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A
turnaround to reckon with
Riding
on the buoyant denim market as also backed by its restructuring
programme, textile major Arvind Mills has posted a net profit of
Rs 25.58 crore in the first quarter of the current fiscal as against
a net loss of Rs 67.88 crore during the corresponding period last
fiscal. After being in red for over three years, the company was
finally back in the black during the Q4 of the previous fiscal.
It clocked a net profit of Rs 10.1 crore for the quarter ended March
31, 2002 as compared to a net loss of Rs 96 crore for the same period
last year. During the quarter, operating profit showed a whopping
growth of 161 per cent at Rs 79.7 crore. Continuing its endeavour,
the company has once again managed a remarkable operating profit
for the first quarter. At an OPM of 28.8 per cent, the operating
profit has taken a two-fold leap to Rs 101.84 crore (Rs 47.8 crore).
Significantly, the interest and finance costs have almost halved
at Rs 40.7 crore as compared to Rs 80.87 crore. This clearly exhibits
the company’s relentless debt restructuring plan. The management
really deserves its share of credit for accomplishing this tough
task. Moreover, this will create a very good precedence to be emulated
by others in the textile industry which is currently under severe
pressure. Operating revenue went up by 7.1 per cent to Rs 353.8
crore due to increased price realisation. Despite difficult market
condition, the Ahmedabad-based denim firm continued its performance
on the export front. Export sales contributed to around 50 per cent
of the total sales during the first quarter as against only 10 per
cent during the previous quarter. This is a reflection of company’s
successful product portfolio catering to in the global market. In
fiscal 2002-03, Arvind’s denim division plans to increase the
contribution of speciality products to 75 per cent of its production
from 65 per cent now. Three years ago, speciality denims accounted
for just 10 per cent of sales and the denim portfolio included only
10 products. The company has rightly decided to carry on with its
product innovations and value engineering activities. This will
be supported by building deep relationships with global brands across
continents. In line with its thrust on high-margins, high-priced
speciality products, Arvind Mills is introducing a completely new
range of 150 denim products for domestic as also overseas markets.
The company has also decided to explore new export markets like
Australia, Korea, Taiwan, Bulgaria and Romania in an attempt to
broaden its market base. The denim-maker is also stitching together
a ‘design-your-fabric’ concept. Under this programme,
the sourcing clients can procure products as per their specifications
and requirements. Conventionally, the company showcases a couple
of collections in a season, from which clients take their pick.
Arvind is also entering into its co-branding programme with DuPont.
All this will certainly see the company scaling new highs in near
future.
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