Key highlights

• The manufacturing division was flat on y.o.y basis for Q3 FY'13 for Himatsingka Seide and stood at around Rs 182 crore. EBIDTA was down by about 10% due to higher input costs. There were no price increases during the quarter.

• Both the bedlinen and Drapery/Upholstery brands saw increase in average realization by 5% and 0.5% respectively. The capacity utilization for Bedlinen and Drapery/Upholstery stood at 81% and 43% respectively.

• On distribution side, the North American market saw a 12% increase in net sales to about Rs 375 crore. Private label grew by 10% and the branded segment registered growth of about 17%. EBIDTA was down by about 2% largely due to lower product mix.

• In EU market, the revenue was down by about 26% and the segment reported loss of about Rs 3.21 crore. Weak EU demand and general economic environment in that region was responsible for the poor performance. Management does not expect the situation in EU to improve in near future.

• Management has indicated that they are taking steps to ensure to increase the reach and presence of their EU brand Bellora to other geographies particularly in South East Asia and in China. This process will take about 4 quarters.

• Consolidated debt stood at about Rs 706 crore which includes working capital debt of about Rs 153 crore. Average interest cost of debt stands at 5.8%. The debt was higher y.o.y, as company borrowed funds to increase their stake in Divatex, the US subsidiary from 80% to 100%. Going forward, management expects the debt to come down.

• There were no price increases during the quarter. Raw material costs were higher by about 3-4% y.o.y. Management mentioned that the price increase can be reviewed in coming quarters, otherwise, product mix and efficiency will take care about 3-4% increase in raw material costs.

• There was a forex gain of about Rs 5.3 crore during Q3. The company has covered its forex exposure for next 2 quarters at average of about Rs 55.7 to $.

• The manufacturing arm has an order book of about Rs 241 crore.

• Company has 14 retail stores as on date, with 12 in India, 1 in Singapore and Dubai each. It has plans to increase the retail stores to about 40 in next 12-15 months.

• Crisil has upgraded the long term rating of the company from BBB- to BBB.