Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated total income for Q1 FY25 was INR665 crores.
- Gross profit increased by 9% quarter-on-quarter to INR293 crores.
- Gross margin improved by 4% quarter-on-quarter to 44%.
- EBITDA for the quarter rose to INR25 crores from INR13 crores in Q4 FY24.
- Total long-term debt reduced by INR22 crores and working capital borrowing decreased by INR27 crores in Q1 FY25.
Negative Points
- Geopolitical tensions and supply chain disruptions are impacting the man-made fiber industry.
- Subdued demand and rising energy costs are ongoing challenges.
- Visibility in market conditions remains unclear, making future performance predictions difficult.
- High ocean freights and political turmoil in key markets like Bangladesh are affecting exports.
- The company has dropped plans for a new INR800-900 crores project due to market uncertainties.
Q & A Highlights
Q: Sir, we have been reducing losses for the past few quarters from INR26 crores to INR11 crores. Do we expect positive numbers in the coming quarters?
A: (S. Khandelia, CEO) We have been improving efficiencies and cutting costs, but market conditions remain challenging. While we hope for positive numbers, visibility is limited due to geopolitical challenges and high ocean freights. It may take a quarter or two to see significant improvements.
Q: How do you think the recent developments in Bangladesh, with international buyers looking for alternative suppliers, will impact us?
A: (S. Khandelia, CEO) Bangladesh's factories are normalizing, and while there may be temporary benefits, the diversion of orders is not easy. Bangladesh is cost-efficient and specializes in certain garments. India may see some benefit, but it won't be significant immediately.
Q: Can you provide an update on our home textile business and expected revenues?
A: (S. Khandelia, CEO) Our home textile business, including curtains and upholstery, has been improving. We are now EBITDA positive in this segment. We expect a 5-10% growth in export numbers for home textiles.
Q: Have you increased any new collections for Nesterra, and what is the status of the existing 36 collections?
A: (S. Khandelia, CEO) We have launched 36 collections and plan to introduce 12 new collections this year. Each collection has a life cycle of five years. We aim to maintain around 50-60 collections in the market at any given time.
Q: Any updates on the subsidy for the green fiber unit?
A: (S. Khandelia, CEO) There is no subsidy for the green fiber unit, but it is preferred due to sustainability. The plant is operational, and we are consolidating our current operations.
Q: What is the overall outlook for the textile sector, and what growth drivers should we track for Sutlej?
A: (Rajib Mukhopadhyay, CFO) The short-term outlook is challenging due to geopolitical tensions and export pressures. However, India's long-term prospects in the textile industry remain positive.
Q: Any updates on the additional CapEx plans?
A: (S. Khandelia, CEO) We have dropped the planned INR800-900 crores project due to market visibility issues. Routine CapEx continues as planned to keep our plants updated.
Q: Is there a specific reason for not continuing with the planned project?
A: (S. Khandelia, CEO) The decision was based on the lack of market visibility and the evaluation that it is not the right time to proceed with such a large project.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
