At the outset Fiscal Year 2017 has been a challenging one. Global growth rates havebeen tepid but they saw some improvement during the second half of the year. Growth inglobal merchandize trade also witnessed correction given the environment that prevailedin major economies. However the economic activity in both developed and emerging marketsare forecasted to improve in 2017 and 2018.
At Himatsingka it has been another year of consolidation. We have been steadfast inpursuing continuous improvement leadership innovation responsible practices andgovernance across The Group.
Our resources and capabilities have been channeled to strengthen our manufacturingcapabilities and infrastructure while also augmenting our brand portfolio acrossgeographies.
We remain focused on cementing a vertically integrated model characterized by seamlessintegration from Fibre to Shelf. With this in mind we have made significant progressduring the year.
On the manufacturing front we have successfully commissioned the brownfield Sheetingexpansion project that enhanced installed Sheeting capacity from 23 million meters perannum (mmpa) to 46 mmpa. The project was commissioned on schedule in October 2016.
To enhance our integration quotient we commenced construction of our Ultra-Fine countCotton spinning facility in July 2016.
This facility with an installed capacity of 211584 spindles will feed the CottonYarn requirements of the sheeting division. With this it will be the world's largestcotton spinning plant under one roof. The work on the project is on schedule and will becommissioned during Q3 FY 2018.
As shared with stakeholders earlier we propose to commence construction of our newTerry Towels facility during FY 18. This new facility will have an installed capacity of25000 tonnes per annum (TPA).
These investments are part of the '1300 Crore (approximately) expansion program toaugment our manufacturing portfolio and are being carried out in phases. Investments underthis program that commenced during Q3 FY 2016 are likely to continue through the middle ofFY 2019.
"We continue to be focused on cementing a vertically integrated modelcharacterized by seamless integration from Fibre to Shelf"
The Group has also taken commendable steps to strengthen its brand portfolio. It hasemerged to be a global leader in Track and Trace capabilities with regard to the cottonvalue chain. With exclusive global rights to the patented DNA tagging-and-fibre typingtechnologies we have an edge in bringing traceability solutions to our clients. OurPimacott HomeGrown Cotton and Organicott brands will be focused to cater to clientrequirements where products will be equipped with DNA based tagging technology.
"We have emerged to be a global leader in Track and Trace capabilities with regardto the cotton value chain."
We also continue to make efforts to enhance visibility and market share of our iconiclabels both owned and licensed. Calvin Klein Home Kate Spade Bellora andAtmosphere among other brands in our portfolio have strong brand recall. They alsohave a strong connect with the consumer with their ever evolving product aestheticsspecifications and global appeal.
The various initiatives across divisions have had a positive impact on the consolidatedfinancial performance. Consolidated revenues for FY 2017 grew by 13.1% and stood at'2138.41 Crores versus '1891.31 Crores during FY 2016. Compounded Annual Growth Rate(CAGR) for consolidated revenue for a five year period improved to 8.4%.
Consolidated EBITDA and Profit After Tax (PAT) for FY 2017 grew by 24.5% and 45.4%respectively. While consolidated EBITDA stood at '390.89 crores versus '314.03 croresduring FY 2016 consolidated PAT stood at '182.10 crores versus '125.26 crores during FY2016. Consequently five year CAGR for EBITDA and PAT stood at 21.5% and 40.7%respectively.
Our focus on sweating assets has kept capital efficiency ratios buoyant. Return onCapital Employed (RoCE) improved to 15.2% from 14.1% in FY 2016. Return on Equity (RoE)also saw an improvement from 15.0% in FY 2016 to 18.6%.
Areas of Focus
During FY 2018 we shall remain focused on furthering our global presence across ourproduct categories. This will be possible with increased capacity utilizations at ourmanufacturing facilities and greater penetration of our brands across existing and newmarkets.
"Setting up the world's largest cotton spinning plant under one roof"
With the commissioning of fresh sheeting capacities in second half of FY 2017manufacturing revenues saw significant growth during the latter half of the fiscal. Wehope to further improve utilization level in the Sheeting division going forward. Allefforts will be made to ensure the timely commissioning of our new cotton spinningfacility during Q3 FY 2018. This will give The Group:
Greater control on the value chain
Enhanced integration levels
Aid in de-risking our model
In addition we plan to commence construction of our new Terry Towel facility duringFY18. This 25000 TPA facility will be synergistic to our Sheeting division and aid ourefforts to be a global leader for home textile products.
The Global manufacturing landscape has been inundated with technology platforms andopportunities that will pave the way for next generation shop floors and usher in a newmanufacturing culture. The textile industry has been no exception.
At Himatsingka we are constantly exploring technology that may have transformationalimpact on productivity and efficiency. We do this by leveraging automation and virtualplatforms that radically alter the way we look at manufacturing.
These themes are especially important given the emphasis on making India a globalmanufacturing hub. We believe that combination of technology and scale in the textilesector will be essential to scale India's share of the global textile trade.
As we look ahead we see a constantly evolving consumer landscape. We are convincedabout our priorities and areas of focus as we need to create models that are sustainableand can stand the test of global volatility and uncertainty.
Over the years we have built a strong foundation encompassing infrastructure know-howand talent for a strong global presence. We are harnessing these strengths to build aglobal enterprise and an industry leader that will be at the forefront of change.
Delivering sustainable value for our stakeholders while adhering to our core beliefs ofcreating a culture built on good governance and responsible practices will remain integralto how we build and execute our businesses.
We take this opportunity to express our sincere gratitude to our board investorsemployees bankers clients and suppliers for continuing to trust and supportHimatsingka.
|Sincerely || |
|Shrikant Himatsingka ||Dinesh Himatsingka |
|Managing Director & CEO ||Executive Chairman |