Release Date: February 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mallcom (India) Ltd (BOM:539400, Financial) achieved a significant milestone, marking 40 years of successful operations.
- The newly established garment unit in West Bengal is now fully operational.
- The company is progressing on its greenfield project at Sanand, Gujarat, with development proceeding according to schedule.
- Mallcom (India) Ltd (BOM:539400) has invested INR 28 crores in the Sanand project, with an additional INR 32 crores expected over the next two quarters.
- The company is seeing good growth in the domestic market and other regions like Asia and the Middle East.
Negative Points
- Operating revenues for the third quarter declined by 4% year-on-year and 12% quarter-on-quarter due to supply chain disruptions and relocation of the garment unit.
- EBITDA margin for the quarter declined by 230 basis points year-on-year and 209 basis points quarter-on-quarter.
- Net profit for the quarter declined by 371 basis points year-on-year and 138 basis points quarter-on-quarter.
- The European market experienced a 20% decline, attributed to both supply chain issues and economic challenges in Europe.
- The company anticipates only a high single-digit revenue growth for FY '24, falling short of the previously targeted 15% growth.
Q & A Highlights
Highlights of Mallcom (India) Ltd (BOM:539400) Q3 and 9 Months FY '24 Earnings Call
Q: Can you provide an update on the supply chain issues faced last quarter with garment supply?
A: The supply chain issues from last quarter have continued into this quarter, impacting export turnover. We are gradually resolving these issues and expect to be fully recovered by year-end, with results improving in the coming quarters. - Rohit Mall, General Manager
Q: Can the entire degrowth in Europe be attributed to garment raw material issues?
A: While supply chain issues were a significant factor, Europe's overall economic performance, including interest rates, unemployment, and geopolitical factors, also contributed to the degrowth. - Rohit Mall, General Manager
Q: What are the growth projections for different geographies?
A: We see significant growth potential in Asia, primarily India, the Middle East, and North America. South America is mixed due to issues in countries like Argentina. Europe will remain key but with slower growth compared to other regions. - Rohit Mall, General Manager
Q: What is the revenue potential of the Ghatakpukur plant, and how much of the old capacity has been shifted there?
A: The Ghatakpukur plant has a revenue potential of INR 200 crores per annum for garments, with around INR 80-90 crores of capacity shifted from the previous plant. - Shyam Agrawal, CFO
Q: What is the current capacity utilization of the plant on average?
A: The current capacity utilization for garments is around 70-80%. - Shyam Agrawal, CFO
Q: When can we expect the commencement of Phase 2 CapEx plans at the Ghatakpukur plant?
A: Talks for Phase 2 have started, and we expect to begin CapEx by Q1 FY '25, with completion within FY '25. - Rohit Mall, General Manager
Q: What is the expected growth rate for FY '24 and beyond?
A: We may not achieve the 15% growth target for FY '24 due to recent challenges but expect accelerated growth in FY '25 with key developments. - Rohit Mall, General Manager
Q: What are the plans for the Ahmedabad unit post-expansion?
A: The Ahmedabad unit will continue its operations as is, with no shifting planned. - Rohit Mall, General Manager
Q: What is the current debt position, and how is the expansion being funded?
A: The expansion is being funded through internal accruals. We have no long-term debt, only working capital borrowing, which is supported by liquid capital investments. - Shyam Agrawal, CFO
Q: What is the expected capacity utilization after the current expansions?
A: Overall capacity utilization is expected to remain in the 70-80% range, with scalability based on demand. - Shyam Agrawal, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
