TRIDENT LTD.

Spinning a global ‘yarn’

Headquartered in Ludhiana (Punjab), Trident Ltd is a well-diversified mid-cap conglomerate engaged in the businesses of cotton yarn, terry towels, linen, paper and chemicals. It is the world’s largest manufacturer of integrated home textiles (bed and bath linen) and the largest manufacturer of wheat straw-based paper. With almost all verticals doing very well, the company is growing at a fast pace. What is more, prospects for the company going ahead are all the more encouraging.

Consider:

• he company is a wellknown player in the segment of yarn and its product mix includes 100 per cent cotton blended yarn, special open-ended yarn, organic cotton core spun yarn, Eli-twist yarn, compact yarn, stub yarn and an exclusive range of value-added yarns like mélanges, package dyed, gassed mercerized yarn, zero twist, wrapper yarn, bamboo/cotton, modal/cotton, soya/cotton, polyester/cotton, BCI/cotton, MMP/cotton and 100 per cent dyed yarn. The company employs over 5.83 lakh spindles and 6,464 rotors across various locations, producing a massive output of 350 tonnes per day. The manufacturing unit is equipped with the latest technology such as a blowroom from Trustzehler, ring frames from Zinsset and Murata, compact attachments of Suessen and testing technologies from UT 5. The company owns the world’s largest compact yarn spinning unit under a single roof. All its good-quality yarns are very much in demand at home as well as abroad.
• Of late, India’s share in the global home textiles market is on the rise and has been increasing at a rate of 15 per cent yoy. India also commands the third largest marketshare in the Asia-Pacific home textile market. This trend puts Trident – a highly capable manufacturer of bedsheets and bath linen — in a sweet spot as the export share of the company is on the rise. Its marketshare in terry towel exports to the US has shot up from 10 per cent in 2014 to around 20 per cent by now.
• The paper business contributes around 20 per cent to the turnover of the company. Trident is the largest manufacturer of wheat straw-based paper in the country. The company has a significant presence in copier paper which accounts for around 60 per cent of the company’s paper sales. As copier paper commands high margins, the company has concentrated on the production, quality and sales of this segment.
• As all the verticals are doing very well, Trident is taking rapid strides on the financial front. During the last eight years, its sales turnover has expanded from Rs 3,737 crore in fiscal 2015 to Rs 5,220 crore in fiscal 2019, before declining to Rs 4,519 crore in fiscal 2021 due to the Covid-19 pandemic. As the pandemic’s impact is on the wane, things have started improving at a fast pace. In the first 3 quarters of fiscal 2022, the company has achieved a sales turnover of Rs 5,097 crore as compared to Rs 3,169 crore in the corresponding three quarters a year ago, and has earned a net profit of Rs 641.40 crore as against just Rs 270.10 crore in the earlier period. Going ahead, the company is expected to make rapid strides as its home textile products are very much in demand in overseas markets. The company will get the benefit from its strong long-term experience of being a leading player with a fully integrated manufacturing setup. Trident appears to be at the start of a high-growth cycle driven by (a) remarkable growth in the bed linen segment, (b) higher utilisation in the bath linen segment, (c) a growing share in the global market and a high paper business margin driven by branded copier paper.

CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)

GOKUL AGRO RESOURCES

Huge leap in sales, net profit

Gandhidham (Kutch, Gujarat)-based Gokul Agro Resources is a well-known manufacturer of edible as well as non-edible oils and related products. The ISO 22000:2005 certifed company has emerged as a leading exporter and supplies its products to the US, South Korea, the European Union, China, Singapore, Indonesia, Malaysia, Russia and Vietnam. The company’s manufacturing facilities have been approved by many international importers and end- users, and that is why the company has established a huge and loyal customer base in various countries across continents. The company is steadily growing on the financial front and its prospects going ahead are all the more promising.

Consider:

• Gokul Agro owns a state-ofthe-art production facility equipped with the latest equipment and technology in Gandhidham. The company’s proximity to ports and its connectivity with major rail/road networks not only ensures uninterrupted supply of raw materials with cost effectiveness but also facilitates extensive distribution of its production to domestic and international markets at an optimal supply chain cost.
• The company has emerged as a leading exporter of castor oil of various grades and its derivatives.
• The company has strongly established its position in the edible oil and non-edible oil sector. It has a seed processing capacity of 32,00 tonnes per day, a DOC capacity of 1,000 tpd, an oil refining capacity of 3,400 tpd, and a vanaspati manufacturing capacity of 200 tpd. With revenues of Rs 5,000 crore from palm oil, the group is among the global top players in trading in imported oils. Crisil Ratings believes that the company will continue to benefit from the established position and promoters’ experience in the business over the medium term.
• Gokul Agro operates on a sound working capital cycle with minimal stocking and low debtors level, which further tightened in fiscal 2021. The company has gross current assets of 45 days with debtors of 24 days amid a price rise in edible oil. The company brought down its GCA (gross current assets) from the previous levels of around 2 months. According to Crisil Ratings, the working capital cycle shall continue to remain well-managed at around 45-50 days.
• CRISIL Ratings also praises Gokul Agro for its sound operating efficiencies, reflected in a robust return on capital employed (RoCE) of over 23 per cent in fiscal 2021. Over the previous fiscal years as well, RoCE was healthy, ranging between 17.5 and 20 per cent. The improvement in RoCE during fiscal 2021, despite a lower operating margin, was backed by faster rotation of capital resulting in scaled up operations. The capacity utilisation is 80 per cent at the refining unit throughout the year.
• The company has been going from strength to strength on the financial front, with sales turnover crossing the Rs 10,000-crore mark in fiscal 2021. During the last five years, its sales have expanded from Rs 4,273 crore in fiscal 2018 to Rs 10,217 crore in fiscal 2022, with operating profit inching up from Rs 101.23 crore to Rs 1,995.91 crore and the net profit taking a long jump from Rs 12.90 crore to Rs 102.98 crore during this period. The company’s financial position is getting sound. At the end of March 2022, the company’s reserves stand at Rs 232.12 crore – around 9 times its equity capital of Rs 28.61 crore. The company is managing its debt very intelligently. In fact, during fiscal 2021 and 2022, it brought down its borrowing costs supported by reduction in term debt, lower average interest costs and reduced LC (Letter Credit) discounting charges. As a result, the company’s interest burden has come down from Rs 82.57 crore in fiscal 2019 to Rs 56.07 crore in fiscal 2021 and 2022. What is more, the company has an adequate liquidity profile backed by optimum management of LC maturity, cash accruals against debt servicing and moderate bank limit utilisation.

The future outlook for the company is highly positive. Though this is a commodity stock, it is a good buy for long-term investors.

PERFORMANCE INDICATORS (Rs. in crore)