Thecur

iouscaseofsi
ngerI
ndi
a

-SingerIndia,adebtf ree330crMcapcompany, i
sa
distr
ibutorandr et
ailerofSingerbrandedSewi ng
machi nesandhomeappl iancesli
kef ood
processor s,t
oasters,waterheaters,aircool
ersand
otherkitchenappliancesl i
keinducti
onst oves,
kettl
es,targetingtheaf f
ordablesegmentonl y.
It
s
di
str
ibut
edt
hrough1000+deal
ersand50+excl
usivest ores.

-Brandsi
nger:150+y earold.Despit
eitslukewarm
perfor
manceov erthedecades, br
andsingerstil
lhassome
mindshareamongt heconsumer satleastfrom anecdotal
evi
dence.Pr
obabl yfrom thequali
tyassociat
edwi thit
'sold
sewingmachines.

-SingerandUSHAf ormt heorgani

zedsewingindust
rymarketi
nIndi
a.Theyaregai
ningmar
ket
sharesfrom unor
ganizedplay
ers.Theannualgrowthrat
eofsewingmachinedemandis3-
5%.
GSTi sapositi
vedevelopmentforsi
nger.

-Si
ngerIndi
awentint
oBI
FRi
n2002-
2003duet
ohi
ghdebtasar
esul
tofi
t'
sfai
l
edhome
appl
iancevent
ure.

-Afterexi
ti
ngBI
FRin2013,theyhaverel
aunchedt hei
rhomeappliancebusiness.Thisti
me
aroundtheyhav
ecorr
ectedthei
rprevi
ousmi stakes,t
heyhavegrownwithinternalcashaccrual
s
fr
om sewingmachi
nebusiness.LowerSKUs, pushingthr
oughexisti
ngdi
stributor
sthanadding
upnewonesandecommer cesiteshas
beenthestrat
egy.

-A100%cont ri
but
iontor evenuesfr
om
sewingmachi nebusinesshas
progressedtonear75%sewi ngand25%
homeappl iancesi
nther ecentquarter
s.

-Intotali
tdoes400crsaleswithwafer
thi
nmar gins.Mostoftheproducti
onis
outsourced.Itenj
oyshighf
ixedassetand
i
nv ent
oryturnover.Thr
eeyearaver
age
ROEi sat18%
-Thehomeappl
iancedi
vi
sioncont
inuestomakelossesexceptf
ort
hel astquar
ter
.Thebr
eak
evenpoi
ntf
orhomeappli
ancesis120cr,
whichi
swi t
hint
ouchingdi
stance.

-Si
ngerIndi
ahasast at
edobjecti
veoftaki
ngthehomeappl
iancecontr
ibut
ionto50%i
nthe
comingyear
sandt herecenti
nventor
ypushwithst
abl
ecashconversi
oncyclepoi
ntst
othe
possi
bil
i
tyofithappeni
ngwi t
hinacoupleofy
ears.

-Keyper
soni
sRajeevBaj
aj,
whohasbeenwitht
hecompanyfor25+year
sandwasappoi
nted
asdir
ect
ori
n2012.Remunerat
ionof80l
.Hehol
dsnost
akeinthecompany.

-I
nt heSi
ngerI
ndiainvestorscommuni cat
ionandreportst
her
eisnoclueont
owhopr ov
idest
he
st
rategyorl
ongterm outlookforthecompany.ThereisoneGavinwal
kerontheboar
d,asout
h
af
ricanwhohasaexper ienceofsteeri
ngaMNCspanni ng16count
ri
esinAfr
ica.Hei
snot
i
nvolvedi
ndaytodayr unningofthecompany .

-Si
ngerAsi
ahasbeenasel
l
erofst
ocki
nSi
ngerI
ndi
athr
oughout2017.Fr
om 75%,
ithasgone
downto60%.

-Thehol
dingst
ruct
ureofSi
ngapor
eAsi
aandSi
ngerI
ndi
a.

-Fr
om Si
ngerAsi
a,ther
eis'
facade'
ofcl
earst
rat
egyandal
ongt
ermr
oadmapt
osust
ained
i
mprovementandgr
owth.

ht
tp:
//www.
singer
asi
a.com/
inpages/
cor
por
ate/
str
ategy
.ht
ml

-Si
ngerAsiai
sheldbyRetai
lholdi
ngsNet herlands(
54%), UCLAsia(41%),Gavinwal
ker(
5%).
Gavi
nwalkerhas5%f r
om convert
inghi
sal l
otedoptions.UCLAsiai
sapr i
vateequi
tyf
ir
m,
whosestat
edobject
iveist
otakemi nor
it
yi nteresti
npr omisi
ngfi
rms,butdoesnoti
nvol
veit
sel
f
i
noperat
ions.
Thefir
m byit
selfi
spr omoterrunanddoesnotev enhi
reanalyst
s!
-Theinterest
ingparti
swit
hRetail
holdi
ngsNether
lands.
.mai
nlywi
thi
tsst
rat
egy
.Thi
sisf
rom
theRetail
holdings2017AR,r
eleasedonApri
l2018.

-I
npr ev i
ousyearsARt oo,t
hisstrat
egyisclear
lyspel
tout,
noambi gui
tyther
e.Theirobj
ecti
veis
compl eteli
quidati
onoft heSingaporeasiabusi
nessanddistr
ibuti
onofthatcashtoRetail
holdi
ngNVshar eholders.Thereisahistoryoft
hesedivi
depay out
stothesharehol
dersinrecent
quarters.Thei
r54%st akeinSingaporeAsiaistheonl
ymeaningfulpar
tofthecompany ,no
otherv i
ablebusinessesinit.

-Thi
siswhatt
heyhav
edonei
nthepastcoupl
eofy
ear
s.
-SingerSri
lankaandSi
ngerBangl
adeshweremar
ketleader
s.InSept
ember2017,
theydi
vest
ed
SingerSri
l
ankaandi nI
ndi
a,Bangl
adesht
heyar
einprocessandit
shappennow.

-Allt
hisi
snotprovi
dedi
nSingerI
ndia'
scommuni
cati
on.Whatappear
edt
obeapr
omi
sing
growthst
oryhaslot
sofuncer
tai
ntysurr
oundi
ngi
t.

-Thequest
ioni
s..
cant
hisuncer
tai
ntybeachancef
orv
aluecr
eat
ion?

-Therearelot
sofpr obableout
comes.Promotersel
lsSingerI
ndi
atoanotherMNCwhoi s
l
ookingataent r
yt oIndi
aORsellsi
ttoabigretai
l
erinIndiawhocanaddmor eval
ueOR/ AND
i
nvestor
spunisht hestockforpr
omotersell
i
ngOR/ ANDsuccessinHomeappl i
ancesegment
wit
hv i
sibl
egaininmar ketshar
eforbrandsi
ngercanfetchpremi
um val
uati
ons.

-Whil
ethi
sdivestur
eplansarehidden, ther
eisnoevi
denceoffoul
play
,whereSi
ngerIndi
aget
s
sol
datpoorvaluati
ons.All
thecasht hatgoesint
oRetai
lHol
dingsNVisbei
ngpaidoutas
di
vi
dends.Thereisnoincenti
veforthem tocheat.

Cur
iouscase..
Cant
hisbeaoppor
tuni
tyt
obuyast
akei
napr
omi
singst
oryf
ort
hef
utur
e?