Large Player in bed linen segment:
Since its venture into home textiles in 2008, Indo Count has established a strong
position in this segment with more than 20% share in bed linen exports to the US.
The company derives its competitive strength through domain expertise in printing
and designing of bed sheets and established clientele of global retailers such as
Wal-Mart, JC Penny and others. Home textiles revenues grew at a CAGR of more than
29% during FY09-15; the segment is expected to continue to be a key growth driver
as the company plans to expand to new geographies and premium product segments,
which will be diversifying the product portfolio other than bed sheets. Company
is the 4th largest supplier for Bed sheets in the USA and 3rd largest manufacturer
and exporter of bed sheets from India. Currently capacity is 68 million meters per
annum for the company.
Strong client relationship:
Indo Count is strongly placed in the Indian bed linen exports market with more than
20% share in the organised sector. The company derives its competitive strength
from strong client relationship coupled with its focus on product quality, product
innovation, and timely deliveries. Over the years, the company has developed strong
domain expertise in the designing and printing of bed linen products that are critical
processes in developing innovative varieties. It has also received patents for a
few bed linen products. It services clientele of global retailers including Wal-Mart,
Target, and Bed Bath and beyond.
Globally reputed suppliers:
Company’s manufacturing units for both Home Textile and Spinning segment are equipped
with top quality machineries which is supplied by leading global suppliers. Their
Home textile equipments are imported from Benninger (Switzerland) , Tsudakoma (Japan),
Monforts & OSTHOFF (Germany), Juki (Japan), Mathis (UK), Zimmer (Austria), Airoli
(Italy) and Spinning segment equipments are imported from XORELLA & USTER (Switzerland
), Rierter (Switzerland), SCHLAFHORST (Germany) & LMW (India).This ensures that
product quality is at superior level meeting international quality standards.
US economy to boost demand in home textiles:
One of the key reasons for strong home textiles exports from India is the growing
demand from the US, which is the second largest import market (22% of global home
textiles imports) after the European Union (EU). We expect the demand for home textiles
to continue to reflect the improvement in the US economy.
Indo Count is expected to be a key beneficiary as it derives more than 70% of its
sales from the US.
Strongly Player in the bed linen exports market:
The Rs 5000 crores domestic home textiles market (60% exports) is highly fragmented
with small and medium enterprises (SME) comprising 70-75% of the overall turnover.
The organised players cater to demand for higher quality products from large organised
retailers such as Wal-Mart, Target and Bed Bath and beyond. The organised market
is closely held between small groups, dominated by few players including Welspun,
Alok Industries, Trident and Indo Count. Welspun is the biggest home textiles Indian
exporter, focusing on terry towels and bath linens and rugs. In contrast, Indo Count
is specifically focused on bed linen exports and Trident on terry towel exports.
Hence Indo Count is considered one of the strongest player in the Bed sheets export
Indo Count’s key strengths is its effective raw material procurement policy which
enables it to maintain a lean working capital cycle. The key raw materials are cotton
for the yarn business and yarn for the bed linen business. The company outsources
its raw material requirements to local suppliers. However, the inventory days are
high because of change in product mix. The company has to keep more inventory of
grey cloth; it typically keeps grey cloth inventory of around two-three months,
and two months of cotton and yarn. It compensates high inventory days with better
credit terms from its raw material suppliers, thereby keeping its working capital
in line with the home textile peers.
Derivative losses and slowdown in demand for home textiles in the US drove the company
into CDR in August 2008. Since then, its financial liquidity has improved significantly
aided by traction in the home textiles business and an asset light business model.
Net debt to equity declined from 3.5x in FY08 to around 0.80x in FY15 and is expected
to decline to 0.5x in FY16. As a result, the company is continuously focusing on
reducing their interest burden and improve their overall business growth. ROCE of
more than 30% and Fixed asset turnover of more than 2.30x in textile industry shows
how well has company has performed in in the last few years.