Welspun India to invest Rs 495 crore in health and hygiene category in two years: Altaf Jiwani, CFO

Altaf Jiwani, CFO, Welspun India Ltd. talks about the impact of lockdown on his business in Q1FY21, expectations in Q2FY21 and new business vertical of health and hygiene during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: COVID & the lockdown have impacted your numbers in the quarter. What kind of demand is expected going forward from here as we are moving towards Unlock 3.0 and do you think that there the numbers will improve in this quarter when compared with the previous quarter?

A: Actually, the US market is our largest market as it has a 70% contribution to our revenues. We have earned revenue of Rs 1,216 crore in the first quarter (Q1). The EBITDA margin of our core business stands at 22.1%, which is about Rs 265 crores. So given the current challenges, we have posted excellent numbers in Q1. We were more dependent on the essential stores as compared to the departmental stores, due to which such traction was seen at our end. On the overall basis, our margin is 19.6%, which is about Rs 238 crores. In addition to this, our core business’s net debt has declined by Rs 350 crore in this quarter and on an overall basis, the debt has reduced by Rs 300 crore. In the case of the US, we have seen that departmental stores have started opening now, along with this, many Tier-II ad Tier-III stores are also opening up. So huge traction is visible from the US market. Interestingly, our plants are working at full utilisation at present. Besides, we had also invested in another business, flooring business, where a lot of traction is coming from the US market. The traction is coming because the US market is shifting towards the hard flooring. It is a USD 3 billion market size of which 80% was being supplied by China. Therefore, many importers of the US are working on alternative sourcing strategy and that is visible in flooring.

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Q: You have forayed into a new ''health & hygiene'' business vertical that will focus on masks and disposal coverall. Your board has also approved an investment of about Rs 500 crore in advance. What timeline you are working on to launch these products?

A: Actually, we started investing in this advance textile business some 6-7 years ago. Now, the plant is working on full capacity and the board has approved Rs 495 crores of investment in advance textile, which will spread over two years. Earlier, we were supplying several application filters in the automobile industry and now we are focusing on health and hygiene. It is a pleasure to announce that Welspun is the first company in the country to get BIS certification for coveralls. This is one of the fastest vertical that we have launched. We have quite focused on health and hygiene and we will spread out the investment in two years and its foundation stone was put on Saturday in Telangana. Some portion of the business will be present in Anjar, Gujarat. In the next three years, we are looking at Rs 500 crore of revenue at 75% utilisation. At present, the export is at a restricted basis but once that is allowed, which we are expecting very soon. So, with our relationship with global retailers, we can very quickly put our products, like masks, coverall and vent pipes, which are now hygiene products, on their shelf.