Sarla Performance Fibers H1 Consolidated EPS up 51%

Sarla Performance Fibers (SPFL) reported significant improvement in Consolidated H1 EPS of Rs.17.86 on the back of 20% increase in sales. Most of the sales increase was driven by export of value added high tenacity nylon and polyester yarns. SPFL –Standalone sales (excluding trading sales) volume rose by 25% and average selling price by 3% during the first half of the financial year. Savitex, a joint venture company of SPFL in Central America also supported this growth by increasing its revenue by 16%.

Commenting on this H1 performance, SPFL’s MD Mr. Krishna Jhunjhunwala said “We have been working hard to achieve a strong growth. Our growth in Q2 is especially noteworthy because the RM cost pressure was quite sudden and sharp. We have managed to pass on some of the material cost increases and expect to pass on further going forward. Had it not been for this sharp spike in RM cost, our earnings would have surged further. SPFL is benefiting from its recent presence in Turkey, Portugal and direct sales to large customers in the US”. He also mentioned that “demand in Europe and US market continues to remain under pressure but that has increased scope of low cost outsourcing and SPFL is well positioned to benefit from the same. Current situation in Europe and US also presents the company with the opportunity to carry out strategic buyouts and partnerships to increase its sales further in these markets and reach large customers directly.”

SPFL has cash (including cash equivalents) of Rs. 88mn and working capital debt of Rs 279mn at the end of H1. Company’s book value stood at Rs 118 per share at the end of H1, an increase of 8% over FY10. SPFL continued to monitor foreign exchange situation and does not foresee any major threats on this front due to its natural hedge of imported raw material.

Last year, SPFL invested in wind power capacity of 1.250 MW by spending Rs. 63mn. This year, depending upon the cash surplus and attractiveness of the returns it will consider investing fresh funds in wind power. In core business, the CAPEX needs are limited and are unlikely to exceed Rs 30mn (excluding Building CWIP) this year.

About Sarla Performance Fibers Ltd.

SPFL is a leading exporter of high tenacity polyester and nylon yarns, having plants in India (Vapi, Silvassa) and Central America (through JV in Honduras). Over the last 15 years, SPFL has exported yarns worth Rs 5.95bn. In FY10, SPFL achieved revenue of Rs 1.31bn, cash profit of Rs 0.17bn and paid a dividend of Rs 3.5 per share. SPFL is promoted by Madhusudan Jhunjhunwala and Krishna Jhunjhunwala. The Jhunjhunwala family holds 63% in SPFL and the balance is held by public. SPFL stock has a face value of Rs10 and is listed on the Bombay Stock Exchange and the National Stock Exchange with a market capitalization of Rs 1078 mn as on 10 November, 2010.