SKNL, a pioneer in manufacturing and distributing branded textile and ready to wear clothing, today announced its results for the quarter ended 30 June 2008.

Financial performance update
Q1 FY2009 results compared with Q1 FY2008 results:
Revenues at Rs 5351.5 million compared to Rs 3793.6 million, a growth of 41.1%
Operating profits enhanced by 59.9% to Rs 1261.5 million from Rs 788.8 million
PAT increases by 29.1% to Rs 550.9 million from Rs 426.6 million
EPS improves to Rs 2.57 from Rs 2.16
Commenting on the performance in Q1 FY2009 Mr. Nitin S. Kasliwal, Managing director and Vice Chairman of SKNL said,

““We have entered this fiscal year on a strong footing by delivering a healthy result in Q1 FY2009 and successfully completing a PE deal with GIC, the private equity arm of the Government of Singapore Investment Corporation. GIC has invested Rs. 9,000 million in Reid & Taylor and acquired 25.4% stake in the company. The balance stake of 74.6% will continue to remain with SKNL. Reid & Taylor being valued at Rs. 35,400 million has been tremendously encouraging for the SKNL team.

The investment symbolizes a high level of confidence amongst global investors in our ability to execute and create distinct businesses that have the potential to deliver sustained value. We look forward to pursuing our opportunities for enhanced profitability and growth.”

One of our key growth drivers going forward will be the high value fine cotton venture as it is a high margin business and since it requires significant expertise and investment, the sector is characterized by few players. This business unit’s manufacturing facility is set to be commissioned by Dec 2008 and once it is operational this segment should add substantial value as we will export a majority of the fabrics to leading international luxury brands.

We enjoy a good degree of penetration with brands present in a number of socio-economic segments across the clothing industry in India. Our brands include Reid & Taylor, Belmonte, Stephens Brothers, Carmichael House and S. Kumars. With a wide portfolio of brands and an undiminished appetite for growth we believe our business will continue to deliver superior performances in the future”
Revenues of the Company in Q1 FY2009 witnessed a healthy increase of 41.1% driven by healthy sales seen across segments of the company especially in the premium fabric and clothing segment
SKNL delivered a healthy operating profit and was successful in maintaining margins even though raw materials costs have risen significantly demonstrating the operating efficiency of the Company
PAT in Q1 FY2009 stood at Rs. 550.9 million
Interest cost increased by 64.9% to Rs. 276.1 million from Rs. 167.4 million, which is temporary in nature and would reduce with the conversion of warrants issued to Asia Debt Management Ltd.
Depreciation for the period stood at Rs. 124.3 million
Tax expense stood at Rs. 287.0 million for Q1 FY2009
Key Strengths:

Highly capable management with several years of experience in the business
Diverse set of brands that offer a varied range of products enabling it to cater to a number of socio-economic groups in the Indian market
Reid & Taylor – premium fabrics and ready-to-wear suiting
Belmonte – mid-price fabrics and ready-to-wear garments
Stephens Brothers – luxury ready-to-wear suiting
Carmichael House – premium home textiles
S Kumars – budget fabrics
Good manufacturing capabilities characterized by 5 state-of-the-art manufacturing units producing fabrics that meet international standards
Penetrative distribution network in domestic as well as international markets
Five channel distribution strategy comprising of a comprehensive wholesale network, multi brand outlets, institutional sales team, export sales and a number of exclusive brand outlets (EBOs)
Over 400 dealers and 30,000 retail outlets spread across India
Largest supplier in the organized textile sector
Key Developments:

GIC SI, the private equity arm of Government of Singapore Investment Corporation invests Rs 9,000 million in Reid and Taylor (India) Limited (RTIL) and acquires up to 25.4% stake in RTIL
RTIL valued at Rs 35,400 million demonstrating the strength of the Reid & Taylor brand
Proceeds to be utilized by SKNL and RTIL for capital expenditure and loan repayment
Brandhouse Retail Limited (BHRL), a fully owned subsidiary of SKNL has been hived off and will be listed shortly
The record date of the hive off was May 2, 2008
BHRL set to aggressively expand operations, hence more focused attention needed for the entity
Pure retail format model which will carry SKNL brands and other licensed foreign luxury and lifestyle brands.

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