Himatsingka Seide

The company has posted a good set of numbers for Q1FY14, with consolidated revenue rising 25% (YoY) at Rs.478 crore. EBIDTA came in 28% higher at Rs.39 crore and net profit at Rs.16 crore was up 59%. Growth was led by higher volumes and better currency realizations. The average realization for bed linen rose10% (YoY) to Rs.358.meter and for drapery and upholstery, realizations rose 2% at Rs.1178/meter. Capacity utilization for bed linen was at 83% though that for drapery and upholstery, it was quite poor at 43%. The interest and finance charges in manufacturing division increased to Rs. 11.65 crores from 9.19 crores in the previous year due to increase in cost was due to increase in interest rate pursuant to reset of a TUF loan that we have had in the quarter, and a one-time upfront charge of Rs. 1.87 crores for working capital facility.

The distribution business in the North Americas, which includes Divatex, its private label business, and DWI, its branded business, clocked growth of 27%. Its business in Europe continues to bleed, with a loss at EBIT levels. On the other hand, its retail business, in India and Asia represented by Atmosphere,  showed as sharp drop in revenue and EBIT due to lack of institutional orders and increased marketing spends, increase in rentals in some of the showrooms pushed up the costs. The total debt outstanding as of 30th June 2013 is Rs. 706 crores, of which Rs.552 crores being the term debt and  Rs.154 crores being the working capital debt. The company’s effective cost of debt is at 6.21%, as compared to 6.37 % in the previous sequential quarter. During the quarter, it repaid debt of around Rs. 22 crores and it hopes to repay another Rs.70 crore in this fiscal and in FY15, the debt reduction target is to the tune of Rs.125 crore. The rupee volatility will play on this company and unless it is able to pass on the costs of cotton and silk to the customers. It has taken a packing credit in foreign currency (PCFC) loan, which is like a working capital loan and this at the end of Q1 was outstanding to the tune of $20 million, repayable over these 60-90 days and unless this is offset with higher dollar sales, the company could see some forex losses. This PCFC was done when rupee to the dollar was at around Rs.56.