Hindoostan Mills Limited - BSE

Foreign Direct Investment (FDI) policy
Efforts to boost roll manufacturing
business
Labour problems
Declining profitability
Quarterly results
Initiative of the BSE Investors’ Protection Fund
Hindoostan Mills Limited
Particulars (Rs in mn) Apr ‘12 to Jun ‘12 Apr ‘11 to Jun ‘11 % Change 1
Jan ’12 to Mar ‘12 % Change 2
Total income 313.1 231.7 35.1% 332.2 (5.7%)
Total expenditure 286.5 215.0 33.3% 305.0 (6.1%)
EBIDTA 26.6 16.7 59.3% 27.2 (2.2%)
PAT 12.0 7.5 60.0% 16.4 (26.8%)
EPS 7.2 4.5 60.0% 9.9 (27.3%)
1
compared to corresponding quarter in the previous year
2 sequential comparison
The government has approved 100% FDI in the textile sector under the automatic
route. The ministry of textiles has also set up a FDI Cell to attract foreign investments in
the textile sector. The role of the cell will be to assist foreign companies in finding out
potential joint venture partners in India and to provide support for co-ordination with
state governments.
Company fundamentals
In a major thrust to increase its capacity of textile machinery units, the company is
currently in the process of developing an additional roll manufacturing unit at Karad,
Maharashtra. HML is also stepping up on its efforts to boost the production and export
of its calendar bowls (liquid extraction rollers) by entering into a technical collaboration
with Voith GmbH, Germany, who is one of the leading manufacturers of textile-based
machinery worldwide. The collaboration is expected to provide technical know-how to
HML and help produce better quality products at a premium price.
Further, in order to reduce its dependence on the textile segment, SML is also exploring
opportunities to foray into roll manufacturing for the steel and automotive industries.
The textile industry is highly labour intensive and management of human resources
therefore becomes an extremely critical issue for determining overall performance of
the company. HML’s relations with its employees have been strained over the last few
years and the company continued to have labour unrest at the factory in FY12. This has
resulted in several disruptions over the course of the year, especially in the last quarter.
Such labour problems in the future may further affect the company’s growth and
expansion plans.
Key financial indicators
The FY12 income of HML fell marginally to Rs.1050 mn (from Rs.1065 mn) on account
of a slowdown in the domestic and international markets. Material costs however,
went up by 21% due to a sharp rise in the prices of key raw materials. As a result,
EBIDTA margins were down to 2% from 11% and the company reported a net loss of
Rs.18 mn for the year.
Q1FY13 performance
The first quarter of FY13 has witnessed a slowdown in revenue growth as compared to Q4FY12. However, expenses have also come
down in line with the revenues which have resulted in a marginal impact on profitability. The y-o-y performance has been
significantly better, and most key financials have registered healthy growth rates during this period.
Page 4 of 6