Dollar Industries will have a turnover of Rs 2,000 crore by March 2025: Vinod Kumar Gupta, MD

Vinod Kumar Gupta, Managing Director, Dollar Industries, talks about the demand situation, a surge in commodity prices, growth targets, margins, price hike plans, CapEx & expansion plans, project Lakshya, Exclusive Brand Outlets, and export markets among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: How is the demand scenario looking like currently as the economy is fully functional now?

A: If we will talk about the hosiery product demand then everyone knows that the coming time is completely a hosiery season time. You can see that weddings are opening in full swing since Holi, even Eid is before this time and it falls in the first week of May. At the same time, the way this summer season is picking up it is sure that the demand will be good in the coming time. Amid this good demand, we will do a good business, it is sure to happen.

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Q: Will you please quantify it compared to the last year and what are your projections and targets for the company in terms of top line and bottom line?

A: As far as the top line and the bottom line is concerned than the FY2021-22 is likely to be better than FY2020-21 because the result of the first three quarters have been announced and they were quite energetic and good in themselves. If I will talk about FY2021-22 in totality then there should be a 25-20% growth in the top line. Going forward, we have set a plan to reach a turnover of Rs 2,000 crore by March 2025. We will be able to touch this turnover target if we will have an annual growth rate of 15% for the next three years.

Q: The cotton prices are surging a lot. So, has the company decided to pass on this surge to the consumer and should we expect a price hike in the future? Also, what trend is visible in terms of cotton prices?

A: Cotton prices are at their peak today and I do not see any reason why the prices will move forward. But we are going to make changes in our prices from April 1, 2022, amid the levels at which the cotton prices stand along with the increase in the production cost in the last two to three months. We are taking a price increase of around 6-7%. From time to time, whenever there is an increase in our production cost, we integrate it into our selling price and pass-on it on to the customer.

Q: How many price hikes have you taken so far?

A: Since the time this price increase has started, for almost a year and a quarter, we have taken price increases six times. We have already taken a price increase of about 12-15%. The last price increase was taken on December 6, 2021, after that the prices were almost standard. But at present, there is a sudden increase in the cotton and cotton yarn prices and we are integrating it into the selling price and have decided to take a price hike.

Q: What would be the percentage of price hike and will it cover the entire price increase of raw material or you will have to review it once again?

A: There will be a need to review it after April 1, 2022, and the review meeting will be conducted around April 7-8, 2022. After that, we will take another price hike just after the Eid season comes to an end, which would be around May 15, 2022.

Q: What would be the quantum of this price hike?

A: We are working on the price because the production cost just does not depend on cotton but there are incidental expenses like bleaching and dying, stitching charges, logistics costs among others. Each of these will be clubbed together before reaching a conclusion on what kind of price hike will be needed from May 15, 2022. Quantifying that price hike at the moment will be premature and will have a discussion on the same on April 7 or 8, 2022, and take a call on the hike that is needed.

Q: Will the aforesaid price hikes will be able to protect your margins in Q4FY22, which stood at 17% in Q3FY22?

A: As I have said that we are taking a price hike from April 1, 2022, which will be repeated on May 15, 2022. These hikes will help us in maintaining the decided EBIDTA margin range of 16-17%. So, the price hike will be made keeping the same level in the mind.

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Q: Will you maintain a similar performance in the future and you will create new records in every quarter or maintaining these levels will be an achievement in itself?

A: We have devised a growth path for ourselves maybe it is a growth of the top line or bottom line. We have already decided on a journey to a turnover of Rs 2,000 crore by March 2025 and an EBITDA of 17-18% by March 2025 and we will try our best to maintain it. The way we are expanding our business in the market, we will be able to maintain our growth rate.

Q: For FY23 you have a CapEx plan of Rs 16 crore for an integrated warehouse & Rs 45 crore for a Brownfield Expansion of spinning capacity. What kind of value addition both will give to your business? Also, you have said that these projects will be completed by FY23. Am I right?

A: We are doubling the capacity of logistics and spinning and both of the two will be completed in FY2022-23. It will, definitely, have a positive impact on the margins of the company. I think, the company will save around 1-1.50% in logistics when an integrated logistics warehouse will be created. Even the margins of the spinning mill, when its capacity is doubled will improve our bottom line by 1-1.50%.

Q: You have already talked a bit about Project "Lakshya" earlier. But can you please update us on it in terms of the investments, product pipeline and the way the project portfolio will be diversified? You have also talked about EBO (Exclusive Brand Outlet), which was launched in October 2021. What are the future plans related to it and how many more EBOs will be launched in the recent future and will that be on your own property or rented property?

A: Project "Lakshya" is an initiative to increase the number of retailers, i.e., how can we increase the MBOs or the point of sales. We have already appointed 125 distributors under project "Lakshya" in Rajasthan, Maharashtra, Karnataka, Telangana and Andhra Pradesh. In fact, more than 125 distributors have been appointed in these five states. We have also added more than 50 outlets to our profile. Project Lakshya aims at spreading the project range in the market and increasing the point of sales. So, Project Lakshya has been a successful event for us in both of these things. Gradually, we are increasing its footprints and we are going to add another three states namely, Bihar, Odisha and Haryana, with project Lakshya. Tamil Nadu and Kerala are also a part of the same. So, the footprints of project Lakshya will spread across India and we have an aim to create 4 to 4.50 lakh points of sales across India for Dollars in the next two to three years. We will be able to do it as its results are quite good. People are willing to join with the project so that more and more range of the product will go into the market and they are able to get better margins. This is why businessmen are joining us.

Q: What are your targets from the view of international/export markets? 

A: As far as exports are concerned, we are taking a 15-20% growth in FY2021-22 as compared to FY2020-21. The growth prospects are good in the future as well. Now, almost all the countries have opened up after the COVID and travel restrictions have also ended everywhere. We are seeing good demand in the market which is likely to grow in the coming days. At the same time, we have got a time, to add new companies with our product, which was decided two years back from here, and we have restarted the work on the same.