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ReturnIndia:Eastern Silk topline grows 30% in April-June 2006
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PublishDate：
2006-07-21 13:51:00
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Eastern Silk Industries Ltd has reported 12.70% in net profit in the quarter ended June 30, 2006 at Rs.14.35 crore against Rs.8.35 crore in the corresponding quarter last year. The topline registered 30% rise to Rs.113 crore from Rs.86.65 crore in the corresponding quarter last year.
Significantly, the operating profit margins have shown healthy improvement. It has risen to 19.93 per cent compared to 15.84 per cent in the first quarter of 2005. This, according to the chairman, Mr. S.S. Shah, is the direct result of higher value addition and increasing share of machine-made fabrics in the company抯 production.
Net profit for the full year in 2005-06 was Rs 38.04 crore on net sales of Rs 387.24 crore. The fully diluted earnings per share on June 30, 2006 works out to Rs.9.25. It was Rs.27.37 on March 31, 2006.
Significantly, ESI has now made a breakthrough in the overseas markets by tying up with an overseas manufacturer for printing and finishing of fabrics/made-ups exported from India. 揃y this arrangement, the company will ensure timely deliveries to clients across markets and also substantial value addition,?chairman Mr. Shah explained.
The company has recently completed the first round of private placement of equity to Leverage India Fund (fund manager- IL & FS Investment Managers) aggregating Rs 50.50 crore. The shares were placed at a price of around Rs 250 per share. The promoters of Eastern Silk are also subscribing to fresh equity at the same price for an aggregate amount of Rs 7 crore. The equity capital after the private placement and promoter contribution would stand at Rs 15.79 crore. The funds raised are being deployed in the expansion project at Anekal and the made-ups project at Bommasundra.
The company is expanding fabric capacity at the Anekal plant from existing 8 lakh metres per annum to 12 lakh metres. It will include double width jacquard and velvet fabrics. The estimated cost of the expansion project works out to Rs 52.20 crore including a foreign exchange component of Rs 30.25 crore.
Coming up as a parallel project is the plant for manufacture of made-ups (made from natural silk fabrics) at Bommasundra on the Hosur Road. This plant is expected to become fully operational in the next 12 months and will utilize about 90 per cent of the fabrics made at Anekal besides fabrics procured from the market. The estimated cost of the made-ups project is Rs 16.57 crore. The planned capacity is for 1500 set/day, where each set has three/four pieces. The cost of this project is Rs 16.6 crore
Significantly, the company has already created a niche market for home furnishings abroad which it wants to retain for strategic reasons. The excess fabric capacity at Anekal after servicing the requirements of the Bommasundra plant will be earmarked for home furnishings, for which it has a ready market.
The rationale of the expansion is to increase sales realization ( $15-20 per metre) from mill made production and reduce dependence on outsourced low margin handloom/powerloom production. Interestingly, profitability from mill made fabrics is superior not just on account of better realizations but also shorter operating cycle for mill made fabrics (110 days) than for handloom/powerloom (260 days).
Source: Industry Website
Significantly, the operating profit margins have shown healthy improvement. It has risen to 19.93 per cent compared to 15.84 per cent in the first quarter of 2005. This, according to the chairman, Mr. S.S. Shah, is the direct result of higher value addition and increasing share of machine-made fabrics in the company抯 production.
Net profit for the full year in 2005-06 was Rs 38.04 crore on net sales of Rs 387.24 crore. The fully diluted earnings per share on June 30, 2006 works out to Rs.9.25. It was Rs.27.37 on March 31, 2006.
Significantly, ESI has now made a breakthrough in the overseas markets by tying up with an overseas manufacturer for printing and finishing of fabrics/made-ups exported from India. 揃y this arrangement, the company will ensure timely deliveries to clients across markets and also substantial value addition,?chairman Mr. Shah explained.
The company has recently completed the first round of private placement of equity to Leverage India Fund (fund manager- IL & FS Investment Managers) aggregating Rs 50.50 crore. The shares were placed at a price of around Rs 250 per share. The promoters of Eastern Silk are also subscribing to fresh equity at the same price for an aggregate amount of Rs 7 crore. The equity capital after the private placement and promoter contribution would stand at Rs 15.79 crore. The funds raised are being deployed in the expansion project at Anekal and the made-ups project at Bommasundra.
The company is expanding fabric capacity at the Anekal plant from existing 8 lakh metres per annum to 12 lakh metres. It will include double width jacquard and velvet fabrics. The estimated cost of the expansion project works out to Rs 52.20 crore including a foreign exchange component of Rs 30.25 crore.
Coming up as a parallel project is the plant for manufacture of made-ups (made from natural silk fabrics) at Bommasundra on the Hosur Road. This plant is expected to become fully operational in the next 12 months and will utilize about 90 per cent of the fabrics made at Anekal besides fabrics procured from the market. The estimated cost of the made-ups project is Rs 16.57 crore. The planned capacity is for 1500 set/day, where each set has three/four pieces. The cost of this project is Rs 16.6 crore
Significantly, the company has already created a niche market for home furnishings abroad which it wants to retain for strategic reasons. The excess fabric capacity at Anekal after servicing the requirements of the Bommasundra plant will be earmarked for home furnishings, for which it has a ready market.
The rationale of the expansion is to increase sales realization ( $15-20 per metre) from mill made production and reduce dependence on outsourced low margin handloom/powerloom production. Interestingly, profitability from mill made fabrics is superior not just on account of better realizations but also shorter operating cycle for mill made fabrics (110 days) than for handloom/powerloom (260 days).
Source: Industry Website
