“Singer” is a legendary brand and is synonyms with sewing machines worldwide, though its business has evolved over the last few decades. Singer India Ltd, is the listed Indian subsidiary of Singer. Last decade had been really bad for singer india, where in mid-2000s the company was making huge losses (due to high competition, management infighting and J&K factory’s labor issues) and its entire net worth was wiped off and as a result, it was referred to BIFR as a sick company. In the year 2008 with a new Top management at helm, a restructuring plan was unveiled for the revival of Singer India. Various steps were identified to heal the fiscal health of the company, like, adjusting accumulated losses against share capital, infusion of fund by hiking stake of its parent, a one-time settlement with banks, settlement with unsecured creditors etc, helped Singer India to pare down its debt and accumulated losses to a much more manageable level. Once the balance sheet was repaired, the company then started focusing on operational turnaround.
With an eye on prudent capital allocation (and partly because of J&K plant’s issues) the management started outsourcing the manufacturing of sewing machines and with its concentrated efforts on high end sewing machines, the profitability also started to look up. A couple of years back the company re-entered small appliances business and that business has grown at a CAGR of 200%, albeit on a much lower base thus far.
As a result of all this Singer India was discharged from the clutches of BIFR on Feb 2013. The company also declared its maiden dividend of 15% last year. Furthermore, last year the company settled its disputes with the workers of J&K factory, and the factory started its operation in H2. The power disputes that was plaguing the J&K factory was also resolved with the assistance of J&K government.
Past Tense Future Perfect:
To bolster further growth, the company has decided to export Sewing machines from India. The Sewing machine market itself is growing at a rate of 3% but most of the market is dominated by unorganized sector and Singer hopes to capture market from them. Singer India has found a new line of customer for its sewing machines – the youth. The company says, that with its technically advanced Sewing machines, youngsters are finding it very easy to play with fabrics and are coming out with their own custom designs. This has opened a new, unique line of customers for Singer India. In the organized sector of Sewing machines, Usha remains the biggest competitor.
The restarting of Jammu factory has opened many avenues for the Company to grow the sewing business in future. The small appliances market, which is a large and growing market, offers tremendous opportunity to the Company to expand this business with its strong brand equity. In home appliances they have various products likes, Food Processors, Juicers, Induction Cookers, Desert Coolers, Heaters, Irons, Toaster, Kettle, Sandwich Maker etc. The brand equity of Singer is really pushing the sales of the small appliances in a different orbit – as evident from 200% CAGR growth of this category.
Singer Bangladesh, Singer Sri lanka (and Singer-in-our-unfriendly-neighborhood) – they each are almost 10 times the size (market-cap) of Singer India but less than 1/10th the size in population. This gives Singer India a huge scope of appreciation. Furthermore, if we analyze the business of those Singer subsidiaries, they all have followed the same template of growth:
- Start with Sewing Machines
- Diversify into Consumer Durables
- Introduce all variety of Consumer durables
- Create a strong retail and dealer network
- Gradually transform itself into a multi-brand retail network.
If we analyze each of the south-Asian subsidiaries we would recognize, they all have been through this template (explained beautifully here -> http://www.singerbd.com/content.php?id=4610802). Given whatever has transpired so far with the Singer India (manufacturing sewing machines and entering into consumer durables), it seems it will also follow the same development framework. If this is the case, we know we have a company that is going to have a massive addressable market, not to forget a brand with very high recall.