Welspun & Himatsingka: FY24 growth amid sustainability challenges

Himatsingka Seide Ltd is a leading Indian manufacturer and retailer of premium home textiles and upholstery products. The company specialises in high-quality bedding, curtains, upholstery fabrics, and rugs, offering various designs and styles for domestic and international markets. With a strong presence in North America and Europe, Himatsingka Seide serves well-known brands and retailers, positioning itself as a key player in the global home textiles industry. The company is known for its innovation, commitment to quality, and ability to blend traditional craftsmanship with modern design aesthetics. Additionally, Himatsingka Seide has embraced sustainable practices, focusing on eco-friendly materials and production methods to minimise its environmental impact.

Sales and net profit analysis

Table 1: Financial snapshot of Welspun Living and Himatsingka Seide (in $ mn)

Source: Annual Reports and Screener

Welspun Living

Welspun Living experienced substantial growth in fiscal 2024 (FY24) compared to 2023. Sales increased from ₹8,093.76 crore to ₹9,679.24 crore (~$955.87 million to $1,143.18 million), indicating strong market demand. Raw material costs rose from ₹3,977.83 crore to ₹4,941.3 crore (~$469.79 million to $583.58 million). However, the company improved its inventory management, shifting from a negative to a positive change in inventory. While expenses for power, fuel, and employees increased, selling and administrative expenses slightly reduced. Profit before tax grew significantly from ₹301.91 crore to ₹966.95 crore (~$35.66 million to $114.19 million), reflecting enhanced revenue and operational efficiency. Net profit also rose sharply from ₹198.83 crore to ₹681.1 crore (~$23.48 million to $80.43 million), showcasing the company’s strong profitability and effective cost management over the year.

Exhibit 1: Welspun Living and Himatsingka Seide’s sales for FY 18-FY 24 (in $ mn)

Source: Annual reports and Screener

Himatsingka Seide

Himatsingka Seide demonstrated significant improvement in FY24 compared to FY23. Sales increased from ₹2,677.74 crore to ₹2,841.45 crore (~$316.21million to $335.51 million, indicating strong market performance. Raw material costs slightly decreased from ₹1,348.25 crore to ₹1,305.21 crore ($159.20 million to $154.12 million), while inventory management improved, shifting from a negative to a positive change. Power and fuel costs rose from ₹236.82 crore to ₹263.12 crore ($27.97million to $31.07 million), and employee costs increased from ₹281.6 crore to ₹307.59 crore ($33.26million to $36.33 million).

Selling and administrative expenses saw a sharp rise from ₹261.67 crore to ₹346.39 crore ($30.90 million to $40.91 million), while other income dropped significantly from ₹75.02 crore to ₹15.39 crore (~$8.86 million to $1.82 million). Despite these challenges, the company improved its profit before tax, moving from a loss of ₹75.22 crore to a profit of ₹162.77 crore (~$8.88 million to $19.21 million), demonstrating a remarkable turnaround. This resulted in a net profit of ₹112.82 crore (~$13.32 million), up from a net loss of ₹64.08 crore (~$7.56 million), highlighting the company's recovery and effective cost management.

Exhibit 2: Welspun Living and Himatsingka Seide net profits from FY 18-FY 24 (in $ mn)

Source: Annual Reports and Screener

Sustainability analysis

Table 2: Sustainability parameters of Welspun Living & Himatsingka Seide

Source: Annual reports

Energy consumption patterns in FY24

Welspun Living

For FY24, Welspun Living witnessed a significant shift in its energy consumption patterns. Notably, the company reported zero energy consumption from renewable sources (0 gigajoule or GJ), a sharp decline from 427 GJ in FY23. This complete transition away from renewable energy is a concerning deviation from sustainable energy practices and raises questions about the company’s long-term environmental goals. The absence of renewable energy in its portfolio may negatively affect the company’s sustainability reputation and its alignment with global trends toward greener practices.

On the positive side, Welspun Living Ltd achieved a reduction in total energy consumption from non-renewable sources, which dropped to 375,962 GJ in FY24, down from 400,903 GJ in FY23. This decrease was largely attributed to:

• Grid electricity consumption: Declined from 28,558 GJ to 14,974.22 GJ
• Fuel consumption: Reduced from 372,345 GJ to 360,987.96 GJ

While this decline reflects efforts to optimise energy usage, the company’s total reliance on non-renewable sources remains high. Furthermore, the energy intensity per rupee of turnover has remained constant at 0.000015 GJ/INR for both FY23 and FY24. This indicates that despite lower energy consumption overall, there has been no improvement in energy efficiency relative to revenue generation.

Himatsingka Seide

In contrast, Himatsingka Seide experienced a significant increase in total energy consumption, rising from 1.87 trillion joules in FY23 to 2.60 trillion joules in FY24. This surge was driven primarily by heightened reliance on non-renewable energy sources, including:

• Electricity from non-renewable sources: Increased from 453.67 billion joules to 510.06 billion joules.
• Fuel consumption: Jumped dramatically from 1.28 trillion joules to 2 trillion joules.

The company’s growing dependence on non-renewable energy sources raises concerns about its carbon footprint and long-term environmental sustainability.

However, there were positive developments in Himatsingka’s use of renewable energy. Electricity consumption from renewable sources increased significantly, from 62.09 billion joules in FY23 to 118.38 billion joules in FY24. While this growth is commendable, the overall share of renewable energy remains relatively small compared to the overwhelming reliance on non-renewable sources.

Key Takeaways

• Welspun Living: Despite reducing total energy consumption, the complete elimination of renewable energy use and stagnation in energy efficiency metrics present critical challenges for its sustainability goals
• Himatsingka Seide: While the company has made progress in renewable energy adoption, the substantial rise in overall energy consumption and continued dependence on non-renewable sources highlight areas for improvement

Recommendations

Both companies need to take proactive steps to enhance their energy sustainability practices:

1. Reintegrate and scale renewable energy usage: To reduce their carbon footprints and align with global energy trends
2. Improve energy efficiency: By investing in advanced technologies and optimising operations to decouple energy consumption from revenue growth
3. Develop clear sustainability roadmaps: To balance operational demands with environmental goals, ensuring resilience to evolving regulations and stakeholder expectations

Fibre2Fashion News Desk (NS)