HIMATSINGKA SEIDE results analysis

The market is yet to get over the poor performance it posted for the first quarter of the current year. It had justified the drop in performance by stating that it had posted the loss on account of the his loss was mainly on account of the new bed line manufacturing facility, which was commissioned in October 2007 at Hassan Special Economic Zone, Karnataka and had yet to fully integrated into the company. Its forex loss also added on to the loss.

Well, the story continues onto the second quarter too. Consolidated revenues for the quarter ended September 30th 2008 stood at Rs.261.27 crores as against Rs.259.14 crores during the previous year. Net loss for the quarter stood at Rs.20.50 crores vs net profit of Rs. 10.94 crores during the previous year. The performance has been impacted by foreign exchange fluctuations amounting to Rs.25.59 crores during the quarter. Also the exceptional items included a write back of provision amounting to Rs.1.94 crores on a mark to market provision for a Foreign Exchange Derivative contract.

What is gratifying to note is that the company’s bed linen facility has turned in a positive EBITDA performance of Rs.5.30 crores in the quarter as against an EBITDA loss of Rs.7.00 crores in the previous quarter. The capacity utilization for the quarter stood at 60.50% capacity.

The entire focus of the company, in FY09 is on stabilising the greenfield facility at Hassan, and continue to explore growth opportunities in emerging markets in retail and distribution. The investors have virtually abandoned the stock which continues to hover near its 52-week low of Rs.23.90. Given the losses and now the dim future prospects of the textile industry, the stock is not expected to do well in the immediate future.
thanks