China textile issues benefit Indian Denim player ADEL

12 Aug '10

3 min read

Aarvee Denims & Exports Limited (ADEL) - one of the largest manufacturer and exporter of all kinds of denim fabrics and garments, has announced its unaudited financial results for the quarter ended June 30, 2010 in the Board meeting of the company held on 11th August, 2010.

The company has made a remarkable performance in the Quarter. Sales & Operating Income for the quarter stood at Rs 101.69 Crores and the PAT stood at Rs 8.08 Crore representing a 22% and 205% growth respectively over the corresponding quarter of previous year.

To get better review on the factors behind this financial rendition, our News team spoke with the Finance Controller at ADEL- Mr UL Pandwar. The verbatim is as below;

F2F- How would you like to comment on the Begin of fiscal 2010-11 for Aarvee?

Mr Pandwar- In the second half of the first quarter of FY 2010-11 the denims market has taken the U turn. In the first half of the quarter our capacity utilization was 85% and in second half the utilization was 100% and is expected same for the rest 9 months. By utilization of 100% capacity in next three quarter, turnover is to be increased by Rs. 15 Crore in each quarter. First phase of expansion of one denim line is to be completed by February 2011 so that we can get benefit of one month in this financial year. Our second phase of expansion of two denim line will be completed by December 2011.

After completion of both the phases of expansion we are hopeful to achieve turnover of Rs. 750 Crore to Rs. 800 Crore per annum.

F2F- Net sales compared to previous year first quarter are on growth track and are up by 22%. Can you please enumerate the determinants driving this growth?

Mr Pandwar- Our export turnover during first quarter of FY 2010-11 is Rs. 19.66 Crores as compared to 8.37 Crore of corresponding quarter of previous year. Due to high cost of production and withdrawal of Govt. support in China and their currency issues, some share of China's export of denim fabric is shifting to India. The impact of high cost of Chinese denim is clearly visible in the Indian market and this is the major reason for this increase in demand, and secondly growth in Indian market is at 15%.

F2F- There is also a remarkable increase in PAT by 205% this FY. How was this achieved in the milieu of price rise in raw materials and other cotton issues?

Mr Pandwar- The increase in PAT during FY 2010-11 is mainly on account of better realization price in exports as well as domestic sales, as compared to corresponding quarter of previous year. Also, increase in volume should be credited to it.

F2F- Are there expansion plans on card? If yes, can you please share with us details on it?

Mr Pandwar- The Company is planning to expand its installed capacity from 61.25 Mn Mtr to 97.50 Mn Mtr in two phases by December 2011 with capex of Rs. 150 Crore approx.

F2F- Any addition in customer base?

Mr Pandwar- The Company has been approved as registered vender of the global retail giant- Walmart during the quarter. The Company has already started receiving orders from them. Apart from this, the Company is flooded with the other export order as well domestic orders for next six months.

Please click here to view ADEL's Q1 for FY2010-11:

Fibre2fashion News Desk - India

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