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Welspun Ramping Up Sales, Profits

Company More Than Doubled Profits in Third Fiscal Quarter

Rapidly building a global platform for its Indian-made sheets and towels, and building a highly profitable business at an equally rapid pace, Welspun India Limited more than doubled its third fiscal quarter profits while driving sales higher by almost two-thirds.

Layering on sales of sheets to its already robust towel business, and ramping up an aggressive marketing program, Welspun pushed sales for the third fiscal quarter ended Dec. 31 up by 61.2%, to $57.9 million from $35.9 million last year, adding $22 million to its top line. And that doesn't include results from last year's acquisition of an 85% stake in British terry producer Christy, a company generating roughly $70 million in annual sales.

Bulking up sales, improving the operating rates in its towel plants and getting a break on taxes, Welspun more than doubled profits in the quarter, which raced ahead by 115.4%, to $3.6 million from $1.7 million last year.

The company said, "The towel division has continued its good performance for the quarter and is operating at 90%-plus utilization level. Sheeting business continues to grow significantly. The marketing paradigm, which was a recent strategic shift, is also helping the company tap more strategic accounts.

The professional team in India and USA is reinforced with experienced staff in the areas of design, product development and marketing."

Rajesh Mandawewala, joint managing director of Welspun India Limited, said, "This performance is a testimony to our belief in our vision to grow in the home textiles market to a noticeable leadership position. The shift of strategy by giving more thrust on marketing will significantly improve the company's world market share and consequently add to its margins."

Sales for the first nine months of the fiscal year rose by 61.4%, to $167.6 million from $103.8 million last year, while earnings jumped up by more than a third, or 35.6%, to $9.5 million from $7.0 million last year.

Racing along an international fast track, Welspun, which was founded in 1985, has leveraged its manufacturing, pricing and marketing strengths into a leading position in the U.S. home fashions market, and in 2006 recorded sales in the United States of $277 million, placing it in the No. 8 position of the Home Textiles Today ranking of the nation's Top 15 home fashions suppliers.

WELSPUN INDIA LIMITED

Qtr. 12/31 (x000) 2006 2005 % change
Because financial reporting standards in India differ from those in the United States, data necessary to calculate average gross margin and SG&A expenses are unavailable. U.S. dollar amounts are converted from Indian rupees using the exchange rate in effect on Dec. 29, 2006, of 1 Indian rupee equals U.S. $0.0226701.
Sales $57,883 $35,922 61.2
Oper. income (EBIT) 11,762 7,570 55.6
Net income 3,604 1,677 115.4
Per share (diluted) 0.13 0.07 84.3
Nine months
Sales $167,575 $103,800 61.4
Oper. income (EBIT) 32,568 23,616 38.0
Net income 9,473 6,980 35.6
Per share (diluted) 0.33 0.23 44.2


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