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Growth prospects are still looking strong: Dipali Goenka, Welspun India
Dipali Goenka, CEO & Joint Managing Director, Welspun India Ltd., talks about the business & its growth outlook, health and hygiene segment, debt position of the company, impact on business in European and the US market amid the second wave of COVID during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: Welspun India’s segmental performance has been very good in this quarter. You have recorded the highest ever bed sheet volume in the quarter. How do you see the trend going forward?
A: The trend looks very good in the future also. If I will provide you with the visibility till March 2021, then we, Welspun India, will be able to make a turnaround of around Rs 7,000 and around 19-20% EBITDA. That is where we are looking at as going forward. Quite robust growth demand is visible because people are spending more time at homes. And definitely, health and hygiene are really playing on their mind at their home. It seems, smiling, our towels are being washed more and more sheets are being used.
Q: Have you reached the pre-COVID levels in this quarter and going forward, in terms of sales projections, what is your outlook and can you outgrow these numbers as well?
A: Even we at our place talk to each other about what next can happen. It is known that the maximum of the companies would like to work from home till June 2021, which means more time will be spent at homes. But the peak we are seeing at present may not exist till then that but yes there will be a kind of consistency definitely, it is visible to us. We have reached the pre-COVID levels in the second quarter and we will proceed by maintaining it. Currently, we are seeing that demand is very high and it is from Big-Box retailers in America or from grocery hypermarkets in the UK and Europe. If you see in India too, then we have grown 200% in Q2FY21 from Q1FY21. So, an opportunity is visible to us as we go forward.
Q: You have forayed into health and hygiene segment with masks and disposable coverall. Can you provide a ballpark figure on the kind of contribution it has in your overall revenue and the kind of focus the company will have in the segment?
A: I will not be able to provide any number on it but would like to say that in our business, the advance textile is one of the verticals of Welspun India which makes Spunlace, Needlepunch and Spunbond among others. And, demand for Spunlace has increased a lot due to health and hygiene. When COVID occurred and complete India was shutdown then we repurposed our business because we had our fabric in advance textile, therefore, we made masks and also distributed it in the community. And going forward it turned into our health and hygiene vertical. Health and hygiene are just not limited to masks but we also make wet wipes, disinfectant wipes, and its portfolio can be quite large because besides health and hygiene it can be used as disinfectant, beauty and kitchen among others. Definitely, we have look at the masks, wet wipes. In addition to this, I would like to say that the environment at Welspun, where masks are made in a clean environment. BIS accredited labs, which would be available with limited manufacturers, and all the products are BIS certified. Apart from this, we have also got permission to export, it is FDA-I permission, and we have got its approval.
Q: You have said that clean environment is available at Welspun but I would like to say that it is a clean and happier environment as we have seen the viral video in which you were dancing with your employees. I would like to know that do you have any such activities/ celebrations with your employees especially these challenging times.
A: I have seen that the employees achieve more production is much better and performance is good at places where the environment is happy. And, this remains consistent at our place and happens fortnightly, however, it is done virtually at present. But I have run with my people at the factory as a small little marathon, walked out with them, done Zumba classes with them. It is not only about that, it is about celebrating also together. You can think about the kind of atmosphere that we are witnessing at present, as you have said that your volume has reached pre-COVID levels. We can work virtually but my factory can’t work virtually, however, we have taken utmost care of them and have distributed decoction (Kadha), vitamin tablets and taken care of them. We also have robotic doctors at our place so that we can reach out to any doctor; we have well-care centres. But if they are performing then it should be celebrated. So, I have gone to the factories in these times and celebrated with them. As you have said that we have got the highest volume of sheets then it should be celebrated together.
Q: Update about the debt position of the company as well as the order book situation and are you seeing any new order inflows in the coming quarter?
A: You might know that our flooring unit is coming up in Telangana due to which the company’s resources are engaged there. So, our net debt stands at Rs 2,380 crore reduction of Rs 582 viz-a-viz March 2020. And, I would like to add to this that our debt of a different business has reduced by Rs 1,000 crore from March 2019. We will try to keep our net debt below Rs 2,400 crore despite we are investing in flooring and advance textile. So, investments will be made but we are calibrating our apex based on the cash flow and also looking at that we will keep around the total depreciation charge.
Q: Concern related to COVID is visible especially in other countries like Europe and the US, where you have a presence. What kind of impact has the second wave of COVID has had on your business?
A: We supply to the big-box retailer here and that’s where replenishment program is and they will be open. They are mainly hypermarkets. So, definitely, the demands will grow here. And the departmental stores and counters, which were opened by now have started a regular discipline. So I don’t think so that we see that kind of impact coming in. In Europe and the UK also primarily our 90-95% of our customers are basically hypermarkets, so we will see that growth continue there as well. Although there will be a lockdown there is a discipline that they follow and these are the stores which are open 24x7.
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