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Banswara Syntex – Highlights of Q3FY11 Conf Call – Highly Positive Views
Banswara Syntex’s conference call after Q3FY11 has brought to light highly
positive views of the management. While margins of the Company are set to
improve going ahead as it passes on increasing raw material cost, the revenues
are likely to nearly double over the next two years to Rs1500-1600Cr without huge
capex. Besides, the high value added businesses of garments and technical
textiles are set to achieve huge scale over next two years. Key highlights from the
conference call are stated below:
--- On recent performance and outlook for Q4FY11
Margins definitely in cloth were eroded when raw material prices went up because there
of time lag of three months in getting price hikes in cloth from the market. Raw material
prices have hopefully now peaked out though there will be another 5% to 10% rise in
prices still possible. But once that reaches in another two month’s time, the Company
should start realizing that in its profitability.
For fabric and garment business, the model has been changing due to high volatility of
raw material prices. The Company is now holding prices for only 15days to 1 month
instead of three months earlier. Prices are now being changed order to order. So now
the Company will be able to pass on whatever impact of raw material happens and the
full profitability of the fabric and garment should be restored because the market has
essentially understood this problem. The problem of lower margins on cloth and garment
business should end within another one month or two months.
Besides, the results reflect that the Company had accumulated stocks as it was
demanding higher prices which were not coming immediately forward. However, higher
prices have started coming since then and in Q4FY11 the Company would sell away
everything at a higher price. Consequently, the margins and results in Q4FY11 would be
better than Q3FY11.
As against 12% YoY value growth in sales of yarn YTD, fabric and garment sales have
increased by 41% and 26% YoY respectively YTD in the current year.
--- On Massive Scale up of business going ahead
The Company is starting with 15,000 spindles within February 2011 which means adding
to the capacity of around 10%. Further 11,000 spindles have been planned and they will
go by month of December 2011. The Company is adding about 100 looms that will be
33% of its loom capacity. On technical textiles, the Company is adding Jacquard
capacity more. So everywhere the Company is growing to the tune of 25-30% and price
wise of around 10%.
The Company is aiming sales of Rs1150-1200Cr for FY12. Within the four areas of yarn,
fabric for apparel, technical textiles and garments, the revenues will be going to the tune
of Rs1500-1600 Cr without adding much of more outside capital.
The total CAPEX during FY12 and FY13 is estimated at about Rs80Cr each aggregating
to Rs160 Cr in two years.
--- On Exponential Growth of Garment and Technical Textiles business
The Company has introduced a training program for garments division and is gradually
increasing production. It will take six months to stabilize the type of quantum and it will
get around a sale of about Rs15Cr every month in six months i.e. an annual run rate of
Rs180Cr.
The Company has successfully supplied the first order to the army. The Company has
got its second order from army and is expecting very big orders next year from the army.
The Company expects to get the lion’s share in the forthcoming new tender from the
army. So, technical textile sale will suddenly zoom to a level of about Rs30-40 Cr in
FY12 and Rs100Cr in FY13 from Rs1-2 Cr last year.
--- On Significant Product Diversification plans on anvil in fabrics segment
The Company is already working on diversification of fabric portfolio, it is thinking of
foreign partners also into it and negotiating with them and shortly, the Company would
come out with announcement in case everything materializes.
--- On Private Equity stake hike, Increase in Dividend Payout, Debt Position
A private equity showed interest in the Company and it has been invited to buy stake
from the market. It has bought 6% from the market and it will probably further buy
another 3-4%.
The Company is thinking of increasing dividend payout to 25% from 20% in the past.
The term loan is around Rs330Cr and the working capital loan is Rs225Cr.
Transcript Note
Q3FY11 Results Conference Call of Banswara Syntex Limited
Event Date / Time : 9th February 2011, 12:15 PM IST
Event Duration : 37 mins 15 secs
Presentation Session
Moderator: Good afternoon ladies and gentlemen. I am the moderator
for this conference. Welcome to the Q3FY11 results
conference call of Banswara Syntex Limited. On the call
we have with us the management representation of
Banswara Syntex Limited by Mr. R. L. Toshniwal,
Chairman and Managing Director, Mr. Ravi Toshniwal,
Joint Managing Director and Mr. J. K. Jain, Senior Vice
President Finance and Company Secretary. At this
moment all participants are in listen only mode. Later, we
will conduct a question and answer session, at that time if
you have a question, please press * and 1 on your
telephone keypad. Please note this conference is
recorded. I would now like to hand over the conference to
Mr. R. L. Toshniwal.
R. L. Toshniwal: Thank you madam, welcome to the conference again. We
once again say good morning to all of you. You know the
results are already out and they are before you. We have
done reasonably well this quarter and we will continue to
do well as is expected in the next quarter also. So may I
request you to ask your questions to me?
Question and Answer Session
Question: An observation that our profit margins so far is now below
peers who are more focused on the yarn business, so our
margins on fabric and garments are under pressure.
When do you expect the margins of this fabric and garment
segment to come back to optimum levels?
Management: The raw material prices have risen every 15 days and in
cloth business we have to book in advance in advance by
2 to 3 months, before when your raw material prices have
increased and you have not been able to realize the full
margins on cloth for the present sales, you will know that
you will be under pressure for profit for this current quarter.
And if it continues for another 3 quarters, we will remain
less than our peers because we are converting more of our
yarn into cloth and then cloth to garments and longer
gestation period to get prices back. But hopefully, it has
now peaked out and I don’t think there will be another 5%
to 10% rise in prices still possible, but once that reaches in
another two month’s time we should start realizing that in
our profitability. Gross profitability will still remain alright but
margins definitely in cloth are eroded when raw material
prices go up because there will be always a time lag of
three months in case of cloth getting these from the
market.
Question: Yeah, but have we been able to (not clear) for the last
quarter, but will we be continuing in the next quarter?
Management: The next quarter we will be doing better than this quarter
but I do not know how much the raw material price will
further rise. We are expecting further rise of about 5% to
10% because as you know cotton has become Rs.53,000
to Rs.54,000 a candy. Last year it was selling on an
average of Rs.25,000 a candy. In the case of polyester
also, if last year we were selling at Rs.70 a kilo, now we
are already at Rs.110 a kilo because there is still cotton
ratio while there is still Rs.10 further rise may take place in
this and it takes me time because you realize we do about
2700 tons of yarn every month and Rs.10 price rise is 2.7
crores cost addition and to recover that, it means I have to
raise my prices by at least 5% more and when I want to
raise my 5% it takes me time for one or two months to get
it. So all will depend, but definitely we will continue to do
better and better as the time goes by. When we are looking
at the fabric in garment business, the model is now
changing because the raw material is so volatile all the
customers of even garment and fabric have now accepted
that now prices will change faster. So no longer are we
holding prices for three months, we are holding prices now
only for one month or for fifteen days and we are telling the
customer even in the garment and fabric business to go by
order to order and to change the prices every order. So
now we will be able to pass on whatever impact of raw
material happens and the full profitability of the fabric and
garment should be restored because the market has
essentially understood this problem.
Question: So incrementally when we see, leave aside this quarter but
beyond that to the next year, I think I don’t see this
problem hitting you at all?
Management: Yeah because everybody has understood you know, today
all…But we are not so badly off. If you compare with
others, 5-1/2%, 6% profitability they are also doing and we
are also doing on our sales. But the additional profitability
which should have come out of cloth and yarn, that’s not
coming through. I mean we are now still comparable to
most only I would suppose Sutlej is the one in net profit
PAT, which is probably more than us. Not even Sangam is
more, RSWM is much more because they are purely
spinning mills and there is a 15-days’ time lag, but I have
only 1-1/2 to 2 months time lag. When prices rise to the
tune of 3% or 4% every month of raw material we get hit by
1% or 2%, so that is my whole problem. That should end
within another one month or two months.
Question: Longer term picture of the company does not change. This
is a short term impact.
Management: Yeah, longer term we should be much better off than
anybody else. Let me remind you, when everybody went
down, we did not go down. Year before last when every
company was in trouble, they were going for CDR, we
were not. So this will remain we are more stable economy,
we will not have speculative profit, at the same time we will
not have the problem of downfall also speculative.
Question: Can you give us your plans for growth of scaling up?
Every garment of technical textile business in the sense
what are your initiatives to diversify the portfolio of fabrics?
Management: We are already at it, we are thinking of foreign partners
also into it and we are negotiating with them and shortly,
we will come out with our announcement in case
everything materializes, but we are increasing. We got our
second order from army and are expecting very big orders
next year from the army. We have successfully supplied
the first order. We have got the second order and this
tender is now coming where we should get the lion’s share
out of that. So technical textile sale will suddenly zoom to a
level of about 20 to 30 crores from 1 or 2 crores what we
did last year. And from 20, 30 to reach hundred will not be
a difficult job in another year’s time.
Question: By FY13 you are looking at 100 crores from technical
textile?
Management: Yes FY13 100 crores from technical textile. Not FY12.
FY12 I am looking at 30, 40.
Question: And within thin fabrics, in terms of…can you throw more
light in terms of how you want to scale up further?
Management: See basically our sale this year will be as indicated
already. 800 plus are going to be the sales during the
current year. The next year, I am aiming at 1200 crores
sale…1150 to 1200 crores sale for the next year. For that
all necessary preparations we are starting with 15,000
spindles within this month. Already 5000, 6000 is started,
another 8,000, 9,000, so within this month we will start
15,000 spindles added which means adding to the
capacity of around 10%. Further 11,000 spindles have
been planned and they will go by month of October,
November, December next year because machinery is
getting delayed and deliveries are not easy. But we have
booked last year and therefore we are getting the delivery
and we will do it by October, December so we will almost
do like about 15% to 20% increase in our spinning
capacity. We are adding about 100 looms. We will be
25%, 30% of our loom capacity. On technical textiles we
are adding Jacquard capacity more. So everywhere we are
growing to the tune of 25%, 30% and price wise of around
10%, so what you can see…800 to 1200 crores is
something we are aiming at and we should be able to get
it. And from 12 to 15, 16 next year also we have planned
within all the 4 areas of yarn, fabric for apparel, technical
textiles and garments. Within these four areas, we will be
going to the tune of 1500 to 1600 crores within our
resources without adding much of more outside capital; we
should be able to do that. That’s what we told last time that
we are not adding any more capital and that’s what I am
saying, we should be able to do about 1500 to 1600 crores
in the year FY12 - FY13.
Question: FI investment in the company is close to 6%, is it just
ordinary portfolio investment or is it more, there is
something more to it?
Management: There is nothing more to it. It is a private equity who
showed interest in us and we have invited them to buy
from the market and they have bought from the market, 6%
they are saying they want to do another 3%, 4% they will
probably do it. We do not know but most certainly we are
not having much of CAPEX. CAPEX part of it we will be
able to maintain about 50 crores CAPEX next year has
been planned. Further as time goes by for getting 1600 we
might do another 20, 30 crores but all that is within our
resources and we don’t need outside capital for it. We will
be able to do it within our own resources and as much
repayment we are doing, slightly more we will take loan, if
30 crores repayment goes, we might take 50 crores loan
and complete the 80, 90 crore expansions within our
resources. So there is not much to do. We will reach 1500
to 1600 crores within the year FY12, FY13.
Question: What is your thinking in terms of dividend payment going
ahead because your CAPEX is not that high that you plan?
Management: At the moment what we are saying is to get loans into the
company the debt equity ratios are high. To get even 5
crores repayment to me reduces my 10 crores investment
into the company and 10 crores investment brings me a
sale of 30, 40 crores added, so it has become end
profitability. So 5 crores brings almost 5 crores back to
me, so that is the area I have to preserve and we have
made a policy of 20%. I got your suggestion earlier, we are
thinking of 25% but we will take proper decision in this
matter very soon.
Question: This is regarding the 38% growth in sales. Can you just
give us a broad break up of what would be because of the
price hike and what would be the…?
Management: Yarn sales comprises of 42% in the turnover, fabric sales
is also about 42%, garment sales is about 11% in the
turnover and the miscellaneous other sales is about 5%.
Question: Okay but what I was about to ask was what would be the
contribution of price hike in this 38% of growth in net…total
income from operations?
Management: Price hike is about 10% to 12%. Yes, I will just elaborate
this. In yarn if you look at the increase in terms of turnover
as compared to the nine months of the preceding year, the
growth is 12% and if we see the increase in quantity terms,
that is 9%. 9% production increases, the overall increase in
terms of turnover is 12%, in terms of fabric, quantity has
increased by 36% and the value has increased by 41%, in
terms of garments the increase is about 27% and the
garment sales has also increased by 26%. We have also
increased the production capacity and the contribution of
the price hike is about 10% to 12%.
Question: What would be the price hike that has been made. I would
like to understand now how would be the value chain of
price hike going into fabric and how is that getting
absorbed into garment particularly now…what percentage
of…?
Management: It is a peculiar phenomenon through which we are going.
Inspite of price rise the demand is very good and we are
getting supplies of garments not possible out of our factory
we have to increase capacities before we can commit
more. Order book is fully, fully booked till next June and we
are not able to give the delivery earlier and nobody wants
to book from July – August today. Therefore this is the
situation which we are reaching and we have to increase
our capacities into garmenting, which we are doing and
then only we will be able to check out, so is the cloth
situation. Cloth also we are getting excellent orders. But
our problem is today’s prices we are getting orders
because we are very susceptible now, price of raw
materials continuously going up. We do not want to book
too many orders.
Question: But generally what would be the time lag for the orders to
book in and for us to deliver?
Management: Three months for the cloth; four months for the garments.
Garments it is mostly local garments. We are supplying to
almost all the brands whether it is Allen Solly, or whether it
is Van Heusen or whether it is Arrows or whether it is
Mega Mart…all the brands…whether it is Westside…
Private label retailers we supply.
Question: What’s your outlook on wool prices also and what are the
current prices now? Maybe you would be one of the good
person to help us in the wool.
Management: When you look at the prices, our situation in the fiber
market is that we are mainly in poly viscose and synthetic
yarns and wool as well as cotton; natural fibers have risen
much more than the synthetic fibers. In fact what we are
experiencing right now is wool prices and cotton prices
which are double of last year and we in the synthetic fiber
business with polyester and viscose have an increase of
60%, 70% in the fiber prices so there is more of a shift
back to synthetic fibers now and that’s why we are seeing
such a good demand also.
Question: Are we able to hold up the margins particularly in the yarn
front and the fabric front?
Management: Yeah we are able to hold our margins in the yarn front, but
fabric front there is a time lag of two months before we
can. Now there is no lag. Fabric lag also now has gone
away because it has been already now 6 to 7 months of
this continuous increase so like I was telling Anand before,
the customers now in the fabric and garment business also
understand that it is order to order that the prices will be
given.
Question: We could see the operating margins on QoQ basis also
improving. I could see that, but are we able to maintain this
17.8% of operating margins in the coming days also even
in the…
Management: It is better because we have been able to raise the prices
now
Question: Can you just give me the export break up of what was your
export revenue this quarter and what was in the
corresponding previous quarter and what would be the
fabric export and the other export?
Management: Yes, the export comprises for the quarter 62% and 38% is
the domestic sale and for the full 9 months period if you
look at the export is 65% and domestic is 35% sales.
Question: Most of your export revenue comes from fabric front right?
Management: Export revenue comes from yarn, fabric and this. What we
have done is in the place of yarn we have one third
domestic sale, one third export sale and one third
converted into fabric. So our yarn sale is divided into three
– one third, one third, and one third. Now out of the fabric
sales we have about 25% going to the local, 5% to 10% for
our own use and 65% going for export. In garments almost
like at the moment about 75% is local and 25% is export.
Question: The debt and cash positions at the end of the December
quarter.
Management: Basically you look at the debt equity ratio of the company
that is about 1.75. Normally the debt equity ratio accepted
is about 1:1.5; the company is currently working at a ratio
of 1.75. So we are just trying to retain our margins to
improve the debt equity ratio. That for the term loan is
around 330 crores and for the working capital we have
about 225 crores.
Question: What about cash? I could understand the capacity
expansion for the next two years would be from the internal
accruals and from the cash within the company. I would
like to know what is our strategy is to accumulate this
cash?
Management: The total CAPEX during the next year is about 70, 80
crores and the similar amount of expenses is estimated in
the following year also. So in all two financial years, the
CAPEX is about 160 crores and the borrowings would be,
during these two years we will be repaying about 60 crores
of the loan, so overall increase in the term loan would be
marginal that would be 30, to 40 crores. Out of 160 crores
CAPEX, we have to invest our margin money that is about
20%, 25%. So 40 crores we will be investing from our
internal accruals and the overall borrowing would be
around 100 to 120 crores. The 60 crores would already
repay the loans; the net increase would be about 60 crores
in the two years. That is 15% increase in the debt with
100% increase in the turnover, what would you think is bad
about it?
Question: One more clarification on FY08 front, you said there was
some private equity that would…who is interested in
increasing their stake. When will that be getting crystallized
and what’s your….?
Management: We have not got anything. The company has not got it; it
has come from the market. Private equity has taken from
the open market FI and we have not done anything, we are
not issuing any new capital.
Question: The company is doing 1200 crores sales which is next
year, so again can you give the break up of that in yarn,
fabric, garments and all?
Management: Broadly our yarn sale remains about 40%, cloth sales will
go to around 40% and (not sure) around 45% and we do
garment sales of around 13%, 14%, and 5% other things.
Question: Are we going towards value addition in the sense, from
fabric towards garment and more towards technical fabric
kind of thing?
Management: When we are growing to a 1200 crore figure, if we take the
absolute terms, the yarn sales will become around 600
crores….about 650 crores will be yarn production, 650,
700 crores; out of that I will be able to put about 200 crores
of my own cloth business which will get reflected in the
cloth sales. So on the whole, between cloth and yarn, we
will do around 100 crores and for garment sales we will do
around 200 crores.
Question: Regarding garmenting earlier there was some labor
shortage and that’s why you were not in…though demand
is there, but there was a constraint because of labor and
all so what is your outlook about that?
Management: We are increasing our trained labor. It is not shortage of
labor, but trained labor. So we are increasing our trained
labor. We have introduced a training program and we are
gradually increasing our production. It will take us six
months to stabilize the type of quantum, which I told
you…200 crores to reach, it will take us six months, three
months of this year and three months of next year and on
an average we will get around a sale of about 15 crores
every month.
Question: Next year when do you see the raw material prices
especially polyester or viscose…where do you see it going
from here? There will be some sort of increment there,
next year sir?
Management: At least 10% increase is foreseen. Hopefully because poly
viscose is one product where it is shifting from wool to poly
viscose or it is shifting from cotton to poly viscose. So poly
viscose will remain in good demand.
Question: Out of the 330 crores loan what is TUF loan now?
Management: Everything is almost TUF loan and 300 crores will be TUF
loan at the moment. About 30 cores will remain as our
loan and in future also we are hoping that we have got a
loan sanctioned of about 30 crores already done. And that
we are holding we are not taking money at the moment
from the bank because we are waiting for TUF to be
announced at least in the budget. It was to be announced
earlier than the budget, but I think last date will be budget
when TUF will be restored and on that day we will start
taking the 30 crores. At the moment we are working
without the 30 crores, of our own money.
Question: On customer side sir, the agreement you have with
customers, what kind of duration of these agreements are
these like one or two months or they gave for two months,
your French partners what kind of agreement you have
with them?
Management: The agreements are all longer term and relationships with
customers. Our French partner for example we know for
the last 17 years, so these are relationships where
agreements are based on products that we are supplying
them at competitive market price and when the market
increases, they are paying more and that is not a problem.
Everybody understands the situation today. So we are
looking at seeing if the raw material tend is going to be
positive for one year and all prices are increasing, prices of
the product that they are buying from us will continue to
change every month, every 15 days and they will have a
long term arrangement to buy. At the end of it, whenever
the cycle unwinds, we will be in a better position because
we have continued our relationships and we also have a
value added product.
Question: About the power plants, the second one we started with 15
megawatts and all, how is that progressing?
Management: It is already…today we are steam blowing. I think by 16th
or 17th of February, we will be on with our power
production.
Question: With this power plant going up would we be self sufficient
on current basis? With the new power plant going on
stream in the next 10 to 15 days…
Management: We have about 1,00,000 units spare otherwise we are self
sufficient.
Question: You will be self-sufficient after this?
Management: Yes fully self sufficient, for steam also. The power plant is
helping me in two ways, one giving me steam for my
process house, where I have increased my capacity from
90,000 to 1,50,000 a day waiting the power plant to go up
and we will start at the full rate of processing which will add
great value to our product. And when I am talking of 800
to 1200 crores this will be a great addition because steam
will be free to us and we will be able to make competitive
clothing for the local market as well as exports.
Question: You have completed our expansion of roughly 125 crores
CAPEX currently. In this quarter what was the additional
capacities that came up which gave us some production
during the quarter?
Management: Well in this last quarter hardly anything came up. This
quarter I have started my spinning capacity only small
loomage has been started already but all the impact is
going to come from this quarter only. In fact all the effect
of 120, that’s why I am talking of 800, 1200 otherwise it will
not come. Because this CAPEX will now have effect and
full year CAPEX will be available next year.
Question: So what would be the new capacity that would be available
for let us say for 12 months next year.
Management: Next year 12 months I will be adding another 26,000 out of
which on an average about 20,000 spindles would have
been added which means around 20%. So we will become
165,000 spindles in our capacity. We will have around 100
looms added which is around 33% of our capacity. And
when we say 100, another 20 looms get added on the
outside capacity because we are always balancing 75% of
our own, 25% from outside. So when we increase 100, we
are able to do 25 more outside. That’s how the capacity
keeps on building. And another sector which has come
from 10% to 12% of our average price this year and
average price likely to be next year. This year my price
hike has taken place only in the last two months and next
year I am going to get this price hike effect only for the
whole year. Around 10% to 15% of my sale will increase
only on account of price rise. Then it becomes almost like
950 and 950 to 1200 is only around 25% to 30% which is
my capacity I did every year.
Question: In terms of your spinning what is today our blend between
manmade and natural whether it is cotton or wool
blended?
Management: Well almost 90% is manmade, 5%, 7% we use wool,
hardly any cotton is used today, zero. In fact all the mills
who have good profitability is on account of price rise of
raw material in cotton. Cotton is normally stocked for 4, 5
months by a mill from the month of October onwards and
the price rise from October onwards is from Rs.25,000 to
Rs.53,000 a candy. So cotton mills had fantastic profit
during the current six months. These six months are going
to be fantastic for cotton mills.
Question: The margins you were telling us that there could be some
pressure in the short term if we talk about six months down
the line, would you be comfortable that you would be able
to achieve margins?
Management: We are comfortable even now, but we are not getting the
increase in the cost, my peers are getting. What question
was asked by Anand was, that your peers have done
better because they have got cotton also. Whoever has
got cotton will definitely get better by 1% or 2% in the
profitability margin because his raw material price is 100%
up and he can stock 4, 5 months whereas my viscose and
polyester is only 15 days availability to me. So my price
hike in raw material takes place much faster than them.
Question: But on the other hand you have an advantage where manmade
fiber prices have been comparatively more stable
than cotton or putting it the other way round, the price rise
in man-made fiber is not being as much as cotton.
Management: You will see my results and from this you will see we have
accumulated stocks. Not because of demand we
accumulated. But I was demanding prices of our new raw
material which was not coming immediately forward, now
we are getting it. So in this quarter we will sell away
everything at a higher price. This quarter is much better
than last quarter I believe.
Question: Can we have clarity on the margins going forward. Sir you
are saying that you have 15 days availability of raw
material whereas order book you said that you are booked
till June of the next year. So if you know that how will you
protect the margins because as such we are seeing that
have been raw material prices…last quarter we have seen
the prices for the sharp uptrend in the man-made fiber
prices.
Management: The top of my wool sale is for garments, it is around 10%
of our business, so my margins are not coming there, I
know that. My margins have been squeezed in case of
garments because my raw material prices have risen. But
raw material prices in garments are only 20%, 25%,
whereas in yarn it becomes 60%, 70%. In cloth it becomes
35%, 40%. So the impact of raw material prices in cloth is
not all that. If I were to increase the prices by about 10%
in case of garments, we will be able to cover more than the
raw material prices but that’s coming through now, okay?
Fabric orders are two to three months. Fabric orders are
around 2-1/2 to 3 months, garment orders are about 4, 5
months.
Question: How much yarn inventory do you hold generally in the…
Management: Yarn inventory also slightly we have increased because
the prices which we were getting in yarn…if tomorrow the
price rise is going to take place, why do I sell my yarn
today? I will sell it tomorrow. So this is how we have done
it. I cannot stock raw material so I stock finished product,
to sell later. In the case of polyester viscose yarn there is
no export ban.
Question: It is only in case of cotton. So how many months yarn
inventory available?
Managemen: Oh it is a question of 15, 20 days more.. If I do 15, 20 days
more stock, I save myself from 15 days 20 days price rise
in raw materials because raw materials is not just
available. I want to stop one month but nobody is giving
me raw material. Polyester becomes short supply.
Moderator: Thank you sir. Ladies and gentlemen, this concludes your
conference for today. Thank you for your participation and
for using Door Sabha’s conference call service. You may
disconnect your lines now. Thank you and have a
pleasant day.
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Banswara Syntex – Highlights of Q3FY11 Conf Call – Highly Positive Views
Banswara Syntex’s conference call after Q3FY11 has brought to light highly
positive views of the management. While margins of the Company are set to
improve going ahead as it passes on increasing raw material cost, the revenues
are likely to nearly double over the next two years to Rs1500-1600Cr without huge
capex. Besides, the high value added businesses of garments and technical
textiles are set to achieve huge scale over next two years. Key highlights from the
conference call are stated below:
--- On recent performance and outlook for Q4FY11
Margins definitely in cloth were eroded when raw material prices went up because there
of time lag of three months in getting price hikes in cloth from the market. Raw material
prices have hopefully now peaked out though there will be another 5% to 10% rise in
prices still possible. But once that reaches in another two month’s time, the Company
should start realizing that in its profitability.
For fabric and garment business, the model has been changing due to high volatility of
raw material prices. The Company is now holding prices for only 15days to 1 month
instead of three months earlier. Prices are now being changed order to order. So now
the Company will be able to pass on whatever impact of raw material happens and the
full profitability of the fabric and garment should be restored because the market has
essentially understood this problem. The problem of lower margins on cloth and garment
business should end within another one month or two months.
Besides, the results reflect that the Company had accumulated stocks as it was
demanding higher prices which were not coming immediately forward. However, higher
prices have started coming since then and in Q4FY11 the Company would sell away
everything at a higher price. Consequently, the margins and results in Q4FY11 would be
better than Q3FY11.
As against 12% YoY value growth in sales of yarn YTD, fabric and garment sales have
increased by 41% and 26% YoY respectively YTD in the current year.
--- On Massive Scale up of business going ahead
The Company is starting with 15,000 spindles within February 2011 which means adding
to the capacity of around 10%. Further 11,000 spindles have been planned and they will
go by month of December 2011. The Company is adding about 100 looms that will be
33% of its loom capacity. On technical textiles, the Company is adding Jacquard
capacity more. So everywhere the Company is growing to the tune of 25-30% and price
wise of around 10%.
The Company is aiming sales of Rs1150-1200Cr for FY12. Within the four areas of yarn,
fabric for apparel, technical textiles and garments, the revenues will be going to the tune
of Rs1500-1600 Cr without adding much of more outside capital.
The total CAPEX during FY12 and FY13 is estimated at about Rs80Cr each aggregating
to Rs160 Cr in two years.
--- On Exponential Growth of Garment and Technical Textiles business
The Company has introduced a training program for garments division and is gradually
increasing production. It will take six months to stabilize the type of quantum and it will
get around a sale of about Rs15Cr every month in six months i.e. an annual run rate of
Rs180Cr.
The Company has successfully supplied the first order to the army. The Company has
got its second order from army and is expecting very big orders next year from the army.
The Company expects to get the lion’s share in the forthcoming new tender from the
army. So, technical textile sale will suddenly zoom to a level of about Rs30-40 Cr in
FY12 and Rs100Cr in FY13 from Rs1-2 Cr last year.
--- On Significant Product Diversification plans on anvil in fabrics segment
The Company is already working on diversification of fabric portfolio, it is thinking of
foreign partners also into it and negotiating with them and shortly, the Company would
come out with announcement in case everything materializes.
--- On Private Equity stake hike, Increase in Dividend Payout, Debt Position
A private equity showed interest in the Company and it has been invited to buy stake
from the market. It has bought 6% from the market and it will probably further buy
another 3-4%.
The Company is thinking of increasing dividend payout to 25% from 20% in the past.
The term loan is around Rs330Cr and the working capital loan is Rs225Cr.
Transcript Note
Q3FY11 Results Conference Call of Banswara Syntex Limited
Event Date / Time : 9th February 2011, 12:15 PM IST
Event Duration : 37 mins 15 secs
Presentation Session
Moderator: Good afternoon ladies and gentlemen. I am the moderator
for this conference. Welcome to the Q3FY11 results
conference call of Banswara Syntex Limited. On the call
we have with us the management representation of
Banswara Syntex Limited by Mr. R. L. Toshniwal,
Chairman and Managing Director, Mr. Ravi Toshniwal,
Joint Managing Director and Mr. J. K. Jain, Senior Vice
President Finance and Company Secretary. At this
moment all participants are in listen only mode. Later, we
will conduct a question and answer session, at that time if
you have a question, please press * and 1 on your
telephone keypad. Please note this conference is
recorded. I would now like to hand over the conference to
Mr. R. L. Toshniwal.
R. L. Toshniwal: Thank you madam, welcome to the conference again. We
once again say good morning to all of you. You know the
results are already out and they are before you. We have
done reasonably well this quarter and we will continue to
do well as is expected in the next quarter also. So may I
request you to ask your questions to me?
Question and Answer Session
Question: An observation that our profit margins so far is now below
peers who are more focused on the yarn business, so our
margins on fabric and garments are under pressure.
When do you expect the margins of this fabric and garment
segment to come back to optimum levels?
Management: The raw material prices have risen every 15 days and in
cloth business we have to book in advance in advance by
2 to 3 months, before when your raw material prices have
increased and you have not been able to realize the full
margins on cloth for the present sales, you will know that
you will be under pressure for profit for this current quarter.
And if it continues for another 3 quarters, we will remain
less than our peers because we are converting more of our
yarn into cloth and then cloth to garments and longer
gestation period to get prices back. But hopefully, it has
now peaked out and I don’t think there will be another 5%
to 10% rise in prices still possible, but once that reaches in
another two month’s time we should start realizing that in
our profitability. Gross profitability will still remain alright but
margins definitely in cloth are eroded when raw material
prices go up because there will be always a time lag of
three months in case of cloth getting these from the
market.
Question: Yeah, but have we been able to (not clear) for the last
quarter, but will we be continuing in the next quarter?
Management: The next quarter we will be doing better than this quarter
but I do not know how much the raw material price will
further rise. We are expecting further rise of about 5% to
10% because as you know cotton has become Rs.53,000
to Rs.54,000 a candy. Last year it was selling on an
average of Rs.25,000 a candy. In the case of polyester
also, if last year we were selling at Rs.70 a kilo, now we
are already at Rs.110 a kilo because there is still cotton
ratio while there is still Rs.10 further rise may take place in
this and it takes me time because you realize we do about
2700 tons of yarn every month and Rs.10 price rise is 2.7
crores cost addition and to recover that, it means I have to
raise my prices by at least 5% more and when I want to
raise my 5% it takes me time for one or two months to get
it. So all will depend, but definitely we will continue to do
better and better as the time goes by. When we are looking
at the fabric in garment business, the model is now
changing because the raw material is so volatile all the
customers of even garment and fabric have now accepted
that now prices will change faster. So no longer are we
holding prices for three months, we are holding prices now
only for one month or for fifteen days and we are telling the
customer even in the garment and fabric business to go by
order to order and to change the prices every order. So
now we will be able to pass on whatever impact of raw
material happens and the full profitability of the fabric and
garment should be restored because the market has
essentially understood this problem.
Question: So incrementally when we see, leave aside this quarter but
beyond that to the next year, I think I don’t see this
problem hitting you at all?
Management: Yeah because everybody has understood you know, today
all…But we are not so badly off. If you compare with
others, 5-1/2%, 6% profitability they are also doing and we
are also doing on our sales. But the additional profitability
which should have come out of cloth and yarn, that’s not
coming through. I mean we are now still comparable to
most only I would suppose Sutlej is the one in net profit
PAT, which is probably more than us. Not even Sangam is
more, RSWM is much more because they are purely
spinning mills and there is a 15-days’ time lag, but I have
only 1-1/2 to 2 months time lag. When prices rise to the
tune of 3% or 4% every month of raw material we get hit by
1% or 2%, so that is my whole problem. That should end
within another one month or two months.
Question: Longer term picture of the company does not change. This
is a short term impact.
Management: Yeah, longer term we should be much better off than
anybody else. Let me remind you, when everybody went
down, we did not go down. Year before last when every
company was in trouble, they were going for CDR, we
were not. So this will remain we are more stable economy,
we will not have speculative profit, at the same time we will
not have the problem of downfall also speculative.
Question: Can you give us your plans for growth of scaling up?
Every garment of technical textile business in the sense
what are your initiatives to diversify the portfolio of fabrics?
Management: We are already at it, we are thinking of foreign partners
also into it and we are negotiating with them and shortly,
we will come out with our announcement in case
everything materializes, but we are increasing. We got our
second order from army and are expecting very big orders
next year from the army. We have successfully supplied
the first order. We have got the second order and this
tender is now coming where we should get the lion’s share
out of that. So technical textile sale will suddenly zoom to a
level of about 20 to 30 crores from 1 or 2 crores what we
did last year. And from 20, 30 to reach hundred will not be
a difficult job in another year’s time.
Question: By FY13 you are looking at 100 crores from technical
textile?
Management: Yes FY13 100 crores from technical textile. Not FY12.
FY12 I am looking at 30, 40.
Question: And within thin fabrics, in terms of…can you throw more
light in terms of how you want to scale up further?
Management: See basically our sale this year will be as indicated
already. 800 plus are going to be the sales during the
current year. The next year, I am aiming at 1200 crores
sale…1150 to 1200 crores sale for the next year. For that
all necessary preparations we are starting with 15,000
spindles within this month. Already 5000, 6000 is started,
another 8,000, 9,000, so within this month we will start
15,000 spindles added which means adding to the
capacity of around 10%. Further 11,000 spindles have
been planned and they will go by month of October,
November, December next year because machinery is
getting delayed and deliveries are not easy. But we have
booked last year and therefore we are getting the delivery
and we will do it by October, December so we will almost
do like about 15% to 20% increase in our spinning
capacity. We are adding about 100 looms. We will be
25%, 30% of our loom capacity. On technical textiles we
are adding Jacquard capacity more. So everywhere we are
growing to the tune of 25%, 30% and price wise of around
10%, so what you can see…800 to 1200 crores is
something we are aiming at and we should be able to get
it. And from 12 to 15, 16 next year also we have planned
within all the 4 areas of yarn, fabric for apparel, technical
textiles and garments. Within these four areas, we will be
going to the tune of 1500 to 1600 crores within our
resources without adding much of more outside capital; we
should be able to do that. That’s what we told last time that
we are not adding any more capital and that’s what I am
saying, we should be able to do about 1500 to 1600 crores
in the year FY12 - FY13.
Question: FI investment in the company is close to 6%, is it just
ordinary portfolio investment or is it more, there is
something more to it?
Management: There is nothing more to it. It is a private equity who
showed interest in us and we have invited them to buy
from the market and they have bought from the market, 6%
they are saying they want to do another 3%, 4% they will
probably do it. We do not know but most certainly we are
not having much of CAPEX. CAPEX part of it we will be
able to maintain about 50 crores CAPEX next year has
been planned. Further as time goes by for getting 1600 we
might do another 20, 30 crores but all that is within our
resources and we don’t need outside capital for it. We will
be able to do it within our own resources and as much
repayment we are doing, slightly more we will take loan, if
30 crores repayment goes, we might take 50 crores loan
and complete the 80, 90 crore expansions within our
resources. So there is not much to do. We will reach 1500
to 1600 crores within the year FY12, FY13.
Question: What is your thinking in terms of dividend payment going
ahead because your CAPEX is not that high that you plan?
Management: At the moment what we are saying is to get loans into the
company the debt equity ratios are high. To get even 5
crores repayment to me reduces my 10 crores investment
into the company and 10 crores investment brings me a
sale of 30, 40 crores added, so it has become end
profitability. So 5 crores brings almost 5 crores back to
me, so that is the area I have to preserve and we have
made a policy of 20%. I got your suggestion earlier, we are
thinking of 25% but we will take proper decision in this
matter very soon.
Question: This is regarding the 38% growth in sales. Can you just
give us a broad break up of what would be because of the
price hike and what would be the…?
Management: Yarn sales comprises of 42% in the turnover, fabric sales
is also about 42%, garment sales is about 11% in the
turnover and the miscellaneous other sales is about 5%.
Question: Okay but what I was about to ask was what would be the
contribution of price hike in this 38% of growth in net…total
income from operations?
Management: Price hike is about 10% to 12%. Yes, I will just elaborate
this. In yarn if you look at the increase in terms of turnover
as compared to the nine months of the preceding year, the
growth is 12% and if we see the increase in quantity terms,
that is 9%. 9% production increases, the overall increase in
terms of turnover is 12%, in terms of fabric, quantity has
increased by 36% and the value has increased by 41%, in
terms of garments the increase is about 27% and the
garment sales has also increased by 26%. We have also
increased the production capacity and the contribution of
the price hike is about 10% to 12%.
Question: What would be the price hike that has been made. I would
like to understand now how would be the value chain of
price hike going into fabric and how is that getting
absorbed into garment particularly now…what percentage
of…?
Management: It is a peculiar phenomenon through which we are going.
Inspite of price rise the demand is very good and we are
getting supplies of garments not possible out of our factory
we have to increase capacities before we can commit
more. Order book is fully, fully booked till next June and we
are not able to give the delivery earlier and nobody wants
to book from July – August today. Therefore this is the
situation which we are reaching and we have to increase
our capacities into garmenting, which we are doing and
then only we will be able to check out, so is the cloth
situation. Cloth also we are getting excellent orders. But
our problem is today’s prices we are getting orders
because we are very susceptible now, price of raw
materials continuously going up. We do not want to book
too many orders.
Question: But generally what would be the time lag for the orders to
book in and for us to deliver?
Management: Three months for the cloth; four months for the garments.
Garments it is mostly local garments. We are supplying to
almost all the brands whether it is Allen Solly, or whether it
is Van Heusen or whether it is Arrows or whether it is
Mega Mart…all the brands…whether it is Westside…
Private label retailers we supply.
Question: What’s your outlook on wool prices also and what are the
current prices now? Maybe you would be one of the good
person to help us in the wool.
Management: When you look at the prices, our situation in the fiber
market is that we are mainly in poly viscose and synthetic
yarns and wool as well as cotton; natural fibers have risen
much more than the synthetic fibers. In fact what we are
experiencing right now is wool prices and cotton prices
which are double of last year and we in the synthetic fiber
business with polyester and viscose have an increase of
60%, 70% in the fiber prices so there is more of a shift
back to synthetic fibers now and that’s why we are seeing
such a good demand also.
Question: Are we able to hold up the margins particularly in the yarn
front and the fabric front?
Management: Yeah we are able to hold our margins in the yarn front, but
fabric front there is a time lag of two months before we
can. Now there is no lag. Fabric lag also now has gone
away because it has been already now 6 to 7 months of
this continuous increase so like I was telling Anand before,
the customers now in the fabric and garment business also
understand that it is order to order that the prices will be
given.
Question: We could see the operating margins on QoQ basis also
improving. I could see that, but are we able to maintain this
17.8% of operating margins in the coming days also even
in the…
Management: It is better because we have been able to raise the prices
now
Question: Can you just give me the export break up of what was your
export revenue this quarter and what was in the
corresponding previous quarter and what would be the
fabric export and the other export?
Management: Yes, the export comprises for the quarter 62% and 38% is
the domestic sale and for the full 9 months period if you
look at the export is 65% and domestic is 35% sales.
Question: Most of your export revenue comes from fabric front right?
Management: Export revenue comes from yarn, fabric and this. What we
have done is in the place of yarn we have one third
domestic sale, one third export sale and one third
converted into fabric. So our yarn sale is divided into three
– one third, one third, and one third. Now out of the fabric
sales we have about 25% going to the local, 5% to 10% for
our own use and 65% going for export. In garments almost
like at the moment about 75% is local and 25% is export.
Question: The debt and cash positions at the end of the December
quarter.
Management: Basically you look at the debt equity ratio of the company
that is about 1.75. Normally the debt equity ratio accepted
is about 1:1.5; the company is currently working at a ratio
of 1.75. So we are just trying to retain our margins to
improve the debt equity ratio. That for the term loan is
around 330 crores and for the working capital we have
about 225 crores.
Question: What about cash? I could understand the capacity
expansion for the next two years would be from the internal
accruals and from the cash within the company. I would
like to know what is our strategy is to accumulate this
cash?
Management: The total CAPEX during the next year is about 70, 80
crores and the similar amount of expenses is estimated in
the following year also. So in all two financial years, the
CAPEX is about 160 crores and the borrowings would be,
during these two years we will be repaying about 60 crores
of the loan, so overall increase in the term loan would be
marginal that would be 30, to 40 crores. Out of 160 crores
CAPEX, we have to invest our margin money that is about
20%, 25%. So 40 crores we will be investing from our
internal accruals and the overall borrowing would be
around 100 to 120 crores. The 60 crores would already
repay the loans; the net increase would be about 60 crores
in the two years. That is 15% increase in the debt with
100% increase in the turnover, what would you think is bad
about it?
Question: One more clarification on FY08 front, you said there was
some private equity that would…who is interested in
increasing their stake. When will that be getting crystallized
and what’s your….?
Management: We have not got anything. The company has not got it; it
has come from the market. Private equity has taken from
the open market FI and we have not done anything, we are
not issuing any new capital.
Question: The company is doing 1200 crores sales which is next
year, so again can you give the break up of that in yarn,
fabric, garments and all?
Management: Broadly our yarn sale remains about 40%, cloth sales will
go to around 40% and (not sure) around 45% and we do
garment sales of around 13%, 14%, and 5% other things.
Question: Are we going towards value addition in the sense, from
fabric towards garment and more towards technical fabric
kind of thing?
Management: When we are growing to a 1200 crore figure, if we take the
absolute terms, the yarn sales will become around 600
crores….about 650 crores will be yarn production, 650,
700 crores; out of that I will be able to put about 200 crores
of my own cloth business which will get reflected in the
cloth sales. So on the whole, between cloth and yarn, we
will do around 100 crores and for garment sales we will do
around 200 crores.
Question: Regarding garmenting earlier there was some labor
shortage and that’s why you were not in…though demand
is there, but there was a constraint because of labor and
all so what is your outlook about that?
Management: We are increasing our trained labor. It is not shortage of
labor, but trained labor. So we are increasing our trained
labor. We have introduced a training program and we are
gradually increasing our production. It will take us six
months to stabilize the type of quantum, which I told
you…200 crores to reach, it will take us six months, three
months of this year and three months of next year and on
an average we will get around a sale of about 15 crores
every month.
Question: Next year when do you see the raw material prices
especially polyester or viscose…where do you see it going
from here? There will be some sort of increment there,
next year sir?
Management: At least 10% increase is foreseen. Hopefully because poly
viscose is one product where it is shifting from wool to poly
viscose or it is shifting from cotton to poly viscose. So poly
viscose will remain in good demand.
Question: Out of the 330 crores loan what is TUF loan now?
Management: Everything is almost TUF loan and 300 crores will be TUF
loan at the moment. About 30 cores will remain as our
loan and in future also we are hoping that we have got a
loan sanctioned of about 30 crores already done. And that
we are holding we are not taking money at the moment
from the bank because we are waiting for TUF to be
announced at least in the budget. It was to be announced
earlier than the budget, but I think last date will be budget
when TUF will be restored and on that day we will start
taking the 30 crores. At the moment we are working
without the 30 crores, of our own money.
Question: On customer side sir, the agreement you have with
customers, what kind of duration of these agreements are
these like one or two months or they gave for two months,
your French partners what kind of agreement you have
with them?
Management: The agreements are all longer term and relationships with
customers. Our French partner for example we know for
the last 17 years, so these are relationships where
agreements are based on products that we are supplying
them at competitive market price and when the market
increases, they are paying more and that is not a problem.
Everybody understands the situation today. So we are
looking at seeing if the raw material tend is going to be
positive for one year and all prices are increasing, prices of
the product that they are buying from us will continue to
change every month, every 15 days and they will have a
long term arrangement to buy. At the end of it, whenever
the cycle unwinds, we will be in a better position because
we have continued our relationships and we also have a
value added product.
Question: About the power plants, the second one we started with 15
megawatts and all, how is that progressing?
Management: It is already…today we are steam blowing. I think by 16th
or 17th of February, we will be on with our power
production.
Question: With this power plant going up would we be self sufficient
on current basis? With the new power plant going on
stream in the next 10 to 15 days…
Management: We have about 1,00,000 units spare otherwise we are self
sufficient.
Question: You will be self-sufficient after this?
Management: Yes fully self sufficient, for steam also. The power plant is
helping me in two ways, one giving me steam for my
process house, where I have increased my capacity from
90,000 to 1,50,000 a day waiting the power plant to go up
and we will start at the full rate of processing which will add
great value to our product. And when I am talking of 800
to 1200 crores this will be a great addition because steam
will be free to us and we will be able to make competitive
clothing for the local market as well as exports.
Question: You have completed our expansion of roughly 125 crores
CAPEX currently. In this quarter what was the additional
capacities that came up which gave us some production
during the quarter?
Management: Well in this last quarter hardly anything came up. This
quarter I have started my spinning capacity only small
loomage has been started already but all the impact is
going to come from this quarter only. In fact all the effect
of 120, that’s why I am talking of 800, 1200 otherwise it will
not come. Because this CAPEX will now have effect and
full year CAPEX will be available next year.
Question: So what would be the new capacity that would be available
for let us say for 12 months next year.
Management: Next year 12 months I will be adding another 26,000 out of
which on an average about 20,000 spindles would have
been added which means around 20%. So we will become
165,000 spindles in our capacity. We will have around 100
looms added which is around 33% of our capacity. And
when we say 100, another 20 looms get added on the
outside capacity because we are always balancing 75% of
our own, 25% from outside. So when we increase 100, we
are able to do 25 more outside. That’s how the capacity
keeps on building. And another sector which has come
from 10% to 12% of our average price this year and
average price likely to be next year. This year my price
hike has taken place only in the last two months and next
year I am going to get this price hike effect only for the
whole year. Around 10% to 15% of my sale will increase
only on account of price rise. Then it becomes almost like
950 and 950 to 1200 is only around 25% to 30% which is
my capacity I did every year.
Question: In terms of your spinning what is today our blend between
manmade and natural whether it is cotton or wool
blended?
Management: Well almost 90% is manmade, 5%, 7% we use wool,
hardly any cotton is used today, zero. In fact all the mills
who have good profitability is on account of price rise of
raw material in cotton. Cotton is normally stocked for 4, 5
months by a mill from the month of October onwards and
the price rise from October onwards is from Rs.25,000 to
Rs.53,000 a candy. So cotton mills had fantastic profit
during the current six months. These six months are going
to be fantastic for cotton mills.
Question: The margins you were telling us that there could be some
pressure in the short term if we talk about six months down
the line, would you be comfortable that you would be able
to achieve margins?
Management: We are comfortable even now, but we are not getting the
increase in the cost, my peers are getting. What question
was asked by Anand was, that your peers have done
better because they have got cotton also. Whoever has
got cotton will definitely get better by 1% or 2% in the
profitability margin because his raw material price is 100%
up and he can stock 4, 5 months whereas my viscose and
polyester is only 15 days availability to me. So my price
hike in raw material takes place much faster than them.
Question: But on the other hand you have an advantage where manmade
fiber prices have been comparatively more stable
than cotton or putting it the other way round, the price rise
in man-made fiber is not being as much as cotton.
Management: You will see my results and from this you will see we have
accumulated stocks. Not because of demand we
accumulated. But I was demanding prices of our new raw
material which was not coming immediately forward, now
we are getting it. So in this quarter we will sell away
everything at a higher price. This quarter is much better
than last quarter I believe.
Question: Can we have clarity on the margins going forward. Sir you
are saying that you have 15 days availability of raw
material whereas order book you said that you are booked
till June of the next year. So if you know that how will you
protect the margins because as such we are seeing that
have been raw material prices…last quarter we have seen
the prices for the sharp uptrend in the man-made fiber
prices.
Management: The top of my wool sale is for garments, it is around 10%
of our business, so my margins are not coming there, I
know that. My margins have been squeezed in case of
garments because my raw material prices have risen. But
raw material prices in garments are only 20%, 25%,
whereas in yarn it becomes 60%, 70%. In cloth it becomes
35%, 40%. So the impact of raw material prices in cloth is
not all that. If I were to increase the prices by about 10%
in case of garments, we will be able to cover more than the
raw material prices but that’s coming through now, okay?
Fabric orders are two to three months. Fabric orders are
around 2-1/2 to 3 months, garment orders are about 4, 5
months.
Question: How much yarn inventory do you hold generally in the…
Management: Yarn inventory also slightly we have increased because
the prices which we were getting in yarn…if tomorrow the
price rise is going to take place, why do I sell my yarn
today? I will sell it tomorrow. So this is how we have done
it. I cannot stock raw material so I stock finished product,
to sell later. In the case of polyester viscose yarn there is
no export ban.
Question: It is only in case of cotton. So how many months yarn
inventory available?
Managemen: Oh it is a question of 15, 20 days more.. If I do 15, 20 days
more stock, I save myself from 15 days 20 days price rise
in raw materials because raw materials is not just
available. I want to stop one month but nobody is giving
me raw material. Polyester becomes short supply.
Moderator: Thank you sir. Ladies and gentlemen, this concludes your
conference for today. Thank you for your participation and
for using Door Sabha’s conference call service. You may
disconnect your lines now. Thank you and have a
pleasant day.
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