PREMCO GLOBAL LTD recently attended the AGM of Premco Global (Premco) and met Lokesh Harjani, Executive Director at Premco, to get an insight into the global narrow elastic industry and the company’s role in the value chain. Premco is a technical textile company established in 1966. It is primarily into manufacturing woven & knitted narrow elastic fabric, which find application in innerwear (both men & women). The company has an installed capacity of 11.1 crore metre annually with production at ~9 crore metre in FY16, implying capacity utilisation of ~80% and blended realisation of ~| 9/metre. Premco is primarily an export unit with export sales at ~65% of sales. Domestically, the company’s key clients are Rupa, Lux among others while in exports key client is Hanes (US). In FY13-16, sales grew at a CAGR of 11.6% while EBITDA & PAT grew at a CAGR of 32.0% & 34.6%, respectively. In FY16, sales were at | 73.5 crore, EBITDA at | 20.1 crore (EBITDA margins at 27.3%) and PAT at | 12.6 crore. Premco is in the midst of executing a capex programme (capacity 7 crore metre), which will result in healthy sales and PAT growth, going forward. However, the company is susceptible to foreign exchange risk due to high exposure to foreign currency.