Filatex plans to enter home textiles segment

Abhishek Law Kolkata | Updated on October 30, 2019

Madhu Sudhan Bhageria, Chairman and Managing Director

Company ramping up facilities at Dahej

Filatex India, a manufacturer of polyester and polypropylene filament yarn and polyester chips, is looking to get into value-added offerings and the B2C segment as it eyes higher margins.

The company has embarked on a ₹275-crore expansion that include ramping up facilities at Dahej (Gujarat) and also adding new lines to its plants for manufacture of fully drawn textured yarns. Around ₹200 crore will be debt.

While capacity expansion of partially oriented yarn has happened, new lines for manufacture of value-added offerings are expected to go on-stream around March 2020. Drawn textured yarns are mainly used in weaving and knitting of fabrics, for making clothes, home furnishings, seat covers, bags, among others.

NSE and BSE-listed Filatex’s current capacity across Dahej and Dadra and Nagar Haveli facilities together stand at 382,000 tonnes per annum, that include a recent addition of 60,000 tonnes.

According to Madhu Sudhan Bhageria, Chairman and Managing Director, the company is considering an entry into the home textiles segment, and eyeing an estimated capex of ₹100 crore. More offerings can be explored if the foray into the home textiles is successful.

“We are planning to get into home textiles later may be in FY21. Investment details are being worked out,” he told BusinessLine.

The company is also putting up a captive power plant with a capex of ₹150 crore at Dahej. The 30-MW plant is expected to come-up in the January to March period of 2021 (Q4 FY-21). Around ₹100 crore will be borrowings while the remaining is internal accruals.

Improving margins

Post the capex cycle coming through (capacity addition and new value addition line), Filatex India is looking at a near ₹600 crore boost in its topline and a ₹70-crore improvement in bottomline in FY-21.

According to Bhageria, EBITDA (earnings before interest, tax, depreciation and amortisation) margins should also improve to 8.5-9 per cent from the existing 7.5-8 per cent levels.

“Margins are currently under pressure because of a slowdown. But things should revive November onwards,” he said.

Exports are also likely to go up to 20 per cent of the turnover with the textured yarn facility coming on stream. It currently stands at 17-18 per cent of turnover.

China continues to supply 75 per cent global demand for polyester; while India accounts for around 10 per cent.

The company has a debt to equity ratio of 1.2:1 and Bhageria says the repayments are being made on time.

“In FY20, debt to equity ratio will be a bit high. But next fiscal onwards it will be in 1:1 ratio. Every year we are repaying around ₹70-80 crore,” he said, adding that cash profits are to the tune of ₹150 crore.

Published on October 30, 2019

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