Filatex India Ltd

Filatex India –Q2FY23–CNBC interview–Earning Highlights –22nd Nov22 :

–Q2 was weak due to dumping from China due to China has adopted zero covid policy ,so their internal consumption has gone down drastically, so the production they have not dropped. so Producers are trying to dump where they have a mkt so to stop that we have to drop our pricess .

–There is volume growth of 22% but the margins have dropped drastically as we have to compete with the imports coming from china

–Q3 will remain similar or slightly better but from Q4 we will see Chinese have their new Year in early January after that they should open up.

–They are also thinking of reducing capacity as even after dumping they dont see their production being consumed. Already they are 75% of world production of Polyester filament Yarn so by dumping also they are not able to release.

–There is appetite downstream that we have seen our volumes increase by 22%. Our exports are down as they are dumping everywhere in the world so we are becoming uncompetitive in the world. As this gets corrected the margins will jump up.

–current prices –it depends on RM but our Margins EBITDA used to be 14/15% or 15INR/Kg has come down to almost like INR 5/kg so we have dropped our margins by about 10/11INR/Kg

–China was selling 85% of their production locally and its exports used to be hardly 12/15% before this Covid thing happened so they are bound to reduce production capacity, they have not been able to gain mkt share in exports even after dumping as they were catering to almost 80% of export mkt.

–Annual capacity of 401040/tonns that is post expansion by FY23. This has come on stream in sep’22 and we have added 43000 tonnes more this year to make it 4L. Our capacity utilization was onwards of 95% in Yarn , now we are not selling any chips any more so 100% we are converting to Yarn in-house so we are out of the chips mkt. In the old capacity utilization 100% in the new one its 85 to 90%

–Total contribution of value added products which are high margins ? –We will keep increasing our value added products by FY24. Right now its 70% as value added

–Cash of 240Cr on books , plans ? –We will retire some debt as of now & will do capex on our recycling which we are developing . We will commit a capex for that by FY23 end. 200Cr capex.

–We will bring down our debt to below 300Crs by FY23 end.

–Exports we used to do 13/15% but in this Qtr we are only able to do 3/4% due to dumping by China in the world.