Amarjothi spinning mills ltd the value added colour melange yarn

Amarjothi Spinning Mills Ltd. FY18 Annual Report Notes

  • The Company’s sales decreased by 12.62% to Rs.18945.14 Lakhs during the year under review as against Rs.21682.02 Lakhs in the previous year. Profitability of the company also decreased due to this. This reduction resulted due to local market condition.
  • The consolidated net profit for the year was Rs.12.927 cr. as against Rs. 15.194 cr. in the previous year
  • The Processing unit is fully utilized for the dyeing of material of our spinning unit. In addition to our own dyeing, we process our material in outside dyeing also.
  • The Company will continue to perform well in the domestic market. The Company is in the process of implementing several cost saving measures including modernization, which will make the product more competitive.
  • Company has been improving its share of value added yarn in the market in the form of Dyed fibre yarn, Dyed cotton yarn, PC yarn, etc
  • The Company offers competitive price due to low power cost through windmills, low interest cost, low processing cost, etc.
  • Company is in the process of implementing several cost saving measures, which will make the product more competitive.
  • Foreign Exchange earnings : Rs. 799.19 Lakhs
    Foreign Exchange outgo : Rs. 332.23 Lakhs
  • Capex of Rs. 79.27 cr on consolidated basis and Rs. 52 cr in standalone basis. Total addition of Rs. 79.27 cr in P&M on a Gross Block of Rs. 227 cr. Long Term Loans From Banks were taken for the purchase of new wind mills and these loans are required to be repaid before July 2023.
  • Consolidated debt at Rs. 165 cr. Loan from directors at Rs. 109 cr. Interest on director’s loan is Rs. 11.35 cr at 10.41%. This development is good to see as in earlier years management charged around 16-18% interest on Director’s Loan.
  • Lower provision of Tax @ 13%. Direct taxes paid during the year were Rs. 6.68 cr.
  • EBITDA margin at 17.73% against 19.8% in FY17.
  • Production: 6397599 kg (6772336)
    Sale: 6119340 KG (6945618)
  • Sales per Kg dropped marginally from Rs. 307 per kg to Rs. 305 per kg.
  • Manegerial remuneration reduced from Rs. 2.18 cr to 1.42 cr.
  • Promoter holding reduced from 56.23% to 55.05%.
  • The Company owns thirteen wind mills mainly for captive consumption purpose only. During the year the value of power generated through these mills is Rs. 12,94,42,280.00 (21099028 units) and this is adjusted with the power cost of the Company. (In FY17 company had 11 wind mills)
  • The Company has obtained ISO 9001:2000 Certification, MGMT.SYS RVA C 216 Certification for quality management and systems and OEKO TEX STANDARD– 100 Certification for not using harmful substances in the product.
  • Company has made investments for a sum of Rs.20,00,000 in M/s. RPJ Textiles Limited as 100% wholly owned subsidiary for the purpose of acquiring raw material and Rs. 74000 in M/s. Premchander Wind Farms Private Limited as 27% share of capital for the purpose of captive consumption of power generated by their wind mills.
  • Turmover of RPJ Textiles Limited for FY18 was Rs. 13.20 cr. ans PAT was 0.19 cr.

My View: Company’s sales reduced both in terms of volume and value due to tough time in the textile sector. Company made a substantial capex this year but it was disappointing to see that instead of increasing spindles they made investment in wind mills. This investment should bring considerable savings in power cost which will further increase their margins instead of growth in sales. On a positive note it was really good to see that management reduced the amount of interest they were charging on loans given to company and brought it down to more realistic and fair levels. Management also took reduced remuneration during the year.

Regards
Harshit

9 Likes