Delhi-based Filatex India, currently in the throes of a significant expansion, will look to strike foreign tie-ups for contract manufacturing of higher value chain products like polyester yarn and garments next year. The company is aiming to move towards making higher margin products and may consider establishing digital printing facility as well at some point, company Chairman and Managing Director Madhu Sudhan Bhageria told Moneycontrol.
“We would like to tie-up with foreign companies. There is a lot of fabric that is not made in India. We would like to make them here. Manufacturing has become unaffordable in many countries. We would like to meet their demand by making here and supplying to them,” the man at the helm of the family-run company said.
The company clocked a net profit of Rs 60 crore on net revenues of Rs 1,928 crore in 2017-18. Exports contributed around 20 percent to the revenues. In June quarter this year, net profit came at Rs 20.14 crore on revenues of Rs 704.43 crore. Earnings before interest, tax, depreciation and amortization was Rs. 56.96 crore.
Bhageria expects to close the ongoing financial year with net profit Rs 90 crore, a jump of 50 percent from last year on a topline of Rs 3,000 crore . He expects the EBITDA to come at Rs 250 crore to Rs 260 crore. “New capacities will pull up the profit,” he said.
The company’s product portfolio includes polyester chips, polypropylene multifilament crimp yarn, polyester partially oriented yarn, drawn textured yarn, fully drawn yarn and narrow woven fabric. These in turn are used to make products like shirts, trousers, lingerie, sarees, carpets, rugs, yoga wear and sportswear, bedsheets, towels and curtains.
The company commissioned new capacity just six months ago at Dahej in Gujarat at a cost of Rs 340 crore. It is currently implementing a brownfield expansion at the same spot in the port city. Overall, the company has two factories, the other one at Dadra & Nagar Haveli.
The company currently has an annual manufacturing capacity of 328,300 tonne. The brownfield expansion, currently underway in Dahej, will take the manufacturing capacity of the unit to 1,050 tonne per day. This expansion, likely to be completed by December next year, will cost Rs 275 crore and will be funded through a mix of debt and equity. Bhageria said the company had placed the order for the new machines which typically take two years to get delivered.
The company has the necessary approvals to raise Rs 150 crore in equity to fund its expansion and also keep aside a certain amount — Rs 50 crore to Rs 70 crore — for any inorganic opportunity that may come up. Bhageria said the preference would be to mop up this money via a qualified institutional placement. The QIP will see promoter holding come down to 52 percent from 58 percent, according to Bhageria.
Part of the QIP proceeds will also be used to erect a 25-30 MW power plant for captive use in Dahej, he said. “We will apply for environment approval for the power plant. It will cut power cost by Rs 2.50 to Rs 3 per unit with a three-year payback period,” Bhageria said.
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