Financial and Business Highlights
- The value of company increased from Rs.2200 crores to Rs.3000 crores company this year.
- Cotton prices have been prevailing at 25-30% higher levels than theprevious year.
- Brands and Retail business showed 22% revenue growth
- The margins almost doubled to 7.1% from last year
- Power brands show powerful performance with revenue growth of around 21% and margin of around 13% which is up from around 10% in the same period last year
- Q4 revenue for FY 17 was 10% higher than the previous year
- EBITDA margins were down 2% on account of reduced margin in Textiles and lower earnings in a few smaller business
- E-Commerce is the fastest growing but on a smaller base.
- There was 5% are the growth of Branded business and 5.4% on Power brands.
- 9.4% LTL sales growth across all the businesses
Brands and Retail Business
- Brand and Retail business delivered market leading thegrowth of 26% with slight improvement in margins. Also, likely to grow at around 22-25%
- Margins for Brand and Retail business will continue to grow - 150 basis points margin improvement
- Brand and Retail portfolio had a strong LTL growth of 9.5% for the quarter
- Brands are divided into three categories namely “Power Brands,” “Emerging Brands” and “Specialty Retail.”
- Power Brands grew 5.4% on LTL level
- Power Brands delivered very good profitability, but it used to be taken away by some of these Emerging Brands.
- The negative impact of the Emerging Brands is now coming down. Last quarter they reached to breakeven improves the overall margin.
- Emerging Brands and Specialty Retail is improving to help margin.
- The revenue growth of Textile was over 8%, primarily driven by the 25%-odd growth in Garment revenue.
- EBITDA was lower by around 10%.
- Margin for Textiles business is likely to remain under pressure primarily due to higher Cotton prices as well as the currency impact
- Textiles EBITDA is around Rs.900 crore.
- PBIT has gone up from Rs.57 crores to Rs.77
Technical Textile Business
- Technical Textiles has seen a sharp decline from Rs.31 crores EBIT profit to Rs.7 crores EBIT loss
- AMD, a part of Technical Textiles Business, is currently scattered among textiles as well as another segment.
- AMD business is growing at a pace of about 25%; it will be a closer to Textiles margins over a period of one year.
- Technical Textile has grown by over 25%; it is going to be close to Rs.700 crores business this year
- In the next 1, 1.5-years, Technical Textile is planned to make Rs. 1,000 crores with adecent margin
- “Unlimited” brand which is now reinvented and relaunched version of earlier Mega Mart
- Unlimited had an impressive rate of 29%.
- Unlimited had LTL growth of 30.2%
- SSG number of Unlimited brand is around 27-28%
- Specialty Retail which is GAP, TCP and Sephora was launched last year
- Sephora contributing much more than planned
- GAP and TCP had been expanded quite well in one year.
- There was some challenge regarding the cost model because of the CVD introduction in the last budget which is now getting corrected through domestic production
- The company is investing in Ethiopia and will be setting up around 12 million garments unit.
- Overall investment would be close to Rs.100 crores in Ethiopia to set up garment manufacturing plants,
- phase-1 is getting over this financial year
- The first plant that had been bought and invested in has gone into commercial production in Q4 and is expectee to make larger shipments starting July 1
- Almost by October 2017, it will be functional at full levels of production; it is about 6 million garments annual capacity.
• Expense on the internet was over ten million plus last year;it should be down at least 20-25% this year.r
- The inventory level is maintained around two months’ level, that is the standard have been maintained.
- Net debt at the year-end was Rs.2950 crores which arearound 2.9x EBITDA for the year.
- On overall basis, debt would not change for more than Rs.100 crores
- The debt-equity ratio is at 0.8; however, the earning-to-debt ratio has come below 3, and the company's stated objective is to take it to 2.5.
- CAPEX target of almost Rs.500 crores and with working capital increasing because of cotton price increase
- There a possibility that there will be Plus/minus Rs.100 crores neutral cash flow
- Around 40% of Textiles revenue comes from exports approximately and about 30% and 50% of this amount hedge every year
- The contracts remain for two months or the commodity hedges.
- Hedging mostly on international exchanges as liquidity is not very high in the domestic market
- Cotton prices have increased by 15% in Q4
- The raw materials cost to sales have changed by 4% hence margins are under pressure in Q4.
Joint Venture businesses
- Two out of five joint ventures are in the field of Technical Textiles
- One business is in the Garment manufacturing.
- Company suffered a bit because most of its sales were directed to the UK which because of the pound there was a challenge there on margin
- Garment, Tommy & Hilfiger and Calvin Klein have done extremely well this financial year.
- In GST, there is one immediate transition-related rate, and there is one which is a medium-term raes
- On the opening inventory, they would give a set off against the GST in future of VAT as well as excise duty. However, they will not give you set off of service tax or CST.ra
- Overall GST would be about 7% or thereabout as the taxes which are available in transition
- For Textile, Tax after GST would be around 2% and 3%. 90% of sales are B2B sales, and hence tax would be saved because of Input tax credit
Engineering business and water treatment plant
- Engineering business and Water Treatment business are operated under the brand Arvind Envisol which is 100% subsidiary of Arvind
- Engineering business is growing at 25% revenue
- Engineering business was close to Rs.160 crores and anEBIT margin of over 25%.
- Zero discharge patented technology in Water Treatment projects.
- Water Treatment plant’s revenue is expected to touch turnover about a couple of hundred crores over a period