CRISIL has recently upgraded its ratings for Trident Ltd. reflecting its belief that the company’s business risk profile will improve over the near-to-medium term due to ramp-up in utilisation of the towels and newly established bed linen facilities, supported by healthy export prospects for home textiles from India.
The expanded towels and new bed linen facility helped Trident grow its overall revenues by around 25 per cent in fiscal 2017. Going forward growth in the yarn segment will be a function of the company’s initiative to further increase captive yarn consumption. Given the favourable export prospects for home textiles and Trident’s initiatives to enhance its customer base, both towels and bed linen are expected to be ramped up further over the medium term, leading to healthy revenue growth in both these segments. Revenue will grow at over 15 per cent in fiscal 2018 and 10-15 per cent annually over the medium term, primarily driven by growth in the home textile business.
Trident has clocked net revenues of Rs. 4,839.30 crores, an increase of 29.3 per cent over the previous year.
Commenting on the performance, Mr. Rajinder Gupta, Chairman at Trident Group, said: “We are happy to showcase solid financial and operational performance for this quarter. Our strategic initiatives of expanding our global footprint and widening our product offerings in the home textile space helped us yield the desired results. Going forward our focus remains on utilizing Bed and Bath capacities, generating free cashflow and improving our return ratios. There might be some headwinds pertaining to rupee appreciation and global uncertainties, but overall we foresee buoyant times for our stakeholders as we strive to create value for them.”
Trident was originally incorporated in 1990 as Abhishek Industries Ltd., promoted by Mr. Rajinder Gupta. The name was changed in 2011. The company, headquartered in Ludhiana, manufactures cotton yarn, terry towels, bed linen and paper. It is one of the leading manufacturers and exporters of terry towels in India. It also manufactures WPP using wheat straw as primary fibre source and distributes copier paper under the Trident brand in the domestic market. The company’s manufacturing facilities are in Barnala (Punjab) and Budhni (Madhya Pradesh). In the textile business, it has 5.55 lakh spindles, 5,504 rotors, 688 looms for terry towels, and 500 looms for bed linen.
Trident which does not have plans to undertake any major debt-funded capex program in the near term is expected to continue prepaying high cost debt, mainly non-TUFS loans, leading to steady deleveraging of balance sheet.
Trident has diversified into textiles and paper businesses, which contributed 83 per cent and 17 per cent respectively to its revenues in fiscal 2017 (estimated). Within the textile business too, it has a diversified revenue profile with about 40 per cent of its revenue coming from yarn, and 60 per cent from bed linen and bath linen (terry towels) in fiscal 2017. The diversity is expected to improve further going forward with increasing contribution of bed linen and terry towels in overall revenue mix.
The company is one of the largest manufacturers of terry towels in India and, with its foray into bed linen, it has positioned itself among the leading home textile players in the country.
Manufacturing processes of both the home textile and paper businesses are highly integrated. The towel unit consumes 36 per cent of total yarn produced and also sources 100 per cent of its weaving and processing requirements inhouse. The newly-commissioned bed sheeting unit also has captive spinning, weaving and processing capabilities, which caters to 100 per cent of the requirements.
Furthermore, Trident has a captive power facility of about 50 MW which leads to substantial power savings.