The current market conditions have affected all companies in the textile chain and home furnishing companies are no different. The recently released Q2 result of FY ’18 shows that Indian home textile giants are suffering setbacks as companies like Welspun India Limited, Indo Count Industries Limited, GHCL Limited show negative growth in this quarter. Though it has been said that revenues from operations for the current quarter are not comparable with previous periods, since sales are net of GST, whereas excise duties formed part of expenses in previous periods. In many cases, figures are recast to consider impact of Excise/GST accounting treatment but apart from this, the companies gave several other reasons for their downward performance also. Apparel Online analyses the second quarter results of some of the companies. It is interesting to observe that industry leaders are increasing their thrust on e-commerce business.
For GHCL Limited, Noida, Q2 can be said to have been extremely difficult. Textile segment (home furnishing and spinning/weaving) contributes 41 per cent in the overall business of the company and this textile division’s revenue which was Rs. 311 crore in Q1 of FY ’18 reduced by 12 per cent and remained at Rs. 274 crore in Q2. The company’s capacity utilization remained 89 per cent in Q1 but reduced to 77 per cent in Q2. EBITDA margin of the company was 10 per cent in Q1 while it was one per cent in Q2. “Significant drop in EBITDA margin is due to loss of high margin business and certain customers facing financial stress,” the company says.
There was a drop by Rs. 25 crore mainly due to lower sales in sheeting segment, but it has been observed that the sheeting capacity of the company which was 36 million metres from FY ’14 to FY ’17, is increasing and is estimated to be 45 million metres in the current fiscal. Having experience of working with top brands like Bed Bath & Beyond, JCPenney, The White Company, GHCL Limited has 65 per cent share in US market. So, dollar devaluation, stiff competition in US between brick and mortar stores with booming e-commerce are the main challenges for the company. In the Indian market, GHCL has 22 per cent share which has been affected due to uncertainty of GST. Its products’ range includes sheeting, quilts and pillow.
The Bombay Dyeing and Manufacturing Company Limited, Mumbai too witnessed plunge of 43 per cent as in latest Q2, its retail/textile revenue was Rs. 62.39 crore compared to Rs. 110. 19 crore of previous Q2 ending on 30th September, 2016. Profit in this segment also reduced by nearly 50 per cent.
Welspun India Limited (WIL), Mumbai also witnessed negative growth of 10.2 per cent as in Q2 of FY ’17, its total income was Rs. 18,151 million while in comparable period of FY ’18, it is Rs. 16,299 million. As per the company, this decrease was on account of a volume decline due to customer destocking, coupled with the base effect. Despite the downfall, the company did well with its brands as its ‘Spaces’ brand grew at 47 per cent while ‘Christy’ brand grew at 15 per cent. In fact Christy’s presence in China expanded to 24 stores. The company performed well in domestic market, especially in the online segment as domestic e-commerce growth rate was 123 per cent (on Y-o-Y basis). “We have increased our focus on our branding initiatives with new teams across geographies. Our new campaigns for Spaces and Christy have been well received. We believe our unwavering focus on innovation, branding and sustainability will strengthen the company’s leadership position,” says B.K. Goenka, Chairman of the Group. During this period, the company’s expansion in towels from 72,000 MT to 80,000 MT has been completed while some part of the capex for Flooring solutions planned for this year is expected to spill over to next year. Further, the company should get more business in near future owing to its technical textiles’ business being approved by automobile, aerospace and railways.
Another leader in the segment, Indo Count Industries Limited (ICIL), Mumbai also noticed negative growth of 18 per cent as last year in Q2, its revenue from operations was Rs. 552.89 crore, while this year it remains at Rs. 452.84 crore. With prime focus on exports and having clients like Bed Bath & Beyond, Laura Ashley, Debenhams, John Lewis and many more, the company exports mainly bed linen/bed sheets and quilts. Apart from its brand ‘Boutique Living’ which was launched last year for the Indian market, the company is further focusing on e-commerce. KK Lalpuria, ED of the company believes that brick and mortar format is facing strong challenges. ICIL is one among the top-three bed sheet suppliers to the US which is also the core market for the company. Recently, it has started to explore markets like Middle East and Japan.
On the other hand, home textile business of Trident Group, Ludhiana registered positive figures. Its top line increased by 27 per cent in Q2 FY ’17 on Y-o-Y basis to Rs. 963 crore compared to Rs. 760 crore in the corresponding quarter of last financial year. EBITDA margin increased by 41 per cent to Rs. 181 crore in Q2-FY ’17 compared to Rs. 128 crore in Q2- FY ’16. Nearly 55 per cent of total sales of the company comes from export business. The company believes that strong volume growth in terry towels and yarn segment across markets is a result of sustained focus and efforts on marketing, designing as well as product innovation. Healthy traction in bed linen segment, overseas as well as domestic market have further supported this momentum.
Trident claims that its customer base spans over more than 100 countries and it works with top brands and companies like Ralph Lauren, JCPenney, IKEA, Target, Walmart, Macy’s etc. “We are fully focused on optimally utilizing our home textile capacities on a global scale which will enable us to deliver sustainable volume growth going forward. So, we expect the healthy, quarterly trend to continue in the upcoming quarters,” says Rajinder Gupta, Chairman, Trident Group. The company cleared that revenues from operations for the current quarter are not comparable with previous periods, since sales are net of GST whereas excise duties formed part of expenses in previous periods.
Another vertically integrated home textile major which has shown positive results is Himatsingka Seide Limited. Having expertise in production of bed linen products, upholstery and drapery fabrics and ultra-fine cotton yarn, it witnessed 12.11 per cent growth in Q2 of current fiscal. It notices total income of Rs. 592.27 crore in FY ’18 while in Q2 of FY ’17, the total income was Rs. 528.62 crore. The company is also expanding further as Shrikant Himatsingka, MD & CEO of the company says, “We have had a robust operating performance for Q2 and H1-FY ’18. Looking forward, we endeavour to continue to enhance revenues from brands, sweat manufacturing capacities and cement our vertical integrated model by bringing on stream our new spinning facility by the end of Q3-FY ’18.”
