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Himatsingka Seide Ltd.


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Series: EQ | ISIN: INE049A01027 | SECTOR: Textiles - Synthetic & Silk

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Annual Report

For Year :
2018 2017 2016 2014 2013 2012 2010 2008 2007

Chairman's Speech

Dear Shareholders,

At the outset, fiscal 2018 was a year marked by global macro-economic challenges, historic developments on the domestic regulatory front and an ever changing retail environment both onshore and offshore.

On the domestic front, it was a momentous year for India with all the policy reforms that were put in place to enable both the private and public sector enterprises to continue their sustained and high growth trajectories. The ''One Nation One Tax'' GST policy, the transformed regulations on the banking front and various other policy measures will usher in regulatory clarity, allow ease of doing business and stimulate investments.

Seamless integration from fibre to shelf continues to be an integral part of our business model and helps us build and sustain a competitive advantage across the product categories we operate in

Globally, while economic growth rates were indeed encouraging, growing protectionism impacted merchandise trade and ignited geo-political tensions, which are a cause of concern and may cast a shadow on global trade going forward. The global retail environment, especially in the advanced economies of North America and Europe, continued to see increased online activity across product categories, and the pace of change in embracing omni-channel retailing continues.

Business Review

The World of Manufacturing

At Himatsingka, we have been busy with various consolidation and growth initiatives across our businesses. Seamless integration from fibre to shelf continues to be an integral part of our business model and helps us build and sustain a competitive advantage across the product categories we operate in. Himatsingka augmented its Sheeting capacity by completing its brownfield sheeting expansion in FY 2017. We are pleased to have completed, on schedule, another landmark project during FY 2018. We commissioned for commercial production, the world''s largest Spinning plant under one roof with an installed capacity of 2,11,584 spindles.

This project enhances our integration quotient and relatively de-risks our model from volatile raw material price fluctuations. Himatsingka now operates amongst the world''s largest integrated Sheeting plants and the world''s largest cotton Spinning plant under one roof. Both these facilities are state-of-the-art and will help drive financial and operating performance going forward.

In order to broaden our home textile manufacturing portfolio, we commenced construction on our new Terry Towel facility that will be equipped with an installed capacity of 25,000 TPA (Tons per Annum). The new plant will be best-in-class, and is scheduled to be commissioned by H1 2020.

We endeavour to continue with our steadfast focus and discipline on operating our manufacturing assets. Capital and operating efficiency parameters have been and remain a key priority going into FY 2019.

Our Collection of Brands

Our broad manufacturing portfolio, coupled with deep technical and operational know-how, will help us enhance global market share by leveraging our strong brand platforms. FY 2018 has been a busy year vis-a-vis initiatives to enhance our brand portfolio. We concluded the acquisition of the rights to a suite of brands that were a part of the Home portfolio of the Global Brands Group. This will give us exclusive licence rights to the famous and iconic Tommy Hilfiger Home brand, the Copper Fit brand and other brands. This acquisition will augment and strengthen our existing portfolio.

We remain focussed on enhancing branded revenue streams globally. Revenues from brands during FY 2018 crossed the Rs,1,600 crore mark. This was a significant jump from the approximately Rs,1,100 crores that we clocked during FY 2017.

Our exclusive global rights to the patented DNA technology platform for cotton tagging has ensured that we remain global leaders in the cotton Track & Trace space. Our array of exclusive cotton brands that include the Pimacott®, Home Grown Cotton® and the Organist® brands have been well received. They have found their way to shelves across key markets. Augmenting our traceability solutions portfolio will be a key area of focus going into FY 2019.

Himatsingka''s brand portfolio consists of over 10 brands now and will drive growth going forward. Our brands appeal to a broad spectrum of consumers and helps us balance our presence across price points and cater to a broader demographic profile.

Our Operating Scorecard

The various initiatives across divisions have augured well for our financial and operating performance during FY 2018. Consolidated Total Revenues grew by 5.3 % and stood at Rs,2,266.69 crores versus Rs,2,151.60 crores during FY 2017. Our Consolidated Total Revenues have grown at a CAGR of 6.05% over the last 5 years.

Consolidated EBITDA and Profit After Tax (PAT) for FY 2018 grew by 19.3% and 10.7% respectively.

While Consolidated EBITDA for FY 2018 stood at Rs,466.23 crores versus Rs,390.89 crores during FY 2017, Consolidated PAT stood at Rs,201.64 crores versus Rs,182.10 crores during FY 2017. Our 5 year CAGR for consolidated EBITDA and PAT stood at 22.8% and 28.8% respectively.

Our focus on sweating assets helped us augment our margin profile during FY 2018. Our consolidated EBITDA margin grew from 18.2% in FY 2017 to 20.6% in FY 2018. This was also aided by the commissioning of the Spinning facility in the last quarter of FY 2018.

During FY 2018, consolidated Total Assets saw substantial growth and stood at Rs,4,219 crores versus Rs,2,893 crores during FY 2017. This was driven by the increase in Gross Fixed Assets, primarily on account of new projects commissioned and under construction during the year. Considering the commissioning of the new Spinning plant occurred on 5 February 2018, the increase in capital employed excluding work-in-progress projects has had an adverse impact on our capital efficiency parameters. The ROCE and ROE for FY 2018, stood at 13.1% and 17.6% respectively.

Our 5-year CAGR for consolidated EBITDA and PAT stood at 22.79% and 28.75% respectively

Themes for FY 2019

On the manufacturing front, we will remain focussed on enhancing capacity utilisation levels and sweating assets across the value chain. Enhancing our digital quotient via production automation, intensive data analytics and developing cutting-edge applications will be key to monitoring and driving efficiencies.

We will also be focussed on project execution to ensure ongoing capital projects are commissioned on schedule and within budgets. This is important as it will aid in developing new revenue streams and

thereby de-risking current revenue streams.

On the brands front, we will have a multi-faceted strategy to enhance global market share and will be focussed on the following:

- Developing our presence in the European markets

- Continuing to strengthen our IP portfolio

- Working with clients to deepen consumer reach via e-commerce and m-commerce channels

- Exploring new product adjacencies to our existing Bedding and Bath solutions

Building a Sustainable Enterprise

Manufacturing solutions aided by enhanced digital platforms and the introduction of robotics to functions across the value chain will be key components of creating a lean and sustainable manufacturing platform.

These next generation shop floors will also help drive cost efficiencies, reduce carbon footprint and embody the highest levels of agility that will be required to respond to the dynamic and ever-changing consumer preferences across markets.

Manufacturing solutions aided by enhanced digital platforms and the introduction of robotics to functions across the value chain will be key components of creating a lean and sustainable manufacturing platform

However, at the centre of all such initiatives are our people, our mind. We constantly endeavour to train and equip our human capital pool with the right skill and leadership quotient that drive the bold and complex initiatives required to be implemented across our businesses.

We believe that our people are integral not only in achieving tangible corporate goals but also in assisting us to become a responsible enterprise with

a holistic approach in conducting our businesses.

Our people are responsible for preserving our culture and upholding our values thus paving the way to deliver sustainable governance for stakeholders.

Looking Ahead

As we look ahead and introspect on the year gone by, we think about the vibrant and pulsating global economy with all its complexities. To stay relevant in this dynamic environment, it is imperative that we focus on our areas of priority and continue to strengthen our capabilities across businesses and functions. Our strong foundation spanning infrastructure, technical know-how, human capital and a robust value framework will help us build a global sustainable enterprise.

Creating value for our stakeholders, while adhering to our core principles of strong governance and responsible practices, continues to be an integral part of life at Himatsingka.

We take this opportunity to express our sincere gratitude to our shareholders, employees, bankers, clients, suppliers, the Board and other stakeholders for their continued support and belief in Himatsingka.


Shrikant Himatsingka Dinesh Himatsingka

Managing Director & CEO Executive Chairman