Super Sales India Limited Date: 20 th January, 2016 Stock Performance Details Shareholding Details September 2015 Current Price : ` 400.0^ Face Value : ` 10 per share 52 wk High / Low : ` 518.0 / 221.6 Total Traded Volume : 323 shares^ Market Cap : ` 122.8 crore^ Sector : Textiles EPS (H1 FY16) : ` 34.46 per share Equity Share Capital : ` 3.1crore P/E (TTM) : 5.52 (x)^ P/BV (TTM) : 1.16 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : SUPER BSE Scrip Code : 512527 ^ as on 19 th January, 2016 Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 14,77,200 48.09 Total Institutional Holdings (FIIs & DIIs) 603 0.02 Public Holdings 15,93,697 51.89 Total 30,71,500 100.00 Background Super Sales India Ltd. (SSIL), an associate of the Lakshmi Works Group was incorporated in 1981 as Super Sales Agencies Ltd. In 2005 the Company changed its name to Super Sales India Ltdto represent the various other activities. Presently,the Company has four divisions, namely the Marketing/Agency Division, Textile Division, Engineering Division and Wind Energy Division.The Company has a presence in the textile industry for more than three decades. In 2005, the Company entered into the business of generation of electricity by establishing Wind farms having a generation capacity of 28 MW of green power. In 2010, the Company entered into the business of manufacturing Gears of various types required for the textile and other industries by establishing the Engineering division. The Textile division offers VAAMAA brand which provides high quality 100% cotton yarn which meets international quality standards. The yarn caters to both domestic and overseas markets with a turnover of US $30 million. The Company has a spinning mill at Othakkalmandapam, Coimbatore. Presently, this unit has a spindle capacity of 45,600 manufacturing super fine yarn counts ranging from 80s to 100s, another spinning mill at Ayyampalayam, Pollachiwhich has a spindles capacity of 36,000 and manufacturing of compact yarn counts ranging from 40s to 60s. The Marketing division of the Company acts as a selling agent for Lakshmi Machine Works Limited, Elgi Electric and Industries Limited, Lakshmi Electric Drives Limited, Adwaith Lakshmi Industries Limited, Lakshmi Ring Travellers (Coimbatore) Limited and Lakshmi Caipo Industries Limited for their `` textile machineries, overhead travelling cleaners, high efficiency motors, bobbin holders, and slub yarn attachments. The Wind Energy Division has installed 27.525MW of Wind Electric Generators (WEG), which cater to itscaptive energy requirements. An Initiative of the BSE Investors Protection Fund1
Financial Snapshot Particulars Standalone (` Million) Income Statement H1 FY16 H1 FY15 Income from Operations 1,096.9 1,128.8 Y-o-Y Growth (%) (2.8) 6.0 EBITDA 181.6 171.3 Y-o-Y Growth (%) 6.0 (23.0) EBITDA Margin (%) 16.6 15.2 Net Profit 105.8 34.6 Y-o-Y Growth (%) 205.8 (54.4) NPM (%) 9.6 3.1 Balance Sheet Fixed Assets 1,125.6 949.3 Cash and Bank Balances 93.8 28.9 Inventories 274.5 251.4 Net Working Capital 112.1 78.7 Net Worth 1,160.8 915.6 Balance Sheet Ratios ROCE (%) 19.3 29.2 RONW (%) 9.1 3.8 Source:Capitaline From the Research Desk of LKW s Gurukshetra On a Standalone basis, Revenue from Operations stood at Rs. 1,096.9 million in H1 FY16 which is adecreaseof 2.8% y-o-y fromrs. 1,128.8 million reported in H1 FY15.For H1 FY16, Revenues from the Agency Division increased by 9.8% y-o-y to Rs. 110.8 million from Rs. 100.9 million in H1 FY15, whereas Revenues from the Textile Division decreased by 6.5% y-o-y to Rs. 805.7 million from Rs. 861.3 million in H1 FY15. Revenues fromthe Wind Energy Division decreased by 8.2% y-o-y to Rs. 92.9 million from Rs. 101.2 million in H1 FY15. Revenues from the Engineering Division increased by 26.7% y-o-y to Rs. 130.9 million from Rs. 103.3 million in H1 FY15. Material Cost decreased to Rs. 506.2 million in H1 FY16 from Rs. 563.9 million in H1 FY15. Employee Cost increased by 6.6% on a y-o-y basis to Rs. 141.4 million in H1 FY16 from Rs. 132.6 million in H1 FY15. Power and Fuel Cost increased by 12.7% on a y-o-y basis to Rs. 148.4 million in H1 FY16 from Rs. 131.7 million in H1 FY15. Other Expenses stood higher at Rs. 140 million in H1 FY16 as compared to Rs. 128.1 million in H1 FY15. Despite the drop in the Topline, Operating Profit increasedby 6% y-o-y mainly on account of the drop in Material Cost and Change in Inventories. EBIDTA stood atrs. 181.6 million in H1 FY16 as compared to Rs. 171.3 million in H1 FY15. Depreciation & Amortization Cost as well asinterest Cost both decreased and stood at Rs. 66.6 million and Rs. 35.6 million respectively in H1 FY16. Net Profit for H1 FY6 An Initiative of the BSE Investors Protection Fund2
increased by over 200% y-o-y which could be attributed to lower Depreciation and Interest Cost coupled with higher Other Income. PAT stood at Rs. 105.8 million as compared to Rs. 34.6 million in H1 FY15. Operating and Net Profit Margins stood at 16.6% and 9.6% respectively during H1 FY16. Cash and Cash Equivalents increased on a y-o-y basis from Rs. 28.9 million reported in H1 FY15 to Rs. 93.8 million in H1 FY16. Inventories of the Company increasedtors. 274.5 million in H1FY16 from Rs. 251.4 million reported in H1FY15.For H1 FY16, Debtors of the Company decreased and stood at Rs. 365.4 million as against Rs. 400.5 million in H1 FY15. Performance on the Bourses % 160 140 120 100 80 60 40 20 0 Stock Performance Super Sales India BSE Small Cap as on 15th January, 2016 Peer Comparison The following table gives a snapshot view of the Company s performance vis-à-vis its closest peers for H1 FY16. (` In millions) Particulars Super Sales India Eurotex Industries & Exports K. P. R. Mill Income from Operations 1,096.9 1,179.4 9,301.2 EBIDTA 181.6 0.9 1,772.4 Net Profit 105.8 (17.6) 851.8 EBIDTA Margins (%) 16.6 0.1 19.1 PAT Margins (%) 9.6 (1.5) 9.2 Book Value Per Share 343.5 72.8 229.1 P/E (x) 4.28^ 0.00^ 18.05^ P/BV (x) 0.90^ 0.44^ 3.55^ RONW (%) 9.1 (2.8) 8.8 Source: CapitalineFinancials on Standalone Basis; ^ On a Standalone Basis as on September, 2015 (TTM Basis) An Initiative of the BSE Investors Protection Fund3
About the Industry The Indian Textile Industry is one of the largest contributors of employment as well as to the overall trade exports of India. The Indian Textile industry is spread across the length and breadth of the country and in terms of employment is labour intensive. The industry is divided between two prominent segments, that is, hand spun and hand woven segment as against a capital intensive sophisticated mills segment. Not just being amongst the largest employers, the Textile industry has also contributed to the trade exports of the country quite significantly over the years. The industry realized export earnings worth US$ 41.4 billion in FY2015, marking a growth of 5.4% as per data from The Cotton Textiles Export Promotion Council (Texprocil). Another important characteristic of this sector is the dominance of unorganized segment which consists of handloom, handicrafts sericulture which operates on a small scale and adopts traditional manufacturing tools. In contrast to this, the organized segment though as a percentage of the overall industry is small, it brings to the table economies of scale and contributes a large part of the total textile export earnings of the country. It is estimated that the Indian Textile industry could reach US$ 223 billion over the next 5-6 years from the current size of US$ 108 billion. This indicates that the industry growth would more than double in the next 5-6 years. As a percentage of the Indian GDP and Index of Industrial Production, this industry constitutes about 5% and 14% respectively. Given the importance of this industry to overall GDP growth, the government has allowed 100% FDI in this sector under the automatic route; the TUFS Scheme, Textile Parks etc are the other initiatives taken by the Government to promote manufacturing of textiles and thereby increase export revenues for the industry. Besides, the government has also provided for subsidies on machinery and infrastructure. The Indian Government has signed a MoU with Kyrgystan seeking to strengthen bilateral co-operation in the fields of Textiles, Clothing, Silk and Sericulture and Fashion. Management Outlook As per the latest GDP growth estimates, the Indian economy grew by 7.4% in FY15 compared to 6.9% in FY14, mostly driven by improved economic fundamentals. Inflation showed signs of moderation, wholesale price and consumer price inflation decline to 4.2% and 7.4% respectively, compared with last year s 6.3% and 10.1%. The future for the Indian textile industry appears satisfactory with consumerism and disposable income on the rise and the retail sector has experienced a rapid growth in the past decade. The organised apparel segment is expected to grow at a CAGR of more than 13%over a 10-year period. A number of initiatives taken by the Government include implementation of several export promotion measures for increasing the share of India s textile exports and allowance of 100% FDI in the Indian textiles sector under the automatic route. The cotton prices were higher during the first half FY15. There was a sudden fall in the cotton prices in the second half. The fall in the yarn prices was much steeper during this period. Increase in the cost of labour and power have affected the performance of the Textile division. Despite the efforts being made to revive the economy, sluggish global demand andthe decliningsituation at ground level are not reflecting the improvement expected. Certain risks such as increased intensity of competition from local and global players, increased input costs (Wages, Power, Interest) which are not fully passed on to the consumers in the prevalent difficult market environment may affect the performance of the Company. However, the Company s overall growth prospectsappear satisfactory as it is taking appropriate steps to try and increase its sales and profitability. Amongst the key factors affecting growth of Indian Textile Industry is its labour intensive nature, high dependence on monsoon and capital intensive nature. Also, its fragmented nature is hurting the quest for consistent growth in the exports market. An Initiative of the BSE Investors Protection Fund4
Financial Graphs 1140 1130 Net Income from Operations ` in Million 1120 1110 1100 1,128.8 1090 1080 H1 FY15 1,096.9 H1 FY16 185 EBIDTA & EBIDTA Margins 16.6 17 ` in Million 180 175 170 165 15.2 171.3 H1 FY15 181.6 H1 FY16 16 % 15 14 EBIDTA EBIDTA Margins PAT & PAT Margins 120 100 9.6 12 10 ` in Million 80 60 40 20 0 3.1 34.6 H1 FY15 105.8 H1 FY16 8 6 4 2 0 % PAT PAT Margins An Initiative of the BSE Investors Protection Fund5
Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements based on available data, and LKW s Gurukshetra shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW)commenced business in 1991 and is currently engaged in providing CAPITAL MARKET RESEARCH, INVESTMENT ADVISORY and STRATEGY services. GURUKSHETRA is the Research and Training arm of LKW. LKW Investment Advisers is the SEBI registered Investment Advisory arm of LKW. 5 Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office:B Wing, 505-506, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai 400 053. Email:enquiry@lotusknowlwealth.com Tel: 022-4010 5482 4010 5483 Website:www.lkwindia.com An Initiative of the BSE Investors Protection Fund6