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Quarterly results analysis: Apparel export gains over domestic sales

Fabric and garment maker Raymond showed profit of Rs 62 crore as against a net loss of Rs 7 crore in the pre-GST quarter of April-June

Vinay Umarji  |  Ahmedabad 


Apparel exporters gained over others in the segment during the September quarter results, the second one (Q2) of this financial year. For instance, KPR Mill, and Gokaldas Exports, for which external shipment are the bulk of business, has revenue or profit either improving or steady over both the June quarter (Q1), which was just before the rollout of (GST), as well as Q2 a year before. Fabric and garment maker Raymond showed profit of Rs 62 crore as against a net loss of Rs 7 crore in the pre-quarter of April-June. However, Page Industries and Arvind Ltd, whose garmenting business is equally focused on the domestic market, saw the impact of rollout of 28 per cent on branded apparel, with their Q2 bottom line declining over Q1 this year. Analysts say there was slightly reduced domestic demand in the month after the roll-out, despite a slight uptick in export. Wazir Advisors, a consultancy, says sales for exporters had increased with a rise in capacities and utilisation of specific companies (KPR, Kitex, Gokaldas). For instance, saw its garment production increase year-on-year from 30.48 million units in Q2 last year to 39.41 mn this year. “India’s to the US grew 6 per cent in Q2 from a year ago. However, for overall top textile players, consolidated sales fell by five per cent and Ebitda (operating earnings) margins fell by an average of four per cent,” said Prashant Agarwal, joint MD of Wazir Advisors.

Ebitda margin remained the same or fell for most companies. A rise in net profit of some, according to Wazir Advisors, such as Raymond, Kitex and Gokaldas Exports, was primarily due to higher other income. While posted growth in net profit from Rs 62.8 crore in Q2 last year to Rs 63.2 crore this time, went from Rs 13.1 crore to Rs 24.1 crore. Arvind, on the other hand, saw net profit for Q2 at Rs 42.1 crore, down from Rs 67.5 crore in the quarter last year. “Q2 turned out to be challenging one for the industry, with implementation impacting our domestic textile business. Even the consumer-facing brands business was impacted in July, as both the wholesale and retail channels were under pressure. The brands business saw strong performance in August and September, leading to good growth overall. We expect the transitionary impact of to settle and expect revenue growth to return to normalcy,” said Jayesh Shah, chief financial officer at Arvind. said the government had notified reduced drawback rates, along with availing of credit of paid on inputs effective October 1. "The industry is hopeful that the government will address this issue to restore competitiveness of the industry globally." chart

First Published: Wed, November 29 2017. 04:08 IST