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Revenue in garment business grows at Aditya Birla Nuvo
30
Jan '09
Aditya Birla Nuvo continued to work on its defined strategy of building a strong foundation for all the businesses entailing
- Transformation from a wholesale garment company to a “High-end apparel retailing” company through continued expansion of retail space and
- Expanding capacities in manufacturing businesses to tap sector growth.


As a result, while the company grew in net sales, profitability was strained due to: –
a) The global economic slowdown impacting India Inc., which has affected few of our businesses as well:
- Garment industry witnessed weak consumer demand and higher discounting
• In the Garments business, revenues grew to Rs. 293.3 Crores from Rs. 278.8 Crores. Continued weak demand and discounted sale offerings affected growth particularly in the wholesale channel.
• Sales from retail channel registered a robust 26% growth. Controlled retail space stands expanded to 7.6 lacs square feet across 328 Exclusive Brand Outlets (EBOs), five 'Peter England People' stores and one 'The Collective' store.

Investment phase of growth businesses coupled with impact of economic slowdown on few businesses constrained profitability Standalone net profit, during the quarter, reduced to Rs. 4.1 Crores from Rs. 84 Crores. Besides lower off take from tyre customers, Carbon black business was severely impaired by high priced stock due to sharp fall in CBFS prices linked to crude oil.

At the consolidated level, the Company has reported a net loss of Rs. 156.4 Crores against net profit of Rs. 30.2 Crores attained in the corresponding quarter of the preceding year.

• Profitability in the branded garments business was constrained due to the gestating impact of new store launches and higher discounting. In the apparel retail subsidiaries, the pre-launch expenses of stores and branding costs constrained the bottom-line; the benefit of which will accrue going forward.

In the contract manufacturing business, weak order flow / order cancellation resulted in lower capacity utilisation and forex loss, impacting its profitability for which corrective actions have been taken.

Most of our businesses are progressing on the designed path to leverage growth opportunities. Aditya Birla Nuvo is optimistic about meeting the challenges of strategic growth initiatives and enhancing its revenues and earnings. The investments pumped, more specifically into the Life Insurance, BPO and Garments businesses, which have created a stretch on profitability in the short term in line with the plan, will go a long way towards value creation for shareholders.

Aditya Birla Nuvo

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