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Arvind Ltd net profit shoots up by 826.22% in Q2

12
Nov '09
Arvind Limited, one of the largest integrated textile, apparel and branded apparel players in India, generated a net profit of Rs 151.9 million for the second quarter (July-September) in the current fiscal year against a net profit of Rs 16.4 million in the corresponding period of previous year, recording an increase of 826.22%.

Speaking about the quarterly report, the CFO and Director of Arvind Ltd, Mr. Jayesh Shah said “The results are not comparable to the Q2 last year, because during the Q2 of the current fiscal, the company completed the demerger of its brands & retail business in to a separate 100% owned subsidiary companies with effect from 1st April 2009.

Excluding the figures of the now demerged brands & retail businesses, the revenue for the quarter is up by 25% at Rs 6 billion as against Rs 4.79 billion in the corresponding quarter of the previous year. At the operating level, EBIDTA increased by 44% to Rs 840 million against Rs 580 million for the corresponding quarter of the previous year. Brand & Retail Businesses also grew by 24% during the quarter.”

Further he explained the determinants behind this profit increase are mainly due to volume growth, higher price realization and lower energy cost. This year, the company has signed a nine year contract with GAIL for gas supply, and will source all its gas energy requirements from GAIL, which has reduced the energy cost hugely, which is now Rs 16.3 per Kg in 2009-10 compared to Rs. 31.3 per Kg in 2008-09.

Reduction in cotton prices was the other reason for improved business. In the year 2009-10 it is Rs. 60.6 per kg compared to previous year's cost of Rs. 67.1 per Kg. Besides, there was remarkable increase in export volume and domestic market volume of denim fabric and shirting fabric. The company has also hedged most of its future exports receivables and it expects to realize good amount between Rs 47-48 against the dollar.

Projecting the outlook for Q3, Arvind Ltd, expects the company revenue to grow 15% Y-O-Y and margin to grow by 3-4% Y-O-Y, excluding the brands & retail businesses. Giving reasons for the improvement in projected revenues, the report quotes robust product demand and reduced energy costs.

The report further states that, cotton prices are rising but it can be negated by good realization of export collections. Arvind Ltd has passed an enabling resolution to raise equity of Rs. 250-300 Crore by QIP (Qualified Institutional Placement).



Fibre2fashion News Desk - India


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