Sangam India Ltd., a leading integrated textile conglomerate in India, reported a 12.92 per cent rise in net profit at Rs. 15.55 crores for the quarter ended December 31, 2015, compared to Rs. 13.77 crores in the corresponding quarter ended December 31, 2014.
Earnings before interest, depreciation and taxation (EBIDTA) increased 4.02 per cent at Rs. 55.35 crores compared to Rs. 53.21 crores in the corresponding quarter ended December 31, 2014. The company’s operating margins improved by 112 bps to 15.61 per cent in Q3FY16. Increased integration focus on exports helped the company in maintaining realizations, despite falling prices.
However, falling commodity prices impacted the company’s net sales during the quarter. Its total income from operation dipped marginally to Rs. 354.54 crores for the quarter ended December 31, 2015 compared to Rs 367.31 crore in the corresponding quarter of 2014.
Despite falling commodity prices, the company was able to maintain realisation in exports of denim and suiting during the quarter.
Management comment
Commodity prices continue to soften globally over the last couple of months, and yet Sangam has managed to contain its impact on revenues. Significantly, the response to new seamless product launches has been encouraging, said Mr. R.P. Soni, Chairman, Sangam India Ltd.
The management strategy to increase focus on exports seems to be yielding better-than-expected results, with denim exports reporting a sharp jump of 204% YoY and suiting fabrics exports rose by 25.7% YoY.
The Chairman commented: “We have received an encouraging response to our recent foray into seamless garmenting. What enthuses us is that this response is despite the fact that we are yet to fully roll out our brand and marketing campaigns. Till date we have already set up 600 multi-brand outlets (MBOs) all over India and intend taking this network to 1,000 by the end of this financial year. Also, we are on track to set up 8-10 exclusive brand outlets (EBOs). We are hopeful of a much higher revenue contribution and better operating margin from this segment going forward. We remain committed to steer the company towards higher profitability. Our efforts are to see that the company steadily migrates to newer, value-added, product segments. While the company has already started benefiting from the move into specialty denims, we intend to make aggressive inroads into the domestic lingerie retail market through our brand Channel Nine.”
Sangam Ltd. is currently embarking on a Rs. 198-crore expansion plan, which is funded by a term loan of Rs. 157.50 crores and by internal accruals. The project envisages installation of 26,736 spindles of polyester-viscose dyed yarn, 74 imported airjet shuttleless weaving machine, one denim line and a two MW solar project. The project activities are in progress as per schedule.