We are attaching herewith the transcript of the Earnings Conference Call held on Thursday, 26th May, 2022. This information is furnished as per Regulation 30 read with Part A (15(b)(ii)) of Schedule I...
SHIVA TEXYARN LIMITED
Regd. Office: 52, East Bashyakaralu Road, R.S.Puram, Coimbatore -641002, Tamilnadu INDIA
Telephone : 0422 -2544955 E-mail: shares@shivatex.co.in
Website : www.shivatex.co.in CIN : L65921TZ1980PLC000945 GSTRN : 33AABCA6617MIZO
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Dear Sir,
SUB:-TRANSCRIPT OF THE EARNINGS CONFERENCE CALL -REG.
We are attaching herewith the transcript of the Earnings Conference Call held on
Thursday, 26th May, 2022. This information is furnished as per Regulation 30 read
with Part A (15(b)(ii)) of Schedule Ill of the of SEBl (Listing Obligations and Disclosure
Requirements), Regulation 2015.
Pursuant to Regulation 46(2)(o) of the Listing Regulations, the aforesaid information
is also available on the website of the Company
www.shivatex.in.
Thanking you
Yours faithfully
For Shiva Texyam LimitedM-
R . S R I N I VA S^ N Company Sec`retary M.No.21254
“Shiva Texyarn Limited Q4 FY2022 Earnings Conference Call”
May 26, 2022
MANAGEMENT: DR. SUNDARARAMAN - MANAGING DIRECTOR - SHIVA
TEXYARN LIMITED MR. KRISHNA KUMAR – CHIEF FINANCIAL OFFICER – SHIVA TEXYARN LIMITED
Page 1 of 13
Shiva Texyarn Limited May 26, 2022
Moderator:
Ladies and gentlemen, good day and welcome to the Q4 and FY2022 earnings conference
call of Shiva Texyarn Limited. This conference call may contain forward looking
statements about the company which are based on the beliefs, opinions and expectations of
the company as on date of this call. These statements are not the guarantees of future
performance and involve risks and uncertainties that are difficult to predict. As a reminder
all participant lines will be in the listen only mode and there will be an opportunity for you
to ask questions after the presentation concludes. Should you need assistance during the
conference call, please signal an operator by pressing “*” then “0” on your touchtone
phone. Please note that this conference is being recorded. I now hand the conference over to
Dr. Sundararaman-Managing Director Shiva Texyarn Limited. Thank you and over to you
Sir!
Sundararaman:
Thank you. Good afternoon everyone. I would like to wish you all a very warm welcome to
Shiva Texyarn Limited’s earnings conference call for the fourth quarter and the year ended
March 31, 2022. I would like to first begin by expressing my gratitude to all of you for
taking the time to join us today and on the call with me are Mr. Krishna Kumar – Chief
Financial Officer and Bridge IR our investor relations team. Since this is only our third
earnings conference call I would like to share some brief insights and recent developments
about our company before we get into the business and financial performance for the year.
Starting with some of the key developments over the year. As we are well aware the
pandemic continued in the initial quarters for this fiscal year as well and the second wave of
the pandemic led to lockdowns during a substantial part of the first half particularly the first
quarter hampering production and logistics across various industries including ours.
Subsequently, operations have recovered at a staggered manner, the market has been
recovering well during the second half of the year, and luckily we have not had much of an
impact from the third wave as like the previous ones and we look forward with a good
amount of optimism to everything bouncing back to normal. Many of the products we have
introduced during the peak of the pandemic like our face mask and anti-viral products
continue to be sold albeit in a limited manner and we see some continuity in this regard.
The highlight for the year has been the performance of the yarn spinning division. There has
been a hitherto unprecedented performance based upon a very strong demand for cotton
yarn particularly on the back of historically high cotton prices that have been rising steadily
over the last eighteen months. This coupled with other factors like supply and demand
constraints on some of our competing countries have ensured that the spinning sector
particularly and our company in particular has performed extremely well. Another
important aspect of our portfolio of products is the components we supply to the Indian
army. We have recently won a repeat order for NBC Haversack bags from Ministry of
Defence which was proceeded by two orders in the previous year which we have
successfully completed on time. Our association with the armed forces as their preferred
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Shiva Texyarn Limited May 26, 2022
supplier for textile products has shaped up well over the years and we are proud to say that
we are expanding in the nature and range of products that we are planning to supply to the
armed forces. We have a possible Rs.110 Crores of products that we can cater to this year
for the defence, these are all limited tenders that we have participated in and expecting the
results. All these product lines leverage our production capacities and technical prowess to
deliver innovative technical textile products for various end users.
The lamination division of the company has done reasonably well considering the fact that
the markets were closed in Q1 because of the lockdown and Q4 was muted post Pongal in
terms of general retail purchasing activities in the market. The company continues to
introduce new products in the quick dry range and the brand continues to have a leadership
position in the children’s product segment. Looking ahead we are increasing our focus on
seamless garments and poly spandex athleisure fabrics as this is a very high potential
vertical where there are not many players in India and where we possess the technical
knowhow to bring value added products to the market. We have recently acquired a 26%
stake in wind power generation company namely L K distributors. The renewable energy
generated would be for captive use and our plan is to subsequently increase our stake to
40% which should help us meet our energy requirements in an efficient and environment
friendly manner for future expansions. Overall we continue to strive for a balanced and
sustainable growth in our technical textile business supported by the backbone of our
spinning business and we are pretty optimistic on times to come.
Giving a brief background of the company for people who have joined for the first time.
Shiva Texyarn started its first spinning mill unit in 1989 and has grown steadily. Our
spinning business expanded with addition of another unit and went up to 90000 spindles
after which we had a demerger post which we are currently in 52000 spindles spinning
capacity this is ring spinning particularly for cotton yarn. While this has been our traditional
business, our strategic focus area has been technical textiles where we have build up quite a
capability over a period of time. In 2006 we started our lamination division and over the
subsequent years we have commenced garment processing, coating and related activities
each specializing in certain technologies for end products all based upon research and
innovation. We also have as I mentioned earlier the backing of several windmills under a
dedicated division to generate green and competitive power costing renewable energy for
captive use. Today, our product portfolio is a mix of various products that cater to a diverse
range of applications from home textiles, healthcare, childcare, defence, apparel,
accessories and so on and so forth. The company has also taken up a significant amount of
business in online and digital capabilities trying to leverage the new format for brand
promotion and brand creation. Our technical capabilities and knowhow coupled with
consumer centric approach enable us to innovate new products regularly and which finds
great value in the minds of the consumers.
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Shiva Texyarn Limited May 26, 2022
Now, turning to our financial performance, the fourth quarter Q4 FY2022 we have reported
Rs.126.94 Crores in revenues during Q4 FY2022 it is 16.02% year-on-year rise. Growth
was driven primarily by recovery in the markets post COVID lockdowns. Our EBITDA for
the quarter stands at Rs.7.18 Crores while EBITDA margin is 5.65%, volatility in raw
material and other expenses offset the benefit of higher realization. Our net profit during
this quarter is Rs.1.04 Crores as against Rs.3.63 Crores in the fourth quarter of FY2021, the
net profit margin stood at 0.82%. EPS for this quarter is Rs.0.72. For the full year FY2022
we have reported Rs.477.07 Crores in revenues during FY2022 a 40% year-on-year rise,
growth was driven primarily by recovery in the spinning division and overall market
conditions post COVID related lockdowns. Our EBITDA for this period stands at Rs.55.09
Crores increasing 28.09% year-on-year, the EBITDA margin is 11.55%. Continued rise in
cotton prices has a bearing on this margin. Our net profit for the year is Rs.20.41 Crores as
against Rs.12.48 Crores in FY2021 rising 63.47% year-on-year, net profit margin stood at
4.28% up by 62 basis points. EPS for this period is Rs.15.44 as compared with Rs.9.47 in
FY2021. The Board of Directors has recommended a dividend of Rs.1.40 for equity share
of face value Rs.10 each subject to approval of shareholders. That is all from our side and
we can now take questions. Thank you.
Moderator:
Thank you very much. We will now begin the question-and-answer session. The first
question is from the line Aniket Redkar an individual Investor. Please go ahead.
Aniket Redkar:
Good afternoon Sir. I have couple of questions I just wanted to know what has been the
revenue contribution from the spinning business and then non-spinning business?
Sundararaman:
Sure, please and your second question?
Aniket Redkar:
What are the top products you have in terms of the revenue and the profit margins and any
new other product development in the pipeline?
Sundararaman:
Right, let me try to answer your questions. Firstly on this Rs.477 Crores turnover
approximately Rs.348 Crores have come from spinning, I think Krishna Kumar can give the
exact numbers and the rest is from the other divisions which is about approximately Rs.140
Crores. How much is this Krishna Kumar?
Krishna Kumar:
Sir, Rs.350 Crores from spinning, Rs.127 Crores from non-spinning.
Sundararaman:
So, that is the revenue breakup. If you look at what we do of course spinning business you
are aware of the margins and the structures that we deliver. Typically EBITDA margins for
this year have been approximately about 13% I would say on average in spinning and the
areas where we do maximum value add and the work that we do for the army where the
EBITDA margins are approximately about 25% plus and lamination and quick dry division
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Shiva Texyarn Limited May 26, 2022
also would be in that range and broadly the rest of the products would be having an
EBITDA margin in the range of about 16% to 18%.
Aniket Redkar:
What is our expected target for spinning and non-spinning and by when we can expect to
meet these targets?
Sundararaman:
Right, so originally by this time we were actually anticipating that we would be keeping
about 50:50 sort of split between spinning and non-spinning. This was a projection that I
had given more than a year back, while two things have happened that have not allowed this
to happen if you see approximately we are still at 72:28 percentage kind of split between
spinning and non-spinning and the reason for that is because of the cotton spinning industry
the raw materials going up, there has been more of a value increase than a volume increase
in the spinning and that has actually contributed to a turnover of what used to be typically at
Rs.260 Crores turnover in the unit going up to Rs.350 Crores in this year. The non-spinning
on the other hand had a projection of going up to about Rs.150 Crores in this year itself, but
because of some of the muted market conditions in Q1 and the lockdown as well as some
retail market muting in Q4 we were only able to do Rs.127 Crores so this is why the current
skew is like this. Now in the year going forward based upon what we predict to be robust
orders for the garmenting divisions the increased investments of some Rs.20 Crores odd
that has gone into the processing division and that capacity coming on stream we expect in
this year in 2022-2023 to have a non-spinning component of anywhere between Rs.180
Crores to Rs.200 Crores of turnover. Now what spinning component is going to be is
anybody’s guess based upon how the cotton is going to be, but we anticipate that we will
probably finish this year with 60:40 split in terms of spinning, non-spinning in a very
conservative basis.
Aniket Redkar:
I just want to understand the acquisition of stake in the L. K. Distributors, when it is going
to get complete the acquisition of this L.K. Distributors and how are we going to get benefit
from it?
Sundararaman:
L. K. Distributors is an independent firm that is actually a related party where we are just
availing their wind energy generated, when we get wind energy it becomes at least Rs.1
lower cost compared to what the grid energy and what often it be open market exchange, so
we are only going through this 26% acquisition to make it a subsidiary company so that we
are able to avail of its group captive power that is the extent to which we are getting into
L.K. it is not going to be a big investment it is more of a way to facilitate getting power into
the market.
Aniket Redkar:
Can you give the revenue and profit margins for our quick dry and paw paw?
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Shiva Texyarn Limited May 26, 2022
Sundararaman:
This year it was quick dry and paw paw together I would say there was 10% degrowth
compared to the previous year, overall the lamination division turnover was at Rs.49 Crores
and the quick dry division’s turnover was approximately about Rs.38 Crores and this was
essentially because like I told you three months of last year of the first quarter was literally
lockdown there were no market and post Pongal, post January we had a severe slowdown in
markets across the country and now that is just bouncing back in May so because of these
two reasons the revenue for quick dry and paw paw for this year was only Rs.38 Crores.
Aniket Redkar:
Do we have any capex planning where we can use wind power?
Sundararaman:
We have invested using Internal accruals about Rs.25 Crores last year, Rs.20 Crores of that
have gone to processing and about Rs.5 Crores have gone into garmenting and other
divisions as well as the nonwoven division which has come into full production right now.
So, we are waiting for that investment to come into maturity in terms of production before
we go to the next level, but over the period of the next 24 months we are looking at adding
another Rs.70 to Rs.75 Crores of investment in various aspects of the businesses that we do.
That would be the kind of capex that we would be putting in the next 18 to 24 months.
Aniket Redkar:
Okay, Sir can you just throw some light on the yarn prices and how it is going to increase or
decrease in the further coming quarters?
Sundararaman:
Very briefly cotton yarn prices are reflecting cotton prices that is how it has been. Post
COVID there was a supply-demand gap because many mills had not come into production
and hence there was limited supply in the market which was making the price to go up for
cotton yarn; in parallel with the banning of this Xinjiang cotton out of China there has been
a rally in cotton prices in India at an unprecedented level going anywhere from Rs.47000 a
candy all the way up to Rs.110000 at this present point of time. Whenever you have an
uprun in the market like this you would have very good performance from spinning mills
because there would be inventory gains based upon the inventory you are having whether it
is two or three months inventory where yarn is priced on today’s cotton price but your
inventory comes at a lower cost and which is why the spinning industry over the last 18
months has done extremely well. We are hitting a peak because of many reasons, 1) that is
muted customer demand signals coming in from the European, from the United States these
are the main consumers. 2) A bumper crop based upon this year’s cotton prices seems to be
in the anvil with regards to Indian cotton production. 3) The government’s efforts to allow
relax again the import of cotton by removing the duty, all these points to lowering cotton
prices in the months to come. So we definitely see cotton prices coming down. How does it
impact is that the spinning company’s performance might be more muted because again like
I said what goes up comes down but we do not expect any precipitous drop in the business
that is going to happen it will be more muted steady business in my opinion so that is how I
feel the macro. At Shiva Texyarn of course what we have done is we have slightly
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Shiva Texyarn Limited May 26, 2022
decommoditized our product, we have a much superior product that goes into the market
because of the strategic approach where we take more noil and increase the quality of the
product. Hence, our customer stickiness is better than the industry average and we have
been over the last two years quite deleveraged from finance cost perspective and we keep
our working capital in very tight check, so on all those counts we do not expect to see much
disruption as far as our company is concerned.
Aniket Redkar:
As you said the China as we know that there is a partial lockdown over there and recently
the Saudi also announced they are closing the flights due to this Monkey Pox and the
Corona two more variants are coming up and again the situation is coming, so how do you
see these kind of situation for our PPE kit and the mask products what are your views on
this and how the product portfolio look like in the next year?
Sundararaman:
The overall situation seems to be that PPE would be in demand. The PPE is a very broad
world when you look at for example masks of course are universal and there is not much of
a difference because the sort of standard is an N95 and that works for all conditions, but in
terms of PPE the kind of PPE that required for different circumstances vary. At Shiva
Texyarn while we continue to do anti-viral and other products we have decided strategically
that this would not be a growth area for us because we see a lot of players in this market, we
do not see much differentiation. The initial first mover advantage and the urgency of need
and the supply-demand mismatch which gave us significant margins have changed at this
point of time. So, while we continue to be in that space it is not a space where we look at
expanding. We find much more promise in the other areas where we are going where there
is less competition, more opportunities for sustainable branding, etc. While there would be a
demand I think there is a lot of undifferentiated products in the market right now with a lot
of clutter people really do not know which one, we would not be able to differentiate in the
quality between one and the other and it is not an area where we would be like to be in the
long-term.
Aniket Redkar:
What kind of margins are we getting from the DRDO orders and who are our competitors
for such orders?
Sundararaman:
Well in the NBC space, when you say DRDO that is relevant to the nuclear biological
chemical process that we make and as you know we had Rs.27 Crores order for Haversack
last year, for this particular product we are the single vendor in India, it is a very rare
circumstance where there is only single vendor per product but because of the complexities,
we continue to be a single vendor, EBITDA margins on this product would be somewhere
about 33% then that would be broadly in line with the NBC range of products, but what we
make for the army would have slightly lower EBITDA margins and is somewhere like I
said between 25% to 30% but they operate on similar terms for what we supply to the
DRDO.
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Shiva Texyarn Limited May 26, 2022
Aniket Redkar:
Okay, got it. Thank you so much. If I have any questions I will get back to you.
Moderator:
Thank you. The next question is from the line of Kush Gangar from Care PMS. Please go
ahead.
Kush Gangar:
Hi! Sir, my first question is on the fact that you mentioned for FY2023 around Rs.180 to
Rs.200 Crores contribution from non-spinning you are looking at versus Rs.125 Crores in
FY2022, which segment would be the major growth driver?
Sundararaman:
Today, in garments for the financial year we have confirmed orders from the military for
about Rs.12 Crores. We have some leftover supplies from the last year which we have to
complete and we are participating in about Rs.110 Crores worth of tenders with the limited
tenders where we are either the only participant or we are one among two participants, so
we are either going to be L1 or L2. We see the business coming out of that portion alone to
be anywhere between Rs.57 Crores to Rs.70 Crores. In addition to whatever is in the
pipeline we are looking at Rs.75 to Rs.80 Crores kind of business from the army in terms of
garmenting this year and the rest of the other garmenting products that we do to be around
Rs.15 to Rs.20 Crores, so in the conservative basis between Rs.90 Crores is what we are
looking at from our garmenting division. The quick dry division assuming there are no
disruptions in the market we are expecting it based upon the new products we are pushing
into the market to grow to Rs.55 to Rs.60 Crores this year. The new processing plant has
just been commissioned and it is going on, we expect that the plant will have a peak value
production capacity of about Rs.3.8 Crores turnover per month and we expect to reach that
from the month of August, so approximately we are looking at about eight months of
turnover there about Rs.30 Crores, so if you add these itself you are about Rs.170 Crores.
We also have a coating division and wiring division where we have started supplying
insulation wirings to the Decathlon, so even conservatively taking that at Rs.20 Crores we
must be about Rs.190 Crores as I said Rs.180 Crores to give us certain amount of push.
Kush Gangar:
Sure sir, got it and some followup on that, you mentioned that Rs.80 to Rs.90 Crores from
the army side, so the Rs.110 Crores tenders we have participated are those for existing
products that we have already supplied or would those be for new products and as we have
seen some delay earlier also from the army orders how confident are we regarding the
timeline or the conclusion of the tender this time?
Sundararaman:
Generally, what happens with the army orders is that they are very, very patchy and that the
inherent difficulty we face when you go to any army orders. That patchiness typically
happens up to the stage of a tender being published. Once the tender is published then there
is certain timeframe in which they have to respond and do things, there is no danger of
indeterminate delay on that aspect. Today, we are particularly looking at two tenders we
have one more but what we see as absolutely rock solid is we are seeing a tender for the Air
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Shiva Texyarn Limited May 26, 2022
Force for Haversack bags where we have a single tender and we are seeing a tender for cold
weather ECWCS clothing where we are one among two and like I said the tender has got an
approximate order value of 60% or 40% so if you are L1 you get 60%, L2 you get 40%. We
are pretty much sure that the numbers we are looking at are well within our reach.
Kush Gangar:
Sure, that is helpful and on the new capex which you mentioned that Rs.4 Crores run rate
per month is possible from August so do we have orders in hand, we seem to be confident
regarding the capacity utilization what gives us that confidence?
Sundararaman:
We have three categories, we have got something called as poly spandex fabrics which is 25
tons a month, we have seamless garments which is about 28000 pieces per month, in shape
wear going all the way up to about 120000 pieces in innerwear lingerie like panties
becoming on the product mix match. For both of these products we are having confirmed
orders on hand for the next two-and-a-half months and it is more the initial pre-production
sample trials that are going on but our orders and price lines are confirmed. For the regular
fabrics the other component which is our woven raised fabrics that we make fabrics for
Decathlon we have an order visibility for the next six months. Fleece fabrics we have
typically because that operates out of both supplying internally as well as to local markets
in Tirupur. We have a typical order visibility of about 30 days. So, we have very good order
visibility, what more of immediate operational significance is we getting all the product
samples correct and then getting the buyer approval for production.
Kush Gangar:
Sure, and just a clarification you mentioned that our spinning margins for FY2022 were
around 13%, so if I add that to our current revenue of around Rs.350 Crores the EBITDA
comes to approximately Rs.45 Crores and our total EBITDA for FY2022 was Rs.55 Crores,
so you mean to say that only Rs.10 Crores EBITDA is generated from non-spinning
whereas most of those orders would be army and quick dry having 25% margin so what am
I missing over here?
Sundararaman:
We have 13.5% I was actually referring to the EBITDA for the quarter in spinning. I will
probably say that actually the average spinning EBITDA for the year would be around 11%.
Krishna Kumar please correct me on this or would you like to throw some more light?
Krishna Kumar:
Both spinning and non-spinning is 11% this year.
Sundararaman:
If you take between spinning and non-spinning probably out of your Rs.55 Crores around
Rs.20 Crores or Rs.18 Crores would have come from non-spinning and around Rs.37
Crores from spinning would that be approximately correct?
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Shiva Texyarn Limited May 26, 2022
Krishna Kumar:
Correct Sir. The spinning and non-spinning has equal EBITDA this year but the earlier year
non-spinning is doing better EBITDA because of this spinning performance both spinning
and non-spinning equal EBITDA percentage in last year.
Kush Gangar:
Sure Sir and major reason for the lower EBITDA in non-spinning would be lower capacity
utilizations as we move ahead.
Sundararaman:
Equal.
Kush Gangar:
Sure and any reason for the significant fall in other expenses in this quarter Rs.15 Crores
versus Rs.20 Crores last year and Rs.25 Crores in last quarter?
Krishna Kumar:
Actually the other expenses most of the stores and chemical consumption in the non-
spinning revenue whenever this non-spinning revenue has reduced sizably the other expense
also is reduced. If you take last quarter Rs.150 Crores from topline that time this other non-
spinning revenue is more to the extent other expenses are also high.
Kush Gangar:
Sure, and what is our average inventory holding period the fourth quarter and if you can
share rough outlook for the next two years or two quarters for the spinning segment
considering the cotton prices are huge around Rs.1 Lakh per candy which is historical, so
the margin pressure for spinning should continue for the next two, three quarters?
Sundararaman:
It is anybody’s guess but broadly we hold cotton for about 55 days, average inventory is 55
days. Mills across the country based upon their financial strengths would hold cotton
anywhere from 15 days to 75 to 90 days. Now we do have the working capabilities to go
higher but this is not the time to do it, so strategically throughout the year we have been
holding at these levels of 55 – 60 days, etc. We have got a few little bit of import cotton
also on the cards because the challenge that we are seeing right now is in another couple of
months it is not only about the price the availability of quality cotton is going to be a
challenge. All that is going or to go on till I would say October because the arrivals that
come before that would have high moisture content within the country, so from October we
are going to see significant volumes of cotton of reasonable quality coming inside and that
is the time when the prices of cotton are going to go down drastically. So, in that time the
supply-demand situation, the non-cotton factors affecting spinning mills functioning for
various reasons, power, state wise challenges, etc. The international market both in terms of
demand for finished products out of cotton as well as the challenges that other countries,
there are macro challenges will be seen like Sri Lanka going out of the garmenting business
in the recent times, Bangladesh suffering from power and floods and all those things, so
those things will determine whether the industry is going to be in a steady year or it is going
to have a bad year. Typically, when cotton prices go down the industry goes to a very
muted period it might you might even call it a bad year, but it is not just the cotton prices it
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Shiva Texyarn Limited May 26, 2022
is going to be other things and like I said earlier we are not too concerned if things become
worse still the strategy of being slightly non-commoditized we are not too worried at this
point of time.
Kush Gangar:
Sure, got it. Thank you.
Moderator:
Thank you. The next question is from the line of Neha Jain an individual Investor. Please go
ahead.
Neha Jain:
Good afternoon Sir. My question is regarding the patent that we were going to receive for
the Paw Paw technologies so have we received that yet?
Sundararaman:
No, we have a product that we call it Rapi soak it is different layers of fabric where the
inner layer wicks the liquid at a faster rate at the top surface thereby giving the top surface
some amount of quick drying capabilities and that is what we have actually applied for and
that is taking a bit of time because all these IPR issues take time, but it is only in due
process there is no undue delay.
Neha Jain:
Do you have any timeline when we will get?
Sundararaman:
I will have to come back to you miss, typically we look into that in depth if we are trying to
go into multiple countries, multiple geographies with that product which is where we need
the IPR protection, so while we do have that IPR it is protected as much by the brand
strength of quick dry that takes you to the market as by the technology hits us. Honestly I
am not able to give you a timeline offhand if you send me an e-mail we can probably come
back to you.
Neha Jain:
Okay, Sir. Thank you for that. My question is regarding the collaboration with HeiQ
Materials what kind of collaboration is it, is it like a one-time thing or is it like on royalty
basis that has happened?
Sundararaman:
The HeiQ Chemical partnership it was a onetime project particularly, we do different work
with the company but I think what you are referring it to is the anti-viral fabrics that we use
in our face mask which we had done for the first time in India, we were the first ISO 18184
certified vendor for that product in India at that point of time. We continue to do that
product, we continue to offer it to customers who want it, but as I was explaining earlier in
the call with another gentleman, the PPE market is not something where Shiva Texyarn will
be there for the long-term just given the lack of differentiation of products in that area. We
work with HeiQ but it is predominantly on that particular project.
Neha Jain:
It is like a onetime thing?
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Shiva Texyarn Limited May 26, 2022
Sundararaman:
That is correct.
Neha Jain:
My next question is more on the financial side, so the long-term borrowing has reduced but
the short-term borrowings have increased, so have we repaid any of the long-term debt?
Krishna Kumar:
The normal repayment schedule we are making almost Rs.15 Crores long-term loan of
repay. This increase for short-term borrowings mainly because of the current assets also
increased due to the cotton price increase even we maintain the same number of days
stocks, due to price, we have almost Rs.30 Crores of working capital that has increased that
is why the short-term borrowing is higher than the last year.
Neha Jain:
The working capital cycle has also increased mainly due to the cotton price increase?
Krishna Kumar:
Working capital cycle means the number of days not increased due to the volume, the value
has increased.
Neha Jain:
That is it from my side. Thank you.
Moderator:
Thank you. The next question is from the line of Kush Gangar from Care PMS. Please go
ahead.
Kush Gangar:
Sir, you mentioned about Rs.75 Crores worth of investments you might make over the next
18 to 24 months can you share some highlight or details regarding the areas which you are
looking at and how the funding would be, are you looking at raising any funds or it would
be through internal accruals I do not think we can get probably Rs.75 – Rs. 80 Crores worth
of internal accrual so would that be through any fund raising or debt?
Sundararaman:
The investments would be predominantly at this point of time we are looking at expanding
the seamless garments and poly spandex line. There is an investment into expanding the
garmenting division because of all the orders we are getting that is not much I would say
that it is minor component one of this, we are looking at certain other strategic investments
in products related to cold weather clothing but we cannot disclose that at this point of time
what we are going to do. Now, coming to the funding aspect, I would say that you are
absolutely right, we would not be able to do internal accruals all that though at the rate at
which like we were able to do last year we expect over the next 18 months I think anywhere
about Rs.30 – Rs.35 Crores of internal accrual cash can be put inside we expect that to be
sufficient, but for the remaining we are looking at debt instruments we are not looking at
fund raising from the market. Given our size at this point and our current position of growth
we think debt would be a better way of raising funds.
Kush Gangar:
Sure, thank you.
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Shiva Texyarn Limited May 26, 2022
Moderator:
Thank you. As there are no further questions, I would now like to hand the conference over
to Dr. Sundararaman for closing comments.
Sundararaman:
Thank you Miss. Friends I thank the entire team of Shiva Texyarn for their hard work and
dedication which has being driving our company forward and makes it more resilient to
upheavals such as the pandemic. I thank you all for participating in this conference call.
Please do get in touch with our Investor Relations team for any further questions if you
have, anything at all that you would like us to respond to. I thank our IR team and Mr.
Krishna Kumar for participating in this call along with me. Thank you very much.
Moderator:
Thank you. On behalf of Shiva Texyarn Limited that concludes this conference. Thank you
for joining us. You may now disconnect your lines.
Page 13 of 13