Welspun India expects new flooring business to be a game changer
Welspun India reported revenues of Rs 6,600 crore in the fiscal year 2018-19, up 7.8 percent from last year, predominately driven by volume growth, said Altaf Jiwani, director and CFO, in an interview with CNBC-TV18. The year on year EBITDA margins were lower at 17.4 percent compared to 19.6 percent reported last year because the rupee depreciated in FY19, which impacted the cost structure, wherein raw material costs, packing cost etc went up. However, it had a lag effect reflecting on the revenue because of the company’s hedging policy, he said.
Almost 60 percent of receivables are hedged on a 12-month forward basis, he said. In 2017-18 when the rupee was at 63 we had hedged at 66 for 2018-19 but now the situation will correct itself. As we get into 2019-20, our hedges average around 71.5 rupees for the full year.
He said the company has actually managed to reduce net debt by about Rs 287 crore but optically it did not show because they had borrowed for their new business of Welspun Flooring.
The company is hopeful that Welspun Flooring would be a game changer going forward. The project will be commissioned by Q2 of FY20, said Jiwani.
Talking about other businesses, he said the Advanced Textile business saw a growth of 48 percent in FY18. While Towel and Bed Sheet volume growth in Q4 FY19 was in double-digit.
“Some of the initiatives in the domestic business seem to have achieved traction and we would see a substantial focus on domestic business as we go forward,” said Jiwani.