Ponni Sugars (Erode): Expect losses in FY14 on lower cane availability

Riken Mehta
Follow me on Twitter @mehtariken


Ponni Sugars (Erode), a sugar manufacturer in Tamil Nadu, reported a loss of Rs 6.64 crore in the quarter ended June 2013. Sales declined 16 percent to Rs 28.27 crore in this quarter compared to Rs 33.53 crore in the same period.

“The crushing and co-gen operations were severely impacted in this quarter on account of drought. The cane availability was also very low in the quarter gone by,” told K Yokanathan, CFO at Ponni Sugars (Erode)  in an exclusive interview to moneycontrol.com.

Guidance

“We expect cane volumes to drop by 50 percent this year compared to last year. The second quarter will be better compared to the first quarter. We don’t expect much of an up tick in the third and fourth quarter.  Unless the cane volumes don’t improve significantly we expect the company to post losses in FY14,” said Yokanathan.

Partial sugar decontrol

“We will not benefit much from the partial sugar decontrol done by the government. No levy obligation on the sugar mills for 2 years was the only positive for the company. The cane pricing issue needs to be resolved.”

Cane pricing

“The company paid Rs 2400 per tonne for cane in the sugar year 2012-13 (till September 30, 2013). The new SAP price will be declared by the government for sugar year 2013-14 starting from October 1.

Cane pricing needs to be implemented as per the Rangarajan Committee where in cane prices will be fixed at 75 percent of the sugar price realization ex-mill. This will benefit farmers as well as the manufacturers and it will lead to better realizations, volumes and higher cane availability,” he added.

Ethanol blending

“Currently, we have no operations in ethanol blending. We are planning to set up a distillery in one or two years. The government needs to lift the ban from 5 percent to 10 percent for ethanol blending,” said Yokanathan.

Co-gen

“We use baggase only for co-gen production so the co-gen will pick up in the second quarter since crushing has resumed. The sugar recovery rate was close to 10 percent,” concluded Yokanathan.

Siyaram Silk Mills: Aims sales of Rs 1200 cr in FY14; rupee fall won't impact

Riken MehtaFollow me on Twitter @mehtariken


Siyaram Silk Mills  , one of India’s leading suiting and shirting maker reported 4 percent jump in its net profit at Rs 10.73 crore in the quarter ended June 2013. Sales rose 22 percent to Rs 250.73 crore as against Rs 205.06 crore in the previous quarter ended June 2012.

Operating margins were down by 82 basis points from 12.58 percent to 11.76 percent in the same period.  Raw material cost, employee cost and other expenses surged 12 percent, 38 percent and 18 percent respectively, year-on-year.

“Increase in the overhead expenses led to fall in margins. We were not able to pass on the hike to customers in this quarter on back of challenging environment,” told Surendra S Shetty, CFO at Siyaram Silk Mills in an exclusive interview to moneycontrol.com.

Guidance

“We expect annual sales turnover of Rs 1200 crore in FY14. The margins will remain more or less same as they were in the last year,” said Shetty. The company reported operating profit and net profit margins of 12.39 percent and 5.29 percent respectively in FY13.

Current installed capacity and Capex

“Currently we have 450 looms installed and we produce 3.25 lakh pieces per month. We have 160 exclusive franchisees, 1.5 lakh multi-brand outlet retailers and 1600 dealers. We plan to install another 48 looms in FY14. However, if the market condition deteriorates further then we may scale back on the capacity expansion plans,” he added.

Operating margins Product-wise

“We clocked 15 to 17 percent operating margins in the readymade garments category overall and 13 to 15 percent  in the fabrics segment,” said Shetty.

Advertisement expenses

“We will continue to spend on advertisements in a paced manner. We will not spend aggressively on advertisements in FY14,” clarified Shetty.

Demand scenario

“The demand is good for polyester viscous or blended fabrics since cotton prices are high so people are opting for blended fabrics as an alternative.”

Rupee depreciation

“We have no exposure to foreign currencies since we import very little.  The company has no operations in the international markets,” he added.

Exports

“The realizations in the domestic market are much lucrative compared to the international markets. We have no plans to start exports or tap other countries going ahead,” concluded Shetty.

Q1FY14: Stocks that have hit 52-week low post results

Riken Mehta
Follow me on Twitter @mehtariken

The first quarter earnings season (April-June 2013) for the fiscal year 2014 is panning out as predicted by the market experts. Pharma, IT and consumption stocks are beating street expectations while rate sensitives, metals, capital goods and cement disappoint.

It’s been early days so far in the current earnings season but the estimate seems to be pretty accurate. Large and mid-sized IT companies have outperformed by a wide margin on rupee depreciation along with the revival in US economy. Major banks and auto companies have struggled to meet the street estimates so far. Selective agro-based companies have managed to surprise the street with its better-than-expected earnings and with monsoon being good so far one could imagine the current quarter might pan out even better for these companies.

Let’s take a look at the companies that have hit 52-week high post stellar results in this month so far. It will be interesting to see by the end of earnings season the number of midcap and smallcap companies that have hit 52-week high/low post results.

* The list will be updated periodically

No	Company	Net Sales	PAT	PBIDTM(%)	52 Week Low	52 Week Low-Date	Result Date
1	ABC Bearings	37.21	0.26	10.62	49	22/07/2013	16/07/2013
2	Ashok Leyland	2313.21	-141.75	1.25	14.4	24/07/2013	16/07/2013
3	Sintex Inds.	614.88	40.64	20.47	33.7	24/07/2013	12/07/2013
4	Coromandel Inter	1637.26	14.35	6.14	162.4	24/07/2013	23/07/2013
5	Hinduja Foundrie	173.95	-32.83	-3.57	24.5	19/07/2013	17/07/2013
6	Goa Carbon	41.57	-7.49	-13.5	58.25	22/07/2013	06/07/2013
7	Grindwell Norton	215.78	21.71	17.29	220.75	24/07/2013	24/07/2013
8	Larsen & Toubro	12555.06	756.03	12.3	860.9	24/07/2013	22/07/2013
9	Amal	2.52	-0.78	-28.17	9.58	18/07/2013	18/07/2013
10	Sh. Digvijay Cem	85.48	-2.58	-0.28	8.2	24/07/2013	18/07/2013
11	Jay Bharat Mar.	264.26	5.09	8.84	35.8	23/07/2013	12/07/2013
12	Lloyds Finance	0	-0.54	0	0.41	24/07/2013	19/07/2013
13	SM Energy Teknik	0	-0.01	0	1.53	16/07/2013	15/07/2013
14	IL&FS Inv Manage	23.48	12.14	74.32	17.9	24/07/2013	22/07/2013
15	Hind.Oil Explor.	15.5	-18.34	26.06	27	24/07/2013	22/07/2013
16	Fortis Malar	25.9	1.7	12.05	19.1	24/07/2013	19/07/2013
17	NIIT	126.84	-8.56	13.47	16.75	23/07/2013	19/07/2013
18	S Kumars Nation	848.88	-429.42	-27.99	3.25	18/07/2013	16/07/2013
19	Federal Bank	1653.26	105.66	78.58	347	24/07/2013	19/07/2013
20	Sikozy Realtors	0	-0.04	0	1.91	08/07/2013	04/07/2013
21	Jindal Poly Film	650.23	3.8	8.36	132.25	23/07/2013	20/07/2013
22	Cals Refineries	0	-2.98	0	0.09	10/07/2013	09/07/2013
23	Assoc.Alcohols	44.32	0.43	7.08	13.8	22/07/2013	20/07/2013
24	Shalibhadra Fin.	2.75	0.5	64.73	19	17/07/2013	04/07/2013
25	Kwality Dairy	1020.53	15.02	4.54	23.05	24/07/2013	05/07/2013
26	IDBI Bank	6728.39	306.95	85.31	66.4	18/07/2013	18/07/2013
27	Alpha Hi-Tech	0	-0.04	0	0.97	19/07/2013	16/07/2013
28	S Kumars Online	0.3	-0.14	-26.67	0.75	18/07/2013	18/07/2013
29	Century Ply.	299.8	42.35	17.99	38.85	24/07/2013	08/07/2013
30	Abhishek Corp.	1.03	-15.89	-260.19	3.5	19/07/2013	01/07/2013
31	Indiabulls Hous.	1163.67	326.87	98.61	263.3	23/07/2013	18/07/2013

Cera Sanitaryware expects operating profit margins to stabilise at 16%

Riken Mehta
Follow me on Twitter @mehtariken

Ahmedabad-based sanitary ware company Cera Sanitaryware  reported another strong earnings performance in the first quarter of financial year 2013-14. Sales jumped 40 percent year-on-year to Rs 127 crore. Operating profit and net profit were up 27 percent and 20 percent to Rs 20 crore and Rs 11 crore respectively. Operating profit margins were down 152 basis points to 15.7 percent.

“ Cera Sanitaryware has grown at a healthy compound annual growth rate (CAGR) of 32 to 34 percent in last 5 years. In last 2 years company’s CAGR has been close to 50 percent,” Bharat Mody, strategic advisor at Cera Sanitaryware told in an exclusive interview to moneycontrol.com

Guidance

“We will not give a particular figure for sales and profit guidance but it will be safe to assume 35 to 40 percent growth in sales this year depending on the market conditions. We might even beat that number,” said Mody.

Raw material cost

Sanitaryware: The cost of raw material to total percentage of sales is 13 to 14 percent for sanitaryware. The basic raw material for Sanitaryware is mineral. Even if the cost of excavation and transportation cost goes up going ahead, it will not materially impact the company.

Faucetware: “The cost of raw material to total percentage of sales is 80 percent for faucetware. We lowered our production of faucets in this quarter which led to drop in raw material cost in this quarter compared to Q4FY13,” added Mody.

Revenue break-up

Sanitaryware contributes 60 percent to total revenues followed by 20 percent each from faucetware and bathware products.

Sanitaryware

The sanitaryware plants are operating at 95 to 98 percent capacity utilization. The company is focusing on manufacturing higher value-added products. We are outsourcing lower value-added products where margins are not so lucrative.

Faucetware

“We were struggling for the past two years to gain market share in this segment so we have changed our strategy and working on new high quality products. We will try various prototypes this year and then we may launch new products next year,” he added.

Operating profit margins

“Our margins have come down to 16 percent. We are focusing on generating more revenues even at the expense of contracting margins since this business is about volumes. However, it will be safe to assume that operating margins will remain around 16 percent going forward,” said Mody.

Rupee depreciation

Mody clarified, “Around Rs 75-80 crore product works was imported from China last year and roughly Rs 100-120 crore will be imported this year. Cera will be impacted from rupee depreciation going forward. The company has deployed hedging strategies and also some of the cost has been passed on to the consumers.”

Exports

“Currently, exports contribute 3 to 5 percent to total revenues. We will look to scale up our exports now post rupee depreciation of 10 to 15 percent. Margins have become lucrative in exports and the revenues from exports may go up going forward after rupee depreciation,” said Mody.

Loans

The current outstanding loan book is Rs 15 crore.

Tiles

“Cera wants to place itself as a one-stop shop for the entire bathroom setup. We ventured into tiles to offer a complete range of bathware products along with tiles. We have outsourced tiles business and the company has no plans to get into manufacturing for the next five years,” concluded Mody.