BR Research

Kohinoor shines brighter

For the nine months ended FY16, Kohinoor Mills Limited has done pretty well ? a 7 percent pop in sales year-on-year, yielding 11 percent gro
Published April 27, 2016

For the nine months ended FY16, Kohinoor Mills Limited has done pretty well - a 7 percent pop in sales year-on-year, yielding 11 percent growth in gross profit and 4 percent growth in the bottom line. However, there wasn't much movement in the company's gross and net margins.

Despite increasing international competition and challenging demand, Kohinoor was able to improve its performance on better sales volume and reduced energy costs, as per the half-yearly Director's Report. Due to higher international competition and depressed cloth prices, the profitability has been lower in the weaving division. However, better capacity utilization and improved margins resulted in improved performance in the dyeing division. Power generation and related costs remained manageable owing to lower fuel prices.

Kohinoor is an export-based company, with over 80 percent of sales coming from overseas. As such, the depreciation of the Rupee during the previous quarter must have played its part in helping the top line. But the finance cost weighed down on significant bottom line growth. The finance cost was might have been higher owing to the installment of 30 TPH (tons per hour) coal-fired boiler, which is due to complete in the last quarter of this financial year.

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