Key takeaways of the call

Company entered the segment of fashion, utility, and institutional bedding in 2016. Now these segments contribute 15% of revenue.

United States showed strength with all-time high retail sales due to adoption of omni-channel distribution, consolidation towards big box retailers increasing importance of health, hygiene and wellness products along with, home becoming a center stage have all contributed to the rising trend.

Management believes, India's edge in the global Home Textile market has led to India becoming a preferred trade partner as the China plus one strategy plays out.

In domestic business, company is targeting to reach 3% of sales and in e-commerce to reach 8% by FY23.

In FY21 sales volumes stood at 78.17 million meters. For FY22 management expect volumes to be in the range of 85 to 90 million meters.

The total capex for FY22 will be Rs 200 crore and will be funded by a mix of internal accruals and debt. These investments are expected to increase the revenue by Rs 600 crore over the next 2 years, post commissioning.

Capex will be spent on expansion of bed linen capacity by 20% from existing annual capacity of 90 Mn meters to 108 Mn meters and modernization of spinning capacity.

Company is focusing on creating more visibility through digital marketing channels, so that a wider section of people in Tier 2 and Tier 3 cities can buy products.

Company's order book position is quite healthy as of now for the next two quarters.

There has been an increase in debtors and inventory for year ending March 2021, this happened due to logistical challenges, The orders were bunched, and they got extended a little bit from end February towards mid of March.

Spinning capacity is currently 60,000. Company will add up a few thousand more spindles in FY22 to end up with around 70,000 spindles.

Revenue contribution by geography in FY21- 75% came from US, 15% from EU, 10% from UK and Rest of the World countries.

Remission of Duties and Taxes on Export Products (RoDTEP) rates have not been notified yet by the government. If it would have happened that the government would have notified it then company could have added up another Rs 45 Crore to revenue in Q4FY21.

Going forward company expects margins to be in range of 15-17%.

India today, as at end of March 2021 has a 59% market share in bed linen which is substantial and 43% on the towel side.

Going forward company expects substantial growth coming from fashion bedding, utility bedding as well as institutional.

Dividend payout policy of the company is around 12%.

Company believes at current capacity Rs 50 crore employee cost is sustainable.

Company continue to focus on increasing penetration through B2C (Business to consumer) and D2C (Direct to customer) foray.

Other Highlights

Board recommended Final Dividend of 75% (Rs 1.5 per equity share of Rs 2 each) for the Financial Year ended 31st March 2021.

Indo Count Industries Limited is largest exporter of bed linen from India. Also it has highest market share of bed linen in USA.

In FY21 Company delivered record sales volume of 78.2 Mn meters for FY21, a growth of 26% compared to FY20.

Revenue contribution in FY21 - branded business contributed 10%, fashion/utility 15%, E-commerce 4%, and India home textile business 1%.

In FY23 E-commerce is expected to contribute around 8% to revenue.

Management believes capacity utilization ramp-up will drive free cash flow generation and improve return ratios.

Company has Strong balance sheet and liquidity position.

Factors that contributed to retail growth are- adoption of Omni-channel distribution, increased consumer spending due to work from home and shift in demand towards value added categories of health, hygiene and wellness.

Currently China is a dominant player in fashion, utility & institutional category and India is still at an initial stage. China + 1 strategy is helping to shift these product categories to India. Indian Home Textile Industry stands to gain on this potential shift of these product categories.

Indo Count exports to more than 54 countries across 5 continents, and going forward plans to widen geographical footprint.

Product contribution in revenue in FY21- Flat sheet, fitted sheets pillow-cases contributed 85% and Fashion, Utility and Institutional contributed 15%.

Management commentary: Mr. Anil Kumar Jain, Executive Chairman said, "It gives me immense pleasure to share that we have delivered growth despite challenging environment and lockdown restrictions. Our growth during the year was propelled by higher demand for home textile products and consequent increase in our market share globally. Furthermore, our persistent focus on expanding our current capacity, growing our branded portfolio, enhancing our domestic presence, improving ecommerce and building and creating a sustainable value chain have helped us thrive and be future ready."

Mr. Mohit Jain said, "At Indo Count, our key focus has always been to weave an unforgettable legacy of corporate excellence and exceptional service. We continue to transform the world of textiles, one thread at a tim