PIONEER EMBROIDERIES LTD - Turnaround Story

Pioneer Embroideries  Ltd:


Market Price: Rs. 22/-
BSE Code: 514300
FV: Rs. 10/-
Equity Capital : Rs. 17.7 cr
Mrket Cap : Rs. 39 cr
FY- 2014 Sales: Rs.280 cr.

               If a company coming back into the black from the verge of closure should be highly appreciated, Pioneer Embroideries Ltd (PEL) deserves all its glory. As agreed in the CDR package, now the company is settling its defaulted dues to various Banks and Institutions as OTS (one tine settlement) by one-by-one. Its financial performance , particularly in the net level improving considerably. The industry growth, which engaged the company also looking well, we foresees a bright future of PEL in the medium  term.

       

                 Pioneer Embroideries Ltd is India's largest manufacturer - exporter of Embroideries, Bobbin laces, Raschel laces and other garment accessories. PEL owns the No. 1  retail brand Embroidered clothings named "Hakoba".  The company have seven manufacturing units spans 5 states from Tamil Nadu to Haryana. Apart from the domestic sales PEL exports its products to Latin America, North America, Europe, Africa and the Middle East. 

     The company's top-line growth is satisfactory since the past decade and unfortunately its bottom-line is not so. In 2008 (up to 2008, PEL having a regular dividend paying track record), to meet the financial requirement for setting up a Dope Dyed Polyester Yarn (DDPY) division, the company had issued FCCBs for $30mn, which were proposed to convert into shares but not happened that because of the sharp fall in its share prices on account of the Global financial crisis. (In fact just $2 mn converted in 2008, $16 mn restructured in FY 2014 and $11 mn was pending). Recently, the company had bought back the remaining FCCBs. It has settled the defaulted dues with ICICI bank by one time settlement. As per the CDR package instruction, in March, 2013 the promoters of the company  had subscribed 1651978 shares at Rs. 21.22 per shares and another 3125948 shares at Rs. 19.77 per shares to aggregate  Rs. 9.7 crore. Last week PEL has completed the OTS with State Bank of Patiala. So it is clear that the company management is confident with the company's overall growth in the coming years.

      The company's Dope Dyed Polyester Yarn (DDPY) division's performance is continuously improving. Last financial year ended march 2014, the compny's DDPY division surpassed its sales target with a 21% YoY growth. But the bottom line was pitiful due to a large out go of interest. In FY 2014, PEL has reported a sales income of Rs. 280 crore and net loss of Rs. 7 crore after considering an Interest out go of Rs. 16 crore and depreciation of Rs. 11 crore. For the HY ended September the company's sales improved to Rs.  136 crore against it reported Rs. 132 crore in the previous year. At the same time its NP, with the help of Rs. 5.5 crore other Income, reported at Rs. 1.73 crore. The same period of the last financial year NP was reported at Rs. 3.77 crore, including an other income of Rs.11 crore. Finance cost reduced considerably in the first HY of the current FY. We believe the trend will continue in the coming quarters, once it fully settled the dues as per the schedule and arranged the low cost fund. We hope that the company's financial performance, especially in the bottom-line will considerably improve in the future and it would reflect in its stock price too.