Expansion leads growth in net sales (FY09) of Vardhman Textiles Ltd

20 May '09

3 min read

Traversing through the fiscal year 2008-2009 had been a real challenge for the industry across the globe as well as in India. Not only by the recessionary upshots but domestic industry was also influenced by local issues like MSP of cotton, tight liquidity position, fall in lending rates of banks not in line with RBI's benchmark rates etc. “They had been crucial factors deciding financial performance of the company,” points up Mr Rajeev Thapar, CFO, Vardhman Textiles Ltd, in a talk with fibre2fashion team on the financial performance of his company for year 2008-2009.

Divulging more about factors behind the growth in Net Sales, Mr Thapar enlisted full year utilization of new plant (Vardhman Fabric, Budhni) for 08-09 as compared to 2 months working in last year 07-08 and expansion carried out in new spinning plant (Vardhman Yarn Satlapur), to be the main reasons. He further detailed that the operating profit margin of company (PBDIT) before exceptional item has improved from Rs 378 cr in 07-08 to Rs 406 cr in 08-09, hence improved by 7.40% from the last year.

Last year operating profit margin also include the profitability of Sewing thread segment which is no longer part of the company on stand alone basis. However, PBIT of company has declined from Rs 223 cr in 07-08 to Rs 199 cr in 08-09 due to increase in depreciation from Rs 155cr in 07-08 to Rs 207 cr in 08-09 (mainly on account of full year depreciation of new plants (Vardhman Fabric and Vardhman Yarn).

Further explaining the determinants behind almost 100% increase in interest this financial year, Mr Thapar accounted two expansion projects undertaken by the company; one in Satlapur: the spinning project having four phases out of which three phases have become operational as of 31 march 2009 with spindleage of about 1.70 lac apart from CPP of 24 mw which is also operational; and other in Budhni- an integrated plant having spinning, weaving, processing facilities along with CPP of 24 mw capacity operational since towards the end of the last year. “The total capex incurred/ to be incurred in respect of these projects would be in the range of about Rs 1750-1800 cr,” he added.

Describing the capital structure of the company for last financial year, Mr Thapar worded, “the company is having paid up equity capital of Rs 57.76 cr and reserves of Rs 1214 cr and has outstanding term loans of Rs 1841cr and FCCBs worth 59 mn dollars.” Sharing about company's strategic plans on anvil, he retorted, “As the company has carried out massive expansion recently and a part of the same is under implementation the company will like to complete the same during the year and may undertake some modernization, equipment balancing and process improvement plans during the year.”

Summing up the conversation on his outlook on expected rendition of company for ensuing fiscal year 2009-2010, when asked Mr Rajeev Thapar opined saying, “It all depends upon the recovery in economies of US and Europe as textiles industry is largely dependent on the export market.”

Fiber2fashion - News Desk, India

More Vardhman Textiles News... More Textiles News - India...