Can you throw some light on your market penetration strategy in Tier III and IV cities?
In the domestic market, Nandan Denim has tie-ups with around 35-40 distributors who sell our products pan-India. Our actual strength gets multiplied with the eco-system of Chiripal Group, which enables us to capitalise on generating leads for the cross selling of products. Users across the country are catered to by these major distribution points. With the advent of newer products at differing price points, we keep adding a new channel partnership to expand our reach to the users.
The ongoing continuous customer contact programmes enable the company to seize early opportunities for enhancing distribution reach through more than one possible solution, making it the largest selling denim fabric in India.
What has been your growth in the last two to three years? What is the target for the next two years?
Nandan Denim has the second largest denim fabric manufacturing capacity in India and fifth largest in the world. Total income from operations increased by 22.7 per cent, ie to ₹ 1096.5 crore in FY 2015 from ₹ 893.80 crore in FY 2014. The rise in revenue was driven by a healthy increase in denim volume and realisation on the back of an improving demand scenario and a favourable product mix. The company successfully diversified into yarn-dyed shirting business, achieving revenue of ₹ 116 crore and contributing 11 per cent to FY 2015 total revenue. The company continued to increase its penetration in the international market to drive its export business forward, as revenue from exports grew 75 per cent to reach ₹ 136.3 crore in FY 2015 from ₹ 77.7 crore in FY 2014. The total income from operations grew at CAGR of 21 per cent over the period of five years ending FY 2015. EBITDA grew at CAGR growth of 25 per cent, and PAT grew at 31 per cent CAGR for the five years period.
We have been driving growth in revenue through addition of capacities year after year. So far, we have been successful and ready to claim the status of being the biggest denim player in India within one decade. Before adding any more capacity, we will be building our internal competence to exceed internal goals. Our near-term revenue growth will be derived from such internal projects that will have a larger impact on profitability.
What percentage of revenue is ploughed back into R&D?
Our business doesn't require a long gestation period of product development and testing before being put to use. We don't undertake R&D on a fundamental basis. Most of our products are developed in-house, in line with market expectations and upcoming fashion trends. Product development doesn't entail huge costs in financial terms. Yet they cost heavily on the imagination front. We spend days trying to fix certain things that appear to be basic.
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