Sandeep Jain – Executive Director and Dinesh Gogna – Director of the company addressed the call.

Highlights of the call

For the quarter ended December 2017, it registered a 24% rise in sales to Rs 355.92 crore. OPM improved 410 basis points to 79.93% which saw OP grow 51% to Rs 79.93 crore.

PAT jumped 37% to Rs 47.78 crore.

For the nine months, it registered a 15% rise in sales to Rs 559.67 crore. OPM improved 240 basis points to 20.4% which saw OP rise 31% to Rs 114.17 crore.

PAT grew 33% to Rs 68.56 crore.

Q3 generates highest quarterly revenues in any fiscal year

Rock It Brand launched in Q1 already crossed sales of Rs 2.5 crore and is expected to surge going forward. Target for FY 2019 is Rs 10 crore.

The company is focusing on product diversification.

It is seeing consistent growth in Cotton products. Cotton contributes 57.1% sales for the nine months against 54.5% yoy.

Woolen sales also registered strong growth during the quarter. Winter sales picked up in Northern India, signaling strong winter during the year.

Last year business was affected due to demonetization as it came during its peak season. The company was also impacted by GST. However, effect of this two is now no more.

The management has laid a foundation for sustainable and strong growth in the future.

The company has improved traction across NCS, including large format stores like Reliance retail, Shopper stop, Aditya Birla Fashion, Central, Kapsons.

No new capex is planned for next 2 years. For the next 2 years growth will be achieved by higher capacity utilization.

The company is focusing to build a pan India presence.

Central region contributed 15% of the overall sales for the quarter.

The company is expanding presence in western and southern markets as well as expanding its product offerings in home furnishing and kids segments in order to reduce the overall seasonality impact.

Home furnishing business is doing very well. This business is expected to grow 35-40%.

Good growth should come in next year as well.

Debtors stand at Rs 343 crore as compared to Rs 243 crore last year. Debtors have grown due to higher sales.

Hopes to easily to maintain 12-15% growth next year and will grow more if economy grows more than current rate.

Focus is on a comprehensive range of cotton and cotton-blended products which cater to all season in-order to expand all-season product range and strengthen pan-India operations.

Average sustaining capex is to be in the range of Rs 10-15 crore on yearly basis in the next two years.

As on Dec 2017, the company had 234 EBOs (21 Exclusive Brand Outlet- Company own Company operated, and 213 Exclusive Brand Outlet - Franchise own Franchise operated), 2500+ Multi Brand Outlet (MBOs) and 270 National Chain Stores (NCS).

The company has high cash balance of Rs 136.1 crore (includes cash and bank balance along with current and non-current investments).

It is building its presence on e-commerce platform through own portals. The company has also entered into distribution agreements with some of the leading Indian digital commerce platforms for online sale of products.

Advertising guidance has been reduced from 5% to 3-4% of sales.

18-19% EBITDA is sustainable for years to come.

Last year other income has one time duty claim of Rs 7 crore. Otherwise the other income is sustainable going forward.

Next year woolen business will also have double digit growth.

Cotton products booking is better than last year. This segment will also grow in double digits in Q4.

In Woolen segment capacity utilization is 80%.