SVP Global concall was at 22nd jan.
"Fastest growing multinational in cotton yarn manufacturing"
" SVP global is approved supplier of IKEA "
Here are the key takeways π
"Fastest growing multinational in cotton yarn manufacturing"
" SVP global is approved supplier of IKEA "
Here are the key takeways π
Overview
- The quarterly earnings concall is done after a long time.
- Company is India's leading manufacturer of compact cotton yarn.
- Company has evolved from trading company to manufacturer of highest quality of cotton yarn
- The quarterly earnings concall is done after a long time.
- Company is India's leading manufacturer of compact cotton yarn.
- Company has evolved from trading company to manufacturer of highest quality of cotton yarn
- Has a legacy of more than 100 years in textile business & more than 200 years of combined experience of promoters in textile business.
- Has expanded the units to Oman, middle east.
- Has expanded the units to Oman, middle east.
Manufacturing plans
1) Ramnad Plant, Tamil Nadu
- Yarn manufacturing capacity 98000 spindles, manufacturing cotton blended yarn.
- Strategy is focused on exiting low margin cotton yarn business and capacity expansion in high margin compact cotton yarn.
1) Ramnad Plant, Tamil Nadu
- Yarn manufacturing capacity 98000 spindles, manufacturing cotton blended yarn.
- Strategy is focused on exiting low margin cotton yarn business and capacity expansion in high margin compact cotton yarn.
- Reducing Tamil Nadu operations and increasing Oman capacity which has resulted in margin expansion with stable topline revenue.
2) Jhalawar plant, Rajasthan
- State of art facility with an installed capacity of 1.5 lac spindle and 2.4k rotors.
- Jhalawar Plant has manufacturing capabilities of high quality compact yarn along with open end yarn and blended yarn.
- State of art facility with an installed capacity of 1.5 lac spindle and 2.4k rotors.
- Jhalawar Plant has manufacturing capabilities of high quality compact yarn along with open end yarn and blended yarn.
- It is in close proximity with MP, Gujarat which enables efficient raw material procurement.
- Multiple state and central level subsidies to support the company's operation in Rajasthan.
- Multiple state and central level subsidies to support the company's operation in Rajasthan.
3) Oman facility
- Sohar freezone project is of 300 millions $
- Phase 1 to be scaled up fully by March 2021, it is already operational with 1.4lac spindles and 3.5k rotors.
- Phase 2 expansion project cost would be 150 millions $. Financed debt equity 70:30.
- Sohar freezone project is of 300 millions $
- Phase 1 to be scaled up fully by March 2021, it is already operational with 1.4lac spindles and 3.5k rotors.
- Phase 2 expansion project cost would be 150 millions $. Financed debt equity 70:30.
- Equipped with most equipped state of the art technology and will enable easy access to market like turkey and Pakistan.
- Oman project has proximity to the port and is a tax free zone.
- Also has an FTA with USA.
- Power price are almost half.
- Oman project has proximity to the port and is a tax free zone.
- Also has an FTA with USA.
- Power price are almost half.
Next plans
- Become Integrated textile garment manufacturer present across the entire value chain.
- Transformation from trading to manufacturing has led to the shift of product mix to high margin compact yarn & has increased ebitda margin from 3.7% in FY16 to 13.2% in FY20.
- Become Integrated textile garment manufacturer present across the entire value chain.
- Transformation from trading to manufacturing has led to the shift of product mix to high margin compact yarn & has increased ebitda margin from 3.7% in FY16 to 13.2% in FY20.
Financial performance
- Opening up of economy has witnessed a strong demand in yarn market and demand is back to the pre-covid level.
- Revenue mix from radiational and compact yarn is 16:84.
- Operational capacity more than 95%
- There is healthy order book.
- Opening up of economy has witnessed a strong demand in yarn market and demand is back to the pre-covid level.
- Revenue mix from radiational and compact yarn is 16:84.
- Operational capacity more than 95%
- There is healthy order book.
PLI scheme for textile
- Scheme is not directly linked to the company Company. But such scheme would increase the demand of yarn.
Margin differential form compact to traditional yarn
- Margin difference is of 6% to 8%
- Scheme is not directly linked to the company Company. But such scheme would increase the demand of yarn.
Margin differential form compact to traditional yarn
- Margin difference is of 6% to 8%
Debt position
- Total debt of 2300 crores (as of 31st Dec 2020)
- Secured debt is 1770 crores.
- Borrowing cost is relatively lower due to subsidies given by government
- Company is focusing on debt reduction over next 1-2 years.
- Total debt of 2300 crores (as of 31st Dec 2020)
- Secured debt is 1770 crores.
- Borrowing cost is relatively lower due to subsidies given by government
- Company is focusing on debt reduction over next 1-2 years.
New Technology advantage
- It has reduced the labors cost tremendously
- Power consumption is much lesser
- Quality it produces is far superior and wastage of cotton has reduced significantly.
- It has reduced the labors cost tremendously
- Power consumption is much lesser
- Quality it produces is far superior and wastage of cotton has reduced significantly.
Garment segment
- Proposed Garment project in Oman. Aim is to become an integrated manufacturing player.
- This will be more on the Apparel side used in Oman and European markets.
- Proposed Garment project in Oman. Aim is to become an integrated manufacturing player.
- This will be more on the Apparel side used in Oman and European markets.
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