Manish Mandhana, Jt Managing Director, Mandhana Industries, has over 15 years of experience in the textile industry. He holds a Bachelor’s Degree in Commerce from Mumbai University. He is in overall charge of the export activities of the Company. His marketing and administrative abilities have helped the Company’s export division grow outrageously. He is in sync with the latest trends in the export market and understands the taste of the foreign fashion industry.
Mandhana Industries Limited is a vertically integrated textile and garment manufacturing company in India having presence across operations ranging from yarn dyeing to garment manufacturing. The Company’s operations and facilities enable them to manufacture a wide variety of value-added fabrics and garments through integrated operations comprising of dyeing of yarns and fabrics, weaving operations for fabrics, processing solutions for both, fabrics and garments, garment manufacturing, domain expertise in providing sampling and designing for both fabrics and garments. Mandhana has positioned itself as a multi-product, multi-fibre and multi-market player ensuring access to a diverse mix of domestic fabrics and garments as well as international garment markets.
Replying to Yash Ved of IIFL, Manish Mandhana says, "With the revival in the economies of US and EU, exports are expected to pick up and grow at a CAGR of 4.6%".
What are your expansion plans?
We are planning to set up a garment manufacturing facility at MIDC, Tarapur Maharashtra, with an investment of Rs714mn. The company will be expanding Yarn Dyeing and Weaving Facility at C-2, MIDC, Tarapur, Boisar, Taluka Palghar, Thane in Maharashtra.
The company has acquired 26,000 sq mtr of land at Baramati Hi-tech Textile Park at Baramati near Pune. The Company proposes to set up a garment manufacturing unit at the said location with a capacity to manufacture 36 Lacs pieces per annum.
The final budget and implementation schedule for the project are yet to be drawn. As per the SITP scheme (Scheme for Integrated Textile Parks), the company will be eligible for a subsidy of up to 40% on the investment in the Land & Building for the project.
What is the outlook for the textile sector?
The Indian textile sector has put the blues of recession experienced in FY09 completely behind it and has revived in a big way in the past year. The rise in domestic consumption and economic recovery in global majors like US has provided a great boost to the sector and the same can be proven by the performance posted by all the leading companies in the sector over the past year. Readymade Garments industry (domestic & exports) is expected to grow at a CAGR of 6.4% and is expected to reach Rs2,156 bn in year 2014 from Rs1,582 bn in year 2009. Readymade Garments account for nearly 40% of total textile exports of India. With the revival in the economies of US and EU, exports are expected to pick up and grow at a CAGR of 4.6%.
The industry holds out huge potential both in the domestic and global market. The global textile industry is largely dominated by retailers. In the current business atmosphere for textiles, international retailers and fashion houses have shortened the life of fashion trends tremendously. In this scenario of such short shelf-life, the vertically integrated Companies like ours give them the flexibility to service custom made orders at low cost. It is expected that India will become a preferred destination for global manufacturers and retailers as well, and big opportunities for these Companies are forthcoming.
What is the amount raised through your IPO? What is the promoters’ holding after the IPO?
We have raised Rs1.07bn through IPO diluting 25.02% of post issue capital. Post-IPO, the promoters’ holding in the Company stands at 62.20 %.
Any overseas expansion plan?
No concrete plans as of now. But we are open if any good opportunity comes our way.
What revenue do you expect for FY11?
FY10 we closed at a topline of Rs6.22bn. In FY11, we will have revenues added from Tarapur garment project and weaving expansion project in the last quarter. Also we anticipate revenue growth in the finished fabric business with better capacity utilization for the new CDR /CBR process unit at Tarapur. As a result, we estimate to achieve a turnover of approx. Rs7.5bn for the current fiscal year.
The operational margins for FY10 improved substantially to approx. 20 % up from 18 % the previous year. However, PAT declined to almost 7 % down from 8 % the previous year due to one-time forex losses on imports of approx. Rs. 170mn.In the current fiscal year, we expect to maintain same operational margins which shall enable us to post better PAT margins in the region of 8 % - 8.5 %.
What are some of the challenges faced by the industry?
The biggest challenge is the rising cotton & yarn prices which have driven the prices of fabrics northwards. This coupled with rising labour costs has ultimately increased the garment production cost rendering India costly as compared with our Asian counterparts like Sri Lanka, Vietnam, China & especially Bangladesh who are low cost producers mainly due to cheap labour availability.
Another area of concern is fast appreciation of INR against USD on back of foreign funds inflow in Indian Capital markets. Again with the appreciation of USD against Euro and GBP, the realisations in rupee currency have dipped for exports in all these prominent currencies. This has dented the profit margins of the Indian exporters’ community as a whole.
Who are your competitors?
At Mandhana, our business model revolves around two main business segments - textiles & garments. In textiles, we compete with all the leading domestic fabric manufacturers like Alok, Bombay Rayon, Vardhman, Nahar, Arvind etc.
In garments, we have developed a niche market and clientele for ourselves on the strength of our designing capabilities. We mainly export to European markets like Germany, UK, France, Italy, Turkey etc and our clientele includes top brands like FCUK, Tommy Hilfiger, Armani etc. Most of the Indian exporters are US centric and hence in European markets, we don’t have much competition from Indian counterparts. Though we face some competition from Bangladesh & Vietnam when it comes to bulk low-range order which is only about 20 % of our total export business.
Brief us about your financials?
Our Turnover & profits have grown at a CAGR of almost 37 % over the period of past five years. The turnover has grown from Rs.1.81bn in FY06 to Rs. 6.22bn for FY10. Likewise, PAT has grown from Rs. 12.2 crs to Rs. 43.5 Crs during the same period. We have expanded our manufacturing capabilities from time to time with forward & backward integration plans, which is reflected in increase in fixed assets base from Rs. 1.45bn in FY06 to Rs. 4.22bn in FY10. With higher thrust on value addition and better product mix, our Operating profit margins have grown from 14 % in FY06 to 20% in FY10.
What is the debt-equity ratio?
As on 31st March, 2010, the networth of the Company stands at Rs. 1.94bn against Long Term Loans of Rs. 3bn. This translates into a very healthy Debt-equity ratio of 1.55. The Company had recently successfully concluded IPO to raise Rs. 1.07bn. As on 31st March, 2011, we estimate the networth at approx Rs. 3.6bn with an equivalent level of long term debt, which shall further improve the Debt-equity ratio to 1.
This ratio compares very favorably with the industry levels where the other Companies are highly leveraged on account of huge borrowings to avail benefit of TUFS scheme.
What is the total workforce? What are your recruitment plans?
The total workforce as on date is approx. 4,500 employees. With all the new expansion projects which shall be fully operational by the end of next fiscal year, the workforce is expected to double.