Dollar Industry expects to maintain EBITDA margin guidance of 16-17% for this year: MD

“Until the rise in cotton prices around one and a half years back, our freedom range was more than 50% and the economy range was below 50%. But then because of the changes in the prices of the final product, the scenario got changed and premium product now accounts for around 42% of the total turnover and economy range is around 58%,” says Vinod Kumar Gupta, MD, Dollar Industries.

Cotton prices have fallen. What are the current trends like and in the midst of such volatility, how are you maintaining your stock and your margins?
Raw material prices have started coming down. We are expecting a good harvest of cotton this year. The government is expecting to have a total cultivation of around 375 lakh bales. Once that happens, the prices will cease to be volatile and once the prices stabilise, there will be a good demand in market as well.

You have given an EBITDA margin guidance of 16% to 17%. Are you looking at changing your guidance in any sense because of the price volatility?
Yes, of course. We are always trying to maintain the EBITDA margin at 16-17%. We have seen a good drop in the EBITDA margin in the first quarter because of the prices of the raw materials coming down and we had a good stock as well and we could not hike the prices of our final products which were expected to be done by June 15. And since the prices could not be hiked, there was a hit on the bottom side of the balance sheet. But now we are hopeful of maintaining this guidance of 16% to 17% EBITDA by the end of this year.

Until now, the company is having very limited presence in women’ innerwear category. What is the strategy there?
This year we have already launched brassiere in our Missy segment and we have also launched kurtis. Both the brands are doing very well. The market acceptance of the product is very good and it is about now scaling up the production in times to come. There are some more products lined up.

Can you give us a bit of bifurcation in terms of what is the contribution coming in from your premium category? Also what is coming from the value category plus how should we expect this to pan out in FY23?
Until the change in the prices of cotton happened around one and a half years back, our freedom range was more than 50% and the economy range was below 50%. But then because of the changes in the prices of the final product, the scenario got changed and premium product now accounts for around 42% of the total turnover and economy range is around 58%.

If the prices are not hiked further in the times to come, then obviously we will again see a change in the product demand for premium range.

Big Boss is currently your largest brand contributor. Are you looking at further expanding the advertising spend on other brands? Where are you seeing the maximum traction as well as potential going forward?
Big Boss is our flagship brand. It is our premium brand and this is the brand which we advertise on the electronic channel as well as in the newsprint. We hope to continue with this branding of Big Boss in the market and there are no further products lined up under this Big Boss range. The product optimisation has not yet been achieved but once the prices stabilise, we hope to see a jump in demand for our Bog Boss range of products.