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Suryalata Spinning Mills Ltd.

BSE: 514138 Sector: Industrials
NSE: N.A. ISIN Code: INE132C01027
BSE LIVE 15:29 | 19 Sep 132.10 -3.90
(-2.87%)
OPEN

130.60

HIGH

132.10

LOW

130.60

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 130.60
PREVIOUS CLOSE 136.00
VOLUME 150
52-Week high 199.20
52-Week low 123.00
P/E 6.49
Mkt Cap.(Rs cr) 56
Buy Price 132.10
Buy Qty 105.00
Sell Price 137.95
Sell Qty 10.00
OPEN 130.60
CLOSE 136.00
VOLUME 150
52-Week high 199.20
52-Week low 123.00
P/E 6.49
Mkt Cap.(Rs cr) 56
Buy Price 132.10
Buy Qty 105.00
Sell Price 137.95
Sell Qty 10.00

Suryalata Spinning Mills Ltd. (SURYALATASPG) - Chairman Speech

Company chairman speech

Dear Shareholders

The year was marked by extensivechallenges for the synthetic textiles sector marked bya slowdown in global demand continuous decline in price realisations and an increase incosts. India’s purchasing power was affected on account of weak successive monsoonswhich among other things translated into a slower yarn and fabric o_-take. India’sinfrastructure sector was affected by inadequate government investment affecting ruralemployment and incomes. As China reported its weakest annual growth in more than twodecades realisations of synthetic textile products declined the world over. In thisenvironment most players within our space (synthetic yarns) reported a decline inprofits.

I am pleased to report that Suryalata Spinning Mills Limited reported a profitable2015-16. Even as the company’s topline was subdued on account of a decline inrealisations (induced by a decline in resource costs) the company reported a 8.92% EBITDAmargin a cash profit of H17.72 cr and a profit after tax of H971 lakhs during the yearunder review.

The principal message that I wish to communicate to shareholders is that our moderatede-growth in the face of an industry slowdown was not unplanned; it was the result of aconscious business model that prioritised long-term sustainability over short-termadventurousness. For the last number of years the foundation of our business model wascentred round synthetic yarns. We believe that this focus was responsible: over the lastthree decades India’s yarn consumption has been steadily moving away from expensivecotton to a_ordable synthetic alternatives. In a country marked by growing young earnersa large proportion is of the population graduating from the bottom of the economic pyramidand a growing need for every-day convenience and cost-e_ectiveness the age of syntheticfibres and fabrics has indeed arrived.

At Suryalata we see this switchover accelerating; even as only 40% of all yarn ofitakein India is presently synthetic the corresponding global figure is 60%. We foresee thatover the coming years two things will transpire: yarn consumption will increase fasterthan the global average growth rate; the ofitake of synthetic yarn will be even fastermaking it possible for man-made fibres to carve out their rightful place in the nationalyarn consumption story.

The Indian textiles industry is attractively placed to respond to the opportunity.There is an overarching optimism: according to the Ministry of Textiles the domestictextile and apparel industry in India is estimated to reach US$ 223 bn by 2021 from US$108 bn in 2015. Apparel exports from India are expected to increase to US$ 82 bn by 2021from US$ 15 bn in 2014. Total cloth production in India is expected to grow to 112 bnsquare metres by FY17 from 64 bn square metres in FY14. The Indian government hasresponded to this reality through its Textiles Policy 2016. In the policy the governmentrolled out incentives with the objective to generate a $30 billion increase in exportsover three years besides attracting investments of about H74000 crore.

I am pleased to report that Suryalata Spinning Mills Limited is likely to be amongselect companies to capitalise on the positive transformation. The company possesses abusiness model that balances de-risking at one end and entrepreneurial responsiveness atthe other: the company already accounts for around a tenth of the country’s syntheticyarn manufacturing capacity; it has invested in capacity addition (and modernisation)every three years; this investment has been largely funded out of a judicious mix ofaccruals and debt; the capacity expansion has been commissioned on schedule and scaled tonear-peak utilisation thereafter; the product mix addresses specific consumer needs anddirected at stable customers that makes it possible to liquidate stocks with speed duringsectoral downtrends and generate superior realisations during industry rebounds; theattractive cash flows are usually aggregated and reinvested incremental capacity(expansion and modernisation) – a virtuous cycle of liquidity profitability andsustainability.

With opportunities growing for the synthetic yarns segment the time has come to stepout and accelerate capacity creation. In line with this priority the company hasundertaken ongoing modernisation cum expansion programme that will enhance spindles by12000 to an aggregate 105000. When coupled with the ongoing modernisation of another20000 spindles we are optimistic of generating attractive year-on-year growth for threeyears following this investment. It is this quiet and responsible optimism that I extendto our shareholders bankers employees and other stakeholders while thanking them fortheir support in our growth journey.

R. Surender Reddy

Chairman