SVP Global Ventures Q3FY17 Concall Summary

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Brief Intro of Company

  •  SVP is diversified Yarn manufacturing company
  • Primarily incorporated in 1982, has units in Tamilnadu with capacity of 98000 spindles
  • Central benefits like TUF & other interest subsidies & also the state of Rajasthan announced some additional subsidy benefits in its Resurgent Rajasthan scheme for companies to create jobs & set up greenfield capacities in the state. Therefore the company has set up high end value added compact cotton yarn manufacturing facilities in Rajasthan

Financial highlights

SVP Global Q3FY17 Financial Performance
  • Total income for the Q3FY17 grew by 71.9% Quarter on quarter to Rs 6197 million
  • EBITDA was Rs 493 million which is 152% higher quarter on quarter. EBITDA margins stood at 7.96%
  • Net profit grew by 203% to Rs 94 million. This is mainly due to new capacity expansion which are state of the art and also a clear reflection of a well executed business strategy. The focus is on high margin & profitability
  • The volumes this Q3 FY17 is 5000 tonnes from new capacity & from rest of tamil nadu it is 15000 tonnes.
  • Total Gross Debt is about 952 crores
  • Normal receivable cycle is about 60 – 90 days
  • Gross Interest rate is anywhere between 11 to 12%
  • There is operating income of 7.56 crores which is income from subsidy
  • Consolidated EBITDA was about 8-
  • The company has 100 crores of Mortgage loan paying interest of 13%.
  • The company has 390 crores of working capital limits

Realisation from Rajasthan

  • The realization from Rajasthan is higher because the selling price of compact cotton yarn is selling at premium 
  • Average selling price for Rajasthan is Rs 245
  • Average cotton cost was about 100 -110 per kg
  • EBITDA from Rajasthan it is around 22% 

Expansion Plans

  • Setting up 3 units in Rajasthan.
    • In the first phase the company has commissioned 1 lakh spindles of compact yarn, it is currently operating at 90% capacity utilization
    • Phase II of expansion is setting up of 2400 rotors which is expected to commence full production by the end of the current quarter. For phase II the 2400 rotors is expected to generate around 120 crores of revenue
    • Phase III of the expansion plan is adding another 50000 spindles which expect to commission in the next quarter
  • ROE roughly about 20% for these projects
  • Equity invested in the spinning project is about 450 crores, this is including the existing plants
  • In the new plants the company has 170 crores for 1 lakh spindle project & if you include the Phase II & Phase III this figure goes to 270 crores

Exports

  • Exports from new unit are generally in the ratio of 50:50. Last quarter there was increase in exports due to demonetization
  • Exports are mainly to china, Bangladesh, Vietnam, Pakistan etc

Other Operational Updates

•   The company has power tariff concession wherein Electricity duty gets waved or reduced by 40-50 paisa per unit reduction. This may come around 1% 
•    CST is charged on sales @ 2% & no benefit of that is claimed
•    Revenues from Trading is about 100 crores & rest 510 from manufacturing, 90 crores from phase I, 420 crores from Tamilnadu unit
•    Manufacturing revenue from new plant is about 90 crores
•    For FY 18,  the company has 50000 spindles & rotors which will be in operation & expected to get 75 to 80% utilization for the entire year
•    Trading revenue is generally less around 2%
•    VAT exemption is 60% & no plans for dilution of equity
•    The company has overall 490 crores of long term debt which includes the debt taken on for phase II & phase III
•    Generally the machines have very long life span of 20-25 years & depreciation is calculated before that

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