Partner In Growth

1.    The company’s performance for the third quarter as well as first nine months of the year has been reported robust in such a challenging environment. Could you elaborate the reasons for such a financial performance?

This performance was forecasted and planned in advance.  We have been proposing 20% revenue growth and 20% of EBIDTA margin.  We have surpassed on both fronts.  We expanded the capacity from 45 mn to 68 mn and the result of this robust growth is due to available capacity. We could improve on the margin due to economies of scale and available capacity utilisation.

2.    What kind of opportunities you are seeing in the international market?

We plan to expand to various continents to increase the spread and reduce the risk. Our target is to grow the revenue by 20% and maintain EBITDA at 20% level.

3.    The benefit your company enjoys due to our Indian currency has depreciated against US dollar and Chinese currency Yuan?

We have a prudent policy on currency hedging and we cover close to 70% of our annual export target.  Normal premium is availed and this is consistent over the years. Chinese currency impact will take some time to unravel.

4.    Can you throw light on your dividend policy?

We have declared 10% interim dividend post Q2.  We have not created any policy for this.  Board will decide annually depending upon the free cash available.

5.    What is the current status of your capex, especially of your Phase II plan?

Phase I of 175 crs is going as per plan and we should complete this before end of the current calendar year.  Expansion committee of the board is evaluating the phase II expansion post which it will be placed before the board for approval.  It will take some time to communicate to the investors.

6.    Do you have any plan to raise the fund in near future through QIP?

Current cash profit is sufficient to meet our needs.  At present we have no plans on raising money through QIP.

CONSISTENCY IN PERFORMANCE

Revenues

Revenues for 9MFY16 standing at Rs. 1545.74 crore was 26.4% higher than the Rs. 1223.26 crore reported during the corresponding period (9MFY15) of the previous financial year. This has outperformed the growth of the country’s textile sector (sector grew 5 per cent in 2014-15 as per Business Line and Technopak).

Revenue drivers

The outperformance in the company’s revenues was on account of volume growth, with existing customers, adding new customers, introducing new products, and optimum use of enhanced capacities.

Profits and margins: The company reported a record EBITDA of Rs. 336.61 crore for the 9MFY16 as against Rs. 214.17 crore in the corresponding 9MFY15 (57.2% growth). The company also reported the EBITDA margin at 21.8%. This represented a 430 bps improvement over the EBITDA margin reported in the corresponding period of 9MFY15. This margin improvement was on account of a growing share of revenues derived from the Home Textiles segment within the company’s business portfolio – from 82% to over 90% across 9MFY16 over 9MFY15.

Profits

The profit after tax for 9MFY16 was at Rs. 184.73 crore, representing a 66.4% growth over the 9MFY15. The company reported profitable growth, wherein its profit growth was substantially higher than the percentage increase in revenue growth.

Enhanced competitiveness

The improvement in the company’s record performance was also derived out of tighter operating controls, prudent material sourcing, optimum utilisation of installed capacity, product spread and controlling manufacturing overheads. The company’s net debt-equity ratio (gearing, comprising long and short term debt less cash) was 0.52x at the close of 9MFY16. This represented an improvement over the gearing of 0.92 at the close of 9MFY15. The improved gearing resulted in enhanced financial competitiveness. The company’s interest cover (number of times EBITDA covers interest outflow) improved from 4.57x in FY15 to 8.16x during 9MFY16.

MANAGEMENT VIEW POINT

Commenting on the company’s performance, Anil Kumar Jain, chairman & managing director, Indo Count Industries Limited, said:

“Our consistently improving performance during the nine months of the current financial year was the result of a sustained focus on prudent material sourcing, stronger product mix and value-addition."

Over the last few quarters, Indo Count Industries Limited has reinforced its brand as a focused global bed linen player, enhancing its recall among both prospective customers and the trade across a widening global footprint. Besides, we have always positioned ourselves as more than just a vendor; we research emerging trends well in advance of our products being placed in the market and in doing so, play the role of a trusted partner to our customers, helping them to succeed in their competitive markets.

“The result of this business direction is that we have evolved from a one-off customer engagement to an enduring business relationship. Our enhanced value proposition makes it possible for us to strengthen our make-to-order model, providing our company with revenue visibility.This forward integration approach has translated into superior numbers for the company."

“You can count on us...”

A BRIEF INSIGHT INTO INDO COUNT INDUSTRIES LIMITED

It is a global bed linen company. The company is integrated from the manufacture of yarn at one end to the manufacture of finished madeups. This extensive integration 

has made it possible for the company to enhance quality and maximize value addition. The result is that the company possesses one of the best margins within the country’s integrated textile sector and one of the highest asset-turnover ratios.

• The company’s products comprise the following:

Bed sheets: Flat sheet, fitted sheet and pillow cases.

Fashion bedding: Comforters, bed in bag, quilts and coverlets, decorative pillows, etc.

Utility bedding: Mattress pads, protectors, comforters filled with poly fibre.

Institutional linen: Basic white bedding, duvet covers and shams; caters to hotels, hospitals and others.

• The company has innovated the following kinds of products:

Infinity cotton: Blend of a few finest cotton varieties in the world resulting in superior yarn.

Thermal balance: Balances temperature between body and bed to deliver superior sleep characteristics.

• The company markets products in 49 countries.

Nearly 65 per cent of revenues are derived from USA, the company’s largest market; its prominent non-US markets comprise UK, Canada, Europe, MENA and Australia. The company enjoys long-term relationships with large global retailers. This has translated into a large and growing offtake, marked by a larger share of the customer’s wallet.

• The company is the SECOND LARGEST manufacturer and exporter of bed linen from India and amongst the top 3 bed sheet suppliers in USA. It is the eleventh largest global home textiles supplier to the US. (Source: “Home & Textiles Today”, February 2016).

• The company is a responsible employer, engaging more than 10,000 people (direct and indirect): it increased the proportion of women in the workforce from 39 (2010-11) to 600 (2015-16).

The company has visualized its Corporate Social Responsibility (CSR) by improving the quality of the life of the people living in the villages of rural India through its CSR foundation.

Philanthropic activities undertaken are: To improve the health care systems through the government Primary Health Care centers; to improve the Sanitary Systems and overall cleanliness in the rural areas with aid and supervision of Gram panchayat; oromoting education by way of digitalized audio visual computer aided medium to the government aided unprivileged schools; economical empowerment of the women through employable skill development training programmes for their economical independence.

Safe Harbor Statement

Statements in this document relating to future status, events, or circumstances, including but not limited to statements about plans and objectives, the progress and results of research and development, potential project characteristics, project potential and target dates for project related issues are forward-looking statements based on estimates, and the anticipated effects of future events on current and developing circumstances. Such statements are subject to numerous risks and uncertainties, and are not necessarily predictive of future results. Actual results may differ materially from those anticipated in the forward-looking statements. The company assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors.