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.