Reliance Chemotex Industries Ltd BSE Scrip Code:

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1 Reliance Chemotex Industries Ltd BSE Scrip Code: Textile - Spinning January 22, 2016 Equity Statistics Current Market Price Rs Week High/Low Rs /36.10 Market Capitalisation Rs. Crore 18.1 Free Float Rs. Crore 9.6 Dividend Yield % 2.2 One Year Regression Beta Times 0.4 BSE Volumes Trend - Average = 1.2 Thousand Relative Returns Returns 1M 3M 6M 1Y - Absolute 4% 7% 10% -9% Rel. to Sensex 12% 6% 29% 10% Shareholding Pattern Business Summary Reliance Chemotex Industries Limited was set up in 1977 by Mr. Shankar Lal Shroff as a synthetic yarn-spinning mill located in Udaipur, India. Presently, the company has 53,280 spindles with state-of-the-art machinery from blow-room to spinning and finishing. The company has its own HT/HP fibre-dyeing plant and also its own captive power generation. The company manufactures 100% Polyester, 100% Viscose, 100% Acrylic, 100% Bamboo Viscose as well as Polyester/Viscose, Polyester/Acrylic, Polyester/Viscose/Acrylic blended yarns. These yarns (which can be produced with raw-white, dope-dyed or fibre-dyed fibres) are intended for knitting, weaving, upholstery, carpet, medical or other industrial end-uses. During FY , Reliance Chemotex Industries Limited reported net sales of Rs crore and net profit of Rs.6.51 crore. The company has won numerous export awards from the Government of India including the State Award for Export Excellence and has also been recognized by the government first as a Star Export House and subsequently as a Trading House. The company has appointed Ravindra Kala as CFO with effect from 09th August, In FY, , The Company's exports have increased % from 6344 metric tonnes to 7236 metric tonnes. The Company is currently trading at 3.73 times FY15 EPS and 0.46 times FY15 adjusted book value. Board of Directors Person Role Qualification Shankar Menon Chairman, NA I-NED Sanjiv Shroff VC & MD Science graduate Rahul Shroff ED Engineering graduate Ameya Shroff ED Engineering graduate R.N. Sharma WD Graduate in Textile N.G. Khaitan NED NA Ramadoss Srinivasan I-NED NA K.L. Sonthalia I-NED NA Narayan Shroff I-NED Commerce graduate Dipika Shroff AD B.A. in Economics and Sociology and a Minor in Political Science Source: AR and CARE Research Note: VC: Vice Chairman, MD: Managing Director, ED: Executive Director, I-NED: Independent Non-Executive Director, WD: Wholetime director, NED: Non-Executive Director, AD: Additional Director, NA: Not Available. Source: CARE, BSE and ACE Equity 1 Initiative of the BSE Investors Protection Fund

2 Background The registered office of RCIL is situated at Kanpur, Rajasthan. The company manufactures approximately 1250 tons of yarn monthly of which 800 tons is exported all over the world. The company has been active in the export market since 1987 and has loyal customers around the world. The company invests considerable resources into research and development to ensure that its products consistently meet the quality expectations of even the most discerning manufacturers downstream. Business overview Exports have always been the main focus of the company. During FY15, exports have increased % from 6344 metric tonnes to 7236 metric tonnes. However, in value terms exports decreased to Rs crore compared to Rs crore due to appreciation in value of INR against Euro. New set of regulations of articles of Association of the company was adopted in the annual meeting held on August 08, This replacement is made to provide effect of The Companies Act, 2013 and remove effects of the older Act, The Companies Act, Overall total income declined by 1.22% due to decrease in the prices of polyester yarn and polyester fibre. RCIL has allotted 3 lakh 10% Cumulative Redeemable Preference Shares of Rs.100 each on private placement basis on January 17, Strengths and growth drivers During FY15, there was improvement in the overall financial risk profile, particularly its liquidity, backed by stable accruals, continued fund support from promoters and prudent financing. Despite of decline in turnover during FY15, net profit margins have improved by 15% as compared to FY14. Risk and concerns Foreign Exchange Fluctuation may affect value terms of exports Dependence on natural resources for production of cotton Competition and economic conditions at international level Future strategy and expansion plans The Rajasthan State government has announced a new textile policy called the Special Customized Package 2013 for the development of the textile industry in Rajasthan. This scheme will remain in force until March 2020 and hopes to attract an investment of Rs.10,000 crore there by providing, direct and indirect employment to 100,000 people. Target of RCIL is to achieve an annual topline growth of about 10% over the medium term and improve its operating margin from 10% to % over the years. For the same, RIICO & Exim Bank Ltd has disbursed term loan of Rs.1200 Lakh and Rs.1041 Lakh respectively for the expansion and modernization of the company. The Bankers have provided a need-based working capital facility during the year. Industry outlook The textile industry holds significant presence in the Indian Economy and plays a vital role in the growth of the Country. The Textile Industry contributes around 14% in Industrial Production and 4% of Country's GDP. The Industry generates around 21% of the total employment in the Indian Economy. Over the years, India has become the second largest Textile Manufacturer in the World after China. In terms of Raw Materials, Labour, Machine Productivity and Cost of Production, the Textile industry has shown substantial improvement over the last few years. Peer comparison Year ended March 31, Initiative of the BSE Investors Protection Fund

3 Income statement (Rs. crore) RELCHEMQ ALOKTEXT ELAND* BENGALT Total income Net sales EBITDA Ordinary PAT Adjusted PAT Per share data (Rs.) Adjusted BVPS Diluted EPS Growth (Y-o-Y) (%) Growth in Total income Growth in Net sales Growth in EBITDA Growth in Adjusted PAT Growth in EPS Profitability ratio (%) EBITDA margin Adjusted PAT margin Valuation ratios (Times) Price/EPS (P/E) Price/Book value (P/BV) Enterprise value (EV)/EBITDA Note: RELCHEMQ: Reliance Chemotex Industries Ltd, ALOKTEXT: Alok Industries Ltd, ELAND:E-Land Apparel Limited (*Earlier known as Mudra Lifestyle Ltd), BENGALT: Bengal Tea & Fabrics Ltd. Quarterly financials Quarter ended Sept 30, 2015 Income statement (Rs. crore) Q2FY16 Q1FY16 Q4FY15 Q3FY15 Q2FY15 Total income Net sales EBITDA Ordinary PAT Adjusted PAT Growth (Q-o-Q) (%) Growth in net sales Profitability ratio (%) EBITDA margin Adjusted PAT margin Financial analysis 3 Initiative of the BSE Investors Protection Fund

4 In FY15, RCIL reported net sales of Rs crore down 6.15% y-o-y and exports also decreased by 1.22%. Total income witnessed a fall of 0.55% during the same period. Cost of material consumed formed the largest portion of total cost for RCIL. In FY15, Cost of material consumed as a percentage of net sales was at around 59.82%. The company reported the EBITDA margin and adjusted PAT margin of 11.65% in FY15 which has increased by and 2.78% respectively in FY15. RCIL had high levels of leverage as on March 31, The total debt as on March 31, 2015 was at Rs crore compared to an adjusted net worth of Rs crore. Liquidity position was moderate marked by current ratio of 1.30 times. The operations of RCIL are moderately working capital intensive marked by Receivable cycle of 24 days as on March 31, The company has paid a dividend of Rs. 1 per share for FY15, resulting a dividend yield of 2.20% at the current market price of Rs per share Annual financial statistics FY11 FY12 FY13 FY14 FY15 Income statement (Rs. crore) Total income Net sales EBITDA Depreciation and amortization EBIT Interest PBT Ordinary PAT Adjusted PAT Key balance sheet figures(rs. crore) Adjusted net worth Total debt Cash and bank Investments Net fixed assets (incl. CWIP) Net current assets (excl. cash, cash equivalents, current liability includes short-term debt) Per share data (Rs.) Adjusted BVPS Diluted EPS DPS Growth (Y-o-Y) (%) Growth in total income Growth in net sales Growth in EBITDA Growth in adjusted PAT Growth in EPS Key financial ratio EBITDA margin (%) Adjusted PAT margin (%) ROCE (%) ROE (%) Gross debt - equity (times) Net debt - equity (times) Interest coverage (times) Current ratio (times) Inventory days Receivable days Initiative of the BSE Investors Protection Fund

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