Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RSWM Ltd (BOM:500350, Financial) reported a revenue growth of 15.7% year over year for Q2 FY25, reaching 166 crores.
- The fabric division posted an impressive 22% increase year over year, driven by strong demand in both domestic and international markets.
- Gross profit grew by 17.8%, contributing 65 crores to margins, indicating improved operational efficiency.
- The company is exploring new markets to diversify revenues and reduce reliance on specific regions, enhancing global presence.
- RSWM Ltd is investing in industry 4.0 technologies and artificial intelligence to enhance operational efficiency and cost optimization.
Negative Points
- RSWM Ltd reported a loss of 21 crores in Q2 FY25, primarily due to higher depreciation and finance costs.
- The company faces ongoing pricing pressures in the yarn division, impacting profitability.
- There are challenges related to the integration of an acquired unit, affecting operational efficiency.
- The polyester yarn division is underperforming due to price realization challenges and geopolitical crises.
- The company's employee benefit expenses have increased, impacting overall cost structure and margins.
Q & A Highlights
Q: How is RSWM planning to reduce inventory levels?
A: The business team is actively exploring avenues to sell inventory at competitive prices, and improvements are expected in the upcoming quarter numbers. - President and CFO
Q: Are there any future CapEx plans?
A: Given the current environment, future capital expenditures are being approached cautiously. Expansion plans will be revisited once there is a shift in demand outlook, with no CapEx planned beyond routine maintenance. - President and CFO
Q: What were the main drivers for the 15.4% increase in total income year-over-year?
A: The increase was primarily due to the new unit at Kabal and the acquisition at Chata, which contributed to the revenue growth. - President and CFO
Q: How is artificial intelligence being utilized in RSWM's operations?
A: AI is being implemented in cotton forecasting to optimize procurement costs. This tool is expected to improve margins by accurately predicting the right levels, prices, and quantities of cotton to purchase. - President and CFO
Q: What efforts are being made to reduce total debt and improve profitability?
A: RSWM is working on off-balance sheet financing, including vendor supply chain financing and trends financing, to reduce borrowing and alleviate working capital stress. Additionally, cost optimization and reducing finished goods stock levels are being focused on to improve margins. - President and CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
