Welspun India net up 33%; to bring down debt further

Mumbai: The world's third largest home textile manufacturer Welspun India, which Tuesday reported its best-ever quarterly profit with a 32.7 percent rise at Rs 172.35 crore for the September quarter, said it will considerably bring down its debt this fiscal year.

As of the September quarter, the company had a debt of Rs 2,427.7 crore, down from Rs 2,609.4 crore a year ago, after the company paid back Rs 181.7 crore during the quarter from internal accruals.

The company also said it has cash balance of Rs 182 crore on its book now.

"We brought down our debt by Rs 182 crore in Q2 making our debt-equity ratio to 1.8:1. We want to bring this down to 1.4:1 by the end of this fiscal year," Welspun India Executive Director Dipali Goenka told PTI here.

The company's net sales rose 6.3 percent to Rs 1,336.92 crore and Goenka said that lower sales were result of high base effect in the year ago period, when it had the best sales turnover.

The company had invested Rs 1,400 crore in expansion last fiscal and Rs 1,000 crore over the next one year.

She also said the ongoing vertical integration at its Vapi and Anjar plants in Gujarat, which are also under an expansion, will result in better realisation and margins going forward.

Commenting on the good set of numbers, Welspun Group Chairman B K Goenka said, "We've sustained our growth momentum during the quarter and hope to continue on our growth path and target to reach an annual turnover of USD 2.5 billion, more than double the current figure, by the turn of the decade."

On the sales and profit outlook, Dipali Goenka said the company hopes to maintain a revenue guidance of 15 percent rise and profit guidance of over 22 percent for the rest of the fiscal year.

Welspun currently is a contract manufacturer for some of the world's largest retailers like Walmart, JC Penny and Macy's among others and nets more than 65 percent of its revenue from the US market where it is the single largest organised player with over 5 percent of the USD 17 billion American home textile market. 

When asked about retail sales now, Dipali Goenka said it

grew 35 percent and expressed hope that with the just launched e-commerce portal, which has been received well by customers with over 6000 visitors in the first week of going live, this should go up further.

She said the capital expenditure during the quarter stood at Rs 230 crore and the balance investment of around Rs 850 crore is expected over the next 12 months. This capex will entail modernisation, automation and capacity enhancement for towels and sheets as well as routine maintenance at Anjar and Vapi plant.

With this expansion, the company has a current capacity of 50,000 tonnes of towels per annum, 60,000 million meters of sheets, 15,000 tonnes of rugs and carpets per annum.

Welspun India also announced an interim dividend of Rs 6.50 per equity share for the financial year 2015-16.

Welspun India stock closed 0.53 percent down at Rs 760.60 on the BSE.