Arvind Mills Investor Present a Ti Ion

8/8/2019 Arvind Mills Investor Present a Ti Ion

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A R V I N D L I M I T E D

Arvind Limited

INVESTOR PRESENTATION

25

th

October 2008


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Financial Performance


3/22

The Arvind Mills Limited In spite better operational

performance the earningsof the company continueto be depressed on

account of rapid rise inthe input cost of cottonand power

The major contributory tothe lower performance is

the interest cost alongwith the loss on accountforeign exchangetransactions andoutstanding

Other income is onaccount of profit from saleof land and sale of sharesin company which holdsanother piece of land

Q II

Particulars 2008-09 2007-08 Change %

Net Sales/Income from Operations 599 564 6%

Other Income 35 2 2050%

Revenues 634 565 12%

Total Expenditure :

Consumption of Raw Materials 218 209 4%

Employees Cost 63 60 6%

Power & Fuel 74 47 57%Stores Consumption 65 62 5%

Other Expenses 114 107 6%

EBIDTA 100 80 25%

Interest & Finance Cost (Net) 66 34 97%

Cash Accruals 34 46 -27%

Depreciation/Impairment 29 35 -16%Exceptional Items 2 0

Profit from Ordinary Activities before tax 2 11 -80%

Taxes 1 1

Net Profit from Ordinary Activities after tax 2 11 -84%


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Arvind Mills Sales Mix


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Debt Profile

Long term borrowings also include borrowing

under TUF scheme amounting to Rs. 244 Crores

Statement of Total Borrowing as on 30-09-2008 Rs. In Crs

In Rupees Rate of Int In FC Rate of Int Total Rate of Int

Long Term Debt 1086 8.60% 146 7.82% 1231 8.51%Working Capital Debt 419 10.35% 300 7.00% 719 8.95%

Total 1505 9.09% 446 7.27% 1951 8.67%

Borrowing Proportion 77% 23%


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Business Analysis


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Denim

The realization in denimbusiness continues to go up asthe product mix continues toimprove

The cost escalation envisaged

for cotton might not be as highas originally anticipated

The key markets of US and

Europe are in flux andmaintaining the volumes atcurrent level will be a hugechallenge for the business

20.85

19.3418.60

20.12

16.22 16.2117.22 17.49

93

100 103 10296

105109

114

0

20

40

60

80

100

120

0.00

5.00

10.00

15.00

20.00

25.00

Oct -Dec 06 Jan - Mar 07 Apr - Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Denim Volume & Realisation

Volume Real isat ion


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Shirting

The business is doing well even in

face of stiff competition and

operational parameters are stable

The business continues to sufferfrom further 17-18% increase in

the cost of energy

With the cotton situation lookingup the cost of raw material is notof concern anymore

5.12

5.92 5.88 5.896.26

5.395.90

5.56

121

116

126

121

129

133 134 133

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

105

110

115

120

125

130

135

140

Oct -Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Shirting Volume & Realisation



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Shirts

The business continues to dowell in the current quarter andthe realization is at historicalhigh in rupee even at theRs.40 to dollar

The drop in volume is primarilydue to change in product mixand a sluggish July month

0.57

0.700.76

0.970.91 0.89

0.96

0.69

400 396

362 360 357

387 387406

100

150

200

250

300

350

400

450

0.00

0.20

0.40

0.60

0.80

1.00

1.20


Shirts Volume & Realisation



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Jeans

The average realizationcontinue to improve throughthe quarter

The volumes are lower duringthe quarter due to productivity

losses and delay in certainorder

The business continues to be

impacted by shortage ofmanpower

0.44

0.63

0.92

0.780.83

1.01

1.281.21449

383407 397 401

346378

432

0

50

100

150

200

250

300

350

400

450

500

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Oct - Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Jeans Volume & Realisation

Volume Realisation


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Knits

The new management team atknits is delivering very goodresults and has brought aroundtremendous operationalimprovements

The order book position isrobust and profitable

Certain structural changes are

likely to bring further costbenefits in the business

0.84

1.18

1.45

1.68

1.43

1.24

1.54

1.88

156

190

175

157 155

197187

175

0

50

100

150

200

250

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00


Knits Volume & Realisation



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Brands & Retail

The sales have increased by 37%

over corresponding quarter

previous financial year

Two more large format MegaMartwere opened in Pune and

Bangalore during the quarter

The first MegaMart 100% privatebrand showroom was opened

The first franchisee MegaMart

show room was opened

Decision to convert Excalibur and

Newport as private brands ofMegaMart was implemented

79.85 80.3770.79

100.59112.02

132.87

95.93

138.19


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Business Environment


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Foreign Exchange Hedging


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Cotton Prices


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Cotton Cost

The cotton cost have come off substantial highs and

continue to fall during last two weeks of globalcommodity meltdown

In absence of purchase support the prices in domesticmarket are also weakening substantially

Even though cotton cost for the company would be

higher than the previous financial year average , but itwill be substantially lower than the original anticipation


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Energy Cost

Cost of power cost at Naroda is Rs. 5.27 per Kwh and at

Santej is Rs.8.35 per Kwh as against previous yearaverage of 4.10 and 4.80 respectively

Non availability of gas is significantly driving up the cost

of steam

Our efforts to obtain alternative gas is likely to yield

positive results and company is hopeful of situationresolving by end of current financial year


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Brand & Retail Environment

Retail environment was very sluggish during previous quarter andfirst two months of current quarter

Last two weeks have been substantially better and the market isdelivering like to like stores growth

Retailers distress

Large inventory pile up with retailers across the country

A string of closed and unprofitable stores across the retail segment

Post Diwali uncertainty

In light of global meltdown and domestic slowdown the post Diwali

scenario is uncertain

Real Estate After three years of rapid rise the commercial real estate is under

pressure and presenting interesting opportunities


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Arvind Brand & Retail Management

Response

Retail Sales

Management is tracking sales on daily basis and suitablyadjusting the short term strategies

A structured sourcing plan for ensuring minimum inventoryaccumulation already put up

Primary shipments to MBOs and retailers only on the basis offeedback of secondary sales


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Global Meltdown and Impact

The current global meltdown could impact fabric and garment salesto customers from US and Europe

Early signs of uncertainty is forcing buyers to postponecommitments

Most of the large customers of the company are going through arough patch

Response

Start aggressively pushing volume business at a price point to create

cushion for order fluctuations

Restart the commodity market and sharply priced orders

End expensive front end engagement in the overseas market Monitor the commercial position on daily basis and limit the global

outstanding exposure


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Outlook

The company would like to maintain a cautious outlook

due to difficult global conditions Even though the cost factors might improve substantiallymaintaining volumes could be a challenging task

The company is very confident of growing the ValueApparel retail business under the MegaMart umbrella.

in difficult times value retailers do much better business globallyand same is seen in the Indian markets too


22/22

Thank You

Arvind Mills Investor Present a Ti Ion

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