On what other businesses does cotton prices have an impact on?
Phase 2 commissioned but capacity utilization is less and shall ramp up to 90-95% in next 6 to 9 months. Phase 1 installation has reached 95% capacity utilization.
It’s capacity optimization and gradually settling of gst and demonetization issues that will increase local sales and help margin expansion (presently 70% are exports though margins are less than local sales)
I hope company uses fcf for debt reduction. capacity optimization should add ebitda margins
Thanks Savishesh for your reply. But on what basis are you saying that phase II has been commissioned? Do you have some personal source of information? Is it that something is in public domain but I have missed it. Please clarify.
Phase 2 was comissioned in August. You can check BSE announcements around that time.
I have rechecked all announcements since June '17. But I am unable to find the relevant announcement. Will you please post the link of that announcement? I am expecting you to give a concrete reply.
Can someone throw light on how much more FCCBs are yet remaining in SIL to be converted to equity.
http://www.moneycontrol.com/stocks/reports/sintex-industries-limited-9741021.html
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In recent concall they mentioned phase 2 has commenced in sep.
I am sorry. I was going by my friend’s word about it. I wasn’t able to find any confirmed news about phase 2. I just found one in July where they said Phase 2 will be commissioned in August:
go through their latest Concall.
Kindly post exact words of the company. On what basis are you saying that second phase has started production. I have again gone through the documents. I could not find any mention. Please post the exact link here on VP.
have you gone through the latest Concall of sintex industries?? it’s there on researchbytes
Thanks Savishesh
I stand corrected after listening to the audio. Previously I was looking at PDFs. The additional capacity of the second phase has been commissioned that is a good news indeed.
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Hi Khushi
While nobody can answer your question with certainty. I have tried to look at the technical charts of Sintex.
Prices of the security seem to be drifting down. On NSE today it closed at 26.05. Further drift down is suggested by the charts, before an upmove occurs. Today 9D MACD seems to be piercing its signal line from above. This is a bearish indicator. One has to wait for tomorrow for confirmation.
Sept quarter margins are declared as 8%. Phase 1 margins are at 18% with regular compact yarn being made.Phase 2 will also have similar margins.
But in recent Q2 results , due to training expenses for new workers and sale in export market due to low demand in domestic market and rampup of phase 2 costs increased and margins are impacted.
Management repeatedly guided in concall for March 2018 timeline for full commissioning of phase 2 of 3 lakh spindles.
Already 1 lakh spindles are already commissioned. May be thats why we see 70% jump in revenues.
Further management guided that we would see effect of full capacity in Q1 of next year. So 9 months an investor shud wait to see improved results. By then if things are in control, 18% ebitda margins may be a reality.
Further from Q1 of next year, management said they would make Value added products to increase margins further.
Recent news on Anti dumping duty of textile products might improve local demand. The margins in local market are higher.
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How much spindle capacity is commissioned for phase 2 vs 3.3 L for phase 1.
Hi csteja
The spindle capacity of the two phases is equal. However the capacity utilization is low in the early stages. This is because the workers need to be trained in using the new machines and that may prove to be a challenging task. The profits of company will depend more on the skills and the efficiency of the workers than anything else.
Second phase is more for high value products. it will produce no touch compact yarn and hence the labour required will be much less. However, skilled labour is required who is able to properly run the machinery for which extensive training is initially required.
First phase has reached 90% efficiency and second phase is at 50% efficiency which should reach 90% efficiency in another 2 quarters and in next 3-4 quarters they should be able to optimise product mix so as to produce value added yarn instead of commodity yarn they are producing right now just to increase capacity utilization. current ebitda margins are 18% for first phase and for second it should be around 23% after optimization.
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Hi Savishesh
It is easy to sell commodity yarn and entire produce can be sold in minutes literally. However, special yarns are a different story and finding buyers is a challenge. Fortunately these machines have flexibility and any type of yarn can be produced. The business of special yarn will grow only slowly, and initially the company has to depend on selling commodity. Therefore the margins may not rise in the beginning. Selling special yarn is a highly competitive area. I am just trying to add some caution to what you are saying.
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Already their 2 nd phse of 3 lakh spindle capacity was commissioned.They are now trying to utilize the additional capacity in sequential basis
