| S. Kumar Nation Wide (SKNL), engaged in design, manufacturing, marketing and distribution of high quality fabrics, ready-to-wear garments and home textiles; has announced its results for the year ended 31 March, 2010 and conducted concall on 5 June 2010 to discuss the financial performance and its future growth strategy. Anil Channa - Managing Director, Jagadish Shetty – CFO addressed the call. Highlights of the call: - In the financial year under review, SKNL's Consolidated Net sales grew 70% to Rs 3860 crore from Rs 2276 crore, driven by volume enhancement across brands. On the other hand, inclusion of financial performance of HMX, starting August 7, 2009 till 31st December, 2009 in the Company's results is also main reason for enhancement of revenues in FY2010.
- The company has decided to consolidate overseas subsidiary business with standalone entity with a lag of 1 quarter. So the HMX and Leggiuno financials for Q4FY10 will be consolidated with Q1FY11 results of the standalone entity.
- Overseas subsidiaries contribution in the total sales of the Company was Rs 714.4 crore, a contribution of 18.5% of the total sales. HMX business turns EBIDTA positive in its five months of Operations.
- The performance break up of Overseas business in the FY10 was as follows: Legguino - revenues Rs 155 crore and reported EBITA of (Rs 11 crore); HMX (5 months performance) - Revenues Rs 525 crore and EBITA Rs 38 crore; DKNY Rs 34 crore and EBITA of Rs (18 crore) respectively. The management expects 15% EBITDA in the overseas business in FY11.
- Ready-to-wear garments contributed strongly with a 59% increase in sales over the last year. This healthy improvement in garment sales was driven by volume increment in Reid & Taylor and Belmonte brands.
- Revenues from the Consumer Textiles division for FY2010 stood at Rs 1584.8 crore as compared to Rs 1086.5 crore during corresponding period last year, showing an increase of 46%. Enhanced revenues from the division were primarily driven by higher volume contribution from Belmonte brand. Margins in this division during the year stood at 20.8% compared to 16.5% in the last year. Strong margins improvements were on the back of high value products in the Belmonte category.
- In FY2010, Luxury textiles division reported revenues of Rs 764.8 crore compared to Rs 540.5 crore in corresponding period of last year, resulting to 41.5% increase. This healthy revenue growth was primarily on account of enhanced Reid and Taylor fabric sales during the year.
- Sales for the luxury textile segment, which comes under Reid and Taylor fabrics, grew by about 41% at Rs 764.8 crore. EBITA margins stood at 2.7%, up by 10 bps on y-o-y basis.
- Revenues from the Total Home Expression stood at Rs 385.9 crore for FY2010 compared to Rs 340.5 crore in FY2009. EBIDTA for the period under review sustained at Rs 69.1 crore compared to Rs 59.3 crore indicating an increase of 16.5%.
- The company has changed product mix in favor of garments, which is lean on working capital from Garment to Fabric ratio of 11:89 in FY09 to 25:75 in FY10.
- It has entered into Joint Venture with DKNY for the global menswear license of the DKNY brand in the month of May 2010. The company has bought license to produce and distribute apparel globally (except in Japan) for 5 years and additional 7 years of extension period.
- Baruche Super Fine Cotton - 12.75 million meters per annum state-of-the-art BSFC facility is stabilized. Sales in the BSFC division are poised to grow as Core product lines are synergized through Backward-forward integration strategy with Leggiuno, Italy.
- As on March 31, 2010 SKNL's Net worth is Rs 2448.4 crore and a total consolidated debt including Working Capital facilities and independent debts on subsidiary companies are Rs 2835.2 crore, signifying a total debt to Net worth ratio of 1.16
- The debtors and inventory levels have substantially improved as on 31 March 2010 signifying a decrease of 1.4 months of Debtors and 0.5 months of inventory.
- Estimated Capex in India is to the tune of Rs 500 crore for FY11 and Rs 50-60 crore of Normal capex in FY12. On the other hand, Capex for FY10 was Rs 670 crore.
- The company is still looking in to the demerger of Reid & Taylor and has not filed any DHRP with SEBI.
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