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RSWM Limited Q4 & FY24 Earnings Conference Call Summary
Conference Call Details • Date: May 31, 2024 • Participants: CFO Mr. Avinash Bhargava, VP - Legal Mr. Surender Gupta • Format: Listen-only mode with Q&A session • Disclaimer: Discussion may include forward-looking statements
Economic Outlook • Cautiously optimistic global textile industry despite challenges (high interest rates, shipping costs) • Indian textile sector thriving with projected growth rate of over 7% for FY25 • Positive trends in cotton market with healthy crop outlook
Operational Highlights • Full production capacity maintained; strong sales of premium cotton product, Kaapas • Acquisition of Ginni Filament Limited's operations to enhance production capacity
Financial Performance • Q4FY24 Revenue: ₹1,171 Cr (19.9% QoQ, 22.5% YoY increase) • Full FY24 Net Sales: ₹4,057 Cr (up from ₹3,789 Cr in FY23) • Key drivers: Improved production capacity utilization, reduced stock levels
Investments and Future Projections • Total expenditure of ₹725 Cr for capacity expansion (denim and melange yarn) • Kaapas project expected to generate ₹500-600 Cr in revenue • Volume growth outlook for FY25: 2,000 metric tonnes
Risk Management and Capital Allocation • Risk Management Committee reviews risks biannually • Monthly compliance reviews by Grant Thornton; no significant litigation pending • Environmental improvements in Effluent Treatment Plants (ETPs) and Sewage Treatment Plants (STPs)
Margin Recovery Strategies • Revitalizing New Product Development segment • Cost optimization expected to improve profit margins in H2 FY2023-24
Conclusion • Call concluded with gratitude expressed by Mr. Bhargava for participant engagement.
RSWM Limited Q3 and 9M FY24 Earnings Conference Call Summary
Submission Details • Date of submission: February 16, 2024 • Transcript of call held on February 9, 2024 • Compliance with SEBI regulations • Key participants: CFO Mr. Avinash Bhargava, VP of Legal Mr. Surender Gupta • Transcript available on company website • Discussion included forward-looking statements
Industry Overview • Challenges: • Struggling export market, particularly in Turkey and Egypt • Pricing pressures in the textile and cotton yarn industry • Disruptions due to the Red Sea crisis • Opportunities: • Recovery of yarn prices in Bangladesh • Increased demand for dyed yarn linked to home textile sector improvements
Financial Performance • Revenue: ₹977 crore for the quarter • Declines in EBITDA and profit after tax compared to previous year • Acquisition of Ginni Filament Limited expected to enhance capacity and profitability
Product Mix and Capacity Utilization • High capacity utilization for denim (96%) • Knit fabric utilization at 65-70% • Focus on consolidating knitting business before expansion
Challenges in Yarn Business • Losses due to weak international demand and domestic fiber import restrictions • Quality Control Order (QCO) complicating international procurement
Acquisition Details • Ginni Filament Limited's Chhata unit acquisition cost: ₹160 crore • RSWM to assume ₹71 crore loan • Machinery refurbishment costs discussed
Financial Outlook • Current borrowing costs around 8.5% • No significant impact expected from recent negative outlook by rating agencies • Improvements in power and fuel costs noted
Power Generation and Costs • Reliance on grid power; no captive power generation • Blended power cost decreased to ₹6.75 per unit • Savings of ₹5-6 crore due to improved power conditions
Employee and Production Costs • Elevated employee costs due to variable pay and increments • Increasing yarn production costs, particularly power expenses • Investments in renewable energy to mitigate costs
Cash Flow Management • Working capital utilization at 60% • Efforts to reduce inventory and monitor credit periods • Optimism for market recovery in FY 2024-25, especially in denim sector
Business Environment and Future Outlook • Improvements noted since December • Expectations for a stronger market in March and April • Export revenue mix decreased to 25% from usual 35-37% • Positive order bookings with 267 containers scheduled for export
Conclusion • Gratitude expressed to participants for their support during challenging times.
RSWM Limited Q2 and H1 FY24 Earnings Conference Call Summary
Submission Details • Date of submission: November 16, 2023 • Call date: November 9, 2023 • Participants: • Mr. Avinash Bhargava, Chief Financial Officer • Mr. Surender Gupta, VP - Legal and Company Secretary • Compliance: Submitted transcript to BSE and NSE as per SEBI regulations • Transcript availability: On the company's website
Key Highlights • Market Performance • Domestic and international market challenges in the spinning sector. • Yarn demand slightly improved but remains below pre-pandemic levels. • Full-capacity operations hindered by low demand and market surplus. • Economic factors affecting consumer spending: high interest rates, gas prices, food inflation.
• Sector Recovery • Signs of recovery in the U.S. apparel market. • India's spinning industry exports have returned to pre-pandemic levels. • Local consumption remains low; economic issues in Turkey and Egypt complicate exports.
• Denim and Knitting Sectors • Denim sector performing well despite industry declines. • Strong strategies and partnerships maintained sales. • Robust demand in the knitting market with timely orders from Indian brands.
• Financial Performance • Q2 sales: Rs. 1,007 crore; net loss: Rs. 15 crore; debt-to-equity ratio: 0.5x. • Anticipation of improved capacity utilization and performance in Q3.
Q&A Session Insights • Opportunities from FTAs • Expected growth in the textile sector in H2 FY24 due to consumer preferences and government initiatives. • Current production capacity utilization at 85%.
• Profitability and Order Visibility • Weak performance in October; expected improvement in November and December. • 33% decline in export volumes; net debt approximately Rs 600 crore.
• Margin Concerns • Yarn prices have decreased significantly since June 2022, affecting margins. • High utilization in knits (85%); yarn and denim at full capacity.
• Revenue Breakdown • H1 FY23-24: Rs 500 crore from exports; Rs 1,402 crore from domestic sales. • Lower EBITDA margins for exports compared to domestic sales.
• Raw Material Costs • 60-40 ratio of PV yarn to cotton yarn; significant price drops observed. • Anticipation of rising cotton prices post-November due to government policies.
• Power and Fuel Costs • Power costs constitute about 12% of total expenses; largely influenced by external suppliers and regulations.
Conclusion • Optimism for long-term growth despite current economic challenges. • Extended festive greetings to participants.
RSWM Limited Q1 FY24 Earnings Conference Call Summary
Submission Details • Date of submission: August 17, 2023 • Call date: August 11, 2023 • Compliance: Submitted transcript to BSE and NSE per SEBI regulations • Participants: CFO Mr. Avinash Bhargava, VP Legal and Company Secretary Mr. Surender Gupta • Format: Listen-only mode with a Q&A session • Disclaimer: Forward-looking statements with potential risks highlighted • Transcript availability: Company website
Economic Overview • India's projected growth rate: 6% to 6.5% • Textile industry: Demand slowdown but signs of improvement • Margin pressures: Spinners facing challenges due to low demand and falling yarn prices • Cotton crop yield: Satisfactory with favorable expectations for the upcoming season
Industry Challenges and Opportunities • Segments affected: Yarn, denim, and knit facing excess inventory and pricing pressures • Growth opportunities: Focus on domestic markets and innovative products • Anticipated impact: Upcoming BIS regulations expected to benefit the domestic market • Strategic focus: Maximizing cotton capacity and shifting towards polyester fabrics
Product Development and Sustainability • New product initiatives: Intelligent fabrics with quick absorbency and UV protection • Customer base expansion: Secured initial order of 25 metric tonnes from Antigua • Commitment: Sustainable practices to meet eco-friendly consumer demand
Financial Performance • Revenue: ₹901 Cr (5.8% decrease quarter-over-quarter) • EBITDA: ₹25 Cr • Loss: ₹18 Cr in PAT • Anticipation: Demand increase expected with the festive season
Q&A Session Highlights • Industry challenges: Low demand, overstocking, rising costs; slow recovery predicted • Export decline: Revenue from exports dropped from 65% to 25% • Capacity expansion: New facility focusing on specialty products operational in 1-2 months • Financials: Total debt of approximately ₹1,350 Cr; net cost of funds around 6% to 7% • Renewable energy: 29 megawatts of solar capacity; previous acquisitions noted • Competitive landscape: Challenges from countries like China and Bangladesh
Conclusion • Closing remarks: Bhargava thanked participants for their engagement.
Compliance and Overview • RSWM Limited submitted a transcript of their Investors Conference Call to BSE and NSE on June 2, 2023. • The call featured CFO Mr. Avinash Bhargava and VP Legal Mr. Surender Gupta. • Participants were in listen-only mode, followed by a Q&A session. • A disclaimer was provided regarding forward-looking statements.
Market Insights • Indian cotton market remains resilient despite lower global prices. • Q4 FY23 average cotton price: ₹174/kg, with year-on-year declines in cotton and yarn prices. • Anticipated improved margins due to lower-cost inventory and increased utilization.
Financial Performance • Total income for FY23: ₹3,789 Cr.; consolidated EBITDA: ₹340 Cr. • Q4 FY23 showed a 15.3% increase in total income and a threefold increase in EBITDA compared to Q3. • Dividend of ₹5 per share announced, pending shareholder approval. • Optimism for demand improvement in FY24.
Q&A Highlights • Increased Q4 sales attributed to seasonal strength in textiles. • Full capacity utilization confirmed in spinning and denim divisions. • Other income includes insurance claims from fire damage; funds from rights issue used for working capital. • Yarn and cotton price discussions focused on average realizations; cotton prices recently dropped below ₹60,000 per candy.
Operational Performance • Acknowledgment of operational income not performing as well as previous quarters. • Yarn price trends show declines, except for Cotton Grey yarn, which saw a slight increase. • Investment in BG Power aimed at leveraging state incentives for captive power plants.
Sustainability Initiatives • RSWM focuses on sustainability, including recycling PET bottles into fiber and zero discharge effluent treatment plants. • Clarification on a ₹30 crore property investment as a reclassification of existing office space, not a new purchase.
Conclusion • The call concluded with thanks to participants and an invitation to disconnect.
RSWM Limited Investors Conference Call Summary
Call Details • Date: February 10, 2023 • Compliance: Submitted transcript per SEBI regulations • Participants: CFO Mr. Avinash Bhargava, VP - Legal and Company Secretary Mr. Surender Gupta • Format: Moderated, listen-only mode with Q&A session • Disclaimer: Forward-looking statements with potential risks highlighted
Industry Challenges • Geopolitical events and fluctuating raw material prices impacting the textile industry • 12% decline in textile and apparel exports (April to December 2022) • Recent increase in inquiries suggesting potential recovery
Financial Performance • Q3 Results: Significant drop in revenue and EBITDA, net loss of ₹14 Cr • Improved utilization rates: • Yarn: 100% • Denim: 63% • Focus on operational efficiency, cost control, and capacity expansion
Outlook • Long-term outlook remains positive; no specific earnings guidance due to uncertainties • Confidence in demand recovery within 2-3 quarters
Key Inquiries and Responses • Capacity Utilization: Yarn and denim utilization reported at 100% and 63%, respectively. • Debt Management: Gross debt projected at ₹900-950 crore; ₹200 crore repayment scheduled for this year. • Inventory Levels: Yarn inventory increased to 8,000 metric tonnes; plans to reduce to 7,000 metric tonnes by end of February. • External Challenges: Demand affected by Turkey earthquake and Ukraine-Russia conflict; maintaining spindle exposure due to domestic demand. • Cost Management: Power and fuel expenses high; plans to enhance solar power capacity. • Employee Costs: Managing costs by promoting internally; no increase in managerial positions.
Strategic Initiatives • Cotton Purchase Committee: Monitoring cotton prices to avoid trading losses. • Inventory Control: Regular reviews to manage inventory levels and costs.
Market Insights • Difficulty in providing precise market comparisons due to diverse product range. • No significant inventory losses reported; valuation losses attributed to accounting.
Conclusion • Call concluded with gratitude for support during challenging times.