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Operating Margins Under Crunch: Vardhman Group
Feb '09
Vardhman Group- a major integrated textile producer in India has diversified portfolio that includes manufacturing and marketing of Yarns, Fabrics, Sewing Threads, Fibre and Alloy Steel. During last decade, the conglomerate has recorded 11 percent top line growth rate, which is higher then the industry average growth rate. In these last ten years, the Group has embarked turnover growth from Rs 723 crores (1995) to over Rs 2000 crores (2005-06).

For its third financial quarter ended in December 2008, Vardhman Group companies have declared their Q3 results in the end of January 2009. With an aim to provide our valued visitors, a closer look on the financial progress of Group's textile arm- Vardhman Textiles Ltd., Fibre2Fashion team spoke with Mr. Rajeev Thapar, CFO, Vardhman Group, who shares more about the factors affecting Group's performance this financial quarter. The excerpts are as below;

F2F: What is your Products Volume?
Mr. Thapar: Going segment wise, there is increase in production in Yarns by about 10%, Fabric by about 50% as compared to corresponding last quarter. However there is decline by about 65% in production in Steel segment as compared to corresponding last quarter.

F2F: The Company has seen fall in its operating profit margins by aprox 1% compared to same quarter previous year; what determinants do you point up for this?
Mr. Thapar: The operating profits are lower due to sluggish demand and MSP of cotton fixed at a quite high level as compared to last year.

F2F: Have any sops by Govt helped to cushion the situation?
Mr. Thapar: Packing Credit subvention of 2% w.e.f. December 1, 2008 is expected to give slight cushion to the situation.

F2F: What is your order backlog?
Mr. Thapar: Orders are generally on month to month basis.

F2F: How do you look forward to next financial quarter?
Mr. Thapar: In next quarter, the operating margins will continue to remain under pressure.

Please click here to view Q3(FY2008-2009) results of Vardhman Textiles Ltd.

Fibre2fashion News Desk - India

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