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Trident takes giant leap on back of value addition
13
Dec '13
Slowdown offers the biggest opportunity for growth. Many companies have demonstrated their ability to deliver robust growth while economies deal with the worst possible crisis. A recent case in the point is Trident Limited, the flagship company of Trident Group, which registered spectacular growth in the second quarter ended September 2013 with net profit jumping over 50 times and EBITDA soaring by almost 80 per cent year-on-year.
 
Further closer look at the company’s performance in the September quarter would show that its EBITDA margins increased sharply to 21.1 percent from 14.4 per cent in the corresponding quarter of previous fiscal. Within the yarn segment, revenues increased by 25 percent to Rs. 507 crore, but PBIDT jumped even higher—at Rs. 73 crore in Q2 FY14 from Rs. 23 crore in Q2 FY13.
 
In the terry towel segment, where the company claims to be one of the top five manufacturers in world, revenues and PBIT improved by 12 percent and 213 percent registering Rs. 363 crore and Rs. 48 crore respectively.
 
Apart from favourable exchange rates and cost optimization initiatives, this spectacular growth can be attributed to the company’s enhanced focus on value-added products. The company sold around 21,500 MT and 22,000 MT of cotton and blended yarns respectively during this quarter and out of that, value added yarn contributed 25 percent to the total yarn revenue. 
 
Helped by change in product mix towards value added products, the company’s terry towel business reported PBIT margin of 13.3 percent as against 4.7 percent in the year ago period. The company sees demand outlook in towel business as positive, on back of improving consumption trend in the US, anticipation of signing FTA in European Union, Japan and South Africa; growing demand in markets like Latin America and Africa and FDI in domestic retail.
 
Going ahead, the company seems to be in a comfortable spot since China, the closest rival for Indian textile companies, stays at a disadvantage because of its higher power and labor cost.
 

Fibre2fashion News Desk - India


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