Welspun India, one of the largest suppliers of home textiles globally to retailers like Walmart, Costco and others, is looking to be debt-free over the next five years.

As per its latest annual report, Welspun India’s net debt stands at ₹3,028 crore. It has short term loans of ₹1,408 crore and long term debts of ₹1,902 crore. Cash and cash equivalents stand at ₹282 crore (as on March 31, 2019). Its net worth stands at ₹2,780 crore.

The net debt to equity stands at 1.09 times for FY19 (as against 1.16 times in FY18). The net debt to EBITDA stands at 2.64 times. Net debt to EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.

Altaf Jiwani, CFO, Welspun India, said the company prepaid ₹284 crore on September 30, and is expected to repay another ₹100 crore by this fiscal end as its “capex cycle has come to an end with the investment in the flooring solutions” . The cashflow generated from the existing business will be utilised to retire the debt after dividend payout in the coming years.

Welspun India reported net sales of about ₹6,608 crore with a profit before tax and exceptional item of ₹552 crore in FY19.

Exports to markets like US, Europe and the Middle East account for over 90 per cent of its turnover.

“In five years we will become nil debt. Moreover, as the capex cycle gets over and as the ecosystem for growth in home textile business gets into place, and we will not have to borrow much. As of the June quarter, our net debt was in the range of ₹2,800 crore and by March 2020 we should have a net debt of ₹2,700 crore in our books,” he told BusinessLine .

“Economic slowdown will have some impact on demand. But, our three pronged strategy for growth, that is to look for new market (India), new channels (hospitality/e-commerce) and new products (flooring and advance textile) will help us mitigate the impact,” said the CFO.

Jiwani said that almost one-tenth or around ₹280 crore of the debt accrued after the company decided to set up the flooring unit in Hyderabad.

“We had to make some borrowings for the flooring business. However, as the business starts generating cash flows, we will recover the capex and pay-off debts too,” he said.

Related Topics