Quarterly performance

Himatsingka Seide (HSL) has the highest operating margins in Indian textile industry and a strong global clientele of 150 customers including Osborne & Little, Baker, JAB, Donghia and Fischbacher. It is now leveraging its designing strength to expand by putting up a bed linen project with annual capacity of 20 million meters. Also, with expansion of its successful domestic retail venture for home textiles, ‘Atmosphere,’ in international locations and planned acquisition of a couple of US$ 50-100 million brands in the US/EU markets, the company is expected to become a global player in the attractive home textiles space.

Sales increased by 11% to Rs 37.77 crore as against Rs 34.17 crore. The operating front, OPM dropped to 33.3% (against 38.7%). All expenses (except personnel costs) as a % of sales increased. Raw material cost, manufacturing costs and administration, sales and other expenses as a percentage of sales (net of stock adjustment) increased significantly from 30.8% to 36.7%, 9.8% to 11.3% and from 9.9% to 10.2% respectively compared to the corresponding previous quarter.

Other income during the quarter increased by 92% to Rs 6.17 crore. At the PBIDT level, the company registered an increase of 14% to Rs 18.75 crore. Interest expenses declined significantly by 79% while depreciation increased marginally by 1% at Rs 3.53 crore, after which PBT witnessed a modest 2% increase to Rs 13.04 crore. Tax provision for the quarter stood at Rs 0.70 crore as against Rs 1.15 crore in the corresponding previous year. The net profit thus stood at Rs 14.41 crore up by 28%.

Sales from the fabric witnessed an increase of 14% while the yarn business registered a modest decline of 3%; segment margins in both divisions have declined. The margins in the fabric division declined from 39.1% to 36% at Rs 11.91 crore. The decline in sales in the yarn segment, was coupled with a fall in margins in this division resulting in a loss of Rs 0.14 crore as against a profit of Rs 0.44 crore for the quarter ended June 2006.

FY 2005-06

For the year ended March 2006, net sales grew 9% to Rs 150.90 crore. Sales from the fabric business registered a modest growth of 5% to Rs 126.26 crore, while yarn division witnessed a growth of 29%; PBIT in fabric segment declined by 11% at Rs 44.72 crore, while that of the yarn segment increased by 49% for the quarter.

OPM decreased by 620 basis points to 34.3% from 40.5%. Other income during the year increased by 119% to Rs 14.31 crore. At the PBIDT level, the company registered a modest increase of 6% to Rs 66.07 crore. Interest charges decreased by 3% to Rs 1.15 crore, while depreciation increased by 10% to Rs 13.75 crore, PBT recorded a modest 3% increase at Rs 51.17 crore. Tax provision was lower by 10% at Rs 2.86 crore . Net profit stood at Rs 48.31 crore higher by 4%.

The construction of Company's Bedlinen Project at Hassan is on schedule.

The promoter holding stands at 49.03% as against 61.16% in the previous year. Presently the scrip trades at a price of Rs 96 on the BSE