EBITDA at INR 186 Cr,YoY EBITDA Margin at 11% PAT at INR 82 Cr YoY
RSWM Ltd., one of the largest manufacturers and exporters of synthetic and blended spun yarns from India, announced its financial results for the quarter ended September 30, 2021.
Financial and Business Outlook for Q2 and H1 FY22
RSWM Limited delivered a robust business performance and closed H1FY22 with INR 82 crores Profit After Tax (PAT)- a strong return to profitability after the loss of INR (83) crores in the corresponding period H1FY21. The company continued to see the rallying effect of the positive sentiments and market recovery on the business in FY22, reflecting in the strong sales and profit results recorded in the first half of the year, despite the continued lockdown in the initial months of H1 FY22.
Despite the lockdown induced restrictions in many parts of the country during the second wave of COVID-19, RSWM Ltd. registered a turnover of INR 1695 crores in H1FY22 against INR 769 crores in the corresponding period in FY21. Within the group, RSWM Yarn business witnessed a sudden surge in demand in H2FY21. With ease in restrictions, the denim business performed better with increasing demand from existing customers which continues to see upwards growth trend and reflects in the strong business performance of the group.
RSWM also announced its business plans, including a few critical structural changes, manufacturing capacity building and allocation of INR 330 crore to continue growth trajectory and stronger financial performance. The investment allocation will support expansion of Denim Fabric manufacturing capacity, Cotton Melange Yarn manufacturing capacity and Modernisation & Balancing equipments across all units.
With strategic inteventions and focused efforts, RSWM has improved its Debt Equity ratio from 1.56 as on 31.03.18 to 0.92 as on 30.09.21. Over the last 4.5 years, the debt has been reduced to INR 612 crores. from INR 1402 crores. as on 31.03.18 to INR 790 crores. as on 31.09.21.
Current Scenario and Outlook
RSWM is looking forward to continued robust business performance in Q3FY22. Despite the initial impact of local lockdowns and night curfews which impacted dispatches in the first quarter of FY22, consumer sentiments and market confidence improved due to increasing vaccination. Along with this, operations at the manufacturing plants remained normal. Moreover, increased penetration of organised retail, festive celebrations, favourable demographics and rising income level is expected to drive demand of Textiles after recording sharp increase in in Online apparel buying during COVID 19 lockdowns. With this, pandemic has also led to increased demand for Technical Textiles.
Additionally, the company will be setting up 30,000 spindles of Mélange yarn at its largest unit in Kharigram (Rajasthan) and also installating 20,000 spindles for combed cotton at the yarn facility in Mordi (Banswara). This is apart from the modernization and balancing equipment across all the locations in FY22.
Denim Business
The denim business expects to perform well given the global industry forecast. In addition, the company expects new opportunity creation in the denim market owing to the demand for recycled denim. The addition of important global brands to RSWM’s clients’ portfolio lends growth optimism in the coming years. The company also reinforces its sustainability efforts to protect the environment by recycling waste and converting it into wearables.
Sufficient cash generation has put the company in very comfortable position in terms of liquidity.
The investment in Denims allocated for building facility of 8.4 million metres of denim capacity for sheet dyeing and finishing capacity at Mordi.
Commenting on the results, Mr. Riju Jhunjhunwala, Chairman & Managing Director of RSWM Ltd. said, “FY21 was full of learnings and challenges both in terms of business and battling the pandemic which catalyst for change. RSWM stood among the companies that envisioned the change and showcased agility to prepare to continue delivering better financial numbers in a highly unpredictable ecosystem. Also, FY21 was a very satisfying year for us because we made structural changes that we believe were critical for a sharper focus of business growth. As we step into a new period of growth with a sharper focus on business growth, our consolidation efforts, new investment allocation and focus on core business capabilities building remains critical for sustainable business growth. With stronger business performance in H1 FY22, we are confident that the company would continue to build on the momentum while executing our blueprint with disciplined determination.”