Important thing to keep in mind  

The information provided in this report is based on online sources and is centered on the premise that the company is anticipated to receive a substantial sum in the upcoming period. While there are indications of the management’s confidence in this prospect, direct corroborative statements are not readily available. It is crucial to note that the entire assessment hinges on the assumption of the company receiving the mentioned funds in the foreseeable future. Past instances raise concerns about the management’s approach to wealth distribution and potential misuse of funds from the balance sheet, which could negatively impact shareholder interests and result in poor stock performance. Furthermore, while there is an expectation of funds being realized within a two-year timeframe, delays beyond estimations can occur due to unforeseen legal complications or other factors. As such, this company carries inherent risks that should be thoroughly evaluated by users before making any investment decisions. The presented analysis is based on a certain set of assumptions and does not guarantee future outcomes.

Ruby Mills

Current price on the date of publishing this report: 226 Rs

Introduction

Incorporated in the year 1917, a time devoid of televisions, computers, helicopters, or nuclear reactors, and with Indian independence remaining a distant aspiration, the looms at Ruby Mills were already shaping the future of the fabric industry. Ruby Mills Limited stands as a comprehensive Textile Mill, dedicated to crafting Cotton/Blended Yarn, Fabric, and Real Estate. The company’s manufacturing facilities are strategically situated in Khalapur (Raigad district) and Bombay. Notably, Ruby Impex serves as the company’s wholly owned subsidiary. The establishments boast a contemporary research and development laboratory, duly acknowledged by the Department of Scientific and Industrial Research under the Ministry of Science and Technology, Government of India. Supported by cutting-edge machinery and a proficient workforce, the daily fabric production capacity stands at 1.25 lakh meters, reflecting the state-of-the-art nature of the facilities.

The operational performance of the company faced challenges during the fiscal year 1994-95 due to the significant surge in prices for materials such as polyester staple fibre (PSF) – up by 22%, viscose staple fibre (VSF) – up by 41%, and cotton – up by 60%. The acute scarcity of VSF led to a detrimental impact on production for a span of 5 months. As part of its modernization strategy, the company introduced 30 Sulzer looms, thereby replacing 50 Cimmco autolooms and 36 wider Picanol looms.

Built on the solid foundation of technical expertise, impeccable product quality, and non-negotiable business ethics, the Ruby Mills have been the hallmark of textile innovation in India since 1917. Beyond its unwavering commitment to product quality and uniformity, Ruby is renowned for its ceaseless pursuit of innovation. The company embarks on exploration and experimentation with novel blends, refining them through cutting-edge processing and finishing technology. This dedication places Ruby at the forefront of fabric engineering and excellence in interlining.

The reach of The Ruby Mills Limited extends to every nook and cranny of India, facilitated by an expansive network encompassing over 10,000 retail outlets, served by 200 dealers and 19 dedicated agents.

Business

Company’s business is mainly divided into four different segments such as Fabric, Interlining, Apparel and Real Estate.

Fabric

Ruby Mills is an undisputed thought leader and maker of pure and blended fabrics. Company’s range of premium quality fabrics include Cotton, Polyester, Viscose, Modal, Lyocell, Linen, Bemberg, Ramie, Rayon, Lycra and their blends.

Company is the creator of iconic fabric brands such as Busy Lizzie and Lusterous Venture loved and worn by billions over the years.

Company’s product range includes

• Cotton Embrace: India’s affection for cotton’s touch is undeniable. Its breathability, lightweight nature, and soothing comfort resonate deeply. Simultaneously, company value garments that retain their splendor without demanding extensive care. Ruby’s Cotton Embrace is a masterful fusion of exquisite long-staple cotton and resilient, low-maintenance polyester. Enhanced with an advanced cotton-like finish that endures wash after wash. Those who drape themselves in this fabric often ponder: Is it cotton or something more?
• Absolute Cottons -Ruby Mills places the utmost emphasis on cotton quality. Company’s commitment to excellence shines through as it utilize the finest grade of cotton – a choice that speaks for itself. This impeccable raw material is then entrusted to the realm of Fabric Engineering. This is where a sequence of high-performance treatments is meticulously applied, weaving strength and a timeless touch into every fabric we create. The unparalleled finish, executed with true expertise, ensures enduring beauty even through years of use.
• Fluidic Fabrics and Blends – : Embrace style without sacrificing comfort through Ruby’s breathable and fluidic fabrics. These fabrics epitomize elegance and panache. Exclusively crafted using natural cellulosic fibers, they exude perfect fluidity and drape, setting them apart from boxy or synthetic alternatives. With Ruby’s Fluidic Fabrics, company not only ensures breathability, absorption, and comfort, but also uphold its commitment to environmentally friendly materials and consistently impeccable fashion appeal.
• Linen and Blends: The authenticity of linen is unmatched. To consistently craft exceptional fabric, it demands an exceptional quality of fiber. Sourced from India’s organic farms, our linen undergoes a process that enhances its weaving and dyeing compatibility with other fibers, revealing its inherent matte sheen. Linen and its blends exhibit remarkable versatility – boasting unparalleled strength, color absorption, retention, and aesthetics.

Company believes in customising and catering to the special client requirements such as 

• Diamond Emery and Carbony
• Easy To Iron
• Anti Odour
• Fragrant Finishes
• Stain Repellant
• Nano Care
• Peaching
• Aero
• Anti Microbial
• Anti Fungal
• Anti Bacterial
• Permanent Whiteness
• Brush
• Water Repellant
• Wrinkle Free

*Diamond Emery and Carbony 

Brands

Ruby Fabrics -:Ruby stands as the company’s emblematic brand, renowned for its excellence and innovation within India’s textile industry. Ruby serves as the overarching brand that endorses well-regarded product brands like Busy Lizzie and Lusterous Venture.

Lukas:Lukas represents the company’s collection of Comfort Suitings, encompassing a blend of mid-range to premium options across various fibers including cotton, linen, poly-viscose, and more. Lukas provides a versatile range of suiting solutions tailored for everyday wear.

Hitline: Catering to the astute consumer, Hitline stands as the brand delivering most exceptional fabrics to date. Comprising 100% Gizas, Supimas, and 100 Lea x 100 Lea Linens, Hitline caters to those who seek the utmost refinement in fabric quality and craftsmanship.

Label R: Label R signifies Ruby’s collection of intelligent fabrics, meticulously designed for the smartphone era. These fabrics are characterized by their effortless maintenance, quick ironing, and a smart pricing strategy. The brand is crafted with the youthful, forward-thinking Indian in mind – someone who embraces an active lifestyle.

H+ TECHNOLOGY

Ruby Mills has dedicated years of thorough research to develop H+ Technology fabrics, boasting potent, enduring anti-viral, anti-microbial, and anti-fungal defense. This remarkable protection seamlessly applies to both pure and blended fabrics. Unlike competing anti-microbial materials, Ruby maintains its signature fabric finish even with the incorporation of H+ technology, ensuring uncompromised quality.

• H+ Technology-treated fabric prevents survival of viruses and microbes on its surface.
• Active component swiftly eliminates over 99% of H1N1 Influenza virus (a Novel Coronavirus family member) upon contact. – Enduring protection remains effective for up to 30 washes.

• Effectively curbs infection transmission by eradicating up to 99% of viruses and microbes.

Interlining

Launched in the year 1996, Ruby Mills Interlining Solutions emerged through a strategic partnership with Gygli Textile AG, Switzerland, showcasing top-tier Interlining technology and in-depth application expertise. As the sole vertically integrated interlining manufacturer in India, Ruby Mills ensures comprehensive quality control spanning from fiber inception to the final product. Notably, Company holds the leadership position in India for Micro Dot Fusible Interlining and non-fusible interlining.
Under this segment company’s product range includes

• Basic Interlining: For collars and cuffs, Basic Interlining provides a straightforward application process that requires no fusing. Ruby’s Basic Interlining boasts unparalleled whiteness and a minimal shrinkage ratio, ensuring utmost reliability. Ideal for garments not necessitating fusible interlining.
• HDPE Interlining: In the pursuit of flawlessness, every garment demands impeccable interlining. Introducing Ruby Mills’ HDPE range, featuring a uniform HDPE coating on impeccably even-toned fabric, complemented by shrinkage ratios that rival the finest fabrics. With expert guidance on pressure, temperature, and timing based on the shirt’s core fabric, Ruby HDPE Interlining consistently delivers an impeccable appearance, every single time.
• LDPE Interlining: Catering to the mastery of tailors and designers, Ruby’s LDPE Interlining range presents an evenly coated LDPE option, allowing for boutique-level application using a simple iron. With its impeccable color consistency and minimal shrinkage, this Interlining choice remains steadfast, never letting you down.
• Furthermore, the company is diligently exploring a range of additional services to enhance its offerings, aiming to both elevate its service quality and introduce inventive approaches to interlining.

Apparel

Ruby Apparel designs and manufactures quality clothing experience across the range of ready-to-wears garments (workwear, uniforms). Perfectly executed with every detail in the brief as required, company prides itself on the comfortable fit delivered on each of the ready-to-wear garment that leaves its facility. With strict adherence to point-by-point quality control, Ruby apparels ensure absolute quality across its offerings.

Under the Apparels company caters to the following different categories such as 

• Healthcare : Uniforms for doctors, nurses and other healthcare professionals
• Fashion Apparels
• Corporate: Trendy custom-fit uniforms for back-end teams or customer-facing teams
• Educational Institutions: All kinds of uniform requirements from blazers to pinafores, short pants to trousers and caps to shoes with correct estimation to not have stock-outs.
• Workwear: Range of workwear solutions for various industries with specialty finishes such as water repellency, fire retardance to choose from.
• Defence: Company pride’s itself to be one of the few nominated suppliers to the Indian Defence Forces.

Real Estate

The Ruby Mills has proudly introduced The Ruby, an exemplar of India’s Tallest LEED Platinum Commercial Tower upon its unveiling. The Ruby offers an integrated business ecosystem, encompassing contemporary amenities such as cutting-edge infrastructure, robust safety measures, and state-of-the-art security systems. Its strategic connectivity links seamlessly to key hubs across Mumbai, ensuring an unparalleled commercial encounter.
Guided by a proficient project team and collaborative subject experts, our mission remains rooted in crafting enduring landmarks of distinction. Our brand is forged upon a heritage of significance.

Clients

Financials

For the year ended March 23

•   Net Sales: Rs. 260 crore, up by 30.65% from Rs. 199 crore in March 2022.
• Net Profit: Rs. 35 crore, an increase of 12.90% from Rs. 31 crore in March 2022.
• EBITDA: Rs. 52 crore, down by 5.45% from Rs. 55 crore in March 2022.
• Debt Reduction: Reduced debt from Rs. 280 crore in March 2022 to Rs. 241 crore in March 2023.
• Compounded Profit Growth (3 years): 12%.
• Sales Growth (Past Years): Subdued.

Cash Position:

• Cash Balance: Rs. 85 crore.
• Future Potential: Receipt of construction cost from Mindset Estates Pvt Ltd (Developer) could significantly boost cash balance and eliminate debt, although exact accounting entries are pending.

Liquidity:

• Net Cash Accruals vs. Repayment Obligation (March 2023): Rs. 40.18 crore vs. Rs. 12.13 crore.
• Estimated Net Cash Accruals (Projected): Rs. 53-64 crore vs. Repayment Obligation of Rs. 19-20 crore.
• Working Capital Reliance: Moderate, average bank limit utilization at 50.13% for six months ended September 2022.
• Unencumbered Cash Balance (as of March 31, 2022): Rs. 3.38 crore.

For Q4 FY 23

• March 2023: Net Sales rose to Rs. 76.96 crore, up by 12.98% from Rs. 68.11 crore in March 2022.
• March 2023 Quarterly Net Profit: Rs. 11.06 crore, a decrease of 44.12% from Rs. 19.80 crore in March 2022.
• EBITDA in March 2023: Rs. 16.04 crore, down by 41.91% from Rs. 27.61 crore in March 2022.

Agreement with Mindset Private Ltd

• Company partnered with Mindset Estates Pvt Ltd (Developer) for developing ‘The Ruby Tower,’ a 40-floor skyscraper in Dadar, Mumbai.
• The land is owned by TRML; bank loans were acquired on behalf of the developer to finance the commercial space’s development.
• Resulted in significant outstanding dues from developers amounting to Rs. 635.33 crore as of March 31, 2022.
• Phased receipt of occupancy certificates for the property occurred in 2011 and 2022, except for the top floor.
• Recovery progress: ~Rs. 116 crore reclaimed in H1FY23, reducing outstanding dues to Rs. 519.30 crore by September 30, 2022.
• Historical trend: Dues retrieval from developers has been sluggish and sporadic.
• Recovery anticipation: Company expects dues recovery to continue over the next two years.

Sectorial Outlook

Textiles

• Second only to China, India proudly holds the position of the world’s second-largest textiles and garments producer. With a rich heritage spanning centuries, India’s textile industry stands as one of the nation’s oldest and most enduring sectors. 
• Anchored in a sturdy production foundation, this industry encompasses a diverse array of fibers and yarns, ranging from natural sources such as cotton, jute, silk, and wool to modern synthetics like polyester, viscose, nylon, and acrylic. 
• A robust contributor, this sector constitutes 13% of the industry’s overall output and significantly contributes 12% to the nation’s exports, solidifying its pivotal role in the economy by contributing 2.3% to the GDP.
• – Noteworthy Developments:   – In April 2021, the government granted approval for a production linked incentive scheme valued at ₹10,683 crore (approximately US$1.44 billion) to enhance the manufacturing of manmade fibers and technical textiles.   – The Textile Sector welcomes 100% Foreign Direct Investment (FDI) through the automatic route, fostering an environment conducive to growth and collaboration.

Real Estate

• The commercial leasing sector has displayed robust growth, witnessing a notable 40% surge in gross absorption compared to the previous year, reaching an impressive 69.4 million sq ft. The IT/ITeS sector remains a significant driver of demand, accounting for 42% of leasing activities, closely followed by co-working spaces, BFSI, and other industrial occupants. Moreover, the warehousing domain continues to thrive, fueled by government policy initiatives like the Goods and Services Tax (GST), shifting global trade dynamics, and evolving consumption trends. The upsurge in demand for top-tier logistics facilities, coupled with an advancing market landscape, is projected to propel further expansion in the warehousing sector. In the realm of commercial real estate, prime locations are witnessing heightened interest in new developments, drawing attention from local and global corporations as a return to office work gains momentum. Notably, company’s commercial project “The Ruby” in Dadar maintains a remarkable occupancy rate, and now, with full Occupancy Certificates granted for the remaining upper floors, the Company anticipates substantial accruals from the Sale/Lease of premises.

Additional Notes Summary of Development Agreement (DA) and Cost Reimbursement:

• In a previous year, the Company engaged in a Development Agreement (DA) with a developer to utilize approximately 12,204 square meters of Freehold Land at Dadar for constructing around 36,000 square meters of developed area.
• The DA outlines that the Company’s costs for construction, including expenses and borrowing expenses (including interest), associated with the property development, will be reimbursed by the Developer.
• As of March 31, 2022, the Company has incurred construction costs amounting to Rs. 57,354.44 lakhs (compared to Rs. 65,125.41 lakhs in the prior year), net of amounts received from the Developer as per the DA. This outstanding amount is reflected as “Due from developer.”
• The outstanding reimbursement of approximately Rs. 573 crores from the Developer remains pending, representing a significant portion of the Company’s assets.
• The Company’s receipt of this outstanding amount depends on obtaining necessary approvals from competent authorities and market developments.
• The Company anticipates realizing the outstanding amount from the Developer in the upcoming period.

• The DA and cost reimbursement arrangement have been identified as a Key Audit Matter (KAM) due to its impact on the Company’s financials, assets, and recoverability considerations.

Conclusion

Company’s rich history spans a century, aligning with India’s textile legacy since its inception in 1917. A vertically and horizontally integrated fabric manufacturer, blending cotton and other fibers, Company leads the organized fabric sector, its flagship endeavor. Bolstered by enduring channel partnerships, Company’s fabric influence extends nationwide, especially catering to the fabric needs of everyday consumers. Rooted in strong fabric demand from Tier 1 to Tier 6 towns, Company’s business evolves with innovative offerings to match evolving customer preferences. Venturing into real estate alongside textiles, Company’s potential is underscored by the anticipated receipt of around 500+ crs, held as accounts receivables—a contingent liability with potential to significantly impact financials upon realization. Though sales may have plateaued, Company’s buildings maintain exceptional occupancy rates, adding to its profile. In summation, Company is positioned promisingly, with avenues for exponential growth and profitability through strategic management enhancements awaiting exploration.