Banswara Syntex Limited
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99turns
5analyst exchanges
3executives
Management on call
Ravi Toshniwal
MANAGING DIRECTOR, BANSWARA SYNTEX LIMITED
Pankaj Gharat
CFO, BANSWARA SYNTEX LIMITED
Ravi
Toshniwal
Managing Director, Banswara Syntex Limited. Thank you and over to you sir.
Key numbers — 40 extracted
33%
ion in these two segments is good. Yarn is showing some flatness in price but we expect that with 33% of our yarn consumed for fabric and garment internally, the overall impact on the balance 66% o
66%
ith 33% of our yarn consumed for fabric and garment internally, the overall impact on the balance 66% of our yarn even with reduced prices of yarn would allow H2 to be hopefully as good as H1. This
31%
al and operational performance of the company; for Quarter 2 FY23 revenue from operations grew by 31% Rs. 408 crores. For H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150
Rs. 408 crore
nd operational performance of the company; for Quarter 2 FY23 revenue from operations grew by 31% Rs. 408 crores. For H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150 basis points
46%
or Quarter 2 FY23 revenue from operations grew by 31% Rs. 408 crores. For H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150 basis points from 11.1% in Quarter 2 FY22 to
Rs. 766 crore
r 2 FY23 revenue from operations grew by 31% Rs. 408 crores. For H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150 basis points from 11.1% in Quarter 2 FY22 to 12.6% in Quarter 2
150 basis point
31% Rs. 408 crores. For H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150 basis points from 11.1% in Quarter 2 FY22 to 12.6% in Quarter 2 FY23. For H1 FY23 our yarn division grew its
11.1%
r H1 FY23 revenue grew by 46% to Rs. 766 crores. EBITDA margins improved by 150 basis points from 11.1% in Quarter 2 FY22 to 12.6% in Quarter 2 FY23. For H1 FY23 our yarn division grew its sales by 17%
12.6%
to Rs. 766 crores. EBITDA margins improved by 150 basis points from 11.1% in Quarter 2 FY22 to 12.6% in Quarter 2 FY23. For H1 FY23 our yarn division grew its sales by 17%. The fabric division incre
17%
.1% in Quarter 2 FY22 to 12.6% in Quarter 2 FY23. For H1 FY23 our yarn division grew its sales by 17%. The fabric division increased its sales by 64% and the garment division has shown the highest
64%
. For H1 FY23 our yarn division grew its sales by 17%. The fabric division increased its sales by 64% and the garment division has shown the highest increase of 129% when compared to the correspondin
129%
ic division increased its sales by 64% and the garment division has shown the highest increase of 129% when compared to the corresponding period in FY22. The increased domestic sales in garments durin
Guidance — 20 items
“Going forward H2 has headwinds due to the recession cloud.”
“Yarn is showing some flatness in price but we expect that with 33% of our yarn consumed for fabric and garment internally, the overall impact on the balance 66% of our yarn even with reduced prices of yarn would allow H2 to be hopefully as good as H1.”
“The implementation of our solar power project has helped in moderating the higher coal cost by 1.66 crores in this quarter.”
“How do you see these evolving and how do you plan to manage these going forward?”
“With the growth and if we look at the total expenses that we are having on finance or the expenses we are having on our people cost, we are not concerned that these will be issues.”
“Just some more clarifications here, so do we see this as a peak debt and do you expect this to come down in the going forward quarters?”
“So, I'm saying that going forward, Q3 since we don’t publish balance sheet, I would expect these numbers to be given out.”
“So, whatever are the postponement you see, in the coming quarters you will be shipping those goods.”
“like you said you will be growing 25% to 35%.”
“So, till when do you think your expansion will be taken care of and when you'll need fresh capital to employ for the expansion?”
Risks & concerns — 8 flagged
While for Quarter 2 FY23 export sales were 46% of total sales due to the increasing risk of inflation the export sales may further witness some downside pressure.
— Ravi Toshniwal
Power cost which has been a concern for us for a while has lowered a little to 54.2 crores.
— Ravi Toshniwal
That is quite risk free and we had the availability of limits to do that.
— Ravi Toshniwal
These things will keep happening cyclically but I don't see a concern there.
— Ravi Toshniwal
In Q3 publisher results, please give out the debt numbers and also a receivable number because as an investor any further increase from here would really be a concern in these levels because in Q3 the balance sheet doesn’t get published too, for Q3 specifically because Q3 we don’t publish.
— Anant Jain
However, based on what you're saying right now you haven't yet seen too much of a demand pressure even in your export market, domestic of course continues to be solid.
— Navneet Bhaiya
No, we are just being cautious about the fact that recession fears are there but we don't see it in terms of the order book or the way the clients are working with us right now.
— Ravi Toshniwal
We'll have to do it in the fabric too because demand is going to be higher than our production capacities but we're being cautious.
— Ravi Toshniwal
Q&A — 5 exchanges
Q
My first question is that although we are growing and we are growing significantly, our revenues have grown and our profitability has also gone up. But at the same time what we are also seeing, there is a significant increase in our debt levels and considerable increase in the balance sheet overall whether it is the receivable part of our balance sheet or the borrowings part of our balance sheet or the inventory part of our balance sheet. How do you see these evolving and how do you plan to manage these going forward?
Ravi Toshniwal
Anand thank you for your question. I understand what you're saying very clearly. You notice that one of the biggest increases in the debt level is because we chose not to take the expensive credit that we were getting by discounting bills. We were discounting bills of our garment domestic division sales to the corporates. corporates like the Arvind or the Arrow Group or the Raymond Group or Madhura. They were giving us a very high cost of credit of almost 12% to 13% discountable. We chose to give them open credit instead of discounting and that's why the debt level increased there. That is qui
Q
I have few questions which are pertaining to the gentleman who asked earlier. Now when you say that letter of credit, it is a very safe mode of payment, I totally agree on that. But there is one thing. There are a lot of cancellations which are happening worldwide because I belong to the same industry. So, when the cancellations are happening. letter credit is not really a safe option �SWARA SYNIEX LIMITED again. Do you see any bad payments which might not get realized and there are a lot of cancellations from your customers?
Ravi Toshniwal
No not really because we don't ship the goods until the primary customer, not the garment maker confirms that they should be shipped. The garment maker then has to honor the LC to receive the goods. Otherwise, the goods come back to us. That’s never happened. So, whatever are the postponement you see, in the coming quarters you will be shipping those goods. There are no cancellations on that. Yes. We are producing only goods against orders that are confirmed and we start to produce after orders are confirmed. So, cancellations from customers are not without liability…we are not making stock. W
Q
My first question is, in your presentation you've outlined your vision to grow to a 1,600 crores top line company by FY25. In this quarter we are already roughly at that run rate. So, would you like to revise that?
Ravi Toshniwal
We might revise it as we go down the road. Maybe by end of Q3 we should be able to give a better idea about that. It is going well and we are achieving a run rate better than what we have projected. �SWARA SYNIEX LIMITED Yes, exactly that's precisely so yes if you can come up with a revised vision it will just help us to visualize better? So, I mean people are concerned about headwinds and my personal view right now is that the headwinds that people are talking about which are coming around let's say in some of the furnishing sectors and the commodity businesses in cotton we are not being impa
Q
Just to understand the working capital intensity of your business. If you can throw some light on the receivables, inventory and the payrolls because the cash flow statements, the operating levels, we are turning negative and most of the performance are carried of the working capital days. Can you throw some light on the inventory and the receivables and payables especially for the receivables because we are nearly halfway mark from export to domestic markets equally divided. What is the receivable days for the Indian customers and what is it of the overseas customers?
Ravi Toshniwal
So, you did listen to what we had said to our first question with Anant, I think. Did you listen to that? I didn’t get. �SWARA SYNIEX LIMITED I said a similar question was asked, by the first question that we got from Anant and did you listen to the reply on that and so I will let Pankaj reply again to your reply, our CFO. I have got, in the previous questions working capital was not disclosed in detail. I'm asking because the cash from operating activities are negative and mostly due to the working capital carried out. So, if you can…? I'll address that again and ask Pankaj to do that please.
Q
Thank you everyone and thank you all for the questions. I hope we have been able to answer them in a way in which there is more clarity. We do look forward to our continued communications and our conference calls and find this opportunity to be stimulating as well as educative for us to understand your concerns. We look forward to continue this process and wishing that the next half year will be as good as this one and we're going to keep working towards that. Thank you so much everyone.
Opening remarks
Ravi Toshniwal
Thank you. Good afternoon, everyone and good morning from New York City where I'm calling from. Welcome to our Quarter 2 and H1 FY23 earnings conference call. I hope each of you and your families continue to remain safe and healthy and joined on our call by our CFO Mr. Pankaj Gharat and SGA, our investor relations advisors. I hope everyone has had a chance to go through our updated investor presentation uploaded on the exchanges and our company website. It is my pleasure to announce that we reached the halfway mark for FY22-23 and have already exceeded and crossed our last year's numbers for the complete FY21-22 financial year. Going forward H2 has headwinds due to the recession cloud. However, in my current and ongoing trip visiting customers in the USA, Europe and next week in the UK, the response that I am getting to our products is encouraging both for our fabric and garment business. The China-plus-one strategy of customers continues to be real and there is also further Europe-plu