Bsl Ltd (BSL) Q4 FY23 Earnings Concall Transcript

Bsl Ltd (NSE:BSL) Q4 FY23 Earnings Concall dated May. 09, 2023.

Corporate Participants:

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

Shri Nivedan Churiwal — Managing Director

Analysts:

Pranay Dhelia — Panchatantra Advisors — Analyst

Shruti Kamath — Value Growth Advisors — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the BSL Limited Q4 and FY 2023 Earnings Conference Call hosted by Rick Capital. We have with us today from the management, Mr. Nivedan Churiwal, Managing Director; Mr. Praveen Jain, Director, Operations. [Operator Instructions]

Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today’s discussion may be forward-looking in nature based on management’s current beliefs and expectations. It must be viewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what we — what may be expressed or implied by such forward-looking statements.

I now hand the conference over to Mr. Praveen Jain for opening remarks. Thank you, and over to you, sir.

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

Good afternoon. Participants we are pleased to welcome you to BSL Limited FY ’23 Earnings Conference Call. It is our privilege to host this conference call for the first time, and we sincerely appreciate your valuable time. We are optimistic that our decision will be fruitful and [Technical Issue]

Operator

Mr. Jain, please go ahead. Your audio is breaking, Mr. Jain.

Shri Nivedan Churiwal — Managing Director

Your audio is breaking. Parveen ji, your voice is breaking.

Operator

Mr. Jain, we are not able to hear your audio.

Shri Nivedan Churiwal — Managing Director

I’ll start. I’ll take it. Let him reconnect.

Operator

Sir, I will disconnect and reconnect the line.

Shri Nivedan Churiwal — Managing Director

Of Praveen ji or mine?

Operator

Mr. Jain sir.

Shri Nivedan Churiwal — Managing Director

Should I continue then on his behalf?

Operator

Yes, sir.

Shri Nivedan Churiwal — Managing Director

Okay. So first, I would like to give you an outlook of the Indian textile industry. I would like to provide you with your overview of the current outlook of the Indian textile industry despite a challenging period of approximately six to eight months marked by rising cotton prices and subdued demand, we have observed an encouraging improvement in demand accompanied by an increase in utilization levels.

The Indian textile industry has several opportunities to expand and become more competitive to succeed in the global market, India must prioritize increasing production capabilities and enhancing capacities while also investing in the training and development of its workforce. We grow trajectory of Indian export hinges on the ability of Indian companies to expand their capacity as those capable of expanding more rapidly are likely to receive larger orders from international customers.

The brand on Xinjiang cotton has resulted in stringent measures taken by the U.S. customer authorities on cotton imports from the region and other leading customers. This, along with other factors, has made the leading global customers adopt the China one strategy in an offer to reduce the dependence on China and India would certainly be an immediate beneficiary of the same across all textile sectors, especially cotton. Overall, the Indian textile industry outlook is very positive with growth in demand from both domestic and export markets for Indian textile products in the long run. India is now being seen as a reliable, sustainable and long-term business partner.

Now, talking about some of our sectors. The domestic market for home decor and snooping witnessed remarkable growth, exceeding the pre-pandemic levels going to the surge in demand for premium products. This uptake in demand was primarily driven by factors such as increased footfall, expansion of retail stores, shift towards organized players, and rising consumer spending.

Towards the end of the quarter, the export market also showed signs of improvement as global retailers began to see positive outcomes from inventory optimization, leading to an increase in order flow for suppliers.

Now, I would like to speak briefly about BSLs different verticals and its marketing strategy is today one of EMEA’s most diversified being expensed with interest in a very bread and diverse range of products which are suiting fabric furnished and other ITFs.

DSL continues to expand its core routing business across globe in the export market, it has a presence in over 35 countries and is consolidating its base on trying to expand its forte in the more profitable markets in order to make it stand export business more suitable and viable.

BSL Limited is taking rapid strides in the domestic shooting segment and extracting more market share from its competitors. It is focused on the growth of both the segments, BHL Bank for PV mass segment and Jeffrey Hammond its premium range where it offers luxury fabric in the form of soluble and Puregold and ethnic wear in the perform of Chakas.

Both segments have grown well and shares continue to remain on the growth trajectory. Over the past decade, the furnishing business has been a driving force through its strategic partnership with ITF, and this segment will continue to grow.

As ITF premiums happier furnishing fabrics, BSL has successfully showed its product across 450 stores worldwide, reinforcing its position as a permanent player in the global market. The yarn business at BSL is extremely diverse with existing segments of synthetic bursted and vortex spinning and now with the newly launched cotton spinning the spinning business now accounts for a major chunk of the company’s revenue. This spinning business has been instrumental in the company’s growth in recent years and now with potent spinning. It is expected to grow further.

The company has recently commenced commercial operation in its cotton spinning project, where it has installed a capacity of 29,184 spindles, which will give a product traction of around 700 tonnes per month and it is expected to generate additional revenue to the tune of around INR250 crores from this financial year.

Overall, shooting export contributes around 35% of turnover with 20% coming from domestic and furnishing business and the balance from the yarn business. Going forward, BSL foresee the 40% increase in the yarn business and a 50% increase company’s overall revenue led by the growth in yarn business and other segments.

Praveen, are you there?

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

Yes.

Shri Nivedan Churiwal — Managing Director

Okay. Now I will request Mr. Pravin Jain to take over the financial performance. Thank you.

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

We are thrilled to announce that your company has made significant strides in FY 2023 with increasing financial results to show for it. Our revenues have sold to INR472 crores, representing a remarkable Y-o-Y growth rate of 8.2%.

Our EBITDA has also demonstrated robust performance, surpassing expectations and reaching INR53 crores, an increase of 33.8% compared to the previous year. Additionally, we are related to report that our pet for FY 2023 has delayed email standing at approximately INR19 crores, including an excessive loss of approximately to INR2 crores, which are seen time lows. This makes a significant increase of around 66% only Y-o-Y basis, inclusive of the excessive loss compared to the previous year’s pack of approximately INR11 crores. Our EPS has also shown for duty growth, reaching INR6.43 representing a growth of 47.4% on a Y-o-Y basis. We take pride in the achievements of our company in FY 2023 and remain steadfast in our commitment to maintaining its upward trajectory.

Furthermore, we are proud to announce that Board is approved, a dividend of $1.50 per share, which reflects our strong commitment to creating value for our steam shareholders. We believe that this decision is testament to our consistent performance and dedication to driving long-term growth and profitable grid for our stakeholders. We are elated by these remarkable achievements and grateful for the dedication and support of our team and stakeholders that contributed to their success.

With that being said, we welcome any questions or discussion.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Pranay Dhelia from Panchatantra Advisors. Please go ahead.

Pranay Dhelia — Panchatantra Advisors — Analyst

Good afternoon and many congratulations on a good set of numbers. I just want to know the debt repayment schedule that the company has planned for the next three to five years?

Shri Nivedan Churiwal — Managing Director

Peak that? Yes.

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

We have the repayment obligation for the current year of 2023, 2024 of INR12 crores. And for 2025 about INR23 crores and for 2025 2026 INR25 crores.

Pranay Dhelia — Panchatantra Advisors — Analyst

So with the enhanced cash flow, I hope that the company will prepay debt to reduce the interest burden on the company. I would just request you to please support this to the Board as well. Thank you so much.

Shri Nivedan Churiwal — Managing Director

That certainly is Mr. Dhelia a part of our consideration. With the enhanced cash flows, we will definitely look to prepay our debts and we will take the call as an situation arrives. Thank you.

Pranay Dhelia — Panchatantra Advisors — Analyst

Thank you. many congratulations and best of luck for the years a ahead.

Operator

Thank you. The next question is from the line of Shruti Kamath from Value Growth Advisors.

Shruti Kamath — Value Growth Advisors — Analyst

Thank you for the opportunity and congratulations on a the good set of numbers. Sir, my first question would be with this new capex, what size of opportunity do you able to cater over next two to three years?

Shri Nivedan Churiwal — Managing Director

You mean in terms of turnover?

Shruti Kamath — Value Growth Advisors — Analyst

Yes, sir. But what kind of opportunity do we see with this new capex coming and now?

Shri Nivedan Churiwal — Managing Director

Well, I had also mentioned — okay, you complete your questions and then we’ll answer them together.

Shruti Kamath — Value Growth Advisors — Analyst

Okay. My second question would be — by when we’ve been able to reach the breakeven of this the tact and if you can elaborate more on the opportunity of opportunity in your home decor segment? Thank you.

Shri Nivedan Churiwal — Managing Director

Sure. So as I mentioned in my speech, we are expecting a production of around 650 to 700 tonnes per month which is expected to generate additional revenue of around INR250 crores annually.

This, of course, is based on today’s raw material prices. If there a further fluctuation in the prices, the corresponding yarn prices would fluctuate proportionately. So just take care of that also.

Now breakeven, we are hoping to be profitable from the first year. We just completed our first month of operation and the cotton price situation is very volatile. So it’s too early for us to say, but we are very hopeful that we will be profitable from the first year itself.

Now coming to your question related to Home Furnishing, Home Furnishing business has been our growth engine for the last decade or so. Primarily, the business is centered around IKEA, which is one of the world’s leading retail giant for furniture products.

And we at BSL will and probably still are the only supplier of furniture or fabrics to IKEA from South Asia. And as I mentioned, you walk into any of the 450 IKEA stores you will see our products available there so far. The BSL mark fabric so far shares in different home products made from our fabrics.

And we are very confident that this business will grow from comes time-to-time. There is a temporary deep in movement, because of the slowdown in Europe, but that’s something which can always come up from time-to-time. We’re very confident that this home decor furnishing business. We will continue to grow and drive the company’s growth as it has been doing for the past decade. Thank you.

Shruti Kamath — Value Growth Advisors — Analyst

Sir, two more questions. So what is the total debt — net debt position as of today?

Shri Nivedan Churiwal — Managing Director

As of today — as of 31st March…

Shruti Kamath — Value Growth Advisors — Analyst

Yes. Yes, Yes, sir.

Shri Nivedan Churiwal — Managing Director

Yeah. Long-term debt are INR159 crores. And the working capital limits for today is INR186 crores.

Shruti Kamath — Value Growth Advisors — Analyst

Right. Sir, one last question from my side. How do you see this cotton price now shaping up positions from last quarter to this quarter and for the coming years? Thank you.

Shri Nivedan Churiwal — Managing Director

Cotton prices at present are at 62,000 level candies. And last month, it was holding around to 61,500 to 63,000. So almost it is we can say it is stable, not very volatile age of now since last quarter.

Shruti Kamath — Value Growth Advisors — Analyst

Thank you sir.

Shri Nivedan Churiwal — Managing Director

Yeah. Thank you.

Operator

Thank you. [Operator Instructions] Ladies and gentlemen, that was the last question. [Operator Closing Remarks]

Shri Praveen Jain — Director (Operations) and Chief Financial Officer

Thank you.

Shri Nivedan Churiwal — Managing Director

Thank you.

Operator

Thank you, sir.