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Vardhman retains growth in Q2

04
Nov '09
Second Quarter in India seems to has brought along some relaxation to the crisis afflicted business and trade in the country. Amidst chain of festivals since previous quarter ended, companies have seen a growth in the obvious demand and consumer spendings.

Vardhman Textiles Ltd, a major integrated textile producer in India manufacturing and marketing yarns, fabrics, sewing threads, fibre and alloy steel, has posted its Q2 results in last month end.

This quarter too, results show the growth trend. Net Sales have gone up by over 8% compared to last quarter of current fiscal year. Speaking to News team at Fibre2fashion, the CFO of Vardhman, Mr. Rajeev Thapar reasons, “Indirectly our sales are linked with festive season because we produce yarn and fabric which is raw material for garments. Besides, some signs of recovery in economy have also been seen.

He, further explaining factors behind rise by 3% in Net Sales and by 5% in operating profit margins this quarter in comparison to same quarter last fiscal, quotes “The company is having steel division other than textiles, Net Sales of steel division have decreased by 50% i.e from Rs 97 Crores in 2nd quarter to Rs 49 Crores where as turnover of Textiles division has increased from Rs 554 Cr to Rs 618 cr, therefore increase by 11.55%. The main reason for fall in sales of steel division in this quarter was the huge power cuts imposed by the electricity board resulting in lesser production and sales.”

Comparing company's quarter to quarter more than 42% of reduction in Interest can be noticed. Justifying determinants, the CFO explains, “No major capex planned in 2nd quarter and the company having cash surplus, less requirement of working capital, soften interest rate and income earned on surplus funds netted from Interest cost resulting reduction in Interest expenses.”

Interestingly, comparing Q2(2008-09) to Q2(2009-10), one can also notice Total Income rise by 2.2%, and a huge increase i.e. over 828% in PAT. Answering our 'Why' on this, Mr. Thapar brings out, “Total income rise by 2.2% merely down due to decline in turnover of steel division. Substantial increase in PAT on quarter to quarter basis is due to the fact that the corresponding quarter had exceptional item on account of forex provisioning. Also, we have lower interest cost and better realizations in the current quarter.”

Rolling up this detailed study on Vardhman's this quarter performance with its CFO's outlook; we requested his prevision on the quarter in offing. He comments “Textile Industry is largely dependent on cotton prices. Accordingly the Q3 and Q4 would largely depend upon the price of the cotton and the resultant movement in yarn prices.”

To view Q2 (2009-10) click here.

Vardhman Textiles Ltd


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