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Nandan Denim Ltd.

BSE: 532641 Sector: Industrials
NSE: NDL ISIN Code: INE875G01030
BSE LIVE 15:29 | 24 Nov 166.00 0.50
(0.30%)
OPEN

166.00

HIGH

166.25

LOW

164.50

NSE 15:51 | 24 Nov 165.80 0.15
(0.09%)
OPEN

166.70

HIGH

166.75

LOW

164.30

OPEN 166.00
PREVIOUS CLOSE 165.50
VOLUME 16304
52-Week high 186.65
52-Week low 107.00
P/E 14.00
Mkt Cap.(Rs cr) 798
Buy Price 165.05
Buy Qty 50.00
Sell Price 166.25
Sell Qty 100.00
OPEN 166.00
CLOSE 165.50
VOLUME 16304
52-Week high 186.65
52-Week low 107.00
P/E 14.00
Mkt Cap.(Rs cr) 798
Buy Price 165.05
Buy Qty 50.00
Sell Price 166.25
Sell Qty 100.00

Nandan Denim Ltd. (NDL) - Chairman Speech

Company chairman speech

Dear shareholders

It would be customary to begin my statement with an analysis of the previousyear’s performance.

I will take the opportunity to address the shareholders apprehension about our capacityexpansion encapsulated in a single question: where will Nandan Denim market theincremental output?

This question is relevant and timely. According to media reports India nurses excessdenim capacity and needs to export to protect domestic realisations.

However this reality is true only for the short-term.

If one takes a three to five year horizon we foresee industry realities transformingfrom surplus to shortage.

The Indian denim market is growing annually at about ~18% against the global average of3-5%. Assuming that this growth rate continues India would need 2000 mn metres of denimfabric to feed its rising fabric appetite.

At Nandan Denim we believe there are a number of factors promising 18% annual growthin the domestic denim market.

India suffers from the lowest per capita denim jeans consumption in the world - 0.3denim jeans pair - even as China’s stands at 2 and US and UK at 8 and 9 respectively.This under-penetration is on account of a mere 7% of India’s population driving 49%of the country’s jeans consumption and nearly 85% of the country’s consumptionbeing accounted by men.

We believe that this reality could soon change for good reasons:

Youth: India is the youngest country of the world; more than 50% Indians are below25 years and 65% below 35 years. The aspirational youth (15-29 year olds) with risingspending power account for 26% of the consuming population. By 2020 it is estimated thatthe average age in the country will be 29 an attractive average of young earners andconsumers desiring to try out the new.

Urbanisation: About 377 million in India’s population of 1.27 billion areurban. With more than 10 million people migrating to cities and towns every year thecountry’s urban population is expected to reach about 600 million by 2031.

Smart Cities: The Central Government has selected 20 cities to launch itslarge-scale urban makeover plan. It proposes to invest C50802 crore on these cities inthe first phase of an ambitious plan to set up 100 ‘Smart Cities’.

Workforce: India is expected to add 110 million people to its labour force in 10years. Besides by 2020 India could have 116 million workers in the work-starting agebracket of 20-24 years (China 94 million).

Working women: The number of women joining India’s workforce is increasing.India’s government is preparing to extend mandatory paid maternity leave tosix-and-a-half months -- among the longest such periods in the world. This could add toIndia’s working women population and in turn add 200 bps to India’s GDPaccording to the Organisation for Economic Cooperation & Development.

Earnings: India’s per capita income has increased – from C71050 in FY13to C93231 in FY16 and could cross C100000 in FY17 leading to an increase indiscretionary spending.

Reach: The e-commerce revolution has extended fashion awareness and apparelavailability to Tier II and III cities.

During the past 12 to 18 months there has been a decline in the production of denimfabrics in US and China resulting in accelerated denim manufacturing opportunities: from35% of India’s total textile exports to 45% by 2020.

Business strategy

At Nandan Denim we have drawn out a two-pronged strategy.

In-plant

• Streamline operations for maximising asset utilisation and optimising costs

• Enhance knowledge on the fashionability of denim (value-added)

• Enhance infrastructure and product development capabilities customised aroundselect geographies and preferences

• Build expertise and capabilities to maximise value-added production

On-field

• Deepen global presence in existing and high-growth geographies

• Strengthen customer loyalty

Overview

The big message I would like to leave with shareholders is that Nandan Denim is at aninflection point where an interesting volume-value play will strengthen growth andprofitability enhancing shareholder value.

On behalf of the Board of the Company I would like to express gratitude to ourstakeholders customers and employees for their unstinted support in growing our respectand performance.