More focus on exports and home textile segment: Sutlej Textiles

Sutlej Textiles reported a good set of first quarter earnings where net profit increased 42.9 percent to Rs 45.1 crore year-on-year (YoY) and revenue grew 19.5 percent to Rs 553.6 crore (YoY).

In an interview with CNBC-TV18, Dilip Ghorawat, Wholetime Director and CFO of Sutlej Textiles said that the company is focusing more on exports and home textile segment and has seen exports increase by 30 percent sequentially.

He further expects a good monsoon and the Seventh Pay Commission to boost demand.Below is the verbatim transcript of Dilip Ghorawat's interview to Surabhi Upadhyay and Nigel D'Souza on CNBC-TV18.Nigel: Could you tell us what exactly was the capacity utilisation can be seen, this kind of a runrate going ahead as well?A: The numbers that we have given today for the whole year should be on the sustainable basis and with monsoons coming in and with 7th Pay Commission, we feel that this should improve going forward.Surabhi: If you could tell us a little bit about the operational performance and how you are expecting margins to shape up from hereon?A: The company is into manufacture of value added dyed yarns and is a leading player in the country of dyed yarns. The company is also focusing into products of fancy yarns and value added products, the company is adding new geographies in the world and focus on exports, company is also focusing on home textiles where we are planning an expansion. This all will culminate into more growth for the company going forward.Nigel: You could tell us out of your total income, you did at around Rs 550 crore, how much of it was from exports because you are focusing more on exports and margins as well have inched up a little bit to around 14 percent, can you maintain this margins at around 14 percent, can you do even better?A: The exports of last quarter to this quarter has gone up about 30 percent higher. The performance of the yarn division has done better because we are into value added dyed yarns and Mélange yarns. Going forward, we feel that the performance should further improve in view of good monsoons, in view of the 7th Pay Commission -- there was a drought two years back, this year we have excellent monsoons. The government has given good initiatives for the textile sector, we feel that things should further improve from here.Surabhi: Can you give us an update on exactly where your margins stand right now? You mentioned a lot of the new geographies that you are entering into, can we expect margin expansion in the rest of the year?A: Presently our EBITDA margins is about 15.40 percent and also we have started the expansion trial run of our Mélange at Bhawanimandi, Kota, out of 35,000 spindles we have started 9,000 spindles on trial runs. We feel that margin should further improve going ahead.