DOLLARNSENovember 11, 2022

Dollar Industries Limited

7,237words
106turns
8analyst exchanges
3executives
Management on call
Ankit Gupta
PRESIDENT, MARKETING.
Ajay Patodia
CHIEF FINANCIAL OFFICER.
Saurabh Ginodia
SMIFS LIMITED.
Key numbers — 40 extracted
18%
abilized at sustainable level. In spite of these challenges, company showed the revenue growth of 18% in terms of total revenue for the six months ended 2022. Our Q2 FY23 total revenue was down by
12%
in terms of total revenue for the six months ended 2022. Our Q2 FY23 total revenue was down by 12% as compared to same period last year, our domestic sales showed a growth of 10% in terms of volum
10%
venue was down by 12% as compared to same period last year, our domestic sales showed a growth of 10% in terms of volume, while modern trade and e-commerce sales showed a growth of 67% in terms of
67%
ed a growth of 10% in terms of volume, while modern trade and e-commerce sales showed a growth of 67% in terms of volume, on six months basis as compared to same period last year. For the six month
40 crore
3 company generated positive cash flow from the operating activities to the tune of approximately 40 crores. As promised, the company has opened eight EBOs till date and plans to open more by the end of t
43%
distributors as compared on six months basis of last financial year to the tune of approximately 43% and 46%. We are sure of this idea of theory of constraint will help us in the long run to reach o
46%
ors as compared on six months basis of last financial year to the tune of approximately 43% and 46%. We are sure of this idea of theory of constraint will help us in the long run to reach our FY25
Rs.2000 crore
ure of this idea of theory of constraint will help us in the long run to reach our FY25 vision of Rs.2000 crores revenue. Our efforts towards channel financing arrangement for our dealers continues to see good
5.5%
i Gautam as the brand ambassador to give an extra mileage to the winter sale. This fiscal we have 5.5% to 6% for our advertisement expenses. Further the company has planned to launch the new product r
6%
as the brand ambassador to give an extra mileage to the winter sale. This fiscal we have 5.5% to 6% for our advertisement expenses. Further the company has planned to launch the new product range i
14%
in the market by late Q4 FY23. We are sure that we’ll be able to maintain the revenue guidance of 14% to 15% on the full year basis, while maintaining the EBITDA level of 13% to 14%. Thank you all.
15%
market by late Q4 FY23. We are sure that we’ll be able to maintain the revenue guidance of 14% to 15% on the full year basis, while maintaining the EBITDA level of 13% to 14%. Thank you all. Now, I
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Guidance — 20 items
Ankit Gupta
opening
“As promised, the company has opened eight EBOs till date and plans to open more by the end of the fiscal to touch the target of 25 to 30 EBOs.”
Ankit Gupta
opening
“Further our flagship project, Project Lakshya is going in the right path while increasing the number of distributors reach and range of products.”
Ankit Gupta
opening
“We have also planned to start this particular project into two new states, Tamil Nadu and Kerala.”
Ankit Gupta
opening
“We are sure of this idea of theory of constraint will help us in the long run to reach our FY25 vision of Rs.2000 crores revenue.”
Ankit Gupta
opening
“We expect to onboard several more every quarter, which will continue to improve our receivable days and also help us move towards our overall working capital improvement efforts.”
Ankit Gupta
opening
“Further the company has planned to launch the new product range in woman’s athleisure segment and men’s activate wear in Force NXT brand and it will be available in the market by late Q4 FY23.”
Ankit Gupta
opening
“We are sure that we’ll be able to maintain the revenue guidance of 14% to 15% on the full year basis, while maintaining the EBITDA level of 13% to 14%.”
Bajrang Bafna
qa
“So, if you could guide on that sense it will be helpful.”
Management
qa
“And in this quarter in last quarter Q2 we have expected a good growth in our winter products which is (Inaudible) 11:21 in quarter three, if our projection is we can target is achieved, then this margin is also adjust with our high margin products that is winter thermal products.”
Management
qa
“It is also shown in our current quarter working, during this quarter our project Lakshya, the volume growth is doubled, increased by 43% in last six months, and the total amount of revenue is increased by 100%.”
Risks & concerns — 6 flagged
Currently the entire Indian hosiery sector is facing the impact of price volatility in cotton and yarn prices.
— Ankit Gupta
So, obviously, there has been a depletion in terms of channel inventory levels, but to what extent it would be very difficult to say because we don’t have a visibility to track data.
— Management
So, Vaibhav the thing is that, none of the players have come up with the results, and it is very difficult to tell what has been the industry growth rate in the past three months.
— Management
And from past two years what we have been seeing that it’s too volatile, initially one and a half years we saw the growth in the cotton and the yarn prices, there was a revision in our selling prices also every couple of months.
— Management
So, it is based on complete replenishment model theory of constraints and that is why we are seeing such a good traction because, and that is what proves that there is no decline in the consumer demand for the product or in this particular sector.
— Ankit Gupta
What we say is that, prices have been very volatile this particular fiscal the first half of it, the second half we think it really seems that the prices have stabilized as of now, but we really aspire to be somewhere around 14% kind of an EBITDA level 13% to 14% is what we think is achievable in the second half.
— Management
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Q&A — 8 exchanges
Q
Ankit, just to begin with we have also seen this quarter is not the way we have been precisely thinking of, so definitely there is some amount of inventory loss that has happened during the quarter. So, if you could quite broadly that when the quarter was just starting, the rate of candy was going close to Rs.1 lakh and then we have seen that constantly declining and now stabilizing around let’s say 60 to Rs.65,000 a candy. So, what sort of loss, that has occurred which perhaps is there to some extent in the numbers and to my mind and my judgment that most of your distributors when they are an
Management
Sir you have very perfectly analyze the situation currently, in current market situation the same is applicable in our hosiery industry with respect to your first question regarding our inventory loss, we have high inventory cost in this quarter because there is our inventory procurement in the first quarter around is at that time cotton rate is around one lakh per kg now, it is reduced to around 65 to 70,000 per kg due to this our gross margin is down by 3.5% to 4%, in absolute term it is around Rs.12 to Rs.13 crore. And in this quarter in last quarter Q2 we have expected a good growth in our
Q
Firstly, I would like to ask you about what has been the industry growth rate for the last three months, how has been the experience and how have we failed compared to the industry?
Management
So, Vaibhav the thing is that, none of the players have come up with the results, and it is very difficult to tell what has been the industry growth rate in the past three months. So, there are few players who have come up with the results. But based on that and extrapolating on that would be, will not justify the exact industry growth rate that we are looking forward to. But the industry has been in distress in the last quarter because it is mainly because of the raw material prices movement. And from past two years what we have been seeing that it’s too volatile, initially one and a half yea
Q
Sir just to reconfirm you said that your revenue from project Lakshya is around 100 crore, right?
Management
Yes, the last financial year. And what about H1? In H1 FY23 it is around 98 crore, we already achieved the same amount within six months. Okay. And sir generally the thermal sales, largely happens in Q2 right? So, it’s 50% to 55% sales happens in Q2 and the rest happens in Q3. But since last year was a bad winter season for the industry, so there’s a huge stockpile of which happened at the distributor level as well. So, that’s why in Q2, the major shortage that we faced was because of the thermal sales. So, last year Q2, we had somewhere around 12% contribution coming from thermal in Q2, and t
Q
Just wanted to know the annual advertisement spend and your advertisement net-net increased in your comments you said like already 7.5% of revenue for the full year so can you just give me the brand wise advertisement spend for H1?
Management
Sorry sir, we are unable to understand as your voice is a bit muffled, you were asking something about advertisement expenditure which has increased this particular fiscal is that correct sir? No, that was already answered, what I was asking is about brand wise advertisement spend. So, majorly 60% of our advertisements spend happens for the man product, Big Boss Man another 15% is for Dollar women, 15% for thermal the seasonal product that we have and the rest is for the in-shop branding and the retail branding that we have and plus the post, plus the digital media. Okay, got it sir. One quest
Q
Sir, my question is on the CAPEX front the last time we spoke on our spinning capacity in our warehouse, we were expecting that both of them would commission somewhere in October November. Now, when we see the presentation, it has been postponed to March and May 2023. So, can you just put throw some light on the same?
Management
Yes, they already make the good progress. Our warehousing project is already 90% is completed, but due to some there is a requirement from the government side there is some problem from electric connection in there, electric distribution some part of it is pending from the government front only. Our construction is already ready, but without power distribution, we are not able to commence our production, for this reason we take the maximum time that by March government is completed that power distribution, electric distribution is properly implemented. Because there is delay due to some offici
Q
Just one clarification question, the margin guidance is for the entire year or the second half. That was the first question that I had.
Management
What we say is that, prices have been very volatile this particular fiscal the first half of it, the second half we think it really seems that the prices have stabilized as of now, but we really aspire to be somewhere around 14% kind of an EBITDA level 13% to 14% is what we think is achievable in the second half. So, that is for the second half, not the full year that’s what I wanted to clarify that’s where you aspire to be from the second half of the year? So, on a full year it would be somewhere around 13%, we really want to be there. Understood. My second question is on the number of dealer
Q
I just wanted to understand a little better on the EBO front. So, the numbers you spoke about 45 crores from 125 stores. So, that looks good, given that our competition has had a much faster rollout of EBOs, Go Fashion adding 100, why haven’t we chosen a strategy to be more aggressive on the EBO front, is it because it might disturb the relationship with your Lakshya dealer?
Management
So, nothing of that sort, so what the thing is that Go Colors operate in a very different segments as well as the page industries Jockey. So, they have always been into this particular industry, they have always been into the retail sector, I would say not industry the retail sector, wherein they open EBOs or they are in modern retail, large format stores. And after that, they started coming to offline marketing which is the traditional channel sales. Go Colors is still not there in the traditional sales. So, they have always been there, their concept of their brand the brand DNA was more towa
Q
I take this opportunity to thank everyone for joining this call. I hope we have been able to address all your queries. For any further information or any kind of query kindly get in touch with us. Thank you once again for joining in. Have a good evening.
Management
Thank you.
Speaking time
Management
47
Dhiral Shah
16
Moderator
10
Pallavi Deshpande
6
Sheel
5
Vishal Bagadia
5
Chirag
5
Vaibhav Agarwal
4
Bajrang Bafna
3
Ankit Gupta
2
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Opening remarks
Saurabh Ginodia
Good evening everyone present on the call today. On behalf of SMIFS Limited I welcome you all to quarter two and H1 FY23 Post Results Earning Call of Dollar Industries Limited. We are pleased to host the top management of the company. Today we have with us on the call Mr. Ankit Gupta, President, Marketing; and Mr. Ajay Patodia, Chief Financial Officer of Dollar Industries Limited. They will start the call with some initial comments on the results from the management post which we will open the floor for Q&A. I will now hand over the call to the management. Over to you sir.
Ankit Gupta
Good evening ladies and gentlemen. On behalf of the entire management team at Dollar Industries Limited I welcome you all to the second quarter FY23 post results conference call. Currently the entire Indian hosiery sector is facing the impact of price volatility in cotton and yarn prices. In last quarter and half year ended September 2022 there has been substantial inventory losses due to continuous falling of cotton and yarn prices. However, such losses are temporary in nature, and seems to have an end as the cotton and yarn prices have stabilized at sustainable level. In spite of these challenges, company showed the revenue growth of 18% in terms of total revenue for the six months ended 2022. Our Q2 FY23 total revenue was down by 12% as compared to same period last year, our domestic sales showed a growth of 10% in terms of volume, while modern trade and e-commerce sales showed a growth of 67% in terms of volume, on six months basis as compared to same period last year. For the six
Ajay Patodia
Thank you Ankit. Good afternoon to everyone. Our revenue for the quarter two, FY23 stood at Rs.342 crores against Rs.391 crore and revenue for the six months FY23 stood Rs.706 crore against Rs.596 crore in six months FY22. In this quarter, we have a de-growth of around 12%. But in overall six month FY23 we have the growth of 18.41%. Our EBITDA for quarter two FY23 stood at Rs.30.71 crore against Rs.62.01 crore registering a de-growth of 50%. In six months FY23 our EBITDA is around 70.48 crore against six month FY22 EBITDA is around Rs.98.26 crore, registering a de-growth of 28.27%. Our profit before tax for quarter two FY23 stood at Rs.22.51 crores against Rs.56.34 crores and in six months FY23 our profit before tax is around 55.04 crore against 87.39 crores registering a de-growth of 37% for six months FY23. Profit after tax for quarter two FY23 stood at Rs.17.95 crore against Rs.41.24 crores and profit after tax for six months FY23 stood at Rs.45.82 crores again Rs.64.35 crores regis
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