Cash & bank balance has increased to 241 Cr from 203 Cr in Mar 15. This is lot of cash, almost 2.5 times FY15 profit.

Fabric segment (71 Cr) has more capital employed than garment (110 Cr). The EBITA contribution from fabric segment is hardly 1 Cr. On the other hand, Garment segment contributed 43 Cr.

Why such low returns in Fabric segment as compare to garment?

And also what happened to the merger? It was expected in this quarter

raj_kalyan just now
The key implication, based on preliminary research is as follows –

The Yarn Forward Rule
This stipulates that in order to escape duty in the U.S exporters must use yarn or fabric manufactured in member countries. Currently India exports yarn an fabric to those countries who then export textiles. Member countries will push to create local yarn and fabric production with clear implications for Indian exports of yarn and fabric.

If Kitex uses Indian yarn and fabric then it ends up paying anywhere between 18 to 34 percent duty on its finished products exported to U.S, while a Vietnam for example pays zero duty.

Request people with detailed insight on Kitex yarn sourcing to evaluate this.

Solicit a view from Kitex watchers and stakeholdets

(post withdrawn by author, will be automatically deleted in 24 hours unless flagged)

Thank you Quest4Value,

This is an important development with possible implications for Kitex Business Model

Questions are :

1. Are there Competitor Suppliers to Kitex in the member countries
2. Will Buyers be interested to develop suppliers in those countries given the significant duty advantages.
3. By when is this treaty ratified and applicable ?

HMVL came out with very good set of numbers. Here is the link

http://www.bseindia.com/xml-data/corpfiling/AttachLive/4A50806D_C401_431C_8124_88FFBC065ABA_150724.pdf

Revenue increased by 13% while net profit up by 43%. Operating margins expanded significantly by 4.7% (24.2% to 28.9%) YoY.

Following are key points from the concall

• Ad growth at 18.2% while circulation revenue up by 7.6%. Ad revenue growth is more on like to like basis when one considers that some part of festival season was in Q2 (Navratri and Dashera).

• Most of the advertising growth was on account of volume and marginally contributed through yield. Thus 75% of ad revenue growth came from volume increase while 25% due to yield imporvement.

• The leader in UP market, last quarter, had offered deep discounting in ad rates for bulk volumes. However, HMVL has not resorted to any discounting. However, it has not been able to improve ad yield as desired due to discounts offered by the market leader. However, company will continue to look for yield improvement going forward

• Ad growth has been very good across sectors except for real estate and education which remain subdued.
• In terms of geographical distribution of ad growth- Bihar experienced exceptional growth – 25%+, UP/UT grown by 20%+, In Jharkhand the growth was moderate while in Delhi it was tepid.
• The political advertising impact in Bihar is very marginal in Q2. However company benefited due to pre election DAVP spending in July/August however it was partially offset by the code of conduct in September and hence reduced activity in tendering/DAVP.
• There is no visible impact of rural slow down seen by the company.
• There was very high growth in e-commerce sector advertising, however overall contribution remains low. It currently stands at 1% of the overall ad revenue
• Amalgmation of HMVL’s digital assets in a separate company- To focus on digital business at group level and bring in greater focus. HMVL will transfer livehindustan.com to the new company. It is valued at around 70 Crore. HMVL will have 44% stake in new SPV formed. The new SPV will have assets from HT Media as well namely ht.com and livemint,com
• Losses from transfer of assets and amalgamation will not be more than that at HMVL level. The process of valuation is done by investment bankers as required.
• Company did some very good activation business in UP/UT. Hindustan leadership conclave was one such activation event. It was a hue success in terms of visibility and establishing thought leadership. In its first year it more than break even.
• Local: national ratio has improved. It was 45:55 and it is now moving towards 50:50. Traction in local market was slightly higher than the national market.
• In the current year, HMVL is not planning any expansion in other market.
• Difference in ad rates in UP is 35% between market leader and HMVL which used to be 45% last year. The difference between the Amar Ujala and HMVL is now 15% which used to be 25%. Company expects to close the gap between Amar Ujala and itself by end of this year (suggesting 15% increase in ad rates)
• Company in the last two years have consistently taken away market share from both Amar Ujala and market leader Dainik Jagran. Even in this year, HMVL continues to take away market share from Amar Ujala in all the months and have taken away market share from Dainik Jagaran in most of the months
• Company has launched both android and iOS app fro the Hindustan
• Q2/Q3 for Bihar this years may be exceptional due to pre election spend and election. The underlying volume growth in Bihar is expected to be 8-10% while in UP/UT it is higher by couple of percentage points (10-12%). This will be supplemented by yiled improvement.
• Company is confident of delivering robust growth in the next two quarters as well.

Overall, the momentum in business performance continue to be excellent (especially when seen in the context of peers , i.e.DB delivered de growth in ad revenue and degrowth in bottom line as well) while the utilization of cash still remain uncertain.

Disclosure: A significant portion of my portfolio and continue to hold from much lower levels of 102-105