Sumeet Industries Ltd — Q3 FY26

Sumeet Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Uy1wL9JpMDc Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to Sumit Industries Limited Q3 and 9 months FI26 results conference 0:09 9 seconds call hosted by Kirin Advisers Private Limited. As a reminder, all participant lines will be in the listenonly mode and 0:17 17 seconds there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please 0:25 25 seconds signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being 0:32 32 seconds recorded. I now hand the conference over to Mr. Par Aaria from Kirin Advisers Limited. Thank you and over to you sir. 0:42 42 seconds Thank you. Good morning everyone. On behalf of Kin Advisor, I welcome you all to the conference call of Sumit Industries Limited. From the management 0:51 51 seconds team we have Mr. Pratik A Jaju, managing director, Mr. Rohan Mud, executive director. With that, now hand out the 0:59 59 seconds call to Mr. Pratik Jaju for the opening remarks. Over to you, sir. Thank you. 1:04 1 minute, 4 seconds Thank you. Good morning everyone and a very warm welcome to all the participants joining us today for the quarter 3 and 9 months financial 26 1:12 1 minute, 12 seconds earnings conference call of Sumit Industries Limited. I sincerely thank all our investors, analysts and stakeholders for taking the time to join 1:20 1 minute, 20 seconds us and for your continued trust and support. At Summit Industries, we have built a strong legacy as an integrated polyester manufacturer since our 1:28 1 minute, 28 seconds incorporation 1988. We manufacture diversified range of polyester products including pad chips, partially uh 1:35 1 minute, 35 seconds partially oriented yarn, fully draw yarn and poly texturized yarn catering to apparel, home textiles and industrial applications. Our manufacturing facility 1:44 1 minute, 44 seconds is in Suda, one of India's largest synthetic textile hubs, provides us a strategic advantage through proximity to customers, efficient logistics and faster delivery capabilities. 1:55 1 minute, 55 seconds One of our key strengths in our end-to-end integrated manufacturing setup. This integrated this integration allows us to maintain strong control 2:03 2 minutes, 3 seconds over quality, cost structure, and delivery timeline. Our flexible production configuration enables us to respond quickly to changing customer 2:10 2 minutes, 10 seconds requirements and varying order sizes helps helping us build long standing relationships across segments. Our 2:18 2 minutes, 18 seconds operations are supported by disciplined waste control in-house recycling initiatives and continuous process optimization with cost stability and 2:26 2 minutes, 26 seconds margin resilience. In 2024, Sumit Industries was uh taken over by the Eagle Group, a textile focused promoter 2:34 2 minutes, 34 seconds group with more than four decades of industrial experience. Since the takeover, we have focused on strengthening operational discipline, 2:42 2 minutes, 42 seconds improving planning efficiencies and aligning the company with a long-term strategic growth vision. The eagle group sector expertise, executive execution 2:51 2 minutes, 51 seconds capability and industry relationships are helping enhance growth visibility and build a stronger more sustainable business platform from Smith industries. 3:00 3 minutes Now coming to our financial performance, we delivered a steady and resilient performance during the quarter despite a dynamic operating environment. For Q3 3:08 3 minutes, 8 seconds FI26, we reported consolidated total income of 267.74 crores. Our AIDA stood at 16.66 crores with AIDA margin at 6.22%. 3:20 3 minutes, 20 seconds Profit after tax for the quarter stood at 9.04 crores and earnings per share was8 0.18. We are proud to announce the 3:29 3 minutes, 29 seconds profit from continuous operations has gone up by 205%. 3:34 3 minutes, 34 seconds As compared to the last uh year ending 2025. 3:40 3 minutes, 40 seconds In 2025 year ending we had an exceptional profit of 71 170 cr which is not considered as a profit and lo from 3:48 3 minutes, 48 seconds continuous operations and hence there is a good jump. The improvement in profitability reflects our continuous focus on operational efficiency cost 3:56 3 minutes, 56 seconds optimization and better cap capacity utilization for the 9 month period of FI26. We reported consolidated total 4:04 4 minutes, 4 seconds income of 786 for 83 crores. IDA stood at 46.09 09 crores with income margin at 5.86%. 4:12 4 minutes, 12 seconds Profit after tax stood at 26.88 crores and EPS stood at.51 0.51. Overall the performance 4:20 4 minutes, 20 seconds demonstrate our ability to maintain operational stability, improve efficiencies and deliver consistent executions. 4:26 4 minutes, 26 seconds Along with maintaining stable financial performance, we remain focused on strengthening our platform for long-term growth. Our strategy is aligned towards 4:34 4 minutes, 34 seconds calibrated capacity expansions, improved product mix and increasing the share of value added products. 4:40 4 minutes, 40 seconds We are working in a phased and disciplined manner to enhance manufacturing capabilities while simultaneously upgrading machineries and automation to improve productivity and quality consistency. 4:50 4 minutes, 50 seconds Cost optimization and sustainability remain important focus areas. We are taking steps to improve energy efficiencies and increase the share of 4:58 4 minutes, 58 seconds renewable energy usage in our operations which will support long-term cost competitiveness. 5:03 5 minutes, 3 seconds We are also strengthening our presence in specific in speciality and premium Y segments to enhance realization and improve margin over 5:12 5 minutes, 12 seconds time. We continue to deepen our customer relationships while exploring new market market opportunities. Our integrated setup and flexible production allows us 5:21 5 minutes, 21 seconds to serve customers efficiently across cycles. enhancing repeat business and stickiness. At the same time, we are building capabilities to support export readiness and diversify revenue streams. 5:32 5 minutes, 32 seconds Our long-term vision is to build a scalable, efficient, and future ready pollster platform while maintaining financial discipline and strong governance standards. We remain 5:41 5 minutes, 41 seconds confident about the growth potential of the business and our ability to create sustainable value for all the stakeholders. I would like to thank our employees for the dedication, our 5:49 5 minutes, 49 seconds customers and partners for the continued association and our investors and lenders for the unwavering support. With this, I now open the floor for questions and answer sessions. Thank you. 6:01 6 minutes, 1 second Thank you very much. We will now begin with the question and answer session. 6:05 6 minutes, 5 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you 6:14 6 minutes, 14 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 6:22 6 minutes, 22 seconds wait for a moment while the question Q assembles. 6:35 6 minutes, 35 seconds Participants may press star and one to ask a question. 6:46 6 minutes, 46 seconds The first question is from the line of Dand from an individual investor. Please go ahead. 6:56 6 minutes, 56 seconds Sir, you may unmute your lines. 7:06 7 minutes, 6 seconds Standard. Sir, you may unmute your line, please. I'm audible. Yes, I audience. 7:15 7 minutes, 15 seconds Okay. So, I have a couple of questions with me. I'll just start with the first one. So, uh I just wanted to know the divergence between the topline growth 7:22 7 minutes, 22 seconds and the margin performance. So, how do you see this margin profile as structurally sustainable you can say going forward? 7:32 7 minutes, 32 seconds Uh I'm sorry I was not able to hear you. 7:34 7 minutes, 34 seconds Can you repeat your question? I'm saying uh I just wanted to know the interpretation between the like divergent diver divergence between the 7:42 7 minutes, 42 seconds topline growth and margin growth. So how do you see this margin profile as structurally sustainable going forward? 7:51 7 minutes, 51 seconds See uh our top line and the bottom line are very much sustainable. We are focused on the bottom line of uh 8:00 8 minutes of our production of our finances and uh we are focusing by uh 8:07 8 minutes, 7 seconds diversification everything to maintain our top line and increase our bottom line. 8:15 8 minutes, 15 seconds So you like the current margin are sustainable or the performance we are seeing like the previous model. What will the sustainable margin? 8:27 8 minutes, 27 seconds The current margins are sustainable and we are keen to uh increase our current margins. Our net margin after tax is 8:34 8 minutes, 34 seconds approximately 3.5% presently and we are uh targeting it to increase it to 5%. 8:41 8 minutes, 41 seconds Okay. Okay. And also um are we doing any like um do we have any internal benchmarks or you can say operating 8:50 8 minutes, 50 seconds metrics to track uh this improvement like this this should be durable across different industry cycles. 9:00 9 minutes Okay. In the textile industry, these margins are very uh these margins are up to the uh send industry standards and as 9:10 9 minutes, 10 seconds we have just taken over uh this unit a year back, we are still upgrading and uh changing the dynamics so as to improve 9:19 9 minutes, 19 seconds our uh top margin as well as the bottom margins of conver as well as the bottom margins. 9:26 9 minutes, 26 seconds Okay. Um also uh I want to uh note the the demand trends uh we are seeing with 9:34 9 minutes, 34 seconds the FDI and how do how the customer requirements are evolving in terms of specifications, quality or even value added features. 9:43 9 minutes, 43 seconds Yes, the demand is constantly increasing in the Indian market as well as the international market. Till now we were catering only to the Indian market and 9:52 9 minutes, 52 seconds now we are focused to uh diversify into uh foreign markets as well and that is why we are focusing on our exports as 9:58 9 minutes, 58 seconds well. In the Indian market also uh due to the FDI and due to the uh trade deal 10:05 10 minutes, 5 seconds between uh various countries the exports of our finished products have increased a lot and which will help us to 10:12 10 minutes, 12 seconds diversify into more valued products and affect margin products. 10:17 10 minutes, 17 seconds Okay. Okay. And also um I could see in the last financial year F25 um company has reported over um 170 cr of exception item um in the provin laws. 10:31 10 minutes, 31 seconds So this has a significant impact on the reported profitability for the year. So I just wanted to know the nature of this exception item. Um whether it is cash 10:40 10 minutes, 40 seconds as I as I yes sorry as I just informed in the my opening speech the 170 10:48 10 minutes, 48 seconds exceptional items is the amount uh when we took over uh the difference the all 10:55 10 minutes, 55 seconds the liabilities of the previous owners were waved off. we took over at a certain amount from the from the banks and the difference in the books uh when 11:03 11 minutes, 3 seconds all the liabilities were waved off. So that is the profit of 170 CR it's not operational profit it is uh the 11:11 11 minutes, 11 seconds liabilities were waved off when it was given to us all the previous liabilities when you you take over a company from NC all the 11:19 11 minutes, 19 seconds previous liabilities are waved off and that uh turns into the profit. 11:26 11 minutes, 26 seconds Okay. And uh also what is the current capacity utilization right now? 11:31 11 minutes, 31 seconds Current capacity utilization is over 95%. 11:34 11 minutes, 34 seconds And this is a like maximum capacity we can expect in the future or no we are expanding. Yes with the with the current uh uh uh infrastructure. 11:45 11 minutes, 45 seconds This is the maximum capacity but we are on the we are already expand expanding our uh capacities. So yes we will be 11:52 11 minutes, 52 seconds expanding our production as well as sales. 11:55 11 minutes, 55 seconds So how like we are already at the like highest level of the utilization. So how can we like increase our volume like 12:04 12 minutes, 4 seconds let's say we have 100 base and we are already utilizing 95%. So what is the maximum utilization and what maximum 12:12 12 minutes, 12 seconds capacity you can increase it in the medium term? 12:16 12 minutes, 16 seconds We are as I told you we are expanding mean we are adding more capacities by adding more machineries and after that 12:23 12 minutes, 23 seconds we can expand our capacity by at least 30 to 40%. 30 to 40%. Okay. 12:31 12 minutes, 31 seconds Okay. Got it. Got it. Thank you sir. That's all from Thank you. 12:39 12 minutes, 39 seconds Thank you. A reminder to all participants to test RN1 to ask a question. The next question is from the 12:46 12 minutes, 46 seconds line of Anushi Nay, an individual investor. Please go ahead. 12:51 12 minutes, 51 seconds Thank you for this opportunity. So saw uh could you please share management's medium-term plans for exports including 12:59 12 minutes, 59 seconds the key market your targeting the product segment you intend to focus on and how exports fit into your overall growth and margin strategy. 13:12 13 minutes, 12 seconds Okay. uh there is a product that we make which is called polyester texturized yarn and there is a good scope of export 13:19 13 minutes, 19 seconds of that yarn uh in all of the Asian countries as well as African countries and we have targeted uh the Asian 13:27 13 minutes, 27 seconds countries like Malaysia and uh uh Malaysia, Vietnam as well as African countries for the same product. 13:36 13 minutes, 36 seconds Presently we have started exports not direct export but we have started de exports to these countries via agents from local uh India. 13:48 13 minutes, 48 seconds Okay. So with ongoing discussions and developments around trade arrangements involving uh India, the US and the 13:56 13 minutes, 56 seconds European Union, there is increasing focus on sourcing diversification and manmade fiber exports. 14:05 14 minutes, 5 seconds Yes. But we are a B2B company. So uh our direct expose to this country will be difficult. But yes, due to this trade 14:14 14 minutes, 14 seconds deal, our customers would have requirement of exports and uh indirectly uh we would have good uh requirements and good opportunities. 14:23 14 minutes, 23 seconds Okay. So how does management view the potential impact of trade dynamics on export opportunities for polyester yarn? 14:33 14 minutes, 33 seconds We expect the rise of uh at least 10 to 20% uh in the current exports due to the trade deals going overall of the whole industry. 14:45 14 minutes, 45 seconds Okay. So sir like specifically which geographics or product categories do you believe could see incremental demand and 14:54 14 minutes, 54 seconds uh steps is company taking to position itself to benefit from any favorable trade outcomes? 15:02 15 minutes, 2 seconds while managing risks such as pricing pressure compliance requirement and currency volatility 15:11 15 minutes, 11 seconds as I told you uh we are not uh with the trade deal we wouldn't uh we won't be affected directly in exports but we 15:18 15 minutes, 18 seconds would be affected indirectly uh we will get opportunities directly as our customers who are making the finished 15:24 15 minutes, 24 seconds fabrics uh in synthetic uh market they would be having opportunities to export and indirectly they would be taking uh 15:32 15 minutes, 32 seconds quality raw materials from us to make the fabrics. Uh due to the trade deals with the EU as well as the trade deal with the US, many finished products 15:41 15 minutes, 41 seconds which were getting exported from other Asian countries like China, Vietnam, Bangladesh, Philippines, now India will 15:49 15 minutes, 49 seconds also have the opportunity to export the same finished products to these countries. 15:55 15 minutes, 55 seconds Okay sir. Okay. Uh thank you. Thank you so much. Thank you. 16:04 16 minutes, 4 seconds Thank you. Ladies and gentlemen, you may press star and one to ask a question. 16:09 16 minutes, 9 seconds The next question is from the lion of Suman Gupta from Oakland Capital. Please go ahead. 16:19 16 minutes, 19 seconds Okay. Uh thank you for the opportunity. 16:22 16 minutes, 22 seconds Uh sir, uh renewable energy currently contributes a good portion of your power 16:29 16 minutes, 29 seconds consumption and uh and sir with your plans to increase this further through uh solar and wind, can you just uh help me 16:39 16 minutes, 39 seconds understand the direct impact of uh renewable sourcing on power cost and margins like uh how is this uh advant 16:47 16 minutes, 47 seconds how how does this advantage uh evolve as uh energy P prices fluctuate. 16:57 16 minutes, 57 seconds As per the government rules, we are allowed to install 50% of our current usage of power through renewable energy. 17:06 17 minutes, 6 seconds That is what we are planning to do. We have already installed a 14 megawatt power plant, solar power plant and we are planning to install further more. It 17:14 17 minutes, 14 seconds will help to reduce our power cost overall by at least 25%. 17:22 17 minutes, 22 seconds Okay. Okay. And sir, uh uh beyond energy, where where do you see the next uh leg of cost optimization coming from? 17:31 17 minutes, 31 seconds So, so will it be uh from raw material sourcing, logistics, automation or waste reduction and and 17:40 17 minutes, 40 seconds how material uh can these savings be over the medium term? 17:47 17 minutes, 47 seconds Yes. See, we have identified several factors to reduce our cost of production. First comes power which I've already informed you. Second, our one of 17:55 17 minutes, 55 seconds the major uh cost factor is the interest cost which we are already optimizing by uh adding 18:04 18 minutes, 4 seconds our reserves and uh um negotiating uh uh we are negotiating 18:13 18 minutes, 13 seconds from our suppliers uh financial terms by increasing the credit limit they provide us. And the another 18:23 18 minutes, 23 seconds another point to reduce the power cost uh sorry another point to reduce the cost of production is to increase the efficiency and upgrade the machinery. So 18:31 18 minutes, 31 seconds uh get more production from the same uh setup. So that is uh what we are planning to do in 18:38 18 minutes, 38 seconds the next quarter by upgrading our machines. 18:42 18 minutes, 42 seconds Okay. Okay. Uh so one last uh uh couple of questions. So, 18:50 18 minutes, 50 seconds so the company recently announced a fund raise uh which is an important development from a strategic and capital 18:58 18 minutes, 58 seconds allocation perspective. So if you could just elaborate on the primary objectives of the fund raise including how could 19:06 19 minutes, 6 seconds you uh how the proceeds are intended to be utilized across uh uh growth initiatives, capacity expansions, 19:15 19 minutes, 15 seconds uh working capital or balance sheet strengthening. 19:19 19 minutes, 19 seconds Yes, we have recently announced a right issue of approximately 200 crores. Uh I'm very sorry to say the intent of the 19:28 19 minutes, 28 seconds saying could not be disclosed uh right now as we have not filed a DL yet. The DL will be filed very soon and then the 19:36 19 minutes, 36 seconds object clause of this amount will be disclosed but it is a balanced object 19:43 19 minutes, 43 seconds which will be used in analysis as well as expansion as well as everything else. 19:50 19 minutes, 50 seconds Okay. and and sir if you could just also uh you know share the current status of the fund raise uh and the expected timeline for completion. 20:02 20 minutes, 2 seconds Yes, we are expecting to complete this uh right issue uh as soon as possible maybe within the next 3 months. 20:11 20 minutes, 11 seconds Okay. Okay. Yeah. Uh thank you so much sir. I I'll join back in the queue. All right. Thank you. 20:20 20 minutes, 20 seconds Thank you. Participants may press star and one to ask a question. The next question is from the line of Raj Sha from Star Insurance. Please go ahead. 20:32 20 minutes, 32 seconds Uh yeah. Hi, good morning. Uh so my uh first question is uh uh could you explain the key factors that uh helped 20:40 20 minutes, 40 seconds uh improve margins during this quarter and which of those factors you believe uh can continue in the coming quarters like what would be your approach? 20:49 20 minutes, 49 seconds Yes. A key factor after we took over uh is that the first of the factor is that uh we were able to uh negotiate good 20:58 20 minutes, 58 seconds deals with our suppliers. Secondly, we uh have changed quite a bit of product 21:06 21 minutes, 6 seconds mix which enabled us to capture uh different segments of the market if you were not there and uh which help us 21:14 21 minutes, 14 seconds improve our margins. Also another cost factor is as as you told our power cost 21:20 21 minutes, 20 seconds by implementing renewable power and which we have done and we are going to do in the next uh couple of quartals 21:29 21 minutes, 29 seconds and coming to the uh how to how we expect to increase our margin in the future. We are upgrading our 21:37 21 minutes, 37 seconds machineries. We are doing expansions which will help us to cater more markets and uh we are converting our product mix more to uh value added products. 21:49 21 minutes, 49 seconds Okay. And uh uh sir uh how are your customer demand trends uh shaping up currently and uh are you seeing any uh 21:58 21 minutes, 58 seconds changes in order uh ordering behavior compared to last year? 22:03 22 minutes, 3 seconds No, the current uh demand is very good in the market and uh as we as I told you we have uh introduced many new products 22:11 22 minutes, 11 seconds in the last couple of quarters and due to that we are having a good demand from all the sectors and we are expecting a good demand also in the future. 22:24 22 minutes, 24 seconds Okay. Okay. And uh what are the uh main like major focus areas for uh management over the uh next 12 months in terms of operations and growth? 22:35 22 minutes, 35 seconds Uh reduce our cost as much as possible. 22:38 22 minutes, 38 seconds Introduce new products uh convert our existing and introduction of new value added products to improve our margins 22:47 22 minutes, 47 seconds as well as uh reduce our power cost and other cost. 22:53 22 minutes, 53 seconds Okay, great. And uh as the company uh moves towards more value added products uh what changes are you uh making on the 23:02 23 minutes, 2 seconds production and marketing side to support this shift? 23:07 23 minutes, 7 seconds On the production side as we told you we are modifying, upgrading and adding capacities to increase our valued 23:14 23 minutes, 14 seconds products. As for the marketing, we have set up a marketing as well as the research team who is constantly 23:22 23 minutes, 22 seconds researching in the market for new products as well as the marketing. We are expanding a marketing team to cater to all the markets. 23:32 23 minutes, 32 seconds Okay. And uh how do you see uh uh like uh capacity utilization trending over the last few quarters? 23:42 23 minutes, 42 seconds No, our cap capacity utilization was optimum in the last few quarters as well and it will be optimum in the coming few uh quarters as well. 23:52 23 minutes, 52 seconds So in terms of capital capacity utilization we have always been above 95%. 23:57 23 minutes, 57 seconds Okay. Okay. Uh great sir. Thanks. Uh that's all from my side. Yes. Thank you sir. Have a great day. 24:04 24 minutes, 4 seconds Thank you. 24:08 24 minutes, 8 seconds Thank you ladies and gentlemen. You may press star and one to ask a question. 24:16 24 minutes, 16 seconds A reminder to all participants to press star and one if they want to ask a question. 24:37 24 minutes, 37 seconds Participants may press star and one and ask a question. 25:00 25 minutes So should I close more question? 25:17 25 minutes, 17 seconds Okay ladies and gentlemen we take that as the last question of the day and now I would like to hand the conference over 25:25 25 minutes, 25 seconds to Mr. Par Achara for closing comments. 25:42 25 minutes, 42 seconds So you need to unmute your Okay. 26:14 26 minutes, 14 seconds So, can you hear me? 26:23 26 minutes, 23 seconds So, can you hear me? 26:29 26 minutes, 29 seconds Am I audible? 26:38 26 minutes, 38 seconds Audible. But yes, Mr. Park. 26:55 26 minutes, 55 seconds Hello. Yes, sir. I can hear you. Hello. Yes sir. I can hear you now. 27:03 27 minutes, 3 seconds Yeah. Uh thank you everyone for joining the conference call of Sum Industries Limited. If you have any further queries, you can write us at research at the redirect.com. 27:13 27 minutes, 13 seconds Once again, thank you everyone for joining the conference. Thank you everyone. 27:19 27 minutes, 19 seconds Thank you on behalf of Kin Advisers Private Limited. That concludes this conference. Thank you for joining us.