Interviews
Maharaja Shree Umaid Mills does exceptional well in textile segment
19 Feb '09
6 min read
F2F: How had your company managed to increase its OPM by 2% this quarter, inspite of recession and its adverse upshots?
Mr Govind Sharda: The Company benefited with the reduced fuel prices in view of nose diving crude prices globally. Switching over the power from the grid to the captive facilities has helped us keep the costs in check apart from passing on the benefits to consumer to boost the demand for our range of products.
The Company remained conservative on direct exports in view of volatile Dollar. The bare minimum direct exports to keep the business associates floating were only permitted and we kept the FOREX positions open to take the possible advantage of upside. However weaker the US economy appears, it has the power to bounce back much faster than its Indian counter-part.
The Company is undergoing a transformation where individual profit centre concept is intended to be deployed. The specific business heads are being held accountable for the business outcome rather than centralising the accountability. The individual ownership has created a larger sense of ownership to initiate the market intelligence like product segmentation keeping in mind the zonal structure of textile product requirement, expansion of distribution network in hitherto unattended markets. Adequate detailing of the costs and revenues during the tough marketing conditions helps a lot to bring internal efficiencies.
F2F: Your Q3 reveals Interest figures reduced to Rs1.4mn from Rs15.5mn from same quarter last year. A noticeable reduction! What are the reasons behind this?
Mr Govind Sharda: The Company accounts for TUFs benefits on “receipt” basis. Towards the end of the previous quarter, the ministry of textile released the funds and the entire receipts were taken to the credit of interest costs that had been over-charged for the amount (unrealised) in the previous period. The reduced interest costs should be interpreted keeping in view the earlier period higher costs.
Of course, apart from the above credit, the Company has undertaken a specific project to “trim the belly” for reduction of “cash-to-cash” cycle that has reduced overall borrowing levels particularly during higher interest cost regime.
F2F: What are your comments on interim Budget announced yesterday? And, what kind of consequences you envision on our industry?
Mr Govind Sharda: An outgoing Government can't extend enduring benefits to the society. Internally, we had no great expectations from this “gap filler” budget and we are contended with it. The best boost that it could provide could be by way of enhancing purchasing power with the masses to support the economy during the tough phase but well, we may not be aware about the exact limitations that the Government has just the way, the Government may not be fully aware about the real problem with the industry and masses.
We strongly feel, in absence of any booster, that the consumer is going to hold money in his pocket and all discretionary expenditure (textile being one of it) would be deferred till possibilities exist. “Cash is king” would become the market diktat and therefore, the pricing pressure would exist and the Companies with the internal efficiencies would be able to survive. The trend may not undergo a change till 2010 end but the normal buoyancy may not come to market before 2011-2012. Globally, the Government expenditure for the economy boosting may be more in the nature of “bail out” rather than the “growth” in next couple of years.
Please click here to view quarter three results of the company.
Mr Govind Sharda: The Company benefited with the reduced fuel prices in view of nose diving crude prices globally. Switching over the power from the grid to the captive facilities has helped us keep the costs in check apart from passing on the benefits to consumer to boost the demand for our range of products.
The Company remained conservative on direct exports in view of volatile Dollar. The bare minimum direct exports to keep the business associates floating were only permitted and we kept the FOREX positions open to take the possible advantage of upside. However weaker the US economy appears, it has the power to bounce back much faster than its Indian counter-part.
The Company is undergoing a transformation where individual profit centre concept is intended to be deployed. The specific business heads are being held accountable for the business outcome rather than centralising the accountability. The individual ownership has created a larger sense of ownership to initiate the market intelligence like product segmentation keeping in mind the zonal structure of textile product requirement, expansion of distribution network in hitherto unattended markets. Adequate detailing of the costs and revenues during the tough marketing conditions helps a lot to bring internal efficiencies.
F2F: Your Q3 reveals Interest figures reduced to Rs1.4mn from Rs15.5mn from same quarter last year. A noticeable reduction! What are the reasons behind this?
Mr Govind Sharda: The Company accounts for TUFs benefits on “receipt” basis. Towards the end of the previous quarter, the ministry of textile released the funds and the entire receipts were taken to the credit of interest costs that had been over-charged for the amount (unrealised) in the previous period. The reduced interest costs should be interpreted keeping in view the earlier period higher costs.
Of course, apart from the above credit, the Company has undertaken a specific project to “trim the belly” for reduction of “cash-to-cash” cycle that has reduced overall borrowing levels particularly during higher interest cost regime.
F2F: What are your comments on interim Budget announced yesterday? And, what kind of consequences you envision on our industry?
Mr Govind Sharda: An outgoing Government can't extend enduring benefits to the society. Internally, we had no great expectations from this “gap filler” budget and we are contended with it. The best boost that it could provide could be by way of enhancing purchasing power with the masses to support the economy during the tough phase but well, we may not be aware about the exact limitations that the Government has just the way, the Government may not be fully aware about the real problem with the industry and masses.
We strongly feel, in absence of any booster, that the consumer is going to hold money in his pocket and all discretionary expenditure (textile being one of it) would be deferred till possibilities exist. “Cash is king” would become the market diktat and therefore, the pricing pressure would exist and the Companies with the internal efficiencies would be able to survive. The trend may not undergo a change till 2010 end but the normal buoyancy may not come to market before 2011-2012. Globally, the Government expenditure for the economy boosting may be more in the nature of “bail out” rather than the “growth” in next couple of years.
Please click here to view quarter three results of the company.
Maharaja Shree Umaid Mills Limited
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