K.P.R. Mill is engaged in one of the largest vertically integrated apparel manufacturing Companies in India. The Company produces Yarn, Knitted Fabric, Readymade Garments and Wind power. The company has presence across different sectors which includes textiles, Sugar and ethanol, power and somewhat automobile products as well.

K P R MILLS

Current market price on the date of publishing this report-: 536 Rs

Introduction

Incorporated in 2003, KPR Mills is one one of the largest vertically integrated apparel manufacturing companies in India producing Yarn, Cotton Knitted Fabric, Readymade Garments and Wind Power.  Located in South India company has state-of-the-art production facilities in Coimbatore, Sathyamangalam and Tirupur in Tamil Nadu.

In FY 2021-22, Company commissioned new 42 million Garments production capacity at Chengapally, Tirupur Dist., Tamil Nadu on . Besides the expansion plans in Garment and Sugar, modernisation was implemented in some of the units. The expansion of sugar, cogeneration and ethanol production capacity with 10,000 TCD, 50 MW and 230 KLPD at Chowdapur, Karnataka was completed.

K.P.R Group’ has 15 Manufacturing units of advanced technology equipped with a capacity to produce 1,00,000 MT of Cotton yarn & 4,000 MT Viscose yarn per annum; 40,000 MT fabrics per annum; 157 million ready-made knitted apparel per annum, one of the largest Garment Producers in India; Industry acclaimed ETP embedded Fabric Processing capacity of 30,000 MT per annum equipped with Advanced Cold Processing Technology and Sophisticated Printing Division with a capacity to print 7500 MT per annum; 30 Million High Fashion Garments placement printing per annum; 66 Wind mills with a total green power generation capacity of 61 92 MW; Co-gen cum Sugar Plants with an aggregate capacity of 90MW & 20,000TCD and Ethanol Plants with 360 KLPD capacity. The unique 100% organic cotton FASO products with multiple special features has set its foot strongly in the Retail industry al South. Inspired by the market response, the plans for spreading its wings in the rest of the Nation is in progress. 

K.P.R Mill Limited, is now considered  as one of the Top 10 Listed Textile Companies in India with diversified business focus spanning across Yarn, Fabrics, Garments, Green Power Sugar and Ethanol providing employment to over 25,000 people (90% are women). The Company has earned a great deal of experience of over three decades to produce an indelible mark in the textile landscape Manufacturing an impressive product range of textile varieties such as Readymade Knitted Apparel; Fabrics; Compact,  Melange, Carded, Combed, Polyester, Vortex Viscose and Fancy Yarn, the Company reaches out to global customers with diligence, superior quality and delivery excellence 

Company caters to ~60 leading international brands across 60 countries, which includes Marks & Spencer, H & M, and Primark and plans to add more clients once the new capacity is fully operational.

Manufacturing Capacity

• Spinning – 3,54,240 spindles to produce 1,00,000 MT of yarn per annum. 
• Knitting – Capacity to produce 40,000 MT of fabrics per annum. 
• Dyeing – Processing 18000 MT per annum. 
• Garmenting – 115 million pieces of readymade knitted apparel per annum. 
• Power generation 66 wind mills with a total captive power generation capacity of 61.92 MW. 
• Sugar – White Crystal Sugar is made as per the approved standards

SPINNING

KPR is one of the largest manufacturers of yarn in terms of installed spindleage capacity. The Company has spinning mills with a total capacity of 3,70,000 spindles. Together, they produce approximately 1,00,000 MT  of cotton yarn per annum of counts ranging from 10s to 40s

Knitting

KPR’s knitting division in Arasur,Neelambur and Karumathampatty is equipped with high speed automatic circular knitting machines with a capacity to manufacture 40,000 MT of fabrics per annum.

Fabric Dyeing and Processing

The state-of the art fabric processing unit setup at SIPCOT, Perundurai integrates the fabric processing activities of dyeing, bleaching and finishing. The unit has a processing capacity of 30,000MT per annum

PRINTING & EMBROIDERY

Total garment printing capacity is a whopping 1,00,000 pieces /day

Garment

KPR Garment, the exclusive garmenting center is ranked among the largest garment manufacturing facilities in India with total  capacity of 115 million garments per annum (10 million in Ethiopia)

Windmill

KPR has installed Windmills at diverse, strategic locations in Tamilnadu (Tirunellveli, Theni, Thenkasi, & Coimbatore) with a capacity of 61.92 MW Green power, sufficient enough to meet about 75% of its power requirement

Sugar

KPR has been proactively exploring new avenues for green power. To attain 100% self sufficiency in meeting our Power requirements through Green Power, a Co-gen Cum Sugar Factory with 30 MW , 10,000 TCD and 130 KLPD of Ethanal Extraction has been established at Almel Village, Sindagi Taluk, Bijapur (DT), Karnataka, one of the highest sugar recovery area.

Business Products

Yarn

Company produces and supplies superior quality sustainable yarns to many popular international brands. Company produces yarns in a comprehensive range and counts like Compact yarn, Combed yarn, Carded yarn, Melange yarn, Polyester Cotton, Viscose Yarn and Grindel Yarns.

Company also specializes in in more unique and special yarn ranges such as Colour Melange, Slub Yarn, Injection Slub (Cotton, Poly Cotton & Melange) BCI, Organic, CMIA and REEL yarn.

KPR has the most advanced technology Vortex Spinning machine, which creates a new wave of global fashion. It removes two major steps, saving labour and power while providing the optimal yarn structure. KPR possesses six Air Jet Spinning Machines (12,000 Spindles)

Company also manufactures slub yarn in compact spinning in 100%cotton, poly/cotton and melange yarn, ranges from 16s to 40s counts.

Fabric

Key fabric products include the entire range of single jersey (also with lycra/spandex), interlock, rib, 2 and 3 thread fleece, pique polo, flat bed collar are key products. We produce knitted cotton fabric ranging in counts from 16s to 40s with the gauge of 24 and 28.

Company has Manufacturing capacity of 40000 MT of fabrics per annum.

Garment

KPR offers supreme range of high quality knitted garments for men, women and children out of 100% conventional cotton, organic cotton, cotton blends and fair trade cotton.

Garment Types include Casual wear, Sports wear, Active wear, Sleep wear, Work wear. Company caters to both the genders that is Men’s Wear as well as Women’s wear. 

Company has garment manufacturing capacity of 115 million garments per annum

SUGAR

KPR presents the finest quality White Crystal Sugar manufactured from the best quality sugarcane ensuring better taste and sweetness.

Sugar division revenue increased 30% year on year to Rs 645 crore in FY22. The new sugar and ethanol plant will be operational in Q4FY22, with the corporation aiming for a revenue split of 50:50 between the ethanol and sugar divisions. The management expects overall sugar revenues to exceed 1200-1300 crore in the next 2-3 years, with EBITDA margins of 20%.+

In terms of sugar and ethanol capacity, the company currently has a sugar capacity of 90000 tonnes per year and an ethanol capacity of 4 crore litres. The sugar capacity is expected to expand to 165000 tonnes per year after the expansion, and the ethanol capacity is predicted to increase to 10 crore litres. The company has begun trial operations at the new sugar plant and is seeking commercial launch approval.

Brands

FASO – Fashion Retail

Company launched a unique and stylish brand ‘FASO.’ Under this brand company brings the finest range of inner wear and athleisure wear for the Indian market under the brand name FASO.

Power

Company also is involved in generation of Green Power through wind mills and Co-gen facilitates meeting most of its Power requirement through Green Power..

Capex 

In FY 2022, company established a new Garment facility with a capacity to produce 42 million knitted garments per annum at Chengappally, Erode District Tamil Nadu and ramping of its production is in progress. The expansion of sugar, co­ generation and ethanol production capacity with 10,000 TCD, 50 MW and 230 KLPD at Chowdapur, Gulbarga District, Karnataka has also been completed. 

In FY 22 company undertook total capex of around 900 crs. This amount was spent on two projects, one was garment project and another one sugar and apparels with some amount spent on modernization of the plant. In the coming year company expects capex of around 100-150 crores and this would be spend mostly on modernising the plants and equipments.

Since huge amount was spent on the capex in the coming period we can see sharp increase in the depreciation expense as well, however the key focus would be on the operating cash flows and incremental revenue which is generated by the company.

Complete ramp up from the new garment capacity should be expected from q3fy23

The new factory will be able to run at full capacity during the second half of the year, and could generate growth of somewhere around 15% to 20% from this levels.

The new capacity including the expansion for the company would be for Yarn 1 lakh ton, Fabric 40,000 tons, Garment 157 million, Sugar 20,000 TCD & Ethanol 3.50 lakh liters per day .

Order Book

Company has a very well order book of around 900 crs and is confident of more orders ahead.

Financials

For the year ended March 2022

• Net Sales at Rs 4,822 crore in March 2022 up 36% from Rs. 3,527 crore in March 2021.
• Net Profit at Rs. 842 crore in March 2022 up 63% from Rs. 515 crore in March 2021.
• EBITDA stood at Rs. 1,219 crore in March 2022 up 46% from Rs. 830 crore in March 2021.
• KPR Mill EPS has increased to Rs. 24.47 in March 2022 from Rs. 14.97 in March 2021. (+64%)
• ROCE grew from 21% in FY18 to 31% in FY22.
• Company is maintaining a steady EBITDA margin (between 20-25%), despite various global and industry-related issues, over the last few years, which is commendable considering the volatile nature of the textile business.
• The textile sector has substantial working capital requirements, both in terms of debtors and inventories. Despite rising raw material prices, the Company’s WCC days have been consistent over the last two years. WCC days decreased by 6 days in FY 22 to 128 days from 122 days in FY 21.
• The increase in inventory was due to the company’s specified pricing increases.
• Opm for various products are as under Yarn and fabric 18%, garment 25%, sugar 28%, 

For Q1FY 23

• Revenue increased by 75.4% YoY as well as 9% QoQ to Rs 1,585cr for q1fy23.
• Textile segment grew 63% to Rs 1,276 cr while sugar segment revenue grew 2.5x to INR284cr.
• Within textile, garments grew 83% YoY and 16% QoQ  to Rs 692cr. Company had commissioned of new garment facility and that lead to higher realization. Yarn & fabric segment grew relatively slower by 42% YoY and saw a degrowth of 6% QoQ basis to Rs 541cr.
• There was contraction in Gross margins by 40 bps QoQ at 40.5% which was on account of higher cotton prices and freight costs. 
• EBITDA margins remained flat at 23.2%. 
• On account of higher depreciation, interest costs and taxes, PAT was up 35% YoY and 4% QoQ to thereby stood at Rs 227cr.

Managements comments and future outlook

The present capacity in Tamil Nadu is 157 million garments per year, following the inauguration of a new 42 million garment production facility. The company expects the increased capacity to be fully operational by September 2022 (now at 25% utilisation), with the entire impact on revenue obvious in FY24.

In terms of margins company expects it to be around17% 18% for yarn, 25% for garment and sugar ethanol to be around 25%.

With the things coming back to normal and with increased additional capacity as well as being fully operational management has guided for a growth of 15% to 20% for the revenue and PAT.

Sectorial Outlook

The global textile market size is predicted to grow at a CAGR of 3.9% The rising consumer awareness levels coupled with rapidly changing trends and Increasing demand for apparel from the fashion industry coupled with the growth of e-commerce platforms is expected to drive the market growth. The abundance of cotton in India, China and the United States, is contributing significantly to the growth of the global textile market. The increasing consumption of natural fibers, will drive the global textile market at the expected level. 

Additionally there are various pro-active policy initiatives taken by the Government and spurt in demand both from the domestic and international market. 

If we look at the demand for textile products, it is projected to be positive in the near time since international players such as Pakistan, Sri Lanka, and minor players are all dealing with issues related to the production of garments and yarn. These countries are having difficulties since India’s position has significantly improved. As a result, demand is likely to be strong in the future year as well. 

Conclusion

K.P.R. Mill is engaged in one of the largest vertically integrated apparel manufacturing Companies in India as well as one of the top 10 listed textile companies in India. During FY22 company undertook a major capex to of about 900 crs with new production facilites being set up as well as modernising the existing plant and machineries, effect of which will be felt on the financials fro q3fy23. Additionally garment export orders are expected to gain further momentum, supported by the signing of FTAs with Australia and Dubai and the anticipated signing of an FTA with the UK by the end of 2023. Thus based on the optimistic outlook of the management for the coming period and the various steps taken, KPR mills is worth exploring for long term.