FINANCIAL PERFORMANCE
I talked about Filatex’s financial performance during FY22, in this post – here is the excerpt:
The overall performance in the FY22 is commendable, the revenue from operations surged by 71.9% to ₹3828 crores, the operating profits increased by 61.9% to ₹467.72 crores (OPM – 12.22%), the total earnings for the year shot up by 82% to ₹302.42 (NPM – 7.9%) crores and the cash flow from operations barely moved as it just outperformed last year’s figures by 3.5% to reach ₹227.35 crores (CFM – 5.94%).
The company’s ROCE improved from 22% in FY21 to 35% in FY22 and ROE for FY22 stood at 32.7%. The company’s domestic sales increased by 75.12% to reach ₹3478.47 Crs during FY22 and export sales increased by 45.19% to ₹349.62 Crs.
OPERATIONAL PERFORMANCE
Net production:
Polyester Chips – Decreased by 54.44%
POY – Increased by 88.89%
DTY – Increased by 1.4%
FDY – Decreased by 4.31%
Polypropylene – Decreased by 13.6%
Narrow Woven polyester – Remained the same
Total production quantity during the financial year increased by 32% YoY and total sales quantity also increased by 31.07%.
The company’s total operating revenues for the year increased by 71.88% and the increase in revenues was evenly contributed by an increase in the quantity of sales of 31.07% and an increase in prices of 31.14%. Whereas the COGS increased by 81.02% during the FY which means that the price of inputs increased by 38.11%. As the input prices increased by a greater rate than the selling price, the company’s gross margins deteriorated during FY22. However, the company was able to pass through the majority of the cost inflation to the customers.
The company’s working days during FY22 increased by 3.7 days to 25.45 days, debtor days improved by 7 days and inventory days improved by 5 days but trade payables days decreased by 14 days thereby worsening the working capital cycle.
Reason for low export growth rate
The growth in export volumes last year has been low on account of very high freight rates to and from India and erratic shipping schedules. High freight costs and rupee depreciation have also adversely affected domestic raw material prices which are set based on import price parity affecting the landed cost of raw materials. Cooling down freight rates is visible, making our yarn prices competitive for exports.
POLYESTER MARKET FORECAST
Excerpts from the annual report –
In the last 10-12 years, almost 95% of growth in global textile fibres demand has been contributed by MMF and amongst MMF polyester is the most dominant fibre, at around 80%, due to its unique properties.
The global textile market, estimated to be worth USD 978 billion in 2021, is likely to grow at a CAGR of 4-5% between 2021 and 2026. During the forecast period, the market is anticipated to be driven by the fashion industry’s growing need for garments and the rise of e-commerce platforms. Polyester is expected to grow at a 3-4% CAGR between 2021 and 2026.
According to the Ministry of Textiles annual report for 2020-21, Indian textiles and apparel contributed 11.8% of total exports in the fiscal year 2020. Furthermore, the Indian textile and apparel industry accounts for 5% of the global textile and apparel industry. The Indian textile and apparel market, pegged at INR 8,153 billion in the fiscal year 2021, is anticipated to grow at a CAGR of 11-13% between fiscal years 2022 and 2026 and reach a value of INR 15,300 – INR 15,400 billion. During this period, it is anticipated that exports will grow at a CAGR of 9 to 10%, while the domestic industry will grow at a slightly higher pace of 13 to 15%.
India consumes only 3.1 kg of MMF per capita, compared to the global average of 7.7 kg. The consumption of MMF in the country is lower than the global average and that of developed countries, indicating a huge potential for MMF in the country.
Between fiscal years 2022 and 2026, the MMF Yarn market is anticipated to grow at a CAGR of 7 to 10%.
CAPEX
Excerpts from the annual report –
At our Dadra plant, we replaced old POY lines with new equipment, which will improve the quality of yarn along with an increase in the capacity by around 8 tonnes/day and reduce the operating costs. In Dahej, the work on our planned project of debottlenecking melt capacity of 50 tonnes/day and manufacturing lines of 120 tonnes/day POY is underway. The Company commissioned and commenced commercial production of its captive thermal power plant of 30 MW capacity at Dahej on 4th August 2021. The work on the expansion project of debottlenecking melt capacity of 50 TPD and manufacturing lines of 120 TPD of POY is progressing well. The Company is targeting to complete the installation and commissioning activities by August 2022. The company has also engaged in R & D activities to develop process parameters for chemical recycling of Polyester waste. It is in the process of setting up a 1500 Kgs per day pilot plant which will help revalidate the process conditions and operating costs.
OTHER IMPORTANT DEVELOPMENTS
The Managing director received a remuneration of ₹2.72 Crs (37% increase YoY) during FY22 whereas the Joint MDs (57%) made over ₹2.3Crs each and the other Whole-time director made ₹0.43 Crs (34%).
The company as of 31/03/2022 had receivables from Statutory bodies (including GST refund) worth ₹134.85 Crs as compared to 79.6 Crs as of 31/03/2021.
The company allotted 4,447,250 (2.01% dilution) shares during FY22 under its ESOP scheme and preferential allotment. The preferential allotment amounted to ₹26.6 Crs.
₹52.8 Crs worth of borrowings will be maturing during FY23.
REFERENCES
I hereby declare that the information, examples and other materials used here are referred from various papers and articles listed below. The information is used and consolidated from these resources for the purpose of disseminating knowledge. The information gathered here is credited to the authors, writers and publishers of these papers and articles. The intention of this article is not to profit off of the work of others.
DISCLAIMER
Do not interpret anything above as financial advice. The author is not a SEBI registered financial advisor. This article is prepared by the author for informational & educational purposes only. The writing contains certain forward-looking statements and opinions which are based on the Author’s analysis of publicly available information believed to be accurate and reliable. While the author believes that such forward-looking statements and opinions are reasonable, they are subject to unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. As of the date the Report is published, the author may or may not hold a position in the security mentioned. Nothing in this Report constitutes investment advice. Readers should conduct their due diligence and research and make their own investment decisions. Any financial decision made by the reader based on the information herein will be the reader’s sole responsibility.
Financial Odyssey 