I had a quick word with the CS of Singer India, to discuss a few questions and the results.
The results are very good, better than my own expectations. Sales have grown 37.4% YoY and profits at 45% YoY. More importantly sales have grown around 2% QoQ. This is interesting, as for last three years, it was seen that June ending quarter sales are lower than March ending quarter sales. The reason for growth this time around is on account of consumer durables sales. This is encouraging trend. EBITA improved 0.5% QoQ.
According to the CS Company is insulated to currency fluctuations. The company is primarily into sewing machines – retail sewing machines. Industrial sewing machines portion is negligible. They are not very concerned at the moment in increasing industrial sewing machines sales at the moment. The sewing market is increasing by mere 3% yearly, but they are growing more than that because their brand pull is seizing opportunity from unorganized sector (which has a big share in itself). Their biggest competition is still Usha. Since, the market is more mature and since the growth itself could mature in a few years they plan to open a new segment for growth and given their brand and past experience, they decided to get back into consumer durables. But this time, given their learning from past mistakes, they have tuned their strategy. In the earlier avatar, they introduced a lot of products with tons of variants at once, Now, firstly they are introducing products one at a time and whatever products they introduce, the number of variants are small, 1 or 2 and only once they start seeing some consistent demand for that product, they start coming out with newer variants. So far, the consumer durables demand looks very good and there’s good customer response. Also, this time around, they do not have debt to worry about and Debt was the single biggest reason for their failure last time around. This time around the sustainable profit growth is the motto.
Given their past experience with debt, they strategy would be to always be debt free (as far as possible). They do not see any Capex in near future and if at all in future they plan anything, everything would be done from internal accruals. Also, the company made it clear that they would never decrease the prices of its products once, they take a price hike. This means company is obviously comfortable with the demand of its products. They are cognizant of the fact that right now EBITA margins are very less, but according to them the EBITA margins would keep on improving. The company has also become an income tax paying company now. The recent addition of Mrs. Madhu Vij as additional director will help the company manage its finances even better. She was a professor in FMS delhi and has a PhD in finance.
Unfortunately, there were too many more questions I had to ask, but he was pressed with his time, still he gave me enough information. The experience was talking to him was very good and the man Mr. Ashish Srivastava himself seemed very cooperative.