Vardhman Textile Concall was today at 3.30 PM.
Here are the key highlights of the conference call😀
@varinder_bansal @karansharma_09 @gvkreddi @nbalajiv
Here are the key highlights of the conference call😀
@varinder_bansal @karansharma_09 @gvkreddi @nbalajiv
- This has been a mixed quarter, started with challenges but gradually improved.
- less order from Customers as customers had the inventory piled up.
- In 3-4 the week of July, company started100% capacity utilization and have been working on that.
- less order from Customers as customers had the inventory piled up.
- In 3-4 the week of July, company started100% capacity utilization and have been working on that.
- Most of the formal wear is not being used as no formal gathering happening but company has done reasonably well.
- The western world has started picking up very well.
- Raw material of yarn and material both took a hit during pandemic.
- The western world has started picking up very well.
- Raw material of yarn and material both took a hit during pandemic.
- In the fabric side of business, domestically consumption is less.
-Export has reached 80-85% of what was done before.
- Expectation from festival season for the reasonable pick up as festival season is the best season for textiles.
-Export has reached 80-85% of what was done before.
- Expectation from festival season for the reasonable pick up as festival season is the best season for textiles.
- Derivative loss due to hedging of raw material prices. Company is cutting down the hedge as company believes that cotton prices have reached at reasonable price.
- Company looks at International price parity to decide what will be the price in India.
- Company looks at International price parity to decide what will be the price in India.
- If the price of cotton is too low in India then cotton will start getting Exported.
- CCI will continue to buy at MSP.
- The price of cotton will be determined by CCI, what policy they adopt to sell of their old cotton supply and what will be the new cotton harvest.
- CCI will continue to buy at MSP.
- The price of cotton will be determined by CCI, what policy they adopt to sell of their old cotton supply and what will be the new cotton harvest.
- If international prices are strong then no way cotton price will come down in India.
-In earlier years, Good quality raw material use to get exported and it use to be difficult for company to find the right supplies. So this factor determined the raw material stock.
-In earlier years, Good quality raw material use to get exported and it use to be difficult for company to find the right supplies. So this factor determined the raw material stock.
- Fabric side, inquiry numbers are huge as lot of companies want to diversify apart from China.
- As the income level of people increase people spend on clothing.
- On spinning side:100% capacity. For the fabrics side now reaching 60-70% capacity in this month.
- As the income level of people increase people spend on clothing.
- On spinning side:100% capacity. For the fabrics side now reaching 60-70% capacity in this month.
- Improvement in top line will come when the fabric business improves.
- Practically all the price level are reaching levels of before the pandemic happened.
- Practically all the price level are reaching levels of before the pandemic happened.
- By the time pandemic happened, company already had a good stock of cotton so company could not take advantage of low cotton price. Now prices have stabilized.
- Acrylics are running at full capacity. There is an antidumping duty imposed on acrylics. This duty may come down.
- Acrylics are running at full capacity. There is an antidumping duty imposed on acrylics. This duty may come down.
- On fabrics side knitted fabric required new machinery.
- In woven fabrics has already reached 60-70% utilization.
- There is no organized data available on how the industry is doing. But according to internal data Industry is operating at 80% capacity.
- In woven fabrics has already reached 60-70% utilization.
- There is no organized data available on how the industry is doing. But according to internal data Industry is operating at 80% capacity.
-Cotton prices have gone up but at the same time yarn prices is also going up so it is not affecting the profitability.
- Export was 65% before pandemic. Currently domestic business is improving.
- Company has Export of 2 types direct and indirect.
- Export was 65% before pandemic. Currently domestic business is improving.
- Company has Export of 2 types direct and indirect.
- In the garment export denim and weaving is still not fully recovered.
- Next 1 year company is not looking for any capex to conserve cash.
- If company gets any right opportunity in the market then company will look at it.
- Next 1 year company is not looking for any capex to conserve cash.
- If company gets any right opportunity in the market then company will look at it.
- The way customers needs are changing, company will have to adopt to it.
- As things will become normal then volumes will go up.
- Indian share of retail is still very small. There is not internal consumption advantage in the retail side.
- As things will become normal then volumes will go up.
- Indian share of retail is still very small. There is not internal consumption advantage in the retail side.
- Cotton season has just started so company will now take decision of how much stock company will keep of cotton.
In one and half month company will have better picture of cotton prices.
- Yarn capacity utilization should not be a problem.
In one and half month company will have better picture of cotton prices.
- Yarn capacity utilization should not be a problem.
- Working Capital: Expected Receivable of Export usually takes 90 days, while the domestic days it varies from 10 days to 3 months and average domestic of company is around 40 days. This make receivable high in current quarter
- Value added yarn: Rs 270-80 per kg
Basic yarn: Rs 200/kg
But the cost of value added is also higher.
- Home textile is doing very well. In apparel segment even if country gets small opportunity from diversification from China then it will be very big opportunity.
Basic yarn: Rs 200/kg
But the cost of value added is also higher.
- Home textile is doing very well. In apparel segment even if country gets small opportunity from diversification from China then it will be very big opportunity.
- In spinning and weaving, India is competitive to all over the world.
- In garmenting, labor cost is the main cost. The labor cost in Bangladesh is much lower than India.
- Textile capacity is also world class.
- Polyester can accept the share with the world class technology
- In garmenting, labor cost is the main cost. The labor cost in Bangladesh is much lower than India.
- Textile capacity is also world class.
- Polyester can accept the share with the world class technology
-Spinning side: Company is not inclined to expand
Fabric: Company is inclined, based on the order received from the market
- Customers expectation of delivery time is changing. Now customers want a differentiated product with faster delivery .
Fabric: Company is inclined, based on the order received from the market
- Customers expectation of delivery time is changing. Now customers want a differentiated product with faster delivery .
- Capex: As the focus is not on Capex, all the efforts are to improve the margins. wherever margins are better then company will shift to those products and customers.
- The margins in Spinning is good and demand for yarn is also good so if someone is not able to operate company thinks then that company will not be able to operate.
- There is hardly any company is knitting fabric. It is an unorganized business. It is all together a different business. If company has to enter this business then company will have to start this segment from scratch.
Inventory: Not booked any inventory loss. Stocking policy depends on commercial cost. Due to festive season coming in line, inventory is been slowly added. However can't comment how the expected inventory would be due to uncertain periods
Conclusion:
Time is really challenging for the industry.
Many thing remain still uncertain for the industry and the company as well.
CAPEX : company has decided not to have any capex for a year and focus on margin improvement.
Time is really challenging for the industry.
Many thing remain still uncertain for the industry and the company as well.
CAPEX : company has decided not to have any capex for a year and focus on margin improvement.
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