Captains Speak     

Published: March 15, 2024
Updated: March 15, 2024

Arvind Ltd

Navy order for anti-fungal uniform fabric

Ahmedabad-headquartered Arvind Ltd, a leading textile and apparel company, has signed a memorandum of understanding with the Indian Navy for the supply of technically advanced uniform fabric for the navy. The new anti-fungal, anti-microbial and anti-bacterial fabric is specially developed for tropical conditions with improved moisture management technology and a higher whiteness index lasting multiple washing cycles.

Discussing the performance during Q3FY2025, Mr Lalbhai said revenue during the quarter stood at Rs 1,888 crore, down 3 per cent. This was despite a healthy volume growth, especially in the advanced materials section. EBITDA grew 16% to Rs 216 crore, which translates into an overall EBITDA margin of 11.4%. The EBITDA margin during the period improved by 200 basis points. PAT grew 22% to Rs 92 crore. Overall, the textile volume was similar to last quarter, though denim volumes saw a seasonal decline and clocked

about 10.3 million metres. This was more than offset by a strong growth in the woven section, which sold about 32.9 million metres during the quarter. Fully formed garments during the quarter was about 7.7 million pieces. Overall, textile revenues stood at Rs 1,426 crore, down 2% qoq and down 8% yoy. Textile margins inched closer to the 12% mark, as the management had earlier suggested, and stood close to 11.8% in the current quarter. The EBITDA margin improved by 140 basis points compared to the same quarter last year.

DEFENCE BIZ UP

According to him, the advanced materials division (AMD) continued its growth trajectory and delivered a volume growth of 20%-plus during the quarter. Revenue growth was limited to 2% on account of a sharp price deflation in raw material prices, particularly in industrial section. Human Protection revenues driven by new account additions and wallet share increases increased traction in the Middle East and healthy growth in the defence business. Composites volumes jumped sharply driven by large global project orders, while a new factory for mass transportation went live. Maintaining that “AMD’s quality and innovation and capability was acknowledged by the Indian Navy as the first order was awarded,” Mr Lalbhai added that “the MoU is an important step towards scaling up supplies of high performance speciality products to our armed forces which will provide comfort and protection against all kinds of adverse operating environments.”

According to Mr Lalbhai, revenue for Advanced Materials stood at Rs 345 crore. EBITDA was Rs 52 crore. The EBITDA margin stood at 15.2%, aided by softer input costs and operating leverage. The EBITDA margin of the AMD division improved by 150 basis points. Based on the current order book and momentum in the inquiry pipeline, the management is confident that Q4 will show further improvement and help deliver a very strong second half of FY2024. Overall net debt stood at Rs 1,390 crore at the end of the current quarter. The small increase is on account of higher working capital. With resumed investments for growth, the management expects long-term borrowing to close the year within the Rs 400-crore mark. The capex programme of Rs 300 crore is primarily focused towards AMD, and garmenting capacity expansion is on track.

ORDER BOOK UP

Striking an optimistic note about future prospects, Mr Lalbhai said the order book for Q4 is looking better for both Denim and Garments. Woven volumes improved as the inventory cycle got over, and new account additions started giving results. Textile margins benefited from operating leverage and mix, and have continuously trended towards the 12% mark as guided. Market demand showed signs of coming off the bottom, though caution prevails. Cotton and other input costs were likely to remain soft, while container shipping costs were likely to remain elevated. The management expects a stronger Q4 leading to a healthy H2. Based on the current trends, Denim & Garments volumes are likely to show improvements. Textile and AMD margins are expected to remain healthy at around Q3 levels. And the management expects to incur about Rs 220 crore in capex during the year.