Himatsingka Seide Limited (HSL) is a vertically integrated Home Textile major with a global footprint, engages in themanufacture, marketing, distribution, and retail of home furnishing fabrics in India, the North America, and Europe. The company provides decorative fabrics, such as fabrics for drapes and upholstery for home, as well as for contract andhospitality. In addition, the company manufactures spun and silk blended yarn products. The company commissionedgreen-field bed linen project at Hassan SEZ in 2007-08. As part of its forward integration initiative it acquired 70% stakein Giuseppe Bellora SpA, Italy and 80% stake in Divatex Home Fashions Inc., and 100% stake in DWI Holdings, New York,in 2007-08. The company used the distribution channel of Divatex, DWI and Bellora to sell its bed linen business. Thedistribution business is engaged in both the private label and branded space. The company also operates 14 retailstores, including 2 international stores at Dubai and Singapore under the ATMOSPHERE brand name.
Himatsingka Siede Ltd. (HSL) profitability got impacted in the last four years onaccount of delay in commissioning of new bed linen business at Hassan SEZ,acquisition of 80% stake in Divatex Home Fashions Inc., New York, in July 2007(distribution company) at peak time, slow down in US economy, volatility inraw-material prices (raw silk and cotton) and long open derivative contracts.To combat the crisis, the company had introduced product mix changes,addition of new customers, enhancing focus on the brands, launching valueadded products and higher capacity utilization will lead growth in the sales andimprovement in margins. The last leg of derivative contract also got closed inAugust 2012.
All issues behind now, we can see some stable earnings outflow if the managementdoesn’trepeat their previous mistakes. Debt is reducing, there is no major capex lined up in next 2 years and they intend to reduce debt further, so we will see higher growth in bottom line for next few qtrs. Seems like a decent bet at current level.