings and launch of Belmont brand • Improving Customer Serviceability by enhancing in-house finishing capacity • Upgradation of weaving capacity to cater for more innovative product.

  23. Home Textiles Capacity expansion, modernization and technology upgradation to cater to high demand in the post quota regime Sales Growth Investment Plan EBITDA Margins Growth Initiatives • Expanding capacities to 28mm meters • Increasing sales due to : • Exploring new markets (Domestic & Exports) • Launch of new brands catering to • Higher disposable incomes • Growing consumerism • Introducing special finish fabrics • Diversifying product mix to “Top of Bed” decorative items

  24. High Value Cotton Fabric Set to enter High Value Cotton Fabrics to cater to large, high margin, high growth segment in the International as well as domestic markets Sales Growth Investment Plan EBITDA Margin Growth Strategy • Setting up weaving & processing facilities of 12.75mm meters • Domestic • Fabricators making shirts for international brands • Indian brands offering premium shirts to Indian customers • International • Global market for HVFC shirting approx 550 – 600mm meters • Primarily European manufacturers • SKNL to offer quality & cost benefits • European Know-how & expertise • Indian manufacturing advantage • Access to global customers through • Reid & Taylor, Scotland &International labels coming to India through SKNL

  25. Growth Summary Sales Growth Drivers • Reid & Taylor Scotland helps SKNL to access its clients - leading international brands • Strategic initiatives, modernization and capacity expansion to help capitalize on favorable international environment • Building Infrastructure to tap export opportunities in international markets • Leveraging strong brand equity • Focus on domestic high growth retail sector • Launching new Garment brands to increase market share • Introducing new product lines • Diversifying into Technical Textiles • Moving up the value chain to improve margins • Launching (HVFC) Shirting Projected CAGR FY07-FY09E

  26. Growth Initiatives - Inorganic Potential Overseas Acquisitions Though we got Shareholders approval to invest up to USD 500 Million for overseas acquisition, But we plan to invest USD 75 Million, as of now. This money will be raised through internal accruals

  27. SKNL in FY09 Sales US$641.9mmPBIDT US$154.1mm Luxury Textiles HVFC Home Textiles Ready-to-wear Consumer Textiles • Reid & Taylor Worsted Suitings • Reid & Taylor Premium Natural Fiber Suitings • S.Kumars • Belmonte • Michelangelo • Uniformity • Shirting • Benetton • Carmichael House • Mid-Premium Brand • Stephens Brothers • Reid & Taylor • Balmoral • Belmonte • S.Kumars • World Player Sales: US$127.8mm PBIDT: US$51.8mm PBIDT margin:40.6% Sales: US$303.7mm PBIDT: US$53.8mm PBIDT margin: 17.7% Sales: US$36.1mm PBIDT: US$13.3mm PBIDT margin: 36.7% Sales: US$89.7mm PBIDT: US$19.4mm PBIDT margin: 21.6% Sales: US$84.7mm PBIDT: US$ 15.8mm PBIDT margin: 18.6% Contribution to Sales 19.9% Contribution to Sales 47.3% Contribution to Sales 5.6% Contribution to Sales 14.0% Contribution to Sales 13.2%

  28. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  29. On a High Growth path Revenues EBITDA Net Income* Gross COGS/Revenue * Tax is not deferred tax

  30. Increasing Profitability Profitability ROCE EPS (Before Extraordinary Items) Debt - Equity Ratio

  31. Shareholding Pattern Promoters acquired additional 10 mn shares through creeping acquisition (average price Rs 115 per share) – March 08

  32. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  33. India—A Growing Market Purchasing Power Explosion Favorable Demographic Working Age Population as % of Total Population (Age 15–60) Source: KPMG Source: Equity Research Indian Consumption Pattern Growing Middle Class A Growing middle class whose size exceeds the population of the USA or the European Union Aggregate Consumption Across Income Brackets US$ bn , 2000 Household Income Brackets US$ ‘000, 2000 Globals (>23.5) Strivers (11.8–23.5) MiddleClass Seekers (4.7–11.8) Aspirers (2.1–4.7) Deprived (<2.1) Source: McKinsey, NCAER Source: McKinsey Global Institute Note: Figures are rounded to the nearest integer and may not add up exactly to column totals

  34. Indian Clothing Market Segmentation Industry Characteristics • The overall market can be divided into 3 segments • Fabric (the largest seller): is retailed over the counter as: • Custom tailoring is very inexpensive • Garment industry is yet to reach maturity levels • Garments: Growth due to : • Growth in organized retailing (spreading beyond Metros) • Enhanced propensity towards fashion (international exposure) • Home Textiles –the next big growth area in India • Rapid growth in disposable incomes –indulgence at home • Increased exposure –enhanced home décor etiquette • Few players in the organized segment –opportunity for growth Market Size: US$23.5bn • One of India’s most important sectors accounting for 4% of the country’s GDP • 15-20% revenue growth overall for the textile industry • Branded apparel is the fastest growing segment domestically at 20% p.a., due to the growth in the modern retailing format • Worsted fabrics is currently a US$550mm market growing at 20-25% • Ready to wear market of US$2bn growing at 20% p.a. • Retail market for clothing, textile and fashion accessories has total size US$28.5bn of which the organized sector accounts for US$5.5bn (19%) Domestic Growth Potential Source: KPMG

  35. International Market International Market Overview International Market Growth Opportunities • Quota restrictions & tariff barriers phased out • Significant production capacity shift to India due to • High quality manpower, raw material and lower costs • Inherent strengths in textile production • India, second largest producer of apparel and textiles after China • Only country with ability to compete with China in the textile and apparel industry (USITC report) • Major initiatives by Government of India (recognized as a high-growth area) • De-reservation of substantial portion of the industry • Fiscal reforms in the synthetic textiles business underway • Increase in investment ceilings • FDI freely allowed in the sector • Technology Upgradation Fund • India has a low contribution to a huge international market in the post-quota regime • Developed markets looking at India as the alternative to China for textiles & apparel imports

  36. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  37. Brandhouse Retail Limited - Overview

  38. Brandhouse Retail – Organizational Chart Tarun Joshi Managing Director & CEO COO Business Development CFO COO Operations VP Scouting (Real Estate) VP Projects (Store Implementation) GM Accounts GM IT Company Secretary & Legal GM Commercial VP Operations VP Merch. GM HR VP Luxury Managers, Executives & Support Staff Regional managers and executives in 4 regions of India

  39. Brandhouse Retail – Experiencing Rapid Growth No of Stores Revenues EBITDA Margin

  40. Brandhouse Retails – At a glance * Earning Per Share : EPS is computed based on existing nos of shares.

  41. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  42. Reid & Taylor (India) Company Overview Fabrics Ready-to-Wear garment FY08 Sales $95.5mm FY08 EBITDA Margin 39.9% FY08 Sales $19.3mm FY08 EBITDA Margin 25.9% • Ready to Wear — Formals • Suits (Pure wool, wool blended) Blazers, Tweed jackets, Shirts in pure cotton and CVC, Trousers in Wool, Wool blended and Cotton • Ready to Wear — Casuals • T-Shirts, Smart casual shirts, Polos, chinos and denims • Accessories • Ties, belts, trousers, cufflinks and other accessories • Pure wool, Poly wool, Poly viscose, pure linen, pure silk, and superfine polyester • Wide collection of designs-500 designs with some varieties having 40 shades • Products • Manufactured at the state-of-art mill at Mysore, Karnataka • Finished fabrics production capacity of 8.4mm mtrs p.a • Facilities • Retailed through distribution channels with 110 wholesale dealers and 11,000 retailers and 158 Reid & Taylor exclusive stores • Retailed through 300 multi-brand outlets, 158 Reid & Taylor exclusive stores, several large format stores and retail chains • Distribution • 7-8 players include Raymond, Reliance, Digjam, OCM, Dinesh, BSL • Key players in the market include Madura Garments, Raymond, Arvind brands, Zodiac • Competitors • No.2 player with 18% market share • MarketPosition

  43. SKNL Group Highlights 4 Pillars– Brands, Professional Management, Distribution, Manufacturing SKNL Overview 1 2 Transaction Update 3 4 Future Growth – Building Scale Organically and Inorganically 5 Strong Financials 6 India – A Large Growing Market Opportunity 7 8 Brandhouse Retail – SKNL Group’s Initiative Reid & Taylor – SKNL Group Initiative

  44. STRICTLY PRIVATE AND CONFIDENTIAL Important Notice By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: The information in this document has been prepared by S.Kumars Nationwide Limited (“SKNL") solely for use at a presentation. This document and its contents are confidential and may not be distributed, published, reproduced (in whole or in part) by any medium or in any form, or disclosed or made available by recipients, to any other person. Nothing in this presentation constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither SKNL, its investment manager, nor any of SKNL's advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. This document does not constitute or form part of, and should not be construed as, an offer, invitation or inducement to purchase or subscribe for any securities nor shall it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. Any decision to purchase securities should not made on the basis of the information contained in this document. This document does not constitute a recommendation regarding the securities of SKNL. The information communicated in this document contains certain statements that are or may be forward looking. These statements typically contain words such as "expects" and "anticipates" and words of similar import. By their nature forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.

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