Himatsingka Seide

The company had posted a good set of numbers for Q1FY14 and the good tidings continued into Q2FY14. Consolidated revenue was up 16% (YoY) at Rs.550 crore, EBIDTA rose 32% at Rs.56 crore and it ended the quarter with a net profit at Rs.57% at Rs.18 crore. Growth was led by higher volumes and better currency realizations. Its earnings continued to be led by manufacturing, represented by drapery/upholstery and bedding which showed a 35% growth in revenues. There has been a rise in interest outgo since Q1 and it remains around Rs.19 crore levels, compared to Rs.17 crore in previous Q1. This is due to the increase in rate pursuant to reset of a TUF loan and in Q1, it had stated that there was a one-time upfront charge of Rs. 1.87 crores for working capital facility. The same came in this Q2 too?

The distribution business in the North Americas, which includes Divatex, its private label business, and DWI, its branded business, clocked growth of 18%, much lower than 27% in Q1. Its business in Europe is what bounced back and it showed a growth of 38%. On the other hand, its retail business, in India and Asia represented by Atmosphere,  which in Q1 had shown a sharp drop in revenue and EBIT due to lack of institutional orders and increased marketing spends, increase in rentals in some of the showrooms, in Q2, showed a growth of 10% in revenue. The total debt is around Rs.700 crore of which Rs.550 crores is term debt and  Rs.150 crores being the working capital debt. During Q1, 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, things will remain on thin ice. It has taken a packing credit in foreign currency (PCFC) loan, which is like a working capital loan and this at 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.