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Dollar Industries Ltd.

BSE: 538421 Sector: Industrials
NSE: DOLLAR ISIN Code: INE325C01027
BSE LIVE 12:39 | 10 Aug 10.00 -0.85
(-7.83%)
OPEN

10.00

HIGH

10.00

LOW

10.00

NSE 15:46 | 23 Aug 2227.50 168.05
(8.16%)
OPEN

2070.35

HIGH

2259.20

LOW

2065.00

OPEN 10.00
PREVIOUS CLOSE 10.85
VOLUME 1
52-Week high 10.00
52-Week low 0.00
P/E 0.26
Mkt Cap.(Rs cr) 11
Buy Price 10.00
Buy Qty 1999.00
Sell Price 0.00
Sell Qty 0.00
OPEN 10.00
CLOSE 10.85
VOLUME 1
52-Week high 10.00
52-Week low 0.00
P/E 0.26
Mkt Cap.(Rs cr) 11
Buy Price 10.00
Buy Qty 1999.00
Sell Price 0.00
Sell Qty 0.00

Dollar Industries Ltd. (DOLLAR) - Chairman Speech

Company chairman speech

Q: Were you pleased with the company's working during the year under review?

A: I was delighted for a number of reasons.

One the company reported record revenues of RS. 830 cr corresponded by record profitsof RS. 26.35 cr .

Two the company reported profitable growth while doing so – revenues increased13.6 per cent but profit after tax strengthened 35.5 per cent.

Three if you look at the revenue increments of the last two years – RS. 40 cr in2014-15 over the previous year and RS. 100 cr in 2015-16 over the previous year –then it becomes evident that we are growing faster the larger we get.

Four the company reported improving margins – 15.02 per cent EBIDTA margin for2014-15 strengthening to 17.68 per cent in 2015-16.

Q: It would appear that the company's performance was achieved against a favourableindustry environment.

A: On the contrary one of the things that I wish to assure readers is that thecompany's performance during the year under review was achieved in challengingcircumstances.

The country's economy continued to be sluggish beyond what is evident in its GDP growthof 7.6 per cent. This sluggishness translated into a weak offtake of innerwear productsfrom a sectoral perspective. The sector grew 5-7% per cent; Dollar did well by reporting2.1x sectoral revenue growth.

There was another point that worried industry players. Over the last few years therewas a perspective that as per capita disposable incomes increased consumers of productsin the economy innerwear segment would graduate to the premium segment. Interestingly weare seeing a divergence – some of the consumers are indeed moving to the value-addedsegment but on the other hand the price-sensitive consumers are downtrading towardscheaper options. This divergence is testing the mettle of innerwear brands in respondingwith corresponding strategy.

Q: How is the company responding to this unforeseen divergence?

A: At Dollar we believe that the future of our company lies in sustainability. Inturn we believe that sustainability will be reinforced through the ability to evolve ourproduct mix towards the value-added leaving us with adequate surpluses to reinvest in ourbrand vendors distribution partners and manufacturing assets. This strategy is visiblyreflected in our evolving sales mix: from the economy towards the premium and the superpremium (prospective). From this it would appear that the company would like toconsciously vacate the economy segment completely. This would not be true; what would be amore accurate picture is that one segment of consumers is moving away from premiumproducts towards the economy segment and within the economy segment they are selecting tobuy the cheapest products on offer.

At Dollar even as we are playing the value game through progressive premiumisation weare attempting to cater to the economy segment as well. Through various initiatives wecompeted price to price with a large number of brands. The result is that our economysegment accounted for 45 per cent of revenues during 2015-16 translating into revenues ofRS. 360 cr compared with RS. 356 cr during the preceding year.

Q: How did the company strengthen its business to address the future?

A: The company did so in various ways.

One of the principal initiatives was that when profits increased it would have beentempting to play to the gallery and report a short-term spike in profits by keeping brandexpenditure at the level of the previous year.

On the contrary the company did something courageous – when revenues increasedthe company concurrently invested a considerably larger amount in brand buildingstrengthening its capacity to enhance recall and report larger profits across theforeseeable future.

The result was that the increment in brand investment was RS. 4.42 cr in 2014-15 overthe previous financial year; the increment in brand spending in 2015-16 was RS. 23.21 crduring the year under review leading to a total brand spend of RS. 72.75 cr – 8.7 percent of our revenues and possibly one of the highest quantum brand spends in the country'sinnerwear industry.

We believe that the quantity and quality of this spending will continue to rejuvenateour brand translating into not just increasing revenues but also increasing revenues ofvalue-added products.

Q: What were some of the other initiatives that strengthened the company's business in2015-16?

A: The company made a decisive initiative to strengthen its aspirational positioning in2015-16. For years there were largely two segments that we addressed – economy andpremium. During the last financial year the company made a decisive initiative; itlaunched brand Force NXT to address the super premium category. We feel that thisextension represents an idea whose time has come for some good reasons. With urban incomesrising consumers generally moved to higher-priced garments even as they continued toselect legacy innerwear brands. There has been a major rethink on the selection ofinnerwear towards the super premium since; these super premium products are marked byfabric manufactured using superior yarn stitched using superior thread cut aroundcontemporary fashion trends and aligned around a superior branding aspiration. Dollarbegan to address this segment from the second half of the last financial year onwards thebenefits of which will start becoming evident from the current financial year onwards. Webelieve that this extension represents a watershed in our existence sending out anunmistakable signal of our desired premium positioning.

Q: What is the outlook for the company during the year under review?

A: We are optimistic of generating RS. 1000 cr in revenues in 2016-17 even aschallenges of economic slowdown and consumer downtrading remain. The ability to pass on anincrease in raw cotton prices should make the achievement of our goal easier in additionto our being able to generate a higher throughput per dealer address market gapseffectively and increase offtake from our premium and super premium categories. In doingso we believe that we would be the fastest in our sector to get to this four digitbenchmark emphasising the point that we have always made: Dollar is a different kind ofcompany.

Mr. Din Dayal Gupta

Chairman